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Clarification of the effect from changing Accounting Policy

BackMay 11, 2007

SF 171/07

10 May 2007

Subject: Clarification of the effect from changing Accounting Policy for investments in Subsidiaries and Dividend Policy

To: President The Stock Exchange of Thailand

Siam Future Development Public Company Limited would like to clarify the effect from changing Accounting Policy for investment as follows:

In order to follow the accounting standard TAS 44 (amendment 2006): 'Consolidated Financial Statements and Accounting for Investments in Subsidiaries' and TAS 45 (amendment 2006): Investment in Associated Company, effective on 1 January 2007, the Company has changed an accounting treatment from the equity method to historical method for investments in subsidiaries and associates. The Company has applied retrospective adjustments for this change to the comparative company financial statements which lead to unequal of Net Profit on the Consolidated Financial Statements and on the Company Financial Statements. For the three-months periods ended 31 March 2007, Net Profit on the Consolidated Financial Statements equals to Baht 55.24 Million but Baht 7.05 Million on the Company Financial Statements. The Company would like to clarify more in details as follows:

1. Changing in this accounting policy leads the decrease in Net Profit on the Company Financial Statements for three-months periods ended 31 March 2007 by Baht 48.18 Million; as a result of excluding the share of profit (loss) of investments: equity method and the increase in Net Profit by Baht 0.28 Million from the retrospective adjustments on the Company Financial Statements for three-months periods ended 31 March 2006.

2. The effects from adjustments to Balance Sheet of the Company Financial Statements for three-months periods ended 31 March 2007 are as follows: Investments in subsidiaries and retained earnings decrease by Baht 458.12 Million which leads the deficits of Baht 85.48 Million shown on Statements of changes in shareholders equity of the Company Financial Statements.

3. The company will conduct the subsidiaries for dividend payment in order to reduce the deficits.

However, changing in accounting policy affects the accounting transaction of investments in subsidiaries presented on the Company Financial Statements only, not affect the preparation of the Consolidated Financial Statements and fundamental factors of operating the business of the Company.

Regarding the accounting policy for investments, the operating results of the company on the Consolidated Financial Statements and the Company Financial Statements are not equal which leads to dividend payment of the company. Therefore, the Company would like to clarify the dividend policy as follows:

The Company will pay the dividend not less than 40% of Net Profit after tax if there is no deficits and sufficient working capital for business expansion. The dividend payment will not affect normal business of the company.

Edit to

The Company will pay the dividend not less than 40% of Net Profit after tax of the Company Financial Statements after deducting deficits (if any) and sufficient working capital for business expansion. The dividend payment will not affect normal business of the company.

The dividend payment from subsidiaries which the Company holds more 50% share will be considered from the dividend policy and cash requirement of subsidiariesin order to lead the Company to pay the dividend as above.

For the dividend policy of subsidiaries to the Company, the subsidiaries will pay the dividend not less than 60% of Net profit of the Company Financial Statements after deducting deficits (if any) if there is no expansion.

Please be informed accordingly.

 

Sincerely Yours,

 

(Mr. Somnuk Pojkasemsin)
President