INTEGRITY QUALITY SERVICE - Saha-Union Co., Ltd

SAHA-UNION
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manufacturing of electronic components in 2011, while the gross profit from this part still existed in 2010. Secondly, the
cost of sales in textile went up in the second half of year when compared to the first half due to the continuous rise of cotton
prices but starting to fall in the second half of year. This made the cost of raw material acquired in advance become high
while selling price of the product went down following the falling market prices of cotton, bringing lower gross profit in the
second half of year. Thirdly, the plastic and rubber businesses located in Bang Chan Industrial Estate were surrounded
by flood. They were indirectly affected by the flood incident and had to cease the production for a short term. Customers
delayed the product delivery and lower sales, but some costs in the factories were constant and could not be reduced,
resulting in a decrease in gross profit. The vacuum bottle business, which partly operated at Bang Chan Industrial Estate,
was in part affected by the flood, while there were some production sectors being expanded to Bangpakong District, which
was still unable to operate in their full capacity; therefore, the higher cost made the gross profit decrease when compared
to the previous year.
Regarding the operating profits, the Company and its subsidiaries had the operating profit margin to total revenue calculated
under the equity method equal to 10.91%, decreasing by 11.07% when compared to 21.98% in 2010. This was because
gain on disposals of property, plant and equipment fell by 5%. Also, last year there were the special profits which were
generated only once from selling some parts of land owned by a subsidiary named “Union Textile Industries Public Co.,
Ltd.,” which was mentioned in the topic “other incomes”, but in this year there were no profits of such kind. Moreover, the
gross profits to total income fell by 4.83% due to the reason mentioned in the topic “Profit” (first paragraph). Lastly, the share
of profit from investments in associate companies per total income was lower by 2.66%, mainly because of lower profit in
associate companies in China, mostly were the power plants using coal as the main raw materials went noticeably high but
the electricity price could not be adjusted proportionately. Also, a power plant in Yunnan had a continuous loss until the
Board of Directors had a resolution to cease the operation, resulting in a dramatic decrease in asset value. The Company
had to record the recognition of the loss into the 2011 operating results.
The proportion of net profits to the total revenues in 2011 was equal to 8.51%, decreasing by 10.20% when compared to 18.71%
of total revenues in 2010 because of the operating profit to income as mentioned earlier fell by 11.07%, when deducted by
the proportion of finance cost at 0.22% of total revenues, when compared to 0.55% in 2010 and the proportion of corporate
income tax at 2.18% of total revenues, when compared to 2.72% last year. As a result, the decreases in finance cost and
corporate income tax by 0.87% in total had increased the proportion of operating profit to 11.07%, making net profit to total
revenues to decrease to 10.20%. The reason why the finance cost decreased was that the Company had surplus liquidity, so
it used the surplus money to pay the long-term debts before due, causing the interest expense to decrease. The decrease
in corporate income tax was in line with the decrease in net profit in taxation. Deducted by the net profit of stakeholders
with no control power of the subsidiaries at 1.04% of total revenues, the net profit of shareholders of the Company in 2011
was equal to 7.46% of total revenues. The rate of returns to shareholders in 2011 was equal to 4.94%, when compared to
12.98% in 2010, or decreased by 8.04%. The main reason was due to the decreasing net profit in 2011, as mentioned in the
previous paragraph that in 2010 there was a special profit generated only once from sale of some part of land owned by a
subsidiary, which did not occurred in 2011.
According to the consolidated financial statements of the Company in 2011, the net profit before dividing the equities of
the Company’s shareholders and the subsidiaries’ minor shareholders was equal to Baht 841.39 million, when compared
to the net cash flow from its operating activities at Baht 723.37 million. The net profit from the income statements was more
than the net cash flow from operating activities because the net profit included incomes in terms of dividend and interest
incomes, which were not listed in the operating activities, amounted to Baht 330.9 million categorized under the cash
flow from investment activities. Although the proportion of net cash flow from operating activities was 85.97% of the net
profits, when deducted by the 2 transactions under the investment activities, the cash derived from the net profit from the
operating activities was added to the cash inflow from all operating activities, demonstrating that the Company had good
liquidity.
3.5 Rates of Returns to Shareholders
As per the consolidated financial statement of 2011, under which the accounting standard required the calculation according
to the equity method, the Company shall record the recognition of profit shares (losses) from its subsidiaries and other
associated companies. As such, the Company had its net profits attributed to shareholders’ equities amounted to Baht
738.08 million or the earnings per share was Baht 2.55 (calculated by using the number of weighted average common