SNC Former Public Company Limited and its...

SNC Former Public Company Limited

and its Subsidiaries

Condensed Interim financial statements

for the three-month periods ended

31 March 2020

and

Independent auditor’s review report

1

Independent Auditor’s Report on Review of Interim Financial Information

To the Board of Directors of SNC Former Public Company Limited

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

Former Public Company Limited and its subsidiaries, and of SNC Former Public Company Limited,

respectively, as at 31 March 2020; the consolidated and separate statements of comprehensive income,

changes in equity and cash flows for the three-month periods ended 31 March 2020; and condensed notes

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

interim financial information in accordance with Thai Accounting Standard 34, “Interim Financial

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

review.

Scope of Review

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

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

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

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

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

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

Accordingly, I do not express an audit opinion.

Conclusion

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

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

Standard 34, “Interim Financial Reporting”.

(Vilaivan Pholprasert)

Certified Public Accountant

Registration No. 8420

KPMG Phoomchai Audit Ltd.

Bangkok

13 May 2020

SNC Former Public Company Limited and its Subsidiaries

Statement of financial position

31 March 31 December 31 March 31 December

Assets Note 2020 2019 2020 2019

(Unaudited) (Unaudited)

Current assets

Cash and cash equivalents 1,612,848 836,768 366,167 84,765

Trade accounts receivable 4, 17 1,597,795 850,014 61,776 59,703

Other receivables 4 57,211 39,262 5,420 14,866

Short-term loan to other 5 63,000 - - -

Short-term loans to related parties 4 27,433 27,433 1,650,866 1,345,166

Inventories 6 1,073,234 546,918 15,361 9,377

Other current assets 160,594 134,278 534 268

Total current assets 4,592,115 2,434,673 2,100,124 1,514,145

Non-current assets

Other non-current financial assets 17 27,683 26,500 27,683 26,500

Investments in associate 7 - 4,218 - -

Investments in subsidiaries 8 - - 1,194,388 1,185,309

Investment properties 9 204,170 210,000 - -

Property, plant and equipment 10 2,764,333 2,630,925 185,286 188,494

Right-of-use assets 3 319,151 - 52,349 -

Intangible assets 51,177 52,829 11,671 11,530

Deferred tax assets 26,019 24,844 6,970 5,575

Other non-current assets 23,787 12,892 8,502 8,502

Total non-current assets 3,416,320 2,962,208 1,486,849 1,425,910

Total assets 8,008,435 5,396,881 3,586,973 2,940,055

(in thousand Baht)

Consolidated financial Separate financial

statements statements

The accompanying notes form an integral part of the interim financial statements.

2




Liabilities and equity Note 2020 2019 2020 2019


Current liabilities

Short-term loans from financial institutions 11 710,000 169,000 710,000 154,000

Trade and other payables 4 2,553,373 1,290,696 211,100 90,284

Current portion of deferred income 9,804 10,480 - -

Accounts payable - acquisition of assets 269,759 221,300 1,174 743

Current portion of long-term loans from

financial institutions 12 126,300 45,067 - -

Short-term loans from related parties 4, 17

Current portion of lease liabilities 26,849 - 4,450 -

Current income tax payable 83,887 84,127 77,344 80,758

Other current financial liabilities 234 - - -

Other current liabilities 13,607 13,284 2,471 2,655

Total current liabilities 3,793,813 1,833,954 1,006,539 328,440

Non-current liabilities

Deferred income 47,599 48,132 - -

Long-term loans from financial institutions 12 377,927 32,302 - -

Lease liabilities 294,063 - 48,158 -

Deferred tax liabilities - 1,796 - -

Provisions for employee benefits 80,585 78,511 11,293 11,020

Other non-current liabilities 4,489 4,426 - -

Total non-current liabilities 804,663 165,167 59,451 11,020

Total liabilities 4,598,476 1,999,121 1,065,990 339,460


(in thousand Baht)



3




Liabilities and equity 2020 2019 2020 2019


Equity

Share capital:

Authorised share capital

( 287,777 ordinary shares, par value at

Baht 1 per share ) 287,777 287,777 287,777 287,777

Issued and paid-up share capital

( 287,777 ordinary shares, par value at

Baht 1 per share ) 287,777 287,777 287,777 287,777

Share premium on ordinary shares 1,213,596 1,213,596 1,213,596 1,213,596

Retained earnings

Appropriated

Legal reserve 75,698 75,698 30,140 30,140

Unappropriated 1,668,623 1,648,576 992,524 1,069,082

Other components of equity (3,054) - (3,054) -

Equity attributable to owners of the parent 3,242,640 3,225,647 2,520,983 2,600,595

Non-controlling interests 167,319 172,113 - -

Total equity 3,409,959 3,397,760 2,520,983 2,600,595

Total liabilities and equity 8,008,435 5,396,881 3,586,973 2,940,055



(in thousand Baht)


4


Statement of comprehensive income (Unaudited)

Note 2020 2019 2020 2019

Continuing operations

Revenues from sales of goods and

rendering of services 13 2,354,910 2,031,113 104,033 131,906

Cost of sales and rendering of services (2,106,445) (1,755,577) (87,778) (114,890)

Gross profit 248,465 275,536 16,255 17,016

Interest income 1,136 1,097 18,287 7,222

Gain on sale of assets held for sale

Other income 18,419 34,162 268 22,231

Dividend income from subsidiaries 8 - - - 44,000

Distribution costs (34,409) (28,625) (3,090) (3,391)

Administrative expenses (91,414) (76,214) (6,885) (6,469)

Direct expenses arising from investment properties (402) (10,078) - (9,629)

Directors and management benefit expenses 4 (5,526) (7,585) (391) (411)

Profit from operating activities 136,269 188,293 24,444 70,569

Finance costs (7,080) (4,717) (3,456) (1,982)

Share of loss of associate accounted for using equity method (4,218) (4,085) - -

Profit before income tax expense 124,971 179,491 20,988 68,587

Tax expense (income) 83 (12,890) 3,176 (5,479)

Profit for the period 125,054 166,601 24,164 63,108

Discontinued operation

Loss for the period from discontinued operation,

net of tax 5 - -


Other comprehensive income

Items that will not be reclassified to profit or loss

Loss on investments in equity instruments designated

at fair value through other comprehensive income (430) - (430) -

Income tax relating to item that will not be reclassified 86 - 86 -

Other comprehensive income for the period, net of tax (344) - (344) -

Total comprehensive income for the period 124,710 166,601 23,820 63,108

31 March 31 March

(in thousand Baht)



Three-month period ended Three-month period ended


5


Statement of comprehensive income (Unaudited)

2020 2019 2020 2019

Profit attributable to:

Owners of the parent 121,578 165,229 24,164 63,108


125,054 166,601 24,164 63,108

Total comprehensive income attributable to:

Owners of the parent 121,234 165,229 23,820 63,108


124,710 166,601 23,820 63,108

Basic earnings per share (in Baht) 0.42 0.57 0.08 0.22

(in thousand Baht)



31 March 31 March



6


Statement of changes in equity (Unaudited)

Equity

Issued and attributable to Non-

paid-up Share Legal owners of controlling Total

Note share capital premium reserve Unappropriated parent interests equity

Three-month period ended 31 March 2019

Balance at 1 January 2019 287,777 1,213,596 75,823 1,211,767 2,788,963 170,975 2,959,938

Transactions with owners, recorded directly in equity

Contributions by and distributions to owners of the parent

Dividends 16 - - - (143,889) (143,889) - (143,889)

Total contributions by and distributions to owners of the parent - - - (143,889) (143,889) - (143,889)

Comprehensive income for the period

Profit - - - 165,229 165,229 1,372 166,601

Other comprehensive income - - - - - - -

Total comprehensive income for the period - - - 165,229 165,229 1,372 166,601

Transfer to legal reserve - - (125) 125 - - -

Balance at 31 March 2019 287,777 1,213,596 75,698 1,233,232 2,810,303 172,347 2,982,650

Consolidated financial statements

Retained earnings

(in thousand Baht)


7



Other components

of equity

Loss on investments

in equity instruments

designated at fair Equity

Issued and value through other attributable to Non-

paid-up Share Legal comprehensive owners of controlling Total

Note share capital premium reserve Unappropriated income parent interests equity


Balance at 31 December 2019 - as reported 287,777 1,213,596 75,698 1,648,576 - 3,225,647 172,113 3,397,760

Impact of changes in accounting policies 3 - - - - (2,710) (2,710) - (2,710)

Balance at 1 January 2019 - restated 287,777 1,213,596 75,698 1,648,576 (2,710) 3,222,937 172,113 3,395,050



Dividends 16 - - - (100,722) - (100,722) - (100,722)

Total contributions by and distributions to owners of the parent - - - (100,722) - (100,722) - (100,722)

Changes in ownership interests in subsidiaries

Acquisition of non-controlling interests without a change in control - - - (809) - (809) (8,270) (9,079)

Total changes in ownership interests in subsidiaries - - - (809) - (809) (8,270) (9,079)

Total transactions with owners, recorded directly in equity - - - (101,531) - (101,531) (8,270) (109,801)


Profit - - - 121,578 - 121,578 3,476 125,054

Other comprehensive income - - - - (344) (344) - (344)

Total comprehensive income for the period - - - 121,578 (344) 121,234 3,476 124,710

Balance at 31 March 2020 287,777 1,213,596 75,698 1,668,623 (3,054) 3,242,640 167,319 3,409,959


Retained earnings

(in thousand Baht)


8



Issued and

paid-up Share Legal Total

Note share capital premium reserve Unappropriated equity


Balance at 1 January 2019 287,777 1,213,596 30,140 782,392 2,313,905



Dividends 16 - - - (143,889) (143,889)

Total contributions by and distributions to owners of the parent - - - (143,889) (143,889)


Profit - - - 63,108 63,108

Other comprehensive income - - - - -

Total comprehensive income for the period - - - 63,108 63,108

Balance at 31 March 2019 287,777 1,213,596 30,140 701,611 2,233,124

(in thousand Baht)

Separate financial statements

Retained earnings


9



Other components

of equity

Loss on investments

in equity instruments

designated at fair

Issued and value through other

paid-up Share Legal comprehensive Total

Note share capital premium reserve Unappropriated income equity


Balance at 31 December 2019 - as reported 287,777 1,213,596 30,140 1,069,082 - 2,600,595

Impact of changes in accounting policies 3 - - - - (2,710) (2,710)

Balance at 1 January 2020 - restated 287,777 1,213,596 30,140 1,069,082 (2,710) 2,597,885



Dividends 16 - - - (100,722) - (100,722)

Total contributions by and distributions to owners of the parent - - - (100,722) - (100,722)


Profit - - - 24,164 - 24,164

Other comprehensive income - - - - (344) (344)

Total comprehensive income for the period - - - 24,164 (344) 23,820

Balance at 31 March 2020 287,777 1,213,596 30,140 992,524 (3,054) 2,520,983

Retained earnings

(in thousand Baht)



10


Statement of cash flows (Unaudited)

2020 2019 2020 2019

Cash flows from operating activities


Adjustments to reconcile profit to cash receipts (payments)

Tax expense (83) 12,890 (3,176) 5,479

Finance costs 7,080 4,717 3,456 1,982

Depreciation of property, plant and equipment 87,762 70,564 7,340 8,423

Depreciation of investment properties 421 2,420 - 1,931

Depreciation of right-of-use assets 8,187 - 1,342 -

Amortisation of intangible assets 2,399 2,339 294 290

Provisions for employee benefits 2,074 475 273 461

Unrealised loss on exchange 7,866 366 - -

Unrealised loss on forward exchange contract 234 - - -

Share of loss of associate accounted for using equity method, net of tax 4,218 4,085 - -

Bad and doubful debts expenses 35 511 - -

(Reversal of) loss on inventories devaluation 12,440 (73) 19 (14)

Loss on disposal of property, plant and equipment 2,145 57 1 (6)

Loss on disposal of intangible assets - 281 - -

Dividend income - - - (44,000)

Interest income (1,136) (1,097) (18,287) (7,222)

258,696 264,136 15,426 30,432

Changes in operating assets and liabilities

Trade accounts receivable (737,880) (560,833) (2,073) (19,203)

Other receivables (18,186) 3,778 10,241 37,052

Inventories (538,756) (264,010) (6,003) (5,048)

Other current assets (26,316) (31,331) (266) 3,006

Other non-current assets (10,895) (807) - 33

Trade and other payables 1,133,905 842,210 19,428 25,824

Employee benefits paid - -

Other current liabilities 323 (1,309) (184) (320)

Deferred income (1,209) (1,476) - -

Other non-current liabilities 63 59 - -

Net cash generated from operating 59,745 250,417 36,569 71,776

Taxes paid (2,365) (6,297) (870) (1,383)

Net cash from operating activities 57,380 244,120 35,699 70,393




31 March 31 March

(in thousand Baht)


11


Statement of cash flows (Unaudited)

2020 2019 2020 2019

Cash flows from investing activities

Acquisition of shares in subsidiary - - (9,079) -

Acquisition of other equity securities (5,000) - (5,000) -

Proceeds from sale of property, plant and equipment 85 224 7 6

Acquisition of property, plant and equipment (169,532) (33,883) (3,709) (728)

Proceeds from sale of investment properties - (65,580) - -

Proceeds from sale of intangible assets (747) (17) (435) -

Short-term loan to other (63,000) - - -

Proceeds from repayment of loans to related parties - - - 104,000

Loans to related parties - - (305,700) -

Interest received 1,293 1,107 17,492 7,674

Net cash from (used in) investing activities (236,901) (98,149) (306,424) 110,952

Cash flows from financing activities

Payment of change in ownership interest in subsidiaries

without a change in control (9,079) - - -

Proceeds from loans from financial institutions 1,659,000 - 1,219,000 -

Repayment of loans from financial institutions (691,142) (213,612) (663,000) (181,525)

Payment of lease liabilities (9,873) - (1,650) -

Dividends paid to non-controlling interests - (10,413) - -

Interest paid (2,937) (4,871) (2,223) (2,172)

Net cash from (used in) financing activities 945,969 (228,896) 552,127 (183,697)

Net increase (decrease) in cash and cash equivalents,

before effect of exchange rate changes 766,448 (82,925) 281,402 (2,352)

Effect of exchange rate changes on cash and cash equivalents 9,632 600 - -

Net increase (decrease) in cash and cash equivalents 776,080 (82,325) 281,402 (2,352)

Cash and cash equivalents at 1 January 836,768 879,623 84,765 97,165

Cash and cash equivalents at 31 March 1,612,848 797,298 366,167 94,813

Non-cash transactions

Liabilities from construction of plant and purchase of equipment 67,956 8,819 3,344 189

Transfer property, plant and equipment to non-current assets

classified as held for sale - 1,042 - 1,042

Transfer investment properties to non-current assets

classified as held for sale - 66,727 - 66,727

Transfer investment properties to property, plant and equipment 5,409 6,223 - -

Transfer intangible assets to property, plant and equipment - 31 - -

Changes in right-of-use assets 327,338 - 53,691 -

Changes in lease liabilities 327,338 - 53,691 -

Separate financial


31 March 31 March

(in thousand Baht)

Consolidated financial



12

SNC Former Public Company Limited and its Subsidiaries Notes to the condensed interim financial statements

For the three-month period ended 31 March 2020 (Unaudited)

13

Note Contents 1 General information 2 Basis of preparation of the interim financial statements 3 Changes in accounting policies 4 Related parties 5 Short-term loan to other 6 Inventories 7 Investments in associate 8 Investments in subsidiaries 9 Investment properties 10 Property, plant and equipment 11 Short-term loans from financial institutions 12 Long-term loans 13 Segment information and disaggregation of revenue 14 Leases 15 Income tax expense 16 Dividends 17 Financial instruments 18 Commitments with non-related parties 19 Events after the reporting period 20 Reclassification of accounts



14

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

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

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

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

13 May 2020.

1 General information

The principal businesses of the Company and its subsidiaries (“the Group”) are engaged in the

manufacturing of component parts for cooling machines, component parts for air conditioners for

automobile, contract manufacturing and assembly of air conditioners for household use, manufacturing

of heat pump for water heat pump and manufacturing of insulation copper pipe kit used for the

installation of cooling machine and foam pipe insulation.

2 Basis of preparation of the interim financial statements

(a) Statement of compliance

The condensed interim financial statements are presented in the same format as the annual financial

statements and prepared its notes to the interim financial statements on a condensed basis (“interim

financial statements”) in accordance with Thai Accounting Standard (TAS) No. 34 Interim Financial

Reporting, guidelines promulgated by the Federation of Accounting Professions and applicable rules

and regulations of the Thai Securities and Exchange Commission.

The interim financial statements do not include all of the financial information required for full annual

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

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

conjunction with the financial statements of the Company and its subsidiaries for the year ended 31

December 2019.

The Group has initially applied TFRS - Financial instruments standards and TFRS 16 Leases and

disclosed impact from changes to significant accounting policies in note 3.

In addition, the Group has not early adopted a number of new and revised TFRS, which are not yet

effective for the current period in preparing these financial statements. The Group has assessed the

potential initial impact on the financial statements of these new and revised TFRS and expects that there

will be no material impact on the financial statements in the period of initial application.

(b) Use of judgements and estimates

In preparing these interim financial statements, judgements and estimates are made by management in

applying the Group’s accounting policies. Actual results may differ from these estimates. The

accounting policies, methods of computation and the key sources of estimation uncertainty were the

same as those that described in the financial statements for the year ended 31 December 2019, except

for the new significant judgements and key sources of estimation uncertainty related to the application

of new TFRS as described in note 3.



15

At 31 March 2020, the Group elected to apply accounting guidance on temporary accounting relief

measures for additional accounting options in response to impact from the situation of COVID-19

outbreak on the following:

(a) Impairment of assets

The Group considered impairment of trade accounts receivables under simplified approach using

historical loss rate and did not take forward-looking information into account.

The Group elected to exclude the COVID-19 situation as impairment indicator for property,

plant and equipment, investment properties, intangible assets, and elected to exclude the

COVID-19 situation, which may affect future financial forecasts, from the impairment testing

factors of investments in subsidiaries and investments in associate.

3 Changes in accounting policies

From 1 January 2020, the Group has initially applied TFRS - Financial instruments standards and TFRS

16. Impact of changes in accounting policies on shareholders’ equity are as follows:

Consolidated financial

statements

Separate financial

statements

Other components of

equity

Other components of

equity

Note (in thousand Baht)

At 31 December 2019 - as reported - -

Increase (decrease) due to:

Adoption of TFRS – Financial

instruments standards

Classification of financial instruments A (3,387) (3,387)

Related tax 677 677

At 1 January 2020 - restated (2,710) (2,710)

A. TFRS - Financial instruments standards

The Group has adopted TFRS - Financial instruments standards by adjusting the cumulative effects

to retained earnings and other components of equity on 1 January 2020. Therefore, the Group did

not adjust the information presented for 2019.

These TFRS - Financial instruments standards establish requirements related to definition,

recognition, measurement, impairment and derecognition of financial assets and financial liabilities,

including accounting for derivatives and hedge accounting. The impact from adoption of TFRS –

Financial instruments standards are as follows:

(1) Classification and measurement of financial assets and financial liabilities

TFRS 9 contains three principal classification categories for financial assets: measured at

amortised cost, fair value to other comprehensive income (FVOCI) and fair value to profit or

loss (FVTPL). The classification under TFRS 9 is based on the cash flow characteristics of the

financial asset and the business model in which they are managed. TFRS 9 eliminates the

previous classification of held-to-maturity debt securities, available-for-sale securities, trading

securities and general investment as specified by TAS 105.



16

Under TFRS 9, interest income and interest expenses recognised from all financial assets and

financial liabilities measured at amortised cost shall be calculated using effective interest rate

method. Previously, the Group recognised interest income and interest expenses at the rate

specified in the contract.

Under TFRS 9, derivatives are measured at FVTPL. Previously, the Group recognised the

derivatives when they were exercised.

The following table shows measurement categories under previous standards and TFRS 9, including

reconciliation of the carrying amounts of each class of the Group’s financial assets and financial

liabilities as at 1 January 2020.


Classification under previous standards

at 31 December 2019

Classification under TFRS 9 at 1 January 2020

Carrying

amounts

Fair value

applied

hedge

accounting

Fair value

through

profit or

loss

Fair value

through other

comprehensive

income

Amortised

cost - net

(in thousand Baht)

Other financial assets

- Other non-marketable

equity instruments 26,500

-

-

23,113

-

Total 26,500 - - 23,113 -


Classification under previous standards

at 31 December 2019

Classification under TFRS 9 at 1 January 2020

Carrying

amounts

Fair value –

applied

hedge

accounting

Fair value

through

profit or

loss

Fair value

through other

comprehensive

income

Amortised

cost - net

(in thousand Baht)


- Other non-marketable

equity instruments 26,500

-

-

23,113

-

Total 26,500 - - 23,113 -

The Group and the Company intends to hold non-marketable equity securities amounted of Baht

26.5 million and Baht 26.5 million, respectively, for the long-term strategic purposes. The Group

has designated them as measured at FVOCI. The accumulated loss on measurement of these

investments will not be reclassified to profit or loss.



17

B. TFRS 16 Leases

From 1 January 2020, the Group has initially adopted TFRS 16 on contracts previously identified as

leases according to TAS 17 Leases and TFRIC 4 Determining whether an arrangement contains a

lease using the modified retrospective approach.

Previously, the Group, as a lessee, recognised payments made under operating leases and relevant

lease incentives in profit or loss on a straight-line basis over the term of the lease. Under TFRS 16,

the Group assesses whether a contract is, or contains, a lease. If a contract contains lease and non-

lease components, the Group allocates the consideration in the contract based on stand-alone selling

price (transaction price). As at 1 January 2020, the Group and the Company recognised right-of-use

assets and lease liabilities, as a result, the nature of expenses related to those leases was changed

because the Group recognised depreciation of right-of-use assets and interest expense on lease

liabilities.

On transition, the Group also elected to use the following practical expedients:

- do not recognise right-of-use assets and lease liabilities for leases with less than 12 months of

lease term;

- use hindsight when determining the lease term;

- apply a single discount rate to a portfolio of leases with similar characteristics;

- rely on previous assessments whether leases are onerous as an alternative to performing an

impairment review; and

- exclude initial direct costs from measuring the right-of-use asset.

Impact from the adoption of TFRS 16

Consolidated

financial

statements

Separate

financial

statements

(in thousand Baht)

At 1 January 2020

Increase in right-of-use assets 326,208 53,691

Increase in lease liabilities 326,208 53,691

Measurement of lease liability

Consolidated

financial

statements

Separate

financial

statements

(in thousand Baht)

Operating lease commitment as disclosed at 31 December 2019 44,630 6,600

Extension and termination options reasonably certain to be

exercised 356,530 59,400

401,160 66,000

Present value of remaining lease payments, discounted using the

incremental borrowing rate at 1 January 2020 326,208 53,691

Lease liabilities recognised at 1 January 2020 326,208 53,691

Weighted-average incremental borrowing rate (% per annum) 4.25 4.25

During the three-month period ended 31 March 2020, the Group entered into a new lease agreement for

vehicle for 3 years. The Group makes fixed payments during the lease term. The Group recognised

right-of-use asset amounted of Baht 1.13 million

Carrying amounts of the Group’s and the Company’s right-of-use assets at 31 March 2020 are Baht

319.15 million and Baht 52.35 million, respectively and the Group and the Company recognised

depreciation of right-of-use assets for the three-month period ended 31 March 2020, amounting to Baht

8.19 million and Baht 1.34 million, respectively.



18

4 Related parties

Relationships with subsidiaries and associate are described in notes 7 and 8.

Significant transactions for the three-month period ended 31 March with related parties were as follows:

Consolidated

financial statements

Separate


Three-month period ended 31 March 2020 2019 2020 2019

(in thousand Baht)

Subsidiaries

Sales of goods - - - 4,836

Purchases of goods - - 10,022 17,446

Receiving of services - - 7 600

Interest income - - 17,959 6,610

Dividend income - - - 44,000

Associate

Sales of goods 1,616 673 - -

Rendering of services 2,893 2,662 - -

Receiving of services 302 302 - -

Rental income 1,650 1,970 - -

Interest income 328 612 328 612

Directors and management

Directors and management benefit expenses

Short-term benefits 5,431 7,438 337 364

Post-employment benefits 95 147 54 47

Total directors and management benefit

expenses 5,526 7,585 391 411

Balances as at 31 March 2020 and 31 December 2019 with related parties were as follows:

Consolidated

financial statements Separate


Trade accounts receivable

31 March 2020

31 December

2019

31 March 2020

31 December

2019 (in thousand Baht)

Associate 1,167 1,853 - 337

1,167 1,853 - 337 Less allowance for impairment (2019: allowance for doubtful accounts) - - - -

Net 1,167 1,853 - 337



19

Consolidated


Separate


Other receivables

31 March 2020

31 December

2019

31 March 2020

31 December

2019

(in thousand Baht)

Subsidiaries - - 4,264 12,505

Associate 2,402 3,778 - 123

2,402 3,778 4,264 12,628 Less allowance for impairment (2019: allowance for doubtful accounts) - - - -

Net 2,402 3,778 4,264 12,628

Interest rate Consolidated financial statements

Loans to

31

December

2019

31

March

2020

31

December

2019 Increase Decrease

31

March

2020

(% per annum) (in thousand Baht)

Associate 4.80 4.80 27,433 - - 27,433

Total 27,433 27,433 Less allowance for impairment (2019: allowance for doubtful accounts)

-

-

Net 27,433 27,433

Interest rate Separate financial statements

Loans to

31

December

2019

31

March

2020

31

December

2019 Increase Decrease

31

March

2020

(% per annum) (in thousand Baht)

Subsidiaries 4.80 4.80 1,337,338 305,700 - 1,643,038

Associate 4.80 4.80 27,433 - - 27,433

Total 1,364,771 1,670,471 Less allowance for impairment

(2019: allowance for doubtful

accounts)

(19,605)

(19,605)

Net 1,345,166 1,650,866

Consolidated


Separate


Trade account payable

31 March 2020

31 December

2019

31 March 2020

31 December

2019

(in thousand Baht)

Subsidiaries - - 6,331 1,985

Total - - 6,331 1,985



20

Consolidated


Separate


Other payables

31 March 2020

31 December

2019

31 March 2020

31 December

2019

(in thousand Baht)

Subsidiaries - - 703 185

Associate 93 362 - -

Total 93 362 703 185

5 Short-term loan to other

During the year 2019, SNC Pyongsan Evolution Co., Ltd., a subsidiary, has hired a subcontractor to

construct the buildings on a subsidiary's land. The project has been smoothly progressed until the

subcontractor faced a lack of financial liquidity caused the project to delay. The subsidiary contacted a

new subcontractor to complete the project. However, the proposed price from new subcontractor was

higher than remaining project value, so the subsidiary decided to have the previous subcontractor to

complete the project. On 1 February 2020, the subsidiary has entered into loan agreement amounting to

Baht 63 million to director of the said subcontractor for the purpose of completing the project. To

secure the loan, the director of the said subcontractor pledged 24 rai 2 ngan 91 square wa of land with

7,000 square meters of building located in Pluakdaeng district, Rayong province, as collateral. The loan

bears interest at the rate of 5% per annum and the repayment date is due in July 2020. The director of

the said subcontractor is not related party.

6 Inventories

As at 31 March 2020, the allowance for decline in value of inventories of the Group and the Company

amounting to Baht 35.20 million and Baht 0.72 million, respectively. (31 December 2019: Baht 22.76

million and Baht 0.70 million, respectively).



21

7 Investments in associate


Type of business

Ownership

interest

Paid-up capital

Cost

Equity - net of

impairment

Dividend

income for the

three-month

period ended

31 31 31 31 31 31 31 31 31 31

March December March December March December March December March March

2020 2019 2020 2019 2020 2019 2020 2019 2020 2019

(%) (in thousand Baht)

Associate

SNC Atlantic Water

Heater Asia Co., Ltd.

Manufacturing and

selling of air-to-water

heat pump 26.00 26.00 105,000 105,000

27,300

27,300 - 4,218 - -

Total 27,300 27,300 - 4,218 - -



22


Ownership At cost - net of Dividend income for the

interest Paid-up capital Cost Impairment impairment three-month period ended

31

March

2020

31

December

2019

31

March

2020

31

December

2019

31

March

2020

31

December

2019

31

March

2020

31

December

2019

31

March

2020

31

December

2019

31

March

2020

31

March

2019


Associate

SNC Atlantic Water Heater

Asia Co., Ltd. 26.00 26.00 105,000 105,000 27,300 27,300 (27,300) (27,300) - - - -

Total 27,300 27,300 (27,300) (27,300) - - - -

Associate was incorporated in Thailand.

None of the Group and the Company’s associate is publicly listed and consequently do not have published price quotations.

The Group has not recognised losses relating to certain investments accounted for using the equity method where its share of losses exceeds the carrying

amount of that investments. As at 31 March 2020, the Group’s cumulative share of unrecognised losses was Baht 2.11 million (31 December 2019: nil), of

which Baht 6.33 million were the Group’s share of losses for the three-month periods ended 31 March 2020 (2019: Baht 4.09 million). The Group has no

obligation in respect of these losses.



23

8 Investments in subsidiaries



Type of business interest Paid-up capital Cost Impairment impairment three-month period

ended

31 31 31 31 31 31 31 31 31 31 31 31

March December March December March December March December March December March March

2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019


Direct subsidiaries

SNC Pyongsan Evolution

Co., Ltd.

Manufacturing of cooling

parts and manufacturing

and assembly of cooling

machines 99.99 99.99 220,000 220,000 212,010 212,010 - - 212,010 212,010 - -

SNC Santec Co., Ltd. Under liquidation process

80.00

80.00

20,000

20,000

16,000

16,000

(16,000)

(16,000)

-

-

-

-

SNC Cooling Supply

Co., Ltd.

Manufacturing automotive

air conditioner parts 99.99 99.99 30,000 30,000 30,000 30,000 - - 30,000 30,000 - -

Immortal Parts Co., Ltd. Production of cooling parts 99.99 99.99 70,000 70,000 70,000 70,000 - - 70,000 70,000 - 44,000

Paradise Plastic Co., Ltd. Manufacturing plastic parts

for electric appliance and

automobile 99.99 99.99 30,000 30,000 29,999 29,999 - - 29,999 29,999 - -

SNC Creativity

Anthology Co., Ltd.

Manufacturing household

and automotive air

conditioner parts 99.99 99.99 700,000 700,000 700,000 700,000 -

- 700,000 700,000 -

-

SNC Atlantic Heat Pump

Co., Ltd.

Manufacturing of heat

pump for water heat pump

74.00

74.00 45,000

45,000

33,300

33,300

-

-

33,300

33,300

-

-

Odin Power Co., Ltd. Investing in alternative

power plant 60.00 55.00 200,000

200,000

119,079 110,000 - - 119,079 110,000

-

-

Total 1,201,388 1,201,309 (16,000) (16,000) 1,194,388 1,185,309 - 44,000



24



Type of business interest Paid-up capital Cost Impairment impairment three-month period

ended

31 31 31 31 31 31 31 31 31 31 31 31

March December March December March December March December March December March March

2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019


Indirect subsidiaries

Ultimate Parts Co., Ltd. Manufacturing of cooling

parts

99.99

99.99

40,000

40,000

- - - - - - - -

Infinity Parts Co., Ltd. Manufacturing of cooling

parts 99.99 99.99

20,000

20,000 - - - - - - - -

Meisou SNC Precision

Co., Ltd.

Manufacturing of mold used

for manufacturing tools 99.99

99.99(*) 100,000

100,000

- - - - - - - -

SSM Automation

Co., Ltd.

Manufacturing of tools for

equipment 77.50

77.50(*) 360,000

360,000

- - - - - - - -

Yalafahsaard Co., Ltd. Generating biomass electric

plant garbage 60.00

55.00

150,000

150,000

-

-

-

-

-

-

-

-

Odin Myanmar Co., Ltd. Investing in alternative

power plant 36.00

33.00

1,000

1,000

-

-

-

-

-

-

-

-

Total - - - - - - - -

All subsidiaries were incorporated in Thailand.

(*) Be indirect subsidiary as at 20 November 2019.



25

Dissolution of subsidiary

At the extraordinary meeting of the shareholders of SNC Fukui Holy Insulation Co., Ltd, the subsidiary,

held on 28 November 2019, the shareholders unanimously approved the dissolution of SNC Fukui Holy

Insulation Co., Ltd. The subsidiary registered its dissolution with the Ministry of Commerce on

3 December 2019 and the liquidation was completed on 20 February 2020.

Acquisitions in subsidiary

On 9 March 2020, The Group acquired non-controlling interest in Odin Power Co., Ltd. from a

shareholder, ordinary shares 100,000 shares with a value of Baht 90.79 per share, totalling Bath 9.08

million, increasing its ownership from 55% to 60%. The Group recognized a decrease in non-controlling

interests of Baht 8.27 million and decrease in retained earnings of Baht 0.81 million.

9 Investment properties

Consolidated


Separate

Financial statements

Three-month period ended 31 March 2020 2019 2020 2019

(in thousand Baht)

Cost

At 1 January 219,595 327,508 152,196

Addition - 65,580 - -

Transfer to property, plant and equipment (5,409) (10,227) - -

Transfer to non-current assets classified as

held for sale

-

(152,196)

-

(152,196)

At 31 March 214,186 230,665 - -

Depreciation

At 1 January 9,595 95,375 - 83,538

Depreciation charge for the period 421 2,420 - 1,931

Transfer to property, plant and equipment - (4,004) - -

Transfer to non-current assets classified as

held for sale

-

(85,469)

-

(85,469)

At 31 March 10,016 8,322 - -

Net book value

At 1 January 210,000 232,133 - 68,658

At 31 March 204,170 222,343 - -

Investment properties comprise of land, building and factories lease out to an associate. Each of the

leases contains an initial non-cancellable period of 3 years. Renewals are negotiated with the lessee.

No contingent rents are charged.

The fair value of land and factory lease out to an associate had fair value of Baht 67.27 million, which

comprised of fair value of the factory of Baht 57.99 million and land of Baht 9.28 million, appraised

by the independent valuer during 2020 using revenue approach for factory and open market values on

an existing use basis.

Another investment property was land held for a currently undetermined future use which had total fair

value of Baht 283.88 million. The fair value was determined by the independent valuer during 2018 -

2020 using open market value on an existing use basis.



26

10 Property, plant and equipment

Acquisitions, disposals and transfers of property, plant and equipment during the three-month period

ended 31 March 2020 were as follows:

Consolidated


Separate


Increase (Acquisitions

and transfers in

- at cost)

Decrease (Disposals

and transfers out - net book

value)

Increase (Acquisitions

and transfers in

- at cost)

Decrease (Disposals

and transfers out - net book

value) (in thousand Baht)

Land and land improvement 22,291 - - -

Buildings and building improvements 61,979 - - -

Machinery and equipment 248,062 (2,230) 2,349 (8)

Furniture and office equipment 5,142 - 953 -

Vehicles 2,051 - - -

Assets under construction and installation 104,328 (224,833) 1,782 (945)

Total 443,853 (227,063) 5,084 (953)

During the three-month period ended 31 March 2020, land of Baht 5.41 million was transferred to

investment properties.

11 Short-term loans from financial institutions

As at 31 March 2020, the Group and the Company have short-term loans from commercial banks

under promissory notes, amounting to Baht 710 million and Bath 710 million, respectively (31

December 2019: Baht 169 million and Baht 154 million, respectively) at an interest rate of 2.80% -

2.89% per annum (2019: 2.95% per annum), which will become due during April until June 2020.

12 Long-term Loans

On 12 March 2020, a subsidiary entered into a loan agreement with a commercial bank amounting to

Baht 440 million at an interest rate of MLR - 2% and MLR - 1.75% per annum, which will be paid in

monthly installment start from April 2020 until March 2025.

Long-term loan of the aforesaid subsidiary was pledged by the Company and another subsidiary and

also committed to the bank that there will no commitment made by the subsidiary with third parties

related to the subsidiary’s land and plant.

In addition, the subsidiary has to maintain the required financial ratios and other terms as stated in the

agreements such as maintaining the debt to equity ratio and the debt-service coverage ratio.



27

13 Segment information and disaggregation of revenue

Management determined that the Group has three reportable segments which are the Group’s strategic

divisions for different products and services, and are managed separately because they require different

technology and marketing strategies. The following summary describes the operations in each of the

Group’s reportable segments.

• Segment 1 Manufacturing of component parts for automobile use.

• Segment 2 Manufacturing and assembly of electric appliances.

• Segment 3 Manufacturing of component parts of electric appliances.

None of other operations meets the quantitative thresholds for determining reportable segments in

2020 or 2019.

Each segment’s performance is measured based on segment profit before tax, as included in the

internal management reports that are reviewed by the Group’s CODM. Segment profit before tax is

used to measure performance as management believes that such information is the most relevant in

evaluating the results of certain segments relative to other entities that operate within these industries.

Disaggregation of revenue

In the following table, revenue is disaggregated by primary geographical market, major products and

service lines and timing of revenue recognition.



28


Manufacturing of

component parts

for automobile use

Electric appliances

Manufacturing and

assembly

Manufacturing of

component parts

Other segments Eliminations Total

Three-month period ended

31 March

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

(in thousand Baht)

Information about reportable segment

Revenue from external customers 259,359 315,827 1,307,541 881,856 787,566 831,991 444 1,439 - - 2,354,910 2,031,113

Inter-segment revenue 1,106 201 36 10,574 90,646 72,863 1,414 8,596 (93,202) (92,234) - -

Total revenues 260,465 316,028 1,307,577 892,430 878,212 904,854 1,858 10,035 (93,202) (92,234) 2,354,910 2,031,113

Segment results 35,293 41,277 35,629 46,177 71,204 94,223 (5,857) 6,616 - - 136,269 188,293

Unallocated amounts:

Finance costs (7,080) (4,717)

Share of loss of investments

in associate (4,218) (4,085)

Tax Income (expense) 83 (12,890)

Profit for the period 125,054 166,601


Primary geographical markets

Thailand 237,848 305,284 692,744 572,300 774,684 824,119 444 1,439 - - 1,705,720 1,703,142

Other countries 34,315 10,543 614,797 309,556 78 7,872 - - - - 649,190 327,971

Total 272,163 315,827 1,307,541 881,856 774,762 831,991 444 1,439 - - 2,354,910 2,031,113

Timing of revenue recognition

At a point in time 272,163 315,827 1,307,541 881,856 774,762 831,991 444 1,439 - - 2,354,910 2,031,113



29


Manufacturing of

component parts

for automobile use

Electric appliances

Manufacturing and

assembly

Manufacturing of

component parts

Other segments Eliminations Total

Three-month period ended

31 March

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

(in thousand Baht)

Information about reportable segment

Revenue from external customers 9,221 10,101 - - 94,812 121,071 - 734 - - 104,033 131,906

Segment results 505 1,123 - - 8,356 8,976 15,583 16,470 - - 24,444 26,569

Unallocated amounts:

Dividend income - 44,000

Finance costs (3,456) (1,982)

Tax Income (expense) 3,176 (5,479)

Profit for the period 24,164 63,108


Primary geographical markets

Thailand 9,221 10,101 - - 94,812 121,071 - 734 - - 104,033 131,906

Timing of revenue recognition

At a point in time 9,221 10,101 - - 94,812 121,071 - 734 - - 104,033 131,906



30

14 Leases

For three-month period ended 31 March 2020

Consolidated


Separate


(in thousand Baht)

Recognised in profit or loss

Interest on lease liabilities 3,760 614

Expenses relating to short-term leases 5,306 1,068

Expenses relating to leases of low-value assets 296 39

Total cash outflow for leases presented in the consolidated and separate statement of cash flows for the

three-month period ended 31 March 2020 were Baht 9.87 million and Baht 1.65 million, respectively.

15 Tax expense

Income tax expense is recognised based on management’s best estimate of the weighted average

annual income tax rate expected for the full financial year multiplied by the pre-tax income of the

interim reporting period. The Group’s consolidated and separate effective tax rate in respect of

continuing operations for the three-month period ended 31 March 2020 was -0.07% and -15.13%,

respectively (The Group’s consolidated and separate effective tax rate for the three-month period

ended 31 March 2019: 7% and 8%, respectively). This effective tax rate differs from the corporate

income tax rate principally because the Group and the Company has significant profit for the three-

month periods ended 31 March 2020 and 2019 from promotional privileges and dividends income and

these profits are exempted from corporate income tax. In addition, there are the different treatments for

accounting and taxation purposes of certain items of income and expense during the three-month

periods ended 31 March 2020 and 2019.

16 Dividends

The dividends paid by the Group to the shareholders are as follows:

Dividend Dividend

Dividend rate payment

Dividend Approved by paid per share date

(in thousand

Baht) (in Baht)

SNC Former Public Company Limited

Annual dividend paid Annual General Meeting

from the profit of last of shareholders

six months of 2019 on 27 March 2020 100,722 0.35 27 April 2020

Annual dividend paid Annual General Meeting

from the profit of last of shareholders

six months of 2018 on 27 March 2019 143,889 0.50 26 April 2019

17 Financial instruments

Carrying amounts and fair values

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

liabilities, including their levels in the fair value hierarchy for financial instruments measured at fair

value. It does not include fair value information for financial assets and financial liabilities not

measured at fair value if the carrying amount is a reasonable approximation of fair value.



31


Carrying amount Fair value

At 31 March 2020

Fair value

through profit

or loss

Fair value

through other

comprehensive

income Total

Level 1

Level 2

Level 3

Total

(in thousand Baht)

Financial assets


Non-marketable equity instruments - 27,683 27,683 - - 27,683 27,683

Total other financial assets - 27,683 27,683

Financial liabilities

Other financial liabilities

Forward exchange contract (234) - (234) - (234) - (234)

Total Other financial liabilities (234) - (234)


Carrying amount Fair value

At 31 March 2020

Fair value through

other comprehensive

income Total

Level 1

Level 2

Level 3

Total

(in thousand Baht)

Financial assets


Non-marketable equity instruments 27,683 27,683 - - 27,683 27,683

Total other financial assets 27,683 27,683



32

Financial instruments measured at fair value

Type Valuation technique

Forward exchange

contracts

Forward pricing: The fair value is determined using quoted forward

exchange rates at the reporting date and present value calculations based

on high credit quality yield curves in the respective currencies.

Non-marketable equity

instruments

The adjusted net asset value as of the reporting date.

Impairment loss

Impairment on cash and cash equivalents was measured on a 12-month ECLs. The Group considers

that cash and cash equivalents have low credit risk based on the external credit ratings of the

counterparties.

Allowance for impairment loss for trade receivables are measured at an amount equal to lifetime

ECLs. ECLs on these financial assets are estimated using a provision matrix based on the historical

credit loss experience, adjusted for factors that are specific to the debtors and assessment of the current

general economic conditions.

As at 31 December 2019, the Group had no allowance for impairment losses for trade accounts receivable.

Consolidated


Separate


At 31 March 2020

Trade

accounts

receivables

Allowance for

impairment

losses

Trade

accounts

receivables

Allowance for

impairment

losses

(in thousand Baht)

Within credit terms 1,566,317 - 61,776 -

Overdue:

1-30 days 19,744 - - -

31-60 days 2,070 - - -

61-90 days 9,414 - - -

More than 90 days 330 80 - -

Total 1,597,875 80 61,776 -

Less allowance for impairment (80) -

Net 1,597,795 61,776

Trade accounts receivables

Consolidated

financial

statements

Separate

financial

statements

(in thousand Baht)

At 31 December 2019

Within credit terms * 844,284 59,703

Overdue: **

Less than 3 months 5,730 -

850,014 59,703

Less allowance for doubtful accounts - -

Net 850,014 59,703

The normal credit terms granted by the Group range from 30 days to 150 days.

* Within credit terms means that it was not over the date that the Company and the customer agreed

to receive payment.

** Overdue means that the payment



33

Allowance for impairment - general approach

Separate financial

statements (in thousand Baht) Loans to related parties

At 1 January 2020 19,605

At 31 March 2020 19,605

Exposure to foreign currency risk


As at 31 March 2020

United States

Dollars

Euro

Swedish

Krona Total

(in thousand Baht)

Cash and cash equivalents 93,833 - - 93,833

Trade receivables 442,613 252 - 442,865

Trade payables (837,995) (513) (188) (838,696)

Other payables (511) - - (511)

Account payable - acquisition of assets (8,178) - - (8,178)

Net forecast transaction exposure (310,238) (261) (188) (310,687)

Currency forwards purchase 19,093 163 182 19,438

Currency forwards sales (45,862) - - (45,862)

Net exposure (337,007) (98) (6) (337,111)

18 Commitments with non-related parties

At 31 March 2020

Consolidated


Separate financial

statements

(in thousand Baht)

Capital commitments

Contracted but not provided for:

Buildings and other constructions 17,154 -

Machinery and equipment 26,215 3,576

Total 43,369 3,576

Future minimum lease payments under non-cancellable

operating leases

Within one year 7,830 2,773

Total 7,830 2,773

Other commitments

Unused letters of credit for goods and supplies 1,019,551 -

Bank guarantees for land rental, electricity used and others 18,829 5,748

Total 1,038,380 5,748



34

19 Events after the reporting period

At the extraordinary meeting of the shareholders No.1/2020 of SNC Creativity Anthology Co., Ltd., a

subsidiary, held on 17 April 2020, the shareholders unanimously approved the additional ordinary

shares of 300,000 shares, with a par value of Baht 100 per share. The subsidiary increased called up

capital and registered with Ministry of Commerce on 21 April 2020. The Company had invested in

these additional shares, amounting to Baht 30 million. The proportion of ownership remain

unchanged.

Subsequent to the financial reporting date, many countries have enacted several protection measures

against COVID-19, with a significant impact on the daily life, production and supply chain of goods in

these countries and beyond. The evolution of COVID-19 as well as its impact on the global economy,

and more specifically, on the Group’s operation, is hard to predict at this stage. The management is

monitoring the situation to ensure the safety of its staff as well as to adapt its operations in response to

the situation.

20 Reclassification of accounts

Certain accounts in the 2019 financial statement, which are included in the 2020 interim financial

statements for comparative purposes, have been reclassified to conform to the presentation in the 2020

interim financial statements.

2019

Consolidated

financial statements Separate


Before

reclass

Reclass.

After

reclass Before

reclass

Reclass.

After

reclass

(in thousand Baht)

Statement of financial

position as at

31 December 2019

Trade and other accounts

receivable

889,276

(889,276)

-

74,569

(74,569)

-

Trade accounts receivable - 850,014 850,014 - 59,703

Other receivables - 39,262 39,262 - 14,866

- -

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

more appropriate to the Group’s business.

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