ESSO (THAILAND) PUBLIC COMPANY LIMITED
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 31 DECEMBER 2019
Independent Auditor's Report
To the shareholders (and the Board of Directors) of Esso (Thailand) Public Company Limited
My opinion
In my opinion, the consolidated financial statements of Esso (Thailand) Public Company Limited (the Company) and its subsidiaries (the Group) and the separate financial statements of the Company present fairly, in all material respects, the consolidated and separate financial position of the Group and of the Company as at 31 December 2019, and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with Thai Financial Reporting Standards (TFRSs).
What I have audited
The consolidated financial statements and the separate financial statements comprise:
- the consolidated and separate statements of financial position as at 31 December 2019;
- the consolidated and separate statements of comprehensive income for the year then ended;
- the consolidated and separate statements of changes in equity for the year then ended;
- the consolidated and separate statements of cash flows for the year then ended; and
- the notes to the consolidated and separate financial statements, which include a summary of significant accounting policies.
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 and separate financial statements section of my report. I am independent of the Group and the Company in accordance with the Federation of Accounting Professions under the Royal Patronage of His Majesty the King's Code of Ethics for Professional Accountants together with the ethical requirements that are relevant to my audit of the consolidated and separate 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.
Key audit matters
Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of my audit of the consolidated and separate financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters.
Key audit matter
Revenue Recognition
In 2019, the Group recognised revenues of Baht 168,529 million which derived from two main business segments, Downstream and Petrochemical segments, as disclosed in the Notes 4 to the financial statements. In addition, TFRS 15 Contracts with Customers has become effective on 1 January 2019 and impacted to the Group's revenue recognition.
The revenues are determined and recognised, based on the contractual price and volume of products delivered. The price is based on the market price and a number of other factors, depending on the distribution channels and contract terms with customers. The volumes sold are measured using applicable meters when the products are delivered to customers via pipeline, truck, or vessel.
I focused on the revenue recognition of the petroleum products and petrochemical products because the revenue amounts and number of revenue transactions are material. In addition, selling prices are based on market prices and a number of other factors as stated in the contracts with customers.
Cost of Inventory
As of 31 December 2019, the Group held inventories, mainly petroleum and petrochemical products, of Baht 8,073 million which represent 12 percent of the Group's total assets.
Cost of inventories primarily comprise purchase prices of crude oil and the manufacturing costs which are allocated to each type of products. Cost calculation requires the Group to perform the following procedures :
- Generating an automated report that computes the unit cost of each product. From this report, the production costs of inventories are pooled together and are allocated to each product using percentage of each product reference value to total production costs;
- Performing a comparison between product unit costs and market prices to ensure there is no significant unusual item; and
- Using final unit costs for calculation of
inventory balance using FIFO application.
I focused on this area because the sizes of inventory balances from petroleum and petrochemical products are material to the Group's financial statements. In addition, the calculation of inventory cost is complex. The accuracy and the completeness of information used for unit cost calculation are important which influences pricing decision and the Group's profit and loss.
How my audit addressed the key audit matter
My work performed over revenue recognition included:
- Obtaining an understanding and making inquiries tomanagement about revenue recognition principleand the Group's implementation of TFRS15, accounting guidelines, disclosures and systems to support revenue recognition to assess correctness and appropriateness of the adoption of this new accounting standard and accounting policies the Group applied.
- Obtaining an understanding and testing the design andoperating effectiveness of key controls in relation to the recognition of revenues, particularly focus on controls around the timely and accurate recording of sales transactions;
- Testing gross sales transactions and credit/debit noteson sampling basis by tracing to relevant supporting documents, including invoices to customers, delivery documents and subsequent cash receipts from those customers. Additionally, I inspected sales contracts and/or other related documents between the Group and customers to determine whether the revenue transactions were recognised correctly and appropriately.
- Selecting revenue samples prior to and after year endto test whether they are recorded in appropriate timing, based on terms and conditions set out in sales invoices and delivery documents or system generated reports; and
- Sending debtor confirmations for balances as at 31 October2019, completing appropriate roll-forwardprocedures and performing subsequent receipt testing on customer balances for which confirmations were not received.
From the procedures performed, I found that the revenue recognition of the petroleum products and petrochemical products was appropriately applied in accordance with theGroup's accounting policies.
My work performed over cost of inventories included:
- Obtaining an understanding and testing the design and operating effectiveness of key controls in relation to over the inventory management and procurement cycle to the purchase requisitions, purchase orders, goods receiving, payments and recording to reflect the accuracy of the cost of inventory;
- Testing purchase transactions in relation to timing, amounts and volumes on sampling basis by tracing to relevant supporting documents, including invoices from suppliers and receiving documents.
- Obtaining an understanding of basis of inventory cost to identify appropriateness of accounting policies the Group applied;
- Comparing unit cost of each product with its market price as at the reporting date to ensure there is no significant unusual item; and
- Engaging specialists in Information Systems and Technology to verify accuracy and reliability of the reports used in cost allocation.
From the procedures performed, I found that cost of inventories is calculated and allocated based on appropriate methodologies which are consistent with the Group's accounting policies.
Key audit matter | How my audit addressed the key audit matter |
Valuation of deferred tax assets on net losses carried forward
As of 31 December 2019, the balance of deferred income tax assets relating to net losses carried forward of the Group was Baht 929 million which represents approximately 1 percent of the Group's total assets. The Group recognises deferred tax assets from tax losses carried forward to the extent it is probable that future taxable profits will allow it to be recovered.
Management of the Group has performed a financial performance projection of the Group, including expected future taxable profit to support recoverability of such deferred tax assets. The projection is based on historical data and expected future outcome. The significant assumptions include refining margin, production volumes, and crude prices.
I focus on this area because there are a number of assumptions used in the Group's financial performance projection. Those assumptions involve significant judgement made by management in assessing the Group's future taxable profit. In addition, the balance of deferred income tax assets from net losses carried forward is significant to the consolidated financial statements.
I evaluated evidence supporting the recoverability of the deferred tax assets from net losses carried forward which is management's projected future taxable income byperforming procedures below.
- Evaluating and challenging management's judgement andassumptions used in forming its four-yearfinancial performance projection, which includes the assumptions for future growth of refinery margin, production volumes, and crude prices. The reasonableness of these underlying assumptions were verified against external sources, industry benchmarks, and historical information.
- Developing an independent projection of the Group'sfuture taxable income using researched information and verified internal information, with no significant differences from the result that the Group's management prepared.
Based on procedures I have carried out, I consider that management's key assumptions underlying the projection offuture taxable income to be within a reasonable range.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, but does not include the consolidated and separate financial statements and my auditor's report thereon. The annual report is expected to be made available to me after the date of this auditor's report.
My opinion on the consolidated and separate financial statements does not cover the other information and I will not express any form of assurance conclusion thereon.
In connection with my audit of the consolidated and separate 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 and separate financial statements or my knowledge obtained in the audit or otherwise appears to be materially misstated.
When I read the annual report, if I conclude that there is a material misstatement therein, I am required to communicate the matter to the audit committee.
Responsibilities of the directors for the consolidated and separate financial statements
The directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with TFRSs, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated and separate financial statements, the directors are responsible for assessing the Group and 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 the directors either intend to liquidate the Group and the Company or to cease operations, or has no realistic alternative but to do so.
The audit committee assists the directors in discharging their responsibilities for overseeing the Group and the Company's financial reporting process.
Auditor's responsibilities for the audit of the consolidated and separate financial statements
My objectives are to obtain reasonable assurance about whether the consolidated and separate 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 and separate financial statements.
As part of an audit in accordance with TSAs, I exercise professional judgment and maintain professional scepticism throughout the audit. I also:
- Identify and assess the risks of material misstatement of the consolidated and separate 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 and the Company's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
- Conclude on the appropriateness of the directors' 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 and 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 consolidated and separate 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 and the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate 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 the audit committee 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.
I also provide the audit committee with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards.
From the matters communicated with the audit committee, I determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
PricewaterhouseCoopers ABAS Ltd.
Pongthavee Ratanakoses
Certified Public Accountant (Thailand) No. 7795
Bangkok
24 February 2020
Esso (Thailand) Public Company Limited
Statement of Financial Position
As at 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
Consolidated | Separate | |||||||||
financial statements | financial statements | |||||||||
Notes | 2019 | 2018 | 2019 | 2018 | ||||||
Assets | ||||||||||
Current assets | ||||||||||
Cash and cash equivalents | 5 | 276,683 | 482,648 | 276,683 | 482,648 | |||||
Trade receivables, net | 6 | 6,464,042 | 6,289,896 | 6,464,042 | 6,289,896 | |||||
Amounts due from related parties | 31f | - | 50 | 50,526 | 47,803 | |||||
Inventories, net | 7 | 19,085,170 | 18,415,967 | 19,085,170 | 18,415,967 | |||||
Other receivables, net | 8 | 1,377,578 | 2,330,760 | 1,377,578 | 2,330,760 | |||||
Other current assets | 9 | 4,774,725 | 1,766,063 | 4,957,208 | 1,940,141 | |||||
Total current assets | 31,978,198 | 29,285,384 | 32,211,207 | 29,507,215 | ||||||
Non-current assets | ||||||||||
Available-for-sale investments | 10 | 1,350,000 | 1,473,750 | 1,350,000 | 1,473,750 | |||||
Investments in an associate | 12 | 2,206,905 | 2,194,255 | 1,729,360 | 1,729,360 | |||||
Investments in subsidiaries | 12 | - | - | 114,589 | 114,589 | |||||
Long-term loans to related parties | 31g | - | - | 3,251,419 | 3,035,705 | |||||
Property, plant and equipment, net | 13 | 25,599,800 | 25,999,722 | 21,394,910 | 21,794,832 | |||||
Intangible assets, net | 14 | 181,174 | 160,958 | 181,174 | 160,958 | |||||
Deferred income tax assets, net | 15 | 1,500,999 | 537,283 | 1,388,763 | 423,700 | |||||
Prepaid rental and deferred charges | 1,725,830 | 2,074,810 | 2,118,327 | 2,694,946 | ||||||
Other non-current assets | 16 | 1,699,723 | 23,820 | 1,699,723 | 23,548 | |||||
Total non-current assets | 34,264,431 | 32,464,598 | 33,228,265 | 31,451,388 | ||||||
Total assets | 66,242,629 | 61,749,982 | 65,439,472 | 60,958,603 |
Director …………………………………………………
The notes on pages 12 to 42 are an integral part of these consolidated financial statements and separate financial statements.
5
Esso (Thailand) Public Company Limited
Statement of Financial Position
As at 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
Consolidated | Separate | |||||||||
financial statements | financial statements | |||||||||
Notes | 2019 | 2018 | 2019 | 2018 | ||||||
Liabilities and equity | ||||||||||
Current liabilities | ||||||||||
Bank overdrafts and short-term borrowings | ||||||||||
from financial institutions | 17 | 6,488,377 | 5,296,189 | 6,488,377 | 5,296,189 | |||||
Trade and other payables | 18 | 5,020,169 | 6,994,856 | 5,019,720 | 6,982,006 | |||||
Amounts due to related parties | 31f | 8,091,234 | 9,995,379 | 8,101,318 | 10,010,154 | |||||
Current portion of long-term borrowings | ||||||||||
from financial institutions | 17 | 1,466,667 | 1,400,000 | 1,466,667 | 1,400,000 | |||||
Current portion of long-term borrowings | ||||||||||
from related parties | 31h | 1,633,333 | 2,300,000 | 1,633,333 | 2,300,000 | |||||
Short-term loans from related parties | 31h | 13,188,379 | 4,749,161 | 13,189,278 | 4,750,079 | |||||
Current income tax payables | 632 | 776 | - | - | ||||||
Short-term provisions for employee benefits | 19 | 787,070 | 851,261 | 787,070 | 851,261 | |||||
Total current liabilities | 36,675,861 | 31,587,622 | 36,685,763 | 31,589,689 | ||||||
Non-current liabilities | ||||||||||
Long-term borrowings from financial | ||||||||||
institutions | 17 | 1,816,667 | 1,200,000 | 1,816,667 | 1,200,000 | |||||
Long-term loans from related parties | 31h | 2,350,000 | 400,000 | 2,350,756 | 401,200 | |||||
Long-term provisions for employee benefits | 19 | 3,280,326 | 2,728,319 | 3,280,326 | 2,728,319 | |||||
Other non-current liabilities | 1,845 | 1,943 | 1,845 | 1,943 | ||||||
Total non-current liabilities | 7,448,838 | 4,330,262 | 7,449,594 | 4,331,462 | ||||||
Total liabilities | 44,124,699 | 35,917,884 | 44,135,357 | 35,921,151 |
The notes on pages 12 to 42 are an integral part of these consolidated financial statements and separate financial statements.
6
Esso (Thailand) Public Company Limited
Statement of Financial Position
As at 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
Consolidated | Separate | |||||||||
financial statements | financial statements | |||||||||
Notes | 2019 | 2018 | 2019 | 2018 | ||||||
Liabilities and equity (continued) | ||||||||||
Equity | ||||||||||
Share capital | ||||||||||
Authorised share capital | ||||||||||
3,467,916,666 ordinary shares | ||||||||||
with par value | ||||||||||
of Baht 4.9338 each | 20 | 17,110,007 | 17,110,007 | 17,110,007 | 17,110,007 | |||||
Issued and paid-up share capital | ||||||||||
3,460,858,000 ordinary shares | ||||||||||
with paid-up value | ||||||||||
of Baht 4.9338 each | 20 | 17,075,181 | 17,075,181 | 17,075,181 | 17,075,181 | |||||
Share premium | 20 | 4,031,711 | 4,031,711 | 4,031,711 | 4,031,711 | |||||
Retained earnings | ||||||||||
Appropriated | ||||||||||
Legal reserve | 21 | 1,000,901 | 1,000,901 | 1,000,901 | 1,000,901 | |||||
Unappropriated | (169,916) | 3,241,873 | (983,542) | 2,452,481 | ||||||
Other components of equity | 22 | 172,619 | 474,998 | 179,864 | 477,178 | |||||
Equity attributable to owners of the parent | 22,110,496 | 25,824,664 | 21,304,115 | 25,037,452 | ||||||
Non-controlling interests | 7,434 | 7,434 | - | - | ||||||
Total equity | 22,117,930 | 25,832,098 | 21,304,115 | 25,037,452 | ||||||
Total liabilities and equity | 66,242,629 | 61,749,982 | 65,439,472 | 60,958,603 |
The notes on pages 12 to 42 are an integral part of these consolidated financial statements and separate financial statements.
7
Esso (Thailand) Public Company Limited
Statement of Comprehensive Income
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
Consolidated | Separate | |||||||||
financial statements | financial statements | |||||||||
Notes | 2019 | 2018 | 2019 | 2018 | ||||||
Revenue from sales and services | 23 | 168,529,734 | 199,058,512 | 168,529,734 | 199,058,512 | |||||
Subsidy from Oil Fuel Fund | 818,452 | 1,739,690 | 818,452 | 1,739,690 | ||||||
Cost of sales and rendering of services | (167,343,727) | (192,586,609) | (167,358,959) | (192,601,182) | ||||||
Gross profit | 2,004,459 | 8,211,593 | 1,989,227 | 8,197,020 | ||||||
Selling expenses | (5,800,455) | (5,470,723) | (5,995,374) | (5,662,350) | ||||||
Administrative expenses | (309,886) | (298,619) | (309,886) | (298,619) | ||||||
(Loss) profit from sales | (4,105,882) | 2,442,251 | (4,316,033) | 2,236,051 | ||||||
Other income | 81,884 | 65,848 | 447,857 | 425,071 | ||||||
Interest income | 8,059 | 9,012 | 204,251 | 193,718 | ||||||
Finance costs | (321,533) | (245,848) | (321,592) | (245,928) | ||||||
Share of profit from an associate | 12 | 379,986 | 383,621 | - | - | |||||
(Loss) profit before income tax | (3,957,486) | 2,654,884 | (3,985,517) | 2,608,912 | ||||||
Income tax credit (expense) | 25 | 892,545 | (428,958) | 895,580 | (434,256) | |||||
(Loss) profit for the period | (3,064,941) | 2,225,926 | (3,089,937) | 2,174,656 | ||||||
Other comprehensive income for the year, net of tax: | ||||||||||
Item that will not be reclassified to profit or loss: | ||||||||||
Remeasurements of provisions for employee benefits | 22 | (198,314) | 81,754 | (198,314) | 81,754 | |||||
Share of other comprehensive expense | ||||||||||
of an associate accounted for using the equity method | 22 | (5,065) | - | - | - | |||||
Item that will be reclassified subsequently to profit or loss | ||||||||||
Changes in fair value of available-for-sale investments | 22 | (99,000) | (504,000) | (99,000) | (504,000) | |||||
Total comprehensive (loss) income for the year | (3,367,320) | 1,803,680 | (3,387,251) | 1,752,410 | ||||||
(Loss) profit attributable to: | ||||||||||
Owners of the parent | (3,065,703) | 2,225,164 | (3,089,937) | 2,174,656 | ||||||
Non-controlling interests | 762 | 762 | - | - | ||||||
(3,064,941) | 2,225,926 | (3,089,937) | 2,174,656 | |||||||
Total comprehensive (loss) income attributable to: | ||||||||||
Owners of the parent | (3,368,082) | 1,802,918 | (3,387,251) | 1,752,410 | ||||||
Non-controlling interests | 762 | 762 | - | - | ||||||
(3,367,320) | 1,803,680 | (3,387,251) | 1,752,410 | |||||||
(Loss) earnings per share for (loss) profit attributable | ||||||||||
to the equity holders of the parent | ||||||||||
(expressed in Baht per share) | ||||||||||
Basic (loss) earnings per share | 26 | (0.89) | 0.64 | (0.89) | 0.63 |
The notes on pages 12 to 42 are an integral part of these consolidated financial statements and separate financial statements.
8
Esso (Thailand) Public Company Limited
Statement of Changes in Equity
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
Consolidated financial statements | ||||||||||||||||||||||||
Attributable to owners of the parent | ||||||||||||||||||||||||
Other components of equity | ||||||||||||||||||||||||
Retained earnings (Deficits) | Other comprehensive income | Equity | ||||||||||||||||||||||
Share of other | Total | attributable | ||||||||||||||||||||||
Issued and | comprehensive | other | to owners | Non- | ||||||||||||||||||||
paid-up | Share | Appropriated | - retained | Available-for- | Provisions for | income of | components | of the | controlling | Total | ||||||||||||||
Note | share capital | premium | - legal reserve | earnings | sale investments | employee benefits | an associate | of equity | parent | interests | equity | |||||||||||||
Opening balance 2018 | 17,075,181 | 4,031,711 | 892,168 | 5,278,472 | 1,654,200 | (754,776) | (2,180) | 897,244 | 28,174,776 | 7,434 | 28,182,210 | |||||||||||||
Changes in equity for the year 2018 | ||||||||||||||||||||||||
Total comprehensive income | - | - | - | 2,225,164 | (504,000) | 81,754 | - | (422,246) | 1,802,918 | 762 | 1,803,680 | |||||||||||||
Dividend paid | 32 | - | - | - | (4,153,030) | - | - | - | - | (4,153,030) | (762) | (4,153,792) | ||||||||||||
Appropriation during the year | 21 | - | - | 108,733 | (108,733) | - | - | - | - | - | - | - | ||||||||||||
Closing balance at 31 December 2018 | 17,075,181 | 4,031,711 | 1,000,901 | 3,241,873 | 1,150,200 | (673,022) | (2,180) | 474,998 | 25,824,664 | 7,434 | 25,832,098 | |||||||||||||
Opening balance 2019 | ||||||||||||||||||||||||
17,075,181 | 4,031,711 | 1,000,901 | 3,241,873 | 1,150,200 | (673,022) | (2,180) | 474,998 | 25,824,664 | 7,434 | 25,832,098 | ||||||||||||||
Changes in equity for the year 2019 | ||||||||||||||||||||||||
Total comprehensive income | - | - | - | (3,065,703) | (99,000) | (198,314) | (5,065) | (302,379) | (3,368,082) | 762 | (3,367,320) | |||||||||||||
Dividend paid | 32 | - | - | - | (346,086) | - | - | - | - | (346,086) | (762) | (346,848) | ||||||||||||
Appropriation during the year | 21 | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||
Closing balance at 31 December 2019 | 17,075,181 | 4,031,711 | 1,000,901 | (169,916) | 1,051,200 | (871,336) | (7,245) | 172,619 | 22,110,496 | 7,434 | 22,117,930 |
The notes on pages 12 to 42 are an integral part of these consolidated financial statements and separate financial statements.
9
Esso (Thailand) Public Company Limited
Statement of Changes in Equity
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
Separate financial statements | |||||||||||||||||
Other components of equity | |||||||||||||||||
Retained earnings (Deficits) | Other comprehensive income | Total | |||||||||||||||
Issued and | Unappropriated | Provisions for | other | ||||||||||||||
paid-up | Share | Appropriated | - retained | Available-for- | employee | components | Total | ||||||||||
Note | share capital | premium | - legal reserve | sale investments | benefits | of equity | equity | ||||||||||
Opening balance 2018 | |||||||||||||||||
17,075,181 | 4,031,711 | 892,168 | 4,539,588 | 1,654,200 | (754,776) | 899,424 | 27,438,072 | ||||||||||
Changes in equity for the year 2018 | |||||||||||||||||
Total comprehensive income | - | - | - | 2,174,656 | (504,000) | 81,754 | (422,246) | 1,752,410 | |||||||||
Dividend paid | 32 | - | - | - | (4,153,030) | - | - | - | (4,153,030) | ||||||||
Appropriation during the year | 21 | - | - | 108,733 | (108,733) | - | - | - | - | ||||||||
Closing balance at 31 December 2018 | |||||||||||||||||
17,075,181 | 4,031,711 | 1,000,901 | 2,452,481 | 1,150,200 | (673,022) | 477,178 | 25,037,452 | ||||||||||
Opening balance 2019 | |||||||||||||||||
17,075,181 | 4,031,711 | 1,000,901 | 2,452,481 | 1,150,200 | (673,022) | 477,178 | 25,037,452 | ||||||||||
Changes in equity for the year 2019 | |||||||||||||||||
Total comprehensive income | - | - | - | (3,089,937) | (99,000) | (198,314) | (297,314) | (3,387,251) | |||||||||
Dividend paid | 32 | - | - | - | (346,086) | - | - | - | (346,086) | ||||||||
Appropriation during the year | 21 | - | - | - | - | - | - | - | - | ||||||||
Closing balance at 31 December 2019 | 17,075,181 | 4,031,711 | 1,000,901 | (983,542) | 1,051,200 | (871,336) | 179,864 | 21,304,115 |
The notes on pages 12 to 42 are an integral part of these consolidated financial statements and separate financial statements.
10
Esso (Thailand) Public Company Limited
Statement of Cash Flows
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
Consolidated | Separate | ||||||||
financial statements | financial statements | ||||||||
Notes | 2019 | 2018 | 2019 | 2018 | |||||
Cash flows from operating activities | |||||||||
Cash (used in) generated from operations | 27 | (9,947,982) | 3,663,671 | (9,930,863) | 3,657,824 | ||||
Interest paid | (237,803) | (230,495) | (237,864) | (230,614) | |||||
Income tax received (paid) | 18,938 | (1,330,378) | 20,126 | (1,329,371) | |||||
Net cash (used in) generated from operating activities | (10,166,847) | 2,102,798 | (10,148,601) | 2,097,839 | |||||
Cash flows from investing activities | |||||||||
Loan payments received from related parties | 31 g | - | - | 1,003 | 44,702 | ||||
Loans made to related parties | 31 g | - | - | (216,717) | (192,534) | ||||
Purchase of property, plant and equipment | (1,610,879) | (1,303,881) | (1,610,879) | (1,303,881) | |||||
Purchase of intangible assets | 14 | (47,838) | (41,065) | (47,838) | (41,065) | ||||
Proceeds from disposal of property, plant | |||||||||
and equipment | 27 | 15,437 | 40,709 | 15,437 | 15,785 | ||||
Interest received | 8,059 | 9,012 | 201,528 | 191,398 | |||||
Dividends received from a subsidiary | - | - | 3,700 | 4,000 | |||||
Dividends received from an associate | 362,271 | 350,024 | 362,271 | 350,024 | |||||
Dividends received from available-for-sale investments | 61,650 | 56,700 | 61,650 | 56,700 | |||||
Net cash used in investing activities | (1,211,300) | (888,501) | (1,229,845) | (874,871) | |||||
Cash flows from financing activities | |||||||||
Net proceeds from short-term borrowings | 1,192,188 | 2,224,710 | 1,192,188 | 2,224,710 | |||||
Payments on long-term borrowings | (1,616,666) | (900,000) | (1,616,666) | (900,000) | |||||
Proceeds from long-term borrowings | 2,300,000 | 1,500,000 | 2,300,000 | 1,500,000 | |||||
Net proceeds from short-term loans from related parties | 8,360,175 | 2,449,264 | 8,360,156 | 2,440,379 | |||||
Payments on long-term loans from related parties | (2,416,667) | (2,300,000) | (2,421,629) | (2,304,975) | |||||
Proceeds from long-term loans from related parties | 3,700,000 | - | 3,704,518 | 4,427 | |||||
Dividends paid to group shareholders | (346,086) | (4,153,030) | (346,086) | (4,153,030) | |||||
Dividends paid to non-controlling interests | (762) | (762) | - | - | |||||
Net cash generated from (used in) financing activities | 11,172,182 | (1,179,818) | 11,172,481 | (1,188,489) | |||||
Net (decrease) increase in cash and cash equivalents | (205,965) | 34,479 | (205,965) | 34,479 | |||||
Cash and cash equivalents at the beginning of the year | 482,648 | 448,169 | 482,648 | 448,169 | |||||
Cash and cash equivalents at the end of the year | 5 | 276,683 | 482,648 | 276,683 | 482,648 |
The notes on pages 12 to 42 are an integral part of these consolidated financial statements and separate financial statements.
11
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
1 General information
Esso (Thailand) Public Company Limited ("the Company") is a public limited company incorporated and domiciled in Thailand. The address of its registered office is 3195/17-29 Rama IV Road, Klongton, Klongtoey, Bangkok, 10110.
The Company listed on the Stock Exchange of Thailand ("SET") on 6 May 2008.
The Company and its subsidiaries (together "the Group") are involved in the refining and marketing of petroleum products, which includes a network of retail service stations. The Group operates a refinery and chemical manufacturing plant in Sriracha, Thailand. The Group also operates distribution facilities and oil terminals throughout Thailand. The Group's products are sold through a network of retail service stations, directly to industrial customers, and through export. Additionally, the Group is involved in the sale of chemical products to both domestic and overseas customers.
The Company is a subsidiary of ExxonMobil Group which holds 65.99% of the Company's shares.
These consolidated and separate financial statements were authorised for issue by the Board of Directors on 24 February 2020.
2 Accounting policies
The principal accounting policies applied in the preparation of these consolidated and separate financial statements are set out below:
2.1 Basis of preparation
The consolidated and separate financial statements have been prepared in accordance with Thai Financial Reporting
Standards ("TFRS") and the financial reporting requirements issued under the Securities and Exchange Act.
The consolidated and separate financial statements have been prepared under the historical cost convention except as disclosed in the accounting policy for the revaluation of available-for-sale investments
The preparation of financial statements in conformity with TFRS requires management to use certain critical accounting estimates and to exercise its judgement in applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated and separate financial statements are disclosed in Note 3.
As at 31 December 2019, the current liabilities of the Group exceeded the current assets by approximately Baht 4,698 million. The Group currently has adequate financing sources to enable the payment of liabilities when they become due as follows: (1) uncommitted borrowing facilities from related companies and financial institutions in the amount of Baht 74,533 million, and (2) the ability to offer Baht 11,500 million of bills of exchange in a revolving program as approved by the Securities and Exchange Commission. Accordingly, the consolidated and separate financial statements have been prepared on a going concern basis and do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or to amounts or classification of liabilities that may be necessary if the going concern basis of preparing the consolidated and separate financial statements is not appropriate.
An English version of the consolidated and separate financial statements have been prepared from the statutory financial statements that are in the Thai language. In the event of a conflict or a difference in interpretation between the two languages, the Thai language statutory financial statements shall prevail.
12
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
2.2 New and amended financial reporting standards that are relevant and have significant impacts to the Group
2.2.1 The Group has applied the following standard and amendments for their annual reporting commencing 1 January 2019
-
Thai Financial Reporting Standard no.15 (TFRS 15), Revenue from contracts with customers
The standard provides principle and approach of revenue recognition under five-step process. The underlying principle is that the Group will recognise revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. It replaces the principles of transferring the significant risks and rewards of ownership of the goods or services to the buyer in accordance with TAS 18, Revenue and related interpretations.
The Group has adopted the new TFRS 15, Revenue from contracts with customers from 1 January 2019 (initial application date) by applying the modified retrospective approach and the comparative figures have not been restated. The Group did not apply practical expedient relates to completed contracts and contract modifications as allowed by TFRS 15. Additionally, there is no change in timing or amount of revenue recognized under TFRS 15 as compared to TAS 18.
The accounting policies for revenue from contracts with customers under TFRS 15 are disclosed in Note 2.18. The impact from adoption mainly concerns the reclassifications of non-current portion deferred charges which previously reported under prepaid rental and deferred charges, to other non-current assets as contract assets under TFRS 15 of Baht 1,650 million. The effects of reclassification are disclosed in Note 9, 16 and 18.
2.2.2 New and amended financial reporting standards that are effective for accounting period beginning or after 1 January 2020
Certain new and amended financial reporting standards have been issued that are not mandatory for current period end 31 December 2019 reporting period and have not been early adopted by the Group.
- Financial instruments
The new financial standards relate to financial instruments are:
TAS 32 | Financial instruments: Presentation |
TFRS 7 | Financial Instruments: Disclosures |
TFRS 9 | Financial Instruments |
TFRIC 16 | Hedges of a Net Investment in a Foreign Operation |
TFRIC 19 | Extinguishing Financial Liabilities with Equity Instruments |
These new standards address the classification, measurement, derecognition of financial assets and financial liabilities, impairment of financial assets, hedge accounting, and presentation and disclosure of financial instruments.
The Group's management is currently assessing the impact of initial adoption of these standards relate to financial instruments.
-
TFRS 16, Leases
Where the Group is a lessee, TFRS 16, Leases will result in almost all leases being recognised on the balance sheet as the distinction between operating and finance leases is removed. A right-of-use asset and a lease liability will be recognised, with exception on short-term and low-value leases.
On 1 January 2020, the Group will apply TFRS 16, Leases and adjust cumulative impact to opening retained earnings (modified retrospective approach). From the preliminary impact assessment, the management expect that the Group will be affected by significant lease liabilities from contracts on land which service stations are operated and was previously classified as operating leases under TAS 17.
The Group's management is currently assessing the impact of initial adoption of this standard.
13
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
2.3 Group Accounting - Investments in subsidiaries and associates
-
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns though its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non- controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss.
Intercompany transactions, balances and unrealised gains or losses on transactions between Group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
In the Company's separate financial statements, investments in subsidiaries are accounted for at cost less impairment. Cost also includes direct attributable costs of investments. Details of the subsidiaries are included in Note 12. - Transactions with non-controlling interests
The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. - Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor's share of the profit or loss of the investee after the date of acquisition. The investments in associates of the Group including identifiable goodwill at the time the investment was acquired.
The Group's share of its associate's post-acquisition profits or losses is recognised in the consolidated statement of comprehensive income, and its shares of post-acquisition movements in reserves are recognised in equity. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount related to share of profit/(loss) of associates in the income statement.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.
In the Company's separate financial statements, the investment in an associate is accounted for at cost less impairment. Cost also includes direct attributable costs of investments. Details of the associate are included in Note 12.
14
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
-
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, and other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position. - Trade receivables
Trade receivables are carried at original invoice amount and subsequently measured at the invoice amount less allowance for impairment. An allowance for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the allowance is the difference between the carrying amount and the amount expected to be collected. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the statement of comprehensive income within 'selling expenses'. The receivables are written-off against the allowance account when it is uncollectible. Subsequent recoveries of accounts previously written-off are credited against 'selling expenses' in the statement of comprehensive income. - Inventories
Inventories are stated at the lower of cost or net realisable value. Cost is determined under the following methods:
Crude oil and petroleum products Petrochemical products Materials and supplies
Other merchandise
First-in,first-out method First-in,first-out method Average unit cost method Average unit cost method
Purchase cost includes the purchase price and costs directly attributable to the acquisition of the inventory, such as import duties and transportation charges, less all attributable discounts, allowances or rebates. The cost of finished goods is primarily comprised of raw materials, transportation costs, direct labour, and direct manufacturing expenditures. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Allowance is made, where necessary, for obsolete, slow-moving, and defective inventories.
2.7 Investments Available-for-sale investments
Available-for-sale investments are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the statement of financial position date.
Investments are initially recognised at fair value of consideration paid plus transaction costs. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale investments are subsequently carried at fair value based on the quoted bid price on the Stock Exchange of Thailand at the statement of financial position date.
Unrealised gains or losses arising from changes in the fair value of investments classified as available-for-sale are recognised, net of tax, in the consolidated and separate statement of comprehensive income. When investments classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the consolidated and separate statement of comprehensive income as part of other income or costs. Dividends on available-for-sale investments are recognised in the consolidated and separate statement of comprehensive income as part of other income when the Group's and Company's right to receive payment is established.
15
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
-
Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity.
The current income tax charge is calculated on the basis of the tax laws enacted or substantially enacted at the statement of financial position date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary differences between the tax base of assets and liabilities and their carrying amounts in the financial statements.
However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority. - Intangible assets
-
Royalties and licenses
Acquired royalties and licenses are shown at historical cost. Royalties and licenses have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight line method to allocate the cost of royalties and licenses over their estimated useful lives (5 to 20 years). - Computer software
Acquired computer software licenses are capitalised on the basis of costs incurred to acquire and bring to use the specific software. Costs associated with developing or maintaining computer software programs are recognised as an expense as incurred.
Costs that are directly associated with the development of identifiable and unique software products controlled by the Group, and which will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Costs include the software development employee costs and an appropriate portion of relevant overhead.
Computer software development costs recognised as assets are amortised over their estimated useful lives (5 to 20 years).
-
Royalties and licenses
16
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
2.10 Property, plant and equipment
Land is stated at historical cost. All other property, plant and equipment is stated at historical cost less accumulated depreciation. Historical cost includes expenditures that are directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the consolidated and separate statement of comprehensive income during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate the cost of each asset, except for land which is considered to have an indefinite life, to its residual value over its estimated useful life, as follows:
Buildings, plant and equipment | 3 to 25 years |
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount (Note 2.11).
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within 'selling expenses', 'administrative expenses' and 'other income' in the statement of comprehensive income.
The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted- average interest rate applicable to the outstanding borrowings during the year. Where funds are borrowed specifically for the construction of property, plant and equipment, the amount of borrowing costs for capitalisation is determined from the actual borrowing costs during the period less any income on the temporary investment of those borrowings.
-
Impairment of non-financial assets
Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. - Leases - where the Group is the lessee
The Group leases certain property, plant or equipment. Leases of property, plant and equipment, where the Group has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased assets and the present value of the minimum lease payments.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases, net of any incentives received from the lessor, are charged to the statement of comprehensive income on a straight-line basis over the period of the lease. - Borrowings
Borrowings are recognised initially at contractual amounts, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost with any difference between the proceeds, net of transaction costs, and the redemption value being recognised in the consolidated and separate statement of comprehensive income over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of reporting date.
17
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
- Employee benefits
-
Provident Fund Plan
The Group operates a Provident Fund that is a defined contribution plan, the assets of which are held in a separate trust fund, in accordance with the Provident Fund Act B.E. 2530. The Provident Fund is funded by payments from employees and the Group. Contributions to the Provident Fund are charged to the statement of comprehensive income in the year to which they relate. All employees hired on or after 1 September 1997 are required to be members of the Provident Fund.
The Group provides for post-employment benefits, payable to Provident Fund members reaching normal retirement age, in accordance with Thai Labour Law. The benefit liability is recorded as the present value of estimated future cash outflows using interest rates which have terms to maturity approximating the terms of the related liabilities. - Employee Separation Benefit and Long Service Allowance Plan
The Group maintains a defined benefit plan for employees hired prior to 1 September 1997 and who do not elect to participate in the Provident Fund, with this plan being unfunded. The plan contains Employee Separation Benefit and Long Service Allowance Plans, which is in accordance with the retirement laws and regulations of Thailand. Entitlement to these benefits is based on a minimum service period, final month's salary, and the plan provisions.
Actuarial valuations of the benefit plan requirements are performed every 3 years using the projected unit credit method. Based on the valuation, appropriate provisions are accrued and all payments are made against the accumulated provisions. The liability recognised in the statement of financial position is the present value of the defined benefit obligation at the end of the reporting period.
The present value of the defined benefit obligation is determined by discounting the estimated future cash flows using interest rates of Investment grade corporate bonds that are mainly denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related obligations.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.
Past-service costs are recognised immediately in profit or loss. - Employee Savings Plan
Beginning 2009, the Group operates an Employee Savings Plan for all regular Thai employees. The entitlement to this plan is based on a minimum service period of three years and the plan's provisions on withdrawal rights after vesting. This plan will vest 50 percent after three years and 100 percent after six years.
-
Provident Fund Plan
- Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events such that it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset at the time when reimbursement is virtually certain.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation. The increase in the provision due to passage of time is recognised as interest expense. - Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new shares are shown in equity as a deduction, net of tax, from the proceeds.
18
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
-
Foreign currency translation
Items included in the financial statements of each of the group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The financial statements are presented in Thai Baht, which is the Company's functional and the Group's presentation currency.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
When a gain or loss on a non-monetary item is recognised in other comprehensive income, any exchange component of that gain or loss is recognised in other comprehensive income. Conversely, when a gain or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss is recognised in profit or loss. - Revenue recognition
Revenue include all revenues from ordinary business activities. All ancillary income in connection with the sales of goods and rendering of services in the course of the Group's ordinary activities is also presented as revenue.
Revenue are recorded net of value added tax. They are recognised in accordance with the provision of goods or services, provided that collectability of the consideration is probable. - Sales of goods
Sales are recognised when control of the products has transferred, being when the risks and rewards of ownership have passed to the buyer, which is generally at the point of delivery, and there is no unfulfilled obligation that could affect the customer's acceptance of the products. - Sales of services and other operating revenues
The Group receives rental income and franchise fees from dealers who operate branded retail stations. Rental income and franchise fees are recognised over the contract's term. Service revenues are recognised in the period in which the services are provided. - Interest income
Interest income is recognised on a time-proportion basis using the effective interest method. - Dividend income
Dividend income is recognised when the right to receive payment is established.
- Sales of goods
When inventories are exchanged or swapped for inventories which are of a similar nature and value, the exchange is not considered a transaction which generates revenue.
Contract assets and contract liabilities
A contract asset is recognised where the Group has performed by transferring goods or services to a customer before the customer pays for consideration or before payment is due.
A contract liability is recognised when the customer paid consideration or a receivable from the customer that is due before the Group fulfilled a contractual performance obligation.
2.19 Government Grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government grants relating to the compensation of costs are recognised in profit or loss over the period necessary to match them with the costs they are intended to compensate.
Government grant, which is subsidy from oil fuel fund, is separately presented from revenue from sales.
19
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
-
Dividend distribution
Dividend distribution to the Company's shareholders is recognised as a liability in the Group's financial statements in the period in which the dividends are approved by the Company's shareholders or Board of Directors (as the case maybe). - Financial instruments
Financial assets carried on the statement of financial position include cash and cash equivalents, trade receivables, amounts due from related parties, loans to related parties, and other assets. Financial liabilities carried on the statement of financial position include borrowings from financial institutions, trade and other payables, amounts due to related parties, loans from related parties, and other liabilities. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item where applicable. - Segment reporting
Segment results that are reported to the Group's Management Committee (the chief operating decision maker) include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
3 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, not necessarily equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Recognition of deferred tax assets associated with tax losses carried forward
A deferred tax asset is recognised to the extent it is probable that the tax losses carried forward will be utilised. Such an assessment is based upon management's review of the forecasted financial income.
Asset retirement obligations
It is recognised that the Group may incur asset retirement obligations for the dismantling and site restoration costs of its manufacturing facilities. The timing and amount of cash flows is difficult to estimate as the Group has no intention to decommission the sites in the near future. Accordingly and consistent with industry practice, no provision is recorded for asset retirement obligations as the amount cannot be measured with sufficient reliability due to the significant uncertainties involved.
4 Segment information
As at 31 December 2019, the Group is organised into two main business segments, namely:
- Downstream, which includes the refining and marketing of petroleum products; and
- Petrochemicals, which includes the manufacturing and marketing of chemical products.
Inter-segment transactions are priced under normal commercial terms and conditions that would also be available to unrelated third parties.
20
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
The segment information for the year ended 31 December 2019 are as follows:
Downstream | Petrochemicals | Group | ||||||
Total segment revenue | 173,301,257 | 23,873,657 | 197,174,914 | |||||
Inter-segment revenue | (17,153,402) | (10,673,326) | (27,826,728) | |||||
Revenue | 156,147,855 | 13,200,331 | 169,348,186 | |||||
Segment profit (loss) from sales | (2,593,424) | (1,512,458) | (4,105,882) | |||||
Segment fixed assets | 24,190,455 | 1,409,345 | 25,599,800 | |||||
Revenue from contracts with customers | ||||||||
Timing of revenue recognition | ||||||||
- At a point in time | 155,149,479 | 13,183,309 | 168,332,788 | |||||
- Over time | 45,064 | 17,022 | 62,086 | |||||
Total | 155,194,543 | 13,200,331 | 168,394,874 | |||||
Other revenue not from contracts with customers | 953,312 | - | 953,312 | |||||
Total revenue | 156,147,855 | 13,200,331 | 169,348,186 | |||||
The segment information for the year ended 31 December 2018 are as follows:
Downstream | Petrochemicals | Group | |
Total segment revenue | 206,195,164 | 33,928,415 | 240,123,579 |
Inter-segment revenue | (24,214,631) | (15,110,746) | (39,325,377) |
Revenue | 181,980,533 | 18,817,669 | 200,798,202 |
Segment profit (loss) from sales | 3,322,975 | (880,724) | 2,442,251 |
Segment fixed assets | 24,218,979 | 1,780,743 | 25,999,722 |
The segment revenue information for the year ended 31 December 2018 has been prepared in accordance with TAS 18 (old revenue recognition standards). Therefore, the segment revenue information presented in the current and prior years are not comparable.
5 Cash and cash equivalents
Consolidated and Separate
financial statements
20192018
Cash on hand | 113,354 | 254,906 | |
Cash at bank | 163,329 | 227,742 | |
Cash and cash equivalents | 276,683 | 482,648 | |
The average interest rate for cash at bank in 2019 was 0.6% (2018: 0.7%). |
21
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
6 Trade receivables, net
Consolidated and Separate
financial statements
20192018
Trade receivables, gross | 6,496,747 | 6,304,249 | |
Less: Allowance for doubtful accounts (Note 27) | (32,705) | (14,353) | |
Trade receivables, net | 6,464,042 | 6,289,896 |
Outstanding trade receivables, as at 31 December 2019 and 2018, are analysed as follows:
Consolidated and Separate | ||||
financial statements | ||||
2019 | 2018 | |||
Current | 6,354,026 | 6,221,910 | ||
Overdue: | ||||
- Less than 3 months | 103,953 | 53,061 | ||
- 3 to 6 months | 3,835 | 14,625 | ||
- 6 to 12 months | 1,928 | - | ||
- Over 12 months | 33,005 | 14,653 | ||
6,496,747 | 6,304,249 | |||
Less: Allowance for doubtful accounts (Note 27) | (32,705) | (14,353) | ||
6,464,042 | 6,289,896 | |||
7 | Inventories, net | |||
Consolidated and Separate | ||||
financial statements | ||||
2019 | 2018 | |||
Crude oil | 10,023,865 | 10,017,113 | ||
Petroleum products | 7,210,993 | 6,410,230 | ||
Petrochemical products | 862,020 | 1,075,158 | ||
Materials and supplies | 986,817 | 911,917 | ||
Other merchandise | 1,475 | 1,549 | ||
Inventories, net | 19,085,170 | 18,415,967 |
As at 31 December 2019, part of petroleum and petrochemical products in the consolidated and separate financial statements of Baht 1,346 million (2018: Baht 2,494 million) was carried at net realisable value with this being lower than cost.
The provisions of the Oil Trading Act B.E. 2543 require the Group to maintain certain minimum levels of inventory at all times. As at 31 December 2019, the value of this inventory amounted to Baht 6,762 million (2018: Baht 6,600 million).
8 Other receivables, net
Other receivables primarily relate to value-added tax and subsidy claims which are expected to be refunded within 12 months.
22
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
9 | Other current assets | ||||||
Consolidated | Separate | ||||||
financial statements | financial statements | ||||||
2019 | 2018 | 2019 | 2018 | ||||
Prepaid excise tax | 3,530,592 | 646,736 | 3,530,592 | 646,736 | |||
Prepaid expenses and deferred charges | 384,429 | 491,083 | 566,963 | 665,586 | |||
Contract assets | 257,335 | - | 257,335 | - | |||
Income tax receivable | 517,912 | 483,645 | 517,912 | 483,645 | |||
Other | 84,457 | 144,599 | 84,406 | 144,174 | |||
4,774,725 | 1,766,063 | 4,957,208 | 1,940,141 |
The Group has adopted TFRS 15 effective 1 January 2019. Had 2018 figures been restated to conform with TFRS 15, current contract assets would have been Baht 151 million and prepaid expenses and deferred charges would be reduced by Baht 151 million.
10 Available-for-sale investments
Consolidated and Separate
financial statements
20192018
At 1 January | 1,473,750 | 2,103,750 | |
Change in fair value of available-for-sale investments (Note 22) | (123,750) | (630,000) | |
At 31 December | 1,350,000 | 1,473,750 |
Available-for-sale investments consist primarily of an investment in equity securities of Bangkok Aviation Fuel Services Public Company Limited (BAFS) which is listed on the Stock Exchange of Thailand.
11 Fair value
Fair value estimation
The table below demonstrates financial instruments carried at fair value, by the valuation method. The different levels have been defined as follows:
- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
- Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
The following table presents the Group's financial assets that are measured and recognised at fair value Level 1 at 31 December 2019 and 2018.
Consolidated and Separate
financial statements
20192018
Available-for-sale investments | |||
• | Equity securities | 1,350,000 | 1,473,750 |
The Group and the Company have no financial assets that are measured at fair value Level 2 or 3. There were no changes in valuation techniques during the periods.
23
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
12 Investments in subsidiaries and an associate
12.1 Subsidiaries
The principal subsidiaries, all of which are incorporated and domiciled in Thailand, are:
Investment value | % Ordinary share | |||||
per cost method | ownership | |||||
Business | 2019 | 2018 | 2019 | 2018 | ||
Mobil Enterprises (Thailand) Limited | Lubes and Specialties | 833 | 833 | 100.00 | 100.00 | |
Industry Promotion Enterprises Limited | Real Estate Leasing | 51,484 | 51,484 | 100.00 | 100.00 | |
United Industry Development | Real Estate Leasing | 58,939 | 58,939 | 100.00 | 100.00 | |
Company Limited and its subsidiaries | ||||||
Pacesetter Enterprises Limited | Real Estate Leasing | 3,333 | 3,333 | 99.99 | 99.99 |
The ownership percentages detailed above include the effects of both direct and indirect ordinary shareholdings, but exclude preferred shares. The Company does not own any of the preferred shares issued by these subsidiaries, but has the ability to govern the financial and operating policies of each subsidiary.
12.2 Associate
The Company holds a 20.78% interest in an associate, Thai Petroleum Pipeline Company Limited ("Thappline"), which is incorporated and domiciled in Thailand with its primary business activity being the operation of a petroleum pipeline business.
The movements in investments in an associate are as follows:
Consolidated | Separate | ||||||
financial statements | financial statements | ||||||
2019 | 2018 | 2019 | 2018 | ||||
At 1 January | 2,194,255 | 2,160,658 | 1,729,360 | 1,729,360 | |||
Share of profit from an associate (Note 27) | 379,986 | 383,621 | - | - | |||
Dividend received | (362,271) | (350,024) | - | - | |||
Share of other comprehensive expense | |||||||
(Note 22) | (5,065) | - | - | - | |||
At 31 December | 2,206,905 | 2,194,255 | 1,729,360 | 1,729,360 |
The Group's share of the results of its associate, which is unlisted, and its aggregated assets and liabilities, are as follows:
Consolidated | |||
financial statements | |||
2019 | 2018 | ||
Assets | 2,393,469 | 2,376,672 | |
Liabilities | (186,564) | (182,417) | |
Net assets | 2,206,905 | 2,194,255 | |
Revenues | 755,342 | 745,307 | |
Net profit | 379,986 | 383,621 |
24
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
13 | Property, plant and equipment, net | ||||||||
Consolidated financial statements | |||||||||
Buildings, | |||||||||
plant and | Construction | ||||||||
Land | equipment | in progress | Total | ||||||
At 1 January 2018 | |||||||||
Cost | 4,995,476 | 61,169,251 | 760,259 | 66,924,986 | |||||
Less: Accumulated depreciation | - | (40,010,743) | - | (40,010,743) | |||||
Net book amount | 4,995,476 | 21,158,508 | 760,259 | 26,914,243 | |||||
Year ended 31 December 2018 | |||||||||
Opening net book amount | 4,995,476 | 21,158,508 | 760,259 | 26,914,243 | |||||
Additions | - | - | 1,163,653 | 1,163,653 | |||||
Disposals | (29,386) | (67,807) | - | (97,193) | |||||
Transfers | - | 1,004,644 | (1,004,644) | - | |||||
Depreciation charge (Note 27) | - | (1,980,981) | - | (1,980,981) | |||||
Closing net book amount | 4,966,090 | 20,114,364 | 919,268 | 25,999,722 | |||||
At 31 December 2018 | |||||||||
Cost | 4,966,090 | 61,714,388 | 919,268 | 67,599,746 | |||||
Less: Accumulated depreciation | - | (41,600,024) | - | (41,600,024) | |||||
Net book amount | 4,966,090 | 20,114,364 | 919,268 | 25,999,722 | |||||
Year ended 31 December 2019 | |||||||||
Opening net book amount | 4,966,090 | 20,114,364 | 919,268 | 25,999,722 | |||||
Additions | - | 9,703 | 1,648,454 | 1,658,157 | |||||
Disposals | - | (38,370) | (870) | (39,240) | |||||
Transfers | - | 1,715,233 | (1,715,233) | - | |||||
Depreciation charge (Note 27) | - | (2,018,839) | - | (2,018,839) | |||||
Closing net book amount | 4,966,090 | 19,782,091 | 851,619 | 25,599,800 | |||||
At 31 December 2019 | |||||||||
Cost | 4,966,090 | 63,081,062 | 851,619 | 68,898,771 | |||||
Less: Accumulated depreciation | - | (43,298,971) | - | (43,298,971) | |||||
Net book amount | 4,966,090 | 19,782,091 | 851,619 | 25,599,800 |
25
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
Separate financial statements | ||||||||
Buildings, | ||||||||
plant and | Construction | |||||||
Land | equipment | in progress | Total | |||||
At 1 January 2018 | ||||||||
Cost | 675,420 | 60,812,880 | 760,258 | 62,248,558 | ||||
Less: Accumulated depreciation | - | (39,568,592) | - | (39,568,592) | ||||
Net book amount | 675,420 | 21,244,288 | 760,258 | 22,679,966 | ||||
Year ended 31 December 2018 | ||||||||
Opening net book amount | 675,420 | 21,244,288 | 760,258 | 22,679,966 | ||||
Additions | - | - | 1,163,654 | 1,163,654 | ||||
Disposals | - | (67,807) | - | (67,807) | ||||
Transfer | - | 1,004,644 | (1,004,644) | - | ||||
Depreciation charge (Note 27) | - | (1,980,981) | - | (1,980,981) | ||||
Closing net book amount | 675,420 | 20,200,144 | 919,268 | 21,794,832 | ||||
At 31 December 2018 | ||||||||
Cost | 675,420 | 61,358,017 | 919,268 | 62,952,705 | ||||
Less: Accumulated depreciation | - | (41,157,873) | - | (41,157,873) | ||||
Net book amount | 675,420 | 20,200,144 | 919,268 | 21,794,832 | ||||
Year ended 31 December 2019 | ||||||||
Opening net book amount | 675,420 | 20,200,144 | 919,268 | 21,794,832 | ||||
Additions | - | 9,703 | 1,648,454 | 1,658,157 | ||||
Disposals | - | (38,370) | (870) | (39,240) | ||||
Transfers | - | 1,715,233 | (1,715,233) | - | ||||
Depreciation charge (Note 27) | - | (2,018,839) | - | (2,018,839) | ||||
Closing net book amount | 675,420 | 19,867,871 | 851,619 | 21,394,910 | ||||
At 31 December 2019 | ||||||||
Cost | 675,420 | 62,724,691 | 851,619 | 64,251,730 | ||||
Less: Accumulated depreciation | - | (42,856,820) | - | (42,856,820) | ||||
Net book amount | 675,420 | 19,867,871 | 851,619 | 21,394,910 |
As at 31 December 2019, the cost of fully-depreciated property, plant and equipment of the Group and the Company that were still in use amounted to Baht 12,169 million and Baht 11,842 million, respectively (2018: Baht 11,615 million and Baht 11,288 million).
26
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
14 | Intangible assets, net | |||||
Consolidated and Separate | ||||||
financial statements | ||||||
Computer | Royalties | |||||
software | and licences | Total | ||||
At 1 January 2018 | ||||||
Cost | 697,996 | 802,047 | 1,500,043 | |||
Less: Accumulated amortisation | (613,010) | (737,498) | (1,350,508) | |||
Net book amount | 84,986 | 64,549 | 149,535 | |||
Year ended 31 December 2018 | ||||||
Opening net book amount | 84,986 | 64,549 | 149,535 | |||
Addition | 41,065 | - | 41,065 | |||
Amortisation charge (Note 27) | (7,195) | (22,447) | (29,642) | |||
Closing net book amount | 118,856 | 42,102 | 160,958 | |||
At 31 December 2018 | ||||||
Cost | 706,609 | 802,047 | 1,508,656 | |||
Less: Accumulated amortisation | (587,753) | (759,945) | (1,347,698) | |||
Net book amount | 118,856 | 42,102 | 160,958 | |||
Year ended 31 December 2019 | ||||||
Opening net book amount | 118,856 | 42,102 | 160,958 | |||
Addition | 47,838 | - | 47,838 | |||
Amortisation charge (Note 27) | (11,502) | (16,120) | (27,622) | |||
Closing net book amount | 155,192 | 25,982 | 181,174 | |||
At 31 December 2019 | ||||||
Cost | 754,447 | 802,047 | 1,556,494 | |||
Less: Accumulated amortisation | (599,255) | (776,065) | (1,375,320) | |||
Net book amount | 155,192 | 25,982 | 181,174 |
All amortisation charges are recorded in cost of sales, selling expenses and administrative expenses in the statement of comprehensive income based on the nature of the asset.
15 Deferred income tax, net
The analysis of deferred tax assets and deferred tax liabilities is as follows:
Consolidated | Separate | |||||
financial statements | financial statements | |||||
2019 | 2018 | 2019 | 2018 | |||
Deferred tax assets: | ||||||
- To be recovered within 12 months | 1,081,619 | 174,328 | 1,081,619 | 174,328 | ||
- To be recovered after more than 12 months | 768,338 | 650,505 | 656,102 | 536,922 | ||
1,849,957 | 824,833 | 1,737,721 | 711,250 | |||
Deferred tax liabilities: | ||||||
- To be settled after more than 12 months | (348,958) | (287,550) | (348,958) | (287,550) | ||
Deferred tax assets, net | 1,500,999 | 537,283 | 1,388,763 | 423,700 |
Deferred income taxes are calculated on all temporary differences, under the liability method, using the statutory tax rates expected to apply in periods when the related deferred tax asset is realised or the deferred tax liability is settled.
27
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
The gross movement of the deferred income tax account is as follows:
Consolidated | Separate | |||||
financial statements | financial statements | |||||
2019 | 2018 | 2019 | 2018 | |||
At 1 January | 537,283 | 512,433 | 423,700 | 405,499 | ||
Charged to profit or loss (Note 25) | 889,387 | (80,711) | 890,734 | (87,360) | ||
Charged to other comprehensive income (Note 22) | 74,329 | 105,561 | 74,329 | 105,561 | ||
At 31 December | 1,500,999 | 537,283 | 1,388,763 | 423,700 |
The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:
Consolidated financial statements | |||||||||
(Charged)/Credited | |||||||||
At | to other | At | |||||||
1 January | (Charged)/Credited | comprehensive | 31 December | ||||||
2018 | to profit or loss | income | 2018 | ||||||
Deferred tax assets | |||||||||
Depreciation | 69,257 | (87,799) | - | (18,542) | |||||
Provisions for employee benefits | 719,982 | 15,834 | (20,439) | 715,377 | |||||
Others | 136,744 | (8,746) | - | 127,998 | |||||
Deferred tax assets | 925,983 | (80,711) | (20,439) | 824,833 | |||||
Deferred tax liabilities | |||||||||
Changes in fair value of | |||||||||
available-for-sale investments | (413,550) | - | 126,000 | (287,550) | |||||
Deferred tax liabilities | (413,550) | - | 126,000 | (287,550) | |||||
Consolidated financial statements | |||||||||
(Charged)/Credited | |||||||||
At | to other | At | |||||||
1 January | (Charged)/Credited | comprehensive | 31 December | ||||||
2019 | to profit or loss | income | 2019 | ||||||
Deferred tax assets | |||||||||
Depreciation | (18,542) | 18,542 | - | - | |||||
Provisions for employee benefits | 715,377 | 38,179 | 49,579 | 803,135 | |||||
Tax losses carried forward | - | 929,291 | - | 929,291 | |||||
Others | 127,998 | (10,467) | - | 117,531 | |||||
Deferred tax assets | 824,833 | 975,545 | 49,579 | 1,849,957 | |||||
Deferred tax liabilities | |||||||||
Changes in fair value of | |||||||||
available-for-sale investments | (287,550) | - | 24,750 | (262,800) | |||||
Depreciation | - | (86,158) | - | (86,158) | |||||
Deferred tax liabilities | (287,550) | (86,158) | 24,750 | (348,958) |
28
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
Separate financial statements | |||||||||
(Charged)/Credited | |||||||||
At | to other | At | |||||||
1 January | (Charged)/Credited | comprehensive | 31 December | ||||||
2018 | to profit or loss | income | 2018 | ||||||
Deferred tax assets | |||||||||
Depreciation | 69,257 | (87,799) | - | (18,542) | |||||
Provisions for employee benefits | 719,984 | 15,832 | (20,439) | 715,377 | |||||
Others | 29,808 | (15,393) | - | 14,415 | |||||
Deferred tax assets | 819,049 | (87,360) | (20,439) | 711,250 | |||||
Deferred tax liabilities | |||||||||
Changes in fair value of | |||||||||
available-for-sale investments | (413,550) | - | 126,000 | (287,550) | |||||
Deferred tax liabilities | (413,550) | - | 126,000 | (287,550) | |||||
Separate financial statements | |||||||||
(Charged)/Credited | |||||||||
At | to other | At | |||||||
1 January | (Charged)/Credited | comprehensive | 31 December | ||||||
2019 | to profit or loss | income | 2019 | ||||||
Deferred tax assets | |||||||||
Depreciation | (18,542) | 18,542 | - | - | |||||
Provisions for employee benefits | 715,377 | 38,179 | 49,579 | 803,135 | |||||
Tax losses carried forward | - | 923,988 | - | 923,988 | |||||
Others | 14,415 | (3,817) | - | 10,598 | |||||
Deferred tax assets | 711,250 | 976,892 | 49,579 | 1,737,721 | |||||
Deferred tax liabilities | |||||||||
Changes in fair value of | |||||||||
available-for-sale investments | (287,550) | - | 24,750 | (262,800) | |||||
Depreciation | - | (86,158) | - | (86,158) | |||||
Deferred tax liabilities | (287,550) | (86,158) | 24,750 | (348,958) |
Deferred income tax assets are recognised for tax loss and carried forwards only to the extent that realisation of the related tax benefit through the future taxable profits is probable.
16 Other non-current assets | |||||||
Consolidated | Separate | ||||||
financial statements | financial statements | ||||||
2019 | 2018 | 2019 | 2018 | ||||
Contract assets | 1,650,308 | - | 1,650,308 | - | |||
Income tax receivables | 25,512 | - | 25,512 | - | |||
Other | 23,903 | 23,820 | 23,903 | 23,548 | |||
1,699,723 | 23,820 | 1,699,723 | 23,548 |
The Group has adopted TFRS 15 effective 1 January 2019. Had 2018 figures been restated to conform with TFRS 15, non-current contract assets would be increased by Baht 778 million and non-current prepaid rental and deferred charges would be reduced by Baht 778 million.
29
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
17 | Borrowings from financial institutions | |||
Consolidated and Separate | ||||
financial statements | ||||
2019 | 2018 | |||
Current | ||||
Bank overdrafts | 33,560 | 4,767 | ||
Short-term borrowings | 5,955,000 | 4,792,000 | ||
Bills of exchange | 499,817 | 499,422 | ||
Current portion of long-term loan | 1,466,667 | 1,400,000 | ||
7,955,044 | 6,696,189 | |||
Non-current | ||||
Bank borrowings | 1,816,667 | 1,200,000 | ||
9,771,711 | 7,896,189 |
Bank borrowings and other facilities detailed above are unsecured and bear interest at rates based on prevailing market rates. The interest rates in 2019 ranged between 1% and 2% per annum (2018: 1% to 3% per annum).
Short-term borrowings
Short-term borrowings comprised bank revolving facilities (overnight loans and promissory notes due within 3 months).
Long-term borrowings
The long-term bank loans consisted of the following:
- A 5-year loan of Baht 1,000 million which was obtained in November 2014 and is repayable in 20 quarterly installments commencing from March 2015 to December 2019. The loan bears interest at 1-month (BIBOR) rate plus a margin. As at 31 December 2019, there was no outstanding loan balance.
- A 5-year loan of Baht 1,000 million which was obtained in September 2015 and is repayable in 20 quarterly installments commencing from January 2016 to October 2020. The loan bears interest at 1-month (BIBOR) rate plus a margin. As at 31 December 2019, the outstanding loan balance was Baht 200 million, which is payable in 2020.
- A 3-year loan of Baht 1,500 million which was obtained in November 2016 and is repayable in 12 quarterly installments commencing from March 2017 to December 2019. The loan bears interest at 1-month (BIBOR) rate plus a margin. As at 31 December 2019, there was no outstanding loan balance.
- A 3-year loan of Baht 1,500 million which was obtained in December 2018 and is repayable in 12 quarterly installments commencing from March 2019 to December 2021. The loan bears interest at 1-month (BIBOR) rate plus a margin. As at 31 December 2019, the outstanding loan balance was Baht 1,000 million, of which Baht 500 million is payable in 2020.
- A 3-year loan of Baht 1,300 million which was obtained in June 2019 and is repayable in 12 quarterly installments commencing from September 2019 to June 2022. The loan bears interest at 3-month (BIBOR) rate plus a margin. As at 31 December 2019, the outstanding loan balance was Baht 1,083 million, of which Baht 433 million is payable in 2020.
- A 3-year loan of Baht 1,000 million which was obtained in November 2019 and is repayable in 12 quarterly installments commencing from February 2020 to November 2022. The loan bears interest at 1-month (BIBOR) rate plus a margin. As at 31 December 2019, the outstanding loan balance was Baht 1,000 million, of which Baht 333 million is payable in 2020.
The carrying amounts at each year end of short-term borrowings and long-term borrowings approximate to their fair values. All borrowings are denominated in Baht.
Maturity of long-term bank borrowings
Consolidated and Separate
financial statements
20192018
No later than 1 year | 1,466,667 | 1,400,000 | |
Later than 1 year and no later than 5 years | 1,816,667 | 1,200,000 | |
3,283,334 | 2,600,000 |
30
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
18 Trade and other payables | ||||||
Consolidated | Separate | |||||
financial statements | financial statements | |||||
2019 | 2018 | 2019 | 2018 | |||
Trade accounts payable | 3,249,372 | 2,632,377 | 3,248,810 | 2,619,539 | ||
Other tax payables | 869,446 | 3,456,993 | 869,446 | 3,456,993 | ||
Contract liabilities | 224,706 | - | 224,706 | - | ||
Other payables and accruals | 676,645 | 905,486 | 676,758 | 905,474 | ||
5,020,169 | 6,994,856 | 5,019,720 | 6,982,006 |
Other tax payable represents excise tax payable generated as a result of normal operations. Additionally, the Group has adopted TFRS 15 effective 1 January 2019. Had 2018 figures been restated to conform with TFRS 15, contract liabilities would be increased by Baht 251 million and Other payables and accruals would be reduced by Baht 251 million.
19 Provisions for employee benefits | |||||
Consolidated and Separate | |||||
financial statements | |||||
2019 | 2018 | ||||
Statement of financial position: | |||||
Liability in the statement of financial position | 4,067,396 | 3,579,580 | |||
Profit or loss charge included in operating profit | 326,550 | 296,444 | |||
Remeasurements | 247,893 | (102,193) | |||
The movement in the defined benefit obligation over the year is as follows: | |||||
Consolidated and Separate | |||||
financial statements | |||||
2019 | 2018 | ||||
At 1 January | 3,579,580 | 3,600,991 | |||
Service cost | 199,019 | 179,561 | |||
Interest cost | 127,531 | 116,883 | |||
3,906,130 | 3,897,435 | ||||
Remeasurements recognised in other comprehensive income (Note 22) | |||||
Loss from change in demographic assumptions | - | - | |||
(Gain) loss from change in financial assumptions | 288,188 | (70,730) | |||
Experience (gain) loss | (36,259) | (31,463) | |||
Transfer in | (4,036) | - | |||
247,893 | (102,193) | ||||
Payment from plans: | |||||
Benefits paid | (133,270) | (215,662) | |||
Transfer in | 46,643 | - | |||
At 31 December | 4,067,396 | 3,579,580 | |||
Analysis of total provisions for employee benefits: | |||||
- Current | 787,070 | 851,261 | |||
- Non-current | 3,280,326 | 2,728,319 | |||
At 31 December | 4,067,396 | 3,579,580 |
On 5 April 2019, an amendment bill to the Labour Protection Law was published in the Government Gazette. The amended law will become effective 30 days after its publication. The main amendment is that the compensation for employees who have retired and have more than or equal to 20 years of service has changed from 300 day's pay to 400 day's pay. The effects of the amendment were recognised as service cost during the year.
31
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
The principal actuarial assumptions used were as follows:
Impact on defined benefit obligation | ||||||||
0.5 % Increase | 0.5 % Decrease | |||||||
Assumption | in assumption | in assumption | ||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||
Discount rate | 2.75% | 3.75% | Decrease by | Decrease by | Increase by | Increase by | ||
3.64 % | 3.78 % | 3.85 % | 4.01 % | |||||
Salary growth rate | 7.00% | 7.00% | Increase by | Increase by | Decrease by | Decrease by | ||
3.68 % | 3.87 % | 3.52 % | 3.69 % |
The discount rate used is based on investment grade corporate bonds with tenure approximating the tenure of the employee benefit liability. The salary growth rate takes into account market factors such as projected market salary growth and incorporates assumptions relating to inflation rates.
The Group does not anticipate a change in expected rate of salary increase based on historical data.
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognised within the statement of financial position.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.
Through its defined benefit, the Group is exposed to a number of risks, the most significant of which are changes in bond yields. A decrease in Investment grade corporate bond yields will increase plan liabilities.
Expected maturity analysis of undiscounted employee benefits:
Consolidated and Separate | |||||||
financial statements | |||||||
2019 | 2018 | ||||||
- Less than a year | 96,158 | 135,486 | |||||
- Between 1-2 years | 125,367 | 95,023 | |||||
- Between 2-5 years | 803,793 | 599,755 | |||||
- Over 5 years | 6,055,307 | 6,067,924 | |||||
7,080,625 | 6,898,188 | ||||||
20 Share capital and premium | |||||||
Issued and paid-up share capital | |||||||
Number of | |||||||
shares | Ordinary | Share | |||||
(million) | shares | premium | Total | ||||
At 1 January and 31 December 2019 and 2018 | 3,461 | 17,075,181 | 4,031,711 | 21,106,892 |
As at 31 December 2019 and 2018, the total authorised number of ordinary shares is 3,468 million shares with a par value of Baht 4.9338 per share. All issued shares are fully paid.
32
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
21 Legal reserve
Consolidated and Separate
financial statements
20192018
At 1 January | 1,000,901 | 892,168 | ||
Appropriation during the year | - | 108,733 | ||
At 31 December | 1,000,901 | 1,000,901 |
Under the Public Limited Companies Act B.E. 2535, the Company is required to set aside as a legal reserve at least 5 percent of its net profit after taking into account any accumulated deficit brought forward until the reserve is not less than 10 percent of the registered capital. The legal reserve is non-distributable.
22 Other component of equity
The movement of other component of equity are as follows:
Consolidated | Separate | ||||||
financial statements | financial statements | ||||||
2019 | 2018 | 2019 | 2018 | ||||
At 1 January | 474,998 | 897,244 | 477,178 | 899,424 | |||
Remeasurement of provisions for | |||||||
employee benefits (Note 19) | (247,893) | 102,193 | (247,893) | 102,193 | |||
Share of other comprehensive expense of | |||||||
associate, net of tax (Note 12) | (5,065) | - | - | - | |||
Changes in fair value of available-for-sale | |||||||
investments (Note 10) | (123,750) | (630,000) | (123,750) | (630,000) | |||
Income tax relating to components of | |||||||
other comprehensive income (Note 15) | 74,329 | 105,561 | 74,329 | 105,561 | |||
At 31 December | 172,619 | 474,998 | 179,864 | 477,178 |
23 Revenue from sales and services
Revenue from sales of goods Revenue from sales of services
24 Expenses by nature
Consolidated and Separate
financial statements
2019 2018
167,799,824 198,321,801
729,910 736,711
168,529,734 199,058,512
The following expenditure items, classified by nature, have been charged in arriving at the operating profit.
Net changes in inventories of finished goods Raw materials and consumables used Depreciation and amortisation (Notes 13 and 14) Employee expenses
Consolidated and Separate
financial statements
2019 2018
(587,551) 358,370
160,586,640 186,257,765
2,046,461 2,010,623
1,864,270 1,748,799
33
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
25 Income tax expense | ||||||||
Consolidated | Separate | |||||||
financial statements | financial statements | |||||||
2019 | 2018 | 2019 | 2018 | |||||
Current tax : | ||||||||
Current tax on profits for the year | 1,265 | 352,493 | - | 351,222 | ||||
Adjustments in respect to prior year | (4,423) | (4,246) | (4,846) | (4,326) | ||||
Total current tax | (3,158) | 348,247 | (4,846) | 346,896 | ||||
Deferred tax : | ||||||||
Deferred tax for the year (Note 15) | (889,387) | 80,711 | (890,734) | 87,360 | ||||
Total deferred tax | (889,387) | 80,711 | (890,734) | 87,360 | ||||
Total income tax (credit) expense | (892,545) | 428,958 | (895,580) | 434,256 |
The tax on the Group's and Company's profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the Group and the Company as follows:
Consolidated | Separate | |||||
financial statements | financial statements | |||||
2019 | 2018 | 2019 | 2018 | |||
(Loss) Profit before tax | (3,957,486) | 2,654,884 | (3,985,517) | 2,608,912 | ||
Tax calculated at domestic tax rates | (791,497) | 530,977 | (797,103) | 521,782 | ||
Tax effect of: | ||||||
Income not subject to tax | (92,942) | (94,060) | (90,371) | (79,567) | ||
Expenses not deductible for tax purposes | 3,818 | 4,125 | 3,818 | 4,125 | ||
Expenses more deductible for tax purposes | (11,924) | (12,084) | (11,924) | (12,084) | ||
Income tax (credit) expense | (892,545) | 428,958 | (895,580) | 434,256 |
26 Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.
Consolidated | Separate | ||||
financial statements | financial statements | ||||
2019 | 2018 | 2019 | 2018 | ||
(Loss) Profit attributable to equity holders | |||||
of the parent | (3,065,703) | 2,225,164 | (3,089,937) | 2,174,656 | |
Weighted average number of ordinary shares | |||||
in issue (million shares) | 3,461 | 3,461 | 3,461 | 3,461 | |
Basic (loss) earnings per share (Baht per share) | (0.89) | 0.64 | (0.89) | 0.63 |
There are no potential ordinary shares in issue during the years presented and as such diluted earnings per share is not presented.
34
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
27 Cash flow information
27(a) Reconciliation of net profit to cash flows from operating activities:
Consolidated | Separate | ||||||
financial statements | financial statements | ||||||
2019 | 2018 | 2019 | 2018 | ||||
(Loss) Profit before income tax expense | (3,957,486) | 2,654,884 | (3,985,517) | 2,608,912 | |||
Adjustments for: | |||||||
Depreciation (Note 13) | 2,018,839 | 1,980,981 | 2,018,839 | 1,980,981 | |||
Amortisation (Note 14) | 27,622 | 29,642 | 27,622 | 29,642 | |||
Allowance for impairment of trade receivables | |||||||
(Note 6) | 18,352 | (60) | 18,352 | (60) | |||
Write-down of inventory to net realisable value | 96,742 | 197,907 | 96,742 | 197,907 | |||
Loss on disposal of property, plant and | |||||||
equipment and intangible assets | 23,803 | 56,484 | 23,803 | 52,022 | |||
Share of profit from an associate (Note 12) | (379,986) | (383,621) | - | - | |||
Interest income | (8,059) | (9,012) | (204,251) | (193,718) | |||
Finance costs | 321,533 | 245,848 | 321,592 | 245,928 | |||
Dividend income | (61,650) | (56,700) | (427,622) | (410,724) | |||
Net unrealised foreign exchange (gain) loss | 88,706 | (96,593) | 88,706 | (96,593) | |||
Changes in working capital | |||||||
Trade receivables | (188,167) | (1,228,373) | (188,167) | (1,228,373) | |||
Amount due from related parties | 50 | (50) | - | - | |||
Inventories | (765,945) | (538,489) | (765,945) | (538,489) | |||
Other receivables | 953,184 | (1,493,096) | 953,184 | (1,493,096) | |||
Other current assets | (3,049,956) | (650,032) | (3,057,858) | (649,967) | |||
Prepaid rental and deferred charges | 348,980 | (478,221) | 576,619 | (272,966) | |||
Other non-current assets | (1,650,390) | 17,300 | (1,650,664) | 17,300 | |||
Trade and other payables | (2,022,588 | ) | 2,068,788 | (2,010,188 | ) | 2,056,749 | |
Amount due to related parties | (2,001,247) | 1,750,128 | (2,005,935) | 1,756,872 | |||
Income tax payables | (144) | (486,577) | - | (487,036) | |||
Provisions for employee benefits | 239,923 | 80,782 | 239,923 | 80,782 | |||
Other non-current liabilities | (98) | 1,751 | (98) | 1,751 | |||
Cash (used in) generated from operations | (9,947,982) | 3,663,671 | (9,930,863) | 3,657,824 | |||
In the cash flow statement, proceeds from sale of property, plant and equipment consist of: | |||||||
Consolidated | Separate | ||||||
financial statements | financial statements | ||||||
2019 | 2018 | 2019 | 2018 | ||||
Net book amount | 39,240 | 97,193 | 39,240 | 67,807 | |||
Loss on disposal of property, | |||||||
plant and equipment | (23,803) | (56,484) | (23,803) | (52,022) | |||
Proceeds from disposal of property, | |||||||
plant and equipment | 15,437 | 40,709 | 15,437 | 15,785 |
35
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
27(b) Non-cash transactions of investing and financing activities:
Consolidated and Separate
financial statements
20192018
Non-cash transactions | ||||
Acquisition of property, plant, equipment | 293,037 | 245,758 | ||
27(c) Change in liabilities arising from financing activities: | ||||
Consolidated financial statements | ||||
Borrowings | Total | |||
Liabilities as at 1 January 2018 | 12,346,391 | 12,346,391 | ||
Cash flows | 2,973,974 | 2,973,974 | ||
Other non-cash movement | 24,985 | 24,985 | ||
Liabilities as at 31 December 2018 | 15,345,350 | 15,345,350 | ||
Cash flows | 11,519,030 | 11,519,030 | ||
Other non-cash movement | 79,043 | 79,043 | ||
Liabilities as at 31 December 2019 | 26,943,423 | 26,943,423 | ||
Separate financial statements | ||||
Borrowings | Total | |||
Liabilities as at 1 January 2018 | 12,357,942 | 12,357,942 | ||
Cash flows | 2,964,541 | 2,964,541 | ||
Other non-cash movement | 24,985 | 24,985 | ||
Liabilities as at 31 December 2018 | 15,347,468 | 15,347,468 | ||
Cash flows | 11,518,567 | 11,518,567 | ||
Other non-cash movement | 79,043 | 79,043 | ||
Liabilities as at 31 December 2019 | 26,945,078 | 26,945,078 |
28 Contingent liabilities
As at 31 December 2019, the Group had contingent liabilities in respect to bank guarantees arising in the ordinary course of business, amounting to Baht 70 million (2018: Baht 80 million) to third parties. It is not anticipated that any material liabilities will arise from these bank guarantees.
29 Commitments
Capital commitments
As at the statement of financial position date, the Group had capital commitments amounting to Baht 640 million (2018: Baht 666 million).
Operating lease commitments - the Group and the Company as lessee
The Group leases various plots of land on which retail service stations are operated under non-cancellable operating lease agreements. The lease terms generally range between 15 and 30 years, and the majority of lease agreements are renewable at the end of the lease period at market rates.
36
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
Consolidated | Separate | ||||
financial information | financial information | ||||
31 December | 31 December | 31 December | 31 December | ||
2019 | 2018 | 2019 | 2018 | ||
No later than 1 year | 237,472 | 164,551 | 263,524 | 169,085 | |
Later than 1 year but no later than 5 years | 838,863 | 697,251 | 1,281,251 | 886,846 | |
Later than 5 years | 1,421,482 | 1,132,103 | 5,855,815 | 5,222,965 | |
2,497,817 | 1,993,905 | 7,400,590 | 6,278,896 |
30 Financial risk management
The Group's activities expose it to a variety of financial risks, which include market risk (including market prices for petroleum commodities risk, foreign exchange risk and interest rate risk), credit risk, liquidity risk, and capital risk.
- Market risk
-
Market prices for petroleum commodities risk
The Group's financial results can be significantly affected from time to time by volatility and cyclical movement in the market prices for crude oil, petroleum, and petrochemical products. Given the large size and the long-term nature of its business, the Group expects that this risk will be moderated over time. The Group does not employ the use of derivative instruments to manage the risk. - Foreign exchange risk
The Group's activities are exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US Dollar. Purchases of goods and export sales are primarily transacted in US Dollars. Domestic sales are transacted predominantly in Baht, and are thus not subject to foreign exchange risk.
As at 31 December 2019 and 2018, the Group had no short-term or long-term debt denominated in foreign currencies. In 2019, the Group did not enter into any forward foreign currency contracts. The Group's foreign exchange guidelines prohibit speculative foreign exchange transactions. - Interest rate risk
As the Group has no significant interest bearing assets, the Group's income and operating cash flows are substantially independent of changes in market interest rates.
The interest rate risk arises from borrowings that are issued at variable interest rates exposing the Group to cash flow interest rate risk. The Group continually optimises the mix in its borrowing facilities to maximise financing flexibility while minimising financing cost.
-
Market prices for petroleum commodities risk
- Credit risk
Credit risk is managed on a Group basis. Credit risk primarily arises from cash and cash equivalents, and credit exposures to commercial and retail customers, including outstanding receivables and committed transactions. Credit risk in respect to balances outstanding with related parties has been assessed to be low due to the overall strength of the ExxonMobil Group.
In the case of cash and cash equivalents, only independently rated banks with a minimum rating of at least BBB-, or equivalent, are accepted.
For trade customers, risk evaluations are performed internally which include reviews of financial position, business success indicators, past experience, and other factors. Individual risk limits are set based on the resulting internal ratings in accordance with limits set by management. Risk categories are established for individual customers based on internal credit guidelines ranging from very low to very high risk. The risk categories are intended to reflect the risk of payment default by a customer and are similar to the rating scales established by external rating agencies.
37
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
-
Liquidity risk
The Group manages liquidity risk by maintaining a minimum operating level of cash and cash equivalent balances. In addition, the Group maintains committed credit facilities as well as a number of uncommitted credit facilities from banks and related parties. The Group reviews requirements for future cash flows through the completion of an annual finance plan. The finance plan is completed for the forthcoming year to ensure that estimates of future requirements are analysed such that appropriate facilities can be made available.
The Group currently has adequate financing sources. As at 31 December 2019, the Group has uncommitted facilities of Baht 74,533 million (2018: Baht 83,251 million). The Group has also received an approval from the Securities and Exchange Commission to offer for sale Baht 12,000 million of bills of exchange in a revolving program, of which Baht 500 million has been utilised as of 31 December 2019.
Liquidity risk may also arise if customers are not able to settle obligations to the Group within the normal credit term. To manage this risk, the Group periodically assesses financial viability of customers and may require certain customers to provide bank guarantees or other similar instruments. - Capital risk
The Group's objective when managing capital is to safeguard the Group's ability to continue as a going concern in order to provide returns to shareholders and benefits to other stakeholders. In the future, the Group may adjust the amount of dividend paid to shareholders in order to maintain an appropriate capital structure. Annually, the Group completes a finance plan which seeks to establish positions for the current and future years' dividend projections.
31 Related party transactions
ExxonMobil Asia Holding Private Limited acquired 65.43% of the shares from ExxonMobil International Holdings Incorporated and 0.56% of the shares from other companies within the ExxonMobil Group on 28 November 2014.
Therefore, the Group is controlled by ExxonMobil Asia Holding Private Limited incorporated in Singapore, which owns 65.99% of the Company's shares as at 31 December 2019. The ultimate holding company is Exxon Mobil Corporation incorporated in the United States of America. A further 8.21% of the shares are held by Vayupak Fund 1, a mutual fund established by the Ministry of Finance, with the remaining shares held by a variety of institutional and retail investors.
The Vayupak Fund 1 acquired the shares from the Ministry of Finance on 15 September 2010. The significant investments in subsidiaries and an associate are set out in Note 12.
The following transactions were carried out with related parties:
- Sales of goods and services
Consolidated and Separate
financial statements
20192018
Sales of goods and services: | |||
- Other related parties | 7,935,657 | 13,612,662 | |
7,935,657 | 13,612,662 |
Sales of goods and services between related parties are based on market prices and primarily relate to the sale of petroleum and petrochemical products.
38
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
- Purchases of goods and services
Consolidated and Separate | |||
financial statements | |||
2019 | 2018 | ||
Purchases of goods: | |||
- Other related parties | 101,842,935 | 131,151,097 | |
Purchases of services: | |||
- An associate | 729,423 | 805,726 | |
102,572,358 | 131,956,823 |
Purchases of goods from related parties primarily relate to the purchase of crude oil, petroleum and petrochemical products. Purchases of services from an associate relate to the provision of pipeline transportation services for the Group's products. Purchases of goods and services are based on market prices.
(c) | Expenses | |||||||
Consolidated | Separate | |||||||
financial statements | financial statements | |||||||
2019 | 2018 | 2019 | 2018 | |||||
Expenses paid to: | ||||||||
- Subsidiaries | - | - | 221,628 | 218,133 | ||||
- Other related parties | 3,490,201 | 3,005,433 | 3,487,558 | 3,001,166 | ||||
3,490,201 | 3,005,433 | 3,709,186 | 3,219,299 |
Expenses primarily relate to the provision of support services and are charged on either a cost or cost plus basis.
(d) | Finance costs, net | ||||||||
Consolidated | Separate | ||||||||
financial statements | financial statements | ||||||||
2019 | 2018 | 2019 | 2018 | ||||||
Interest income received from: | - | ||||||||
- Subsidiaries | - | 196,199 | 184,706 | ||||||
- | - | 196,199 | 184,706 | ||||||
Interest expenses paid to: | |||||||||
- Subsidiaries | - | - | 58 | 80 | |||||
- Other related parties | 187,717 | 151,849 | 187,717 | 151,849 | |||||
187,717 | 151,849 | 187,775 | 151,929 |
Interest charges are based on market rates at the time the agreements were entered.
- Key management compensation
Consolidated and Separate
financial statements
20192018
Salaries and other short-term employment benefits | 72,593 | 71,869 | |
Post-employment benefits | 18,911 | 18,565 | |
91,504 | 90,434 |
The above information is prepared in accordance with the Securities and Exchange Commission's regulations. This includes the managing director, the first four managers reporting to the managing director as well as all managers at the same level.
39
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
- Year-endbalances arising from sales/purchases of goods/services and expenses
Consolidated | Separate | ||||||
financial statements | financial statements | ||||||
2019 | 2018 | 2019 | 2018 | ||||
Amounts due from: | |||||||
- Subsidiaries | - | - | 50,526 | 47,803 | |||
- Other related parties | - | 50 | - | - | |||
- | 50 | 50,526 | 47,803 | ||||
Amounts due to: | |||||||
- Subsidiaries | - | - | 10,269 | 14,868 | |||
- Other related parties | 8,091,234 | 9,995,379 | 8,091,049 | 9,995,286 | |||
8,091,234 | 9,995,379 | 8,101,318 | 10,010,154 |
Amounts due from related parties relate primarily to interest receivables on long-term loans (Note 31g).
The amounts due to related parties reflect a net payable which arises mainly from the purchase and sales of crude oil, petroleum and petrochemical products under standard industry terms.
(g) | Loans to related parties | |||||||
Consolidated | Separate | |||||||
financial statements | financial statements | |||||||
2019 | 2018 | 2019 | 2018 | |||||
Long-term loans to: | ||||||||
- Subsidiaries | - | - | 3,251,419 | 3,035,705 | ||||
Movements in long-term loans to related parties are analysed as follows: | ||||||||
Separate | ||||||||
financial statements | ||||||||
2019 | 2018 | |||||||
At 1 January | 3,035,705 | 2,887,873 | ||||||
Loans advanced during the period | 216,717 | 192,534 | ||||||
Loan repayments received | (1,003) | (44,702) | ||||||
At 31 December | 3,251,419 | 3,035,705 |
Long-term loans to related parties are unsecured. They bear interest based on the minimum lending rate of Bangkok Bank Public Company Limited.
40
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
(h) | Loans from related parties | |||||||
Consolidated | Separate | |||||||
financial statements | financial statements | |||||||
2019 | 2018 | 2019 | 2018 | |||||
Current | ||||||||
Short-term loans from: | ||||||||
- Subsidiaries | - | - | 899 | 918 | ||||
- Other related parties | 13,188,379 | 4,749,161 | 13,188,379 | 4,749,161 | ||||
13,188,379 | 4,749,161 | 13,189,278 | 4,750,079 | |||||
Current portion of long-term loans from: | ||||||||
- Other related parties | 1,633,333 | 2,300,000 | 1,633,333 | 2,300,000 | ||||
14,821,712 | 7,049,161 | 14,822,611 | 7,050,079 | |||||
Non-current | ||||||||
Long-term loans from: | ||||||||
- Subsidiaries | - | - | 756 | 1,200 | ||||
- Other related parties | 2,350,000 | 400,000 | 2,350,000 | 400,000 | ||||
2,350,000 | 400,000 | 2,350,756 | 401,200 |
Movements in loans from related parties are analysed as follows:
Consolidated | Separate | ||||
financial statements | financial statements | ||||
2019 | 2018 | 2019 | 2018 | ||
At 1 January | 7,449,161 | 7,274,913 | 7,451,279 | 7,286,464 | |
Additional borrowings | 14,814,162 | 7,851,639 | 14,818,695 | 7,856,080 | |
Loans repaid during the period | (5,091,611) | (7,677,391) | (5,096,607) | (7,691,265) | |
At 31 December | 17,171,712 | 7,449,161 | 17,173,367 | 7,451,279 |
Short-term loans from other related parties include:
- Revolving loan from a related party totaling Baht 11,113 million out of facility size Baht 12,000 million at the end of December 2019.
- Short-termloan from a related party under Loan and Current Account Agreement totaling Baht 2,075 million at the end of December 2019.
Short-term loans from related parties are unsecured. They have no fixed term of repayment and bear interest based on the adjusted minimum lending rate of Bangkok Bank Public Company Limited or Bangkok Interbank Offered Rate (BIBOR).
41
Esso (Thailand) Public Company Limited
Notes to the Consolidated and Separate Financial Statements
For the year ended 31 December 2019
(All amounts in Baht thousand unless otherwise stated)
Long-term loans from other related parties include:
- A 5-year loan of Baht 7,000 million which was obtained in November 2014 and is repayable in 20 quarterly installments commencing from March 2015 to December 2019. The loan bears interest at 1-month (BIBOR) rate plus a margin. As at 31 December 2019, there was no outstanding loan balance.
- A 5-year loan of Baht 6,000 million which was obtained in September 2015 and is repayable in 20 quarterly installments commencing from January 2016 to October 2020. The loan bears interest at 1-month (BIBOR) rate plus a margin. As at 31 December 2019, the outstanding loan balance was Baht 400 million, which is payable in 2020.
- A 3-year loan of Baht 1,500 million which was obtained in November 2016 and is repayable in 12 quarterly installments commencing from March 2017 to December 2019. The loan bears interest at 1-month (BIBOR) rate plus a margin. As at 31 December 2019, there was no outstanding loan balance.
- A 3-year loan of Baht 700 million which was obtained in June 2019 and is repayable in 12 quarterly installments commencing from September 2019 to June 2022. The loan bears interest at 3-months (BIBOR) rate plus a margin. As at 31 December 2019, the outstanding loan balance was Baht 583 million, of which Baht 233 million is payable within 1 year.
- A 3-year loan of Baht 3,000 million which was obtained in November 2019 and is repayable in 12 quarterly installments commencing from February 2020 to November 2022. The loan bears interest at 1-month (BIBOR) rate plus a margin. As at 31 December 2019, the outstanding loan balance was Baht 3,000 million, of which Baht 1,000 million is payable within 1 year.
Long-term loans from related parties bear interest based on the adjusted minimum lending rate of Bangkok Bank Public Company Limited or Bangkok Interbank Offered Rate (BIBOR).
Maturity of long-term loans from related parties
Consolidated | Separate | |||||
financial statements | financial statements | |||||
2019 | 2018 | 2019 | 2018 | |||
No later than 1 year | 1,633,333 | 2,300,000 | 1,633,333 | 2,300,000 | ||
Later than 1 year but no later than 5 years | 2,350,000 | 400,000 | 2,350,756 | 401,200 | ||
3,983,333 | 2,700,000 | 3,984,089 | 2,701,200 |
32 Dividend paid
On 24 April 2018, the Annual General Meeting of shareholders resolved by majority vote that dividend payment for year 2017 be approved at a rate of Baht 1.00 per share, totalling Baht 3,461 million. The dividend was paid to the shareholders on 22 May 2018.
On 4 September 2018, the Board of directors approved the payment of an interim dividend at a rate of Baht 0.20 per share, totalling Baht 692 million. The dividend was paid to the shareholders on 2 October 2018.
On 23 April 2019, the Annual General Meeting of shareholders resolved by majority vote that additional dividend payment for year 2018 be approved at a rate of Baht 0.10 per share, totalling Baht 346 million. The dividend was paid to the shareholders on 21 May 2019.
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Esso Thailand pcl published this content on 24 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 February 2020 11:46:14 UTC