SCI Annual Report 2015

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SCI Electric Public Company Limited SCI ELECTRIC PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOW AS “SCI ELECTRIC MANUFACTURER COMPANY LIMITED”) NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE TEAR ENDED 31 DECEMBER 2015 5 Significant Accounting Judgements And Estimates Estimates and judgements are continually evaluated and are based on historical experience and other factors, in cluding expectations of future events that are believed to be reasonable under the circumstances. Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below. Revenue recognition The Group uses the percentage of completion method in accounting for its fixed-price contracts to deliver service. Use of the percentage-of-completion method requires the Group to estimate the services performed to date as a pro portion of the total services to be performed. Allowance for doubtful accounts In determining an allowance for doubtful accounts, the management needs to make judgement and estimates based upon, among other things, past collection history, aging profile of outstanding debts and the prevailing economic condition. Allowance for net realizable value The Group considers the allowance for net realizable value based on the estimate of selling price in the ordinary course of business and normal condition of inventory. The net realizable value is the estimate of the selling price in the ordinary course of business, less the costs of completion and selling expenses. Property plant and equipment and intangible assets In determining depreciation of property plant and equipment and intangible assets, the management is required to make estimates of the useful lives and residual values of the property plant and equipment and intangible assets and to review estimate useful lives and residual values when there are any changes. In addition, the management is required to review property, plant and equipment for impairment on a periodical basis and records impairment losses when it is determined that their recoverable amount is lower than the carrying amount. This requires judgements regarding forecast of future revenues and expenses relating to the assets subject to the review. Leases In determining whether a lease is to be classified as an operating lease or finance lease, the management is required to use judgement regarding whether significant risk and rewards of ownership of the leased asset has been transferred, taking into consideration terms and conditions of the arrangement. Employee benefit obligation Employee benefit obligation is determined based on actuarial techniques. Such determination is made based on various assumptions, including discount rate, future salary increase rate, mortality rate and staff turnover rate. The present value of the employee benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for the employee benefit obligations include the discount rate. Any changes in these assumptions will have an impact on the carrying amount of employee benfit obligations. The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the employee benefit obligations. In determining the appropriate discount rate, the Group considers the market yield of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related employee benefit obligations. Other key assumptions for employee benefit obligations are based in part on current market conditions. Additional information is disclosed in Note 25. 206
SCI ELECTRIC PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES (FORMERLY KNOW AS “SCI ELECTRIC MANUFACTURER COMPANY LIMITED”) NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE TEAR ENDED 31 DECEMBER 2015 6 Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt. 7 Transactions With Related Person And Companies 7.1 Relationship and pricing policy he relationship and pricing policies among the Company, subsidiaries and related parties are as follows: Annual Report 2015 Subsidiaries Ajikawa & SCI Metal Tech Co., Ltd. SCI Holding Company Limited Tad Slen Power Company Limited Related Companies AG Ajikawa Corporation Star Rail Company Limited Relationship Shareholding by the company and directorship Shareholding by the company and directorship Shareholding by the subsidiary Shareholder of parent company Directorship Related Persons Aunada Phruttinarakorn Sirichai Phruttinarakorn Kriengkrai Pienwitthayasakul Loan to Loan from Sales/service income Cost of goods sold/service Engineering service expenses Guarantee Shareholder and Director Shareholder and Director Shareholder and Director Pricing policies Interest charged at rate of 2% - 10% per annum Interest charged at rate of 7% per annum Compare to market price Compare to market price At Contract price which had been agreed upon No fee charged 207
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SCI Annual Report 2015

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