SET Announcements

Management Discussion and Analysis Company name : ENERGY ABSOLUTE PUBLIC COMPANY LIMITED Year : 2014 Quarter : Quarter 2 Ending : 30-Jun-2014 Note : Ref : EA 5708/001 14th August 2014 Subject: Management Discussion and Analysis of Financial Statement for 2nd quarter ended 30th June 2014 To : The President of the Stock Exchange of Thailand We, the Energy Absolute Public Company Limited would like to report the result of the company and subsidiaries (all together as "the Company") for the 2nd quarter ended 30th June 2014 which has been approved by the meeting of the Board of Directors No. 5/2014 held on 14th August 2014. The details are as follows: The overall of operations result for the three-month and six-month periods ended 30th June 2014 Year 2014 Year 2013 Increase (Decrease) Three-month period Six-month period Three-month period Six-month period Three-month period Six-month period Million Baht Million Baht Million Baht Million Baht Million Baht % Million Baht % Total Revenues 1,799.88 3,889.98 841.94 1,864.50 957.94 113.78 2,025.48 108.63 Net profit attributable to Owners of the parent 408.43 868.39 60.50 143.75 347.93 575.08 724.63 504.08 Basic Earnings per Share (Baht : Share) 0.109 0.233 0.017 0.039 0.092 544.06 0.194 496.92 Net Profit For the three-month period ended 30th June 2014, the Company has earned the net profit of Baht 408.43 million representing the increase of Baht 347.93 million or increased by 575.08% as compared to the net profit of Baht 60.50 million incurred in the same period of last year. And for the six-month period ended 30th June 2014, the Company has earned the net profit of Baht 868.39 million representing the increase of Baht 724.63 million or increased by 504.08% as compared to the net profit of Baht 143.75 million incurred in the same period of last year. The reasons for changes are as follows : Revenues For the three-month and six-month periods ended 30th June 2014, the Company has earned the total revenues of Baht 1,799.88 million and Baht 3,889.98 million respectively. These represent the increase of Baht 957.94 million and Baht 2,025.48 million or increased by 113.78% and 108.63% as compared to the total revenues of Baht 841.94 million and 1,864.50 million incurred during the same periods last year respectively. The reasons are as follows : 1. Production line and distribution of bio-diesel fuel : For the three-month and six-month periods ended 30th June 2014, the revenue has increased by Baht 398.04 million and Baht 979.98 million or increased by 54.39% and 63.49% respectively. This is due to the sales volume has increased by 9.71 million liters and 17.55 million liters or increased by 30.96% and 26.96% respectively as compared to the sales volume during the three-month and six-month periods ended 30th June 2013 of 31.37 million liters and 65.12 million liters which were increased to be 41.08 million liters and 82.67 million liters respectively. Moreover, the average sales price per unit has increased to Baht 6.82 per liter or increased by 28.77% as compared to the average sales price per unit during the six-month period ended 30th June 2013 of Baht 23.71 per liter which was increased to be Baht 30.53 per liter. For pure glycerin : The revenues incurred during the three-month and six-month periods ended 30th June 2014 have increased by Baht 21.11 million and Baht 88.92 million or increased by 99.66% and 296.33%. This is due to the increase of sales volume. 2. Production line and distribution of electricity unit : For the three-month and six-month periods ended 30th June 2014, the revenues have increased by Baht 532.75 million and Baht 1,027.81 million or increased by 1,227.27% and 1,181.60% mainly due to the 90 MW solar power plant of subsidiary has commenced the commercial operation on 23rd December 2013 resulting the first haft of the year 2014, the Company earned the revenue from the solar power plants totally 98 MW whereas the first haft of the year 2013, the Company just earned the revenue from solar power plant 8 MW only. 3. Other income : For the six-month period ended 30th June 2014, the other income has decreased by Baht 40.21 million or decreased by 81.49%. This is due to during the 1st Quarter of the year 2013, a subsidiary has incurred the penalty income amounting of Baht 35.88 million due to the delay of work. Cost of Sales The total cost of sales during the three-month and six-month periods ended 30th June 2014 were Baht 1,227.20 million and Baht 2,736.65 million representing the increased of Baht 503.93 million and Baht 1,133.17 million or increased by 69.67% and 70.67% respectively as compared to the same periods of last year which incurred the total cost of sales of Baht 723.26 million and Baht 1,603.49 million respectively. The summaries are as follows: 1. Production line and distribution of bio-diesel and pure glycerin : For the three-month and six-month periods ended 30th June 2014, the costs of sales have increased by Baht 396.42 million and Baht 978.55 million or increased by 56.54% and 66.53% respectively. This is due to the increase of sales volume and cost per unit of raw material reflecting to the market situation. However, in comparison, the increase of sales cost ratio was lower than the increase of revenue of this unit. This is due to the efficiency of inventory management, the procedure of manufacturing as well as the efficiency of raw material procurement. 2. The production line and distribution of electricity : For the three-month and six-month periods ended 30th June 2014, the sales costs have increased by Baht 77.31 million and Baht 154.57 million or increased by 793.81% and 797.05% respectively. This is due to the 90 MW solar power plant of a subsidiary has commenced the commercial operation on 23rd December 2013 Selling Expenses For the three-month and six-month periods ended 30th June 2014, the selling expenses were Baht 14.38 million and Baht 30.43 million representing the increase of Baht 0.80 million and Baht 2.17 million or increased by 5.90% and 7.69% respectively as compared to the same periods of last year which incurred the selling expenses of Baht 13.58 million and Baht 28.26 million respectively. This is due to the increase of sales volumes of bio-diesel fuel causing the expenses in part of production and distribution bio-diesel fuel were increased as well. Administrative Expenses For the three-month and six-month periods ended 30th June 2014, the administrative expenses were Baht 67.31 million and Baht 99.51 million representing the increase of Baht 41.69 million and Baht 50.20 million or increased by 162.77% and 101.79% respectively as compared to the same periods of last year which incurred the administrative expenses of Baht 25.62 million and Baht 49.31 million respectively. This is due to the increase of expenses for expanding the business and annual salary as well as bonus of the year. Finance Cost For the three-month and six-month periods ended 30th June 2014, the finance cost were Baht 84.71 million and Baht 152.31 million representing the increase of Baht 71.14 million and Baht 126.16 million or increased by 545.87% and 482.43% respectively as compared to the same periods of last year which incurred the finance cost of Baht 13.03 million and Baht 26.15 million respectively. This is due to the solar power plant of subsidiary has completed construction, therefore, the Company recorded the finance cost incurred thereafter as the expenses rather than the cost price during construction. The Financial Position Trade accounts receivable The trade accounts receivable as of 30th June 2014 and 31st December 2013 were Baht 696.48 million and Baht 500.34 million respectively. This represents the increase of Baht 196.15 million or increase of 39.20% resulting from the increase of trade accounts receivable in part of Production line and distribution of bio-diesel. This is due to the sales volume nearly the end of quarter has increased as compared to the sales volume during end of year 2013 resulting from the Government policy to promote Bio-diesel fuel. This also includes the increase of trade accounts receivable on the production line and distribution of electricity unit resulting from the increase of electricity sales volume during the end of quarter as compared to the sales volume during the end of the year 2013 mainly due to the commencing in operation (COD) of solar power plant - 90 MW of subsidiary on 23rd December 2013. Inventories The inventories as of 30th June 2014 and 31st December 2013 were Baht 181.41 million and Baht 220.38 million respectively. This represents the decrease of Baht 38.97 million or decreased by 17.68% because of the Company has reduced the stock of inventory to reflect the fluctuation of raw material price. Deposits at Financial Institution held as Collateral The Deposits at Financial Institution held as Collateral as of 30th June 2014 and 31st December 2013 were Baht 42.58 million and Baht 701.97 million respectively. This represents the decrease of Baht 659.39 million or decreased by 93.93% due to the Company has received the asset which the Company has to provide the guarantee before the acquisition and such guarantee has been withdrawn. Retention for construction work The retention for construction work as of 30th June 2014 and 31st December 2013 were Baht 303.13 million and Baht 611.04 million respectively. This represents the decrease of Baht 307.91 million or decreased by 50.39% due to a subsidiary has paid the retention for construction work according to condition of contract. The business outlook for the 3rd Quarter ended 30th September 2014 The production line and distribution of bio-diesel unit, in term of sales volume, will be reduced during the 3rd quarter due to the rainy season. However due to the Department of Energy Business has made the announcement subject: the determination of nature and quality of diesel fuel (No. 3) B.E. 2557 dated 30th April 2014 by increasing the proportion of bio-diesel methyl esters of acid fat of high-speed diesel from 4% to 7% with effect from 14th May 2014. This announcement will affect by increasing the sales volume of bio-diesel of the Company as compared to the same period of last year. It may also affect to bio-diesel by increasing the value of sales. For the production line and distribution of electricity, the sales volume may slightly reduce as compared to the 2nd quarter. This is due to the drop of ability to produce electricity during the rainy season which is normal cycle of business. Please be informed accordingly. Yours faithfully, ????????????? (Mr. Amorn Sapthaweekul) Deputy of Chief Executive Officer This announcement was prepared and disseminated by listed company or issuer through the electronic system which is provided for the purpose of dissemination of the information and related documents of listed company or issuer to the Stock Exchange of Thailand only. The Stock Exchange of Thailand has no responsibility for the correctness and completeness of any statements, figures, reports or opinions contained in this announcement, and has no liability for any losses and damages in any cases. In case you have any inquiries or clarification regarding this announcement, please directly contact listed company or issuer who made this announcement.