SCI Annual Report 2015

US dollars. The Company will have to manage the money by paying to the sub-contractor and the seller of raw materials
in the same currency. Moreover, the subsidiary has the loan from the financial statements in US dollars and has the expense
which has to be paid in US dollars as well. This causes the business operation of the Company and the subsidiary has the
risk management from the exchange rate in the same time (Natural hedge) and the Company has the reserve for forward partly.
Moreover, the subsidiary also has the loan debt for 5.4 million US dollars which is due for the repayment of principal
in 5 years and the principal will be totally paid within March, 2020. Therefore, in the period when the principal has not
been totally paid yet, if the exchange rate at the end of accounting period changes, the income statements of TAD and
the financial statements of the group of companies will be affected. In case of US dollars becomes weak, the profits from
the non-occurring exchange rate will occur. In case of US dollars becomes stronger, the loss from the non-occurring exchange
rate will occur.
Previously, the Company had not been affected from the fluctuation of the exchange rate significantly or recognized
the profits or loss from the foreign currency exchange rate in the less proportion compared to the total income of the
Company. In 2013, the Company gained the profits from the exchange rate for 32.73 million baht. In 2014, the Company
suffered the loss from the exchange rate equaling to 15.71 million baht. In 2015, the Company obtained the profits from
the exchange rate for 13.45 million baht, respectively (the Company did not have the profits or loss from the exchange
rate in 2012). Although the Company has the Forward amount from the bank the fee is quite high. If there is no situation
which can clearly indicate that the exchange rate will change a lot, the Company will not use the Forward contract
making. The Company will observe and consult with the direction of initial money value with the bank periodically. For
the operating project, the Company does not Forward but reduce the risk by using Natural Hedge and exchange money
periodically.
3. Risk from the fact that the subsidiary infringes the condition of maintaining in the financial proportion in the loan contract
The subsidiary requests the loan from a commercial bank in Lao PDR with the Company and the Company’s directors
as the guarantors for 5.4 million US dollars to be invested in the project of Tat Slane Dam. The contract term is 5 years.
Besides, the subsidiary has to maintain the debt rate per shareholder equity not to over 2:1 and the financial competence
ratio (DSCR) not to less than 1.1:1. The assets of Tat Slane and the shares of Tat Slane held by the parent company are
used as the guarantee. However, as the subsidiary lacks of liquidity in circulating fund, Tat Slane requests the loan from
the parent company (SCI) causing the debt rate per shareholder equity (D/E) and DSCR as at 31st December, 2014,
equaling to 1.21 time and 0.39 time, respectively. Therefore, if the subsidiary is still not able to improve its financial status,
the subsidiary is likely to breach the loan contract made with the financial institute and the financial institute may prose
cute for the guarantee and auction causing the subsidiary not to be able to operate the business anymore.
Nevertheless, nowadays the subsidiary has negotiated with such financial institute in order to delay the remaining of
financial ratio to be suitable for the operational condition of the subsidiary. The financial institute has already approved
such delay on June, 2015. The financial institute will consider such financial ratio from the annual financial statements
without taking the quarterly data for consideration. On 31st December, 2015, the subsidiary had the debt rate per share
holder equity (D/E) and DSCR 1.47 time and 0.30 time, respectively. The subsidiary has negotiated with the financial institute
and has been delayed in such issue as the subsidiary does not make the default payment for the interest and principal.
There is also the surety with financial institute. Moreover, if the Company has been approved to sell the capital-increasing
ordinary shares to general people, the Company will bring part of money gained from selling the shares to pay for the
debt of Tat Slane back to the financial institute causing the risk in this part is removed.
Annual Report 2015
Risk Affecting the Right or the Investment of Surety Holder
1. Risk from the companies with the main shareholders of >50%
On 31st December, 2015, the main shareholders consisted of Phreutnarakorn Group, Yanissarangkul Group,
Phianwitthayasakul Group; holding the shares in the Company for 527,427,000 shares calculated as 70.32% of the paid-up
authorized capital. The main shareholders can control nearly all resolutions of the meeting whether in the nomination of
directors or ask for the resolution in other issues requiring the majority vote of the shareholder’s meeting. Therefore, other
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