11. Financial Highlight

(1) Financial statements

  The company paid 430,000 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 2006-2009 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

  ------------------------------------ ------------ -------- ------------ -------- ------------ -------- ------------- ------------- --------
                                       2006                  2007                  2008                                2009          

                                       Amount       %        Amount       %        Amount       %                      Amount        %

  ASSETS                                                                                                                             

  CURRENT ASSETS                                                                                                                     

  Cash in hand and at Bank             153,282      22.15    79,850       14.99    8,710        1.84                   37,187        5.95

  Current investment                   50,646       10.86    84,523       15.87    126,865      26.77                  253,486       40.59

  Short-term investment                                                                                                              

  Fixed deposit                                                                                                                      

  Investment in listed company         -            -        -            -        -            -                      -             -

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

  Other companies, net                 128,618      27.58    135,151      25.38    92,870       19.60                  161,177       25.81

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

  Inventories                          96,160       20.62    155,671      29.23    176,529      37.25                  102,674       16.44

  Other current assets                                                                                                               

  Vat receivable                       -            -        -            -        -            -                      -             -

  Others                               2,496        0.54     1,863        0.35     1,869        0.39                   2,495         0.40

  Total current assets                 381,202      81.75    457,058      85.83    406,843      85.84                  557,019       89.19

  Investment in subsidiary                                                                                                           

  Loan to Subsidiary                   -            -        -            -        -            -                      -             -

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

  Investment in subsidiary             -            -        -            -        -            -                      -             -

  Investment in related company        -            -        -            -        -            -                      -             -

  Long-term receivable and loan to     -            -        -            -        -            -                      -             -
  related company                                                                                                                    

  Property, Plant and Equipment Net    84,835       18.19    74,397       13.97    66,704       14.07                  67,380        10.79

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

  Wothholding income tax for refund    -            -        -            -        -            -                      -             -

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

  Deposits and guarantee               -            -        -            -        -            -                      -             -

  Land not used in operation           -            -        -            -        -            -                      -             -

  Deferred charge                      -            -        -            -        -            -                      -             -

  Other non-current assets             280          0.06     1,057        0.20     395          0.08                   120           0.02

  Total other assets                   85,115       18.25    75,454       14.17    67,099       14.16                  67,500        10.81

  Total assets                         466,317      100.00   532,512      100.00   473,942      100.00                 624,519       100.00

  LIBILITIES AND SHAREHOLDERS’ EQUITY                                                                                                

  Current Liabilities                                                                                                                

  Short-term loan from financial       50,378       10.80    95,683       17.97    22,838       4.82                   80,440        12.88
  institutions                                                                                                                       

  Trade accounts and notes payable –   12,669       2.72     10,778       2.02     10,444       2.20                   -             -
  Related Company                                                                                                                    

  - Other Companies                    11,981       2.57     10,305       1.94     5,647        1.19                   33,684        5.39

  Current portion of hire-purchase     -            -        121          0.02     126          0.03                   87            0.01
  contracts payable                                                                                                                  

  Payable from Investment Acquistion   -            -        -            -        -            -                      -             -

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

  Other current liabilities                                                                                                          

  Accrued income tax and accrued       9,544        2.05     27,171       5.10     18,741       3.95                   41,931        6.71
  expenses                                                                                                                           

  Others                               240          0.05     220          0.04     23           0.00                   202           0.03

  Total Other Current Liabilities      9,784        2.10     27,391       5.14     18,764       3.96                   42,133        6.75

  Total Current Liabilities            84,812       18.19    144,278      27.09    57,819       12.20                  156,344       25.03

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

  Hire-Purchase contracts payable-net  -            -        212          0.04     87           0.02                   -             -

  Provision for liabilities from       39,455       8.46     18,262       3.43     -            -                      -             -
  lawsuit                                                                                                                            

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

  Total Liabilities                    124,367      26.65    162,752      30.56    57,906       12.22                  156,344       25.03

  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       140,000      30.02    140,000      26.29    140,000      29.54                  140,000       22.42
  capital 14,000,000 shares                                                                                                          

  Premium on share capital             135,000      28.95    135,000      25.35    135,000      28.48                  135,000       21.62

  Retained earning                                                                                                                   

  Appropriated for reserve fund        14,000       3.00     14,000       2.63     14,000       2.95                   14,000        2.24

  Unappropriate                        53,050       11.38    80,760       15.17    127,036      26.80                  179,175       28.69

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

  Total Shareholders' Equity           342,050      73.35    369,760      69.44    416,036      87.78                  468,175       74.95

  Total Liabilities and Shareholders'  466,317      100.00   532,512      100.00   473,942      100.00                 624,519       100.00
  Equity                                                                                                                             

  Book value per share (baht)          24.43                 26.41                 29.72                               0.33          

  Par Value                            10                    10                    10                                  1             

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

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

                                       2006                  2007                  2008                  2009                        

                                       Amount       %        Amount       %        Amount       %        Amount                      %

  Revenues                                                                                                                           

  Sales                                600,728      99.12    620,541      98.16    758,032      99.55    851,616                     98.85

  Reversal of provision for doubtful   -            -        4,985        0.79     -            -        -                           -
  account from loan                                                                                                                  

  Gain on exchange rate                1,321        0.22     3,627        0.57     -            -        4,113                       0.48

  Other income                         4,021        0.66     3,016        0.48     3,414        0.45     5,821                       0.68

  Total Revenues                       606,070      100.00   632,169      100.00   761,446      100      861,550                     100.00

  Expenses                                                                                                                           

  Cost of sales                        450,360      74.31    458,418      72.52    537,411      70.58    591,997                     68.71

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

  Bad debt and doubtful debt           39,455       6.51     -            -        -            -        -                           -

  Others                               52,801       8.71     -            -        -            -        -                           -

  Loss from exchange rate              -            -        -            -        -            -        -                           -

  Selling expenses                     -            -        24,409       3.86     26,363       3.46     38,680                      4.49

  Administrative expenses              -            -        21,940       3.47     24,630       3.23     26,145                      3.03

  Loss on Impairment of Investment     -            -        -            -        -            -        -                           -

  Interest Expenses                    2,546        0.42     4,402        0.70     6,218        0.82     932                         0.11

  Directors remuneration               870          0.14     9,676        1.53     15,197       2.00     5,236                       0.61

  Total Expenses                       546,032      90.09    518,845      82.07    609,819      80.09    662,990                     76.95

  Net Income(Loss) before Income Tax   60,038       9.91     113,324      17.93    151,627      19.91    198,560                     23.05
  and extraordinary                                                                                                                  

  Income Tax                           (12,916)     (2.13)   (33,114)     (5.24)   (38,851)     (5.10)   (41,421)                    (4.81)

  Net Income (Loss) from operation     47,122       7.78     80,210       12.69    112,776      14.81    157,139                     18.24

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

  Net income (loss)                    47,122       7.78     80,210       12.69    112,776      14.81    157,139                     18.24

  Earning per share (bath)             3.37         -        5.73                  8.06                  1.12                        

  Par value (bath)                     10.00                 10.00                 10.00                 1.00                        

  Weight average (Share)               14,000,000            14,000,000   -        14,000,000            140,000,000                 

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

+--------------------------------------+-------+-------+-------+-------+
| Pato Chemical Industry Public Co.,   |       |       |       |       |
| Ltd.                                 |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Statement of income for the Year     |       |       |       |       |
| Ended December 31                    |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
|                                      | 2006  | 2007  | 2008  | 2009  |
+--------------------------------------+-------+-------+-------+-------+
| Cash Flows from Operating Activities |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Net Income                           | 4     | 11    | 15    | 19    |
|                                      | 7,122 | 3,324 | 1,627 | 8,560 |
+--------------------------------------+-------+-------+-------+-------+
| Adjustments to reconcile net income  |       |       |       |       |
| to net cash                          |       |       |       |       |
|                                      |       |       |       |       |
| provided by operating activities     |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Interest Expense Under Hire-Purchase | -     | -     | -     | -     |
| Agreements                           |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Unrealized gain on exchange rate     | (133) | (67)  | 266   | (254) |
+--------------------------------------+-------+-------+-------+-------+
| Unrealized gain from changes in      | (646) | (847) | (773) | (1    |
| value of investments                 |       |       |       | ,921) |
+--------------------------------------+-------+-------+-------+-------+
| Gain on disposal of current          | -     | (1    | (1    | (699) |
| investment                           |       | ,030) | ,569) |       |
+--------------------------------------+-------+-------+-------+-------+
| Gain of disposal of investment in    | (11)  | -     | -     | -     |
| related company                      |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| (Reversal of) Provision for doubtful | 3     | (4    | -     | (1    |
| account from loan                    | 9,455 | ,985) |       | ,023) |
+--------------------------------------+-------+-------+-------+-------+
| Loss on debt restructuring           | -     | -     | -     | -     |
+--------------------------------------+-------+-------+-------+-------+
| Loss on Impairment of Investment     | -     | -     | -     | -     |
+--------------------------------------+-------+-------+-------+-------+
| Depreciation and amortization        | 1     | 1     | 1     | 1     |
|                                      | 1,447 | 3,540 | 2,458 | 1,998 |
+--------------------------------------+-------+-------+-------+-------+
| Provision for doubtful accounts      | 23    | 60    | 2,148 | -     |
+--------------------------------------+-------+-------+-------+-------+
| Gain on disposal of fixed assets     | (2    | (350) | (546) | (2    |
|                                      | ,017) |       |       | ,003) |
+--------------------------------------+-------+-------+-------+-------+
| Interest expenses                    | -     | 4,527 | 6,218 | 931   |
+--------------------------------------+-------+-------+-------+-------+
| Income from operating before         | 9     | 12    | 16    | 20    |
| changing in operating assets and     | 5,240 | 4,172 | 9,829 | 5,589 |
| liabilities                          |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| (Increase) decrease in operating     |       |       |       |       |
| assets                               |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Account and note receivables         | (5    | (6    | 4     | (67   |
|                                      | ,550) | ,593) | 0,133 | ,283) |
+--------------------------------------+-------+-------+-------+-------+
| Inventories                          | 4     | (59   | (20   | 7     |
|                                      | 2,007 | ,512) | ,858) | 3,855 |
+--------------------------------------+-------+-------+-------+-------+
| Other current assets                 | (548) | 50    | (6)   | (627) |
+--------------------------------------+-------+-------+-------+-------+
| Refundable Income Tax                | -     | -     | -     | -     |
+--------------------------------------+-------+-------+-------+-------+
| Other assets                         | 483   | (194) | 662   | 275   |
+--------------------------------------+-------+-------+-------+-------+
| Increase(decrease) in operating      |       |       |       |       |
| liabilities                          |       |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Notes and account payable            | 2,463 | (3    | (5    | 1     |
|                                      |       | ,494) | ,094) | 7,947 |
+--------------------------------------+-------+-------+-------+-------+
| Liability arising From Guarantee     | -     | (16   | (18   | -     |
|                                      |       | ,208) | ,262) |       |
+--------------------------------------+-------+-------+-------+-------+
| Accrued income tax and accrued       | (8    | 921   | 574   | 3,605 |
| expenses                             | ,624) |       |       |       |
+--------------------------------------+-------+-------+-------+-------+
| Other current liabilities            | (402) | (19)  | (197) | 179   |
+--------------------------------------+-------+-------+-------+-------+
| Cash flows received in operation     | 12    | 3     | 16    | 23    |
|                                      | 5,069 | 9,123 | 6,781 | 3,540 |
+--------------------------------------+-------+-------+-------+-------+
| Cash paid for interest expenses      | -     | (4    | (6    | (932) |
|                                      |       | ,402) | ,218) |       |
+--------------------------------------+-------+-------+-------+-------+
| Cash paid for income tax             | -     | (16   | (47   | (21   |
|                                      |       | ,408) | ,854) | ,836) |
+--------------------------------------+-------+-------+-------+-------+
| Net cash provided by(use in)         | 12    | 1     | 11    | 21    |
| operating activities                 | 5,069 | 8,313 | 2,709 | 0,772 |
+--------------------------------------+-------+-------+-------+-------+

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

  Statement of Income for the year ended                                   
  December 31                                                              

                                         2006       2007       2008        2009

  Cash Flows from Investing Activities                                     

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

  Cash paid for purchase current         (50,000)   60,191     (163,265    (348,337)
  investment                                                               

  Proceeds from Disposal of Investment   11         (92,191)   123,265     224,337

  Proceeds from sale of fixed assets     2,017      350        548         2,003

  Acquisition of fixed assets            (16,553)   (2,769)    (4,766)     (12,674)

  Decrease (increase) in loans to        -          -          -           -
  subsidiary                                                               

  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         -          -          -           -
  receivable-related company                                               

  Decrease (increase) in restricted cash -          -          -           -
  fixed deposits                                                           

  Net cash provided by ( used in)        (81,025)   (34,418)   (44,218)    (134,671)
  investing activities                                                     

  Cash Flows from Financing Activities                                     

  Increase(decrease)in short-term loans  18,502     45,172     (73,009)    57,502
  from financial institutions                                              

  Repayment of hire purchase contract    -          -          (121)       (126)

  Repayment of long-term loan            -          -          -           -

  Dividend paid                          (56,000)   (52,500)   (66,500)    (105,000)

  Net cash provided by (used in)         (37,498)   (7,328)    (139,630)   (47,624)
  financing activities                                                     

  Increase(decrease) in cash and cash    6,546      (23,433)   (71,139)    28,477
  equivalents                                                              

  Unrealized loss on exchange rate on    -          -          -           -
  cash in bank in foreign currency                                         

  Net Increase(decrease) in Cash and     6,546      (23,433)   (71,139)    28,477
  Cash equivalents                                                         

  Cash and cash equivalents, beginning   96,736     103,283    79,850      8,710
  of period                                                                

  Cash and cash equivalents, end of      103,282    79,850     8,711       37,187
  period                                                                   
  -------------------------------------- ---------- ---------- ----------- -----------

(c) Financial Ratio

Pato Chemical Industry Public Co.,Ltd. Financial Ratio 2005-2008

  ------------------------------------- --------- -------- --------- --------
                                        2006      2007     2008      2009

  Liquidity Ratio                                                    

  Current Ratio (Time)                  3.70      2.81     7.04      3.56

  Quick Ratio (Time)                    2.27      1.84     3.95      2.89

  Cash Flow Ratio (Time)                1.17      0.13     1.02      1.97

  Receivable Turnover (Time)            4.77      4.71     6.65      6.70

  Collection Period (Day)               75        77       54        54

  Inventory Turnover (Time)             3.84      3.64     3.24      4.24

  Inventory T/Period (Day)              94        99       111       85

  Account Payable Turnover (Time)       6.97      4.78     6.90      7.74

  Payment Period (Day)                  52        75       52        47

  Cash Cycle (Day)                      117       100      113       92

  Profitability Ratio                                                

  Gross Profit Margin (%)               25.03     26.13    29.10     30.49

  Profit from operation (%)             9.53      17.10    20.37     22.26

  Other profit (%)                      0.46      1.14     (0.37)    1.04

  Cash (%)                              218.49    17.26    72.98     111.19

  Net Profit Margin (%)                 7.78      12.69    14.81     18.24

  Return on Equity (%)                  13.60     22.54    28.70     35.54

  Efficiency Ratio                                                   

  Return on Total Assets (%)            10.39     16.06    22.41     28.61

  Return on Fixed Assets (%)            71.18     117.75   177.51    252.29

  Assets Turnover (Time)                133.68    126.58   151.31    156.86

  Financial Ratio                                                    

  Debt to Equity (Time)                 0.36      0.44     0.14      0.33

  Interest Coverage (Time)              55.20     12.68    25.37     271.59

  Cash Basis (Time)                     1.72      0.33     1.58      1.79

  Payout Ratio (%)                      111.41    82.91    93.10     84.64

  Per Share (Baht)                                                   

  Book Value (Baht)                     24.43     26.41    29.72     3.34

  Earning per Share (Baht)              3.37      5.73     8.06      1.12

  Dividend per Share (Baht)             3.75      4.75     7.50      9.50

  Growth Rate                                                        

  Total Sale (%)                        5.88      14.20    (11.00)   31.77

  Cost of Goods Sold (%)                38.84     30.97    (64.42)   170.00

  Sales Revenue (%)                     12.28     3.30     22.16     12.35

  Selling & Admin Expense (%)           19.60     (5.34)   17.33     9.68

  Net Profit (%)                        (23.33)   70.22    40.60     39.34
  ------------------------------------- --------- -------- --------- --------

2) Management Discussion and Analysis

In the financial statement of Pato Chemical Industry Plc. indicated net
profit (loss) totaled 80.21, 112.78, and 157.14 million baht in 2007 –
2009 respectively. These figures represent an increase percentage of
70.22, 40.60, and 39.34 respectively.

In 2007, overall economic conditions expanded at quite a good rate
despite the fact that there were incidences and factors on many fronts
that affected both internal and external growth. These include politics,
rising oil prices, US economic problems and appreciation of the baht.

Oil prices in particular had a direct negative effect on various
production sectors, including production in the agricultural sector
which led to higher production costs and also affected consumption
expenditure, and led to a trend for reduced expansion in investment and
business. However, the overall export sector expanded by as much as 14%
in US dollar currency.

With regard to production in the agricultural sector for the year 2007,
weather conditions were conducive for agriculture. Although there was
drought and flooding in certain areas, the overall agricultural sector
was not greatly affected. As a result, this enabled the sector to expand
at about 4.3 %. Meanwhile, international demand for agricultural
products increased, leading to good agricultural prices and this became
an incentive for expansion in agricultural output.

In 2008, overall economic growth was good during the first half of the
year, despite incidences and factors on many fronts, both from within
the country and from outside the country which affected the country’s
economic system. These included domestic political problems, higher oil
prices, the US financial crisis and the appreciation of the baht.
However, the effects were not severe and proved a positive factor in
spurring economic expansion through increased exports as a result of
higher demand for agricultural products. Prices for agricultural
products were thus mostly higher, leading to an expansion in the
production sector.

However in the second half of the year, the world economy and US economy
fell into a recession as a result of a financial crisis. This led
consumers in foreign markets to have reduced purchasing power, and there
was less demand for oil. As a result, crude oil prices on the world
market fell steeply, leading to a contraction in the export sector,
adversely affecting the production sector and causing lower agricultural
product prices. In addition, continuous flooding lasting until the end
of the 4^(th) quarter, caused a decrease in domestic consumer demand.
However, in the overall picture, the agricultural production sector in
2008 expanded by 4.4% because of favorable weather conditions. Although
there was some drought and flooding in certain areas, this did not
greatly affect the agricultural sector as a whole. And even though
foreign markets had reduced demand for agricultural products,
agricultural product prices were good during the beginning of the year,
leading the price index for farm goods to expand by as much as 23.90%
from the previous year, and thus became an incentive for farmers to
continue expanding production.

In 2009, the world economic recession which began in 2008 continued to
have a severe effect on Thailand's economy, resulting in lower growth
rate in 2009 and weaker purchase power of overseas consumers. This
affected the structure of the Thai agricultural production which heavily
relies on exports. In addition, the baht continued to appreciate, from
an average of 35 baht per dollar at the beginning of 2009 to an average
of 33 baht per dollar at the end of the year. As a result, Thailand's
competitive advantage decreased in the global market, leading to a
reduction in the manufacturing sector.

While the global crude oil prices were fluctuating, causing production
costs to rise, the inflation rate in 2009 was on the downward trend,
which is a mere reflection of the population's decreased consumption and
spending, and in no way stimulated the production the sector. On the
upside, the 2009 weather conditions were kind to farming. Although short
flooding occurred in some areas, its impact on production was not
severe.

Meanwhile, the government launched several measures and policies such as
provision of water sources, the price guarantee scheme, and the income
guarantee scheme, which supported production as well as the selling
prices in the agricultural sector. As a result, the prices of several
agricultural products in 2009 were satisfactory despite being lower than
in 2008 during which the prices were extremely high. This led to a
year-on-year decrease of 0.23% in agricultural gross domestic product
(GDP).

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

Sales revenue during 2007 – 2009 was 620.54, 758.03, and 851.62 million
baht respectively, representing increases of 3.30%, 22.16%, and 12.35%
respectively.

Total revenue during 2007 – 2009 was 632.17, 761.44, and 861.55 million
baht, representing increases of 4.31%, 20.45%, and 13.15% respectively.

Cost of Sales in 20067– 2009 was 458.42, 537.41, and 592.00 million
baht, representing increases of 1.79%, 17.23%, and 9.91% respectively.
(For comparison with 2009, new amount for 2008 is 538.61 million baht)

The company adjusted some categories of 2007 financial statements to be
in line with that of 2008 and the adjustment did not affect net profit
or shareholders’ equity. (Amount before adjustment was 459.56 million
baht) In 2009, the company adjusted some categories in balance sheet of
2008 again to be in line with financial statements of 2009. The
adjustment did not affect net profit or shareholders’ equity but
affected the previous analysis in 2008. For better understanding, the
2008 financial statements analysis is used as standard. There will be
small change on expenses.

  In 2007, the overall economy registered a 4.3% growth in gross
production in the agricultural sector. Normal conditions were returning
to the overall agricultural sector due to more favorable weather
conditions in 2007 than in the year before. Although there was drought
and flooding in certain areas, domestic and international agricultural
prices were good. This became an incentive for farmers to expand
cultivation of farm goods such as rice, sugarcane, palm oil and cassava,
despite higher production costs caused by rising oil prices and which
adversely affected foreign trade balance. However, when considering the
value of agricultural exports during the period from January to October
2007, it was found that in terms of Thai currency, export value rose by
as much as 2.1%. And in terms of US dollar currency, export value rose
by as much as 17.7% compared to figures for the same period the year
before. The increased exports were in many farm goods such as rice,
cassava and palm oil products.

More than 50% of the company’s total products sold, is used in rice
cultivation. Thus overall volume of rice output in 2007 rose 5.7% from
the previous year and prices for pre-milled rice were good on average.

The above factors led total sales to increase by 19.81 million baht, or
by 3.30%. These comprised a 7.33% rise in sales of herbicides, with a
0.43% rise in liquid form herbicide, a 6.18% rise in granule herbicide
and a 41.91% rise in powder herbicide. This led overall total sales to
increase by 12.43%.

Total number of insecticide units sold fell by 3.12%, with the liquid
form, granule form and powder form dropping 5.53%, 2.57% and 7.58%
respectively, leading to overall sales to fall by 6.92%.

Total units of fungicides sold increased by 1.93%, with the liquid form
rising by 11.62% and powder form falling by 10.16%, causing total
overall sales to fall by 1.88%.

Total number of units sold for acaricides fell by 16.99% and total sales
fell by 9.25%.

The company is aware of the effects from many negative factors which
caused total sales to rise by only 3.30%. The company thus devised a
market strategy and placed emphasis on promoting sales on all fronts at
times appropriate to current conditions, in order to maintain market
share and stimulate customer demand. The problem of rising global oil
prices and the decrease in imports of needed raw materials resulting
from China’s move to solve the problem industrial factories unfriendly
towards the environment, led to higher raw material prices. Thus,
forward purchase of raw materials for future market demand was very
important, and could also reduce adverse effects from the rising raw
material prices, even though it increased the burden of storage costs.
Another factor is the appreciation of the baht, with the baht exchange
rate at 36 baht to the dollar in 2007 and which has now appreciated to
about 33 baht to the dollar. Even though raw material costs in dollar
value rose, the appreciated baht helped ease the serious adverse effect
from high raw material prices. Thus, average prices for raw material in
terms of the baht currency, did not rise too much and the value of raw
material purchase orders rose in the 4^(th) quarter by as much as 52.18%
compared to figures for the same period the previous year, and value of
overall raw material purchase orders rose by 30% compared to the
previous year. This led to an increase of 59.51 million baht in
inventory or a rise of 61.89%. With regard to labor and production cost
management, the company set a policy which emphasised utmost economic,
efficient and cost effective management in light of current economic
conditions. There was a slight increase in the number of workers in 2007
in order to meet production process needs. This led to a rise of 10.16%
in production labor costs, and a 10.49% rise in production costs
compared to the previous year. The increased effects from rising oil
prices led to a rise in transport expenses, expenses for electricity
used in production, and higher expenses for packaging and machinery
repair . Also recorded was 1.22 million baht for adjusted depreciation
value of an unused factory in Min Buri . The rise in raw materials
costs, labor costs and production costs was the result of an increase in
total sales amid highly competitive market conditions. In light of these
conditions, the 4^(th) quarter post-flood period during which normal
conditions were returning to the agricultural sector, saw production and
sales costs rise by 1.51% and 2.04% respectively and initial profits
rose by 7.06% compared to the previous year.

Other income, regardless of forex gain (loss) and the reverse of bad
debt from loan, it was found that other income in 2007 decreased by 1.01
million baht or 25.01% as a result of a rise in income from interest
receivable and investment in debt instruments. Other income from selling
old vehicle decreased and led to the decrease in total income.

In 2008, the world economic recession had a severe effect on Thailand’s
economy during the 3^(rd) and 4^(th) quarters. In addition, domestic
factors such as political problems and effects from flooding led to less
demand in foreign markets and thus a contraction in the export sector.
Product prices, which were once good, were on such a downward trend that
there was no incentive for expanding production in the agricultural
sector. Other production sectors were also affected as seen by increased
unemployment resulting from industrial workers being laid off. As a
consequence, the gross domestic product (GDP) in the first half of the
year did not increase greatly as had been expected. The financial crisis
in the second half of the year caused the GDP to expand by a mere 2.26%.

Agricultural product prices during the period January to June 2008, rose
greatly due to the continued increase in demand for agricultural
products. This was because many countries encountered natural disasters
leading to a shortfall in many agricultural products, particularly a
shortfall in rice on the global market. At the same time, alternative
energy agricultural products such as palm oil, cassava and animal feed
corn, were in high demand in foreign markets because of rising crude oil
prices on global markets. These above factors led total sales in the
first half of the year to rise by 189.61 million bah or increased by
57.56% compared to the same period in the previous year.

Meanwhile, the financial crisis in the second half of the year led to an
economic recession, causing a reduction in total sales in the second
half of the year when compared to the previous year. However, overall
total sales for the entire year still rose by 137.49 million baht or by
22.16% as a result of an average increase of 15.70% in the sale of all
types of chemical pesticides. However, as the effects of the economic
crisis continued to be felt, it became necessary to lay down a marketing
strategy and emphasize on sales promotion in all areas as was suitable
to current conditions, in order to stimulate product demand and maintain
market share.

Because of the problem of oil prices fluctuating to their highest level
and lowest level on the world market, raw material orders had to be
managed to ensure sufficient level and ability to accommodate market
demand which was on a downward trend. Moreover, economic problems caused
fluctuation in the value of the baht, leading to higher raw material
prices in the first half of the year and lower raw material prices in
the second half of the year.

Therefore, the value of raw material purchase orders was higher for the
first half of the year than for the second half of the year. A slow-down
in market demand led to a slow-down in raw material procurement, in line
with the current market conditions at the time at the time at the time
and avoid excessive inventory. As a result, raw material purchase orders
in 2008 rose by 36 million baht or by 7.32% compared to the previous
year. The total value of raw materials purchase orders rose by 6.60%
compared to the previous year and the value of inventory rose by 20.86
million baht from the previous year, or by 13.40%. As for labor cost
management and other production expenses or income, the company set a
policy that emphasized the most economic, cost-effective and efficient
management under the current economic conditions at the time. As a
result, in 2008 there was only a slight increase in the number of
workers to meet production process needs. Thus, labor costs for
production rose by 19.91% and other production expenses rose by 2.45%
compared to the previous year. This increase came from labor costs,
overtime costs and worker rewards as well as employee benefits. As for
the increase in other production costs, this came from higher transport
expenses, higher electricity expenses for production, material waste
expenses and expenses for various other services. The increase in the
expenses for raw materials, labor and other production expenses was the
result of higher total sales, amid high competition on the market
coupled with a slow-down in demand on the market, making it necessary to
maintain market share. Thus, production and sales costs rose by 20.64%
and 17.23% respectively. The rate of this rise however, was still lower
than the rise in total sales with initial profits rising by 36.08%,
compared to the previous year.

As for other income apart from foreign exchange income, income from bad
debt reversal and loans, it was found that in 2008 there was 3.41
million baht in other income, representing an increase of 0.40 million
baht or 13.22%. This came from increased investment in debt instruments,
increase in interest receivable, income from sale of old vehicles and
miscellaneous.

In 2009, as the world economy continued to go into recession, the growth
rate of Thailand’s economy went down. Both domestic and overseas factors
affected the agricultural production structure immensely. Exports
decreased inline with product prices which created no incentive for
expansion of production. As a result, total sales in the first half of
the year amounted to 446.15 million baht, a drop of 72.87 million or
14.04% when compared with the previous year.

In the second half of year, despite the impact from the financial
crisis, the weather conditions were very beneficial to farming. Together
with the ongoing outbreaks of Brown Plant Hoppers and Blast Diseases in
rice fields, these factors led to a rise in the demands for the
company’s products. Consequently, total sales in the second half of the
year amounted to 405.47 million baht, a decrease of 166.45 million baht
or 69.64%, resulting in the sales for the entire year of 815.62 million
baht, a rise of 93.58 million baht or 12.35%.

Sales costs of 2009 amounted to 592 million baht, an increase of 53.39
million baht or 9.91%. It is noted that the risen sales costs were lower
than the increased sales, showing effectiveness in cost management.
During the first half of the year, the company slowed down its raw
material purchases due to remaining inventory and for the purpose of
maintaining a balance between the amount of raw materials and market
demands. This caused the amount of raw material purchases to fall down
by 39.65% year-on-year. However, market demands for the company’s
products increased drastically in the second half of the year, causing
the raw material purchases to go up by 67.11% in order to sufficiently
support the market demands. However, the total purchases for the entire
year still dropped by 9.64% compared with the previous year. The prices
of raw materials tended to fall between downward and stable, and last
year’s raw material costs were higher than those as of now. As for labor
cost management and other production expenses, the company set a policy
that emphasized the most economic, cost-effective and efficient
management under the current economic conditions at the time. As a
result, in 2009 there was only a slight increase in the number of
workers to meet production needs. Thus, labor costs for production rose
only by 5.73% and other production expenses rose by 6.23% compared with
the previous year. The increase in labor costs for production is due to
labor costs, overtime costs and worker rewards as well as employee
benefits. Meanwhile, the increase in other production costs is due to
transport expenses, electricity and water fees and material waste
expenses. Such increases are a result of higher total sales, amid high
market competition coupled with increased market demands, making it
necessary to maintain market share. Thus, production and sales costs
rose by 4.43% and 9.91%, respectively. Such increases in costs, however,
are still lower than the rise in total sales with initial profits
increasing by18.32%, compared with the previous year.

Other income in 2009 totaled 5.82 million baht, a decrease of 2.41
million baht or 70.49% due to increased investments in debt instruments
and income from sales of old vehicles.

 Table showing rate of increases (reduction) during 2007 – 2009

+-----------+-------------------+------------------+------------------+
|           |  PATO             |                  |                  |
+-----------+-------------------+------------------+------------------+
| Year      | Sales Revenue     | Total revenue    | Cost of Sale     |
+-----------+-------------------+------------------+------------------+
| 2007      | 3.30              | 4.31             | 1.79             |
+-----------+-------------------+------------------+------------------+
| 2008      | 22.16             | 20.45            | 17.23            |
+-----------+-------------------+------------------+------------------+
| 2009      | 12.35             | 13.15            | 9.91             |
+-----------+-------------------+------------------+------------------+

Sales and General Administrative expenses during 2007-2009 totaled 56.02
, 66.19, and 70.06 million baht, representing increases (reductions) of
(39.85%), 18.15, and 7.80 respectively, not including interest payable
or finance cost. New amount in 2008 for comparison with 2009 is 64.99
million baht.

Interest payable or finance cost in 2006 – 2008 totaled 2.55, 4.40, and
6.22 million baht, representing increases (decrease) of 72.86%, 41.27,
and (85.02) respectively.

The company adjusted some categories in 2007 financial statements to be
in line with that of 2008 and the adjustment did not affect net profit
or shareholders’ equity. (Amount before adjustment was 54.89 million
baht)

In 2007, sales and management expenses totaled 54.01 million baht,
representing a decrease of 38.24 million baht or a drop of 41.45%
compared to the previous year. In 2006, the company recorded 39.45
million baht in damages from a lawsuit as doubtful debt. However, if
this doubtful debt is not taken into consideration, sales and management
expenses in 2006 would total 52.80 million baht, and when compared to
the year 2007, this would represent an increase of 1.21 million baht or
2.30%. As a result of the increase in total sales, the was a rise in
various costs particularly those involving transport vehicles, fuel and
goods transport, as well as costs for stimulating sales in order to
maintain market share, including commission fees, product permit fees
and expenses for sales promotion.

With regard to doubtful debts from trade debtors, it was found that in
2007, this totaled 0.06 million baht compared to 0.08 million baht in
2006. This represents a reduction of 0.02 million baht or 25% and
reflects the company’s cautious policy in consideration of each new
client and on credit control, leading to a reduction in the fraction of
doubtful debts and thus a very low ratio to trade debtors.

As for profit (loss) from exchange rates in 2007 totaling 3.63 million
baht, this showed an increase of 2.31 million baht or 174.35% compared
to the previous year. This resulted from the appreciation of the baht
during 2007 which saw the baht trading at 36-33 baht to the dollar and
with the baht still continuing to appreciate. The company perceived the
effects from the baht fluctuation and undertook a risk prevention policy
by undertaking T/R to prolong payment of foreign debts. This resulted in
actual profit of 3.69 million baht from exchange rates and (0.07)
million in unrealized exchange rate loss resulting from exchange rate
adjustment by T/R payables left at year end.

Interest payable in 2007 totaled 4.40 million baht, reflecting an
increase of 1.86 million baht or 72.86% compared to the previous year.
This came from appropriate management of T/R payables in light of the
financial situation and baht value at the time, by extending payment
term and thus leading to increased interest payable burden.

Corporate tax in 2007 totaled 33.12 million baht , reflecting an
increase of 20.20 million baht or 156.36%. There was no record of
doubtful debts from lawsuit damages this year, which had caused net
profit to fall in 2006. And the change in corporate tax rate from 25% to
30% of net profit , led to an increase in corporate taxes for the year
2007.

In 2008, expenses for sales and administration are shown in the 2007
financial statement corresponding with the 2008 financial statement,
with sales and administrative expenses listed in the following separate
categories.

  -------------------------- -------------------- ------------------------
                             2008                 2007

  Sales expenses             26,362,818           20,563,922

  Management expenses        24,629,541           20,834,020

  Management remuneration    15,197,250           14,626,699

  Total expenses             66,189,609           56,024,641
  -------------------------- -------------------- ------------------------

When these expenses are considered as separate items, sales expenses
rose by 5.80 million baht or by 28.20% compared to the previous year. It
was found that the big increase in total sales led to higher expenses
for marketing such as higher commission costs, increased travel and
transport expenses and higher expenses for sales promotion in order to
stimulate and create incentives for market demand. Management costs,
meanwhile rose by 3.80 million baht or by 18.22% compared to the
previous year. This came mainly from bad debts of trade debtors in 2008
totaling 2.15 million, whereas in 2007, such bad debts totaled only 0.06
million baht. This was caused by economic problems which led to poor
liquidity. The company thus was very careful in releasing credit and
considered each customer’s suitability. Anyhow, the bad debt ratio was
still very low.

Profit (loss) from exchange rate in 2008 totaling (0.73) million baht
and totaling 3.63 million baht in 2007, is shown as income. When these
figures are compared against each other, it shows a fall of 4.36 million
baht or a fall of 120.21%. This came from adverse effects from the
sub-prime economic crisis which caused extreme fluctuations in the
exchange rate during the year. In addition, there were effects from a
loss of confidence in business and internal political problems. This
caused the baht to weaken and the exchange loss in the 3^(rd) and 4^(th)
quarters. Anyhow, the company perceived the effects from the fluctuation
in the value of the baht and therefore, undertook a risk prevention
policy by making T/R to extend payment term of foreign debts and making
in advance Forward Contracts in order to minimize future exchange rate
risks. As a result, there was 0.53 million baht registered as loss that
had not yet been incurred following an adjustment in the exchange rate
as at the end of the year for remaining T/R payables.

As for expenses for CSR in 2008, the company had a policy to give back
to society by giving a total of 0.51 million baht in the 4^(th) quarter
for 5 schools in need in Bangkok. The money was used to support the
purchase of educational equipment which included computers, audio-visual
equipment, education equipment and playground equipment, thus increasing
donation expenses by 0.62 million compared to the previous year.

Legal expenses rose by 0.66 million baht or by 291.24% due to a lawsuit
undertaken by the company which was exercising its right as guarantor
for 34.22 million baht, against the Plastic Precision Industry Co. Ltd.

In 2007 and 2008, management remuneration was re-categorized in the
account books, with management remuneration expenses rising 0.57 million
baht or 3.90% due to an increase in meeting allowance and management
remuneration.

Finance costs or interest payable in 2008 totaled 6.22 million baht and
in 2007 totaled 4.40 million baht, showing an increase of 1.82 million
baht or a rise of 41.27% compared to the previous year. This was due to
management of foreign creditors by making T/R suitable to the financial
situation and baht value at that time. In 2008, the number of T/R
creditor payments totaled 14.82 million dollars. This extended term of
payment increased interest payable burden.

Corporate tax in 2008 totaled 38.85 million baht and in 2007 totaled
33.11 million baht, representing an increase of 5.74 million baht or a
rise of 17.32%, with an increase in total net profit before taxes in
2008. It was government policy to help the private sector and thus the
government announced a reduction in corporate tax rate from 30% to 25%
of net profit. This became a positive factor for corporate income in
2008. In addition in 2007 a contingent liability was reversed and added
back And as the company had already set aside full reserves for
contingent liabilities, this was a positive factor for corporate income
in 2007. Thus these above factors helped corporate taxes to rise only
slightly.

In 2009, selling and administrative expenses have been reclassified in
the 2008 financial statements to conform to those of 2009 by separating
selling expenses from administrative expenses as follows :

  -------------------------- -------------------- ------------------------
                             2008                 2007

  Sales expenses             38,680,290           32,283,362

  Management expenses        26,145,121           27,535,102

  Management remuneration    5,236,000            5,172,829

  Total expenses             70,061,411           64,991,293
  -------------------------- -------------------- ------------------------

Selling expenses amounted to 38.68 million baht, a rise of 6.40 million
baht or 19.81% compared to the previous year. This is due to increased
sales as a result of increased marketing expenses such as commission
fees, freight expenses and promotional expenses. Administrative expenses
totaled 26.14 million baht, a year-on-year drop of 1.39 million baht or
(5.05)%. This is a result of an offset between some increased expenses
such as employee benefits, and some decreased expenses such as doubtful
accounts which decreased by 2.12 million baht or (98.70)% and a
recoverable amount from doubtful accounts of 1.02 million baht. The
company has a policy to be cautious in giving loans to customers and in
considering the suitability of each customer under the current economic
circumstance. This results in a very small portion of doubtful accounts
in each year, which shows the company’s effective management of accounts
receivable.

Gain (loss) on foreign exchange of 2009 amounted to 4.11 million baht, a
hike of 4.84 million baht or 661.19% compared with the previous year,
shown under the caption of Revenues. The ongoing economic recession is
responsible for the volatility of foreign exchange rates. The baht
continued to appreciate, from an average of 35 baht per dollar at the
beginning of 2009 to an average of 33 baht per dollar at the end of the
year. This led to realized gain on exchange of 3.33 million baht and
unrealized gain on exchange of 0.78 million baht based on adjustment of
exchange rates as at year end on T/R and outstanding overseas accounts
payable.

Remuneration to senior executives has been reclassified in 2009 and
2008. The remuneration went up by 0.06 million baht or 1.22% due to an
appointment of one additional independent committee member.

Financial expenses or interest in 2009 amounted to 0.93 million baht, a
year-on-year drop of 5.29 million baht or (85.02)% due to the
appreciation of the baht. The company managed its payment to T/R and
overseas accounts payable to suit the financial situation and the
appreciation of the baht in order to maximize the company’s interest at
the moment by complying with the payment terms. This results in low
interest.

The above operational results led to gross profit during 2007-2009 to
total 162.12, 220.62 , and 259.62 million baht respectively,
representing a percentage of 26.13, 29.10, and 30.49 respectively. (The
2008 new amount of 219.42 is used for the comparison with 2009)

The company adjusted some categories in 2007 financial statements to be
in line with that of 2008 and the adjustment did not affect net profit
or shareholders’ equity. (Amount before adjustment was 160.98 million
baht)

Operational profits in 2007–2009 came to 106.10, 154.43, and 189.56
million baht respectively, representing percentage of 17.10, 20.37, and
22.75 respectively.

Net profits in 2007 – 2009 came to 80.21, 112.78, and 157.14 million
baht, or a percentage of 12.69, 14.81, and 18.24 respectively.

Return on equity during 2007 – 2009 were 22.54%, 28.70, and 35.54
respectively.

In 2007, the overall economic situation improved amid various conditions
affecting economic expansion. However, there was increased expansion in
the agricultural sector due to more favorable weather conditions
compared to the year before. Domestic and export prices for agricultural
produce were good particularly for rice, cassava, palm oil products,
sugarcane and rubber. This increased farmers’ purchasing power and led
to an 3.30% increase in total sales for 2007.

Meanwhile, factors causing higher production costs such as rising oil
prices in the global market and the problem of decreased volume of raw
materials resulting from China’s move to solve the problem industrial
factories unfriendly towards the environment, led to higher raw material
prices. Forward purchase of raw materials for future market demand was
also still necessary, and thus the company could not avoid the burden of
storage costs. The appreciation of the baht was thus a positive factor
helping to lessen the effect of higher raw material prices. Meanwhile,
the average increase of 10% for labor and production costs amid slightly
improved economic conditions, led the company to set a policy for
highest economic, efficient and cost-effective management, in order to
be competitive cost-wise and to effectively maintain market share.
Production and sales costs saw a rise of 1.51% and 2.04% respectively,
but this reflected a lower rate of increase than the rise in total
sales, leading to initial profit rate to be 25.94%, an increase from the
previous year. Sales and management expenses in 2007 rose by 1.21
million baht or 2.30%, not taking into account doubtful debts that arose
from lawsuit damages incurred in 2006. The rise in total sales led the
company to set an investment management policy for sales expenses, to
ensure economy and cost-effectiveness. Company strategy and sales
promotion were aimed as an incentive for clients, leading to a rise in
total sales for the 4^(th) quarter. The increase in expenses came from
an increase in sales and management expenses and which rose at a lower
rate than the rate of increase for total sales. This led operational
profit to rise to 17.10% from last year.

Profit (loss) from exchange rate rose to a very high level due to
economic conditions in the US which strengthened the baht. And in 2007
when the exchange rate of the dollar to the Baht was 36-33 baht to the
dollar, this became a factor creating exchange profits.

Interest payable was affected by baht exchange rate fluctuations,
through managing T/R payables and exchange risk management by extending
payment term in line with the situation of the baht at the time. In
addition, raw material purchase orders rose considerably in 2007 and
this resulted in the burden of increased interest payable.

Corporate tax in 2007 rose by 156.36% as a result of company operations.
Through effective production, sales and management and no doubtful debts
from lawsuit damages, total sales rose, while production and sales costs
including other expenses, enabled income to increase. As a result, the
company’s net profit came to 12.69% of total income, an increase from
the previous year. This also created increased corporate taxes. Also in
2007, the corporate tax rate was adjusted from 25% of net profit to 30%,
thus creating higher corporate taxes. With a rise in the company’s net
profit, shareholder return rate was at 22.54%, an increase from the year
before.

In 2008, the country’s overall economy experienced a slow-down with GDP
growth rate at 2.26% as a result of the various factors on many fronts
mentioned above. In the first half of the year, the various crises that
took place such as the US financial crisis which turned into a global
economic crisis, rising crude oil prices on the global market, and
natural disasters in foreign countries, caused a reduction in
agricultural products. This instead proved positive for Thailand by
increasing foreign demand for Thai agricultural products and thus higher
prices for the farm goods. Alternative energy farm goods were also in
higher demand as oil prices rose. Total sales in the first half thus
increased by as much as 57.50% compared to the same period in the
previous year.

In the second half of the year, the overall global economy was affected
by the various crises mentioned above, leading to a severe reduction in
global demand. World oil prices tumbled because of a drop in actual
consumption. This also caused a continued contraction in exports.
Production in the country’s agricultural sector also dropped. Prices for
agricultural products which were once good in the beginning, fell
sharply. There were also other domestic factors. These included
political factors, flooding and economic factors, leading total sales to
fall by as much as 17.90% compared to the same period of the previous
year.

Despite this, operational results for the entire 12 months were still
good, with total sales increasing by as much as 22.16%, and from the
above-mentioned factors, average raw material costs rose by 6.60%
compared to the previous year. At the same time, demand on the market
continued to fall and competition on the market was very high. Thus
pricing strategy was necessary and unavoidable in order to maintain as
much market share as possible. Efficient cost management enabled the
company to compete with its rivals on the market. The company undertook
a policy for economic and cost-effective management in the current
situation, leading labor costs to rise by 19.91% and other production
expenses rose by only 2.45% compared to the previous year. Production
costs and sales costs rose by 20.64% and 17.23% respectively, but which
was still a lower rate than the rise in total sales. This caused initial
profits to be equal to 29.10% of net total sales, representing an
increase from the previous year.

Selling and administrative expenses in 2008 were reclassified in the
financial statements, so that it would correspond with 2007 and a
comparison could be made, including with management remuneration which
it can be concluded that in 2008, there was an increase of 10.16million
baht or a rise of 18.14%, not including the reversal of loan bad-debts
and foreign exchange profits shown under income in 2007. With the rise
in total sales amid the economic slow-own, the company adjusted its
strategy for management of investments in sales expenses in order to
ensure utmost efficiency, emphasizing on sales promotion to stimulate
the most incentives in customers, particularly in the 3^(rd) and 4^(th)
quarters. However, the increase in expenses for sales and management,
including management remuneration was still at a lower rate than the
rise in total sales. This made operational profit rate in 2008 to be
equal to 20.37%, reflecting an increase from the previous year.

Profit (loss) from exchange rate meanwhile rose sharply due to the US
sub-prime crisis. This severely affected the Thai economy. There were
fluctuations in the baht, with the baht strengthening in the first half
of the year and weakening in he second half of the year as a result of
lack of business confidence. Foreign investors thus sold off a lot of
stocks and this was thus the factor for the exchange rate loss.

As a result of the fluctuation in the baht exchange rate, the company
undertook a policy to management damage risk from the baht’s value.
Thus, making it necessary to continually monitor the value of the baht.
There was management of payment to foreign creditors by expanding
payment term to correspond with the baht value situation at the time and
also in 2008, there was an increase in raw material purchase orders.
These were factors increasing interest payable thus increased, which in
this case, means financial expenses.

Corporate tax meanwhile rose only slightly compared to net income before
tax. This was because in 2008, there was a change in the corporate tax
rate from 30% of net profit to 25%. Also in 2007 there was a reversal of
loan bad-debts which the company had already set aside reserves for,
leading to an increase of 17.32% in corporate taxes.

As a result of these main factors, the company had good operational
results leading to a shareholder return of 28.70, an increase from the
previous year.

In 2009, The ongoing economic recession led to lower growth rate of GDP
despite a rise in exports during the fourth quarter. Many factors
mentioned above are also attributable to such decrease. During the first
half of the year, the global financial crisis had an ongoing severe
effect on both Thailand and overseas, causing the world market demands
for agricultural products to lower, which led to lower domestic
agricultural production. The selling prices of agricultural products
slightly decreased yet are still satisfactory. However, due to the
decrease in demand, sales in the first half of the year dropped. As the
financial crisis continued, the outbreak of Brown Plant Hoppers and
Blast Diseases intensified. This results in an increase in demands for
the company’s products, which consequently led to a drastic hike in
sales during the second half of the year, leading to satisfactory
operating results for the entire year of 2009, with a 12.35% rise in
sales. Due to the factors mentioned above, management policies in terms
of production and the high market competition, especially in terms of
pricing, it is necessary for the company to maintain its market share.
Effective cost management is the solution that would enable the company
to compete in the market. As a result, the company set a policy that
emphasized the most economic, cost-effective and efficient management
under the current economic conditions at the time. This led to increases
of 4.32%, 5.73% and 6.23% in material costs, labor costs and overhead
costs, respectively. Increases of 4.43% and 9.1% in cost of production
and cost of sales, respectively, are due to the rise in sales. The
increase of costs is still lower than the increase in sales, resulting
in initial profits of 30.49% of the total net profits, a 18.32% rise
compared with the previous year.

Selling and administrative expenses increased by 5.07 million baht or
7.8% in 2009 due to a rise in sales. Consequently, the company
maintained its economic and cost-effective policy in investments and
selling expenses to maximize income by emphasizing promotional
activities to stimulate demands, especially during the third and fourth
quarter. The increase in selling and administrative expenses along with
remuneration to senior executives is lower than the rise in sales,
leading to an increase of 22.75% in operating profits of 2009, compared
with the previous year.

Gain (loss) on exchange increased due to the appreciation of the baht,
resulting in a positive effect on gain on exchange and lower material
costs. It also had a positive impact on payment to overseas and T/R
accounts payable under the financial condition and the value of the baht
at the time. As a result, the company was able to comply the terms of
payment, saving the burden of interest payment which decreased financial
expenses substantially.

Corporate income tax payable increased slightly by 2.57 million baht or
6.61%, compared with the previous year. In 2009, there was a tax credit
as a result of a lawsuit amounting to 34.22 million baht, and payment of
debts for which the company made a full allowance totaling 10.05 million
baht. Such transactions slightly increased corporate income tax payable.

Due to the factors mentioned above, the company had satisfactory
operating results, leading to increases of 18.24% and 35.54% in net
profits and return on shareholders’ equity, respectively, compared with
the previous year.

Total assets in 2007-2009 amounting to 532.51, 473.94, 624.52 million
baht respectively, marked an increase (decrease) at a percentage of
14.20, (11.00), and 31.77 respectively.

Total liabilities in 2007-2009 amounting to 162.75, 57.91, 156.34
million baht, marked an increase (decrease) of 30.97%, (64.42), and 170
respectively.

Shareholder equity in 2007-2009 amounting to 369.76, 416.04, and 468.17
million baht, marked an increase of 8.10%, 12.52%, and 12.53%
respectively.

In 2007, with total sales revenue increasing 3.30% in 2007, this led to
a decrease of 85.46% in cash flow from operations. Liquidity ratio fell
from 3.70 in 2006 to 2.81 in 2007. Quick ratio fell from 2.27 in 2006 to
1.84 in 2007. Cash liquidity ratio fell from 1.17 in 2006 to 0.13 in
2007. Average debt collection period increased from 75 days in 2006 to
77 days in 2007. Product sales time increased from 94 days in 2006 to 99
days in 2007. Debt payment period increased from 52 days in 2006 to 75
days in 2007, making the cash cycle equal to 100 days.

An analysis showed a downward trend in the liquidity ratio due to a rise
in total sales in the 4^(th) quarter of 2007. This caused an increase of
5.08% in the number of remaining trade debtors. And due to factors
affecting raw material procurement, the company had to import raw
materials in order to sufficiently meet market demand. Thus there was an
increase in raw material purchase orders in the 4^(th) quarter leading
to an increase of 61.85% in inventory. At the same time, the number of
account payables and T/R payables rose by 55.63%. Also, there was a rise
in rotating debts comprising income tax and unpaid expenses which rose
by 184.70%. Due to the above reasons, rotating assets increased by
20.08% while rotating debts were up by 30.80% compared to the previous
year. This thus reflects a downward trend in overall liquidity ratio
including an increase in the average debt collection period, product
sales period and debt payment period. This led to a decrease in cash
flow from operations.

Cash flow from investment activities fell by 57.52% compared to the
previous year. Because the company invested 32 million baht in temporary
financial investment purchasing a small number of additional machinery
equipment, cash flow from sale of financial investments decreased.

Cash flow from financial procurement activities fell by 80.79% as a
result of purchase orders of raw materials from abroad in the 4^(th)
quarter. This led to a rise in inventory from last year. This and a
dividend payout of 52.5 million baht which was lower than last year,
caused net cash and cash-equivalent items to decrease from the previous
year by 29.98 million baht or 457.96%.

Consideration of investment structure showed debt to shareholder ratio
to be 0.44 times in 2007 from 0.36 times in 2006. Because of the
increase in T/R payables and the rise in income tax and unpaid expenses,
total debts increased by 30.97%, while shareholders rose by 8.10%, thus
increasing the said ratio. However, this is still considered a very low
ratio. Interest payment ability ratio fell to 12.65 times in 2007 from
55.20 times in 2006. The ratio of return from assets and fixed assets
were 16.06 and 117.75 in 2007, up from 10.39 and 71.18 in 2006. And
rotating assets ratio equaled 126.58 times, down from 133.68 times in
2006.

The company set a policy for the most careful and effective financial
management taking into account economy and cost effectiveness, and also
reducing risks from currency exchange and burden of interest payable
that would come from extending future debt payment term and to ensure
that exchange rate and payment period is appropriate in order to derive
the most benefit. Shareholder return was also taken into consideration
and thus temporary financial investments with low risk were made. The
company also set a policy of bringing rotating debts for more investment
in rotating assets in order to attain highest return and reduce
financial costs, while at the same time providing the highest overall
return to shareholders. Also to maintain the various key ratios in order
to reduce financial risks to the minimum and ensure the company’s
highest stability. Thus, the operational results for 2007 has been shown
as above.

In 2008, as sales revenue rose by 22.16%, operational cash flow thus
increased by 515.46%, with liquidity ratio up from 2.81 times in 2007 to
7.04 times in 2008. Quick ratio rose from 1.84 times in 2007 to 3.95
times in 2008. Cash liquidity ratio rose from 0.13 times to 1.02 times
in 2008. Average debt collection period decreased from 77 days to 54
days in 2008. Average sales duration period rose from 99 days to 111
days in 2008. Average debt payment period decreased from 75 days to 52
days in 2008, thus making cash cycle equal to 113 days.

Analysis of the liquidity ratio showed an upward trend, as total sales
rose and debt collection was still at a good level. Bad debt ratio was
very low and thus the number of remaining debtors reduced by 31.28%
compared to last year.

Meanwhile, the economic crisis caused the second half of the year to
affect inventory goods which increased. Thus, the rotating ratio for
inventory rose higher. However this increase was not great and lasted
only a short period of time as demand in the 4^(th) quarter continued to
fall as a result of quicker debt collection. Thus the company had
considerable cash liquidity. As a consequence, during the period of the
baht fluctuation, payment was made to T/R payables in order to reduce
risk from the baht’s value. Because of this, loans from financial
institutions during that period fell by 76.13% and account payables
reduced by 23.67%. Income tax and expenses decreased by 31.02% compared
to the previous year. All these were the main factors causing rotating
assets in 2008 to increase and rotating debts in 2008 to fall. Because
of this, the liquidity ratio trend was good and operational cash flow
increased.

Cash flow from investment activities rose by 28.47% compared to the
previous year, with the company making a temporary financial investment
of 40 million baht from 2007 and a 2.00 million baht purchase of
additional equipment machinery, or representing a rise of 72.18% and
thus increased cash flow from investment activities.

Cash flow from financial procurement activities rose by 1805.43% due to
the fact that in 2008 raw material procurement orders from abroad rose
by 7.32%. As a result, there was more payment to foreign creditors. In
addition, there was a 66.50 million baht increase in dividend payout
from the previous year. This caused cash and cash-equivalent item to
fall by 28.80 million baht, or by 17.52%.

The investment structure consisted a debt to equity ratio equal to 0.14
times in 2008, from 0.44 times in 2007. This came from a reduction in
rotating debts composing mainly of short-term loans from financial
institutions and account payables, including a reduction in income tax
and outstanding expenses. This caused total debts to drop by 64.42%,
while the company saw a 40.60% increase in net profits. This increased
stockholders’ share by 12.52% compared to the previous year. The said
ratio is considered to be very low.

The ratio for interest payment capability rose to 25.37 times in 2008
from 12.68 times in 2007. This shows the company’s very high financial
stability. Moreover, returns on assets and fixed assets was equal to
22.41 times and 177.51 times in 2008, up from 16.06 times and 117.75
times in 2007. The rotating assets ratio was 151.31 times in 2008, an
increase from 126.58 times in 2007. This led the company to lay down a
policy for the most cautious and efficient financial management, bearing
in mind low risk and the most worthwhile returns. For temporary
investments, emphasis was on low risk and best returns. The company also
bore in mind risks from exchange rates amid the economic crisis and the
burden of payable interest resulting from the extension of debt payments
in. Thus Forward Contracts were made so that the effects from the
exchange rate would be low, with appropriate payment period for the most
benefit. The company still had the policy of bringing rotating debts for
investment in rotating assets in order to achieve the highest return and
reduce financial costs, while shareholders were still given the highest
return. Key financial ratios were also maintained to their best,
enabling the company to be the most stable and secure. Thus operational
results in 2008 were achieved as mentioned above.

In 2009, revenues from sales increased by 12.35% in line with cash flows
which went up by 87.01%. The current ratio decreased from 7.04 times in
2008 to 3.56 times in 2009. The quick ratio also decreased from 3.95
times in 2008 to 2.89 times in 2009. The liquidity of cash flow
increased from 1.02 times in 2008 to 1.97 times in 2009. The collection
period remained at 54 days in 2008 and 2009. The average sales time went
down from 111 days in 2008 to 85 days in 2009. The payment period went
down from 52 days in 2008 to 47 days in 2009, resulting in the cash
cycle of 92 days.

In analysis, the current ratio is on downward trend as a result of an
increase in sales, which caused the majority of raw material purchases
to be made during the third and fourth quarters. This increased T/R and
other accounts payable, resulting in an increase in liabilities during
such periods. As a result, the current ratio is on downward trend.
However, other ratios are on upward trend. The liquidity of cash flow
increased as evidenced by the fact that the collection period remained
the same while sales increased. The company was able to collect more
debts, resulting in reasonably high liquidity in cash. Inventory
turnover accelerated as a result of good management that balanced the
raw material purchases and market demands. This led to a 41.84% drop
from last year. The payment period also accelerated since the company’s
liquidity is satisfactory. In addition, partially due to the
appreciation of the baht, the company was able to comply with terms of
payment of T/R and other accounts payable. The abovementioned factors
increased current assets. Meanwhile, current liabilities also increased
because of the rise in raw material purchases during the third and
fourth quarters, which led to decreases in current and quick ratios, yet
remained satisfactory. Other ratios adjusted in a positive way,
resulting in higher cash flows from operating activities.

Cash flows from financing activities decreased by 65.89% because of
increases in T/R and overseas accounts payable during the third and
fourth quarters, as a result of high domestic and overseas purchases of
raw materials. In addition, the company paid a dividend of 105 million
baht, an increase from last year, coupled with a rise in cash flows from
operating activities. This led to a decrease in financing activities.

Regarding the funding structure, the debt/equity ratio increased from
0.14 times in 2008 to 0.33 times in 2009. This is due to increases in
T/R and other accounts payable as a result of raw material purchases
during the second half of the year, and higher corporate income tax
payable and accrued expenses. Although the debt/equity ratio increased
compared with last year, it is considered very low and remained
satisfactory.

Interest payment coverage surged from 25.37 times in 2008 to 271.59
times in 2009. This is due to the company’s high liquidity in cash which
resulted in lower interest. Return on total assets and return on fixed
assets increased from 22.41% and 117.51% in 2008 to 28.61% and 252.29%
in 2009, respectively. Total assets turnover went up from 151.31 times
in 2008 to 156.86 times in 2009. Return on asset management generated
revenue and net profits effectively.

Based on the current funding structure, the company set a financial
management policy with utmost caution and effectiveness, focusing on low
risk, high return. This principle of low risk, high return is applied to
even temporary investments. The company also considered risks from
foreign exchange during the recession and potential interest arising
from debt payment extension in the future. As a result, it entered into
a forward contract to prevent potential risk at a suitable period to
maximize its benefits. The company continued to invest current
liabilities in current assets to maximize return and incur the least
financial costs while still able to optimize return on networth. The
company followed its policy to maintain the best ratios for key
financial ratios and to achieve highest stability. Consequently, it led
to the operating results of the year 2009 as described above.

Key impacts on operations in 2010, the agricultural sector is expected
to improve inline with the overall economic climate, especially the
global economy which is expected to recover with a 3.1% growth, leading
to growth in consumption demands and product and services supply.
However, there will still be risk factors that could hinder growth in
agricultural production, which are the volatility of world oil prices
and volatility of foreign exchange that will affect the baht as it may
result in higher costs of raw materials. In addition, the national
financial policies may also have an impact on the agricultural sector.

Therefore, the company will consider every factor that may have an
impact on the 2010 operations, including natural disasters which affect
demands and supplies of affected countries as well as new regulations
that the government enforces which may have an effect on the company.
However, there are several positive factors for the agricultural sector
in terms of production and prices such as the income guarantee scheme
applicable to key agricultural products such as rice, tapioca and field
corn for the purpose of maintaining high level of selling prices, which
is an incentive for farmers to expand production. In addition, there are
several state measures and schemes that support agricultural products
under the regular plan or the Strengthening Thailand plan.

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 and create competitive capability.

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 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, and the
new regulation from the government to be enforced recently 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 manage forex on raw material imports, for example,
with an extension of account payable to reduce risks and the
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.

5.  Setting budget and operation plan so as to comply with the new
    regulation to be enforced .

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.