25 Apr 2019 17:03:00
Clarification of news or information requested by SET
SET requests to clarify news or information Subject : Clarification of news or information requested by SET Description : -Translation- SET.011/2019 25 April 2019 Subject: Clarification information of letter No. Bor.Jor.120/2019 dated 4 April 2019 To: Directors and the Manager The Stock Exchange of Thailand Refer to: The letter No. Bor.Jor.120/2562 dated 4 April 2019 The Stock Exchange of Thailand had the letter No. 120/2019 dated 4 April 2019 requesting the company to clarify information about the annual audited financial statement 2018 from certified public accountant to the Stock Exchange of Thailand with qualified opinion especially the adequacy issues of allowance for doubtful account investment in bills of exchange (B/E) and loans of 1,067 and 447 million baht including fair value assessment of leasehold rights for Koh Larn, Chonburi as well as the important items are other long-term investments 900 million baht The inquiry details of the stock exchange are as follows. 1. Adequacy of allowance for doubtful account investment in bills of exchange (B/E) and loans The company increased its capital to private placement of 3,632 million baht, which is intended to be used to repay debts according to the judgment of Supreme Court's Criminal Division for Persons Holding Political Positions to Krung Thai Bank However, such damage payment is still in the process of land auction. The company use some money approximately 1,600 million baht to invest in B/E of Planet Energy Holding Pte. Ltd. (Planet) and provide short-term loans to Krung Thai Development Company Limited (Krung Thai Land). The Board of Directors has provided the policy to prevent risks, including monitoring operational performance that invest and provide short-term loans closely as well as to find ways of negotiating collateral and/or additional guarantees. The details are according to referred letter No. 2 and outstanding summary of value as follows. Description Start Transaction Date Outstanding Value (Million Baht) Due Date As of 31December 2018 As of 28 February2019 Investment in B/E of Planet 30 November 2017 1,067 1,067 30 June 2019 Short-term loans to Krung Thai Land 17 July 2017 1/ 447 4122/ 30 April 2019 Total 1,514 1,479 1/ Start investing in type of B/E, change to loan on 30 June 2018 2/ Received debt payment of 35 million baht However, the report of auditors indicates that such transaction continues to change due dates The company had not yet received the financial report in 2017 and 2018 of Planet For Krung Thai Bank, the company received financial statements in 2017 with shareholders' equity of 218 million baht but show the information that Krung Thai Land has temporarily stopped construction due to adjusted construction drawing and such construction assets are pledged as loan guarantees. The Stock Exchange of Thailand would like to clarify additional information as follows: 1.1. In the opinion of Board of Directors on the adequacy appropriateness of not reserve allowance for such doubtful accounts. The company has no current financial position of Planet and temporary stop of construction for Krung Thai Land. Answer The Board of Directors considers the following information 1.1.1. Planet has evaluated the property of authorized control person and ultimate shareholder for PEH consists of the valued ordinary shares of Meta Corporation Plc. (META), value of Green Earth Power (Thailand) (GEP) ordinary shares and cash received from GEP sale of common shares such as ECF Power and Scan Inter Plc (SCN) In the valuation of META ordinary shares, the analysis is based on the market capitalization as of 18 February 2019 and the holding proportion of PEH at 6.72% of all shares sold of META. Therefore, the value of META ordinary share which the authorized control person and ultimate shareholder hold at 6,72% of all shares sold will be the value of 175.36 million baht. In the valuation of GEP ordinary shares, the analysis is based on the fair value evaluation report of GEP and prepared by approved financial advisor from office of SEC. as of February 2019 which is evaluated with caution according to reasonable assumptions and using net present value method of cash flow that the analytical department considers appropriate. Thus, the value of GEP ordinary shares of authorized control person and ultimate shareholder holding at 38% of all shares sold will be valued at 1,308.99 million baht. In addition, the authorized control person and ultimate shareholder of PEH has received from sales GEP ordinary shares to ECF-Power and SCN equal to 608.71 million baht which returned to invest in the development of GEP solar power plant project. Therefore, the authorized control person and ultimate shareholder of PEH has the total asset value of 2,093.06 million baht and concluded that the asset value of authorized control person and ultimate shareholder of PEH holdings are worth more than sufficient to repay short-term debt securities or bills of exchange (BE) issued by PEH with equals 1,067 million baht1 and accounted for approximately 1.96 times the value of short-term debt securities or bills of exchange (BE). As a result of PEH has often changed the company structure, the analysis department therefore considers that investors in such short-term debt securities may be gradually partial repayment. 1.1.2. Krung Thai Land The total assets value in accounting of company current situation is 1,265.59 million baht which adjusted book value, according to the property valuation report prepared by Siam City Appraisal Company Limited as at 2 November 2017 and conducted land and improvement assessment of "Portrait Condominium Rama 4 Project", which is the company project. The total of company assets after accounting adjustment are 1,434.84 million baht when deducted from the company total liabilities, totalling 1,047.74 million baht. The value of shareholders' equity after the accounting adjustment is 387.11 million baht. Nevertheless, the group of 4 Krung Thai Land shareholders are famous person in the political and real estate development business. Such group of company shareholders are holding ordinary shares in various proportion of 4 other companies such as: 1) Triple P Assets Company Limited 2) Chao Phaya Insurance Public Company Limited 3) Krung Thai Tractor Company Limited 4) Reuziti (Thailand) Company Limited When considering such proportionate shareholding in above 4 companies, the group of Krung Thai Land shareholders holding assets in other companies valued at 1,481.01 million baht and paid-up authorized capital of 517.14 million baht. However, the value of Krung Thai Land shareholders' equity is equal to 387.11 million baht, including reputation and assets value in 4 other companies that group of Krung Thai Land shareholders is holding in the amount of 1,481.01 million baht and show such group of Krung Thai Land shareholders has potential to repay the loan agreement worth 412 million baht by selling company assets both Krung Thai Land and other companies more than the value of loan agreements if demand and to repay to the company (Attachment 2). 1.2. Progress to obtain the information on current financial position of Planet, full reserve allowance consideration for doubtful accounts with explanations of potential impacts on the financial position and operating results of company. Answer For the analysis information of management department regarding Planet Company and Krung Thai Land, the Board of Directors is also confidence that both companies will be able to repay debts as recalled by company according to analysis document (Attachment1), as for the Krung Thai Company to repay both principal and interest within April 2019. In the event of impact on financial position and operating results of company if Planet and Krung Thai Land is unable to pay. the following impacts will be as follows. Shareholderes equity as at 31 December 2018 3,668 million baht Reserve allowance for doubtful accounts 1,479 million baht Balance of shareholderes equity 2,189 million baht 1.3. Specify the person responsible in charge of risk prevention according to the Board of Directors stated above including identify the operational result that according to the policy or not. Answer Risk Management Committees consist of: 1) Mr. Somchai Meesen 2) Mr. Vuttiphong Issaramalal 3) Dr. Saranya Sanghiran The company policy to invest in bills of exchange and loans made by the management to follow up the performance in each company closely and analyse of invested company status and always to report the Board of Directors. The management is able to get some money back when company wants to use money. Both companies have the potential to be returned money by the company needs and no default in the interest. 2. Fair valuation of leasehold rights to Koh Larn, Chonburi In 2013, the subsidiary company has the right to lease land 81 rai on Koh Larn, Chonburi and the remaining lease period of 27 years. The project development plan was interrupted in 2017 Therefore, the company hired the independent appraiser to evaluate leasehold by appraised value of 79 million baht (net book value of 71 million baht in 2019). For the consideration method of income from renting leasehold rights at the market price and discounted to the present value under an unusual assumption, the auditor was unable to use other audit methods to be satisfied in evaluating fair value of such leasehold rights. The Stock Exchange of Thailand would like to clarify additional information as follows: 2.1. Policy on fair valuation of land leasehold rights for testing impairment and company reason of unable to evaluate fair value of such leasehold rights Answer The company provides fair valuation every year. In this year, the company changed the appraisal company from Knight Frank Chartered (Thailand) Company Limited to SL Standard Appraisal Company Limited, which commissioned in March 2018 and assessment completed on 30 April 2018 by using two assessment methods: 1) Price appraised by Market Approach, evaluated price of 82 million baht. 2) Priced apprised by Discounted Cash Flow Approach-DFC, evaluated price of 91 million baht. 2.2. Opinion of the Board of Directors regarding the fair value consideration and such impairment of leasehold rights. Answer The Board of Directors always seek the appraisal company in the list of approved names by the Stock Exchange of Thailand 3. Other Long-term investments In accordance with the notes to the financial statements No.14 regarding other long-term investments stated that on 3 September 2018, the company recorded the preliminary agreement to purchase an ordinary share of company not less than 1.5 million shares, 600 baht par value, totalling 900 million baht from unrelated individuals. The company paid up shares of 730 million baht, the remaining unpaid amount to 96 million baht and received the share transfer on 3 December 2018. The Stock Exchange of Thailand would like to clarify additional information as follows: 3.1. The date on which the Board of Directors has resolved to invest and make the investment decisions., including any information of Board of Directors to consider investing, coordinator or recommend investment, pricing criteria, investment sources used to purchase investments. In case of using funds from the capital increase, requesting to consider whether is in accordance with the purpose of capital increase or not and the benefited company will receive from investing in such company. Answer The Board of Directors passed a resolution to invest in such ordinary shares on 3 October 2018. The Company entered into sale and purchase agreement on 5 October 2018. However, the Board of Directors considered the investment decision from the following information. 1) The company has received the most information for due diligence of business status (Not verify the information on an official document). For such information, the present value return of received company are 979.73 million baht or accounted for 7.3% of return on investment which is an attractive return in investing. 2) Entering into the agreement with condition if the due diligence of business status is completed and the value of return is not company satisfactory, the sale contract will be considered to be terminated. The seller must return the deposit with interest rate at 3% per year from the date that the seller receives payment from company's deposit. 3) The company is in the process of resolving Krung Thai Bank case, thus delaying investment in real estate. The company has the option to invest in new business in order to receive good returns. The seller contacted the company to offer the energy company shares. New business management department was brought to the Board of Directors to consider alternative investments. Therefore, the Board of Directors passed the resolution for Khun Prapat Yokhan (Director) to coordinate such investments as alternative investments due to the company wants to diversify risks from the real estate business as the main company business and the company used the proceeds from business of investment acquisition. 3.2. Summary details of the invested company such as company name, nature business, shareholder structure, the Board of Directors, financial position and operating results in 2016 - 2018. Answer The company invests in ordinary shares of Wind Energy Holding Company Limited (Wind Energy) which is the company with main income from holding shares in other companies. At present, Wind Energy has investment in 8 subsidiaries. The company operates manufacturing business and electricity sale from wind power, with the shareholding structure as follows. The Board of Directors of Wind Energy Limited 1) Mr. Nop Narongdej 2) Mr. Natthawut Phowborom 3) Mr. Than Riensuwan 4) Mr. Apichat Nathasilp 5) Mr. Wichai Thongtang 6) Mr. Vichate Tantiwanich 7) Mrs. Emma Lewis Collins 8) Mr. Kamthorn Kittiisaranon 9) Miss Nanthida Kittiisaranon 10) Miss Anicha Ahsirano 11) Mr. Akararat Na Ranong Financial position and operating results of Wind Energy and subsidiaries in 2016-2018. Unit: Million Baht Description 2016 2017 2018 Total Assets 19,905.04 49,106.73 27,812.31 Total Liabilities 12,163.17 40,770.77 19,965.20 Shareholder's Equity 7,741.87 8,335.96 7,847.11 Total Revenues 2,686.93 4,275.00 3,268.61 Total Expenses 1,914.60 2,707.14 2,295.77 Net Profit 772.33 1,567.86 972.84 3.3. Summary details of seller such as name. In the case of the juristic person, specify name of the directors and ultimate shareholders, Business relationship and shareholding with the Group of Board of Directors and Management. Answer The seller is natural person named Khun Jariya Buasup which is no business relationship and shareholding with the Group of Board of Directors and Management. 3.4. Such transaction is within the scope of asset acquisition transaction or connected transaction and the company has complied with the requirements referred to No. 3-4 or not and how. Answer The purchase-sale transactions of such ordinary shares are the derived revenues from assets under the Notification of Capital Market Supervisory Board No. TorChor. 20/2008 Re: Rules on Entering into Material Transactions Deemed as Acquisition or Disposal of Assets (Including the amendments) and the Notification of Board of Governors of Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets, 2004 (Including the amendments) ("Announcement of Acquisition or Disposition of Assets"). However, when calculating the transaction size compared to the total assets referring to the consolidated financial statements of company ended 30 June 2018, which measured the size of all 4 cases have been found the maximum transaction size at 12.98 % according to the criteria of return value. Therefore, the company has no duty to disclose any information in accordance with the announcement of acquisition or disposition transaction due to lower than 15%. Please be aware and please spread further. Yours Sincerely, (Mr. Suthad Chankingthong) (Ms. Ranchana Rajatanavin) Director Director Signature ___________________________ ( Mr.Suthad Chankingthong Ms.Ranchana Rajatanavin ) Director Director Authorized to sign on behalf of the company ______________________________________________________________________ This announcement was prepared and disseminated by listed company or issuer through the electronic system which is provided for the purpose of dissemination of the information and related documents of listed company or issuer to the Stock Exchange of Thailand only. The Stock Exchange of Thailand has no responsibility for the correctness and completeness of any statements, figures, reports or opinions contained in this announcement, and has no liability for any losses and damages in any cases. In case you have any inquiries or clarification regarding this announcement, please directly contact listed company or issuer who made this announcement.