2.11 Transaction and Connected Parties
2.11.1 Necessary and Reason of Transaction
The connected transactions were financial assistance for the Company’s working capital
because of low liquidity. Terms and conditions of transaction benefit the Company. For
example, the Company pays interest charges directly to a bank at the rate charged by the bank
and if the Company pays directly to the lender, the Company will pay interest at the same rate as
render borrowing rate without charge. Thus, the lender requested the Company to provide a
secondary land mortgage registration.
Above said transactions were approved by the Company’s Board of Director, and
reported to the Stock Exchange of Thailand (SET) following SET’s regulations of connected
transaction disclosure.
2.11.2 Policy of Connected Transaction Approval
The Company minimizes or avoids further financial assistance from connected
and/or related parties. The transactions below provide the Company with credit facilities in
case of unplanned working capital shortages to meet immediate financial commitments.
Upon entering such transactions, controls are in effect pursuant to the Board of Director’s
resolution (meeting No. 2/2009, February 26, 2009) stating as follow:
1. On receiving or granting finance assistance transactions between related parties, do as
follows concerning amounts and procedures for each transaction (Note:(1):
1.1 Between THB 1 M and THB 20 M; notify the SET immediately and obtain approval from
the BOD.
1.2 THB 20 M (approximately USD 0.57 M) or more; notify the SET immediately, and obtain
approval from the BOD and shareholders.
2. On purchasing goods or services, or entering into any kind of contracts or agreements,
such as purchase, service, joint venture, or agent contract etc. do as follows concerning
amounts and procedures (Note: (2):
2.1 Between THB 1 M. and THB 20 M (approximately USD 28,000 to USD 0.57 M.); notify
the SET immediately. Also, BOD approval may be needed in certain cases, such as in
transactions where the terms are not normal commercial terms (except in the lease of immovable
assets where the lease period is not over 3 years), or in an asset/ service transaction.
2.2 THB 20 M (approximately USD 0.57 M) or more; notify the SET immediately and obtain
approval from BOD. Also, shareholders’ approval may be needed in certain transactions such as
in cases where the terms are not normal commercial terms, or in an asset/ service transaction.
(1) The amount is referred to in the financial statement and/or SET or SEC’s announcement
and can be changed as appropriate.
(2) There is no need to inform or send the reports as mentioned above to the secretary if the
transaction is an ordinary and normal business transaction with normal commercial term e.g.
purchase of raw materials, purchase of supplies used in processing, purchase-selling
inventories. However, if the transaction is done between the related parties, normal
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commercial terms have to be applied, otherwise the procedure- as in 2.1 or 2.2 above, must be
applied regardless of the value involved.
In the latter case, any involved parties must abstain from voting on the transaction(s); and said
transaction(s) must be scrutinized by the Audit Committee and reported to the SET pursuant to
SET regulations relating to the disclosure of related parties transactions.
2.11.3 Connected Parties
Company
Transaction
Type
Aspac
Construction
Limited (ASPAC)
Sino
Pac
Development
(Thailand) Limited (SPD)
Overdraft (OD) facility of
Baht 14 million was
extended by Aspac to THL
as working capital and the
2nd mortgage was released in
May 2008.
The bank had released the
mortgage that THL provided to
SPD on May 15, 2008.
Therefore, no more related
parties transaction.
Therefore, no more related
parties transaction.
Transaction
Value &
Criteria on
Net Tangible
Assets
There is no balance of short
term loan as at December
31, 2008 (fully repaid since
2007)
Baht 12 million land mortgage.
(released on May 15, 2008)
Reason for
Transaction
In 1999 THL accepted
financial assistance from
AsPac due to severe cash
flow restraints brought on
by the extremely tight credit
market. The financial
assistance rendered was
used primarily to support the
high strength aggregate
quarry operations and as
THL’s working capital.
To provide working capital for
THL and its controlled entities.
Terms and
Conditions of
Transaction
1) The facility was made
exclusively for THL and its
controlled entities for
When THL no longer utilised the
Baht 14 million OD facility, the
Baht 12 million secondary
This value represents less than
3% of the latest audited net
tangible assets of THL as per the
Stock Exchange of Thailand
(SET)’s regulation (ref: Bor Jor:
52-2-01, clause 9 (1) and (2),
page 122). The Transaction
Value divided by THL’s Net
Tangible Assets
(12,000,000/793,431,000)
derives a percentage of 1.51%.
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Company
Aspac
Construction
Limited (ASPAC)
Sino
Pac
Development
(Thailand) Limited (SPD)
working capital.
registration will be released.
2) THL pays the monthly
interest charge directly to a
bank at the prevailing rate.
(The bank had released the
mortgage on May 15, 2008)
3) THL provided collateral
consisting of land at
Saraburi province in the
amount of Baht 4 million.
The remaining Baht 10
million of the facility is
secured by AsPac’s group
collateral.
4) The OD facility by Aspac
is allocated to THL and its
controlled entities without
other charges.
Scope of
Connected
Persons/
Relationships
THL and AsPac are
connected to the extent that
Mr. Ronald Ng and the late
Mr. W. Sukasem were
directors of both THL and
AsPac at the time of the
transaction. Per THL policy,
these persons abstained from
voting in connection with
this transaction.
THL and SPD are connected to
the extent that Mr. R. Ng, the
late Mr. W. Sukasem, and Dr.
J.P. Mills were directors of both
THL and SPD at the time of the
transaction. As per THL policy,
these persons abstained from
voting in connection with these
transactions.
Transaction
Transparency
and approval
process
This transaction was
reported in THL’s annual
and quaterly financial
statements and submitted
quarterly to the SET. This
transaction was reviewed by
an external auditor, legal
counsel, THL’s Audit
Committee, and Board of
Directors who deemed the
said transaction to be fair,
reasonable, and in
compliance with generally
acceptable accounting
procedures.
This transaction was reported in
THL’s annual and quaterly
financial statements and
submitted quarterly to the SET.
This transaction was reviewed
by an external auditor, legal
counsel, THL’s Audit
Committee, and Board of
Directors who deemed the said
transaction to be fair, reasonable,
and in compliance with generally
acceptable accounting
procedures.
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2.11.4 CONNECTED TRANSACTIONS WITHIN THE GROUP
The transactions within the Group relate mainly to inter-company loans from Tongkah Harbour
Public Company Limited to the subsidiaries. The terms of agreement between the parent entity
and the subsidiaries are mainly as follows:
Transaction type
Reason for loan
Terms
Disclosure
Approval Process
Company
Name
: Long term loan
: To provide long term capital for the subsidiary’s projects.
: Interest charged on the average banking interest cost.
: Reported to the SET and shareholders, quaterly and
annually as incurred.
: Reviewed by auditors, legal counsel, Tongkah Harbour Public Company
Limited’s Audit Committee and Board of Directors who deemed said
transaction to be fair, reasonable, and in compliance with generally
acceptable accounting procedures.
Tungkum
Limited (TKL)
Cholsin
Limited (CSL)
Principal
due from
(due to)
Baht 34,365,105
Baht 70,128,521
Acc. Interest
Baht 19,071,616
Baht 43,253,378
Sky Cliff
Limited (SCL)
Sea Minerals
Limited (SML)
Transaction
Value
Receivable
(payable)
Baht
125,244,565
Baht
(33,972,000)
Baht 23,511,555
Baht (821,414)
Provision
0.00
Baht 93,608,000
0.00
0.00
Scope of
Connected
Persons/
Relationships
Share holders
98.86%
Share holders
72.10%
Share holders
75.00%
Share holders
99.99%
Joint directors
and shareholders
Joint directors
and shareholders
Joint directors
and shareholders
Joint directors
and shareholders
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2.11.5 Future of Connected Transactions
The Company operates business based on Company benefit. Connected transactions
with related companies or parties (financial assistance) will occur in significant circumstance. In
future, the Company has no intent to do connected transactions, except where the Company
encounters severe circumstances. However, the Company follows the policy of connected
transaction approval as stated in clause 2.11.2 In addition, the Company will report connected
transactions to SET.
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