ROBINS : Annual Report 2004
89
Message from President 5 General Information 6 Financial Highlights 9 Management Discussion and Analysis 10 Nature of Business 12 Organization Chart of The Group 14 Shareholding Structure 18 Management 19 Market and Competition Environment 30 Risk Factors 31 Internal Control 33 Inter-Company Transactions 33 Financial Statements 38 Annual Report 2004 Contents
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Annual Report 2004
Transcript of ROBINS : Annual Report 2004
Message from President 5 General Information 6 Financial Highlights 9 Management Discussion and Analysis 10 Nature of Business 12 Organization Chart of The Group 14 Shareholding Structure 18 Management 19 Market and Competition Environment 30 Risk Factors 31 Internal Control 33 Inter-Company Transactions 33 Financial Statements 38
Annual Report 2004 Contents
02
Annual Report 2004
04
Message From President
The Re-launch of the new image “Robinson …. Your Life Vitalizer” in 2003 has effectively and successfully convinced the target customers of its new market position and greatly enhanced the competitive edge of Robinson Department Store. It has become increasingly popular especially in the early career group and families who have the taste for modern life style, exciting store ambience at best value price range.
In 2004 the Company still gave high priority to improving the stores including the design, layout, ambience, and merchandise display to attract and best satisfy the customers. Moreover, it has continued to develop the merchandising management system to ensure that it could always provide new products right to the requirements of the customers while maintaining the optimum level of inventory resulting with no burden from the obsolete stock to the Company. This is another important aspect of the continued development in order to change the Robinson image.
On the part of marketing the Company has revamped the sales promotion activities to attract more specific groups of customers employing the theme promotion technique to emphasize the store image and participation of the customers. Such activities must suit the customers’ lifestyle and requirements in each store location. The shopping environment must be exciting and fun to better impress the customers.
Along with the effort to satisfy the customers through the merchandising management and stores improvement, the Company has been working hard on human resources and work processes development. In 2004 the overall store management system and process have been re-organized so that the store personnel could be properly developed and optimize their working efficiency with clear objectives. Such working system and human resources development have been the crucial aspect of the Company s long term development plan to enhance its competitive edge and ever better performance.
With the above mentioned undertakings plus the good economic environment continued from 2003, the Company’s 2004 performance was highly successful in terms of sales, profit, efficient expense control, and above all the greater satisfaction of the customers.
On the financial aspect the Company could achieve all the steps of the Rehabilitation Plan as it has continuously good performance and has been able to repay the debts over the minimum requirement of the Plan. In 2004 the Company has been granted new fund by local financial institutes to buy back 77% of the remaining Notes prior to the repay schedule. All those have contributed towards stronger financial status, which will greatly support future business expansion plan starting with the opening of new stores in 2005. This will definitely enable the Company to exit from the Rehabilitation Plan by December 2005 as scheduled.
May I, on behalf of the Board of Directors, take this opportunity to express our sincere thanks and gratitude to all our customers, employees, trade partners, share holders and others for their valuable support and sincerely hope it will be continued in times to come.
Mr. Preecha Ekkunagul
President
,
06
General Information Robinson Department Store Public Company Limited, registration number Bor Mor Jor 115, is conducting the business of Department Store under them name “Robinson”. At present, the businesses are operated throughout the country where there are totally 18 branches, comprising 9 branches in Bangkok and 9 Branches in upcountry.
The Company’s registered capital is Baht 11,106,611,330 which are fully paid-up of 1,110,661,133 ordinary shares, Baht 10 Par Value.
Head Office Address
2 Silom Road, Suriyawong, Bangkok, Bangkok 10500 Tel. 0-2266-3340 Fax. 0-2236-5330
Central Administration Office
139 Ratchadaphisek Road, Dindang, Dindang, Bangkok 10400 Tel. 0-2245-4811 Fax. 0-2247-5325 Store Location Location Tel. Fax. Robinson Department Store Pcl., Silom Branch 0-2266-3340-50 0-2236-5533 2 Silom Road, Suriyawong Bangrak, Bangkok 10500 Robinson Department Store Pcl., Ratchadapisek Branch 0-2248-2626-35 0-2642-2047 139 Ratchadapisek Road, Dindang, Dindang, 0-2247-5300-9 Bangkok 10320 Robinson Department Store Pcl., Sukhumvit Branch 0-2651-1533-42 0-2651-1500 259 Shukhumvit Road, Klongtoey-Nue, 0-2252-5122 Wattana, Bangkok 10500 Robinson Department Store Pcl., Bangrak Branch 0-2238-0052-61 0-2235-2467 1522 Charoenkrung Road, Bangrak, 0-2267-3781-86 Wattana, Bangkok 10500 Robinson Department Store Pcl., Bangkae Branch 0-2455-0143-45 0-2454-8350 110/5 Moo 9, Petchakasem Road, Bangwa, Phasrichroen, Bangkok 10160 Robinson Department Store Pcl., Srinakarin Branch 0-2721-8990-9 0-2721-9066 904/1 Moo 6, Srinakarin Road, Nhong Bon, Pravej, Bangkok 10260 Robinson Department Store Pcl., Rangsit Branch 0-2958-0800-39 0-2958-0899 161 Moo 2, Phaholyothin Road, Prachatipat, Thanyaburi, Pathumthani 12130 Robinson Department Store Pcl., Ramintra Branch 0-29475320-62 0-2947-5400 5/7 Moo7, Ramintra Road, Kannayao, Kannayao, Bangkok 10230
Location Tel. Fax. Robinson Department Store Pcl., Ladya Branch 0-2437-0111, 0-2439-4296 99 Ladya Road, Somdejchaopraya, 0-2437-0104-5 Klongsam, Bangkok 10230 CR Udonthani (Thailand) Co., Ltd. (042) 242-777 (042) 248-780 277/2 Phajak Road, Makkaeng, Amphur Muang, Udonthani 41000 CR Phuket (Thailand) Co., Ltd. (076) 256-500-12 (076) 223-304 36 Dilokuttit1 Road, Taladyai, Amphur Muang, Phuket 83000 CR Nakorn Sri Thammarat (Thailand) Co., Ltd. (075) 318-012-20 (075) 318-010 89/201 Pattanakukwang Road, Kiang, Amphur Muang, Nakorn Sri Thammarat 80000 CR Had yai (Thailand) Co., Ltd. (074) 220-150 (074) 220-157 9 Thammanoonvithi Road, Hadyai, Songkhla 90110 CR Chiang Mai (Thailand) Co., Ltd. (053) 203-640-59 (053) 283-129 2 Maheedon Road, Haiya, Amphur Muang, Chaing Mai 50100 CR Ubon Ratchatani (Thailand) Co., Ltd. (045) 241-887 (045) 241-268 221 Chayangkook Road, Naimuang, (045) 242-866 Amphur Muang, Ubon Ratchatani 34000 Robinson Department Store Pcl., Sriracha Branch (038) 771-001-10 (038) 770-999 90/1 Sukhumvit Road, Sriracha, Amphur Sriracha, Chonburi 20110 CR Ratchaburi (Thailand) Co., Ltd. (032) 310-831 (032) 310-866 265 Srisuriyawong Road, Namuang, Amphur Muang, Ratchaburi 70000 CR Chanthaburi (Thailand) Co., Ltd. (039) 340-348-57 (039) 303-114 22/107 Moo 7 Chantanimit, Amphur Muang, Chanthaburi 22000
08
3. References Share Registrar Thailand Securities Depository Co., Ltd. 62 The Stock Exchange of Thailand Building, 4th and 7th Floor, Ratchadapisek, Kwaeng Klongtoey, Khet Klongtoey, Bangkok 1110 Tel. 0-2229-2800 Fax. 0-2359-1262-3 Note Registrar BFIT Securities Pcl. 540 Mercury Tower 14th, 18th Ploenchit Road, Lumpini, Patumwon Bangkok 10330 Tel. 0-2677-4330 Fax. 0-2677-4331 Note Representative Bangkok First Investment & Trust Pcl. Bangkok Insurance Tower, 22nd Floor, South Sathorn Road, Khet Sathorn, Bangkok 10120 Tel. 0-2677-4330 Fax. 0-2677-4331 Auditor KPMG Phoomchai Audit Co., Ltd. 22nd Floor, Empire Tower, 195 South Sathorn Road, Kwaeng Yannawa, Khet Sathorn, Bangkok 10120 Tel. 0-2677-2000 Fax. 0-2677-2222 Auditor: Mr. Winid Silamongkol Certified Accountant Registration Number : 3378 Plan Administrator Robinson Planner Co., Ltd. 139 Ratchadapisek Road, Kwaeng Dindang, Khet Dindang, Bangkok 10230 Tel. 0-2248-8391 Fax.0-2248-2651
Financial Highlights Balance Sheet Consolidated 2004 2003 2002 Current Assets 2,462 2,098 2,017 Total Assets 7,355 7,286 7,778 Current Liabilities 2,794 2,252 2,357 Total Liabilities 4,873 5,516 6,232 Share Capital 11,107 11,107 11,107 Retained Earnings 1,157 364 -227 Minority Shareholders 181 186 190 Total Shareholdersû Equities 2,482 1,770 1,546 Profit and Loss Statement Consolidated 2004 2003 2002 Net Sales 8,835 7,765 7,615 Total Revenue 9,941 8,817 8,680 Cost of Sales 6,900 6,053 6,036 Selling and Administrative Expenses 2,252 2,183 2,105 Profit (Loss) from Ordinary Activities 717 515 463 Net Profit (Loss) 717 515 15,257 Key Financial Ratios Consolidated 2004 2003 2002 Liquidity Ratio (time) 0.88 0.93 0.86 Average Collection Period (day) 7.01 6.47 6.71 Average Selling Period (time) 26.32 29.88 38.39 Average Payment Period (time) 77.19 83.09 95.28 Gross Profit Margin (%) 21.90 22.05 20.74 Net Profit Margin (from Ordinary Activities) (%) 7.21 5.84 5.33 Return on Equity (%) 33.72 34.01 NA. Return on Assets (%) 9.79 6.97 191.79 Debt to Equity Ratio (time) 1.96 3.12 4.95 Book Value per share Baht 2.23 1.59 1.13 Basic Earning per share Baht 0.65 0.46 1.43
010
Management Discussion And Analysis
Financial Status And Operational Results
Sales and other revenue The Company and its subsidiaries generated the sales increase of Baht 1,070.32 million in 2004, representing 13.78% sales growth, compared to 1.96% sales growth in 2003. The sales increase was resulting from the success of efficiency in merchandising management, selecting of new and interesting products, renovating store format to be modern, and expanding customer’s base by implementing of theme promotion in connection with the target customer’s lifestyle. In the year 2004, the Company still faced fierce competition environment in retailing business and also the effects from avian flu outbreaks and the violence in the three Muslim-majority border provinces in some branches, however, the Company and its subsidiaries’ performance in 2004 achieved sales growth at a satisfaction level. In addition, the Company and its subsidiaries recognized the gain from investment in affiliated companies in 2004 of Baht 101.10 million, an increase of Baht 68.84 million from last year. Cost of Sales Cost of sales of the Company and its subsidiaries for the year 2004 was in the proportion of 78.1% of sales, a small change from the same period of the previous year of 77.96%. This was due mainly to a more efficiency in merchandising management, and the appropriate arrangement of frequency of price promotions during the year. Selling and Administrative Expenses An increase in selling and administrative expenses of Baht 68.73 million, or 3.15% increase from the year 2003 which was much lower than the growth in sales and gross profit. This was a result of the efficiency in human resource management and energy saving control. Net Profits and Interest The Company and its subsidiaries incurred interest expenses of Baht 3.19 million to certain local financial institutions according to the restructuring agreements made between subsidiaries and financial institutions, and to local financial institutions under loan agreement for the repurchase of Notes under the Voluntary Debt Refinance Program. This interest expense arising from the new loan was presented in a net interest basis from the difference between par value and repurchase price of Notes, as detailed in the Note to Financial Statements no.15. For the profit after interest, tax, and Minority Interest, the Company and its subsidiaries recorded a net profit of Baht 716.77 million in 2004, an increase of Baht 201.58 million or 39.13% from the year 2003 Assets The effectiveness of merchandising management policy has given shorter time to sell from 29.88 days in 2003 to 26.32 days in 2004. Besides the Company and its subsidiaries have recorded an increase in return from assets from 6.84% to 9.79% in 2004. Such increase was due to the improving performance as mentioned, and the slow down in investments as well as the higher depreciation compared to last year, therefore the assets increased in a diminishing rate.
Liabilities and Shareholderʼs Equity At the end of 2004, the financial liabilities of the Company and its subsidiaries brought down to Baht 2,516.71 million, compared to Baht 3,402.39 million at the end of the year 2003. This is 1.01 and 1.92 times of shareholders’ equity respectively). This was because the Company repaid for its principal and interest continuously. At present, liabilities comprised the Partially Secured Amortizing Notes due in 2005 and loan from financial institutions for Notes repurchase under VDRP program. Audit Fee Audit Fee The Company and its subsidiaries have paid audit fee to; The Company’s auditor for the year ended December 31,2004 of Baht 6,138,494.39. Auditor s Company or person who related to auditor s company for the year ended December
31,2004 of none Baht Non-audit Fee None
’ ’
012
Nature of Business
History and Major Development
1979 Robinson Department Store has started its first branch at the Victory Monument 1992 Robinson Department Store became the first department store that listed under The Stock Exchange of Thailand 1995 The Central Retails Corporation group joined Robinson as a major shareholder and jointly established CR Thailand Co., Ltd. in order to create upcountry department
stores under the name of çRobinsoné. As a result, it has increased up to 20 branches. 1998 The company has announced a debt moratorium as a result of Baht devaluation from change in exchange rate system announced on 2 July 1997 2000 On 2 May 2000, the Central Bankruptcy court ordered to rehabilitate the business of the company and appointed Robinson Planner Co., Ltd. as a Plan Administrator on 20 December 2000. This year the company has decided to close the Don Muang branch, as it did not yield a good income. 2001 The company closed the Victory Monument branch as the lease agreement had terminated and when consider its return from investment, it was not worth running this branch. The total branches left was 18 where nine of them were in Bangkok and the other nine branches were in upcountry. Moreover, the company launched the issuance of Notes to the unsecured financial creditors in the amount of Baht 4,766.7 millions for principal and interest. 2002 The company had successfully implemented major steps set forth in the Rehabilitation Plan, including increased of its capital from Baht 1,480.8 millions to Baht 14,808.8 millions proceeding the debt to equity conversion, decreased of capital of 25% and forgiveness of remaining debt. Owing such success, the Stock Exchange of Thailand considered approving trade resumption on commerce sector for the companyûs ordinary shares since November 26th, 2002 onward. 2003 In May, the company started to relaunch a campaign to promote its new image under
the concept of çRobinson... Your Life Vitalizeré. Additionally, in November, the company arranged to amend the Rehabilitation Plan with the Court approval to facilitate the repurchase of Notes under the Voluntary Debt Refinance Program (VDRP).
2004 The company is still running its retail business under the concept of çRobinson... Your
Life Vitalizeré with the aim to generate a continual sales growth. Moreover, the company has continually renovated the existing stores throughout the country to be modernize, colorful, lively ambience, with product variety for its target customer to reflect the new image of Robinson.
The major changes and development of the company in the year 2004 are as follows; 15 January There were two newly appointed directors namely Mr. Sudhitham Chirathivat and Mr. Tos Chirathivat. This was to replace the resignation of the previous directors namely Mr.Thaveevat Tatiyamaneekul and Mr.Manit Udomkunnatam. 16 January Robinson SPV Co., Ltd. (SPV) has signed the loan agreement with 2 financial institutes in order to provide new fund for Notes repurchase under the VDRP program. The Long term loan is provided up to 2,700 Million Baht (1,350 million baht from each financial institute). The interest referred the Minimum Loan Rate (MLR) as agreed for SPV to withdraw the loan to repurchase its existing Notes starting from 16 January 2003 to 30 December 2005. The first Notes repurchase was 8,066,409 units from the total outstanding of 22,510,749 units or 35.83%. 22 March At the creditorsû meeting ordered by the court, there was a resolution to elect three new directors representing unsecured financial creditors namely Mr. Thawatchai Varawandthanachai, Mr. Vatcharin Lerdsuvankul and Mr. Prasert Patradhilok in order to replace the resigned directors effective from 1 April 2004. On the same day, creditors also passed a resolution to elect the new team of creditorsû committee. 12 May The company has conducted a major renovation for Silom Branch to be modern so as to fit with its targets who worked in Silom area. Moreover, there was a Food Fusion opened at the fourth floor at Silom Branch to serve food and drink with modern decoration and good atmosphere for its target group. 8 December The company has acquired all shares from its local partner in CR Ratchaburi (Thailand) Co., Ltd. thus an increase in shareholding from 49.99% to 99.99%. This is to provide more flexibility for management. Early 2004, the company has renovated its Ratchaburi branch by extending selling area and its rental shops area be renovated to be modern. 16 December Robinson SPV Co., Ltd. has repurchased the Notes under VDPR program of 15,899,277 units from 20,638,776 units or 77.04% of total outstanding. Business Goal As a leading retail operator, we strive to be the most preferred department store with widest market coverage in Thailand, offering merchandises to best fit our customer lifestyle with innovative store format and services.
014
Organization Chart Of The Group
* The company acquired the stakes from its local partner in CR Rajchaburi (Thailand) Co., Ltd. as a result the percentage of shareholding was increased from 49.99% to 99.99%.
** R.S.T. Sky Bridge Co., Ltd. is a new joint venture company registered on 20 January 2005. Its objectives
were to build and manage the BTS link that joining the building at Robinson Sukhumvit branch and the other two buildings owned by 2 joint venture with the Bangkok Mass Transit System (BTS) at Asoke Station so as to provide convenience to Sukhumvit’s customers.
ROBINSON DEPARTMENT STORE
CR 99.99% 99.91% Robinson Power Buy 40.00% (Thailand) Anusawaree 49.99% CR 50.00% 74.50% Sapanmi CRC Sport 29.19% Rajchaburi* Department Store
89.99% CR 99.35% Robinson Siam Retail 24.00% Chiang Mai Rajdamri Deverlopment
74.99% CR 99.86% Robinson Square Ritz 24.00% Ubon Nakarin
76.00% CR 99.99% Robinson DCR 20.86% Udon Sukhumvit 64.99% CR 99.98% Robinson RST Sky 33.33% Chantaburi Ratchada Bridge
76.00% CR 99.99% Had Yai Kruekaew
49.99% CR 99.99% Nakornsi Kruepetch
49.99% CR 99.98% Phuket RD Pattana 99.92% R - Trading(L)BHD
99.99% Robinson SPV
Name Paid-up Capital Nature of Business Robinson Department Store Pcl. 11,106,611,000 Retail business and currently department stores in Bangkok and upcountry areas under “Robinson” brand, comprising branches of Silom, Ratchadaphisek Road, Sukhumwit, Bangrak, Bangkae, Srinakarin, Fashion Island, Rungsit, Ladya and Sriracha CR (Thailand) Co., Ltd. 501,000,000 Holding company to provide jointly investment in department stores business in 8 provinces which operate under “Robinson” name. CR Ratchaburi (Thailand) Co., Ltd. 102,500,000 Operate a department store in Ratchaburi CR Chiang Mai (Thailand) Co., Ltd. 220,000,000 Operate a department store in Chiang Mai CR Had Yai (Thailand) Co., Ltd. 202,000,000 Operate a department store in Had Yai CR Udonthani (Thailand) Co., Ltd. 225,000,000 Operate a department store in Udonthani CR Ubonrachathani (Thailand) Co., Ltd. 71,000,000 Operate a department store in Ubonrachathani CR Chanthaburi (Thailand) Co., Ltd. 130,000,000 Operate a department store in Chanthaburi CR Nakornsrithammarat (Thailand) Co., Ltd. 280,000,000 Operate a department store in Nakornsrithammarat CR Phuket (Thailand) Co., Ltd. 177,000,000 Operate a department store in Phuket Robinson Anusawaree Co., Ltd. 8,000,000 Dormant Company Sapanmai Sappasinka Co., Ltd. 20,000,000 Dormant Company Robinson Rajdamri Co., Ltd. 46,000,000 Dormant Company Robinson Nakarin Co., Ltd. 105,000,000 Dormant Company Robinson Sukhumvit Co., Ltd. 100,000,000 Offer space rental within store Robinson Ratchada Co., Ltd. 75,000,000 Offer space rental within store
Kruekaew Co., Ltd. 40,000,000 Offer space rental for warehouse
016
Name Paid Capital Nature of Business Kruepetch Co., Ltd. 11,250,000 Invest in businesses R-Trading (L) BHD 50,000 Invest in businesses Robinson SPV. Co., Ltd. 1,000,000 Repurchase of Notes under VDRP program Power Buy Co., Ltd. 560,000,000 Operate Specialty Store : Electrical Appliance CRC Sport Co., Ltd. 370,000,000 Operate Specialty Store : Sport Accessories Siam Retail Development Co., Ltd. 500,000,000 Owner and management of Fashion Island shopping complex (Ramindra) Siam Square Ritz Plaza Co., Ltd. 125,000,000 RD Pattana Co., Ltd. 3,000,000 Land developer DCR Co., Ltd. 428,200,000 Invest in businesses R.S.T. Sky bridge Co., Ltd. 10,500,000 Build and manage the sky train connection to department store
Income Structure/Type of % of 2004 2003 2002 Income/Company share holding Million Baht % Million Baht % Million Baht %
Net Sales 8,834.99 88.87 7,764.67 88.06 7,615.28 87.73 Robinson Department Store Pcl. CR Rachburi Co., Ltd. 99.99 CR Chiang Mai Co., Ltd. 89.99 CR Had Yai Co., Ltd. 76.00 CR Udonthani Co., Ltd. 76.00 CR Ubonrachathani 74.99 CR Chanthaburi Co., Ltd. 64.99 CR Nakornsrithammarat 49.99 CR Phuket Co., Ltd. 49.99 Other business 1,106.43 11.13 1,052.74 11.94 1,064.78 12.27 Total Income 9,941.42 100.00 8,817.41 100.00 8,680.06
Categories of Products 2004 2003 2002 SOFT LINE 84.81 83.32 80.68 HARD LINE 14.54 16.12 18.84
OTHERS 0.67 0.56 0.48
Product Line Our current products can be divided into 3 main categories 1) The Group of Soft line products are of modern and fashion comprised the main categories as follows: -
- Clothes for men and women: this comprises the department for menûs wears, womenûs wear, jeans and underwear. - Cosmetics and accessories: This comprises the department of cosmetics, decoration and accessories. - Leather: This includes the department of handbags, shoes and suitcases.
- General products for children : This comprises the department of childrenûs wear, childrenûs consumption products and toys This line emphasizes on brand name, modern, quality, variety and trendy. The nature of trendy products has rapid change and customer’s decisions depend on the trend. 2) The Group of Hard line products are consisting of following categories : - Home furnishings
- Automobilesû accessories and equipment - Gifts This line emphasizes on quality, variety of products, styles and trend. Besides, this line of products is those of sensitivity to the economy. Customers normally use the price as well as quality of goods for their decision making
3) The group of Exclusively @ Robinson Products are the company itself has developed including the selection of new and interesting products which are only available at Robinson 18 branches;
- Private Label Products: This comprises the products, which are developed by Company and offered to sell under the brand determined by the Company. The consideration is made to select only the products demanded by the customers offered with the reasonable price and allowed the good quality in the modern style available throughout 18 branches. This type of products is of :
- Kitchenware and bedroom items, which are under çRobinson at homeé, brand. - Fashion & Women ware such as FOF (Freedom of fashion), Cheer, Three Nine O. - Shoes & Women bags such as FOF, G. Chic, Jazzy. - Clothing & Men accessories such as Pacific Union, Existing Snap, True Blue, Beyond Basic, Otoko. - Child Products such as Cheeze, Abloom, Tomato, Young Bum, Bunny & Duck, Joyo.
- Exclusive Brand Products: This comprises the products which the Company has contacted with manufacturers and the brand owners both local and aboard to be available only at Robinson. This is a part of the differentiation strategy by selecting only the fashionable items available at the branch where the customers can afford to buy and also demand products different from other retailers. This type of products are of : - Imported fashion & Women wear such as Allure, Franciz, Ermis, Vertical Club, I.E. Ying & Yang. - Ladies Shoe such as Cindy, Sue. - Men Products such as FX Creation.
- One-Price Products Just 25: Every Items are sold at Baht 25 consisting of variety of products including the products for teenagers, newly working persons and consumption products such as the accessories, cosmetics, stationeries, gifts etc.
018
Shareholding Structure and Management On 31 December 2004 the company had registered capital of Baht 11,106,611,330 with a number of 1,110,661,133 paid-up capital shares, par value Baht 10 each Top 10 shareholder list as of 31 December 2004 No. Shareholders Name No. of Shares % 1 C.R.G. Service Co., Ltd. 311,164,488 28.06 2 Central Retail Corporation Ltd. 279,494,409 25.76 3 The Bank of New York (Nominees) Limited 54,373,096 4.90 4 PICTET & CIE 33,033,300 2.97 5 State Street Bank and Trust Company for Switzerland 29,587,994 2.66 6 Thai NVDR Co., Ltd. 23,601,700 2.13 7 Goldman Sachs & Co 22,767,659 2.05 8 Credit Industrial ET Commercial Singapore Branch 21,548,769 1.94 9 United Overseas Bank Limited 17,249,827 1.55 10 Viella Assets Ltd. 14,578,677 1.31
The ultimate shareholder of Company is Central Retail Group which comprising of Central Retail Corporation Ltd., C.R.G. Service Co., Ltd. They jointly hold the Company s shares in the aggregate of 53.82% of total outstanding shares. Dividend Policy
Under the Rehabilitation Plan where the Notes are still remain, the Company cannot pay dividend except it is permitted to pay dividend before it makes a fully repayment to the Notes or it makes available for the new fund to repay all Notes, under the following conditions:
50% of excess cash starting from the year 2002 onwards that the company can use for any capital expenditure, dividend payment, repurchase of Notes, or keep it for future capital expenditure and dividend payment. And only after it is jointly approved by 1 RPL’s directors representing Noteholder and 1 director appointed by CRC.
,
Management Organization Structure Nowadays, the organization structure consists of 3 sets of the Board of directors, the Board of Executive Officers of Robinson Department Store Public Company Limited and the Board of Directors of Robinson Planner Co., Ltd. Details are as follows: The Board of Directors comprised of: 1) Mr. Sudhitham Chirathivat Director 2) Mr. Tos Chirathivat Director 3) Mr. Preecha Ekkunagul Director 4) Ms. Narttaya Chirathivat Director
5) Mr. Pandit Mongkolkul Director 6) Mr. Pracha Pathayakorn Director 7) Mr. Vitaya Chavananant Director and independent committee 8) Mr. Vasit Taepaisithpong Director and independent committee
The authorized directors for the company signage are Mr. Sudhitham Chirathivat, Mr. Tos Chirathivat, Mr. Preecha Ekkunagul, Mr. Pandit Mongkolkul, Ms. Narttaya Chirathivat, Mr. Pracha Phathayakorn. Any two of these six directors are authorized to jointly sign on behalf of the Company with the company seal affix. Scope of work and authority of the board of Directors 1. To carry out activities in accordance with the Governing Laws, Objectives and the Articles of Association of the company and the resolutions of shareholders’ meeting2. To honestly perform the functions of Directors, protect the Company and maximize any benefit to the Company. 3. Directors are obliged not to operate the same business and not to compete with the Company either for their own interest or others’. Except in such case that a notice is made to the shareholders’ meeting before the election of the board.4. To notify the Company without delay in the following cases; 4.1 There are some direct or indirect benefits/losses to the Director in any contract the Company makes during an accounting period. The Director must inform facts about the nature of the contract. People involved in the contract and also benefit/loss of the Director. 4.2 In the case of a Director holding shares or bonds in the Company and subsidiaries, the Director has to specify the number of shares that are increased or decreased in each accounting period. 5. To prepare a financial status report of the Company However, the administrative authority of the Company is currently with the Plan Administrator, who has authorized executives of the Company to operate the business in general.
020
Organization Stucture
Mr. Sudhitham ChirathivatDirector
(Authorized Director)
Mr. Tos ChirathivatDirector
(Authorized Director)
Mr. Preecha EkkunagulDirector
(Authorized Director)/President
Mrs. Narttaya ChirathivatDirector
(Authorized Director)/Vice President-
General Goods Merchandising Line
Mr. Pracha PhatayakornDirector
(Authorized Director)
Mr. Vitaya Chavananand(Director & Independent Director)
Mr. Vasit Taepaisitphong(Director &
Independent Director)
Mr. Pandit MongkolkulDirector
(Authorized Director)
022
The board of Executive Officers 1) Mr. Preecha Ekkunagul President 2) Ms. Narttaya Chirathivat Vice President-General Goods Merchandising Line 3) Mr. Paul Millar Vice President-Retail Business Line 4) Ms. Vajariya Anamwathana Assistant Vice President-General Goods Merchandising Line 5) Mr. Gerard McGurk Assistant Vice President-Retail Business Line 6) Mr. Sukitti Kittipassorn Assistant Vice President-Retail Business Line 7) Ms. Usara Yongpitikul Assistant Vice President-Marketing Line 8) Mr. Parivat Sopasit Assistant Vice President-Finance and Administration Line
The Scope of Authority and Duty of the Board of Executive Officers 1. To carry out activities of the Company in accordance with the authority given by the Board and/or the Plan Administrator 2. To carefully carry out the Company’s business operations.3. To honestly perform functions, protect and maximize the benefits of the Company. Board of Directors of Robinson Planner Co., Ltd. Robinson Planner Co., Ltd. was established as of the order made by the Bankruptcy Court on 2 May 2000 to rehabilitate the Company s business. Robinson planner Co., Ltd. was both the Planner and the Plan Administrator. Members of the Board of Directors are as follows:
1) Mr. Prasert Patradilok 2) Mr.Thawatchai Vorawandthanachai 3) Mr. Vatcharin Lerdsuvankul 4) Mr. Piya Nguiakaramahawongse 5) Mr. Pandit Mongkolkul 6) Mr. Pracha Pathayakorn
The power to manage all the company administration and properties, and the right of the shareholders except the right to receive its dividend were transferred to the Planner in accordance with section 90/25 of the Bankruptcy Act B.E.2483 And the rights and authority of the Planner was then transferred to the Plan Administrator according to section 90/59 of Bankruptcy Act B.E.2483
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entr
al
Dep
artm
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tore
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, Ltd
.
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Co.
, Ltd
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nam
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.
Niti
pat
Co.
, Ltd
.
Rob
inso
n P
lann
er
Co.
, Ltd
.
Mr.
Sud
hith
am C
hira
thiv
at
Dire
ctor
(Aut
horiz
ed D
irect
or)
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Tos
Chi
rath
ivat
Dire
ctor
(Aut
horiz
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irect
or)
Mr.
Pre
echa
Ekk
unag
ul
Dire
ctor
(Aut
horiz
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irect
or)/
Pre
sid
ent
Mrs
. Nar
ttaya
Chi
rath
ivat
Dire
ctor
(A
utho
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)/Vi
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chan
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dis
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gko
lkul
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(Aut
horiz
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irect
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cha
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korn
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(Aut
horiz
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or)
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e/ P
osi
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(yea
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ackg
rou
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Fam
ily
Rel
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ips
wit
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Man
-
agem
ent
Sh
are
Ho
ldin
g
(%)
Org
aniz
atio
n/C
om
pan
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Du
rati
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lor
Deg
ree
(E
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rical
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nive
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of M
aryl
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(C
olle
ge
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k), U
SA
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per
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ree(
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hula
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ity
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aste
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egre
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ndus
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anag
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ache
lor
Deg
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nom
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nive
rsity
of H
artfo
rd, C
T, U
SA
.
- M
BA
Uni
vers
ity o
f Har
tford
in P
aris
,Fra
nce
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ache
lor
Deg
ree-
Acc
ount
ing
,
C
hula
long
korn
Uni
vers
ity
- M
BA
(Fi
nanc
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d In
tern
atio
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usin
ess)
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asin
Gra
dua
te In
stitu
te o
f Bus
ines
s
A
dm
inis
trat
ion
- B
ache
lor
Deg
ree-
Acc
ount
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,
C
hula
long
korn
Uni
vers
ity
- M
BA
(Fi
nanc
e an
d In
tern
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usin
ess)
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asin
Gra
dua
te In
stitu
te o
f Bus
ines
s
A
dm
inis
trat
ion
Unc
le o
f
Mr.
Tos
Chi
rath
ivat
Nep
hew
of
Mr.S
udhi
tham
and
Mrs
. Nar
ttaya
Cha
i-
rath
ivat
-
Aun
t of
Mr.
Tos
Chi
rath
ivat
- -
0.04 - - - - -
1990
-200
2
Pre
sent
1996
-200
1
2002
-Pre
sent
1995
-200
0
2000
-200
3
2003
-Pre
sent
1995
-Pre
sent
1992
-Pre
sent
2000
-Pre
sent
2003
-Pre
sent
1994
-199
7
2000
-Pre
sent
Pre
sid
ent a
nd
Chi
ef E
xecu
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Offi
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stm
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epar
tmen
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and
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ntry
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, Th
aila
ndVi
ce P
resi
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t-R
etai
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usin
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Gen
eral
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ager
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sid
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ail M
anag
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Thai
land
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orea
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Cap
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td.
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Mr.
Vita
ya C
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nana
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irect
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dep
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irect
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Mr.
Vasi
t Ta
epai
sitp
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&
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MR
. Pau
l Mill
ar(V
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sid
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etai
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Mis
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ener
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ood
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Mr.
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itti
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ice
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sid
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s U
sara
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gp
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Mr.P
ariv
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Ad
min
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- B
ache
lor
Deg
ree
Pol
itica
l Sci
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-Fin
ance
Maj
or C
hula
long
korn
Uni
vers
ity-
MB
A W
ebst
er U
nive
rsity
, US
A
- B
ache
lor
Deg
ree-
Cos
t Acc
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hula
long
korn
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vers
ity-
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nive
rsity
of T
exas
at A
rling
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AS
TER
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. (H
ON
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UK
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ache
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Deg
ree,
Fac
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of A
rt,
Th
amm
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ity
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aste
r D
egre
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acul
ty o
f
Mas
s C
omm
unic
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n,
Th
amm
asat
Uni
vers
ity
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awsi
de
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Aca
dem
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Dun
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Col
leg
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Com
mer
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ache
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harm
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idol
Uni
vers
ity-
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A, T
ham
mas
at U
nive
rsity
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ache
lor
Deg
ree
(Mar
ketin
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BA
(B
usin
ess
Com
mun
icat
ion)
- B
entle
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olle
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Bos
ton,
US
- B
ache
lor
Deg
ree
(Cos
t Acc
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),
Chu
lalo
ngko
rn U
nive
rsity
1986
-Pre
sent
1988
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sent
1990
-199
7
1998
-Pre
sent
1996
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9
1999
-Pre
sent
1984
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8
1998
-200
020
00-2
002
2002
-pre
sent
1996
-Pre
sent
1998
-200
0
2000
-200
3
2004
-pre
sent
1997
-200
0
2000
-200
320
03-P
rese
nt
Organization Stucture
Currently, the Company’s Board of Directors has no rights to manage the company. As such the Plan Administrator has given its power to the President to run the Company’s normal business activities.
P
lan
Ad
min
istr
ator
P
resi
den
t B
oard
of D
irect
ors
Fi
nanc
ial P
lann
ing
M
anag
emen
t offi
ce
offic
e
R
etai
l G
ener
al G
ood
s M
arke
ting
Fi
nanc
e an
d B
usin
ess
Line
M
erch
and
isin
g L
ine
Line
A
dm
inis
trat
ion
Line
026
Nomination of Directors and Executives of Robinson Department Store PCL. Structure of the Board of Directors/ the Appointment/ and Dismissal Procedure Structure: The board of directors comprises at least five directors and at least half of the number of board of directors must domicile in Thailand territory.
Appointment Procedure: Directors must be appointed in the general shareholdersû meeting according to the following rules and processes: 1. Voting will be casted by majority, assigning one share with one vote 2. Each shareholder shall cast all his votes to each nominee 3. The nominee who has the highest vote and the runners up will be elected as directors equal to the number of director that shall be appointed in case, there is a tie between nominees the chairman will add one vote to reach the final resolution In case of position becomes available before the due term, the board of director must select a person
who is qualified to be a replacement in the next directorûs meeting except when the term of directors has less than two months to be served. The replacement will be his term only for the remaining period of that director whom he replaces. However, the resolution of the replacement has to be from 34 of the total votes of the remaining directors. Number of Directors is not specified in the Article of Association of the company, therefore, it depends
on the resolution of a general shareholderûs meeting.
Minor Shareholderûs Right in Appointing a Director of the Company The companyûs Article of Association has specified that each shareholder has one vote for one share, and the cumulative voting is not applicable. However, the administrative authority is currently not with the board of director, it is instead with the plan administrator. Therefore, such rights to appoint a director, are also be with the plan administrator. Remuneration for Directors and the Management Money Remuneration Remuneration for Directors in 2004 comprises monthly payment and car allowance of 2 directors amounted to Baht 480,000. Details are as follows; 1) Mr. Pandit Mongkolkul Total remuneration is Baht 240,000 2) Mr. Pracha Phatayakorn Total remuneration is Baht 240,000 Remuneration for management including President, Vice-President, Assistant Vice-President and the Board member acting as management will be paid with monthly salary, bonus, provident fund and others (car allowance). The total remuneration of nine executives in 2004 is Baht 27,271,700. Non-Monetary Remuneration There is no non-monetary remuneration in 2004. Since the Company is in a rehabilitation period, the remuneration committee is not yet established.
However, the Companyûs remuneration package is of reasonable when compare to peer industry so as to keep good quality executives and high expertise people to run the business.
Corporate Governance 1. Policy of Corporate Government The company, by the administrative authority of the Plan Administrator realized the importance of ùgood governanceû, in concern with the policy of Stock Exchange of Thailand. Therefore, company Executives and the Plan Administrator studied appropriate procedures to implement the çgood governanceé principles, such as in 2004 there is an establishment of internal audit function to monitor and audit the Companyûs operations according to the internal control provision. Another consideration is investor relations for distributing correct information to shareholders, analysts, and other stakeholders, etc. However, the Company is still in the process of rehabilitation, there are limitations to completely implementing the ùgood governanceû principles. The Company and the Plan Administrator still manage under the following frameworks on a strict compliance basis to support the good governance. - Prudent administration in accordance with the Rehabilitation Plan to achieve good performance, together with the long term value added, and the prevention of any default, which would harm shareholders. - Operate with a transparency and timely disclosure of correct information to all shareholders equally - Operate with a high concerns of risks, establish a preventive measures and contingency plan to prevent any damage/loss - Strict compliance to the regulation imposed by the regulatory agency including the Stock Exchange of Thailand and the Securities and Exchange Commission (SEC)
2. Shareholderûs Meeting and Rights The Company did not hold 2004 shareholder’s meeting since the rights of shareholders except rights to receive dividends fell upon the Plan Administrator. However, the Company still reported its performance and the progress of its implementation under Rehabilitation Plan to the shareholders via the Stock Exchange of Thailand electronics channel. The Company’s annual report was also distributed to all shareholders.
3. Shareholderû Rights Apart from the shareholders, the Company also realizes the importance of all groups of stakeholders such as executives, employees, customers, business partners, competitors, creditors, the community, the government sector and other concerned parties. The company realized that all of these stakeholders’ supports will lead to the long-run success of the company. 4. Leadership and Vision The Plan Administrator’s Board of Directors is comprised of three representatives from the debtor and three representatives from the creditors. They share collaboration to determine the vision, mission, strategy, goal, business plan and annual budget proposed by the Company executives and also supervised the executives who were assigned by the Plan Administrator to operate in accordance with the specified terms and conditions set forth in the Rehabilitation Plan. The purpose is to maximize the value to the business under the terms and conditions and objectives of the Plan. Nonetheless, the mentioned authority is assigned only for the normal business operations, therefore, if there is any extraordinary cases, the Company ‘s management shall seek prior approval from the Plan Administrator. 5. Conflict of Interest The Company policy is to follow the Stock Exchange of Thailand regulations regarding the prevention of conflict of interest that includes connected transactions and disposition/acquisition of assets by using Armûs Length basis to determine price and condition. Moreover, the Company supervises the use of inside information by determining that new executives must report the holding of securities and also the transfer of the Companyûs securities pursuant to section 59 under the Securities and Exchange Act B.E. 2535. The Company also clearly specifies the responsibilities of the executives and organization units by prohibiting executives and/or any persons who have inside information from disclosing such information to any non-engaged persons or outsiders, except the disclosure is made to the Stock Exchange of Thailand. Any violation shall be subject to the disciplinary action according to the Companyûs regulations.
028
6. Business Ethics The company has normally clarified and made awareness of business ethics to new executives and new staff during their orientation course with a special emphasis on the punishment if the ethical conduct is violated. The company is now preparing a booklet of business ethic so as to give out to all staff to be used as a guideline. 7. Balance of Power for Non-Executive Directors/ Aggregation or Segregate of Position Currently the authority of the Board of Directors has transferred to the Plan Administrator comprised of three representatives from the debtor and three representatives from the creditors. This committee has duty and responsibility in accordance with the bankruptcy law to operate the business of the Company as set forth in the Rehabilitation Plan. In practice, the power is given to the management for day to day business operation, while the Plan Administrator took a monitoring role on management performance on the check and balance basis. The purpose of Rehabilitation Plan is to make continuous business operation in the long run and to ensure that creditors would receive repayments as claimed in the Plan. In managing the Company, the Plan Administrator is aware of the benefits for all stakeholders including the shareholders by closely monitoring and governing the company’s operation. However, after the Company finishes its Rehabilitation Plan, all management power will be returned to the Company’s Board of Directors which the member be elected and appointed by the shareholders. At present, the board of directors comprises eight directors, including two independent directors as per the SET’s rule, accounted for 25% of all board members. 8. Board of Directorûs Meeting At present, the Company has not held any Board of Director’s meeting owing to the transfer of power of the Board of Director to the Plan Administrator. 9. Subcommittee The committee has not set up a subcommittee to assist in supervising company operations. However, the company is studying the process in setting up an audit committee, which will be established once the company has successfully completed its Rehabilitation Plan. Also, the remuneration subcommittee has not been established, however the Company has procedure to consider the appropriate remuneration which is reflected the industry standard. 10. Controlling Systems and Internal Audit In 2004, the Company has reviewed the duty and authority of each function with an emphasis on work efficiency by increasing working speed and must be able to control and audited. This was piloted with the front office function at major branches and will be roll-out to every store in 2005.
For internal audit, in 2004 the Company has established a new function known as “Internal audit and system” with its responsibilities in performing operational audit to ensure the compliance with the Company’s policy and regulation, and applicable laws. The main focus of audit function is to audit the work system, review and give recommendations on issues: the prevention of confidential information of stakeholders, security and access of confidential information, and the levels of access to such information given to limited user.
11. Risk Management The Company established preventive measures to prevent and reduce 3 major risks as follows:
(1) Measure relating to the prevention / reduction of risk associated with
merchandising management The Company employs a strict compliance in inventory management by arranging the
appropriate level of products to meet customersû demand, emphasizing the stocks with regularly checking the items and counting the number of stocks including follow-up of inventory aging to prevent obsolete and quality depleted stocks.
(2) Measure relating to the prevention of loss and damaged assets Loss and damage prevention measure are established and Loss Prevention officers will be
responsible for. These are including the arrangement of fire alarm, fire extinguish contingency plan to the bomb-thread, riot, blackout, the installation of CCTV to assets robbery, and the arrangement of contingency plan. Also, properties insurance business interruption insurance policies are provided against the unexpected loss, Company can maintain the business opportunity as much as possible.
(3) Measure relating to security The company sets up a committee to be responsible for the hygiene, Safety and working
environment in all 18 branches to ensure that employees can work effectively on the safety and good health.
12. Board of Directorûs Report The Board of Directors of the Plan Administrator and the Company’s executives are responsible for the consolidated financial statements of the Company and its subsidiaries and all information presenting in the Annual Report. Such financial statements are prepared in accordance with Thai General Accepted Accounting Principles by the adoption of the appropriate accounting policy and consistent practice including the disclosure of substantial information in the Notes to the financial statements.
The Board has the opinion that the internal control of the Company is at a satisfactory level and believes in the creditability of the financial report of the Company and its subsidiaries as of 31 December 2004.
13. Investor Relations The Company realizes the importance of the disclosure of the accurate, complete, transparent, equal and timely information including the financial report and business information which impact the stock price of the Company by distributing such information via the communication channel of the SET and the Companyûs web site www.robinson.co.th.
Investor Relations Unit is not yet separated, the financial management division thus assigned to be responsible for the investor relations duties by communicating the information to the institutional investors, shareholders, stock analysts, press and general public. To acquire such information, the investors are invited to contact at Tel. 02248-2626 ext. 732, 733 or E-mail [email protected] Supervision on Insider Information The company has clearly determined the duty and responsibility of all employees in the form of Job Description and also has trained them to accurately understand their duties and the Company’s regulations. However, some duties may cause an inside information revealing to employees and then to public without permission. Therefore, the Company specifically allows the high-level executives to be informed such important inside information, especially the financial information by limiting the information access by each level of authority with the assistance of computer system. The Company will disclose information to those concerned at the appropriate time only without the contravention to the concerned regulations of the Stock Exchange of Thailand and applicable laws. Moreover the Company has regulation in connection with the employees disclosing the Company’s confidential information. This is to enforce in the case of Investigation that any employee discloses the confidential or financial information without permission shall be subject to be investigated and strictly punished in accordance with the Company’s regulations.
030
Market And Competition Environment Retail Business Overview The Thai economy still generated a continual growth from last year, even though the economic growth has inclined from 6.8% to 6%* in 2004 resulting from the economy slowdown during the second half of 2004. However, overall retail businesses has expanded more than last year, evidenced by new opened branches of large scale retail operators which amounted to 12% increase from the number of branches in 2003. This was quite a moderate expansion when comparing to new opened small and medium size branches (excluded convenience store). These expansion were a result of government measure in stimulating the economy at grassroots level to create household consumptions. In addition, government policy engaged in export promotion, tourism promotion, and Bangkok Fashion City project also attributed to the growth in retail businesses. Over all retail businesses during the year 2004 and 2005 have been facing with a significant change from their previous expansion model. The implementation of City Plan law plays a major role in controlling the expansion of large scale retail operators. This will result in a slow down in large-scale modern trade expansion, meanwhile, paving the way for smaller shopping complex or retail businesses to open new outlets with smaller format in public communities throughout the country. Competition Environment In 2004, the company still has competed with direct competitor from 2 chain department stores as it was in last year. Within department store segment, only 1 new store was opened in Phuket on the late 2004 where the company has already operated 1 store in Phuket downtown. Given the difference in location, however, the new opened store thus produced only a small impact to the sales of Phuket store. The competition among department stores still focused on product presentation, quality, variety, and promotional campaign with a specific pattern to be in line with customer lifestyles by focusing on activities that could establish a good relationship with customers and keep them as loyal customers.
Discounted store is an indirect competitor who uses the pricing strategy as a main drive of the business. This is because the products available are normally of daily use which lower emphasize on fashion, brand name, and product differentiation. There are a strong pricing competitive throughout the year and this put a lot of pressure to the suppliers in determining their wholesale prices for the retailers.
In terms of location, the company has operated nine branches in Bangkok area and nine branches in upcountry area. Whereby the company has to directly compete with two major chains of department store namely Central and The Mall group in the total of nineteen branches. For the upcountry locations, the degree of competition with the direct competitors are lower since the competitors have only four branches locating in Chiang Mai, Had Yai, Phuket and Nakornratchasima where the company has operated only 3 of 9 upcountry in the same provinces in Chaing Mai, Had Yai, and Phuket. Additionally, there are still the differences in location and target group of customers. However, the competition in upcountry also came from smaller local department store and indirect competitors as discount stores/super center which also provided some products in the same category as available in department store, but not with brand name thus they can offer lower price. In 2004, this group of business has opened many new branches including Chanthaburi branch where the company has currently operating the branch in this area. Hence, the company has to carefully implement its strategy to maintain the customer base including the creation of product differentiation and brand name, and the implementation of Theme Promotion to avoid price-cutting and to create the differentiation under Robinsonûs new
image.
Risk Factors Risk associated with the retail business competitive environment In the year 2004, Thailandûs economy has been continually affected from both internal and external factors though out the year, such as, avian flu outbreaks, the violence in the three Muslim-majority border provinces, the effect from high oil price, the weakening of dollars and natural disaster. Those mentioned factors have created bad environment for tourism industry as well as retail businesses. Besides, the launch of new City Plan law has affected the expansion of a certain segment of retail businesses. As a result, a development of new shopping complex is facing more difficulties. And even the intention of the law is not to limit the expansion of department store business, it will produce indirect effect to department store expansion due to the shopping complex, a commercial point providing a variety of products and services, is a major location for department store expansion. If the expansion of shopping complex is limited by the law, finding location for department store for is expansion will be more difficult, and need higher cost for expansion. For the branch expansion, department store segment has opened only one branch in Phuket area during the end of 2004 which the Company has already operated one store in this area. However, given the difference in location where the Companyûs store was located in downtown area, this storeûs revenue was slightly affected by the new entry. To prepare for the highly competitive situation in the future, the Company has planned to renovate this branch in order to maintain customer base and to meet customer expectations. For discounted store / super center, there were two openings in upcountry area where the Company already operated two stores. Existing retail operators were inevitably affected by this new entry across the board. However, since this competitor did not run department store business that has a key difference in target customers who have difference shopping purpose. As such, variety of products and services offered by department store together with the use of information technology to effectively support promotional campaigns, resulted in a small effect to the companyûs business. For competitive strategy, the company has a policy to avoid the price competition by emphasizing the constitution of product and service differentiation. This could be achieved by developing and selecting brand name products, with variety and differentiation, fashionable and modern products to be consistent with the lifestyle of the target customers in order to draw more customers. Additionally, instead of using price promotion the company has adopted a new strategy by having more marketing activities and product recommendation via Theme Promotion to compensate for discount. These will help the company to increase sales, maintain a gross profit margin, image and market positioning as well. Risk associated with the dependency of purchasing from supplier The company diversified to purchase from more than 2,300 suppliers for the variety and differentiation of products in consistent with the companyûs strategy including the reduction of the dependency of the huge purchase from a specific supplier. However, the company has purchased products from the largest supplier account for 16% of sales in 2004 whose product brand names are very popular among customers. The company is also acting as the major partner to distribute products for this supplier in both Bangkok and upcountry areas. Besides, there is also a corporation for the development of supply chain management system. Risk associated with the dependency of leasehold The company owns land and building for two branches and own leasehold rights on land and/or building for the remaining sixteen branches for operation. This is a result of the necessity to select the high potential areas for operating department store business where such land and buildings are not normally sold by the owners, they are rather leased out. In some cases, the cost in acquiring the land and building are costly and not worth for the investment comparing to the lease. However, the remaining periods of such lease agreement are over 6 to 22 years. Moreover, certain number of agreements were already provided terms and conditions for the renewal, together with the smooth compliance to the agreement by both parties, the company accordingly expects to achieve the renewal of lease agreement in the future.
032
Risk associated with the business rehabilitation The company has succeeded in following the major steps set forth in the rehabilitation plan since 2002 evidencing by the note repayments which have been paid more than the minimum requirement. This is a consequence of the ability to generate more income. However, the company still has the liability on the Notes amounting of Baht 2,301.4 million (as of 17 January 2005), which will be gradually due until the end of year 2005. The company has preceded the measurement to reduce the default risk by arranging to amend the rehabilitation plan to facilitate the repurchase of Notes under the Voluntary Debt Refinance Program (VDRP). The company successfully obtained new source of fund for repurchasing of all outstanding Notes and in the year 2004, 77% of total outstanding Notes were repurchased. Risk associated with the interest rate The company has liabilities to pay interest and principal from the issuance of the partial secure Notes to the creditors according to the rehabilitation plan. The interest payments of such Notes are determined in a fixed rate from 2001-2005 at 5%, 6%,7%,8% and 9% per annum respectively. These interests have been recorded as liabilities, which will be settled in the future. The company has to pay principal and interest with the amount and schedule of payments as specified in the terms and conditions of the Notes. Therefore, the company has not been exposed to the interest rate risk fluctuation in the market.
The company has borrowed new fund to repurchase the Notes under VDRP where a total credit facilities are up to Baht 2,700 millions. The interest rate is the average MRL of two commercial banks minus 1.75% or 4% whichever is higher. Such interest will be recorded as interest expenses calculating on the actual drawdown amount. Presently, the company achieved to repurchase 77% of total outstanding Notes. However, given the high liquidity of money market and the growing trend of the company’s sales growth, the company expects the changes in such interest rate will not have material impact to the company business. Risk associated with foreign exchange rate The company has not been exposed to foreign exchange rate risk because all the foreign liabilities filed claims by the creditors set forth in the rehabilitation plan were converted into Baht and the liabilities from the new source of fund to repurchase notes are also provided in Baht. As for the foreign exchange risk arising from imported merchandise as a normal business transaction, the company has provided a small credit line of letter of credit facility comparing to total amount of sales. Additionally, the company has a policy to hedge foreign exchange rate position in the event of money market fluctuation.
Internal ControlThe Company is under the Rehabilitation Plan administered by Robinson Planner Ltd. The Plan Administrator closely monitors the operation of the Company and its subsidiaries, especially the Company’s cash flow to ensure that no payment is made beyond the ordinary course of business. Besides, the company has established an internal audit function to review the compliance with internal control as well as engaged an external auditor to audit the system and day to day operation in some important units to ensure the correctness and efficiency.
For the opinion of the Company’s auditor, there is no opinion concerning the internal control of the Company in the audited report and financial statement for the year 2004.
For the risk management, the Company concerns and substantially considers the risk factors both currently expose and expose in the future. The Company also analyzes the consequences and provides measures or the business plan to mitigate risks as mentioned in the article of risk factors.
For the control and monitor, the Company clearly regulates the approval authority and the authority level in order that the expense requisition is on track with the budget approved by the Plan Administrator. Also, the regulations and the operation process and the audit are distinctly regulated to evaluate the performance and find out the deficiency need to be improved.
Inter-Company TransactionsParts of assets, liabilities, income, cost and expenses of the company and its subsidiaries are inter-company transactions disclosed in the note to financial statements no.4. These businesses are related by means of having the same shareholders and/or directors.
Details of major transactions for the year ended 31 December 2004
Subjects Related Company/ Inter-company Relationship with the company value *
(Million Baht) Purchase of merchandises Central Trading Co., Ltd. / the same group of 585.55 ultimate shareholder Central Garment Factory Co., Ltd. / the same group of ultimate shareholder / the same director C Track Sakol Co., Ltd. / the same group of ultimate shareholder Textral Textile Co., Ltd. / the same group of ultimate shareholder Central Department Co., Ltd. / the same group of shareholder / the same director
Rental and Service Power Buy Co., Ltd / affiliates / the same group of 327.27 Income shareholder / the same director CRC Sport Co., Ltd. / affiliates / the same group of shareholder / the same director B2S Co., Ltd. / the same group of shareholder / the same director CRC Power Retail Co., Ltd. / the same group of shareholder / the same director Office Club(Thailand) Co., Ltd. / the same group of
shareholder / the same director Central Food Retail / the same group of ultimate shareholder / the same director
* Inter-Company Transaction as at December 31, 2004
034
Subjects Related Company/ Inter-company Relationship with the company value * (Million Baht)
Central Retail Corporation Co., Ltd. / shareholder / the same director CDS Restaurant Co., Ltd. / the same group of ultimate shareholder Central Watson Co Ltd. / the same group of ultimate shareholder / the same directorMoney
Financial service income Power Buy Co., Ltd. / affiliates / the same group of 6.24 shareholder / the same director CRC Sport Co., Ltd. / affiliates / the same group of shareholder / the same director
B2S Co., Ltd. / the same group of shareholder / the same director
CRC Power Retail Co., Ltd. / the same group of shareholder / the same director
Management fee income CR. Udornthani(Thailand)/Subsidiary 97.48 CR. Phuket (Thailand)/Subsidiary CR. Nakornsrithammarat (Thailand)/Subsidiary CR. Had Yai (Thailand)/Subsidiary CR. Chiang Mai (Thailand)/Subsidiary CR. Ubonrachthani (Thailand)/Subsidiary CR. Rachburi (Thailand)/Subsidiary CR. Chanthaburi (Thailand)/Subsidiary Robinson Sukhumvit Co., Ltd. / Subsidiary
Kruekaew Co., Ltd / subsidiary RD Pattana Co., Ltd / subsidiary
Interest income Robinson Anusawaree Co., Ltd. 434.38 (Victory Monument branch) /Subsidiaryy Robinson Ratchada/Subsidiary Robinson Sukhumvit/ Subsidiary Robinson Nakarin Co., Ltd. / Subsidiary
Kruepetch Co., Ltd. / Subsidiary Robinson SPV Co., Ltd. / Subsidiary
CR (Thailand) Co., Ltd. / Subsidiary
Management fee expense Central Retail Corporation / shareholder / 8.53 the same director Central Department Co., Ltd. / the same group of shareholder / the same director
Interest expense Robinson Rajdamri Co., Ltd. / subsidiary 7.32 Robinson Sukhumvit Co., Ltd. / subsidiary
Kruekaew Co., Ltd. / subsidiary RD Pattana Co., Ltd. / subsidiary Central Retail Corporation / shareholder / the same director
* Inter-Company Transaction as at December 31,2004
The Necessary of Inter-Company Transaction
Purchase of merchandises: products that the Company purchased from the connected person are of popular brand and such person is the sole distributor. The Company uses the same procurement policy with both general suppliers and connected person in price negotiation to reach the highest gross profit margin. These products must be highly competitive to other competitors.
Rental and Service Income: Specialty Stores that runs by affiliated companies and connected companies are the expertise in specialty merchandising management. They are famous and popular among the Company’s target customers. They have unique style and modern, which can reflect the Company’s image. The compensation is based either on a certain percentage of sales sharing, or a fixed rate charge.
Financial Service Income: This is to earn money from the affiliates that use the Company’s secure room for cash keeping during the day. This is a kind of general service offered to business partner or rental shop operator. The Company apply the rate charge to connected companies with the same rate as It offered to other business partners.
Management Fee Income: This is to be collected from affiliates and subsidiaries as the Company provides merchandising management, marketing, Robinson’s brand name and logo to them. The compensation is calculated based on percentage of their sales and/or other income as set forth in the joint venture agreement.
Management Fee Expense: This is paid for the money transfer business and goods receiving / distribution transactions which are servicing by connected companies so as to create utmost benefits and efficiency for business.
Lending and borrowing with subsidiaries: Centralisation of merchandise buying leads to the need of merchandise payment from the Company’s center to suppliers. Those companies will be recorded as debtors of the Company under current account system where the company will charge an interest based on the rate offered by certain domestic financial institutions plus a premium of 1% to 1.5% p.a.
Measurement and Procedure to approve the Inter-Company Transaction
The company and its subsidiaries are complied with the Notification of the Stock Exchange of Thailand regarding the measurement, method and the disclosure of related transactions of the listed companies under the supervision of the Plan Administrator.
Future trend for the Inter-Company Transactions
The company and its subsidiaries still have transaction between each other, as it is necessary to department store business in general. Such transactions will be in compliance with the Stock Exchange of Thailand regulations. Pricing policy for the related-company is as follows:
1. The company and its subsidiaries set the policy of pricing for any sell or service transactions with related-companies. Such prices must not be less than the original price.
2. The company and its subsidiaries set the policy to calculate the interest charge to the loan between each other, this is in reference with the interest rate applied by domestic financial institutions plus 1.0% to 1.5% p.a.
3. The company and its subsidiaries set the policy to charge any rental or service fee using the percentage
of sales or fixed charge per square meter referring to market price.
036
Robinson, N.C.C. , ITV Minimarathon
Orchid & My Beauty
Activities
I go Jeans I go disco Jeans
My Wish My gift 2005
038
Financial Statements
040
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES
Financial Statements
For the years ended December 31, 2004 and 2003
and
Report of Certified Public Accountant
REPORT OF CERTIFIED PUBLIC ACCOUNTANT To the Shareholders of Robinson Department Store Public Company Limited I have audited the accompanying consolidated balance sheets of Robinson Department Store Public Company Limited and its subsidiaries as at December 31, 2004 and 2003, the consolidated statements of income, changes in shareholders’ equity and cash flows for each of the years ended December 31, 2004 and 2003. I have also audited the balance sheets of Robinson Department Store Public Company Limited as at December 31, 2004 and 2003, the statements of income, changes in shareholders’ equity and cash flows for each of the years ended December 31, 2004 and 2003. The management of Robinson Department Store Public Company Limited is responsible for the correctness and completeness of information presented in these financial statements. My responsibility is to issue a report on these financial statements based on my audits. Except as discussed in the following paragraph, I conducted my audits in accordance with generally accepted auditing standards. This Standard requires that I plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. As discussed in Note 1 to the financial statements, the financial statements for the year ended December 31, 2004, included investments in the associated companies and share of profit from investments in those associated companies which were computed from the unaudited financial statements for the year ended December 31, 2004. The investments in the associated companies as at December 31, 2004 amounted to approximately Baht 445.4 million (6.1 % of total assets for the consolidated financial statements and 6.0 % of total assets for the Company’s financial statements). The share of profit from investments in the associated companies for the year ended December 31, 2004, amounted to approximately Baht 101.1million (14.1 % of net profit). In my opinion, except for the effects of such adjustments to the 2004 financial statements, if any, as might have been disclosed had the financial statements of the associated companies been audited by me, as described in the third paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of Robinson Department Store Public Company Limited and of Robinson Department Store Public Company Limited and subsidiaries as at December 31, 2004 and 2003, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles.
(Winid Silamongkol)Certified Public Accountant Registration No. 3378 KPMG Phoomchai Audit Ltd. Bangkok February 14, 2005 pectively.
042
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT DECEMBER 31, 2004 AND 2003
ASSETS In Baht Consolidated The Company Only Note 2004 2003 2004 2003CURRENT ASSETS
Cash and cash equivalents 1,695,783,815 1,365,213,659 525,145,059 357,078,398
Trade accounts receivable - net
- Related parties 4, 5 46,136,105 22,995,436 55,779,777 40,434,351
- Other companies 5 154,560,246 120,472,940 102,762,332 85,516,086
Short-term loans and
advances to
subsidiaries 4 - - 2,011,104,760 1,799,080,949
Inventories - net 6 488,493,946 520,744,752 312,053,006 345,107,517
Other current assets 7 76,669,540 69,240,907 54,276,493 42,630,586
Total Current Assets 2,461,643,652 2,098,667,694 3,061,121,427 2,669,847,887
NON-CURRENT ASSETS
Investments in shares 8, 14 445,393,457 344,262,690 1,623,446,528 1,561,419,510
of related parties
Long-term loans to related 4 - - 61,223,493 -
parties
Property and equipment - net 9, 14 1,786,719,649 1,991,002,303 988,452,241 1,097,650,059
Leasehold right - net 10 2,198,700,720 2,368,482,477 1,482,059,930 1,614,163,809
Other non-current assets 11, 21 462,311,935 483,826,732 197,923,487 230,751,121
Total Non-Current Assets 4,893,125,761 5,187,574,202 4,353,105,679 4,503,984,499
TOTAL ASSETS 7,354,769,413 7,286,241,896 7,414,227,106 7,173,832,386
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT DECEMBER 31, 2004 AND 2003 LIABILITIES AND SHAREHOLDERS ̓EQUITY In Baht Consolidated The Company Only Note 2004 2003 2004 2003CURRENT LIABILITIES
Trade accounts payable
- Related parties 4 129,217,194 112,731,953 80,822,749 70,272,763
- Other companies 1,472,872,488 1,243,802,572 799,537,600 649,997,334
Liability under guarantee agreement
of subsidiary 13 - 159,193,373 - -
Short - term loans and
advances from related parties 4 26,926,852 17,464,932 960,512,384 1,047,470,897
Current portion of partially secured
amortizing notes (convertible
upon default) 14 721,667,012 372,722,000 2,674,048,569 372,722,000
Other current liabilities 443,483,251 345,804,703 292,499,959 227,516,125
Total Current Liabilities 2,794,166,797 2,251,719,533 4,807,421,261 2,367,979,119
NON-CURRENT LIABILITIES
Long-term loan from 15 1,795,044,911 - - -
financial institutions
Long-term loan from subsidiary 4 - - 113,300,000 113,300,000
Liabilities under debt restructuring
agreements of subsidiaries 12 - 34,098,064 - -
Partially secured amortizing notes
(convertible upon default) - net
of current portion 14 - 2,836,377,149 - 2,847,698,849
Provision for loss from investments
in subsidiary companies recorded
by the equity method 8 - - 65,309,959 60,810,973
Unearned lease income
- Related parties 4 174,712,346 - 122,470,057 -
- Other companies 87,154,392 368,226,119 - 192,452,947
Other non-current liabilities 22,102,466 25,794,611 4,658,405 7,320,350
Total Non-Current Liabilities 2,079,014,115 3,264,495,943 305,738,421 3,221,583,119
Total Liabilities 4,873,180,912 5,516,215,476 5,113,159,682 5,589,562,238
044
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT DECEMBER 31, 2004 AND 2003 LIABILITIES AND SHAREHOLDERS ̓EQUITY (Continued) In Baht Consolidated The Company Only Note 2004 2003 2004 2003
SHAREHOLDERS ̓EQUITY Share capital - common shares,
- Authorized share capital, common
share 1,110,661,133 shares at Baht 10
par value (Baht 11,106,611,330)
- Issued and paid-up share capital,
common shares 1,110,661,133
shares, Baht 10 per share 13 11,106,611,330 11,106,611,330 11,106,611,330 11,106,611,330
Discount on share capital - net 13 (10,919,678,429) (10,919,678,429) (10,919,678,429) (10,919,678,429)
Revaluation increment in assets 9 860,800,469 936,928,523 860,800,469 936,928,523
Revaluation increment from changes
in available - for - sale investment
value of associated company 148,208 121,642 148,208 121,642
Legal reserve 16 96,215,000 96,215,000 96,215,000 96,215,000
Retained earnings (deficit) 1,156,970,846 364,072,082 1,156,970,846 364,072,082
Shareholders ̓Equity of the Parent Company 2,301,067,424 1,584,270,148 2,301,067,424 1,584,270,148
Minority interests 180,521,077 185,756,272 - -
Total Shareholders ̓Equity 2,481,588,501 1,770,026,420 2,301,067,424 1,584,270,148
TOTAL LIABILITIES AND
SHAREHOLDERS ̓EQUITY 7,354,769,413 7,286,241,896 7,414,227,106 7,173,832,386
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR EACH OF THE YEARS ENDED DECEMBER 31, 2004 AND 2003
In Baht Consolidated The Company Only Note 2004 2003 2004 2003REVENUES 4
Sales 8,834,996,677 7,764,672,228 5,296,257,302 4,641,503,008
Rental and service income 639,072,522 633,273,180 384,026,818 385,205,916
Interest income 10,811,163 3,942,807 435,823,682 431,351,608
Other income 17 355,439,423 383,256,536 337,112,554 386,566,290
Share of profit from investments recorded
by the equity method 101,104,201 32,262,041 26,300,662 -
Total Revenues 9,941,423,986 8,817,406,792 6,479,521,018 5,844,626,822
EXPENSES 4
Cost of sales 6,900,104,108 6,053,406,122 4,135,543,657 3,613,449,208
Selling and administrative expenses 2,252,047,333 2,183,316,150 1,621,424,312 1,586,739,461
Share of loss from investments recorded
by the equity method - - - 122,335,617
Total Expenses 9,152,151,441 8,236,722,272 5,756,967,969 5,322,524,286
Profit Before Interest Expense and Income Tax 789,272,545 580,684,520 722,553,049 522,102,536
Interest Expense (3,194,618) (7,888,164) (5,782,339) (6,903,780)
Income Tax 18 (34,102,895) (27,988,836) - -
PROFIT AFTER TAX 751,975,032 544,807,520 716,770,710 515,198,756
Net Profit of Minority Interests (35,204,322) (29,608,764) - -
NET PROFIT 716,770,710 515,198,756 716,770,710 515,198,756
Basic Earnings per Share (Baht) 0.65 0.46 0.65 0.46
046
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR EACH OF THE YEARS ENDED DECEMBER 31, 2004 AND 2003 In Baht
Consolidated The Company Only
2004 2003 2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES: Net profit 716,770,710 515,198,756 716,770,710 515,198,756
Adjustments to reconcile net profit (loss) to net cash provided by operating activities: Net profit of minority interests 35,204,322 29,608,953 - -
Share of loss (profit) from investments
recording by the equity method (101,104,201) (32,262,041) (26,300,662) 122,335,617
Gain on sales of property (1,099,025) (911,280) (765,118) (622,366)
and equipment
Depreciation and amortization 503,696,352 517,465,833 362,431,984 368,599,405
Provision for shortage and 7,624,356 27,110,724 5,323,221 17,704,893
damage inventory
Earned lease income (106,359,381) (114,792,596) (69,982,890) 72,275,766)
Reversal of other current liabilities - (6,979,955) - (6,979,955)
Reversal of liability under debt (7,809,190) - - -
restructuring agreement
of subsidiaries
Bad debt 40,631,023 - 36,455,943 -
Reversal allowance for (33,519,996) - (26,748,730) -
doubtful accounts
Reversal of allowance for - (41,654,754) - (41,650,046)
withholding income tax
Loss on write-off withholding tax - 1,044,183 - -
Decrease (increase) in Operating Assets Trade accounts receivable (64,339,002) (7,305,448) (42,298,885) (8,876,496)
Inventories 24,626,450 (64,025,520) 27,731,290 (50,743,945)
Other current assets (7,428,633) (18,839,635) (11,645,907) (7,753,305)
Other non-current assets 17,092,710 60,573,007 30,128,091 53,116,288
Increase (decrease) in Operating Liabilities
Trade accounts payable 245,555,157 (81,062,462) 160,090,252 (44,668,611)
Other current liabilities 94,323,133 (22,528,951) 64,983,834 (28,384,929)
Other non-current liabilities (3,692,145) (1,067,740) (2,661,945) (1,552,801)
Net Cash Provided by 1,360,172,640 759,571,074 1,223,511,188 813,446,739
Operating Activities
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS (Continued) FOR EACH OF THE YEARS ENDED DECEMBER 31, 2004 AND 2003
In Baht
Consolidated The Company Only
2004 2003 2004 2003
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from short-term loans and
advances to related parties - - 21,690,212,294 2,997,105,046
Increase in short-term loans and advances
to related parties - - (22,034,810,402) (3,715,783,000)
Purchase of property and equipment (144,541,303) (218,834,075) (118,928,518) (126,622,978)
Increase in investments in shares - - (51,250,000) (999,930)
of subsidiary
Proceeds from sales of property 1,714,668 1,617,478 1,262,892 1,184,443
and equipment
Dividend income - - 91,400,000 -
Net Cash Used in Investing Activities (142,826,635) (217,216,597) (422,113,734) (845,116,419)
CASH FLOWS FROM FINANCING ACTIVITIES: Increase in long-term loan from 1,795,044,911 - - -
financial institutions
Repayment of liability under guarantee
agreement of subsidiary (159,193,373) - - -
Proceeds from short-term loans and
advances from related parties 11,407,956 4,705,806 8,618,594,083 1,062,591,680
Repayment of short-term loans and
advances from related parties (1,946,036) - (8,705,552,596) (1,051,749,208)
Repurchase of Notes (2,030,485,136) - - -
Repayment of partially secured amortizing notes
(434,875,780) (492,801,587) (546,372,280) (494,303,387)
Repayment of liability under debt restructuring
agreements of subsidiaries (26,288,874) (1,494,083) - -
Payment of dividends (40,439,517) (33,984,269) - -
Net Cash Used in Financing Activities (886,775,849) (523,574,133) (633,330,793) (483,460,915)
048
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS (Continued) FOR EACH OF THE YEARS ENDED DECEMBER 31, 2004 AND 2003
In Baht
Consolidated The Company Only
2004 2003 2004 2003
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 330,570,156 18,780,344 168,066,661 (515,130,595)
Cash and cash equivalents at
beginning of year 1,365,213,659 1,346,433,315 357,078,398 872,208,993
CASH AND CASH EQUIVALENTS
AT END OF YEAR 1,695,783,815 1,365,213,659 525,145,059 357,078,398
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION 1. Cash and Cash Equivalents at end
of Year Consisted of :
Cash and deposits at financial institutions 1,674,668,095 1,364,103,447 524,029,339 355,968,186
Short - term investments in fixed deposits 21,115,720 1,110,212 1,115,720 1,110,212
Total Cash and Cash Equivalents 1,695,783,815 1,365,213,659 525,145,059 357,078,398
2. Cash paid during the year: Interest expense 21,166,502 7,813,968 - - Income tax 71,743,317 61,050,374 25,630,856 24,526,416
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements December 31, 2004 and 2003 1. GENERAL
Robinson Department Store Public Company Limited, the çCompanyé, is a company in Thailand and listed on the Stock Exchange of Thailand. The registered head office of the Company is incorporated at 2 Silom Road, Suriyawong, Bangrak, Bangkok, Thailand. The principal activities of the Company and its subsidiaries are operation of a chain of department
stores under the brand of çRobinsoné. The Company has also jointly invested with groups of business partners (Indirect subsidiaries) outside Bangkok through a holding company, CR (Thailand) Co., Ltd. engaging in the operation of department stores. Basis of preparation of financial statements The financial statements are prepared in Thai Baht, in the Thai Language, and in conformity with generally accepted accounting standards in Thailand. Accordingly, the financial statements are intended solely to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in Thailand. The financial statements are prepared under historical cost convention except as disclosed in the accounting policies. For the convenience of the readers, an English language translation of financial statements has been prepared from the Thai language financial statements which are issued for domestic reporting purposes. The consolidated financial statements of the Company for the year ended December 31, 2004 and
2003 comprise the Company, its subsidiaries (together referred to as the çGroupé) and the Groupûs
interest in associates. Details of the Companyûs subsidiaries are as follows: Country of Percentage of Holdings (%) Business Type Registration 2004 2003Direct SubsidiariesRobinson Anusawaree Co., Ltd. Dormant Company Thailand 99.91 99.91 Robinson Rajdamri Co., Ltd. Dormant Company Thailand 99.35 99.35 Robinson Ratchada Co., Ltd. Dormant Company Thailand 99.80 99.80Robinson Nakarin Co., Ltd. Dormant Company Thailand 99.86 99.86 Robinson Sukhumvit Co., Ltd. Dormant Company Thailand 99.99 99.99Sapanmai Department Store Co., Ltd. Dormant Company Thailand 74.50 74.50Kruerpetch Co., Ltd. Investing Company Thailand 99.99 99.99Kruerkaew Co., Ltd. Dormant Company Thailand 99.99 99.99CR (Thailand) Co., Ltd. Investing Company Thailand 99.99 99.99 R-Trading (L) BHD. Investing Company Malaysia 99.92 99.92 RD Pattana Co., Ltd. Real Estate Thailand 99.98 99.98 Robinson S.P.V. Co., Ltd. Investing Company Thailand 99.99 99.99CR Rajchaburi (Thailand) Co., Ltd. Department Store Thailand 50.00 -
050
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 Country of Percentage of Holdings (%) Business Type Registration 2004 2003Indirect Subsidiaries CR Udorn Thani (Thailand) Co., Ltd. Department Store Thailand 76.00 76.00 CR Phuket (Thailand) Co., Ltd. Department Store Thailand 49.99 49.99 CR Nakhon Sri Thammarat (Thailand) Co., Ltd. Department Store Thailand 49.99 49.99CR Had Yai (Thailand) Co., Ltd. Department Store Thailand 76.00 76.00CR Chiang Mai (Thailand) Co., Ltd. Department Store Thailand 89.99 89.99CR Ubon Ratchathani (Thailand) Co., Ltd. Department Store Thailand 74.99 74.99CR Chantaburi (Thailand) Co., Ltd. Department Store Thailand 64.99 64.99CR Rajchaburi (Thailand) Co., Ltd. Department Store Thailand 49.99 49.99 All of the above subsidiaries are incorporated in Thailand, except for R-Trading (L) BHD., which is incorporated in Malaysia. The foreign subsidiary is an active company and its major assets are receivable, loan to, bond and interest receivable from the Company. The functional currency of a portion of transactions of this Malaysian subsidiary is Baht. Significant intra-group transactions between the Company and its subsidiaries are eliminated on consolidation. The Company’s financial statements represent the accounts of Robinson Department Store Public Company Limited. The Company has recorded investments in subsidiaries and associated companies (those with more than 20% of registered capital owned by the Company) by the equity method. The share of profit from investments in subsidiaries is computed based on the audited financial statements. The share of profit from investments in certain associated companies for the year ended December 31, 2004 was computed from the unaudited financial statements for the year ended December 31, 2004. The investments in the associated companies as at December 31, 2004 amounted to approximately Baht 445.4 million (6.1 % of total assets for the consolidated financial statements and 6.0 % of total assets for the Company’s financial statements). The share of profit from investments in those associated companies for the year ended December 31, 2004, amounted to approximately Baht 101.1 million (14.1 % of net profit).
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 2. RESULTS OF OPERATIONS
The Company and subsidiaries have been affected by adverse business condition in the past which resulted in the Company entering into a debt restructuring process and a rehabilitation plan problems (Note 13). The Company has successfully complied with conditions outlined in the rehabilitation plan. As at December 31, 2004 and 2003, the Company had outstanding loan receivable net of provision for loss from investments in subsidiary companies recorded by the equity method of approximately Baht 1,649.9 million and Baht 1,679.6 million, respectively, for the Company‘s financial statements. This subsidiary is a holding company in the group. The financial statements reflect management’s current assessments of the impact to date of the business situation on the financial position of the Company and subsidiaries.
3. SIGNIFICANT ACCOUNTING POLICIES
3.1 Basis of Consolidation The consolidated financial statements of the Company comprise the Company and its subsidiaries
(together referred to as the çGroupé) and the Group,s interest in associates. Subsidiaries Subsidiaries are those entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are presently exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Associates Associates are those entities in which the Group has significant influence, but not control, over the
financial and operating policies. The consolidated financial statements include the Groupûs share of the total recognized gains and losses of associates on an equity accounted basis, from the date that
significant influence commences until the date that significant influence ceases. When the Groupûs share
of losses exceeds its interest in an associate, the Groupûs carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an associate.
052
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 3.2 Use of estimates The management needs to make estimates and set assumptions that affect income, expenditure, assets and liabilities in order to disclose information on the valuation of assets, liabilities and contingent liabilities. Actual outcomes may, therefore, differ from the estimates used. The estimates and underlying assumptions used in the preparation of these financial statements are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. 3.3 Foreign Currencies Foreign currency transactions Transactions in foreign currencies are translated at the foreign exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Thai baht at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognized in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in foreign currency are translated using the foreign exchange rate ruling at the date of the transaction. 3.4 Property, Plant and Equipment Owned assets Building and equipment except for land, leasehold improvement and building system equipment are stated at cost less accumulated depreciation and impairment losses. The cost of self-constructed assets includes the cost of materials, direct labor, the initial assessment of the costs of dismantling (if relevant) and an appropriate proportion of production overheads.
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 Revalued assets Revaluations are performed by independent professional valuers with sufficient regularity to ensure that the carrying amount of these assets does not differ materially from that which would be determined using fair values at the balance sheet date. Any increase in value, on revaluation, is credited to the revaluation reserve unless it offsets a previous decrease in value recognized in the income statement. A decrease in value is recognized in the income statement to the extent it exceeds an increase previously recognized in the revaluation reserve. The revaluation surplus is utilized by reference to the difference between depreciation based on the revalued carrying amount of the asset and depreciation based on the assetûs original cost and credited to the income statement. Upon disposal, any remaining related revaluation surplus is transferred from the revaluation reserve to the income statement and is taken into account in calculating the gain or loss on disposal. The carrying value of any asset reclassified as a non-operating asset held for sale is credited with the remaining balance of amounts previously taken to the revaluation reserve in respect of that asset. Subsequent expenditure Subsequent expenditure relating to an item of property, plant and equipment is added to the carrying amount of the asset when it is probable that the future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. All other subsequent expenditure is recognized as an expense in the period in which it is incurred. Depreciation Depreciation is charged to the income statement on a sum-of-the-year-digits basis (except property, plant and equipment which were acquired before 2001 are depreciated on a straight-line basis) over the estimated useful lives of each part of an item of those assets. The estimated useful lives are as follows:
Years Leasehold improvements 20 Buildings and construction 20 Buildings and construction improvements 5-20 Information system equipment 5-10 Building system equipment 5-10 Furniture, fixtures and office equipment 5 Vehicles 5
No depreciation is provided on freehold land or assets under construction.
054
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 3.5 Intangible assets Goodwill Goodwill arising on acquisition represents the excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired. Negative goodwill arising on acquisition represents the excess of the fair value of the Group,s share of the identifiable net assets acquired over the cost of acquisition. Goodwill and negative goodwill are stated at cost less accumulated amortization and impairment losses. Goodwill and negative goodwill arising on acquisition of shares in subsidiaries and associates in the Company’s separate financial statements is included in investments. The gain or loss on disposal of an entity includes the unamortized balance of goodwill relating to the entity disposed of. Other intangible assets Other intangible assets that are acquired by the Group are stated at cost less accumulated amortization and impairment losses. Amortization Amortization is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Goodwill, negative goodwill and other intangible assets are amortized from the date they are available for use. The estimated useful lives of goodwill are 20 years and 27 years. Subsequent expenditure Subsequent expenditure relating to an intangible asset is added to the carrying value of the asset only when it increases the future economic benefits embodied in the specific asset to which it relates. All other subsequent expenditure is recognized as an expense in the period in which it is incurred.
3.6 Investments Investments in subsidiaries and associates Investments in subsidiaries and associates in the separate financial statements of the Company are accounted for using the equity method.
Equity securities which are not marketable are stated at cost less impairment losses.
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 3.7 Trade and Other Receivables Trade and other receivables (including balances with related parties) are stated at their invoice value less impairment losses. Any impairment loss on doubtful receivables is assessed primarily on analysis of payment histories and future expectations of customer payments. Allowances made are based on historical write-off patterns and the aging of accounts receivables. Bad debts are written off when incurred. 3.8 Inventories Finished goods Inventories purchased under normal credit terms are stated at the lower of cost and net realizable value. Cost is calculated using the average cost formula and comprises all costs of purchase at invoice value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale. An allowance is made for all deteriorated, damaged, obsolete and slow-moving inventories. 3.9 Cash and Cash Equivalents Cash and cash equivalents comprise cash balances, call deposits and highly liquid short-term investments. Bank overdrafts that are repayable on demand are a component of financing activities for the purpose of the statement of cash flows. 3.10 Impairment The carrying amounts of the Group’s assets, other than inventories, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognized in the income statement.
Calculation of recoverable amount The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
056
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 Reversals of impairment An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. All reversals of impairment losses are recognized in the income statement. An impairment loss in respect of goodwill is not reversed unless the loss was caused by a specific external event of an exceptional nature that is not expected to recur, and the increase in recoverable amount relates clearly to the reversal of the effect of that specific event. 3.11 Employee benefits Employee registered provident fund Obligations to defined employee registered provident fund are recognized as an expense in the income statement as incurred. 3.12 Provisions A provision is recognized in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. 3.13 Trade and Other Payables Trade and other payables (including balances with related parties) are stated at cost.
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 3.14 Revenue Revenue excludes value added taxes or other sales taxes and is arrived at after deduction of trade discounts. Sale of goods and services rendered Revenue from the sale of goods is recognized in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognized if there are significant uncertainties regarding recovery of the consideration due, associated costs, the probable return of goods or the continuing management involvement with the goods. As soon as the outcome of a contract for the rendering of services can be estimated reliably, revenue associated with the contract is recognized in the income statement in proportion to the stage of completion of the contract. When the outcome of the contract cannot be estimated reliably, revenue is recognized only to the extent of the expenses recognized that are recoverable. Rental income Rental income from investment property is recognized in the income statement on a straight-line basis over the term of the lease. 3.15 Expenses Operating leases Payments made under operating leases are recognized in the income statement on a straight line basis over the term of the lease. Lease incentives received are recognized in the income statement as an integral part of the total lease payments made. Contingent rentals are charged to the income statement in the accounting period in which they are incurred. Other income and expenses Interest expenses and similar costs are charged to the income statement in the period in which they are incurred. Interest income is recognized in the income statement as it accrues. Dividend income is recognized in the income statement on the date the entity’s right to receive payments. 3.16 Income Tax Income Tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date based on the conditions described as the Revenue Code, and any adjustment to tax payable in respect of previous years.
058
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 3.17 Financial assets and financial liabilities Financial assets and financial liabilities carried on the balance sheet include cash and cash equivalents, accounts receivable trade and others, investments, accounts payable trade and others, loans to, borrowings, and debenture payable. The accounting policies on recognition and measurement of these items are disclosed in the respective notes to financial statements. 3.18 Basic Earnings per Share Basic earnings per share is determined by dividing the net income by the weighted average number of shares outstanding during the year. (1,110,661,133 shares in 2004 and 2003). 4. TRANSACTIONS WITH RELATED PARTIES Related parties are those parties linked to companies in the Group by common shareholders or directors. In general, the Company and subsidiaries have policies on determining prices and/or charges with their related companies as follows: (a) Merchandise selling prices and service charges between the Group should not be lower than the cost of those merchandise and/or services. (b) Interest costs on borrowings or lendings between the Group are determined by referring to the interest rates of certain local financial institutions plus 1.0% to 1.5% per annum. (c) Rental and service fees are based on certain percentages of sales with a reference to the related market prices. (d) Management fees are based on certain percentages of sales or fixed amount.
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 Significant balances at each balance sheet date, and transactions for the financial years then ended, with related parties are as follow: In Thousand Baht Consolidated The Company Only 2004 2003 2004 2003Subsidiaries Sales (and cost of sales) - - 58,452 57,283 Rental and service charges - - 363 939 Management fee income - - 97,483 89,330 Interest income - - 434,381 429,948 Interest expense - - 5,686 6,904 Associates Rental and service charges 86,064 94,160 59,784 65,116 Financial fee income 4,124 4,253 2,624 2,840 Related Parties Rental and service charges 241,204 29,567 172,534 27,947 Interest expense 1,637 1,568 - - Management fee expense 8,530 7,329 8,530 7,329 Since 1997, Power Buy Co., Ltd. And CRC Sport Co., Ltd. have occupied the areas of electrical equipment division and sports division, respectively, with service fees charged as a percentages of sales.
In 1996, the Company and subsidiaries subleased areas to Central Food Retail Co., Ltd. (Formerly CRC Ahold Co., Ltd.) for the period of 10 years ending in September and October 2006. The Company charges management fees to its certain subsidiaries and associated companies, based on the percentages of sales or fixed amount.
060
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 Balances with related parties as at December 31, 2004 and 2003 were as follows: In Thousand Baht Consolidated The Company Only 2004 2003 2004 2003Trade Accounts Receivable Direct Subsidiaries Robinson Sukhumvit Co., Ltd. - - 326 326 Kruerkaew Co., Ltd. - - 321 321 RD Pattana Co. ,Ltd. - - 267 267 Indirect Subsidiaries CR Udorn Thani (Thailand) Co., Ltd. - - 2,605 3,200 CR Phuket (Thailand) Co., Ltd. - - 2,658 2,429 CR Nakorn Sri Thammarat (Thailand) Co., Ltd. - - 2,593 3,711 CR Had Yai (Thailand) Co. ,Ltd. - - 3,315 3,415 CR Chiang Mai (Thailand) Co., Ltd. - - 3,359 4,264 CR Ubon Ratchathani (Thailand) Co., Ltd. - - 1,054 1,232 CR Rajchaburi (Thailand) Co., Ltd. - - 2,118 2,357 CR Chantaburi (Thailand) Co., Ltd. - - 1,691 2,770 Associated Companies Power Buy Co., Ltd. 7,917 9,163 6,390 6,343 CRC Sport Co. Ltd. 5,338 6,818 3,352 4,548 Related Parties New and Now Network Co., Ltd. - 15,307 - 13,807 Samakeesan (Dokya) Co., Ltd. - 5,760 - 5,322 Central Food Retail Co., Ltd. 20,920 - 16,449 - Other companies 11,961 6,670 9,282 5,252 Total 46,136 43,718 55,780 59,564 Less allowance for doubtful accounts ( - ) (20,723) ( - ) (19,130) Net 46,136 22,995 55,780 40,434
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 In Thousand Baht Consolidated The Company Only 2004 2003 2004 2003 Short-Term Loans and Advances (interest at 7.5% per annum) Direct Subsidiaries Robinson Anusawaree Co., Ltd. - - 69,724 64,668 Robinson Ratchada Co., Ltd. - - 41,709 37,215 Robinson Nakarin Co., Ltd. - - 203,477 30,862 Kruerpetch Co., Ltd. - - 206,742 168,968 Robinson S.P.V. Co., Ltd. - - 109,383 - Robinson Sukhumvit Co., Ltd. - - 5,893 1,891 CR (Thailand) Co., Ltd. - - 5,490,026 5,478,752 Less: Allowance for loss from investments in subsidiary companies recorded by the equity method (Note 8) - - ( 4,116,073) ( 3,983,499) Net - - 2,010,881 1,798,857 Indirect Subsidiaries CR Phuket (Thailand) Co., Ltd. - - 224 224 Total - - 2,011,105 1,799,081 Long-Term Loans (interest rate per annum) Direct Subsidiary Robinson Nakarin Co., Ltd. (6%) - - 61,223 61,223 Associated Companies Siam Retail Development Co., Ltd. (MLR plus 0.5%) 324,882 324,882 324,882 324,882
062
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 In Thousand Baht Consolidated The Company Only 2004 2003 2004 2003Related Parties (Shareholdings) Rangsit Plaza Co., Ltd. (non-interest bearing) 19,687 19,687 19,687 19,687 Total 344,569 344,569 405,792 405,792 Less : Allowance for loss from investments in subsidiary companies recorded at by the equity method (Note 8) - - - (61,223) Allowance for doubtful accounts (344,569) (344,569) (344,569) (344,569) Net - - 61,223 -
Trade Accounts Payable Central Trading Co., Ltd. 50,195 49,075 31,280 32,095 Central Garment Factory Co., Ltd. 30,247 27,496 17,405 15,363 Cetrac International Co., Ltd. 33,405 26,589 18,410 14,538 Central Department Store Co., Ltd. 5,240 5,679 4,891 4,945 Other companies 10,130 3,893 8,837 3,332 Total 129,217 112,732 80,823 70,273 Short-Term Loans and Advances (Interest rate per annum) Direct Subsidiaries Robinson Rajdamri Co., Ltd. (0.75%) - - 59,079 153,393Robinson Sukhumvit Co., Ltd. (non-interest bearing) - - 9,509 7,243 Kruerkaew Co., Ltd. (2.75%) - - 9,597 13,524RD Pattana Co., Ltd. (2.75%) - - 5,909 2,467 R - Trading (L) BHD. (non-interest bearing) - - 870,063 867,821 Other companies - - 76 177 Related Parties (Shareholdings/ Directorships) Central Retail Corporation Co., Ltd. (15%) 16,096 14,594 201 - Other companies 10,831 2,871 6,078 2,846 Total 26,927 17,465 960,512 1,047,471
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 In Thousand Baht Consolidated The Company Only 2004 2003 2004 2003Long-Term Loan (interest rate per annum) Direct Subsidiary Robinson Sukhumvit Co., Ltd. (2%) - - 113,300 113,300 Deferred lease income Related Party Central Food Retail Co., Ltd. 174,712 - 122,470 -
Movements of short-term loans and advances to related parties in the Companyûs financial statements for the year ended December 31, 2004 were as follows: In Thousand Baht Other Subsidiaries Associates Related partiesBalance as at January 1, 2004 5,782,580 - - Increase during the period 22,034,810 - - Decrease during the period (21,690,212) - - Balance as at December 31, 2004 6,127,178 - - Movements of long-term loans to related parties in the consolidated financial statements of the Company and subsidiaries for the year ended December 31, 2004 were as follows: In Thousand Baht Other Subsidiaries Associates Related partiesBalance as at January 1, 2004 - 324,882 19,687 Increase during the period - - - Decrease during the period - - - Balance as at December 31, 2004 - 324,882 19,687
064
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 Movements of long-term loans to related parties in the Company’s financial statements for the year ended December 31, 2004 were as follows: In Thousand Baht Other Subsidiaries Associates Related partiesBalance as at January 1, 2004 61,223 324,882 19,687 Increase during the period - - - Decrease during the period - - - Balance as at December 31, 2004 61,223 324,882 19,687 Movements of short-term loans and advances from related parties in the consolidated financial statements of the Company and subsidiaries for the year ended December 31, 2004 were as follows: In Thousand Baht Other Subsidiaries Associates Related partiesBalance as at January 1, 2004 - - 17,765 Increase during the period - - 11,408 Decrease during the period - - (1,946) Balance as at December 31, 2004 - - 26,927 Movements of short-term loans and advances from related parties in the Company’s financial statements for the year ended December 31, 2004 were as follows: In Thousand Baht Other Subsidiaries Associates Related partiesBalance as at January 1, 2004 1,044,625 - 2,846 Increase during the period 8,613,224 - 5,370 Decrease during the period (8,703,616) - (1,937) Balance as at December 31, 2004 954,233 - 6,279 Movements of long-term loans from related parties in the Company’s financial statements for the year ended December 31, 2004 were as follows: In Thousand Baht Other Subsidiaries Associates Related partiesBalance as at January 1, 2004 113,300 - - Increase during the period - - - Decrease during the period - - -
Balance as at December 31, 2004 113,300 - -
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 5. TRADE ACCOUNTS RECEIVABLE As at December 31, 2004 and 2003, the Company and its subsidiaries had outstanding balances of trade accounts receivable aged by number of months as follows: In Thousand Baht Consolidated The Company Only 2004 2003 2004 2003Related Parties Less than and up to 3 months 45,744 23,914 55,379 39,708 Over 3 months up to 6 months 160 69 194 227 Over 6 months up to 12 months 215 168 207 341 Over 12 months 17 19,567 - 19,288 Total 46,136 43,718 55,780 59,564 Less allowance for doubtful accounts - (20,723) - (19,130) Net 46,136 22,995 55,780 40,434 Other Companies Less than and up to 3 months 142,696 105,802 96,440 73,358 Over 3 months up to 6 months 11,749 6,515 5,943 4,820 Over 6 months up to 12 months 774 4,316 379 2,971 Over 12 months 4,875 23,185 3,578 15,564 Total 160,094 139,818 106,340 96,713 Less allowance for doubtful accounts (5,534) (19,345) (3,578) 11,197 Net 154,560 120,473 102,762 85,516 6. INVENTORIES In Thousand Baht Consolidated The Company Only 2004 2003 2004 2003
Merchandise 526,260 558,223 336,175 368,844Less - Allowance for shortage, damage, obsolete and slow-moving inventories (37,766) (37,478) (24,122) (23,736)Total 488,494 520,745 312,053 345,108
066
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 7. OTHER CURRENT ASSETS In Thousand Baht Consolidated The Company Only 2004 2003 2004 2003 Accrued income 21,981 17,677 16,150 14,213 Prepaid expenses 19,037 18,195 13,796 13,582 Advances 11,114 12,134 6,541 7,642 Revenue Department receivable - 11,055 - - Others 24,538 10,180 17,789 7,194 Total 76,670 69,241 54,276 42,631 8. INVESTMENTS IN SHARES OF RELATED PARTIES Investments Recorded by the Equity Method As at December 31, 2004 and 2003, investments recorded by the equity method consisted of the investments in shares of subsidiaries and associates in the Companyûs financial statements, and investments in shares of associates in the consolidated financial statements. Investments recorded by the equity method in the consolidated financial statements of the Company and its subsidiaries as at December 31, 2004 consisted of:
In Thousand Baht
Paid-up Capital % Share At Cost At Equity
Type of Business Relationship (In Thousand Baht) Holding Method Method Dividends
Associates CRC Sports, Co., Ltd. Sport Equipment Store Shareholding 370,000 29.19 108,000 94,970 -
Power Buy Co., Ltd. Electric Equipment Store Shareholding 560,000 40.00 224,000 350,423 -
Siam Retail
Development Co., Ltd. Shopping Center Shareholding 500,000 24.00 120,000 10,194 -
Square Ritz Plaza Co., Ltd. Investing Company Shareholding 125,000 24.00 30,000 29,858 -
D C R Co., Ltd. Investing Company Shareholding 428,200 20.86 89,323 34,584 -
Total 1,983,200 571,323 520,029 -
Less allowance for impairment - - (74,636) -
Net 1,983,200 571,323 445,393 -
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003
Investments recorded by the equity method in the Company’s financial statements as at December 31, 2004 consisted of:
In Thousand Baht
Paid-up Capital % Share At Cost At Equity
Type of Business Relationship (In Thousand Baht) Holding Method Method Dividends
Subsidiaries CR Rajchaburi (Thailand) Co., Ltd. Department Store Shareholding 1,700,000 50.00 51,250 51,092 -
Robinson Rajdamri Co., Ltd. Dormant Company Shareholding 46,000 99.35 45,701 59,870 91,400
Robinson Sukhumvit Co., Ltd. Dormant Company Shareholding 100,000 99.99 100,000 105,217 -
Sapanmai Department
Store Co., Ltd. Dormant Company Shareholding 20,000 74.50 14,900 16,106 -
Kruerkaew Co., Ltd. Dormant Company Shareholding 40,000 99.99 40,000 58,044 -
Robinson S.P.V. Co., Ltd. Investing Company Shareholding 1,000 99.99 1,000 3,576 -
R-Trading (L) BHD. Investing Company Shareholding 50 99.92 50 884,149 -
Total 1,907,050 252,901 1,178,054 91,400
Associates CRC Sports Co., Ltd. Sport Equipment Store Shareholding 370,000 29.19 108,000 94,970 -
Power Buy Co., Ltd. Electric Equipment Store Shareholding 560,000 40.00 224,000 350,423 -
Siam Retail
Development Co., Ltd. Shopping Center Shareholding 500,000 24.00 120,000 10,194 -
Square Ritz Plaza Co., Ltd Investing Company Shareholding 125,000 24.00 30,000 29,858 -
D C R Co., Ltd. Investing Company Shareholding 428,200 20.86 89,323 34,584 -
Total 1,983,200 571,323 520,029 -
Less allowance for impairment - - (74,636) -
Net 1,983,200 571,323 445,393 -
Total Investments 3,890,250 824,224 1,623,447 91,400
068
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 Investments recorded by the equity method in the consolidated financial statements of the Company and its subsidiaries as at December 31, 2003 consisted of:
In Thousand Baht
Paid-up Capital % Share At Cost At Equity
Type of Business Relationship (In Thousand Baht) Holding Method Method Dividends
Associates CRC Sports, Co., Ltd. Sport Equipment Store Shareholding 370,000 29.19 108,000 68,108 -
Power Buy Co., Ltd. Electric Equipment Store Shareholding 560,000 40.00 224,000 276,155 -
Siam Retail
Development Co., Ltd. Shopping Center Shareholding 500,000 24.00 120,000 10,194 -
Square Ritz Plaza Co., Ltd. Investing Company Shareholding 125,000 24.00 30,000 29,858 -
D C R Co., Ltd. Investing Company Shareholding 428,200 20.86 89,323 34,584 -
Total 1,983,200 571,323 418,899 -
Less allowance for impairment - - (74,636) -
Net 1,983,200 571,323 344,263 -
Investments recorded by the equity method in the Company’s financial statements as at December 31, 2003 consisted of: In Thousand Baht
Paid-up Capital % Share At Cost At Equity
Type of Business Relationship (In Thousand Baht) Holding Method Method Dividends
Subsidiaries Robinson Rajdamri Co., Ltd. Dormant Company Shareholding 46,000 99.35 45,701 148,314 -
Robinson Sukhumvit Co., Ltd. Dormant Company Shareholding 100,000 99.99 100,000 106,172 -
Sapanmai Department
Store Co., Ltd. Dormant Company Shareholding 20,000 74.50 14,900 16,025 -
Kruerkaew Co., Ltd. Dormant Company Shareholding 40,000 99.99 40,000 61,947 -
Rebinson S.P.V. Co., Ltd. Investing Company Shareholding 1,000 99.99 1,000 993 -
R-Trading (L) BHD. Investing Company Shareholding 50 99.92 50 883,705 -
Total 207,050 201,651 1,217,156 -
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 Investments recorded by the equity method in the consolidated financial statements of the Company and its subsidiaries as at December 31, 2003 consisted of:
In Thousand Baht
Paid-up Capital % Share At Cost At Equity
Type of Business Relationship (In Thousand Baht) Holding Method Method Dividends
Associates CRC Sports, Co., Ltd. Sport Equipment Store Shareholding 370,000 29.19 108,000 68,108 -
Power Buy Co., Ltd. Electric Equipment Store Shareholding 560,000 40.00 224,000 276,155 -
Siam Retail
Development Co., Ltd. Shopping Center Shareholding 500,000 24.00 120,000 10,194 -
Square Ritz Plaza Co., Ltd. Investing Company Shareholding 125,000 24.00 30,000 29,858 -
D C R Co., Ltd. Investing Company Shareholding 428,200 20.86 89,323 34,584 -
Total 1,983,200 571,323 418,899 -
Less allowance for impairment - - (74,636) -
Net 1,983,200 571,323 344,263 -
Investments recorded by the equity method in the Company’s financial statements as at December 31, 2003 consisted of: In Thousand Baht
Paid-up Capital % Share At Cost At Equity
Type of Business Relationship (In Thousand Baht) Holding Method Method Dividends
Subsidiaries Robinson Rajdamri Co., Ltd. Dormant Company Shareholding 46,000 99.35 45,701 148,314 -
Robinson Sukhumvit Co., Ltd. Dormant Company Shareholding 100,000 99.99 100,000 106,172 -
Sapanmai Department
Store Co., Ltd. Dormant Company Shareholding 20,000 74.50 14,900 16,025 -
Kruerkaew Co., Ltd. Dormant Company Shareholding 40,000 99.99 40,000 61,947 -
Rebinson S.P.V. Co., Ltd. Investing Company Shareholding 1,000 99.99 1,000 993 -
R-Trading (L) BHD. Investing Company Shareholding 50 99.92 50 883,705 -
Total 207,050 201,651 1,217,156 -
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 In Thousand Baht
Paid-up Capital % Share At Cost At Equity
Type of Business Relationship (In Thousand Baht) Holding Method Method Dividends
Associates CRC Sports Co., Ltd. Sport Equipment Store Shareholding 370,000 29.19 108,000 68,108 -
Power Buy Co., Ltd. Electric Equipment Store Shareholding 560,000 40.00 224,000 276,155 -
Siam Retail
Development Co., Ltd. Shopping Center Shareholding 500,000 24.00 120,000 10,194 -
Square Ritz Plaza Co., Ltd Investing Company Shareholding 125,000 24.00 30,000 29,858 -
D C R Co., Ltd. Investing Company Shareholding 428,200 20.86 89,323 34,584 -
Total 1,983,200 571,323 418,899 -
Less allowance for impairment - - (74,636) -
Net 1,983,200 571,323 344,263 -
Total Investments 2,190,250 772,974 1,561,419 -
General Investments Recorded by the Cost Method General investments recorded by the cost method in the consolidated financial statements of the Company and its subsidiaries as at December 31, 2004 consisted of: In Thousand Baht
Paid-up Capital % Share Investment
Type of Business Relationship (In Thousand Baht) Holding Value
Samakeesan (Dokya)
Co., Ltd. Book Store Shareholding 170,000 4.15 12,713 -
Rangsit Plaza Co., Ltd. Department Store Shareholding 400,000 6.56 26,250 -
Wattanawana Co., Ltd. Department Store Shareholding 600,000 19.58 117,500 -
Siam Family Mart Co., Ltd. Convenient Store Shareholding 800,000 2.50 20,000 -
Total 1,970,000 176,463 -
Less allowance for impairment - (176,463) -
Net 1,970,000 - -
070
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 General investments recorded by the cost method in the Company’s financial statements as at December 31, 2004 consisted of :
In Thousand Baht
Paid-up Capital % Share Investment
Type of Business Relationship (In Thousand Baht) Holding Value
Samakeesan (Dokya)
Co., Ltd. Book Store Shareholding 170,000 4.15 12,713 -
Rangsit Plaza Co., Ltd. Department Store Shareholding 400,000 6.56 26,250 -
Siam Family Mart Co., Ltd. Convenient Store Shareholding 800,000 2.50 20,000 -
Total 1,370,000 - 58,963 -
Less allowance for impairment - (58,963) -
Net 1,370,000 - - -
General investments recorded by the cost method in the consolidated financial statements of the Company and its subsidiaries as at December 31, 2003 consisted of:
In Thousand Baht
Paid-up Capital % Share Investment
Type of Business Relationship (In Thousand Baht) Holding Value
Samakeesan (Dokya)
Co., Ltd. Book Store Shareholding 170,000 4.15 12,713 -
Rangsit Plaza Co., Ltd. Department Store Shareholding 400,000 6.56 26,250 -
Wattanawana Co., Ltd. Department Store Shareholding 600,000 19.58 117,500 -
Siam Family Mart Co., Ltd. Convenient Store Shareholding 150,000 13.33 20,000 -
Total 1,320,000 176,463 -
Less allowance for impairment - (176,463) -
Net 1,320,000 - -
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 General investments recorded by the cost method in the Company’s financial statements as at December 31, 2003 consisted of :
In Thousand Baht
Paid-up Capital % Share Investment
Type of Business Relationship (In Thousand Baht) Holding Value
Samakeesan (Dokya)
Co., Ltd. Book Store Shareholding 170,000 4.15 12,713 -
Rangsit Plaza Co., Ltd. Department Store Shareholding 400,000 6.56 26,250 -
Siam Family Mart Co., Ltd. Convenient Store Shareholding 150,000 13.33 20,000 -
Total 720,000 58,963 -
Less allowance for impairment - (58,963) -
Net 720,000 - -
Provision for loss from investments in subsidiary companies recorded by the equity method Provision for loss from investments in subsidiaries exceeding investment value in the Companyûs financial statements as at December 31, 2004 consisted of : In Thousand Baht
Paid-up Capital % Share At Cost At Equity
Type of Business Relationship (In Thousand Baht) Holding Method Method Dividends
Subsidiaries
Robinson Anusawaree Co., Ltd. Dormant Company Shareholding 8,000 99.91 8,000 69,948 -
Robinson Nakarin Co.,Ltd. Dormant Company Shareholding 105,000 99.86 104,853 124,053 -
Kruerpetch Co., Ltd. Investing Company Shareholding 11,250 99.99 11,250 121,408 -
CR (Thailand) Co., Ltd. Investing Company Shareholding 501,000 99.99 501,000 3,840,186 -
RD Pattana Co., Ltd. Real Estate Shareholding 3,000 99.98 3,000 2,918 -
Robinson Ratchada Co., Ltd. Dormant Company Shareholding 75,000 99.80 74,850 22,870 -
Total 703,250 702,953 4,181,383 -
Shown in the Companyûs financial statements under the caption: - Provision for loss from investments in subsidiary
companies recorded by the equity method 65,310
- Deduction against short-term loans and advances
to subsidiary companies (Note 4) 4,116,073
Net 4,181,383
072
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003
Provision for loss from investments of subsidiaries exceeding investment value in the Companyûs statements as at December 31, 2003 consisted of: In Thousand Baht
Paid-up Capital % Share At Cost At Equity
Type of Business Relationship (In Thousand Baht) Holding Method Method Dividends
Robinson Anusawaree Co., Ltd. Dormant Company Shareholding 8,000 99.91 8,000 64,892 -
Robinson Nakarin Co.,Ltd. Dormant Company Shareholding 105,000 99.86 104,853 110,639 -
Kruerpetch Co., Ltd. Investing Company Shareholding 11,250 99.99 11,250 111,294 -
CR (Thailand) Co., Ltd. Investing Company Shareholding 501,000 99.99 501,000 3,799,151 -
RD Pattana Co., Ltd. Real Estate Shareholding 3,000 99.98 3,000 4,310 -
Robinson Ratchada Co., Ltd. Dormant Company Shareholding 75,000 99.80 74,850 15,247 -
Total 703,250 702,953 4,105,533 -
Shown in the Companyûs financial statements under the caption: - Provision for loss from investments in subsidiary
companies recorded by the equity method 60,811
- Deduction against short-term loans and advances
to subsidiary companies (Note 4) 3,983,499
- Deduction against long-term loan to subsidiary
company (Note 4) 61,223
Net 4,105,533
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 The Company and subsidiaries pledge shares of subsidiaries and associated companies with net book value as at December 31, 2004 and 2003 approximately Baht 1,623.4 million and Baht 1,561.4 million, respectively, as discussion in Note 14. 9. PROPERTY, PLANT AND EQUIPMENT In Thousand Baht Consolidated As at As at January 1, Movement During the Year December 31, 2004 Addition Deduction 2004 Land Cost 280,834 - - 280,834 Less revaluation reduction (105,180) - - (105,180) Add revaluation increment 191,242 - - 191,242 Land - Net 366,896 - - 366,896 Leasehold improvements Cost 1,381,534 - 35 1,381,499 Less revaluation reduction (589,964) - - (589,964) Leasehold improvements - Net 791,570 - 35 791,535 Buildings, constructions and improvements - At Cost 1,126,818 37,058 - 1,163,876
Information system equipment - At Cost 270,799 16,034 3,705 283,128 Building system equipment Cost 1,237,441 41,254 108,918 1,169,777 Less revaluation reduction (113,696) - - (113,696) Building system equipment - Net 1,123,745 41,254 108,918 1,056,081 Furniture, fixtures and office equipment - At Cost 1,741,331 64,691 38,106 1,767,916 Vehicles - At Cost 18,419 69 288 18,200 Construction in progress - At Cost 29,856 75,551 86,547 18,860 Total Property and Equipment 5,469,434 234,657 237,599 5,466,492
074
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 In Thousand Baht The Company Only As at As at January 1, Movement During the Year December 31, 2004 Addition Deduction 2004 Accumulated Depreciation Leasehold improvements (522,045) (49,391) 21 (571,415) Buildings, constructions and improvements (426,724) (67,437) - (494,161) Information system equipment (201,358) (23,351) 1,357 (223,352) Building system equipment (740,186) (109,813) 108,906 (741,093) Furniture, fixtures and office equipment (1,572,290) (97,011) 36,296 (1,633,005) Vehicles (15,828) (1,207) 289 (16,746) Total Accumulated Depreciation (3,478,431) (348,210) 146,869 (3,679,772) Property and Equipment - Net 1,991,003 - - 1,786,720 Land Cost 69,538 - - 69,538 Less revaluation reduction (20,780) - - (20,780) Add revaluation increment 191,242 - - 191,242 Land - Net 240,000 - - 240,000
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 In Thousand Baht The Company Only As at As at January 1, Movement During the Year December 31, 2004 Addition Deduction 2004 Leasehold improvements Cost 1,309,921 - 35 1,309,886 Less revaluation reduction (576,955) - - (576,955) Leasehold improvements - Net 732,966 - 35 732,931 Buildings, constructions and improvements - At Cost 328,057 29,056 - 357,113 Information system equipment - At Cost 224,665 13,165 136 237,694 Building system equipment Cost 814,598 26,868 108,872 732,594 Less revaluation reduction (68,189) - - (68,189) Building system equipment - Net 746,409 26,868 108,872 664,405 Furniture, fixtures and office equipment - At Cost 1,239,483 46,607 28,424 1,257,666 Vehicles - At cost 11,949 - 257 11,692 Construction in progress - At Cost 10,957 64,494 61,261 14,190 Total Property and Equipment 3,534,486 180,190 198,985 3,515,691
076
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 In Thousand Baht The Company Only As at As at January 1, Movement During the Year December 31, 2004 Addition Deduction 2004 Accumulated Depreciation Leasehold improvements (507,934) (45,415) 20 (553,329) Buildings, constructions and improvements (102,814) (23,146) - (125,960) Information system equipment (171,802) (18,729) 89 (190,442) Building system equipment (521,520) (69,686) 108,871 (482,335) Furniture, fixtures and office equipment (1,122,650) (69,796) 27,988 (1,164,458) Vehicles (10,116) (856) 257 (10,715) Total Accumulated Depreciation (2,436,836) (227,628) 137,225 (2,527,239) Property and Equipment - Net 1,097,650 988,452 In September 1995, the Company and its subsidiaries appraised certain plots of and certain leasehold rights to market prices by an independent appraiser. The excess of revalued amounts over costs of approximately Baht 540.6 million and Baht 1,464.5 million, respectively, have been presented as
çRevaluation increment in assetsé under Shareholdersû Equity in the balance sheets. In June 1999, the Company and its subsidiaries reappraised every parcel of land, by an independent appraiser, including all land stated at appraisal value mentioned in the above paragraph. As a result of the revaluation, the revaluation increment in assets presented under the shareholdersû equity was reduced by Baht 355 million. For the revaluation of other plots of land (stated at cost since these had never been appraised), the revalued amount was lower than cost by Baht 52 million, which was charged to operations. The Company and subsidiaries mortgage and pledge property and equipment with net book value as at December 31, 2004 and 2003 approximately Baht 291.6 million and Baht 291.9 million, respectively, as discussion in Note 14.
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 10. LEASEHOLD RIGHTS In Thousand Baht Consolidated As at As at January 1, Movement During the Year December 31, 2004 Addition Deduction 2004 Leasehold Rights - Net 2,368,482 59,225 229,007 2,198,700 In Thousand Baht The Company Only As at As at January 1, Movement During the Year December 31, 2004 Addition Deduction 2004 Leasehold Rights - Net 1,614,164 59,225 191,329 1,482,060 In September 1995, the Company and its subsidiaries appraised certain plots of and certain leasehold rights to market prices by an independent appraiser as discussion in Note9. In December 1999, the Company and its subsidiaries reappraised each leasehold rights, by an independent appraiser using joint methodologies among Sales Comparison Approach (Market Approach), Discounted Cashflow Analysis and Income Capitalization Approach, including leasehold rights stated at appraisal value mentioned in the above. As a result of the revaluation, the revaluation increment in
assets presented under the shareholdersû equity was reduced by Baht 248.9 million. For the revaluation of other leasehold rights (stated at cost since these had never been appraised), the revalued amount was lower than cost by Baht 3,406.9 million, which was charged to operations. The Company and subsidiaries have various leasehold agreements covering land and buildings for their department stores. The leasehold agreements are for the periods ranging from 20 to 30 years.
078
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 11. OTHER NON-CURRENT ASSETS In Thousand Baht Consolidated The Company Only 2004 2003 2004 2003
Restricted investments in fixed deposits 65,436 65,414 49,200 49,200 Guarantees and deposits 62,482 63,090 60,888 61,487 Receivable from the Revenue Department 40,780 106,619 24,673 55,508 Unused land 140,913 140,913 - - Unused fixed assets - net 7,530 9,306 - - Goodwill - net (net of loss on impairment of assets of Baht 430 million) 61,584 10,147 - - Others 83,587 88,338 63,162 64,556 Total 462,312 483,827 197,923 230,751 Land not used in operations was appraised in 1999 reflecting an amount higher than cost amounting to Baht 287.1 million. The Company presents the amount of Baht 140.9, which is the amount net from revaluation increment in asset. 12. LIABILITIES UNDER DEBT RESTRUCTURING AGREEMENTS OF SUBSIDIARIES On March 11, 2002, CR (Thailand) Co., Ltd. (CRT), a subsidiary, signed debt restructuring agreement with a local financial institution for overdrafts and related accrued interest expense of CRT and certain subsidiaries totalling approximately Baht 75.5 million. Under the terms of debt restructuring agreement, CRT’s and the subsidiaries’ overdrafts and related accrued interest expense would be settled as follows: a) Principal and accrued interest expense amounting to approximately Baht 29.4 million would be paid by the Company according to the terms, conditions and period specified in the Companyûs rehabilitation plan (Note 13). b) Principal debts owed by CRT and other subsidiaries amounting to approximately Baht 19.3 million had grace period for five (5) years. CRT agreed to repay principal in equal quarterly installments basis within 5 years with the first installment of principal commencing in June 2007 and to pay the first installment of interest on contract signing date. Interest expense on restructured principal is payable in monthly installments at MLR commencing in March 2002. Under the terms of such debt restructuring agreement, liabilities of CRT and other subsidiaries which consisted of a portion of overdrafts and related accrued interest, were waived on the date that the debt restructuring agreement was effective. CRT and the subsidiaries recorded the amount being waived as gain on debt restructuring totalling approximately Baht 36.4 million which was presented as a portion of “Extraordinary Item of Subsidiaries” in the consolidated statements of income and the Company’s statements of income for the year ended December 31, 2002. On March 19, 2002, CRT signed another debt restructuring agreement with a local financial institution for the restructuring of outstanding debt of another subsidiary, which has been liable in respect of overdrafts and related accrued interest expense amounting to approximately Baht 18.5 million. Significant
terms of such debt restructuring agreement are as follows:
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 a) Principal and accrued interest of approximately Baht 7.2 million would be paid by the Company in accordance with the terms, conditions and period specified in the Companyûs rehabilitation plan (Note 13). b) The right to claim partial outstanding debt owed by such subsidiary had been assigned from the financial institution to CRT approximately Baht 11.3 million and CRT agreed to pay to the financial institution the consideration for such claim assignment approximately Baht 5 million. Such consideration has already been paid by CRT on the contract signing date. CRT also entered into a loan agreement with such financial institution to borrow from the financial institution the amount of Baht 4.7 million for the payment of said amount of consideration. The principal under loan agreement had grace period of five (5) years. CRT agreed to repay the principal on the basis of equal quarterly installments within five (5) years, commencing in June 2007. The first installment of interest has been paid since March 2002. The interest rate under the loan agreement is MLR which shall be calculated from March 2002 onwards. CRT and the subsidiary recorded the difference of the future payment amount according to the debt restructuring agreements which is lower than book value of the subsidiary’s overdrafts and related accrued interest expense at the contractual date amounting to approximately Baht 10.1 million as gain on debt restructuring presenting as a portion of “Extraordinary Item of Subsidiaries” in the consolidated statements of income and the Company’s statements of income for the year ended December 31, 2002. In addition, CRT is required to comply with certain conditions and restrictions stipulated in the agreements mentioned above such as not directly or indirectly creating new loans or obligation with creditors or any other parties including asset guarantee, pledge, and mortgage, unless otherwise relating to the Companyûs rehabilitation plan. During the year 2004, CRT and other subsidiaries made fully repayments back to the said financial institution. 13. REHABILITATION PLAN On June 10, 1998, the Company temporarily suspended payments of its financial debts in conjunction with the commencement of a restructuring of its indebtedness. These suspensions constituted events of defaults, the occurrence of which enables lenders to declare their debt due and demand immediate repayment. On May 2, 2000, the Central Bankruptcy Court ordered the Company to enter into business rehabilitation and appointed Robinson Planner Limited to be the plan preparer. On December 20, 2000, the Court approved the rehabilitation plan and appointed Robinson Planner Limited to be the plan administrator and to operate the business of the Company in accordance with the rehabilitation plan. Under the rehabilitation plan, the Company is required to comply with outlined conditions as follows: (a) On June 13, 2001, the Company proceeded with the registration of decrease in the Companyûs registered share capital, which was reserved for convertible debentures from Baht 1,870,000,000 (ordinary share 187,000,000 shares at Baht 10 par value) to Baht 1,480,881,510 (ordinary share 148,088,151 shares at Baht 10 par value) and on June 15, 2001, the Company proceeded with the registration for the increase of the Companyûs registered share capital from Baht 1,480,881,510 (ordinary share 148,088,151 shares at
Baht 10 par value) to Baht 14,808,815,100 (ordinary share 1,480,881,510 shares at Baht 10 par value).
080
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 (b) On October 5, 2001, the Company issued the partially secured amortizing notes (convertible upon default) in the amount of Baht 3,614.5 million, for allocating to the unsecured financial creditors as described in the rehabilitation plan of the Company, and in October 2001, the Company has provided, to the extent possible, the Noteholders’ representative, acting on behalf of the unsecured financial creditors who are the Noteholders, the securities for the issuance of such Notes in accordance with the conditions stipulated in the rehabilitation plan and other related documents. (c) On October 10, 2001, and November 13, 2001, the Company made initial repayments to the unsecured financial creditors of the Company in the amount of totalling Baht 956 million. (d) On October 30, 2002, the Company converted unsecured debt of approximately Baht 1,777 million into approximately 888 million ordinary shares, representing 60% of the enlarged total share capital of the Company. The conversion of unsecured debt into ordinary share was made at the rate of Baht 2 per share, resulting in a discount on share capital of approximately Baht 7,108.2 million. The ordinary shares issued to the unsecured financial creditors, approximately 311 million ordinary shares (CRC Option Shares), representing 21% of the enlarged total share capital of the Company were issued to CRC (Central Retail Corporation Ltd. and its designee) in line with conditions and time indicated in the Company’s rehabilitation plan in April 2003. (e) On October 30, 2002, the Company issued approximately 370 million ordinary shares, representing 25% of the enlarged total share capital of the Company to CRC (CRC Support Shares) at Baht 0.0001 per share resulting in an increase in discount on share capital of approximately Baht 3,702.2 million. The CRC support shares would be conditionally assigned to the unsecured financial creditors. The Security Agent will hold the share certificates. The condition assignment will be released and the share certificates will be released to CRC pro rata to the total repayments of principal and interest.
In addition, on October 30, 2002, the Company issued approximately 74 million ordinary shares, representing 5% of the enlarged total share capital of the Company, to a Special Purpose Vehicle, owned by the management of the Company (MIOP Shares) at Baht 0.0001 per share resulting to increase in discount on share capital of approximately Baht 740.4 million. These shares would be conditionally assigned to the unsecured financial creditors. The Security Agent would hold the share certificates. To the extent these shares are earned by management, the conditional assignment, and custody of the Security Agent will be released within 5 years. In consideration for the issuance of new ordinary shares to CRC and the Special Purpose Vehicle, CRC and the Company’s management undertake to provide their continuous support for the Company. (f) On November 8, 2002, the Company proceeded with the registration of decrease in the Company’s capital from Baht 14,808,815,100 (ordinary share 1,480,881,510 shares at Baht 10 par value) to Baht 11,106,611,330 (ordinary share 1,110,611,133 shares at Baht 10 par value). The purpose of the capital reduction is to reduce the Company’s deficit as stipulated in the rehabilitation plan. (g) On November 8, 2002, the portion of debt remaining was forgiven by the unsecured financial creditors in line with the condition stipulated in the Company’s rehabilitation plan. The Company recorded the difference of the total of the partially secured amortizing notes and related interest, the amount of initial repayment and the ordinary shares issued to creditors, which is lower than book value of debt under the Company’s rehabilitation plan, as gain on debt restructuring totalling approximately Baht 14,747.8 million and presented this as a portion of “Extraordinary Item” in the consolidated statement of income and the Company’s statement of income for the year ended December 31, 2002.
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003
(h) During the third quarter of 2002, a subsidiary entered into a debt restructuring agreement with a local financial institution to settle the Company’s debt as a guarantor, of Baht 159.2 million. Such liability bears interest at the rate of MLR and has to be repaid on January 1, 2003. Sebsequently, the financial institution made three amendments to the debt restructuring agreement to extend the repayment date in which the most recent repayment date was scheduled on April 1, 2004, with the interest rate at MLR. On May 10, 2004, the Company entered into a new amendment to the debt restructuring agreement with the said financial institution to extend the repayment schedule into the three consecutive periods as specified in the agreement. The final repayment will be within December 30, 2005 with MLR interest rate. During the year 2004, the subsidiary made repayments to a financial institution of Baht 159.2 million. 14. PARTIALLY SECURED AMORTIZING NOTES (CONVERTIBLE UPON DEFAULT) In Thousand Baht Consolidated The Company Only 2004 2003 2004 2003
Principal amount 515,851 2,473,273 2,115,308 2,484,595 Interest 205,816 735,826 558,741 735,826 Total 721,667 3,209,099 2,674,049 3,220,421 Less portion due within one year (721,667) (372,722) (2,674,049) (372,722) Net - 2,836,377 - 2,847,699
On October 5, 2001, the Company issued partially secured amortizing notes (convertible upon default) totalling Baht 3,614.5 million pursuant to the rehabilitation plan of the Company. (Note 13) The notes bear interest at the rate specified in the Terms and Conditions and included as part of future payable amounts. The Company shall make an amortized repayment of interest together with principal amount and times specified in the Terms and Conditions through maturity date, which means the earliest of December 31, 2005 or the date when all of the Notes have been fully redeemed and/or converted into shares of the Company. The conversion right attaching to a note may be exercised, at the option of the holder thereof, at any time and not less than 15 business days following the occurrence of an event of default. The number of shares to be issued on conversion of a note will be determined by dividing the aggregate of the principal amount of the notes to be converted and interest due to the maturity date and the bonus payment by the conversion price in effect at the conversion date, which means the market price as at the conversion date. The Noteholders may by a special resolution direct that all Noteholders shall convert their notes into shares on a pro rata basis in accordance with Terms and Conditions (Mandatory Conversion). Nevertheless, the Company has the right to make early redemption according to the Terms and Conditions. The Company and subsidiaries have mortgaged and pledged property and equipment including shares of subsidiaries and associated companies with net book value as at December 31, 2004 and 2003 approximately Baht 1,915.0 million and Baht 1,853.3 million, respectively, as collaterals for these notes. The Company has presented the portion due within one year of partially secured amortizing notes (convertible upon default) under current liabilities in the balance sheets.
082
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003
15. THE VOLUNTARY DEBT REFINANCE PROGRAM
The Voluntary Debt Refinance Program (”VDRP”) was launched by the Company to reduce the refinancing risk upon the maturity of the Notes in 2005 (Note13). In order for the VDRP to be implemented the Company has had to amend the rehabilitation plan dated November 14, 2000 to accommodate the repurchase of the Notes. Therefore, the statutory creditors’ meeting was held on November 5, 2003 by the Official Receiver in order to consider and vote for the plan amendment proposal. Accordingly, the plan amendment proposal was approved by special resolution of the creditors’ meeting according to the Bankruptcy Act.
Further to the above, creditors meeting pursuant to the Bankruptcy Act, the Noteholders’ Representative called the Noteholders meeting according to the term and condition of the Note on November 5, 2003 for the Noteholders to consider and vote on the proposal to amend the terms and conditions of the Note for consistency between the terms and conditions of the Note and the rehabilitation plan as amended. The resolution of the meeting unanimously resolved to approve such amendment proposal. On December 29, 2003 the Central Bankruptcy Court approved the plan amendment as approved by the creditors’ meeting . As a consequence, the plan amendment and the term and conditions amendment have become effective and the Company is able to proceed with implementing the VDRP. In January 2004, the Company started implementing the VDRP program by having Robinson S.P.V. Ltd. (“SPV”), the Company,s subsidiary, sign long-term loan agreements with 2 local banks on January 16, 2004 with credit line not exceeding Baht 2,700 million, Baht 1,350 million from each bank , at the interest rate of average minimum lending rate of lending banks (MLR) minus 1.75% per annum or 4% per annum, which ever is higher. The proceeds drawn down under the agreements shall be used by SPV to repurchase the Notes pursuant to the VDRP during the period from January 16, 2004 to December 30, 2005. Consequently, the Company and its subsidiary have made four offerings to repurchase Notes during the year 2004. The tender offer prices were set at Baht 115.01, Baht 119.13, Baht 119.50 and Baht 120 for the first to the fourth offer, respectively, which offer prices were below the book value of the Notes (Par value of Baht 100 each). Accordingly, 77.04% of the total outstanding principal of Notes as at December 31, 2004 or 16,996,310 units was tendered. The premium over par value paid by the subsidiary for the repurchased Notes will be compensated throughout the agreement period by the difference between the subsidiary’s loan rate and the coupon rate of the Note to be received by the subsidiary, which is lower than the loan rate, and the bonus payment to be received by the subsidiary according to the terms and conditions of the Notes. During the year 2004, SPV has commenced the drawdown of the loan for payment to the Noteholders, who tendered their Notes, and pledged repurchased Notes with the lending banks as collateral for the loans. 16. LEGAL RESERVE AND DIVIDEND DISTRIBUTION OF SUBSIDIARY Under the Public Limited Companies Act B.E. 2535, the Company is required to appropriate at least 5% of its annual net income after deduction of the deficit brought forward (if any) at each dividend declaration as reserve fund until the reserve not less than 10% of the registered capital. The reserve is not available for dividend distribution. At the directors’ meeting of Robinson Rajdamri Co., Ltd., a local direct subsidiary, held on July 5, 2004, the directors of the subsidiary approved the distribution of dividends from the unappropriated retained earnings as at June 30, 2004, at Baht 100,000 per share for 920 common shares, totalling Baht 92,000,000. The subsidiary had completely made appropriation for legal reserve at the rate of 10% of the authorized share capital.
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 At the ordinary shareholders’ meeting of CR Phuket (Thailand) Co., Ltd., a local subsidiary, held on April 25, 2003, the shareholders of the subsidiary approved the distribution of dividends from net profit for the year 2002 at Baht 38.4 per share for 1,770,000 common shares, totalling Baht 67,968,000 and made an appropriation for legal reserve at the rate of 5% of annual net profit amounting to Baht 2,801,097. On April 30, 2004, the shareholders of the subsidiary approved the distribution of dividends from the retained earnings as at December 31, 2003, Baht 45 per share for 1,770,000 common shares, totalling Baht 79,650,000 and made an appropriation for legal reserve at the rate of 5% of annual net profit amounting to Baht 2,960,816. 17. OTHER INCOME In Thousand Baht Consolidated The Company Only 2004 2003 2004 2003
Utilities income 172,914 167,119 101,721 106,599 Promotion and advertising income 37,685 45,060 38,838 44,747 Management fee income 6,545 5,974 97,483 89,344 Income sharing and trade commissions 6,967 7,398 5,655 5,359 Miscellaneous income 131,328 157,706 93,416 140,517 Total 355,439 383,257 337,113 386,566 18. INCOME TAX The Company and certain subsidiaries had no income tax expense for the year ended December 31, 2004 because of the utilization of tax loss carry forwards. 19. FINANCIAL INSTRUMENTS As at December 31, 2004 and 2003, the Company and subsidiaries did not speculate in or engage in the trading of any derivative financial liabilities. Liquidity Risk Liquidity risk arises from the problem in raising funds adequately and in time to meet commitment as indicated in the financial liabilities. The management believes that the Company and subsidiaries have no such risk. Interest Rate Risk As at December 31, 2004 and 2003, the Company and subsidiaries had risk from the changing value of
financial assets and financial liabilities, from changing market interest rates as follows:
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ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 2004 Consolidated
In Thousand Baht
Floating Fixed interest rate maturing in: Average interest rate
Interest 1 year or Over 1 to More than Floating Fixed
rate less 5 Years 5 Years Total % %
Financial assets Cash at financial institutions 1,584,555 - - - 1,584,555 0.25-1.50 -
Restricted investment in fixed deposits 65,436 - - - 65,436 0.50-1.00 -
Financial liabilities Long-term loan from financial
institutions 1,795,045 - - - 1,795,045 MLR-1.75 -
Short - term loans and advances
from related parties - 26,927 - - 26,927 - 15.00
The Company Only
In Thousand Baht
Floating Fixed interest rate maturing in: Average interest rate
Interest 1 year or Over 1 to More than Floating Fixed
rate less 5 Years 5 Years Total % %
Financial assets Cash at financial institutions 468,793 - - - 468,793 0.25-1.25 -
Restricted investment in fixed deposits 49,200 - - - 49,200 0.50-1.00 -
Short-term loans and advances
to subsidiaries 6,127,178 - - - 6,127,178 MOR+1.5 -
Long-term loans to related parties - - - 61,223 61,223 - 6.00
Financial liabilities Short-term loans and advance from
Related parties 960,512 - - - 960,512 MOR+1.5 -
Long-term loan from subsidiary - - - 113,300 113,300 - 2.00
ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 2003 Consolidated
In Thousand Baht
Floating Fixed interest rate maturing in: Average interest rate
Interest 1 year or Over 1 to More than Floating Fixed
rate less 5 Years 5 Years Total % %
Financial assets Cash at financial institutions 1,310,401 - - - 1,310,401 0.25 -
Restricted investments in fixed
deposits 65,414 - - - 65,414 0.75-1.00 -
Financial liabilities Liabilities under guarantee
agreement of subsidiary 159,193 - - - 159,193 MLR -
Short - term loans and advances
from related parties - 17,465 - - 17,465 - 15.00
The Company Only
In Thousand Baht
Floating Fixed interest rate maturing in: Average interest rate
Interest 1 year or Over 1 to More than Floating Fixed
rate less 5 Years 5 Years Total % %
Financial assets Cash at financial institutions 322,413 - - - 322,413 0.25 -
Restricted investment in fixed deposits 49,200 - - - 49,200 1.00 -
Short-term loans and
advances to subsidiaries 5,782,580 - - - 5,782,580 MOR+1.5 -
Long - term loans to related parties - - - 61,223 61,223 - 6.00
Financial liabilities Short - term loans and advances
from related parties 1,047,471 - - - 1,047,471 2.75 -
Long-term loan from subsidiary - - - 113,300 113,300 - 2.00
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ROBINSON DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 Credit Risk Credit risk is the risk that a counterparty is unable or unwilling to meet a commitment that they entered into with the Company and subsidiaries. The management believes that the Company and subsidiaries do not face any significant credit risks due mainly to recognition of revenue is from cash sales. However, the Company and subsidiaries still face credit risk from loans granted and accrued income from the companies in the group, for which the Company and subsidiaries have set up an allowance to cover the estimated losses. Fair Value of Financial Assets and Financial Liabilities Financial assets and financial liabilities held to maturity in the normal course of business are recorded at cost or redemption amount as appropriate. Fair value is the amount for which an asset could be exchanged, or a liability settled between knowledgeable, willing parties in an arm’s length transaction. The Company and subsidiaries use the following methods and assumptions in estimate the fair values of financial assets and financial liabilities. - Financial assets classified as current assets and accounts and notes payable - trade The carrying amount approximates fair value because of the short period to maturity of those instruments. - Long-term investments and liabilities under rehabilitation plan The fair value of long-term investment and liabilities under rehabilitation plan cannot be properly calculated. Accordingly, no disclosure is made. - Loans from and loan to related parties The fair value approximates carrying amounts stated in the balance sheets, since interest on financial instruments approximates market rates.
DEPARTMENT STORE PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued) December 31, 2004 and 2003 - Partially secured amortizing notes (Convertible upon default) The fair value of partially secured amortizing notes (convertible upon default) is estimated using a discounted cash flow method based on the current market rate and the remaining period to maturity. As at December 31, 2004 and 2003, the fair value was approximately Baht 2,481.5 million and Baht 2,890.2 million. 20. EMPLOYEE REGISTERED PROVIDENT FUND The Company established a contributory registered provident fund in accordance with the Provident Fund Act. B.E. 2530. The registered provident fund plan was approved by the Office of the Securities and Exchange Commission. Under this plan, the Company contributes an amount equivalent to the employees’ contribution (which is computed on a certain percentage of the employees’ basic salaries). The Company appointed a fund manager to manage the fund in accordance with the terms and conditions prescribed in the Ministerial Regulation No. 2 (B.E. 2532) issued under the Provident Fund Act. B.E. 2530. The Company’s contribution to the fund for the years 2004 and 2003 amounted to approximately Baht 3.4 million and Baht 2.8 million, respectively. 21. COMMITMENT AND CONTINGENT LIABILITIES As at December 31, 2004 and 2003, the Company and its subsidiaries had unused letters of credit and were contingently liable for letters of guarantee issued by the banks to certain government agencies of approximately Baht 77.2 million and Baht 74.8 million, respectively, for the consolidated financial statements and Baht 32.7 million and Baht 33.9 million, respectively, for the Company only financial statements. These credit facilities were guaranteed by certain Company and subsidiaries fixed deposits and note certificates of deposit totalling approximately Baht 65.6 million and Baht 65.4 million, respectively, for the consolidated financial statement and Baht 49.4 million, for the Company only financial statement. 22. ADDITIONAL INFORMATION Detail of expenses for the years ended December 31, 2004 and 2003, which are required to be disclosed
in accordance with the Accounting Standard No. 35 çPresentation of Financial Statementsé are as follow: In Thousand Baht Consolidated The Company Only 2004 2003 2004 2003
Depreciation expense 349,984 343,023 227,622 232,714 Employee expenses 524,293 458,084 394,566 340,958 Amortization expense 174,335 177,747 132,104 138,156
As of December 31, 2004 and 2003, the Company’s and subsidiaries’ employees numbered 2,511 and 2,162, respectively.
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