Financial Highlight

  (A) Auditor report

The auditor has reported the financial statements of Pato Chemical
Industry Public Co.,Ltd. as of 31 December of 2000, 2001,2002 and 2003
without any conditions.

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

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

  -------------------------------------- ------------ -------- ------------ -------- ------------ -------- ------------ ------------ --------
                                         2000                  2001                  2002                               2003         

                                         Amount       %        Amount       %        Amount       %                     Amount       %

  Assets                                                                                                                             

  CURRENT ASSETS                                                                                                                     

  Cash in hand and at Bank               9,377        2.29     12,894       3.63     31,143       8.73                  97,360       23.88

  Short-term investment                  -            -        -            -        464          0.13                  -            -

  Fixed deposit                          25,558       6.25     17,789       5.01     -            -                     -            -

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

  Investment in listed company           -            -        -            -        -            -                                  

  Accounts and Receivable – Related      -            -        10,385       2.92     -            -                     -            -
  Company                                                                                                                            

  Other companies, net                   139,419      34.08    105,091      29.59    94,538       26.51                 103,395      25.36

  Current portion of loan and receivable -            -        -            -        9,000        2.52                  -            -
  – related company                                                                                                                  

  Inventories                            88,267       21.58    90,479       25.47    83,103       23.31                 86,033       21.10

  Other current assets                                                                                                               

  Vat receivable                         -            -        -            -        -            -                     -            -

  Others                                 6,349        1.55     6,446        1.81     5,683        1.59                  2,493        0.61

  Total current assets                   268,970      65.75    243,084      68.44    223,931      62.80                 289,281      70.95

  Investment in subsidiary                                                                                                           

  Loan to Subsidiary                     9,262        2.26     4,600        1.30     -            -                     -            -

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

  Investment in subsidiary               22,557       5.51     1,407        0.40     -            -                     -            -

  Investment in related company          -            -        -            -        1,407        0.39                  1,407        0.35

  Account receivable and long term loan  -            -        -            -        28,813       8.08                  29,183       7.16
  to related company                                                                                                                 

  Property, Plant and Equipment Net      107,966      26.39    99,134       27.91    81,474       22.85                 74,241       18.21

  Restricted cash fixed deposits         -            -        -            -        7,131        2.00                  -            -

  Refundable withholding income tax      -            -        6,489        92.99    6,489        4.89                  6,489        5.48

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

  Deposits and guarantee                 220          0.05     130          0.04     82           0.02                  4            0.00

  Land not used in operation             -            -        -            -        7,030        1.97                  7,030        1.71

  Deferred charge                        74           0.02     359          0.10     -            -                     -            -

  Other non-current assets               -            -        -            -        209          0.06                  116          0.03

  Total other assets                     294          0.07     6,978        1.96     132,635      37.20                 118,470      29.05

  Total assets                           409,049      100.00   355,203      100      356,566      100.00                407,751      100.00

  Liabilities and Shareholders' Equity                                                                                               

  Current Liabilities                                                                                                                

  Shortterm loan from financial          1,629        0.40     23,892       6.73     11,233       3.15                  43,349       10.63
  institutions                                                                                                                       

  Trade accounts and notes payable –     63,689       15.57    14,558       4.10     1,953        0.55                  1,430        0.35
  Related Company                                                                                                                    

  - Other Companies                      17,406       4.26     11,594       3.26     10,813       3.03                  11,669       2.86

  Current portion of hire-purchase       295          0.07     973          0.27     526          0.15                  902          0.22
  contracts payable                                                                                                                  

  Payable from forward exchange          -            -        -            -        14           0.00                  -            -
  contracts                                                                                                                          

  Other current liabilities                                                                                                          

  Accrued income tax and accrued         8,007        1.96     5,906        1.66     12,136       3.40                  15,180       3.72
  expenses                                                                                                                           

  Others                                 264          0.06     148          0.04     174          0.05                  200          0.05

  Total Other Current Liabilities        8,271        2.02     6,054        1.70     12,310       3.45                  15,380       3.77

  Total Current Liabilities              91,290       22.32    570,71       16.07    36,849       10.33                 72,730       17.84

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

  Hire-Purchase contracts payable-net    -            -        526          0.15     -            -                     444          0.11

  Provision for loss in a subsidiary     -            -        -            -        -            -                     -            -
  company                                                                                                                            

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

  Total Liabilities                      91,290       22.32    57,597       16.22    36,849       10.33                 73,174       17.95

  Minority interest                      -            -        -            -        -            -                     -            -

  Shareholders' equity                                                                                                               

  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 capital 140,000      34.23    140,000      39.41    140,000      39.26                 140,000      34.33
  14,000,000 shares                                                                                                                  

  Premium on share capital               135,000      33.00    135,000      38.01    135,000      37.86                 135,000      33.11

  Retained earning                                                                                                                   

  Appropriated for reserve fund          14,000       3.42     140,000      3.94     14,000       3.93                  14,000       3.43

  Unappropriate                          28,759       7.03     8,606        2.42     30,717       8.61                  45,577       11.18

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

  Total Shareholders' Equity             317,759      77.68    297,606      83.78    319,717      89.67                 334,577      82.05

  Total Liabilities and Shareholders'    409,049      100.00   355,203      100.00   356,566      100.00                407,751      100.00
  Equity                                                                                                                             

  Book value per share(baht)             22.70                 21.26                 22.84                              23.90        

  Par Value                              10                    10                    10                                 10           

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

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

                                         2000                  2001                  2001                  2002                      

                                         Amount       %        Amount       %        Amount       %        Amount                    %

  Revenues                                                                                                                           

  Sales                                  508,478      97.29    435,576      97.94    484,690      98.33    528,755                   98.76

  Share of profit(loss)in subsidiary     5,019        0.96     -            -        -            -        -                         -

  Profit from exchange rate              -            -        1,804        0.41     -            -        1,694                     0.32

  Other income                           9,153        1.75     7,357        1.65     8,231        1.67     4,936                     0.92

  Total Revenues                         522,650      100.00   444,737      100.00   492,921      100.00   535,385                   100.00

  Expenses                                                                                                                           

  Cost of sales                          446,658      85.46    371,492      83.53    407,117      82.59    428,571                   80.05

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

  Bad debt and doubtful debt             1,611        0.31     1,889        0.42     4,366        0.89     1,051                     0.20

  Diminution in value of Short term      -            -        -            -        -            -        -                         -
  investment                                                                                                                         
  of??????????????????????????????????                                                                                               

  Others                                 43,721       8.37     41,277       9.28     39,325       7.98     44,433                    8.30

  Loss from exchange rate                7,456        1.43     -            -        2,517        0.51     -                         -

  Share of loss in subsidiary            -            -        9,018        2.03     -            -        -                         -

  Loss from Divestment                   -            -        12,086       2.72     -            -        -                         -

  Interest Expenses                      1,453        0.28     270          0.06     1,774        0.36     1,084                     0.20

  Directors remuneration                 600          0.11     859          0.19     982          0.20     618                       0.12

  Total Expenses                         501,499      95.95    436,891      98.24    456,081      92.53    475,757                   88.86

  Net Income(Loss) before Income Tax and 21,151       4.05     7,846        1.76     36,840       7.47     59,628                    11.14
  extraordinary                                                                                                                      

  Income Tax                             (3,810)      (0.73)   -            -        (7,029)      (1.43)   (16,768)                  (3.13)

  Net Income (Loss) from operation       17,341       3.32     7,846        1.76     29,811       6.05     42,860                    8.01

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

  Net income (loss)                      17,341       3.32     7,846        1.76     29,811       6.05     42,860                    8.01

  Earning per share                      1.24                  0.56                  2.13                  3.06                      

  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                    |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
|                                      | 2000  | 2001  | 2002  | 2003  |
+--------------------------------------+-------+-------+-------+-------+
| Cash Flows from Operating Activities |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Net Income                           | 1     | 7,846 | 2     | 4     |
|                                      | 7,341 |       | 9,811 | 2,860 |
+--------------------------------------+-------+-------+-------+-------+
| Adjustments to reconcile net income  |       |       |       |       |
| to net cash                          |       |       |       |       |
|                                      |       |       |       |       |
| provided by operating activities     |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Unrealized gain on exchange rate     | 37    | 187   | 129   | (353) |
+--------------------------------------+-------+-------+-------+-------+
| Unrealized loss on exchange rate     | -     | -     | -     | -     |
+--------------------------------------+-------+-------+-------+-------+
| Gain on disposal of short-term       | -     | -     | -     | -     |
| investment                           |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Minority interest                    | -     | -     | -     | -     |
+--------------------------------------+-------+-------+-------+-------+
| Share of profit (loss) in subsidiary | (5    | 9,018 | -     | -     |
|                                      | ,019) |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Short-term Investment                | -     | 1     | -     | -     |
|                                      |       | 2,086 |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Depreciation and amortization        | 1     | 1     | 1     | 1     |
|                                      | 3,995 | 2,432 | 1,977 | 1,194 |
+--------------------------------------+-------+-------+-------+-------+
| Allowance for doubtful accounts      | 1,611 | 1,889 | 4,366 | 1,050 |
+--------------------------------------+-------+-------+-------+-------+
| Gain on disposal of fixed assets     | -     | (557) | (421) | (1    |
|                                      |       |       |       | ,754) |
+--------------------------------------+-------+-------+-------+-------+
| Gain on disposal of investment       | -     | -     | -     | -     |
+--------------------------------------+-------+-------+-------+-------+
| Excess of investment over book value | -     | -     | -     | -     |
+--------------------------------------+-------+-------+-------+-------+
| Income from operating before         | 2     | 4     | 4     | 5     |
| changing in operating assets and     | 7,965 | 2,901 | 5,862 | 5,378 |
| liabilities                          |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| (Increase) decrease in operating     |       |       |       |       |
| assets                               |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Account and note receivables         | (22   | 2     | (9    | (9    |
|                                      | ,716) | 2,053 | ,229) | ,908) |
+--------------------------------------+-------+-------+-------+-------+
| Inventories                          | 5     | (2    | 7,376 | (2    |
|                                      | 8,767 | ,212) |       | ,930) |
+--------------------------------------+-------+-------+-------+-------+
| Other current assets                 | 1,626 | (51)  | (188) | 2,439 |
+--------------------------------------+-------+-------+-------+-------+
| Refundable Income Tax                | -     | (6    | -     | -     |
|                                      |       | ,489) |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Other assets                         | (143) | (196) | 198   | 90    |
+--------------------------------------+-------+-------+-------+-------+
| Increase(decrease) in operating      |       |       |       |       |
| liabilities                          |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Notes and account payable            | 9,331 | (54   | (13   | 341   |
|                                      |       | ,975) | ,427) |       |
+--------------------------------------+-------+-------+-------+-------+
| Accrued income tax and accrued       | 751   | (2    | 6,230 | 3,044 |
| expenses                             |       | ,100) |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Other current liabilities            | 126   | (116) | (933) | 12    |
+--------------------------------------+-------+-------+-------+-------+
| Net cash provided by(use in)         | 7     | (1    | 3     | 4     |
| operating activities                 | 5,707 | ,185) | 5,889 | 8,466 |
+--------------------------------------+-------+-------+-------+-------+

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

  Statement of Cash Flows for the year                                    
  ended December 31                                                       

                                         2000       2001       2002       2003

  Cash Flows from Investing Activities                                    

  Decrease(increase) in called and fixed (5,098)    (12,130)   209        464
  deposit                                                                 

  Decrease(increase) in short-term       2,000      -          -          -
  investment                                                              

  Decrease(increase) in deposit with     15,543     -          -          -
  financial institution                                                   

  Proceeds from sale of fixed assets     -          896        421        2,229

  Acquisition of fixed assets            (9,349)    (3,939)    (1,348)    (3,158)

  Decrease (increase) in loans           (3,262)    9,262      -          -

  Decrease (increase) in Loan to related -          (4,600)    (7,151)    -
  company                                                                 

  Decrease(increase) in investment in    (20,000)   1,406      -          -
  subsidiary                                                              

  Decrease (increase) in investment in   -          (1,406)    -          -
  related company                                                         

  Decrease in long-term loan and         -          -          690        7,000
  receivable-related company                                              

  Decrease (increase) in restricted cash -          -          9,986      7,131
  fixed deposits                                                          

  Net cash provided by ( used in)        (20,166)   (10,511)   2,807      13,666
  investing activities                                                    

  Cash Flows from Financing Activities                                    

  Increase(decrease)I in bank overdrafts (54,214)   22,110     (12,695)   32,558
  and loan                                                                

  Repayment of leasing payable           -          -          -          (376)

  Repayment of long-term loan            -          1,204      -          -

  Dividend paid                          (42,000)   (28,000)   (7,700)    (28,000)

  Net cash provided by (used in)         (96,214)   (4,686)    (20,395)   4,182
  financing activities                                                    

  Increase(decrease) in cash and cash    (40,673)   (16,382)   18,301     66,314
  equivalents                                                             

  Unrealized loss on exchange rate on               -          (51)       (97)
  cash in bank in foreign currency                                        

  Net cash and cash equivalents          (40,673)   (16,382)   18,250     66,217
  increase(decrease)                                                      

  Cash and cash equivalents, beginning   70,510     34,935     12,893     31,143
  of year                                                                 

  Cash and cash equivalents, end of year 29,837     18,553     31,143     97,360
  -------------------------------------- ---------- ---------- ---------- ----------

(c) Financial Ratio

Pato Chemical Industry Public Co.,Ltd. Financial Ratio 2000-2003

  ------------------------------------- --------- --------- --------- --------
                                        2000      2001      2002      2003

  Liquidity Ratio                                                     

  Current Ratio (Time)                  2.95      4.26      6.08      3.98

  Quick Ratio (Time)                    1.91      2.56      3.67      2.76

  Cash Flow Ratio (Time)                0.65      (0.02)    0.76      0.88

  Receivable Turnover (Time)            3.95      3.42      4.40      5.11

  Collection Period (Day)               91        105       81        71

  Inventory Turnover (Time)             3.80      4.16      4.69      5.07

  Inventory T/Period (Day)              95        87        77        71

  Account Payable Turnover (Time)       5.84      6.93      20.92     33.14

  Payment Period (Day)                  62        52        17        11

  Cash Cycle (Day)                      124       140       144       131

  Profitability Ratio                                                 

  Gross Profit Margin (%)               12.16     14.71     16.00     18.95

  Profit from operation (%)             1.66      5.02      6.27      10.55

  Other profit (%)                      2.43      (3.15)    1.31      0.72

  Cash (%)                              897.85    (5.42)    118.12    86.89

  Net Profit Margin (%)                 3.32      1.76      6.05      8.01

  Return on Equity (%)                  5.25      2.55      9.66      13.10

  Efficiency Ratio                                                    

  Return on Total Assets (%)            3.88      2.05      8.38      11.22

  Return on Fixed Assets (%)            26.55     19.58     44.54     63.68

  Assets Turnover (Time)                1.17      1.16      1.39      1.40

  Financial Ratio                                                     

  Debt to Equity (Time)                 0.29      0.19      0.12      0.22

  Interest Coverage (Time)              55.73     (3.39)    25.19     61.18

  Cash Basis (Time)                     0.57      (0.05)    3.97      1.54

  Payout Ratio (%)                      161.47    98.14     93.93     91.46

  Per Share (Baht)                                                    

  Book Value (Baht)                     22.70     21.26     22.84     23.90

  Earning per Share (Baht)              1.24      0.56      2.13      3.06

  Dividend per Share (Baht)             2.00      0.55      2.00      2.80

  Growth Rate                                                         

  Total Sale (%)                        (15.66)   (13.16)   0.38      14.35

  Cost of Goods Sold (%)                (35.97)   (36.91)   (36.02)   98.58

  Sales Revenue (%)                     (2.26)    (14.34)   11.28     9.09

  Selling & Admin Expense (%)           (2.15)    (17.54)   7.20      4.48

  Net Profit (%)                        43.58     (54.75)   279.95    43.77
  ------------------------------------- --------- --------- --------- --------

2) Management Discussion and Analysis

In the consolidated financial statement of Pato Chemical Industry Public
Co. Ltd. and its subsidiary companies, net profit (loss) totaled 7.85,
29.81 and 42.86 million baht in 2001 – 2003 respectively. These figures
represent an increase and reduction of (54.75), 279.95 and 43.77
respectively.

These changes are attributed to the continued economic slump, leading to
reduced liquidity in the business system and a reduction in consumers’
purchasing power. Although financial institutions reduced the interest
rate in a bid to stimulate investment, this was not successful.

As a result of a bid to control the effect of pesticides on the
environment, the Government enforced laws prohibiting the import and
sale of certain products, causing the company’s total sales to fall. It
was necessary for the company to urgently develop new products to
replace these prohibited products. The period was also marked by
competition from rivals with regard to quality and price. Price was used
as the basis for formulating competitive strategy. There were also
market expenses and increased costs for developing new products.

Agricultural produce prices fell from 2000 to 2002 as a result of floods
from heavy rain in the South and the Northeast during second and third
quarter which caused great damage to farm produce. As a result, farmers
had extremely less purchasing power. At the same time, there were
fluctuating effects from foreign exchange rates and a weakened baht,
causing prices for imported raw materials to rise. Oil prices tend to
increase and thus affected our cost. Consequently, performance of the
company during the past 3 year were as follows :

Sales revenue during 2001 – 2003 was 435.58, 484.69 and 528.76 million
baht respectively, representing increases (reductions) of (14.34%),
11.28% and 9.09% respectively.

Total revenue during 2001 – 2003 was 444.74, 492.92, and 535.39 million
baht, representing increases (reductions) of (14.91%) ,10.83%, and 8.61%
respectively.

Sales costs in 2001 – 2003 were 371.49, 407.12 and 428.57 million baht,
representing increases (reductions) of (16.83%) , 9.59% , and 5.27%
respectively.

In 2001, the economic situation was still a continuing problem, causing
a slump in the market and reduced sales. Agricultural prices were not so
good and there were floods during the middle of the year, which reduced
the spread of harmful insects. Meanwhile, weeds became a major problem
for farmers instead. Thus, sales of pellet insecticides dropped by 0.34
million kg, or 31.41%, compared to year 2000. However, sales of pellet
herbicides rose by 0.38 million kg or 10.37% compared to last year. The
company thus adjusted its strategy in line with the situation, by trying
to maintain distribution volume, with the least rate of reduction
possible. The distribution volume reduced at a faster rate than total
sales value. This was because the company made price adjustments for
certain products and launched new products onto the market . At the same
time, the company employed efficient management for production. This led
labor and production costs to drop by 11.80%. New raw material sources
were also procured, setting raw material prices on a downward trend.
This made initial profit rates up by 20.97% from year 2000.

In 2002, the economic situation began to improve. Thanks to the
Government’s policy to solve economic problems at the grassroots, by
supporting SME operations and through the Government’s One Tambon, One
Product project. A segment of the products – agricultural products -
received good government support. However, agricultural prices were
still not so good and there were also flood problems during the 3^(rd)
and 4^(th) quarters. The Government fully dealt with the problems and
gave all forms of agricultural support, such as guaranteeing
agricultural prices, giving assistance in the form of seeds, fertilizer
and chemicals. With regard to the latter, government and private sector
units gave importance to the quality of products used by farmers. Thus,
there was a policy to check and curtail products not of standard
quality, so that these inferior products would no longer be on the
market.

The above factors led to a rise in the outbreak of harmful plant
insects, presenting a major problem for farmers engaging in cultivation
after the floods. It led to a 8.61% rise in the sales volume of
insecticides compared to 2001, of which granule insecticides sales
volume rose by 221 tons or 29.85%, compared to 2001.

Sales of herbicides also rose by 2.62%, compared to 2001. This comprised
an increase in liquid herbicide of 155,000 liters or 11.60%, and a rise
of 159 tons or 34.91% for powder herbicide, while sales of granule
herbicide reduced slightly. These figures are respectively in comparison
to the sale of liquid, powder and granule herbicide in 2001.

Due to the increase in total sales, income from sales rose by 11.28%
compared to 2001, with the company adjusting its marketing strategy in
line with the situation and also introducing many new products, leading
to a rise in total sales. Another outside factor helping to boost sales
was suppression and strict measures against substandard products on the
market.

At the same time, the company set an efficient administrative management
policy for production. This lead to a 2.32% decrease in labor costs and
other production costs. Raw materials were also procured from new
sources, leading to an average 7.19% decrease in raw material prices.
Production and selling costs rose by 3.44% and 9.59% compared to 2001.
However, production and selling costs rose at a lower ratio than the
increase in total sales income which rose by 11.28%. Therefore, these
factors led to a 16% initial profit rate for the company, representing a
rise of 8.77% from 2001.

In 2003, The overall economy expanded. Gross Domestic Product expanded
by 5.61 %, with expansion in agricultural production, food production
and agricultural processed goods rising at a rate of 4.39%. This was the
result of various favorable production factors, particularly government
policy fully supporting the agricultural sector, such as solving farm
problems and providing assistance to farmers after flooding, and
provision of financial support for farmers to develop quality production
efficiency. This would inevitably lead to development in processing
agricultural goods and to competing on the world market. An example is
support for the One Tambon, One Product project that has the potential
for developing export products.

  The above factors led to an expansion of 4.64% and 4.66% respectively
for plants and processed agricultural goods. Because of higher
agricultural prices, and at the same time government measures and policy
to increase the value of agricultural produce which also supported
expansion in the output of agricultural processing sector, farmers were
able to enjoy a better financial position and higher purchasing power.

  Total sales rose by 44.06 million baht or 9.9% compared to the year
2002. This is due to the spread of plant pests, a major problem for
farmers beginning their planting after the floods. This led to an
increase of 62.63% in the sales of pesticides compared to 2002, with a
97.06% rise seen in the sale of granule pesticide and 78.25% rise in the
sale of powder pesticide compared to 2002. This led to initial total
sales to rise by 36.68 million baht or an increase of 28.09%. At the
same time, total sales of herbicides rose by 0.92% compared to 2002.
Under this increase, liquid herbicide increased by 21.27%, while granule
and powder herbicide fell by 5.55% and 7.37% respectively compared to
2002. This caused initial total sales to rise by 7.95 million baht or
2.72%. Sales of liquid fungicide rose by 60.18%, ca using initial sales
to rise by 7.51 million baht, representing an increase of 62.46%.
However at the same time, there was a slight fall in total sales and
retailing of powder fungicide.

  Thus, the rise in total sales and rise in earnings from the increase
in sales, was due to the outbreak of plant pests and the beginning of
planting following the floods, which led to increased use of pesticides.
The company devised a marketing strategy in accordance with the
prevailing situation. In addition, the company also introduced many new
products and product types to suit market demand during the time.
Another outside factor helping to increase sales is the suppression and
strict supervision by both government and private sectors over
sub-standard products. This prevented sub-standard products from being
sold on the market.

  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. Raw material prices on average
decreased by about 8.25%, leading production costs and sales costs to
rise by 7.78% and 5.27% respectively compared to 2002. The rate of
increase for production and sales costs was smaller than the rate of
increase for total sales income which amounted to 9.09%. Production
costs in utilization of raw materials rose by 7.76%, labor costs rose by
14.27% and other costs rose by 1.68%. This resulted from higher market
demand, which in turn raised production output and retail, giving the
company initial profits of 18.95%, representing a rise of 18.44% from
2002.

 

Table showing rate of increases (reduction) during 2001 - 2003

+------+--------------------+-------------------------+--------------+
| Year | PATO               |                         |              |
+------+--------------------+-------------------------+--------------+
|      | Sales Revenue      | Consolidated revenue    | Cost of Sale |
+------+--------------------+-------------------------+--------------+
|      |                    |                         |              |
+------+--------------------+-------------------------+--------------+
| 2001 | (14.34)            | (14.91)                 | (16.83)      |
+------+--------------------+-------------------------+--------------+
| 2002 | 11.28              | 10.83                   | 9.59         |
+------+--------------------+-------------------------+--------------+
| 2003 | 9.09               | 8.61                    | 5.27         |
+------+--------------------+-------------------------+--------------+

Sales and services expenses during 2001-2003 totaled 44.03, 47.19, and
46.10 million baht, representing increases (reductions) of (17.54%),
7.20% , and (2.39%) respectively, not including losses from foreign
exchange rates and interest payable.

Interest payable in 2001 – 2003 totaled 0.27, 1.77 and 1.08 million
baht, representing increases (reductions) of (81.42%), 557.04% and
(38.90%) respectively.

In 2001, sales and management costs decreased by 9.36 million baht, or
17.54%, due to efficient cost management policies which led to efficient
control and reduction. Sales costs and management costs mostly decreased
by 3.41 million baht. But at the same time, there was an increase for
certain types of costs such as for costs bank fees, which increased by
0.85 million from year 2000, director remuneration which rose by 0.20
million, cost for additional association members amounting to 0.18
million baht and an increase of 0.27 million in bad debts.

Meanwhile, payable interest decreased by 81.42 % because of cost
management policy, and the substantial difference between deposit rates
and loan rates. The company thus tried to cut down on bank credit. But
at the same time, most of the payable interest came from L/C, T/R credit
and from car hire-purchases.

In 2002, sales and management costs rose by 3.16 million baht or 7.20%
due to a management cost control policy that led to efficient cost
reduction while total sales rose at a higher ratio, with investment in
sales and management costs proving to be worthwhile. This led to a
higher ratio of income generation, while sales and management costs were
also mostly down compared to 2001. However, at the same time certain
costs rose from last year, such as a rise of 1.27 million baht for
salary and benefits or 0.18%, a rise in irretrievable debts costs of
2.48 million baht or 14.33%. As the company had a policy to protect
against risk from flood-ravaged debtors, the company thus increased its
reserves from the previous year.

Interest payments, meanwhile, rose by 1.50 million baht or 557.04% due
to payment policy to T/R creditors and foreign creditors, under which
payment terms were extended in the 2^(nd), 3^(rd) and 4^(th) quarters,
thus leading to the burden of increased interest payments.

With regard to foreign exchange losses, there were foreign exchange
profits of 1.80 million baht in 2001, while in 2002 there was a foreign
exchange loss of 2.52 million baht, representing a 4.32 million baht
difference or a change of 239.56%. This was due to fluctuation of the
baht which weakened continuously, leading to increased foreign exchange
losses.

Income tax in 2002 came to 7.03 million baht, whereas in 2001 the
company sold off its investments in subsidiary companies. This led to a
loss in taxes of 49.79 million and thus no income tax payments for 2001.
There was also a 15 million baht loss from taxes which could be entered
as Credit and this led to an increase in income tax in 2002, compared to
the previous year.

In 2003, sales and management costs fell by 1.13 million baht or 2.39%
compared to 2002. However, if bad and doubtful debts, and foreign
exchange profits are not taken into consideration, it can be seen that
sales and management costs amounting to 40.31 million baht in 2002 and
45.05 million baht in 2003, represent a rise of 4.74 million baht or
11.76%. This was the result of a policy to manage and control various
costs to rise at only the minimum and make investment worthwhile so as
to generate income with the highest efficiency.

  However, there were certain rising costs which could not be controlled
and which came from debtor management. Loss from debt restructuring was
acknowledged in the form of Net Present Value (NPV) which came from
extending payment contracts worth 2.38 million baht or 0.44% of total
income. At the same time, salary costs and various benefits, including
commission, rose by 1.89 million baht or 0.35% of total income. Other
costs rose by 0.47 million baht or 0.09% of total income.

  Bad debts and doubtful debts fell by 3.32 million baht or 75.93% due
to the company’s policy to protect against and reduce risks involving
bad debtors, through efficient debtor management and exercising caution
in selecting good customers to extend commercial credit. This was able
to control and reduce bad debts.

  As for profits (loss) from foreign exchange in 2002, there was a loss
of 2.52 million baht and in 2003, foreign exchange profits amounted to
1.69 million baht, a rise of 4.21 million baht or 167.30%. This was the
result of a continually stronger baht, with an average exchange rate
from the beginning of 2003 to the end of 2003 that was 3 baht less to
the dollar. Efficient risk management also pushed foreign exchange
profits higher.

Corporate income tax in 2002 amounted to 7.03 million baht and in 2003
amounted to 16.77 million baht. This represented an increase of 9.74
million baht or 138.55%. These came as a result of company loss in 2002
from the sale of tax investment money amounting to 15 million baht that
crossed over from 2001, which then led to a decrease in corporate income
tax. In 2003, net profits rose, causing corporate taxes to increase from
that of the previous year.

The above operational results led to initial profits during 2001 – 2003
to total 64.08, 77.57 million and 100.18 million baht respectively,
representing a percentage of 14.71, 16.00 and 18.95 respectively.

Operational profits in 2001 – 2003 came to 21.86, 30.38 and 55.78
million baht respectively, representing percentage of 5.02, 6.27 and
10.55 respectively.

Net profits in 2001 – 2003 came to 7.85, 29.81, and 42.86 million baht,
or a percentage of 1.76, 6.05 and 10.55 respectively.

Return on equity during 2001 – 2003 were 2.55% , 9.66% , and 13.10
respectively.

In 2001, total sales decreased by 14.34% and consolidated earnings
decreased by 14.91% owing to the occurrence of floods in the middle of
the year causing farmers to have reduced purchasing power. The company
saw these problems and made adjustments in its marketing strategy, in
line with the situation. Because of this, the company was able to manage
total distribution volume for each product to achieve a higher initial
profit rate, and undertook efficient cost management. This made initial
profit rates rise by 14.71%, compared to year 2000, and sales costs and
management costs decreased by 4.15%. And by setting a policy to reduce
risk from foreign exchange rates, the company made a total profit of
1.80 million baht from foreign exchange, or 0.41% of consolidated
earnings. At the same time, the company sold off a total of 4.59 million
shares in affiliated companies in the 3^(rd) quarter of 2001, leading to
a loss from the sale of a total of 12.09 million baht in investments.
This is in addition to prior share of losses of subsidiary companies
totaling 9.02 million baht, which brings the overall total to 21.11
million baht, or 4.77% of consolidated earnings. This caused net profit
to fall by 1.76% and shareholder return rate to fall by 2.55%.

In 2002, total sales rose by 11.28% which resulted from government and
private sector assistance to farmers following flooding during the
3^(rd) and 4^(th) quarters, helping farmers to recover more quickly. At
the same time, there were stricter measures against sub-standard
products. This led to less market competition as these products could
not be sold. In addition to this, an adjustment in marketing and pricing
strategies to suit changes in costs, also led to higher market share.
This was also coupled with the fact that new products were able to make
higher profit rates. There was also efficient management of production
costs which led production costs and selling costs to increase at a
lower ratio than the rise in total sales. This made initial profit rate
rise to 16.00%

Under a set policy for efficient management and control, selling and
management costs increased at a lower ratio compared to the rise in
total sales. There was also a policy to prevent risk from irretrievable
debts and increased reserves were set aside for this, making operational
profit for 2002 rise to 6.79%.

At the same time, the baht’s fluctuation made it difficult to implement
a policy to prevent against foreign exchange risks, and as a result,
foreign exchange losses increased. And due to the fact that in 2002,
there were no effects from the operations of subsidiary companies,
income tax burden was higher and net profit rose 6.05%, leading
shareholder returns to increase to 9.66%.

In 2003, total sales rose by 9.09%, due to government policy to support
and assist farmers in production, marketing and finances. This led to
higher agricultural prices and improved the financial position of
farmers. At the same time, suppression and control of sub-standard
products led to less market competition. Marketing and pricing
strategies were devised in accordance with market conditions in which
raw material prices were lower because of new sources of cheaper and
good quality raw materials. The stability of the baht also reduced raw
material costs. The company was thus able to set suitable prices and
gain a greater share of the market. The company also had efficient
production management an d this made production costs and sales costs to
rise at a lower rate than total sales. As a result, the company saw
initial profits rise by 18.95%.

  Overall sales and management costs fell, as already stated, with the
company’s policy to manage and control costs to rise at only the minimum
rate and make investment most worthwhile, so as to make the most
efficient income generation. There was also a policy for careful debtor
management so as to reduce risk of bad debts, with a great reduction bad
debts and doubtful debts seen in 2003. This resulted in the company
seeing operational profit in 2003 increase by 55.78%. 

At the same time, the increased stability of the baht and company policy
for efficient management of foreign exchange risks, led to higher
foreign exchange profits in 2003. The company’s net profits thus rose by
8.01% and return of equity in 2003 rose by 13.10%.

Total assets in 2001-2003 amounting to 355.20, 356.57 and 407.75 million
baht respectively, marked an increase (decrease) at a percentage of
(13.16), 0.38 and 14.35 respectively.

Total liabilities in 2001-2003 amounting to 57.07, 36.85, and 73.17
million baht, marked an increase (decrease) of (36.91%), (36.02) , 98.58
and respectively.

Shareholder equity in 2001-2003 amounting to 297.61, 319.72 and 334.58
million baht, marked an increase (decrease) of (6.34%), 7.43%, and 4.65%
respectively.

In 2001, total distribution volume fell by 14.34% while operational cash
flow fell 101.57%, and liquidity ratio rose from 2.95 in 2000 to 4.26 in
2001. Quick ratio rose from 1.91 in 2000, to 2.56 in 2001. The 9.62%
reduction in circulating assets from 2000 and the 37.48% fall in
circulating liabilities, improved the liquidity ratio. While cash
liquidity ratio decreased because of faster payments to trade creditors,
with debt collection period extended from 92 days in 2000 to 107 days in
2001. Products were also sold within a shorter period of time, from
within 66 days in 2000, to 88 days in 2001, and debt repayments were
faster, from 63 days in 2000, to 53 days in 2001. Thus in 2001, Cash
Cycle increased to 142 days.

The reduced circulating liabilities comprised commercial creditors which
decreased by as much as 67.75%. Because of inventory management policy,
there was suitable inventory for demand and reduced raw material costs.
Total raw material orders decreased by 2.86% from 2000. Consideration
was also given to repayment period in order to economize on interest and
other fees.

Cash flow from investment activities increased by 47.88% from repayment
of loans to subsidiary companies. Also the company paid a total of 28
million baht for dividends and used L/C, T/R credit for ordering 22.11
million baht in raw materials, leading to an increase in bank loans from
year 2000, and an increase of 95.13% in cash flow from procurement
activities.

In 2002, total sales of the company rose by 11.28% while operational
cash flow rose 3,128.61%, with liquidity ratio up from 4.26 in 2001 to
6.08 in 2002. Quick ratio rose from 2.56 in 2001 to 3.67 in 2002. Cash
flow liquidity ratio rose from (0.02) in 2001 to 0.76 in 2002 due to
classification of related debtor companies to debtors and long-term
loans to related companies. The classification led to a reduction in
circulating debts totaling 28.81 million baht. The company also made
quicker payments to T/R creditors and commercial creditors, leading to a
reduction in circulating debts.

Meanwhile, debt collection period was shortened from 107 days in 2001 to
83 days in 2002. Product selling period were also shorter from 88 days
in 2001 to 78 days in 2002, and debt payments were also quicker from 53
days in 2001 to 17 days in 2002, making Cash Cycle rise to 144 days.

An analysis of the above ratio showed a trend for improvement from the
previous year, as a result of a policy for stock management in which a
reduction of 8.15% is seen. This is for sufficiency in meeting market
demand at appropriate periods and to prevent excess stocking which would
lead to higher storage costs, with consideration given to Lead Time for
efficient product ordering management, and strict policy and management
of debtors, not including related debtor companies. This led to quicker
payment collection and as a result quicker payments to T/R creditors and
commercial creditors. Company liquidity also became better, creating
greater operational cash flow.

Cash flow for investment activities increased 126.71% as a result of the
company freeing itself from the burden of deposit guarantor and
repayment of loans from related companies, including the sale of company
cars totaling 11.31 million baht. At the same time, the company gave
loans to related companies and bought assets totaling 8.50 million baht,
leading to a rise in cash flow from investment activities compared to
the previous year.

Cash flow from procurement activities improved company liquidity and
thus the company was able to repay T/R creditors before schedule and
give out dividends in 2002 totaling 20.40 million baht. This led to a
reduction of 335.23% in cash flow from procurement activities.

In 2003, company sales income rose by 9.09% while cash flow from
operations rose by 35.04%, with liquidity ratio falling from 6.08 in
2002 to 3.98 in 2003. Fast liquidity fell from 3.67 in 2002 to 2.76 in
2003. Current ratio rose from 0.76 in 2002 to 0.88 in 2003. Higher sales
led to an increase in stocks and commercial debtors. Also overdrawing
and loans from financial institutions rose by 285.91% as a result of raw
material purchase orders to meet higher market needs. This thus caused a
downward trend in the ratio.

 

Meanwhile, debt collection was faster. From 81 days in 2002, it dropped
to 71 days in 2003. Sales duration on average was also faster from 77
days in 2002 to 71 days in 2003 and debt payments were also faster, from
17 days in 2002 to 11 days in 2003, thus reducing the cash cycle to 131
days.

  Analysis results show a downward trend in the liquidity ratio due to
increased total sales and inventory management policy. As a result,
inventory were found to have risen by only 3.53% from the year 2002,
while total sales rose by 9.09%. Thus it can be seen that the company
managed to keep inventory within market demand so as to reduce inventory
costs and avoid the problem of deteriorated goods. The company also made
purchase orders according to market demand periods, taking into
consideration lead time. This led to efficient management of inventory.

The company laid down a cautious policy and management of debtors, which
did not include debtors of related companies. This led to faster
collection and enabled the company to make faster payments to T/R and
commercial creditors. Thus with this improved liquidity, there was
increased operational cash flow.

Cash flow from investment activities rose by 386.85% due to the
relieving of guarantee funds and payment of loans from related
companies, including the sale of worn-out company cars which totaled
16.82 million baht. Meanwhile, the company spent only 3.16 million on
car purchases, using hire-purchase to replace the old lot. This led to
increased cash flow from investment activities compared to the previous
year.

  Cash flow from financial procurement activities rose by 120.51%
because of raw material purchase orders to meet increased market demand.
This led to increased loans from financial institutions, while the
company enjoyed good liquidity. The company paid out 28 million baht in
dividends and paid car hire-purchase creditors a total of 0.38 million.

  When taking into account investment structure and that the ratio of
debts to shareholder was 0.22 times in 2003, this represented an
increase from the previous year. There was also a big increase in loans
from financial institutions due to increased purchases of raw materials
from abroad. However, this ratio was still a very low ratio and
reflected the company’s careful and efficient management of funds. The
company had a policy of using rotating debts to invest in rotating
assets so as to get the highest returns, taking into consideration that
outlay capital should not be excessive and should provide the greatest
return to the shareholder. The company also kept the ratio from becoming
too high for fear of financial risk to the company.

For the main factors that are important and bear effect on operations in
2004 , it is expected that the overall economy will continue to expand
from 2003, with positive factors on many sides. These include various
supporting policies in the government sector, as well as in major and
small business operations, and people in rural areas, all of which will
help in enabling the GDP to be able to increase by 8%.

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 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
it to go on world markers, such as through the One Tambon One Product
Project (OTOP) . Products under this project have now become export
products going onto world markets.

  These are the main factors improving the financial conditions of
farmers. At the same time, the government and private sectors, through
the Thai Crop Protection Association joined forces to control and check
sub-standard products which when used by farmers, lead to higher costs
for farmers and yields which do not meet expectations. This, in turn,
reduces farmers’ purchasing power. The company is aware of the
importance of this problem and at present is able to control this
problem to a certain level, making sub-standard products more difficult
to market.

Raw material prices are another factor affecting product prices. Most
raw materials are imported and thus is affected by fluctuating foreign
exchange rates all the time. The rise and fall of raw material prices
depends on the stability of the baht. This is an outside factor which
cannot be controlled, but risks from foreign exchange damage can be
reduced by following measures :

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.