annual report 2017 - scg packaging · company profile registration no. 0107537000921 head office...
TRANSCRIPT
Annual Report 20
17 SCG
Packaging Public Com
pany Limited
SCG Packaging Public Company Limited1 Siam Cement Road, Bangsue, Bangkok 10800Tel: +66 2586 2894Fax: +66 2586 3007E-mail: [email protected]: www.scgpackaging.com
COLLABORATIVE
INNOVATIVE
CLIENT - CENTRIC
DIGITALIZED
SUSTAINABLE
Annual Report 2017SCG Packaging Public Company Limited
10 mm
Cover ENG.indd 1 3/7/2561 BE 12:12 PM
SCG Packaging Public Company Limited
Company Profile
Registration no. 0107537000921
Head office address 1 Siam Cement Road, Bangsue, Bangkok 10800
Business type Holding company for packaging and packaging paper, forestry,
pulp and paper and other businesses
Initial registered capital (as at the registration date of conversion into the Public Limited
Company on March 24, 1994)
Registered capital: 1,000 Million Baht
Paid-up capital: 1,000 Million Baht
Issued and paid up ordinary shares of: 100 Million shares,
Issued and paid up preference shares: - None -
Par value of 10 Baht per share
Present registered capital
Registered capital: 1,563 Million Baht
Paid-up capital: 1,563 Million Baht
Issued and paid up ordinary shares of: 156.3 Million shares,
Issued and paid up preference shares: - None -
Par value of 10 Baht per share
Website www.scgpackaging.com
Contact Tel: +66 2586 2894
Fax: +66 2586 3007
E-mail: [email protected]
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Contents
2
8
17
164
5
14
107
165
6
14
161
Financial Overview of SCG Packaging Public Company Limited and its Subsidiaries
2017 Operating Results of SCG Packaging Public Company Limited and its Subsidiaries
2017 Consolidated Financial Statements of SCG Packaging Public Company Limited and its Subsidiaries
Directors’ Information
SCG Packaging Public Company Limited and its Subsidiaries
The Board of Directors SCG Packaging Public Company Limited (As of January 24, 2018)
2017 Financial Statements of SCG Packaging Public Company Limited
First 10 Major Shareholders (As of December 31, 2017)
Message from the Board of Directors
Executive Officers SCG Packaging Public Company Limited and its Subsidiaries(As of January 24, 2018)
Investment in its Subsidiaries, Associates and Other Companies
Financial OverviewSCG Packaging Public Company Limited and its Subsidiaries
Profit Before Finance Costs, Income Tax Expense, Depreciation and Amortization - EBITDA
Profit Attributable to Owners of the Parent
Revenue from Sales
Total Assets
0
1,000
2,000
3,000
4,000
5,000Unit : Million Baht
3,290 3,225
1,454
3,4183,123 3,285
2,114
3,1943,332
4,425
2010 20152008 20132011 20162009 20142012 2017
0
20,000
40,000
60,000
80,000
100,000
Unit : Million Baht
50,127
83,218
51,102
65,141
52,463
85,369
47,942
73,987
58,439
91,312
2010 20152008 20132011 20162009 20142012 2017
2010 20152008 20132011 20162009 20142012 2017
Unit : Million Baht
8,843
10,499
6,369
9,1898,518
10,554
7,654
9,4228,554
12,082
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2010 20152008 20132011 20162009 20142012 20170
20,000
40,000
60,000
80,000
100,000 Unit : Million Baht
51,714
70,907
47,110
59,13554,839
74,542
42,729
64,61457,430
81,455
2
Financial OverviewSCG Packaging Public Company Limited and its Subsidiaries
* The figures for year 2016 are reclassified.
2017 2016 2015 2014 2013
Statements of Income*
Revenue 82,862 75,128 71,598 65,107 59,582
Costs and expenses (76,888) (70,799) (67,114) (60,664) (54,825)
EBITDA 12,082 10,554 10,499 9,422 9,189
Profit attributable to owners of the parent 4,425 3,285 3,225 3,194 3,418
Statements of Financial Position
Assets 91,312 85,369 83,218 73,987 65,141
Liabilities 35,661 32,617 34,892 29,150 26,105
Total equity attributable to owners of the parent 42,891 40,402 38,339 35,714 34,103
Total shareholders’ equity 55,651 52,752 48,326 44,837 39,036
Share Information
Total number of shares issued (Million Shares) 156.3 156.3 156.3 156.3 156.3
Book value per share (Baht) 274.4 258.5 245.3 228.5 218.2
Basic earnings per share (Baht) 28.3 21.0 20.6 20.4 21.9
Proposed dividends per share (Baht) 50.0 5.0 5.0 5.0 5.0
Financial Ratio
Dividends payout ratio (%) 176.6 23.8 24.2 24.5 22.8
Profit on revenue from sales (%) 5.4 4.4 4.5 4.9 5.8
Return on assets (%) 5.0 3.9 4.1 4.6 5.5
Return on equity attributable to owners of the parent (%) 10.6 8.3 8.7 9.1 10.4
Unit : Million Baht
3
Moving Towards Sustainable Growth
COLLABORATIVE
INNOVATIVE
CLIENT - CENTRIC
DIGITALIZED
SUSTAINABLE
4
Packaging ChainPackaging Business
Thai Containers Group Co., Ltd.Thai Containers Khonkaen Co., Ltd.Thai Containers Rayong Co., Ltd.Tawana Container Co., Ltd.Dyna Packs Co., Ltd.Orient Containers Co., Ltd.D-In Pack Co., Ltd.TC Flexible Packaging Co., Ltd.Prepack Thailand Co., Ltd.SCGP Solutions Co., Ltd. Precision Print Co., Ltd.SCGP-T Plastics Co., Ltd. Conimex Co., Ltd. TCG Rengo (S) Limited (Singapore)New Asia Industries Co., Ltd. (Vietnam)Alcamax Packaging (Vietnam) Co., Ltd. (Vietnam)AP Packaging (Hanoi) Co., Ltd. (Vietnam)Packamex (Vietnam) Co., Ltd. (Vietnam)PT Primacorr Mandiri (Indonesia)PT Indoris Printingdo (Indonesia)PT Indocorr Packaging Cikarang (Indonesia)Tin Thanh Packing Joint Stock Company (Vietnam)SCGP Solutions (Singapore) Pte. Ltd. (Singapore)
Packaging Paper Business
Siam Kraft Industry Co., Ltd. Thai Cane Paper Public Company LimitedSCG Paper Energy Co., Ltd.United Pulp and Paper Co., Inc. (The Philippines)Vina Kraft Paper Co., Ltd. (Vietnam)
Fibrous ChainForestry Business
The Siam Forestry Co., Ltd.
Pulp and Paper Business
Phoenix Pulp & Paper Public Company LimitedPhoenix Utilities Co., Ltd.Thai Paper Co., Ltd.
Other Businesses
SCGP Excellence Training Center Co., Ltd. Invenique Co., Ltd.
SCG Packaging Public Company Limited and its Subsidiaries
5
Message from the Board of Directors
The global economic fundamentals showed slight growth in 2017 driven by growth-friendly fiscal policies and steadily expanding global trade primarily in the United States, the European Union, Japan, and China coupled with a favorable economic environment and diminishing risks.
The ASEAN economy expanded steadily, particularly in Vietnam which focused primarily on the promotion of foreign direct investment and trade liberalization, making its economy one of the most attractive in the region. The country with the largest population in ASEAN like Indonesia benefited from higher government spending and healthy household consumption, which has positively affected the country’s economy. The Philippines maintained a consistent economic growth rate while Thailand’s neighboring nations including Myanmar, Lao PDR and Cambodia enjoyed economic advantages derived from the foreign direct investment.
For Thailand, the economic growth beat market expectations and the momentum carried over to the final quarter of the year. The National Economic and Social Development Board (NESDB) has projected on November 20, 2017 that Thailand’s 2017 GDP growth will expand by 3.9% as a result of government spending on infrastructure and stimulus packages on top of the recovery of export market, despite the sluggishness in the first half of the year.
In 2017, packaging industry in Thailand and ASEAN was growing in line with their economies, which grew at a moderate pace.
Paper and packaging producers continued to add capacities amidst heightened challenges from increased raw material prices in the packaging paper sector and dwindling demand in the printing and writing sector, mostly from the publication and commercials segment. In order to deal with these challenges, SCG Packaging has focused on improving operational agility, including enhancing organizational effectiveness, expanding to new markets, increasing business values and improving sales and operation processes to ensure that the maximum efficiency is achieved. As a result, SCG Packaging has recorded a total sales of 81,455 million baht, an increase of 9%, and registered a total profit of 4,425 million baht, an increase of 35% from 2016.
Continue to invest in ASEAN and enhance business potentials for sustainable growth
In response to growing demand for packaging and the ever-changing consumer lifestyles, SCG Packaging is strongly committed to becoming an ASEAN leading total packaging solutions provider. The company has been investing in many packaging companies in the region, including stake acquisitions in a rigid plastic packaging producer, Conimex Co., Ltd. (Thailand), and a corrugated containers producer, PT Indocorr Packaging Cikarang (Indonesia). Additionally, the company also acquired stakes in an offset printing company, Precision Print Co., Ltd. (Thailand).
6
Develop digital technology and innovations that deliver values to customers
SCG Packaging has adopted “Data Virtualization” technology that helps collect and analyze business data which allows the company to respond to fast-changing needs of customers and shifting competitive landscape more effectively. Additionally, an online platform specializing in logistics packaging is being developed to respond to the rising E-Commerce trend as more customers switch to purchase products and services via online platforms. The company also develops innovative packaging that tailors to different customer needs, for example, a flexible packaging for consumer products that offer better usability to end customers and a packaging design services that add values to customers’ products by their outstanding patterns.
Continue with human resources, organizational, social and environmental developments
SCG Packaging continues to invest in human resources development as well as to make use of the Integrated Business Excellence (IBE) concept in order to improve overall operational efficiencies; ensuring that employees are ready to embrace new business models which will enable the company to achieve its goal of becoming a total packaging solutions provider. In addition, SCG Packaging also put a greater concern on quality of life and well-being of surrounded communities and has relentlessly upgraded its production facilities with modern and environmentally friendly technology. In social aspect, the company has arranged knowledge sharing sessions with local communities and offered supports for community activities to ensure their continuous and sustainable growth.
The Board of Directors would like to express gratitude to all shareholders, business partners, clients, employees and other relevant parties including domestic and overseas financial institutions for your continued contribution and support for SCG Packaging. We urge you to trust that the company will continue to conduct the business effectively and transparently, while adhere to the principles of good governance and sustainable development for maximum benefits of all stakeholders.
(Roongrote Rangsiyopash) Chairman
(Tanawong Areeratchakul) Vice-Chairman and President
Bangkok, January 24, 2018
7
Operating Results
In 2017, revenue from sales of SCG Packaging amounted to 81,455 million baht, up 9% compared to 2016 mainly due to higher sales volume and prices of Packaging Chain. EBITDA was 12,082 million baht, grew 14% from the previous year, and profit for the year was 4,425 Million Baht, improved 35% year on year as a result of profit from Thai Union Paper’s land and asset sale.
Packaging Chain: Total sales volume was up 8% compared to 2016 from capacity expansion in Vietnam and owing to increasing demand for packaging paper and corrugated containers especially in ASEAN with a 5% growth of demand from the previous year.
Fibrous Chain: Total sales volume of printing and writing paper dropped 8% compared to 2016, due to a decline in export sales and steady decline in domestic demand.
Market and Competition
Domestic demand for paper packaging and corrugated containers in 2017 continued to increase owing to export outperforms our expectations. Demand in ASEAN grew moderately, in conjunction with the economy and export-oriented manufacturing. On the other hands, packaging paper and corrugated containers manufacturers in the region continued to increase their production capacities, leading to an intense competition. This posed a challenge for manufacturers to rationalize their operational efficiency in response to customer needs and maintain sustainable business growth.
Domestic demand for printing and writing paper in 2017 declined continuously mainly due to the substitution of digital media, especially in promotional materials and magazine segments while imports coated paper and copy paper increased when compared to the previous year. Copy paper industry remained high competitive from severe price competition from China and Indonesia players.
2017 Operating ResultsSCG Packaging Public Company Limited and its Subsidiaries
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Business Growth and Investment
Acquired 80% stake in PT Indocorr Packaging Cikarang, an Indonesian producer of high quality corrugated containers which serve consumer products of multinational corporations (MNC), with a combined capacity of 32,000 tons per year. Following this transaction, SCG Packaging’s combined production capacity of corrugated containers increased to 1,045,000 tons per year across ASEAN.
Invested in rigid plastic packaging business by acquiring 75% stake in Conimex Co., Ltd., Thailand’s leading manufacturer of rigid plastic packaging products including plastic bottle, plastic tube, cap and closure. Its market coverage includes both domestic and international manufacturers in cosmetic, personal care, consumer products and industrial liquid industries. This acquisition illustrates SCG Packaging’s strong commitment in becoming a total packaging solutions provider in ASEAN and strengthening its footstep in premium packaging segment.
Expanded business portfolio in display packaging to serve premium packaging market. This is achieved by acquiring a 75% stake in Precision Print Co., Ltd., specializes in offset printing of folding cartons which are used in industries ranging from cosmetics and supplementary food. This investment will enhance the overall portfolio, while further strengthening the position as a leader in total packaging solutions provider.
Human Resources Development
Supported and provided readiness to employees regarding the expansion of new business model through various educational programs that cultivate the idea of using digital technology in work as well as the adjustment of organization structure in order to quickly and effectively response to customers, corresponding to the aims of being total packaging solutions provider.
Co-provided training program on emergency responses with the Engineering Department of the Phanurangsi Camp, the 1st Infantry Division of Sri Suriyawongse Camp, Ratchaburi and the 9th Infantry Division of Surasee Camp, Kanchanaburi.
9
Product and Service Development
Developed a digital platform (E-Store) to support spare part management within the organization where different plants are able to co-manage spare parts on the system. As a result, E-Store helps the business manage cost of inventory and spare parts efficiently.
Developed and applied digital technology, Data Virtualization (DV), as a tool for value chain management. The technology helps increase the efficiency in data visibility (Business Visibility) and able to make use of the given data in planning and forecasting future progress. The technology is also available for different data processing (Data Analytics) which will enable the business to make efficient decision making as well as enhance business competitive advantage.
Developed flexible packaging for exported fruits and vegetables (OptiBreath©) and expanded sales channels to modern trade market as well as provided full services such as design customization to serve customers’ needs on design variety.
Developed flexible packaging for beverage and consumer goods (Spout Pouch) that offers ease of use to customers by its stand-up design. The product also acts as a marketing features on store shelf due to its outstanding appearance.
Developed flexible packaging that withstands heat and high pressure (Retort Pouch). The product is suitable for sterilized food as it extends the products’ shelf life. The features of the packaging also ensure that food contained in retort pouch is ready to be consumed, provide convenience and reduce food preparation time.
Developed sales channel for food safe packaging “Fest” through modern and traditional trade retailers across the country as well as actively response to customers’ needs by adding values to the packaging through design customization service.
Co-developed acid-free packaging with the Queen Sirikit Museum of Textiles. The packaging are made from special ingredients that prevent the infiltration of acid particles, thereby helping to safely preserve valuable items such as silk, antiques and important documents.
Developed corrugated containers for different types of parcels and provided integrated solutions within the product such as design customization services, online ordering and delivery service.
Developed honeycomb paper as a substitution of wood in furniture industry. Honeycomb paper has lightweight yet high strength properties which can be used for furniture production, such as tables and shelves, and logistic business. This product is suitable for customers who are seeking for wood-substituted materials.
Developed a coated duplex board from Old Corrugated Carton (OCC); responding to environmental conscious customers. The product contains a strong property and supports automatic packaging system.
10
Production Process Development
Reduced water consumption in production process through water usage balancing and systems installation as a mean to collect wastewater from the machine and treated for reuse in other production sectors. As a result, this process reduces the use of water by 1,000,000 cubic meters per year.
Improved water treatment system by using anaerobic wastewater treatment technology and provided treated water to farmers for agricultural purposes. Moreover, gas received from such system can be used as alternative energy sources.
Reused waste materials by installing a lime kiln to reduce lime mud, a waste material from pulp production, resulting in calcium carbonate which can be used as raw material in pulp production. In addition, used materials from the furnace will be applied as a component for bricks production.
Social and Environmental Responsibility
Inherited the will of King Rama IX in sustainable water management, SCG Packaging and SCG held an event: “The Journey to Water Conservation”, the activity involved the building of environmentally-friendly check dams in three provinces, which are Nakhon Si Thammarat, Kanchanaburi, and Khon Kaen, following the King’s will and passing over the sustainable water management knowledge to the local communities to facilitate a better quality of life and sustain itself as a self-dependent community.
Held a packaging design competition, “SCG Packaging x Wallpaper* The Challenge 2017”. The contest provided an opportunity for younger generation to illustrate their creativeness, potential in packaging design and analytic skill from a given theme. Challenges were proposed and decided from the two leading food manufacturers, Thai Theparos Food Products Public Company Limited and Ampol Food Group. The contest also strengthened the relationship between companies, entrepreneurs and packaging specialists which in turn, elevating designing competencies for packaging industry.
Created a platform for online society called “We Are Greeners”, which is currently in its 5th year, to pass the torch to people with regards to social responsibility by becoming a bridge between consumers and green product manufacturers. The platform provided an additional sales channel via online platform for green manufactures which in turn, secured a sustainable income for the green entrepreneurs.
Held an event entitled, “Green Mart: We are Greeners” with the concept of “Green-hearted Community”, for 3 consecutive years. The event was designed to support communities’ products around the plants area and to establish a network of social enterprise. This project provided a sale channel for green entrepreneurs in order to generate incomes for the community and social enterprise. The total sales made from the project in 2017 was 1,285,000 baht.
Provided educational training to civilians and government agencies in several activities; for instance, first-aid and CPR for emergency training as well as basic firefighting training for Border Patrol Police School students in Pilok, Kanchanaburi and other eight schools in Banpong, Ratchaburi.
11
Major Awards and Achievements in 2017
SCG Packaging Public Company Limited won the World Star Awards 2017, a global contest in packaging design, from the project entitled the “Peach of Prosperity (Orange Box)” in the Luxury category and Thai Containers Group Co., Ltd.’s project on “Faucet Cushion TOTO TTMR 307,308K (Common)” under the category of Transport Packaging: Household from World Packaging Organisation (WPO). Thai Containers Group Co., Ltd. achieved the prizes from ThaiStar Packaging Awards 2017, a national packaging design contest, from the submitted project in Consumer Package category, entitled “Bua-Phai-Kao Gift Set” and in Transport Package category entitled “Reclosable Common Footprint Carton” from the Department of Industrial Promotion, Ministry of Industry.
Thai Containers Group Co., Ltd. received the awards in Asian Packaging Excellence Awards 2017 from “Seasoning Sauce Green Cap” and “Fruit Bowl” projects, under Preprint Flexography and Postprint Flexography category, respectively. Prepack Thailand Co., Ltd. also received the Packaging Excellence Awards from the submitted project, “Tissue Roll” in Web Flexible Flexography category from Asian Flexographic Technical Association (AFTA).
Thai Containers Group Co., Ltd., Navanakorn plant, Saraburi plant, Samutprakarn plant, Ratchaburi plant, Chonburi plant, Prachinburi plant, Songkhla plant, Pathumthani plant, Thai Containers Rayong Co., Ltd., Thai Containers Khonkaen Co., Ltd., Tawana Container Co., Ltd., and Siam Kraft Industry Co., Ltd., received the Outstanding Workplace Award for Safety, Occupational Health and Environment while Dyna Packs Co., Ltd. was presented with a commemorative certificate in the same category. Thai Containers Group Co., Ltd., Navanakorn plant, Ratchaburi plant, Pathumthani plant and Phoenix Pulp & Paper Public Company Limited were awarded for an Outstanding Organization Award – Labor Relations and Welfare in 2017 from the Department of Labor Protection and Welfare, Ministry of Labor.
Thai Containers Group Co., Ltd., Navanakorn plant received the National Excellence Safety Committee, Occupational Health, and Environment Awards 2017, while Ratchaburi plant was awarded with the Head of Safety Agency, Occupational Health, and Environment Awards 2017, from the Department of Labor Protection and Welfare, Ministry of Labor.
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Thai Containers Group Co., Ltd., Samutprakarn plant, and Thai Cane Paper Public Company Limited, Prachinburi plant were awarded with ECO Factory Awards from the Federation of Thai Industries.
Tawana Container Co., Ltd. received the Industry Safety Development and Enforcement Awards (Firefighting and Fire Prevention) from the Department of Industrial Works, Ministry of Industry.
Siam Kraft Industry Co., Ltd., Wangsala plant, and Thai Paper Co., Ltd., were awarded with the Green Industry 5th Level Awards while Thai Containers Group Co., Ltd., Samutprakarn plant, Thai Cane Paper Public Company Limited, Prachinburi plant and Kanchanaburi plant were granted with the Green Industry 4th Level Awards from the Department of Industrial Works, Ministry of Industry.
Siam Kraft Industry Co., Ltd., Wangsala plant received the Bronze Award from Thailand Kaizen Awards 2017 from Technology Promotion Association (Thailand-Japan).
Siam Kraft Industry Co., Ltd., Banpong plant, Wangsala plant and Thai Paper Co., Ltd., Banpong plant were awarded with the CSR-DIW Continuous Awards from the Department of Industrial Works, Ministry of Industry.
Siam Kraft Industry Co., Ltd., Banpong plant, was awarded with Thailand Coal Awards 2017 and the ASEAN Coal Awards by submitting SKIC Closed-System Coal Operation for Sustainable Development (Banpong Dome Coal Storage) from the Department of Alternative Energy Development and Efficiency, Ministry of Energy.
Siam Forestry Co., Ltd. received the Silver Award from the MAT Award 2017: the REAL Marketing Excellences
contest in Social Enterprise Organization category with the project of “Innovative salt-tolerant plants that can restore soils in the northeastern region while simultaneously returning an income source to farmers”, from the Marketing Association of Thailand.
Siam Forestry Co., Ltd. received the Occupational Health and Safety Management System certification (TIS 18001-2554) and Occupational Health Management System certification (BS OHSAS 18001-2007) from the Foundation for Industrial Development Management System Certification Institute (MASCI).
Siam Forestry Co., Ltd. was awarded in the Thailand PES Awards 2017 for an organization that operates in accordance with the principle of Payment for Ecosystem Services (PES), from the Biodiversity-Based Economy Development Office (Public Organization).
13
SCG Packaging Public Company Limited and its Subsidiaries(As of January 24, 2018)
Executive Officers
SCG Packaging Public Company Limited and its Subsidiaries
Mr. Tanawong AreeratchakulVice-Chairman and PresidentSCG Packaging Public Company Limited
Packaging ChainPackaging Business
Mr. Poramate LarnroongrojManaging Director
Thai Containers Group Co., Ltd.Thai Containers Khonkaen Co., Ltd.Thai Containers Rayong Co., Ltd.Dyna Packs Co., Ltd.Orient Containers Co., Ltd.
Mr. Jakjit KlomsingManaging Director
Tawana Container Co., Ltd.
Mr. Leaudej VimonpacktManaging Director
D-In Pack Co., Ltd.
Mr. Karan TejasenManaging Director
TC Flexible Packaging Co., Ltd.
Mr. Paradorn ChulajataManaging Director
Prepack Thailand Co., Ltd.
The Board of Directors
SCG Packaging Public Company Limited
Mr. Roongrote RangsiyopashChairman
Mr. Tanawong AreeratchakulVice-Chairman and President
Mr. Chaovalit Ekabut Director
Mr. Somchai WangwattanapanichDirector
Mr. Aree Chavalitcheewingul Director
Mr. Nithi PatarachokeDirector
Mrs. Pornpen NamwongSecretary to the Board
14
Mr. Tawatchai JungsomsriManaging Director
Precision Print Co., Ltd.
Mr. Prasan KetsawangManaging Director
Conimex Co., Ltd.
Mr. Phua Thye HinManaging Director
TCG Rengo (S) Limited (Singapore)
Mr. Amnuay PattaramongkolkulGeneral Director
New Asia Industries Co., Ltd. (Vietnam)Alcamax Packaging (Vietnam) Co., Ltd. (Vietnam)AP Packaging (Hanoi) Co., Ltd. (Vietnam)Packamex (Vietnam) Co., Ltd. (Vietnam)
Mr. Surasak SongkulPresident Director
PT Primacorr Mandiri (Indonesia)PT Indoris Printingdo (Indonesia)PT Indocorr Packaging Cikarang (Indonesia)
Mr. Somchart PatamamongkonchaiGeneral Director
Tin Thanh Packing Joint Stock Company (Vietnam)
Packaging Paper Business
Mr. Wichan JitpukdeeManaging Director
Siam Kraft Industry Co., Ltd.Thai Cane Paper Public Company Limited
Mr. Panya SopasriphanManaging Director
SCG Paper Energy Co., Ltd.
Mr. Wichan CharoenkitsupatPresident and CEO
United Pulp and Paper Co., Inc. (The Philippines)
Mr. Sangchai WiriyaumpaiwongGeneral Director
Vina Kraft Paper Co., Ltd. (Vietnam)
Fibrous ChainForestry Business
Mr. Mahasan ThieravarutManaging Director
The Siam Forestry Co., Ltd.
Pulp and Paper Business
Mr. Surasak AmawatManaging Director
Phoenix Pulp & Paper Public Company LimitedPhoenix Utilities Co., Ltd.Thai Paper Co., Ltd.
Other Businesses Mr. Jesda SaeliangManaging Director
SCGP Excellence Training Center Co., Ltd.
Mr. Suchai KorprasertsriManaging Director
Invenique Co., Ltd.
15
We deliver packaging solutions
to you 16
2017ConsolidatedFinancial StatementsSCG Packaging Public Company Limited and its Subsidiaries
17
Independent auditor’s report To the Shareholders of SCG Packaging Public Company Limited
Opinion
I have audited the consolidated financial statements of SCG Packaging Public Company Limited and its subsidiaries (the
“Group”), which comprise the consolidated statement of financial position as at 31 December 2017, the consolidated
income statement and statements of comprehensive income, changes in shareholders’ equity and cash flows for the
year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.
In my opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
financial position of the Group as at 31 December 2017, its financial performance and cash flows for the year then
ended in accordance with Thai Financial Reporting Standards (TFRSs).
Basis for Opinion
I conducted my audit in accordance with Thai Standards on Auditing (TSAs). My responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section
of my report. I am independent of the Group in accordance with the Code of Ethics for Professional Accountants
issued by the Federation of Accounting Professions that is relevant to my audit of the consolidated financial
statements, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe
that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.
Other Information
Management is responsible for the other information. The other information comprises the information included
in the annual report, but does not include the consolidated financial statements and my auditor’s report thereon.
My opinion on the consolidated financial statements does not cover the other information and I do not express
any form of assurance conclusion thereon.
In connection with my audit of the consolidated financial statements, my responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or my knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work I have performed, I conclude that there is a material misstatement of this other
information, I am required to report that fact. I have nothing to report in this regard.
18
Responsibilities of Management for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with TFRSs, and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
My objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with TSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with TSAs, I exercise professional judgement and maintain professional skepticism
throughout the audit. I also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
19
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If I conclude that a material
uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions
are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or
conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. I am responsible
for the direction, supervision and performance of the group audit. I remain solely responsible for my audit
opinion.
I communicate with management regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that I identify during my audit.
(Thanyalux Keadkeaw)
Certified Public Accountant
Registration No. 8179
KPMG Phoomchai Audit Ltd.
Bangkok
20 February 2018
20
Consolidated statement of financial positionSCG Packaging Public Company Limited and its Subsidiaries
As at 31 December 2017
Assets Note 2017 2016
Current assets
Cash and cash equivalents 1,383,637 1,518,188
Current investments 247,247 48,000
Trade and other current receivables 5, 6 13,871,966 12,050,133
Short-term loans to related parties 5 811 5,250
Inventories 7 13,417,037 10,591,838
Other current assets 396,252 360,534
Total current assets 29,316,950 24,573,943
Non-current assets
Investments in associates 8 760,734 880,381
Other long-term investments 16,192 16,182
Other non-current receivables 5 819,768 824,787
Long-term loan to related party 5 98,333 -
Investment properties 10 106,281 85,492
Property, plant and equipment 11 57,142,842 56,017,173
Goodwill 12 1,994,878 1,979,378
Other intangible assets 13 276,410 284,320
Deferred tax assets 14 405,213 372,867
Others non-current assets 374,835 334,729
Total non-current assets 61,995,486 60,795,309
Total assets 91,312,436 85,369,252
(Roongrote Rangsiyopash)
Chairman
(in thousand Baht)
For and on behalf of the Board of Directors
(Tanawong Areeratchakul)
Vice-Chairman and President
The accompanying notes are an integral part of these financial statements.21
Consolidated statement of financial positionSCG Packaging Public Company Limited and its Subsidiaries
As at 31 December 2017
Liabilities and shareholders' equity Note 2017 2016
Current liabilities
Bank overdrafts and short-term borrowings from
financial institutions 15 5,079,763 4,811,969
Trade and other current payables 5, 16 9,095,099 7,819,578
Current portion of long-term borrowings 17 2,401,621 2,159,044
Current portion of finance lease liabilities 18 48,425 45,269
Short-term borrowings from related parties 5 15,496,563 12,519,912
Current income tax payable 228,607 224,976
Short-term provisions 98,619 190,368
Total current liabilities 32,448,697 27,771,116
Non-current liabilities
Long-term borrowings from financial institutions 17 1,297,658 3,190,527
Finance lease liabilities 18 30,632 36,217
Deferred tax liabilities 14 270,236 244,841
Non-current provisions for employee benefits 19 1,484,048 1,361,708
Other non-current liabilities 130,569 13,255
Total non-current liabilities 3,213,143 4,846,548
Total liabilities 35,661,840 32,617,664
(in thousand Baht)
The accompanying notes are an integral part of these financial statements.22
Consolidated statement of financial positionSCG Packaging Public Company Limited and its Subsidiaries
As at 31 December 2017
Liabilities and shareholders' equity Note 2017 2016
Shareholders' equity
Share capital 20
Authorised share capital
- Ordinary share 1,563,000 1,563,000
Issued and paid share capital
- Ordinary share 1,563,000 1,563,000
Share premium 21 1,935,000 1,935,000
Retained earnings
Appropriated
Legal reserve 21 156,300 156,300
General reserve 3,000 3,000
Unappropriated 42,129,342 38,502,387
Other components of shareholders' equity (2,895,380) (1,757,342)
Total equity attributable to owners of the parent 42,891,262 40,402,345
Non-controlling interests 9 12,759,334 12,349,243
Total shareholders’ equity 55,650,596 52,751,588
Total liabilities and shareholders' equity 91,312,436 85,369,252
(in thousand Baht)
The accompanying notes are an integral part of these financial statements.23
Consolidated income statementSCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Note 2017 2016
Revenue from sales 5 81,455,287 74,541,943
Cost of sales 5 (67,290,666) (61,499,342)
Gross profit 14,164,621 13,042,601
Gain on exchange rate 157,675 139,031
Other income 5,11 1,249,111 447,451
Profit before expenses 15,571,407 13,629,083
Distribution costs 5, 22 (4,874,030) (4,710,870)
Administrative expenses 5, 23 (3,840,860) (3,677,453)
Total expenses (8,714,890) (8,388,323)
Profit from operations 6,856,517 5,240,760
Finance costs 5 (882,914) (911,817)
Share of profit of associates 8 4,133 4,561
Profit before income tax 5,977,736 4,333,504
Tax expense 25 (603,394) (482,808)
Profit for the year 5,374,342 3,850,696
Profit attributable to:
Owners of the parent 4,425,349 3,284,908
Non-controlling interests 9 948,993 565,788
5,374,342 3,850,696
Basic earnings per share (in Baht)
Attributable to owners of the parent 27 28.31 21.02
(in thousand Baht)
The accompanying notes are an integral part of these financial statements.24
Consolidated statement of comprehensive income SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Note 2017 2016
Profit for the year 5,374,342 3,850,696
Other comprehensive income
Components of other comprehensive income
that will be reclassified to profit or loss
Exchange differences on translating financial statement (1,529,282) (189,452)
Share of other comprehensive income of associates 30,451 (6,039)
Total components of other comprehensive income
that will be reclassified to profit or loss (1,498,831) (195,491)
Components of other comprehensive income
that will not be reclassified to profit or loss
Defined benefit plan actuarial losses 19 (30,059) (6,855)
Income tax relating to components of other comprehensive
income that will not be reclassified to profit or loss 25 7,787 575
Total components of other comprehensive income
that will not be reclassified to profit or loss (22,272) (6,280)
Other comprehensive income for the year, net of tax (1,521,103) (201,771)
Total comprehensive income for the year 3,853,239 3,648,925
Total comprehensive income attributable to
Owners of the parent 3,311,012 3,082,488
Non-controlling interests 542,227 566,437
3,853,239 3,648,925
(in thousand Baht)
The accompanying notes are an integral part of these financial statements.25
Cons
olid
ated
sta
tem
ent
of c
hang
es in
sha
reho
lder
s' e
quity
SCG
Pac
kagi
ng P
ublic
Com
pany
Lim
ited
and
its S
ubsi
diar
ies
For
the
year
end
ed 3
1 Dec
embe
r 20
17
Unap
prop
riate
dTo
tal e
quity
Issue
d Tr
ansla
tion
ofCh
ange
s in
oth
erat
tribu
tabl
e to
Non-
Tota
l
and
paid
Sha
reLe
gal
Gene
ral
finan
cial
com
pone
nts
owne
rs o
fco
ntro
lling
sh
areh
olde
rs'
Note
shar
e ca
pita
l pr
emiu
m
rese
rve
rese
rve
stat
emen
tfro
m s
hare
hold
ers
the
pare
ntin
tere
sts
equi
ty
Bala
nce
at 1
Jan
uary
201
61,
563,
000
1,93
5,00
0
156,
300
3,
000
36,0
03,2
06
(5
14,2
60)
(807
,580
)
38
,338
,666
9,
987,
707
48,3
26,3
73
Tran
sact
ions
with
own
ers,
reco
rded
dire
ctly
in s
hare
hold
ers’
equ
ity
Cont
ribut
ions
by
and
dist
ribut
ions
to
owne
rs o
f the
par
ent
Divid
ends
28-
-
-
-
(7
81,5
00)
-
-
(7
81,5
00)
(155
,248
)
(936
,748
)
Tota
l con
trib
utio
ns b
y an
d di
strib
utio
ns t
o
owne
rs o
f the
par
ent
-
-
-
-
(781
,500
)
-
-
(781
,500
)
(1
55,2
48)
(9
36,7
48)
Chan
ges
in o
wner
ship
inte
rest
s in
sub
sidia
ries
Chan
ges
that
do
not r
esul
t in
a lo
ss o
f con
trol
-
-
-
-
-
-
(2
37,3
09)
(2
37,3
09)
1,95
0,34
7
1,71
3,03
8
Tota
l cha
nges
in o
wner
ship
inte
rest
s in
sub
sidia
ries
-
-
-
-
-
-
(2
37,3
09)
(237
,309
)
1,
950,
347
1,71
3,03
8
Tota
l tra
nsac
tions
with
own
ers,
reco
rded
dire
ctly
in s
hare
hold
ers’
equ
ity-
-
-
-
(7
81,5
00)
-
(2
37,3
09)
(1,0
18,8
09)
1,
795,
099
776,
290
Com
preh
ensiv
e in
com
e fo
r the
yea
r
Prof
it or
loss
-
-
-
-
3,28
4,90
8
-
-
3,28
4,90
8
56
5,78
8
3,
850,
696
Oth
er c
ompr
ehen
sive
inco
me
-
-
-
-
(4,2
27)
(1
98,1
93)
-
(2
02,4
20)
649
(201
,771
)
Tota
l com
preh
ensiv
e in
com
e fo
r the
yea
r-
-
-
-
3,
280,
681
(1
98,1
93)
-
3,08
2,48
8
566,
437
3,
648,
925
Bala
nce
at 3
1 De
cem
ber 2
016
1,56
3,00
0
1,
935,
000
15
6,30
0
3,00
0
38
,502
,387
(712
,453
)
(1
,044
,889
)
40,4
02,3
45
12,3
49,2
43
52
,751
,588
Oth
er c
ompo
nent
s of
sha
reho
lder
s' eq
uity
Appr
opria
ted
(in th
ousa
nd B
aht)
Reta
ined
ear
ning
s
The
acco
mpa
nyin
g no
tes
are
an in
tegr
al p
art o
f the
se fi
nanc
ial s
tate
men
ts.
26
Cons
olid
ated
sta
tem
ent
of c
hang
es in
sha
reho
lder
s' e
quity
SCG
Pac
kagi
ng P
ublic
Com
pany
Lim
ited
and
its S
ubsi
diar
ies
For
the
year
end
ed 3
1 Dec
embe
r 20
17
Unap
prop
riate
dTo
tal e
quity
Issue
d Tr
ansla
tion
ofCh
ange
s in
oth
erat
tribu
tabl
e to
Non-
Tota
l
and
paid
Sha
reLe
gal
Gene
ral
finan
cial
com
pone
nts
owne
rs o
fco
ntro
lling
sh
areh
olde
rs'
Note
shar
e ca
pita
l pr
emiu
m
rese
rve
rese
rve
stat
emen
tfro
m s
hare
hold
ers
the
pare
ntin
tere
sts
equi
ty
Bala
nce
at 1
Jan
uary
201
71,
563,
000
1,93
5,00
0
156,
300
3,
000
38,5
02,3
87
(7
12,4
53)
(1,0
44,8
89)
40
,402
,345
12
,349
,243
52,7
51,5
88
Tran
sact
ions
with
own
ers,
reco
rded
dire
ctly
in s
hare
hold
ers’
equ
ity
Cont
ribut
ions
by
and
dist
ribut
ions
to
owne
rs o
f the
par
ent
Divid
ends
28-
-
-
-
(7
81,5
00)
-
-
(7
81,5
00)
(185
,235
)
(966
,735
)
Tota
l con
trib
utio
ns b
y an
d di
strib
utio
ns t
o
owne
rs o
f the
par
ent
-
-
-
-
(781
,500
)
-
-
(781
,500
)
(1
85,2
35)
(9
66,7
35)
Chan
ges
in o
wner
ship
inte
rest
s in
sub
sidia
ries
Chan
ges
that
do
not r
esul
t in
a lo
ss o
f con
trol
-
-
-
-
-
-
(4
0,59
5)
(40,
595)
(1
60,2
44)
(2
00,8
39)
Chan
ges
that
resu
lt in
an
acqu
isitio
n or
a lo
ss o
f con
trol
-
-
-
-
-
-
-
-
21
3,34
3
21
3,34
3
Tota
l cha
nges
in o
wner
ship
inte
rest
s in
sub
sidia
ries
-
-
-
-
-
-
(4
0,59
5)
(40,
595)
53,0
99
12
,504
Tota
l tra
nsac
tions
with
own
ers,
reco
rded
dire
ctly
in s
hare
hold
ers’
equ
ity-
-
-
-
(7
81,5
00)
-
(4
0,59
5)
(822
,095
)
(1
32,1
36)
(9
54,2
31)
Com
preh
ensiv
e in
com
e fo
r the
yea
r
Prof
it or
loss
-
-
-
-
4,42
5,34
9
-
-
4,42
5,34
9
94
8,99
3
5,
374,
342
Oth
er c
ompr
ehen
sive
inco
me
-
-
-
-
(16,
894)
(1
,097
,443
)
-
(1
,114
,337
)
(406
,766
)
(1,5
21,1
03)
Tota
l com
preh
ensiv
e in
com
e fo
r the
yea
r-
-
-
-
4,
408,
455
(1
,097
,443
)
-
3,
311,
012
54
2,22
7
3,85
3,23
9
Bala
nce
at 3
1 De
cem
ber 2
017
1,56
3,00
0
1,
935,
000
15
6,30
0
3,00
0
42
,129
,342
(1,8
09,8
96)
(1,0
85,4
84)
42
,891
,262
12
,759
,334
55,6
50,5
96
Reta
ined
ear
ning
s O
ther
com
pone
nts
of s
hare
hold
ers'
equi
ty
Appr
opria
ted
(in th
ousa
nd B
aht)
The
acco
mpa
nyin
g no
tes
are
an in
tegr
al p
art o
f the
se fi
nanc
ial s
tate
men
ts.
27
Consolidated statement of cash flowsSCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Note 2017 2016
Cash flows from operating activities
Profit for the year 5,374,342 3,850,696
Adjustments for
Tax expense 603,394 482,808
Depreciation and amortisation 5,190,134 5,302,052
Doubtful debts expenses 3,643 5,554
Loss on inventories devaluation 108,071 49,165
Employee benefit expense 150,526 191,625
Unrealised losses on foreign currency exchange 336 10,844
Share of profit of associates 8 (4,133) (4,561)
Gain on a bargain purchase 4 (65,322) -
Loss on sales of investments and other 8 35,007 92
Impairment losses on investment - 1,141
Impairment losses on property, plant and equipment
and other intangible assets 15,424 182,597
Gains on sales of property, plant and equipment
and other intangible assets (908,911) (43,004)
Dividend Income (14,125) (14,186)
Interest income (21,345) (18,837)
Interest expense 860,198 858,496
Cash flows generated from operations before
changes in operating assets and liabilities 11,327,239 10,854,482
Decrease (increase) in operating assets
Trade and other current receivables (1,703,284) (1,346,873)
Inventories (2,847,635) (24,097)
Other current assets and other non-current assets (272,639) 1,068,889
Net increase in operating assets (4,823,558) (302,081)
(in thousand Baht)
The accompanying notes are an integral part of these financial statements.28
Consolidated statement of cash flowsSCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Note 2017 2016
Increase (decrease) in operating liabilities
Trade and other current payables 1,085,721 933,427
Provision for employee benefits (154,251) (127,543)
Other current liabilities and other non-current liabilities (97,372) (254,694)
Net increase in operating liabilities 834,098 551,190
Net cash flows generated from operations 7,337,779 11,103,591
Income tax paid (595,701) (584,190)
Net cash flows provided by operating activities 6,742,078 10,519,401
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquied 4 (540,348) -
Proceeds from sales of investment 8 106,114 -
Current investments (205,240) (48,000)
Proceeds from sales of property, plant and equipment and
other intangible assets 1,105,343 190,022
Acquisition of property, plant and equipment (6,106,722) (7,915,945)
Acquisition of other intangible assets (45,909) (73,273)
Loans to related parties (98,333) (250)
Proceeds from repayment of loans to related parties 4,439 -
Dividends received 32,913 25,309
Interest received 9,213 17,920
Net cash flows used in investing activities (5,738,530) (7,804,217)
(in thousand Baht)
The accompanying notes are an integral part of these financial statements.29
Consolidated statement of cash flowsSCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
2017 2016
Cash flows from financing activities
Proceeds from change in ownership interests in subsidiaries
that do not result in a loss of control 90,882 1,712,698
Payments of changes in ownership interests in subsidiaries
that do not result in a loss of control (291,615) -
Proceeds from (payments of) borrowings
Decrease in bank overdrafts and short-term borowings
from financial institutions (235,012) (1,988,053)
Increase (decrease) in short-term borrowing from related parties 2,976,651 (284,258)
Proceeds from long-term borrowings from financial institutions 709,527 1,444,914
Payments of long-term borrowings from financial institutions (2,385,166) (1,972,900)
Payments of finance lease liabilities (47,754) (52,878)
Net increase (decrease) in borrowings 1,018,246 (2,853,175)
Dividends paid
Dividends paid to owners of the parent (781,500) (781,500)
Dividends paid to non-controlling interests (185,235) (155,248)
Total dividends paid (966,735) (936,748)
Interest paid (871,129) (890,143)
Net cash flows used in financing activities (1,020,351) (2,967,368)
Net decrease in cash and cash equivalents (16,803) (252,184)
Effect of exchange rate changes on cash and cash equivalents (117,748) (4,356)
Cash and cash equivalents at beginning of the year 1,518,188 1,774,728
Cash and cash equivalents at end of the year 1,383,637 1,518,188
Supplementary information for cash flows
Non-cash transactions
Account payables from purchase of assets 702,225 623,479
Accrued investments 114,992 -
(in thousand Baht)
The accompanying notes are an integral part of these financial statements.30
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 Note Contents 1 General information 2 Basis of preparation of the financial statements 3 Significant accounting policies 4 Acquisitions of business and changes in ownership interests in subsidiaries 5 Related parties 6 Trade and other current receivables 7 Inventories 8 Investments in associates 9 Non-controlling interests 10 Investment properties 11 Property, plant and equipment 12 Goodwill 13 Other intangible assets 14 Deferred tax assets (deferred tax liabilities) 15 Bank overdrafts and short-term borrowings from financial institutions 16 Trade and other current payables 17 Long-term borrowings from financial institutions 18 Finance lease liabilities 19 Non-current provisions for employee benefits 20 Share capital 21 Reserves and others components of shareholders’ equity 22 Distribution costs 23 Administrative expenses 24 Employee benefit expenses 25 Income tax 26 Promotional privileges 27 Basic earnings per share 28 Dividends
31
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 Note Contents 29 Agreements 30 Financial instruments 31 Commitments and contingent liabilities 32 Capital management 33 Events after the reporting period 34 Reclassification of accounts
32
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
These notes form an integral part of the consolidated financial statements. The consolidated financial statements issued for Thai statutory and regulatory reporting purposes are prepared in the Thai and English languages, and were approved and authorised for issue by the management on 20 February 2018.
1 General information
SCG Packaging Public Company Limited, the “Company”, is a company incorporated in Thailand.
The head office of the Company is located at 1 Siam Cement Road, Bangsue, Bangkok 10800, Thailand.
The parent company is The Siam Cement Public Company Limited. It was incorporated in Thailand.
The Company and its subsidiaries, the “Group” are mainly engaged in the manufacturing of pulp, paper and packaging.
Details of the Company’s subsidiaries, which have significant operations and were included in the consolidated financial statements, are as follows: 2017 2016 Direct / Indirect Holding (%) Registered in Thailand Siam Kraft Industry Co., Ltd. 100 100 SCGP Excellence Training Center Co., Ltd. 100 100 SCG Paper Energy Co., Ltd. 100 100 SCGP Solutions Co., Ltd. 100 - SCGP-T Plastics Co., Ltd. 100 - Thai Cane Paper Public Company Limited 94.54 94.54 Precision Print Co., Ltd. 75 - Conimex Co., Ltd. 75 - Thai Containers Group Co., Ltd. 70 70 Thai Containers Khonkaen Co., Ltd. 70 70 Thai Containers Rayong Co., Ltd. 70 70 Phoenix Pulp & Paper Public Company Limited 69.58 68.73 Phoenix Utilities Co., Ltd. 69.58 68.73
33
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
2017 2016 Direct / Indirect Holding (%) Thai Paper Co., Ltd. 69.58 68.73 The Siam Forestry Co., Ltd. 69.58 68.73 Thai Union Paper Public Company Limited 69.55 68.70 TC Flexible Packaging Co., Ltd. 52.50 52.50 Dyna Packs Co., Ltd. 52.50 52.50 Orient Containers Co., Ltd. 52.50 52.50 D-In Pack Co., Ltd. 52.50 52.50 Tawana Container Co., Ltd. 50.40 50.40 Prepack Thailand Co., Ltd. 37.80 37.80 Siam Cellulose Co., Ltd.* - 68.73 Registered in Philippines United Pulp and Paper Co., Inc. 99.70 99.70 Registered in Vietnam Vina Kraft Paper Co., Ltd. 70 70 New Asia Industries Co., Ltd. 70 70 Alcamax Packaging (Vietnam) Co., Ltd. 70 70 AP Packaging (Hanoi) Co., Ltd. 70 70 Packamex (Vietnam) Co., Ltd. 70 70 Tin Thanh Packing Joint Stock Company 47.24 42 Registered in Singapore TCG Rengo (S) Limited 70 70 Registered in Indonesia PT Primacorr Mandiri 63 63 PT Indoris Printingdo 63 63 PT Indocorr Packaging Cikarang 56 - * Siam Cellulose Co., Ltd. amalgamated with Thai Paper Co., Ltd. The new company which is named “Thai Paper Co., Ltd.” has already been registered with Ministry of Commerce on 1 February 2017.
34
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Most of the above subsidiaries were established in Thailand unless otherwise stated. There was no material change in the percentage of holding from 2016, except as discussed in note 4. During 2017, the Group acquired the ordinary shares of Precision Print Co., Ltd. and Conimex Co., Ltd. which are incorporated in Thailand and PT Indocorr Pakcaging Cikarang which is incorporated in Indonesia. These 3 companies are included in the Group’s consolidated financial statements, as discussed in note 4.
2 Basis of preparation of the financial statements (a) Statement of compliance
The consolidated financial statements are prepared in accordance with Thai Financial Reporting Standards (TFRSs) and guidelines promulgated by the Federation of Accounting Professions under the Royal Patronage of His Majesty the King (“FAP”). The FAP has issued new and revised TFRSs effective for annual accounting periods beginning on or after 1 January 2017. The adoption of these new and revised TFRSs did not have any material effect on the accounting policies, methods of computation, financial performance or position of the Group. In addition to the above new and revised TFRSs, the FAP has issued a number of new and revised TFRSs which are effective for annual financial period beginning on or after 1 January 2018 and have not been adopted in the preparation of these consolidated financial statements. The Group has made a preliminary assessment of the potential initial impact on the consolidated financial statements of these new and revised TFRSs and expected that there will be no material impact on the financial statements in the period of initial application.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for the following material items in the consolidated statements of financial position: contingent consideration assumed in a business combination are measured at fair value. biological assets are measured at fair value less cost to sell. defined benefit obligations are measured at the present value of non-current provisions for defined
benefit plans.
35
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 (c) Functional and presentation currency
The consolidated financial statements are prepared and presented in Thai Baht, which is the Company’s functional currency. All financial information presented in Thai Baht has been rounded in the notes to the financial statements to the nearest thousand unless otherwise stated.
(d) Use of estimates and judgements
The preparation of consolidated financial statements in conformity with TFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively. Information about significant areas of estimation uncertainty and critical assumptions in applying accounting policies that have the most significant effect on the amount recognised in the consolidated financial statements is included in the following notes: Note 4 Acquisitions of subsidiary: fair value of the consideration transferred
(including contingent consideration) and fair value of the assets acquired and liabilities assumed;
Note 8, 10, 11, 12 and 13 Impairment test: key assumptions underlying recoverable amount; Note 6, 7, 8, 10, 11, 12 and 13 Measurement of the recoverable amounts of each asset and
cash-generating units; Note 14 and 25 Recognition of deferred tax assets: availability of future taxable
profit against which tax losses carried forward can be used; Note 19 Measurement of non-current provision for defined benefit
obligations: key actuarial assumptions; and Note 31 Recognition and measurement of provisions and contingent
liabilities.
36
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Measurement of fair values A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
The Group has an established framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the CFO. The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of TFRS, including the level in the fair value hierarchy in which these valuations should be classified. Significant valuation issues are reported to the Group’s Board of Directors. When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity
can access at the measurement date. Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: inputs are unobservable inputs for the asset or liability.
If the inputs used to measure the fair value of an asset or liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirely in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
37
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Further information about the assumptions made in measuring fair values is included in the following notes:
Note 4 Acquisitions of business and changes in ownership interests in subsidiaries; Note 10 Investment properties; and Note 30 Financial instruments.
3 Significant accounting policies
The accounting policies set out below have been consistently applied to all periods presented in these financial statements.
(a) Basis of consolidation
The consolidated financial statements relate to the Group and the Group’s interests in associates.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.
Non-controlling interests
At the acquisition date, the Group measures any non-controlling interest at its proportionate interest in the identifiable net assets of the acquiree.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
38
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Loss of control When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controlling interests and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost. Interests in equity-accounted investees The Group’s interests in equity-accounted investees comprise interests in associates. Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Interests in associates are accounted for using the equity method. They are recognised initially at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of equity-accounted investees, until the date on which significant influence ceases.
Business combinations The Group applies the acquisition method for all business combinations when control is transferred to the Group, as described in subsidiaries section, other than those with entities under common control. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The acquisition date is the date on which control is transferred to the acquirer. Judgement is applied in determining the acquisition date and determining whether control is transferred from one party to another. In a business combination achieved in stages, the Group shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognise the resulting gain or loss in profit or loss. Goodwill is measured as the fair value of the consideration transferred including the recognised amount of any non-controlling interest in the acquiree, less the fair value amount of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. Any gain or bargain purchases is recognised in profit for the period immediately.
39
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Group to the previous owners of the acquiree, and equity interests issued by the Group. Consideration transferred also includes the fair value of any contingent consideration and share-based payment awards of the acquiree that are replaced mandatorily in the business combination. A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a present obligation and arises from a past event, and its fair value can be measured reliably. The Group measures any non-controlling interest at its proportionate interest in the identifiable net assets of the acquiree. Transaction costs that the Group incurs in connection with a business combination, such as legal fees, and other professional and consulting fees are expensed as incurred.
(b) Foreign currencies Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the end of reporting period are translated to the functional currency at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognised in profit or loss. Non-monetary assets and liabilities measured at cost in foreign currencies are translated to the functional currency using the foreign exchange rates ruling at the dates of the transactions. Non-monetary assets and liabilities measured at fair value in foreign currencies are translated to the functional currency at the foreign exchange rates ruling at the dates when the fair value was measured. Foreign entities The assets and liabilities of foreign entities, including goodwill and fair value adjustments arising on acquisition, are translated to Thai Baht at the foreign exchange rates ruling at the end of reporting period.
40
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Goodwill and fair value adjustments arising on the acquisition of foreign entities are stated at exchange rates ruling on transaction dates for acquisition occurred before the date 1 January 2013, and stated at exchange rates ruling at the end of reporting period for acquisition beginning on or after 1 January 2013. The revenues and expenses of foreign entities are translated to Thai Baht at rates approximating the foreign exchange rates ruling at the dates of the transactions and using the weighted average method. Foreign exchange differences arising on translation are recognised in other comprehensive income and presented in other components of equity until disposal of the investments, except to extent that the translation difference is allocated to non-controlling interests. When a foreign operation is disposed of in its entirety or partially such that control or significant influence is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. If the Group disposes of part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of an associate while retaining significant influence, the relevant proportion of the cumulative amount is reclassified to profit or loss. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and presented in other components of equity until disposal of the investment.
(c) Cash and cash equivalents
Cash and cash equivalents in the statements of cash flows comprise cash on hand, saving deposits, current deposits and highly liquid short-term investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. In addition, bank overdrafts that are repayable on demand are a component of financing activities for the purpose of the statement of cash flows.
41
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 (d) Trade and other receivables
Trade and other receivables are stated at their invoice value less allowance for doubtful accounts. The allowance for doubtful accounts is primarily assessed on analysis of payment histories and future expectations of receivable payments. Bad debts are written off when incurred.
Bad debts recovered are recognised in other income in profit or loss.
(e) Inventories Inventories are measured at the lower of cost and net realisable value. Cost is calculated using the following formula: Finished goods - at standard costs which approximate actual production costs Merchandise - at average cost Goods in process - at standard cost Raw materials, spare parts, stores, supplies and others
-
at average cost
Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured inventories and goods in process, cost includes an appropriate share of overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to complete and to make the sale.
(f) Biological assets
Biological assets are measured at fair value less costs to sell (the incremental cost directly attributable to the disposal of a biological asset), except for the case where the fair value cannot be measured reliably, there are measured at cost less accumulated depreciation and impairment losses. Gain or losses on changes in fair value less costs to sell are recognised in profit or loss.
42
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 (g) Investments
Investments in associates Investments in associates in the consolidated financial statements are accounted for using the equity method. Investments in other debt and equity securities Equity securities which are not marketable are stated at cost less any accumulated impairment losses. Disposal of investments On disposal of an investment, the difference between net disposal proceeds and the carrying amount together with the associated cumulative gain or loss that was reported in equity is recognised in profit or loss. If the Group disposes of part of its holding of a particular investment, the deemed cost of the part sold is determined using the weighted average method applied to the carrying amount of the total holding of the investment.
(h) Investment properties Investment properties are properties which are held to earn rental income, for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment properties are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the investment properties. The cost of self-constructed investment properties includes the cost of materials and direct labour, and other costs directly attributable to bringing the investment properties to a working condition for its intended use and capitalised borrowing costs of a qualifying assets.
43
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each property. The estimated useful lives are as follows: Land improvements 20 years Buildings and structures 5, 20 years
Reclassification to property, plant and equipment When the use of an investment properties changes such that it is reclassified as property, plant and equipment, its carrying amount at the date of reclassification becomes its cost for subsequent accounting.
(i) Finance lease The Group recognised finance leases as assets and liabilities in the consolidated statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. Lease payments are apportioned between the finance charge and the reduction of the outstanding liabilities. The finance charge is allocated to the periods during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
(j) Property, plant and equipment Owned assets Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located and capitalised borrowing costs of a qualifying asset. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different assumption patterns or useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
44
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within income or expense in profit or loss. Leased assets Leases in terms of which the Group substantially assumes all the risk and rewards of ownership are classified as finance leases. Property, plant and equipment acquired by way of finance leases is capitalised at the lower of its fair value or the present value of the minimum lease payments at the inception of the lease, less accumulated depreciation and accumulated impairment losses. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the profit or loss. Reclassification to investment properties When the use of a property changes from owner-occupied to investment properties, its carrying amount is recognised and reclassified as investment properties. Subsequent costs The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Depreciation Depreciation is calculated based on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value. Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. The Group has changed the estimated useful lives of some assets based on the report of the independent appraiser prospectively from the date as 1 January 2017.
45
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
The estimated useful lives are as follows: 2017 2016 Land improvements 5 - 33 years 5 - 33 years Buildings and structures 5 - 40 years 5 - 30 years Machinery and equipment 3 - 25 years 3 - 20 years Furniture, fixtures and office equipment 3 - 20 years 3 - 20 years Transportation and equipment 3 - 10 years 3 - 10 years For three particular subsidiaries, Phoenix Pulp & Paper Public Company Limited, The Siam Forestry Co., Ltd. and Thai Cane Paper Public Company Limited, depreciation of property, plant and equipment has been computed by the following methods over the periods as follows: - Phoenix Pulp & Paper Public Company Limited
2017 2016 Depreciation
methodLand improvements 5 - 30 years 5 - 30 years Straight-lineBuildings and structures - Acquired prior to 1 January 2002 30 years 30 years Sinking Fund- Acquired from 1 January 2002 20, 25, 30, 40 years 20, 25, 30 years Straight-lineMachinery and equipment 15 years 15 years Sinking FundCertain machinery and equipment 5 - 25 years 5 - 25 years Straight-lineFurniture, fixtures and office equipment 3, 5 years 3, 5 years Straight-lineTransportation and equipment 5 years 5 years Straight-lineBearer plant 5 years 5 years Straight-line
- The Siam Forestry Co., Ltd.
Depreciation methodBearer plant Actual production in each month
46
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
- Thai Cane Paper Public Company Limited
2017 2016 Depreciation method Land improvements 5, 10, 20 years 5, 10, 20 years Straight-line Buildings and structures 5 - 20, 40 years 5 - 20 years Straight-line Production machinery - Kanchanaburi Mill Estimated production capacity of 1.92 million tons - Prachinburi Mill Estimated production capacity of 5.25 million tons Machinery and equipment 5 - 25 years 5 - 15 years Straight-line Furniture and fixtures 5 - 15 years 5 - 10 years Straight-line Transportation and equipment 5, 10 years 5, 10 years Straight-line The effect of using the above different depreciation methods on the consolidated financial statements is insignificant. Depreciation for the finance lease assets is charged as expense for each accounting period. The depreciation method for leased assets is consistent with that for depreciable assets that are owned. No depreciation is provided on freehold land or assets under construction. Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.
(k) Goodwill and other intangible assets Goodwill Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. The measurement of goodwill at initial recognition is described in note 3 (a). Subsequent to initial recognition, goodwill is measured at cost less accumulated impairment losses. In respect of equity-accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss on such an investment is not allocated to any assets.
47
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Research and development Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in profit or loss as incurred. Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour, other costs that are directly attributable to preparing the asset for its intended use, and capitalised borrowing costs. Other development expenditure is recognised in profit or loss as incurred. Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses.
Other intangible assets Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortisation and accumulated impairment losses. Subsequent expenditure Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred. Amortisation Amortisation is calculated based on the cost of the asset, or other amount substituted for cost, less its residual value. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.
48
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
The estimated useful lives are as follows: Software licences and others 3 - 10 years
No amortisation is provided on assets under development. Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.
(l) Impairment The carrying amounts of the Group’s assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. For goodwill and intangible assets that have indefinite useful lives or are not yet available for use, the recoverable amount is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in profit or loss unless it reverses a previous revaluation credited to equity, in which case it is charged to equity. Calculation of recoverable amount The recoverable amount of a non-financial asset is the greater of the asset’s value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Reversals of impairment An impairment loss in respect of financial asset is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised in profit or loss.
49
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
An impairment loss in respect of goodwill is not reversed. Impairment losses recognised in prior periods in respect of other non-financial assets are assessed at each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of accumulated depreciation or accumulated amortisation, if no impairment loss had been recognised.
(m) Trade and other payables Trade and other payables are stated at cost.
(n) Employee benefits
Defined contribution plans
Obligations for contributions to defined contribution plans are expensed as the related service is provided. Defined benefit plans
The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount. The calculation of defined benefit obligations is performed by a qualified actuary using the projected unit credit method which is based on actuarial valuation method. Remeasurements of the net defined benefit liability, actuarial gain or loss are recognised in other comprehensive income. The Group determines the interest expense on the net defined benefit liability for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period, taking into account any changes in the net defined benefit liability during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.
50
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs. Other long-term employee benefits The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Remeasurements are recognised in profit or loss in the period in which they arise. Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
(o) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance costs.
(p) Revenue
Revenue excludes value added taxes and is arrived at after deduction of trade discounts and volume rebates allowed by the entity.
Sale of goods and rending of services Revenue is recognised in profit or loss when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there is continuing management involvement with the goods or there are significant uncertainties regarding recovery of the consideration due, associated costs or
51
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
the probable return of goods. Revenue from rending of services is recognised as services are provided on the basis of stage of completion of the transaction.
Interest and dividend income
Interest income is recognised in profit or loss using the effective interest method. Dividend income is recognised in profit or loss on the date the Group’s right to receive payments is established, which in the case of quoted securities is usually the ex-dividend date.
Royalty fee income
Royalty fee income is recognised on an accrual basis in accordance with the terms of agreement.
(q) Expenses
Operating leases Payments made under operating leases are recognised in profit or loss on a straight line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of lease.
Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.
Determining whether an arrangement contains a lease At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. A specific asset is the subject of a lease if fulfilment of the arrangement is dependent on the use of that specified asset. An arrangement conveys the right to use the asset if the arrangement conveys to the Group the right to control the use of the underlying asset. At inception or upon reassessment of the arrangement, the Group separates payments and other consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to separate the payments reliably, an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance charge on the liability is recognised using the Group’s incremental borrowing rate.
52
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Finance costs
Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions and contingent consideration, and dividends on preference shares classified as liabilities.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.
Early retirement expense
The Group offered certain qualifiable employees the option to take early retirement from the Group. Eligible employees who accept the offer are paid a lump sum amount which is calculated based on a formula using their final month’s pay, number of years of service or the number of remaining months before normal retirement as variables. The Group records expenses on early retirement upon mutual acceptance.
(r) Income tax
Income tax expense for the year comprises current and deferred tax. Current and deferred tax are recognised in profit or loss except to the extent that they relate to items recognised directly in equity or in other comprehensive income.
Current tax Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantially enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years. Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill; the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, using tax rates enacted or substantively enacted at the end of the reporting period.
53
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. In determining the amount of current and deferred tax, the Group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that the related tax benefit will be realised.
(s) Derivative financial instruments Financial assets and financial liabilities carried on the statement of financial position include cash and cash equivalents, trade and other current receivables, other non-current receivables, loans, investments, trade and other current payables and borrowings. The Group operates internationally and is exposed to risks from changes in foreign exchange rates. The Group uses derivative financial instruments to mitigate those risks. All gains and losses on hedge transactions are recognised in profit or loss in the same period as the exchange differences on the items covered by the hedge.
54
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 4 Acquisitions of business and changes in ownership interests of subsidiaries
(1) Acquisitions During the year 2017, the Group had acquired the significant business as follows: (a) PT Indocorr Packaging Cikarang, Indonesia
On 21 April 2017, the Group acquired 80% of ordinary shares of PT Indocorr Packaging Cikarang (“Indocorr”), which is a producer of high quality corrugated containers in Indonesia, for a total consideration of Rupiah 79.2 billion or equivalent to approximately Baht 206 million. Obtaining control in Indocorr results in the Group increasing combined production capacity of corrugated containers to 1.045 million tons per year across ASEAN with Indocorr’s production capacity of 32,000 tons per year. This acquisition is to serve rapidly growing packaging demand in Indonesian market. The Group recognised a gain from bargain purchase of Baht 65 million which is included in other income in consolidated income statement. This bargain purchase was attributable to the fair value adjustment on land.
(b) Precision Print Co., Ltd., Thailand On 1 September 2017, the Group acquired 75% of ordinary shares of Precision Print Co., Ltd. (“Precision Print”), which is a producer in Offset Printing of folding cartons, hangtag and stickers which are used in various industries in Thailand for a total consideration of Baht 165 million. Obtaining control in Precision Print results in the Group expanding its display packaging production to serve premium packaging market with Precision Print’s production capacity of 4,650 tons per year. Furthermore, this acquisition is potential for strengthening the position of a total packaging solutions.
55
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
(c) Conimex Co., Ltd., Thailand On 21 November 2017, the Group acquired 75% of ordinary shares of Conimex Co., Ltd. (“Conimex”), which is a producer of rigid plastic packaging products including plastic bottle made from HDPE, plastic tube, cap and closure which are used in industries ranging from cosmetic, personal care, consumer products and industrial liquid industries both domestic and international manufacturers, for a total consideration of Baht 298 million. Obtaining control in Conimex will enhance the Group business’s overall portfolio in term of incremental product category while strengthening its footstep in premium packaging segment such as cosmetic packaging.
According to the above acquisitions, the Group has engaged an independent appraiser to determine the fair values of net assets and liabilities acquired. As at 31 December 2017, the determination of the fair values of net assets and liabilities has been completed, and the carrying amount of the assets acquired and liabilities assumed were adjusted accordingly. The Group has continuously determined its review of fair values of the business acquired within one year from the acquisition date, taking into accounts additional information, facts as well as circumstances that existed at acquisition date. Consequently, the adjustments on accounting transactions of such acquisition will be made.
56
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Assets acquired and liabilities assumed at the acquisition date were as follows: Fair Value
Indocorr Precision
Conimex
Total (in million Baht) Cash and cash equivalents 2 11 7 20 Trade receivables 114 54 207 375 Inventories 54 12 128 194 Other current assets 3 17 7 27 Property, plant and equipment 396 296 638 1,330 Intangible assets - 1 2 3 Other non-current assets 11 28 21 60 Interest-bearing debts (114) (217) (420) (751)Trade payables (100) (57) (58) (215)Other current liabilities (3) (25) (33) (61)Other non-current liabilities (24) (35) (77) (136)Net identifiable assets and liabilities 339 85 422 846 Less non-controlling interests (68) (21) (124) (213)Recognised value of net assets acquired 271 64 298 633 Goodwill - 101 - 101 Gain on a bargain purchase (65) - - (65)Total consideration transferred 206 165 298 669 Cash acquired (20)Net cash outflows 649 Less accrued investments (115)Net cash outflows in 2017 534 The Group has agreed to pay total consideration payables of Baht 115 million to the former shareholders when certain conditions are achieved within 2019.
57
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
The assets, liabilities and operating results since acquisition date of those subsidiaries have been included in the Group’s consolidated financial statements for the year ended 31 December 2017. The subsidiaries contributed total revenue from sales of Baht 489 million and gain for the year of Baht 5 million to the Group’s operating results. If the acquisition had occurred on 1 January 2017, management estimates that consolidated revenue from sales would have been Baht 82,621 million and consolidated profit for the year would have been Baht 4,436 million. The Group incurred acquisition costs totalling Baht 6 million which had been included in administrative expenses in consolidated income statement. (2) Change in ownership interests in a subsidiaries In February 2017, the Group had purchased additional ordinary shares of Phoenix Pulp & Paper Public Company Limited (“PPPC”), a subsidiary, which consisted of 1,928,388 ordinary shares and 171,612 preferred shares, totalling Baht 172 million. As a result, the Group’s ownership in PPPC was changed from 68.73% to 69.58%. In September 2017, the Group had purchased additional ordinary shares of Tin Thanh Packing Joint Stock Company (“Batico”), a subsidiary, 1,019,400 ordinary shares, totalling Vietnamese Dong 81,552 million or equivalent to Baht 119 million. As a result, the Group’s ownership in Batico was changed from 42.00% to 47.24%. The following summarises the effect of the change in the Group’s ownership interests:
PPPC Batico (in thousand Baht)
Carrying amount of non-controlling interests acquired 168,610 49,085 Less Consideration paid to non-controlling interests (172,200) (118,710) Decrease in equity attributable to owners of the Group from additional investments in subsidiaries
(3,590)
(69,625)
58
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 5 Related parties
Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa or where the Group and the party are subject to common control or common significant influence. Relationships with related parties were as follows:
Name of entities
Country of incorporation/ nationality
Nature of relationships
The Siam Cement Public Company Limited Thailand Ultimate parent company SCG Trading Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited PT SCG Trading Indonesia Indonesia A subsidiary of The Siam Cement Public Company Limited SCG Trading Vietnam Co., Ltd. Vietnam A subsidiary of The Siam Cement Public Company Limited Siam Sanitary Ware Industry Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited SCG Logistics Management Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited Prime Group Joint Stock Company Vietnam A subsidiary of The Siam Cement Public Company Limited Sosuco Ceramic Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited PT Keramika Indonesia Assosiasi, Tbk. Indonesia A subsidiary of The Siam Cement Public Company LimitedThai-German Ceramic Industry Public
Company Limited Thailand A subsidiary of The Siam Cement Public Company Limited
Nawa Plastics Industries Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company LimitedSiam Sanitary Ware Industry (Nongkae) Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company LimitedThe Siam Fibre-Cement Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited SCG Cement-Building Materials Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited SCG Marketing Philippines, Inc. Philippines A subsidiary of The Siam Cement Public Company LimitedPT SCG Indonesia Indonesia A subsidiary of The Siam Cement Public Company Limited Mariwasa-Siam Ceramic, Inc. Philippines A subsidiary of The Siam Cement Public Company Limited SCG Trading Philippines Inc. Philippines A subsidiary of The Siam Cement Public Company Limited SCI Eco Services Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company LimitedSCG Performance Chemicals Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company LimitedSCG Trading Hong Kong Limited Hong Kong A subsidiary of The Siam Cement Public Company Limited
59
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Name of entities
Country of incorporation/ nationality
Nature of relationships
Rayong Olefins Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company LimitedSCG Trading USA Inc. USA A subsidiary of The Siam Cement Public Company Limited The Siam Refractory Industry Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company LimitedSCG Vietnam Co., Ltd. Vietnam A subsidiary of The Siam Cement Public Company LimitedMap Ta Phut Olefins Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company LimitedThe Concrete Products and Aggregate Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited Siam Sanitary Ware Co., Ltd. Thailand A subsidiary of The Siam Cement Public Company Limited Siam Nippon Industrial Paper Co., Ltd. Thailand An associate of SCG Packaging Public Company Limited Siam Toppan Packaging Co., Ltd. Thailand An associate of SCG Packaging Public Company Limited Saha Green Forest Co., Ltd. Thailand An associate of SCG Packaging Public Company Limited P&S Holding Corporation Philippines An associate of SCG Packaging Public Company LimitedThe Siam Gypsum Industry (Saraburi)
Company Limited Thailand An associate of The Siam Cement Public Company Limited
The Siam Gypsum Industry (Songkhla) Company Limited
Thailand An associate of The Siam Cement Public Company Limited
Thai MFC Co., Ltd. Thailand An associate of The Siam Cement Public Company Limited Siam Polyethylene Co., Ltd. Thailand An associate of The Siam Cement Public Company Limited Siam Synthetic Latex Co., Ltd. Thailand An associate of The Siam Cement Public Company Limited IT One Co., Ltd. Thailand An associate of The Siam Cement Public Company Limited Thai British Security Printing Public Company
Limited Thailand Common directors with SCG Packaging Public Company
Limited and its Subsidiaries
60
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
The pricing policies for particular types of transactions are explained further below:
Transactions Pricing policies Revenue from sales Market price Purchases Market price Intellectual properties fees Percentage of net revenue from sales Expenses Market price and contract rate Dividends income Upon declaration Interest expense Contract rate
Significant transactions for the years ended 31 December with related parties were as follows: 2017 2016 (in thousand Baht) Parent Revenue from sales 15,927 13,747 Intellectual properties fees 349,808 330,116 Interest expense 533,213 490,341 Expenses 399,692 346,348 Associates Revenue from sales 948,814 763,297 Dividends income 18,788 11,123 Purchases 391,771 376,002 Others Revenue from sales 3,160,852 2,630,645 Purchases 6,020,660 4,521,694 Expenses 2,811,952 2,784,727 Dividend income 14,125 14,186
61
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Balances as at 31 December with related parties were as follows: Trade receivables 2017 2016 (in thousand Baht) Parent
The Siam Cement Public Company Limited 3,502 3,238 Associates
Siam Nippon Industrial Paper Co., Ltd. 51,725 33,989 Siam Toppan Packaging Co., Ltd. 41,259 48,006 Saha Green Forest Co., Ltd. 1,893 7,986
Others SCG Trading Co., Ltd. 88,916 68,669 The Siam Gypsum Industry (Saraburi) Co., Ltd. 71,943 32,823 PT SCG Trading Indonesia 54,099 55,908 SCG Trading Vietnam Co., Ltd. 25,932 4,949 The Siam Gypsum Industry (Songkhla) Co., Ltd. 9,372 7,267 Thai MFC Co., Ltd. 9,037 22,122 Thai British Security Printing Public Company Limited 8,080 9,942 Siam Sanitary Ware Industry Co., Ltd. 7,896 6,656 SCG Logistics Management Co., Ltd. 6,941 11,254 Prime Group Joint Stock Company 6,309 5,234 Sosuco Ceramic Co., Ltd. 5,613 7,714 Siam Polyethylene Co., Ltd. 5,510 2,740 PT Keramika Indonesia Assosiasi, Tbk. 5,418 - Thai-German Ceramic Industry Public Company Limited 5,127 5,076 Nawa Plastics Industries Co., Ltd. 4,588 3,874 Siam Sanitary Ware Industry (Nongkae) Co., Ltd. 4,111 2,784 The Siam Fibre-Cement Co., Ltd. 3,669 580 Others 30,606 25,617
Total 451,546 366,428
62
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Other current receivables from related parties 2017 2016 (in thousand Baht) Parent
The Siam Cement Public Company Limited 701 4,012 Associates
Siam Nippon Industrial Paper Co., Ltd. 64,116 36,487 P&S Holdings Corporation 3,812 3,300 Saha Green Forest Co., Ltd. 2 89
Others The Siam Fibre-Cement Co., Ltd. 1,167 1,399 SCG Cement-Building Material Co., Ltd. 655 25 Thai British Security Printing Public Company Limited 625 380 SCG Trading Co., Ltd. 488 1,107 SCG Marketing Philippines, Inc. 227 460 SCG Logistics Management Co., Ltd. 39 417 Others 165 1,341
Total 71,997 49,017
Short-term loans to related parties
2017 2016 (in thousand Baht) Associates
Saha Green Forest Co., Ltd. - 5,000 Others
PT SCG Indonesia 811 250 Total 811 5,250
Long-term loans to related parties
2017 2016 (in thousand Baht) Others
Mariwasa-Siam Ceramic, Inc. 98,333 -
63
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Long-term receivable and deposit shown under other non-current receivables 2017 2016 (in thousand Baht) Associate
P&S Holdings Corporation 126,380 139,440 Trade payables 2017 2016 (in thousand Baht) Associates
Siam Nippon Industrial Paper Co., Ltd. 25,119 24,125Siam Toppan Packaging Co., Ltd. 8,274 8,310
Others SCG Trading Co., Ltd. 633,708 291,006SCG Logistics Management Co., Ltd. 578,913 373,331SCG Trading Vietnam Co., Ltd. 79,855 59,507SCG Trading Philippines Inc. 46,270 25,736SCI Eco Services Co., Ltd. 34,766 25,599SCG Performance Chemicals Co., Ltd. 31,180 22,850Siam Synthetic Latex Co., Ltd. 22,680 10,509SCG Trading Hong Kong Limited 21,312 2,691Rayong Olefins Co., Ltd. 16,253 -SCG Trading USA Inc. 8,747 48,020IT One Co., Ltd. 7,496 14,260The Siam Refractory Industry Co., Ltd. 6,444 3,602SCG Vietnam Co., Ltd. 3,586 3,046Map Ta Phut Olefins Co., Ltd. - 6,793Others 15,577 14,442
Total 1,540,180 933,827
64
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Other current payables to related parties 2017 2016 (in thousand Baht) Parent
The Siam Cement Public Company Limited 168,718 171,999Associates
Siam Toppan Packaging Co., Ltd. 3,610 3,965P&S Holdings Corporation 1,122 1,287Siam Nippon Industrial Paper Co., Ltd. 165 292
Others The Siam Fibre-Cement Co., Ltd. 1,639 2,213The Concrete Products and Aggregate Co., Ltd. 1,326 8Thai British Security Printing Public Company Limited 1,291 945SCG Cement-Building Materials Co., Ltd. 274 1,151IT One Co., Ltd. 229 861Siam Sanitary Ware Industry Co., Ltd. - 800SCG Logistics Management Co., Ltd. - 763Others 963 1,311
Total 179,337 185,595 Short-term borrowings from related parties 2017 2016 (in thousand Baht) Notes payable Parent
The Siam Cement Public Company Limited (Interest rate 3.75% and 4.00% per annum in 2017 and 4.00% and 4.25% per annum in 2016) 15,444,571 12,466,886
Others PT SCG Indonesia 51,992 53,026
Total 15,496,563 12,519,912
65
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Movements during the years on short-term borrowings from related parties were as follows:
2017 2016 (in thousand Baht) At 1 January 12,519,912 12,804,170Increase 168,819,718 69,209,447Decrease (165,843,067) (69,493,705)At 31 December 15,496,563 12,519,912
Key management compensation
2017 2016 (in thousand Baht) For the year ended 31 December Short-term employee benefits 122,840 119,894Post-employment benefits 2,067 2,027Total 124,907 121,921 Management benefit expenses comprise of the remuneration paid to the management as staff expenses in terms of salary, bonus, others and contribution to defined contribution plans.
66
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 6 Trade and other current receivables
Note 2017 2016 (in thousand Baht) Trade receivables Related parties 5 451,546 366,428Other companies 11,988,723 10,278,913 Less allowance for doubtful accounts (152,633) (178,694)Net 11,836,090 10,100,219 12,287,636 10,466,647Other current receivables Related parties 5 71,997 49,017 Other companies 1,512,333 1,534,469 1,584,330 1,583,486Total 13,871,966 12,050,133 For the year ended 31 December Doubtful debts expenses 1,578 5,051 Bad debts recovery (2,721) (2,522)
67
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
2017 2016 (in thousand Baht) Trade receivables Related parties Within credit terms 443,174 358,808 Overdue Less than 3 months 8,255 7,513 3 - 6 months 117 107 Total 451,546 366,428 Other companies Within credit terms 11,117,607 9,488,399 Overdue Less than 3 months 682,893 593,094 3 - 6 months 33,859 13,323 Over 6 - 12 months 4,338 8,951 Over 12 months 150,026 175,146 11,988,723 10,278,913 Less allowance for doubtful accounts (152,633) (178,694)Net 11,836,090 10,100,219Total 12,287,636 10,466,647 The normal credit term granted by the Group is 30-90 days.
68
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 7 Inventories
2017 2016 (in thousand Baht) Finished goods 3,925,035 3,446,045 Goods in process 914,591 575,483 Raw materials 4,099,627 2,788,736 Spare parts, stores, supplies and others 2,926,252 2,777,431 Goods in transit 1,751,292 1,111,050 Total 13,616,797 10,698,745Less allowance for decline in value (199,760) (106,907)Net 13,417,037 10,591,838 Cost of inventories recognised as an expense in cost of sales: Cost of sales 67,290,666 61,499,342 Less Write-down to net realisable value (131,663) (89,751)Add Reversal of write-down 109,355 58,176 Less Service cost and others (3,492) (4,431)Net total 67,264,866 61,463,336 Changes in inventories of finished goods and goods in process (818,098) 369,362 Raw materials and supplies used 30,861,732 23,686,905
69
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 8 Investments in associates
Movements for the years ended 31 December in investments in associates accounted for using the equity method were as follows:
2017 2016 (in thousand Baht) At 1 January 880,381 892,982Share of net profit of investments - equity method 4,133 4,561 Share of other comprehensive income of investment - equity method (234) (6,039)Dividend income (18,788) (11,123)Disposal (104,758) - At 31 December 760,734 880,381
In December 2017, the Group sold its entire stake in Rengo Packaging Malaysia Sdn. Bhd. to Rengo Company Limited with the proceeds from sales of Baht 106 million and recognised loss of Baht 29 million.
70
Not
es t
o th
e fi
nanc
ial s
tate
men
ts
SCG
Pac
kagi
ng P
ublic
Com
pany
Lim
ited
and
its
Subs
idia
ries
F or
the
year
end
ed 3
1 D
ecem
ber
2017
Inv
estm
ents
in ass
ociat
es as
at 31
Dec
embe
r and
divid
end i
ncom
e from
thes
e inv
estm
ents
for th
e yea
rs the
n end
ed at
the s
ame d
ate, w
ere as
follo
ws:
Total
direc
t/
indire
ct ho
lding
Paid-
up ca
pital
Co
st me
thod
Eq
uity m
ethod
Divide
nd in
come
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
(%)
(in
thou
sand
Baht)
As
socia
tes
Siam
Topp
an Pa
ckag
ing Co
., Ltd
. 49
49
500,0
0050
0,000
245,0
00
245,0
00
420,4
1740
9,048
14,03
811
,123
Siam
Nippo
n Ind
ustrial
Pape
r Co.,
Ltd.
31.31
30
.93
1,100
,000
1,100
,000
495,0
00
495,0
00
281,2
6230
3,448
-
-
Reng
o Pac
kagin
g Mala
ysia S
dn. B
hd.
- 17
.50
- 80
3,897
-
200,9
74
- 11
2,864
-
-
Saha
Gree
n Fore
st Co
., Ltd
. 17
.40
17.18
19
0,000
190,0
0047
,500
47,50
0 59
,055
55,02
14,7
50
-
P&S H
olding
Corpo
ration
40
40
262,5
8826
2,588
105,1
21
105,1
21
- -
-
-
Total
2,052
,588
2,856
,485
892,6
21
1,093
,595
760,7
3488
0,381
18,78
811
,123
71
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Immaterial associates
The following is summarised financial information for the Group’s interest in immaterial associates based on the amounts reported in the Group’s consolidated financial statements:
2560 2559 (in thousand Baht) Carrying amount of interests in immaterial associates 760,734 880,381 Group’s share of:
- Profit for the year from continuing operations 4,133 4,561 - Other comprehensive income for the year (234) (6,039) - Total comprehensive income for the year 3,899 (1,478)
9 Non-controlling interests
The following table summarises the information relating to each of the Group’s subsidiaries that has a material non-controlling interest, before any intra-group eliminations:
Phoenix Pulp & Thai Containers Paper Public Group Co., Ltd. Company Limited
(in thousand Baht) Non-controlling interests at 31 December 2017 Non-controlling interest percentage 30.42% 30.00% Current assets 7,745,832 3,854,995 Non-current assets 19,806,370 10,245,608 Current liabilities (5,032,449) (4,923,373) Non-current liabilities (1,055,676) (310,136) Net assets 21,464,077 8,867,094 Carrying amount of non-controlling interest 6,529,372 2,660,128
72
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Phoenix Pulp & Thai Containers Paper Public Group Co., Ltd. Company Limited (in thousand Baht) For the year ended 31 December 2017 Revenue 7,988,443 15,640,046 Profit for the year 394,095 848,695 Other comprehensive income for the year (5,222) 613 Total comprehensive income for the year 388,873 849,308
For the year ended 31 December 2017 Profit for the year
- Attributable to owners of the parent 273,854 594,087 - Attributable to non-controlling interest 120,241 254,608
Other comprehensive income for the year - Attributable to owners of the parent (3,633) 429 - Attributable to non-controlling interest (1,589) 184
388,873 849,308 Cash flows from operating activities 950,202 1,068,509 Cash flows from investing activities (140,447) (978,395) Cash flows from financing activities (890,913) (81,431) Net increase (decrease) in cash and cash equivalents (81,158) 8,683
Dividends to non-controlling interest 29,920 45,672 Non-controlling interests at 31 December 2016 Non-controlling interest percentage 31.27% 30.00% Current assets 7,959,646 3,496,559 Non-current assets 19,866,269 9,527,332 Current liabilities (5,540,569) (4,554,663) Non-current liabilities (1,111,674) (299,202) Net assets 21,173,672 8,170,026 Carrying amount of non-controlling interest 6,621,007 2,451,008
73
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Phoenix Pulp & Thai Containers Paper Public Group Co., Ltd. Company Limited (in thousand Baht) For the year ended 31 December 2016 Revenue 7,853,324 14,825,072 Profit for the year 1,115,992 838,334 Other comprehensive income for the year (3,228) (1,084) Total comprehensive income for the year 1,112,764 837,250
For the year ended 31 December 2016 Profit for the year
- Attributable to owners of the parent 853,990 586,834 - Attributable to non-controlling interest 262,002 251,500
Other comprehensive income for the year - Attributable to owners of the parent (2,219) (759) - Attributable to non-controlling interest (1,009) (325)
1,112,764 837,250
Cash flows from operating activities 857,058 1,070,343 Cash flows from investing activities (439,833) (100,909) Cash flows from financing activities (400,169) (986,496) Net increase (decrease) in cash and cash equivalents 17,056 (17,062)
Dividends to non-controlling interest 21,028 34,877
74
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 10 Investment properties
Note
Land and land improvements
(in thousand Baht) Cost At 1 January 2016 56,021 Transfer from property, plant and equipment 11 41,152 At 31 December 2016 97,173 Acquisitions through business combinations 4 29,812 Transfer from property, plant and equipment 11 6,843 Transfer to other current assets (4,158) At 31 December 2017 129,670 Accumulated depreciation At 1 January 2016 - Transfer from property, plant and equipment 11 11,681 At 31 December 2016 11,681 Acquisition through business combinations 4 8,780 Depreciation charge for the year 2,928 At 31 December 2017 23,389 Carrying amount As at 31 December 2016 85,492 As at 31 December 2017 106,281
Investment properties were revalued as at 31 December 2017 at open market values on an existing use basis. The fair value was Baht 433 million (2016: Baht 264 million). The fair value measurement for investment properties have been categorised as a Level 3 fair value based on the inputs to the valuation technique used, which are discounted cash flows and market approach.
75
Not
es t
o th
e fi
nanc
ial s
tate
men
ts
SCG
Pac
kagi
ng P
ublic
Com
pany
Lim
ited
and
its
Subs
idia
ries
F or
the
year
end
ed 3
1 D
ecem
ber
2017
11
Pro
perty
, plan
t and
equip
ment
Const
ructio
n
Furni
ture,
in p
rogres
s, and
La
nd an
d
Mach
inery
fix
tures
and
Tran
sportat
ion
mach
inery
lan
d B
uildin
gs an
d
and
off
ice
an
d a
nd eq
uipme
nt
impro
vemen
ts
struc
tures
equip
ment
eq
uipme
nt
equ
ipmen
t u
nder
install
ation
Be
arer p
lant
To
tal
(in
thou
sand
Baht)
Co
st At
1 Jan
uary
2016
3,384
,405
14,77
1,875
99,09
4,376
1,583
,588
3
29,09
6 10
,254,2
10-
129,4
17,55
0 Ad
dition
s28
,683
149,2
7693
4,048
65,91
857
,858
6,392
,898
8,067
7,636
,748
Dispo
sals/w
ritten
off
(3,00
0)(25
,226)
(767,1
50)
(18,13
0)(15
,324)
(2,53
1)-
(831,3
61)
Trans
fer to
inve
stmen
t prop
erties
(4,
159)
(36,99
3)-
-
--
-
(41,15
2) Tra
nsfer
s in (
out)
300,7
1978
0,358
5,3
65,58
7
125,4
98
16,31
0
(6,63
1,760
)79
7(42
,491)
Curre
ncy t
ransla
tion d
ifferen
ces
(89)
(43,37
4)(32
5,074
) (6,
290)
174
(7,42
6)-
(382,0
79)
At 31
Dec
embe
r 201
6 3,7
06,55
915
,595,9
16 1
04,30
1,787
1,750
,584
38
8,114
10,00
5,391
8,864
135,7
57,21
5 Ac
quisit
ions t
hroug
h bus
iness
comb
inatio
ns38
9,944
64
7,001
1,1
18,36
442
,345
40
,663
-
-2,2
38,31
7 Ad
dition
s40
,230
186,7
79
1,493
,508
56,94
1 40
,715
4,447
,483
74
6,26
5,730
Dis
posal
s/writt
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f(53
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(2,89
4,965
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(6,84
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-
--
-
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out)
94,81
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55
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2,275
(15
,668)
Curre
ncy t
ransla
tion d
ifferen
ces
(41,04
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9,403
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(11,7
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7,793
)-
(2,11
7,083
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31 D
ecem
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017
4,129
,832
17,12
7,820
109,1
87,58
2 1,
770,3
22
44
5,930
6,2
06,72
7 11
,213
138,8
79,42
6
76
Not
es t
o th
e fi
nanc
ial s
tate
men
ts
SCG
Pac
kagi
ng P
ublic
Com
pany
Lim
ited
and
its
Subs
idia
ries
F or
the
year
end
ed 3
1 D
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2017
Co
nstruc
tion
Fu
rnitur
e,
in prog
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nd
Land
and
Ma
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fixtur
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d T
ranspo
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ma
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land
Buil
dings
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office
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and
equip
ment
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provem
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uctur
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eq
uipme
nt
equip
ment
e
quipm
ent
und
er ins
tallatio
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Beare
r plan
t
Total
(in th
ousa
nd Ba
ht)
Accu
mulat
ed d
eprec
iation
and
ac
cumu
lated
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irmen
t los
ses
At 1
Janua
ry 20
1697
7,549
8,019
,784
64,87
0,794
1,229
,381
21
5,161
-
-75
,312,6
69
Depre
ciatio
n cha
rge fo
r the
year
57,87
558
5,970
4,382
,807
135,5
7247
,079
-3,1
305,2
12,43
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13,70
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0,684
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8,069
-18
2,460
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f-
(23,93
9)(62
6,879
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-
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--
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31 D
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016
1,032
,145
8,5
52,78
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,552,5
98
1,342
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24
9,212
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3,130
79,74
0,042
Ac
quisit
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rough
busin
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comb
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ns1,2
41
220,1
25
633,3
34
28,72
3 23
,990
-
- 90
7,413
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precia
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ar 87
,328
481,7
05
4,369
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129,6
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47,19
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7,968
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osse
s-
-15
,424
--
--
15,42
4 Dis
posal
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9,177
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rrenc
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s (5,
360)
(104,0
00)
(866,4
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(8,72
0)(10
,519)
--
(995
,086)
At 31
Dec
embe
r 201
7 1,0
81,60
3 9,0
02,68
8 69
,956,3
57
1,38
8,192
30
1,617
-
6,127
81
,736,5
84
Carry
ing am
ount
At
31 D
ecem
ber 2
016
2,674
,414
7,043
,133
35,74
9,189
*40
8,479
138,9
029,9
97,32
25,7
3456
,017,1
73
At 31
Dec
embe
r 201
7 3,0
48,22
98,1
25,13
239
,231,2
25*
382,1
3014
4,313
6,206
,727
5,086
57,14
2,842
77
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
* These include machinery acquired under financial lease with carrying amount Baht 163 million at 31 December 2017 (2016: Baht 164 million). The effect of the change in the estimated useful lives of some assets as described in note 3(j), for the year ended 31 December 2017 is a decrease in depreciation expense approximately Baht 524 million. The gross carrying amount of fully depreciated property, plant and equipment that is still in use as at 31 December 2017 amounted to Baht 47,483 million (2016: Baht 47,884 million). In 2017, the Group capitalised borrowing costs relating to the acquisition of the property, plant and equipment were capitalised as part of the cost of construction in progress, amounting to Baht 12 million (2016: Baht 29 million), rates of interest capitalised at 1.90% - 3.96% per annum (2016: 2.05% - 6.25% per annum). During 2017, the Group sold fixed assets and recognised loss on sales of property, plant and equipment amounting to Baht 852 million, which is included in other income in the consolidated financial statement. For the purpose of impairment testing of property, plant and equipment of the Group where indicators occurred, the recoverable amount was based on its value in use, determined by discounting the future cash flows which included estimates for five years and a terminal growth rate thereafter. The terminal growth rate was determined based on the long term compound annual EBITDA growth rate estimated by management. Discount rate was determined by using weighted average cost of capital of the Group.
78
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 12 Goodwill
Note 2017 2016 (in thousand Baht) At 1 January 1,979,378 1,975,815Acquisitions through business combinations 4 101,624 - Currency translation differences (86,124) 3,563At 31 December 1,994,878 1,979,378 For the purpose of impairment testing of goodwill of the Group where indicators occurred, the recoverable amount was based on its value in use, determined by discounting the future cash flows which included estimates for five years and a terminal growth rate thereafter. The terminal growth rate was determined based on the long-term compound annual EBITDA growth rate estimated by management. Discount rate was determined by using weighted average cost of capital of the Group.
13 Other intangible assets
Software licenses (in thousand Baht) Cost At 1 January 2016 758,774 Additions 92,423 Disposals/written off (9,123) Transfers in (out) 42,491 Currency translation differences (335) At 31 December 2016 884,230 Acquisition through business combinations 12,904 Additions 45,909 Disposals/written off (19,423) Transfers in (out) 15,668 Currency translation differences (2,895) At 31 December 2017 936,393
79
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Software licenses (in thousand Baht) Accumulated amortisation At 1 January 2016 521,295 Amortisation charge for the year 87,244 Impairment losses 136 Disposals/written off (8,605) Currency translation differences (160) At 31 December 2016 599,910 Acquisition through business combinations 9,498 Amortisation charge for the year 72,166 Disposals/written off (19,355) Currency translation differences (2,236) At 31 December 2017 659,983
Carrying amount At 31 December 2016 284,320 At 31 December 2017 276,410
14 Deferred tax assets (deferred tax liabilities)
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, and are included in the consolidated statements of financial position as follows: 2017 2016 (in thousand Baht) Deferred tax assets 405,213 372,867Deferred tax liabilities (270,236) (244,841)Net 134,977 128,026
80
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Movements in total deferred tax assets and liabilities during the year were as follows: Credited (charged) to other At 1 profit comprehensive Currency At 31 January or loss income translation December 2016 (Note 25) differences 2016 (in thousand Baht) Deferred tax assets Loss carry forward 780 33,943 - 29 34,752 Trade receivables 30,879 (2,430) - - 28,449 Inventories 11,471 11,644 - - 23,115 Property, plant and equipment 55,527 (8,812) - - 46,715 Provisions for employee benefits 282,864 (4,007) (1,010) (538) 277,309 Others 2,162 (659) - (3) 1,500 Total 383,683 29,679 (1,010) (512) 411,840 Deferred tax liabilities Property, plant and equipment 261,076 (14,278) - (676) 246,122 Others 37,221 485 - (14) 37,692 Total 298,297 (13,793) - (690) 283,814 Net 85,386 43,472 (1,010) 178 128,026
81
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Credited (charged) to other Increase At 1 profit comprehensive Through Currency At 31 January or loss income Business translation December 2017 (Note 25) combinations differences 2017 (in thousand Baht) Deferred tax assets Loss carry forward 34,752 31,215 - 17,898 (2) 83,863Trade receivables 28,449 (412) - 711 - 28,748Inventories 23,115 30,231 - 1,107 - 54,453Property, plant and equipment 46,715 (16,230) - 8,913 (261) 39,137Provisions for employee benefits 277,309 12,484 7,245 14,857 (2,770) 309,125Others 1,500 (488) - - (153) 859Total 411,840 56,800 7,245 43,486 (3,186) 516,185 Deferred tax liabilities Property, plant and equipment 246,122 39,258 - 58,419 (4,482) 339,317Others 37,692 4,199 - - - 41,891Total 283,814 43,457 - 58,419 (4,482) 381,208 Net 128,026 13,343 7,245 (14,933) 1,296 134,977
82
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
The deductible temporary differences and unused tax losses that the Group have not been recognised as deferred tax assets (liabilities) are as the following items: 2017 2016 (in thousand Baht) Temporary differences
- Trade receivables 80,827 89,365- Inventories 5,856 27,056- Provisions for employee benefits 74,575 96,295- Property, plants and equipment 1,948 179,247- Others 33,305 50,275
Unused tax losses 96,495 2,363,142Total 293,006 2,805,380 The deductible temporary differences do not expire under current tax legislation and the tax losses which would be expired within 2022. The Group has not recognised these items in deferred tax assets. As at 31 December 2017 and 2016, no deferred tax liability has been recognised in respect of temporary differences associated with investments in subsidiaries, where the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such difference will not reverse in the foreseeable future.
15 Bank overdrafts and short-term borrowings from financial institutions
2017 2016 (in thousand Baht) Bank overdrafts 101,393 4,638Short-term borrowings 4,978,370 4,807,331Total 5,079,763 4,811,969
83
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 16 Trade and other current payables
Note 2017 2016 (in thousand Baht) Trade payables Related parties 5 1,540,180 933,827Other parties 5,637,309 4,827,996 7,177,489 5,761,823Other current payables Related parties 5 179,337 185,595Other parties 1,738,273 1,872,160 1,917,610 2,057,755Total 9,095,099 7,819,578
17 Long-term borrowings from financial institutions
2017 2016 (in thousand Baht) Unsecured Local borrowings 2,386,774 4,075,300 Foreign borrowings - Vietnamese Dong 1,312,505 1,274,271 Total 3,699,279 5,349,571 The period to maturity of long-term borrowings from financial institutions is as follows: 2017 2016 (in thousand Baht) Within one year 2,401,621 2,159,044 After one year but within five years 1,268,892 3,084,910 After five years 28,766 105,617 Total 3,699,279 5,349,571
84
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Local borrowings In 2013, Siam Kraft Industry Co., Ltd., a subsidiary entered into a loan agreement with a commercial bank to borrow a total of Baht 7,800 million. This loan bears interest at 4.50% per annum and is repayable in semi-annual installments commencing from March 2015 through September 2018. This loan has no collateral. In 2015, Prepack Thailand Co., Ltd., a subsidiary entered into a loan agreement with a commercial bank to borrow a total of Baht 220 million. This loan bears interest at MLR minus 2.35% per annum and is repayable in monthly installments commencing from August 2016 through August 2020. This loan has no collateral. In 2017, the Company entered into a loan agreement with a commercial bank to borrow a total of Baht 280 million. This loan bear interest in year 1 - 2 at 3.65% per annum and year 3 - 5 at MLR minus 2.75% per annum and is repayable in semi-annual installments commencing from August 2017 through February 2021. This loan has no collateral. Foreign borrowings In 2015 Vina Kraft Paper Co., Ltd., a subsidiary entered into the long-term loan agreements with 3 commercial banks in Vietnam totalling Vietnamese Dong 1,210 billion, equivalent to Baht 1,948 million. The interest rates are at cost of fund plus 0.50% - 0.80% per annum in 2016. These Company has drawn down under the loan agreements with 2 commercial banks totalling Vietnamese Dong 660 billion, equivalent to Baht 1,056 million. During 2017, the Company has additional drawn down under the loan agreements totalling Vietnamese Dong 264 billion, equivalent to Baht 369 million and is repayable in semi-annual installments commencing from August 2017. This loans have no collateral. In 2016 Tin Thanh Packing Joint Stock Company, a subsidiary entered into long-term loan agreement with a commercial bank in Vietnam totalling Vietnamese Dong 140 billion, equivalent to Baht 225 million. This loan bears interest cost of fund plus 0.75% per annum and is repayable in semi-annual installments commencing from July 2017 through July 2021. This loan has no collateral.
85
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 18 Finance lease liabilities
Subsidiaries entered into leased machinery and equipment agreements. Lease terms are for a period of 3 - 5 years. Finance lease liabilities as at 31 December are as follows: Principal Interest Payments (in thousand Baht) Year 2017 Within one year 48,425 3,174 51,599 After one year but within five years 30,632 3,247 33,879 Total 79,057 6,421 85,478
Year 2016 Within one year 45,269 4,683 49,952 After one year but within five years 36,217 3,766 39,983 Total 81,486 8,449 89,935
19 Non-current provisions for employee benefits The Group operates defined benefit plans based on the requirement of the Thai Labour Protection Act B.E. 2541 to provide retirement benefits and other long-term benefits to employees based on pensionable remuneration and length of service. The defined benefit plans expose the Group to actuarial risks, such as longevity risk, current risk, interest rate risk and market (investment) risk.
86
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Non-current provisions for employee benefits in consolidated statement of financial position as at 31 December
2017 2016 (in thousand Baht) Post-employment benefits
Legal severance payments plan 1,392,247 1,265,040Pension 36,434 39,319
Other long-term employee benefits 79,444 78,942Other employee benefits 2,107 2,790Total 1,510,232 1,386,091Less plan assets of foreign subsidiaries (26,184) (24,383)Net 1,484,048 1,361,708
Movement in the present value of non-current provisions for defined benefits plans
2017 2016 (in thousand Baht) Non-current provisions for defined benefit plans at 1 January 1,383,301 1,390,794 Include in profit or loss Current service costs 80,733 96,459 Interest on obligation 52,118 47,329 Actuarial losses 1,289 2,438 134,140 146,226 Included in other comprehensive income Actuarial losses 30,541 6,855 Other Benefits paid (106,111) (154,290)Transferred of employees - (172)Acquisition through business combinations 68,246 - Others (1,992) (6,112) (39,857) (160,574)Non-current provisions for defined benefit plans at 31 December 1,508,125 1,383,301
87
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Movements in the fair value of plan assets of foreign subsidiaries
2017 2016 (in thousand Baht)
Plan assets at 1 January 24,383 24,383 Contributions paid into the plan 13,860 10,053 Benefits paid (13,860) (10,053) Expected return on plan assets 1,319 - Actuarial gains 482 - Plan assets at 31 December 26,184 24,383 Actuarial losses (gains) recognised in other comprehensive income as of the end of the reporting period arising from:
2017 2016 (in thousand Baht)
For the years ended 31 December Demographic assumptions (1,390) - Financial assumptions 25,608 - Experience adjustment 5,841 6,855 Total 30,059 6,855
88
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Actuarial assumptions Principal actuarial assumptions as of the end of the reporting period 2017 2016 (%) For the years ended 31 December Discount rate * - Thailand 2.62 - 3.53 2.62 - 3.53 - Vietnam 6.81 - 6.97 6.81 - 6.97 - Indonesia 7.00 - 7.40 8.30 - 8.50 - Philippines 5.16 5.90 Salary increase rate 3.00 - 9.00 3.00 - 8.00 Employee turnover rate ** 1.00 - 35.00 1.00 - 35.00 Mortality rate *** 25.00, 50.00, 75.00, 25.00, 50.00, 75.00, 100.00 of TMO2008 100.00 of TMO2008 * Market yield on government’s bonds for legal severance payments plan and pension ** Upon the length of service *** Reference from TMO2008: Thai Mortality Ordinary Table 2008
Sensitivity analysis Reasonably possible changes at the end of the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the non-current provisions for defined benefit plans by the amounts shown below.
89
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Effect on the non-current provisions for defined benefit plans at 31 December Increase (decrease) 2017 2016
(in thousand Baht) Discount rate 0.50% increase (68,609) (69,551) 0.50% decrease 74,580 75,736 Salary increase rate 1.00% increase 171,876 165,844 1.00% decrease (146,843) (142,096) Employee turnover rate 10.00% increase (47,715) 46,260 10.00% decrease 50,499 48,966 Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.
Plan assets of foreign subsidiaries
2017 2016 (%) For the years ended 31 December Discount rate 5.16 5.90
90
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 20 Share capital
Par 2017 2016 value Number Number (in Baht) of shares Value of shares Value (in thousand shares / thousand Baht) Authorised At 1 January - ordinary share 10 156,300 1,563,000 156,300 1,563,000At 31 December - ordinary share 10 156,300 1,563,000 156,300 1,563,000 Issued and paid-up At 1 January - ordinary share 10 156,300 1,563,000 156,300 1,563,000At 31 December - ordinary share 10 156,300 1,563,000 156,300 1,563,000
21 Reserves and other components of shareholders’ equity
Share premium
Section 51 of the Public Companies Act B.E. 2535 requires companies to set aside share subscription monies received in excess of the par value of the shares issued to a reserve account (“share premium”). Share premium is not available for dividend distribution.
Legal reserve
Section 116 of the Public Companies Act B.E. 2535 requires that a company shall allocate not less than 5% of its annual net profit, less any accumulated losses brought forward (if any), to a reserve account (“legal reserve”), until this account reaches an amount not less than 10% of the registered authorised capital. The legal reserve is not available for dividend distribution.
91
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Currency translation differences The currency translation differences account within equity comprises all foreign currency differences arising from the translation of the financial statements of the Group’s foreign operations until disposal of investment.
22 Distribution costs
2017 2016 (in thousand Baht) Freight and commission expenses 3,097,118 2,926,634 Salary, welfare and employee expenses 776,890 766,874 Custom, insurance expense and intellectual properties fees 392,541 352,855 Sales promotion and advertising expenses 250,317 292,463 Rent, depreciation and amortisation 128,787 120,053 Others 228,377 251,991 Total 4,874,030 4,710,870
23 Administrative expenses
2017 2016 (in thousand Baht) Salary, welfare and employee expenses 2,403,361 2,333,576Professional fees 611,907 553,716Rent, depreciation and amortisation 261,692 427,106Loss from decline in value of inventory 84,886 17,589Idle costs 83,270 - Labor and wages from outside, repair and maintenance expenses 72,222 82,632Representation, public relations expenses and donations 72,538 44,148Insurance expenses, bank charges and other fees 66,159 45,891Office equipment, printing form and communication expenses 42,132 50,274Others 142,693 122,521Total 3,840,860 3,677,453
92
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 24 Employee benefit expenses
2017 2016 (in thousand Baht) Salaries and wages 6,993,753 6,785,527Contribution to defined contribution plans 402,490 390,531Contribution to defined benefit plans 132,820 146,226Early retirement expenses 31,820 62,835Others 757,105 700,246Total 8,317,988 8,085,365
The Group has provident fund plans to provide retirement and gratuity benefits to employees upon resignation at 5% to 10% of the employee’s salaries, depending on the length of employment. The defined contribution plans comprise provident funds established by the Group for its employees in addition to the above provident fund. The provident funds were registered with the Ministry of Finance under the Provident Fund Act B.E. 2530. Membership to the funds is on a voluntary basis. Contributions are made monthly by the employees at 2% to 15% of their basic salaries and by the Company at 5% to 13% of the members’ basic salaries, depending on the length of employment.
25 Income tax Income tax recognised in profit or loss
Note 2017 2016 (in thousand Baht) Current tax Current tax expense 630,161 552,330 Over provided in prior years (13,424) (26,050) 616,737 526,280 Deferred tax Movements in temporary differences 14 (13,343) (43,472)Total 603,394 482,808
93
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Income tax recognised in other comprehensive income 2017 2016 (in thousand Baht) Actuarial losses (7,787) (575) Reconciliation of effective tax rate
2017 2016 Rate
(%)
(in thousand Baht)
Rate (%)
(in thousand Baht)
Profit before income tax 5,977,736 4,333,504 Share of profit of associates (4,133) (4,561) 5,973,603 4,328,943 Income tax using the Thai corporation tax rate 20 1,194,721 20 865,789 Tax rates in foreign jurisdictions 31,441 8,814 Income not subject to tax (16,900) (1,823) Tax privileges (422,938) (507,741) Expenses deductible at a greater amount (52,528) (27,958) Expenses not deductible for tax purposes and others 7,938 98,775 Prior year expenses deductible for tax purposes (35,663) - Tax losses increase (used) (75,910) 116,474 Current tax expense 630,161 552,330 Over provided in prior years (13,424) (26,050) Movement in temporary differences (13,343) (43,472) Income tax expense 10 603,394 11 482,808 Income tax reduction Revenue Code Amendment Act No. 42 B.E. 2559 dated 3 March 2016 grants a reduction of the corporate income tax rate to 20% of net taxable profit for accounting periods which begin on or after 1 January 2016.
94
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 26 Promotional privileges
By virtue of the provisions of the Investment Promotion Act of B.E. 2520, the Group was granted the following privileges. 50% Deduction Exemption from of normal corporate income corporate income tax for 8 years from tax for 5 years from Thai Containers Rayong Co., Ltd. Manufacture of corrugated paper and cartons 4 January 2009 4 January 2017 Exemption from corporate income tax for 8 years from Phoenix Utilities Co., Ltd. Manufacture of electricity and steam 1 April 2011 Siam Kraft Industry Co., Ltd. Manufacture of kraft paper 21 September 2011 Thai Cane Paper Public Company Limited Manufacture of kraft paper 1 June 2013 Manufacture of kraft paper 1 March 2014 Thai Containers Group Co., Ltd. Manufacture of corrugated paper 3 October 2011 Manufacture of corrugated paper 1 October 2012 Manufacture of corrugated paper 1 June 2017
95
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Exemption from corporate income tax for 8 years from Precision Print Co., Ltd. Manufacture of printing 10 August 2015 The Siam Forestry Co., Ltd. Eucalyptus forest plantation 19 June 2013 Exemption from corporate income tax for 6 years from Thai Paper Co., Ltd. Manufacture of coated plastic - Hygienic 29 July 2012 Exemption from corporate income tax for 5 years from Prepack Thailand Co., Ltd. Manufacture of printing 7 March 2016 Thai Paper Co., Ltd. Manufacture of glassine paper 11 April 2017
96
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Exemption from corporate income tax for 3 years from Thai Containers Group Co., Ltd. Manufacture of corrugated paper 5 March 2014 Manufacture of corrugated paper 12 April 2017 Siam Kraft Industry Co., Ltd. Manufacture of kraft paper 11 October 2014 Manufacture of gypsum paper 21 May 2015 Manufacture of industrial paper bag 22 September 2015 Phoenix Pulp & Paper Public Company Limited Manufacture of dissolving pulp 7 February 2015 Manufacture of Pulp 22 July 2017 Thai Paper Co., Ltd. Manufacture of Pulp 17 February 2016 Manufacture of hygienic food packaging 3 November 2016 Vina Kraft Paper Co., Ltd. also obtained privileges from a government agency in Vietnam an obligation to pay the income tax at the rate of 15% of taxable profits for the first 12 years starting from the first year of operation, and exemption from corporate income tax for 3 years from the year that profit is first reported and 50% deduction of the said corporate income tax for 7 years thereafter. Vina Kraft Paper Co., Ltd. also obtained privileges from a government agency in Vietnam for Expanding capacity project No.2 to pay the income tax at the tax rate of 10% of taxable profits for the first 6 years starting from the first year of operation, and exemption from corporate income tax for 2 years from the year that profit is first reported. Tin Thanh Packing Joint Stock Company also obtained privileges from a government agency in Vietnam an obligation to pay the income tax at the rate of 17% of taxable profits until 2017.
97
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
New Asia Industries Co., Ltd. also obtained privileges from a government agency in Vietnam an obligation to pay the income tax at the rate of 15% of taxable profits until 2021. Alcamax Packaging (Vietnam) Co., Ltd. also obtained privileges from a government agency in Vietnam an obligation to pay the income tax at the rate of 15% of taxable profits until 2027. AP Packaging (Hanoi) Co., Ltd. also obtained privileges from a government agency in Vietnam an obligation to pay the income tax at the rate of 10% of taxable profits until 2052. As promoted companies, the Group must comply with certain conditions and restrictions provided for in the promotional certificate.
27 Basic earnings per share The calculations of basic earnings per share for the years ended 31 December was based on the profit for the year attributable to owners of the parent and the weighted average number of ordinary shares outstanding during the years as follow: 2017 2016 (in thousand Baht /
thousand shares) Profit for the year attributable to owners of the parent 4,425,349 3,284,908Weighted average number of ordinary shares outstanding 156,300 156,300 Basic earnings per share (in Baht) 28.31 21.02
28 Dividends
At the Annual General Meeting of the Shareholders of the Company held on 28 March 2016, the shareholders approved the appropriation of dividends of Baht 5.00 per share, amounting to Baht 782 million. The dividend was paid to shareholders during 2016. At the Annual General Meeting of the Shareholders of the Company held on 27 March 2017, the shareholders approved the appropriation of dividends of Baht 5.00 per share, amounting to Baht 782 million. The dividend was paid to shareholders during 2017.
98
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 29 Agreements
As at 31 December, the Group had: (a) Lease agreements for cars with local companies. The terms of the leases are up to 2018 through
2021 with the annual rental fees of Baht 153 million.
(b) Lease agreements for land, building and structure with local companies. The terms of the leases are up to 2018 through 2040 with the annual rental fees of Baht 122 million.
(c) A subsidiary entered into a lease agreement with a government entity for the use of a parcel of land situated at Ubolrat Settlement Area, Khon Kaen Province as its plant site. The agreement is for a period of 3 years (with annual rental of Baht 7 million) expiring in the year 2018.
(d) A subsidiary entered into a lease agreement with an associate covering the land where its factory is located. The agreement has a period of 50 years commencing from 2003, renewal for another 25 years with the annual rental fee of Peso 19.2 million.
(e) Land leasehold agreement with a foreign company as its plant site. The agreement has a period of 50 years commencing from January 2007. The Company already paid rental in advance amounting to US Dollars 4.8 million which present included under “Other non-current receivables” in statement of financial position.
(f) A subsidiary entered into a lease agreement with a foreign company covering the land where its factory is located. The agreement has a period of 25 years commencing from December 1996. The Company already paid rental in advance amounting to US Dollars 1.2 million which present included under “Other non-current receivables” in statement of financial position.
(g) Three subsidiaries entered into lease agreements with foreign companies covering the land where theirs factory are located. Agreements have a period of 49 years commencing from April 1997. The Company already paid rental in advance amounting to US Dollars 2.6 million which present included under “Other non-current receivables” in statement of financial position.
(h) A subsidiary entered into lease agreements with foreign companies covering the land where theirs factory are located. Agreements have a remaining period of 37 years expiring in the year 2053. The Company already paid rental in advance amounting to Vietnamese Dong 40,241 million which present included under “Other non-current receivables” in statement of financial position.
99
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 30 Financial instruments
Liquidity risk
The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows.
Credit risk Credit risk arises from the possibility that customers may not be able to settle obligations to the Group as per contracts which may cause financial loss. The Group has a policy to protect this risk by assessing the credit of customers, defining the credit limit, asking for bank guarantees and/or personnel guarantees, credit terms, controlling credit utilisation and reviewing collections. Fair value of receivables which are presented in statement of financial position is the balances net of allowance for doubtful accounts. Interest rate risk Interest rate risk arises from the changing of interest rates in the market, which may effect current and future operations of the Group. Management believes that the interest rate risk is minimal, hence, the Group does not have any hedging agreement to protect such risk.
100
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
The effective interest rates of interest-bearing financial liabilities as at 31 December and the periods in which those liabilities mature were as follows:
After 1 year Effective interest
rates Within 1 year
but within 5 years
Total
(% per annum) (in million Baht) 2017 Current Bank overdrafts and short-term borrowings from financial MMR, MOR - 1.75, institutions Cost of fund plus 0.75, 1.60 - 5.90 5,080 - 5,080 Short-term borrowings from related parties
3.75, 4.00
15,496 -
15,496
Long-term borrowings from MLR minus 0.50 - 2.35, financial institutions Cost of fund plus (0.5 - 0.8), 3.65, VNIBOR plus 0.50, 4.50 2,402 - 2,402 Finance lease liabilities 2.30 - 3.40, 10.50 - 19.00, 6.20, MLR minus 1.00 - 1.25 48 - 48Non-current Long-term borrowings from MLR minus 0.50 - 2.75, financial institutions Cost of fund plus (0.5 - 0.8), 3.65, VNIBOR plus 0.50 - 1,298 1,298 Finance lease liabilities 2.30 - 3.40, 10.50 - 19.00, 6.20, MLR minus 1.00 - 1.25 - 30 30Total 23,026 1,328 24,354
101
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
After 1 year Effective interest
rates Within 1 year
but within 5 years
Total
(% per annum) (in million Baht) 2016 Current Bank overdrafts and short-term borrowings from financial institutions MMR, 1.30 - 5.50 4,812 - 4,812 Short-term borrowings from related parties 4.00, 4.25 12,520 - 12,520 Long-term borrowings from MLR minus 2.35, 4.50, financial institutions Cost of fund plus (0.5 - 0.8) 2,159 - 2,159 Finance lease liabilities 2.30 - 3.40, 9.80 - 11.55 45 - 45 Non-current Long-term borrowings from MLR minus 2.35, 4.50, financial institutions Cost of fund plus (0.5 - 0.8) - 3,191 3,191 Finance lease liabilities 2.30 - 3.40, 9.80 - 11.55 - 36 36 Total 19,536 3,227 22,763 Foreign exchange risk
Foreign currency risk arises from the fluctuation of foreign exchange rates.
The Group has a policy to enter into forward exchange contracts to manage foreign exchange risk related to assets and liabilities denominated in foreign currencies.
Fair values of financial assets and liabilities
The fair value of current portion of financial assets and liabilities are taken to approximate the carrying value due to the relatively short-term maturity of these financial instruments.
The fair value of long-term borrowings carrying a floating rate, which is considered to be market rate, are taken to approximate their fair values.
102
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Other financial assets and liabilities not stated above had the fair and carrying value at 31 December as follows: 2017 2016 Carrying Fair value Carrying Fair value amount Level 2 amount Level 2 (in million Baht) Current Current portion of long term borrowings 1,950 1,958 1,950 1,958 Forward exchange contracts *
Forward receivable 1,363 1,358 1,022 1,020 Forward payable 1,215 1,207 707 694
Non-current Long-term borrowings - - 1,950 1,972 * The fair value of forward exchange contracts were calculated using the rates initially quoted by the Group’s bankers which were based on market conditions existing at the end of the reporting period to reflect current fair values of the contracts. The Group determines Level 2 fair values for debt securities using a discounted cash flow technique, which uses contractual cash flows and a market-related discount rate. Level 2 fair values for simple over-the-counter derivative financial instruments are based on broker quotes. Those quotes are tested for reasonableness by discounting expected future cash flows using market interest rate for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Group and counterparty when appropriate.
31 Commitments and contingent liabilities As at 31 December 2017, the Group had:
(a) The purchase and installation of machinery and equipment of Baht 1,684 million (2016: Baht 2,588
million).
103
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
(b) The purchase of raw material of Baht 194 million (2016: Baht 222 million).
(c) Outstanding forward exchange contracts for foreign currencies against Thai Baht as follows:
Contract amount Forward Receivable Forward Payable Currency Equivalent to Baht Currency Equivalent to Baht 2017 2016 2017 2016 2017 2016 2017 2016 (in million) (in million Baht) (in million) (in million Baht)
US Dollars 42 28 1,359 995 20 10 662 347Euro - 0.6 - 23 12 6 456 256Yuan - - - - 2 7 11 37Yen - - - - 152 181 45 57Other 4 4 41 10Total 1,363 1,022 1,215 707
The above contracts are due within November 2018 (2016: due within November 2017).
(d) Contingent liability for letter of guarantees issued by local banks for the Group to government organisations of Baht 61 million (2016: Baht 38 million).
(e) Contingent liability for borrowings guarantees issued by a local bank for the Group to associate which limit is not exceed Baht 495 million.
32 Capital management
The management of the Group has the capital management policy for which to maintain a strong capital base by emphasis on planning and determining the operating strategies resulting in good business’s performance and sustain good cash flows management. In addition, the Group considers investing in projects which have good rate of return, appropriate working capital management, maintain a strong financial position and appropriate investment structure as to maintain sustained future operations of the business and to maintain shareholders, investors, creditors and others interest’s confidence.
104
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017 33 Events after the reporting period
(a) On 22 January 2018, the Group had completed the acquisition of 68.3% stake from existing
shareholder in Interpress Printers Sendirian Berhad, a sector-leading food-grade paper packaging company in Malaysia. The enterprise value is approximately Baht 836 million.
(b) At the Board of Directors’ Meeting of the Company held on 24 January 2018, the directors proposed for approval at the Annual General Meeting of Shareholders, the payment of a dividend for 2017 at the rate of Baht 50.00 per share, amounting to Baht 7,815 million and is scheduled for payment on 20 April 2018. The dividend is subject to the approval of the Shareholders at the Annual General Meeting to be held on 23 March 2018.
(c) On 31 January 2018, the Group had acquired additional stakes from existing shareholders from 75%
to 100% in two packaging companies in Thailand, namely Dyna Packs Co., Ltd. and Orient Containers Co., Ltd., for a total consideration of approximately Baht 263 million.
34 Reclassification of accounts
Certain accounts in the 2016 consolidated financial statements have been reclassified to conform to the presentation in the 2017 consolidated financial statements were as follows:
Before reclassification
Reclassification
After reclassification
(in thousand Baht) Consolidated statement of financial position as at 31 December 2016 Trade and other current receivables 11,309,584 740,549 12,050,133 Other current assets 1,084,958 (724,424) 360,534 Other non-current receivables - 824,787 824,787 Other non-current assets 1,175,641 (840,912) 334,729 Trade and other current payables 7,510,098 309,480 7,819,578 Other current liabilities 309,480 (309,480) -
105
Notes to the financial statements SCG Packaging Public Company Limited and its Subsidiaries
For the year ended 31 December 2017
Before reclassification
Reclassification
After reclassification
(in thousand Baht) Consolidated income statement for the year ended 31 December 2016 Gain on exchange rate 138,699 332 139,031 Distribution costs (3,671,179) (1,039,691) (4,710,870)Administrative expenses (4,717,144) 1,039,691 (3,677,453)Finance costs (911,485) (332) (911,817)
106
2017Financial StatementsSCG Packaging Public Company Limited
107
Independent Auditor’s Report
To the Shareholders of SCG Packaging Public Company Limited
Opinion
I have audited the financial statements of SCG Packaging Public Company Limited (the “Company”), which
comprise the statement of financial position as at 31 December 2017, the income statement and statements
of comprehensive income, changes in shareholders’ equity and cash flows for the year then ended, and notes,
comprising a summary of significant accounting policies and other explanatory information.
In my opinion, the accompanying financial statements present fairly, in all material respects, the financial position
of the Company as at 31 December 2017, its financial performance and cash flows for the year then ended in
accordance with Thai Financial Reporting Standards (TFRSs).
Basis for Opinion
I conducted my audit in accordance with Thai Standards on Auditing (TSAs). My responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements
section of my report. I am independent of the Company in accordance with the Code of Ethics for Professional
Accountants issued by the Federation of Accounting Professions that is relevant to my audit of the financial
statements, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe
that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.
Other Information
Management is responsible for the other information. The other information comprises the information included
in the annual report, but does not include the financial statements and my auditor’s report thereon.
My opinion on the financial statements does not cover the other information and I do not express any form
of assurance conclusion thereon.
In connection with my audit of the financial statements, my responsibility is to read and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit,
or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that
there is a material misstatement of this other information, I am required to report that fact. I have nothing to report
in this regard.
108
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with
TFRSs, and for such internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with TSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with TSAs, I exercise professional judgment and maintain professional skepticism
throughout the audit. I also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
109
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Company’s ability to continue as a going concern. If I conclude that
a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures
in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions
are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or
conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
I communicate with management regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that I identify during
my audit.
(Thanyalux Keadkeaw)
Certified Public Accountant
Registration No. 8179
KPMG Phoomchai Audit Ltd.
Bangkok
20 February 2018
110
Statement of financial position
SCG Packaging Public Company Limited
As at 31 December 2017
Assets Note 2017 2016
Current assets
Cash and cash equivalents 4,703 4,710
Other current receivables 4, 5 149,770 154,060
Short-term loans to related parties 4 11,147,587 9,128,638
Other current assets 6 88,457 39,962
Total current assets 11,390,517 9,327,370
Non-current assets
Investments in associates 7 350,121 350,121
Investments in subsidiaries 8 27,027,254 26,112,882
Other non-current receivables 13,847 15,769
Investment properties 9 216,914 218,754
Property, plant and equipment 10 260,799 268,263
Intangible assets 11 24,536 19,115
Deferred tax asset 12 17,787 17,029
Other non-current assets 124,360 84,124
Total non-current assets 28,035,618 27,086,057
Total assets 39,426,135 36,413,427
(Roongrote Rangsiyopash)
Chairman
(in thousand Baht)
For and on behalf of the Board of Directors
(Tanawong Areeratchakul)
Vice-Chairman and President
The accompanying notes are an integral part of these financial statements.
111
Statement of financial position
SCG Packaging Public Company Limited
As at 31 December 2017
Liabilities and shareholders’ equity Note 2017 2016
Current liabilities
Other current payables 4, 13 100,498 127,275
Short-term loans from related parties 4 15,458,617 12,466,886
Current provisions for employee benefits 13,759 12,207
Total current liabilities 15,572,874 12,606,368
Non-current liabilities
Non-current provisions for employee benefits 14 75,451 73,304
Other non-current liabilities 8,168 3,793
Total non-current liabilities 83,619 77,097
Total liabilities 15,656,493 12,683,465
(in thousand Baht)
The accompanying notes are an integral part of these financial statements.
112
Statement of financial position
SCG Packaging Public Company Limited
As at 31 December 2017
Liabilities and shareholders’ equity Note 2017 2016
Shareholders’ equity
Share capital 15
Authorised share capital
- Ordinary share 1,563,000 1,563,000
Issued and paid-up share capital
- Ordinary share 1,563,000 1,563,000
Share premium 16 1,935,000 1,935,000
Retained earnings
Appropriated
Legal reserve 16 156,300 156,300
General reserve 3,000 3,000
Unappropriated 20,112,342 20,072,662
Total shareholders’ equity 23,769,642 23,729,962
Total liabilities and shareholders’ equity 39,426,135 36,413,427
(in thousand Baht)
The accompanying notes are an integral part of these financial statements.
113
Income statement
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Note 2017 2016
Dividend income 4, 7, 8 801,704 774,236
Other income 4 224,306 176,167
Gain on exchange rate 117 81
Total revenues before expenses 1,026,127 950,484
Administrative expenses 4, 17 (60,758) (33,169)
Profit before finance costs and income tax 965,369 917,315
Finance costs 4 (146,463) (130,835)
Profit before income tax 818,906 786,480
Tax benefits 19 149 432
Profit for the year 819,055 786,912
Basic earnings per share (in Baht) 20 5.24 5.03
(in thousand Baht)
The accompanying notes are an integral part of these financial statements.
114
Statement of comprehensive income
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Note 2017 2016
Profit for the year 819,055 786,912
Other comprehensive income
Components of other comprehensive income
that will not be reclassified to profit or loss
Defined benefit plan actuarial gains (losses) 14 2,657 (1,181)
Income tax relating to components of other comprehensive
income that will not be reclassified to profit or loss 19 (532) 236
Other comprehensive income for the year, net of tax 2,125 (945)
Total comprehensive income for the year 821,180 785,967
(in thousand Baht)
The accompanying notes are an integral part of these financial statements.
115
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116
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117
Statement of cash flows
SCG Packaging Public Company Limited
For the year ended 31 December 2017
2017 2016
Cash flows from operating activities
Profit for the year 819,055 786,912
Adjustments for
Tax benefits (149) (432)
Depreciation and amortisation 39,871 36,167
Employee benefit expense 8,180 10,695
Unrealised losses on foreign currency exchange 219 362
Losses on sales of property, plant and equipment - 28
Dividend income (801,704) (774,236)
Interest income (387,022) (359,896)
Interest expense 533,383 490,518
Cash flows generated from operations
before changes in operating assets and liabilities 211,833 190,118
Decrease in operating assets
Other current receivables and other non-current receivables 9,191 27,585
Other current assets and other non-current assets - 1,219
Net decrease in operating assets 9,191 28,804
(in thousand Baht)
The accompanying notes are an integral part of these financial statements.
118
Statement of cash flows
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Note 2017 2016
Increase (decrease) in operating liabilities
Other current payables (32,009) 27,250
Provisions for employee benefits (1,824) (14,686)
Net increase (decrease) in operating liabilities (33,833) 12,564
Net cash flows generated from operations 187,191 231,486
Income tax paid (42,860) (42,926)
Net cash flows provided by operating activities 144,331 188,560
Cash flows from investing activities
Investment in subsidiaries 6, 8 (961,384) (148,898)
Proceeds from sales of property, plant and equipment - 27
Acquisition of investment property - (10,084)
Acquisition of property, plant and equipment (23,049) (37,367)
Acquisition of intangible assets (9,811) (2,703)
Decrease (increase) in short-term loans to related parties (2,018,949) 527,623
Dividends received 801,704 774,236
Interest received 383,822 360,761
Net cash flows provided by (used in) investing activities (1,827,667) 1,463,595
(in thousand Baht)
The accompanying notes are an integral part of these financial statements.
119
Statement of cash flows
SCG Packaging Public Company Limited
For the year ended 31 December 2017
2017 2016
Cash flows from financing activities
Increase (decrease) in short-term loans from related parties 2,991,731 (380,995)
Dividends paid (777,125) (781,608)
Interest paid (531,277) (491,451)
Net cash flows provided by (used in) financing activities 1,683,329 (1,654,054)
Net decrease in cash and cash equivalents (7) (1,899)
Cash and cash equivalents at beginning of the year 4,710 6,609
Cash and cash equivalents at end of the year 4,703 4,710
Supplementary information for cash flows
Non-cash transactions
Account payables from purchases of assets 6,041 2,913
(in thousand Baht)
The accompanying notes are an integral part of these financial statements.
120
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Note Contents
1 General information
2 Basis of preparation of the financial statements
3 Significant accounting policies
4 Related parties
5 Other current receivables
6 Other current assets
7 Investments in associates
8 Investments in subsidiaries
9 Investment properties
10 Property, plant and equipment
11 Intangible assets
12 Deferred tax asset (deferred tax liability)
13 Other current payables
14 Non-current provisions for employee benefits
15 Share capital
16 Reserves
17 Administrative expenses
18 Employee benefit expenses
19 Income tax
20 Basic earnings per share
21 Dividends
22 Financial instruments
23 Lease agreements
24 Capital management
25 Events after the reporting period
26 Reclassification of accounts
121
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
These notes form an integral part of the financial statements.
The financial statements issued for Thai statutory and regulatory reporting purposes are prepared in the
Thai and English languages, and were approved and authorised for issue by the management
on 20 February 2018.
1 General information
SCG Packaging Public Company Limited, the “Company”, is incorporated in Thailand.
The head office of the Company is located at 1 Siam Cement Road, Bangsue, Bangkok 10800, Thailand.
The parent company is The Siam Cement Public Company Limited. It is incorporated in Thailand.
The Company is engaged in investment.
2 Basis of preparation of the financial statements
(a) Statement of compliance
The financial statements are prepared in accordance with Thai Financial Reporting Standards (TFRSs);
guidelines promulgated by the Federation of Accounting Professions under the Royal Patronage
of His Majesty the King (“FAP”).
The FAP has issued new and revised TFRSs effective for annual accounting periods beginning on or after
1 January 2017. The adoption of these new and revised TFRSs did not have any material effect on the
accounting policies, methods of computation, financial performance or position of the Company.
In addition to the above new and revised TFRSs, the FAP has issued a number of new and revised TFRSs
which are effective for annual financial periods beginning on or after 1 January 2018 and have not been
adopted in the preparation of these financial statements. The Company has made a preliminary
assessment of the potential initial impact on the financial statements of these new and revised TFRSs and
expects that there will be no material impact on the financial statements in the period of initial
application.
122
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis except for the following material
item in the statements of financial position: defined benefit obligations are measured at the present value
of non-current provisions for defined benefit plans.
(c) Functional and presentation currency
The financial statements are prepared and presented in Thai Baht, which is the Company’s functional
currency. All financial information presented in Thai Baht has been rounded in the notes to the financial
statements to the nearest thousand unless otherwise stated.
(d) Use of estimates and judgements
The preparation of financial statements in conformity with TFRSs requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised prospectively.
Information about significant areas of estimation uncertainty and critical judgements in applying accounting
policies that have the most significant effect on the amount recognised in the financial statements
is included in the following notes:
Note 5, 6, 7, 8, 9 and 10 Measurement of the recoverable amounts of each asset and
cash-generating units; and
Note 14 Measurement of defined benefit obligations:
- key actuarial assumptions.
Measurement of fair values
A number of the Company’s accounting policies and disclosures require the measurement of fair values,
for both financial and non-financial assets and liabilities.
123
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
The Company has an established framework with respect to the measurement of fair values. This includes
a valuation team that has overall responsibility for overseeing all significant fair value measurements,
including Level 3 fair values, and reports directly to the CFO.
The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third
party information, such as broker quotes or pricing services, is used to measure fair values, then the
valuation team assesses the evidence obtained from the third parties to support the conclusion that these
valuations meet the requirements of TFRS, including the level in the fair value hierarchy in which these
valuations should be classified.
Significant valuation issues are reported to the Company Committee.
When measuring the fair value of an asset or a liability, the Company uses observable market data
as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the
inputs used in the valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity
can access at the measurement date.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs are unobservable inputs for the asset or liability.
If the inputs used to measure the fair value of an asset or liability might be categorised in different levels
of the fair value hierarchy, then the fair value measurement is categorised in its entirely in the same level
of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting
period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following
notes:
• Note 9 Investment properties
• Note 22 Financial instruments.
3 Significant accounting policies
The accounting policies set out below have been consistently applied to all periods presented in these
financial statements.
124
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
(a) Foreign currencies
Foreign currency transactions
Transactions in foreign currencies are translated to functional currency at the foreign exchange rates ruling
at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are
translated to the functional currency at the foreign exchange rates ruling at that date. Foreign exchange
differences arising on translation are recognised in profit or loss.
Non-monetary assets and liabilities measured at cost in foreign currencies are translated to functional
currency using the foreign exchange rates ruling at the dates of the transactions.
(b) Cash and cash equivalents
Cash and cash equivalents in the statements of cash flows comprise cash on hand, saving deposits, current
deposits and highly liquid short-term investments that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value.
In addition, bank overdrafts that are repayable on demand are a component of financing activities for the
purpose of the statement of cash flows.
(c) Other receivables
Other receivables are stated at their invoice value less allowance for doubtful accounts.
The allowance for doubtful accounts is primarily assessed on analysis of payment histories and future
expectations of receivable payments. Bad debts are written off when incurred.
Bad debts recovered are recognised in other income in profit or loss
(d) Investments
Investment in associates and subsidiaries
125
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Investments in associates and subsidiaries are accounted for using the cost method less any accumulated
impairment losses.
Disposal of investments
On disposal of an investment, the difference between net disposal proceeds and the carrying amount is
recognised in profit or loss.
If the Company disposes of part of its holding of a particular investment, the deemed cost of the part sold
is determined using the weighted average method applied to the carrying amount of the total holding of
the investment.
(e) Investment properties
Investment properties are properties which are held to earn rental income, for capital appreciation or for
both, but not for sale in the ordinary course of business, use in the production or supply of goods or
services or for administrative purposes.
Investment properties are measured at cost less accumulated depreciation and accumulated impairment
losses.
Cost includes expenditure that is directly attributable to the acquisition of the investment properties.
The cost of self-constructed investment properties includes the cost of materials and direct labour, and
other costs directly attributable to bringing the investment properties to a working condition for its
intended use and capitalised borrowing costs of a qualifying asset.
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of
each property. The estimated useful lives are as follows:
Land improvements 20 years
Building and structures 5, 20 years
Reclassification to property, plant and equipment
When the use of an investment properties changes such that it is reclassified as property, plant and
equipment, its carrying amount at the date of reclassification becomes its cost for subsequent accounting.
126
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
(f) Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of
self-constructed assets includes the cost of materials and direct labour, any other costs directly
attributable to bringing the asset to the location and condition necessary for it to be capable of operating
for their intended use, the costs of dismantling and removing the items and restoring the site on which
they are located, and capitalised borrowing costs of a qualifying asset. Purchased software that is integral
to the functionality of the related equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different consumption patterns or useful
lives, they are accounted for as separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing
the proceeds from disposal with the carrying amount of property, plant and equipment,
and are recognised in profit or loss.
Reclassification to investment properties
When the use of a property changes from owner-occupied to investment properties, its carrying amount is
recognised and reclassified as investment properties.
Subsequent costs
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the part will
flow to the Company, and its cost can be measured reliably. The carrying amount of the replaced
part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are
recognised in profit or loss as incurred.
Depreciation
Depreciation is calculated based on the depreciable amount, which is the cost of an asset, or other
amount substituted for cost, less its residual value.
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each
component of an item of property, plant and equipment. The estimated useful lives are as follows:
127
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Land improvements 5, 20 years
Building and structures 5, 10, 20 years
Machinery and equipment 5, 10, 15, 20 years
Transportation equipment 5, 10 years
Furniture, fixtures and office equipment 3, 5, 20 years
No depreciation is provided on freehold land or assets under construction.
Depreciation methods, useful lives and residual values are reviewed at each financial year-end and
adjusted if appropriate.
(g) Intangible assets
Intangible assets that are acquired by the Company, which have finite useful lives, are stated at cost less
accumulated amortisation and accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in
the specific asset to which it relates. All other expenditure, including expenditure on internally generated
goodwill and brands, is recognised in profit or loss as incurred.
Amortisation
Amortisation is calculated based on the cost of the asset, or other amount substituted for cost, less
its residual value.
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives
of intangible assets, other than goodwill, from the date that they are available for use, since this most
closely reflects the expected pattern of consumption of the future economic benefits embodied in the
asset.
The estimated useful lives are as follows:
Software licenses 3, 5, 10 years
128
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
No amortisation is provided on assets under development.
Amortisation methods, useful lives and residual values are reviewed at each financial year-end and
adjusted if appropriate.
(h) Impairment
The carrying amounts of the Company’s assets are reviewed at the end of each reporting period to
determine whether there is any indication of impairment. If any such indication exists, the assets’
recoverable amounts are estimated. For goodwill and intangible assets that have indefinite useful lives or
are not yet available for use, the recoverable amount is estimated each year at the same time.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. The impairment loss is recognised in profit or loss unless it reverses a previous
revaluation credited to equity, in which case it is charged to equity.
Calculation of recoverable amount
The recoverable amount of a non-financial asset is the greater of the asset’s value in use and fair value
less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset.
Reversals of impairment
An impairment loss in respect of a financial asset is reversed if the subsequent increase in recoverable
amount can be related objectively to an event occurring after the impairment loss was recognised in profit
or loss.
Impairment losses recognised in prior periods in respect of other non-financial assets are assessed at each
reporting period for any indications that the loss has decreased or no longer exists. An impairment loss
is reversed if there has been a change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed
the carrying amount that would have been determined, net of accumulated depreciation or accumulated
amortisation, if no impairment loss had been recognised.
129
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
(i) Other current payables
Other current payables are stated at cost.
(j) Employee benefits
Defined contribution plans
Obligations for contributions to defined contribution plans are expensed as the related service is provided.
Defined benefit plans
The Company’s net obligation in respect of defined benefit plans is calculated separately for each plan by
estimating the amount of future benefit that employees have earned in the current and prior periods,
discounting that amount.
The calculation of defined benefit obligations is performed by a qualified actuary using the projected unit
credit method which is based on actuarial valuation method.
Remeasurements of the net defined benefit liability, actuarial gain or loss are recognised in other
comprehensive income. The Company determines the interest expense on the net defined benefit liability
for the period by applying the discount rate used to measure the defined benefit obligation at the
beginning of the annual period, taking into account any changes in the net defined benefit liability during
the period as a result of contributions and benefit payments. Net interest expense and other expenses
related to defined benefit plans are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that
relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The
Company recognises gains and losses on the settlement of a defined benefit plan when the settlement
occurs.
130
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Other long-term employee benefits
The Company’s net obligation in respect of long-term employee benefits is the amount of future benefit
that employees have earned in return for their service in the current and prior periods. That benefit is
discounted to determine its present value. Remeasurements are recognised in profit or loss in the period
in which they arise.
Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for
the amount expected to be paid if the Company has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and the obligation can be estimated
reliably.
(k) Provisions
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation. Provisions are determined by discounting the expected future cash flows
at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific
to the liability. The unwinding of the discount is recognised as finance cost.
(l) Revenue
Revenue excludes value added taxes.
Rental income
Rental income is recognised in profit or loss on a straight-line basis over the term of the rent.
Lease incentives granted are recognised as expenses in which they are incurred.
131
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Interest and dividend income
Interest income is recognised in profit or loss using the effective interest method. Dividend income
is recognised in profit or loss on the date the Company’s right to receive payments is established, which in
the case of quoted securities is usually the ex-dividend date.
Royalty fee income
Royalty fee income is recognised on an accrual basis in accordance with the terms of agreement.
(m) Expenses
Operating leases
Payments made under operating leases are recognised in profit or loss on a straight line basis over the
term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total
lease expense, over the term of lease.
Contingent lease payments are accounted for by revising the minimum lease payments over the remaining
term of the lease when the lease adjustment is confirmed.
Finance costs
Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions and
contingent consideration.
Borrowing costs that are not directly attributable to the acquisition, construction or production of
a qualifying asset are recognised in profit or loss using the effective interest method.
Early retirement expenses
The Company offered certain qualifiable employees the option to take early retirement from the
Company. Eligible employees who accept the offer are paid a lump sum amount which is calculated based
on a formula using their final month’s pay, number of years of service or the number of remaining months
before normal retirement as variables. The Company records expenses on early retirement upon mutual
acceptance.
132
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
(n) Income tax
Income tax expense for the year comprises current and deferred tax. Current and deferred tax are
recognised in profit or loss except to the extent that they relate to items recognised directly in equity or in
other comprehensive income.
Current tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax
rates enacted or substantially enacted at the end of the reporting period, and any adjustment to tax
payable in respect of previous years.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognised for the following temporary differences: the initial recognition of goodwill; the initial recognition
of assets or liabilities in a transaction that is not a business combination and that affects neither accounting
nor taxable profit or loss; and differences relating to investments in subsidiaries and joint ventures to the
extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at
the tax rates that are expected to be applied to the temporary differences when they reverse, using tax
rates enacted or substantively enacted at the end of the reporting period.
The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow
the manner in which the Company expects, at the end of the reporting period, to recover or settle the
carrying amount of its assets and liabilities.
In determining the amount of current and deferred tax, the Company takes into account the impact of
uncertain tax positions and whether additional taxes and interest may be due. The Company believes that
its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors,
including interpretations of tax law and prior experience. This assessment relies on estimates and
assumptions and may involve a series of judgements about future events. New information may become
available that causes the Company to change its judgement regarding the adequacy of existing tax
liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is
made.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax
liabilities and assets, and they relate to income taxes levied by the same tax authority on the
133
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets
on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be
available against which the temporary differences can be utilised. Deferred tax assets are reviewed at the
end of each reporting period and reduced to the extent that it is no longer probable that the related tax
benefit will be realised.
4 Related parties
Parties are considered to be related to the Company if the Company has the ability, directly or indirectly,
to control the party or exercise significant influence over the party in making financial and operating
decisions, or vice versa, or where the Company and the party are subject to common control or common
significant influence. Related parties may be individuals or other entities.
Relationships with related parties were as follows:
Name of entities
Country of
incorporation /
nationality
Nature of relationships
The Siam Cement Public Company Limited Thailand Ultimate parent company
Siam Kraft Industry Co., Ltd. Thailand Subsidiary, direct ownership interest
Phoenix Pulp & Paper Public Company
Limited
Thailand Subsidiary, direct ownership interest
Thai Cane Paper Public Company Limited Thailand Subsidiary, direct ownership interest
Thai Containers Group Co., Ltd. Thailand Subsidiary, direct ownership interest
Invenique Co., Ltd. Thailand Subsidiary, direct ownership interest
United Pulp and Paper Co., Inc. Philippines Subsidiary, direct ownership interest
SCGP Excellence Training Center Co., Ltd. Thailand Subsidiary, direct ownership interest
SCG Paper Energy Co., Ltd. Thailand Subsidiary, direct ownership interest
SCGP Solutions Co., Ltd. Thailand Subsidiary, direct ownership interest
SCGP-T Plastics Co., Ltd. Thailand Subsidiary, direct ownership interest
Phoenix Utilities Co., Ltd. Thailand Subsidiary, indirect ownership interest
Thai Containers Khonkaen Co., Ltd. Thailand Subsidiary, indirect ownership interest
Thai Containers Rayong Co., Ltd. Thailand Subsidiary, indirect ownership interest
The Siam Forestry Co., Ltd. Thailand Subsidiary, indirect ownership interest
Thai Paper Co., Ltd. Thailand Subsidiary, indirect ownership interest
134
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Name of entities
Country of
incorporation /
nationality
Nature of relationships
Thai Union Paper Public Company Limited Thailand Subsidiary, indirect ownership interest
Siam Cellulose Co., Ltd.* Thailand Subsidiary, indirect ownership interest
Thai Wanabhum Co., Ltd. Thailand Subsidiary, indirect ownership interest
Siam Panawes Co., Ltd. Thailand Subsidiary, indirect ownership interest
Thai Panaboon Co., Ltd. Thailand Subsidiary, indirect ownership interest
Thai Panaram Co., Ltd. Thailand Subsidiary, indirect ownership interest
Panas Nimit Co., Ltd. Thailand Subsidiary, indirect ownership interest
Suanpa Rungsris Co., Ltd. Thailand Subsidiary, indirect ownership interest
Thai Panadorn Co., Ltd. Thailand Subsidiary, indirect ownership interest
Thai Panason Co., Ltd. Thailand Subsidiary, indirect ownership interest
Tawana Container Co., Ltd. Thailand Subsidiary, indirect ownership interest
Dyna Packs Co., Ltd. Thailand Subsidiary, indirect ownership interest
Orient Containers Co., Ltd. Thailand Subsidiary, indirect ownership interest
D-In Pack Co., Ltd. Thailand Subsidiary, indirect ownership interest
TC Flexible Packaging Co., Ltd. Thailand Subsidiary, indirect ownership interest
Prepack Thailand Co., Ltd. Thailand Subsidiary, indirect ownership interest
Precision Print Co., Ltd. Thailand Subsidiary, indirect ownership interest
Conimex Co., Ltd. Thailand Subsidiary, indirect ownership interest
Vina Kraft Paper Co., Ltd. Vietnam Subsidiary, indirect ownership interest
New Asia Industries Co., Ltd. Vietnam Subsidiary, indirect ownership interest
Alcamax Packaging (Vietnam) Co., Ltd. Vietnam Subsidiary, indirect ownership interest
AP Packaging (Hanoi) Co., Ltd. Vietnam Subsidiary, indirect ownership interest
Packamex (Vietnam) Co., Ltd. Vietnam Subsidiary, indirect ownership interest
Tin Thanh Packing Joint Stock Company Vietnam Subsidiary, indirect ownership interest
TCG Rengo (S) Limited Singapore Subsidiary, indirect ownership interest
Paperlink Inter-Trade Corporation Philippines Subsidiary, indirect ownership interest
PT Primacorr Mandiri Indonesia Subsidiary, indirect ownership interest
PT Indoris Printingdo Indonesia Subsidiary, indirect ownership interest
PT Indocorr Packaging Cikarang Indonesia Subsidiary, indirect ownership interest
Siam Toppan Packaging Co., Ltd. Thailand Associate, direct ownership interest
P&S Holdings Corporation Philippines Associate, direct ownership interest
Sahagreen Forest Co., Ltd. Thailand Associate, indirect ownership interest
135
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Name of entities
Country of
incorporation /
nationality
Nature of relationships
Siam Nippon Industrial Paper Co., Ltd. Thailand Associate, indirect ownership interest
PT SCG Indonesia Indonesia Subsidiary of The Siam Cement Public
Company Limited
SCG Vietnam Co., Ltd. Vietnam Subsidiary of The Siam Cement Public
Company Limited
SCG Legal Counsel Limited Thailand Subsidiary of The Siam Cement Public
Company Limited
Thai British Security Printing Public Company
Limited
Thailand Common directors
Thai British Depost Co., Ltd. Thailand Common directors
Thai British Security Printing Overseas
Co., Ltd.
Thailand Common directors
* Siam Cellulose Co., Ltd. amalgamate with Thai Paper Co., Ltd. The new company is named “ Thai Paper Co., Ltd.”
has already been registered with Ministry Commerce on 1 February 2017.
136
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Significant transactions with related parties for the years ended 31 December and the pricing policies are
summarised as follows:
2017 2016 Pricing Policies
(in thousand Baht)
Parent
Rental and service expense 77,244 72,138 Contract rate and market price
Interest expense 533,213 490,341 Contract rate
Subsidiaries
Rental income 28,827 27,795 Contract rate
Management fee income 163,940 105,700 Percentage of net sales
Dividend income 774,457 748,927 Upon declaration
Interest income 387,022 359,896 Contract rate
Interest expense 170 177 Contract rate
Associates
Dividend income 14,039 11,123 Upon declaration
In the income statement for the year ended 31 December 2017, the Company presents finance costs
of Baht 146 million (2016: Baht 131 million), which is comprised of interest expense from related parties
and finance charges of Baht 533 million (2016: Baht 491 million) and interest income from related parties
of Baht 387 million (2016: Baht 360 million).
137
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Balances as at 31 December with related parties were as follows:
Other current receivables
2017 2016
(in thousand Baht)
Siam Kraft Industry Co., Ltd. 35,693 56,757
Thai Paper Co., Ltd. 14,083 13,127
Vina Kraft Paper Co., Ltd. 13,334 18,309
Thai Containers Group Co., Ltd. 13,169 17,326
Phoenix Pulp & Paper Public Company Limited 9,911 14,074
Thai Cane Paper Public Company Limited 5,803 2,525
United Pulp and Paper Co., Inc. 3,427 3,469
Prepack Thailand Co.,Ltd. 2,571 230
SCGP Excellence Training Center Co., Ltd. 1,273 1,608
Siam Cellulose Co., Ltd. - 6,551
Others 6,370 6,212
Total 105,634 140,188
Short-term loans to related parties
2017 2016
(in thousand Baht)
Notes receivable (Interest rate 3.75% to 4.00% per annum in
2017 and 4.00% to 4.25% per annum in 2016)
Siam Kraft Industry Co., Ltd. 7,788,166 6,279,188
Thai Containers Group Co., Ltd. 2,844,587 2,776,103
SCGP-T Plastics Co., Ltd. 278,469 -
SCGP Solutions Co., Ltd. 165,216 -
SCG Paper Energy Co., Ltd. 71,149 52,133
SCGP Excellence Training Center Co., Ltd. - 20,315
Invenique Co., Ltd. - 899
Total 11,147,587 9,128,638
138
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Movements during the years on short-term loans to related parties were as follows:
2017 2016
(in thousand Baht)
At 1 January 9,128,638 9,656,261
Increase 25,027,827 20,422,230
Decrease (23,008,878) (20,949,853)
At 31 December 11,147,587 9,128,638
Other current payables
2017 2016
(in thousand Baht)
The Siam Cement Public Company Limited 23,501 23,291
Siam Kraft Industry Co., Ltd. 4,616 6,254
SCG Vietnam Co., Ltd. 3,586 3,046
Thai Paper Co., Ltd. 3,505 1,649
PT SCG Indonesia 1,780 1,951
SCGP Excellence Training Center Co., Ltd. 1,262 2,988
Others 2,732 3,756
Total 40,982 42,935
139
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Short-term loans from related parties
2017 2016
(in thousand Baht)
Notes payable (Interest rate 0.50% to 4.00% per annum in 2017
and 0.50% to 4.25% per annum in 2016)
The Siam Cement Public Company Limited 15,444,571 12,466,886
SCGP Excellence Training Center Co., Ltd. 7,210 -
Invenique Co., Ltd. 6,836 -
Total 15,458,617 12,466,886
Movements during the years on short-term loans from related parties were as follows:
2017 2016
(in thousand Baht)
At 1 January 12,466,886 12,847,881
Increase 14,145,885 11,750,270
Decrease (11,154,154) (12,131,265)
At 31 December 15,458,617 12,466,886
Key management compensation
2017 2016
(in thousand Baht)
For the years ended 31 December
Short-term employee benefits 87,832 94,326
Post-employment benefits 7,659 7,758
Total 95,491 102,084
Management compensation comprises of the remuneration paid to the management as staff expenses
in terms of salary, bonus, others and contribution to defined contribution plans.
140
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
5 Other current receivables
Note 2017 2016
(in thousand Baht)
Related parties 4 105,634 140,188
Other parties 44,136 13,872
Total 149,770 154,060
Other current receivables as at 31 December were as follows:
2017 2016
(in thousand Baht)
Allocated expenses 93,167 128,623
Accrued compensation 16,952 -
Accrued interest income 11,784 8,584
Others 27,867 16,853
Total 149,770 154,060
6 Other current assets
2017 2016
(in thousand Baht)
Specified purpose deposit in bank for investment projects 47,012 -
Refundable tax 41,445 39,962
Total 88,457 39,962
141
No
tes
to t
he
fin
an
cia
l st
ate
me
nts
SC
G P
acka
gin
g P
ub
lic C
om
pan
y L
imit
ed
Fo
r th
e y
ear
en
ded
31
Decem
ber
20
17
7 In
vest
men
ts in
ass
ocia
tes
Inve
stm
ents
in a
ssoc
iate
s as
at 3
1 De
cem
ber a
nd d
ivid
ends
inco
me
from
the
inve
stm
ents
in th
e ye
ars
ende
d at
the
sam
e da
te w
ere
as fo
llow
s:
O
wne
rshi
p in
tere
st
Paid
-up
capi
tal
Co
st m
etho
d
Divi
dend
inco
me
20
17
2016
20
17
20
16
20
17
20
16
20
17
20
16
(%
) (in
thou
sand
Bah
t)
Siam
Top
pan
Pack
agin
g Co
., Lt
d.
49
49
500,
000
500,
000
245,
000
245,
000
14,0
39
11,1
23
P&S
Hold
ings
Cor
pora
tion
40
40
262,
588
262,
588
105,
121
105,
121
- -
Tota
l
76
2,58
8 76
2,58
8 35
0,12
1 35
0,12
1 14
,039
11
,123
142
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2016
8 Investments in subsidiaries
Movements for the years ended 31 December in investments in subsidiaries accounted for using the
cost method were as follows:
2017 2016
(in thousand Baht)
At 1 January 26,112,882 25,963,984
Acquisitions and additional investments 914,372 148,898
At 31 December 27,027,254 26,112,882
In June 2016, the Company has paid-up final share capital of Phoenix Pulp & Paper Public Company
Limited for 515,344 shares. As a result, shareholding percentage of the Company decreased from 76.48%
to 68.73%.
In February 2017, the Company had repurchased all shares of Phoenix Pulp & Paper Public Company
Limited (“PPPC”) from NP Trading Company Limited which consisted of 1,928,388 ordinary shares and
171,612 preferred shares at Baht 82.00 per share totalling Baht 172 million. As a result,
the Company’s ownership was increased from 68.73% to 69.58%.
In May 2017, the Company had paid-up increased share capital of SCG Paper Energy Co., Ltd. for
7,400,000 shares at 70 Baht per share totalling Baht 518 million. The Company has already been
registered with Ministry Commerce on 26 May 2017.
In July 2017, the Company registered SCGP Solutions Co., Ltd. which is virtually owned 99.97% totalling
Baht 1 million. The Company has already been registered with Ministry Commerce on 27 July 2017.
In September 2017, the Company had paid-up share capital of SCG Paper Energy Co., Ltd.
for 7,400,000 shares at 30 Baht per share totalling Baht 222 million.
In September 2017, the Company registered SCGP-T Plastics Co., Ltd. which is virtually owned 99.97%
totalling Baht 1 million. The Company has already been registered with Ministry Commerce
on 29 September 2017.
143
No
tes
to t
he
fin
an
cia
l st
ate
me
nts
SC
G P
acka
gin
g P
ub
lic C
om
pan
y L
imit
ed
Fo
r th
e y
ear
en
ded
31
Decem
ber
20
17
Inve
stm
ents
in s
ubsid
iarie
s as
at 3
1 De
cem
ber a
nd d
ivid
end
inco
me
from
the
inve
stm
ents
dur
ing
the
year
s en
ded
at th
e sa
me
date
wer
e as
follo
ws:
A
ccum
ulat
ed
Ow
ners
hip
inte
rest
Pa
id-u
p ca
pita
l Co
st m
etho
d
impa
irmen
t los
ses
Net
Di
viden
d in
com
e
2017
20
16
2017
20
16
2017
2016
2017
2016
2017
2016
2017
2016
(%)
(in th
ousa
nd B
aht)
Siam
Kra
ft In
dust
ry C
o., L
td.
100
100
3,45
0,00
0 3,
450,
000
3,98
2,68
03,
982,
680
-
-
3,98
2,68
0 3,
982,
680
36
2,25
0 36
2,25
0
Thai
Cont
ainer
s Gr
oup
Co.,
Ltd.
70
70
1,
384,
000
1,38
4,00
0 1,
013,
805
1,01
3,80
5
- -
1,01
3,80
5 1,
013,
805
10
6,56
8 81
,379
Inve
niqu
e Co
., Lt
d.
100
100
70,2
00
70,2
00
70,2
0070
,200
64,0
35
64,0
356,
165
6,16
5
- -
Phoe
nix
Pulp
& P
aper
Pub
lic C
ompa
ny
Li
mite
d 69
.58
68.7
3 2,
462,
812
2,46
2,81
2 13
,439
,561
13,2
67,1
89
-
- 13
,436
,561
13
,267
,189
68,5
48
68,2
07
Unite
d Pu
lp a
nd P
aper
Co.
, Inc
. 77
.33
77.3
3 4,
327,
982
4,32
7,98
2 2,
963,
899
2,96
3,89
9
- -
2,96
3,89
9 2,
963,
899
-
-
Thai
Cane
Pap
er P
ublic
Com
pany
Lim
ited
94.5
4 94
.54
3,58
2,53
7 3,
582,
537
4,68
0,14
44,
680,
144
-
- 4,
680,
144
4,68
0,14
4
237,
091
237,
091
SCGP
Exc
elle
nce
Train
ing
Cent
er C
o., L
td.
100
100
49,0
00
49,0
00
49,0
0049
,000
- -
49,0
00
49,0
00
- -
SCG
Pape
r Ene
rgy
Co.,
Ltd.
10
0 10
0 89
0,00
0 15
0,00
0 89
0,00
015
0,00
0
- -
890,
000
150,
000
- -
SCGP
Sol
utio
ns C
o., L
td.
100
- 1,
000
- 1,
000
-
- -
1,00
0 -
- -
SCGP
-T P
last
ics C
o., L
td.
100
- 1,
000
- 1,
000
-
- -
1,00
0 -
- -
Tota
l
16
,218
,531
15
,476
, 531
27
,091
,289
26,1
76,9
17
64
,035
64,0
3527
,027
,254
26
,112
,882
77
4,45
7 74
8,92
7
144
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
9 Investment properties
Land
Land improvements Buildings Total
(in thousand Baht)
Cost
At 1 January 2016 183,352 26,152 36,993 246,497
Additions 10,084 - - 10,084
At 31 December 2016 and 2017 193,436 26,152 36,993 256,581
Accumulated depreciation
At 1 January 2016 - 26,147 9,840 35,987
Depreciation charge for the year - - 1,840 1,840
At 31 December 2016 - 26,147 11,680 37,827
Depreciation charge for the year - - 1,840 1,840
At 31 December 2017 - 26,147 13,520 39,667
Carrying amount
At 31 December 2016 193,436 5 25,313 218,754 At 31 December 2017 193,436 5 23,473 216,914
Investment properties were revalued as at 31 December 2017 at open market values on an existing use
basis. The fair value was Baht 497 million (2016: Baht 494 million).
The fair value measurement for investment properties have been categorised as a Level 3 fair value
based on the inputs to the valuation technique used, which is income approach.
145
No
tes
to t
he
fin
an
cia
l st
ate
me
nts
SC
G P
acka
gin
g P
ub
lic C
om
pan
y L
imit
ed
Fo
r th
e y
ear
en
ded
31
Decem
ber
20
17
10
Prop
erty
, pla
nt a
nd e
quip
men
t
Fu
rnitu
re,
La
nd
fix
ture
s
an
d la
nd
Bu
ildin
gs a
nd
M
achi
nery
Tran
spor
tatio
n
and
offic
e
Cons
truct
ion
im
prov
emen
ts
st
ruct
ures
and
equi
pmen
t
equi
pmen
t
equi
pmen
t
in p
rogr
ess
To
tal
(in
thou
sand
Bah
t)
Cost
At 1
Janu
ary
2016
63
,050
12
4,81
8 24
9,32
5 89
1 60
,160
36
,653
53
4,89
7
Addi
tions
15
12
16
,569
-
760
19
,794
37
,150
Disp
osal
s /
writ
ten-
off
-
-
(1,9
66)
-
(1,8
86)
-
(3
,852
)
Tran
sfer
s in
(out
) 18
7 2,
477
31,4
99
- 2,
301
(3
7,23
6)
(772
)
At 3
1 De
cem
ber 2
016
63,2
52
127,
307
295,
427
891
61,3
35
19,2
11
567,
423
Addi
tions
-
29
6
11,8
19
-
6
69
13,3
93
26,1
77
Disp
osal
s /
writ
ten-
off
-
-
- -
(5
5)
- (5
5)
Tran
sfer
s in
(out
) -
648
14,1
29
-
32
7 (1
5,34
4)
(2
40)
At 3
1 De
cem
ber 2
017
63,2
52
128,
251
321,
375
891
62,2
76
17,2
60
593,
305
146
No
tes
to t
he
fin
an
cia
l st
ate
me
nts
SC
G P
acka
gin
g P
ub
lic C
om
pan
y L
imit
ed
Fo
r th
e y
ear
en
ded
31
Decem
ber
20
17
Fu
rnitu
re,
La
nd
fix
ture
s
an
d la
nd
Bu
ildin
gs a
nd
M
achi
nery
Tran
spor
tatio
n
and
offic
e
Cons
truct
ion
im
prov
emen
ts
st
ruct
ures
and
equi
pmen
t
equi
pmen
t
equi
pmen
t
in p
rogr
ess
To
tal
(in
thou
sand
Bah
t)
Accu
mul
ated
dep
reci
atio
n an
d
ac
cum
ulat
ed im
pairm
ent l
osse
s
At 1
Janu
ary
2016
11
,839
62
,554
15
1,25
6 19
8 47
,279
-
273,
126
Depr
ecia
tion
char
ge fo
r the
yea
r -
5,87
0 18
,216
87
5,
658
- 29
,831
Disp
osal
s /
writ
ten-
off
-
-
(1,9
66)
- (1
,831
) -
(3,7
97)
At 3
1 De
cem
ber 2
016
11,8
39
68,4
24
167,
506
285
51,1
06
- 29
9,16
0
Depr
ecia
tion
char
ge fo
r the
yea
r 10
5,
933
23,1
09
88
4,26
1 -
33,4
01
Disp
osal
s /
writ
ten-
off
- -
- -
(55)
-
(55)
At 3
1 De
cem
ber 2
017
11,8
49
74,3
57
190,
615
373
55,3
12
- 33
2,50
6
147
No
tes
to t
he
fin
an
cia
l st
ate
me
nts
SC
G P
acka
gin
g P
ub
lic C
om
pan
y L
imit
ed
Fo
r th
e y
ear
en
ded
31
Decem
ber
20
17
Fu
rnitu
re,
La
nd
fix
ture
s
an
d la
nd
Bu
ildin
gs a
nd
M
achi
nery
Tran
spor
tatio
n
and
offic
e
Cons
truct
ion
im
prov
emen
ts
st
ruct
ures
and
equi
pmen
t
equi
pmen
t
eq
uipm
ent
in
pro
gres
s
Tota
l
(in
thou
sand
Bah
t)
Carr
ying
am
ount
At 3
1 De
cem
ber 2
016
51,4
13
58,8
83
127,
921
606
10,2
29
19
,211
26
8,26
3
At 3
1 De
cem
ber 2
017
51,4
03
53,8
94
130,
760
518
6,96
4
17,2
60
260,
799
The
gros
s ca
rryin
g am
ount
of f
ully
dep
recia
ted
prop
erty
, pla
nt a
nd e
quip
men
t tha
t is
still
in u
se a
s at
31
Dece
mbe
r 201
7 am
ount
ed to
Bah
t 200
mill
ion
(201
6: B
aht 1
91 m
illio
n).
148
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
11 Intangible assets
Software
licenses
Software development
licenses cost Total
(in thousand Baht)
Cost
At 1 January 2016 59,355 9,658 69,013
Additions 1,229 1,474 2,703
Transfer in (out) 3,003 (2,231) 772
At 31 December 2016 63,587 8,901 72,488
Additions 1,235 8,576 9,811
Transfer in (out) 7,727 (7,487) 240
At 31 December 2017 72,549 9,990 82,539
Accumulated amortisation
At 1 January 2016 48,877 - 48,877
Amortisation charge for the year 4,496 - 4,496
At 31 December 2016 53,373 - 53,373
Amortisation charge for the year 4,630 - 4,630
At 31 December 2017 58,003 - 58,003
Carrying amount
At 31 December 2016 10,214 8,901 19,115
At 31 December 2017 14,546 9,990 24,536
149
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
12 Deferred tax asset (deferred tax liability)
Deferred tax asset and liability are offset if there is a legally enforceable right to offset current tax asset
and liability, and they relate to income taxes levied by the same tax authority on the same taxable entity,
and are included in the statement of financial position as follows:
2017 2016
(in thousand Baht)
Deferred tax asset 17,842 17,034
Deferred tax liability (55) (5)
Net 17,787 17,029
Movements in total deferred tax asset and liability during the years were as follows:
Credited (charged) to
At profit other At
1 January or loss comprehensive 31 December
2016 income 2016
(Note 19)
(in thousand Baht)
Deferred tax asset
Provision for employee benefit 15,877 1,157 - 17,034
Deferred tax liability
Unrealised gain on foreign
currency exchange - (5) - (5)
Net 15,877 1,152 - 17,029
150
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Credited (charged) to
At profit other At
1 January or loss comprehensive 31 December
2017 income 2017
(Note 19)
(in thousand Baht)
Deferred tax asset
Provision for employee benefit 17,034 1,340 (532) 17,842
Deferred tax liability
Unrealised gain on foreign
currency exchange (5) (50) - (55)
Net 17,029 1,289 (532) 17,787
13 Other current payables
2017 2016
(in thousand Baht)
Allocated expenses 37,672 37,139
Withholding tax payable 34,495 41,086
Account payables from purchases of assets 6,041 2,913
Value added tax payable 4,758 3,904
Accrued expenses 2,191 1,717
Others 15,341 40,516
Total 100,498 127,275
14 Non-current provisions for employee benefits
The Company operates defined benefits plans based on the requirement of the Thai Labour Protection
Act B.E. 2541 to provide retirement benefits and other long-term benefits to employees based on
pensionable remuneration and length of service.
151
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
The defined benefit plans expose the Company to actuarial risks, such as longevity risk, current risk,
interest rate risk and market (investment) risk.
Non-current provisions for employee benefits in statement of financial position as at 31 December
2017 2016
(in thousand Baht)
Post-employment benefits - legal severance payments plan 71,860 69,445
Other long-term employee benefits 3,591 3,476
Other employee benefits - 383
Total 75,451 73,304
Movement in the present value of non-current provisions for defined benefit plans
2017 2016
(in thousand Baht)
Defined benefit plans at 1 January 72,921 77,508
Included in profit or loss
Current service costs 4,019 3,932
Interest on obligation 2,534 2,368
Actuarial losses 75 82
Transfer of employee benefit obligations from subsidiaries - 2,536
6,628 8,918
Included in other comprehensive income
Actuarial losses (gains) (2,657) 1,181
Other
Benefits paid (1,441) (14,686)
Non-current provisions for defined benefit plans
at 31 December 75,451 72,921
152
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Actuarial losses (gains) recognised in other comprehensive income as of the end of the reporting period
arising from:
2017 2016
(in thousand Baht)
For the years ended 31 December
Experience adjustment (2,657) 1,181
Total (2,657) 1,181
Actuarial assumptions
Principal actuarial assumptions as of the end of the reporting period
2017 2016
(%)
For the years ended 31 December
Discount rate * 3.09 - 3.23 3.09 - 3.23
Salary increase rate 3.00 - 9.00 3.00 - 9.00
Employee turnover rate ** 4.00 - 15.50 4.00 - 15.50
Mortality rate *** 100.00 of TMO2008 100.00 of TMO2008
* Market yields on government bonds for legal severance payments plan
** Upon the length of service
*** Reference from TMO2008: Thai Mortality Ordinary Table 2008
Sensitivity analysis
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding
other assumptions constant, would have affected the non-current provisions for defined benefit plans by
the amounts shown below.
153
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Effect on the non-current provisions for defined benefit plans at 31 December
Increase (decrease)
2017 2016
(in thousand Baht)
Discount rate
0.5% increase (3,478) (3,494)
0.5% decrease 3,750 3,771
Salary increase rate
1.0% increase 9,115 8,343
1.0% decrease (7,924) (7,279)
Employee turnover rate
10.0% increase (6,384) (5,863)
10.0% decrease 7,131 6,531
Although the analysis does not take account of the full distribution of cash flows expected under the plan,
it does provide an approximation of the sensitivity of the assumptions shown.
15 Share capital
2017 2016
Par Number Number
Value of shares Value of shares Value
(in Baht) (in thousand shares / thousand Baht)
Authorised
At 1 January
- ordinary share 10 156,300 1,563,000 156,300 1,563,000
At 31 December
- ordinary share 10 156,300 1,563,000 156,300 1,563,000
Issued and paid-up
At 1 January
- ordinary share 10 156,300 1,563,000 156,300 1,563,000
At 31 December
- ordinary share 10 156,300 1,563,000 156,300 1,563,000
154
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
16 Reserves
Share premium
Section 51 of the Public Companies Act B.E. 2535 requires companies to set aside share subscription
monies received in excess of the par value of the shares issued to a reserve account (“share premium”).
Share premium is not available for dividend distribution.
Legal reserve
Section 116 of the Public Companies Act B.E. 2535 requires that a company shall allocate not less than
5% of its annual net profit, less any accumulated losses brought forward (if any), to a reserve account
(“legal reserve”), until this account reaches an amount not less than 10% of the registered authorised
capital. The legal reserve is not available for dividend distribution.
17 Administrative expenses
2017 2016
(in thousand Baht)
Salary, welfare and personnel expenses 844,597 811,974
Rent, depreciation and amortisation expenses 97,776 92,758
Professional fees 70,843 48,778
Allocated expenses (1,158,579) (1,141,698)
Others 206,121 221,357
Total 60,758 33,169
18 Employee benefit expenses
2017 2016
(in thousand Baht)
Salaries and wages 670,350 634,378
Contribution to defined contribution plans 50,364 45,720
Contribution to defined benefit plans 6,628 8,918
Welfares and others 117,255 122,958
Total 844,597 811,974
155
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
The defined contribution plans comprise provident funds established by the Company for its employees in
addition to the above provident fund. The provident funds were registered with the Ministry of Finance
under the Provident Fund Act B.E. 2530. Membership to the funds is on a voluntary basis. Contributions
are made monthly by the employees at 2% to 15% of their basic salaries and by the Company at 5% to
13% of the members’ basic salaries, depending on the length of employment.
19 Income tax
Income tax recognised in profit or loss
Note 2017 2016
(in thousand Baht)
Current tax
Current tax 1,413 1,908
Over provided in prior years (273) (1,188)
1,140 720
Deferred tax
Movements in temporary differences 12 (1,289) (1,152)
Total (149) (432)
Income tax recognised in other comprehensive income
2017 2016
(in thousand Baht)
Actuarial gains (losses) 532 (236)
156
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
Reconciliation of effective tax rate
2017 2016
Rate
(%)
(in thousand
Baht)
Rate
(%)
(in thousand
Baht)
Profit before income tax 818,906 786,480
Income tax using the Thai corporation tax rate 20 163,781 20 157,296
Income not subject to tax (158,834) (153,429)
Expenses deductible at a greater amount (5,720) (6,403)
Expenses not deductible for tax purposes 2,991 7,381
Prior year expenses deductible for tax purposes (805) (2,937)
Current tax 1,413 1,908
Over provided in prior years (273) (1,188)
Movement in temporary differences (1,289) (1,152)
Income tax benefits (149) (432)
Income tax reduction
Revenue Code Amendment Act No. 42 B.E. 2559 dated 3 March 2016 grants a reduction of
the corporate income tax rate to 20% of net taxable profit for accounting periods which begin on or after
1 January 2016.
20 Basic earnings per share
The calculations of basic earnings per share for the years ended 31 December was based on the profit
for the years attributable to owners and the number of ordinary shares outstanding during the years
as follow:
2017 2016
(in thousand Baht / thousand shares)
Profit for the year attributable to owners 819,055 786,912
Weighted average number of ordinary shares outstanding 156,300 156,300
Basic earnings per share (in Baht) 5.24 5.03
157
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
21 Dividends
At the Annual General Meeting of the Shareholders of the Company held on 28 March 2016,
the shareholders approved the appropriation of dividends of Baht 5.00 per share, amounting to Baht
782 million. The dividend was paid to shareholders during 2016.
At the Annual General Meeting of the Shareholders of the Company held on 28 March 2017,
the shareholders approved the appropriation of dividends of Baht 5.00 per share, amounting to Baht
782 million. The dividend was paid to shareholders during 2017.
22 Financial instruments
Liquidity risk
The Company monitors its liquidity risk and maintains a level of cash and cash equivalents deemed
adequate to finance the Company’s operations and to mitigate the effects of fluctuations in cash flows.
Interest rate risk
Interest rate risk arises from the changing of interest rates, which may effect current and future operations
of the Company. Management believes that the interest rate risk is minimal, hence, the Company
does not have any hedging agreement to protect such risk.
Foreign exchange risk
The Company’s exposure to foreign exchange risk relates principally to its receivables and payables which
are denominated in foreign currencies. However, as at 31 December 2017 and 2016, the Company
does not have material foreign currency risk.
Fair value of financial assets and liabilities
Since the majority of the financial assets and liabilities classified as short-term and loans are bearing
interest at rates closed to current market rate, the management believes that as at 31 December 2017 and
2016, the carrying amount of the Company’s financial instruments does not materially differ from their
aggregate fair value.
158
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
23 Lease agreements
(a) The Company entered into lease agreements with related parties covering the land where its
building are located. The term of the lease is up to year 2018 and 2019 with the rental fee of Baht
3.5 million per year.
(b) The Company entered into lease agreements for cars with local companies. The terms of the leases
are up to year 2022 with the rental fees of Baht 10.9 million per year.
24 Capital management
The management of the Company has the capital management policy to maintain a strong capital base by
emphasis in planning and determining the operating strategies resulting in good business’s performance
and sustain good cash flows management. In addition, the Company considers investing in projects which
have good rate of return, appropriate working capital management, maintain a strong financial position and
appropriate investment structure as to maintain sustain future operations of the business and to maintain
shareholders, investors, creditors and others interest’s confidence.
25 Events after the reporting period
(a) At the Board of Directors’ Meeting of the Company held on 24 January 2018, the directors proposed
for approval at the Annual General Meeting of Shareholders, the payment of a dividend for 2017 at
the rate of Baht 50.00 per share, amounting to Baht 7,815 million and is scheduled for payment on
20 April 2018. The dividend is subject to the approval of the Shareholders at the Annual General
Meeting to be held on 23 March 2018.
(b) On 18 January 2018, the Company paid-up 20,000,000 shares capital in SCGP Solutions
(Singapore) Pte. Ltd. totalling Malaysia Ringgit 61 million or equivalent to Baht 492 million.
The Company’s ownership is 100%.
159
Notes to the financial statements
SCG Packaging Public Company Limited
For the year ended 31 December 2017
26 Reclassification of accounts
Certain accounts in the 2016 financial statement have been reclassified to conform to the presentation in
the 2017 financial statements were as follows:
Before
reclassification
Reclassification
After
reclassification
(in thousand Baht)
Statement of financial position
At 31 December 2016
Other current receivables 153,610 450 154,060
Other current assets 450 39,512 39,962
Other non-current receivables - 15,769 15,769
Other non-current assets 139,855 (55,731) 84,124
Other current payables 82,282 44,993 127,275
Other current liabilities 44,993 (44,993) -
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163
1. Directors having interests directly or indirectly in any contract entered into by the company during financial year.
- None -
2. Shareholding of Directors in the Company and its affiliates. (As of December 31, 2017)
Directors
SCG Packaging Public Company Limited
Affiliated Companies1
Ordinary Shares(Shares)
Ordinary Shares(Shares)
Debentures(Shares)
Year 2017
Year 2016
Increase (Decrease)
during Financial
Year
Year 2017
Year 2016
Increase (Decrease)
during Financial
Year
Year 2017
Year 2016
Increase (Decrease)
during Financial
Year
1. Mr. Roongrote Rangsiyopash - - - 30,000* 30,000* - 80,000** 58,000** 22,000**
2. Mr. Tanawong Areeratchakul - - - - - - - - -
3. Mr. Chaovalit Ekabut - - - 30,000* 30,000* - - - -
4. Mr. Somchai Wangwattanapanich - - - 4,300* 4,300* - - - -
5. Mr. Aree Chavalitcheewingul - - - - - - - - -
6. Mr. Nithi Patarachoke - - - 4,000* 4,000* - - - -
Notes:1 According to the Public Limited Companies Act, an “affiliated company” means a public limited company with a relationship to
a private company or with any public limited company, or with any companies in the following manner:- Any company that has the authority to control over appointment and removal of directors who have full or majority management authority of another company.- Any company holds more than 50% of issued shares of another company.
* Ordinary shares of the Siam Cement Public Company Limited** Debentures of the Siam Cement Public Company Limited
3. Remuneration, shares, debentures, or other benefits which directors received from the company
As the Board of Directors Meeting on August 20, 2003 resolved to cancel all directors’ remuneration, the company does not pay any remuneration to directors accordingly, effective from August 2003 onwards. Moreover, all directors do not receive any other benefits given for being the company’s directors.
Directors’ InformationSCG Packaging Public Company Limited
164
First 10 Major Shareholders (As of December 31, 2017)
ShareholdersNo. of
Ordinary Shares Percent of Total Shares
1. The Siam Cement Public Company Limited 153,960,593 98.503
2. Office of the Privy Purse 826,200 0.529
3. Mr. Taewan Tantichattanont 116,000 0.074
4. Miss Orapin Thidarat 104,400 0.067
5. Randery Burahmakan Company Limited 93,600 0.060
6. Mr. Man Nana 78,160 0.050
7. Roman Catholic Mission of Bangkok 53,448 0.034
8. Mr. U-thane Tantichattanont 50,000 0.032
9. Mr. Somsak Nana 46,572 0.030
10. Mr. Pipatpong Israsena Na Ayuthaya 26,444 0.017
Other Shareholders 944,583 0.604
Total 156,300,000 100.000
165
Annual Report 20
17 SCG
Packaging Public Com
pany Limited
SCG Packaging Public Company Limited1 Siam Cement Road, Bangsue, Bangkok 10800Tel: +66 2586 2894Fax: +66 2586 3007E-mail: [email protected]: www.scgpackaging.com
COLLABORATIVE
INNOVATIVE
CLIENT - CENTRIC
DIGITALIZED
SUSTAINABLE
Annual Report 2017SCG Packaging Public Company Limited
10 mm
Cover ENG.indd 1 3/7/2561 BE 12:12 PM
SCG Packaging Public Company Limited
Company Profile
Registration no. 0107537000921
Head office address 1 Siam Cement Road, Bangsue, Bangkok 10800
Business type Holding company for packaging and packaging paper, forestry,
pulp and paper and other businesses
Initial registered capital (as at the registration date of conversion into the Public Limited
Company on March 24, 1994)
Registered capital: 1,000 Million Baht
Paid-up capital: 1,000 Million Baht
Issued and paid up ordinary shares of: 100 Million shares,
Issued and paid up preference shares: - None -
Par value of 10 Baht per share
Present registered capital
Registered capital: 1,563 Million Baht
Paid-up capital: 1,563 Million Baht
Issued and paid up ordinary shares of: 156.3 Million shares,
Issued and paid up preference shares: - None -
Par value of 10 Baht per share
Website www.scgpackaging.com
Contact Tel: +66 2586 2894
Fax: +66 2586 3007
E-mail: [email protected]
10 mm
Cover ENG.indd 2 3/7/2561 BE 12:12 PM