ข่าวแจ้งตลาดหลักทรัพย์
Information Memorandum
DEMCO PUBLIC COMPANY LIMITED (DEMCO)
| Head Office : | 59 Moo 1 Suan Prik Thai, Muang, Pathumthani 12000 Tel. 0 2959 5811-5 Fax 0 2959 6738 Website www.demco.co.th |
| Factory Location: | 64 Moo 4 Tambon Bothong, Amphoe Nongmuang, Lopburi 15170 Tel. 0 3643 1193 Fax 0 16675636 |
| Listing Date | 14 December 2006, trading commencement on 14 December 2006 |
| Listing Securities | Common shares of 210 million shares at par value of 1 baht/share, total of 210 MB. |
| Note: | These are comprised of 160 million existing shares and 50 million capital increased shares offering to public investors. |
| Capital | 14 December 2006 Registered Capital Paid-up Capital |
| Secondary | MarketMarket for Alternative Investment (MAI) |
| Offering Price | 3.05 baht |
| Offering Date | 4 and 6 December 2006 |
| Objectives and plans for utilizing | Reserve for working capital 50%, Partial Debt payment 35%, and purchasing the capital increase machinery 15%. |
| Green Shoe Option | None |
Type of Business and Nature of Operation
Designing, constructing, and installing the entire range of high-voltage transmission line, construction of high and low voltage sub station, electrical distribution system, electrical and mechanical system, energy conservation system, construction of telecommunication tower, including fabrication and supply of steel structure & support structure for high voltage transmission line, telecommunication tower system and bill board under Demco trademark.
The business can be classified into 6 categories.
1. Designing, supplying, constructing, and installing the electrical system on the turnkey basis. The scope of service covers from generating step up through substation, transmiting through transmission lime, and electrical distribution system.
2. Electrical system and mechanical services. Service includes designing, supplying, constructing and installing all that related to mechanical engineering. This business line was first initiated in air-conditioning system in the factory and, then, to ventilation system, refrigeration, automatic temperature and humidity control system, pumping system, sewage system, and pipeline systems.
3. Telecommunication tower service. The company fabricates and erects telecommunication tower to customers whose communication system requires steel structure. Clients are varied from public to private sectors, including mobile phone service operators and bidding winner from mobile phone service operators. The Company also provides fiber glass cable installation using blowing method technique which the Company is one of the two service providers in Thailand.
4. Steel structure erection and fabrication. The initial objective of steel structure fabrication is to produce hardware equipment which is employed in electrical dirstribution system, and, later, fabricate for electrical engineering activities such as transmission line, distribution system, and substation. Subsequently, the Company expands production lines to telecommunication tower and radio communication tower since their production techniques are similar to that of steel structure. Other than customer in steel structure segment, the new customer base includes outdoor advertising companies who needs poles for billboards. Presently, the galvanizing bath production capacity is 6,000 ton per year. The Company has one factory in Lopburi and one warehouse in Patunthani. However, the company plans to expand the galvanizing bath capacity to 12,000 ton/year.
5. Supplying equipments for distribution system, transmission system and sub station including generator and all kinds of electrical equipment. The Company also supplies mechanical equipment, construction equipment, and various electrical equipments to Bangladesh, Asian countries, and Middle East through the Company's subsidiary, Ali Kathun (Thailand) Co, Ltd.
6. Energy Conservation. Presently, the Company joins the governments's energy conservation project by studying, planning, installing, and designing the energy conservation for government organization and large-scale manufacture. Since the Company has just entered into this business and has few experiences, the Company hires Genius Tech, the specialist in this business, as a project operator and hires it project by project. If the Company specializes in this type of service, the company will solely operate by itself.
* Distribution Channel
The company receives the projects from both contractor and subcontractor. Over the last 3 years, the proportion of work from contractor is, 87% and 88% of total service value in 2005 in 9M 2006. The increase of this proportion was accounted by electrical engineering which is the the company's primary source of revenue. Given the several years of experience in electrical engineering business, the Company is able to offer superior technical assistance, price quotation, and payment condition than other competitors.
The subcontract project, usually in considerable value, has either huge scope of responsibilities which is greater than the company scope of operation or requires too much substantial outlay from the Company to take on it. On the other hand, this alternative is used to approach customers and distribution channels. Previously, the major subcontract projects are from telecommunication operators who were selected by the clients such as Siemens (appointed by BKFT to install telecommunication tower for Hutch), Motorola (appointed to install CDMA system for Hutch) and Huawei Technology (Thailand) (appointed to install CDMA for CAT Telecom) etc.
* Revenue Structure
| Unit: MB | ||||||||
| Revenue type | 2003 | 2004 | 2005 | 9M 2006 | ||||
| Value | % | Value | % | Value | % | Value | % | |
| Service Revenue | ||||||||
| 1. Electrical engineering | 162.20 | 42 | 193.80 | 32 | 968.16 | 63 | 645.16 | 61 |
| 2. Electrical and Mechanical system | 22.41 | 6 | 21.29 | 3 | 140.39 | 9 | 125.00 | 12 |
| 3. Telecommunication tower | 52.62 | 14 | 116.15 | 19 | 93.33 | 6 | 19.39 | 2 |
| 4. Others | ||||||||
| - Civil construction | 44.39 | 11 | 96.51 | 16 | 45.70 | 3 | 3.81 | 0.4 |
| - Energy conservation | 0 | 0 | 0.88 | 0 | 3.62 | 0 | 1.43 | 0.1 |
| Total of service revenue | 281.61 | 73 | 428.64 | 70 | 1,251.18 | 82 | 794.79 | 76 |
| Sales Revenue | ||||||||
| 1. Steel structure | 61.99 | 16 | 117.07 | 19 | 186.21 | 12 | 207.05 | 20 |
| 2. Electrical equipment | 29.24 | 8 | 31.04 | 5 | 65.78 | 4 | 27.77 | 3 |
| Total of sale revenue | 91.23 | 24 | 148.11 | 24 | 252.00 | 16 | 234.82 | 22 |
| Other Revenue | 15.35 | 4 | 33.74 | 6 | 29.35 | 2 | 21.08 | 2 |
| Total Revenue | 388.19 | 100 | 610.49 | 100 | 1,532.53 | 100 | 1,050.68 | 100 |
Source: the Company
Note: This is based on Company performance, not consolidated, since the Company restructured its business group in 2005 by disposing and liquidating its consortium/subsidiaries whose business were not related to the Company's business. Currently, there are 1 subsidiary, Ali Kathun (Thailand) Co.Ltd whose financial status does not affect the Company's financial statement in a significant way. The Company has plan to sell its portion in Ali Kathun next year.
From the table above, we can see that, in the past 3 years and 9M 2006, the principal sources of revenue were from electrical engineering service which comprised of power substation construction, distrubution system, and transmission line. With more 20 years of experience of the engineer team, the company is able to develop and expand in to new businesses which require proficiency in electrical engineering such as electrical and mechanical system or telocommunication. Both generate incresing revenue, too.
* The proportion of customer base
The clients can be classified in to 2 types which are 1) private sector - manufacture, Independent Power Producer
(IPP), Small Power Producer (SPP), and mobile phone operator etc. 2) public sector - public organization and state
enterprise.
The proportions of revenue from each types of customers from the past 3 years and 9M 2006 are as follow.
Value : MB
Type 2003 2004 2005 9M 2006
Value % Value % Value % Value %
Private sector 185.43 66 277.60 65 584.02 47 595.96 75
Public sector 96.18 34 151.02 35 667.17* 53 198.83 25
Total 281.61 100 428.63 100 1,251.18 100 794.79 100
Source: the Company
Note: Project from PEA, 626 MB.
* Project in progress
As of 30 September 2006, the company has project in progress with total of 1,619.76 MB with delivery date as
follows
Type of Project 2006 2007 2008
Project Value Project Value Project Value
(Total) (MB) (Total) (MB) (Total) (MB)
Electrical engineering 39 236.19 8 1,231.75 1 112.40
Electrical and Mechanical system 11 15.72 - - - -
Telecommunication tower 8 23.12 - - - -
Civil engineering 1 0.20 - - - -
Power conservation 2 0.38 - - - -
Total 60 275.61 8 1,231.75 1 112.40
The principle projects of each project type are
Name of the Project Remaining Project
Value (MB)
30 Sept 06
Electrical engineering
- Construction of 5 power substations for PEA 725.72
- Construction of power substation (PTT's subsidiary) 275.00
- Construction of power substation for Rojana power 246.96
- Construction of transmission system for EGAT (Consortium with Cobra) 108.76
Electrical and mechanical engineering system
- EGAT 5.76
- PTT Utility project 4.09
Telecommunication tower
- Advance Info Service Project 13.23
- Huawei Project 6.21
At the present, most of each project progress follows the schedule as plan.
Environmental Impacts
The Company has no environmental dispute. For the galvanizing bath, the company follows the regulation of
Department of Industrial Works, Provincial Industry Affair, and Tambon Administrative Organisation (TAO).
Besides, the galvanizing bath has already been verified by TAO in 2006.
Summary of Material Contracts
Summary of business contracts
Party in contract Demco Public Company Limited and Bangsean Mahanakhon Ltd.,Part.
Contract date 15 August 2005
Objective To bid for the line threading of 22KV high-pressure underground cable, including designing
and installing Compact Unit Substation around Pattaya road. This is PEA's project with
value of 93 MB.
Portion of work The 93-MB project is divided to
- Design and installation of Compact Unit Substation operated by the Company with
value of 88 MB.
- Electrical line threading in the pipe operated by Bangsean Mahanakhon Ltd.,Part. with
value of 5 MB.
Responsibility - Bangsean Mahanakhon Ltd.,Part. is agreed to be a debtor to the project's owner in part of
line threading in the pipe only.
- The Company is agreed to be a debtor for the rest of the project such as material cost,
transportation cost, monitoring cost, miscellaneous cost, and other wages that are apart from
electrical line threading in the pipe.
- The Company and the co-investor have the responsibility in form of Joint and Several.
Financial Agreement - Bangsean Mahanakhon Ltd.,Part. is responsible for profit/loss that occurs from
electrical line threading in the pipe only.
- The Company is responsible for profit/loss of the rest such as material cost,
transportation cost, miscellaneous cost, monitoring cost, and other wages that are
apart from electrical line threading in the pipe
Construction duration - Febuary 2006 - March 2007
Party in Contract Demco Public Company Limited and Cobra Instalacionesy Servicios, S.A. (Cobra)
Contract Date 1 December 2005
Objective To bid for the construction of 230 KV high-voltage transmission line between Sokla
Train station 2 and Hat Yai Train Station
2. This is EGAT's project with value of 137.46 MB.
Responsibility - Cobra is responsible for supplying equipments from abroad such as insulator,
ground wire equipment, and fiber optic contained in ground wire.
- The Company supports other materials such as construction, transportation, and
installation.
- The Company and the co-investor have the responsibility in form of Joint and Several.
Portion of work The 137-MB project is divided to
- Construction of high-voltage station operated by the Company with value of 113 MB.
- Supplying equipments from abroad operated by Cobra with value of 24 MB.
Financial Agreement - According to each company's responsibility.
Construction duration - May 2006 - May 2007
Feasibility Study None
Technical and Management Assistance None
Future Projects
The future projects consist of
1. The projects that the Company won the bid and are waiting for signing the contract (between 30 August 2006 - 31
October 2006 and waiting for signing the contract) total of 18.85 MB.
2. The projects that the Company submitted the tender after 31 October 2006 and have not known the result, total of
322.79 MB.
3. At the present, the steel structure factory has capacity to produce 6,000 ton per year and is now on expansion
process, together with new larger galvanizing bath, which increase production capacity to 12,000 per year.
Related Transactions
Person / Juristic Person Transaction Value
2005 9M2006
1. Demco Pattana Panich Company Limited - Other expenses 166,320 -0-
Business - Minimart - Service revenue 84,607 -0-
- Son of Mrs. Praphee Puipunthavong, - Office expense 30,204 -0-
Chairman & CEO, and shareholder of Demco, - Profit from sale of asset 57,019 -0-
is the director/shareholder of theabove company
with 31.80% of total amount of shares.
- Son of Mr. Pradej Kitti-itsaranon,
Managing Director and shareholder of Demco,
is the director and shareholder of the above
company with 17.80% of total amount of shares.
- Son of Mr. Suwat Choradol, director
of the company, is the shareholder of the above
company with 8.16% of total amount of shares.
2. Ali Khatun (Thailand) Company Limited - Other revenue (Office rent) 72,000 54,000
Business - purchasing electrical transmission line and - Insurance and down payment 8,000 8,000
telecommunication tower and selling in Bangladesh.
- Demco's subsidiary with 50.49% of total account of shares
3. Mrs. Praphee Puipunthavong - Loan (Beginning period) +10,000,000 +8,000,000
- CEO and major shareholder of Demco. - Principle payment -10,000,000 -8,000,000
- This transaction increased the liquidity - Loan (Ending period) -0- -0-
to the Company at that time and is - Interest expense 235,149 35,979
rational since this loan needed no
guarantee and charged lower interest
rate than banks. Hence, taking on
this loan benefited the company, based
on standard criterion.
4. Si-Phya Publisheing Company Limited - Revenue from internal light 1,390,540 780,000
Business - printing and publishing. system within building
- Mrs. Praphee Puipunthavong, director
and shareholder of the above company, is
the director and shareholder with 30.51% of .
total share in Demco
5. Mr.Sawat Puipunthavong - Consulting fee 540,000 270,000
- Mr.Sawat Puipunthavong is
the shareholder with 12.5% of
the total shares in Demco and is the
husband of Mrs. Praphee Puipunthavong,
Chairman, CEO, and shareholder with
30.51% of the total shares in Demco
- This transaction is rational. Mr.Sawat
Puipunthavong, once, worked in the high
management level in electrical state enterprise,
hence, he is knowledgeable and proficient in
electrical system technique and marketing
strategy. He also introduces clients to the Company, too.
6. Genius Tech Continental Company Limited - Building controlling 2,812,190 287,850
Business - building construction and other analyzing fee
construction, including energy - Other revenue -0- 2,000
conservation.
- Mr.Warut Choradol, director of Genius
Tech Continental Co, Ltd, is the grandchild of Mr.
Suwat Choradol, director and shareholder of Demco
with 7.38% of the total shares.
- This transaction is rational. Since the Company
has just entered into this business and has few
experiences, so the Company hires Genius Tech,
the specialist in this business, as a project operator.
In the future, if the Company specializes in
the energy conservation, the company will operate
by itself. Moreover, the profit obtains from the
difference from the contract between the
Company and the contractor and between the
Company and Genius Tech is 20% which is
normal standard.
7. Heritage House Company Limited - Loan
Business - Construction Total loan (beginning period) +500,000 +500,000
- An alliance with Demco to establish Less Doubtful debt -500,000
Demco Heritage Land Co, Ltd in 2002. Total -0-
However, this company was shut down
since 14 December 2004
- There are no Demco's director or management - Loan payment -200,000
team as the shareholder or controlling person Total loan remaining +300,000
in the above company. Less Doubtful debt 300,000
Total -0-
Contingencies and Commitments
Assets Title Accounting Value (MB) Commitment
1. Land 3 plots located at Suanprikthai, Owner 22.64 Mortgage amount 55.00 MB.
Muang, Patunthani
Total area 9-4-8 rai 2.78
1 Office building and 2 warehouses
2. Land 2 plots located Anusawari, Bangken, Owner 1.67 Mortgage amount 10.00 MB.
Bangkok
Total area 0-0-33.3 rai
1 building 4 storeys 1.36
3. Land 4 plots located at Borthong, Owner 1.95 Mortgage amount 17.2 MB.
Nong Muang, Lopburi
Total area 41-3-18 rai
Factory, building, galvanizing bath, and 9
employee houses. 4.35
4. Equipment for cutting, punching, shaping Owner 0.48 Mortgage amount 10.00 MB
and pumping 121 steel structure orders in factory (Only 25 machines with
accounting cost of 4.19 MB.)
5. Land 4 plots located at Dae tok, Bangsai Ayutthaya Owner 3.28 Mortgage amount 2 MB.
Total area 0-8-0 rai
6. Land 1 plots located at Bung Yee Tho, Owner 4.40 Mortgage amount 3.50 MB.
Thanyaburi, Patumthani
Total area 0-2-61 rai
Risk Factors
1. Risk of relying on management team and engineer from manager level and above Since the operation of the business
needs the knowledge and competency from its human resource, the Company minimizes this risk by offering welfare
and fringe benefits such as health insurance, scholarship, and distribution of authority to management team to reduce the
reliance on single individual.
2. Risk of non-regular streams of revenue
Risk from a single project not a permanent work. As a result, the continuity of revenue depends on the ability to win
the bid or being selected to work. The Company has policy to reduce this risk by expanding customer base and providing
services for continuing business such as maintenance services.
Risk from relying on customers. Offering service and merchandise to both public and private customers, the
Company's performance depends on growth and investment expansion of customers, together with the company's
ability to win the bid. However, the Company tries to balance the revenue from each type of customers in order to
reduce the reliance on particular type of customer and to maintain revenue growth and proper profit margin.
Risk from economic and political uncertainty. Both affect investment budget, domestic investment environment
which, then, adversely affected private investment esp. manufacture construction. These consequences impact designing,
procurement, and installation of electrical engineering and electrical system & machinery business. However, from
the last 3 years (2003-2005), half of the revenue is from public sector (3 Electric Authorities) whose primary responsibility
is to support infrastructure and supply sufficient electricity for domestic use. Thus, economic and political
uncertainties are short-term risks for the Company.
3. Risk of increasing cost
Risk of delayed project as stated in the agreement. This may be caused by the project's owner, sub-contractor,
or the Company. If it is owner's fault, he/she will be billed the additional expense. If it is caused by the sub-contractor,
the Company will either take control by being the purchaser of raw material or appoint other sub-contractor while the
previous sub-contract has to pay the incurred expense.
Risk of fluctuated raw material cost. Since price quotation includes cost from bidding to final installation,
it is possible that, during that bidding process, the material cost may rise. Practically, the Company receives the price
confirmation from raw material sellers during the bidding process and whenever the Company receives the bid agreement,
the Company will purchase immediately to acquire material at confirmed price. For general materials, the Company initially
collects the order from many projects and, then, purchase at one time. This gives the negotiation power to good bargain.
Risk of controlling and managing. Since the design, supply, construction, and installation of electrical distribution
system, power substation, transmission line, and telecommunication tower are dispersed to several areas depending on
customer's location, the problems of staff's careless and dishonesty can be found. The Company assigned group of
engineers to take care and investigate the project management to minimize this risk.
4. Risk from working capital
The necessary working capital is 10-15% of particular project value. This is used for bidding, preparation, and
procurement and is incurred before receiving payment from the project's owner. Without proper working capital
management or in the event of changing payment method, it may affect the operation or capability toengage the new
project or business expansion. In 2005, since the main customers are from public sector, the company did not experience
much difficulty from changing payment method. Nevertheless, The Company examines the financial status and negotiates
for the cautious and sound payment condition from the clients. Besides, the Company has the overdraft contract to
withdrawn money over the project period, providing sufficient liquidity.
5. Risk from engaging in consortium.
If the Company engages in consortium in order to expand the customer base or bid the very high-valued project,
both of the Company and co-investor will take responsibility in form of "Joint and Several". Whenever the co-investor
can not perform as stated in the contract, the Company may have to carry on the work or additional invest or payback
the incurred expense. However, the Company stringently investigates the financial status of the co-investors and
selects ones that have equivalent performance and financial status to the Company.
6. Risk of foreign exchange
As some of the raw material needs to be imported, 5,230,770 USD bought in previous years, the Company is
exposed to foreign exchange risk. Nevertheless, The Company has policy to do currency forward contract for the full
amount and let the customer do the letter of credit to the seller directly.
7. Risk of declining securities price after IPO. It is caused by the sale of warrants which will be exercised by the
Company's directors and employees who are able to purchase at price lower than IPO price. The exercise of warrants
will affect stock price (price dilution) and voting rights (control dilution) equal to 1.56% and 2.33% consequently,
calculating from the amount of paid-up capital after IPO.
8. Other risks that are out of control and can not be controlled or natural disaster such as earthquake, tsunami, flood,
and storm. The Company reduces the risk by including in the agreement as the exemption of responsibility. For the
high-value project or public sector's project, the Company engages in the insurance for all risk.
Lawsuit
As of 30 September 2006, the company has neither lawsuit, whether it is disputant or litigant, that might cause
the loss to the company higher than 5% of the shareholders nor other lawsuits which might negatively affect the
operation of the business in a significant way.
No. of Employees As of 30 September 2006, the company has 375 employees.
Company Background
Demco Public Company Limited registered as the Company Limited on 1 June 1992 with 6 MB registered
capital, increased to 20 MB in November 1992, and continually increased afterwards. Currently, the Company has
215 MB registered capital which includes 210 MB paid-up capital. The Company was found by a group of electrical
engineers who have more than 20-year experience in electrical distribution system, power substation, electrical
transmission system, and telecommunication and was led by Mr. Pradej Kittiitsaranon, the Company's managing
director. The business line also covers steel structure fabrication which its growth goes along with economic growth
and nation's energy development. In 2004, the company restructured the business structure by selling its shares in 4
companies and liquidating 2 companies that were not related to the company's business. Hence, the Company has
only one subsidiary firm which is Ali Kathun Co, Ltd. left.
Major changes of the Company are as follow
1994: Steel structure and hardware for electric post factory was established and was granted the promotion
investment certificate from Board of Investment (BOI). Moreover, the Company won the bid from PEA to design,
supply, and install 22-33 KV distribution system in the middle and southern region of Thailand. This was the first
project for the Company.
1995: The Company launched the hot galvanizing bath size 1.2x4.0x1.5 meter for galvanizing steel structure
and hardware for electric post. Customer base was increasingly expanded to private sector, for instance, the construction
of power substation for Honda Car Manufacturing in Ayuthaya and Rojana Industrial Park. Furthermore, the Company
set up and installed low voltage system in the factory, too, for example Siam Wire Steel Co., Ltd. (The subsidiary
of Siam Cement) and Thai Pure Drinks Co, Ltd.
1996: The Company initiated in designing and installation of the cooling system for the manufactures and public
sector e.g. EGAT's training center in Chonburi.
1997: It was the first time for the company to work on the underground cable in Srinakarin Dam, Kanchanaburi
hired by EGAT and the 115KV transmission line for PEA and other private companies.
1998: The Company took on the 230KV turnkey basis of electrical station construction (Turnkey) for Khanom
Electricity Generating Company Limited (KEGCO), the subsidiary of EGAT.
2001: The Company initiated in the supply, groundwork construction, and telecommunication tower
communication equipment installation e.g. Antenna and Microwave reflector for public and private sector such as
Department of Provincial Administration (DPA), PEA, DTAC, Alcatel, Motorola, and TA Orange.
2002: The Company jointly invested with Mr.Eng MirLek Ali to establish Ali Khatun (Thailand) Company Limited
with 2 MB registered capital, holding 50.49% of total amounts of shares. The Objective is to export high and low
voltage electrical equipment and other related merchandises in Asia esp. to Bangladesh.
2003: The Company registered with Department of Alternative Energy Development and Efficiency (DEDE).
Moreover, many of public and private sectors, for instance Rajapak University in Lampang campus, Mae Jo
University, Chiangmai Phucome Hotel, and Suanprung Hospital in Chiangmai, hired the company to be the
energy saving audit.
2004: The Company installed the fiber optic by blowing method for the first time to Thai-Malaysia gas-pipe
line installation project for Trans Thai-Malaysia Co, Ltd in Hat Yai, Songkla. Besides, the Company initiated in
steel structure billboard fabrication for Master Ad Co, Ltd.
2004: The Company restructured its business structure by selling its shares of 4 companies whose businesses
were not related to the company's business, which are Demco Pattana Panich Co, Ltd., NEC Prestressed Concrete
Co, Ltd., Namchai Phatthana Engineering Co, Ltd., and Anusorn Service (2004) Co, Ltd. and liquidating
2 companies which are Demco Heritage Land Co, Ltd and Demco Property Development Co. Ltd.
2005: The factory received ISO 9001: 2000 from Anglo Japanese American (AJA) Registrars for production
quality of steel fabrication product (except machine and equipment), hardware/support equipment in electrical system,
tower system, transmission line, power substation structure, telecommunication tower, steel pole for bill board, steel
structure for general buildings, and metal appliance in high and low voltage distribution system.
2005: The Company increased the registered capital and paid-up capital from 142 MB to 160MB and sold to
the existing shareholders at par (100 baht/par). The objective was for working capital.
2006: The Company transformed its status to Public Company Limited on 26 May 2006 and had the resolution
to increase the registered capital from 160 MB to 215 MB and offered the shares to general public, directors,
managements and employees.
Investment in Subsidiary/ As of 30 September 2006
Associated/ Related Companies
Million Baht
Name Type of business Paid-up capital % of shareholding Investment cost
Ali Khatun (Thailand) Purchasing mechanical 2 50.49% 1.009
Company Limited and construction machinery,
and all kinds of electrical
equipments and selling in
Bangladesh, Middle East
and other Asian countries.
Notes: Executive Board of director approved in the meeting no. 7/2006 on 4 October 2006 to sell the shares
in Ali Kathun (Thailand) Co, Ltd as it had high operating cost. Moreover, the Company changes its targeted foreign
customers of electric equipments to Middle East and South East Asia and is expected that the process will be finished
by Q2 2007. However, the selling of shares in Ali Kathun has no implication on performance and financial status
of the Company since performance and financial status of Ali Kathun has insignificant effect on the Company's
profit & Loss statement
Change in Capital in the last 3 years
Unit: MB.
Date Capital increase (decrease) After the increase (decrease) Note
2004 (43) 142 Reverse deficit
2005 18 160 Working capital
2006 55 215 Reserve for working capital, Partial
Debt payment, and purchasing
machinery
Accounting Period 1 January - 31 December
Auditor Mr.Somchai Kurujitkosol from S.K. Accoount Services Company Limited
Registrar Thailand Securities Depository Company Limited
Financial Advisor Asia Plus Securities Public Company Limited
Dividend Policy
Not less than 40% of net profit after tax and reserved requirement required by law. The Board of director has
authority to refrain from or temporarily change the policy under the circumstances that it will benefit most to the
shareholders.The examples include using the reserve for debt repayment, funding for business expansion or in the event
of changing market situation which might affect the Company's future cash flow.
B.O.I. Certificates None
No. of Shareholders As of 7 December 2006
No. of shareholders No. of shares % of paid-up capital
1. Strategic shareholders
1.1 Government, state-owned enterprises 0 0 0
or public sector agencies
1.2 Directors, manager, and executive management 15 125 59.5
including related persons and associated persons
1.3 Shareholders who have a holding of above 5% 0 0 0
including related persons
1.4 Controlling Shareholders 0 0 0
1.5 Shareholders who enter into agreement not to sell 1/ 0 0 0
their stocks within a specified period
2. Non-Strategic shareholders hold > 1 trading unit 973 85 40.5
3. Non-Strategic shareholders hold < 1 trading unit 0 0 0
Total Shareholders 988 210.00 100
1/ Note: this refers to the shareholders who have agreement with the Company, not the silent period rule.
Major Shareholders As of 7 December 2006
Name No. of shares % of paid-up capital No. of shares % of paid-up capital
(Million)
1. Mrs. Praphee Puipunthavong's group* 68.82 43.01 69.08 32.13
2. Mr. Pradej Kitti-itsaranon's group* 35.83 22.39 35.83 17.06
3. Mr. Suwat Choradol 10.49 6.56 10.49 5.00
4. Bangkok First Investment&Trust
Public Co,Ltd 4.09 2.56 4.09 1.95
5. ABN AMRO BANK N.V.
HONG KONG BRANCH - - 4.00 1.90
6. Mr.Pairoj Sirirat 3.52 2.20 3.52 1.68
7. Mr. Phongsak Siricupta 3.07 1.92 3.07 1.46
8. Mr.Arkom Manakeaw 2.48 1.55 2.48 1.18
9 Mr.Samrerng Yangkratok 2.03 1.27 2.33 1.10
10. Mr.Prakrong Wongsa 2.30 1.44 2.30 1.10
Total 132.63 82.90 137.19 64.56
Note Mrs.Praphee Puipunthavong's group is consisted of Mrs.Praphee Puipunthavong and Mr.sawat Puipunthavong.
Mr.Pradej Kitti-itsaranon's group is consisted of Mr.Pradej Kitti-itsaranon, Mrs.Busaya Kitti-itsaranon, Ms.Nantida
Kitti-itsaranon, Ms.Janejira Kitti-itsaranon and Mr.Kamtorn Kitti-itsaranon.
Foreign Shareholders
As of 7 December 2006, the Company has 9 foreign shareholders, holding total shares of 4,307,400 or
2.05% of paid-up capital.
Note : The company has a limitation on the percentage of equity shares held by foreign shareholders stated
in the article 11 of association that "the Company's shares can be transferred indefinitely, except in the case that
the transfer will cause the foreign shareholders to hold more that 49% of the total shares sold".
Board of Directors
Shareholders meeting No. 1/2549 held on 28 April 2006 passed a resolution appointing Board of durector
as follow
Name Position Start Date
Mrs. Praphee Puipunthavong Chairman & CEO September 1996
Mr. Pradej Kitti-itsaranon Director August 1993
Mr. Suwat Choradol Director February1993
Mr. Phongsak Siricupta Director September 1993
Mr. Phumchai Hirunchai Director July 1992
Mr. Arkom Manakaew Director October 1994
Gen.Thian Chonmaitree Independent Director and Audit committee April 2006
Mr.Sanguan Tungdajahiran Independent Director and Audit committee April 2006
Mrs.Manee Charumanus Independent Director and Audit committee April 2006
Audit Committee
Shareholders meeting No. 1/2549 held on 28 April 2006 passed a resolution appointing the audit committee.
Members of the audit committee
Chairman Gen.Thian Chonmaitree
Member Mr.Sanguan Tungdajahiran
Member Mrs.Manee Charumanus
Secretary Ms.Wonruedee Suwapan
Scope of duties and responsibilities
1. Audit committee has duties and responsibilities according to Securities and Exchange Commission's (SEC) and
Stock Exchange of Thailand (SET)'s rules and regulations and directly report to Company's Board of Directors.
2. Carry out Audit to ensure that the financial reports correctly follow the accounting standard and are sufficiently
disclosed.
3. Develop guidelines and carry out Audit to ensure that the Company has an appropriate and effective internal
control and internal audit in cooperation with both external and internal auditors.
4. Carry out the Audit operation of the Company of ensure its compliance with the law, regulations of the Stock
Exchange of Thailand or any law that relates to the business operation of the Company.
5. Consider the selection and the proposal to appoint auditors of the Company and consider auditors' remuneration.
6. Consider the completeness and correctness disclosure of Company's information regarding the connected
transaction or conflict of interest transaction.
7. Carry out the audit committee report by disclosing in the Company's annual report This report should contain
the information as follows
a. Opinion regarding the preparation and disclosure of Company's financial report concerning accuracy,
completeness, and reliability.
b. Opinion regarding the sufficiency of Company's internal control.
c. Reasons to believe that Company's auditors are appropriate to be elected.
d. Opinion regarding the action toward Securities and Exchange Commission's (SEC) and Stock Exchange
of Thailand's (SET ) rules and regulations.
e. Any reports that shareholders and investors should know, under scopes and responsibilities which are
assigned by the Company's Board of director.
8. Provide opinion to support decision to appoint, transfer, and grant merit for head of compliance.
9. Other actions that is assigned by Company's Board of director and with approval of Audit committee.
Terms for holding office
1. Chairman 3 years
2. Member 3 years
(Including the additional appointment to and removal from the audit committee)
Listing Conditions None
Silent Period
- Shareholders, who own common shares before the company's public offering, holding 136,500,000 shares
or 65% of paid up capital after the initial public offering certify to the Stock Exchange of Thailand that their shares
will not be sold for the period of one and a half years from the trading date. Upon the expiry of each 6 months period
of the prescribed time, those shareholders will be allowed to sell of 25% of the total amount of shares prohibited for
sale and the rest after one and a half years.
- Warrant holders holding 3,412,703 warrants or 68.25% of total warrant holders certify to the Stock Exchange
of Thailand that their warrants will not be sold for the period of one and a half years from the trading date. Upon the
expiry of each 6 months period of the prescribed time, those warrant holders will be allowed to sell of 25% of the
total amount of shares prohibited for sale and the rest after one and a half years.
Others ESOP Warrant
Shareholders meeting No. 1/2549 held on 28 April 2006 passed a resolution to issue 5,000,000 warrants, which
will be offered to directors and employees, with offering price of -0- baht per unit. These warrants will be expired in
2 years after issuing. One warrant can be converted to one common stock, exercising at 1 baht per unit. Warrant holders
can exercise his or her rights, as specified in the warrant certificate, not more than 25% of the total warrants that he or
she is allocated in every 6 months. The first exercise date will be on 15th of the month that warrants are 6 months of
age and the next exercise date will be on 15th of every 6 month until the warrants are 2 years of age. The Company
will sell warrants to directors and employees once the Company gets the approval from Securities and Exchange
Commission (SEC). After warrants are allocated, they will be deposited at Thailand Securities Depositary Co, Ltd.
(TSD). However, if warrants are exercised during the silent period, these common stocks will be deposited at TSD
over their silent period. The warrants are allocated to the Company's directors
as follow.
Name Position Amount of warrants % of total warrants issued
1. Mrs. Praphee Puipunthavong Chairman & CEO 141,200 2.82
2. Mr. Pradej Kitti-itsaranon Director 156,000 3.12
3. Mr. Suwat Choradol Director 158,000 3.16
4. Mr. Phongsak Siricupta Director 155,200 3.12
5. Mr. Phumchai Hirunchai Director 160,800 3.22
6. Mr. Arkom Manakaew Director 150,800 3.02
7. Gen.Thian Chonmaitree Independent Director and
Audit Committee 94,000 1.88
8. Mrs.Manee Charumanus Independent Director and
Audit Committee 94,000 1.88
9. Mr.Sanguan Tungdajahiran Independent Director and
Audit Committee 94,000 1.88
For the other 3,796,000 warrants, 75.92% of total warrants issued, the Company allocated to managements
and employees.
STATISTICAL SUMMARY
Demco Public Company Limited
--------- in thousands --------- ------------ baht/share* --------------------
Year Total sales Net Profit Earnings Dividend Book Payout
(LOSS) (LOSS) Value Ratio
2003* 372,842 (36,679) (0.20) - 0.77 -
2004** 576,738 8,552 0.05 - 0.88 -
2005*** 1,503,180 44,434 0.28 0.10 1.36 36.01%
9 monthes**** 1,029,605 85,544 0.53 0.30 1.55 18.70%
30 September 2006 (Reviewed)
* Par @ 1 Baht
Demco Public Company Limited and its Subsidiaries
----------- in thousands ---------- ----------------- baht/share* ------------------------
Year Total sales Net Profit Earnings Dividend Book Payout
(LOSS) (LOSS) Value Ratio
2003* 655,994 (36,885) (0.20) - 0.85 -
2004** 955,777 8,552 0.05 - 0.88 -
2005*** 1,510,750 44,434 0.28 0.10 1.37 36.01%
9 monthes**** 1,029,606 85,544 0.53 0.30 1.77 18.70%
30 September 2006 (Reviewed)
* Par @ 1 Baht
* Par value at Baht 1 per share with the weighted average number of shares of 185,000 thousand shares.
** Par value at Baht 1 per share with the weighted average number of shares of 171,372 thousand shares.
*** Par value at Baht 1 per share with the weighted average number of shares of 157,041 thousand shares.
**** Par value at Baht 1 per share with the weighted average number of shares of 160,000 thousand shares.
Demco Public Company Limited
For the Period ended 2003 2004 2005 and 9-month period of September 30, 2006
(Unit: Thousand Baht)
Audited Audited Audited Reviewed
2003 2004 2005 9-mth 2006
Cash and Equivalent 1,198 1,208 37,399 43,178
Account Receivables 36,909 60,403 303,657 154,325
Accrued Revenue 115,188 224,951 164,966 229,403
Inventories 60,643 47,871 62,491 67,806
Property, Plant, and Equipment 77,960 65,738 71,330 85,123
Deposit with restriction 6,134 21,464 19,931 25,805
Withholding Tax expense 27,059 18,709 42,676 43,548
Total Asset 429,262 488,097 743,426 696,512
Short-term Loan from financial institutions 129,523 129,867 244,995 85,423
Account Payables 56,814 81,013 128,354 129,998
Long Term Loan and debt under financial lease 17,165 11,837 9,382 11,418
(Within 1 year)
Accrued Expense 15,996 15,582 37,084 18,093
Prepaid Revenue - Service 18,792 70,321 40,749 121,671
Prepaid Revenue - Sales 0 985 22,619 1,363
Long Term Loan 4,367 12,911 6,330 0
Debt under Financial Lease (Over 1 year) 5,364 828 4,941 4,453
Total liabilities 287,253 337,535 530,431 413,973
Registered Capital and paid up capital 185,000 142,000 160,000 160,000
Premium on share capital 35,400 35,400 35,400 35,400
Retain earnings (loss) (78,391) (26,839) 17,595 87,139
Total shareholder's equity 142,009 150,561 212,995 282,539
Revenue from Sales 91,234 148,113 251,996 234,816
Revenue from Services 281,608 428,626 1,251,184 794,789
Other revenue 15,349 33,736 28,708 21,078
Total revenue 388,191 610,474 1,532,530 1,050,683
Cost of Sales 98,724 141,333 220,639 187,478
Cost of Services 258,666 365,118 1,143,032 661,278
Selling and administrative expense 52,415 80,273 106,425 77,208
Interest expense (11,670) (13,372) (13,833) (12,697)
Tax Expense 0 0 (4,168) (22,812)
Net profit (36,679) 8,552 44,434 85,544
Weighted average number of shares 185,000 171,372 157,041 160,000
Basic income (loss) per share (Baht) (0.20) 0.05 0.28 0.53
Cash flows from operating activities 4,890 888 (68,145) 194,500
Cash flows from investing activities 9,462 23,191 (4,070) (21,591)
Cash flows from financing activities (84,777) (24,068) 108,406 (167,130)
Net increase (decrease) in cash (70,426) 11 36,190 5,779
Demco Public Company Limited and Subsidiary
For the Period ended 2003 2004 2005 and 9-month period of September 30, 2006
(Unit: Thousand Baht)
Audited Audited Audited reviewed
2003 2004 2005 9-mth 2006
Cash and Equivalent 3,932 1,844 39,725 43,975
Account Receivables 37,151 60,403 303,977 154,325
Accrued Revenue 115,188 224,951 164,966 229,403
Inventories 91,645 47,871 62,491 67,806
Property, Plant, and Equipment 89,463 65,826 71,385 85,156
Deposit with restriction 6,134 22,169 20,639 26,515
Withholding Tax expense 27,099 18,709 42,676 43,548
Total Asset 455,847 488,643 745,728 697,441
Short-term Loan from financial institutions 130,220 129,867 244,995 85,423
Account Payables 61,102 81,013 128,774 129,998
Long Term Loan and debt under financial lease 17,165 11,837 9,382 11,418
(Within 1 year)
Accrued Expense 16,878 15,600 37,408 18,154
Prepaid Revenue - Service 16,600 70,321 40,749 121,671
Prepaid Revenue - Sales 0 985 22,619 1,363
Long Term Loan 4,367 12,911 6,330 0
Debt under Financial Lease (Over 1 year) 5,364 828 4,941 4,453
Total liabilities 299,360 337,349 531,169 414,028
Registered Capital and paid up capital 185,000 142,000 160,000 160,000
Premium on share capital 35,400 35,400 35,400 35,400
Retain earnings (loss) (78,597) (26,839) 17,595 87,139
Total shareholder's equity 156,487 151,295 214,559 283,413
Revenue from Sales 374,386 527,152 259,566 234,816
Revenue from Services 281,608 428,626 1,251,184 794,790
Other revenue 17,971 39,574 29,092 21,032
Total revenue 673,965 995,351 1,539,842 1,050,638
Cost of Sales 369,957 507,850 225,233 187,478
Cost of Services 258,666 365,118 1,143,032 661,278
Selling and administrative expense 73,040 101,946 108,144 78,155
Interest expense (12,302) (14,208) (13,843) (12,697)
Tax Expense 0 0 (4,526) (22,812)
Net profit (36,885) 8,552 44,434 85,544
Weighted average number of shares 185,000 171,372 157,041 160,000
Basic income (loss) per share (Baht) (0.20) 0.05 0.28 0.53
Cash flows from operating activities (14,924) (818) (66,462) 193,376
Cash flows from investing activities 28,202 12,298 (4,063) (21,996)
Cash flows from financing activities (83,641) (13,568) 108,406 (167,130)
Net increase (decrease) in cash (70,363) (2,088) 37,881 4,250
Demco Public Company Limited
For the Period ended 2003 2004 2005 and 9-month period of September 30, 2006
Audited Audited Audited Reviewed
2003 2004 2005 9-mth 2006
Liquidity Ratio
Current ratio (times) 1.10 1.14 1.14 1.30
Quick ratio (times) 0.72 0.98 1.00 1.07
Cash ratio (times) 0.02 0.003 (0.16) 0.42
Account Receivables turnover (times) 1.85 2.32 3.78 3.15
Account Receivables days (days) 194.32 155.13 95.15 115.98
Inventories Turnover (times) 10.13 16.77 42.47 36.96
Inventories day (days) 35.54 21.47 8.48 9.74
Account Payables Turnover (times) 8.61 7.35 13.03 8.76
Account Payables days (days) 41.83 48.99 27.64 41.09
Cash Cycle (days) 188.03 127.61 75.99 84.63
Profitability Ratio
Gross Profit Margin (%) 4.14 12.19 9.28 17.56
Operating Profit Margin (%) (6.71) 3.80 4.15 11.76
Net Profit Margin (%) (9.45) 1.40 2.90 8.14
Return of Equity (%) (22.95) 5.85 24.44 46.03
Efficiency Ratio
Return on Asset (%) (7.72) 1.86 7.22 15.84
Return on Fixed Asset (%) (37.18) 22.46 66.98 139.26
Asset turnover (times) 0.82 1.33 2.49 1.95
Financial Policy Ratio
Debt to Equity Ratio (times) 2.02 2.24 2.49 1.47
Interest Coverage Ratio (times) 1.42 1.07 (3.62) 18.12
Obligation Recovery Service Ratio (times) 0.12 0.02 (2.78) 0.99
Dividend Payout Ratio (%) - - 36.01 18.70*
* calculated from actual dividend paid out
Demco Public Company Limited and Subsidiary
For the Period ended 2003 2004 2005 and 9-month period of September 30, 2006
Audited Audited Audited Reviewed
2003 2004 2005 9-mth 2006
Liquidity Ratio
Current Ratio (times) 1.18 1.14 1.15 1.30
Quick Ratio (times) 0.71 0.98 1.00 1.07
Cash Ratio (times) n/a (0.003) (0.16) 0.42
Account Receivables Turnover (times) n/a 3.85 3.80 3.15
Account Receivables days (days) n/a 93.61 94.67 114.40
Inventories Turnover (times) n/a 11.29 42.62 36.96
Inventories Turnover Days (days) n/a 31.89 8.45 9.74
Account Payables Turnover (times) n/a 12.29 13.04 8.75
Account Payables days (days) n/a 29.30 27.60 41.16
Cash Cycle (days) n/a 96.20 75.52 82.98
Profitability Ratio
Gross Profit Margin (%) 4.17 8.66 9.43 17.56
Operating Profit Margin (%) (4.22) 2.14 4.20 11.71
Net Profit Margin (%) (5.47) 0.86 2.89 8.05
Return on Equity (%) n/a 5.56 24.29 45.28
Efficiency Ratio
Return on Asset (%) n/a 1.81 7.20 15.63
Return on Fixed Asset(%) n/a 22.50 66.97 126.70
Asset Turnover (times) n/a 2.11 2.49 1.94
Financial Policy Ratio
Debt to Equity ratio (times) 1.91 2.23 2.48 1.46
Interset coverage ratio (times) (0.21) 0.94 (3.50) 18.03
Obligation Recovery Service Ratio (times) (0.35) (0.01) (2.71) 0.99
Dividend Payout Ratio (%) - - 36.01 18.70*
* calculated from actual dividend paid out