13. Financial Information

The corporate accounting period begins on November 1 and ends on October
31 of every year.

1.  Report of Independent Auditor

1)  Auditor

  Year 2012 Miss Wimolporn Boonyusthian, Certified Public Accountant,
  Registration No. 4067, Deloitte Touche Tohmatsu Jaiyos Audit Co., Ltd.

  Year 2013 Miss Wimolporn Boonyusthian, Certified Public Accountant,
  Registration No. 4067, Deloitte Touche Tohmatsu Jaiyos Audit Co., Ltd.

  Year 2014 Miss Wimolporn Boonyusthian, Certified Public Accountant,
  Registration No. 4067, Deloitte Touche Tohmatsu Jaiyos Audit Co., Ltd.

2)  Summary of the audit reports over the past three years

  Year 2012 The Auditor reviewed corporate financial statements and
  issued unconditional opinions.

  The Auditor clarified the scope of her responsibilities that she had
  not audited financial statements of three foreign subsidiaries and six
  local subsidiaries which are included in this consolidated financial
  statements. In 2012, the financial statements of the subsidiaries
  indicated the total assets of THB 7,321.04 million, accounting for
  24.72 % of the total assets. The total sales was THB 3,737.93 million,
  accounting for 16.83 % of the year’s total sales. The net loss totaled
  THB 322.03 million, accounting for 13.02 % of the year’s total sales.
  The financial statements of the subsidiaries were audited by other
  certified public accountants. The Auditor presented parts of the
  reports related to monetary amounts of transactions of the
  subsidiaries included in the consolidated financial statements; those
  amounts presented were based on the other certified public
  accountants' reports.

  Year 2013 The Auditor reviewed corporate financial statements and
  issued unconditional opinions.

  Year 2014 The Auditor reviewed corporate financial statements and
  issued unconditional opinions.

2.  Percentage of Shareholding in the Subsidiaries and Consolidated
    Financial Statements Preparation Criteria

(Refer to the attached Financial Statements for details.)

The financial statements for 2012, 2013, and 2014 include a total of 14
subsidiaries (excluding subsidiaries of Thai Sugar Terminal Public
Company Limited).

Table 13.1: Percentage of Direct and Indirect Corporate Shareholding

  ---------------------------------------- -------------- ---------- ---------
                                           % of                      
                                           Shareholding              

                                           2012           2013       2014

  Tamaka Sugar Industry Co., Ltd.          90.21          90.21      90.21

  New Krung Thai Sugar Factory Co., Ltd.   95.78          95.78      95.78

  New Kwang Soon Lee Sugar Factory Co.,    98.61          98.61      98.61
  Ltd.                                                               

  KSL Real Estate Co., Ltd.                80.31          91.02      91.02

  KSL Export Trading Co., Ltd.             79.55          79.55      79.55

  KSL Chemicals Co., Ltd.*                 100.00         100.00     100.00

  Khon Kaen Sugar Power Plant Co., Ltd.    100.00         100.00     100.00

  Khon Kaen Alcohol Co., Ltd.              100.00         100.00     100.00

  KSL Agro and Trading Co., Ltd.           100.00         100.00     100.00

  Savannakhet Sugar Co., Ltd.              98.49          98.49      98.49

  Koh Kong Plantation Co., Ltd.**          70.00          80.00      80.00

  Koh Kong Sugar Industry Co., Ltd.        70.00          80.00      80.00

  Wynn In Trading Co., Ltd.                100.00         100.00     100.00

  Thai Sugar Terminal Public Company       23.82          23.82      23.82
  Limited***                                                         
  ---------------------------------------- -------------- ---------- ---------

NOTE:

* Formerly name KSL Chemicals Co., Ltd.

** Koh Kong Plantation Co., Ltd. holds shares through Wynn In Trading
Co., Ltd.

*** Although the company only has 23.82 % shareholding in Thai Sugar
Terminal Public Company Limited, it has controlling power in that
particular company. Thai Sugar Terminal Public Company Limited is,
therefore, considered a corporate subsidiary. Thai Sugar Terminal Public
Company Limited, a KSL subsidiary listed in the SET as TSTE, has 5
subsidiaries:

TSG Assets Company Limited operates real estate rentals. TSTE holds
23.11% shares.

TS Oil Industry Company Limited (formerly name as TSG Property Company
Limited) trades, leases, develops real estate, and operates a palm oil
refinery plant. TSTE holds 28.48% shares directly and indirectly.

TS Flour Mill Public Company Limited rents out real estate and
manufactures wheat flour. TSTE holds 16.59% shares directly and
indirectly. It is also listed in the SET as TMILL.

TS Warehouse Company Limited stores and transfers goods. TSTE holds
19.30% shares directly and indirectly.

TS Transport and Logistics Company Limited provides transport and
security service. It also manufactures plastic sacks. TSTE holds 30.58%
shares directly and indirectly.

For further details, refer to Listed Company Information on Thai Sugar
Terminal Public Company Limited (TSTE) and TS Flour Mill Public Company
Limited (TMILL).

3.  Profit and Loss Statement

In 2014, the company generated the revenues from operations of THB
19,185 million, in total, increasing from that in the previous year by
1%. The revenue from sales amounted to THB 18,728 million and the
revenue from services amounted to THB 457 million. The company’s total
cost was THB 14,440 million, decreasing from that of the previous year
by 3%. Other incomes amounted to THB 447 million. The company had profit
before selling and administration expenses totaled THB 5,191 million,
increasing from that of the previous year by 9%.

Regarding the selling and administrative expenses, the company incurred
selling expenses totaled THB 623 million, increasing by 31% and
administrative expenses totaled THB 644 million, increasing by 7%. There
is also management remuneration cost of THB 193 million and Fee paid to
Sugar Fund, THB 992 million. Subsequently, the company had the profit
before financial cost and tax expenses totaled THB 2,740 million,
increasing by 11 %.

In 2014, the company incurred financial cost of THB 834 million, an
increase by 24%. The corporate income tax burden amounts to THB 109
million. After deduction of THB 159 million loss in minority interests,
the company’s net profit decreased by 3% from the previous year, from
THB 1,676 million to THB 1,626 million in 2014.

Table 13.2 : Consolidated Profit and Loss in the past 3 years

[]

With reference to the company’s revenue structure, the total revenues
from operations was THB 19,185 million. The company had revenues from
sales of sugar and molasses amounted to THB 13,344 million, accounting
for 70% of the total revenue. Revenues from sales of ethanol and
gasoline totaled THB 2,391 million, representing 12% of the total
revenue. Electricity sales, which the corporate power generation
facilities had distributed to the Electricity Generating Authority of
Thailand according to the firm contract, amounted to THB 1,141 million,
accounting for 6% of the total revenue. Revenues from sales of wheat
flour, palm oil, and sacks totaled THB 1,161 million, accounting for 6%
of the total revenue. The rest of the revenue were generated from the
sales of fertilizer, service provision, and other sources.

Table 13.3 : Consolidated Revenue Structure in the past 3 years

[]

4.  Statement of Financial Position of the Company and its Subsidiaries

Table 13.4 : A Summary of the Consolidated Statement of Financial
Position in the past 3 years

[]

In 2014, the company and its subsidiaries had the total assets of THB
40,134 million, an increase of 11% from the previous year due mainly to
(1) Investments PP&E from a power plant expansion and sugar factory’s
crushing capacity enhancement in Nampong, Khonkaen province. (2)
Increase in volume, the farmers required more loans for plantation cause
the increase in Loans to farmers of the company. (3) Delay shipment by
customers cause higher ending inventory this year.

The company funds these investment projects by using credit loans from
financial institutions and issuing bonds. Consequently, the total
liability increased by 13%, from THB 22,315 million in 2013 to THB
25,301 million. Hence, D/E ratio increased from 1.63 to 1.71 and
interest-bearing debt/equity also increased from 1.39 to 1.48.

5.  Cash Flow Statement

Table 13.5 : Cash Flow Statements of the Company in the past 3 years

[]

In 2014, the company and its subsidiaries the company and its
subsidiaries received cash flows from their operations before change in
working capital totaled THB 3,875 million, a 15% increased from the
previous year due to increase from the sugar volume. And also, increase
in loans to farmers and ending inventory. As a result, the company and
its subsidiaries have THB 1,598 million of cash flow from operating
activities or decreased by a 10% from the year 2013.

For cash flows from investing activities, the company and its
subsidiaries had cash paid in (net) totaled THB 3,195 million, of which
THB 2,650 million was mainly invested in lands, buildings, properties,
plants and equipment (net) from a power plant expansion and sugar
factory’s crushing capacity enhancement in Nampong, Khonkaen province.

Regarding financing activities in 2014, the company and its subsidiaries
received the net cash of THB 1,780 million from short term loan, issuing
bonds and project finance credit line.

6.  Financial Ratios

Table 13.6 : Financial Ratios

[]

According to the 2014 financial ratios, liquidity ratios that is part of
current ratio and acid test ratio had improved. This is because the
company restructured some of its debts from sort-term to long-term
tenor. In past few year the company managed by using short-term credits
as working capital for its investment projects. Once the long-term loan
contract periods were due, the company switched to use the long-term
credits. The purpose was to relieve the interest burden on loans.
Subsequently, the company’s current ratio and acid test ratio decreased.

Regarding solvency ratios, it can be seen that the D/E ratio, IBD/E
ratio and LTD to equity had increased as a result of using loan to fund
investment project, increase in loans to farmers and higher ending
inventory due to delay shipment by customer.

In terms of profitability ratios, the ROE decreased due to the slightly
decrease in overall operation. However the ROA was flat compare to the
previous year due to non-operating asset from our new project just take
place.

14. Management Discussion and Analysis

In 2014, the company has a net profit of THB 1,626 million. Compared to
the previous year result of THB 1,676 million, the company’s net profit
dropped by THB 50 million or about 3%, of which:

The revenue from sales and services increased 1% from THB 18,941 million
to THB 19,185 million even the world sugar price decreased. Because the
company had more sugarcane crushed volume from 8.02 million tons to 8.72
million tons. As a result, the company’ revenue slightly increased
compare to previous year.

The cost of sales and services decreased 3% from THB 14,961 million to
THB 14,440 million due to efficiency improvement. As a result, gross
profit increased 19% from THB 3,980 million to THB 4,744 million.

The other revenue decreased due to in 2013, the company had foreign
currency exchange gain, THB 183 million and derivatives gain, THB 245
million while in 2014, the company had only derivatives gain, THB 57
million.

For the selling and administrative expense, it is divided into the
following:

1)  Selling Expense – increased by 31% as the sales volume increased
    from 720,318 tons in 2013 to 836,701 tons in 2014.

2)  Administrative Expense – increased by 7% from THB 603 million to THB
    644 million.

3)  Fee paid to Sugar Fund – a fund the company contributed to the Cane
    and Sugar Fund to support the cane and sugar industry in Thailand.
    Since 2001, the company contributed money to this fund in two ways.
    First, through deducting THB 5/kg from all the sugar it sold
    domestically. Second, the company pays the fund with the difference
    in VAT that it gained from the price of sugar it used to sell
    previously with VAT and currently without VAT as required by current
    pricing regulation. Hence, the amount of fund the company
    contributes each year will depend on the domestic price of sugar
    during that year. In 2014, the amount of fund the company
    contributed is less than that of the previous year as the volume of
    domestic sugar sale decreases from 192,331 tons in 2013 to 177,057
    tons in 2014.

Financial expense and corporate tax – the burden of interest from
investing in a few new projects and delay sugar shipment by customer had
lead to an increase in the company’s financial costs of 24%. However,
the company also has some tax relief from some of its business
operations from the Board of Investment of Thailand (BOI).

As a result, the company reported net profit decreased by 3% from THB
1,676 million to THB 1,626 million

Table 14.1 Sales Revenue from Ethanol (exclusive of petroleum) and
Electricity

[]

Our expectation for 2015 is that our sugar business operation will be
stable even if the company has more sugar volume from the new facilities
that already take place but the world sugar price is in a downtrend
compare to previous year. The world economy holds back which affect
commodities price. However, the reduction in world market price of sugar
will help to decrease the cost of the company’s sugar production as the
cost of domestic cane is systematically tied to the price of sugar sold
as part of the 70:30 profit sharing arrangement between Thai cane
farmers and Thai sugar producers and the company expects compensatation
from lower sugar price by the weaken Thai Baht against US dollars.
Furthermore, in 2015 the company expects more sugarcane volume which
will give more raw material for value-added products such as electricity
and ethanol.