information of memorandum - asian insulators public ...¸ªรุป...page 5 of 29 sources of...

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- Information of Memorandum -

Asian Insulators Public Company Limited

HeadQuarter and Factory

Address

: 254 Seri Thai Road, Kannayao, Bangkok 10230

Tel.: 0-2517-1451, 0-2517-1026 Fax: 0-2517-1465, 0-2540-0993

Website http://www.asianinsulators.com

Date of being listed in SET : 9 September 2004

Registered Securities : 2,799,996,084 Ordinary Shares at Par Value of 0.25 Baht totaling 699,999,021 Baht

Registered Capital : Registered Capital

Ordinary shares of 2,799,996,084 shares

Par value of 0.25 Baht totaling 699,999,021 Baht

Paid-up Capital

Ordinary shares of 2,799,996,084 shares

Par value of 0.25 Baht totaling 699,999,021 Baht

Secondary Market : Stock Exchange of Thailand (SET)

Business and Operation:

Asian Insulators Public Company Limited (“Company” or “AI”) manufactures and distributes high quality electrical insulators products for electricity distribution and transmission line. Currently, the Company’s factory is located at Phrom Buri District, Sing Buri Province with a manufacturing capacity of 6,000 tons per year.

Moreover, the Company is also involved in engineering business, manufacturing and distributing vegetable oil,

and alternative energy to replace biodiesel. Organization Structure as of 31 March 2019

Remark: PPC Insulators Holding GmbH (PPC) invested through the subsidiary that PPC hold 100% of shares such as

Porzellanfabrik Frauenthal Insulators GmbH (PFI) which manufactures and distributes electrical insulators in Europe and has the

headquarter in Austria.

25.10%

AI

AIE

AIES

100.00% 61.77%

PPCAI

PFI/1

74.90%

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Subsidiaries / Joint

Ventures Business

Registered

Capital

Paid-Up

Capital

Percentage of

Ownership

(Million Baht) (Million Baht) %

Subsidiaries

AIES

(AI Engineering Services

Company Limited)

The main business is an

engineering contractor for

construction of high voltage

sub-stations and high voltage

transmission lines.

200.00 200.00 100.00

AIE

(AI Energy Public

Company Limited)

The main business is

alternative energy

manufacturer and vegetable

oil refinery

1,356.00 1,308.07 61.77

Joint Venture(s)

PPCAI

(PPC Asian Insulators

Company Limited)

The main business is to

manufacture and distribute

electrical insulators in

Europe. PPCAI has the

headquarter in Austria.

263.00 263.00 25.10

Product(s) Characteristics

Electrical insulator is one of the most important components in overhead line, transmission line, and

distribution line. The product act as an insulator which allow the electricity to flow through the electric pole to

the ground and fix the electric wires to the pole. If there is an electrical surge, the installed insulators will halt

the circuit which will stop power supply and cause power outage.

The insulators come in both circular and cylinder shaped with groove(s) for the electric wires. The

products are made from insulating materials such as, glass, porcelain, or polymer-like substance. Nonetheless,

porcelain insulator is the most accepted and used in variety of countries due to its insulating ability, standard,

usage life, and price appropriateness. Glass insulators used to be the most accepted insulators in the 1847

due to its cheaper price comparing to porcelain. Later in 1877, glass insulators had lost its popularity to

porcelain insulators because of the inability to support bigger electrical wires with higher voltage. Moreover,

until 1917 porcelain insulators have been developed consistently resulting in a major shift of usage from glass

insulators to porcelain insulators by many countries such as the United States of America. Polymer insulators

were first created to replace the two mentioned insulators, but due to its low durability and loss fraction of its

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insulating ability in low temperatures, it was not widely accepted. In general, the usage life of an insulator is

approximately 15 to 20 years, subject to the material used and usage environment.

In the manufacturing of insulators, the manufacturers need to harvest technologies in varies branches

including material science, electricity, and metal to meet with the standards such as, American National

Standard Institute (ANSI), International Electrotechnical Commission (IEC), Australian Standard (AS) and/or Thai

Industrial Standard. Therefore, quality check in every process of the production process is essential to the

Company. This includes physical, chemical, and after production quality checks in the Company’s lab and also, in leading local and foreign labs. Meeting up to the standards, porcelain insulators when installed properly can

accept varies electrical voltages across different electric systems, withstand aerodynamic, changing

temperature, and most importantly, have a constant insulating ability.

The Company’s porcelain insulators can sort out to 11 different types of insulators, each with different purposes as follows:

Types of Insulator Usage

1. Suspension Insulators

Used to fix electric cables in the power supply

and transmission system with voltages of 22 –

115 Kilowatt

2. Pin Type Insulators

Used to support electric cables in the

transmission system with voltages of 22 – 33

Kilowatt

3. Pin Post Type Insulators



Kilowatt

4. Line Post Type Insulators



Kilowatt

5. Alumina Ceramic Cable Spacer

Used as a separator and electrical cord holder

in the distribution system 22 - 33 Kilowatt.

6. Station Post Type Insulators

Used to attach to the steel rod supporting the

power line before entering the transformer in

sub-station. 7. Strain Insulators

Used as an electrical pole anchor in the

distribution system 22 - 33 Kilowatt.

8. Cleat Insulators

Used as insulators to fixed electric cables and

Optic Fiber cables

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Types of Insulator Usage

9. Underground Cable Support

Used to support underground electric cables

10. Spool Insulators

Used to fixed electric cables in the transmission

system with voltages of 220 – 380 Volt

11. Fuse Cut Out Insulators

Used to cut out high voltage systems 22 – 33

Kilowatt

Each product of the Company complies with both local and foreign standards such as, American

National Standard Institution (ANSI), International Electrotechnical Commission (IEC), Australian Standard (AS),

and Thailand Institution of Standard (TIS). Moreover, the products receive ISO 9001:2000 which ensures the

standard of the products. Currently, the Company is the only porcelain insulator manufacturers which has met

all the standards concerning electrical businesses.

The Company has received an investment promotion from the Board of Investment of Thailand (BOI)

according to the Investment Promotion Act, B.E. 2520 as follows:

Company 1. Promotion

Certificate No. 2. Promotion

Certificate Issuance 3. Business

4. Expiration date according to 5.1 and 5.2


1478(2)/2553 12 June 2012 Manufacture

insulators 11 June 2020

5. Primary Rights and Benefits that have been supported

5.1. Income arising from the stated business will be tax exempted for a period of 8 years or not more than 495.91

Million Baht (only for Promotion Certificate No.1478(2)/2553)

5.2. Corporate tax exemption on dividend paid from the promoted business as in 5.1 to be calculated for paying income tax throughout the promotion period for any promotional certificates. 5.3. Allowance of yearly loss carry forward within the granted period according to 5.1 to deduct from the net profit

after the granted period for a period of 5 years (for any Promotion Certificate)

Company and Subsidiaries’ Revenue Structure

Sources of

Revenue

Consolidated

Q1/2019 (Jan-Mar) 2018 2017 2016

Million Baht % Million Baht % Million Baht % Million Baht %

1. Revenue from

sales

604.36 96.07 2,362.08 90.56 3,012.76 91.25 4,169.03 89.23

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Sources of

Revenue

Consolidated

Q1/2019 (Jan-Mar) 2018 2017 2016

Million Baht % Million Baht % Million Baht % Million Baht %

2. Revenue from

production contract

5.07 0.81 49.46 1.90 77.03 2.33 32.58 0.70

3. Revenue from

construction contact

9.91 1.58 120.39 4.62 151.85 4.60 422.99 9.05

4. Revenue from

operating vessel

6.44 1.02 54.11 2.07 32.92 1.00 29.94 0.64

Total Operating

Revenue

625.78 99.47 2,586.04 99.15 3,274.56 99.18 4,654.54 99.62

Other Revenue 3.31 0.54 22.24 0.85 27.10 0.82 17.61 0.38

Total Revenue 629.09 100.00 2,608.28 100.00 3,301.66 100.00 4,672.15 100.00

Target Market

The primary target market is Provincial Electricity Authority (PEA) and Metropolitan Electricity Authority

(MEA) and the secondary target market is the contractors who perform services to PEA and MEA.

Marketing Strategy and Policy

Product Policy Quality of the product is where the priority lies within the Company so, it has set up a research

department which will in turn, consistently maintain and develop the ultimate quality and quality control of the

product. To increase the confidence among the customers, the Company will randomly select product samples

from each production lot to be quality tested at the Engineering Faculty, Chulalongkorn University and other

leading abroad labs as mentioned earlier.

Pricing Policy The Company’s pricing policy will refer to its main customers which are PEA and MEA. The two primary

customers have a base price which is in line with global market price. Then, the private sectors will bid the

prices. Historically, the bid price and global market price are similar.

Distribution Channel

The Company distributes to the primary target market through bidding process and/or other means

determined by the customer(s). As for the secondary target market, the customers will contact the Company so

that, the Company can offer the prices.

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Product Sourcing

Currently, the Company has 1 manufacturing factory located in Ban Mo, Phrom buri, Sing Buri. The

factory has a production capacity of 6,000 tons per year. For the maintenance of the machines and equipment,

the Company has a policy to shut down the machines and equipment for 2 weeks per year. The primary raw

materials that are used to produce are clay, clay mixes, hardware, and natural gas which the Company has

implemented the sourcing policy for the raw materials used. Employees will do a supplier assessment once a

year to ensure that the quality of the materials and services provided are constant or improve and have sufficient

capacity to support the Company. The sourcing methods are as follows:

Clay

Clay is a raw material that can all be domestically sourced which the suppliers are spread across the

country. Mae-Tan Soil can be found in Lampang Province and Ranong Province. As for plastic clay and ball

clay, the materials can be supplied from Surat Thani and Nakhon Si Thammarat. Despite various sources of

clay, the Company still have excess clay reserves.

Clay Mixes Mixes such as Alumina Oxide, Feldspar, China Stone, Kaolin, Silica Sand, and Talcum are used to mix

with the base clay to increase its stickiness and strengthwhere can be found in many provinces across the

country such as Feldspare can be found in Tak and Ratchaburi provices,Kaolin can be found in Ranong provice,

and China Stone can be found in Lampang provice.. Even though most of the mixes can be found domestically,

some of the mixes are needed to be imported from foreign sources such as Alumina oxide which has to be

imported from Japan, Australia, and India.

Hardware

This includes the metallic parts of the insulator such as, steel anchor bolt and steel closure. The

Company orders hardware both domestically and abroad by directly contact the manufacturers such as, Iron

casting factory or steel stamping machine. Hardware suppliers have to deeply understand the features of the

insulators to prevent defects or impacts on the quality of the final product.

Natural Gas

The gas is used to fuel the furnace that is used to manufacture the insulators which can be supplied

domestically. The suppliers have installed gas pipes from the source to the Company. Prices of the gas are in accordance with the price of liquid petroleum gas.

Competition

There are currently 7 standards governing the quality of porcelain insulators which consist of 21

different forms of products as follows:

1. TIS. 227-2525 Spool Insulators : Porcelain which has 2 types of products.

2. TIS. 279-2525 Pin Type Insulators : Porcelain which has 3 types of products. 3. TIS. 280-2529 Strain Insulators : Porcelain which has 4 types of products.

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4. TIS. 354-2528 Suspension Insulators : Porcelain which has 5 types of products.

5. TIS. 1251-2537 Pin Post Type Insulators : Porcelain which has 3 types of products.

6. TIS. 1077-2535 Line Post Type Insulators : Porcelain which has 3 types of products.

7. TIS. 2762-2559 Cable Spacer Insulators : Porcelain coated ceramic with polymer electrical wire

clamp.

Currently, there are 6 manufacturers that have been approved of the mentioned industrial standards,

and the Company has been granted total of 11 forms of products. Not only have the products of the Company granted the Industry Standard, the products of the

Company are widely accepted by targeted customers.

Environmental Impact:

Environmental impact caused by the production process is in the non-concerning level. This is due to

the nature of the production which does not use any chemicals which can harm or have any impact on the

atmosphere and water source. However, the Company still considers and try to prevent the impact that can be

cause from the operation by strictly managing the production process, educate and train employees, and gives

employee consistently health checks. Moreover, the water that is used in the production process has been

treated according to the standards so no impact on the environment is created.

Despite all the standards that the Company complies to, Department of Industrial Works visits the

factory once or twice a year to inspect on its activities. The Company has not been once found guilty of not

complying with the standard. The Company consistently analyzes the environmental impact that it is causing or

may cause. The analysis is done by Office of Occupational Safety and Health Area, Sing Buri which consist of

taking water samples, brightness inspection, noise level inspection, and heat inspection. All the cars, trucks

and heavy duty machines are all fueled by gasohol and biodiesel to help with global warming.

Project Feasibility Study:

- None -

Management and technical Aid:

- None –

Future Projects:

AI Energy Public Company Limited (AIE), the subsidiary, is investing in Pure Glycerin Refinery Project

AIE has the Biodiesel (B100) production capacity of 600 tons per day in which the production process

of B100 will give 10-15% of glycerin or 60-90 tons per day, which AIE currently sells to the targeted industrial

customer and Chemical Trader domestically and internationally. AIE has a plan to invest in Pure Glycerin

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Refinery Project in order to add value to the raw glycerin. Not only receive pure glycerin, AIE also receives fat

acid that extracted from the raw glycerin and reuses it as the raw material to produce Biodiesel.

AIE has imported Glycerin Refinery Machines since 2017 which has United State Pharma Grade (USP)

or European Pharma Grade (EP) and has production capacity of 100 tons of pure glycerin per day with the total

investment amount of 430 million Baht as of March 31, 2019.

Project Progression: as of March 31, 2019, the construction was completed 100% while currently is

undergoing the commissioning process and is expected to operate commercially on quarter 2 of 2019.

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Connected Transaction: Connected transactions between the Company with its subsidiaries and related persons for the year ended 31 Dec 2018 and ended 31 March 2019 are as

follows:

Related Parties Business Relationship

1. PPC Asian Insulators Co., Ltd. (PPC AI)

Manufacture, distribute, and export

insulators and ceramic products

Juristic person which is held by the Company amounting of 25.10% of registered

paid-up capital

Potential Juristic Person(s) Transaction(s)

Transaction Value (Million Baht) Details and Appropriateness 12 Months Period

Ended 31 Dec 18

3 Months Period

Ended 31 Mar 19

1. PPC Asian Insulators

Co., Ltd. (PPC AI) Goods Sold: The Company

selling water-coated and

sand

2.00 0.04 The Company sells mixed dirt, water-coated, and sand to

PPC AI to manufacture porcelain insulator with prices

stated in the contract.

Opinion of Audit Committees

The Audit Committee Meeting No.3/2019 on May 14, 2019

has considered and resolved that the prices in the contract

is reasonable.

Raw Material Sold: The

Company selling mixed soil

55.63 0.96

Account Receivables 10.16 -

Other Revenue: Rent and

Services

0.54 0.13 The Company allows related company to rent 190 square

meters as office space on the second floor which is located

at No.254 Seri Thai Rd., Khan Na Yao, Khan Na Yao,

Bangkok. The rent period starts from 1 June 2018 until 31

May 2019 at the rate of 250 Baht per square meter, or

47,500 Baht per month. The lease will be responsible for

Other Receivables 0.09 0.09

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Ended 31 Dec 18

3 Months Period

Ended 31 Mar 19

1.PPC Asian Insulators

Co., Ltd. (PPC AI) (continue)

utility bills which is calculated by taking the average usage

of both water and electricity and multiply that number by

the office space. If the lessee wish to continue the lease,

the lessee has to notify the lessor of the intention to

continue the lease 1 month prior to the termination of the

contract as stated.

As of 31 March 2019, the Company has other receivables

amounting to 0.09 Million Baht which has been paid.



has considered and resolved that the rental rate in the

contract is appropriate and reasonable. Goods Purchase: Porcelain

Insulators

0.42 - The Company purchases porcelain insulators from PPC AI

and resells the product to end customers. The prices are

stated in the contract between the companies.

The Company purchase dirt from PPC AI as raw material

used in the production of the insulators. The prices are

stated in the contract between the companies.

Raw Material Purchase:

Dirt

21.16 0.96

Account Payable 9.33 -

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Ended 31 Dec 18

3 Months Period

Ended 31 Mar 19

1.PPC Asian Insulators

Co., Ltd. (PPC AI) (continue)



has considered the price comparison document according

to the Company policy concerning the appropriateness of

the transaction and price.

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Audit Committee’s Opinion

The Company’s Audit Committee reviewed all of the connected transactions and viewed that all

transactions were justified and reasonably conducted to provide utmost benefits for the Company and

subsidiaries. The connected transactions mentioned above are reasonable and set price and condition

according to the market price as same as other unrelated persons and has no benefit transfer between the

Company, Subsidiary and related person who may have conflict of interest.

Measure or Procedure for Transaction Approvals In the past year, the Company has assigned the Audit Committee to review all connected

transactions performed between the Company or subsidiaries and related companies. After the review,

the Audit Committee has the view that all connected transactions were conducted as a part of and

accordance with the normal course of business, and the Company had made payment as remuneration

for the transaction based on the fair market value.

Policy or Protect of Connected Transactions The Company’s Board of Directors shall comply with all rules and regulations concerning

connected transactions and shall not approve any transactions which may cause the Board of Directors or

any conflicting party to have interest or conflict of interest of any manner with the Company. Such

transactions shall be complied with the regulations, notifications, instructions or stipulations of the Stock

Exchange of Thailand, including stipulation concerning a disclosure of connected transaction, and

acquisition or disposition of significant assets of the Company or subsidiaries.

In the future, if a connected transaction between the Company or subsidiaries and a conflicting

or interested party arises, the Company will assign the Audit Committee to provide opinion on values,

remunerations, including justification and rationale for such transaction. Asian Insulators Public Company

Limited has always disclosed connected transactions in the Notes to Financial Statement audited by

Auditor of Certified Public Accountant.

Obligation(s): As of 31 March 2019

- the Company has the liability from Bank Guarantee from Commercial Bank of 438.13 million Baht which is the

normal obligation of the Company.

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Risk Factors:

Business Risk

Porcelain Insulators Business

As the market leader, The Company manufactures and distributes Porcelain Insulators which are used in

distribution and transmission of electricity. The major clients are Utilities / State Enterprise such as the Provincial

Electricity Authority (PEA) and the Metropolitan Electricity Authority (MEA). If there is any change in demand for

Porcelain Insulators, it will be reflected in the revenue and profit of the Company.

Regardless the above, Utilities / State Enterprises have the policy and projects to expand the distribution

and transmission line network as per National Development Plan. The expansion of the distribution and transmission

lines networks shall be in line with the development and expansion of economic and Gross Domestic Products

(GDP) of the country, and has indication of continuing growth and demand. Also the Utilities / State Enterprises

have a clear policy in the procurement and require the quality products as per international standards such as

American National Standard Institution (ANSI), International Electrotechnical Commission (IEC), Australian Standard

(AS) and Thailand Institution of Standard (TIS). The Company’s products have been certified with Quality

Management to ISO 9001:2000, and only company in Thailand that has all Porcelain Insulators products required

by utilities for Thailand’s distribution and transmission lines networks. With a strong business reputation and over

30 years of experience, our products have been accepted by utilities in quality and reliability.

Risk from New Entrants

The Company may expose to risk from new entrants from both domestic manufacturers and foreign

manufacturers by the information disclosed to the public and number of domestic electrical insulators

manufacturers that still in few numbers. It may attract the new entrants domestically and internationally such

America and Japan to compete with domestic players and may cause the reduction of market share and revenue

of the Company.

However, the Company is expected to face a lower risk of entrant into the domestic market due to the

technology of producing electrical insulators. Since production of international standards requires a high

technology ceramic production which is completely different with the advanced ceramic technology used in the

manufacture of crockery and sanitary ware. Know-how Technology as well as the techniques of production and

quality inspection of the products used in the current production process are derived from the research and

development of research team and management team for more than 30 years. In addition, the company has a

policy to send employees at the management level to visit the international company. In order to improve and

develop the production process of the company, to obtain products with international quality standards and to

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reduce the production cost as much as possible. However, it is very difficult for new manufacturers to develop

technology and compete with the company in a short time.

There are not many possibilities that a foreign company could set up a joint venture with a Thai company

to compete in the domestic market because there must be technology transfer between each other in the joint

venture agreement in order to integrate the Know-How technology as well as production techniques. For a joint

venture in the present only a few domestic producers have such potential. In addition, the company has entered

into a joint venture agreement with PPC Insulators, one of the leading electrical insulators in the world which have

more than 100 years of experience in producing electrical insulators in the competition with companies that are joint

ventures between foreign manufacturers and Thai companies that may occur in the future. It also helps reduce the

number of major competitors from overseas who may join other companies. The company holds a 25.10% stake,

which will focus on exports to European and American customers with the potential and policy of the company. This

reduces and diversifies the risk of reliance on a small number of major clients to a low level.

There are more restrictions on the competition for the manufacturer of electrical insulators from abroad

because the main customers of the industry are PEA and MEA. This is a state enterprise that must comply with the

regulations of the Office of the Prime Minister on procurement. Mainly used raw materials or products produced

domestically. Currently, the government has a policy not to use foreign loans. The PEA and MEA are not subject to

restrictions on the right of the borrower to participate in the auction. The manufacturer of the electrical insulator from

abroad cannot participate in the tender.

Risks Arising from Competition within the Industry The main customers of the industry are PEA and MEA, which are state enterprises that have to open

bids for the purchase price. It is possible that the company may be exposed to severe competition from a

competitor within a single industry. This may lead to price cuts to grab market share. The company may have a

lower sales or market share.

However, compared to the group of manufacturers of electrical insulators in the country. The company

is the only manufacturer of electrical insulators in the country with all standard products for use in the domestic

electrical industry. And some products with advanced manufacturing technology, which has been developed by

the company's research and development. And patents of such products already. The research was conducted

throughout the duration of the operation. As a result, the company has an efficient production process with lower

production costs. It can reduce the percentage of waste from the production process at a lower rate. With such

potential, the company has a higher competitive advantage than other competitors. In the same industry

The Company has provided additional property and casualty insurance in the event of a business

interruption.

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Engineering Business

AI Engineering Services Co., Ltd. operates in different business segments. It is a contractor for the

construction and installation of power substations and high-voltage transmission lines, in which the main customers

are the Provincial Electricity Authority (PEA) and the Electricity Generating Authority of Thailand (PEA). According

to this structure, the growth of related businesses in this industry depends on the operation of state-owned

enterprises. However, the operation and expansion of PEA's power transmission and sub-station construction and

installation projects are in line with the national power and electricity development policy. This will be in line with the

overall economic growth in the country. Currently, there is a continuing trend of expansion. In addition, the PEA

has the criteria for selecting qualified companies, experience and ability to handle this large construction project.

As a result, competition in the construction and installation of power substations and transmission lines was not

severe due to the low number of qualified operators. The Company provides engineering services to the private

sector for the construction of high-voltage systems for industrial plants to reduce and diversify risk of dependence

on a small number of major clients as well as control the price of construction equipment to be within the budget

for all construction projects including insurance, accidents and theft during construction of all projects.

Alternative Energy and Vegetable Oil

AI Energy Public Company Limited manufactures and sells palm oil and biodiesel. Although the

government supports the use of renewable energy, the user confidence is still at a low level. The demand for

biodiesel is still low. However, high crude oil prices and high demand for energy will increase the demand for

renewable energy in the future and will reduce the global warming when more renewable energy is used, which

will benefit the renewable energy business. According to the state policy, the promotion of alternative energy

since February 1, 2008, diesel fuel sold in Thailand will have to contain biodiesel not less than 1.5% - 7%, which

will bring more demand for biodiesel fuel, respectively. But there is the risk of the company to face some

company that produces Biodiesel itself.

The company has invested in research and development to develop a system of refining crude palm

oil for consumption and biodiesel fuel. The company has succeeded in improving its production system to be a

continuous system, which normally is non-continuous system. Continuous systems can reduce production costs.

Reuse of the substance used in the production of methanol and yields apart from biodiesel can also generate

income for the company.

Palm oil is a highly competitive product, prices are set by the government and crude palm oil is a

commodity, prices are going up and down according to world market prices. This is a risk that the company will

lose inventory if the price of crude oil fluctuates.

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The Company pays attention to the risk management by inspecting the machinery of each production

unit at a pre-defined period. The Company has purchased the risk insurance for all major assets used in the

business. In addition, the Company has made additional insurance in the event of a business interruption.

Raw Material Risk

Porcelain Insulator Business

The production of electrical insulators of Asian Insulators Public Company Limited consists of four

main raw materials used in the production: soil, raw materials used in the soil, composite material and fuel gas.

In terms of raw material risk, the Company has a policy to prevent or reduce the risk by finding sources of

raw materials from both domestic and foreign suppliers. After checking the price and quality of raw materials,

which must meet the standards of production of the company, the company will be able to order in sufficient

quantities for production over a period of time. Raw materials available in the country can be used for more than

50 years, the raw material companies that the company has been trading with have good business relationship for

more than 30 years, so there is very little chance that the current raw material suppliers will not distribute raw

materials to the company.

For the risk of volatility of raw material prices. The soil and raw materials mixed in the soil will be less

volatile because there are many sources in both domestic and foreign. The company can select the appropriate

quality and price. In terms of price of materials, metal and fuel gas will fluctuate according to the demand and

supply of the world market. In particular, fuel prices will fluctuate based on the price of oil, which changes

according to the world market price.

With such risk factors, the Company has a policy to prevent or reduce the risk by the search and

selection of suppliers or sources of raw materials both domestic and foreign sources. In addition, long-term

planning for the production and procurement of raw materials is anticipated for future use. This approach allows

the company to bargain the price of raw materials at a lower price because of the sufficient volume of orders and

back up in case of risk. The company still have raw materials for production for a period of time. Natural gas

prices are fluctuated based on world prices, but cheaper than liquid petroleum gas prices.

Alternative Energy and Vegetable Oil Business

AI Energy Public Company Limited has a risk of raw material shortage. Biodiesel production requires

palm oil. Prices and quantities will depend on the season. Imports of palm oil can be made, but will be subject to

tariffs leading to 140%

The company has reduced the risk by improving production to use other materials such as palm fats

which is the product in addition to refined palm oil for consumption and can be imported from abroad with low tax

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rates and the company has enough storage tanks for palm oil, so the company can buy raw materials to the

warehouse and enough to use for a while. The production system of the company can use a variety of raw

materials such as palm oil, palm oil, soybean oil. A fleet of AI Logistics Co., Ltd., equipped with equipment for the

transportation of fat palm, support transportation from overseas which reduce the risk of raw material shortage. In

addition, the government has supported agriculture to grow palm oil continuously, which will increase

continuously in the future which ultimately reduce the risk of material shortages.

Employee Turnover Risk

The Company recognizes the important of the human resource. The company provides a training and

development center for employees working in both production lines and the office line. The compensation and

promotion is fair which lowers the level of entry and exit of employees.

Foreign Exchange Risk

Currently, the Company and its subsidiaries have purchased some raw materials from overseas

suppliers and traded in foreign currencies, for example. US Dollar, Euro and Japanese yen. The sale of goods to

a foreign company or management of a foreign subsidiary will receive such goods or services in US dollars. When

the company needs to supply the currency to repay the debt or currency exchange, the company may also be

affected by fluctuations in exchange rates.

However, the Company and its subsidiaries have taken measures to mitigate such risks. Forward foreign

exchange contracts have been entered into according to the repayment schedule. The Company is able to control

the risk from exchange rate fluctuations to a certain extent and manage foreign currency deposits in foreign

currency accounts.

Dispute: - None -

Employee Count: As of 31 March 2019, the Company has (excluding management) 514 employees.

Company’s History: Year Events

2001 - The Company moved its manufacturing factory from Bang Chan Industrial Estate, Bangkok to Sing

Buri, and started using Investment Promotion Certificate

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Year Events

2002 - The Company started research and development program for line post type insulators used in high

voltage of 69-115 Kilowatt to manufacture and distribute to PEA and MEA

2003 - The Company obtained ISO 9001-2000 standard certification

2004 - The Company set up a joint venture (JV) with PPC to form PPC AI with initial registered capital of

165 Million Baht which the Company holds 40% of the registered capital. The JV’s operation is to export porcelain insulators to major continents including Europe and America.

- The Company purchased 63.21% of EPC which is a contractor to install minor power stations and

electric cable from Thareratanavibool Group.

- On 19 March 2004, the Company transform to Public Company Limited.

- According to the Ordinary Shareholder Meeting 2004 on 7 April 2004, the Company increased its

registered capital to 500 Million Baht and its paid-up capital to 400 Million Baht by issuing

67,540,000 ordinary shares at 5 Baht Par Value. 47,540,000 ordinary shares were offered through

rights offering at Par. This operation was completed on 23 April 2004.

Capital Increase (Decrease) Within the Last 3 Years:

Date / Month / Year

Capital Increase

(Decrease)

(Million Baht)

After Capital Increase

(Decrease)

(Million Baht)

Note

28 April 2015 200 Million Baht 700 Million Baht Capital Increase by Stock Dividend

Accounting Period : 1 January to 31 December

Auditor(s) : Mr. Sathien Vongsnan CPA Reg No. 3495

Mr. Atipong Atipongsakul CPA Reg No. 3500

Mr. Vichai Ruchitanont CPA Reg No. 4054

Ms. Kultida Pasurakul CPA Reg No. 5946

Mr. Yuttapong Chuamuangpan CPA Reg No. 9445

ANS Audit Co., Ltd.

The person taking

the highest

responsibility in

finance and

accounting

: Mr. Thanit Thareratanavibool

Education:

Bachelor of Engineering, Northeastern University, Boston Massachusette U.S.A.

Master of Business Administration, Kasetsart University

Working Experience:

2004 - Present Chief Financial Officer, Asian Insulators Public Company Limited

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The Person taking

responsibility in

accounting

Mrs. Yaowamarn Kongmuang

Position : Accounting and Financial Manager

Education:

Bachelor of Accounting, Sripatum University

Working Experience:

1993-2002 Head of Accounting, Asian Insulators Public Company Limited

Security Registrar : Thailand Securities Depository Co., Ltd.

Financial Advisor : Asset Pro Management Company Limited

Dividend Payment

Policy

: Company and subsidiary have the policy to pay the dividend to the shareholder each

operation year, and not less than 40% of the net profit after tax and legal reserved. The

dividend payout depends on the investment of the new project in the future. The Board of

Directors’ decision to payout the dividend is subject to approval of shareholder at the General Annual Meeting, except the interim dividend payout. The Board of Directors has

authorized to approve the interim dividend payout, and inform the shareholders at the next

shareholder meeting. The Company shall set the legal reserve at least 5% of net profit until

the legal reserve is equal to 10% of the Company registered capital.

Investment Promotion Certificate

Company Promotion Certificate

No.

Promotion

Certificate

Issuance Date

Expiration Date Business

Asian Insulators Public

Company Limited

1478(2)/2553 12 June 2012 11 June 2520 Manufacturing

Insulator

Shareholder Count: As of 7 May 2019,

Shareholders Number of Shares

(Ordinary Shares) % of Paid-Up

Capital

1.Ordinary Shareholder(s) who is

1.1 Directors Executives and Management including related

parties 10 1,428,430,532 51.02

1.2 Shareholders that hold > 5 % including related parties - - -

1.3 Controlling Person(s) - - -

2. Shareholders that hold no less than 1 share 7,836 1,371,563,520 48.97

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3. Shareholders that hold less than 1 share 116 2,032- <0.01

Total Ordinary Shareholders 7,962 2,799,996,084 100.00

Major Shareholders: As of 7 May 2019

Shareholders Number of Paid-

Up Shares % of Paid-Up Shares

1 Thareratnavibool Group 1,492,795,457 53.31%

Mr.Narong Thareratanavibool 596,228,892 21.29%

Mr.Noppol Thareratanavibool 496,654,372 17.74%

Mr.Thanit Thareratanavibool 192,816,064 6.89%

Mr.Kovit Thareratanavibool 58,800,000 2.10%

Mr.Sirikul Thareratanavibool 50,973,080 1.82%

Mr.Anurak Thareratanavibool 50,400,000 1.80%

Mrs.Aussana Thareratanavibool 43,609,524 1.56%

Mr.Lum Thareratanavibool 2,352,000 0.08%

Mr.Nukorn Thareratanavibool 527,520 0.02%

Ms.Hatairath Thareratanavibool 308,000 0.01%

Ms.Janejira Thareratanavibool 84,000 0.00%

Mr.Montol Thareratanavibool 39,205 0.00%

Mr.Nattakit Thareratanavibool 2,800 0.00%

2 Thai NVDR Company Limited 111,662,920 3.99%

3 Worakitjanuwat Group 95,200,532 3.40%

Mr.Chonrasin Worakitjanuwat 60,000,000 2.14%

Mrs.Jarunee Worakitjanuwat 35,200,532 1.26%

4 Karintarakul Group 39,201,680 1.40%

Mr.Napol Karintarakul 22,400,000 0.80%

Mr.Sirichai Karintarakul 16,800,000 0.60%

Mr.Sutanai Karintarakul 1,120 0.00%

Ms.Varasinee Karintarakul 560 0.00%

5 Mr.Viroj Ungpaiboon 28,000,105 1.00%

6 Kayunngarn Group 21,721,184 0.78%

Mr.Surachai Kayunngarn 21,718,384 0.78%

Mrs.Aussanee Kayunngarn 2,800 0.00%

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Shareholders Number of Paid-

Up Shares % of Paid-Up Shares

7 UOB SMART DIVIDEND-FOCUSED EQUITY

FUND

16,845,480 0.60%

8 Ms.Yada Triratanapakdee 11,200,000 0.40%

9 Mr.Kuttiya Rojjanatrikoon 9,513,100 0.34%

10 UOB EQUITY RETIREMENT MUTUAL FUND 9,282,420 0.33%

11 Others 964,573,206 34.45%

Total 2,799,996,084 100.00%

Remark : Group of shareholders were grouping by surname.

Foreign Shareholders:

As of 7 May 2019, the Company has 15 foreign shareholders with total of 28,362,320 shares which is

approximately 1.01% of the total outstanding share according to the regulation no.12, “The Company's shares are

freely transferable without restriction. Unless such transfer of shares results in the alien holding more than 15% of

the total issued shares of the Company.”

Board of Directors:

As of 31 March 2019, the Board of Directors consists of

First-Surname Position/Title

1. Mr. Narong Thareratanavibool Chairman

2. Mr. Thanit Thareratanavibool Director / Managing Director

3. Mr. Kovit Thareratanavibool Director

4. Pol. Gen. Wichean Potephosree Independent Director / Chairman of Audit Committee

5. Mr. Boonlert KhawCharoenporn Independent Director / Audit Committee

6. Dr. Veeraphat Phetcharakupt Independent Director / Audit Committee

Audit Committee:

First-Surname Position/Title

1. Pol. Gen. Wichean Potephosree Independent Director / Chairman of Audit Committee

2. Mr. Boonlert KhawCharoenporn Independent Director / Audit Committee

3. Dr. Veeraphat Phetcharakupt Independent Director / Audit Committee

Remark: - Audit Committee who has experience in reviewing financial statements is Pol. Gen. Wichean Potephosree

Education

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Bachelor of Accounting, Chulalongkorn University

Master of Science in Finance, University of Essex, 2004

Chartered Financial Analyst (CFA Level III)

- Secretary of Audit Committee is Mrs.Mattika Chansuwan

▪ Authority and Responsibility of the Audit Committee

The Audit Committee is responsible for ensuring that the company is run in a clear and honest way.

In addition, the committee has to inspect the performances of the Chief Executive Officer and administrators

so as to make sure that the policies of the Board of Directors have been followed completely, in correctly and

in the best interests of the stockholders. This includes the following:

1. Ensuring that the company has correct financial reports in keeping with general accounting

standards, with sufficient details and transparency.

2. Ensuring that the company has appropriate and effective internal control and auditing.

3. Ensuring that the company follows the laws on the Stock Exchange market, the regulations of the

Stock Exchange market and the laws related to the company’s business. 4. Selecting and appointing the company’s accounting auditor, and setting his/her stipend. 5. Considering which items of the company’s information should be revealed in situations where such a

revelation might benefit a competitor and presenting the information correctly and completely.

6. Ensuring that the company has an appropriate and effective risk management system in place.

7. Examining and reviewing internal auditing plans and the performance of the internal auditing office in

coordination with the accounting auditor.

8. Preparing reports on the results of the company audits to be included in the company’s annual report, endorsed by the chair of the Audit Committee.

9. Reporting the auditing results of the company’s performance to the Board of Directors at least 4 times a year.

10. In performing auditing work under its jurisdiction, the Audit Committee is empowered to invite any

administrators and personnel concerned with the issue under consideration to join meetings or to

provide necessary documents.

11. Having the authority to engage consultants or outside people for advice when necessary.

12. Performing any other jobs delegated by the Board of Directors with the consent of the Audit

Committee.

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Term Period of the Position(s)

1.1 Chairman of The Audit Committee 3 Years

1.2 Audit Committee 3 Years

Securities Acceptance Conditions: - None -

Silent Period: - None –

Waiver by SET: - None -

Other Important Information: - None –

Statistic:

Year of Financial

Statement

Million Baht Baht Per Share Percent

Revenue from

Sales and Services

Net Profit

(Loss)

Net Profit

(Loss)

Dividend Book

Value

Dividend

Payout (%)

Year Ended 2016 4,654.54 293.85 0.10 0.09 1.12 90.00

Year Ended 2017 3,274.56 255.67 0.091 0.10 1.06 109.89

Year Ended 2018 2,586.03 322.71 0.115 0.12 1.13 104.35

3 Months Period

Ended 31 March

2019

625.78 43.34 0.015 0.00 1.14 0.00

Financial Statements: Summary of

Statement of Financial Position

Consolidated

As of 31 Mar 19 As of 31 Dec 18 As of 31 Dec 17 As of 31 Dec 16

Million

Baht %

Million

Baht %

Million

Baht %

Million

Baht %

Asset

Cash and Cash Equivalents 102.85 3.00 125.72 3.70 127.69 4.01 291.16 8.26

Current Investments 564.49 16.47 562.30 16.55 477.21 14.99 316.47 8.98

Trade and Other Receivables - net 244.04 7.12 234.15 6.89 258.41 8.12 457.00 12.96

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Consolidated


Million

Baht %

Million

Baht %

Million

Baht %

Million

Baht %

Current Portion of Receivables Under

Finance Lease Contracts 8.62 0.27 9.48 0.27

Unbilled Receivables 10.13 0.30 36.88 1.16 37.07 1.05

Inventory – net 445.46 13.00 445.30 13.11 355.73 11.17 447.34 12.69

Oil Supplies 1.86 0.05 1.57 0.04 1.98 0.06 2.29 0.06

Non-Current Assets held for Sales – Net 218.92 6.21

Total Current Asset 1,358.70 39.65 1,379.17 40.59 1,266.52 39.78 1,779.74 50.49

Investments in Associated Company –

net 2.64 0.08 6.35 0.18

Pledged Deposits at Financial Institutions 24.02 0.70 24.02 0.71 23.02 0.72 6.87 0.19

Financial Lease Receivables - Net 8.62 0.24

Property, Plant, Vessel, and Equipment -

net 2,007.85 58.59 1,959.63 57.68 1,834.08 57.61 1,686.59 47.84

Intangible Assets - net 5.49 0.16 5.66 0.17 1.44 0.05 2.44 0.07

Deferred Tax Assets - net 6.15 0.18 8.89 0.26 11.79 0.37 14 0.4

Deposit for Purchase of Assets 10.98 0.32 6.54 0.19 19.3 0.61

Other Non-Current Assets 13.55 0.40 13.55 0.40 24.88 0.78 20.54 0.58

Total Non-Current Asset 2,068.04 60.35 2,018.29 59.41 1,917.14 60.22 1,745.40 49.51

Total Asset 3,426.74 100.00 3,397.46 100.00 3,183.66 100.00 3,525.14 100.00

Liability

Overdraft and Short Term Loan from

Financial Institutions 0.30 0.01 128 3.63

Trade and Other Payables 199.67 5.83 200.27 5.9 169.89 5.34 143.65 4.08

Unearned Revenue from Selling Assets 80 2.27

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Consolidated


Million

Baht %

Million

Baht %

Million

Baht %

Million

Baht %

Advance Received and Deferred

Construction Revenue 7.06 0.22 3.69 0.1

Income Tax Payable 3.88 0.11 1.8 0.05 11.01 0.35 7.83 0.22

Total Current Liability 203.85 5.95 202.07 5.95 187.96 5.9 363.18 10.3

Non-Current Provisions for Employee

Benefits 27.96 0.82 27.13 0.8 30.5 0.96 29.32 0.83

Total Non-Current Liability 27.96 0.82 27.13 0.8 30.5 0.96 29.32 0.83

Total Liability 231.81 6.76 229.2 6.75 218.46 6.86 392.5 11.13

Shareholder’s Equity

Authorized Share Capital 700.00 20.43 700.00 20.60 700.00 21.99 700.00 19.86

Issue and Fully Paid-Up Share Capital 699.99 20.43 699.99 20.60 699.99 21.99 699.99 19.86

Premiums on Share Capital 902.77 26.34 902.77 26.57 902.77 28.36 902.77 25.61

Retained Earnings (Deficits) (330.71) (9.65) (374.05) (11.01) (556.77) (17.49) (420.45) (11.93)

Other Components of Shareholders’ Equity

1,236.41 36.08 1,236.41 36.39 1,220.70 38.34 1,220.70 34.63

Total shareholders’ equity of the Company

2,508.47 73.21 2,465.12 72.55 2,266.70 71.22 2,403.02 68.17

Non-Controlling interests 686.47 20.03 703.14 20.70 698.50 21.94 729.63 20.70

Total sholders’s equity 3,194.93 93.24 3,168.26 93.25 2,965.20 93.14 3,132.64 88.87

Total liabilities and shareholders’ equity 3,426.74 100.00 3,350.19 100.00 3,183.66 100.00 3,525.14 100.00

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Summary of Statement of Comprehensive

Income

Consolidated

Quarter 1

31 Mar 19

Year Ended 31 Dec 18

Year Ended 31 Dec 17

Year Ended

31 Dec 16

Million

Baht %

Million

Baht %

Million

Baht %

Million

Baht %

Total Revenue 625.78 100.00 2,586.03 100.00 3,274.56 100.00 4,654.54 100.00

Revenue from Sales of Goods 604.36 96.58 2,362.08 91.34 3,012.76 92.01 4,169.03 89.57

Revenue from Production Contract 5.07 0.81 49.46 1.91 77.03 2.35 32.58 0.70

Revenue from Construction

Contract 9.91 1.58 120.39 4.66 151.85 4.64 422.99 9.09

Revenue from Vessel Operating 6.44 1.03 54.11 2.09 32.92 1.01 29.94 0.64

Cost of Goods and Services 556.85 88.98 2,109.63 81.58 2,998.46 91.57 4,145.21 89.06

Cost of Sales 541.26 86.49 1,907.99 73.78 2,759.16 84.26 3,699.74 79.49

Cost of Production Contract 3.72 0.59 36.37 1.41 62.98 1.92 26.85 0.58

Cost of Construction Contract 4.01 0.64 111.60 4.32 135.55 4.14 381.56 8.20

Cost of Vessel Operating 7.86 1.26 53.67 2.08 40.77 1.25 37.06 0.80

Gross Profit 68.93 11.02 476.41 18.42 276.10 8.43 509.33 10.94

Net gain from Selling Non-Current Asset

Held for Sales 0.00 0.00 156.57 4.78 - -

Other Revenue 3.31 0.53 22.24 0.86 27.10 0.83 17.61 0.38

Share of Profit (Loss) from Investment in

Associates (2.64) (0.10) (3.71) (0.11) 1.75 0.04

Selling and Administrative Expenses 40.72 6.51 (171.17) (6.62) 192.41 5.88 195.92 4.21

Impairment Loss from PPE (17.40) (0.67)

Finance Costs 1.58 0.05 8.01 0.17

Income Tax Expense -4.85 -0.78 (10.65) (0.41) 37.50 1.15 13.62 0.29

Net Profit (Loss) 26.67 4.26 296.79 11.48 224.57 6.86 311.14 6.68

Profit (Loss) Attributable To:

Equity Holders of the Parent 43.34 6.93 322.71 12.48 255.67 7.81 293.85 6.31

Non-Controlling Interests (16.67) (2.66) (25.92) (1.00) (31.10) (0.95) 17.29 0.37

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Summary of Statement of Cash Flows

(Unit: Million Baht) Consolidated

Q1/2019 Y/E 2018 Y/E 2017 Y/E 2016

Profit (loss) before income tax expenses 31.52 307.44 262.07 324.77

Adjustments to reconcile profit (loss) to cash provided by (used in)

operating activities:

Depreciation 34.22 142.21 138.03 147.86

Amortization of computer software 0.22 1.09 1.28 2.15

(Gain) loss on disposal asset 8.29 (150.12) (3.72)

Unrealized (gain) loss on investments in Open-end Fund (1.49) (1.21) (1.23) (0.88)

Allowance for doubtful accounts 2.78 7.08

Allowance for devaluation of inventories 19.25 17.36

Reversal allowance for devaluation of inventories (5.88) (8.73)

Reversal impairment loss on asset 11.53 1.96

Share of loss from investment in associate 2.64 3.71 (1.76)

Unrealized loss on exchange rates (5.11) (1.15)

Non-current provisions for employee benefits 1.34 5.05 4.28 5.94

Interest income (0.17) (3.28) (4.11) (1.57)

Interest expenses 1.58 8.01

Gain from operating activities before changes in operating assets

and liabilities Changes in operating assets - (increase) decrease 84.89 470.66 243.61 504.1

Temporary investment 103.59

Trade and other receivables (10.13) 13.24 202.49 82.33

Unbilled receivables 10.13 26.75 0.19 (17.4)

Inventories (19.71) (83.29) 100.66 (0.19)

Advance payment for subcontractors (4.72)

Deposit for purchase of assets (5.59) 23.24 (28.03)

Non-Current Asset held for Sales

Other non-current assets 1.64 10.32 5.78 (5.35)

Trade and other payables -45.37 25.26 2.78 (27.17)

Advance received and deferred construction revenue (7.06) 3.37 (24.57)

Retention payables (0.12) (2.45) 0.97

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Summary of Statement of Cash Flows

(Unit: Million Baht) Consolidated

Q1/2019 Y/E 2018 Y/E 2017 Y/E 2016

Cash provided by operating activities 15.74 467.67 527.1 615.34

Payment for employee benefit obligations (0.5) (4.31) (3.11) (5.91)

Income tax received 0.9 2.48

Income tax paid (0.28) (19.93) (34.21) (17.83)

Net Cash Inflow (Outflow) From Operating 14.96 453.33 492.26 591.6

Pledge deposits at financial institution increase (1) (16.15) (3.31)

Interest received 0.17 2.26 2.04 1.28

Increase (decrease) in current investments (0.69) (83.88) (159.51)

Dividend income from investments in subsidiary

Payment for investment in subsidiary (135.06)

Payment for purchases of assets (37.57) (281.66) (290.51) (79.41)

Payment for purchases of intangible assets (0.05) (5.62) (0.13)

Cash advance receive from disposal of asset 80

Cash advance receive from disposal of equipment 2.36

Proceeds from disposal of assets 11.26 329.98

Proceeds from disposal of intangible assets 0.31

Net Cash Inflow (Outflow) From Investing (38.14) (493.39) (134.28) 0.92

Decrease in bank overdrafts and short-term loans from financial

institutions 0.31 (128) (196.03)

Interest paid (1.44) (8.04)

Pay long term loan from financial institution

Cash received from increase in share capital 178.07

Dividend payment (139.98) (392) (252)

Subsidiary's dividend paid to non-controlling interests (0.02) 0

Net Cash Inflow (Outflow) From Financing 0.31 38.09 (521.46) (456.07)

Net Cash and Cash Equivalents Increase (Decrease) (22.87) (1.97) (163.48) 136.45

Cash and cash equivalents at beginning of the periods 125.71 127.68 291.16 154.71

Cash and cash equivalents at end of the periods 102.84 125.71 127.68 291.16

Assets payable for plant and equipment 46.56 8.73 21.39 8.53

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Prepared by: Asian Insulators Public Company Limited

I hereby certified that the information is correct

With All Respect,


(Company Seal)

(Mr.Narong Thareratanavibool)

Director

(Mr.Thanit Thareratanavibool)

Director

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