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C.P.L. Group Public Company Limitedบริษัท ซี.พี.แอล กรุ๊พ จำ�กัด (มห�ชน)
รายงานประจำาปี 2553annual report
Contents
Message from Chairman .....................................................................................................1
Audit committee’s Report ..................................................................................................2
The Board of Directors’ Report on the Accountability
of the Company’s Financial Reports ...............................................................................3
1. General Information ........................................................................................................4
2. Summary Financial Information of Company .......................................................6
3. Business Review ...............................................................................................................7
4. Factors of Risk .................................................................................................................. 10
5. Structure of Shareeholder and Management ..................................................... 12
6. Transactions between company and Affiliates ................................................... 23
7. Management Discussion and Analysis .................................................................. 24
8. Financial Statement ...................................................................................................... 27
Note to Financial Statements ......................................................................................... 34
Message from the President
This year the Company celebrates the 22nd year of delivering service to society. Until now, the Company
has enjoyed continuous growth and stability. This shows that we have successfully overcome any threats while
maintaining the operating result at a satisfactory level in the midst of negative economic situations and challenges
and therefore we have the capability and skill in operating the leather-tanning business. More importantly, the
organization appreciates employees who are skillful and knowledgeable about their work achieved by long-term
experience with the Company. Moreover, they also work with determination to achieve success.
Inthefirsthalfof2010,Thailand’seconomyregisteredaconsiderablegrowth,mostlydrivenbythe
export sector. However, its growth was stagnant in the second half due to the economic downturn among
leadingindustrializedcountries.OurCompanywasalsoinfluencedbythisthreat.Secondly,wecopedwiththe
risingcostofrawmaterialby50%comparedtothepreviousyear.Thirdly,astrongappreciationoftheThai
bahthascausedasignificantnegativeimpactonprofitability.Fortunately,wepreparedandplannedaheadby
acquiring additional machinery and tools and upgrading existing equipment as well as increasing investment in
research & development, which led to improved product quality and testing process. Cost-saving activities met
expectations,inventorymanagementwasimproved,andfinancialtoolswereproperlyandeffectivelyutilized.As
aresult,theprofitabilityoftheCompanythisyearwasnotadverselyaffected.
However,weforecastthatin2011thepriceoffuel,commodities,andrawhides–whichisourkeyraw
material–willincrease,andthistrendhascontinuedthisyear.Inflationratewillbehigher,andtheeconomy,
politicalsituation,andtheexchangeratewillbeevenmoreunstable.Allthesefactorswillcertainlychallengethe
Company’sgrowth.Therefore,wemuststrictlyfollowtheannualbusinessplanincludingproductqualitycontrol,
costreduction,inventory,andexpensescontrol.Furthermore,weshalllaunchmorenewproductsandinnovations
toaddvaluetoourproductsinordertoleveragethehigheroperatingcostandensuretheCompany’ssurvival
in this unfriendly and uncertain environment.
Althoughthisyearthesituationstillremainsuncertainandchallenging,weareconfidentthattheCompany
isstrongenoughtogrowsteadily,drivenbytheefficiencyofthemanagementteamandeveryemployee.
The Chairma
Mr.Manoch Wongcharoensin
1 Annual Report 2010C.P.L. Group Public Company Limited
2 Annual Report 2010C.P.L. Group Public Company Limited
Audit Committee’s Report
ThisyeartheauditcommitteemournsforthepassingofMr.SookpreedaPhanomyonginlate2010.Itiswithgreatsadnessthatduetohispassingtheauditcommittee,thencomprisingofMr.SookpreedaPhanomyongaschairmanwithMr.KamthonVathanalaohaandMr.SukhoVoddhijotiasmembers,hadthechancetomeetwith him chairing only for 3 of the 4 meetings. The 4th meeting was chaired by Mr. Kamthon Vathanalaoha, whowasthenappointedasacting-chairmanafterthepassingofMr.SookpreedaPhanomyong. AsofJanuary2011,wearepleasedtowelcomeMr.MongkonLaoworapongwhojoinedtheauditcommitteeasthenewmember.Mr.MongkolLaoworapongarrivalintheauditcommitteethusbringstheauditcommitteebackasawhole.Companyexecutives,externalauditorandotherconcernedofficershadattendedallsuchmeetingtoclarifyissuesontheagendaoftheirconcernsuchasauditingresultsonfinancialstatements,internalauditingresultsaswellasthecompany’srisksmanagement.Allresolutionofthemeetingsaresummarizedasfollows: 1. Annual Financial Statements Financial statements of theCompany have been prepared in accordancewith the Accounting ActB.E.2543andaccountingstandardsasrecommendedbytheFederationofAccountingProfessionUndertheRoyalPatronageofHisMajestytheKing,andcertifiedbyauthoritiesconcerned.Relevantinformationhasbeensufficientlydisclosedinthefinancialstatements.Anysuggestionrecommendedbytheexternalauditorwouldbereflectedinaccountingrecordscorrectlyandappropriately. 2. Internal Control System TheCompanyhassufficientinternalcontrolsystem.InternalauditorsofthecompanyconductedinternalauditingaccordingtotheplansetupannuallybytheAuditCommittee.InternalcontrolwasevaluatedbyusingmeasuresfromsuggestedbytheStockExchangeofThailandcoveringorganizationandenvironment,managementoperating control, information system, communication and monitoring control. The evaluation results were fairly good. 3. Risk Management The Audit Committee has join with management team to know on financial risk, operational risk,businessriskandexternalfactorsthatareuncontrollable,Soasthemitigateriskstoacceptablelevelortoinitiate remedial measures. The management team was assigned to monitor operation results as compared to price, and raw material price which have director impact on production cost of our product. 4. Appointed the company auditor and remuneration TheAuditCommitteerecommendedtheBoardofDirectortoproposetotheAnnualGeneralMeetingofShareholdertoappointtheCompany’sAuditorsfromS.K.AccountantServicesCo.,Ltd,asMs.WanrayaPuttasatienCPANo.4387,Mr.AmpolChamnongwatCPANo.4663Mr.NairsSaowalagsakulCPANo.5369fortheaccountingyearendingDecember31,2010withtheremunerationamountof470,000bahtincreasedfromlastyear17,500baht. Mr. Kamthon Vathanalaoha ChairmanoftheAuditCommitee
3 Annual Report 2010C.P.L. Group Public Company Limited
The Board of Directors’ Report on the Accountability of the Company’s Financial Reports
TheBoardofDirector isaccountable forcorrectnessoffinancialstatementsofCPLGroupLimited
CompanyincludingfinancialinformationpresentedintheAnnualReportandform56–1.TheCompanyhas
adopted appropriate accounting policies consistently applied and conformed to generally accepted accounting
standards.Also,significantinformationwassufficientlydisclosedinnotestofinancialstatementforproperbenefits
to shareholders, investors and stakeholders.
FinancialStatementoftheCompanyhavebeenauditedbyS.K.AccountantServicesCo.,Ltd,auditorof
theCompany.TheBoardofDirectorshassupportedtheauditorwillallnecessaryinformationanddocuments
so that external auditor could audit the and express his opinion in accordance with accounting standards. The
externalauditorhasexpressedhisopinioninAuditor’sReport.
TheBoardofDirectorhasappointedanAuditCommitteetoberesponsibleforthereviewingaccounting
policies,qualityoffinancialreports,internalcontrolsystem,riskmanagementsystem.TheAuditCommitteehas
expressedtheiropinionintheAuditCommittee’sReportasshowninthisAnnualReport.
TheBoardofDirectoropinesthatmanagerialstructureandinternalcontrolsystemoftheCompanywas
satisfactory.TheCompany’sauditordidnotqualifyorraisedanyspecificobservationtheCompany’sfinancial
statement.SowecouldassuredthatfinancialstatementofCPLGroupPublicCompanyLimitedasatDecember
31,2010presentfairlyinallmaterialrespectsthefinancialposition,performance,andcashflowinaccordance
with generally accepted accounting principles and other relevant laws and regulations.
Mr.LaiChiHsiang
ManagingDirector
4 Annual Report 2010C.P.L. Group Public Company Limited
CPL GROUP PUBLIC COMPANY LIMITED
CPL was founded in1989 bya teamofinternational managers with more than 40 years ofexperience in the tanning industry. The founders comprised of leaders in modern tannery management, skilled techniciansandstrongmarketing teams.CPLGroupPublicCoLtd.locatedat700moo6,SukhumvitRoad, Tambol Bangpoomai, Ampour Muang, Samut-prakarn 10280, Thailand, is registeredwith a capitalissuedandpaidupof120millionbahtonJune28,1989toproducebovineleathersuppliestoThailocaland overseas shoes and leather goods manufacturers. Because of its successful performance, CPLbecameaPublicCompanyandamemberofStockExchangeofThailand(SET)onJanuary27,1994,andknowasCPGroupPublicCompanyLimitedwithacapitalissuedandpaidupof240millionbahtdividedinto 24 million ordinary shares with per share value of 10baht.Subsequently,theAnnualExtraordinaryShare-holdersMeetingfor2005hadunanimouslyresolvedtoincreaseditsregisteredcapitalfrom24m.sharesto26.4millionshareeachof10baht,totalvalue264millionbaht to support the issuance of dividend shares pursuant totheresolutionofOrdinaryShareholdersMeetingfor2005ofwhichthecompanyhadsubsequentlyissuedthose dividend shares and registered to increase its capitalwithMinistryofCommerceon1June2005.
SUBSIDIARY COMPANY & ASSOCIATED COMPANY SUBSIDIARY COMPANY On July 1, 1991, CPL Group bought WenHwaTannery(Thailand)Co.,Ltd.locatedat96/2SoiThaipipat,SukhumvitRoad,TambolMuang,CholburiProvinceandbecameasubsidiarycompanyofCPLGroup. The original capital of Wen Hwa Tannery (Thailand)Co.,Ltd.was44millionbaht.Thenincreasedto90millionbahtonJune8,1992with1,000bahtpersharefortotal90,000shares.CPLGroupowns99.99%ofWenHwa’Sshare.Thesubsidiarycompanyhas conducted the contract of acquisition of land and propertydatedonAugust1,2005withonecompanycarried the amount in accordance with the contract of acquisition in total 45 million baht. The subsidiary company has transferred ownership of land and property to purchaser in accordance with letter of contract dated onJanuary17,2007.However,sinceMay30,2007,thesubsidiary has liquidated which is complied with the minuteoftheExtra-OrdinaryShareholders’MeetingNo.1/2007.ItisunanimouslyresolvedtoliquidatefromMay30,2007.ThesubsidiarycompanyhasregisteredtheliquidationwiththeMinistryofCommercesinceJune14,2007. ASSOCIATED COMPANYDuringtheyear2001and2002,thecompanyhad invested a new joint venture company in Hong KongnamedCPLInternationalCo.,Ltd.andhadbeenbuilt up a tannery in Guangzhou, China. CPLinternational Co., Ltd. issued and paid up sharecapitalUSD7millionordinaryshare@USD1,andhadincreasedcapitalfromUSD7milliontoUSD8millionordinarysharein2004.CPLhadinvested15%fromtotalsharecapitalofCPLInternationalCo.,Ltd.
General Information
5 Annual Report 2010C.P.L. Group Public Company Limited
OTHER REFERENCES
1. Stock registration ThailandSecuritiesDepositoryco.,ltd.
62RatchadapisekRoad,Klongtoey,
Bangkok10110,Tel.02359120001
Fax.02-359-1259
2. Certified Public Accountant S.KAccountantServicesCo.,Ltd.
Mr.AmpholJamnongwatC.P.A No.4663
Mr.NarisSaowalagsakulC.P.A. No.5369
Ms.WanrayaPuttasatienC.P.A. No.4387
14th.fl.PayataiPlazBuilding No.128/150-153
Tel.02-214-6464,Fax.02-215-4772,02-214-6065
6 Annual Report 2010C.P.L. Group Public Company Limited
Financial Statement Data 2010 2009 2008
Million baht Million baht Million baht
TotalAsset 1,123.26 1,104.51 1,118.55
TotalLiabilities 173.46 154.73 216.34
TotalShareholder‘sEquity 949.80 949.78 902.21
SalesRevenue 1,986.49 1,545.40 1,844.42
TotalRevenue 2,004.60 1,556.01 1,854.57
GrossProfit(Loss) 185.00 211.70 187.88
NetProfit(Loss) 66.02 87.83 76.91
Financial Ratio 2010 2009 2008
Returnonrevenue(%) 3.29 5.64 4.15
ReturnonShareholder’sequity(%) 6.95 9.25 8.52
ReturnonAsset(%) 5.88 7.95 6.67
NetProfit(Loss)PerShare(Baht) 2.50 3.33 2.91
DividendPerShare(Baht) 1.75 2.50 1.50
BookValuePerShare(Baht) 35.98 35.98 34.17
2. Summary Financial Information of Company
7 Annual Report 2010C.P.L. Group Public Company Limited
3. Business Review
Review Revenue Structure
RevenueStructureOfCPLPublicCompanyLimited
Revenue 2010 2009 2008
MillionBaht % MillionBaht % MillionBaht %
SalesRevenue 1,986.49 99.10 1,545.40 99.32 1,844.42 99.45
Other Revenue
ProfitFromForeign
ExchangeRate 7.520.38 3.22 0.21 6.57 0.35
Other 10.59 0.52 7.39 0.47 3.58 0.20
TotalRevenue 2,004.60 100.00 1,556.01 100.00 1,854.57 100.00
Changes in 2010
Nature of the Company’s business The Company engages in the full-service tanning business. The primary products include full grain leather, suedesplit,andwetblue.WeoperateaccordingtoISO9001andareamemberoftheSatraTechnologyCenter,the world class leather tanning development institute in the UK. Moreover, we have been awarded a silver rating bytheLWG.ThisprovesthattheCompany’sleathertanningfacilitiesaretotheinternationalstandard.Theseproducts are the raw materials for manufacturing leather shoes, luggage, furniture, auto seats, and any other genuine leather ware products.
Changes in 2010 Astheeconomyrecoveredin2009afteraperiodofstagnation,marketdemandisgrowing,particularlyfromtheforeignmarket,tocompensateforlast’syearloss.Inthedomesticmarket,afterthemanufacturingbaseofNike-thesportshoesgiant–leftThailand,localshoecompaniesreducedtheirorders,leadingtoadecreaseintheCompany’sdomesticsalesproportiontoonly25%whiletheinternationalsalesincreasesto75%oftotalsales.However,totalsalesincreasedby16%comparedtothepreviousyear.Therewereseveralreasonsstimulatingchangesin2010;mostimportantly,thepriceofrawhideswasrisingbymorethan50%overthepreviousyear,significantlyimpactingtheCompany’sperformance.Thisleftuswithnoalternativebuttosurviveby boosting sales and increasing product prices. However, it is not always possible to push the cost burden ontothecustomer.Atthesametime,theCompanyisrequiredtocreateoraddvalueintotheproductssothatthe customer will not feel that they are being taken advantage of. Thus, we have launched new products that
8 Annual Report 2010C.P.L. Group Public Company Limited
meetthecustomer’ssatisfactionandinitiatednewtechnologyandinnovationasaddedvaluetoourproducts.Furthermore,weshallfocusonimprovementanddevelopmentofqualityandspecificationthatmatchessalesorders, reduce defects and returned goods, the delivery service must be timely to reduce logistic expenses, and administrationandprocurementefficiencyisessentialtoreduceproductioncosts.TheCompanyshallrespondto all these requirements to cope with the aforementioned situation of raw material cost. To initiatenew innovation, theCompanyneedssignificantcapital investment foracquisitionofnewmachineryandequipmentintheproductiondepartmentaswellasR&D.Apartfromnewmachinery,weshallhire tanning experts from overseas to initiate experimentation and new product knowledge enhancement, as these will lead to upcoming innovation.
In other areas, we have improved the information management system by installing hardware and software, particularly for the improvement of accuracy in vital transaction processing such as marketing information, sales data,procurementrecords,andfinancial&accountingdataforsupportingcalculationofproductpriceandcosttobeinlinewithtoday’schangingneedforsuchinformation.Thisshallmaintaintheoperatingresultasplanned.Moreover,theCompanyprovidestrainingforproductionstaffandbackofficepersonnel,aimingtoimprovetheirknowledge and skill as well as enabling them to transfer such knowledge and skill to their successors in view of the uncertain future.
Marketing & Distribution Marketing and distribution Thefinishedleatherwaremarketin2010hasrecoveredfromastagnantstatusin2009.Theenormousnumber of sales orders indicates a dynamic market stimulating the shoe manufacturing industry back to life. However, the Company must maintain the quality standard and delivery time accuracy because, in this business, not only the quality, but also punctuality play an important role in retaining the existing customer base and expanding into new markets. AfterNike’sproductionbase leftThailand2yearsago, localshoemakerswhoweretheCompany’scustomersfaceddifficultiesandoperatinglosses,creatingabignegativeimpactonourdomesticsalesvolume.Asaresult,wewereforcedtofindnewcustomersinmarketsoutsidethecountrytocompensatetheloss,andtheresultwassatisfactoryinlastyear.Inthefirsthalfofthecurrentyear,dealerofficesintheUSA,China,Vietnam, and Indonesia received a considerable number of sales orders due to the recovery from the previous downturn and raw material in the stock inventory bought at the old rate. This combination led to an excellent
9 Annual Report 2010C.P.L. Group Public Company Limited
operating result. Unfortunately, in the second half of the year, the Company found it more challenging as the priceofrawhidesandchemicalsskyrocketedasneverbefore,butoursellingpricewasfixedbycontract.Obviously,hinderedbythischallenge,theCompanycouldnotmaintainitsnormalprofitabilityandsatisfactoryoperating result, regardless of the success in overhead cost reduction and quality control. In2011,tomaintainagoodresultwhilepricesofrawhidesandchemicalscontinuetoincrease,thecompany needs to re-launch the marketing plan by introducing new products to create diversity for and new innovations as customers around the world, well as add value to products to compensate the price increase in raw materials and chemicals. More importantly, the customers should feel that the extra amount of money theypayisnotfornothingbutforaddedvalueintheproduct.Theproductspecificationthatmeetsthesalesorder must be maintained or improved, and also delivery timeliness. These two requirements are deemed highly necessarybyworldclassshoemakers.Fortunately, theCompany isexpertandrenowned for inventingnewtechnology,provenbymorethan50newproductslaunchedeachyear.
Future Trends in Manufacturing and Marketing Competition. Duringthelastyear,thedomesticshoemarketcontinuedtodeclinesincethedepartureofNiketwoyears ago. This caused a reduction in domestic sales so the Company attempted to leverage the loss by increas-inginternationalsales,bychangingthedomesticandinternationalsalesproportionfrom40:60to25:75within2years.However,totalsalesincreasedby16%lastyeardrivenbytheboostindemandafterthelongstagnation.Fromtheannualreport,althoughthesalesvolumewasincreasing,thesellingpriceremainedunchangedwhilethepriceofrawhidesincreasedbymorethan50%.Thus,profitabilitywasweakened. Trendoftherawhidepriceisexpectedtoclimbcontinually,directlyaffectingthepriceoffinishedproducts. However, a high price is only acceptable for a high grade product. Raising prices alone cannot entirely compensatethecostincreasesinrawmaterials.Addingvaluetoproductsallowsthemsurviveinthemarket.Furthermore,themarkettendstoreplacegenuineleatherwithlessexpensivesuede,causingthedemandforbet-ter and more expensive genuine leather to remain unchanged while there is a greater need for suede. Therefore, the Company shall focus not only on new product design, but also development of suede products to expand our product range. FromtheleathermarkettrendinEuropeandChina,themarketinthenext1-2yearswillacceptcolorfulandbrightcoloredproducts.Modelstyleshoeswillbewarmlywelcomedbyconsumers.ThisrequiresR&Dtostudy, examine, and develop products for this trend and support future demand and control cost that may rise to the point of commercial infeasibility. Competition must be taken into serious consideration in a shrinking domestic market. We have lost somemarketsharesinceanumberofcustomerssufferedcashflowrelatedproblemsanddeficits.Thisyear,there emerged 2-3 new factories in Indonesia and 2-3 facilities in Vietnam. These two countries cover the same market as our dealers. In a sizable market as China, the market share is merely maintained. In conclusion, similar tolastyear’ssituation,thecompetitiveenvironmentonlyslightlyaffectedtheCompany.Althoughnewfactoriesstart operations, they are not our direct competitor because, to acquire expertise in the leather tanning business, it requires long-term experience and readiness in terms of tools and machinery as well as skill. Therefore, in order to compete with the Company, one must be in this industry for a long time. This makes the Company oneoftheworld’sleadersintheindustry.
10 Annual Report 2010C.P.L. Group Public Company Limited
Risk on Operation. In general, the leather tanning business is quite complicated in terms of the production process, uncertainty
ofthefinishedgoodsamount,unpleasantodor,andnegativeimpactontheenvironment.Therefore,itisnot
easy to establish a new tanning facility because it is not welcomed by the local community, expertise in leather
tanning is scarce, and long-term experience and expertise in inventing new products in response highly changeable
fashionarenecessarytoexceedthecustomers’expectations.Moreover,acompanymustcontrolthecostfor
environmental management to avoid causing damage to the community. Heavy capital investment in machinery
andequipmentmustbemadetohavethesameproductioncapacityasourCompany’sexistingcapacity.In
conclusion, new competition that would put the Company at risk is a small concern.
Concerning the risk of substitute material for genuine leather, there is no such material available in the
marketforthetimebeing,asanimalskinpossessesuniquenaturalqualitiessuchasflexibility,softness,durability,
aswellasthesenseofvalue,elegance,andhigh-fashion.Itisdifficulttofindormakeanysyntheticmaterial
that has the same qualities. Therefore, substitute material is also not a major concern.
The market situation at the present time is positive because demand for leather products is growing
consistentlyafterlastyear’seconomicrecovery.Secondly,thereisonlyasmallnumberofnewbleachersin
Indonesia, and it will take a considerable time until they become our competitors. On the other hand, there is
a possibility that some of the existing manufacturers may close, discouraged by the aforementioned adverse
factors,particularlythehighlyfluctuatingrawhidepricein2011.
Generally,aleathertanningbusinessmustkeepitsproductqualityandproductionprocesstothestan-
dardspecifiedbythecustomer.TheCompanythereforefocusesonimprovingthetanningprocesstobestate
of the art. To achieve this goal, grooming personnel to become experts in tanning leather and producing high
quality and beautiful pieces of leather is very important since training a worker to become an artist cannot be
completedwithinashorttime.Insomecases,ittakesyearstodevelopaworkertobecomeanexpert.After
an expert has been trained, the expertise shall be consistently transferred to other workers, and this transfer
process must be carefully determined to ensure concrete and measurable practicability. This is considered one
of the most important policies of the Company.
Fromtheaforementionedreasons,oneofthemajorrisksislackofexpertiseand“artist”resourcesto
meettheCompany’sdemand.Moreover,thenumberoftheseexpertsandartistsisdiminishingastimepasses.
It will be serious if the long expert building process is delayed for any reason.
The other risk the Company faces this year is that the price of raw hides remains high, as this directly
threatenstheCompany’sprofitability.Hence,wecloselymonitorpricesofrawhidesintheglobalmarketand
buy raw hides at the right time and the right cost.
4. Factors of Risk
11 Annual Report 2010C.P.L. Group Public Company Limited
Credit Risk Atthepresenttime,theCompanyisselling25%ofitsproductdomesticallyandtheother75%tothe
internationalmarket.Theexportsaleshavebeenoperatedincash,prepaid,orbyL/Cterms,whichisloan-risk
free.Fordomesticsales,alltransactionsarewithmajorcustomerswithgoodcreditsothattheloanriskislow.
However,wefindfoundlatelythatsomecustomersfailtopay,ordelaypayment,butonlyinsmallproportion
comparedtothetotalsales.TheCompanymonitorsandevaluatescloselythesecustomerstoallowasufficient
bad debt reserve. In conclusion, the loan risk is low, or one may say that there is no loan risk.
Risk on Exchange Rates. Risk on exchange rate is connected to purchases raw material and sales denominated in foreign
currencies.Thecompanyhasnoholdafixedpolicyonexchangeratetradingbutcompanypaysattentionfor
the timing and import & export volume to manage cleverly the foreign exchange trades with banking facilities.
C.P.Lhasgainfromforeignexchangerateof7.52millionbahtin2010andhasgainfromforeignexchangerate
of3.22millionin2009.
12 Annual Report 2010C.P.L. Group Public Company Limited
5. Constructure Shareholder and Management
5.1 Shareholder
Thereareregisteredcapital26,400,000share,10bahtpershareandallissuedandpaid-up.Thenameof
shareholdersasatApril10,2011
5.2 Shareholder Equities
GroupofTopTenShareholders
NameofGroup AmountShare %
Million
1. ChareonsinAssetsCo.,Ltd. 10.03 38.00
2. Mr.CHEN,JUIYUNG 2.83 10.74
3. Mr.PrayuthAuewattana 2.56 9.71
4. ThaiNVDRCo.,Ltd 1.87 7.10
5. Ms.NuchnapaWongcharoensin 1.00 3.80
6. Mr.ChenRuiTeng 0.93 3.19
7. Mr.LaiChiHsiang 0.68 2.53
8. Mr.KuoShihLun 0.46 1.75
9. Mr.ManitWongcharoensin 0.45 1.71
10. Ms.WalairatSilchevakijja 0.39 1.47
GroupofMajorShareholders
NameofGroup AmountShare %
Million
1.CharoensinGroup 12.91 48.88
2. ChenGroup 3.76 14.30
Dividend Policy
Thecompanyhavedividendpolicytoshareholderaround50-60%ofnetprofitfromeachyearandwill
pay90%fromnetprofittoshareholder.
Management Structure
1. Mr. Manoch Wongcharoensin Position Chairman Work experience CharoensinGroup Present ChairmanCPLGroupPublicCompanyLimited
2. Mr. David Lai Position ManagingDirector Work Experience 1969-1979 MarketingManager,FormosonChemicalIndustry 1979-1989 GeneralManager,LienDahLtd.. Present DirectorandManagingDirector CPLGroupPublicCompanyLimited
3. Mr. Chen Rui Teng Position DirectorandDeputyManagingDirector Work experience 1972-1989 DeputyGeneralManager,LienDahLtd. Present DirectorandDeputyManagingDirector CPLGroupPublicCompanyLimited
13 Annual Report 2010C.P.L. Group Public Company Limited
4. Mr. Kua Shin Lun Position DirectorandDeputyManagingDirector Work experience 1976-1988 PurchasingManager,ADIGroupTaiwan 1988-1989 MarketingManager,PanOverseas(Thailand) Co.,Ltd. Present DirectorandAssistantManagingDirector, CPLGroupPublicCompanyLimited,
6. Mr. Suwatchai Wongcharoensin Position Director Work experience 1997-1998 StaffofResearch&DevelopmentDepartment Present DirectorandSeniorManager CPLGroupPublicCompanyLimited,
7. Mr. Kitichai Wongcharoensin Position Director Work experience 1999-2003 SalesSupervisor 2003-2005 SalesCenterManager Present Director
14 Annual Report 2010C.P.L. Group Public Company Limited
15 Annual Report 2010C.P.L. Group Public Company Limited
Company Committee can be divided into 3 sets as follows:
1.BoardofDirectorasatMarch10,2011have9personsasfollow
Name Position
1.Mr.ManochWongcharoensin Chairman
2.Mr.SuwatchaiWongcharoensin Director
3.Mr.LaiChiHsiang ManagingDirector
4.MrChenRuiTeng Director
5.Mr.KuoShihLun Director
6.Mr.KitichaiWongcharoensin Director
7.Mr.MongkonLaoworapoong Director/ChairmanofAuditcommittee
8.Mr.SukhoVoddhijoti Director/Auditcommittee
9.Mr.KamthonVathanalaoha Director/Auditcommittee
**Mr.MongkonlaoworapongbeinginpositionasatJanuary18,2011**
Companycommitteeisresponsibleforthefinancialstatementofthecompanyandtechnologyinformation
appearingintheannualreportandannualinformation.Suchfinancialreportisestablishedinaccordancewith
theaccreditedstandardandchoosinganappropriateandcontinuouslyobservedpolicy.Moreover,inthefinancial
statement,importantinformationshouldbesufficientlydisclosed.Thiscommitteealsohasthedutiestomanage
all internal work as assigned by the managing director or general manager to be complied with law, regulations
andobjectives,toobservethelawfulresolutionfromtheshareholder’smeetings,andtodeterminecompany
policy, guideline and operation plan, assign the work to lower administrator so that the company can have a
progressandcreateprofits.Alltheseshouldbeperformedwithcompetency,honestyandcarefulperformance.
Thecommitteeestablishesanefficientinternalcontrollingandmonitoringsystem.Accountingshouldbe
recordedcorrectly,completelyandsufficientlyinordertoknowthecompanyweakpointandtopreventitfrom
any dishonesty and illegal actions.
2. Executive director who is authorized committee of
thecompanyatMach10,2011have6personsasfollow.
1.Mr.ManochWongcharoensin
2.Mr.SuwatchaiWongcharoensin
3.LaiChiHsiang
4. Mr Chen Rui Teng
5.Mr.KuoShihLun
6.Mr.KitichaiWongcharoensin
Numbersornameofthedirectorswhosesignatures
are binding on the company:
Threedirectorsjointlysigntogetherandaffixedseal
16 Annual Report 2010C.P.L. Group Public Company Limited
of company as evidence by the said directors must be chosen from any directors named below. Each group
chooses one man,
1.Mr.ManochWongcharoensin,Mr.Suwatchaiwongchaorensin
2.Mr.LaiChiHsiang,MrChenRuiTeng
3.Mr.KuoShihLun
Board of Executive directors has the following duties and authorities:
1. setcommercialstrategiesandpolicyforbusinessconducttomeetwiththecompanytarget.
2. inspectandmonitortheinternaldeterminedoperationandadministrationtoreachtheefficiencyandcomply
with the regulations.
3. consider the allocation of annual budget and approve all expenses.
4. consider the distribution of premium, reward and other remuneration to staff and lower administrators.
5. perform other duties concerning the business conduct of the company or assignment from the company
committee.
The duty performances of the company committee and board of directors must not contradict to the
regulationsandrequirementsoftheOfficeoftheSecuritiesandExchangeCommissionandtherequirementsof
theStockExchangeofThailand.
3.TheAuditCommitteeforthecompanywhichisconsistingof3independentdirectorswhoarenot
the member of Management
ThenameoftheBoardasMarch102011are
1.MrKamthonVathanalaoha Chairrman
2.Mr.SukhoVoddhijoti Chairman
3.MrMongkonLaoworapong Committee
4.MissArjareeSuphasinwongchai Secretary
**Mr.mongkonlaowarapongbeinginpositionasatJanuary18,2011**
DefinitionofIndependentDirectoroftheCompany
Independentdirectors are thosenot under the influenceofmajor shareholdersorgroupsofmajor
shareholders,andcommandthefollowingqualifications.:
• Theirshareholdingsmustnotexceed0.5%ofallsharesentitledtovotingrightsoftheCompany,i.e.
theparentcompany,itssubsidiaries,itsjointventures,orjuristicentitiesinpotentialconflictwiththe
Company.
• Theymustnotnowbenoreverhavebeeninvolvedasemployees,hiredworkers,salariedconsultants,
or anyone with controlling authority of the Company, i.e. the parent company, its subsidiaries, its joint
ventures, associated subsidiaries.
• Theyarenotrelatedbybloodorregisteredasbeingparents,spouses,siblings,orspousesofthechildren
of the executives, major shareholders, persons with controlling authority, or persons to be nominated as
executives or persons of controlling authority in the Company or its subsidiaries.
17 Annual Report 2010C.P.L. Group Public Company Limited
• TheyhavenobusinessrelationswiththeCompany,i.e.theparentcompany,itssubsidiaries,itsjoint
ventures, or juristic entities in potential conflictwith theCompany inways thatmight impair their
independent judgment. They must also not be nor have been major shareholders, directors other than
independent directors, or executives of entities
AllauditcommitteehavepassEffectiveAuditCommitteeProgramfromtheThaiInstituteofDirector.
TheAuditCommitteehadthedutiesandresponsibilitiesasfollows:-
• Reviewandcontrolthecompanytomanagecorrect
andreasonablefinancialreport
• Reviewandcontrolthecompanytoarrangethesuit-
ableandefficientinternalcontrolandaudit
• Reviewandcontrolthecompanytocomplywiththe
law concerning security and security exchange, stipulation of
SETorotherlawsrelatedtothecompany’sbusiness.
• Consider, recruit, propose, appoint andpropose the
remuneration of the auditor.
• Consider,disclosetheinformationofthecompanyin
case of there is any related item or any item which may
objectagainstbenefittobecorrectandcomplete.
• PreparereportofAuditCommitteeexpresslyrecorded
inannualreportdulysignedbytheChairmanoftheAuditCommittee.
• Conductotherbusinessbeingassignedby theBoardofDirectorsunder theapprovalof theAudit
Committee.
Intheyear2010thedirectorshasallmeetingasfollow.
BoardofDirector Auditcommittee
1.Mr.ManochWongcharoensin 5
2.Mr.SuwatchaiWongcharoensin 5
3.Mr.LaiChiHsiang 5
4.MrChenRuiTeng 1
5.Mr.KuoShihLun 5
6.Mr.KitichaiWongcharoensin 5
7.Mr.SookpreedaPhanomyong 3 3
8.MrKamthonVathanalaoha 4 4
9..MrSukhoVoddhijoti 4 4
**Mr.SookpredaPhanomyonghaspassawayonOctober28,2010**
18 Annual Report 2010C.P.L. Group Public Company Limited
NameofManagementTeamatMarch10,2011
1. Mr.ManochWongcharoensin Chairman
2. Mr.SuwatchaiWongcharoensin Director
3. Mr.LaiChiHsiang ManagingDirector
4. MrChenRuiTeng Director
5. Mr.KuoShihLun Director
6. Mr.KitichaiWongcharoensin Director
7. Mr.SinghaWongcharoensin ChiefFinancialOfficer
8.Mr.VichaiSirivivattana ProductManager
9.Mr.SomphongWongrujipairoj DomesticMarketingManger
10.Ms.ChutimaKititarakul OverseasMarketingManager
11.Ms.TanyatornApichatvicheanchot AccountingManager
12.Ms.ArjareeSuphasinwongchai FinanceManager
ToselectDirectorsandManagement.
DirectorsofcompanywereelectedbymajorshareholdersonShareholder’sMeeting.ManagingDirector
was assigned by board of directors and was charged with company business. The term of position is 3 years.
However,theyhavearighttoreturntobedirectoragainaftershareholders’meetingelection.
TheChairmanandManagingDirectoraretherepresentativesfrom2majorshareholdersgroupwhoare
differently experienced in management shall separately responsible to clearly prescribe the policy and authorities
fluentlymanagement.AuditCommitteewereanindependentdirectorsandnon-executivedirectors.Theterm
for holding 3 years.
TheremunerationforDirectorsandManagement
The remuneration
1.IndividualDirector
Amount Typeremuneration
1. Mr.ManochWongcharoensin 275,000 Position,Meetingfee,Director’sfee
3. Mr.SuwatchaiWongcharoensin 380,000 Position,Meetingfee,Director’sfee
4. Mr.LaiChiHsiang 515,000 Position,Meetingfee,Director’sfee
5. MrChenRuiTeng 200,000 Position,Meetingfee,Director’sfee
6. Mr.KuoShihLun 380,000 Position,Meetingfee,Director’sfee
7. Mr.KitichaiWongcharoensin 180,000 Position,Meetingfee,Director’sfee
8. Mr.SookpreedaPhanomyong 150,000 Position,Meetingfee
9. MrKamthonVathanalaoha 210,000 Position,Meetingfee
10.MrSukhoVoddhijoti 210,000 Position,Meetingfee
Total 2,500,000
**Mr.SookpredaPhanomyonghaspassawayonOctober20,2010**
19 Annual Report 2010C.P.L. Group Public Company Limited
2.TheremunerationforDirectorsandManagement
TyperemunerationDirectorsandManagement
Number Baht
Salary 12 13,508,080
Bonus 6,719,820
Otherremuneration 1,478,500
Total 12 21,706,400
The Principles of Good Corporate Governance.
1. Rights of Shareholders
CPLrecognizestheimportanceofshareholdersrightsandtreatsallshareholderequitable,fairlyandin
linewithrelevantlaws.AllshareholdershavetheEqualrightsforeachclassofsharestoreceivethedividend
payment,tobuy,sellandtransfersharesincludingtherighttoaccessorobtainthecompany’sinformation
disclosed to shareholders and the public.
Before the meeting day :
Thecompanyholdsthegeneralmeetingofshareholderswithin4monthsafterfinancialstatementyear
end.Fortheyear2010,CPLinvitetheshareholderstoproposetheagendaof2010AnnualGeneralShare-
holders’meetingandnameofqualifiedcandidatestobenominatedforselectionasCPLboardofdirector
inadvancebeforethemeetingstartedandassigntoThailandSecuritiesDepositoryCo.,Ltd.whichwasthe
company’ssecuritiesdepositregistrartosendthenoticetoshareholders’meetingpriortothemeetingdatein
ordertoprovidesufficienttimeforshareholderstoreviewtheagenda.Thenoticeofmeetingexpresslyindicated
the matters to be tabled at the meeting, whether for acknowledgement, approval or consideration, including the
board’sopiniononeachagenda.Othersupportinginformationanddocumentswerealsoattachedtothenotice,
In addition to the direct delivery , the notice of meeting was made available to the shareholder through the
company’swebsitewww.cpl.co.thinadvanceofthemeetingdateinbothThaiandEnglish.
On the meeting day :
The quorum, voting procedures and voting count method are clearly informed to the meeting prior to
discuss the agenda items. There are key directors participating such as the chairman of the board, the Chair-
manoftheAuditCommittee,ManagingDirector,managementofficerincludeexternalauditoralsoattendthe
meetingsothattheycouldlistentoshareholders’opinionsorsuggestionsandalsoansweranyquestions.The
BoardofDirectorallowedshareholderstoelecteachdirectoreligibleforelectiononindividualbasis.
After the meeting day:
TheCompanynotifiedtheAnnualGeneralMeetingresolutionsvietheSetCommunityPortalinthe
nextbusinessday,specifyingthevotingresults(agree/disagree)andallissuesandthevotecounts(abstain)
ofeachissue.TheCompanysenttheminutesresolutionandkeydiscussionissuestotheSETwithin14days.
The minutes were disclosed in both Thai and English version via the website. The minutes are maintained at
theCompany’sheadoffice.
CorporateGovernanceReportofThaiListedCompanies2009fromThaiInstituteofDirectorsCPL
getExcellentGCScoringwithScorerange90–99.
20 Annual Report 2010C.P.L. Group Public Company Limited
2. Equitable Treatment of Shareholders
TheCompanyensuresfairtreatmentofshareholdersirrespectiveofsizeofholdings.Allofsharehold-
ers,inrespectofeachclassofshares,areentitletothesamedividendpayment.Thecompany’sshareholder
meeting are open to all shareholders and all share of the same class have the same voting rights. Voting at the
annualshareholders’meetingisdonebytheprincipleofoneshareonevote.Shareholders,whocannotattend
theshareholders’meeting,canauthorizeourindependentdirectorsortheirbehalftoattendthemeetingand
votetotheproxyform.financialstatementyearend.TheCompanyallowtheshareholderstoproposethe
agendaforAnnualGeneralShareholders’meetingandnameofqualifiedcandidatestobenominatedforselec-
tionasCPLboardofdirectorinadvancebeforethemeetingstartfromOctobertoJanuaryofthemeetingyear
notlessthan60days
The procedures and criteria to nominate the director to the board and propose items for the agenda
fortheannualgeneralmeetinghavebeenpostedtothecompany’swebsite.
3. Role of Stakeholders
The Company has give precedence to the right of every group of stakeholders, all corporate policies
basedonallstakeholders’rightsandeminencearestrictlyfollowed.
Customers The Company determines to produce high quality consumer products in accordance with
related laws and regulations. It also continuously employs research and development activities to raise its quality
of product.
Employees The Company also focuses on personnel development such as competency, skill, and ex-
pertise in employee career path including healthy work environment, welfare and incentive for every employee.
PartnersTheCompanyhassincerelytreatedallpartnersin
accordance with related agreements and laws based on fair
mutualbenefitandfuturerelationship.
CompetitorsTheCompanyhasspecifiedcompetitor
treatment in its business ethics handbook in accordance with
international standard corresponding to business trade prac-
tice laws and regulations without fraudulent acts in infringing
competitors’confidentialinformation.Inthepastyearthere
was no dispute of such competitor infringement.
Creditors The Company shall strictly follow agreements
and conditions set forth by creditors.
ShareholdersTheCompanydeterminestocarryout
its business activities to increase corporate economic value
andshareholders’value.
CorporateSocialResponsibilityTheCompanyhasperformsitsbusinessactivitieswithessentialsocial
responsibilityincludingefficientproductionprocesstoreduceenvironment.Thecompanyoptstoemploylocal
members of the community and has initiated several projects to develop and raise the quality of living within
the community.
21 Annual Report 2010C.P.L. Group Public Company Limited
4. Disclosure and Transparency
Company has disclosed essential and adequate information to shareholders on time with transparency
andwithoutdiscriminationinaccordancewithregulationsspecifiedbytheStockExchangeofThailandinclud-
ingfinancialinformation,e.g.,financialreport,financialstatement,detailedfinancialinformation,andnon-financial
informationsuchasrolesandfunctionsofBoardofDirectorsanditssubcommittees,numberofBoardmeetings
andnumberofattendanceofeachmemberinthepastyear,Directors’compensation,InternalControls,Corpo-
rateSocialResponsibility,etc.SuchinformationwasdisclosedthroughtheStockExchangeofThailand’sonline
system,annualreport,shareholdermeetings,minutesofshareholdermeetings,andcorporatewebsite.Additional
informationnotrequiredbytheStockExchangeofThailandthatmightbeusefulforinvestorsandanalystshas
also been prepared and included in the corporate website under investor relations.
Remuneration for Directors
TheCompanyhasmatchedtheindustry’scompensationstandardandhighenoughtoretainDirectors
withdesirablequalificationsatalltime.Theamountofremunerationincludingitspolicieshavebeenapproved
byshareholdersinAnnualGeneralMeetinganddisclosedintheannualreport.
Investor Relations
ChiefFinancialOfficerisresponsibleforinvestorcommunications.TheCompanyhasbeendisclosingaccurate,
complete, transparent, on-time, and fair information to the public as it is well aware of the importance of such
informationforinvestors’analysisanddecisionmakingbyaccommodatinginvestorsandanalysts,e.g.,Company
visitandmeetingwiththeManagementforinformationexchangesandvariousactivities.Forfurtherinformation
onthedisclosureofcorporateinformation,pleasecontactsecretary@cpl.co.thandsingha@cpl.co.thortelephone
number66270956338Fax6627096033
5 Responsibilities of the Board
TheBoardofDirectorsconsistofqualifiedmembers
with experience and business expertise who devote their
time and effort on their duties in accordance with the law,
corporate objectives and regulations, including resolutions of
shareholder meetings with honesty to protect corporate best
interest. Formore detail please see 5. STRUCTUREOF
SHAREHOLDERANDMANAGEMENT
InsideData
The company prohibit the usage of information for private
purpose, Before the company shall disclose any information
tothepublic, theBoardofDirectorsandallmanagement
muststrictlykeepconfidentialofthesameespeciallythose
related to the business operation of the company according
totheregulationsofthecompanyandregulationsofSET.
22 Annual Report 2010C.P.L. Group Public Company Limited
Internal Control
TheBoardofDirectorssatisfiestheinternalcontrolsystemthatcreatedreasonablecredibilityofthe
financialstatementofthecompanyat31December2010
TheboardofdirectorandAuditCommitteehasevaluatedtheinternalcontrolsystemoftheCompany’asfollow:
1.TheOrganizationandenvironment
TheCompanyspecifiesthebusinessgoalsannuallywheretheactualperformanceistaken
into consideration and reviewed with the business goals in board of director every quarter.
In addition, the Company has issued the clear job description according following the line of command.
2. Risk Management
The management shall monitor the risks with all relevant departments at least every month. The meeting
have been set and conducted to analyze the performance as well as the situations.
3. The information and communication systems
The Company used the computer system for all part include production line for keep record and im-
portant data which is easy and correct in order to report to the board.
4. The monitoring system
The Company has monitoring system by issued monthly report from all operation, marketing mainte-
nance and has a policy to specify the business goals and to compare the actual performance with such goals
wherethereasonsofthedifferencesshallbeidentified.anyoperationalerrorsmustbepromptlyreportedtothe
management for their actions.
Theboardofdirectorsalsodeemedthattheinternalcontrolsystemsaresufficient.
23 Annual Report 2010C.P.L. Group Public Company Limited
There was the open report of the
inter-transaction item 5 and 9 from the notes to
financialstatementsalready.
External Committee Commended
The relation transaction between company and
affiliateswere under regularization trade inmarket
price compared with the others and have the signature
approve for selling and purchasing which regulariza-
tion to conduct.
6. Transactions between company and Affiliates
24 Annual Report 2010C.P.L. Group Public Company Limited
CPLGroupPublicCo.,Ltd.isafullyintegratedtannery,fromthepurchaseofrawhidestopickling,
wetblues,crustinguntilfinalfinishingascowfinishedleatherreadytobecutintoshoes&leatherproducts.
Thebeamhouseandtannerywascompletedin1989dulyoperatedandmanagedbyfoundingpersonnelwith
experienceofmorethan40years.CPLhascontinuouslyexpandedsincethen.In1994CPLwasregisteredin
SETwithregisteredcapitalof240millionbaht.Subsequently,theAnnualExtraordinaryShareholdersMeeting
for2005hadunanimouslyresolvedtoincreaseditsregisteredcapitalfrom24m.sharesto26.4millionshares,
eachof10baht,andtotalvaluingto264millionbaht.CPLhasregisteredthisincreaseincapitalwithMinistry
ofCommerceon1June2005.
Forthepasstime,thecompanyeverhold99.99%sharesinWenHwaTannery(Thailand)Co.,Ltd.
asthecompany’ssubsidiarywithitsregisteredcapitalof90millionbaht.However,sinceMay30,2007,the
subsidiary company was liquidated and the liquidation has been registered with the Ministry of Commerce since
June14,2007.
During2001and2002,thecompanyhadjointlyinvestedwithitsalliestoestablishanewcompany
namedCPLInternationalCo.,Ltd.inHongKongandinvestedintheconstructionofatanneryinGuangZhou.
SubsequentlyCPLInternationalCo.,Ltd.hasincreaseditsregisteredcapitalfrom7millionUSDto8million
USDoftotalregisteredcapital.
CPLGroupPublicCo.,Ltd.procuresimportedsalt-fermentedrawhidesandreadymadetannedleather
fromAmericaundersightL/Cterms.Chemicalproductsarebothimportedandpurchasedwithinthecountry.
Forthepurposesofsuchpurchases,thecompanyhadbeengrantedcreditfromitssuppliersofapprox.30-120
days.Chemicalspurchasedfromabroadarepurchasedunderapprox.90-120dayscreditterms.
In looking for the right raw material for production use, The cost of rawhide from international increased
about16.26%.In2010,thecompanypurchasedabout0.86%ofrawhidesuppliesfromthedomesticmarketwhile
purchasedformoverseaabout99.14%.Withregardstochemicalpurchases,thecompanyconsideredavariety
offactorsinpurchasingchemicals;suchaspricecomparisonsbetweensuppliers,periodofcreditterm,after
salesserviceandtrainingonchemicalusage,etc.In2010localchemicalpurchaseswas60.92%and39.08%
from overseas.
ANALYSIS FROM OPERATION OF COMPANY.
Operationsintheyear2010resultedinanincomeof1,986.49millionbahtincreasefromtheyearbefore
whichwaspostedat1,545.40millionbaht.Salesquantitiesincreasedabout27.98%.Thecompanyhavegross
profitdecreasedfrom211.70millionbahtto185millionbaht.
Themainreasonwastheaveragecostofrawmaterialperhideincreased173.86baht.Sothat,thevalueof
costpersquarefoothigherthanlastyear3.01baht.ForeveryyearThecompanyhavemadeadvancedplan-
ningstartingfromrawmaterialsselection,throughtheproductionprocessintofinishedgoodsbystrictand
7. Management Discussion and Analysis
25 Annual Report 2010C.P.L. Group Public Company Limited
efficientlymanagingmaterials,chemicalsandexpenses.Theratioofsalesvolumebetweenlocaldomesticand
overseasexportsalesin2009was26.35%:65%,in2010thereisachangetothisratiotobecome26%:
74%.Customersincludebrandnamesthathavebeenloyalwithusbefore;Adidas,Lacoste,Timberland,Marc
Stevensandotherwell-knownbrandnamesinfootwear.ThemajorityofthesaleswasstillbelongtoMarc
steventhesameoftheyearbeforewhichhavetheproportion34.85%fromtotalsale.Therelatedbuyerhave
23.56%oftotalsaleswasTimberland.Therewere16.34:11.05whencomparedthesalesratiobetweenTimber-
land and Marc steven .
Otherthansalesrevenues,therewerealsoearningsfromtheforeignexchangeratesof7.52millionbahtinter-
estincomefrominvestmentabout2.70millionbaht.Taxrefund6.93millionbaht,totalrevenueincreasedfrom
1,556.01.millionbahtin2010tobecome2,004.60millionbaht
in201orincreasedofabout28.83%.Thecompanyhasno
policy toholdor issuefinancial instrument forspeculation
or for trading because such policy or instruments are not
suitable to operate in the company.
CPLmanagementplanstocontrolexpensestonotexceed
the planned budget, avoiding all risks which may effect the
financialstatusandcontrollingcashflowwith thethought
toprovidemaximumbenefitforthecompany.
ANALYSIS FINANCIAL SITUATION OF COMPANY
ASSET
At the end of 2010, the company has cash and
cashequivalentsof58.24millionbaht.Currentratioin2010was4.72times,whilein2009itwas5.46times.
Intheyear2010Thecompayinvestedtopurchaseasset62.05millionbaht,paymentforshorttermloanfrom
financial institutions,48.63millionbahtandtomakedividendpaymentsof66millionbaht,arrivingatanet
balance58.22millionbaht.
Accountreceivabledecreased7.75millionbaht.Althoughtherewascashflowproblefacebymany
customers.However,thecompany’sadministratorsarecertainthattherewillbenorisksofbadpayment.The
occurrence of bad debt happened from the year before where the customer was able to settle the debt result-
ing in a reversal in bad debt to become 5.3 million baht.
Netendinginventoriesconsistofraw-material,chemical,workinprocessandfinishedgoods.In2010,
inventoriesincreasedfrom402.64millionbahttobecome584.89millionbahtinaccordancewithcompanypolicy
to reserve the raw-material stocks to avoid the shortage, then there have reserved raw-material as suitable to
use continuously in production and can delivery on time to prevent the damage which may be happen to the
customer’sbusiness.
LIABILITIES AND INVESTING ACTIVITIES
Duetocontactwithforeigncountries, thecompanyhascredit linefromcommercialbankforbank
overdraft, trust receipts, short-term loan, letter of guarantee, credit line for forward contract, and foreign exchange.
AsofDecember31,2010CPLhasBeengrantedatotalcreditlineof1,048.00millionbahtand3.00million
26 Annual Report 2010C.P.L. Group Public Company Limited
USD.Itispledgedbythemortgagedoflandregistrationsplusproperty,machinery,equipment,andinventory.
Thetrustreceiptspayablehadaninterestrateof6.125-7.00%peryear.Attheendof2010,therewasloan
fromfinancialsituation53.23millionbaht.
Theregisteredsharecapitaloftheformer24,000,000shares,parvalueof10bahtpersharwasincreased
to26,399,995sharespervalueof10bahtpershare.Thecompanyhasissuedandregisteredtheincrementof
sharesattheMinistryofCommerceonJune1,2005.Intheyear2010,theresultfromoperationhadanetprofit
of66.02millionbahtearning2.50bahtpershare.Shareholders’Equitywas949.80whichwasthesamevalue
aslastyear.Fortheyear2009,Thedividend66millionbahtwasdistributedwhichwaspaidinthesecond
quarterof2010.Itisunanimouslyresolvedfromtheminuteofdirectors’meetingNo.2/54,thatthecompany
appropriatesretained-earningsfor2010asdividendtoshareholdersintherateof1.75pershare.
Future Outlook:
Althoughshowingasmalldecreasefrom2009,theoperatingresultforlastyearwasacceptable.This
was because the price of raw hides in the second half of the year remained higher than usual, leading to a
downturn in the same period. However, in total the overall operation was satisfactory as stated before.
In2011,thepriceofrawhidesiscontinuingtoincreasewithnosignsofslowingdown.Closemonitor-
ing of the raw material price trend indicates a clear upward trend that will certainly affect the operation of the
Company.Ourproductcostwillincrease,andtheCompanymayexpectadeficitifwedonottakeanycoun-
termeasure.Asthepriceofrawhidesisforecasttosetanewhighat$90-100USDcomparedtothelast10
years, the Company must revise the pricing and adopt radical cost-saving activities to leverage the skyrocketing
price of raw materials.
By increasing selling prices in response to the increasing cost of raw materials, the Company will
figureoutthewaythefashiontrendisgoingandlaunchnewproductsaccordinglyinatimelymanner.This
willaddvaluetoournewproductsandsatisfycustomerswhilethepriceriseisunavoidable.Duringthisyear,
theCompanyplanstolaunchmorethan50newproducts.Furthermore,concerningcost-savingactivities,the
Company shall concentrate particularly on quality of products to minimize cost of defect rework and quality
inspectionpriortodelivery,aimingtoreducecostofreturnedgoods.Forotheractivities,suchasrawmaterial
and chemical purchasing management, the Company shall negotiate vigorously with suppliers and decide to only
buy raw materials at the right price for the Company. Inventory shall be controlled to a minimum level in such
aprice-sensitiveenvironment.Theexistingrawmaterialwillbeselectedandclassifiedtoaddvaluetocertain
rawmaterials.Intermsoffinancialmanagement,thesituationintheforeigncurrencyexchangemarketmust
bewatchedcloselyasThaibahtremainsstrongandfluctuating,theinflationrateisincreasing,andthecrude
oilpricethathascomecloseto$100USDabarrelandisestimatedtoexceed$100USDinthenearfuture.
Finally,thereisthepossibilitythatthegovernmentwillraisetheminimumwagerate.Ifthesefactorsbecome
true, the operation of the Company will inevitably drop.
AlltheaforesaidfactorspotentiallyhaveanegativeimpactontheCompany.Itisachallengeforthe
Company to overcome these threats by implementing measures with discipline and patience.
27 Annual Report 2010C.P.L. Group Public Company Limited
ToTheShareholdersandBoardofDirectorsofC.P.L.GROUPPUBLICCOMPANYLIMITED
sheetsasofDecember31,2010and2009thestatementsofincome,thestatementsofchangesinshare-
holders’equityandthestatementsofcashflowfortheyearthenendedofC.P.L.GROUPPUBLICCOMPANY
LIMITED.Thesefinancialstatementsaretheresponsibilityofthecompany’smanagementastotheircorrectness
andthecompletenessofthepresentation.Myresponsibilityistoreportonthesefinancialstatementsbased
on my audit.
I conducted my audit in accordance with generally accepted auditing standards. Those standards require
thatIplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsare
freeofmaterialmisstatement.Anauditincludesexamining,onatestbasis,evidencesupportingtheamounts
anddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedand
significantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatementpresentation.I
believe that my audit provides a reasonable basis for my opinion.
Inmyopinion, thefinancialstatements referred toabovepresent fairly, inallmaterial respects, the
financialpositionasofDecember31,2010and2009,theoperationsandcashflowsfortheyearthenended
ofC.P.L.GROUPPUBLICCOMPANYLIMITED,respectivelyinaccordancewithgenerallyacceptedaccounting
principles.
S.K.ACCOUNTANTSERVICESCOMPANYLIMITED
(NarisSaowalagsakul)
AuthorizedAuditorNo.5369
Bangkok,
February16,2011.
8. Independent Auditor’s Report
28 Annual Report 2010C.P.L. Group Public Company Limited
ASSETS
CURRENTASSETS
CashandCashEquivalentsItems (Note6) 58,240,574.52 244,190,118.38
Short-TermInvesment (Note7) - 20,000,000.00
AccountsandNotesReceivable-OtherCompanies-Net (Note8) 117,709,077.72 131,092,251.62
AccountsandNotesReceivable-RelatedCompanies (Note5.2,9) 48,430,804.73 42,796,122.36
Inventories-Net (Note10) 584,889,601.57 402,641,897.72
OtherCurrentAssets 9,874,110.30 3,974,193.98
TOTAL CURRENT ASSETS 819,144,168.84 844,694,584.06
NON-CURRENTASSETS
Long-TermInvestment (Note11) 82,781,260.81 76,325,161.35
Property,PlantandEquipment-Net (Note12) 213,247,664.88 176,819,185.50
OtherNon-CurrentAssets 8,089,616.33 6,673,888.33
TOTAL NON - CURRENT ASSETS 304,118,542.02 259,818,235.18
TOTAL ASSETS 1,123,262,710.861,104,512,819.24
Notestothefinancialstatementsareanintegralpartoftheabovefinancialstatements.
2010 2009
Balance SheetsC.P.L.GROUPPUBLICCOMPANYLIMITED
AsofDecember31,2010and2009
29 Annual Report 2010C.P.L. Group Public Company Limited
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENTLIABILITIES
Short-TermLoanfromFinancialInstitution (Note13,14) 53,227,816.38 4,468,687.69
AccountsandNotesPayable 59,368,251.17 64,710,115.69
AccountsPayable-RelatedCompanies (Note5.2) 34,996,522.10 37,898,931.34
OtherCurrentLiabilities
AccruedCorporateIncomeTax - 17,889,660.73
AccruedExpenses 21,804,493.18 25,776,517.75
Others 4,066,189.05 3,987,027.82
TOTAL CURRENT LIABILITIES 173,463,271.88 154,730,941.02
TOTAL LIABILITIES 173,463,271.88 154,730,941.02
SHAREHOLDERS’EQUITY
ShareCapital
AuthorizedShareCapital
26,399,995OrdinaryShares@10.00Baht 263,999,950.00 263,999,950.00
IssuedandPaid-UpShareCapital
26,399,995OrdinaryShares@10.00Baht 263,999,950.00 263,999,950.00
PremiumsonShareCapital 198,000,000.00 198,000,000.00
Retained Earnings
Appropriated
LegalReserve 28,940,744.21 28,940,744.21
Unappropriated 458,858,744.77 458,841,184.01
TOTAL SHAREHOLDERS’ EQUITY 949,799,438.98 949,781,878.22
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 1,123,262,710.861,104,512,819.24
Notestothefinancialstatementsareanintegralpartoftheabovefinancialstatements.
2010 2009
Balance SheetsC.P.L.GROUPPUBLICCOMPANYLIMITED
AsofDecember31,2010and2009
30 Annual Report 2010C.P.L. Group Public Company Limited
Sales 1,986,491,775.261,545,396,114.98
CostofSales (1,801,491,662.52)(1,333,692,334.00)
Gross Profit 185,000,112.74 211,703,780.98
OthersIncome 18,107,129.41 10,616,470.23
Profit Before Expenses 203,107,242.15 222,320,251.21
SellingExpenses (52,527,129.31) (41,768,822.92)
AdministrativeExpenses (37,243,752.84) (32,802,251.86)
LossfromImpairmentofGeneralInvestment (3,543,900.54) (8,493,089.22)
ManagementBenefitExpenses (Note15) (15,868,000.00) (14,665,000.00)
Total Expenses (109,182,782.69) (97,729,164.00)
Profit Before Finance Costs and Corporate Income Tax 93,924,459.46 124,591,087.21
FinanceCosts (3,723,685.26) (3,832,251.66)
Profit Before Corporate Income Tax 90,200,774.20 120,758,835.55
CorporateIncomeTax (Note16) (24,183,225.94) (32,933,063.44)
NET PROFIT 66,017,548.26 87,825,772.11
BASICEARNINGS(LOSS)PERSHARE(UNIT:BAHT) 2.50 3.33
ORDINARYSHARES(UNIT:SHARE) 26,399,995 26,399,995
Notestothefinancialstatementsareanintegralpartoftheabovefinancialstatements.
Income Statements
2010 2009
C.P.L.GROUPPUBLICCOMPANYLIMITED
FortheyearendedonDecember31,2010and2009
(Unit:Baht)
ISSUEDAND PREMIUMS UNREALIZEDGAINRETAINEDEARNINGS
PAID-UPSHARE ONSHARE INSECURITIES APPROPRIATED UNAPPROPRIATED TOTAL
CAPITAL CAPITAL AVAILABLEFORSALE LEGALRESERVE
Balance As of December 31, 2008 263,999,950.00198,000,000.00 653,327.15 28,940,744.21410,615,404.40902,209,425.76
UnrealizedGaininSecuritiesAvailable
forSale - - (653,327.15) - - (653,327.15)
NetProfit - - - - 87,825,772.11 87,825,772.11
PaidDividends(Note18) - - - -(39,599,992.50)(39,599,992.50)
BalanceAsofDecember31,2009 263,999,950.00198,000,000.00 - 28,940,744.21458,841,184.01949,781,878.22
NetProfit - - - - 66,017,548.26 66,017,548.26
PaidDividends(Note18) - - - -(65,999,987.50)(65,999,987.50)
BalanceAsofDecember31,2010 263,999,950.00198,000,000.00 - 28,940,744.21458,858,744.77949,799,438.98
Notestothefinancialstatementsareanintegralpartoftheabovefinancialstatements.
Changes In Shareholders’ Equity StatementsC.P.L.GROUPPUBLICCOMPANYLIMITED
FortheyearendedonDecember31,2010and2009
31 Annual Report 2010C.P.L. Group Public Company Limited
32 Annual Report 2010C.P.L. Group Public Company Limited
CASH FLOW FROM OPERATING ACTIVITIES ProfitbeforeCorporateIncomeTax 90,200,774.20 120,758,835.55AdjustmentstoProfitbeforeTaxforCashReceipt(Used)from Operation Depreciation 25,876,169.07 25,470,255.26 PrepaidExpenseAmortization 939,258.59 3,355,738.91 ReversalofAllowanceforDoubfulDebt (5,300,000.00) (6,097,569.66) EstimationofDebtReductionfromReturnedGoodsand DiscountPayment (1,145,830.72) (91,154.52) EstimationCostfromReturnedGoods 731,268.03 (68,972.48) LossfromDeclininginValueofInventories(Reversal) 4,799,405.65 (3,965,603.71) Loss(Gain)fromUnrealizedExchangeRate 213,264.68 (392,762.24) Loss(Gain)fromSaleofProperty,PlantandEquipment (287,881.00) (366,257.07) Loss(Gain)fromSaleofGeneralInvestment - (693,169.58) LossfromImpairmentofGeneralInvestment 3,543,900.54 8,493,089.22 InterestIncomefromBankDeposit (236,139.89) (217,717.59) InterestIncomefromDefaultedRepaymentofAccountReceivable (15,594.49) - InterestIncomefromInvestmentinDebtInstrument (2,636,286.01) (2,829,745.20) InterestExpenses 675,273.25 759,009.10 CashReceipt(Paid)beforeChangesinOperatingAssetsandLiabilities 117,357,581.90 144,113,975.99 (Increase)DecreaseinAccountsandNotesReceivableOtherCompanies 19,670,583.84 53,109,165.98 (Increase)DecreaseinAccountsandNotesReceivableRelatedCompanies (5,634,682.37) (8,605,546.61) (Increase)DecreaseinInventories (187,778,377.53) 108,250,289.57 (Increase)DecreaseinOtherCurrentAssets 426,112.22 (3,331,518.50) Increase(Decrease)inAccountsandNotesPayable (5,366,052.00) (37,931,899.94) Increase(Decrease)inAccountsPayable-RelatedCompanies (2,902,409.24) 2,540,390.79 Increase(Decrease)inAccruedExpenses (4,023,567.96) (182,084.39) Increase(Decrease)inOtherCurrentLiabilities 9,611.23 180,678.88 CashReceipt(Paid)fromOperatingActivities (68,241,199.91) 258,143,451.77 CashReceivedinInterestIncomefromBankDeposit 236,139.89 217,717.59 CashReceivedinInterestIncomefromDefaultedRepayment ofAccountReceivable 15,594.49 - CashPaidCorporateIncomeTaxandWithholdingTax (49,480,281.32) (33,330,181.87)CashProvided(Used)fromOperatingActivities-Net (117,469,746.85) 225,030,987.49
Notestothefinancialstatementsareanintegralpartoftheabovefinancialstatements.
Cash Flow StatementsC.P.L.GROUPPUBLICCOMPANYLIMITED
FortheyearendedonDecember31,2010and2009
2010 2009
33 Annual Report 2010C.P.L. Group Public Company Limited
CASHFLOWFROMINVESTINGACTIVITIES CashPaidfromInvestmentinDebtInstrument (10,000,000.00) - CashReceivedfromSaleofInvestmentinMutualFund - 4,101,418.10 CashReceivedfromSaleofInvestmentinDebtInstrument 20,000,000.00 - CashPaidforPurchasesofProperty,PlantandEquipment (62,045,667.45) (27,197,922.65) CashReceivedfromSaleofProperty,PlantandEquipment 287,900.00 474,702.24 CashReceivedinInterestIncomefromLongTermInvestment 2,782,943.53 2,842,000.01 CashPaidinDepositPurchasesAssets (1,609,728.00) (6,668,388.00)CashProvided(Used)fromInvestingActivities-Net (50,584,551.92) (26,448,190.30)CASHFLOWFROMFINANCINGACTIVITIES Increase(Decrease)inShort-TermLoanfromFinancialInstitute 48,627,904.64 (26,372,395.50) PaidDividends (65,999,987.50) (39,599,992.50) CashPaidinInterestExpenses (621,485.89) (813,421.26)CashProvided(Used)fromFinancingActivities-Net (17,993,568.75) (66,785,809.26)Effect from Changes in Exchange Rate of Cash and Cash EquivalentItems 98,323.66 290,166.78CASHANDITSEQUIVALENTINCREASE(DECREASE)-NET (185,949,543.86) 132,087,154.71CASHANDITSEQUIVALENTITEMSATBEGINNINGOF THEPERIOD (Note6) 244,190,118.38 112,102,963.67CASHANDITSEQUIVALENTITEMSATENDINGOF THEPERIOD (Note6) 58,240,574.52 244,190,118.38 AdditionalDisclosuresofCashFlowsInformation: Non-CashTransactions - Property,PlantandEquipmentIncreasefromtransferof DepositPurchasesAssets 194,000.00 950,000.00 - PurchasesAssetsinCredit 65,000.00 444,604.09
Notestothefinancialstatementsareanintegralpartoftheabovefinancialstatements.
Cash Flow StatementsC.P.L.GROUPPUBLICCOMPANYLIMITED
FortheyearendedonDecember31,2010and2009
2010 2009
34 Annual Report 2010C.P.L. Group Public Company Limited
1. General Information TheCompanywasregisteredonJanuary27,1994,haveregistrationnumber0107537000289with
itsregisteredofficesituatedat700Moo6,SukhumvitRd,BangPooMai,MuangSamutprakran,Thailand.ItsmainbusinessactivityisproducingandsellingtannedleatherbywasCHAROENSINHOLDINGCO.,LTD,MajorShareholder.
2. The Basis of Preparation of the Financial Statements2.1 TheCompanyhadpreparedthefinancialstatements inaccordancewithThaiAccountingStan-
dardsincludingrelatedinterpretationsandguidelinespromulgatedbytheFederationofAccountingProfessions,applicablerulesandregulationsoftheSecuritiesandExchangeCommissionandwithgenerally accepted accounting principles in Thailand.
2.2 Thefinancialstatementshavebeenpreparedonahistoricalcostbasisexceptwhereotherwisedisclosed in the accounting policies.
2.3 Inordertopreparethefinancialstatementstocomplywithgenerallyacceptedaccountingstandards,theCompany’smanagementhadtomakesomeestimatesandsuppositionswhichmayhaveaneffect on the amount shown for revenue, expenses, assets and liabilities and also on the disclosures concerning assets and contingent liabilities, therefore the actual result may differ the estimated amount.
2.4 Fortheconvenienceoftheuser,andEnglishtranslationofthefinancialstatementshasbeenpre-paredfromthefinancialstatementsthatareissuedintheThailanguage.
Notes to Financial StetementsC.P.L.GROUPPUBLICCOMPANYLIMITED
December31,2010and2009
35 Annual Report 2010C.P.L. Group Public Company Limited
3. Adoption to New Accounting Standards, Financial Reporting Standards and Interpretation TheFederationofAccountingProfessionshasissuedNotificationNo.17/2010andNo.50toNo.
55/2010,regardingnewaccountingstandards,financialreportingstandardsandinterpretation.Thesearenoteffectiveforthecurrentyear,exceptFrameworkforthePreparationandPresentationofFinancialStatements,whichwaseffectiveimmediately. Effective date
FrameworkforPreparationandPresentationofFinancialStatements(revised2009) Immediately
TAS1(revised2009) PresentationofFinancialStatements 1January2011
TAS2(revised2009) Inventories 1January2011
TAS7(revised2009) StatementofCashFlows 1January2011
TAS8(revised2009) AccountingPolicies,ChangesinAccountingEstimatesandErrors 1January2011
TAS10(revised2009) EventsAftertheReportingPeriod 1January2011
TAS11(revised2009) ConstructionContracts 1January2011
TAS12 IncomeTaxes 1January2013
TAS16(revised2009) Property,PlantandEquipment 1January2011
TAS17(revised2009) Leases 1January2011
TAS18(revised2009) Revenue 1January2011
TAS19 EmployeeBenefits 1January2011
TAS20(revised2009) AccountingforGovernmentGrantsandDisclosure
ofGovernmentAssistance 1January2013
TAS21(revised2009) TheEffectsofChangesinForeignExchangeRates 1January2013
TAS23(revised2009) BorrowingCosts 1January2011
TAS24(revised2009) RelatedPartyDisclosures 1January2011
TAS26(revised2009) AccountingandReportingbyRetirementBenefitPlans 1January2011
TAS27(revised2009) ConsolidatedandSeparateFinancialStatements 1January2011
TAS28(revised2009) InvestmentsinAssociates 1January2011
TAS29 FinancialReportinginHyperinflationaryEconomies 1January2011
TAS31(revised2009) InterestsinJointVenture 1January2011
TAS33(revised2009) EarningsperShare 1January2011
TAS34(revised2009) InterimFinancialReporting 1January2011
TAS36(revised2009) ImpairmentofAssets 1January2011
TAS37(revised2009) Provisions,ContingentLiabilitiesandContingentAssets 1January2011
TAS38(revised2009) IntangibleAssets 1January2011
TAS40(revised2009) InvestmentProperty 1January2011
TFRS2 Share-basedPayment 1January2011
TFRS3(revised2009) BusinessCombinations 1January2011
TFRS5(revised2009) Non-currentAssetsHeldforSaleandDiscontinuedOperations 1January2011
TFRS6 ExplorationforandEvaluationofMineralResources 1January2011
Interpretation15 AgreementsfortheConstructionofRealEstate 1January2011
36 Annual Report 2010C.P.L. Group Public Company Limited
ThemanagementoftheCompanyhasassessedtheeffectoftheaccountingstandardsandfinan-cialreportingstandardsbelievethatthesestandardswillnothaveanysignificantimpactonthefinancialstatementsfortheyearinwhichtheyareinitiallyapplied.Except,theTAS19EmployeeBenefits,themanagementoftheCompanyhasbeenevaluatingforthecontingentliabilitiesfromRetirementBenefitPlans.
4. Summary of Significant Accounting Policies4.1 Recognitionofrevenues
- Revenue from sale is recognized when goods are delivered to customer.- Revenue of rental is recognized in accordance with the period of rent.- Revenue of interest receivable is recognized in accordance with the period of receipt which
is computed from outstanding principle.- Revenue from tax return is recorded to other income when tax return are received- Dividendrevenueisrecognizedwhentherighttoreceivedividendarises.
4.2 Recognition of expenses- Expenses are recognized on accrual basis.
4.3 Cash and cash equivalents Cash and cash equivalents include bank deposit in saving account, current account, and not
over3monthsfixedaccountwithnotobligations.4.4Accountsreceivable,otheraccountsreceivable,allowancefordoubtfuldebtandestimationofdebt
reduction allowance Accountsreceivableandotheraccountsreceivablearevaluedatnetrealizablevalue.For
allowance for doubtful debt accounts, estimated from those accounts which are likely to be uncol-lectable.
Estimation of debt reduction allowance is estimation of debt reduction and merchandise returned receipt which is derived from the Company merchandise is not complied with the at-tributethecustomersdefinedwherebytheCompanycomputedfromthedebtreductionrateandmerchandise returned receipt over sales by average multiplication with merchandise sales incurred every three months.
4.5 Inventories Inventories are valued at cost or net realizable value, whichever is lower by calculated as
follow: - RawmaterialsarevaluedatcostpriceunderFIFOmethod.- Work-in-process is valued at actual cost.- Finishedgoodsarerecordedincostpriceinaccordancewithspecificmethod.- SparepartsarevaluedatcostpriceunderFIFOmethod. Estimation of return goods is estimation from average cost of goods sold rate multiplied with
estimation of debt reduction allowance incurred from merchandise returned.
37 Annual Report 2010C.P.L. Group Public Company Limited
4.6 Short-termandlong-terminvestments- Investments in non-marketable securities which are held as a general investment are shown
at cost price and also adjusted the allowance for impairment. The Company recognized the change of the value of general investments in the income statement when there is a disposal of the investment or the impairment of investment.
- Investment in unit trust in the marketable security which the Company holds as available for salesecurityisreflectedbyfairvalue.Thefairvalueofunittrustisannouncementpricefromopen fund as of the date in the balance sheet. The Company recognized the change of the value as separate transaction in the shareholders equity in the balance sheet and would be recorded in the income statement when there is a disposal of the investment or impairment of investment.
- Held to maturity debt instrument stated at amortized cost.4.7Propertyplantandequipment Propertyplantandequipmentarerecordedatcostonthetransactiondatelessaccumulated
depreciation.Depreciationiscalculatedonastraight-linebasisovertheapproximateusefullifeasfollows:
-BuildingsandConstructions 20years - Buildings Improvement 5 years -MachinesandEquipments 10years -FixturesandofficeEquipments 5,10years - Vehicles 5 years -WasteWaterStorage 10years The Company did not carry depreciation for land and asset being construction.
Expenditure in respect of extension, life renewal or asset improvement which causes the present replacement price increased materially. It will combine as cost of asset. Regarding repairing fee and maintenance, it is recognized as expense in the incurred accounting period.
Gainorlossfromdisposalofland,plantandequipmentiscomputedfromdiscrepancybetweennet cash received and book value and recognized as other revenue or other expense in the state-ment of income.
4.8Intangibleasset IntangibleAsset,typeofcomputersoftwareisvaluedatcostonthetransactiondatede-
ductedaccumulatedamortization;amortizationiscalculatedbyreferencetoitscostonastraightline method over the 5 years useful life.
4.9 Impairment Impairment of outstanding book value of asset is revised as of the balance sheet date as
to whether there is indication of impairment or not. If there is indication, realizable asset value will beestimated.Lossfromimpairmentwillberecognizedwhenbookvalueofassetorbookvalueofassetunitwhichgeneratescashhigherthannetrealizablevalue.Lossfromimpairmentisrecordedin the statement of income.
38 Annual Report 2010C.P.L. Group Public Company Limited
CalculationofRecoverableAmount-Therecoverableamountisthegreateroftheasset’snetsellingpriceandvalueofusage.In
assessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.Foranassetthatdoesnotgeneratecashinflowslargely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
Reversals of Impairment- Animpairmentlossisreversediftherehasbeenachangeintheestimatesusedtodetermine
therecoverableamount.Animpairmentlossisreversedonlytotheextentthattheasset’scarrying amount does not exceed the carrying amount that would have been determined, net ofdepreciationoramortization,ifnoimpairmentlosshadbeenrecognized.Allreversalsofimpairment losses are recognized as revenue in the statement of income.
4.10 Provisions ProvisionsarerecognizedwhentheCompanyhasapresentlegalorconstructiveobligation
asaresultofpastevents,itisprobablethatanoutflowofresourceswillberequiredtosettlethe obligation, and a reliable estimate of the amount can be made. Where the Company expects a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.
4.11Employeesbenefit TheCompanyisrecognizedsalary;wage,bonusandsocialsecurityfundareexpenseon
date when the transactions occur.4.12 Foreigncurrencies Items denominated in foreign currencies are recorded in Baht at the prevailing exchange rate
when the transactions occur, and their balances of assets and liabilities at the ended of period are convertedintoBahtbyclosingratewhichistheprevailingexchangerateonthatdate.Profitorloss arising from such conversion is shown as revenues or expenses in the income statements.
4.13 Financialinstruments Financialassetscarriedonthebalancesheetsincludecashandbankdeposit,investment,
andaccountsreceivable,financialliabilitiescarriedonthebalancesheetsincludeaccountspayable,loan. The particular accounting policies adopted for each items are disclosed in each individual section.
Theperformedtheforwardforeigncurrenciescontractsoastohedgeagainstriskfromfluc-tuation of exchange rates. The forward foreign currencies contract will determine exchange rates in the future that foreign currencies asset and liability will receive or has to be repayable. The forward foreign currencies contract as of period end will be computed by fair value and disclosed in the notetothefinancialstatements.Inaddition,realizedgain(loss)incurredfromtheforwardforeignexchange contract will be recorded in the statement of income.
4.14Earnings(loss)pershare Basicearnings(loss)persharearecalculatedbydividingnetprofit(loss)withtheweighted
averaged number of issued and paid-up shares. The Company did not calculate the fully-diluted earnings(loss)persharesinceithasnoequivalentordinarysharesequivalents.
39 Annual Report 2010C.P.L. Group Public Company Limited
4.15 Theappropriationofretainedearnings TheappropriationofretainedearningsisattributabletothePublicCompanyAct2535(1992).
TheCompanywillappropriateretainedearningswhenitisapprovedattheshareholders’meeting.
5. Inter - Transactions The Company constitutes important business transaction with the related companies. (common group
shareholdersandexecutives)Suchbusinesstransactionsarecompliedwithtradingtermandcriteriaasper mutually agreed between the Company and related companies which is complied with the normal course of business whereby it can be summarized as follows:5.1 Inter-RevenuesandExpenses
PricingPolicy FortheQuarters
endedonDecember31,
2010 2009
Baht Baht
The Related Company
Inter-SalesMaterial
-EAGLECHEMICALINDUSTRIALCO.,LTD. (1) 95,760.00 151,200.00
Inter-SalesGoods
-MIMIINDUSTRAILCO.,LTD. (2) 674,822.00 442,653.50
-MITNIYUM(MANWOOD)CO.,LTD (2) 9,050,790.90 10,478,010.90
-C.P.L.MARKETINGCO.,LTD. (2) 94,480,712.19 70,198,220.58
Inter-PurchasesMaterial
-EAGLECHEMICALINDUSTRIALCO.,LTD. (2) 109,736,211.00 99,456,998.00
-APPLYD.B.INDUSTRIALCO.,LTD. (2) 11,668,950.00 9,174,000.00
Inter-SaleExpenses
-C.P.L.MARKETINGCO.,LTD. (4) - 485,406.55
Inter-Professionalservice
-CHAROENSINASSETCO.,LTD. (3) 180,000.00 180,000.00
PricingPolicywasasfollows: (1)Costplusmarginapproximate20% (2)Normalbusinesspriceswhichcanbecomparedwithtransactionsincurredbyoutsideparties (3)Pricesinaccordancewiththecontract (4)Basedonmutualagreed
40 Annual Report 2010C.P.L. Group Public Company Limited
5.2 Inter-AssetsandLiabilities
Asof Asof March31,2010December31,2009 Baht Baht Inter-AccountsandNotesReceivable The Related Companies -C.P.L.MARKETINGCO.,LTD. 45,314,003.55 37,598,026.34 -MIMIINDUSTRAILCO.,LTD. 210,764.32 50,682.96 -MITNIYUM(MANWOOD)CO.,LTD 2,906,036.86 5,147,413.06Total 48,430,804.73 42,796,122.36 Inter-AccountsPayable The Related Companies -EAGLECHEMICALINDUSTRIALCO.,LTD 34,057,597.10 36,987,291.34 -APPLYD.B.INDUSTRIALCO.,LTD. 938,925.00 911,640.00Total 34,996,522.10 37,898,931.34 AccruedExpenses The Related Company -EAGLECHEMICALINDUSTRIALCO.,LTD 130,304.60 468,446.00Total 130,304.60 468,446.00
5.3 TheCompany’sRelationship Consist of: Name Activities Relationship
EAGLECHEMICALINDUSTRIALCO.,LTD. ProducerandImporterofColourandChemicals Related Company by Common Group
ShareholdersandExecutives
APPLYD.B.INDUSTRIALCO.,LTD. ProducerandImporterofColourandChemicals Related Company by Common Group
ShareholdersandExecutives
MIMIINDUSTRAILCO.,LTD. ProducerandSellerofRubber RelatedCompanybyCommonGroup
ShareholdersandExecutives
MITNIYUM(MANWOOD)CO.,LTD. ProducerandSellerofFootwear RelatedCompanybyCommonGroup
ShareholdersandExecutives
CHAROENSINASSETCO.,LTD. RentforProperty RelatedCompanybyCommonGroup
ShareholdersandExecutives
C.P.L.INTERNATIONALCO.,LTD. HoldingInvestment RelatedCompanybyShareholders.
C.P.L.MARKETINGCO.,LTD. TradingofLeatherProducts RelatedCompanybyindirect
shareholdingviaC.P.L.INTERNATIONAL
CO.,LTD.
41 Annual Report 2010C.P.L. Group Public Company Limited
6. Cash and Cash Equivalent Items Consist of:
Asof Asof December31,2010 December31,2009 Baht Baht Cash 523,783.72 2,612,080.54 BankDeposit-CurrentDeposit 15,490,656.15 52,492,680.28 BankDeposit-SavingDeposit 42,226,134.65 189,085,357.56 Total 58,240,574.52 244,190,118.38
7. Short - Term Investment Consist of :
Asof Asof December31,2010 December31,2009 Baht Baht DebtInstrumentMaturityin1year - 20,000,000.00Total - 20,000,000.00 AsofDecember31,2009,amountofBaht10.00millionwasinvestmentinunsubordinatedsecured
and holder name debentures. The maturity of debentures for 4 years from issue date for since October 2,2006toOctober2,2010withinterestrateof6.25%perannum.Presently,theCompanyhasalreadyredeems the investment in debt instrument.
AsofDecember31,2009,amountofBaht10.00millionwasinvestmentinunsubordinatedsecuredandholdernamedefinableadebentures.Thematuritydebenturesfor7yearsfromissuedateforperiodsinceOctober8,2003toOctober8,2010withinterestrateof3.70%perannum.Presently,theCompanyhas already redeems the investment in debt instrument.
8. Accounts and Notes Receivable Other Companies - Net Consist of:
Asof Asof December31,2010 December31,2009 Baht Baht AccountsReceivable–Oversea 43,064,124.20 32,464,396.32 AccountsReceivable–Domestic 94,712,655.51 134,719,058.51 Total 137,776,779.71 167,183,454.83 NotesReceivable 7,676,896.24 2,187,136.05 Total 145,453,675.95 169,370,590.88 LessAllowanceforDoubtfulDebt (22,928,354.40) (32,316,264.71) EstimationofDebtReductionfromReturnGoodsand DiscountPayment (4,816,243.83) (5,962,074.55) Net 117,709,077.72 131,092,251.62
42 Annual Report 2010C.P.L. Group Public Company Limited
FortheyearsendedonDecember31,2010and2009,allowancefordoubtfuldebthasmovementas follows:
Fortheyearsendedon December31,2010 December31,2009 Baht Baht AllowanceforDoubtfulDebt–Beginning (32,316,264.71) (38,413,834.37) AddReservewithinPeriod - - LessReceivewithinPeriod 5,300,000.00 6,097,569.66 Writtenoff 4,087,910.31 - AllowanceforDoubtfulDebt-Ending (22,928,354.40) (32,316,264.71)
AnaginganalysisofaccountsreceivableothercompaniesasofDecember31,2010and2009areas follows:
Asof Asof December31,2010 December31,2009 Baht Baht Withincreditterm 69,122,150.86 72,584,102.06 Overdue1to30days 30,344,626.07 41,075,181.92 Overdue31to60days 6,437,537.13 16,015,126.48 Overdue61to90days 499,312.73 4,193,581.74 Overdue91to180days 3,873,260.88 849,135.72 Overdue181to365days 4,571,537.64 150,062.20 Overdueover366days 22,928,354.40 32,316,264.71 Total 137,776,779.71 167,183,454.83
AsofDecember31,2010,accountsreceivableoverdueover181daysinamountofBaht4.49million,SuchaccountreceivablehasnegotiatedwiththeCompanyandconstitutesthelettertonotifyrequesting the gradually debt repaymentwithin 1 years.However, themanagement of theCompanybelieves that the Company does not have risk that will not be able to collect debt.
9. Accounts and Notes Receivable - Related Companies Consist of:
Asof Asof December31,2010 December31,2009 Baht Baht AccountsReceivable–Oversea 45,314,003.55 37,598,026.34 AccountsReceivable–Domestic 2,461,106.46 5,198,096.02 Total 47,775,110.01 42,796,122.36 NotesReceivable 655,694.72 - Total 48,430,804.73 42,796,122.36
43 Annual Report 2010C.P.L. Group Public Company Limited
AnaginganalysisofaccountsreceivablerelatedcompaniesasofDecember31,2010and2009are as follows:
Asof Asof December31,2010 December31,2009 Baht Baht Withincreditterm 28,074,069.00 25,565,921.86 Overdue1to30days 19,631,191.68 6,852,326.27 Overdue31to60days 69,849.33 7,728,066.23 Overdue61to90days - 2,649,808.00Total 47,775,110.01 42,796,122.36
10. Inventories - Net Consist of:
Asof Asof December31,2010 December31,2009 Baht Baht FinishedGoods 44,182,237.59 19,260,063.68 RawMaterials 26,557,457.92 10,264,029.97 Work-in-Process 409,836,746.39 296,042,196.67 Chemical 40,037,387.24 31,722,394.97 SparePart 3,280,535.24 757,645.96 Goods-in-Transit 65,349,263.56 43,418,919.16Total 589,243,627.94 401,465,250.41 LessAllowancefromDeclininginValueofInventories (7,297,540.90) (2,498,135.25) PlusEstimationCostofAllowanceforReturnedGoods 2,943,514.53 3,674,782.56Net 584,889,601.57 402,641,897.72 AsofDecember31,2010and2009,theCompanyhasinsuredfinishedgoods,rawmaterials,work
inprocess,andsuppliesinBaht614million,equallyfortwoyearswhichthebeneficiaryfrominsuranceisgrantertoonemerchantbankinnote13.
FortheyearsendedonDecember31,2010and2009,allowancefromdeclininginvalueofinven-tories has movement as follows:
Fortheyearsendedon December31,2010 December31,2009 Baht Baht AllowanceforDeclininginValueofInventories-Beginning (2,498,135.25) (6,463,738.96) AddAllowanceincreasedwithinPeriod (16,449,585.99) (1,078,168.09) LessSalewithinPeriod 11,650,180.34 5,043,771.80 AllowanceforDeclininginValueofInventories-Ending (7,297,540.90) (2,498,135.25)
44 Annual Report 2010C.P.L. Group Public Company Limited
11. Long Term Investment Consist of : Activities Placeof Paidup %of OriginalCost Investment Dividends
incorporation ShareCapital Shareholding ofInvestment Asof Forthequarterendedon
March31,2010December31,2009March31,2010 March31,2009
2010 2009 2010 2009
U.S.Dollar % U.S.Dollar Baht Baht Baht Baht
GeneralInvestment:
C.P.L.INTERNATIONAL Businessof BritishVirgin
COMPANYLIMITED Tannery Islands 8,000,000.00 15 1,200,000.00 51,483,750.00 51,483,750.00 - -
LessAllowanceforImpairment (13,152,489.19) (9,608,588.65) - -
38,331,260.81 41,875,161.35 - -
SIRINRATCOMPANYLIMITED Building Thai Baht Baht
Forrent 15,000,000.00 3 450,000.00 450,000.00 450,000.00 - -
TotalGeneralInvestment 38,781,260.81 42,325,161.35 - -
DebtInstrumentheldtoMaturity:
DebtInstrumentMaturityin2-5years 26,000,000.00 16,000,000.00 - -
DebtInstrumentMaturityin6-10years 18,000,000.00 18,000,000.00 - -
TotalDebtInstrumentheldto
Maturity 44,000,000.00 34,000,000.00 - -
TotalLong-TermInvestment 82,781,260.81 76,325,161.35 - -
InvestmentinDebtInstrumentHeldtoMaturity AsofDecember31,2010,amountofBaht10.00millionwasinvestmentinunsubordinatedsecured
andholdernamedefinableadebentures.Thematuritydebenturesfor4yearsfromissuedateforperiodsinceOctober1,2010toOctober1,2014withinterestrateof3.85%perannum.
AsofDecember31,2010and2009,amountofBaht16.00millionwasinvestmentinunsubordinatedsecuredandholdernamedefinabledebentures.Thematurityofdebenturesfor8yearsfromissueddateforperiodsinceMay20,2004toMay20,2012withinterestrateyears1-4is4.25%perannumandinterestyears5-8is5.75%perannum.
AsofDecember31,2010and2009,amountofBaht18.00millionwasdebenturesintypeofnon–guaranteed,non–convertible.Thematurityofdebenturesfor10yearsfromissueddateforperiodsinceOctober22,2009toOctober22,2019withinterestrateyears1-5is4.80%perannumandinterestyears6-10is6.00%perannum.
45 Annual Report 2010C.P.L. Group Public Company Limited
12. Property, Plant and Equipment - Net (Unit:Baht) Balanceof Increase Decrease Balanceof Asof Purchase Transferin Sales TransferOut Asof December31, December31, 2009 2010 Cost LandandLandImprovement 49,425,352.00 40,679,418.00 - - - 90,104,770.00Buildings and Constructions BuildingsImprovement 151,952,064.35 - - - - 1,215,438.69MachinesandEquipments 226,260,557.96 18,339,062.15 194,000.00 (12,152,316.46) - 232,641,303.65FixturesandOfficeEquipments 7,281,447.12 1,297,187.30 - - - 8,578,634.42Vehicles 27,743,986.08 1,795,000.00 - - - 29,538,986.08WasteWaterStorage 6,250,000.00 - - - - 6,250,000.00 Total 470,128,846.20 62,110,667.45 194,000.00 (12,152,316.46) - 520,281,197.19 Accumulated Depreciation BuildingsandConstructions (118,065,712.91) (4,169,348.33) - - - (122,235,061.24)BuildingsImprovement - (243,087.74) - - - (243,087.74)MachinesandEquipments (146,014,476.99) (16,159,938.91) - 12,152,297.46 - (150,022,118.44)FixturesandOfficeEquipments (5,313,960.19) (848,382.51) - - - (6,162,342.70)Vehicles (17,665,512.72) (4,455,411.58) - - - (22,120,924.30)WasteWaterStorage (6,249,997.89) - - - - (6,249,997.89) Total (293,309,660.70) (25,876,169.07) - 12,152,297.46 - (307,033,532.31)Property, Plant and Equipment – Net 176,819,185.50 213,247,664.88DepreciationinIncomeStatementsFortheYears EndedonDecember31,2010 25,876,169.07
EndedonDecember31,2009 25,470,255.26
AsofDecember31,2010and,2009,theCompanyhadassetswiththedepreciationfullycalculated
butstilloperatewhichhadacostvalueofBaht156.27millionandBaht159.06millionrespectively.ThenetbookvalueofwhichwasnowBaht276.00andBaht257.00respectively.
AsofDecember31,2010and,2009,theCompanypledgedandmortgagedlandplusproperty,machineryandsomeequipmentwhichthenetbookvalueofBaht105.33andBaht90.88respectively,ascollateralagainstalltypeofliabilityatthemerchantbankandbeneficiaryfromtheinsuranceintheamountaccordingtotheinsurancecontractinBaht216.00million,equallyfortwoyears.ItisgiventomerchantbankaccordingtonoteNo.13.
46 Annual Report 2010C.P.L. Group Public Company Limited
13. Credit Facilities and Guarantee TheCompanyhascreditlinefromcommercialbankandfinancialinstitutionsinformbankoverdraft,
trust receipts, short-term loan, letter of guarantee, credit line for forward contract, and foreign exchange. AsofDecember31,2010and2009hasgrantedthetotalcreditlineinamountofBath1,048.00millionandamountofUSdollar3.00million,equallyfortwoyears.Itispledgedbymortgageregisteroflandplusproperty,machineryandequipment, andbeneficiary from insurance in inventory, such landplusproperty,machinery,equipment.(Foryears2009directorsoftheCompanypledged.Presently,hasalreadydischargedobligationpledgedofdirectors.)
14. Short - Term Loan from Financial Institution AsofDecember31,2010and2009,thewholeamountisloanfrommerchantbankinformoftrust
receiptpayablewithcarriedtheinterestrateof6.125–7.00%perannumandtermpayableabout60-120days,ifrepaymentoverthetermtheloancarriedtheinterestrateof6.125perannum(Foryears2009termpayableabout62-102days,ifrepaymentoverthetermtheloancarriedtheinterestrateof6.125perannum).Undertermoftrustreceiptcontract,theCompanyreceivesmerchandiseorderedbyusingcreditofthefinanceinstitutes.Hence,theCompanyconstitutesobligationcommitmenttothefinanceinstitutesforsuchmerchandisefeeboththatkeptordisposed.
SuchaboveloanconstitutescollateralaccordingtonoteNo.13.
15. Management Benefit Expenses ThismanagementremunerationisbenefitthatrepayabletomanagementanddirectorsoftheCom-
pany.Itiscomposedofremunerationthatismonetary,i.e.salary,relatedbenefitandremunerationofdirectorsincludingremunerationbenefitinotherform.TheCompany’smanagementisthepersonswhoaredefinedundertheSecuritiesandExchangeAct.
16. Corporate Income Tax FortheyearendedofDecember31,2010and2009,theCompanycalculatescorporateincometax
at25%,whichcomplieswithroyaldecreeNo.475datedonJuly29,2008toreducecorporateincometaxfrom30%to25%ofnetprofitnotoverBaht300millionforthe3consecutivelyaccountingperiodscom-mencedfromthefirstaccountingperiodwhichcommencedwithinorafterJanuary1,2008,forthelistedcompanies according to the law of securities and securities market. The Company computed corporate incometaxofaccountingnetprofitafteraddingadjustedtransactioninaccordancewiththeRevenueCode which is mainly reversal of allowance for doubtful debt, estimation of debt reduction, estimation of return goods, loss from impairment of general investment and loss from declining in value of inventories, etc.
47 Annual Report 2010C.P.L. Group Public Company Limited
17. Expenses by Nature Expenses by nature items consist of main expenses items are as follows:
Fortheyearsendedon December31,2010 December31,2009 Baht Baht ChangingwithinWorkinProcessandFinishGoods (138,716,723.63) 53,524,071.92 RawMaterialandChemicalUsed 1,759,756,602.07 1,123,676,232.55 LossfromDeclininginValueofInventories(Reversal) 4,799,405.65 (3,965,603.71) Employeeexpenses 104,455,253.19 90,287,967.41 Depreciation 25,876,169.07 25,470,255.26 ReversalofAllowanceforDoubtfulDebt (5,300,000.00) (6,097,569.66) LossfromImpairmentofGeneralInvestment 3,543,900.54 8,493,089.22 Sellingexpenses 52,527,129.31 41,768,822.92 OtherProductionExpenses 77,599,817.57 77,033,390.71 Otherexpenses 26,132,891.44 21,230,841.38 Total 1,910,674,445.21 1,431,421,498.00
18. Payment of Dividends Inaccordancewith theminuteof theAnnualGeneralShareholders’Meeting for theyear2010
whichheldonApril28,2010,itisunanimouslyresolvedthattheCompanyappropriatesretainedearn-ingsfor2009asdividendtoshareholdersinnumberof26.39millionsharesintherateofBaht2.50pershareaggregatingtoamountofBaht66.00million.DividendisrepayableonMay25,2010,wherebytheCompany has already paid dividend.
Inaccordancewith theminuteof theAnnualGeneralShareholders’Meeting for theyear2009whichheldonApril28,2009,itisunanimouslyresolvedthattheCompanyappropriatesretainedearn-ingsfor2008asdividendtoshareholdersinnumberof26.39millionsharesintherateofBaht1.50pershareaggregatingtoamountofBaht39.59million.DividendisrepayableonMay25,2009,wherebytheCompany has already paid dividend.
48 Annual Report 2010C.P.L. Group Public Company Limited
19. Presentation of Financial Data Segregated by Business Sector The Company operates in only one business sector, namely manufacturing and distribution of leather
productsandoperateinonegeographicalareaonlyinThailand.Thusallincome,profitandentireassetsshowninthefinancialstatementsarerelatedtothesaidbusinesssectorandgeographicalarea.
AsshowninfinancialstatementfortheyearendedonDecember31,2010and2009,theCompanycon-stitutes net foreign sales and domestic sales as follow:
Domestic Foreign Total 2010 2009 2010 2009 2010 2009 ’000Baht ’000Baht ’000Baht ’000Baht ’000Baht ’000Baht Sales512,059 539,015 1,474,433 1,006,380 1,986,492 1,545,396 ProfitfromOperation 30,851 91,790 154,149 119,913 185,000 211,704 OthersIncome 18,107 10,616 ProfitBeforeExpenses 203,107 222,320 SellingExpenses (52,527) (41,769) AdministrativeExpenses (37,244) (32,802) LossfromImpairmentofGeneralInvestment (3,544) (8,493) Managements’Remuneration (15,868) (14,665) ProfitBeforeFinancialCostsandCorporateIncomeTax 93,924 124,591 FinancialCosts (3,724) (3,832) ProfitBeforeCorporateIncomeTax 90,200 120,759 CorporateIncomeTax (24,183) (32,933) NetProfit 66,017 87,826
20. Contingent Liabilities and Obligation20.1 ApartfromliabilitiesshownonthebalancesheetsasofDecember31,2010and2009theCompany
still remains other obligations with commercial banks as follows:
Asof Asof December31,2010 December31,2009 -LettersofCredit
CreditLine770.0MillionBaht,CreditUsed 32.86MillionBaht 46.88MillionBaht CreditLine3.0MillionUSDollar,CreditUsed 4.48MillionBaht 17.78MillionBaht -LettersofGuarantee 3.67MillionBaht 3.41MillionBaht
20.2 AsofDecember31,2010and2009,theCompanyhascommitmentaboutcapitalexpenditureinamountofBaht160,000.00andBaht256,000.00respectively.
20.3 TheCompanycomprisesobligationcommitmentaccordingtothecontractofsecurityengagementwithoneothercompany.ThecontractholdsthelifeofoneyearendedonMay31,2011and2010.Itisdeterminedthatthelifeisautomaticallyrenewedfortheperiodof1year.TheengagementfeeisintherateofBaht82,000.00permonthandBaht63,000.00permonthrespectively,asofDecember31,2010and2009,theCompanyholdsthetotalengagementfeewhichhastofullyrepayuntilthecontractiscompleteinamountofBaht0.41millionandBaht0.31million,respectively.
49 Annual Report 2010C.P.L. Group Public Company Limited
20.4 TheCompanycomprisesobligationcommitmentaccordingtothecontractofexpertandadviserengagementwithonerelatescompany.ThecontractholdsthelifeoftwoyearendedonDecember31,2011.TheengagementfeeisintherateofBaht15,000.00permonthasofDecember31,2010and2009,theCompanyholdsthetotalengagementfeewhichhastofullyrepayuntilthecontractiscompleteinamountofBaht0.81millionandBaht0.36million,respectively.
21. Financial Instruments21.1PolicyofFinancialRiskManagement The Company constitutes risk in relation to change of interest rates and exchange rates by
whichtheCompanyconsiderstoutilizeanappropriatefinancialinstrumenttohedgeagainstsuchrisk.However,theCompanyhasnopolicytoholdorissuefinancialinstrumentforspeculatingorfor trading.
21.2RiskfromInterestRates Interestrateriskarisesfromthefluctuationofinterestratesinthefuturewhichwillaffect
operationsandcashflowoftheCompany,whichtheCompanyhadassetsandliabilitiesinstrumentsagainst this risk as follow :
Amount Interestrateperannum December31,2010 December31,2009 December31,2010 December31,2009 Million Baht Million Baht % % BankDeposit–SavingAccount 42.23 189.08 0.05–0.50 0.25–1.65 InvestmentinDebtInstrument heldtoMaturity 44.00 54.00 3.85–6.00 3.70–6.70
TrustReceiptsPayable 53.23 4.47 6.125–7.00 -
21.3CreditRisk
TheCompanyhasnotsignificantriskfromcreditriskinconnectiontoaccountsreceivablesincetheCompanyprovidessalesoverseasbyL/Capplicationoralternativelyclientsmakegoodspaymentinadvance.Moreover,domesticsalesaretypicallyperformedtofinanciallysecuredcom-panies whose capability is good at debt repayment. The Company has dealt with these clients foralongtime:therefore,itisanticipatedofnonsignificantriskderivedfromunpaymentofthoseaccountsreceivable.However,theCompanysufficientlyconsideredtheallowanceofdoubtfuldebt.
50 Annual Report 2010C.P.L. Group Public Company Limited
21.4RiskonExchangeRates Risk on exchange rates is regarded to purchase raw material, machines and sales denominated
inforeigncurrencies.TheCompanyhasfinancialassetsandfinancialliabilitiesinforeigncurrenciesas follows:
Currencies FinancialAssets FinancialLiabilities Asof Asof Asof Asof March31,2010 December31,2009 March31,2010 December31,2009 EUR - 450.00 - - GBP 235.00 - - - CNY - 100.00 - - INR 2,601.00 3,861.00 - - USDollars 3,620,729.81 4,002,600.53 2,373,343.47 1,060,831.68
AsofDecember31,2010and2009,theCompanyhedgetheriskfromforeigncurrencyex-change rate incurred from purchase raw material from overseas by performing the forward foreign currency contract as follows:
Asof Asof December31,2010 December31,2009 CreditLimitforForwardContract 20.00MillionBaht 20.00MillionBaht ValueofForwardContract–Buy 0.50MillionUS - Dollars - ValueofForwardContract-Buy 14.85MillionBaht - FairValue 15.12MillionBaht -
Fairvalueoftheforwardcontract-buyiscomputedbyusingratesdeterminedbythose counter party bank as of the date in balance sheet.
21.5FairValue Duetothefinancialassetsandliabilitiesaremainlyshorttermtype,themanagementbelieves
thatbookvaluesofsuchfinancialassetsandliabilitiesreflectvalueswhichdonotmateriallydifferfrom their fair values. In additional, the book values of long-term investments are equivalent to fair value.
22. Capital Management TheobjectivesoftheCompany’scapitalmanagementarearrangementofappropriatedfinancial
structure and maintenance of ability in continuously business operation whereas there is policy of debt to equity ratio maintenance to hold in the rate that the Company can operate business of the Company while there is appropriated capital cost burden including policy of debt to equity ratio maintenance to complywithtermintheloancontractthattherearerelatedfinancialinstitutes.
AsatDecember31,2010and2009,debttoequityratiointhefinancialstatementsis0.18:1and0.16:1,respectively.
23. Approval of the Financial Statements These financial statements have been approved by authorized directors of the Company on
February16,2011.
51 Annual Report 2010C.P.L. Group Public Company Limited
Companyname AuditorName FeeBaht
CPLGroupPublicCo.,Ltd. Mr.NarisSaowalagsakul 452,500
The company have no constitutes business transaction or personality relationship with the auditor or
theauditor’sofficeneitherdirectnorindirect,thentherehavenootherremuneratetopaytoauditor
The Remuneration in 2010 for Audit Fee
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