INTEGRITY QUALITY SERVICE - Saha-Union Co., Ltd

SAHA-UNION
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the finance lease agreements amounted to Baht 68 million; and repaid deposits from related parties amounted
to Baht 37 million. Moreover, the Company had the cash received from short-term loans from financial institutions
amounted to Baht 302 million; oversea subsidiaries received long-term loans from banks in China amounted to Baht
2,283 million; and subsidiaries received payment for increase of capital to expand their business from shareholders
with no participation in management amounted to Baht 78 million. In total, the net cash flow from financing activities
was equal to Baht 1,482 million.
After the summation of the above 3 activities, the Company had the additional cash flow of Baht 2,709.74 million;
and when summing up with the translation adjustments, the Company’s cash flow has increased by Baht 70.32
million (differences from foreign exchange rates) and when summing up with cash and cash equivalent at beginning
of year brought forwards amounted to Baht 1,588.07 million, balance of cash and cash equivalent at end of year
was equal to Baht 4,368.51 million, which was considered as having high liquidity.
4.2.2 Significant Liquidity Ratios
At year-end 2011, the Company had the ratio of current assets to current liabilities of 3.26:1 and the ratio of quick
liquidity to current liabilities of 2.61:1, indicating that the Company was able to convert the liquid assets to cash in
order to fully repay the current liabilities and still had the surplus liquidity of 1.61 times, indicating that the Company
and its subsidiaries still had sufficient financial liquidity.
Regarding the management of its account receivables and account payables, the Company had the average
period of debt collection of 55 days, which was equal to the previous year and approximately equivalent to the
credit term that the Company has given to its account receivables. Moreover, the Company had the cash cycle
as from the date of payment of raw materials, including the date of selling the products until the date of receiving
the product payment equal to 36 days, which was faster than the previous year of 39 days per cycle, as though
the Company and its subsidiaries had approximately 10 cash cycles in 1 year.
In 2011, the Company and its subsidiaries had the rate of operating profits to total incomes equal to 10.91%, which
was lower than 21.98% last year due to 3 major factors. First, the Company’s components of gross profit fell down by
4.83% as a result of a change in business type of the Company’s branch as mentioned earlier. Second, there was
no special profit generated only once from sale of a part of land owned by a subsidiary, causing the components to
decrease by 5.0%. Finally, profit shares from associated companies decreased, causing the components to decrease
by 2.66%. The main reason was the record of loss from the power plant owned by Yunnan Energy Qujing-Union
Power Co., Ltd., with details mentioned earlier under the topic Operating Profits.
Regarding the policy of financial structure, the Company had the debt-to-equity ratio of 0.33:1, which was slightly
better than 0.21:1 in the previous year, indicating that the financial structure with the sources of money from the
creditor’s equity was very limited when compared to the sources of money from shareholder’s equity; therefore,
the Company still had good opportunities to spend the sources of capital from the creditors in new projects (if any)
because the ratio of liabilities was still very low.
Moreover, the Company and its subsidiaries had the interest coverage ratio of 55.45 times, indicating that the
Company and its subsidiaries had sufficient current cash flow to fully repay the interest to creditors
The Company had the rates of returns to the shareholder’s equity of 4.94%, which was higher than the rates of
returns when compared to the interest rates of the fixed savings accounts of financial institution if considering
the dividends expected to be paid to shareholders at the rate of Baht 1.50 per share, or 59.18% of the net profits
under the cost method, which was in accordance with the Company’s policy of rates of dividend payment, at least
one-third of the net profits under the cost method.
4.2.3 Short-Term Liabilities Repayment Period which affects the Company’s Liquidity
The Company and its subsidiaries had the short-term loans amounted to Baht 449.59 million and some portions of
long-term loans, which shall be payable within 1 year, amounted to Baht 226.71 million; and some portions of liabilities
under the finance lease agreements, which shall be payable within 1 year, amounted to Baht 60.82 million; deposit from
related parties amounted to Baht 40.74 million; income tax payable amounted to Baht 45.19 million; and other current
liabilities amounted to Baht 57.73 million, totaling Baht 880.78 million which may be payable within 1 year; however,
when comparing the liquid assets, cash and cash equivalent, and the instant temporary investments, amounted to