Financial Highlight

(1) Financial statements

  The company paid 400,000 baht to the auditor for audit fee. There was
  no non-audit fee.

  Auditor report

The auditor has reported the financial statements of Pato Chemical
Industry Public Co., Ltd. as of 31 December of 2003-2006 without any
conditions.

(2) Balance Sheet, Statement of Income, Statement of cash flows

Pato Chemical Industry Public Co., Ltd. Balance Sheet for the year ended
December 31

  ------------------------------------ ------------ -------- ------------ -------- ------------ -------- ------------ --------- --------
                                       2003                  2004                  2005                               2006      

                                       Amount       %        Amount       %        Amount       %                     Amount    %

  Assets                                                                                                                        

  CURRENT ASSETS                                                                                                                

  Cash in hand and at Bank             97,360       23.88    86,429       20.60    96,736       21.96                 153,928   33.01

  Short-term investment                -            -        -            -        -            -                     -         -

  Fixed deposit                        -            -                                                                           

  Deposit with financial institutions  -            -        -            -        -            -                     -         -

  Investment in listed company                               -            -        -            -                     -         -

  Accounts and Receivable – Related    -            -        -            -        -            -                     -         -
  Company                                                                                                                       

  Other companies, net                 103,395      25.36    128,614      30.66    123,091      27.95                 128,618   27.58

  Current portion of loan and          -            -        -            -        -            -                     -         -
  receivable – related company                                                                                                  

  Inventories                          86,033       21.10    119,781      28.55    138,167      31.37                 96,160    20.62

  Other current assets                                                                                                          

  Vat receivable                       -            -        -            -        -            -                     -         -

  Others                               2,493        0.61     2,231        0.53     1,948        0.44                  2,496     0.54

  Total current assets                 289,281      70.95    337,055      80.35    359,942      81.72                 381,202   81.75

  Investment in subsidiary                                                                                                      

  Loan to Subsidiary                   -            -        -            -        -            -                     -         -

  Loan to related company              -            -        -            -        -            -                     -         -

  Investment in subsidiary             -            -        -            -        -            -                     -         -

  Investment in related company        1,407        0.35     2,661        0.63     -            -                     -         -

  Account receivable and long term     29,183       7.16     -            -        -            -                     -         -
  loan to related company                                                                                                       

  Property, Plant and Equipment Net    74,241       18.21    72,513       17.29    79,729       18.10                 84,835    18.19

  Restricted cash fixed deposits       -            -        -            -        -            -                     -         -

  Refundable withholding income tax    6,489        5.48     -            -        -            -                     -         -

  Deposit with financial institutions  -            -        -            -        -            -                     -         -

  Deposits and guarantee               4            0.00     -            -        -            -                     -         -

  Land not used in operation           7,030        1.71     7,030        1.68     -            -                     -         -

  Deferred charge                      -            -        -            -        -            -                     -         -

  Other non-current assets             116          0.03     239          0.06     762          0.17                  280       0.06

  Total other assets                   118,470      29.05    82,443       19.65    80,491       18.28                 85,115    18.25

  Total assets                         407,751      100.00   419,498      100.00   440,433      100.00                466,317   100.00

  Liabilities and Shareholders' Equity                                                                                          

  Current Liabilities                                                                                                           

  Shortterm loan from financial        43,349       10.63    45,067       10.74    31,835       7.23                  50,378    10.80
  institutions                                                                                                                  

  Trade accounts and notes payable –   1,430        0.35     4,822        1.15     11,430       2.60                  12,669    2.72
  Related Company                                                                                                               

  - Other Companies                    11,669       2.86     16,146       3.85     10,931       2.48                  11,981    2.57

  Current portion of hire-purchase     902          0.22     496          0.12     -            -                     -         -
  contracts payable                                                                                                             

  Payable from Investment Acquistion   -            -        -            -        16,500       3.75                  -         -

  Payable from forward exchange        -            -        -            -        -            -                     -         -
  contracts                                                                                                                     

  Other current liabilities                                                                                                     

  Accrued income tax and accrued       15,180       3.72     22,414       5.34     18,167       4.12                  9,544     2.05
  expenses                                                                                                                      

  Others                               200          0.05     237          0.06     642          0.15                  240       0.05

  Total Other Current Liabilities      15,380       3.77     22,651       5.40     18,809       4.27                  9,784     2.10

  Total Current Liabilities            43,349       10.63    45,067       10.74    31,835       7.23                  84,812    18.19

  Loan from associate company          -            -        -            -        -            -                     -         -

  Hire-Purchase contracts payable-net  496          0.12     -            -        -            -                     -         -

  Provision for loss in a subsidiary   -            -        17,048       4.06     -            -                     39,455    8.46
  company                                                                                                                       

  Excess of book value over cost of    -            -        -            -        -            -                     -         -
  investment                                                                                                                    

  Total Liabilities                    73,174       17.95    106,230      25.32    89,505       20.32                 124,367   26.65

  Minority interest                    -            -        -            -        -            -                     -         -

  Shareholders' equity                 22,414       5.34     18,167       4.12     -            -                     -         -

  Share capital-common share Bht. 10                                                                                            
  par value                                                                                                                     

  Authorized share capital 14,000,000  140,000      -        140,000      -        140,000      -                     140,000   -
  shares                                                                                                                        

  Issued and fully paid-up share       140,000      34.33    140,000      33.37    140,000      31.79                 140,000   30.02
  capital 14,000,000 shares                                                                                                     

  Premium on share capital             135,000      33.11    135,000      32.18    135,000      30.65                 135,000   28.95

  Retained earning                                                                                                              

  Appropriated for reserve fund        14,000       3.43     14,000       3.34     14,000       3.18                  14,000    3.00

  Unappropriate                        45,577       11.18    24,268       5.79     61,928       14.06                 53,050    11.38

  Unrealised gain on securities held   -            -        -            -        -            -                     -         -
  as available-for-sale                                                                                                         

  Total Shareholders' Equity           334,577      82.05    313,268      74.68    350,928      79.68                 342,050   73.35

  Total Liabilities and Shareholders'  407,751      100.00   419,498      100      440,433      100.00                466,317   100.00
  Equity                                                                                                                        

  Book value per share(baht)           23.90                 22.38                 25.07                              24.43     

  Par Value                            10                    10                    10                                 10        

  Common Share                         14,000,000            14,000,000            14,000,000                         140,000   

  Pato Chemical Industry Public                                                                                                 
  Co.,Ltd. Statement of Income for the                                                                                          
  year ended December 31                                                                                                        

                                       2003                  2004                  2005                  2006                   

                                       Amount       %        Amount       %        Amount       %        Amount                 %

  Revenues                                                                                                                      

  Sales                                528,755      98.76    558,963      99.30    535,019      99.30    600,728                99.12

  Share of profit(loss)in subsidiary   -            -        -            -        -            -        -                      -

  Profit from exchange rate            1,694        0.32     -            -        -            -        1,321                  0.22

  Other income                         4,936        0.92     3,967        0.70     3,774        0.70     4,021                  0.66

  Total Revenues                       535,385      100.00   562,930      100.00   538,793      100.00   606,070                100.00

  Expenses                                                                                                                      

  Cost of sales                        428,571      80.05    425,246      75.54    402,686      74.74    454,674                75.02

  Selling and administrative expenses                                                                                           
  expenses??????????????????????????                                                                                            

  Bad debt and doubtful debt           1,051        0.20     32,879       5.84     61           0.01     39,455                 6.51

  Others                               44,433       8.30     42,150       7.49     44,198       8.20     48,487                 8.00

  Loss from exchange rate              -            -        2,471        0.44     4,522        0.84     -                      -

  Share of loss in subsidiary          -            -        -            -        -            -        -                      -

  Loss from Divestment                 -            -        -            -        -            -        -                      -

  Loss on Impairment of Investment     -            -        15,794       2.81     2,113        0.39     -                      -

  Interest Expenses                    1,084        0.20     1,715        0.30     2,508        0.47     2,546                  0.42

  Directors remuneration               618          0.12     769          0.14     850          0.16     870                    0.14

  Total Expenses                       475,757      88.86    521,024      92.56    456,938      84.81    546,032                90.09

  Net Income(Loss) before Income Tax   59,628       11.14    41,906       7.44     81,855       15.19    60,038                 9.91
  and extraordinary                                                                                                             

  Income Tax                           (16,768)     (3.13)   (24,014)     (4.27)   (20,395)     (3.79)   (12,916)               (2.13)

  Net Income (Loss) from operation     42,860       8.01     17,892       3.18     61,460       11.41    47,122                 7.78

  (Profit)Loss of minority equity in   -            -        -            -        -            -        -                      -
  subidiary company                                                                                                             

  Net income (loss)                    42,860       8.01     17,892       318      61,460       11.41    47,122                 7.78

  Earning per share                    3.06                  1.28                  4.39                  3.37                   -

  Par value                            10.00                 10.00                 10.00                 10.00                  

  Weight average (Share)               14,000,000            14,000,000            14,000,000            14,000,000             -

                                                                                                                                
  ------------------------------------ ------------ -------- ------------ -------- ------------ -------- ------------ --------- --------

+--------------------------------------+-------+-------+-------+-------+
| Pato Chemical Industry Public Co.,   |       |       |       |       |
| Ltd.                                 |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Statement of Cash Flows for the Year |       |       |       |       |
| Ended December 31                    |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
|                                      | 2003  | 2004  | 2005  | 2006  |
+--------------------------------------+-------+-------+-------+-------+
| Cash Flows from Operating Activities |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Net Income                           | 4     | 1     | 6     | 4     |
|                                      | 2,860 | 7,892 | 1,460 | 7,122 |
+--------------------------------------+-------+-------+-------+-------+
| Adjustments to reconcile net income  |       |       |       |       |
| to net cash                          |       |       |       |       |
|                                      |       |       |       |       |
| provided by operating activities     |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Interest Expense Under Hire-Purchase | -     | 52    | 30    | -     |
| Agreements                           |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Unrealized gain on exchange rate     | (353) | 861   | (148) | (133) |
+--------------------------------------+-------+-------+-------+-------+
| Unrealized loss on exchange rate     | -     | -     | -     | (11)  |
+--------------------------------------+-------+-------+-------+-------+
| Gain on disposal of short-term       | -     | -     | -     | -     |
| investment                           |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Minority interest                    | -     | -     | -     | -     |
+--------------------------------------+-------+-------+-------+-------+
| Share of profit (loss) in subsidiary | -     | -     | -     | -     |
+--------------------------------------+-------+-------+-------+-------+
| Short-term Investment                | -     | -     | -     | -     |
+--------------------------------------+-------+-------+-------+-------+
| Loss on debt restructuring           | 2,381 | -     | -     | -     |
+--------------------------------------+-------+-------+-------+-------+
| Loss on Impairment of Investment     | -     | 1     | 2,113 | -     |
|                                      |       | 5,794 |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Depreciation and amortization        | 1     | 1     | 1     | 1     |
|                                      | 1,194 | 0,329 | 1,006 | 1,447 |
+--------------------------------------+-------+-------+-------+-------+
| Allowance for doubtful accounts      | 1,050 | 3     | 61    | 3     |
|                                      |       | 2,879 |       | 9,478 |
+--------------------------------------+-------+-------+-------+-------+
| Gain on disposal of fixed assets     | (1    | (1    | (2    | (2    |
|                                      | ,754) | ,722) | ,048) | ,017) |
+--------------------------------------+-------+-------+-------+-------+
| Income from operating before         | 5     | 7     | 7     | 9     |
| changing in operating assets and     | 5,378 | 6,085 | 2,474 | 5,886 |
| liabilities                          |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| (Increase) decrease in operating     |       |       |       |       |
| assets                               |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Account and note receivables         | (9    | (28   | 5,462 | (5    |
|                                      | ,908) | ,915) |       | ,550) |
+--------------------------------------+-------+-------+-------+-------+
| Inventories                          | (2    | (33   | (18   | 4     |
|                                      | ,930) | ,748) | ,386) | 2,007 |
+--------------------------------------+-------+-------+-------+-------+
| Other current assets                 | 2,439 | 262   | 282   | (548) |
+--------------------------------------+-------+-------+-------+-------+
| Refundable Income Tax                | -     | 6,489 | -     | -     |
+--------------------------------------+-------+-------+-------+-------+
| Other assets                         | 90    | (120) | (524) | 483   |
+--------------------------------------+-------+-------+-------+-------+
| Increase(decrease) in operating      |       |       |       |       |
| liabilities                          |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Notes and account payable            | 341   | 7,737 | 1,411 | 2,463 |
+--------------------------------------+-------+-------+-------+-------+
| Accrued income tax and accrued       | 3,044 | 7,235 | (4    | (8    |
| expenses                             |       |       | ,247) | ,624) |
+--------------------------------------+-------+-------+-------+-------+
| Other current liabilities            | 12    | 37    | 405   | (402) |
+--------------------------------------+-------+-------+-------+-------+
| Net cash provided by(use in)         | 4     | 3     | 5     | 12    |
| operating activities                 | 8,466 | 5,062 | 6,877 | 5,715 |
+--------------------------------------+-------+-------+-------+-------+

  -------------------------------------- ---------- ---------- ---------- ----------
  Pato Chemical Industry Public Co.,Ltd.                                  

  Statement of Income for the year ended                                  
  December 31                                                             

                                         2003       2004       2005       2006

  Cash Flows from Investing Activities                                    

  Decrease(increase) in called and fixed 464        -          -          -
  deposit                                                                 

  Decrease(increase) in short-term       -          -          -          -
  investment                                                              

  Decrease(increase) in deposit with     -          -          -          11
  financial institution                                                   

  Proceeds from sale of fixed assets     2,229      1,722      2,048      2,017

  Acquisition of fixed assets            (3,158)    (8,601)    (11,191)   (16,553)

  Decrease (increase) in loans           -          -          -          -

  Decrease (increase) in Loan to related -          -          -          -
  company                                                                 

  Decrease(increase) in investment in    -          -          -          -
  subsidiary                                                              

  Decrease (increase) in investment in   -          -          -          (16,500)
  related company                                                         

  Decrease in long-term loan and         7,000      -          -          -
  receivable-related company                                              

  Decrease (increase) in restricted cash 7,131      -          -          -
  fixed deposits                                                          

  Net cash provided by ( used in)        13,666     (6,879)    (9,143)    (31,025)
  investing activities                                                    

  Cash Flows from Financing Activities                                    

  Increase(decrease)I in bank overdrafts 32,558     1,002      (13,164)   18,502
  and loan                                                                

  Repayment of leasing payable           (376)      (902)      (526)      -

  Repayment of long-term loan            -          -          -          -

  Dividend paid                          (28,000)   (39,200)   (23,800)   (56,000)

  Net cash provided by (used in)         4,182      (39,100)   (37,490)   (37,498)
  financing activities                                                    

  Increase(decrease) in cash and cash    66,314     (10,917)   10,244     57,192
  equivalents                                                             

  Unrealized loss on exchange rate on    (97)       (14)       63         -
  cash in bank in foreign currency                                        

  Net cash and cash equivalents          66,217     (10,931)   10,307     57,192
  increase(decrease)                                                      

  Cash and cash equivalents, beginning   31,143     97,360     86,429     96,736
  of year                                                                 

  Cash and cash equivalents, end of year 97,360     86,429     96,736     153,928
  -------------------------------------- ---------- ---------- ---------- ----------

(c) Financial Ratio

Pato Chemical Industry Public Co.,Ltd. Financial Ratio 2003-2006

  ------------------------------------- ------- --------- --------- ---------
                                        2003    2004      2005      2006

  Liquidity Ratio                                                   

  Current Ratio (Time)                  3.98    3.78      4.02      4.49

  Quick Ratio (Time)                    2.76    2.41      2.46      3.33

  Cash Flow Ratio (Time)                0.88    0.43      0.64      1.44

  Receivable Turnover (Time)            5.11    4.82      4.25      4.77

  Collection Period (Day)               71      75        85        75

  Inventory Turnover (Time)             5.07    4.13      2.91      3.88

  Inventory T/Period (Day)              71      87        124       93

  Account Payable Turnover (Time)       33.14   11.19     9.64      7.04

  Payment Period (Day)                  11      32        37        51

  Cash Cycle (Day)                      131     130       171       117

  Profitability Ratio                                               

  Gross Profit Margin (%)               18.95   23.92     24.73     24.31

  Profit from operation (%)             10.55   7.09      15.06     9.53

  Other profit (%)                      0.72    0.40      0.23      0.24

  Cash (%)                              86.89   88.42     70.58     219.62

  Net Profit Margin (%)                 8.01    3.18      11.41     7.78

  Return on Equity (%)                  13.10   5.52      18.51     13.60

  Efficiency Ratio                                                  

  Return on Total Assets (%)            11.22   4.33      14.29     10.39

  Return on Fixed Assets (%)            63.68   35.10     91.00     71.18

  Assets Turnover (Time)                1.40    136.10    125.31    133.68

  Financial Ratio                                                   

  Debt to Equity (Time)                 0.22    0.34      0.26      0.36

  Interest Coverage (Time)              61.18   35.45     31.81     55.45

  Cash Basis (Time)                     1.54    (0.72)    (1.60)    (1.73)

  Payout Ratio (%)                      91.46   117.37    91.12     111.41

  Per Share (Baht)                                                  

  Book Value (Baht)                     23.90   22.38     25.07     24.43

  Earning per Share (Baht)              3.06    1.28      4.39      3.37

  Dividend per Share (Baht)             2.80    1.50      4.00      3.75

  Growth Rate                                                       

  Total Sale (%)                        14.35   2.88      4.99      5.88

  Cost of Goods Sold (%)                98.58   45.17     (15.74)   38.84

  Sales Revenue (%)                     9.09    5.71      (4.28)    12.28

  Selling & Admin Expense (%)           4.48    9.40      (12.49)   19.60

  Net Profit (%)                        43.77   (58.25)   243.51    (23.33)
  ------------------------------------- ------- --------- --------- ---------

2) Management Discussion and Analysis

In the financial statement of Pato Chemical Industry Plc. indicated net
profit (loss) totaled 17.89, 61.46, and 47.12 million baht in 2004 –
2006 respectively. These figures represent an increase and reduction of
(58.25), 243.51 and (23.33) respectively.

In 2004, the overall economic stability is good, though the economic
growth rate is lower compared to last year. The inflation rate was low
by a slight economic situation slowdown in the second half of the year
resulting from the insurgency in the South, tsunami disaster, bird flu
and the drought in various areas. As a result most of quantity of the
agricultural product decreased, for instance, rice, palm oil and
sugarcane. Despite the drought, the production of para rubber increased.
The prices of agricultural products such as rice, rose by the average
percentage of 6-17. The farmers earned more income from the sales of the
main agricultural produces. The government fully dealt with the problems
and gave all forms of agricultural support by providing assistances for
production , marketing and finances as well as developing the complete
processing agricultural goods to compete on the world market. As a
result, the prices of agricultural products were higher. The policy to
control the prices of diesel oil made the cost of imported material
decreased as well.

In 2005, Thailand’s economic situation was on a slow-down trend from the
previous year, with decreased expansion in both agricultural and
non-agricultural production, owing to factors such as the prolonged
drought from year-end 2004 to mid-2005, floods at year-end 2005, tsunami
disaster, continued rise in world oil prices, higher interest rates,
higher inflation rate, and the unrest in the 3 southern provinces. These
factors led to reduced buying consumption and decreased expansion in
private sector investment.

Although the agricultural sector was affected by many factors leading to
a Supply Shock with agricultural production greatly reduced in the first
half of the year, overall prices increased considerably from the
previous year and value of agricultural exports rose. Although in the
latter half of 2005, there was sufficient water for cultivation and even
flooding in some areas, the damage was not great. This led to increased
value in the agricultural production sector. However, in the overall
picture for economic expansion, the agricultural sector expanded less
than the last year.

In 2006, Thailand saw a slight economic improvement over 2005 with a
development in export and significant drop in import. The increase of
income from services and tourism industry led to a surplus of current
account. The decline in investment from private sectors parallelized
with the compression of import volume. The insurgency in the 3 southern
provinces , floods from August to December 2006, an ever-rising world
oil prices, and bird flu were obstacles to economic expansion. These
were major factors contributing to the changes in demand and supply in
the country reflecting sufficient economic situation.

Although the agricultural sector was affected by many factors mentioned
above, the weather was favorable enough for cultivation and the
agricultural produce prices were still as good as the previous year.
This pushed farmers to increase production in most crops. The flooding
problem in some area during the latter half of 2006 did not affect
overall picture of agricultural economy. The export of agricultural
product expanded by 19.6%, causing overall agricultural economy to rise
by 4.6% year-on-year.

Consequently, performance of the company during the past 3 year were as
follows :

Sales revenue during 2004 – 2006 was 558.96, 535.02 and 600.73 million
baht respectively, representing increases (reductions) of 5.71%, (4.28%)
and 12.28% respectively.

Total revenue during 2004 – 2006 was 562.93, 538.79 and 606.07 million
baht, representing increases (reductions) of 5.14%, (4.29%), and 12.49%
respectively.

Cost of Sales in 2004 – 2006 was 425.25, 402.68, and 454.67 million
baht, representing increases (reductions) of (0.78%), (5.31%) and 12.91%
respectively.

  In 2004, the overall economic situation was good despite the decrease
of agricultural produces. This was due to severe drought which was the
worst in 30 years, and led to lack of water for cultivation. As a result
agricultural produces were damaged. The farmers faced many problems and
at the same time. The government set a policy to support and help the
agricultural sector in general and thereby strengthening the prices of
agricultural produce, such as para rubber and rice which are the main
economic crops. The prices of exporting rice rose by 6-17%. The
increasing prices of the rice contributed to the policy of the
government to help supporting the prices of the paddy in the country as
well as the policy to push Thailand to be the first rice exporting
country. The export quotas were above the target and they were higher
than many competing countries of potential productivity such as China,
Vietnam, and United States. These countries suffered from natural
disaster of heat wave resulting in lower production while the demand was
higher.

As for the marketing and financial assistance, the government offered
low interest loans to support the agricultural sector and processed
agricultural products so as to get value-added agricultural products
with low cost for competition. From the said policy and assistance
resulted in better financial situation and increased purchasing power of
farmers and the development of their products.

From the above mentioned factors, the sales revenue increased by 30.21
million Baht or 5.71%. Such increase was in the lower rate compared to
2003. The severe draught led to lack of water for cultivation in many
areas. As a result, agricultural produces were reduced. With the policy
of the government to support and help agricultural sector in general and
thereby strengthening the price of agricultural produces. At the same
time, the company launched many new products to meet demand of the
farmers.

Thus in 2004, the total sales of insecticides increased by 4.47 per unit
compared to last year. This was a reduction in the part of liquid and
powder form of insecticides by 23.93% and 18.47% per unit. The granule
insecticides increased by 18.38 % per unit. This led the overall sales
of insecticides dropped by 3.19 million baht or 1.91%.

The sales of granule herbicides increased by 9.68% per unit compared to
last year. This was a drop of liquid herbicides by 11.76% per unit. The
granule and powder herbicides increased by 19.49 % and 14.19%
respectively. This led to an increase of overall sales of herbicides by
0.81 million baht or 0.27%.

The sales of fungicides increased by 0.80% per unit compared to last
year. This was an increase of liquid fungicide by 40.57% per unit and a
drop of powder fungicides by 15.18% per unit. This led to an increase of
overall sales of fungicides by 4.73 million baht or 14.24%.

The sales of acaricides increased by 25.48% per unit or increased 3.94
million baht or 23.15%. The overall sales of other products increased by
24.26 million baht or 71.67%.

Despite the draught and the drop of the quantity of agricultural
produces, the sales were satisfactorily increased. This was because the
marketing strategy was in line with the situation and the launch of new
products at appropriate time.

  Production factors had an effect on operations. The company set a
policy for efficient management of production by searching for sources
of quality and lower cost raw materials in 2004. The price of the world
oil market rose much higher and led to an increase of price of raw
materials by about 18% at the end of the 4^(th) quarter. As a result,
production costs and sales costs rose. The company managed the
procurement appropriate to the market demand so as to cushion the impact
of the rising prices of raw material and to minimize the impact against
the production and sales cost as much as possible. Moreover, the
strengthen of the baht value at the end of 2004 helped minimize the
effect of the price rise of the raw materials. The weighted average
method was applied for inventories, then there were no impact from the
price rise of raw materials in 2004 but it was anticipated of the impact
in 2005. As for the labor cost and overhead cost, the company set an
efficient administrative management policy and led to a decrease of 1%.
Production cost and sales cost decreased by 0.95% and 0.78%
respectively. Gross profit rose by 33.53 million baht or 33.47% compared
to last year. Other income excluding forex gain (loss) dropped by 0.97
million baht or 19.64% due to the reduction of rebate and interest
receivable and led to a drop of total income compared to last year.

In 2005, there was expansion in the overall economic situation, amid
factors slowing down the expansion such as the prolonged severe drought
from year end 2004 to September 2005. The led to irrigation problems,
lower than normal water level at dams and thus insufficient water for
cultivation. Agricultural areas and produce were damaged and farmers
faced a multitude of problems. Cultivation was not on schedule.
Although, the government sector provided assistance in all areas,
including His Majesty the King’s rain-making initiative to increase the
water level in dams, this could only ease the severe drought problem to
a certain level. The drought problem eased in September and then
agricultural areas were damaged by floodwaters. This resulted in a
Supply Shock with decreased agricultural output. Overall production
value for 2005 expanded less by a percentage of 2.72. However, this led
to overall agricultural prices to rise. For example, overall rice output
increased slightly by 0.4 % and the selling price for pre-milled rice
rose an average of 20.5- 23.6%, as a result of the government rice
mortgaging scheme.

The above factors caused total sales revenue to decrease by 23.94
million baht or 4.28%, while at the same time the company launched a new
product, as well as used marketing strategies with regard to prices and
stimulated total sales through sales promotion, in order to maintain
market share and supply market demand.

Consequently, in 2005 the total number of insecticide units sold rose by
10.14 per cent compared to the last year, which led total sales to
increase by 8.58%.

Total number of herbicide units sold decreased by 16.51% compared to the
last year, leading total sales to rise by 13.26 per cent.

Total number of fungicide units sold decreased by 3.93 % compared to the
last year. The number of liquid fungicide units sold rose by 28.18%,
while powder fungicide units sold decreased by 25.31%, causing total
overall sales to increase by 11.57%.

The number of acaricide units sold fell by 17.72 % compared to the last
year, leading to a rise of 5.25 % in total overall sales, as a result of
value-added product improvement.

With regard to production factors, raw material prices were on an upward
trend in line with world oil prices. Forward purchasing of raw materials
was very important, as this lessened the impact from high raw material
prices and exchange rate fluctuations, which saw the baht weaken
continually and thus caused average cost price for raw materials to
increase. Seeking quality raw materials with lower-cost price for
production, combined with company policy to efficiently manage and
economize on labor costs and production expenses, led to production
costs and sales costs to reduce by 4.41% and 5.31% respectively. This
caused initial profits to rise by 0.81% compared to the last year.

Other income, not including profit (loss) from exchange rates, decreased
by 0.19 million baht or by 4.85% as a result of a fall in income from
rebate and interest receivable. This caused gross income to decrease
compared to the last year.

In 2006, there was an expansion in the gross agricultural product by
4.6% for the overall picture of agricultural economy. The favorable
weather for cultivation during the first half of the year and the
continuing good prices of agricultural produce from 2005 through 2006
contributed to an increase in production of all crops despite the unrest
in the 3 southern provinces , floods from August to December 2006, the
continued rise in world oil prices, and bird flu. The government sector
fully dealt with the problems by providing assistance in all areas
especially to rice which was severely damaged by floodwaters. Rice
production overall increased. Since the floods damaged some areas of the
central and lower north, while the northeast where jasmine rice was
cultivated, was slightly damaged in some low-land fields. The highland
and out of irrigation areas, instead, gave good yields from sufficient
water for cultivation. The selling price for pre-milled rice was good
for both season rice and off-season rice by 0.4% and 1.7% respectively,
as a result of the government rice mortgaging scheme.

The above factors led to an increase in sales revenue by 65.71 million
baht or 12.28%. Above 50% of total revenue of the company was from
herbicide and insecticide for rice field. The company used marketing
strategies and sales promotion to create demand. The appropriate selling
time also increased sales revenue.

Consequently, in 2006 the total number of herbicide units sold by
16.51%. The number of liquid herbicide unit sold increased by 24.88%,
granule herbicide unit sold increased by 13.98% and powder herbicide
unit sold increased by 12.26% which led total sales to increase by
17.83% year-on-year.

Total number of insecticide units sold increased by 11.40%. The number
of liquid insecticide unit sold increased by 1.66%, granule insecticide
unit sold increased by 13.89 while powder insecticide unit sold
decreased by (2.19%) leading total sales to rise by 2.29% year-on-year.

Total number of fungicide units sold increased by 1.28%. The number of
liquid fungicide units sold rose by 5.42%, while powder fungicide units
sold decreased by (3.45%), causing total overall sales to decrease by
2.14% year-on-year.

The number of acaricide units sold rose by 18.91 %, leading to a rise of
7.16 % in total overall sales.

With regard to production, raw material prices were on an upward trend
in line with world oil prices. Forward purchasing of raw materials was
very important. The sufficient inventories reduced storage cost and also
helped reducing the impact from high raw material prices. The weather
was another factor led to an adjustment of suitable plan for purchasing
of raw materials. The adjustment with current situation in 2006 led to a
decrease of inventories by 33.79% compared to last year. The slowdown US
economy led to a weak dollar. The Chinese RMB, on the contrary, was
strengthened. The baht became stronger as a result, cutting raw material
costs. The searching for sources of quality at lower cost of raw
materials attributed to the decrease of cost of raw materials. As a
result, the average cost of raw materials slightly increased. The
company managed to control expenses on labor and overhead to make it
most worth investing with current economic situation causing the labor
cost to rise by 7.53% and overhead cost to rise by 14.29% compare to
last year. The increase in labor cost contributed to salaries, wages,
and overtime expenses. While the increase in overhead cost contributed
to the rise in world oil prices causing higher expenses in
transportation, electricity, packaging and maintenance, the high
competitive market after floods caused production cost and sales cost to
rise by 12.35 and 12.91 respectively. The gross profit margin increased
by 10.37 compared to last year.

Other income, regardless of forex gain (loss) of 1.32 million baht or an
increase of 0.25 million baht compared to 2005, increased by 6.55% as a
result of selling old vehicle, a rise in income from interest receivable
and investment in debt instruments. This caused gross income to increase
by 12.24% compared to that of the last year.

Table showing rate of increases (reduction) during 2003 - 2005

+------+--------------------+-------------------------+--------------+
| Year | PATO               |                         |              |
+------+--------------------+-------------------------+--------------+
|      | Sales Revenue      | Consolidated revenue    | Cost of Sale |
+------+--------------------+-------------------------+--------------+
|      |                    |                         |              |
+------+--------------------+-------------------------+--------------+
| 2004 | 5.71               | 5.14                    | 0.78         |
+------+--------------------+-------------------------+--------------+
| 2005 | (4.28)             | (4.29)                  | (5.31)       |
+------+--------------------+-------------------------+--------------+
| 2006 | 12.28              | 12.49                   | 12.91        |
+------+--------------------+-------------------------+--------------+

Sales and General Administrative expenses during 2004-2006 totaled
94.06, 5.74, and 88.81 million baht, representing increases (reductions)
of (104.03%), (44.99%) and 71.63% respectively, not including interest
payable.

Interest payable in 2004 – 2006 totaled 1.71, 2.51, and 2.55 million
baht, representing increases (reductions) of 58.19%, 46.30%, and 1.51%
respectively.

In 2004, the sales and administrative expenses increased by 47.96
million baht or 104.03% compared to last year. However, if bad or
doubtful debts of 32.88 million baht comprising of the doubtful debt
from account receivable amounting to 3.70 million baht, the doubtful
debt from the long term loan to affiliated companies amounting to 29.18
million baht, the impairment from investment amounting to 15.79 million
baht which was the special particulars and the forex loss amounting to
2.47 million baht were not taken in to consideration, it can be seen
that the sales and management expenses in 2004 amounting to 42.92
million baht and in 2003 amounting to 45.05 million baht decreased by
2.13 million Baht or 4.73%. This was the result of a policy to manage
and control various cost to be lessened and worthwhile in order to
generate income with highest efficiency, especially the policy through
efficient debtor management and exercising caution in selecting good
customers to extend appropriate credit to reduce the risk of bad debt.
In 2004, the company booked a provision for bad debts of 3.70 million
Baht or 2.87% of total debtors. This represented 0.66% of total revenue
of 2004. As for the doubtful debt of long term loan to affiliated
companies, the company considered the potential risk of nonperformance
of the contract and in order to prevent against damage to the company in
the future, the company booked provision for bad debt amounting to 29.18
million baht. In addition, in 2004, the company anticipated to buy back
600,000 shares under the contract with IFCT (currently called Thai
Military Bank PLC) at the price of 17.05 million Baht and impairment
from investment of 15.79 million Baht was booked.

As for forex gain (loss) in 2004, there was a loss of 2.47 million Baht
and in 2004 while it was a forex gain of 1.69 million baht in 2003. This
represented a decrease of 4.16 million Baht or 245.86% resulting from
the fluctuation of the baht during the year. The average exchange rate
was at 39 baht per one dollar while in the 2^(nd) and 3^(rd) , the bath
was weaken to the average exchange rate of 41.71 Baht per one dollar and
led to forex loss in the 2^(nd) and 3^(rd) quarter amounting to 4.12
million Baht. As for another quarters, the baht strengthened and it led
to forex gain of 1.65 million baht. The company set up the policy to
reduce the risk from exchange rate by appropriately and with efficiency
executing forward contract when the fluctuation of the baht happened.

Interest payments of 1.71 million baht or 0.63 million baht increased or
an increase of 57.19% compared to last year was due to payment policy to
T/R creditors and foreign creditors in line with finance situation and
the exchange rate. The extension of T/R credit led to an increase in
interest payments.

Income tax in 2004 came to 24.01 million baht, whereas in 2003 it was
16.77. The increase of 7.24 million baht or an increase of 43.21%
resulting from less income tax of 0.90 million baht paid for divestment
of shares in 2002. The company booked provision for bad debts of 32.88
million baht and impairment from investment of 15.79 million baht thus
increased burden of income tax.

In 2005, sales and administrative expenses when taking into account bad
or doubtful debts amounting to 33.88 million baht and loss suffered from
impairment of investment amounting to 15.79 million baht in 2004, as
well as bad or doubtful debts totaling 0.06 million baht and loss on
impairment of investment of 1.88 million baht in 2005, led to sales and
management expenses in 2004 to be 94.06 million baht and to be 51.74
million baht in 2005, representing a reduction of 42.32 million baht or
a fall of 44.99 % from the last year.

If bad or doubtful debts and impairment from investment are not taken
into account when comparing operational results, net sales and
management expenses were found to total 45.39 million baht in 2004 and
total 49.57 million baht in 2005, representing an increase of 0.90
million baht or a rise of 1.85%. This was the result of natural
disasters throughout last year such as drought and flooding which
damaged produce and initially decreased agricultural purchasing power,
causing a Supply Shock in the agricultural sector. Agricultural output
fell, and although this caused overall agricultural prices to move
higher after farmers recovered, purchasing power did not return to
previous levels. The company therefore had to devise a policy to fully
help farmers in order to ease the severity of the agricultural problem
and to maintain sales and market share. As a result, there was an
increase in expenses for sales promotions, special allowances and
transportation costs, commission fees and foreign exchange loss.

Profit (loss) from foreign exchange rates came to (2.47) million baht in
2004 and totaled (4.52) million baht in 2005, representing an increase
of 2.05 million baht or 82.97%. This was caused by the continued
weakening of the baht, , which weakened particularly in the 4^(th)
quarter. In the first quarter of 2005, the average rate was 38-39 baht
to the Dollar, while in the last quarter, the baht weakened to an
average of 41.43 baht to the Dollar. This caused an increase in forex
loss.

Interest payable in 2004 totaled 1.71 million baht and came to 2.51
million baht in 2005, representing an increase of 0.80 million baht or
46.30%. This was the result of increased foreign raw material purchase
orders, and managing T/R creditors and foreign creditors in accordance
to financial status and value of the Baht at that time through expansion
of payment term. However, managing risks from the continuing
fluctuations in the foreign exchange rate, caused interest payable
burden to increase.

Corporate income tax for 2004 totaled 24.01 million baht and came to
20.39 million baht in 2005, representing a reduction of 3.62 million
baht or a fall of 15.07%. This was the result of writing off 4.75
million baht in bad debts following the end of a lawsuit, and an
adjustment in the account showing loss from impairment of investment
which was over booked. An agreement on debt reduction made with a
financial institution, entitled 3.08 million baht in future debt to tax
privileges, thus easing corporate income tax.

In 2006, selling and administrative expenses when taking into
consideration the doubtful debts and directors’ remuneration amounting
to 88.81 million baht and 51.74 million baht in 2005, the doubtful debts
and directors’ remuneration was 39.48 million baht and 0.87 million baht
respectively in 2005 while it was 0.06 million baht and 0.85 million
baht respectively in 2006. There was also loss suffered from impairment
of investment amounting to 2.11 million baht, as well as forex loss of
4.52 million baht in 2005. If the amount was not taken into
consideration, selling and administration expenses was 48.46 million
baht in 2006 and was 44.20 million baht in 2005, an increase of 4.26
million baht representing an increase of 9.64 % compared to last year.
As a result of this growth, there was an increase in expenses for sales
promotions, transportation costs, vehicles expenses and commission fees.
In the 4^(th) quarter, farmers started their cultivation after flood
waters receded. Sales revenue in December rose as a result.

Doubtful debts amounting to 39.48 million baht was from account
receivable in 2006 totaled 0.08 million baht. The Company also received
payment from customers to reverse a provision for bad debt of 0.06
million baht. The 39.47 million baht was loss from lawsuit which was
booked and affected the performance of the company and thus causing the
net profit to fall compared to last year.

Profit (loss) from foreign exchange rates came to (4.52) million baht in
2005 and totaled 1.32 million baht in 2006, representing an increase of
5.84 million baht or 129.21%. This was caused by the continued
strengthening of the baht. In the 1^(st) to 3^(rd) quarter, the average
rate was 37-39 baht to the dollar while in the 4^(th) quarter, the baht
was stronger to an average of 35-36 baht to the dollar. To cope with the
fluctuation of the baht in the future, the company executed forward
contract to cushion the impact for T/R payable.

Interest payable in 2005 totaled 2.51 million baht and came to 2.55
million baht in 2006, representing an increase of 0.04 million baht or
1.59%. The managing of T/R payable and foreign account payable to be in
accordance with financial status and value of the baht at that time
through expansion of payment term and caused interest payable burden to
increase.

Corporate income tax for 2005 totaled 20.39 million baht and came to
12.92 million baht in 2006, representing a reduction of 7.48 million
baht or a fall of 36.68%. This was the result of writing off 31.56
million baht doubtful debts from account receivables and loan to Plastic
Precision Industry Co., Ltd. who had entered into a compromise agreement
in court to pay debts by installments with interest but later default.
Pato consequently entered the execution procedure with the court to
finalize the case amounting 31.56 million baht. The Company also
received payment from customers to reverse a provision for bad debt of
0.06 million baht. These two transactions led to a decrease in income
tax payable in the 4^(th) quarter by 7.91 million baht. In addition, the
Company sold off investment in Plastic Precision Industry Co.,Ltd. for
1,130,923 shares at the selling price of Baht 0.01 per share. The
Company recognized gain from disposal of investment amounting to
11,309.23 baht. The adjustment in the account showing realized loss from
impairment of investment and entitled the Company to tax privileges. The
income tax for 2006 was over paid by 0.58 million baht as a result.

The above operational results led to gross profit during 2004-2006 to
total 133.72, 132.33, and 146.05 million baht respectively, representing
a percentage of 33.92, 24.73, and 24.31 respectively.

Operational profits in 2004–2006 came to 39.65, 80.59, and 57.24 million
baht respectively, representing percentage of 7.09, 15.06, and 9.53
respectively.

Net profits in 2004 – 2006 came to 17.89, 61.46, and 47.12 million baht,
or a percentage of 3.18, 11.41 and 7.78 respectively.

Return on equity during 2004 – 2006 were 5.52%, 18.51%, and 13.60%
respectively.

In 2004, total sales increased by 5.71%, the increase at the rate of
diminishing compared to last year. Due to the problem of natural
disaster but the government’s assistance extended to the farmers both
the production, marketing and financing made the prices of agricultural
produce high, though the quantity of produce was low. The farmers had
good financial status. The company set up production and marketing
strategies to suit the situation and the effort to reduce the cost of
production as much as possible. While the oil prices in the world market
rose higher, by seeking raw material sources with good quality but low
cost to replace, and the realization of the value of the baht in order
to prevent the impact of exchange rate to push the cost of raw material
higher, as well as to control and lower the production and labor
expenses compared to last year. As for the marketing, the company
launched various kinds of new products to the market causing the gross
profit of the company increased by 33.47%.

As for the increase of sales and management costs, since the company
anticipated the bad debt amounting to 32.88 million Baht and the loss of
impairment of investment amounting to 15.79 million Baht in order to
reduce the risk of doubtful debt and the loss of impairment of the
capital, the company acknowledged these impacts in this year. As for the
sales and management expenses apart from this, the company had the
policy to manage and control the expenses to be increased as less as
possible in order to make it worth investing and to generate income with
the highest efficiency, including the policy of cautious and careful
account receivable management in order to reduce the risk of
uncollectible debt, as well as the policy of risk management and risk
protection from foreign exchange rate with efficiency in the situation
of fluctuation by executing forward contract to cushion the impact made
the company to have profit from the operation in 2004 lower at 7.09%.

The interest payable in 2004 increased from the extension of the
performance of T/R creditors and foreign creditors. It made the increase
of the burden of interests. The corporate income tax increased from the
doubtful debt entry and the loss of impairment of capital which made the
net profit of taxation higher. It made the company to have the profit
decreased by 3.18% and return of equity in 2004 decreased by 5.52%.

In 2005, total sales fell by 4.28% amid an economic slow-down from the
last year. Many factors were responsible for the reduced expansion in
both agricultural and non-agricultural output, such as the problem of
drought and flooding at year-end 2005, effects from the tsunami
disaster, continued rise in world oil prices, higher interest rates and
increased rate of inflation. The government sector gave farmers
assistance in all areas, including production, marketing and finances in
order to ease the effects from these various problems.

Although the agricultural sector was affected by many factors which
caused a Supply Shock, with agricultural output greatly reduced, overall
prices rose considerably from the previous year, with increased
expansion in export value of agricultural products. In the second half
of 2005, there was sufficient water for cultivation and even though
there was flooding in some areas, the damage was not great. Thus the
agricultural sector saw increased expansion in its value. However, in
the overall picture, the economic expansion in the agricultural sector
was still less than the last year.

Because of these above factors, the company was aware of their effect on
total sales and thus launched a new product as well as used marketing
strategies on prices and boosted sales through promotion campaigns, in
order to maintain market share and meet market needs. While at the same
time, raw material prices rose with world oil prices, and effects were
felt from the continual weakening of the baht. This was the reason for
raw material costs to rise on average. Thus quality raw materials at
lower cost were instead sought for production and the company devised a
policy to efficiently manage and economize on labor costs and production
costs in line with the current economic situation. This resulted in
production costs and sales costs to fall by 4.41% and 5.31%
respectively, and initial profits to increase by 0.81% compared to the
last year.

Sales and management expenses, when taking into consideration bad or
doubtful debts and impairment from investment in 2004 and 2005, totaled
94.06 million baht in 2004 and 51.74 million baht in 2005, representing
a reduction of 42.32 million baht or a fall of 44.99% when compared to
the last year.

And when comparing operational results, without taking into account bad
or doubtful debts and impairment from investment, net sales and
management expenses in 2004 can be seen at 45.39 million baht and 49.57
million baht in 2005, representing an increase of 0.90 million baht or
an increase of 1.85%. This was because of effects from the above
mentioned problems on the company’s total sales and operational results.
While the company devised a marketing policy to maintain sales and
market share, it also had a policy to manage and control expenses to
rise at the minimum rate, in order to make the most of investment and
most efficiently create income. Although certain expenses increased,
they were necessary to reach set targets and were used effectively. Such
expenses include sales promotions, special allowances, commission fees
and increased loss from foreign exchange rates. The company also
carefully managed trade debtors to reduce risk of non-payment. Because
of the company’s efficient management and control, initial profits rose
by 0.81% compared to the last year and operational profit rates
increased by 7.97% (compared including bad or doubtful debts and
impairment from investment in 2004).

Interest payable in 2005 increased by 0.80 million baht or by 46.30% as
a result of managing T/R creditors and foreign creditors in accordance
with financial status and value of the baht at that time by expanding
payment term and thus increased interest payable burden.

Corporate income tax in 2005 totaled 20.39 million baht, representing a
decrease of 3.62 million baht or a fall of 15.07%. This resulted from
the writing off of bad or doubtful debts following the end of a lawsuit
and an adjustment of an over-written account showing impairment of
investment, in line with a debt reduction agreement with a financial
institution under which future debt was entitled to tax privileges, thus
enabling the company to save on corporate income tax. Thus the company’s
net profit rate was11.41%, up by 243.51% from 2004, and shareholder
dividend rate also rose by 18.51% from the last year.

In 2006, total sales rose by 12.28% amid slightly expanded economic
situation compared to last year including agricultural sector. With
regards to many problems, the insurgency in the south, the continued
rise in world oil prices, bird flu and the floods that damaged many
agricultural output such as rice, the government sector gave farmers
assistance in all areas, including production, marketing and finances in
order to ease the effects from these various problems. The overall
agricultural produce prices in 2006 maintained as good as 2005. In the
first half of 2006, the favorable weather contributed to cultivation.
Thus the agricultural sector saw increased expansion in its value. The
purchasing power of farmers rose, despite the fact that the agricultural
output during the second half of the year from August to November was
damaged from floods. In the overall picture, the economic expansion in
the agricultural sector still improved. These factors contributed to
changing in supply and demand of the country. The floods gave sufficient
water for cultivation. Agricultural product improved, for instance,
rice. Rice was severely damaged by floods but still showed better
product yield in 2006 by 0.85% compared to last year. Although rice
fields in the central part were damaged, the significant rice field in
the northeast at the higher area and out of irrigation area had
sufficient water for cultivation. Major sales of the company was from
rice field. The sales of herbicide and insecticide representing 80% of
gross sales improved by 11.52% compared to last year.

The price of raw materials rose in line with world oil price. This was
outside factor directly affected production cost. In addition to this,
the national monetary policy resulted in fluctuation of the bath causing
risk management burden to the company, such as interest and led to an
increase in cost of raw materials. The company devised a policy to
efficiently manage and economize on labor costs and production costs in
line with the current economic situation. This resulted in production
costs and sales costs to slightly increase by 12.35% and 12.91%
respectively. Gross profit representing 24.31% of total sales showed a
slightly drop from last year.

Selling and administrative expenses, when not taking into consideration
doubtful debts, directors’ remuneration and impairment from investment
in 2005, increased by 9.64 % compared to last year resulted from the
increase in sales. The selling and administrative expenses were deemed
to be an investment to generate worthwhile and efficiency income. The
company consequently devised a policy to efficiently manage economic
investment. The increase of expenses were for sales promotion,
transportation, vehicles and sales commission etc. to encourage sales
revenue especially during the flooding period in the 4^(th) quarter of
2006. The total sales in December improved accordingly.

When comparing operational results, taking into account doubtful debts,
directors’ remuneration and loss from investment in 2005, doubtful debts
of 39.48 million baht in 2006 occurred from loss from lawsuit causing
operational profit to drop. The transaction did not account for expenses
for income tax privileges.

Profit (loss) from exchange rate increased resulting from a weak dollar
against baht. The decline economic situation in the US led to the
weakened dollar. The Chinese RMB continued to be strengthening led to a
stronger baht during the 4^(th) quarter of 2006. Forex gain amounting to
5.84 million baht represented 129.21% increased causing the profit rate
from operation to drop by 9.53% from that of the last year.

Corporate income tax in 2006 decreased resulting from the writing off
bad debts of account receivables, loan and realized loss from investment
totaled 49.50 million baht, representing a fall of 36.68%. The company
was entitled to tax privileges for the second half of 2006 enabling the
company to save on corporate income tax. Thus the company’s net profit
rate was 7.78% which was lower than 2005, and shareholder rate of return
also dropped by 13.60% from the last year.

Total assets in 2004-2006 amounting to 419.50, 440.43, and 466.32
million baht respectively, marked an increase (decrease) at a percentage
of 2.88, 4.99, and 5.88 respectively.

Total liabilities in 2004-2006 amounting to 106.23, 89.50, and 124.27
million baht, marked an increase (decrease) of 45.18%, (15.74%), and
38.84 respectively.

Shareholder equity in 2004-2006 amounting to 313.27, 350.93, and 342.05
million baht, marked an increase (decrease) of (6.31%), 12.02%, and
(2.52%) respectively.

In 2004, total revenue rose by 5.71%, while cash flow from operation
decreased by 27.66%, with liquidity ratio decreased from 3.98 in 2003 to
3.78 in 2004. Quick ratio decreased from 2.76 in 2003 to 2.41 in 2004.
Cash liquidity ratio decreased from 0.89 in 2003 to 0.43 in 2004. The
increase in total sales during the 3^(rd) and 4^(th) quarters led to an
increase of inventory and account receivables at the end of the year.
Overdrawing and short term loans from financial institutions rose by
3.96%, and account payables rose by 60.07% as a result of raw material
purchased during the 3^(rd) and 4^(th) quarters prevailing the price of
raw materials to rise and to meet higher market demand. This thus caused
a downward trend in the ratio.

Meanwhile, debt collection was extended from 71 days in 2003 to 75 days
in 2004. Sales duration on average was longer from 71 days in 2003 to 87
days in 2004, and debt payment was also longer from 11 days in 2003 to
32 days in 2004, thus reducing the cash cycle to 130 days.

Analysis results showed a downward in the liquidity ratio due to lower
increase of total sales compared to last year. Total sales during the
3^(rd) and 4^(th) rose by 27.88% and 36.61% respectively compared to
last year. The situation of raw material prices tended to rise resulting
from oil prices. Thus it can be seen that raw material purchased was
higher in the 3^(rd) quarter to avoid the increase of raw material
prices. As a result, the inventory increased by 39.23% compared to last
year so as to meet the increasing demand in the said quarter. Total
sales in the 3^(rd) and 4^(th) quarters were 51.06% of total sales of
the year. Total account receivables increased by 24.39% consequently.
This also led to longer collection and selling period. As sales and the
purchasing of raw materials, T/R creditors, and account payables were
all in the second half of 2004, resulting in longer payment period. The
decrease in financial liquidity of the company led to the decrease in
operational cash flow.

Cash flow from investment activities decreased by 250.35% due to the
hire- purchase of cars and machines to replace the worn-out ones and
sold out the old lot.

Cash flow for procurement activities decreased by 1,034.94 %, because of
raw material purchase orders to meet market demand and thus increasing
short-term loans from financial institutions. The company paid out 39.20
million baht in dividends.

In 2005, total revenue from sales fell by 4.28% while operational cash
flow rose by 62.22%, liquidity ratio increased from 3.78 in 2004 to 4.02
in 2005. Quick ratio increased from 2.41 in 2004 to 2.46 in 2005. Cash
liquidity ratio rose from 0.43 in 2004 to 0.64 in 2005. Because of a
reduction in total sales in the 3^(rd) and 4^(th) quarters, inventory
increased in comparison to the last year, while trade debtors fell at
the same rate of 4.29% as total sales, compared to the last year.
Short-term loans from financial institutions and trade creditors also
fell 32.82% as a result of raw material purchase orders in 2005 falling
by 41.54 million baht or 9.68%.

The average debt collection period was extended from 75 days in 2004 to
85 days in 2005. Product selling period was longer on average from 87
days in 2004 to 124 days in 2005. Debt payment period was on average
longer from 32 days in 2004 to 37 days in 2005, causing Cash Cycle to
increase to 171 days.

From an analysis of the rising trend in the liquidity ratio resulting
from reduced total sales as affected by natural disaster problems in
2005, as well as higher raw material costs seen as a consequence of
world oil prices and baht fluctuation, the company undertook proper
management of raw material purchasing orders to coincide with market
demand and thus avoid the problem of excess inventory and storage costs.
However, the effects of natural disaster problems are factors that are
difficult to anticipate, the company’s total sales therefore did not go
as expected and thus there was still excess inventory, which will be
utilised for future market needs. Trade debtors decreased at the same
rate as total sales compared to the last year, with only a slight number
of them being trade debtors from sales in 4^(th) and 3^(rd) quarters.
Thus the debt collection period and product selling period rose on
average. The decrease in short-term loans from financial institutions
and trade creditors by 32.82 % as a result of a decrease in raw material
purchase orders by 41.54 million baht or 9.68%, combined with managing
T/R creditors and foreign creditors in accordance with financial
situation and baht value through extension of payment term, these
increased debt payment period. Thus the company’s financial liquidity
increased, and there was more cash flow from operations.

Cash flow from investment activities decreased by 32.92% compared to the
last year as a result of the company buying additional cars and
machinery to replace those which were worn out and thus sold off.

Cash flow from financial procurement activities rose by 4.11% compared
to the last year as a result of reduced raw material purchase orders
from 2004. This reduced short –term loans from financial institutions.
Cash flow from financial procurement activities also rose from a reduced
dividend payout of 23.80 million, down by 15.40 million baht from 2004.
This caused cash and entries equivalent to cash, to rise by 10.31
million baht or by 11.93%.

With regard to capital structure, the ratio of debt to shareholders was
equivalent to 0.26 times in 2005, which showed a reduction from the
previous year. This came from a reduction in short-term loans from
financial institutions and trade creditors of 21.67 million baht or a
fall of 32.82%, and also from a reduction of creditors through
investment purchase following a debt reduction agreement with a
financial institution. This is considered a very low ratio. The ratio
for interest payment ability was 31.81 times in 2005, with the company
undertaking the most careful and efficient financial management as
possible taking into consideration resulting interest burden.
Furthermore, the company had a policy to use rotating liabilities to
invest in assets in order to gain the highest return. The company also
endeavored not to create excessive financial costs and was able to give
shareholders the highest return, with the company also keeping the ratio
from becoming too high in order to prevent the company from financial
risk.

In 2006, total sales revenue rose by 12.28% while operational cash flow
rose by 121.02%, liquidity ratio increased from 4.02 in 2005 to 4.49 in
2006. Quick ratio increased from 2.46 in 2005 to 3.33 in 2006. Cash
liquidity ratio rose from 0.64 in 2005 to 1.44 in 2006. The average debt
collection period fell from 85 days in 2005 to 75 days in 2006. Product
selling period was shorter from an average of 115 days in 2005 to 93
days in 2006. Debt payment period was on average shorter from 54 days in
2005 to 51 days in 2006, causing Cash Cycle to decrease to 117 days.

From an analysis of the rising trend in the liquidity ratio resulted
from continuously improved sales from 2005 by favorable weather during
the first half of the year, reflected that the flood problems slightly
affected agricultural produce in 2006. Trade account receivable and
short-term loan from financial institutions were higher because payment
had not yet been due. Inventory turn over was at the higher rate as the
company undertook proper management of raw material purchasing orders to
coincide with market demand in 2006. Thus, the company enjoyed better
financial liquidity, and there was more cash flow from operations.

Cash flow from investment activities increased by 239.32% compared to
last year, were from the buying of additional machinery and vehicles to
replace those which were worn out and thus sold off. In addition, the
disposal of investment causing realized loss from investment. Cash flow
from financial procurement activities slightly rose as a result of
reduced raw material purchase orders during the second half of 2006.
Inventories increased compared to that of the last year. Dividend payout
amounting to 56 million baht resulted in cash and cash equivalents to
rise by 46.88 million baht or by 454.88%.

With regard to capital structure, the ratio of debt to shareholders was
equivalent to 0.36 times in 2006, which showed a reduction from 0.26
times in the previous year. This came from debt moratorium from lawsuit
amounting to 39.45 million baht. The increase of account payables and
short-term loan from financial institution totaling 20.83 million baht
was considered a very low ratio. The ratio for interest payment ability
was 55.45 times in 2006 compared to 31.81 times in 2005. Assets turnover
and fixed assets turnover was 10.39% and 71.17% respectively compared to
2005. Current asset ratio was 133.68 times in 2006 showed an increase
from 2005 as the company undertook the most careful and efficient
financial management especially interest burden in the future.
Furthermore, the company had a policy to use rotating liabilities to
invest in assets in order to gain the highest return. The company also
endeavored not to create excessive financial costs and was able to give
shareholders the highest return, with the company also keeping the ratio
from becoming too high in order to prevent the company from financial
risk as shown in 2006 performance.

A key factor and one which will bear effect on operational results in
2007, it is expected that overall economy will slightly expand further
from 2006, as a result of the continued expansion of the economy. Floods
in 2006 contributed to sufficient water for cultivation. Agricultural
produce prices continue to increase from 2006. The instability of the
world economy, for example, world oil price will somehow affect overall
company’s management. Thus, to set production policy is very important.
Other factors affecting financial conditions, such as interest rate and
inflation rate, will also be under consideration. The company realizes
natural disaster which will affect supply and demand of the country. The
agricultural sector is expected to get assistance and support from
government in all aspects to boost agricultural product and to raise
agricultural produce prices. This is an incentive for farmers to expand
cultivation areas and look after their crops well.

In agricultural sector production, the Government will continue to
provide its full support in all areas such as:

  1.       Technology development - Developing production technology by
educating farmers and providing good plant breeds in order to further
develop quality of output.

  2.       Marketing - Helping to sustain agricultural prices by
  providing farmers with loans using their agricultural goods as
  collateral. This will keep agricultural prices from falling too low
  and let market forces operate on their own.

  3.       Finances – Providing loan support which might be in the form
  of a village fund, low-interest loans and loans derived from
  transforming assets into capital, so as to create opportunity for
  farmers.

4.       Promote agricultural processing – This is done by creating
added value to products which would develop product quality and enable
to export.

Government support on production and its strategy to restructure
agricultural products to make it in line with market needs and create
competitiveness for the country, will improve farmers’ situation and
living standards. On the part of the private sector, the Thai Crop
Protection Association is joining hands with the government sector to
control and check against sub-standard products. This is important in
order to create good quality agricultural products meeting market needs.
This will increase company sales.

Raw material prices rising higher with world market conditions are a
risk factor, making the cost price of products higher. Higher oil
prices, baht fluctuation and weakening, drought and flooding, are also
external factors which are beyond control. However, the company has
devised a policy to ease the effects from these risk factors.

1. Company policy to undertake Forward Rate purchase on foreign exchange
for raw material imports to reduce risks with consideration of favorable
exchange rate.

2.  Practicing more caution when ordering raw materials, seeing that it
    concords with needs. This will reduce damage from excessive
    inventory. However, lead Time is considered to avoid short of
    inventory.

3.  Making careful consideration before opening new trade accounts and
    expanding credit lines to prevent damage from bad debts and strictly
    performing in accordance with collection policy.

4.  Disseminate knowledge on technology and correct usage of product to
    increase yields, promote safety, with no environmental effects.

These above factors affect the company’s operations and financial
position. Therefore, it is the policy of the company to try and reduce
the adverse effects from these various factors through the above
mentioned measures. Although, these are outside factors that cannot be
controlled, it is expected that this policy will reflect in better
operations for the company.