GUNKUL : Annual Report 2010
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Annual Report 2010
Transcript of GUNKUL : Annual Report 2010
çTo become Thailandûs number one manufacturer and provider of equipment for electrical systemsand renewable energy systems that meet and satisfy customersû need and concurrently maximizestakeholdersû returné
1. Sales: Not only offer existing product, but also procure new products from around the world to meet customer needsand gain customer satisfaction; concurrently emphasize on brand building to increase commercial value. Providefull-option services with regard to renewable energy systems, offering a wider range of product lines and equipmentset-up services at project sites
2. Renewable Energy Business Development: -Establish renewable energy power plants3. Return: -Maximize shareholdersû and stakeholdersû value and profitability;4. Technology: -Develop manufacturing techniques and adopt new production technology to improve productivity and
reduce production costs-Increase capability and adopt Information technology to respond promptly to fast-moving business environment
5. Personal: -Increase employeesû capability to enhance the Companyûs competitiveness on a global scale and retaintalent employees
6. Management Framework: -Create a strong management framework based on principles of good corporate governance.
Our mission serves as our objectives and guidelines that lead our decisions and actions.
Company Vision&ssion
1
Message from the Chairman of Board of Directors 2Message from the President 3Board of Directors 4Executive Board 5Financial Highlights 6Corporate Social Responsibility CSR 8Report of the Audit Committee 9Shareholders and Management Structure 10General Information 36Nature of Business 38Industry Overview and Competition 43Risk Factors 52Corporate Governance Policy 57Internal Control and Internal Audit 62Related Transactions 63Summary of Financial Statements 65Management Discussion and Analysis 72Board of Directorsû Responsibility for Financial Reporting 88Independent Auditorûs Report 89Notes to Financial Statements 98Corporate Social Responsibility : CSR 136Other References 137
Contents
2
Gunkul Engineering Public Company Limited
Message from the Chairman of Board of Directors
Due to the world and Thailand economic revival from the lowest
point during year 2009, Gunkul Engineering Public Company Limited (The
Company) adapted its business direction to aim to become a leader
in renewable energy business. With this excellence vision from our
management teams, it was perfect timing for the Company to raise
funds in Stock Exchange of Thailand (SET) in October, 2010.
Adapting business in the era of globalization which required
promptitude, diversification and flexibility influenced on Thailandûs
development in several dimensions. Renewable energy was one of an
important industry which provided more stability and more sustainability
for developing country by managing usage of nationalûs resources
consuming at the right time and the right place. By doing this, generating electricity from solar power which
received support (Adders) by government could increase a level of electricity backup and reduce an
expense from imported fuel and natural gas. Along with this, the Company constructed the Companyûs first
solar power plant at Chon Daen, Phetchabun Province that has been commercial since January, 2011.
The Company made a commitment to do business as a supplier and a manufacturer of high voltage
electrical products, which has been the Companyûs conventional business for the beginning, and as a power
producer from renewable resources by selecting technologies which were suitable with energy development
plan of the country. With this commitment, it was an important step to create sustainable growth with strong
foundation for the Company in the future. More importantly, the Company not only established its business
direction in accordance with good corporate governance but also maintained a credibility of operating
business and a commitment to make improvement for country in matter of energy.
The Company would like to express appreciation to stakeholders that encourage the Company
to enter to renewable energy business and shareholders that confide and invest in the Company. The
Company makes commitment to operate business in accordance with good corporate governance practice
by taking consideration of all stakeholders and continue to explore an opportunity in business.
(Dr.Ekaporn Rakkwamsuk)
Chairman of the Audit Committee
3
Transition in business of manufacturing and supplying medium andhigh voltage electrical products initially occurred since GUNKUL Engineering(GUNKUL) became a listed company in Stock Exchange of Thailand (SET)in October 19, 2010. Releasing initial public offering (IPO) was an importantfactor to create an opportunity for GUNKUL to enter to a renewable energybusiness.
During year 2010, GUNKULûs growth rate increased as expected.Revenue from year 2010 was equal to 1,290 million baht, which increased 394million baht or 44.07 percent comparing with revenue from year 2009. NetProfit was equal to 116 million baht, which increased 62 million baht or 114.81percent. Earnings per share in year 2010 was equal to 0.29 baht/share higherthan earnings per share in 2009, which was equal to 0.14 baht/share.
Breakthrough of GUNKUL during 2010 came from significant growth in the companyûs conventionalbusiness and renewable energy business. GUNKUL invested in 3 MW solar power plant at Ban Kluai, Chon Daen,and Phetchabun Province. This solar power plant project was awarded a Power Purchase Agreement (PPA) with8 baht adder from Ministry of Energy to sell electrical power to Provincial Electrical Authority (PEA). After around5 months construction, the first solar power plant of GUNKUL and Thailand which used CIS Thin Film technologyas solar modules was commercial on January 4, 2011. GUNKUL plans to compete constructing another 4.4 MWsolar power plant as the second phase within this year according to GUNKULûs initial schedule.
Developing new technologies and innovations to maintain and improve quality of medium and highvoltage electrical products were major concerns for GUNKUL. By doing this, GUNKUL was able to reducevolume of imported goods. With capability to serve all ranges of domestic and oversea customers, GUNKULhad 600 million baht backlog order which was expected to record as revenue in year 2011.
With all respect, I as representative of GUNKUL would like to express appreciation to all stakeholders,shareholders, stockholders and financial institutions for well support that has helped render our success today.Moreover, I would like to also thank to all GUNKULûs employees for dedication to work with trustworthy.GUNKUL has confidence to manage risks and formulate both renewable energy and conventional business planto accommodate fluctuation in economic situation. Last but not least, GUNKUL pledges to operate the businessas the companyûs vision which is çTo become Thailandûs number one manufacturer and provider of equipmentfor electrical systems and renewable energy systems that meet and satisfy customersû5 need and concurrentlymaximize stakeholdersû return in accordance to the code of conduct and good corporate governanceé.
Yours sincerely,
(Mr.Gunkul Dhumrongpiyawut)President
Message from the President
4
Gunkul Engineering Public Company Limited
Board of Directors
1. Dr.Ekaporn RakkwamsukChairman of the Board of Directors
4 5 6
7 8 9
2. Mr.Sathaporn KotheeranurakIndependent Director
3. Pol.Col.Visit SukarasepIndependent Director
4. Mr.Gunkul DhumrongpiyawutPresident, Director
5. Miss Sopacha DhumrongpiyawutManaging Director
6. Miss Naruechon DhumrongpiyawutDirector
7. Mr.Somboon AueatchasaiDirector
8. Mr.Chaloempon SricharoenDirector
9. Mrs.Areewan RoonpraphanDirector
1 2 3
5
1. Mr.Gunkul DhumrongpiyawutPresident
2. Miss Sopacha DhumrongpiyawutManaging Director
3. Miss Naruechon DhumrongpiyawutDirector
4. Mr.Somboon AueatchasaiDeputy Managing Director
5. Mr.Chaloempon SricharoenDirector
6. Mrs.Areewan RoonpraphanSenior Vice President - Factory
1 2
3 4
5 6
Executive Board
6
Gunkul Engineering Public Company Limited
Financial Highlights
447 443719
451 448
347 391
285
249 240
310
704 362
164600
1,8001,600 1,400 1,200 1,000 800 600 400 200
02006 2007 2008 2009 2010
Government GovernmentPrivate PrivateForeign Foreign
448
240(18.61%)
(46.62%)(34.75%)600
Revenue Breakdown by Type of Customenr % Revenue Breakdown by Type of Customer
Government and foreign segments have been taking turns as amajor contributor to GUNKULûs revenue
Unit : Million
31 Dec. 2010** 31 Dec. 2009** 31 Dec. 2008** 31 Dec. 2007*** 31 Dec. 2006***
Total Assets (Million Baht) 1,789.71 856.99 1,051.36 944.51 696.88
Total Liabilities (Million Baht) 657.51 351.79 428.17 665.46 600.54
Shareholdersû Equity (Million Baht) 1,132.20 505.20 632.19 279.05 96.34
Paid up Share Capital (Million Baht) 400.00 300.00 240.00 75.00 25.00
Revenue-Sales of Goods (Million Baht) 1,288.76 864.07 1,366.20 1,537.93 1,103.32
Net Profit / Loss (Million Baht) 123.17 53.66 123.01 187.71 84.78
Net Profit / Assets (%)* 6.88 6.26 11.70 19.87 12.16
Net Profit / Shaeholdersû Equity (%)* 10.88 10.62 19.74 67.26 88.00
Net Profit Margin (%) 9.56 6.21 9.00 12.20 7.68
Remarks * Adjustment for Full Year
** Consolidated Financial Statements
*** Separate Financial Statements
7
Revenue vs. Overall Gross Margin Net Profit vs. Net Profit Margin
THB (MM) THB (MM)
Balance Sheets
Unit : M.THB
Current Liabilties
Non Current Liabilties
Shareholdersû Equity
Current Asset
Non Current Asset
Total Asset 856.99 Total Asset 1,789.71
619.6
237.23
343.31
8.47
505.20
1,035.23
754.48
651.46
6.04
1,132.21
As of Dec. 31, 2009 As of Dec. 31, 2010
Net Profit Net Profit Margin(%)
1,400
1,200
1,000
800
600
400
200
0
30
25
20
15
10
5
02006 2007 2008 2009 2010
716
1,158
19.6
24.125.5
28.14
22.7
831
406
987
387 380
535458
302
Rev.from Trading Rev.from Manu Gross Margin(%)-RHS
12
10
8
6
4
2
0
200180160140120100806040200
2006 2007 2008 2009 2010
85
7.5
6.7
8.9
6.2
9.55
188
123
54
123
% %
8
Gunkul Engineering Public Company Limited
Venerable Luang Por Along Kot, the abbot ofWat Prabaht Nampu,
Venerable Luang Por Along Kot, the abbot ofWat Prabaht Nampu, Lobburi Province, kindly cameto Gunkul Engineering Co., Ltd. On July 21, 2009at 09.00 am in order to be granted the offeringssuch as money, rice, food and medicines forH.I.V patients and over 1,800 orphans under hispatronage. Gunkul Engineeringûs executives andemployees led by Khun Gunkul, president, andpeople residents around the company area joinedthe activity.
Phrabatnampu Merit ActivityOn September 16, 2010 at Gunkul Head
Office, Mr. Gunkul Dhumrongpiyawut, president of GunkulEngineering Plc with the companyûs executive teamparticipated in the çPhrabatnampu Merit Activityé to makedonation and provide utilities. This merit activity is set upto support çWhite Heart Projecté, which aims to supportpeople with AIDS and orphans.
Educational Support FundOn May 4, 2010, Our GK Group have granted
the Educational Support Fund for our EmployeesûChildren by President, Mr.Gunkul Dhumrongpiyawutand Managing Director, Ms.Sopacha Dhumrongpiyawutas the Level of Education Support Fund followings :-Kindergarten level 10 funds, Primary School level 20funds, Secondary and High School Level 6 funds,Total 36 funds. This activity of the 3rd consecutiveyear since 2008 to 2010 is one of our pride to produceand encourage the employeesû children with goodstudying result and being the good children in social.
National Childrenûs Day 2011On January 7, 2011, Mr.Gunkul Dhumrongpiyawut
and Mrs.Sopacha Dhumrongpiyawut (President andManaging Director of Gunkul Engineering PCL) includingManagement Teams gave presents to support governmentsectors such as Watsawaswareesrimaram Schools, PoliceDepartment of Samsen District and Villages nearby Gunkuloffice for National Childrenûs Day 2011. Gunkul EngineeringPCL has support National Childrenûs Day for many years,which is along with the companyûs corporate socialresponsibility (CSR).
Corporate Social Responsibility CSR
99
Report of the Audit Committee
Dear Shareholders,
The Audit Committee appointed by the Board of Directors Resolution on July 22, 2009 consists ofDr.Ekaporn Rakkwamsuk as Chairman of the Audit Committee, Pol. Col. Visit Sukarasep and Mr.SathapornKotheeranurak as Audit Committee.
The Audit Committee acts as assigned from the Board of Directors in accordance with duties andresponsibilities as defined in çAudit Committee Charteré which complies with guidelines and best practices forAudit Committee of the Stock Exchange of Thailand, Re: Qualifications and Scope of Work of the AuditCommittee, 2008.
In 2010, the Audit Committee has four meetings and all members of the Audit Committee are present inevery meeting with executives, internal auditors and auditors attended. The Audit Committee independentlygives opinions which can be summarized as follows.1. In reviewing the financial statements, the Audit Committee has asked for the accuracy and completeness
of the quarterly and annual separated financial statements and consolidated financial statements. Withthe explanation from the management and auditor, the quarterly and annual separated financialstatements and consolidated financial statements are prepared in accordance with the legal requirementsand generally accepted accounting principles before presenting to the Board of Directors.
2. In reviewing the internal control system, the Audit Committee in cooperation with the auditors and theinternal auditors has asked for the internal control system. The Audit Committee is of the opinion that thecompany has adequate and suitable internal controls in the acceptable criteria.
3. In reviewing the internal auditing plans, the Audit Committee has asked and considered the internalauditing plans to ensure that the internal auditing plans has been adjusted and been consistent withcurrent situation for more effective work.
4. In reviewing the risk management, the Audit Committee has asked risk management plan in order toensure that the risk has been managed properly in the acceptable criteria. As the result of reviewing, TheAudit Committee is of the opinion that the company has adequate and suitable the risk management.
5. In reviewing the related party transactions, the Audit Committee has considered and asked for thetransactions that may have conflicts of related party transactions. As the result of reviewing, the majorityof the transactions between the company and subsidiaries were normal commercial transaction inaccordance with good corporate governance.
6. The Securities and Exchange Commission Law and Regulations, the Audit Committee has preformed thefull scope of authority set forth in the Charter of the Audit Committee in compliance with the Securitiesand Exchange Commission Law and Regulations.
7. In determining, selecting, nominating and recommending compensation of annual external auditor, afterconsidering performance, independence and appropriate compensation, the Audit Committee hasnominated SP Audit Co., Ltd as the companyûs external auditor in 2010 and presented to the Board ofDirectors for final approval.
(Dr.Ekaporn Rakkwamsuk)
Chairman of the Audit Committee
10
Gunkul Engineering Public Company Limited
Shareholders and Management Structure
Shareholders StructureTop 10 major shareholders at the closing date of share registration book on November 10, 2010
Shareholder As of November 10, 2010
Amount of shares %
1. Gunkul Group Co., Ltd. 239,861,000 59.965
2. Mr.Chatree Taweepreechachart 11,100,100 2.775
3. Ms.Nanpapatr Piyapootinun 10,500,100 2.625
4. Mr.Supart Sujivarodom 10,200,100 2.550
5. Mr.Khanaphat Jirakasemphong 10,000,100 2.500
6. Mr.Yudhana Sitthimahachaikul 10,000,100 2.500
7. Mr.Prakin Sricharoen 10,000,100 2.500
8. Miss Charom Kongsompoch 2,500,000 0.625
9. Mr.Nattaphong Pansatanamongkul 2,200,000 0.550
10. Mr.Manaksing Narula 2,000,000 0.500
Total 308,361,600 77.090
Gunkul Group Co., Ltd. operates for investment in several company (Holding Company) and for the year
ended as on 31st December 2010, registered capital is 110.00 million baht by Dumrongpiyawut Family held
shares in the proportion of 99.64%.
Shareholder Amount of Shares %
1. Dhumrongpiyawut Family
1.1 Mr.Gunkul Dhumrongpiyawut 254,000 23.09
1.2 Miss Naruechon Dhumrongpiyawut 211,000 19.18
1.3 Mr.Pawich Dhumrongpiyawut 211,000 19.18
1.4 Miss Sopacha Dhumrongpiyawut 210,000 19.09
1.5 Master Arpakorn Dhumrongpiyawut 210,000 19.09
2. Mr.Chaloempol Sricharoen 3,000 0.27
3. Ms.Nanpapatr Piyapootinun 1,000 0.09
Total 1,100,000 100.00
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12
Gunkul Engineering Public Company Limited
Structure of the Board of DirectorsThe structure of the Board of Directors consists of 5 sub-committees, namely, the Board of Directors,
Audit Committee, Executive Committee, Risk Management Committee, and Remuneration Committee.
Board of DirectorsAs of 31st December 2010, the Companyûs Board of Directors has 9 directors as listed below:
Name Position
1. Dr.Ekaporn Rakkwamsuk Chairman/Chairman of the Audit Committee/Independent Director2. Mr.Sathaporn Kotheeranurak Audit Committee / Independent Director3. Pol.Col.Visit Sukarasep Audit Committee / Independent Director4. Mr.Gunkul Dhumrongpiyawut Director5. Ms.Sopacha Dhumrongpiyawut Director6. Ms.Naruechon Dhumrongpiyawut Director7. Mr.Chaloempon Sricharoen Director8. Mrs.Areewan Roonpraphan Director9. Mr.Somboon Aueatchasai Director
Provided that 9. Mr.Somboon Aueatchasai performs the duty of secretary of the Board of Directors.
Directors authorized to sign on behalf of the Company:The Directors authorized to sign and bind the Company are Mr.Gunkul Dhumrongpiyawut or Ms.
Sopacha Dhumrongpiyawut or Ms.Naruechon Dhumrongpiyawut, which one of them signs jointly with Mr.Somboon Aueatchasai or Mrs.Areewan Roonpraphan or Mr.Chaloempon Sricharoen, and whereby two ofthese directors shall jointly sign and affix the Companyûs seal, or otherwise Mrs.Areewan Roonpraphan, Mr.Chaloempon Sricharoen, and Mr.Somboon Aueatchasai shall jointly sign and affix the Companyûs seal.
The Board of Directorsû Authority and Duty ScopeAccording to the minutes of the meeting of the Board of Directors no. 13/2008 on 27th October 2008
and no. 1/2009 on 19th January 2009 and the Extraordinary General Meeting of Shareholders no. 4/2009 on22nd July 2009, the authority and duties of the Board of Directors have been assigned as follows;
Other than the Board of Directorsû authority and duties stipulated under the Companyûs regulations,the Board of Directors shall have the following authority and duties;1) Supervise and determine the Companyûs significant policies related to business management, finance,
funding, fund management, and risk management.2) Take into account the investment, approving the budget for the Companyûs investment projects and
supervising the projects to achieve the plan established.3) Supervise the Companyûs operation to achieve or outdo the purpose and set up the solution in event
of obstacles and problems in order to achieve or outdo the purpose.4) Provide the general information reports and finance reports to be given to the shareholders and
stakeholders or general investors in correct, timely, and legal manners.5) Acknowledge the main audit report of the Audit Committee or internal supervision and audit unit,
including auditor and consultants in any aspects, and establish the solution and modification in eventof essential defects.
6) Verify the sufficiency and appropriateness of the internal control and risk management systems.
13
7) Provide and facilitate the CEO up-building process to achieve the Companyûs Succession Plan.8) Nominate the Audit Committee and approve their authority and duties.9) Nominate any or many directors or other person to do any act on behalf of the Board of Directors,
provided that any such authorized one shall not have the power to approve any items/matters that suchperson or individual who may be involved with any conflicts (çindividuals who might be involved with anyconflictsé shall have the meaning as prescribed in the Notification of the Securities and ExchangeCommission (SEC)), stakes or any other beneficial conflicts with the Company or its subsidiaries.
Except for the following matters which can be implemented only under the resolutions of theshareholder meeting, provided that any director or individual may be involved with any conflicts,stakes or any other beneficial conflicts with the Company or its subsidiaries shall not be granted theright to vote in that matters.ë Matters stipulated by Laws must be obtained the resolutions from Shareholder Meeting.ë Transactions that any directors are involved with either conflict of interest or any other beneficial
conflicts particularly stated by the laws or Stock Exchangeûs specifications must be approvedby the resolution of shareholder meeting.
ë Besides, the following events must be approved by the Committee meeting and the shareholdermeeting with the votes not less than 3 fourth of total votes of the eligible shareholders presentin the meeting.- To sale or transfer all or important part of the company business to other person.- To make, amend or abolish the contract to rent out all or some important part of
company business. To nominate any other person who will manage company business ormerge the business with any other person in order to share profit and loss.
- To issue the new shares in order to make payment to the Companyûs debtor under thedebt capitalization project.
- To decrease the registered capital reducing the number of shares or their value.- To increase and decrease capital, to issue debenture, to merge or to terminate the business.- Other matters as required by the laws.
Audit CommitteeAs of 31st December 2010, the Audit Committee is comprised of 3 members as listed below:
Name Position
1. Dr.Ekaporn Rakkwamsuk Chairman of the Audit Committee2. Mr.Sathaporn Kotheeranurak 1) Audit Committee3. Pol.Col.Visit Sukarasep Audit Committee
1) The Audit Committee member has skills and experience in verifying the Companyûs financial statement.
Audit Committeeûs Authority and Duty ScopeThe çAudit Committeeé has the duties within the scope required as follows;
1) To verify that the Company has accurately and adequately disclosed its financial statements bycooperating with external auditor and the Companyûs executives are responsible for preparing thefinancial report both quarterly and annually.
2) To verify that that there are suitable and effective internal control and auditing system in the Companyby co-auditing with external and internal auditors (if any). The independence of internal audit unit orany other units related to internal audit shall be reviewed.
14
Gunkul Engineering Public Company Limited
3) To verify that the Company is operated in accordance with the laws regarding properties and stockexchange, the requirements of Stock Exchange and other laws relevant to the Companyûs business.
4) To select and nominate the Companyûs auditor to be appointed, as well as consider the audition feehaving regard to the credibility, resource sufficiency, work volume of that auditor and the experienceof the personnel to be assigned to audit the Company, and attend the auditor meeting without theAdministration Department at least once a year.
5) To consider any connected transactions or other transactions that may be in the conflict of interestsin accordance with the laws and the requirements of Stock Exchange in order to ensure that suchtransactions are reasonable and in the best favor of the Company.
6) To provide the Audit Committee activity reports by disclosing on the Companyûs annual report. Thereport shall be signed by the Chairman of Audit Committee and should contain following information:ë Comments on the preparation process and disclosure of companyûs financial statement to be
accurate and reliable.ë Comments on the sufficiency of Companyûs internal control system.ë Comments on the compliance with the laws regarding properties and stock exchange, the
requirements of Stock Exchanges and other laws related to the Companyûs business.ë Reasons to believe that the companyûs auditor is appropriateë Comments on any transactions that may be in conflict of interests.ë The number of the Audit Committee meeting and the attendance of each of them.ë Overall comments or remarks on the compliance with the charter given by the Audit Committee.ë Any other reports on which the Audit Committee views that shareholders and investors should
be concerned within a scope of duties and responsibilities assigned by the Board of Directors.7) To conduct other tasks as instructed by the Board of Directors approved by the Audit Committee
e.g. make revisions on financial policies and risk management, make revisions on the executivesûcompliance with business ethics, make co-revisions with the Companyûs executives on importantreports which need to be disclosed to public as stated by the laws, for instance, report and analysisof management team, etc.
For the effective performance, the Audit Committee may seek for the independent comments fromany consultants in other fields, if necessary, at the Companyûs expenditure.
Qualifications of the Audit Committee and Independent Directors1. Holding not exceeding 1 % of the Companyûs total amount of shares with voting right and its parent
company, subsidiary, associated company, or legal entity which may have conflict of interest, includingsuch shares held by any persons related to the independent director.
2. Not being or having been the director involving in the management of works, employee, staff, advisorreceiving a regular salary or controller of the Company, its parent company, subsidiary, associatedcompany, or subsidiary at the same level or legal entity which may be in conflict of interest, unless releasingfrom the characteristics aforesaid not at least 2 years prior to submit an application to the office.
3. Not have or used to have relationship by blood or by legal registration in the manners as parent,spouse, sibling and offspring, including the offspringûs spouse of any executive, major shareholder,controller or person to be nominated as executive or controller of the Company or its subsidiary.
4. Not have or used to have business relationship with the Company, its parent company, subsidiary,associated company, or legal entity which may have conflict of interests in any natures preventing
15
their independent discretion, as well as not being or having been the major shareholder, director (notindependent), or executive of any person relevant to the Company, its parent company, subsidiary,associated company, or legal entity which may have conflict of interests, unless releasing from thecharacteristics aforesaid not at least 2 years prior to submit an application to the office.
5. Not being or having been the auditor of the Company, its parent company, subsidiary, associatedcompany, or legal entity which may have conflict of interests, as well as not being the major share-holder, director (not independent), executive or managing partner of the audit office with which theaudit of the Company, its parent company, subsidiary, associated company, or legal entity which mayhave conflict of interests is affiliated, unless releasing from the characteristics aforesaid not at least 2years prior to submit an application to the office.
6. Not being or having been the service provider in any professions, including legal or financial advisor,receiving the fee of more than 2 million baht per annum from the Company, its parent company,subsidiary, associated company, or legal entity which may have conflict of interests. In case that theprofessional service provider is juristic entity, it shall include the major shareholder, director (notindependent), executive or managing partner of such professional service provider, unless releasingfrom the characteristics aforesaid not at least 2 years prior to submit an application to the office.
7. Not being the director appointed as representative of any directors, major shareholder, or shareholderrelated to the Companyûs major shareholder.
8. Not manage any business in the same condition and significantly competitive against the Company orits subsidiary or not being the significant partner in partnership or director participating in themanagement, employee, staff, advisor receiving a regular salary or holding not exceeding 1 % of othercompanyûs total amount of shares with voting right, which manages any business in the samecondition and significantly competitive against the Company or its subsidiary.
9. Not having any other characteristics preventing him/her from giving an independent comment on theCompanyûs operations.
Executive CommitteeAs of 31st December 2010, the Executive Committee has 6 directors as listed below:
Name Position
1. Mr.Gunkul Dhumrongpiyawut President2. Ms.Sopacha Dhumrongpiyawut Managing Director3. Ms.Naruechon Dhumrongpiyawut Director4. Mr.Chaloempon Sricharoen Director5. Mrs.Areewan Roonpraphan Director6. Mr.Somboon Aueatchasai Director
Executive Committeeûs Authority and Duty Scope1) Be authorized to make decision on the Companyûs important performances by determining the scope,
type or size of business, objectives, guideline and policies within the assigned power, including overallgovernance, output, customer relations and responsibility towards the Board of Directors.
2) Take into account the investment to expand business, and the Companyûs fixed asset procurement topresent the Board of Directors.
3) Be authorized to act and make appearance as the business representative to internal person in anyrelated activities and in favor of the business.
16
Gunkul Engineering Public Company Limited
4) Take into account the Companyûs funding to present it to the Board of Directors.5) Approve the nomination of consultants in any aspects necessary to the business operation.6) Run the businesses related to the general management.7) Take into account approving the action plan of the Companyûs each department and approving the
applications of each department above the power of such department.
Provided the authorization, duties, and responsibilities transferred to the Executive Committee, theauthorized person shall not have the power to approve the transaction that aforesaid person or any orindividual who may be involved with any conflicts (çindividuals who might be involved with any conflictséshall have the meaning as prescribed in the Notification of the Securities and Exchange Commission (SEC)),stakes or any other beneficial conflicts with the Company or its subsidiaries. The transaction to be approvedshall be presented to the meeting of the Board of Directors and/or the shareholder meeting for considerationand approval under the regulations of the Company or relevant laws, unless the approval of any transactionsin the course of business in accordance with the policies and principles as approved by the Board ofDirectors.
Remuneration CommitteeAs of 31st December 2010, the Remuneration Committee has 5 directors as listed below:
Name Position
1. Mr.Gunkul Dhumrongpiyawut Chairman of Remuneration Committee2. Ms.Sopacha Dhumrongpiyawut Remuneration Committee3. Mr.Thamrong Chankraithong Remuneration Committee4. Mr.Dhammanan1) Kuntatien Remuneration Committee5. Mrs.Somluk Kanuenghet Remuneration Committee and Secretary
1) Mr.Dhammanan Kuntatien resigned from the Remuneration Committee and Executive since 11th September 2010.
The appointment of new director replacing of the resigning director is being under consideration. Mr.Phongsakorn
Damnoen, Vice President of Business Development, will be nominated to apply for the approval of the Board of
Directors.
Remuneration Committeeûs Authority and Duty Scope1) Propose the remuneration criteria, methods of remuneration and other benefits to the Board of
Directors and sub-committee appointed thereby.
2) Consider the recommendations on determining the remuneration and other benefits having regard
to the duties and responsibilities of the Chairman and members of Executive Committee, as well
as consider the criteria and evaluate the overall performance in order to determine the annual
performance remuneration.
3) Consider and review the structure and criteria related to remuneration according to 1) and 2) to be
appropriate with the duties and responsibilities, overall performance, and in line with the marketing
condition.
4) Take into account the overall budget with respect to salary and bonus, as well as other benefits of the
Companyûs employees.
17
5) Review and propose the revisal, scope, duties, and responsibilities of the Remuneration Committee in
conformity with the circumstances.
6) Provide the performance report to the Board of Directors at least once per annum.
7) Perform any other duties assigned by the Board of Directors.
For the effective performance, the Remuneration Committee shall, under the scope and authority,invite the Administration Department or supervisors to attend the elucidation meeting or submit the relateddocuments. As well as the Remuneration Committee may employ the consultant or may make any paymentrelated to their performance at the Companyûs expense.
Risk Management CommitteeAs of 31st December 2010, the Risk Management Committee has 5 directors as listed below:
Name Position
1. Mr.Gunkul Dhumrongpiyawut Chairman of the Risk Management Committee2. Ms.Sopacha Dhumrongpiyawut Risk Management Committee3. Mr.Somboon Aueatchasai Risk Management Committee4. Mr.Thamrong Chankraithong Risk Management Committee5. Mr.Papangkorn Sakulvorakarn Risk Management Committee and Secretary
Risk Management Committeeûs Authority and Duty Scope1) Determine the policy and Risk Management Framework, including specify the role and responsibility,
and also participate in setting up the purpose to be applied.2) Supervise and promote the risk management to be success all over the organization level and project
level (Enterprise Wide Risk Management), giving precedence to and having regarding to the riskawareness in each factor to support making proper decision on resource utilization and procedures.
3) Take into account the main risk in the organization level in line with its direction and the value chainof business, promote the capacity of risk management all over the organization as well as promotethe development of technical risk management skill, make the guideline for integrating the riskmanagement with business plan and other management activities.
4) Provide the risk management language to be the same, including the shared measurement ofpossibility, impacts, and types of risk.
5) Facilitate the managers to develop the reporting rules, including the maximum/minimum criteria bothin quantity and quality, and perform following up the reporting preparation process.
6) Report the chief or executive of the progression of risk management and any abnormality (Outliers)and give comments on the operation as necessary.
ExecutiveAs of 31st December 2010, the executives have 13 people as listed below:
Name1) Position
1. Mr.Gunkul Dhumrongpiyawut Director and President2. Ms.Sopacha Dhumrongpiyawut Director and Managing Director3. Ms.Naruechon Dhumrongpiyawut Director4. Mr.Somboon Aueatchasai Director and Deputy Managing Director
18
Gunkul Engineering Public Company Limited
Name1) Position
5. Mr.Chaloempon Sricharoen Director6. Mrs.Areewan Roonpraphan Director and Senior Vice President, Factory7. Mrs.Somluk Kanuenghet Senior Vice President, The Office of Managing Director8. Mr.Papangkorn Sakulvorakarn Senior Vice President, Business Support9. Mr.Worathep Luangsirapornchai Senior Vice President, Internal Audit10. Mr.Thamrong Chankraithong Senior Vice President, Sale & Marketing11. Mr.Pongsakorn Damnoen Vice President, Business Development & Special Project12. Mr.Pamornchai Traiwilaskul Acting for Vice President, Logistics
13. Mr.Pichai Pheungsakdanukul Accounting Manager
1) Mr.Dhammanan Kuntatien resigned from executive since 11th September 2010.
Managing Directorûs Authority and Duty Scope1) To supervise the business operation and/or general administration of the Company.2) To direct and oversee the administration and the management in accordance with policies, plans and
budget approved by the Board of Directors or the Executive Committee.3) To authorize and/or to sub-authorize the disbursement approval of procurement on properties and
services in favor of the Company. Such approval authorization shall be approving the general trans-action not exceeding the amount as required by the Board of Directors.
4) Be authorized to issue an order, regulation, notification or memorandum in order that the performanceis carried out under the policies and in favor of the Company and in order to observe the rules andregulations within the Company.
5) Be authorized to act and make appearance as the Companyûs representative to exnternal person inany related activities and in favor of the business.
6) To approve the nomination of consultants in any fields necessary to the Companyûs operation.7) Be authorized to operate the Companyûs businesses in accordance with the objective, regulations,
policies, rules, requirements, orders, the resolutions of the shareholder meeting and/or the meetings ofthe Board of Directors and Executive Committee.
Provided the authority delegated to the managing director and to other persons under the approval ofmanaging director shall not include the authority and/or authorization to approve any transactions that he/she or any persons who may be involved with any conflicts, stakes or any other beneficial conflicts (asrequired by the Companyûs regulations and the Securities and Exchange Commission (SEC)) with theCompany or its subsidiaries. The transaction to be approved shall be presented to the meeting of the Boardof Directors and/or the shareholder meeting for consideration and approval under the regulations of theCompany or relevant laws, unless the approval of any transactions in the course of business in accordancewith the policies and principles as approved by the Board of Directors.
Authorization to Approve an AmountThe committees are authorized to approve the amount as required by the Board of Directors as
follows;
19
1. The Executive Committee has the power to approve the purchase and sale of goods, raw materials,services, and enter into the contract that produces the trade encumbrance and financial encumbrancenot exceeding 300 million bah, and has the power to approve the purchase and sale and transfer ofthe properties not exceeding 200 million baht.
2. The Chairman of Executive Committee has the power to approve the purchase and sale of goods, rawmaterials, services, and enter into the contract that produces the trade encumbrance and financialencumbrance not exceeding 200 million baht, and has the power to approve the purchase and saleand transfer of the properties not exceeding 100 million baht.
3. The Managing Director has the power to approve the purchase and sale of goods, raw materials,services, and enter into the contract that produces the trade encumbrance not exceeding 100 millionbaht, and has the power to approve the contract producing the financial encumbrance not exceeding50 million baht, as well as has the power to approve the purchase and sale and transfer of theproperties not exceeding 20 million baht.
Selection of DirectorsAlthough the Company has no nomination committee, the selection process of nominating
any individuals as the Board of Director will be carried out by the selection committee, based on theknowledge, competency, experience, vision and reliability, including such individual shall be qualified and notbe prohibited as required by the applicable laws in order to present in the shareholder meeting for approval.Provided the Company has stipulated the criteria and procedures that can be essentially concluded asfollows;1. The Board of Directors is comprised of at least 5 people, and not less than half of them shall be
domiciled in the Kingdom of Thailand. The Board of Directors shall be qualified individuals as requiredby the applicable laws.
2. In case of election of directors by the shareholder meeting, the majority voting shall be applied as thefollowing criteria and procedures:2.1 Each shareholder has one vote for one share held.2.2 Election of directors shall be made on an individual basis.2.3 The candidates receiving the highest votes shall be elected as directors on descending basis
up to the number of directors to be elected or vacancies at that time. The Chairman of thatmeeting shall act as an arbiter in case that equal votes occurred and numbers of directorsexceed the required number of directors.
3. In every annual ordinary general meeting of shareholders, one-third of the number of directors shallvacate their office and if 3 is an aliquant part of such number of directors, the number then nearestto one-third must retire from office. At the first and second years after registration, the drawing of lotsshall be made to determine which the directors must vacate their office. Thereafter the director whoholds the office for the longest term shall vacate. The retiring directors may be re-elected.
4. The directors shall be entitled to be remunerated by the Company in forms of reward, meetingallowance, pension, bonus or other benefits under the regulations or as approved by the shareholdermeeting that may specify the fixed rate or lay down the principles, to be effective occasionally orcontinually until they may be changed. Besides, the directors shall be given the allowances andwelfares in accordance with the regulations of the Company. Provided that such rights shall not affectthe rights of the Companyûs employees/staffs elected as directors to receive the remuneration andbenefits as an employee/staff of the Company.
20
Gunkul Engineering Public Company Limited
5. Any director who will resign from office shall submit the resignation to the Company. This resignationshall enter into force from the date of resignation arriving at the Company, and such resignation maybe notified to the registrar.
6. In case that any position of director vacates for any reasons other that routine retirement, theCommittee shall select the qualified individual, that has no characteristics prohibited under the lawsin re Public Company Limited and in re Securities and Stock Exchange, as the replacing director inthe next meeting of the Board of Directors, unless the term of such director remains not less than2 months. Provided the individual in replace of such director will hold the office just equivalent to theremainder terms of the director replaced. The resolution of the Board of Directors aforesaid stillcomprises the votes not less than 3 fourth number of remaining directors.
7. The meeting of shareholders may pass the resolution to relieve any director from office beforeretirement by not less than 3 fourth votes of the number of shareholders present in the meeting withvoting right and the total amount of shares is not less than half number of shares held by theshareholders present in the meeting with voting right.
8. The directors shall select one of them as the Chairman. In case that the Board of Directors views asproper, one or more of them may be nominated as deputy chairman.
Selection of Audit Committee/Independent DirectorsAs for the selection of the Audit Committee, the Board of Directors or the shareholder meeting will
nominate this committee that comprises not less than 3 members of the Audit Committee selected from theCompanyûs independent directors. The Audit Committee shall hold the office for 2 years per each term, butthey may be re-elected by the Board of Directors or the shareholder meeting. One member, at least, of theAudit Committee shall be skilled and experienced enough in accounting and finance and can perform theduties to verify the reliability of the Companyûs financial statements.
Selection of Executive CommitteeThe Board of Directors shall be authorized to appoint the Companyûs Executive Committee that
comprises not less than 3 members but not exceeding 5 members, selecting from the directors or staffs orskilled & competent person. They shall not be the Audit Committee assigned by the Board of Directors tosupervise the Companyûs business operation. The Executive Committee shall be liable directly to the Boardof Directors.
Executive RemunerationRemuneration for the Board of Directors
The Company has determined the director remuneration policy obviously and transparently. TheRemuneration Committee shall consider and propose the director remuneration to the Board of Directors inorder to present it to the shareholders for approval. The director remuneration is defined at appropriate levelcompared to that of the registered companyûs directors of energy industry. In this regard, the directorsassigned as the Audit Committee or Executive Committee shall be remunerated according to the increasingquantity of duties and responsibilities.
The remuneration of the Board of Directors is comprised of the meeting allowance and annual directorremunerations for the years 2009 and 2010, totaling 2,935,667 baht and 5,019,500 baht, respectively, asfollows;
21
Unit : Baht
20094) 20104)
Name Position Meeting Annual Meeting Annual
Allowance Remuneration3) Allowance Remuneration3)
1. Dr.Ekaporn Rakkwamsuk Chairman of the Board of Directors 200,000 480,000 160,000 480,000
Chairman of the Audit Committee
2. Mr.Sathaporn Kotheeranurak Audit Committee 170,000 400,000 136,000 400,000
3. Pol.Col.Visit Sukarasep Audit Committee 153,000 316,667 136,000 400,000
4. Mr.Gunkul Dhumrongpiyawut Director 85,000 -4) 75,500 900,000
5. Ms.Sopacha Dhumrongpiyawut Director 102,000 -4) 73,000 500,000
6. Ms.Naruechon Dhumrongpiyawut Director - - 34,000 400,000
7. Mr.Chaloempon Sricharoen Director 102,000 400,000 68,000 400,000
8. Mrs.Areewan Roonpraphan Director 102,000 400,000 68,000 400,000
9. Mr.Somboon Aueatchasai2) Director - 25,000 49,000 340,000
Total 914,000 2,021,667 799,500 4,220,000
1) Pol.Col.Visit Sukarasep has been nominated as director in accordance with the resolution of the Extraordinary General
Meeting of Shareholders no. 4/2009 on 22nd July 2009.2) Mr.Somboon Aueatchasai has been nominated as director in accordance with the resolution of the Extraordinary General
Meeting of Shareholders no. 2/2010 on 27th May 2010.3) The Company will make annual remuneration at once a year and the 2009 annual remuneration has been paid in 2010
and the 2010 annual remuneration will be entirely paid in 2011.
4)The meeting allowance and annual remuneration that the Board of Directors receives for holding the position as member
of all committees. In 2009, Mr.Gunkul Dhumrongpiyawut and Ms.Sopacha Dhumrongpiyawut did not desire to receive the
annual remuneration for each committee held, totaling 1,400,000 baht.
RemunerationIn 2009, there were 10 executives of the Company comprising 5 of them holding the positions of
directors and another 5 not holding the positions of directors.
In 2010, there were 13 executives of the Company comprising 6 of them holding the positions ofdirectors and another 7 not holding the positions of directors. The Company made remuneration as follows;Remuneration for 6 Executives holding the Board of Directors
Unit : Baht
20091) 20102)
Executive Number1) Remuneration Number Remuneration
Total Salary 5 6,272,838 6 8,218,426
Total Bonus 5 - 6 1,379,960
Total 5 6,272,838 6 9,598,3861) In 2009, there were 5 executives holding the Board of Directors i.e. Mr.Gunkul Dhumrongpiyawut, Ms.Sopacha
Dhumrongpiyawut, Ms.Naruechon Dhumrongpiyawut, Mr.Chaloempon Sricharoen, and Mrs.Areewan Roonpraphan.2) In 2010, Mr.Somboon Aueatchasai has been nominated as director by the resolution of the ordinary general meeting of
shareholders no.2/2010 on 27th May 2010.
22
Gunkul Engineering Public Company Limited
Remuneration for 7 Executives
Unit : Baht
2009 2010
Executive Number Remuneration Number Remuneration
Total Salary 5 6,279,360 7 6,501,060
Total Bonus 5 - 7 921,300
Total 5 6,279,360 7 7,422,360
Meetings of Board of Directors
The Board of Directors has stipulated the quarterly meetings ordinarily held for a year and the other
meetings extraordinarily held as necessary. The meeting agenda is specified obviously and the invitations
with agenda are sent to the directors not less than 7 days in advance, as well as the documents to the
meeting so that the directs have sufficiency time to study the information.
In 2009 and 2010, the Board of Directors held the meetings for 6 and 5 times, respectively.
The Chairman of Board of Directors was responsible for allotting the time enough for the Administration
Department that would present and information to discuss the material issues. Besides, the meeting of the
Executive Committee was regularly held, and the meeting of the Audit Committee that is required to be
quarterly held, the most of directors attended the meetings, excepting some of them was busily engaged.
The meeting attendances of each director can be summarized as follows;
Name Attendance Number/ Attendance Number/Meeting Number Year 2009 Meeting Number Year 2010
Dr.Ekaporn Rakkwamsuk1) 6/6 4/5Mr.Sathaporn Kotheeranurak1) 6/6 4/5Pol.Col.Visit Sukarasep2) 5/6 4/5Mr.Gunkul Dhumrongpiyawut 5/6 5/5Ms.Sopacha Dhumrongpiyawut 6/6 5/5Ms.Naruechon Dhumrongpiyawut 0/6 2/5Mr.Chaloempon Sricharoen 6/6 5/5Mrs.Areewan Roonpraphan 6/6 5/5Mr.Somboon Aueatchasai3) - 2/2
1) Dr.Ekaporn Rakkwamsuk and Mr.Sathaporn Kotheeranurak have been nominated as directors by the resolution of the
extraordinary general meeting of shareholders no.3/2008 on 20th October 2008.2) Pol.Col.Visit Sukarasep has been nominated as directors by the resolution of the extraordinary general meeting of
shareholders no.2/2009 on 31st March 2009.3) Mr.Somboon Aueatchasai has been nominated as director by the resolution of the extraordinary general meeting of
shareholders no.2/2010 on 27th May 2010, and attended his first meeting as director at the meeting of the Board of
Directors no. 4/2010 on 9th August 2010
23
Dividend Policy
The Company has a policy of paying dividend at the rate of no less than 40% of net profit after
deduction of tax, legal reserve fund and other types of reserve fund in accordance with the Companyûs
financial statements. However, the Company may declare dividend at the rate lower than what is mentioned
above if it is necessary for the Company to use such net profit for expansion of the Companyûs operation.
The annual dividend payment announcement must be approved at the Annual General Meeting of
Shareholders. For the interim dividend payment, the Companyûs Board of Directors may deem it appropriate
to pay interim dividend. The Board of Directors has the responsibility to inform shareholders of the payment
in the subsequent shareholders meeting.
The dividend payment policy of subsidiaries is to pay dividend of no less than 40% of net profits after
deduction of tax, legal reserve fund and other types of reserve fund. In this regard, in specifying the dividend
payment, the Company may consider cash flow, financial status, liquidity and investment plan which would
be required for the next year being taken into account.
24
Gunkul Engineering Public Company LimitedDe
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esen
tDi
rector
S.V. E
vergr
een
Co., L
td.19
95 -
pres
ent
Mana
ging
Direc
torSa
hapo
rn &
Co., L
td.19
93 -
pres
ent
Mana
ging
Direc
torDB
MT C
o., L
td.20
05 -
2010
Asso
ciated
judg
eTh
e ce
ntral
intell
ectua
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er ty
and
inter
natio
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rade
cour
t20
06 -
2009
Chair
man
of au
dit c
ommi
ttee/
Asia
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Publi
c Co
mpan
y Lim
ited
ind
epen
dent
direc
tor20
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rector
Thai
inves
tors a
ssoc
iation
2005
- 20
06Ch
airma
n of
audit
com
mitte
eTh
ailan
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nage
ment
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ciatio
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02 -
2006
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ittee
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and
laTh
e Fe
derat
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artm
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se o
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rliame
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epres
entat
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ssion
al f
or Ac
coun
tancy
Act
26
Gunkul Engineering Public Company LimitedSh
are
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-Surn
ame
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ionAg
esEd
ucati
onal
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ficati
ons
Holdi
ngRe
lation
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Perio
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Exp
erien
ce du
ring t
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ast 5
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Perce
ntage
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)
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l.Col.
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t Suk
arase
pInd
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dent
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tors
55- B
ache
lor D
egree
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ublic
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inistr
ation
-No
ne20
09 -
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ent
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Com
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eGu
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Comp
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2006
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puty
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ffair
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agem
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ourse
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igher
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Roy
al Th
ai Po
lice
Polic
e 28
2005
- 20
06Su
perin
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ffair
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r Sup
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nden
t 31
Roy
al Th
ai Po
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- Dire
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ccred
itatio
n Pr
ogram
(DAP
)20
00 -
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rinten
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iplina
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vision
, Roy
al Th
ai P o
lice
78/25
52 (
discip
linary
dev
elopm
ent)
Thai
Institu
te of
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tor (I
OD)
1998
- 20
00De
puty
supe
rinten
dent
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iplina
ry Di
vision
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al Th
ai P o
lice
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nalty
solic
itor)
1994
- 19
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supe
rinten
dent
Nong
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i Dist
rict P
rovinc
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olice
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ion,
Sup
anbu
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ovinc
e19
92 -
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of P
olice
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yasa
i Dist
rict P
rovinc
ial P
olice
Stat
ion,
Sup
anbu
ri Pr
ovinc
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4.Mr
.Gun
kul D
humr
ongp
iyawu
tDi
rector
with
Auth
ority
56- H
igh S
choo
l0.0
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sban
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1982
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esen
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ntGu
nkul
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blic
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any L
imite
d t
o sig
n on
beh
alf o
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Offic
e of
the n
on-fo
rmal
and
Miss
Sop
acha
2009
- pr
esen
tDi
rector
Gunk
ul Po
werge
n Co
mpan
y Lim
ited
Com
pany
inform
al ed
ucati
onDh
umron
gpiya
wut
1993
- 20
10Di
rector
K.N.P.
Sup
ply C
o., L
td.Pr
eside
nt- D
irecto
r Cer
tifica
tion
Prog
ram (D
CP)
and
Fathe
r of
2534
- pr
esen
tDi
rector
Gunk
ul Gr
oup
Co., L
td.Di
rector
111/2
551
Miss
Naru
echo
n19
96 -
pres
ent
Direc
torGu
nkul
Marin
e lin
e Co
., Ltd.
Thai
Institu
te of
Direc
tor (I
OD)
Dhum
ronpiy
awut
2000
- pr
esen
tDi
rector
Gunk
ul En
ginee
ring
(2000
) Co.,
Ltd.
- Dire
ctor A
ccred
itatio
n Pr
ogram
(DAP
)19
94 -
pres
ent
Direc
torG.
M. S
upply
and
Con
struc
tion
Co., L
td.70
/2551
2008
- 20
10Di
rector
F.S. In
terna
tiona
l Tha
iland
Co.,
Ltd.
Thai
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te of
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tor (I
OD)
1994
- 20
08Di
rector
Necta
r Eng
ineeri
ng a
nd C
hemi
cal C
o., L
td.- M
anag
ing F
inanc
e for
Bus
iness
Owne
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Pete
r Ho
- Sec
rets t
o Do
ublin
g Yo
ur Sa
les,
Prod
uctiv
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its
27
Share
Name
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ame
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esEd
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ngRe
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erien
ce du
ring t
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ast 5
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ss S
opac
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rector
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ority
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ache
lor o
f Nurs
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Wife
of
1998
- pr
esen
tMa
nagin
g Di
rector
Gunk
ul En
ginee
ring
Publi
c Co
mpan
y Lim
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Dhum
rongp
iyawu
t t
o sig
n on
beh
alf o
f the
Kuak
arun
colle
ge o
f nurs
ingMr
.Gun
kul
2009
- pr
esen
tDi
rector
Gunk
ul Po
werge
n Co
mpan
y Lim
i ted
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pany
- Dire
ctor C
ertifi
catio
n Pr
ogram
(DCP
)Dh
umron
gpiya
wut
2000
- 20
10Di
rector
K.N.P.
Sup
ply C
o., L
td.Di
rector
/Exe
cutiv
e11
1/255
120
08 -
pres
ent
Direc
torG.
K. As
semb
ly Co
., Ltd.
Dire
ctor
Thai
Institu
te of
Direc
tor (I
OD)
2000
- pr
esen
tDi
rector
G.K.
Powe
r Prod
uct C
o., L
td.Ma
nagin
g Di
rector
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ctor A
ccred
itatio
n Pr
ogram
(DAP
)20
10 -
pres
ent
Direc
torG-
Powe
r Sou
rce C
o., L
td.70
/2551
2000
- pr
esen
tDi
rector
Futur
e Ele
ctrica
l Con
trol C
o., L
td.Th
ai Ins
titute
of Di
rector
(IOD
)20
02 -
pres
ent
Direc
torGu
nkul
Tradin
g an
d Ag
ency
Co.,
Ltd.
- Man
aging
Fina
nce
for B
usine
ss19
97 -
pres
ent
Direc
torCh
aratla
tpatta
na E
lectric
ity C
o., L
td.Ow
ners
cours
e by
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r Ho
- Sec
rets t
o Do
ublin
g Yo
ur Sa
les,
Prod
uctiv
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Prof
its c
ourse
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ctive
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ior M
anag
er co
urse
6.Mi
ss N
aruec
hon
Direc
tor w
ith A
uthori
ty27
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ter o
f Bus
iness
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inistr
ation
0.01
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hter o
f20
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pres
ent
Direc
torGu
nkul
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g Pu
blic
Comp
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imite
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umron
piyaw
ut t
o sig
n on
beh
alf o
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Bosto
n Un
iversi
ty US
A.Mr
.Gun
kul
2010
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esen
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estm
ent B
ankin
gKa
sikorn
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uritie
s Pub
l ic C
ompa
ny L
imite
d C
ompa
ny- M
aster
of M
anag
emen
tDh
umron
gpiya
wut
2004
- pr
esen
tDi
rector
Nopp
akun
Co.,
Ltd.
Direc
tor/E
xecu
tive
Harva
rd U
nivers
ity y
USA.
2006
- 20
07Ma
nage
ment
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eGu
nkul
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blic
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imite
d D
irecto
r- B
ache
lor o
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ngCh
ulalon
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ersity
- Dire
ctor A
ccred
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n Pr
ogram
(DAP
)70
/2551
Thai
Institu
te of
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tor (I
OD)
- Effe
ctive
Sen
ior M
anag
er co
urse
28
Gunkul Engineering Public Company LimitedSh
are
Name
-Surn
ame
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ionAg
esEd
ucati
onal
Quali
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ons
Holdi
ngRe
lation
ship
Perio
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erien
ce du
ring t
he P
ast 5
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rs
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ntage
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ionCo
mpan
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)
7.Mr
.Somb
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Auea
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aiDi
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with
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ority
40- B
ache
lor in
Man
ageri
al Ac
coun
ting
-No
ne20
10 -
pres
ent
Direc
torGu
nkul
Engin
eerin
g Pu
blic
Comp
any L
imite
d t
o sig
n on
beh
alf o
f the
Tham
masa
t Univ
ersity
2010
- pr
esen
tDe
puty
mana
ging
direc
torGu
nkul
Engin
eerin
g Pu
blic
Comp
any L
imite
d C
ompa
ny- D
iplom
a in
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ing20
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tant m
anag
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blic
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imite
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rector
/Exe
cutiv
e Di
rector
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masa
t Univ
ersity
of B
usine
ss su
ppor
tDe
puty
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ging
Direc
tor- B
ache
lor in
Acc
ounti
ng20
09 -
pres
ent
Direc
torGu
nkul
Powe
rgen
Comp
any L
imite
dRa
jaman
gala
Unive
rsity
of Te
chno
logy
2005
- 20
07Fin
ancia
l con
sulta
ntInt
egrat
ed M
anag
emen
t Con
sulta
nt Co
., Ltd
.Ph
ra Na
khon
2004
- 20
05As
sistan
t gen
eral m
anag
er of
Thai
Rung
Unio
n Ca
r Pub
lic C
ompa
ny L
imite
d- D
irecto
r Cer
tifica
tion
Prog
ram (D
CP)
offic
e of
exec
utive
139/2
554
2008
- pr
esen
tDi
rector
Sean
gunit
hai L
PG C
o., L
td.Th
ai Ins
titute
of Di
rector
(IOD
)- D
irecto
r Acc
redita
tion
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ram (D
AP)
84/25
53Th
ai Ins
titute
of Di
rector
(IOD
)- C
ertifi
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ram in
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natio
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Tax
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clas
s 1Th
ai Ba
r Ass
ociat
ion- D
iplom
a in
certi
fied
intern
al au
ditor,
class
1Ch
ulalon
gkorn
Univ
ersity
and
The
institu
te of
intern
al au
ditors
of Th
ailan
d
29
Share
Name
-Surn
ame
Posit
ionAg
esEd
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onal
Quali
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ons
Holdi
ngRe
lation
ship
Perio
dWo
rking
Exp
erien
ce du
ring t
he P
ast 5
Yea
rs
(Year)
Perce
ntage
Posit
ionCo
mpan
y(%
)
8.Mr
.Cha
loemp
on S
richa
roen
Direc
tor w
ith A
uthori
ty41
- Bac
helor
of A
rts-
Broth
er of
2000
- pr
esen
tDi
rector
Gunk
ul En
ginee
ring
Publi
c Co
mpan
y Lim
ited
to
sign
on b
ehalf
of t
heRa
mkha
mhae
ng U
nivers
ityMi
ss S
opac
ha20
08 -
2009
Assis
tant G
enera
l Man
ager
ofGu
nkul
Engin
eerin
g Pu
blic
Comp
any L
imite
d C
ompa
ny- D
irecto
r Acc
redita
tion
Prog
ram (D
AP)
Dhum
rongp
iyawu
t P
rivate
Sale
sDi
rector
/Exe
cutiv
e70
/2551
2001
- 20
07Pr
ivate
Sales
Man
ager
Gunk
ul En
ginee
ring
Publi
c Co
mpan
y Lim
ited
Dire
ctor
Thai
Institu
te of
Direc
tor (I
OD)
2010
- pres
ent
Direc
torK.N
.P. S
upply
Co.,
Ltd.
- Effe
ctive
Sen
ior M
anag
er co
urse
2009
- pres
ent
Direc
torFu
ture
Electr
ical C
ontro
l Co.,
Ltd.
- Man
aging
Fina
nce
for B
usine
ss20
08- p
resen
tDi
rector
Chara
tlatpa
ttana
Elec
tricity
Co.,
Ltd.
Owne
rs co
urse
by P
eter H
o
9.Mr
s.Aree
wan
Roon
prap
han
Direc
tor w
ith A
uthori
ty41
- Bac
helor
in A
ccou
nting
-No
ne20
00- p
resen
tDi
rector
Gunk
ul En
ginee
ring
Publi
c Co
mpan
y Lim
ited
to
sign
on b
ehalf
of t
heDh
urakij
Pun
dit U
nivers
ity20
10 -
pres
ent
Senio
r Dire
ctor o
f Fac
tory
Gunk
ul En
ginee
ring
Publi
c Co
mpan
y Lim
ited
Com
pany
- Dire
ctor A
ccred
itatio
n Pr
ogram
(DAP
)20
09 -
pres
ent
Direc
torG.
K. As
semb
ly Co
., Ltd.
Direc
tor/E
xecu
tive
70/25
5120
09 -
pres
ent
Direc
torG.
K. Po
wer P
roduc
t Co.,
Ltd.
Dire
ctor
Thai
Institu
te of
Direc
tor (I
OD)
2008
- 20
10As
sistan
t Gen
eral M
anag
er of
Gunk
ul En
ginee
ring
Publi
c Co
mpan
y Lim
ited
Senio
r Vice
Pres
ident,
- Effe
ctive
Sen
ior M
anag
er co
urse
Log
istics
Fac
tory
2007
- 20
08As
sistan
t Gen
eral M
anag
er of
G.K.
Powe
r Prod
uct C
o., L
td. F
actor
y20
03 -
2007
Acco
untin
g Ma
nage
rG.
K. Po
wer P
roduc
t Co.,
Ltd.
1997
- 20
03Ac
coun
ting
Supe
rviso
rGu
nkul
Engin
eerin
g Pu
blic
Comp
any L
imite
d10
. Mr.P
apan
gkorn
Sak
ulvora
karn
Senio
r Vice
Pres
ident
51- B
ache
lorûs
degre
e in
Acco
untin
g-
None
2010
- pr
esen
tSe
nior D
irecto
r of
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ul En
ginee
ring
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c Co
mpan
y Lim
ited
Busin
ess S
uppo
rtRa
mkha
mhae
ng U
nivers
ity B
usine
ss S
uppo
rt20
06 -
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Assis
tant G
enera
l Man
ager
ofGu
nkul
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eerin
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blic
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any L
imite
d B
usine
ss S
uppo
rt20
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2005
Acco
untin
g Ma
nage
rGu
nkul
Engin
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g Pu
blic
Comp
any L
imite
d19
97 -
2003
Acco
untin
g Ma
nage
rUn
ion P
ropert
y Co.,
Ltd.
30
Gunkul Engineering Public Company LimitedSh
are
Name
-Surn
ame
Posit
ionAg
esEd
ucati
onal
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ficati
ons
Holdi
ngRe
lation
ship
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rking
Exp
erien
ce du
ring t
he P
ast 5
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rs
(Year)
Perce
ntage
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ionCo
mpan
y(%
)
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r.Wora
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Senio
r Vice
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ident
55- B
ache
lorûs
degre
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Acco
untin
g-
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- pr
esen
tSe
nior D
irecto
r of I
nterna
l Aud
itGu
nkul
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blic
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any L
imite
dLu
angs
irapo
rncha
iInt
ernal
Audit
Ramk
hamh
aeng
Univ
ersity
2008
- 20
10Ge
neral
Man
ager
of Int
ernal
Audit
Gunk
ul En
ginee
ring
Publi
c Co
mpan
y Lim
ited
- Aud
it Co
mmitte
e Pr
ogram
(ACP
)20
03 -
2008
Intern
al Au
dit M
anag
erGu
nkul
Engin
eerin
g Pu
blic
Comp
any L
imite
d24
/2551
1997
- 20
02Ac
coun
ting
Mana
ger
Gunk
ul En
ginee
ring
Publi
c Co
mpan
y Lim
ited
Thai
Institu
te of
Direc
tor (I
OD)
- Mon
itorin
g of
the Q
uality
of F
inanc
ialRe
porti
ng (M
FR) 7
/2552
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te of
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tor (I
OD)
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itorin
g of
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terna
l Aud
itFu
nctio
n (M
IA) 4
/2551
Thai
Institu
te of
Direc
tor (I
OD)
- Mon
itorin
g of
the S
ystem
of I
nterna
lCo
ntrol
and
Risk
Mana
geme
ntpr
ogram
(MIR
) 5/25
52
Thai
Institu
te of
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tor (I
OD)
31
Share
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ame
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onal
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ons
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ngRe
lation
ship
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ce du
ring t
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ast 5
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ntage
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ionCo
mpan
y(%
)
12. M
s.Som
luk K
anue
nghe
tSe
nior V
ice P
reside
nt45
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helor
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rts-
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- pr
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tSe
nior D
irecto
r of E
xecu
tive O
ffice
Gunk
ul En
ginee
ring
Publi
c Co
mpan
y Lim
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The
Offic
e of
Mana
ging
Srina
khari
nwiro
t Univ
ersity
2010
- pr
esen
tDi
rector
G.K.
Asse
mbly
Co., L
td. D
irecto
r- E
ffecti
ve S
enior
Man
ager
cours
e20
10 -
pres
ent
Direc
torG.
K. Po
wer P
roduc
t Co.,
Ltd.
- Perf
orman
ce A
pprai
sal b
y Bala
nce
2006
- 20
10Ge
neral
Man
ager
of Ex
ecuti
ve O
ffice
Gunk
ul En
ginee
ring
Publi
c Co
mpan
y Lim
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Score
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2003
- 20
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man
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urces
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ent
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ul En
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nning
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pmen
t M
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ssion
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e19
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n Re
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es D
epar
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alary
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urvey
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nkul
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kutûs
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tute
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chno
logy L
adkra
bang
2008
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anag
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ginee
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c Co
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y Lim
ited
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plied
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natio
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Mong
kutûs
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tute
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., Ltd.
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ourse
32
Gunkul Engineering Public Company LimitedSh
are
Name
-Surn
ame
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ionAg
esEd
ucati
onal
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ficati
ons
Holdi
ngRe
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ship
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ce du
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ast 5
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rs
(Year)
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ntage
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ionCo
mpan
y(%
)
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r.Pho
ngsa
korn
Damn
oen
Vice
Pres
ident
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.Sc. (
Electr
ical E
ngine
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)-
None
2010
- pr
esen
tSe
nior d
irecto
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usine
ssGu
nkul
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blic
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any L
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. Eng
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Unive
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of Te
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rector
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ource
Co.,
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ourse
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a20
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2010
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ul En
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c Co
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or Mo
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2009
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ul En
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c Co
mpan
y Lim
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cal F
iber C
able
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l Proj
ect S
uperv
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ol co
urse
2005
- 20
07So
lution
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ager
Jun
(Thail
and)
Co.,
Ltd.
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publi
c of
China
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iber C
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publi
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logy c
ourse
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le Re
publi
c of
China
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Confe
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Jap
an- B
iomas
s Con
feren
ce U
SA.
33
Share
Name
-Surn
ame
Posit
ionAg
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ucati
onal
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ficati
ons
Holdi
ngRe
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ship
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ast 5
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(Year)
Perce
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mpan
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ornch
ai Tri
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kul 1)
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Pres
ident
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degre
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g-
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ager
Gunk
ul En
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c Co
mpan
y Lim
ited
Logis
tics
Dhura
kij P
undit
Univ
ersity
2007
- 20
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rchas
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anag
erGu
nkul
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eerin
g Pu
blic
Comp
any L
imite
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ledge
for
2005
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urcing
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ager
L.V. T
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lic C
ompa
ny L
imite
dpr
ofess
ional
purch
aser
: Purc
hasin
g19
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2005
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asing
Sup
erviso
r and
Siam
Fibre
Ceme
nt Co
., Ltd.
& Su
pply
Chain
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ent
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Use
r (Mo
dule
MM) t
eam
Asso
ciatio
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and
imp
lemen
tation
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tems
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wled
ge in
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natio
nal P
urcha
se o
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ogist
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tan
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pply
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partm
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fsk
ill de
velop
ment
- Cos
t calc
ulatio
n for
: Ex
celle
ntBu
sines
s Corp
oratio
n Int
ernati
onal
LTD.
16. M
r.Pich
ai Fu
engs
akda
nuku
lAc
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ting
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ger
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aster
of B
usine
ss A
dmini
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2006
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ager
Gunk
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Publi
c Co
mpan
y Lim
ited
Ramk
hamh
aeng
Univ
ersity
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oma
in Au
diting
Tham
masa
t Univ
ersity
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helor
ûs de
gree
in Ac
coun
ting
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hamh
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ersity
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tified
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lic A
ccou
ntant
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point
ed o
n Fe
brua
ry 17
, 201
1
34
Gunkul Engineering Public Company LimitedDe
tails
Posit
ion T
itles
of D
irecto
rs a
nd M
anag
emen
ts
Com
pany
1)Su
bsid
iary
Com
pani
esCo
nnec
ted
Com
pani
es2)
Nam
eGu
nkul
GKA
GKP
KNP
GPG
GPS
12
34
56
78
910
1112
1314
1516
17
1.Dr
.Eka
porn
Rak
kwam
suk
X, I,
IIII
2.M
r.Sat
hapo
rn K
othe
eran
urak
I, III
II
II
II
I3.
Pol.C
ol.Vi
sit S
ukar
asep
I, III
4.M
r.Gun
kul D
hum
rong
piya
wut
I, II,
VX,
I, V
I, V
II
I5.
Miss
Sop
acha
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mro
ngpiy
awut
I, II,
VX,
I, V
X, I,
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VX,
I, V
I, V
II
6.M
iss N
arue
chon
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mron
gpiya
wut
I, II
7.M
r.Som
boon
Aue
atch
asai
I, II,
VI,
VI
8.M
r.Cha
loem
pon
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nI,
II, V
II
I9.
Mrs
.Are
ewan
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npra
phan
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VI,
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V10
. Mr.P
apan
gkor
n Sa
kulvo
raka
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11. M
r.Wor
athe
p Lu
angs
irapo
rnch
aiV
12. M
s.Som
luk K
anue
nghe
tV
I, V
I, V
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r.Tha
mro
ng C
hank
raith
ong
V14
. Mr.P
hong
sako
rn D
amno
enV
I, V
I, V
15. M
r.Pam
ornc
hai T
riwila
skul
3)V
16. M
r.Pich
ai Fu
engs
akda
nuku
lV
Rem
ark
1)Re
mar
k 2)
Conn
ecte
d Co
mpa
nies
1 =
Gunk
ul Gr
oup
Co.,
Ltd.
10 =
DBM
T Co
., Lt
d.X
= Ch
airm
an, P
resid
ent
2 =
Futu
re E
lectri
cal C
ontro
l Co.,
Ltd
.11
= B
right
Blue
Wat
er C
orpo
ratio
n Co
., Lt
d.I
= Di
rect
or3
= Gu
nkul
Tradi
ng a
nd A
genc
y Co
., Lt
d.12
= In
terlin
k Co
mm
unica
tion
P ubl
ic Co
., Lt
d.II
= Ex
ecut
ive D
irect
or4
= Ku
lnate
e Co
., Lt
d.13
= S
urap
on F
oods
Pub
lic C
o., L
td.
III= A
udit
Com
mitt
ee /
Inde
pend
ent D
irect
or5
= Gu
nkul
Engin
eerin
g (2
000)
Co.,
Ltd
.14
= S
tar S
anita
rywa
re P
ublic
Co.,
Ltd
.V
= Ex
ecut
ive6
= Gu
nkul
Mar
ine L
ine C
o., L
td.
15 =
Sah
apor
n an
d Co
Co.,
Ltd
.7
= Ja
rasla
t Pat
tana
Elec
trica
l Co.,
Ltd
.16
= S
.V. E
verg
reen
Co.,
Ltd
.Re
mar
k 3)
8 =
G.M
. Sup
ply
and
Cons
truct
ion C
o., L
td.
17 =
San
guth
ai Ga
s LP
G Co
., Lt
dNo
mina
ted
as a
n ex
ecut
ive o
n 17
th F
ebru
ary
2011
9 =
Sung
ora
Co.,
Ltd.
35
Details Position Titles of Directors in Susidiary Companies
Name G.K. Assembly G.K. Power K.N.P. Supply Gunkul Powergen G-Power
Co., Ltd. Products Co., Ltd. Co., Ltd. Co., Ltd. Source Co., Ltd.
Mr.Gunkul Dhumrongpiyawut - - - X,I -
Miss Sopacha Dhumrongpiyawut X,I X,I - I X,I
Mr.Chaloempon Srichaloen - - I - -
Mrs.Areewan Roonpraphan I I - - -
Mr.Somboon Aueatchasai - - - I -
Mr.Phongsakorn Damnoen - - I I
Mrs.Somluk Kanuenghet I I - - -
Remark : X = Presidnet
I = Director
36
Gunkul Engineering Public Company Limited
General Information
Companyûs Name Gunkul Engineering Public Company Limited
Stock Quote GUNKUL
Type of Business Manufacturing and supplying electrical products & renewable energy
products, Generating electrical power from renewable energy resources.
Head Office Address 1038-1046 Nakornchaisri Road, Nakornchaisri, Dusit, Bangkok 10300
Company Registration 0107552000146
Telephone Number 0-2242-5800
Fax Number 0-2242-5818-9
Home Page www.gunkul.com
E-mail [email protected]
Amount and Type Common shares Registered Capital 400,000,000 Baht
of Issued Shares Paid-up Capital 400,000,000 Baht
Par Value 1 Baht per share
Share Registrar THAILAND SECURITIES DEPOSITORY COMPANY LIMITED
62 Rachadapisek Road, Klongtoey, Bangkok 10110
Tel. 0-2359-1200 Fax. 0-2359-1259
Capital Market Academy Building, The Stock Exchange of Thailand
2/7 Moo 4 (Northpark Project), Vibhavadi-Rangsit Road,
Thung Song Hong, Laksi, Bangkok 20210
Tel. 0-2596-9000 Fax. 0-2832-4994-6
Certified-Public Auditor MISS SUSAN EAIMVANICHA Accountant Registration NO. 4306
(CPA) MR.SUCHART PANICHAROEN Accountant Registration NO. 4475
MR.SOMYOT WIWATAPINAI Accountant Registration NO. 5476
SP Audit Company Limited
503/21 12th Floor, K.S.L. Tower, Sriaydhya Road, Phyathai, Ratchathewi,
Bangkok 10400
Tel. 0-2642-6172-4 Fax. 0-2642-6253
37
LEGAL ENTITIES WITH OVER 10% SHAREHOLDING BY THE COMPANY
Company/Name Type of Business Issued Amount % of Type of
Shares of Shares Holding Shares
1. G.K. Assembly Co,, Ltd Manufacturing 2,000,000 1,999,998 99.99 Common
(GKA) Electrical Products
2. G.K. Power Products Co., Ltd Manufacturing 100,000 99,998 99.99 Common
(GKP) Electrical Products
3. K.N.P. Supply Supplying Electrical 500,000 499,998 99.99 Common
(KNP) Products
4. Gunkul Powergen Generating Electrical
(GPG) Power 1,000,000 999,995 99.99 Common
5. G-Power Source Generating Electrical 10,000 9,898 98.98 Common
(GPS) Power
38
Gunkul Engineering Public Company Limited
Nature of Business
The electricity system in Thailand is composed of the 2 major components 1) electricity generation
and 2) the generated electricity transmission and distribution. Electricity is supplied to users via subsystems
which include the high - voltage transmission cables, terminal stations, distribution cables and underground
cables as shown in the diagram below.
Diagram of the electricity transmission and distribution subsystems in Thailand
GUNKUL Engineering Plc. Groupûs operations are to manufacture, provide and supply the equipment
for the electricity and alternative energies systems covering all the transmission and distribution stages from
electricity generation plant to users with more than 5,000 quality products to supply to demands as well as
to the different applications by customer groups from household use to government agenciesû mega
projects. For more, the GUNKUL Engineering Plc. Groupûs operation has been expanding to the production
and distribution of the electricity from alternative energies. GUNKUL Engineering Plc. Group is composed of
altogether 6 mother and daughter companies.
1) Gunkul Engineering Public Company Limited : GUNKUL
Provides and supplies the equipment for electrical system and other systems involved including
the equipment for producing electricity from alternative energies. GUNKULûs products include both
the ones manufactured by the companyûs Group and the ones manufactured by other companies
local and abroad. GUNKULûs registered capital is 400.00 million baht totally at present.
39
2) K.N.P. Supply Co., Ltd. : KNP
Supplies the equipment for electrical system and other systems involved to the government
sector directly by contacting with agencies and bidding in the project procurements. KNPûs major
clients are PEA and MEA. The companyûs registered capital is 50.00 million baht totally at present.
3) G.K. Assembly Co., Ltd. : GKA
Manufactures street lamps together with equipment and the transmission line equipment such
as preformed, cable spacers and hardware under the Groupûs GUNKUL, GK, ZIMLUG, PIGMAN,
TOPWELD and ZIMTAP brands to supply to GUNKUL and KNP. The companyûs registered capital is
200.00 million baht totally at present.
4) G.K. Power Products Co., Ltd. : GKP
Manufactures the transmission and distribution line systems protective and control equipment
under the Groupûs GUNKUL and GK brands. The major products are the line protective and switching
equipment such as fuses and several types of switches to supply to GUNKUL and KNP. The companyûs
registered capital is 100.00 million baht totally at present.
5) Gunkul Powergen Co., Ltd. : GPG
Generates and supplies the electricity from alternative energies which is the solar energy at the
present initial stage to supply to PEA. The companyûs registered capital is 100.00 million baht totally
at present.
6) G-Power Source Co., Ltd. : GPS
Generates and supplies the electricity from alternative energies which is the solar energy at the
present initial stage to supply to PEA. The companyûs registered capital is 1.00 million baht totally at
present.
GUNKUL Groupûs products are classified into 5 types based on their applications as follows:
1) Transmission and distribution line systems protective and control equipment such as disconnecting
switches, load break switches, SF6 gas load break switches, air break switches, transformers, fuses,
fuse cut outs, surge arresters and grounding systems.
2) Transmission and distribution line systems equipment such as cables, preformed, cable spacers,
connectors, cable terminals, cable splices, insulators etc.
3) Accessories and tools such as safety belts, industrial gloves, helmets, meters and test devices etc.
4) Street lamps and equipment such as photo control switches, street lighting control relay etc.
5) Alterative energy equipment such as wind turbine, solar energy plant equipment, solar cells etc.
40
Gunkul Engineering Public Company Limited
GUNKUL Groupûs Enterprising Chart
1) Equipment for the Electricity and Alternative Energy Systems Manufacturing, Supply and
Distribution Enterprising
2) Electricity from Alternative Energies Generation and Supply Enterprising
The electricity is generated from alternative energy.
From chart, the GUNKUL Groupûs 2 major operations are 1) equipment for the electricity and alterna-
tive energy systems manufacturing, supply and distribution enterprising and 2) electricity from alternative
energies generation and supply enterprising having 3 groups of clients 1) the government sector 2) the
private sector and 3 foreign clients. The GUNKUL Groupûs revenues are as shown below.
GPS
GPG
Electricity authorities➤Sopplies products
Provides to supply
Manufactures to supply
Sopplies products
➤
➤
➤
➤
➤
➤
Manufactures theequipment for theelectricity system
GKA
GKP
GUNKUL
KNP
Foreign clients
Private sector clients
Government sectorclients
41
GUNKUL Groupûs Revenues by Enterprising
Revenue 20081) 20091) 20101)
Million baht % Million baht % Million baht %
1. From the equipment for the electricity and
alternative energy systems manufacturing,
supply and distribution enterprising.
1.1 Provision for supply 831.38 60.85 406.28 47.02 986.76 76.57
1.2 Manufacturing for supply 534.82 39.15 457.79 52.98 302.00 23.43
Total 1,366.20 100.00 864.07 100.00 1,288.76 100.00
2. From the electricity from alternative
energy generation and supply enterprising.
ë Electricity from solar energy - - - - - -
generation and supply
Total revenue from products sale 1,366.20 100.00 864.07 100.00 1,288.76 100.00
Other revenues2) 16.80 1.23 8.93 1.03 12.02 0.93
Total revenue 1,383.00 101.23 873.00 101.03 1,300.78 100.93
1) Data from GUNKUL Groupûs financial statement at December 31, 2010 with GUNKUL holding 99.99% shares in KNP,
GKP, GKR and GPG and 98.98% shares in GPS.2) Other revenues are such as the received interest, profits from assets selling, profit from exchange rate, profit from scrap
selling etc.
Revenues by Client Group
Revenue Year 20081) Year 20091) Year 20101)
Million baht % Million baht % Million baht %
1. Government sector clients
1.1 Revenue from the equipment for
electricity and alternative energy
systems enterprising 719.27 52.65 451.14 52.21 448.44 34.80
2. Private sector clients 284.83 20.85 249.06 28.82 239.96 18.62
3. Foreign clients 3 362.10 18.97 163.87 18.97 600.36 46.58
Total revenue 1,366.20 100.00 864.07 100.00 1,288.76 100.00
1) Data From GUNKUUL Groupûs financial statement at December 31, 2010 with GUNKUL holding 99.99% shares in KNP,
GKP, GKA and GPG and 98.98% shares in GPS.
42
Gunkul Engineering Public Company Limited
Enterprising Target
In Year 2011 the GUNKUL Groupûs enterprising targets are as follows:
1. To maintain major clients i.e. PEA, MEA, EGAT, private sector organizations local and abroad and the
electricity authorities in Burma and Laos.
2. To widen the client base local and abroad for market share increase.
3. To provide new products to supply to clientsû demands.
4. To expand the alternative energy enterprising which will include the electricity supply contracts
acquisition, co-investments with other enterprisers having the electricity supply contracts in hand or
the alternative energy equipment supply together with consultancy service provided.
5. To complete the solar energy electricity plant construction as per the electricity supply contract made
with PEA.
6. To increase the business alliance for enterprising security.
7. To improve the operations efficiency for enterprising expansion with the applications of hi - technolo-
gies such as intranet, video conference etc.
8. To have HR development programs to keep pace with the companyûs growth.
9. To elevate the companyûs CSR.
Enterprising Target for the Next 3 - 5 Years Period.
The electricity system industries local and abroad are having a tendency to increase due to recovery
from the economic crisis. The other factor is the alternative energy awakening to which supports to
investments are provided from involved private and government sector agencies such as the Ministry of
Energy and the electricity authorities such as EGAT, PEA etc. GUNKL eventually has a policy to expand its
alternative energy enterprising to correspond with the government sectorûs budget allocated aiming to the
solar and wind energies. Supported by its much improved readiness from the financial status, reliability and
potential after being a public company the company also has a policy to expand its hi - voltage electricity
equipment market to abroad focusing to not high - competition markets such as in Africa in which Thailandûs
products are accepted for qualities and standards. Along with the implementation of the policies mentioned
will be the human resource development significantly based on a good governance and social responsibility.
43
Industry Overview and Competition
Industry OverviewThe Electricity System in Thailand in Overall
The electricity generating industry and electricity systems in Thailand are involved by the following
3 groups.
1) Electricity Producers
There are 6 electricity producer groups in Thailand - EGAT, IPP, SPP, VSPP, other producers
which include the government sectorûs agencies such as the Department of Alternative Energy
Development and Efficiency which produces electricity from small tidal energy dams etc. and the
electricity importers.
Among all EGAT is the largest local producer purchasing electricity from all other groups and
from neighboring countries such as Laos, Malaysia etc. Hence for its role, EGAT will determine the
supply volume of the electricity each production plant to deliver to the countryûs supply system to
correspond with consumption timely.
2) Electricity Distributors
EGAT supplies electricity to the other 2 electricity state enterprises, MEA and PEA, which supply
electricity to the industrial, commercial and household sectors in countryûs regions further. EGAT also
supplies electricity to some clients directly.
In the stage the electricity is supplied to MEA and PEA voltage shall be adjusted to appropriate
level to reduce loss due to long distance transmission. MEA and PEA then distribute to users over
specified voltage having MEA to distribute in the Bangkok, Nonthaburi and Samut Prakarn areas and
PEA to distribute in the other province areas. Voltage of the electricity prior to distribute shall be
reduced to the level usable for users.
3) Electricity Users
Include numerous types of users such as the industrial, commercial and residential sectors etc.
The electricity production and supply system described above can be demonstrated as the diagram below.
Consumers
Self - ues
➤➤
➤
➤
➤
➤
➤
EGAT
IPP
SPP
Electricity importedfrom abroad
VSPP
Other producers
EGAT
MEA
PEA
➤Direct supply to industries
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Gunkul Engineering Public Company Limited
From EGATûs record in Year 2010 Thailandûs peak electricity production over the electricity supply
contracts was 30,920.01 MW surpassing the 16,681 MW peak record in 2001 having EGAT being the major
producer with its top 14,998 MW production capacity equal to 48.5% of the countryûs total production
capacity in the year.
ë Electricity Demand in Thailand
The direction of the growth of the electricity demand in Thailand is along with the countryûs
GDP due to mostly the demand comes from the industrial and commercial sectors causing its
expansion to correspond with the economic situation. Since 2001 Thailandûs electricity demand has
been increasing due to economic expansion driving the industrial and commercial sectorsû electricity
demands to increase accordingly. In 2001 Thailandûs total electricity demand was 93,021 GWH and in
Year 2010 was 155,024 GWH. Approximately 54% of the total electricity demand will be from the
medium and large industries.
ë Trends of the Electricity Generating Industry and Electricity System in Thailand
Since Thailandûs electricity demand has a trend to rise every year with a growth rate higher than
the productionûs eventually in 2010 the Ministry of Energy had revised the Power Development Plan
for Year 2010 - 2030 for the electricity supply across 20 years in future. According to the Plan
Thailandûs electricity production will be increased to correspond with the ever increasing electricity
demand as follows:
Project Year 2010-2020 Year 2021-2030
ë Egatûs Electricity Plants 4,821 MW 20,897 MW
ë IPPs 4,400 MW
ë SPPs 3,539 MW 3,800 MW
ë VSPPs 2,335 MW 1,745 MW
ë Private Sector Producers 800 MW
ë Neighboring Countries 5,669 MW 6,000 MW
According to PDP 2010 the countryûs electricity production capacity increase will be as follows:
Peak Electrical Power Supply Electrical Power Generation
Year To increase To increase
(MW) (MW) % (GWH) (GWH) %
2009 22,315 78.4 4.18 146,182 365.5 0.25
2010 23,249 934 5.67 152,954 6,772 4.63
2011 24,568 1,319 5.47 160,331 7,377 4.82
2012 25,913 1,345 4.92 168,049 7,718 4.81
2013 27,188 1,275 4.24 175,631 7,582 4.51
2014 28,341 1,153 3.96 183,452 7,821 4.45
2015 29,463 1,122 4.38 191,224 7,772 4.24
45
Peak Electrical Power Supply Electrical Power Generation
Year To increase To increase
(MW) (MW) % (GWH) (GWH) %
2016 30,754 1,291 4.78 200,012 8,788 4.60
2017 32,225 1,471 4.54 209,329 9,317 4.66
2018 33,688 1,463 3.86 218,820 9,491 4.53
2019 34,988 1,300 3.85 227,599 8,779 4.01
2020 36,336 1,348 4.18 236,956 9,357 4.11
2021 37,856 1,520 3.84 246,730 9,774 4.12
2022 39,308 1,452 3.75 256,483 9,753 3.95
2023 40,781 1,473 3.57 266,488 10,005 3.90
2024 42,236 1,455 4.09 276,805 10,317 3.87
2025 43,962 1,726 3.77 287,589 10,784 3.90
2026 45,621 1,659 3.78 298,779 11,190 3.89
2027 47,344 1,723 3.58 310,387 11,608 3.89
2028 49,039 1,695 3.92 322,427 12,040 3.88
2029 50,959 1,920 3.79 334,921 12,494 3.87
2030 52,890 1,931 4.18 347,947 13,026 3.89
Source : Ministry of Energyûs PDP 2010.
PDP 2010ûs forecast indicates Thailandûs electricity demand will be ever increasing one to another
year with an average 4.22% annual growth rate. By mandate involved agencies such as EGAT and the
Ministry of Energyûs Energy Policy and Planning Office etc. will forecast Thailandûs electricity demand in
future including will set framework for the electricity production development to serve as data for the
development project investments to handle the increasing electricity demand in future. Estimated, during the
year 2010 - 2030 the investment required for electricity projects will be as much as 4,218,785 million baht as
shown in the table below.
Unit : Million Baht
Year For electricity For electricity Totalproduction projects supply projects
2010-2020 1,690,908 328,209 2,019,117
2021-2030 1,778,618 421,050 2,199,668
Total 3,469,526 749,259 4,218,785
Source : Ministry of Energyûs PDP 2010
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Gunkul Engineering Public Company Limited
To correspond with the national power development plan the involved government agencies
have identified their plans for a continuous power production and supply and distribution systems
development such as
Power transmission system expansion plan in accordance Investment
with the year 2007- 2021 PDP (Million baht)
1. Electricity systems in Bangkok and neighboring provinces areas 9,170
expansion project phase 2
2. 500 KW power transmission line project for electricity supply from 3,215
Namnguem Dam Power Plant 2
3. Power transmission system expansion project phase 11 23,000
4. Power transmission project for electricity supply from Namnguem 17,160
Dam Power Plant 3 and Namturn Dam Power Plant 1
Total 52,545
Source : EGAT
Electricity system development plans Investment
in the Year 2008 - 2014 National Plan period (Million baht)
1. Transmission line and power stations development plan phase 9 20,260
2. Distribution system-support construction and renovation project phase 7 17,270
3. Electricity system reliability elevation project phase 3 11,270
4. Electricity supply-ordering center systemûs performance enhancement 4,600
project
5. Distribution systemûs performance enhancement project 9,340
6. Construction of the power distribution system with submarine supply 1,620
cables to islands project
7. Large turbine installation to generate electricity to co-supply to the 560
supply system project
8. Tidal energy VSSP construction project 250
Total 65,170
Source : PEA
47
Power supply system improvement and expansion plan 10 Investment
(Year 2008 - 2011) (Million baht)
1. Terminal station and substation systems development project 4,658
2. Power transmission line system development project 4,498
3. Medium and low voltage electricity supply systems development project 15,691
4. Transforming the power voltage from 12 KV to 24 KV project 1,761
5. Power supply efficiency elevation project 355
Total 26,963
Changing aerial cables to underground cables master plan
(Year 2008 - 2022)
1. Changing aerial cables to underground cables project 77,678
Changing aerial cables to underground cables master plan
(Year 2008 - 2022)
1. Changing aerial cables to underground cables projects 5,699
(the additional 3 projects)
Total 110,340
Source : MEA
ë The Involved Private Sector Electricity Systems in Overall
In general GUKULûs clients in the private sector are various as they include the construction
business and the power electricity, mass transport and telecommunication system enterprisings. A
focus to the private sectorûs mega projects finds they have the part which involves or is supported by
the government sector especially the part in connection with the infrastructure the government sector
initiates the investment. The government sectorûs plans to stimulate economy by intensifying to the
infrastructure investments, for example - the mass transport system investment which includes both
sky and subway trains with totally more than 800,000 million baht investment in 20 - year period,
has affected the private sector to invest more. For GUKUL Group, to the investment projects the
opportunity to supply the equipment for the power supply to rail systems such as surge arresters,
cable termination, cable splices, grounding systems and others has been seen.
To the mass transport mega project investments, the Ministry of Energyûs Office of Transport
and Traffic Policy and Planning had developed a 20 - year rail mass transport system in Bangkok and
neighboring province areas master plan (2010 - 2029) which includes totally 12 sky train routes and
495 km. distance as follows :
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Gunkul Engineering Public Company Limited
Project Route Distance (Km.)
Deep red train Thammasat-Mahachai 80.8
Light red train Salaya-Hua Mak 58.5
Airport link Bang Sue-Phaya Thai-Suvarnabhumi 36.4
Deep green train Lam Luk Ka-Samut Prakarn 66.5
Light green train Yodse-Bang Wa 15.5
Blue train Bang Sue-Hualampong-Thaphra-Buddhamonthon 4 55.0
Violet train Bang Yai-Rat Burana 42.8
Orange train Taling Chan-Min Buri 37.5
Pink train Kaerai-Min Buri 36.0
Yellow train Lat Phrao-Samrong 30.4
Gray train Watcharaphol-Rama 9 Bridge 26.0
Light blue train Din Daeng-Sathorn 9.5
Source : MRT Plc.
ë Electricity Production from Alternative Energies
The electricity production development plans above indicate the Thai government sector sees
the importance of a real and continuous driving to the adopted alternative energies policy to reduce
the dependence on the energy decomposed from the being-depleted nature such as petroleum,
natural gas etc. as well as to develop the measure for the nationûs energy security in future. Alternative
energies are classified into 2 types 1) consumable energy such as coal, natural gas, nuclear energy
etc. and 2) renewable energy such a sunlight, wind, biomass, tides, hydrogen etc.
In past 2-3 years the government sector and all the involved parties had given importance to
the alternative energy development more seriously particularly the renewable energy due to it is clean
and can be used continuously. Also the cost for raw material is low due to its availability in nature
already. The Ministry of Energy had developed a 15 - year alternative energy development plan
(2008-2022) over the target to increase the alternative energy use to 20.3% of the countryûs
final-stage energy use in Year 2022.
Volume of the electricity produced from alternative energy in the electricity system
Unit : MWBiomass Biogas Sunlight Waste Wind Tides Yearûs
energy Total
At December 2010 663 49 9 11 3 18 754
2010-2022 1,580 97 523 149 708 263 3,319
2023-2030 760 24 400 24 90 - 1,298
Total from 2010-2030 2,340 121 923 173 798 263 4,617
Source : Ministry of Energyûs PDP 2010
49
In addition the National Energy Policy Board to support the alternative energy development on
March 9, 2009 had a resolution to launch a measure to promote the alternative energy development by
assigning Egat to purchase electricity from private producers with adders for the electricity produced from
alternative energy. Adders will differ from each other as to depend on the alternative energy employed for
example - for wind energy the adder will be 3.50 baht / unit, for sunlight the adder will be 8 baht / unit, for
waste incineration the adder will be 2.50 baht / unit etc.
Myanmarûs Electricity System in Overall
Since Myanmar is a major client among GUNKUL Groupûs foreign clients purchasing the Groupûs
products in Year 2008, 2009 and 2010 at 343.72 million baht, 143.35 million baht and 519.13 million baht
values respectively or as 25.16%, 16.59% and 40.31% of the Groupûs total sale respectively eventually
GUNKUL Groupûs electrical equipment business has a remarkable relationship with the countryûs electricity
industry situation.
Myanmarûs electricity system in overall is similar to Thailandûs having government agencies to control
production, supply and distribution solely. At present Myanmar gives importance to the electrical power
source and transmission system developments to cover to provinces in the country particularly the industrial
zones such as Rangoon and Mandalay cities etc. due to the electricity demand mostly comes from the
industrial sectors thereof.
In 2010 Myanmarûs electricity production capacity was 6,286 GWH but actually could supply only
approx. 5,076 GWH due to distribution and transmission systemsû efficiency loss and unready. Compared
with Thailand on the supply Myanmar still much runs short of power supply particularly in the industrial zone
cities. Eventually an electricity development to suffice demand is a major target of the Myanmar government
to develop country with the relevant government agencies having investment projects for continuous
electricity production and electricity supply and transmission to all parts of country to meet the target.
Geographically Myanmar has the Salwin River being the major waterway and has the policy to construct
electricity - generating dams to export to neighboring countries. At present the Salwin Riverûs Tha Sang
Dam project had been approved and its construction is expected to be completed in Year 2020. The dam
will be the largest electricity - generating dam in Southeast Asia with a 35,446.00 GWH capacity.
ë Electricity Demand in Myanmar
Growth of the electricity demand in Myanmar has a direction same as the countryûs GDP.
Mostly the countryûs electricity demand comes from the industrial and household sectors. In year
2005 the countryûs electricity demand was totally 3,909 GWH which increased to 5,076 GWH in Year
2010 or at a 5.38 CAGR.
Laosû Electricity System in Overall
Laos is the GUNKUL Groupûs major foreign client second to Myanmar. In recent years the business
in the country had more competitions due to the expansion of Chinaûs trade to the country affecting
GUNKUL Groupûs turnovers. In Year 2008 GUNKUL Groupûs turnover was 15.80 million baht, in the following
Year 2009 was 2.10 million baht or 4.36% and 1.28% of the annual total foreign turnovers respectively.
50
Gunkul Engineering Public Company Limited
Nevertheless, due to the qualities of GUNKUL Groupûs products meet the international standards as
well as the products were accepted by the Electricite Du Laos (EDL) in previous year the purchases from
clients in the country recovered. In Year 2010 the turnover was 70.39 million baht or 11.71% of GUNKUL
Groupûs total foreign turnover in the year.
The country of Laos is situated in a geography suitable for the investment projects to generate
electricity from tidal energy with dams. In consequence the country managed to achieve loans from ADB
and World Bank and provided the joint-venture opportunity to trans nation companies via EDL-Gen which
is the countryûs first registered public company. The joint - ventures are over the governmentûs concessions.
With the countryûs policy to develop itself from being a developing country to be a developed country within
Year 2020 the expansion of the electricity facility in the country will have a rapid growth tendency.
ë Electricity Demand in Laos
At present the electricity demand in Laos is at the standard level based on the countryûs GDP growth.
But due to the countryûs policy to generate electricity to export to neighboring countries such as
Thailand, Vietnam etc. which tend to consume more electricity for the expansions of their industrial
sectors eventually within Year 2020 Laos will increase its electricity generation capacity to minimum
10,000 MW and export to neighboring countries to earn 40,000 - 50,000 million baht foreign income
yearly. Investment of the said project will be approximately 700,000 million baht.
CompetitionsEquipment for Electricity and Alternative Energy Systems Manufacturing, Supply and Distribution
Enterprising
GUNKUL Groupûs major clients are the government sector, state enterprises and large-scale private
companies which generally will specify qualifications of the procurement bidders including will consider their
potentials and experiences to supplement. Assessed by GUNKUL Groupûs executives, there will be
altogether 8-10 competitors for project biddings, 4 for the protective and control equipment and the other
4 for the street lamps and equipment. Some enterprises have several products, however no other enterprises
have all products same as GUKUL Group. On the other hand since GUKUL Group makes available and
supplies variety of products the competitors are the Groupûs clients also.
Electricity system is an infrastructure the country sees its importance and provides investments
continuingly every year resulting the values of the involved markets to grow accordingly whereas the
number of the new enterprises to join is not much at present due to a considerable capital and a
competence to supply required products both for quality and quantity are needed eventually the
competitions are not too furious.
51
GUKUL Group has a very advantage for its productsû qualities and variety availability supplemented
by an over 25-year experience in the business enabling the Group an expertise to supply products obtained
from business alliance both local and abroad. GUKUL Group has its own factories enabling quality controls
and cost reductions for some equipment resulting the Group to be able to supply quality products with
controllable costs better than the enterprises which do not have their own factories including to have a more
flexibility to prepare products for supply. Being an enterprise recognized for its focusing to products quality
and full supply to clientsû various demands for more than 25 years GUKUL Group has good relationships
with clients and is reliable to them as evidenced from their use of the Groupûs services always.
Electricity Production and Supply Business
For the business to produce and supply the electricity from alternative energies GUKUL Group
at present had conducted the study on the solar energy electricity plant and has a plant being under
construction. Thailand is a country with a good solar energy potential. At present a private sectorûs
commercial solar energy electricity plant investment must be to generate and supply electricity to an
electricity authority having a supply contract with terms and conditions for the supply specified and in
general the supply will be for all the electricity generated. As such, GUKUL Group is generating revenue from
supplying all the solar energy electricity produced to PEA with no competitors. Also, the supply is over a
non-firm contract meaning the electricity production can be anytime and shall be without forfeiture if the
vendor can not supply.
For entry to the business an enterpriser / investor to produce solar energy electricity to supply to an
electricity authority shall have the basic qualification as per the electricity authority and the Ministry of
Energy specify and must consider technical data prior signs the supply contract. Another factor is the
business requires a large investment to construct the production plant. From all said, the competition in the
solar energy electricity production and supply industry at the moment is not furious. At present the Ministry
of Energy had issued an announcement requesting the electricity authorities to wait to accept the solar
energy electricity supply offer from producers and revise to reduce the adder rates since at present the cost
of the electricity production has much decreased compared with the previous time. As said above a new
competitorûs entry will be difficult.
52
Gunkul Engineering Public Company Limited
Risk Factors
Dependence on Client Riskë Dependence on Government Sector Clients Risk
GUNKUL Groupûs major clients are the state enterprises such as PEA, MEA, EGAT etc.
altogether generating 30% - 50% of the GUNKUL Groupûs total revenue in Year 2010. Since the
revenue from this client group depends on the governmentûs budget on electricity effects to the
Group may be incurred if the governmentûs policy on electricity investment changes or the Group fails
in bidding causing a revenue loss.
Electricity investment is a continuingly expanding infrastructural investment. At a time the
economy expands the government sector will expand the infrastructure accordingly to support and
for the nationûs economic, population and household growths. In contrary at a time the economy is in
stagnation the infrastructural investment will be employed to incite recovery. Seen from history during
Year 2006-2007 and Year 2009-2010 GUNKUL Groupûs revenues from the government sector clients
were 890 and 899 million baht respectively whereas in Year 2008 in which the financial crisis in
America took place affecting Thailandûs economy the Thai government sector to avert situation
launched an incitement measure via the countryûs infrastructural investments. In the year GUKUL
Groupûs revenue was 719 million baht to say the risk from the government sectorûs electricity
investment policy change is low. For the potential to win project biddings, biddings will be for required
products and since GUKUL Groupûs products are various and accepted for quality as having been
certified by ISO, TSI and test institutions both local and abroad including the Groupûs some products
are TISI - certified to supply to the governmentûs and state enterprisesû projects the risk to fail in
biddings for product type and timing for all is low also. However, to reduce possible risks GUKUL
Group has a policy not to cling on a client group only but will expand enterprising to various client
groups i.e. government sector clients group, private sector clients group and foreign clients group to
reduce possible effects due to a client groupûs purchase decreases. For clients, from events the
supply quantity to each group differs from others by time and for such the factors affecting purchases
for each client group such as budget, situations of the involved industries, Thailandûs economic
situation in overall and the clientûs country etc. will be considered to adopt the marketing policy to
correspond with factors timely, for example - for a time the government budget is less causing the
government agenciesû purchasing powers to be less accordingly, GUNKUL Group is strategic to
maintain the revenue by dealing with private and foreign clients more. In a time the private sectorûs
investment decreases still there will be the government sector to launch budgets to incite economy
and the foreign customers group to reserve. In consequence, the Groupûs enterprising expansion to
various groups will reduce the risks to depend on a client group only as well as will enable the Group
to maintain revenue always.
53
ë Dependence on Large Clients Risk
In 2010 GUKUL Group supplied products to PEA offices in regions countrywide for 180 offices
altogether at a value of 448 million baht or 34.75% of the Groupûs total revenue in the year.
GUKUL Groupûs large clients are the regular clients continuingly having deals for long time and
having a good relationship with each other. Having maintained the product and service qualities for
more than 25 years GUKUL Group is confident to be trusted by regular clients further and always.
Nevertheless, the Group also has a policy to reduce the risk from being dependent on a particular
client only by continuingly extending to new clients for client base expansion and creating more
business opportunity for new products development.
ë Dependence on the Revenue from Myanmar Risk
In Year 2009 and 2010 GUKUL Group exported to Myanmar at the values of 164 and 519
million baht or 18.98% and 40.26% of the Groupûs total revenues in the years respectively. The
Groupûs revenue and performance might be significantly affected in case the export to Myanmar is
not possible. To reduce the risk the Groupûs executives have been monitoring the situation in Myanmar
closely for assessments and focus to have deals with the countryûs government agencies as the major
clients. Since Year 2000 in which the Groupûs export to Myanmar started until present there have
been no unpaid debts by the country for the Group. To monitor situations closely and increase the
business opportunity in Myanmar a Groupûs supply agent has been established in the country being
more convenient for co-ordinations and for providing the product demand information for the country.
GUKUL Groupûs executives are confident the equipment for the electricity and alternative energy
systems business in Myanmar still has a continuous growth potential and the country is and will be
a major client to the Group. Despite, as the measure to reduce the risk from a particular client
dependence GUKUL Group has a policy to extend to the clients in other countries such as Laos,
Cambodia, Vietnam, Malaysia, Australia etc.
Exchange Rate Fluctuation RiskGUNKUL Groupûs enterprising involves the foreign currencies for 2 causes.
ë The Group exports products to abroad and mostly is paid in US dollar / euro currencies.
ë For same, the Group imports products from abroad and mostly pays in US dollar / euro currencies.
For above GUNKUL Group has a chance to be affected in case an exchange rate fluctuates. Profit or
loss may be incurred from exchange rate if the one on the business transaction date and the one on
payment date differ from each other.
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Gunkul Engineering Public Company Limited
Despite, as GUKUL Group both exports and imports with foreign currencies the risk from exchange
rate fluctuation can be reduced for a level. If US dollar / euro is strong as compared with Baht currency the
Group will gain from export by exchange whereas the costs of import raw materials will rise. In reverse, if
US dollar / euro is weak as compared with Baht currency the Group will lose from export by exchange
whereas the costs of import raw material will decrease.
To prevent the exchange rate fluctuation risk the natural hedge has been employed. GUKUL Group
has opened foreign currency deposit accounts with banks to receive the payments for exports. For the
payments to import raw materials in short term the assigned Groupûs executive will monitor the exchange
rate for planning the purchase and delivery of the import raw materials to pay with foreign currency to
reduce risk. The foreign currency remained from natural hedge will be utilized with the forward contract at
30% - 50% of the foreign debt proportion as a further measure for risk reduction.
In Year 2010 GUNKUL Groupûs export in foreign currencies was 601 million baht totally or 46.62% of the
Groupûs total revenue in the year. The Groupûs raw materials and products import was 559 million baht or
69.77% of the Groupûs total expense for raw materials and products in the year. On December 31, 2010
GUNKUL Group had signed a not - over - 1 year forward contract for a 12.59 million baht amount.
Possible Risks to the Electricity Production and Supply Enterprisingë Electricity Production Performance Risk
The performance for the production of the electricity from solar energy depends on 2 major factors -
solar cellûs efficiency and the loss taking place in the production system. To prevent risk, GUNKUL
Group had selected the solar cell technology from a leading company, the Solar Frontier Co., Ltd.
which manufactures efficient solar cells and is recognized for the product around the world.
The solar cell electricity plant construction and equipment installation has been by the Schnei-
der (Thailand) Limited (SF), a member in the Franceûs Schneider Group which is widely recognized for
the electrical engineering equipment and electrical control system installation experience and skill to
prevent production problems which may affect the production performance. In addition, to create
confidence as well as to prevent possible risks GUNKUL Group had signed contracts with all the
involved parties which include the solar cell provider and the plant construction contractor to guaran-
tee the electricity production efficiency and performance will be as agreed.
ë Electricity Supply Risk
GUKUL Group had signed electricity supply contracts with PEA to supply electricity for the
volume specified. The contracts are non - firm contracts due to the production is uncontrollable
anytime. According to the contracts PEA shall purchase all the volume of the electricity produced.
Each contract has a 5 - year duration since signing and will be renewed for 5 years each time
55
automatically. PEA shall not be entitled to terminate contracts as long as GUNKUL Group complies
with the term and condition. Since PEA is a state enterprise there is no risks to the electricity
production and supply or a risk of non - payment.
ë Failure to Construct Other Electricity Plants in Future Risk
GUNKUL Group had signed contract with PEA to supply electricity from 30.9 MW power plants.
The Groupûs 3.3 MW power plant phase 1 is situated at Chondaen District, Petchabun Province. Its
construction had been completed and the plant had generated income since January 2011. The
remaining power sale is 27.6 MW for which the project implementation has not been started yet since
the supply is by non - firm contract as said. In case fails to complete the other plants construction as
per schedule GUNKUL Group shall not be liable to compensate any to PEA.
However, the project delay might cause effect to the growth of the Groupûs revenue and
performance on this new business. The factors to affect the other plants construction substantially will
be the availability of the finance source. Expected, the construction of the remaining 27.6 MW power
plants will require an approximate 2,760 million baht fund totally which by structure will be similar to
the first plantûs i.e. to have a 2.5 - 3.0 times debt - to - shareholder ratio.
Large Shareholder Influencing the Administration Policy RiskAfter entering the stock exchange the companyûs large shareholder has been the Damrongpiyawudh
family holding 59.69% of the companyûs total shares. The family also is the Groupûs executives and
authorized directors hence holds the power to manage and control votes in major resolutions almostly
including to manage and control votes for the company directors appointment or resolutions in other issues
to which the shareholdersû majority vote are required except for the law and companyûs rule issues for
which 3/4 shareholders majority vote is required such as the companyûs capital increase or decrease.
In consequence, other shareholders may not be able to gather votes to audit or balance the large
shareholdersû administration.
Despite, over the companyûs organization which is composed of boards, committees and
subcommittees, altogether 5, i.e. the board of directors, executive committee, audit committee, remuneration
committee and risk management committee with the subcommittees authorized to specify the scopes of
authorities clearly the companyûs operation system is standard and easy to audit. Whilst, the all 3 audit
committee member are capable independent directors and have the companyûs internal audit unit to equip
to the companyûs operation can be audited to be transparent including to balance the power to propose
issues and agendas to shareholders meetings at a level. For more, GUNKUL Group also has the practice
rule to the listings which involve directors, large shareholder and authorized enterprise controllers including
the person probably with conflicts who shall be not entitled approve the list reducing the possible risks.
56
Gunkul Engineering Public Company Limited
Offering to Sell Shares below the Present Par Value RiskIn February 2009 the company offered 600,000 shares to altogether 6 outsiders for sale to increase
the companyûs capital at 100.00 par value same with the value at the moment (the present par value is 1.00
Baht / share or equal to 60,000 shares totally). The said shares are 15.00% of the total issued and paid
shares. Price of the shares sold to the 6 investors was lower than the price for public. As eventual investors
have a risk from the share prices to be down due to the 6 investors may sell their shares via Thailandûs stock
exchange.
57
Corporate Governance Policy
To comply with the policy on çgood governanceé, the company has adopted such concept to becomethe practical guidelines of the company with approval from the meeting of the board of directors No. 13/2551on October 27, 2008 to ensure that the company will have efficient management and operating systems,transparent disclosure and standard performance for more efficiency, competitiveness and additional value tothe business owner and every stakeholder.
The good governance concept of the company is as follows.Section 1 Rights of the Shareholder
The policy of the company is to promote and encourage the shareholders of the company to beaware of rights and to exercise their right as follows.1. To arrange supply of information on date, time, venue and agenda, including all information
related to the matters to be decided in the meeting of shareholders in advance sufficiently andtimely. The company will send an appointment letter together with information supporting theagenda to the shareholders in advance at least seven days before the meeting date or at leastfourteen days before the meeting date as applicable and will publish the notification on theappointment date in the newspaper at least three days before the meeting date. Besides, thecompany will disclose such information on the website of the company to provide the sharehold-ers an opportunity to study the information sufficiently before the meeting.
2. To send the power of attorney and the appointment letter to encourage uses of rights ofshareholders if the shareholder is unable to attend the meeting himself.
3. To provide the shareholders an opportunity to make comments and inquiries before the meeting date.4. To provide the shareholders an opportunity to make comments and inquiries in the meeting of
shareholders.5. To arrange at least half of the directors to attend the meeting of shareholders for replies to
inquiries in the meeting and at least an audit committee is required to attend the meeting.6. To have the chairman of the meeting clarify the voting criteria, voting right that the shareholders
with the conflict of interest not allowed to cast the vote on the issue examined and rights of theshareholders to oppose the resolution of each agenda.
7. To prepare the minutes of the meeting with complete, correct and clear information identifying theissues inquired by the shareholders and clarification of the board of directors on such issues.
8. To disseminate the minutes of the meeting through electronic media of the Stock Exchange andin the website of the company for examination by the shareholders without any need to sendsuch minutes to the shareholders for approval in the next meeting.
Section 2 Uniform Treatment for ShareholdersThe policy of the company is to arrange a uniform treatment for every group of shareholder,
including the shareholders who are the management and non-management and the minority shareholdersand the foreign shareholders as follows:1. To disseminate information related to the meeting of shareholders to every shareholder in a
uniform manner and not to include an additional agenda without prior notification and necessity.
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Gunkul Engineering Public Company Limited
2. To provide an opportunity to the shareholder who is unable to attend the meeting himself to providethe power of attorney to the proxy o attend the meeting by determining the votes of the proxy.
3. To provide every shareholder an opportunity to make comments and inquiries before the meetingdate and during the meeting.
4. To provide the shareholders an opportunity to exercise their right to appoint each director5. To determine disclosure on information related to the conflict of interest by the shareholder who
is the director or management between himself and the related party and not eligible to cast avote on the matter that is involved with his conflict of interest
6. To inform the board of directors and the management of the obligations and duties to report thechanges in shareholding to the Office of Securities and Exchange Commission in accordancewith Section 59 of the Securities and Stock Exchange Act, B.E. 2535.
7. To prevent the board of directors, the management or those undertaking the work who havelearned of insider information form disclosure of insider information the third party or the personwithout related duty and from sale and purchase of securities of the company during the one-month period before the financial statements are disclosed to the public.
Section 3 Roles of the StakeholdersThe policy of the company is to encourage cooperation between the company and the stakeholders
like the shareholders or financial supporters, customers, trading partners, employees in all levels andcommunities located with the company to enhance the performance of the company and to ensuresustainable business stability. Besides, awareness of the rights of the stakeholders legally provided, thepolicy of the company is to treat the stakeholders in a uniform manner as follows.Employee The company will treat the employees equally and provide a suitable remuneration
and arrange a quality working environment.Trading partner The company will fairly treat the trading partner in accordance with the commercial
conditions as jointly agreed and will arrange a policy to build and develop relationswith the trading partners continuously.
Customer The company will take responsibility on the customers through maintenance ofquality and standard of merchandises and services, including responses to thecustomersû needs to ensure completeness and coverage as much as possible withemphasis on long-term satisfaction of the customers.
Competitor The company will undertake the business in accordance with the fair competitionframework and will develop the market growth for the mutual interest of the industry.
Creditor The company will comply with the contractual conditions and to provide informationrequested by the creditors.
Community/society The company will take responsibility on the operation of the company to anyenvironmental impact on the community and society, including compliance withrelated laws, rules and regulations.
Section 4 Disclosure and TransparencyThe policy of the board of directors is to disclose key information related to the company, both
financial information and non-financial information correctly, completely, timely with easy access. Inaddition to the disclosure in accordance with the criteria of the Stock Exchange and Office of the
59
Securities Exchange Commission through the channel provided, the company has a policy todisseminate key information which may affect the decision of the shareholders to exercise their votingrights or the information which may affect the securities price of the company through various channelof the Stock Exchange and website of the company, including the public media which is easilyaccessible by shareholders and the public.
Section 5 Responsibilities of the Board of Directors1. Structure of the Board of Directors
There are 9 directors in the board of directors consisting of 6 managing directors and 3non-management directors. Every director is competent, knowledgeable and well experienced inthe business of the company. Such three non-management directors are the audit committeeand independent director to ensure check and balance on various matters examined and toreview the management performed by the executive to ensure maximum benefits.
The policy of the company is to separate the authority of the chairman of the board fromthe authority of the managing director to prevent unlimited authority while the board of directorswill determine the authority, duty and select the person to assume both positions. At present thechairman of the audit committee of the company is the chairman of the board of directors.
The secretary of the company is appointed to provide legal recommendations rules andcriteria necessary for the board of directors and to look after the business of the board ofdirectors and to coordinate the work in accordance with the resolution of the board of directors.
2. SubcommitteeFour subcommittees are appointed by the board of directors to help supervise the
business of the company as follows.1. Audit subcommittee consisting of independent and non-management members for three
persons with working provided by the board of directors but not exceeding three years.2. Management subcommittee consisting of 6 subcommittee and executives.3. Remuneration subcommittee consisting of 5 executives4. Risk management subcommittee consisting of 5 executives
The board of directors may appoint other subcommittee as deemed suitable andnecessary with authority and duty of the subcommittee clearly provided to perform the specificwork in need of close supervision as the subcommittee is more efficient and is easy to accessthe issue examined.
3. Role, Duty and Responsibility of the Board of DirectorsThe Board of Directors is consisting of person with competent and knowledge in the businessundertaken, including the qualified persons in various areas with independence to review theperformance of the company. The board of directors will undertake the work to determine vision,mission, strategy, financial target, risk, plan and budget, including supervision and control of themanagement to ensure compliance with the policies and plans provided with efficiency andeffectiveness.
The Board of Directors has arranged the Code of Conduct to communicate to thedirectors, the executives and every employee for understanding and compliance. The topic couldbe concluded as follows.
60
Gunkul Engineering Public Company Limited
Business Ethicsë Business is undertaken with integrity, transparency and fairnessë Compliance with related laws, rules and regulations and practices, traditions and moralsë Information is recorded and supplied correctly, transparently and verifiablyë Maintenance of confidential information of the organizationë Conflict of interestë Maintenance of properties of the organizationë Work performed efficiently with skill, knowledge and competenceë Participation in external activities and activities of the communitiesë Fair procurement and acquisitionë Standard working atmosphereë Free and fair competition
Ethics for the Employeesë Honestyë Maintenance of confidential information and documentsë Maintenance of propertiesë Professionalismë Personal businessë Sale and purchase of securities of the company and use of insider informationë Political activitiesë Religious activities
For the decision on the matter involved with the conflict of interest, the board of directorswill determine that the director or the management who is the shareholder is not eligible to casta vote on the related matter to ensure independence in the decision and the insider informationwill be disclosed to the public immediately to ensure transparency.
In addition, the company has set up the internal audit agency to examine the internalcontrol system and to examine key transaction consistently to ensure that the company has aneffective system to enhance reliability of the financial statements while the audit committee willreview the efficiency of the internal system covering operation, supervision on compliance con-trol, risk management and attention provided to irregularities in the transaction.
4. Meeting of the Board of DirectorsThe meeting of the board of directors will be arranged consistently at least once every
three months while the agenda and supporting documents will be submitted to every director atleast seven days in advance so the directors will have enough time to examine and study theinformation supplied. The secretary of the company is assigned to look after the activities of theboard of directors, prepare the minutes of the meeting and keep the minutes correctly andcompletely for further examination.
5. Remuneration of the Directors and the ExecutivesRemuneration of the directors is the meeting allowance which is required to be in an
average level compared with those in the same industry with consideration on sufficiency for theduty and responsibility of the directors. The executives will receive remuneration in terms of
61
salary and annual bonus based on the performance of the company. The annual remuneration ofthe board of directors and the executives combined together shall not significantly exceed theaverage return of the listed company in the Stock Exchange with regard to the maximum benefitsof the shareholders.
6. Policy and Method to Supervise Uses of Insider Information of the Company by theExecutives
The company has arranged policies and methods to supervise uses of insider informationof the company which has not been disclosed to the public for personal gain, including sale andpurchase of securities as follows.- To provide information to the directors and the executives on duty to report securities
holding by himself, spouse and underage children to the SEC and the Stock Exchange inaccordance with Section 59 and penalty in accordance with Section 275 of the Securitiesand Stock Exchange Act, B.E. 2535.
- The executives are required to report changes in securities holding to the SEC in accordancewith Section 59 of the Securities and Stock Exchange Act, B.E. 2535 and to submit a copy ofsuch report to the company on the same date of submission of report to the SEC.
- The directors, executives or those undertaking the work who have learned the insiderinformation are not allowed to disclose the insider information to the external party orunrelated person and should refrain from sale and purchase of securities of the companyduring the period before the financial statements or the position of the company aredisclosed for at least one month, including key information and should wait for at least 24hours after disclosure of information to the public before involvement with sale and pur-chase of securities of the company.
The company has prescribed the disciplinary action against those seeking personal gain
from the insider information through use or disclosure until the company is damaged and the
penalty charge will be imposed as deemed appropriate for the case through verbal warning,
written warning, probation and termination of employment by dismissal, removal or resignation as
applicable
62
Gunkul Engineering Public Company Limited
Internal Control and Internal Audit
The Board of Directors has appointed 3 Independent Directors which those were not the Companyûs
employees in order to monitor and review the Companyûs Financial Statements, Performance of Internal
Control System and Acting in compliance with related law and regulations including related transaction which
might have conflict of interest with Shareholders, Director and Management Teams.
The Company has appointed Internal Audit Department in order to review and access an internal
monitoring system of the Company and the Companyûs subsidiary. By doing this, Internal Audit Department
has manipulated and employed a Work Book and a KPI system to monitor and access a performance of each
department. Furthermore, the Company has also applied COSO to access risk. A result after accessing risk
using COSO will be used to maneuver a risk management plan and an internal monitoring system. Thus,
Internal Audit Department prepares reports and comments in regard to internal auditing to the Board of
Directors in every quarter.
At the Board of Directorsû Meeting in each quarter with the presence of the 3 members of the Audit
Committee, the Board of Directors has evaluated the sufficiency of the Companyûs internal control system in
5 areas including
1. Organization Control and Environment
2. Risk Management
3. Management Control Activities
4. Information and Communication
5. Monitoring
The Board of Directors has rendered an opinion which is in line with that of the Audit Committee
that the Companyûs internal control system is sufficient and conformed with the SECûs assessment form.
Especially, in the area of internal control of transactions with Major Shareholders, Directors, Management
and related persons and other areas of internal control, the Board of Directors has rendered an opinion that
the Companyûs internal control system is sufficient.
63
Related Transactions
Related transactions between the company and the subsidiary companies and related companies,
including related persons could be classified in to the following categories.
ë Transactions supporting regular business like purchase and sale of raw materials, merchandises or
contract for manufacturing According to the pricing policy of the company, the transactions are regular
business undertaken to support the operation of the company with normal and reasonable conditions.
The related companies are involved in their main business activities without any policy to compete with
the company.
ë Transactions related to assets or services like acquisition or disposal of assets incurred as necessary
and beneficial to the operation of the company with comparative price and conditions.
ë Short-term lease of the real estate, that is, lease or lease out of space between the company and the
subsidiary companies and related persons and companies with the lease term not over three years and
comparative conditions and rental charges in relation to that of the third party and with justification and
necessity.
ë Financial assistance transaction, that is, loans or borrowing within the group of companies and related
companies, including related persons at the interest rate of 2 percent per year across the board.. The
average interest rate charged is generally lower than the interest rate that the companies in the group
have borrowed from the financial institute. The company has no policy to lend to the related persons or
companies. The assistance provided by the directors who are the person related to the company and
subsidiary companies is made through guarantee with personal securities for the credit line extended to
the company and the subsidiary companies free of charge. Such transactions incurred with justification
and necessity and beneficial to the operation of the company
The company and the subsidiary companies have disclosed such related transactions in the
annual information form of 2010 (Form 56-1) and notes to financial statements for the years ended
December 31, 2010 which have been examined by the auditor of the company.
Necessity and Justification of the Related TransactionsThe related transactions between the company and the subsidiary companies and related companies,
including related person are undertaken with consideration on necessity and suitability of such transactions
and mainly on the interest of the company. The audit committee has examined and agreed that the intercom-
pany transactions between the company and the subsidiary companies and related companies and persons
are justified and beneficial to the company.
64
Gunkul Engineering Public Company Limited
Measures or Process on Approval of the Related TransactionsThe related transactions between the company and the subsidiary companies and related companies
and persons are based upon justification and necessity with emphasis on the interest of the company.
Consideration paid between each other is made at a fair price or in accordance with the general commercial
agreement possibly made and comparably and in accordance with the laws or criteria of the notification of the
Office of Securities Exchange Commission. The company has arranged measures and process on approval of
the intercompany transactions stating that the management of the person with conflict of interest is not
allowed to take part in approval on such transaction. If the intercompany transaction between the company
and subsidiary companies has incurred with those possibly having the conflict of interest or prospective
conflict of interest and the management is required to enter into such transactions and it is beyond the power
of the management to undertake such transactions, the company may propose the audit committee to provide
comment on necessity and suitability of such transactions. If the audit committee has no competence to
examine such intercompany transactions possibly incurred, the company may have the independent specialist
or the auditor of the company to examine and provide comment on such intercompany transactions to
support the decision of the board of directors or the shareholders as applicable or submission of such matter
to the meeting of shareholders for approval.
The board of directors is required to comply with the laws on securities and stock exchange, regula-
tions, notifications, order or related requirements, including compliance with the requirements related to
entering into the intercompany transactions and acquisition or disposal of major assets of the company or
subsidiary companies to ensure that the decision to enter into such transaction will not cause any conflict of
interest and it is for the maximum benefit of every shareholder.
Policy and Trend of Prospective Related TransactionsThe policy of the company on prospective related transactions is to conduct the transactions in
accordance with the policy and conditions under the regular practice and at the market price which is
comparable to the price and conditions made with the third party for the maximum benefits of the company.
The company has no policy to provide financial assistance or a guarantee to the related company or the
person with possible conflict of interest in the future.
If the company is required to enter into the related transaction with the person with possible conflict of
interest, the policy of the company is to have the audit committee or the auditor of the company or the
independent specialist as applicable to examine and provide comments on suitability of the price and
justification of such intercompany transaction and the company is required to comply with the measures or
processes on approval of intercompany transactions and related transactions in accordance with the notifica-
tion of the Office of the Securities and Exchange Commission to support the decision of the board of directors
or the shareholders as applicable.
65
Summary of Financial Statements
Financial Statements(1) Auditing Report
ë the report of the auditor for the companyûs financial statements and companyûs and subsidiariesû
consolidated financial statements for the year 2008 and 2007 which were audited by Miss Susan
Eiamvanicha, the certified public accountant, registration No. 4306 of SP Audit Co. , Ltd., she has
shown her opinion that the financial statements referred to above present fairly, in all material
respects, the consolidated financial position as on December 31, 2008 and 2007, the consoli-
dated operational result and consolidated cash flow for the year ended on December 31, 2008 of
the company and its subsidiaries, the separated financial statement showing the financial position
as on December 31, 2008 and 2007, operational result and cash flow for the year ended on
December 31, 2008 and 2007 of the company, in conformity with generally accepted accounting
principle.
ë the report of the auditor for the companyûs financial statements and companyûs and subsidiariesû
consolidated financial statements for the year 2009 and 2008 which were audited by Miss Susan
Eiamvanicha, the certified public accountant, registration No. 4306 of SP Audit Co. , Ltd., she has
shown her opinion that the financial statements referred to above present fairly, in all material
respects, the consolidated financial position as on December 31, 2009 and 2008, the consoli-
dated operational result and consolidated cash flow for the year ended on December 31, 2009 of
the company and its subsidiaries, the separated financial statement showing the financial position
as on December 31, 2009 and 2008, operational result and cash flow for the year ended on
December 31, 2009 and 2008 of the company, in conformity with generally accepted accounting
principle.
ë the report of the auditor for the companyûs financial statements and companyûs and subsidiariesû
consolidated financial statements for the year 2010 and 2009 which were audited by Mr. Somyot
Wiwat - apinai , the certified public accountant, registration No. 5476 of SP Audit Co. , Ltd., he
has shown his opinion that the financial statements referred to above present fairly, in all material
respects, the consolidated financial position as on December 31, 2010 and 2009, the consoli-
dated operational result and consolidated cash flow for the year ended on December 31, 2010
and 2009 of the company and its subsidiaries, the separated financial statement showing the
financial position as on December 31, 2010 and 2009, operational result and cash flow for the
year ended on December 31, 2010 and 2009 of the company, in conformity with generally
accepted accounting principle.
66
Gunkul Engineering Public Company Limited(2
)Ta
ble
of F
inan
cial S
tate
men
t
Gun
kul E
ngin
eerin
g Pu
blic C
ompa
ny L
imite
d an
d Su
bsid
iarie
s
Balanc
e Sh
eet as
on
Dec
embe
r 31
, 200
7-20
10
Sepa
rate
d Fi
nanc
ial S
tate
men
tCon
solid
ated
Fin
ancial S
tate
men
tIte
m20
0720
0820
0920
1020
0820
0920
10M
illion
Bt
%M
illion
Bt
%M
illion
Bt
%M
illion
Bt
%M
illion
Bt
%M
illion
Bt
%M
illion
Bt
%
Curren
t As
sets
Cash
and
cas
h eq
uiva
lent
26.96
2.85
5.92
0.74
70.86
8.77
196.39
14.35
26.95
2.56
109.18
12.74
214.80
12.00
Acco
unt R
eceiva
ble-
net
337.75
35.76
329.68
41.16
225.18
27.88
362.05
26.47
375.63
35.73
227.50
26.55
397.12
22.19
Inve
ntor
ies
275.05
29.12
222.34
27.76
146.67
18.16
166.43
12.17
351.88
33.47
265.99
31.04
342.80
19.15
Goo
ds d
epos
it10
.89
1.15
13.97
1.74
11.92
1.48
44.23
3.23
13.99
1.33
12.25
1.43
54.52
3.05
Shor
t ter
m lo
an to
relate
d bu
sines
s-
-0.30
0.04
6.23
0.77
4.95
0.36
9.60
0.91
--
--
Oth
er c
urre
nt a
sset
s53
.40
5.65
2.77
0.35
3.05
0.38
12.31
0.90
6.35
0.60
4.84
0.56
25.99
1.45
Tota
l cur
rent
ass
ets
704.06
74.54
574.98
71.79
463.91
57.43
786.36
57.48
784.40
74.61
619.76
72.32
1,03
5.23
57.84
Fixe
d de
posit
und
er s
ecur
ity o
bligat
ion
79.40
8.41
28.88
3.61
8.07
1.00
113.04
8.26
48.52
4.62
33.63
3.92
163.34
9.13
Oth
er d
ebto
r and
long
term
loan
to re
late
d
pers
on a
nd b
usines
s-ne
t29
.69
3.14
1.69
0.21
--
- -
--
--
--
Inve
stm
ent i
n as
sociat
ed c
ompa
ny a
nd
subs
idiarie
s1)
91.33
9.67
163.43
20.40
310.02
38.38
449.35
32.84
--
--
--
Land
, build
ing, a
nd e
quip
men
t-net
36.13
3.83
29.43
3.67
23.12
2.86
18.54
1.36
207.85
19.77
190.59
22.24
505.42
28.24
Inta
ngib
le a
sset
-net
--
0.55
0.07
0.43
0.05
0.31
0.02
2.00
0.19
1.61
0.19
66.58
3.72
Oth
er n
on c
urre
nt a
sset
s3.90
0.41
1.97
0.25
2.17
0.27
0.51
0.04
8.60
0.82
11.40
1.33
19.14
1.07
67
Sepa
rate
d Fi
nanc
ial S
tate
men
tCon
solid
ated
Fin
ancial S
tate
men
t
Item
2007
2008
2009
2010
2008
2009
2010
Milli
on B
t%
Milli
on B
t%
Milli
on B
t%
Milli
on B
t%
Milli
on B
t%
Milli
on B
t%
Milli
on B
t%
Tota
l ass
ets
944.51
100.00
800.94
100.00
807.71
100.00
1368
.11
100.00
1,05
1.36
100.00
856.99
100.00
1,78
9.71
100.00
Ove
rdra
ft an
d sh
ort t
erm
loan
42.15
4.46
116.85
14.59
15.23
1.89
82.31
6.02
125.81
11.97
29.98
3.50
247.81
13.85
Acco
unt p
ayab
le (b
usines
s)-n
et36
8.39
39.00
147.47
18.41
163.83
20.28
198.53
14.51
75.34
7.17
74.10
8.65
153.31
8.57
Liab
ilities
unde
r hire
pur
chas
e co
ntra
ctha
ving
due
date
with
in o
ne y
ear
3.68
0.39
2.30
0.29
2.41
0.30
2.65
0.19
7.51
0.71
3.45
0.40
3.16
0.18
Shor
t ter
m lo
an fr
om re
late
d pe
rson
s an
dbu
sines
ses
43.14
4.57
118.15
14.75
110.53
13.68
7.65
0.56
143.05
13.61
106.16
12.39
2.05
0.11
Estim
ate
of g
oods
qua
lity
assu
ranc
e-
--
-1.46
0.18
0.07
0.01
--
1.72
0.20
1.35
0.08
Cred
itor-p
rope
rty e
xpen
se-
--
--
--
-11
9.09
6.65
Cred
itor -
fina
ncial
inve
stm
ent i
n su
bsid
iaries
--
--
--
57.90
4.23
57.90
3.24
Accr
ued
divid
end
--
--
90.00
11.14
--
--
90.00
10.50
--
Oth
er c
urre
nt li
abilit
ies
196.77
20.83
43.01
5.37
29.29
3.63
46.26
3.38
65.85
6.26
37.91
4.42
66.79
3.73
Tota
l cur
rent
liab
ilities
654.14
69.26
427.78
53.41
412.76
51.10
395.37
28.90
417.55
39.71
343.31
40.06
651.46
36.41
Estim
ate
of g
oods
qua
lity
assu
ranc
e-
--
-1.23
0.15
1.89
0.13
--
1.28
0.15
2.01
0.11
Long
term
liab
ilities
from
fina
ncial
inst
itute
s0.63
0.07
0.62
0.08
0.62
0.08
0.62
0.05
0.62
0.06
0.62
0.07
0.62
0.03
Liabi
lities
und
er fi
nanc
ial le
ase
cont
ract
- n
et10
.69
1.13
8.45
1.06
6.06
0.75
3.41
0.25
10.00
0.95
6.57
0.77
3.42
0.19
Tota
l Liabi
lities
665.46
70.46
436.85
54.54
420.67
52.08
401.29
29.33
428.17
40.72
351.78
41.05
657.51
36.74
Regist
ered
cap
ital
75.00
7.94
240.00
29.96
400.00
49.52
400.00
29.24
240.00
22.83
400.00
46.67
400.00
22.35
Capi
tal i
ssue
d an
d pa
id75
.00
7.94
240.00
29.96
300.00
37.14
400.00
29.24
240.00
22.83
300.00
35.01
400.00
22.35
Ord
inar
y sh
are
surp
lus
--
--
--
425.12
31.07
--
--
425.12
23.75
Capi
tal s
urpl
us fr
om b
usines
s m
erge
run
der t
he c
omm
on c
ontro
l-
--
--
--
-93
.22
8.87
93.62
10.92
93.62
5.23
Reta
ined
ear
ning
s (lo
ss)
204.05
21.60
124.09
15.49
87.05
10.78
141.70
10.36
148.42
14.12
111.59
13.02
213.46
11.93
Minor
ity s
hare
hold
erûs e
quity
--
--
--
--
141.56
13.46
--
--
Shar
ehol
derûs
equ
ity27
9.05
29.54
364.09
45.46
387.05
47.92
966.82
70.67
623.19
59.27
505.21
58.95
1,13
2.20
63.26
Tota
l liabi
lities
and
shar
ehol
derûs
equ
ity94
4.51
100.00
800.94
100.00
807.72
100.00
1,36
8.11
100.00
1,05
1.36
100.00
856.99
100.00
1,78
9.71
100.00
68
Gunkul Engineering Public Company LimitedGun
kul E
ngin
eerin
g Pu
blic C
ompa
ny L
imite
d an
d su
bsid
iarie
s
Stat
emen
ts o
f In
com
e fo
r th
e ye
ar e
nded
on
Dec
embe
r 31
, 200
7 - 20
10
Sepa
rate
d Fi
nanc
ial S
tate
men
tCon
solid
ated
Fin
ancial S
tate
men
tIte
m20
0720
0820
0920
1020
0820
0920
10M
illion
Bt
%M
illion
Bt
%M
illion
Bt
%M
illion
Bt
%M
illion
Bt
%M
illion
Bt
%M
illion
Bt
%
Sellin
g re
venu
e1,53
7.94
99.51
1,24
1.93
98.74
872.87
97.46
1,19
2.84
99.76
1,36
6.20
98.79
864.07
98.98
1,28
8.76
99.08
Oth
er re
venu
e7.54
0.49
15.89
1.26
22.79
2.54
2.82
0.24
16.80
1.21
8.93
1.02
12.01
0.92
Tota
l rev
enue
1,54
5.47
100.00
1,25
7.81
100.00
895.67
100.00
1,19
5.66
100.00
1,38
3.00
100.00
873.00
100
.00
1,30
0.77
100.00
Sellin
g co
st1,23
6.25
79.99
1,03
2.48
82.09
714.50
79.77
938.36
78.48
1,04
2.02
75.34
644.13
73.78
922.15
70.89
Sellin
g an
d ad
minist
rativ
e ex
pens
es14
8.72
9.62
119.49
9.50
105.27
11.75
140.21
11.73
155.83
11.27
142.38
16.31
189.05
14.53
Prof
it of
relea
sing
from
the
rest
ruct
uring
plan
84.99
5.50
--
--
--
--
--
--
Inte
rest
paid
10.16
0.66
5.48
0.44
4.80
0.54
6.33
0.53
7.09
0.51
5.57
0.64
6.69
0.51
Corp
orat
e inco
me
tax
47.62
3.08
30.68
2.44
18.12
2.02
34.81
2.91
55.05
3.98
27.26
3.12
59.71
4.60
Net pr
ofit
187.71
12.15
69.67
5.54
52.97
5.91
75.95
6.35
123.01
8.89
53.66
6.15
123.17
9.47
Num
ber o
f weigh
ted
aver
age
ordi
nary
shar
es (m
illion
sha
res
) *25
.00
83.36
296.38
321.91
83.86
296.38
321.91
Note
:1)
The
cons
olid
ated
fina
ncial s
tate
men
ts fo
r the
yea
r end
ed a
s on
Dec
embe
r 31, 2
008, G
unku
l Eng
inee
ring
P ubl
ic C
ompa
ny L
imite
d he
ld s
hare
s in K
.N.P
Sup
ply
Co.,
Ltd.
,
G.K
.Pow
er P
rodu
cts
Co.,
Ltd.
and
G.K
. Ass
embl
y Co
., Lt
d. in
the
prop
ortio
n of
100
.00%
, 61.06
% a
nd 6
1.60
% res
pect
iv ely.
2)Th
e co
nsolid
ated
fina
ncial s
tate
men
ts fo
r the
yea
r end
ed a
s on
Dec
embe
r 31, 2
009, G
unku
l Eng
inee
ring
P ubl
ic C
ompa
ny L
imite
d he
ld s
hare
s in K
.N.P
Sup
ply
Co.,
Ltd.
,
G.K
.Pow
er P
rodu
cts
Co.,
Ltd.
,G.K
. Ass
embl
y Co
., Lt
d. a
nd G
unku
l Pow
erge
n Co
., Lt
d. in
the
prop
ortio
n of
99.99
% .
3)Th
e co
nsolid
ated
fina
ncial s
tate
men
ts fo
r the
yea
r end
ed a
s on
Dec
embe
r 31, 2
010, G
unku
l Eng
inee
ring
P ubl
ic C
ompa
ny L
imite
d he
ld s
hare
s in K
.N.P
Sup
ply
Co.,
Ltd.
,
G.K
. Pow
er P
rodu
cts
Co.,
Ltd.
,G.K
. Ass
embl
y Co
., Lt
d. a
nd G
unku
l Pow
erge
n Co
., Lt
d. in
the
prop
ortio
n of
99.99
% a
nd G
-Pow
er S
ourc
e Co
., Lt
d., 9
8.98
.
69
Gunkul Engineering Public Company Limited and Subsidiaries
Cash Flow Statement for the year ended on December 31, 2007 - 2010
Separated ConsolidatedFinancial Statement Financial Statement
Item 2007 2008 2009 2010 2008 2009 2010Million Bt Million Bt Million Bt Million Bt Million Bt Million Bt Million Bt
Cash flow from operating activities
Net profit (loss) before income tax 1) 235.33 100.35 71.09 110.76 156.35 80.43 182.89
Adjustment of net income to cash received (paid)
Depreciation and amortization 4.94 7.94 7.51 7.16 25.03 25.59 23.84
Bad and doubtful debt (reversal) 1.08 -0.21 0.53 -0.53 -0.08 0.36 -0.53
Loss from impairment of assessment (reversal) 4.53 4.03 4.22 0.80 5.53 5.63 2.71
Profit from property disposal - -0.17 0.00 -0.01 -0.52 -0.97 -0.01
Loss from obsolete property - - - - - - -
Profit of releasing from restructuring plan -84.99 - - - - - -
Profit (loss) from foreign exchange translation 0.74 4.52 0.14 -0.71 5.54 -0.01 -0.63
Estimate of goods quality assurance - - 2.69 -0.72 - 3.01 0.35
Other income from negative goodwill - - - - - - -1.67
Dividend received - -5.54 -19.35 - - - -
Interest received -2.53 -0.78 -0.48 -1.34 -1.65 -0.95 -1.65
Interest paid 10.16 5.48 4.80 6.32 7.09 5.57 6.69
Net profit of minority shareholders - - - - 21.71 0.49 -
Profit from operating activities before changes in
operating assets and liabilities 169.26 115.63 71.15 121.73 219.00 119.14 211.99
(Increase) decrease in account receivable -92.77 11.45 103.86 -135.89 -32.41 147.66 -168.68
(Increase) decrease in inventory - net -80.38 48.68 71.45 -20.55 10.01 80.25 -79.93
(Increase) decrease in goods deposit - net 18.73 -3.50 2.05 -32.31 -3.53 1.74 -42.27
(Increase) decrease in other current asset 0.12 50.55 -0.63 -8.17 54.71 1.05 -19.70
(Increase) decrease in other non current asset -3.24 1.93 -0.19 1.66 8.29 0.73 -5.05
Increase (decrease) in account payable 214.49 -221.46 16.62 34.52 -311.31 -1.00 75.64
Increase (decrease) in other current liabilities -21.54 -142.31 -15.14 7.50 -87.23 -24.02 7.88
Cash received from interest 0.26 0.23 0.29 0.57 2.17 1.10 0.81
Cash paid for interest -7.54 -6.94 -4.40 -5.80 -6.87 -4.92 -6.61
Cash paid for corporate income tax1) -47.87 -40.70 -16.43 -25.37 -64.52 -34.57 -41.40
Net cash received from (used in) operating activities 149.51 -186.43 228.63 -62.11 -211.70 287.15 -67.32
Note 1) According to the accounting standards that have been effective after January 1, 2008, stipulating that net profit
before income tax shall be used in calculation of cash flow from operating activities.
70
Gunkul Engineering Public Company Limited
Separated ConsolidatedFinancial Statement Financial Statement
Item 2007 2008 2009 2010 2008 2009 2010Million Bt Million Bt Million Bt Million Bt Million Bt Million Bt Million Bt
Cash flow from investing activities(Increase) decrease in bank deposit under
security obligation -35.31 50.51 20.82 -104.98 72.48 14.89 -129.71Cash received from interest - bank deposit under
security obligation 2.17 0.64 0.15 - 0.64 0.15 -(Increase) decrease in other debtors and
short term loan to related companies - - -5.93 1.28 - 9.60 -(Increase) decrease in other debtors and
long term loan to related companies 46.13 27.70 1.69 - 5.84 - -Cash paid for investment in subsidiaries -32.50 -80.83 -212.82 -81.43 -19.50 - -5.44Cash paid for investment from minority shareholders - - - - - -112.82 -Cash received from dividend - 14.28 85.58 - - - -Cash received from asset disposal - 0.34 0.45 0.06 0.98 3.07 0.38Cash paid for building and equipment purchasing -7.29 -1.37 -1.52 -2.51 -99.49 -9.99 -218.73Cash paid for intangible property purchasing - -0.60 - - -1.19 -0.14 -0.58Net cash received from (used in) investing activities -26.79 10.68 -111.59 -187.58 -40.24 -95.23 -354.08Cash flow from financing activitiesIncrease (decrease) in overdraft and short term loan -30.47 67.96 -101.53 67.23 75.90 -95.56 221.35Increase (decrease) in short term loan from related
persons and companies 42.02 75.01 -7.62 -102.89 89.79 -36.89 -104.11Cash paid for long term liabilities under
restructuring plan -176.01 - - - - - -Cash paid for liabilities under financial lease contract -1.06 -2.76 -2.28 -2.41 -8.52 -7.48 -3.45Cash paid for interest under financial lease contract - -0.86 -0.68 -0.52 -1.64 -0.93 -0.58dividend paid -5.00 -149.64 - -111.30 -149.64 - -111.30Cash received from capital increase - 165.00 60.00 525.12 165.00 60.00 525.12Cash received from capital increase of minority
shareholders - - - - 47.34 25.00 -Cash paid for dividend of minor shareholders - - - - -9.52 -53.82 -Net cash received from (used in) financing activities -170.51 154.71 -52.10 375.23 208.72 -109.18 527.03Net cash and deposit of financial institute
(decrease) increase -47.80 -21.04 64.94 125.53 -43.22 82.23 105.62Cash and deposit of financial institute as at
the beginning period 74.76 26.96 5.92 70.86 70.17 26.95 109.18Cash and deposit of financial institute as
at the ending period 26.96 5.92 70.86 196.39 26.95 109.18 214.80
71
(3) Table of Significant Financial Ratio
Separated ConsolidatedFinancial Statement Financial Statement
Item 2007 2008 2009 2010 2008 2009 2010
Liquidity RatioLiquidity ratio (time) 1.08 1.34 1.12 1.99 1.88 1.81 1.59Quick liquidity ratio (time) 0.56 0.78 0.72 1.57 0.96 0.98 1.06Cash flow liquidity ratio (time) 0.28 -0.34 0.54 -0.16 -0.40 0.75 -.010Account receivable turnover ratio (time) 5.21 3.70 3.13 4.06 3.80 2.85 4.13Average debt collection period (day) 69.10 97.22 114.92 89.84 94.75 126.18 88.45Inventory turnover ratio (time) 5.49 4.21 3.73 5.99 3.95 2.81 3.03Average sale period (day) 65.52 85.53 96.51 60.93 91.24 128.19 120.46Account payable turnover ratio (time) 4.72 3.00 4.59 5.18 4.52 8.62 8.11Debt payment period (day) 76.28 89.93 78.42 7.46 79.71 41.76 45.01Cash cycle (day) 58.34 92.81 133.00 80.31 106.29 212.62 163.90
Profitability RatioGross profit ratio (%) 19.62 16.86 18.14 21.33 23.73 25.45 28.45Operational profit ratio (%) 9.95 7.24 6.08 9.58 12.32 8.98 13.78Other profit ratio (%) 5.99 1.26 2.54 9.05 1.21 1.02 13.29Cash to profitability ratio (%) 97.74 -207.27 430.57 -56.08 -125.75 370.25 36.81Net profit ratio (%) 12.15 5.54 5.91 6.35 8.89 6.15 9.47Net profit ration (adjusted) 3) (%) 6.65 5.54 5.91 6.35 8.89 6.15 9.56Return on equity (%) 100.01 21.67 14.10 11.22 22.58 9.51 15.05
Efficiency RatioReturn on asset ratio (%) 12.52 7.98 6.59 6.98 11.24 5.62 9.31Return on fixed asset ratio (%) 379.58 236.78 230.15 3.99 87.09 39.78 42.21Asset turnover ratio (time) 1.88 1.44 1.11 0.98 1.26 0.91 1.10
Financial RatioDebt to equity ratio (time) 2.38 1.20 1.09 0.42 0.69 0.70 0.58Interest coverage ratio (time) 20.40 -27.42 52.36 18.51 -21.09 57.48 28.36Fixed charge coverage ratio (time) 0.67 -0.79 1.05 1.12 -0.76 2.19 1.46Payout ratio (%) 79.72 129.17 40.21 N/A 73.16 39.69 N/A
Other ratioAverage net profit per share (Baht) 1) 7.51 0.84 0.18 0.19 1.48 0.18 0.31Basic net profit per share (Baht) 2) 2.50 0.29 0.18 0.24 0.51 0.18 0.38Net book value per share (Baht) 2) 3.72 1.52 1.29 22.36 2.60 1.68 13.79
Note : 1) Net profit per share was calculated from total number of weighted average ordinary share issued and paid.2) Basic net profit per share was calculated from number of ordinary shares issued and paid fully at the end of
the year and at the share value of 1 baht each for comparison.3) Net profit ratio (adjusted) was calculated from net profit excluding the profit of releasing from restructuring
plan.
72
Gunkul Engineering Public Company Limited
Management Discussion and Analysis
Operating Resultsë Overall Operating Results of the Previous Year
Gunkul Engineering Public Company Limited (çThe Companyé or çGUNKULé) and its subsidiaries
namely; K.N.P. Supply Co., Ltd (çKNPé), G.K. Assembly Co., Ltd (çGKAé) and G.K. Power Products Co.,
Ltd. (çGKPé) has a business operation related to distribution of equipments for electrical system, and
sourcing and distribution of equipments for renewable energy system. Its customers are both govern-
ment and private sector. The Group has undergone shareholder restructuring as the Company acquired
99.99 percent of registered capital in KNP, GKA and GKP to settle the conflict of interests and increase
the efficiency in the management. The restructuring was completed on June 30, 2009 and became a
public company on August 10, 2009.
In 2009, the Company established a subsidiary, Gunkul Powergen Co., Ltd. (“GPG”) on December 11,
2009 to conduct a business on selling electricity to the Provincial Electricity Authority. The Company
acquired 99.99 percent of registered share capital of GPG.
In 2010, the Company acquired the ordinary share of G-Power Source Co., Ltd conducting a
business of producing and distributing electricity from the solar cell. The Company held the 98.98
percent of total registered share capital.
The Companyûs sales revenue increased substantially in 2007 which increased from Baht 1,103.32
million to Baht 1,537.94 million according to the separated financial statement. It was resulted from the
sales promotion policy and considerably growth in the foreign market. In 2008, the Company was
affected from the trade embargo against Union of Myanmar who is our biggest customer resulting in
the decrease in sales revenue from foreign customers. However, the Company had various groups of
customers presented in the revenue of subsidiaries which reduce the effect from purchase order from
some groups of customers. In addition, the Company also started to earn from new business which is
sourcing and distribution of wind turbine to Electricity Generating Authority of Thailand resulting in the
Groupûs sales revenue in 2008 to slightly decrease comparing to the decrease in sales revenue in the
foreign market. The Groupûs sales revenue in 2008 was Baht 1,366.20 million according to the
consolidated financial statements. Due to the economic slow down in 2009, the revenue for the first 6
months decrease considerably. However, in the second half of 2009, the economic was recovered and
the Company was able to deliver the project to the customers in the government sector resulting in the
sales revenue of the Group to reach Baht 864.07 million according to the consolidated financial
statements and reach Baht 1,288.76 million which increase 49.15 year over year. This is due to the
economic recovery in 2010; therefore the Company was able to sales more products to the domestic
and oversea customers.
The Groupûs gross profit margin ratio was 23.83 percent in 2007 according to the Groupûs
financial statements and was 23.73, 25.45 and 28.45 percent in 2008, 2009 and 2010 respectively
73
according to the consolidated financial statements. The increasing trend of gross profit margin is in the
same direction with the proportion of the Companyûs production which reflects the cost reduction
policy by establishing production line for some commodities.
However, according to the employeeûs benefit restructuring in 2008, loss from foreign exchange,
increase in miscellaneous expense, as well as increase in depreciation from plant renovation in 2009,
the Group net revenue from normal operation decrease from 9.57 percent in 2007 according to the
Group financial statements to 8.89 and 6.15 percent in 2008 and 2009 in the consolidated financial
statements respectively.
In 2010, according to the consolidated financial statement the Company has gross profit margin
and net profit increased from 25.45 and 6.15 percent to 28.45 and 9.47 percent respectively.
The Companyûs total assets at the year ended 2007, 2008 and 2009, and 2010 are Baht 1,137.24
million, Baht 1,051.35 million, Baht , 856.99 million and Baht 1,789.71 million respectively according to
the consolidated financial statements. The main accounts of the current assets are trade account
receivable and inventory which changes according to sales and debt collection ability of the Group. For
non current asset, the main item is plant and equipment which the Group invested to expand the
production.
For financial source to be used as a working capital and invest in current asset, the Group seeks
by increasing the registered capital, loans from financial institutions as well as borrowing from related
person and company. This has resulted in the debt to equity ratio to decrease to 1.44, 0.69, 0.70 and
0.58 times according to the 2007, 2008, 2009 and 2010 consolidated financial statements.
However, to clearly picture the operating results as well as to compare, the Company had made
the consolidated income statements as if the Company has invested 99.99 percent of the subsidiariesû
registered capital from January 1, 2008 by combining the operating results of the Company and
subsidiaries in 2008. As a result, the Company and subsidiaries are under Common Control of
Damrongpiyawut family.
ë Operating Results
Revenue
Main revenue of the Group during 2007 - 2nd quarter of 2010 came from manufacturing,
sourcing, and distributing of equipments for electrical system and renewable energy system. The
sourcing and distributing business accounted for 50-70 percent of total sales revenue of the Group. The
main products are assembly products such as transmission line, cable clip, and connector which
accounts for 50-70 percent of the revenue from sales. Protection equipments such as fuse, switch,
transformer, grounding and lightning protection are accounted for 20-30 percent of total sales revenue.
The revenue from produce and distribution of electricity from the renewable energy which is the new
business, the Group expected to start recognizing the revenue from sales of electricity at the end of 1st
quarter 2011.
74
Gunkul Engineering Public Company Limited
Revenue structure categorized by product group
Type of revenue 20071) 20082) 20092) 20102)
Million Bt % Million Bt % Million Bt % Million Bt %
1. Revenue from production, sourcing,
and distribution of equipments for
electrical system and renewable
energy system
1.1 Sourcing for distribution
- Protection and control equipment 93.38 6.07 77.77 5.69 38.90 4.50 199.44 15.48
- Assembly equipment 1,019.36 66.28 595.30 43.57 326.97 37.84 578.64 44.90
- Tools and equipments 38.85 2.53 56.35 4.12 38.99 4.51 21.61 1.68
- Street light equipment 6.37 0.41 10.04 0.73 1.42 0.16 17.88 1.39
- Wind turbine equipment - - 91.93 6.73 - - - -
Total 1,157.95 75.29 831.38 60.85 406.28 47.02 817.57 63.44
1.2 Sourcing for distribution
- Protection and control equipment 223.87 14.56 318.73 23.33 162.99 18.86 101.38 7.87
- Assembly equipment 93.36 6.07 145.65 10.66 173.42 20.07 360.06 27.94
- Tools and equipments 2.55 0.17 1.88 0.14 15.59 1.80 2.14 0.17
- Street light equipment 60.20 3.91 68.55 5.02 105.78 12.24 7.50 0.58
Total 379.98 24.71 534.82 39.15 457.79 52.98 471.19 36.56
2. Revenue from produce and distribute
electricity from renewable energy
- Produce and sale electricity from
solar cell - - - - - - - -
Total revenue from sales 1,537.94 100.00 1,366.20 100.00 864.07 100.00 1,288.76 100.00
1) Information from separated financial statements of Gunkul Engineering PCL
2) Information from consolidated financial statements of Gunkul Engineering PCL as of December 31, 2007. Gunkul
Engineering PCL held shares of K.N.P Supply Co., Ltd, G.K. Power Products Co., Ltd and G.K. Assembly Co., Ltd in the
proportion of 60.00, 61.06 and 61.60 percent respectively and held 99.99 percent of shares in subsidiaries as of December
31, 2009.
The Group distributed its products in domestic and international market. The proportion of domestic sales equals
to 45-80 percent of total sales revenue in 2007-2010. The main customers are government sector in both domestics and
overseas.
75
Revenue structure of the Group categorized by types of consumers
Revenue 20071) 20082) 20092) 20102)
Million Bt % Million Bt % Million Bt % Million Bt %
Government sector 442.75 28.79 719.27 52.65 451.14 52.21 448.44 34.80
Private sector 391.40 25.45 284.83 20.85 249.06 28.82 239.96 18.62
Oversea customers 703.79 45.76 362.10 26.50 163.87 18.97 600.36 46.58
Total revenue 1,537.94 100.00 1,366.20 100.00 864.07 100.00 1,288.76 100.00
1. Information from separated financial statements of Gunkul Engineering PCL
2. Information from consolidated financial statements of Gunkul Engineering PCL as of December 31, 2007. Gunkul Engineer-
ing PCL held shares of K.N.P Supply Co., Ltd, G.K. Power Products Co., Ltd and G.K. Assembly Co., Ltd in the proportion
of 60.00, 61.06 and 61.60 percent respectively and held 99.99 percent of shares in subsidiaries as of December 31, 2009.
Revenue from sales was Baht 1,537.94 million in 2007 according to the separated financial
statements which increased 39.39 percent year over year. The main reason of growth was revenue
from oversea had increased especially Union of Myanmar as the Myanmar government had
continuously supported in investment in power system project. In 2007, the Company had sales
revenue to overseas customers equaled to Baht 703.79 million. At the same time, revenue from
domestic sales to government sector was Baht 442.75 million.
In 2008, the Group expanded the business operation to renewable energy business to support
the government policy in promoting the use of renewable energy. The Company earned Baht 91.93
million revenue from sourcing and distribution wind turbine package which was the new business.
However in 2008, the Company was affected from the trade embargo from the USA. This had resulted
in the Thai banks to limit the credit for export for new projects in that country. The Company export
figure decrease from Baht 703.79 million in 2007to Baht 362.10 million in 2008. In addition the total
sales revenue decreases from Baht 1,537.94 million to Baht 1,366.20 million or 11.17 percent. However,
in January 2009, Thai banks had canceled the limitation for export credit to those countries. Therefore,
in 2009 the Company was able to export to Myanmar again. The Company was able to get purchase
orders and export to Myanmar at our full capacity. In addition, since 2000 the Company has exported
to Myanmar and has never received the bad debt from exporting to the country. For private sector
customer, sales revenue in 2008 decreased from Baht 391.40 million in 2007 to Baht 284.83 million in
2008 in line with the economic slowdown in 2008.
For total revenue of the Group in 2008 comparing to 2007 which presented for the comparison
purpose by assuming that Gunkul Engineering PCL had acquired the subsidiaries shares since January
1, 2007, the Groupûs revenue decreased from Baht 1,644.22 million to Baht 1,366.20 million or 16.91
percent due to decrease in export to Myanmar and postpone the purchase order by the private
sector. However, 2008 was a beginning year for investment plan for the new electrical system in the
government sector. Therefore, the governmental units started their purchasing process according for
76
Gunkul Engineering Public Company Limited
budget year after the end of budget year 2007. Revenue from government sector customer was
presented in the revenue from sales in subsidiaries; K.N.P. Supply Co., Ltd , a distributor especially for
government sector. The subsidiaryûs revenue increased from Baht 147.32 million in 2007 to Baht 341.24
million in 2008. Therefore, when combining the operating result of the subsidiary, the Group had the
decrease rate of revenue of the consolidated revenue in 2008 less than considering separated financial
statements containing sales revenue to private sector and foreign customers. Also, as the Company had
many groups of customers, the Company could reduce the effect from specific group as reflected in the
consolidated financial statements.
Total sales revenue in 2008 was Baht 864.07 million or decrease at 36.75 percent comparing to
2008 which was Baht 1,366.20 million. This was resulted from the decrease in sales to domestic and
oversea customers due to the economic slowdown in 1st -3rd quarter, as well as political instability
which affected on the government and oversea customersû bidding projects. The Company had to
postpone its bidding target. However, at the 4th quarter of 2010, the sales revenue expanded and
tended to grow due to the overall economy had recovered. With this reason, the Company could sell
and deliver the equipments for electrical system more to the customers.
Total revenue of the Group in 2010 equals to Baht 1,288.76 million or 49.15 percent increase from
2009ûs revenue of Baht 864.07 million. The growth was mainly resulted from the expansion of sales
revenue in the oversea market and economic recovery.
Cost of Goods Sold and Gross Profit
The Companyûs main business is sourcing and distribution of 5,000 products. Cost of sales
depends on types of products the Company was able to sell each year. Costs of sales for each type of
products are different depending on many factors such as cost of materials, acquisition cost, transpor-
tation cost, exchange rate, etc. For products purchased from the subsidiaries, product cost depends
mainly on cost of raw materials for manufacturing such as steel, brass and aluminum.
During 2007-2008, the Company gross profit margin according to the separated financial statements
increased from 80.38 percent in 2007 to 83.14 and 81.86 in 2008 and 2009 respectively. This had resulted
in the gross profit margin to decrease from 19.62 percent in 2007 to 16.86 and 18.14 percent respectively.
The decrease in gross profit in 2008 was due to the higher cost of materials which affected the average
gross profit margin in 2008 to decrease when comparing to 2007. In 2009, steel and other raw material
price was decreased from 2008; therefore the cost of materials deceased in the same direction. This
resulted in the gross profit margin for the 2008 to increase comparing to the previous year.
However, when considering the gross profit margin according to the Groupûs financial statements
in 2007 and consolidated financial statements in 2008, and when deducting the transaction between the
Company and subsidiaries and including the operating results of K.N.P. Supply Co., Ltd, a distributor to
the customers in the government sector, the gross profit margin of the Group increased to 23.83 and
23.73 percent in 2007 and 2008 respectively. The reason for decrease was due to the increase in raw
material prices as well as setting the allowance for inventory devaluation. However, the raw material
price was decreased in 2008 leading to the increased in gross profit margin ratio to increase to 25.45
77
percent. The increasing trend in gross profit of the Group was in the same direction to the increase in
sales revenue of the production for distribution business of the Group. This reflected the effectiveness
of cost reduction policy by self-production of some material groups which could reduce some sourcing
and transportation costs.
For the fiscal year 2010, according to the consolidated financial statements the Group had the
gross profit margin equaled to 71.55 percent increase 28.45 percent from 2009 which was 25.45
percent. This was resulted from the distribution of the first half of the year which was mainly from the
distribution of materials from sourcing. The materials in this group tends to have gross profit less than
materials from self-production combining with during the first half of 2010, the Group set the allowance
for devaluation of inventory which Baht 10.19 million. The Group had recorded this amount in the cost
of goods sold. However, due to most of electrical equipments has low level of deteriorate both physical
and technical obsolete, the Group can still distribute those items in the future. In addition, at the second
half of the year, the Group could sell more self-production products which resulted in the increase in
gross profit margin.
Selling and administrative expenses
Selling and administrative expenses are accounted for 10.00-20.00 of total revenue. The main
selling and administrative expenses are employee related expense, promotion expense, and delivery
cost which accounted for 25.00-45.00, 10.00-30.00 and 4.00-10.00 of total selling and administrative
expenses each year.
The separated selling and administrative expenses for 2008 equaled to Baht 119.49 million
decreased by 19.65 percent from the 2007 which as at Baht 148.72 million. In 2009, the Company had
selling and administrative expenses of Baht 105.27 million decreased by 11.90 percent from 2008. This
was due to the reduction in selling commission and promotion expense.
However, the Companyûs proportion of selling and administrative expense to total revenue was
increase from 9.62 percent in 2007 to 9.82 and 11.75 percent in 2008 and 2009 respectively. This was
due to the loss from exchange rate and restructuring of employee benefit structure of which the
Company considered as an important asset, leading to the increase in employee related expense.
Selling and administrative expenses of the Group in 2007 and from the consolidated financial
statements in 2008 which included the expenses of the subsidiaries were equal to Baht 181.70 million
and Baht 155.83 million respectively. The main expenses from the separated financial statements are
employee related expense, depreciation of plants and machinery in and owned by the subsidiaries, and
rental expenses for land and building owned by the subsidiaries (see the details in part 2 no. 5.2
subject: significant contract details). Selling and administrative expenses in 2008 accounted for 11.27
percent of total sales revenue of the Group which increased 10.84 percent according to the Groupûs
financial .statements in 2007. The main reason was the restructuring of employee benefit of the Group.
In 2009, the Group had selling and administrative expense amounted to Baht 142.38 million or 16.31
percent of total revenue which increased by 11.27 percent comparing to 2008. The main reason was the
decrease in sales revenue in 2009 while some expenses from operation were stable.
78
Gunkul Engineering Public Company Limited
For the period ended 2010, selling and administrative expenses of the group equaled to Baht
189.05 million or 14.67 percent of total revenue. It is slightly decreased when compared to 2009 which
equaled to 16.48 percent. This was the result from 20-45 percent decrease in selling and administrative
expense which was employee related expense. This expense did not directly varied across the sales
and resulted in the decrease in selling and administrative expenses.
Net Profit
During 2007-2009, Net profit of the Company according to the separated financial statements
were Baht 187.71 million, Baht 69.67 million and Baht 52.97 million respectively or 12.15, 5.54 and 5.91
percent net profit margin. Net profit for 2007, 2008 and 2009 was equal to Baht 245.47 million, Baht
123.01 million, and Baht 53.66 million respectively or 14.64, 8.89 and 6.15 percent net profit margin. Net
profit for 2007 comprised profit from discontinued of restructuring plan of Baht 84.99 million and when
deducted this portion and calculated net profit margin for 2007, the amount equaled to 6.65 percent for
the Companyûs financial statements and 9.57 for the Group financial statements. Also when considered
operating profit, net profit margin of the Group in 2007, 2008 and 2009 were equal to 9.57, 8.89 and
6.15 percent respectively. The decrease in net profit margin was affected from the decrease in gross
profit margin while selling and administrative expense increased.
In 2010, net profit of the Group equaled to Baht 123.18 million or net profit margin of 9.56 percent
according to the consolidated financial statements increase from 6.21 percent in 2009. The main reason
was the increase in revenue at the second half of the year as well as decrease in cost of goods sold.
ë Financial Status
Total Assets
Total assets of the Group at the year ended 2007, 2008 , 2009 and 2010 were Baht 1,137.24
million, Baht 1,051.36 million, Baht 856.99 million and Baht 1,789.17 million respectively. Total assets of
the Company comprises of 50-60 percent total assets which main items are trade account receivable,
and inventory which accounted for 35-45 percent of total assets. Non current assets, accounted for 35-
45 percent of total assets, are mainly property, plant and equipment, and fixed deposit under obligation
which accounted for 30-40 percent of the total assets of the Group.
Trade Account Receivable
The Company and subsidiaries have a policy to give credit terms to customers by considering
their financial status, payment history, frequency of purchase order and value of purchase order. The
approximated credit term is 60 days for private sector and government sector customers and 90 days
for foreign customers.
As of 2007-2010, according to the consolidated financial statements, the Group had total trade
account receivable equaled to Baht 339.96 million, Baht 375.63 million, Baht 227.50 million and Baht
397.12 million respectively. The average collection period at the year ended 2008, 2009 and end of 2nd
quarter of 2010 were 94.75 days, 126.18 days and 88.45 days respectively. The reason of higher
average debt collection period than credit term was the variation of billing period across companies.
79
The Company had to wait until the billing period before the collection. Moreover, before 2009 the
Companyûs average credit term was 60 days but foreign customers were given extra collection period
by including the delivery period of 30 days to the credit term of 60 days resulting in the 61-90 days debt
collection period. The Company had categorized this group of customers a normal customer while the
auditor group them in the overdue as the auditor grouped based on 60 days credit term. However, in
2009 the Company had adjusted the payment system for the customers in this group by giving them 90
days credit term to reflect the real debt collection period according to the Companyûs credit term policy.
In 2009, the Group had a higher average debt collection period comparing to last year due to the
postpone from main customers in government sector combining with the main customers in Myanmar
also postponed the payment due to the catastrophe which strongly affected the countryûs economy.
However, those main customers gradually paid in 2010 which resulted in the average debt collection
period to decrease to 88.45 days.
The Company has a policy to control and closely monitor the credit term as classified by aging as follow
Trade account receivable-related parties
(Million Baht) 2007 2008 2009 2010
Value % Value % Value % Value %
Not yet due 0.03 2.46 0.75 19.60 0.07 7.48 28.54 56.24
Over due
- Less than 3 months 0.03 2.32 1.41 36.76 0.76 77.32 22.21 43.76
- 3-6 months - - 1.67 43.64 0.15 15.19 - -
- 6-12 months - - - - - - - -
- Over 12 months 1.14 95.22 - - - - - -
Total trade account receivable 1.19 100.00 3.83 100.00 0.98 100.00 50.75 100.00
Less Allowance for doubtful accounts (0.66) (55.36) - - - - - -
Trade account receivable-net 0.53 44.64 3.83 100.00 0.98 100.00 50.75 100.00
Trade account receivable-others
(Million Baht) 2007 2008 2009 2010
Value % Value % Value % Value %
Not yet due 124.24 36.43 268.16 71.87 137.89 60.53 284.01 90.92
Over due
- Less than 3 months 199.19 58.40 51.17 13.71 62.30 27.35 23.22 7.43
- 3-6 months 2.71 0.79 28.26 7.57 15.42 6.77 4.48 1.44
- 6-12 months 7.58 2.22 24.27 6.50 11.49 5.04 0.02 0.01
- Over 12 months 7.34 2.15 1.26 0.34 0.69 0.30 0.63 0.20
Total trade account receivable 341.05 100.00 373.10 100.00 227.80 100.00 312.36 100.00
Less Allowance for doubtful accounts (1.62) (0.48) (1.31) (0.35) (1.28) (0.56) (1.06) (0.34)
Trade account receivable-net 339.43 99.52 371.79 99.65 226.52 99.43 311.30 99.66
80
Gunkul Engineering Public Company Limited
From the table showing trade account receivable by aging, it shows that most customers are in
undue group and not over 3 months overdue which accounted for 70-95 percent of total trade account
receivable. The reason the Company have not over 3 months overdue customers is the difference
between collection period and payment period of each company resulting in some customers to
become overdue.
The Company has a policy to set the allowance for doubtful account by analyzing the historical
payment, and review of the balance status. The Company sets the allowance for doubtful accounts for
1 year overdue customers at 100 percent and 180 days overdue at 50 percent.
At the year ended 2007-2010, the Company had set the allowance for doubtful accounts Baht 1.62
million, Baht 1.31 million, Baht 1.28 million and Baht 1.06 million respectively which accounted for
0.3-0.7 percent of total trade account receivable.
Inventory
According to the financial statements for the year ended 2007-2010, the Group had the inventory
amounted to Baht 376.82 million, Baht 366.82 million, Baht 286.56 million and Baht 366.08 million
respectively which accounted for 30-40 percent of total assets. It consisted of 50-70 percent finished
goods, and 20-30 percent raw materials.
(Million Baht) 2007 2008 2009 2010
Value % Value % Value % Value %
Raw materials 86.18 22.87 94.08 25.65 84.66 29.54 105.88 28.92Work in progress 1.33 0.35 0.20 0.06 0.20 0.07 46.23 12.63Finished goods 267.41 70.96 266.32 72.60 192.42 67.15 205.01 56.00Goods in transit 21.91 5.81 6.21 1.69 9.28 3.24 8.96 2.45Total 376.82 100.00 366.82 100.00 286.56 100.00 366.08 100.00
Less inventory revaluation (9.40) (2.50) (14.94) (4.07) (20.57) (7.18) (23.28) (6.36)
Net inventory 367.42 97.50 351.88 95.93 265.99 92.82 342.80 93.64
The Company Group has defined the policy to set up the allowance for decline in value for all
deteriorated, obsolete, and slow-moving inventories by considering each item of them. The Companyûs
products are for the basic electrical systems of the country that do not change so much in technolo-
gies, resulting in the Companyûs products can be distributed continually without obsoleteness. However,
the Company Group has set up the allowance for decline in value for prefabricated products not
exceeding 3 years in life at 40% of their value, equivalent to 20.57 million baht and 23.28 million baht
at the end of 2009 and 2010, respectively.
The Average Says Sale of the Company increased continuingly from 65.52 days in 2007, accord-
ing to the separate financial statements. It increased up to 91.24 and 128.19 days according to the
consolidated financial statements in 2008 and 2009, respectively. The continued increment of Average
Says Sale of the Company was the result of sale decelerated under the overall economic condition.
81
During the period of 4th quarter of 2008 to 2009, in addition, the Company slowed down the delivery
of goods to the major client in foreign country that did not make payment of goods costs due to natural
disaster as mentioned above in the heading “Trade accounts receivable”. This goods delivery slowed
down was under the Groupûs credit control policy for clients that were in arrears.
In 2010, the Average Says Sale of the Company was reduced to 120.46 days that was much less
than that of 2009. Due to the overall economic conditions both inside and outside the country recovered
and the Company could manage the inventories more effectively, resulting in the Average Says Sale
was, according to the consolidated financial statements, reduced.
Investment in Subsidiaries
In 2007, the Company purchased the shares of K.N.P. Supply Co., Ltd., G.K. Power Products Co.,
Ltd., and G.K. Assembly Co., Ltd. in proportions at 60%, 61.06%, and 61.60% of the registered capitals
of 50, 100, and 100 million baht, respectively. The Company and its subsidiaries were under the
Common Control. The Company therefore applied the purchase procedures to record the acquirement
of such subsidiaries. At the end 31st December 2007, the Company has
an investment fund in three subsidiaries totaling 91.33 million baht. It was partly paid for shares of such
subsidiaries, and in the consolidated financial statements, the capital surplus was recorded from the
business association under the Common Control, i.e. the difference of acquirement cost was lower than
the price, amounting to 66.20 million baht, in accordance with the subsidiariesû net asset account.
In 2008, the Company purchased the shares of K.N.P. Supply Co., Ltd. from the existing share-
holders up to 99% of the registered capitals of 50 million baht and made payment of all remaining par
value of such subsidiaries. In 2008, K.N.P. Supply Co., Ltd. proclaimed to pay dividend to the sharehold-
ers at 47.59 baht per each share, totaling 14.28 million baht. The Company recognized the dividend as
an income of 5.54 million baht and reduced the lower of cost of investment in the subsidiaries by 8.74
million baht (under the Generally Accepted Accounting Principles: GAAP). This resulted in the Company
had the investment in subsidiaries from 91.33 million baht in 2007 to 163.43 million baht in 2008, and
the capital surplus of business association under the Common Control in the consolidated financial
statements increased from 66.20 million baht 2007 to 93.22 million baht in 2008.
In 2009, G.K. Assembly Co.,Ltd. increased it registered capital from 100 million baht up to 200
million baht. The Company purchased its announcements equity issue, amounting to 75,000 shares at
100 baht per each and purchased the shares from the subsidiaryûs existing shareholders for 633,998
shares in the same prices as the book value at 107.82 baht per each, totaling 143.27 million baht.
Besides, the Company also purchased the shares of G.K. Power Products Co.,Ltd. and K.M.P. Supply
Co., Ltd. from both subsidiariesû existing shareholders, amounting to 38,934 shares in the same prices
as the book value at 1,125.53 baht per each and 4,998 shares in the same prices as the book value at
128.94 baht per each, respectively, totaling 44.46 million baht. In 2009, G.K. Assembly Co.,Ltd. and G.K.
Power Products Co.,Ltd. proclaimed to pay dividend to the shareholders at 85.00 and 544.00 baht per
each share, amounting to 85 million baht and 54.40 million baht, respectively. The Company recognized
82
Gunkul Engineering Public Company Limited
the dividend as the total income of 19.35 million baht and reduced the lower of cost of investment in
the subsidiaries totally by 66.23 million baht. As of 11th December 2009, the Company made investment
in Gunkul Powergen Co.,Ltd. for 999,995 shares at 25 baht per each, totaling 25 million baht. This
resulted in the Company had the investment in subsidiaries from 163.43 million baht in 2008 to 310.02
million baht in 2008, and the capital surplus of business association under the Common Control in the
consolidated financial statements increased from 93.22 million baht 2008 to 93.62 million baht in 2009.
As of 30th June 2009, the Company had the investment in the subsidiary equal to 315.20 million
baht increasing from 310.02 million baht in 2009 in order to make additional investment of 5 million baht
in Gunkul Powergen Co., Ltd. for par value as the subsidiaryûs current capital.
In 2010, the Company had the investment in the subsidiary equal to 449.36 million baht increas-
ing from 64.34 million baht in 2009 in order to purchase the ordinary shares of G-Power Source Co., Ltd.
which managed the main business engaged in the solar electricity generation and distribution. The
Company held the shares at 98.98% of total registered capital.
Property, Building and Equipments
The Companyûs office and warehouse are located at the land sub-leased by Mr. Gunkul
Dhumrongpiyawut who is the major shareholder and directors. In 2007, according to the separate
financial statement, the Company had the building and equipments with the net value of 36.13 million
baht, and then reduced to 29.43, 23.12, and 20.63 million baht in 2008, 2009, and 6-month period
ending 30th June 2010, respectively. Because the Company did not make investment in any building
and equipment significantly, and the value of the Companyûs building and equipments net value
therefore decreased subject to the depreciation of each year.
For the Company Groupûs consolidated financial statements as of 2007, 2008, 2009, and 2010,
they were equal to 132.13, 207.85, 190.59, and 505.42 million baht, respectively. The net Property,
building, and equipments were more increased according to the consolidated financial statement
comparable to the separate financial statement was due to value totality of the Property, building, and
equipments of 3 subsidiaries. Especially, J.K. Assembly Co., Ltd. owns its land and building. Meanwhile
another 2 subsidiaries run their businesses at the areas sub-leased by Mr. Gunkul Dhumrongpiyawut
just like the Company. Fundamental Changes in Property, building, and equipments as follows;
- In 2007, J.K. Power Products Co., Ltd. made additional investment in the factory machineries and
equipments up to 5.88 million baht for gas switch assembly.
- In 2007, G.K. Assembly Co., Ltd. made additional investment in the factory machineries and
equipments up to 13.48 million baht for the productions of plastic and aluminum products, and
made investment of 6.14 million baht in modifying the factory building.
- In 2008, G.K Assembly Co., Ltd. made investment in the land that was the location of the office
building and factory from Mr. Gunkul at the estimated price of 81.40 million baht (exclusive of
charge). The factory aforesaid was deemed as the main source used to produce the Company
Groupûs products. Besides, the investment in the factory machineries and equipments up to 8.92
83
million baht for the productions of pumps and aluminum products, and made investment of 6.28
million baht in modifying the factory building.
- In 2009, made additional investment in the factory machineries and equipments up to 6.38 million
baht in order to expand the productivity in some groups of goods and to replace the dilapidated
equipments.
- In 2010, Gunkul Powergen Co., Ltd. purchased the assets in form of land in order to manage the
power plant, amounting to 20.56 million baht, and its solar power plant and machineries were
being constructed and nearly available, amounting 312.59 million baht.
Company Groupûs Net Property, Building and Equipment
(Unit : Million Baht) 2007 2008 2009 2010 Remark
Gunkul Engineering Co., Ltd. 36.13 29.43 23.12 18.54 Office and warehouse subleased by Mr.Gukul.
K.N.P. Supply Co., Ltd. 0.24 0.23 0.16 0.09 Office and warehouse subleased by Mr.Gukul.
G.K. Assembly Co., Ltd. 74.23 159.90 154.01 143.75 Property and building owned by GKA.
G.K. Power Products Co., Ltd. 21.49 18.28 13.30 10.26 Property and building subleased by Mr.Gukul
and some area rented out by GKAûs office factory.
Gunkul Powergen Co., Ltd. - - - 332.78 Property owned by GPG
Consolidated liabilities
In 2001, the Company filed a petition for business rehabilitation to the Central Bankruptcy
Court and G.K. Assembly Co., Ltd. was responsible for providing the plan. The process of business
rehabilitation commenced from November 2001. At ending 31st December 2006, the Company had the
accrued liability of 272.74 million baht under the business rehabilitation plan. In 2007, then, the
Company made payment of such liability under the conditions and the Central Bankruptcy Court issued
the order to rescind the business rehabilitation process on November 2007. The Company gained the
profit of 84.99 million baht from being released from the rehabilitation plan.
The Company able to be released from rehabilitation plan resulted in the numerous decrement of
its consolidated liabilities after 2007. According to the consolidated financial statements, the Companyûs
consolidated liabilities at the end of 2007 and 2009 were 670.74, 28.16 and 351.78 million baht,
respectively. In 2010, however, the Company Group had the total consolidated liabilities of 657.51
million baht according the consolidated financial statement higher than that of 2009 due to the 2010
exportation to its foreign clients was more expanded. This resulted in the Company took a short-term
loan and trust receipt payable to support the increasing exportation.
The Companyûs consolidated liabilities was comprised of almost current liabilities. The main
transactions were the bank overdraft and short-term loan from the financial institute representing
approximately 5 - 20% of the Company Groupûs consolidated liabilities, trade account payable
representing approximately 5 - 35% of the Company Groupûs consolidated liabilities, and the related
individualsû and businessesû short-term loans representing approximately 5 - 15% of the consolidated
84
Gunkul Engineering Public Company Limited
liabilities. Three transactions aforesaid were taken by the Company as capital to provide the raw
materials and trade credits for clients. Besides, the asset payable representing approximately 6.65%
arose out of the construction cost of solar power plant of Gunkul Powergen Co., Ltd., a subsidiary.
The Company Group had, according to the consolidated financial statements during 2007-2010,
the liquidity ratios equivalent to 1.30, 1.88, 1.81, and 1.59, respectively. During 2007-2010, the quick
ratios were, according to the consolidated financial statements, 0.63, 0.96, 0.98, and 1.06, respectively.
The Groupûs quick ratios were close to the current ratios per current liabilities due to the inventories
were deemed as the main component of current assets. However, the Company Group still had the
liquid assets excluding inventories at the close level to current liabilities. As that result, the Company
Groupûs quick asset ratio was nearby 1.00.
The Company had the average credit periods equivalent to 79.71, 41.76, and 45.01 days in 2008,
2009 and 2010, according to the consolidated financial statements, and therefore the Company had the
cash cycles equivalent to 106.29, 212.62 and 163.90 days in 2008, 2009 and 2010, according to the
consolidated financial statements, compared to the Groupûs cash cycles of the years 2008 and 2009.
The Group tended to have the longer cash cycle that arose out of the sales decelerated in economic
depression, as well as the major foreign client suffered the problem and delayed to make payment.
Meanwhile the Group had the policy to find the new goods and raw material distributors to reduce the
dependence on particularly any raw material supplier. Therefore the Group must make payment of
goods price through immediate transfer in the early period of contacting a new raw material supplier,
resulting in the longer period of its cash cycle. In 2010, however, the Companyûs sales got bigger than
that of 2009 due to the better economic condition, as well as the effective management of inventories
and quicker payment of goods cost, and therefore the Companyûs cash cycle declined.
For the period the working capital was required, the Group funded by raising a loan form related
individuals or businesses and increased the registered capital continuingly since 2007 in order to
support the business growth during the Group made adjustment on the credit amount with the financial
institute after releasing from the business rehabilitation plan. The Company therefore had the ratio of
liabilities per capital continuingly reduced, equivalent to 1.44 in 2007, and then equivalent to 0.69, 0.70,
and 0.58 in 2008, 2009, and 2010, respectively, according to the consolidated financial statements.
Shareholder Equity
The Company increased its capital continuingly from 25 million baht at the end of 2006 to 75
million baht in 2007, 240 million baht in 2008, and 300 million baht in 2009 in order to manage its
businesses and adjust the shareholding structure of the Group. In this respect, the Company pro-
claimed to pay dividends in 2007, 2008, 2009 and the first six months of 2010, equivalent to 55.00,
149.64, 90.00, and 21.30 million baht. After the registered capital and retained earnings of each year
were totalized, the Companyûs shareholder equity was equal to 279 million baht at the end of 2007,
364.09, 387.05, and 966.83 million baht at the end of 2008, 2009 and 2010.
85
As for the consolidated financial statements at the end of 2007, 2008, 2009, and 2010, the Group
had the shareholder equity totally equivalent to 466.51, 623.19, 505.21, and 1,132.21 million baht,
respectively. The increment of total shareholder equity compared to the separate financial statement
was a result of combining the assets, liabilities, and business profits of all 4 subsidiaries. Also the capital
surplus of business association under the Common Control came from difference between subsidiary-
acquirement cost and book price of the subsidiariesû net assets.
Cash Flows
In 2007, the Company required, according to the separate financial statement, the working capital
to support the trade account receivable and inventories increasing in line with the Companyûs sales. The
cash flows originated mainly from the credits of trade accounts payable, and therefore the Company
had the net cash flows from operating activities of 149.51 million baht. In 2007, the Company had the
net cash flows from investing activities of 26.79 million baht. The most of cash flows was used as the
guarantee-bearing deposit of export credit for exportation to the Union of Myanmar and investment in
the subsidiariesû shares. For the cash flows from financing activities, the Company made payment of
liabilities amounting to 176.01 million baht in accordance with the business rehabilitation plan and made
payment of overdraft and short-term loan amounting to 30.47 million baht, and therefore the Company
had decline in the net cash flows from financing activities by 170.51 million baht and decline in the net
cash flows by 47.80 million baht. In this regard, the Group had cash and cash equivalents at the ending
period, amounting 26.96 million baht.
In 2008, the Company required, according to the separate financial statement, less the working
capital to support the trade account receivable and inventories due to the deceleration of sales.
However, the Group had found and sought for the new goods distributors to reduce resulting in that the
Group must make payment of goods price through immediate transfer in the early period of contact, as
well as the worldwide economic depression the foreign trade account payable mostly reduced the
credit term for goods distribution. Therefore the Group had the cash flows from operating activities in
deficit by 211.70 million baht. Although the cash flows from post date cheque arose out of increasing
in capital in 2007 up to 50 million baht. Besides, the Group still invested in the property, building and
equipment amounting to 99.49 million baht and also funded by increasing the registered capital of 165
million baht. In 2008, additionally, the financial institute had the policy to alleviate the exportation to the
Union of Myanmar, and therefore the Company had the guarantee-bearing deposit decreased. However,
the cash flows from financing still was insufficient to the cash flows spent in operating and investing
activities, and therefore the Group has the net decline in cash flows of 43.22 million baht. In this regard,
the Group had cash and cash equivalents at the ending period, amounting 26.95 million baht.
In 2009, the Company had, according to the consolidated financial statement, the cash flows
from trade accounts receivable collection reduced by 147.66 million baht and inventories reduced by
80.25 million baht. Meanwhile the trade accounts payable only reduced by 1 million baht was a result
of adjusting the cash flows from operating activities in line with the Groupûs sales, and therefore the
86
Gunkul Engineering Public Company Limited
Group had the net cash flows from operating activities 287.15 million baht. In 2009, the Group had the
important investment in buying the subsidiariesû shares from its existing shareholders, amounting to
112.82 million baht and the cash flows increased from the guarantee-bearing deposit reduced by 14.89
million baht, and therefore the Company had the net cash flows in investing activities, totaling 95.23
million baht. As for financing to operation and investment, the Company funded by increasing its and
subsidiariesû capital, totaling 85 million baht, and the short-term loan raised from financial institute was
repaid of 95.56 million baht. The Company therefore had the cash flows in financing activities of 109.68
million baht. However, the Group still had the net increasing cash flows of 82.23 million baht at the end
of 2009. In this regard, the Group had cash and cash equivalents at the ending period, amounting
109.18 million baht.
In 2010, the Group had, according to the consolidated financial statement, the net cash flows
from operating activities reduced by 67.32 million baht. Due to the Companyûs sales was higher
expanded in 2010, especially the foreign clients, resulting in the increment of the cash flows of trade
accounts receivable and goods deposit. The net cash flows used in operation the Company obtained
from its net cash flows from financing activities increased by 527.03 million baht receiving the cash from
increasing the capital in the Stock Exchange of Thailand (SET) and the increment of overdraft cash and
short-term loan, amounting to 221.35 million baht. To adjust, meanwhile, the Groupûs monetary manage-
ment structure, the Group made repayment of total 104.11 million baht for the short-term loan raised
from related individuals and businesses.
As for the cash flows from investing activities in 2010, the Group had, according to the consoli-
dated financial statement, the cash flows used in investing activities of 354.09 million baht from
investment in the subsidiaries, the Groupûs assets and guarantee-bearing deposit, amounting to 5.42,
218.73, and 129.72 million baht, respectively. At the end of 2010, therefore, the Group had, according to
the consolidated financial statement, cash and cash equivalents amounting to 214.80 million baht at the
ending period.
Audit Fee (for Each Company)
In 2009 and 2010, the Companyûs and subsidiariesû audit fee was comprised of annual audit fee
and review fee on 3-quarter interim financial statements. It could be divided in each company as
follows;
Audit Gunkul G.K. G.K. K.N.P. Gunkul G-Power Total
Fee Engineering Assembly Power Poducts Supply Powergen Source
Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd.
2009 800,000.00 350,000.00 300,000.00 210,000.00 - - 1,660,000.00
2010 800,000.00 350,000.00 300,000.00 210,000.00 120,000.00 15,000.00 1,795,000.00
Provided any individuals or businesses related to the auditor and its office; SP Audit Co., Ltd.,
were not the individuals or businesses related to the Company.
87
Factors and Influences May Affect the Operation or Financial Status in the Future1. Due to the Company distributes the products mainly to the customer groups in governmental agencies.
Therefore the Company may be affected significantly on its income and overall performance in case that
the governmental sector changes its electric investment policy or in case that the Company does not win
the auction. Besides, the Company exports a lot of products to the Union of Myanmar resulting in the
Company may be affected significantly on its income and overall performance in case that the exportation
can not made to the Union of Myanmar (see details in Part II, article 11: Risk on Customer Dependence).
2. The Company has the risk on exchange rate volatility due to the Company makes earnings from exporting
the goods to and importing the raw materials from other countries. Therefore the Company has the risk on
exchange rate volatility that may make it loss from the exchange rate (see details in Part II, article 1.3: Risk
on Exchange Rate Volatility).
3. These 100,000,000 ordinary shares sold to general people have the book value representing 25% of Regis-
tered and Paid-up Capital after capital increment of 400 million baht. Thus, the rewards compared to the
shareholder equity or number of shares will be reduced by 25% as a result of such capital increment (Dilution
effect). If the 2009 net profit is taken into account under the consolidated financial statement, it will be
reduced from 0.18 baht per share (total 300 million shares) to 0.13 baht per share (total 400 million shares).
4. Due to the Group has established Gunkul Powergen Co., Ltd. in order to manage the businesses of
electricity production and distribution and filed a petition to sell the solar-power electricity with Provincial
Electricity Authority (PEA) under the Power Purchase Project from Very Small Power Producers (VSSP). The
total productivity proposed to sell is 30.9MW. In this regard, it is expected that the 1st Project, phase I with
the productivity of 3.0MW can be distributed at the beginning of the year 2011 and the 1st Project, phase
I with the productivity of 4.4MW can be distributed at the middle of the year 2011. Other projects with
23.5MW may be gradually construction and recognized the whole income from 2013.
Expanding the business to electricity production and distribution will affect the financial status
and overall performance of the Company in the future in 3 main characteristics i.e. income structure,
capital structure, and cash flows, namely;
ë The Group can make more earnings from the electricity distribution in line with the electricity
quantity to be distributed. The Groupûs income structure in the future will be changed. Provided
the income volatility will depend on the capacity of electricity production.
ë The Phetchabun power plant project with the productivity of 3.0MW and 4.4MW has provided the
capital source from indebtedness, representing approximately 2.5-3.0 in liabilities per capital ratio.
The power plant project being in the early period of investment may change the ratio of liabilities
per shareholder equity from the present, with the increment of liabilities ratio. The construction of
solar power plant will require the investment of approximately 100-120 million baht per 1MW.
ë The most expenses of the Projects are depreciation. Meanwhile the income recognition from
electricity distribution is made in cash payment. The Group therefore tends to get more the cash
flows from operating activities in the future.
Other related information
- None -
88
Gunkul Engineering Public Company Limited
The Board of Directors is responsible for Gunkul Engineering Public Company Limitedûs financial
statements and Gunkul Engineering Public Company Limited and its subsidiarieûs consolidated financial
statements, including the financial information presented in this annual report.
The aforementioned financial statements are prepared in accordance with generally accepted
accounting principles, using careful judgment and the best estimation. Important information is adequately
and transparency disclosed in the notes to financial statements for the Company shareholders and investors.
The Board of Directors has provided and maintained risk management system and appropriate and
efficient internal controls to ensure that accounting records are accurate, reliable and adequate to protect its
assets and uncover any weakness that may be present in order prevent fraud or materially irregular
operations.
In this regard, the Board of Directors has appoints an Audit Committee to be responsible for reviewing
the accounting policy financial reports, review internal controls, internal audit and risk management system.
The Audit Committee has also reviewed a disclosure of related party transactions. All their comments on
these issues have included in the Audit Committee Report, which presented in this annual report.
The financial statements of the Company and the consolidated financial statements of Company and
its subsidiaries have been examined by an external auditor, SP Auditor Co., Ltd. To conduct the audits and
express an opinion in accordance with generally accepted auditing standards, the auditor was provided with
all of the Companyûs records and related data as requested. The auditorûs opinion is presented in the
auditorûs report as part of this annual report.
The Board of Directors considers the Companyûs overall internal control system satisfactory and
provides credibility and reliability to Gunkul Engineering Public Company Limited and its subsidiariesûs
consolidated financial statements for the year ended December 31, 2010. The Board of Directors also
believes that all these financial statements have been prepared in accordance with generally accepted
accounting principle and related regulations.
(Dr.Ekaporn Rakkwamsuk)
Chairman of the Board
Board of Directorsû Responsibility for Financial Reporting
89
Independent Auditorûs Report
To the Shareholders of Gunkul Engineering Public Company Limited
I have audited the accompanying consolidated and separate balance sheets as at December 31,
2010 and the related consolidated and separate statements of income, changes in shareholdersû equity and
cash flows for the years then ended of Gunkul Engineering Public Company Limited and its subsidiaries, and
of Gunkul Engineering Public Company Limited, respectively. The Companyûs management is responsible
for the correctness and completeness of information in these financial statements. My responsibility is to
express an opinion on these financial statements based on my audits. The consolidated and separate
financial statements of Gunkul Engineering Public Company Limited and its subsidiaries and of Gunkul
Engineering Public Company Limited for the year ended on December 31, 2009, which were compared with,
were audited in accordance with generally accepted audited standards by other auditor in the same firm
who expressed an unqualified opinion on these financial statement in her report date February 22, 2010.
I conducted my audits in accordance with generally accepted auditing standards. Those standards
require that I plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the consolidated and separate financial statements referred to above present fairly, in
all material respects, the consolidated and separate financial position as at December 31, 2010, and the
results of their operations and cash flows for the year then ended of Gunkul Engineering Public Company
Limited and its subsidiaries and of Gunkul Engineering Public Company Limited in accordance with
generally accepted accounting principles.
SP Audit Company Limited
(Mr.Somyot Wiwatapinai)
Certified Public Accountant (Thailand) No. 5476
Bangkok
February 11, 2011
90
Gunkul Engineering Public Company Limited
Balance SheetsGUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES
AS AT DECEMBER 31, 2010 AND 2009
Notes to financial statements are an integral part of these financial statements
(Unit : Baht)
Consolidated Separate financial statements
Notes 2010 2009 2010 2009
ASSETS
Current Assets
Cash and cash equivalent 214,801,371.94 109,183,630.28 196,393,024.95 70,864,229.71
Trade accounts receivable - related parties 5.1,6 2,988,915.72 982,193.01 50,748,194.43 20,928,028.59
Trade accounts and notes receivable -
third parties, net 7 394,133,944.73 226,518,906.22 311,301,031.07 204,251,848.47
Inventories, net 8 342,801,082.47 265,993,036.08 166,427,327.14 146,665,997.36
Short-term loans to related parties 5.1 - - 4,950,000.00 6,230,000.00
Deposit for purchase of goods - third parties, net 54,516,645.62 12,250,461.79 44,229,272.40 11,920,455.01
Other current assets, net 9 25,988,831.63 4,836,154.54 12,309,072.27 3,050,059.02
Total Current Assets 1,035,230,792.11 619,764,381.92 786,357,922.26 463,910,618.16
Non-Current Assets
Investments in subsidiaries 10 - - 449,357,991.51 310,021,366.51
Property, plant and equipment, net 11 505,417,802.51 190,592,919.70 18,540,251.20 23,122,882.87
Fixed deposits and bill of exchange
pledged as collateral 12 163,344,169.02 33,629,641.17 113,043,593.58 8,065,286.96
Intangible assets, net 13 66,580,080.90 1,610,776.15 310,918.49 429,928.09
Other non-current assets, net 14 19,139,476.69 11,401,057.56 508,520.12 2,168,524.48
Total Non-Current Assets 754,481,529.12 237,234,394.58 581,761,274.90 343,807,988.91
TOTAL ASSETS 1,789,712,321.23 856,998,776.50 1,368,119,197.16 807,718,607.07
91
Balance Sheets (Continued)GUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES
AS AT DECEMBER 31, 2010 AND 2009
Notes to financial statements are an integral part of these financial statements
(Unit : Baht)
Consolidated Separate financial statements
Notes 2010 2009 2010 2009
LIABILITIES AND SHAREHOLDERSû EQUITY
Current Liabilities
Bank overdrafts and short-term loans from
financial institutions 15 247,808,521.60 29,978,475.49 82,307,142.90 15,226,458.17
Trade accounts payable - related parties 5.1 - 47,742.25 79,522,945.19 133,337,302.12
Trade accounts payable - third parties 153,306,656.84 74,049,357.53 119,001,814.48 30,492,273.44
Current portion of obligation under finance lease 18 3,156,690.17 3,451,808.84 2,647,463.05 2,414,626.36
Short-term loans from related parties 5.1 2,050,000.00 106,157,299.13 7,647,973.86 110,534,658.80
Provision for warranty 16 1,348,242.68 1,724,579.46 77,357.72 1,461,105.50
Payable for purchase of assets 176,998,241.52 - 57,903,300.00 -
Accrued dividend payables - 90,000,000.00 - 90,000,000.00
Accrued income tax payable 37,308,219.98 15,836,057.56 22,478,851.73 13,047,603.47
Other current liabilities 17 29,486,004.03 22,070,542.10 23,785,644.91 16,245,425.85
Total Current Liabilities 651,462,576.82 343,315,862.36 395,372,493.84 412,759,453.71
Non-Current Liabilities
Provision for warranty 16 2,009,921.17 1,282,399.87 1,885,853.22 1,226,934.76
Long-term loans from financial institutions 618,570.67 618,570.67 618,570.67 618,570.67
Obligation under finance lease, net 18 3,415,894.19 6,572,584.36 3,415,894.19 6,063,357.24
Total Non-Current Liabilities 6,044,386.03 8,473,554.90 5,920,318.08 7,908,862.67
TOTAL LIABILITIES 657,506,962.85 351,789,417.26 401,292,811.92 420,668,316.38
92
Gunkul Engineering Public Company Limited
Balance Sheets (Continued)GUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES
AS AT DECEMBER 31, 2010 AND 2009
Notes to financial statements are an integral part of these financial statements
(Unit : Baht)
Consolidated Separate financial statements
Notes 2010 2009 2010 2009
Shareholdersû Equity
Share Capital 19
Authorised share capital
400,000,000 ordinary shares of Baht 1 each 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00
Issued and paid up share capital
400,000,000 ordinary shares of Baht 1 each 400,000,000.00 - 400,000,000.00 -
300,000,000 ordinary shares of Baht 1 each - 300,000,000.00 - 300,000,000.00
Premium on share capital 425,120,000.00 - 425,120,000.00 -
Surplus from reorganisation under common control 93,622,449.53 93,622,449.53 - -
Retained earnings
Appropriated
Legal reserve 20 35,000,000.00 30,000,000.00 35,000,000.00 30,000,000.00
Unappropriated 178,462,908.85 81,586,909.71 106,706,385.24 57,050,290.69
Total Shareholdersû Equity of Parent 1,132,205,358.38 505,209,359.24 966,826,385.24 387,050,290.69
Minority shareholdersû interest - - - -
Total Shareholdersû Equity 1,132,205,358.38 505,209,359.24 966,826,385.24 387,050,290.69
TOTAL LIABILITIES AND SHAREHOLDERSû EQUITY 1,789,712,321.23 856,998,776.50 1,368,119,197.16 807,718,607.07
93
Statements of IncomeGUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES
FOR THE YEARS ENDED ON DECEMBER 31, 2010 AND 2009
Notes to financial statements are an integral part of these financial statements
(Unit : Baht)
Consolidated Separate financial statements
Notes 2010 2009 2010 2009
Revenues
Sales of goods 1,288,763,092.92 864,070,837.26 1,192,839,137.52 872,873,940.56
Other income 21 12,015,337.53 8,930,878.40 2,828,343.86 22,792,663.94
Total revenues 1,300,778,430.45 873,001,715.66 1,195,667,481.38 895,666,604.50
Expenses
Cost of sales 922,154,712.98 644,129,113.23 938,361,779.86 714,502,385.82
Selling expenses 37,286,102.74 13,549,992.71 35,004,025.01 12,219,893.32
Administrative expenses 126,076,643.16 106,175,102.87 82,813,002.94 74,943,575.31
Management benefit expense 25,686,108.65 22,660,411.50 22,400,760.56 18,110,848.08
Total expenses 1,111,203,567.53 786,514,620.31 1,078,579,568.37 819,776,702.53
Net profit before finance cost and income tax 189,574,862.92 86,487,095.35 117,087,913.01 75,889,901.97
Finance cost (6,685,549.98) (5,567,328.51) (6,326,565.15) (4,804,756.02)
Net profit before income tax 182,889,312.94 80,919,766.84 110,761,347.86 71,085,145.95
Income tax 22 (59,713,313.80) (27,259,025.11) (34,805,253.31) (18,121,092.21)
Net profit 123,175,999.14 53,660,741.73 75,956,094.55 52,964,053.74
Attributable to :
Equity holders of the parent 123,175,999.14 53,169,687.28 75,956,094.55 52,964,053.74
Minority interest - 491,054.45 - -
123,175,999.14 53,660,741.73 75,956,094.55 52,964,053.74
Earnings per share for profit attributable to
the equity holders of the parent 23 0.38 0.18 0.24 0.18
Number of weighted ordinay shares (Unit : share) 321,917,808 296,383,562 321,917,808 296,383,562
94
Gunkul Engineering Public Company Limited
Cons
olida
ted S
tatem
ents
of C
hang
es in
Sha
reho
ldersû E
quity
GUNK
UL E
NGIN
EERI
NG P
UBLI
C CO
MPA
NY L
IMIT
ED A
ND ITS
SUB
SIDI
ARIE
S
FOR
THE
YEAR
S EN
DED
ON
DECE
MBE
R 31
, 201
0 AN
D 20
09
Note
s to
fina
ncial
sta
tem
ents a
re a
n inte
gral
par t
of the
se fi
nanc
ial s
tate
men
ts
(Unit :
Bah
t)
Pare
ntûs S
hare
hold
ersû E
quity
Surp
lus
from
Issu
edre
orga
nisa
tion
Reta
ined
ear
ning
sM
inor
ityan
d pa
id-u
pPr
emiu
m o
nun
der
Appr
opria
ted
shar
ehol
ders
ûNo
tes
shar
e ca
pita
lsh
are
capi
tal
com
mon
con
trol
lega
l res
erve
Unap
prop
riate
dTo
tal
inte
rest
Tota
l
Balan
ce a
s at
Jan
uary
1, 2
009
240,0
00,00
0.00
-93
,216,4
69.09
7,500
,000.0
014
0,917
,222.4
348
1,633
,691.5
214
1,559
,601.5
062
3,193
,293.0
2
Net p
rofit
for th
e pe
riod
--
--
53,16
9,687
.2853
,169,6
87.28
491,0
54.45
53,66
0,741
.73
Tota
l rec
ogniz
ed in
com
e an
d ex
pens
es-
--
-53
,169,6
87.28
53,16
9,687
.2849
1,054
.4553
,660,7
41.73
Incr
ease
in s
hare
cap
ital
1960
,000,0
00.00
--
--
60,00
0,000
.00-
60,00
0,000
.00
Incr
ease
fro
m in
crem
ent
inves
tmen
ts-
-40
5,980
.44-
-40
5,980
.44(1
42,05
0,655
.95)
(141
,644,6
75.51
)
Lega
l res
erve
20-
--
22,50
0,000
.00(2
2,500
,000.0
0)-
--
Divid
end
paid
24-
--
-(9
0,000
,000.0
0)(9
0,000
,000.0
0)-
(90,0
00,00
0.00)
Balan
ce a
s at
Dec
embe
r 31,
2009
300,0
00,00
0.00
-93
,622,4
49.53
30,00
0,000
.0081
,586,9
09.71
505,2
09,35
9.24
-50
5,209
,359.2
4
Net p
rofit
for th
e pe
riod
--
--
123,1
75,99
9.14
123,1
75,99
9.14
-12
3,175
,999.1
4
Tota
l rec
ogniz
ed in
com
e an
d ex
pens
es-
--
-12
3,175
,999.1
412
3,175
,999.1
4-
123,1
75,99
9.14
Incr
ease
fro
m in
crem
ent
inves
tmen
ts19
100,0
00,00
0.00
440,0
00,00
0.00
--
-54
0,000
,000.0
0-
540,0
00,00
0.00
Expe
nses
con
cern
ing to
issu
e of
ord
inary
sha
res
19-
(14,8
80,00
0.00)
--
-(1
4,880
,000.0
0)-
(14,8
80,00
0.00)
Lega
l res
erve
20-
--
5,000
,000.0
0(5
,000,0
00.00
)-
--
Divid
end
paid
24-
--
-(2
1,300
,000.0
0)(2
1,300
,000.0
0)-
(21,3
00,00
0.00)
Balan
ce a
s at
Dec
embe
r 31,
2010
400,0
00,00
0.00
425,1
20,00
0.00
93,62
2,449
.5335
,000,0
00.00
178,4
62,90
8.85
1,132
,205,3
58.38
-1,1
32,20
5,358
.38
95
Separate Statements of Changes in Shareholdersû EquityGUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES
FOR THE YEARS ENDED ON DECEMBER 31, 2010 AND 2009
Notes to financial statements are an integral part of these financial statements
(Unit : Baht)
Issued and Retained earnings
paid-up Premium on Appropriated Total
Notes share capital share capital legal reserve Unappropriated
Balance as at January 1, 2009 240,000,000.00 - 7,500,000.00 116,586,236.95 364,086,236.95
Net profit for the period - - - 52,964,053.74 52,964,053.74
Total recognized income and expenses - - - 52,964,053.74 52,964,053.74
Increase in share capital 19 60,000,000.00 - - - 60,000,000.00
Legal reserve 20 - - 22,500,000.00 (22,500,000.00) -
Dividend paid 24 - - - (90,000,000.00) (90,000,000.00)
Balance as at December 31, 2009 300,000,000.00 - 30,000,000.00 57,050,290.69 387,050,290.69
Net profit for the period - - - 75,956,094.55 75,956,094.55
Total recognized income and expenses - - - 75,956,094.55 75,956,094.55
Increase in share capital 19 100,000,000.00 440,000,000.00 - - 540,000,000.00
Expenses concerning to issue of
ordinary shares 19 - (14,880,000.00) - - (14,880,000.00)
Legal reserve 20 - - 5,000,000.00 (5,000,000.00) -
Dividend paid 24 - - - (21,300,000.00) (21,300,000.00)
Balance as at December 31, 2010 400,000,000.00 425,120,000.00 35,000,000.00 106,706,385.24 966,826,385.24
96
Gunkul Engineering Public Company Limited
Notes to financial statements are an integral part of these financial statements
(Unit : Baht)
Consolidated Separate financial statements
Notes 2010 2009 2010 2009
Cash Flow from Operating ActivitiesNet profit before income tax 182,889,312.94 80,428,712.39 110,761,347.86 71,085,145.95Adjustments to reconcile net profit for cash
received (used) from operationsBad debts and doubtful debts (reversal) (528,622.61) 360,663.61 (528,622.61) 534,538.61Unrealized (gain) loss on exchange rate (627,186.01) (13,327.51) (706,515.66) 143,438.38Loss on diminutions in the value of inventories 2,713,307.57 5,632,056.20 795,644.96 4,223,240.95Depreciation and amortisation 23,844,149.32 25,587,047.39 7,168,041.14 7,509,065.90Gain from sale of fixed assets (13,231.11) (971,522.51) (13,231.11) (2,164.67)Loss from assets not used 6.00 9.00 - -Provision for warranty (reversal) 351,184.52 3,006,979.33 (724,829.32) 2,688,040.26Negative goodwill (1,666,591.09) -Dividend income - - - (19,348,816.00)Interest income (1,649,962.44) (953,678.03) (1,342,515.69) (483,959.37)Interest expenses 6,685,549.98 5,567,328.51 6,326,565.15 4,804,756.02Share of net profit of minoritysû interest - 491,054.45 - -
Net profit before change in operating assetsand liabilities 211,997,917.07 119,135,322.83 121,735,884.72 71,153,286.03(Increase)decrease in trade accounts
receivable - related parties (2,006,722.71) 2,851,873.84 (29,820,165.84) 17,967,339.21(Increase)decrease in trade accounts and notes
receivable - third parties (166,680,672.48) 144,809,709.42 (106,066,136.62) 85,888,584.45(Increase)decrease in inventories (79,925,871.87) 80,252,860.86 (20,556,974.74) 71,447,829.92(Increase)decrease in deposit for purchase
of goods - third parties (42,266,183.83) 1,741,830.96 (32,308,817.39) 2,052,837.74(Increase)decrease in other current assets (19,698,703.29) 1,045,306.28 (8,174,799.56) (630,572.44)(Increase)decrease in other non-current assets (5,049,083.64) 730,224.39 1,660,004.36 (193,969.53)Increase(decrease) in trade accounts
payable - related parties (47,742.25) (1,033,263.46) (53,814,356.93) 37,534,177.07Increase(decrease) in trade accounts
payable - third parties 75,685,095.20 34,558.42 88,335,136.04 (20,914,255.20)Increase(decrease) in other current liabilities 7,882,045.38 (24,018,891.62) 7,496,765.54 (15,136,726.61)Cash received (used) from operation (20,109,922.42) 325,549,531.92 (31,513,460.42) 249,168,530.64Proceed from interest income 807,291.50 1,250,442.82 571,669.37 442,303.31Cash paid for interst expenses (6,613,099.73) (4,919,890.71) (5,803,089.67) (4,397,582.66)Cash paid for income tax (41,408,063.36) (34,569,724.86) (25,374,005.05) (16,429,067.92)
Net Cash Provided (Used) from Operating Activities (67,323,794.01) 287,310,359.17 (62,118,885.77) 228,784,183.37
Statements of Cash FlowGUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES
FOR THE YEARS ENDED ON DECEMBER 31, 2010 AND 2009
97
Notes to financial statements are an integral part of these financial statements
(Unit : Baht)
Consolidated Separate financial statements
Notes 2010 2009 2010 2009
Cash Flow from Investing Activities(Increase) decrease in short-term loans
to related parties - 9,600,000.00 1,280,000.00 (5,930,000.00)Cash paid for investments in subsidiaries (5,442,950.00) - (81,433,325.00) (212,823,366.51)Proceed from dividend - - - 85,578,816.00Cash paid for purchase of investments
in minority interest - (112,823,491.51) - -Decrease in advance payment and long-term
loans to related parties - - - 1,693,080.00Cash paid for purchase of property, plant
and equipment (218,732,208.48) (9,988,506.62) (2,510,853.71) (1,524,142.06)Proceed from disposal of property, plant
and equipment 378,088.23 3,069,281.68 57,684.95 446,101.28(Increase) decrease in fixed deposits and bill
of exchange pledged as collateral (129,714,527.85) 14,891,780.83 (104,978,306.62) 20,817,626.44Cash paid for purchase of intangible assets (576,050.00) (136,925.00) - -
Net Cash Provided (Used) from Investing Activities (354,087,648.10) (95,387,860.62) (187,584,800.38) (111,741,884.85)
Cash Flow from Financing ActivitiesIncrease(decrease) in bank overdrafts and short-term
loans from financial institutions 221,346,689.12 (95,558,573.45) 67,230,178.33 (101,529,600.62)Decrease in short-term loans from related parties (104,107,299.13) (36,889,577.60) (102,886,684.94) (7,618,443.83)Repayment of obligation under finance lease (3,451,808.84) (7,484,109.52) (2,414,626.36) (2,276,614.89)Repayment of interest-obligation under finance lease (578,397.38) (932,575.06) (516,385.64) (677,035.47)Proceed from increment of parentûs share capital 540,000,000.00 60,000,000.00 540,000,000.00 60,000,000.00Payment of expenses concerning to share
capital increased (14,880,000.00) - (14,880,000.00) -Proceed from increment of minoritiesû share capital - 25,000,000.00 - -Dividend paid (111,300,000.00) - (111,300,000.00) -Dividend paid of minorityûs interest in subsidiaries - (53,821,184.00) - -
Net Cash Provided (Used) from Financing Activities 527,029,183.77 (109,686,019.63) 375,232,481.39 (52,101,694.81)
Cash and Cash Equivalent Increase-Net 105,617,741.66 82,236,478.92 125,528,795.24 64,940,603.71Cash and Cash Equivalent at the Beginning of the Period 109,183,630.28 26,947,151.36 70,864,229.71 5,923,626.00Cash and Cash Equivalent at the End of the Peirod 25 214,801,371.94 109,183,630.28 196,393,024.95 70,864,229.71
Statements of Cash Flow (Continued)GUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES
FOR THE YEARS ENDED ON DECEMBER 31, 2010 AND 2009
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Gunkul Engineering Public Company Limited
Notes to Financial StatementsGUNKUL ENGINEERING PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES
DECEMBER 31, 2010 AND 2009
1. General informationGunkul Engineering Public Company Limited (çthe Companyé) is a public limited company and
is incorporated in Thailand. The address of the Companyûs registered office is 1038-1046 NakornchaisriRoad, Nakornchaisri, Dusit, Bangkok.
The Stock Exchange of Thailand (SET) has granted a listing of the Companyûs ordinary sharesand permitted trading on October 19, 2010.
The principal activities of the Company and subsidiaries (çthe Groupé) involve manufacture,distribution and importation and exportation of electrical hardware and equipment including generateand sell electricity.
2. Basis of preparation of financial statementsThe consolidated and separate financial statements are presented in Thai language and Thai
Baht, and in conformity with Thai generally accepted accounting principles under the Accounting ActB.E. 2543, being those Thai Accounting Standards issued under the Accounting Profession Act B.E.2547, and the financial reporting requirements of the Capital Market Supervisory Board under theSecurities and Exchange Act B.E.2535 (or 1992).
The consolidated and separate financial statements have been prepared under the historicalcost convention except as disclosed in the accounting policies below.
The preparation of financial statements in conformity with Thai Generally Accepted AccountingPrinciples requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of thefinancial statements and the amounts of revenues and expenses in the reported periods. Actualresults may differ from those estimates. Although the management has most well prepared the figuresof estimation from the understanding of events and the things that have been done presently.
The financial statements issued for Thai report purposes are prepared in the Thai language.This English translation of the financial statements has been prepared for the convenience of readersnot conversant with the Thai language.
The Federation of Accounting Profession (FAP) has issued Notification No.17/2010, No.50/2010,No.51/2010, No.52/2010, No.53/2010, No.54/2010 and No.55/2010 regarding Accounting Standards,Financial Reporting Standards and Financial Reporting Standard Interpretation. The notificationmandates use of the following new Accounting Standards and Financial Reporting Standards.
Effective dateFramework for the Preparation and Presentation of Financial Statements Immediate (revised 2009)TAS No. 1 Presentation of Financial Statements (revised 2009) 1 January 2011TAS No. 2 Inventories (revised 2009) 1 January 2011TAS No. 7 Statement of Cash Flows (revised 2009) 1 January 2011
99
TAS No. 8 Accounting Policies, Changes in Accounting Estimates and Errors 1 January 2011
(revised 2009)
TAS No. 10 Events after the Reporting Period (revised 2009) 1 January 2011
TAS No. 11 Construction Contracts (revised 2009) 1 January 2011
TAS No. 16 Property, Plant and Equipment (revised 2009) 1 January 2011
TAS No. 17 Leases (revised 2009) 1 January 2011
TAS No. 18 Revenue (revised 2009) 1 January 2011
TAS No. 19 Employee Benefits 1 January 2011
TAS No. 23 Borrowing Costs (revised 2009) 1 January 2011
TAS No. 24 Related Party Disclosures (revised 2009) 1 January 2011
TAS No. 26 Accounting and Reporting by Retirement Benefit Plans 1 January 2011
TAS No. 27 Consolidated and Separate Financial Statements (revised 2009) 1 January 2011
TAS No. 28 Investment in Associates (revised 2009) 1 January 2011
TAS No. 29 Financial Reporting in Hyperinflation Economies 1 January 2011
TAS No. 31 Investment in Joint Ventures (revised 2009) 1 January 2011
TAS No. 33 Earnings per Share (revised 2009) 1 January 2011
TAS No. 34 Interim Financial Reporting (revised 2009) 1 January 2011
TAS No. 36 Impairment of Assets (revised 2009) 1 January 2011
TAS No. 37 Provision, Contingent Liabilities and Contingent Assets (revised 2009) 1 January 2011
TAS No. 38 Intangible Assets (revised 2009) 1 January 2011
TAS No. 40 Investment Property (revised 2009) 1 January 2011
TFRS No. 2 Share-based Payment 1 January 2011
TFRS No. 3 Business combinations (revised 2009) 1 January 2011
TFRS No. 5 Non-current Assets Held for Sale and Discontinued Operations 1 January 2011
(revised 2009)
TFRS No. 6 Exploration for and Evaluation of Mineral Resources 1 January 2011
TFRI No. 15 Agreements for the Construction of Real Estate 1 January 2011
TAS No. 12 Income Taxes 1 January 2013
TAS No. 20 Accounting for Government Grants and Disclosure of Government 1 January 2013
Assistance (revised 2009)
TAS No. 21 The Effects of Changes in Foreign Exchange Rates (revised 2009) 1 January 2013
For the revised Framework for the Preparation and Presentation of Financial Statements which
is immediately effective does not have any significant impact on the Groupûs financial statements for
the current period.
The Group has not early adopted such revised accounting standards, financial reporting
standards and financial reporting standards interpretation having the effective date to the financial
statements on the future periods before the effective dates. The management believes that they will
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Gunkul Engineering Public Company Limited
not have any significant impact on the financial statements for the period in which they are initially
adopted except the following accounting standards;
- TAS 19 Employee Benefits, which stipulates that the Group will recognizes the employee
benefits as the expense when the Group consumes the economic benefit arising from service
provided by an employee and will recognizes as a liability when an employee has provided
service in exchange for employee benefits to be paid in the future, however, the Group
presently recognizes the employee benefits as expenses when they are incurred,
- TAS 12 Income Taxes, which stipulates that the Group is required to recognize the deferred
tax liabilities or the deferred tax assets when the temporary difference between the tax base
and the carrying amount of the asset or the liability is occurred, however, the Group presently
doesnût recognize such transaction, and
- TAS 20 Accounting for Government Grants and Disclosure of Government Assistance (revised
2009) which stipulates that the Group shall recognize the government grants in profit or loss
over the periods in which the Group recognizes as expenses the related costs for which the
grants are intended to compensate.
The management is currently assessing the first-year impact on the Groupûs financial statements.
3. Principles of consolidation financial statements
The consolidated financial statements comprise the financial statements of the Company and
its subsidiaries. Subsidiaries, which are those entities in which the Group has power to govern the
financial and operating policies, are consolidated. The existence and effect of potential voting rights
that are presently exercisable or presently convertible are considered when assessing whether the
Group controls another entity. 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.
The purchase method of accounting is used to account for the acquisition of subsidiaries are
as follows.
The purchase method of accounting is used to account for the acquisition of subsidiaries under
common control. The cost of an acquisition is measured as the book value of the assets given up,
shares issued or liabilities undertaken at the date of acquisition plus costs directly attributable to the
acquisition. The excess of the cost of acquisition over or under the book value of the net assets of the
subsidiary acquired is recorded as çSurplus from reorganization under common controlé in the
consolidated financial statement. The Group did not measure the cost of an acquisition as the fair
value of the subsidiariesû assets given up and liabilities undertaken under Financial Reporting
Accounting Standard no. 3, çBusiness Combinationé due to this standard does not apply to business
combination involving entities under common control.
The cost of an acquisition of subsidiaries not under common control is measured as the fair
value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus
costs directly attributable to the acquisition. The excess of the cost of acquisition over the fair value
101
of the net assets of the subsidiary acquired is recorded as goodwill and to be tested for impairment
annually. The cost of acquisition is less than the fair value of net assets of the subsidiary acquired,
the difference is recognised directly in the statement of income.
Related party transactions, balances and unrealized gains on transactions between the
Company and its subsidiaries are eliminated; unrealized losses are also eliminated unless cost cannot
be recovered. Where necessary, accounting policies of subsidiaries have been changed to ensure
consistency with the policies adopted by the Group.
The consolidated financial statements for the year ended December 31, 2010 and 2009 have
been prepared by including the financial statements of Gunkul Engineering Public Company Limited
and subsidiaries after eliminate the significant related party balances and transactions. The
percentage directly and indirectly owned by the Company as follows:-
Percentage of
Country of shareholding
Name of subsidiaries Nature of business incorporation 2010 2009
G.K. Power Product Co., Ltd. Manufacture electrical hardware Thailand 100.00 100.00
and equipment
G.K. Assembly Co., Ltd. Manufacture electrical hardware Thailand 100.00 100.00
and equipment
K.N.P. Supply Co., Ltd. Import-export electrical hardware Thailand 100.00 100.00
and equipment
Gunkul Powergen Co., Ltd. Generating and selling electricity Thailand 100.00 100.00
G-Power Source Co., Ltd. Generating and selling electricity Thailand 98.98 -
The financial statements of the subsidiaries are prepared for the same reporting period as the
Company
4. Accounting policies4.1 Cash and cash equivalents
Cash and cash equivalents are carried in the balance sheet at cost. For the purposes ofthe cash flow statement, cash and cash equivalents comprise cash on hand, deposits withbanks and other short-term highly liquid investments with original maturities of three months orless and free from restrictions.
4.2 Trade accounts receivableTrade accounts receivable are carried in the balance sheet at the amount expected to
be collectible. Allowance for doubtful receivables are estimated by percentage of accountsreceivable which is assessed primarily on analysis of payment histories and review of alloutstanding amounts at balance sheet date. The amount of the allowance is the differencebetween the carrying amount of the receivable and the amount expected to be collectible.Bad debts are written off during the year in which they are identified.
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Gunkul Engineering Public Company Limited
4.3 InventoriesInventories are stated at the lower of cost or net realisable value. The cost of purchase
comprises both the purchase price and costs directly attributable to the acquisition of theinventory, such as import duties and transportation charge, less all attributable discounts,allowances or rebates. The cost of finished goods and work in process comprise raw materials,direct labor, other direct costs and related production overheads, the latter being allocated onthe basis of normal operating activities.
Costs of inventories are calculated as the follow method:-
Finished goods - FIFO method
Work in process - FIFO method
Raw material and supplies - FIFO method
The Group estimates the net realisable value by using the selling price in the ordinarycourse of business less selling expenses.
The Group makes the allowance for diminutions in the value of obsolete, defective orslow-moving inventories.
4.4 Investments in subsidiariesInvestments in subsidiaries are reported by using the cost method of accounting in the
separate financial statements less allowance for impairment investment.
4.5 Property, plant and equipmentProperty, plant and equipment are recorded at cost. Property, plant and equipment,
except for land and assets under construction, are stated in the balance sheet at historical costless accumulated depreciation and accumulated impairment losses (as if).
The Groupûs depreciation is calculated on the straight-line method to write off the cost ofeach asset, except for land and assets under construction, to their residual values over theirestimated useful life as follows:Buildings and power plant 20 - 25 yearsMachinery and factory equipment 5 - 25 yearsTools and equipments 5 yearsFixtures and office equipments 5 yearsMotor vehicles (Including vehicle under lease agreements) 5 years
Expenditure incurred for addition, renewal or betterment, which results in a substantialincrease in an assetûs current replacement value, is capitalized. Repair and maintenance costsare recognized as an expense when incurred.
Gains and losses on disposals are determined by comparing proceeds with carryingamount and are included in operating profit.
4.6 Intangible assetsIntangible assets with finite useful lives which the Group acquired are stated at historical
cost less accumulated amortization and impairment loss (as if). The Groupûs amortisation iscalculated on the straight-line method over their estimated useful life as follows:
103
Computer software 5 yearsCopyright 3 - 5 years
Power purchase agreement acquired in a business combination is initially recognized attheir fair value at the acquisition date which is regarded as their cost and amortized over theperiod of power purchase agreement.
Intangible assets are not revalued. The carrying amount of each intangible asset isreviewed annually and adjusted for impairment where it is considered necessary.
4.7 Impairment of assetsThe carrying amounts of the Groupûs assets and also intangible assets are reviewed at
each balance sheet date to determine whether there is any indication of impairment. If any suchindication that the carrying amount may not be recoverable. An impairment loss is recognizedfor the amount by which the carrying amount of the assets exceeds its recoverable amountwhich is the higher of an assetûs net selling price and value in use. For the purposes ofassessing impairment, assets are grouped at the lowest level for which there is separatelyidentifiable cash flows.
The Group will recognize impairment losses in the statement of income, or reduce therevaluation increment in assets in case that those assets are previously revalued. The reversalof impairment losses will be recognized as part of other income or as a revaluation incrementin assets when there is an indication that the impairment losses are no longer exist ordecreased.
4.8 Accounting for leasesWhere the Group is the lessee
Long term leases which substantially transferred all the risks and rewards of ownershipare classified as finance leases. Finance leases are capitalised at the inception of the lease atthe lower of the fair value of the leased property or the present value of the minimum leasepayments. Each lease payment is allocated to the principal and to the finance charges so as toachieve 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 thefinance cost is charged to the statement of income over the lease period so as to achieve aconstant periodic rate of interest on the remaining balance of the liability for each period. Theassets acquired under finance leases while depreciation is carried throughout the useful life ofleased asset. However, if there is uncertainty in the right of ownership when the contract isterminated, depreciation is carried according to useful life of leased assets or life of leasedcontract whichever the period is lower.
Long term leases not transferring a significant portion of the risks and rewards ofownership to the lessee are classified as operating leases. Payments made under operatingleases (net of any incentives received from the lessor) are charged to the statement of incomeon a straight-line basis over the period of the lease.
When an operating lease is terminated before the lease period has expired, any paymentrequired to be made to the lessor by way of penalty is recognized as an expense in the periodin which termination takes place.
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Gunkul Engineering Public Company Limited
Where the Group is the lesserOperating leases
Assets leased out under operating leases are included in property, plant and equipmentin the balance sheet. They are depreciated over their expected useful lives on a basisconsistent with other similar property, plant and equipment owned by the Group.
4.9 ProvisionsProvisions are recognized 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 settlethe obligation, and a reliable estimate of the amount can be made. Where the Group expects aprovision to be reimbursed, the reimbursement is recognized as a separate asset but only whenthe reimbursement is virtually certain.
4.10 Revenue recognitionSales are recognized on the delivery of goods or on customer acceptance. Sales are
shown net of sales taxes and discounts.
Service income is recognized when services have been rendered.
Rental income is recognized as income over the lease period.
Interest income is recognized using the effective interest method.
Other income is recognized on an accrual basis.
4.11 Foreign currency transactionsThe Group translates foreign currency transactions into Baht using the exchange rate
prevailing at the date of the transaction. Monetary assets and liabilities at the balance sheetdate denominated in foreign currencies are translated into Baht at the exchange rate prevailingat that date. Gains and losses resulting from the settlement of foreign currency transactions andfrom the translation of monetary assets and liabilities denominated in foreign currencies arerecognized in the statements of income as incurred.
4.12 Finance costsInterest expenses and similar costs are charged to the statement of income for the
period in which they are incurred, except to the extent that they are capitalized as being directlyattributable to the acquisition, construction or production of an asset which necessarily takes asubstantial period of time to be prepared for its intended use or sale. The interest componentof finance lease payments is recognized in the statement of income using the effective interestrate method.
4.13 Employee benefitsThe Group operates a provident fund which is funded by payments from employees and
by the Group. The assets for which are held in a separate trust fund. Contributions to theprovident fund are charged to the statement of income in the year to which they relate.
Salaries, wages, bonuses and contributions to the social security fund are recognized asexpenses when incurred.
105
4.14 Corporate income taxIncome tax expense is calculated from taxable income and recorded based on tax paid
and accrued for the year.
4.15 Segment informationBusiness segments provide products and services that are subject to risks and returns
that are different from those of other business segments. Geographic segments provideproducts or services within a particular economic environment that is subject to risks andreturns that are different from those of components operating in other economic environments.
Segment information is presented by business segments of the Groupûs operations.
4.16 Financial instrumentsFinancial assets and liabilities carried on the balance sheets include cash and cash
equivalents, investment in equity securities, trade and other receivables, trade and other payables,and loan receivables and payables. The accounting policies on recognition and measurement ofthese items are disclosed in the respective accounting policies found in this Note.
Financial instruments are classified as liabilities or equity in accordance with thesubstance of the contract arrangement. Interest, dividend, and gains and losses relating to afinancial instrument classified as a liability are reported as income or expense. Distributions toholders of financial instruments classified as equity are charged directly to equity. Financialinstruments are offset when the Group has a legally enforceable right to offset and intends tosettle either on a net basis or to realize the asset and settle the liability simultaneously.
Forward contracts are carried at fair value and presented in other current assets orother current liabilities. Unrealized gains or losses on changes in fair value are recognized asrevenues or expenses in the statement of income.
4.17 The important accounting estimation, supposition and judgment applicationEstimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are believed to bereasonable under the circumstances.Plant, equipment and intangible assets
Management determines the estimated useful lives and residual values for the Groupûsplant, equipment and intangible assets. Management will revise the depreciation charge whereuseful lives and residual values are different to previously estimated, or its will write off or writedown technically obsolete or assets that have been abandoned or sold.
Financial lease/ Operation leaseThe Group has entered into lease agreements for rental vehicle and equipment. The
Group has determined, based on an evaluation on terms and conditions of the arrangements,that the lease transfers ownership of these assets to the lessee, and so accounts for thecontracts as financial leases.
5. Related party transactionsEnterprises 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 holdingcompanies, subsidiaries and fellow subsidiaries are related parties of the Company. Associates andindividuals owning, directly or indirectly, an interest in the voting power of the Company that gives
106
Gunkul Engineering Public Company Limited
them significant influence over the enterprise, key management personnel, including directors andofficers of the Company and close members of the family of these individuals and companiesassociated with these individuals also constitute related parties.
In considering each possible related party relationship, attention is directed to the substance ofthe relationship, and not merely the legal form.
Gunkul Group Co., Ltd. is a major shareholder, holding 59.97% (2009 : 79.95%) of the sharecapital of the Gunkul Engineering Co., Ltd. / The principal shareholder of the Companyûs majorshareholder is Dhumrongpiyawut family. Transactions related to companies in which the Dhumrongpiyawutfamily is the principal shareholders or directors are recognized as related parties to the Company.
The Company has transactions with related persons and companies for the year ended onDecember 31, 2010 and 2009 as follows:5.1 Inter-assets and liabilities
(Unit : Baht)
Consolidated Separate financial statements
2010 2009 2010 2009
Trade accounts receivableG.K. Assembly Co., Ltd. - - 21,989,636.50 12,216,669.60G.K. Power Product Co., Ltd. - - 23,110,478.26 768,833.10K.N.P Supply Co., Ltd. - - 2,659,163.95 7,127,889.53Future Electrical Control Co., Ltd. 1,027,491.48 814,636.36 1,027,491.48 814,636.36Kulnatee Co., Ltd. 2,140.00 167,556.65 2,140.00 -Sri-Uthong and Future Eletrical Control Joint venture 1,598,672.97 - 1,598,672.97 -
FEC & SAC Joint venture 360,611.27 - 360,611.27 -Total 2,988,915.72 982,193.01 50,748,194.43 20,928,028.59
Accrued interest receivableG.K. Assembly Co., Ltd. - - - 42,655.35Gunkul Powergen Co., Ltd. - - 1,019.18 -Director 24,620.82 - - -
24,620.82 - 1,019.18 42,655.35Short-term loans to related parties
G.K. Assembly Co., Ltd.Beginning balance - - 6,230,000.00 300,000.00Addition - - 721,320.89 6,230,000.00Repayment - - (6,951,320.89) (300,000.00)Ending balance - - - 6,230,000.00
Gunkul Trading and Agency Co., Ltd.Beginning balance - 500,000.00 - -Addition - 800,000.00 - 600,000.00Repayment - (1,300,000.00) - (600,000.00)Ending balance - - - -
Future Electrical Control Co., Ltd.Beginning balance - 1,850,000.00 - -Addition - 1,500,043.42 - 250,000.00Repayment - (3,350,043.42) - (250,000.00)Ending balance - - - -
107
(Unit : Baht)
Consolidated Separate financial statements
2010 2009 2010 2009
Short-term loans to related parties (Continued)
Jaraslat Pattana Electric Co., Ltd.
Beginning balance - 100,000.00 - -
Addition - - - -
Repayment - (100,000.00) - -
Ending balance - - - -
Sri-Uthong and Future Eletrical Control Joint venture
Beginning balance - - - -
Addition - 200,000.00 - -
Repayment - (200,000.00) - -
Ending balance - - - -
Kulnatee Co., Ltd.
Beginning balance - 200,000.00 - -
Addition - 9,200,000.00 - -
Repayment - (9,400,000.00) - -
Ending balance - - - -
Gunkul Group Co., Ltd.
Beginning balance - - - -
Addition - 13,000,000.00 - -
Repayment - (13,000,000.00) - -
Ending balance - - - -
Short-term loans to related parties (Continued)
Gunkul Powergen Co., Ltd.
Beginning balance - - - -
Addition - - 4,950,000.00 -
Repayment - - - -
Ending balance - - 4,950,000.00 -
Directors
Beginning balance 980,000.00 6,950,000.00 - -
Addition - 46,716,723.72 - -
Repayment (980,000.00) (53,666,723.72) - -
Ending balance - - - -
Total - - 4,950,000.00 6,230,000.00
108
Gunkul Engineering Public Company Limited
(Unit : Baht)
Consolidated Separate financial statements
2010 2009 2010 2009
Sales of property, plant and equipment
Gunkul Engineering Public Co., Ltd. 298,113.19 43,889.62 - -
G.K. Assembly Co., Ltd. 17,571.89 1,812,606.28 - 428,964.62
G.K. Power Product Co., Ltd. - 6,542.06 - -
315,685.08 1,863,037.96 - 428,964.62
Purchase of property, plant and equipment
Gunkul Engineering Public Co., Ltd. - 1,217,070.75 - -
G.K. Assembly Co., Ltd. 298,113.19 45,261.73 298,113.19 38,719.67
G.K. Power Product Co., Ltd. 17,571.89 1,391,515.49 - 5,169.95
Gunkul Trading and Agency Co., Ltd. 1,000.00 - 1,000.00 -
Director - 900,000.00 - 900,000.00
316,685.08 3,553,847.97 299,113.19 943,889.62
Trade account payable
G.K. Assembly Co., Ltd. - - 3,917,618.27 60,149,994.47
G.K. Power Product Co., Ltd. - - 75,089,547.44 51,505,445.10
K.N.P Supply Co., Ltd. - - 515,779.48 21,645,177.60
Future Electrical Control Co., Ltd. - 47,742.25 - 36,684.95
- 47,742.25 79,522,945.19 133,337,302.12
Short-term loans from related parties
G.K. Power Product Co., Ltd.
Beginning balance - - 3,136,684.94 -
Addition - - - 21,000,000.00
Repayment - - (3,136,684.94) (17,863,315.06)
Ending balance - - - 3,136,684.94
K.N.P Supply Co., Ltd.
Beginning balance - - 6,097,973.86 -
Addition - - 30,800,000.00 12,397,973.86
Repayment - - (31,300,000.00) (6,300,000.00)
Ending balance - - 5,597,973.86 6,097,973.86
Future Electrical Control Co., Ltd.
Beginning balance - 19,690,000.00 - -
Addition - 449,934.91 - -
Repayment - (20,139,934.91) - -
Ending balance - - - -
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(Unit : Baht)
Consolidated Separate financial statements
2010 2009 2010 2009
Short-term loans from related parties(Continued)
Gunkul Trading and Agency Co., Ltd.
Beginning balance - - - -
Addition - 1,500,000.00 - 1,500,000.00
Repayment - (1,500,000.00) - (1,500,000.00)
Ending balance - - - -
Kulnatee Co., Ltd.
Beginning balance 1,381,699.13 21,900,000.00 - 21,900,000.00
Addition - 1,381,699.13 - -
Repayment (1,381,699.13) (21,900,000.00) - (21,900,000.00)
Ending balance - 1,381,699.13 - -
Gunkul Group Co., Ltd.
Beginning balance 102,300,000.00 - 101,300,000.00 -
Addition 69,500,000.00 129,500,000.00 67,500,000.00 115,500,000.00
Repayment (169,750,000.00) (27,200,000.00) (166,750,000.00) (14,200,000.00)
Ending balance 2,050,000.00 102,300,000.00 2,050,000.00 101,300,000.00
Gunkul Powergen Co., Ltd.
Beginning balance - - - -
Addition - - 36,400,000.00 -
Repayment - - (36,400,000.00) -
Ending balance - - - -
Directors
Beginning balance 2,475,600.00 101,456,876.73 - 96,253,102.63
Addition - 177,364,090.64 - 150,900,000.00
Repayment (2,475,600.00) (276,345,367.37) - (247,153,102.63)
Ending balance - 2,475,600.00 - -
2,050,000.00 106,157,299.13 7,647,973.86 110,534,658.80
Accrued dividend payable
Directors - 17,820.00 - 17,820.00
Gunkul Group Co., Ltd. - 71,958,300.00 - 71,958,300.00
- 71,976,120.00 - 71,976,120.00
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Gunkul Engineering Public Company Limited
(Unit : Baht)
Consolidated Separate financial statements
2010 2009 2010 2009
Accrued interest payable
Gunkul Group Co., Ltd. 78,564.39 907,512.32 78,564.39 864,827.39
K.N.P Supply Co., Ltd. - - 388,389.62 -
Gunkul Powergen Co., Ltd. - - 47,167.12 -
Kulnatee Co., Ltd. - 12,968.23 - -
Directors - 27,740.56 - -
78,564.39 948,221.11 514,121.13 864,827.39
Accrued expenses
Gunkul Engineering (2000) Co., Ltd. - 555,500.00 - 467,000.00
G.M. Supply and Construction Co., Ltd. 128,000.00 128,000.00 - -
128,000.00 683,500.00 - 467,000.00
Advance received
Directors 200,000.00 - - -
As at December 31, 2010, the Group constitutes loans to and loans from related companies.
Such inter-loan is in promissory note form at call and interest is carried by the rate of 2% per annum
(2009 : 2% per annum).
As at December 31, 2009 the Group constitute loans from director. Such loan is in promissory
note form at call and no interest charged.
5.2 Inter-revenue and expenses(Unit : Baht)
Consolidated Separate financial statements
2010 2009 2010 2009
Sales of goods
G.K. Assembly Co., Ltd. - - 29,272,260.46 18,521,550.89
G.K. Power Product Co., Ltd. - - 77,729,285.31 56,150,916.30
K.N.P Supply Co., Ltd. - - 20,772,065.78 27,342,438.60
Future Electrical Control Co., Ltd. 5,572,621.86 15,968,849.30 3,144,199.86 16,607,330.02
Kulnatee Co., Ltd. 24,100.00 657,477.00 24,100.00 76,825.00
Sri-Uthong and Future Eletrical Control Joint venture 7,345,442.22 3,344,392.42 7,345,442.22 3,344,682.42
FEC & SAC Joint venture 337,019.88 - 337,019.88 -
13,279,183.96 19,970,718.72 138,624,373.51 122,043,743.23
111
(Unit : Baht)
Consolidated Separate financial statements
2010 2009 2010 2009
Rental income
Future Electrical Control Co., Ltd. - 720,000.00 - -
Service income
Kulnatee Co., Ltd. 37,234.24 - - -
Dividend income
G.K. Assembly Co., Ltd. - - - 10,590,000.00
G.K. Power Product Co., Ltd. - - - 8,758,816.00
- - - 19,348,816.00
Interest income
G.K. Assembly Co., Ltd. - - 74,605.47 43,625.22
Gunkul Powergen Co., Ltd. - - 1,019.18 -
Future Electrical Control Co., Ltd. - 8,621.98 - 287.67
Sri-Uthong and Future Eletrical Control Joint venture - 230.14 - -
Gunkul Trading and Agency Co., Ltd. - 3,375.35 - 1,490.41
Kulnatee Co., Ltd. - 20,876.71 - -
Directors 8,779.73 160,412.00 - -
8,779.73 193,516.18 75,624.65 45,403.30
Purchase of goods and service
G.K. Assembly Co., Ltd. - - 114,523,446.80 161,312,280.12
G.K. Power Product Co., Ltd. - - 68,725,812.00 106,801,419.00
K.N.P Supply Co., Ltd. - - 1,977,364.00 24,432,354.88
Future Electrical Control Co., Ltd. - 401,385.00 - 401,385.00
Sri-Uthong and Future Eletrical Control Joint venture - 399,405.00 - 399,405.00
- 800,790.00 185,226,622.80 293,346,844.00
Office and warehouse rental fee
G.K. Assembly Co., Ltd. - - - 2,562,000.00
Gunkul Engineering (2000) Co., Ltd. 6,666,000.00 3,333,000.00 5,604,000.00 2,802,000.00
G.M. Supply and Construction Co., Ltd. 1,536,000.00 768,000.00 - -
Director - 1,494,900.00 - -
8,202,000.00 5,595,900.00 5,604,000.00 5,364,000.00
Maintenance fee
G.K. Assembly Co., Ltd. - - - 77,340.00
G.K. Power Product Co., Ltd. - - - 2,150.00
- - - 79,490.00
112
Gunkul Engineering Public Company Limited
(Unit : Baht)
Consolidated Separate financial statements
2010 2009 2010 2009
Interest expenseG.K. Power Product Co., Ltd. - - 38,155.83 129,286.59K.N.P Supply Co., Ltd. - - 388,389.62 81,925.86Gunkul Powergen Co., Ltd. - - 121,578.08 -Gunkul Group Co., Ltd. 439,402.74 907,512.32 424,115.06 864,827.39Future Electrical Control Co., Ltd. - 212,170.54 - -Gunkul Trading and Agency Co., Ltd. - 9,868.49 - 9,375.35Kulnatee Co., Ltd. 4,466.86 207,259.73 - 194,291.51Director - 119,398.54 - -
443,869.60 1,456,209.62 972,238.59 1,279,706.70
The Group paid salaries and meeting allowances to its directors and management for theyear ended on December 31, 2010 totaling Baht 24.87 million and Baht 0.82 million in theconsolidated financial statements, respectively and Baht 21.58 million and Baht 0.82 million inthe separate financial statements, respectively (2009 : totaling Baht 21.93 million and Baht 0.73million in the consolidated financial statements, respectively and Baht 17.38 million and Baht0.73 million in the separate financial statements, respectively).
5.3 Pricing policiesTrading Transaction Pricing PolicySales and purchase of goods Cost price + 5 to 30%Interest income and expenses Referred to interest rate of saving account of merchant bankRental Refer with the appraisal value by independent appraiserMaintenance fee Cost price +20%Sales and purchase of assets Net book value + 7 to 200%Purchase of land Nearby book value or the appraisal value by independent
appraiser
5.4 Commitments with related partiesAs at December 31, 2010, the Company has performed leased contract of land plus
property in one contract with one related company for the period of 3 years with option torenew. The Company constitutes obligation commitment that has to repay leased fee by Baht467,000.00 per month (2009 : Baht 467,000.00 per month).
As at December 31, 2010, one subsidiary has performed the sublet contract of land plusproperty in one contract with subsidiary for the period of one year. The subsidiary constitutesobligation commitment that has to repay leased fee by Baht 100,000.00 per month (2009 : Baht100,000.00 per month).
As at December 31, 2010, one related company has performed the sublet contract ofland plus property in 2 contracts with subsidiary for the period of 3 years with option to renew.The subsidiary constitutes obligation commitment that has to repay leased fee by Baht 42,000.00and Baht 86,000.00 per month (2009 : Baht 42,000.00 and Baht 86,000.00 per month).
As at December 31, 2010, one related company has performed the sublet contract ofland plus property in one contract with subsidiary for the period of 3 years with option to renew.
113
The subsidiary constitutes obligation commitment that has to repay leased fee by Baht 88,500.00per month (2009 : Baht 88,500.00 per month).
As at December 31, 2010 and 2009, the subsidiary has performed the leased contract ofland plus property with the Company in order to use as factory and operate related businesswhile such contract does not charge inter-leased fee.
As at December 31, 2010, two subsidiaries and two directors with land plus buildings ofone subsidiary perform the guarantee contract against credits that the Company has receivedfrom a commercial bank in amount of Baht 278.00 million (2009 : Baht 278.00 million).
As at December 31, 2010, two subsidiaries and two directors with their land plus buildingand fixed deposit of the Company perform the guarantee contract against credits that theCompany has received from a commercial bank in amount of USD 13.20 million (2009 : USD3.50 million).
As at December 31, 2010, two directors of the company with fixed deposit and bill ofexchange of one subsidiary perform the guarantee contract against credits that such subsidiaryhas received from two commercial banks in amount of Baht 66.00 million and amount of USD0.50 million (2009 : Baht 86.00 million and USD 0.50 million).
As at December 31, 2010, one subsidiary and one director with his land plus buildingperform the guarantee contract against credits that the Company has received from twocommercial bank in amount of Baht 375.00 million (2009 : Baht 375.00 million).
As at December 31, 2010, the Company performed the guarantee contract againstcredits that one subsidiary has received from one commercial bank in amount of Baht 138.86million and Yen 960.82 million. In addition, such loan contract t to determine the Company willmaintain proportion of shareholding in the subsidiary by minimum of 75% of the subsidiaryûsregistered share capital.
5.5 RelationshipCompany RelationshipGunkul Group Co., Ltd. Parent companyG.K. Assembly Co., Ltd. Common directors and direct shareholdingG.K. Power Product Co., Ltd. Common directors and direct shareholdingK.N.P Supply Co., Ltd. Common directors and direct shareholdingGunkul Powergen Co., Ltd. Common directors and direct shareholdingG-Power Source Co., Ltd. Common directors and direct shareholdingGunkul Trading and Agency Co., Ltd. Common directorsKulnatee Co., Ltd. Common directorsBE - FEC Joint venture Common directorsSri - Uthong and Future Electrical Control Common directors Joint ventureFEC & SAC Joint venture Common directorsG.M. Supply and Construction Co., Ltd. Common directorsGunkul Engineering(2000) Co., Ltd. Common directorsGunkul Marine Line Co., Ltd. Holding by the directorJaraslat Pattana Electric Co., Ltd. Common directors
114
Gunkul Engineering Public Company Limited
Future Electrical Control Co., Ltd. Common directorsGunkul & Company Pte Ltd. Holding by the director
6. Trade accounts receivable - related partiesOutstanding trade accounts receivable - related parties can be aged as follows:
(Unit : Baht)
Consolidated Separate financial statements
2010 2009 2010 2009
Within credit term 1,309,336.49 73,552.87 28,540,589.00 9,064,990.15
Overdue 1 month to 3 months 1,679,579.23 759,437.84 22,207,605.43 9,091,709.25
Overdue 3 months to 6 months - 149,202.30 - 2,771,329.19
Overdue 6 months to 12 months - - - -
Overdue over 12 months - - - -
Total 2,988,915.72 982,193.01 50,748,194.43 20,928,028.59
7. Trade accounts and notes receivable - third parties, net
Consisted of:-(Unit : Baht)
Consolidated Separate financial statements
2010 2009 2010 2009
Post dated cheques 37,409,223.11 22,919,554.46 14,887,744.61 9,763,327.36
Trade accounts receivable-third parties 356,747,364.08 204,246,010.26 296,435,928.92 195,135,179.61
Returned cheques receivable 1,041,276.24 632,515.44 1,041,276.24 632,515.44
Total 395,197,863.43 227,798,080.16 312,364,949.77 205,531,022.41
Less Allowance for doubtful debts (1,063,918.70) (1,279,173.94) (1,063,918.70) (1,279,173.94)
Net 394,133,944.73 226,518,906.22 311,301,031.07 204,251,848.47
Outstanding trade accounts and notes receivable - third parties can be aged as follows:(Unit : Baht)
Consolidated Separate financial statements
2010 2009 2010 2009
Within credit term 337,637,979.00 137,891,813.03 284,008,413.34 116,118,453.28
Overdue 1 month to 3 months 49,148,688.61 62,301,819.49 23,217,614.61 61,808,121.49
Overdue 3 months to 6 months 7,752,681.45 15,417,144.84 4,480,407.45 15,417,144.84
Overdue 6 months to 12 months 25,247.26 11,492,996.87 25,247.26 11,492,996.87
Overdue over 12 months 633,267.11 694,305.93 633,267.11 694,305.93
Total 395,197,863.43 227,798,080.16 312,364,949.77 205,531,022.41
Less Allowance for doubtful debts (1,063,918.70) (1,279,173.94) (1,063,918.70) (1,279,173.94)
Net 394,133,944.73 226,518,906.22 311,301,031.07 204,251,848.47
115
The movement of allowance for doubtful debts - third parties for the year ended of December 31,
2010 and 2009 is as follows:(Unit : Baht)
Consolidated Separate financial statements
2010 2009 2010 2009
Opening balance (1,279,173.94) (1,310,235.91) (1,279,173.94) (1,136,360.91)
Allowance increased during the period (692,781.09) (846,376.00) (445,932.09) (584,868.00)
Collected during the period 908,036.33 877,437.97 661,187.33 442,054.97
Ending balance (1,063,918.70) (1,279,173.94) (1,063,918.70) (1,279,173.94)
116
Gunkul Engineering Public Company Limited8.
Inve
ntor
ies, n
et
Cons
isted
of:-
(Unit :
Bah
t)
Cons
olid
ated
2010
2009
Allo
wan
ce f
or d
imin
utio
nAl
lowan
ce f
or d
imin
utio
n
in v
alue
of in
vent
ory
in v
alue
of in
vent
ory
Redu
ctio
n co
stRe
duct
ion
cost
to n
etSt
ock
to n
etSt
ock
Cost
realizab
le v
alue
obso
lesc
ence
Net
Cost
realizab
le v
alue
obso
lesc
ence
Net
Finish
ed g
oods
205,01
3,95
4.91
(2,093
,607
.45)
(17,06
6,94
7.11
)18
5,85
3,40
0.35
163,49
0,10
4.95
(2,521
,583
.40)
(15,45
1,14
9.58
)14
5,51
7,37
1.97
Wor
k in p
roce
ss46
,227
,417
.64
-(4
44,704
.84)
45,782
,712
.80
33,127
,870
.92
-(5
99,251
.48)
32,528
,619
.44
Raw
mat
erial
s95
,046
,806
.91
-(3
,279
,493
.33)
91,767
,313
.58
72,759
,119
.62
-(1
,697
,727
.86)
71,061
,391
.76
Supp
lies
10,832
,184
.63
-(3
99,437
.55)
10,432
,747
.08
7,90
2,96
7.49
-(3
01,170
.39)
7,60
1,79
7.10
Good
s in tra
nsit
8,96
4,90
8.66
--
8,96
4,90
8.66
9,28
3,85
5.81
--
9,28
3,85
5.81
Tota
l36
6,08
5,27
2.75
(2,093
,607
.45)
(21,19
0,58
2.83
)34
2,80
1,08
2.47
286,56
3,91
8.79
(2,521
,583
.40)
(18,04
9,29
9.31
)26
5,99
3,03
6.08
117
(Unit : Baht)
Separate financial statement
2010 2009
Finished goods 175,155,281.92 154,279,360.03Goods in transit 8,964,908.66 9,283,855.81
Total 184,120,190.58 163,563,215.84Less Allowance for diminutions in value of inventories
- Reduction cost to net realizable value (1,456,702.89) (1,584,699.66)- Stock obsolescence (16,236,160.55) (15,312,518.82)
Net 166,427,327.14 146,665,997.36
The movement of allowance for diminutions of inventories for the year ended on December 31, 2010and 2009 is as follows:
(Unit : Baht)
Consolidated Separate financial statement
2010 2009 2010 2009
Opening balance (20,570,882.71) (14,938,826.51) (16,897,218.48) (12,673,977.53)Allowance increased during the period (14,566,511.17) (10,346,964.07) (6,462,653.97) (8,246,903.83)Reversal during the period 11,853,203.60 4,714,907.87 5,667,009.01 4,023,662.88Ending balance (23,284,190.28) (20,570,882.71) (17,692,863.44) (16,897,218.48)
For the years ended on December 31, 2010 the costs of inventories recognized as expensesare Baht 919.44 million and Baht 937.57 million in the consolidated and separate financial statement,respectively (2009 : Baht 638.50 million and Baht 710.28 million in the consolidated and separatefinancial statements, respectively).
For the years 2010, the Group has reversed allowance for diminutions in the value of inventoriesin amount of Baht 11.85 million and Baht 5.67 million in the consolidated and separate financialstatements, respectively since the Group disposed such inventories. (2009 : Baht 4.71 million and Baht4.02 million in the consolidated and separate financial statement, respectively).
9. Other current assets, netConsisted of:-
(Unit : Baht)
Consolidated Separate financial statement
2010 2009 2010 2009
Receivable - Revenue department 11,169,793.40 263,765.71 2,013,731.68 122,474.40Input tax pending for filing 1,455,208.92 549,539.60 137,170.79 305,774.43Advance payment 7,577,596.46 306,012.51 6,647,384.96 260,922.51Other account receivable 459,175.84 2,083,276.52 92,055.84 1,376,621.84Prepaid expenses 2,555,925.62 1,712,512.64 1,841,840.63 1,128,243.58Others 2,849,489.60 312,773.14 1,655,246.58 247,747.84
Total 26,067,189.84 5,227,880.12 12,387,430.48 3,441,784.60Less Allowance for doubtful
debts-other account receivable (78,358.21) (391,725.58) (78,358.21) (391,725.58)Net 25,988,831.63 4,836,154.54 12,309,072.27 3,050,059.02
118
Gunkul Engineering Public Company Limited
The movement of allowance for diminutions of inventories for the year ended on December 31,
2010 and 2009 is as follows:(Unit : Baht)
Consolidated Separate financial statement
2010 2009 2010 2009
Opening balance (391,725.58) - (391,725.58) -Allowance increased during the period - (391,725.58) - (391,725.58)Reversal during the period 313,367.37 - 313,367.37 -Ending balance (78,358.21) (391,725.58) (78,358.21) (391,725.58)
10. Investments in subsidiariesThe nature and carrying value of investment in subsidiaries in the separate financial statement
can be summarised as follows:
Name of subsidiary Paid-up capital Investment portion Cost method(ù000 Baht) (%) (ù000 Baht)
2010 2009 2010 2009 2010 2009G.K. Power Product Co., Ltd. 100,000 100,000 100.00 100.00 80,425 80,425G.K. Assembly Co., Ltd. 100,000 100,000 100.00 100.00 163,188 163,188K.N.P Supply Co., Ltd. 50,000 50,000 100.00 100.00 41,408 41,408Gunkul Powergen Co., Ltd. 100,000 25,000 100.00 100.00 100,000 25,000G-Power Source Co., Ltd. 1,000 - 98.98 - 64,337 -
Total 449,358 310,021
During year 2010, the Gunkul Powergen Co., Ltd., (çsubsidiaryé) calls for ordinary sharessubscription fee in addition from the former 25% to 90% being amount of Baht 75.00 millions. As aresult, such subsidiary constitutes paid-up capital in number of 1,000,000 shares in value of Baht100.00 per share. Such subsidiary calls for shares subscription fee on June 18, 2010 in amount ofBaht 5.00 millions and on August 18, 2010 in amount of Baht 60.00 millions and on November29, 2010 in amount of Baht 10.00 million. Moreover, the Company has already paid sharessubscription fee to the subsidiary.
On November 19, 2010, the Company purchased 9,898 ordinary shares in G-Power SourceCo., Ltd. at Baht 6,500.00 per share, totaling Baht 64.34 million from the former shareholder ofsuch company which there no relationship with the Company, equivalent to proportion of 98.98% ofthe whole registered capital of such. G-Power Source Co., Ltd.ûs principal activities involve generateand sell solar energy electricity. The Company repays share subscription fee and recognized negativegoodwill as follows :-
(Unit : Baht)Cost of an acquisition
Cash paid 6,433,700.00Paid by issuing promissory note due on February 1, 2011 25,734,800.00Paid by issuing promissory note due on March 31, 2011 32,168,500.00
Total cost of an acquisition 64,337,000.00Less fair value of net assets acquired (66,003,591.09)Negative goodwill arising or acquisition (1,666,591.09)
119
Book value of assets and liabilities before business combination and their fair value on
November 19, 2010 of G-Power Source Co., Ltd. were as follow :-(Unit : Baht)
Book Value Fair Value
Cash on hand and deposits-Saving accounts 990,750.00 990,750.00
Other current assets 15,841.09 15,841.09
Power purchase agreement*** - 65,000,000.00
1,006,591.09 66,006,591.09
Other current liabilities (3,000.00) (3,000.00)
Net Asset 1,003,591.09 66,003,591.09
*** Power Purchase Agreement is agreement selling 26 megawatts solar energy electricity to the Provincial Electricity Authority (çPAEé) for 5
years and renew automatically 5 years whereas such agreement receives the financial support from PAE in the rate of Baht 8.00 per
kilowatt for 10 years
120
Gunkul Engineering Public Company Limited11
.Pr
oper
ty, p
lant
and
equ
ipm
ents
, net
Cons
isted
of:-
Con
solid
ated
(Unit :
Bah
t)
Land
Build
ing
and
Tool
and
Fixt
ure
and
offic
eM
otor
Wor
k in
impr
ovem
ent
equi
pmen
tseq
uipm
ents
vehi
cles
cons
truc
tion
Tota
l
Cost
:-
As a
t Jan
uary
1, 2
010
83,205
,058
.00
95,288
,489
.45
83,402
,736
.58
29,616
,990
.64
31,387
,079
.19
1,12
1,53
6.33
324,02
1,89
0.19
Addi
tion
20,100
,831
.05
135,00
0.00
2,30
4,21
2.76
1,65
8,21
8.86
1,01
9,98
1.11
312,60
8,40
6.22
337,82
6,65
0.00
Tran
sfer
in-
505,41
2.09
1,25
8.60
--
-50
6,67
0.69
Disp
osal
--
(31,87
0.00
)(4
,552
,375
.23)
(493
,066
.12)
-(5
,077
,311
.35)
Tran
sfer
out
--
--
-(5
06,670
.69)
(506
,670
.69)
As a
t Dec
embe
r 31, 2
010
103,30
5,88
9.05
95,928
,901
.54
85,676
,337
.94
26,723
,334
.27
31,913
,994
.18
313,22
3,27
1.86
656,77
1,72
8.84
Accu
mulat
ed d
epre
ciatio
n:-
As a
t Jan
uary
1, 2
010
-(3
3,04
4,45
3.71
)(5
6,70
8,69
7.07
)(2
2,61
8,61
4.59
)(2
0,45
7,20
5.12
)-
(132
,828
,970
.49)
Depr
eciat
ion
char
ge-
(5,382
,931
.43)
(10,23
6,16
1.28
)(3
,311
,356
.37)
(4,306
,954
.99)
-(2
3,23
7,40
4.07
)
Disp
osal
--
22,603
.72
4,49
4,89
3.58
194,95
0.93
-4,71
2,44
8.23
As a
t Dec
embe
r 31, 2
010
-(3
8,42
7,38
5.14
)(6
6,92
2,25
4.63
)(2
1,43
5,07
7.38
)(2
4,56
9,20
9.18
)-
(151
,353
,926
.33)
Net bo
ok v
alue:-
As a
t Dec
embe
r 31, 2
009
83,205
,058
.00
62,244
,035
.74
26,694
,039
.51
6,99
8,37
6.05
10,929
,874
.07
1,12
1,53
6.33
191,19
2,91
9.70
As a
t Dec
embe
r 31, 2
010
103,30
5,88
9.05
57,501
,516
.40
18,754
,083
.31
5,28
8,25
6.89
7,34
4,78
5.00
313,22
3,27
1.86
505,41
7,80
2.51
Depr
eciat
ion
in th
e st
atem
ents
of i
ncom
e fo
r th
e ye
ars
ende
d on
Dec
embe
r 31
, 200
925
,064
,771
.42
Depr
eciat
ion
in th
e st
atem
ents
of i
ncom
e fo
r th
e ye
ars
ende
d on
Dec
embe
r 31
, 201
023
,237
,404
.07
121
Sepa
rate
fina
ncial s
tate
men
t(U
nit :
Bah
t)
Build
ing
and
Tool
and
Fixt
ure
and
offic
eM
otor
impr
ovem
ent
equi
pmen
tseq
uipm
ents
vehi
cles
Tota
l
Cost
:-
As a
t Jan
uary
1, 2
010
32,317
,190
.28
2,50
7,19
0.15
16,958
,709
.70
20,679
,214
.94
72,462
,305
.07
Addi
tion
135,00
0.00
162,13
5.13
1,19
3,23
7.47
1,01
9,98
1.11
2,51
0,85
3.71
Tran
sfer
in-
--
--
Disp
osal
--
(4,124
,317
.07)
(90,50
0.00
)(4
,215
,317
.07)
Tran
sfer
out
--
--
-
As a
t Dec
embe
r 31, 2
010
32,452
,190
.28
2,66
9,32
5.28
14,027
,630
.10
21,608
,696
.05
70,757
,841
.71
Accu
mulat
ed d
epre
ciatio
n:-
As a
t Jan
uary
1, 2
010
(22,09
2,19
2.37
)(2
,187
,835
.03)
(13,31
0,13
0.89
)(1
1,74
9,26
3.91
)(4
9,33
9,42
2.20
)
Depr
eciat
ion
char
ge(2
,138
,419
.89)
(118
,702
.38)
(1,621
,208
.00)
(3,170
,701
.27)
(7,049
,031
.54)
Disp
osal
--
4,08
0,36
5.23
90,498
.00
4,17
0,86
3.23
As a
t Dec
embe
r 31, 2
010
(24,23
0,61
2.26
)(2
,306
,537
.41)
(10,85
0,97
3.66
)(1
4,82
9,46
7.18
)(5
2,21
7,59
0.51
)
Net bo
ok v
alue:-
As a
t Dec
embe
r 31,20
0910
,224
,997
.91
319,35
5.12
3,64
8,57
8.81
8,92
9,95
1.03
23,122
,882
.87
As a
t Dec
embe
r 31,20
108,22
1,57
8.02
362,78
7.87
3,17
6,65
6.44
6,77
9,22
8.87
18,540
,251
.20
Depr
eciat
ion
in the
sta
tem
ent of
inco
me
for th
e ye
ar e
nded
on
Dece
mbe
r 31
,200
97,38
9,26
7.44
Depr
eciat
ion
in the
sta
tem
ent of
inco
me
for th
e ye
ar e
nded
on
Dece
mbe
r 31
,201
07,04
9,03
1.54
122
Gunkul Engineering Public Company Limited
As at December 31, 2010, certain plant and equipment items of the Group have been fullydepreciated but are still in use. The original cost, before deducting accumulated depreciation, ofthose assets amounted to Baht 63.77 million (2009 : 62.25 million).
As at December 31, 2010, one subsidiary has pledged the land plus property in original cost asat December 31, 2010 in amount of Baht 138.93 million (2009: amount of Baht 122.34 million) toguarantee against credit facility of the Company that receives from a commercial bank in amount ofBaht 278.00 million (2009: amount of Baht 278.00 million) according to the note to financial statementno. 15.
As at December 31, 2010 one subsidiary has pledged the land plus property, machinery andequipment to guarantee against credit facility of its subsidiary that receives from a commercial bankin Thai Baht amounting of Baht 138.86 million, Japan Yen amounting of Yen 960.82 million accordingto the note to financial statement no. 15.
Machines and vehicles under finance leases, where the Group are lessee with net book value asat December 31, 2010 of Baht 4.93 million in consolidated financial statements and Baht 4.14 millionin the separate financial statements (2009 : Baht 9.22 million and Baht 7.44 million, respectively)
12. Fixed deposits and bill of exchange pledged as collateralAs at December 31, 2010, the bank deposits and bill of exchange that equipped with guarantee
burden of the Group, has been pledged as surety against credit facility that one subsidiary companyreceives from finance institutes and letter of guarantee that issued by banks in order to use inbusiness operation (2009 : as surety against letter of guarantee that issued by banks in order to usein business operation).
13. Intangible assets, netConsisted of:-
(Unit : Baht)
Consolidated
Computer Power purchase
software Copyright agreement Total
Cost :-As at January 1, 2010 1,568,575.00 1,204,445.00 - 2,773,020.00Increase from subsidiary acquisition - - 65,000,000.00 65,000,000.00Purchase 572,050.00 4,000.00 - 576,050.00As at December 31, 2010 2,140,625.00 1,208,445.00 65,000,000.00 68,349,070.00
Accumulated amortization :-As at January 1, 2010 (580,233.78) (582,010.07) - (1,162,243.85)Amortization charge (363,560.84) (243,184.41) - (606,745.25)As at December 31, 2010 (943,794.62) (825,194.48) - (1,768,989.10)
Net book value :-As at December 31, 2009 988,341.22 622,434.93 - 1,610,776.15As at December 31, 2010 1,196,830.38 383,250.52 65,000,000.00 66,580,080.09
Amortization charges in statements of income for the year ended on December 31,2009 522,275.97Amortization charges in statements of income for the year ended on December 31,2010 606,745.25
123
(Unit : Baht)Separate
financial statementsComputer software
Cost :-
As at January 1, 2010 595,048.00
Purchase -
As at December 31, 2010 595,048.00
Accumulated amortization :-
As at January 1, 2010 (165,119.91)
Amortization charge (119,009.60)
As at December 31, 2010 (284,129.51)
Net book value :-
As at December 31, 2009 429,928.09
As at December 31, 2010 310,918.49
Amortization charges in statements of income for the year ended on December 31,2009 119,798.46
Amortization charges in statements of income for the year ended on December 31,2010 119,009.60
14. Other non - current assets, net
Consisted of:-(Unit : Baht)
Consolidated Separate financial statement
2010 2009 2010 2009
Retention fee 12,282,360.12 7,273,276.48 508,520.12 2,168,524.48
Prepaid withholding tax 8,613,305.39 5,323,969.90 1,796,188.82 1,796,188.82
Other 40,000.00 - - -
Total 20,935,665.51 12,597,246.38 2,304,708.82 3,964,713.30
Less Allowance for doubtful debts -
prepaid withholding tax (1,796,188.82) (1,796,188.82) (1,796,188.82) (1,796,188.82)
Net 19,139,476.69 10,801,057.56 508,520.12 2,168,524.48
15. Bank overdrafts and short-term loans from financial institutions
Consisted of:-(Unit : Baht)
Consolidated Separate financial statement
2010 2009 2010 2009
Bank overdrafts 13,796,841.34 - 13,796,841.34 -
Trust receipt payable 234,011,680.26 29,978,475.49 68,510,301.56 15,226,458.17
Total 247,808,521.60 29,978,475.49 82,307,142.90 15,226,458.17
124
Gunkul Engineering Public Company Limited
As at December 31, 2010, the Group held bank overdraft, trust receipt, and letters of creditfacilities from several financial institutions in Thai Baht amounting of Baht 383.86 million, US Dollaramounting of USD 7.00 million and Japan Yen amounting of Yen 480.41 million (2009 : Baht 236.25million and USD 2.00 million). Interest rate is MOR to MOR+0.50% , LIBOR/SIBOR/EURIBOR + 2.00%to 3.50%, Prime Rate+1.5%and MLR under the interest rate of 2.73% - 7.50% per annum (2009 :LIBOR/SIBOR + 2.25% to 3.50% and MOR + 0.50% under the interest rate of 2.82220% - 5.0% perannum).
As at December 31, 2010, the Group constitutes important procedure to comply with the loancontract which is specified in the loan contract as follows :- It is determined that Company will maintain proportion of shareholding in one subsidiary by
minimum of 75% of registered share capital of the subsidiary.- It is determined that one subsidiary has to maintain proportion of some financial issue in
accordance with the determination of those specified in the loan contract.- It is determined to forbid that one subsidiary guarantee to anyone or cause any obligation
without the prior written except the bank will consent that operation.- It is determined that one subsidiary is not pay dividend or loans to related parties except the
bank will consent that operation.
Such credit facility line is pledged by mortgaged register of land plus property of the Group,machinery and equipment of one subsidiary and shareholders of the Company, including fixed depositof one subsidiary and also guaranteed by the parent company in fully credit line.
16. Provision for warrantyAs at December 31, 2010, the provision of Baht 3.36 million and Baht 1.96 million in the
consolidated and separate financial statements, respectively (2009 : Baht 3.01 million and Baht 2.69million in the consolidated and separate financial statements, respectively), has been recognized forexpected warranty claims on products sold to the customers. The Group is expected that the majorityof this expenditure will be incurred in the next financial year, and all will be incurred within 1 - 5 yearsof the balance sheet date.
The movement of provision for warranty for the year ended on December 31, 2010 and 2009 isas follows:
(Unit : Baht)
Consolidated Separate financial statement
2010 2009 2010 2009
As at January 1 3,006,979.33 - 2,688,040.26 -
Additions 1,446,165.59 3,168,105.37 163,369.14 2,688,040.26
Amounts used - - - -
Unused amounts reversed (1,094,981.07) (161,126.04) (888,198.46) -
As at December 31 3,358,163.85 3,006,979.33 1,963,210.94 2,688,040.26
125
Provision for warranty - minimum payments:(Unit : Baht)
Consolidated Separate financial statement
2010 2009 2010 2009
Within 1 years 1,348,242.68 1,724,579.46 77,357.72 1,461,105.50Within 2 year - 3 years 1,570,654.47 1,142,817.92 1,545,378.54 1,103,063.42Within 4 year - 5 years 439,266.70 139,581.95 340,474.68 123,871.34
Total 3,358,163.85 3,006,979.33 1,963,210.94 2,688,040.26
17. Other current liabilities
Consisted of:-(Unit : Baht)
Consolidated Separate financial statement
2010 2009 2010 2009
Post dated cheques 873,141.36 164,483.95 584,842.91 125,010.25Accrued expenses 21,235,472.36 10,184,623.36 18,781,794.18 8,228,728.45Withholding tax payable 1,670,771.32 1,295,670.14 784,133.01 1,006,850.81Payable to forward oversea currencies contract 36,363.68 - 36,363.68 -Payable to Revenue Department 1,285,723.84 6,623,536.64 13,566.99 3,860,629.94Other payables 3,165,050.91 3,104,334.37 2,585,040.06 2,578,751.52Others 1,219,480.56 697,893.64 999,904.08 445,454.88
Total 29,486,004.03 22,070,542.10 23,785,644.91 16,245,425.85
18. Obligation under finance lease, net
Consisted of:-(Unit : Baht)
Consolidated Separate financial statement
2010 2009 2010 2009
Obligation under finance lease 7,067,222.36 11,106,341.36 6,550,035.18 9,481,047.18Less Deferred interest expense (494,638.00) (1,081,948.16) (486,677.94) (1,003,063.58)
Net 6,572,584.36 10,024,393.20 6,063,357.24 8,477,983.60Less Current portion (3,156,690.17) (3,451,808.84) (2,647,463.05) (2,414,626.36)
Net 3,415,894.19 6,572,584.36 3,415,894.19 6,063,357.24
As at December 31, 2010, the Group performs the contract of long term financial leased with severalleasing companies so as to lease machines and vehicles by number of 6 contracts (2009 : 8 contracts). Theleased contracts determine leased fee repayment as monthly installment from Baht 9,600.00 per month toBaht 137,600.00 per month (2009 : Baht 9,600.00 per month to Baht 137,600.00 per month). The leasedperiod is carried from 3 years to 5 years (2009 : 3 years to 5 years). Such leased contract comprises theGroupûs shareholders and directors as guarantors. In addition, ownership of such machines and vehicles willtransfer to ownership of the Group when the Group pays the final installment in accordance with the leasedcontract.
126
Gunkul Engineering Public Company Limited
Obligation under finance lease - minimum lease payments:(Unit : Baht)
Consolidated2010 2009
Obligation Deferred Obligation Deferredunder finance under finance
finance lease lease charges Net finance lease lease charges Net
Not later than 1 year 3,500,506.36 (343,816.19) 3,156,690.17 4,039,119.00 (587,310.16) 3,451,808.84Later than 1 year but not
later than 5 years 3,566,716.00 (150,821.81) 3,415,894.19 7,067,222.36 (494,638.00) 6,572,584.36Total7,067,222.36 (494,638.00) 6,572,584.36 11,106,341.36 (1,081,948.16) 10,024,393.20
(Unit : Baht)Separate financial statements
2010 2009
Obligation Deferred Obligation Deferredunder finance under finance
finance lease lease charges Net finance lease lease charges Net
Not later than 1 year 2,983,319.18 (335,856.13) 2,647,463.05 2,931,012.00 (516,385.64) 2,414,626.36Later than 1 year but not later than 5 years 3,566,716.00 (150,821.81) 3,415,894.19 6,550,035.18 (486,677.94) 6,063,357.24Total 6,550,035.18 (486,677.94) 6,063,357.24 9,481,047.18 (1,003,063.58) 8,477,983.60
The Group amortised the interest according to the financial leased contract for the year 2010 inthe amount of Baht 0.54 million in the consolidated financial statement and Baht 0.47 million in theseparate financial statements which was recorded as çFinance costé in the statement of income (2009 :Baht 0.93 million and Baht 0.68 million in the consolidate and separate financial statement, respectively).
19. Share capital
The movement of share capital for the year ended on December 31, 2010 and 2009 are as follows:Number Amountof share
(Unit : share) (Unit : Baht)
Registered share capital
As at January 1, 2009 2,400,000 240,000,000.00
Increment of capital on January 23, 2009 600,000 60,000,000.00
Increment of capital on August 10, 2009 1,000,000 100,000,000.00
As at August 10, 2009 4,000,000 400,000,000.00
Convert former par value of Baht 100 per share to par value of
Baht 1 per share on August 10, 2009 400,000,000 400,000,000.00
Increment of capital - -
As at December 31, 2009 400,000,000 400,000,000.00
Increment of capital - -
As at December 31, 2010 400,000,000 400,000,000.00
127
Number Ordinary Premium onof shares shares ordinary share Total
(Unit : shares) (Unit : Baht) (Unit : Baht) (Unit : Baht)
Issued and paid up share capitalAs at January 1, 2009 2,400,000 240,000,000.00 - 240,000,000.00Increment of capital on January 23, 2009 600,000 60,000,000.00 - 60,000,000.00As at August 10, 2009 3,000,000 300,000,000.00 - 300,000,000.00Convert former par value of Baht 100 per share to
par value of Baht 1 per share on August 10, 2009 300,000,000 300,000,000.00 - 300,000,000.00Increment of capital - - - -As at December 31, 2009 300,000,000 300,000,000.00 - 300,000,000.00Increment of capital on October 13, 2010 100,000,000 100,000,000.00 440,000,000.00 540,000,000.00Expenses concerning to issue of ordinary shares - - (14,880,000.00) (14,880,000.00)As at December 31, 2010 400,000,000 400,000,000.00 425,120,000.00 825,120,000.00
In accordance with the minute of the extra-ordinary shareholders meeting no. 1/2009 held onJanuary 10, 2009, it is resolved that the Companyûs registered capital is increased from Baht 240.00million ( 2,400,000 shares in par value of Baht 100.00 per share) to be Baht 300.00 million (3,000,000.00shares in par value of Baht 100.00 per share). The Company has brought such resolution to registerthe capital increment at the Ministry of Commerce since January 23, 2009 and the Company hasalready received share subscription.
In accordance with the minute of the extra-ordinary shareholders meeting no. 4/2009 held onJuly 22, 2009, it is resolved that the Companyûs registered capital is increased from Baht 300.00million (3,000,000 shares in par value of Baht 100.00 per share) to be Baht 400.00 million (4,000,000.00shares in par value of Baht 100.00 per share) and converse the par value from former par value ofBaht 100.00 per share to par value of Baht 1.00 per share. The Company has brought such resolutionto register the capital increment at the Ministry of Commerce since August 10, 2009 and the Companyhas not received such share subscription.
On October 13, 2010, the Company offers ordinary shares by number of 100 million shares togeneral public as the first time. Such ordinary shares comprises par value of Baht 1 per share. Sharesare offered in the price of Baht 5.40 per share aggregating to total amount of Baht 540.00 million. TheCompany recorded expenses in respect of shares distribution by amount of Baht 14.88 millions asdeducted transactions in the premium or share capital. In addition, the shares increment is registeredfor paid-up from Baht 300 million to Baht 400 million equivalent to ordinary shares by number of 400million shares in the par value of Baht 1 per share at the Ministry of Commerce on October 14, 2010.
The capital managementThe Group constitutes purpose with respect to capital management in order to remain for
ability in the continued operation and ability to appropriately provide remuneration to various group ofparticipating interest while the Group will maintain capital in the level with the least risk.
In order to maintain or adjust the capital structure, the Group may adjust the amount ofdividends paid to shareholders, return capital to shareholders, issue new shares or sell assets toreduce debt obligations.
128
Gunkul Engineering Public Company Limited
20. Legal reserve
Under the provisions of the Public Company Limited Act B.E. 2535, the Company is required to
set aside as a legal reserve at least 5% of its net profit after accumulated deficit brought forward (if
any) until the reserve is not less than 10% of the registered capital. This reserve is not available for
dividend distribution.
As at 31 December 2010 and 2009, the Company has appropriated net income in amount of
Baht 5.00 millions and Baht 22.50 million, respectively, to the legal reserve.
21. Other income
Consisted of:-(Unit : Baht)
Consolidated Separate financial statements
2010 2009 2010 2009
Interest income 1,649,962.46 953,678.03 1,342,515.69 483,959.37
Gain from sale of fixed assets 13,231.11 969,661.49 13,231.11 -
Gain on exchange rate 2,706,549.34 200,959.53 - -
Income from sale of savage 4,349,809.81 2,708,726.95 - -
Dividend received - - - 19,348,816.00
Negative goodwill 1,666,591.09 - - -
Other income 1,629,193.72 4,097,852.40 1,472,597.06 2,959,888.57
12,015,337.53 8,930,878.40 2,828,343.86 22,792,663.94
22. Income tax
The corporate income taxed of the Group have been calculated at the rates of 30% on profit
before income tax, after adding adjusted transaction in accordance with the Revenue Code which is
mainly concerning to loss from declining in value of inventories, depreciation of vehicles for the
excess cost from Baht 1 million, etc.
23. 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 in issue during the period.
24. Dividend paid
In accordance with the minute of the general shareholders meeting held on April 30, 2010, it is
resolved to pay the dividend to shareholders in the rate of Baht 0.071 per share amounting to Baht
21.30 million. (2009 : Baht 90.00 million). The Company has already paid the dividend amounting to
Baht 111.30 million in July 2010.
129
25. Supplemental disclosures of cash flow information
25.1 Cash and cash equivalents consist of :-(Unit : Baht)
Consolidated Separate financial statements
2010 2009 2010 2009
Cash on hand 1,273,767.75 302,855.75 200,000.00 200,000.00
Cash deposits-Saving accounts 28,964,571.82 101,319,886.13 11,777,465.00 63,123,717.50
Current accounts 2,531,022.05 7,529,125.97 2,383,549.63 7,508,749.78
Fixed deposits not exceeding 3 months 2,032,010.32 31,762.43 2,032,010.32 31,762.43
Bill of exchange 180,000,000.00 - 180,000,000.00 -
Total 214,801,371.94 109,183,630.28 196,393,024.95 70,864,229.71
25.2 Non-cash items are as follows:-(Unit : Baht)
Consolidated Separate financial statements
2010 2009 2010 2009
Accrued dividend payables - 90,000,000.00 - 90,000,000.00
Purchase assets not paid 119,094,941.52 - - -
Transfer inventory to other current - assets 404,517.91 - - -
Transfer account receivable -income tax to other
non-current assets 141,291.31 - - -
25.3 Obtaining control of subsidiary
As at November 19, 2010, the Company obtained control of subsidiary. The fair value of
assets acquired and liabilities assumed were are as follows :-(Unit : Baht)
Cash and cash equivalents 990,750.00
Other current assets 15,841.09
Power purchase agreement 65,000,000.00
Other current liabilities (3,000.00)
Negative goodwill (1,666,591.09)
Total cost of acquisition of investment in subsidiary 64,337,000.00
Less Promissory note (57,903,300.00)
Less Cash and cash equivalents of subsidiary acquired (990,750.00)
Cash paid to obtain control net of cash acquired 5,442,950.00
130
Gunkul Engineering Public Company Limited
26. Expenses by nature
The following expenditure items of expense have been classified by nature :(Unit : Baht)
Consolidated Separate financial statements
2010 2009 2010 2009
Change in finished goods and work in process 54,623,396.68 73,906,180.58 20,875,921.62 74,520,701.65
Purchased finished goods 617,921,385.96 375,256,246.97 932,999,341.54 636,214,202.65
Raw material and supplied used 221,125,378.49 132,204,437.29 - -
Management benefit expenses 25,686,108.85 22,660,411.50 22,400,760.56 18,110,848.08
Staff Cost 87,240,090.11 73,722,005.06 35,619,145.22 27,165,432.31
Depreciation and amortization expenses 23,844,149.32 25,587,047.39 7,168,041.14 7,509,065.90
Loss for diminution of inventories (reversal) 2,713,307.57 5,632,056.20 795,644.96 4,223,240.95
Transportation expense 7,692,650.92 3,438,266.34 7,665,711.74 3,438,266.34
Promotion expense 2,988,919.28 1,941,107.84 2,899,455.10 1,941,107.84
27. Provident fund
The Group established a contributory registered provident fund, in accordance with the
Provident Fund Act B.E.2530. The Group appointed an authorized fund manager to manage the fund
on November 1, 2008. Under the plan, employees must contribute 2 percent of their basic salary and
the Group is required to make monthly contributions to the fund at the same rate of employees. In
the year 2010, the Group contribution to the provident fund was Baht 1.18 million (2009 : Baht 1.30
million)
28. Segment Information
The Company and its subsidiaries operates the main business with respect to production,
distribution and import - export of electronic appliance and assembly of merchandise while classified
according to sector as domestic sale and international sale. The data classified according to sector of
the Group for the year ended on December 31, 2010 and 2009 constitutes as follows :-
131
(Unit: Million Baht)
Consolidated
Manufacturing
and distribution of Generating and
electrical hardware selling electricity Eliminated Total
2010 2009 2010 2009 2010 2009 2010 2009
Net local sales 1,187.53 1,159.89 - - (505.25) (459.69) 682.28 700.20
Cost of local sales 958.03 977.00 - - (498.76) (459.43) 459.27 517.57
Local segment operations 229.50 182.89 - - (6.49) (0.26) 223.01 182.63
Net export sales 606.48 163.87 - - - - 606.48 163.87
Cost of export sales 462.88 126.56 - - - - 462.88 126.56
Export segment operations 143.60 37.31 - - - - 143.60 37.31
Other income 12.01 8.93
Selling expenses (37.28) (13.55)
Administrative expenses (126.08) (106.17)
Management benefit expense (25.69) (22.66)
Finance cost (6.68) (5.57)
Income tax (59.71) (27.26)
Net profit 123.18 53.66
The Groupûs fixed assets 172.64 190.59 332.78 0.60 - - 505.42 191.19
The Groupûs liabilities 567.05 550.14 280.22 0.89 (189.76) (199.24) 657.51 351.79
Depreciation and amortization 23.84 25.59 - - - - 23.84 25.59
29. Financial instruments
The principal financial risks faced by the Group are interest rate risk and credit risk. The Group
did not speculate in or engage in trading of any derivative financial instruments.
29.1 Risks from Interest Rates
Risk from interest rates is derived from fluctuation of market interest rate in the future
which affect upon operating result and cash flow. Risk from interest rates remains due to bank
deposit, loans to related parties, credit facilities owing to the commercial bank and related
parties. Due to the fact that such financial assets and liabilities constitute interest rates which
are always closed to market interest rate; as a result, the Group anticipates of non material risk
from interest rates.
Consolidated
Amount (Unit : Million Baht ) Interest rate per annum (%)
2010 2009 2010 2009
Fixed deposits pledged as collateral 100.34 33.63 0.90%-1.75% 2.50%
Bank overdraft 13.80 - 7.00%-7.50% 6.875%
Trust receipt payable 234.01 29.98 2.73%-6.375% 2.8222%-5.00%
132
Gunkul Engineering Public Company Limited
Separate financial statements
Amount (Unit : Million Baht ) Interest rate per annum (%)
2010 2009 2010 2009
Fixed deposits pledged as collateral 53.04 8.06 0.90%-1.75% 2.50%
Bank overdraft 13.80 - 7.00%-7.50% 6.875%
Trust receipt payable 68.51 15.23 2.73%-6.375% 2.8222-5.00%
29.2 Credit risk
The Group does not expose the risk from credit provision in connection to trade ac-
counts receivable most from the sale of goods whose capability is good at debt repayment. The
Group has dealt with these clients for a long time therefore, it is anticipated of non risk derived
from non-payment of those trade accounts receivable
29.3 Foreign currency risk
The Group constitutes material risk from exchange rates in oversea currencies which has
been trade accounts receivable and payable that are foreign currency. The management has
managed risk from exchange rates by performing the forward foreign currencies contract
dependent on each case.
As at December 31, 2010 and 2009, the significant outstanding balances of the Groupûs
financial assets and liabilities denominated in foreign currencies are as follow:-
As at December 31, 2010
Consolidated Separated Financial Statement
Foreign currency Assets Liabilities Assets Liabilities
USD 2,600,214.31 2,689,621.55 2,600,214.31 1,177,233.24
EURO 2,878,294.91 1,454,789.00 2,812,347.02 1,454,789.00
YEN - 4,197,356.00 - 4,197,356.00
As at December 31, 2009
Consolidated Separated Financial Statement
Foreign currency Assets Liabilities Assets Liabilities
USD 993,573.77 954,098.89 993,573.77 513,960.89
EURO 762,146.31 174,313.00 762,146.31 174,313.00
YEN 29,933.55 2,358,954.00 29,933.55 2,358,954.00
POND 6,199.31 - 6,199.31 -
133
As at December 31, 2010 and 2009 the Group has performed the forward foreign
currencies contract which holds the contract life not exceeding one year as follows:
Consolidated /
Separate financial statement
2010 2009
Buying forward foreign exchange contractsBuying forward foreign exchange contracts in USD currency 3,379,568.32 -(Amount 0.112 million US dollars at average rate Baht 29.94 per US dollar)
Buying forward foreign exchange contracts in EURO currency 2,935,978.50 -(Amount 0.072 million EURO at average rate Baht 40.82 per EURO)
Fair value of buying forward foreign exchange contractsUS dollar currencies 3,403,673.93 -EURO currencies 2,875,509.21 -
29.4 Fair valueThe financial assets and liabilities include cash and deposit held from financial
institutions, trade accounts receivable and payable, other receivable and payable, loans to andloan from related parties and obligation under financial lease carried values approximate totheir fair values.
30. Obligation and contingent liabilities30.1 As at December 31, 2010, the Group has commitments relating to letters of credit which has
not been withdrawn in amount of Baht 203.18 million in the consolidated and separate financialstatement. (2009 : Baht 71.24 million in the consolidated and separate financial statement).
30.2 As at December 31, 2010, the Group constitutes contingent liability from issuance of guaranteeletter of the bank to government sector by amount of Baht 149.62 million in the consolidatedand separate financial statements, respectively and amount of USD 0.33 million in the consoli-dated and separate financial statements (2009 : Baht 121.87 million and amount of Baht 81.13million in the consolidated and separate financial statements respectively and amount of USD0.46 million and Euro 0.66 million in the consolidated and separate financial statements).
30.3 As at December 31, 2010, the Company has appointed one company in Union of Myanmar tobe distribution representative of the Company merchandise including marketing, sale promotioncontact and providing various customers service within the Union of Myanmar. The contractconstitutes the period of two years and life can be automatically renewable when it is matured.The Company constitutes obligation commitment to repay such service fee in the rate of 3.00-10.00% of merchandise sales. (2009 : 5.00% of merchandise sales).
30.4 The Company has entered into lease and related service agreements with the third parties forthe period 1 year. The Company is committed to pay for the rental in amount of Baht 1,250.00- 6,533.33 per month (2009 : Baht 1,980.00 - 10,000.00 per month).
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Gunkul Engineering Public Company Limited
30.5 As at December 31, 2010 the Company entered into an advisory engagement contract in orderto find out joint investors in the project of power plant from the solar energy in size of 26.00Megawatts whereas the Company constitutes obligation which has to repay minimum servicefee by amount of Baht 12.00 million if such company successfully proceeds with term of thecontract.
30.6 As at May 31, 2010, one subsidiary entered into a Power Plant Construction agreement andservice with a company. The construction commenced in June 2010 and will be completed inDecember 2010. Such power plant was the 3 Megawatts size and the construction contractprice was in amount of Baht 139.00 million. As at December 31, 2010, the subsidiary hadoutstanding commitment in respect of agreement totaling approximately Baht 13.90 million.
30.7 The subsidiary constitutes obligation commitment in mold contact against various company byamount of Baht 0.45 million (2009 : Baht 0.28 million).
30.8 As at December 31, 2010, two subsidiaries entered into the Power Purchase Agreement withProvincial Electricity Authority (çPEAé) are as follow :-
PowerAgreement date electricity size Sell electricity within TermMarch 31, 2009 6.5 Megawatts September 2011 5 yeas/renew automatically 5 yearsMarch 31, 2009 6.5 Megawatts September 2011 5 yeas/renew automatically 5 yearsMarch 31, 2009 6.5 Megawatts September 2011 5 yeas/renew automatically 5 yearsMarch 31, 2009 6.5 Megawatts September 2011 5 yeas/renew automatically 5 yearsApril 29, 2010 3.0 Megawatts November 30, 2011 5 yeas/renew automatically 5 yearsApril 30, 2010 4.4 Megawatts May 31, 2012 5 yeas/renew automatically 5 yearsJuly 16, 2010 3.0 Megawatts May 31, 2012 5 yeas/renew automatically 5 yearsJuly 16, 2010 8.0 Megawatts August 31, 2012 5 yeas/renew automatically 5 yearsJuly 16, 2010 8.0 Megawatts August 31, 2012 5 yeas/renew automatically 5 yearsJuly 16, 2010 4.5 Megawatts July 31, 2012 5 yeas/renew automatically 5 years
30.9 As at December 31, 2010, the subsidiary constitutes representative advisory contract with thirdparty whereas the Company constitutes obligation commitment that has to repay service fee ofBaht 10,000.00 per month.
30.10 As at December 31, 2010, the Company entered into an advisory contract related with creditcarbon project with one company whereas there is value according to contract being amountof Baht 4.80 million. As at December 31, 2010, the Company constitutes outstanding obligationaccording to contract being amount of Baht 4.40 million.
31. Prosecuted CasesIn 2009, the Company constitutes prosecuted case in number of one case; i.e. civil case of
Central Labor Court in black case number at 3129/2552 while the Company is defendant in thesubject of compensation fee repayment, remuneration instead of advance notification and damagedfee in capital amount of Baht 2,927,466.00. The Company requests to stand up against the case and
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requests to dismiss. Moreover, on May 12, 2010, the Company and the plaintiff have performedcompromised contract while both parties will not claim or proceed with any other prosecution fromthe labour engagement contract that dispute both in civil and criminal cases to each other again.
In 2008, the Company constitutes prosecuted case in number of one case which is civil case ofthe Civil Court, black case number at 2933/2008, red case number at 700/2009 while the Company isdefendant in the subject of purchasing selling, infringement, damaged fee claimant in capital amount ofBaht 8,969,821.12 The Primary Court has adjudicated that the defendant repays amount of Baht 1,533,721.12plus interest in the rate of 7.50% per annum commenced from the prosecuted date forwards until itwill completely repay to the plaintiff and the Company repays charge fees in replacement of theplaintiff. The Company has requested for appeal to dismiss. For the time being, the case in underhearing of the Appeal Court and the Company anticipates that it should win the case finally.
32. Promotional privilegesBy virtue of the provisions of the Industrial Investment Promotion Act B.E. 2520, one
subsidiary was granted various promotional by the Board of Investment under the promotioncertificates as follows:
a) Exemption of import duty on machinery as approved by the Board.b) Exemption of corporate income tax on net profit for a period of eight years commencing from
the date of earning operating income. In cases where the business incurs a loss during thatperiod of exemption, the loss incurred in such period can be taken as a deduction from netprofit of the years after the period of exemption, not exceeding five years.
c) Exemption of income tax on dividends paid from the profit of the promoted operation over theabove corporate income tax exemption period.
d) An allowance of fifty percent of the normal rate of corporate income tax on net profit for aperiod of five years after the expiry date of the corporate income tax exemption period asdescribed in b) above.
e) Permission to deduct double the cost of transportation, electricity and water supply forcorporate income tax purpose for a period of ten years commencing from the date of earningoperating income.
f) Permission to deduct the cost of installation or construction of public utilities at the rate oftwenty-five percent in addition to normal depreciation charges.
33. Subsequent event33.1 At the board of directorsû meeting held on 11 February 2011, it is resolved to pay the dividend
for the year 2010 to shareholders at the rate of Baht 0.075 per share totaling Baht 30.00 million.33.2 At the board of directorsû meeting held on 11 February 2011, it is resolved to registered the
increase in the share capital of Gunkul Powergen Co., Ltd. from Baht 100.00 million (1,000,000ordinary shares, Baht 100.00 par value) to Baht 400.00 million (4,000,000 ordinary shares, Baht100 par value).
34. Approval of financial statementsThese consolidated and separated financial statements were authorized for issue by the Companyûs
board of directors on February 11, 2011.
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Gunkul Engineering Public Company Limited
Gunkul Engineering PCL realizes an importance of social responsibility. The Company has operated
its business under good corporate governance practice along with concerning about social and environment
by taking consideration of stakeholders including responsibility to shareholders, suppliers, customers,
employees and society.
To become a sustainable growth company, being good citizen in the society by not only operating the
business with ethic but also providing support to the communities are key factors. The Company believes
that when the foundation of society is strong, sustainable development can be proceeded.
Beyond managing the business under good corporate governance, Gunkul Engineering PCL has
provided supports and help to social and the Companyûs employees by donating things for youthûs learning
and development, providing scholarship to youth and employeesûs descendant and supporting Wat Phrabatnapu
in çWhite Hearté foundation.
Corporate Social Responsibility : CSR
137
Other References
SHARE REGISTRAR THAILAND SECURITIES DEPOSITORY COMPANY LIMITED
Capital Market Academy Building, The Stock Exchange of Thailand
2/7 Moo 4 (Northpark Project), Vibhavadi-Rangsit Road
Thung Song Hong, Laksi, Bangkok 20210
Tel. 0-2596-9000
Fax. 0-2832-4994-6
THAILAND SECURITIES DEPOSITORY COMPANY LIMITED
62 Rachadapisek Road, Klongtoey, Bangkok 10110
Tel. 0-2359-1200
Fax. 0-2359-1259
AUDITOR SP AUDIT COMPANY LIMITED
503/21 12th Floor, K.S.L. Tower, Sriaydhya Road, Phyathai, Ratchathewi,
Bangkok 10400
Tel. 0-2642-6172-4
Fax. 0-2642-6253
Achievement Awards
1038-1064 Nakhonchaisri Rd., Nakhonchaisri, Dusit, Bangkok 10330, Thailand.Tel. (662) 242-5800 (Auto), 242-5847, 242-5867, 242-5897 Fax. (662) 242-5878www.gunkul.com E-mail : [email protected]
