Part 3.

11. Financial Highlight

(1) Financial statements

  The company paid 670,000 THB to the auditor for audit fee. There was
  no non-audit fee.

(a) Auditor report

The auditor has reported the financial statements of Pato Chemical
Industry Public Co., Ltd. as of 31 December of 2016 - 2019 without any
conditions.

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

  PATO Chemical Industry Public Company Limited and Subsidiary

  Comparative Statements of Financial Position for the year ended
  December 31 (Unit: Thousand THB)

Separated financial statements Consolidated

  -------------------- --------- -------- --------- -------- --------- -------- --------- -------- -- --------- -------- --------- -------- --------- -------- ---------- --------
                       2016               2017               2018               2019                  2016               2017               2018               2019       

                       Amount    %        Amount    %        Amount    %        Amount    %           Amount    %        Amount    %        Amount    %        Amount     %

  ASSETS                                                                                                                                                                  

  CURRENT ASSETS                                                                                                                                                          

  Cash and cash        45,971    6.68     37,740    5.25     18,303    2.34     51,220    8.04        56,456    8.17     46,829    6.49     21,809    2.76     53,343     8.31
  equivalents                                                                                                                                                             

  Short - term         171,866   24.97    257,147   35.75    177,325   22.69    165,002   25.90       171,866   24.86    257,147   35.64    185,339   23.42    165,022    25.70
  investments                                                                                                                                                             

  Trade accounts       137,311   19.95    123,049   17.11    159,489   20.41    61,289    9.62        130,187   18.83    115,159   15.96    151,331   19.12    58,584     9.12
  receivable                                                                                                                                                              

  Inventories          199,949   29.05    159,436   22.17    281,772   36.06    226,995   35.64       203,312   29.41    163,592   22.68    290,760   36.75    234,055    36,45

  Total current assets 555,097   80.66    577,372   80.28    636,889   81.51    504,506   79.20       561,821   81.27    582,727   80.77    649,259   82.05    511,0004   79.58

  NON - CURRENT ASSETS                                                                                                                                                    

  Available-for-sale   41,289    6.00     51,675    7.19     57,110    7.31     53,281    8.36        41,289    5.97     51,675    7.16     57,110    7.22     53,281     8.30
  investment                                                                                                                                                              

  Investment in        5,000     0.73     5,000     0.70     5,000     0.64     5,000     0.78        -         -        -         -        -         -        -          -
  subsidiary                                                                                                                                                              

  Property, plant and  53,702    7.80     57,903    8.05     56,463    7.23     48,810    7.66        53,702    7.77     57,903    8.03     56,461    7.14     48,843     7.61
  equipment                                                                                                                                                               

  Intangible assets    31,957    4.64     26,014    3.62     21,426    2.74     18,746    2.94        33,346    4.82     27,903    3.87     24,002    3.03     22,362     3.48

  Deferred tax assets  1,095     0.16     1,209     0.17     4,325     0.55     6,563     1.03        1,095     0.16     1,209     0.17     4,325     0.55     6,563      1.02

  Other non - current  56        0.01     21        0.00     156       0.02     64        0.01        56        0.01     21        0.00     156       0.02     64         0.01
  assets                                                                                                                                                                  

  Total non-current    133,099   19.34    141,822   19.72    144,478   18.49    132,464   20.80       129,488   18.73    138,711   19.23    142,054   17.95    131,113    20.42
  assets                                                                                                                                                                  

  Total Assets         688,196   100.00   719,194   100.00   781,367   100.00   636,970   100.00      691,309   100.00   721,438   100.00   793,313   100.00   642,117    100.00
  -------------------- --------- -------- --------- -------- --------- -------- --------- -------- -- --------- -------- --------- -------- --------- -------- ---------- --------

  --------------------- --------- ------- --------- ------- --------- ------- --------- ------- -- -------------- ------- --------- ------- --------- ------- --------- ------- -- -- ----- --
  Separated financial                                                                              Consolidated                                                                             
  statements                                                                                                                                                                                

                        2016              2017              2018              2019                 2016                   2017              2018              2019                          

                        Amount    %       Amount    %       Amount    %       Amount    %          Amount         %       Amount    %       Amount    %       Amount    %                   

  LIABILITIES AND                                                                                                                                                                           

  SHAREHOLDERS’EQUITY                                                                                                                                                                       
  CURRENT LIABILITIES                                                                                                                                                                       

  Short - term loans    33,985    4.94    13,531    1.88    84,163    10.77   45,705    7.18       33,985         4.92    13,531    1.88    87,382    11.04   46,851    7.30                
  from financial                                                                                                                                                                            
  institutions                                                                                                                                                                              

  Trade accounts        74,237    10.79   56,595    7.87    75,400    9.65    33,093    5.20       75,371         10.90   57,152    7.92    79,591    10.06   34,951    5.44                
  payable - related                                                                                                                                                                         
  companies                                                                                                                                                                                 

  Current portion of    -         -       -         -       -         -       -         -          -              -       -         -       -         -       -         -                   
  hire-purchase                                                                                                                                                                             
  contracts payable                                                                                                                                                                         

  Accrued income tax    19,942    2.90    21,341    2.97    18,668    2.39    8,536     1.34       20,812         3.01    22,003    3.05    19,875    2.51    9,318     1.45                

  Others current        1,085     0.16    878       0.12    879       0.11    728       0.11       1,092          0.16    984       0.14    950       0.12    791       0.12                
  liabilities                                                                                                                                                                               

  Total Current         129,249   18.78   92,345    12.84   179,110   22.92   88,062    13.83      131,260        18.99   93,670    12.98   187,780   23.73   91,911    14.31               
  Liabilities                                                                                                                                                                               

  NON - CURRENT                                                                                                                                                                             
  LIABILITIES                                                                                                                                                                               

  Hire-purchase         -         -       -         -       -         -       -         -          -              -       -         -       -         -                                     
  contracts payable-net                                                                                                                                                                     

  Employee benefit      8,028     1.17    11,840    1.65    16,537    2.12    22,757    3.57       8,028          1.16    11,840    1.64    16,537    2.09    22,757    3.54                
  obligations                                                                                                                                                                               

  Total Liabilities     137,277   19.95   104,185   14.49   195,647   25.04   110,819   17.40      139,288        20.15   105,510   14.62   204,317   25.82   114,688   17.86               

  SHAREHOLDERS' EQUITY                                                                                                                                                                      

  Share                                                                                                                                                                                     
  capital-ordinary                                                                                                                                                                          
  share THB. 1.00 par                                                                                                                                                                       
  value                                                                                                                                                                                     

  Authorizes share                                                                                                                                                                          
  capital                                                                                                                                                                                   

  2015: Authorized                                                                                                                                                                          
  shared capital                                                                                                                                                                            
  142,377,000 ordinary                                                                                                                                                                      
  shares.                                                                                                                                                                                   
  --------------------- --------- ------- --------- ------- --------- ------- --------- ------- -- -------------- ------- --------- ------- --------- ------- --------- ------- -- -- ----- --

[TABLE]

  PATO Chemical Industry Public Company Limited and Subsidiary
  Statements of Income for the year ended December 31 (Unit: Thousand)

Separated financial statements Consolidated

[TABLE]

  Statement of Cash Flows for the Year Ended December 31 (Unit: Thousand
  THB)

Separated financial statements Consolidated

[TABLE]

  Statement of Cash Flows for the Year Ended December 31 (Unit: Thousand
  THB)

Separated financial statements Consolidated

  ---------------------- ----------- ----------- ----------- ----------- -- ----------- ----------- ----------- -----------
                         2016        2017        2018        2019           2015        2016        2017        2018

  Cash flows from                                                                                               
  investing activities                                                                                          

  Temporary investment   12,000      (81,000)    77,103      13,500         12,000      (81,000)    69,103      21,500
  cash increased                                                                                                
  (decreased)                                                                                                   

  Cash paid for          5,102       31          1,368       9,981          5,102       31          1,368       9,981
  investing in                                                                                                  
  short-term investments                                                                                        

  Proceeds from disposal (21,052)    (11,116)    (5,687)     (7,794)        (21,052)    (11,116)    (5,687)     (7,826)
  of assets                                                                                                     

  Cash paid for          (3,152)     (1,752)     (2,659)     (2,322)        (3,321)     (2,252)     (3,691)     (3,467)
  acquisition of                                                                                                
  equipment and vehicles                                                                                        

  Cash paid for          (17,570)    (7,257)     (14,507)    217            (17,570)    (7,257)     (14,507)    217
  acquisition of                                                                                                
  intangible asset                                                                                              

  Cash paid              -           -           -           -              -           -           -           -
  available-for-sale                                                                                            
  investment                                                                                                    

  Cash paid for          8,662       14,390      14,733      12,970         5,862       6,416       5,607       4,820
  investment in                                                                                                 
  subsidiary                                                                                                    

  Dividends income       (16,010)    (86,704)    70,351      26,552         (18,979)    (95,178)    52,193      25,225

  Net cash provided by                                                                                          
  (used in) investing                                                                                           
  activities                                                                                                    

  Cash Flows from        (15,308)    (20,484)    71,190      (38,042)       (15,308)    (20,484)    74,425      (40,114)
  Financing Activities                                                                                          

  Increase(decrease)in   (486)       (618)       (1,637)     (1,662)        (487)       (623)       (1,669)     (1,689)
  short-term loans from                                                                                         
  financial institutions                                                                                        

  Interest paid          -           -           -           -              -           -           -           -

  Proceeds from issue of (99,609)    (131,023)   (175,129)   (142,377)      (99,609     (131,023)   (175,129)   (142,377)
  common shares                                                                                                 

  Dividend paid          (114,917)   (151,507)   (105,576)   (182,081)      (114,917)   (151,507)   (102,373)   (184,180)

  Net cash used in       21,331      (8,231)     (19,437)    32,917         26,957      (9,627)     (25,020)    31,534
  financing activities                                                                                          

  ฟNet Increase          24,639      45,971      37,740      18,303         29,499      56,456      46,809      21,809
  (Decrease) in Cash and                                                                                        
  Cash equivalents                                                                                              

  Cash and cash          45,970      37,740      18,303      51,220         56,456      46,829      21,809      53,343
  equivalents, beginning                                                                                        
  of year                                                                                                       

  Cash and cash          45,970      37,740      18,303                     56,456      46,829      21,809      
  equivalents, end of                                                                                           
  year                                                                                                          
  ---------------------- ----------- ----------- ----------- ----------- -- ----------- ----------- ----------- -----------

(c) Financial Ratio 2016-2019 Separate Financial Statements Consolidated

  ----------------------------- -------- --------- --------- --------- -- -------- --------- --------- ---------
                                2016     2017      2018      2019         2016     2017      2018      2019

  Liquidity Ratio                                                                                      

  Current Ratio (Time)          4.29     6.25      3.56      5.73         4.28     6.22      3.46      5.56

  Quick Ratio (Time)            2.75     4.53      1.98      3.15         2.73     4.47      1.91      3.01

  Cash Flow Ratio (Time)        1.24     2.08      0.12      1.41         1.29     2.11      0.18      1.36

  Receivable Turnover (Time)    5.14     6.43      5.59      5.01         5.54     7.07      6.13      5.41

  Collection Period (Day)       70       56        64        72           65       51        59        66

  Inventory Turnover (Time)     2.42     2.98      2.40      1.54         2.42     3.01      2.38      1.52

  Inventory T/Period (Day)      148      121       150       234          149      120       151       238

  Account Payable Turnover      4.53     6.00      4.61      3.28         4.57     6.13      4.55      3.20
  (Time)                                                                                               

  Payment Period (Day)          80       60        78        110          79       59        79        113

  Cash Cycle (Day)              138      117       136       196          135      112       131       191

  Profitability Ratio                                                                                  

  Gross Profit Margin (%)       30.88    36.12     32.88     29.29        31.70    36.38     33.76     30.01

  Profit from operation (%)     21.12    26.21     22.56     16.04        22.00    26.60     23.53     16.94

  Other profit (%)              2.96     2.43      2.19      3.37         1.69     1.24      0.73      2.21

  Cash (%)                      105.06   105.10    8.87      212.60       103.36   102.98    13.09     197.88

  Net Profit Margin (%)         19.28    22.71     19.54     15.16        19.02    22.16     19.21     14.92

  Return on Equity (%)          25.74    33.43     26.26     15.60        25.79    33.34     26.27     15.56

  Efficiency Ratio                                                                                     

  Return on Total Assets (%)    20.63    27.70     21.01     12.23        20.62    27.57     20.89     12.10

  Return on Fixed Assets (%)    291.36   361.66    288.17    179.38       292.36   361.33    288.79    179.37

  Assets Turnover (Time)        106.97   121.93    107.55    80.65        108.40   124.39    108.77    81.08

  Financial Ratio                                                                                      

  Debt to Equity (Time)         0.25     0.17      0.33      0.21         0.25     0.17      0.35      0.22

  Interest Coverage (Time)      375.15   447.25    32.86     126.21       395.00   457.72    39.11     126.04

  Cash Basis (Time)             1.23     1.60      0.09      1.24         1.30     1.65      0.14      1.24

  Payout Ratio (%)              95.75    89.85     90.31     98.52        95.40    89.94     90.10     98.50

  Per Share (THB)                                                                                      

  Book Value (THB)              3.87     4.32      4.11      3.70         3.88     4.33      4.12      3.70

  Earnings per Share (THB)      0.96     1.37      1.11      0.61         0.96     1.37      1.11      0.61

  Dividend per Share (THB)      0.92     1.23      1.00      0.60         0.92     1.23      1.00      0.60

  Growth Rate                                                                                          

  Total Sale (%)                7.82     4.50      8.64      (18.48)      8.00     4.36      9.69      (18.85)

  Cost of Goods Sold (%)        8.84     (24.11)   87.79     (43.36)      9.40     (24.25)   93.65     (43.88)

  Sales Revenue (%)             7.82     21.60     (5.72)    (29.98)      9.52     22.31     (5.88)    (30.42)

  Selling & Admin Expense (%)   4.40     13.77     (0.89)    (24.01)      5.75     15.11     (1.77)    (24.36)

  Net Profit (%)                36.83    42.48     (19.11)   (45.00)      37.53    41.83     (18.85)   (45.11)
  ----------------------------- -------- --------- --------- --------- -- -------- --------- --------- ---------

2) Management Discussion and Analysis

The performance of PATO Chemical Industry Plc and subsidiary indicated
net profit (loss) totaled THB 194.72, 158.01, and 86.73 million in 2017
– 2019 respectively. These figures represent an increase or a reduction
%age of 41.83, (18.85) and (45.11) respectively.

In 2017, the world economy continued to grow from the previous years in
a narrow range. The International Monetary Fund (IMF) expected that the
world economy would grow 3.60% (as of October 2017) increased from 3.5%
last year. Overall, global economic growth in all regions improved
including the economy of developed countries, the United States,
Eurozone, Japan, China and the ASEAN community, excepted for Middle
Eastern countries which decelerated.

The US economy expanded 2.2% which was mainly supported by consumer
spending and private investment. The unemployment rate continued to
decrease which reflected strength of the US labor market. The inflation
was below the target, therefore, Monetary Policy Committee of Federal
Reserve Bank maintained policy interest rate of 1-1.25%.

The Eurozone’s economy (Germany, France, Italy and Spain) still
continued to expand at 2.1% due to the decreasing of political concerned
in the Eurozone, which improved domestic spending and economic
confidence in the region. The inflation remained low so the European
Central Bank extended the easing of Quantitative Easing (QE) policy
until the 3^(rd) quarter of 2018 and also decreased the purchasing
amount of government bonds.

For the Japanese economy still continued to grow at 1.5% due to the
improvement of consumption spending and private investment including the
tourism sector which expanded highly. Therefore, the easy monetary
policy was still applied due to the low level of inflation rate.

The Chinese Economy still continued expanded at 6.8% due to the growth
of domestic consumption and investment. The unemployment rate was in low
level. However, Chinese economy remained vulnerable from the risks of
high NPL ratio of commercial banks in China which affected the economic
stability of the country.

For overall ASEAN economy, Indonesia, Malaysia, the Philippines,
Thailand, and Vietnam continued to expand at 5.2%.

The economy of Thailand was affected by the global economy expanded 3.9%
in 2017 mainly due to the export growth in all export sectors and almost
every category that in accordance with the expansion of the partner
countries economic and rising value in world market. Therefore, the
export and price of the products increased. While, private consumption
expanded from the improvement of the total income in the economy,
spending stimulation measure of the government, and low inflation and
interest as well as the consumer confidence and spending. Moreover, the
private investment increased especially the investment of machine which
in line with the improvement of the export. In the meantime, the
government investment decreased, this is because the flood crisis which
decreased government procurement so the budget disbursement rate was
lower than the target. The production and transportation were improved
due to the export and delivery service of land, air, and marine
including the services and tourism sectors were expanded significantly
due to tourism revenue.

The overall agricultural economy in 2017 expanded 5.3% when compared
with 2016 due to the weather and the sufficient amount of water which
facilitated the agricultural production. The half of 2016, there was the
water crisis before the situation was improved in the second half of the
year. In contrast, the water in 2017 was sufficient and available in
important reservoirs which could be served to cultivate various types of
crops especially off-season rice in Chao Phraya River Basin, Lower
North, and Upper Central. Moreover, the weather in many regions was
favorable and, therefore, could promote the export of agricultural
products and agricultural production due to the growth of the economy of
partner countries. The major crops which had more productivity are
off-season rice, maize, factory sugarcane, factory pineapple, rubber,
and oil palm. The crops which had less productivity are wet season rice,
cassava. For wet season rice, the decreasing was the result of violent
flood in many areas where damaged by tropical storm Sonca and tropical
storm Doksuri.

As a result, the average prices of agricultural products were increased,
for example, rice, sugarcane, raw rubber sheet. In case of rice, the
increasing price was the result of flood. For sugarcane, the risen price
was in accordance with the prices in the world market. For the increased
price of raw rubber sheet, it was the result of the increasing demand in
the world market. In case of the decreased prices of products, namely,
maize, cassava, factory pineapple, and oil palm, this was because the
less demand in animal food industry and the oversupply in the market.

In 2018, global economy continued to expand in a narrow range comparing
to the past years. International Monetary Fund (IMF) was expecting that
the global economy of the present year would grow by 3.70 % (as of
October 2018). The economic situation still has to face with many risks
such as the effects from trade war between America and China, fragile
economy of some countries in many regions, and tendency of strained
global financial situation.

American economy continued to improve by growing by 2.9 % due to the
increasing of spending in the country including on consumption and
overall investment. At the same time, the labor market in America has
been very strong with low unemployment rate. The inflation rate has
moved to the expected level. This resulted in Federal Reserve Board
agreed to maintain the policy interest rate at the rate of 2.00-2.25 %.

European economy within the group of Germany, France, Italy, and Spain
grew by 2.0 % with the supporting factors from the improvement of
consumption and private sector investment. Though, there was an effect
in the first half of 2018 from the governmental transition in Italy and
Spain, there was some improvement in the second half of the year. This
brings more confidence in the economic situation.

Japanese economy grew by 1.1 % due to the low expansion of household
consumption, the increasing price of consumer goods, and natural
disasters including earthquake and severe storms, which affected tourism
and household consumption. In addition, the central bank of Japan has
decided to maintain the low policy interest rate due to the likelihood
of economic stagnation.

Chinese economy grew by 6.6%. The continuity of economic reformation and
debt restructuring policies caused slowdown in manufacturing sector,
investment, and domestic consumption.

The economic conditions in the ASEAN-5, which included Indonesia,
Malaysia, the Philippines, Thailand and Vietnam, has continuously
expanded by 5.3 %.

Regarding Thai economic condition, it is affected by the global economic
situation, which caused Thai economy to grow by 4.1 % in 2018 due to the
main factors of the likelihood of export deceleration, which caused by
the effects of trade restriction between America and China. The
exporting value in the main markets, which were China, Japan, America,
and European Union, is decreasing. This caused the decreasing in
exporting volume and product prices. However, it is still expanding well
in the overall condition. There is an investment in machines and
equipment to increase the production efficiency in order to respond to
the increasing domestic demand that followed the increasing of household
income, which relevant to the expansion of private sector consumption in
all expenditure categories. This result was part of the Government
Welfare Card project that supports household purchasing power at the
ground level to gradually improve. Due to the betterment of economic
situation, it caused the majority of business sector to invest more on
machinery, equipment, and automatic system in order to continually
improve the effectiveness of production to respond to the purchasing
order from both domestic and international. In terms of tourism, it
still continue to expand in every region, which reflects the growth in
the number of both Thai and international tourists comparing to the
previous years. For the real estate business, the expansion continues
only in Bangkok, metropolitan area, and major touristic cities, which is
relevant to the expansion of governmental construction project. However,
at the provincial level, the expansion is quite still. The inflation and
interest rate were also at low level, which was considered to be a
relaxed financial policy and supportive for the expansion of Thai
economy.

In terms of the overall conditions of agricultural economy in 2018, it
grew by 4.6 % when comparing to 2017 due to the supportive amount of
water and weather condition for agriculture, governmental, private
sector, and public policies that facilitating plantation in suitable
areas, provide water resources and quality seeds, which make farmers to
expand planting area. However, some of the crops were affected by flood
and drought in some area, which affects the agricultural products. The
types of crops with the increasing number of goods include off-season
rice, maize, sugar cane, pineapple, rubber, and palm oil. The important
kinds of crops with the decreasing number of goods include wet season
rice and cassava. Especially, wet season rice production becomes lower
due to drought in certain area of the Northeastern region in the
beginning of planting time and the delay of rain when the rice was
bearing grains. This caused damages to some of the wet season rice.

For these reasons, agricultural product price in average is rising. This
includes the price of rice, maize, and cassava. The price of rice
increased due to the higher demand in foreign market, while the rising
of maize price due to the increasing demand from animal feed industry
and measures for purchasing maize in order to maintain the stability of
the price. The price of cassava rose due to the decreasing of products,
which is inadequate for the market demand. The crop types with the
decreasing in average price include sugar cane, pineapple, rubber sheet,
and palm oil. The price of these crops decreased due to oversupply in
both domestic and international market.

In 2019, the global economy continued to expand from the end of last
year in a narrow range. The International Monetary Fund (IMF) predicted
that the global economy this year will expand by 3.0 % which is a low
level of growth. The global economy is growing weak and slowing down
caused by the decreasing of growth in the manufacturing sector. This is
in addition to many other factors, such as the trade war between the
United States and China and geopolitical problems such as Brexit,
political stability in many countries and conflicts between major
economies. These are the factors that have caused uncertainty in global
trade and economic policy, continued to cause the decline in global
export and investment conditions resulting in the low confidence in the
business sectors.

The United States economy is continually expanding, which grew by 2.40 %
as private consumption continued to expand. This is in line with
improved employment rate while industrial production and exports tend to
decrease. As the core inflation is below the monetary policy target of
2.0 %, resulting in the Federal Reserve cut interest rates.

The eurozone economy (Germany, France, Italy and Spain) grew at a low
level of 1.20 % due to the weakness of industrial production since
mid-year 2018, which has been impacted by the trade and economic
protectionism measures of the trading partner countries which slowed
down. Also, the adjustment of new greenhouse gas emission standards,
which impacts the production in the automotive category. However,
household spending continued to expand well.

Japanese economy grew by 0.9 % due to accelerated household consumption
before the consumption tax increase, which is effective from 1 October
2019. Government spending and investment has increased; however, the
exports are still in downward trend.

Chinese economy grew by 6.1 % from the support of domestic demand
including private consumption. This continued to slowdown as well as in
the private investment. The exports declined because of the trade war
between the United States and China and including the economic slowdown
of trading partner countries.

The economy of ASEAN 5 (Indonesia, Malaysia, the Philippines, Thailand
and Vietnam) grew by 4.8 %, with trade and investment significantly
slowing down due to trade protectionism measures and uncertainty of
global economic which has impacted on the economy, especially in the
production and export sectors.

The Thai economy was impacted by the global economy that occurred in
foreign countries. resulting the Thai economy in 2019 expanded 2.40% due
to the decline in exports. The main reason is due to the intense of
trade and economic protectionism measures between the United States and
China. This is resulting in the decline of value in the exports in the
main markets, which are China, Japan, the United States and the European
Union. As well as the appreciation of Thai Baht and the impact of
factors within the country's manufacturing sector in addition to the
demand of trading partner countries that are still uncertain about the
trade and investment policies. The private investment sectors have
improved in the construction sector and the continuous expansion of
machine tools sector to increase production efficiency in accordance
with the expansion of private consumption with supportive factors from
interest and inflation rates. The unemployment rate was still low and
government stimulus measures to support income and stimulate spending in
the economy. There were decreased in government investment as well as
government consumption expenditure due to budget delay. The industrial
and manufacturing sector have decreased. However, tourism sector
continued to expand significantly from key groups of tourists from
China, India, Japan, Russia and Taiwan.

The overall agricultural economy in 2019 increased by 0.5 % compared to
the year 2018 due to drought Thus, the amount of rain falls is not
enough for cultivation and shortage of water that can be used in an
irrigation system. There is crisis of water shortage as the weather is
not favorable for cultivation resulting in reduced agricultural
production. However, some major crops have increased production, namely,
cassava, rubber, palm oil, etc. The increasing of the productivity is
due to the expanded area of cultivation. On the other hand, other major
crops were decreased in production, for example, in-season rice,
off-season rice, maize, sugarcane, pineapple. In-season rice, in
particular, the production was reduced due to the reduced area of
cultivation as well as some areas experiencing drought, therefore, the
farmers cannot grow rice. Moreover, between the end of August to the
beginning of September farmers were affected by the storm causing
flooding and damaged the production. Other products, the decrease in
cultivated land due to insufficient water supply, drought and the
replacement of the crops with better incentive crop.

Therefore, the reduction of agricultural productions resulting in
increased agricultural product prices, such as pineapple, durian and
rambutans due to the fewer number of products being released into the
market inadequate to meet the market demands. On the other hand, the
production that decreased in price was cassava, maize, sugarcane,
unsmoked rubber sheet, palm oil, longan and mangosteen. Especially in
rice, this is because of the less demand from the international market.
As for other products, the prices decreased due to the large number of
products released to the market and imported products from foreign
countries. Furthermore, the overall economic slowdown in China from the
trade war between China and the United States, causing weaken demand in
the market. With above mentioned factors, therefore affecting the
company's operating results causing the operating results over the past
3 years to appear as follows:

Performance of the company from 2017-2019 were as follows:

Unit- Million Baht

  ---------- ---------- --------- --------- ---------- --------- --------- ---------- --------- ---------
             2017                           2018                           2019                 

             Amount     %         % Change  Amount     %         % Change  Amount     %         % Change

  Sales      867.70     100.00    22.31     816.70     100.00    (5.88)    568.24     100.00    (30.42)
  Revenue                                                                                       

  Other      10.94      1.26      (10.40)   6.03       0.74      (44.88)   12.85      2.26      113.26
  Revenue                                                                                       

  Total      878.64     101.26    21.76     822.73     100.74    (6.36)    581.09     102.26    (29.37)
  Revenue                                                                                       

  Cost of    (522.05)   (63.62)   13.93     (541.02)   (66.24)   2.00      (397.71)   (69.99)   (26.49)
  Sales                                                                                         

  Gross      315.65     36.38     40.36     275.68     33.76     (12.66)   170.52     30.01     (38.14)
  Profit                                                                                        
  ---------- ---------- --------- --------- ---------- --------- --------- ---------- --------- ---------

In 2017, economic situation continued to expand slightly due to the
improved world economic growth, for example, the United States,
Eurozone, Japan, China and ASEAN 5. As mentioned above, The Thai
economic situation experienced both positive and negative factors such
as floods that caused the damages to agricultural products, decreased
number of products and continued affecting to price of agricultural
crops. This was necessary that the government had to find the solution
by determining the policies and measures to help the agricultural
sector. In agricultural sector, these were consisted of upgrading the
agricultural standards to sustainability by focusing on integration of
13 main policies, namely, the learning center project, optimizing
agricultural production, extension needs of large agricultural land plot
of farmers, management of agricultural areas, organic farming, new
theory agriculture, agricultural product bank, upgrading the
cooperatives, production plan and integrated rice marketing. This was to
reduce the cost and upgrade the agricultural products to be more
effective and up to standard by using the innovation and technology for
production.

According to the above factors, the sales in 2017 were THB 867.70
million that was increased THB 158.27 million or 22.31%. The selling
costs were THB 552.05 million in 2017, an increase of THB 67.50 million
or 13.93%. In 2017, the gross profit margin was at THB 315.65 million,
an increase of THB 90.77 million or 40.36% y-o-y.

The key issues could be summarized as follows:

1.  The sales in 2017 were increased since the economic conditions were
    slightly expanded from the previous year. The amount of rainfall in
    2017 was sufficient for cultivation and for irrigation in many dams,
    so agriculturists could increasingly cultivate in many areas and a
    permissive weather effected on agricultural production of wet season
    rice cultivation, off-season rice cultivation and cultivation of
    maize in the planting areas increased for 0.54%, 112.02% and 0.26%
    respectively (source: Agricultural Information Center, Office of
    Agricultural Economics), so productivity of farmers increased,
    especially off-season rice. On the other hand, productivity of wet
    season rice was decreased.

2.  The agricultural outputs of the major crops which were increased,
    namely; off-season rice, maize, sugarcane, factory pineapple,
    para-rubber and oil palm, 131.37%, 3.36%, 15.74%, 7.94%, 3.74% and
    18.33% respectively. In case of wet season rice, the planting areas
    were slightly increased from previous year, but productivity
    decreased 6.98%, this was due to severe flooding from the influence
    of tropical storm Sonca and Doksuri during the third quarter in many
    provinces of the northeastern region such as Sakon Nakhon, Nakhon
    Phanom, Bueng Kan and Kalasin including the central region such as
    Chai Nat, Ayutthaya and Lop Buri, resulting in the damages in
    cultivate areas of wet-season rice. For the price of agricultural
    products with the higher average price such as rice, sugarcane, raw
    rubber sheet, especially the price of Jasmine wet-season rice was
    increased 28.01%, prices of sugarcane, raw rubber sheet were
    increased for 26.50% and 23.63% respectively because flood crisis
    causing the productivity to reduce and resulting in the world market
    price increased as well as the market demand. In contrast, the
    average prices of some agricultural product sectors decreased such
    as maize, cassava, factory pineapple, oil palm since these sectors
    could be substituted by other materials, the oversupply of the
    products to the market and quality could not meet the market
    standards.

3.  For the debt of agriculturists, the government flood relief helped
    agriculturists who received the impact from flood crisis by 3,000
    Baht per household and other measures for reviving the
    agriculturists in terms of debt and new credits such as Farmers'
    Reconstruction and Development Fund to solve the debt problems of
    agriculturists quickly and effectively, in particularly, for helping
    informal debt and supporting the small farmer loan that helped
    farmers had better financial liquidity and to have available fund
    for new round of cultivating.

4.  The exports of agricultural products increased 12.53% from the
    previous year. For example, rice products and value of rice exports
    were increased 10.52%, rubber and oil palm were increased 36.97% and
    65.66% respectively from higher market demand, and the improved
    competitiveness of Thailand including better economy of the trading
    partners, thus the exports of agricultural products increased
    resulting in the higher price of agricultural products in the
    country.

5.  The use for pesticides increased because the increasing of
    agricultural area from the sufficient rainfall and water for
    cultivation, also the weather has facilitated in many areas of the
    country, these factors lead to better results in productivity,
    especially the off-season rice yield which resulted in the weeds and
    insect pests outbreak, therefore, the demand for pesticides
    increased accordingly.

Due to the above reasons, the financial liquidity of agriculturists was
improved, and spending power increased, so demands in the market
increased. The competition between competitors, for example, price and
promotion to maintain the market share was remained but the competition
was soften due to higher demands in the market and thus be able to sell
more.

The sales of all products in both commodity product and specialty
products were increased, especially in the key products used in the
paddy rice field had the added ratio as 55.50% of all sales in 2017 that
was increased 18.72% when comparing with sales in 2016, except acaricide
that was less due to no outbreak of pests and the releasing of new
fungicide products which were the products used in some fruit plants and
flowers as well as rice fields.

The increased sales caused the productivity increased, even though Thai
Baht had strengthened significantly. The costs of imported materials
tended increased to the average material price of 5%-20% since the
enforcement of various pollution laws in China where was the main raw
material producers, therefore, this additional cost of production made
the raw material producers increased their prices.

While the production process required labors to adequately support the
increased of the sales sufficiently, it was necessary to seek labors
from external sources, outside companies and resulting to the higher
labor cost from last year including the overhead expenses of production
as well. Referring to the demand for higher production volume and other
factors made the selling costs increased of 13.93% when comparing with
the previous year. This was the key factor to make the gross profit in
2017 of 315.65 million Baht equal to the gross profit margin of 36.38%,
which increased of 90.77 million Baht or 40.36% when comparing with
gross profit last year.

Although, the cost ratio increased in 2017, the added cost ratio was
lower than the increased in selling ratio. Therefore, the gross profit
margin increased.

The other incomes in 2017 were THB 10.94 million, a decrease of THB 1.27
million or 10.40% in comparison with the other incomes of last year.
These incomes consisted of the increased investment income due to the
slight improvement of investment conditions in stock market, hence, the
investment incomes, which mainly were the capital gain and unrealized
gain including dividend and interest received of THB 10.62 million equal
to the increase of THB 1.14 million or 12.06%. The profits from exchange
rate were due to Thai Baht appreciation in the range of 36.02 – 32.68
Baht/USD. The company provided preventive measure of the foreign
exchange hedging policy by Forward Contract, which resulted in the
profit from exchange rate of THB 0.18 million, decreased of THB 1.28
million or 87.36% compared to the previous year.

In 2018, there was a small expansion of market condition, which was the
result from the global economic condition abroad in America, European
Union, Japan, China, and ASEAN. This caused agricultural and other
important product export value of Thailand decreased. So, this has
affected Thai economic condition in many factors. The positive factor
includes the overall water amount and weather condition that support
agriculture, which the quantity of water in the main reservoirs is
adequate for planting. Negative factors include flood, drought, and the
delay of rain in many provinces in the Northeastern region. These issues
have caused a lot of damages to agricultural production, which led to
the decreasing product quantity and continually affected agricultural
product price. Therefore, public sector needs to solve this by
determining different policies and measures in order to facilitate
agricultural sector and encourage reformation of agricultural sector by
employing production follows marketing principle together with the
utilization of technology and innovation. The crucial policies that
should be implemented include Proactive Management, Improvement of
Agricultural Products Quality, and the development towards Smart Farmer,
which will help increasing production effectiveness, reducing production
cost, strengthening agricultural organizations, encouraging farmers to
be more professional and have more capacity in producing, processing,
and marketing for agricultural products to be relevant to the market
demand and quality standards.

From the factors mentioned above, it caused the sales of 2018 amount
816.70 million baht reduced by 51.00 million baht, which represented
5.88% decrease. Cost of sales in 2018 was 541.02 million baht or an
increase of 18.97 which represent 2% increase. This resulted in the
gross profit of 2018 amount 275.68 million baht decreased by 39.97
million baht or 12.66 %.

The important issues can be concluded as follows :

1.  The sales of 2018, due to the small expansion of economic condition.
    Though the weather condition, rain quantity, and level of water in
    reservoirs were supportive for agriculture and had positive effects
    on agricultural good production. As can be seen from the expansion
    of off-season rice, maize, sugar cane, rubber, and palm oil
    plantation areas that increased by 22.79, 2.14, 26.23, 4.90, and
    5.27 % respectively. (Source: Center for Agricultural Information,
    Office of Agricultural Economics) This caused the increasing product
    quantity especially for off-season rice, while the product quantity
    for wet season rice decreased.

2.  The quantity of crucial agricultural crops increased, this includes
    off-season rice, maize, sugar cane, pineapple, rubber, palm oil that
    increased by 29.18, 9.84, 31.60, 2.12, 7.60, and 9.12 %
    respectively. At the same time, wet season rice quantity decreased
    by 0.40 % comparing to the previous year due to flood, drought, and
    delay of rain during the planting season in many provinces of the
    Northeastern region such as Nakhon Ratchasima, Sisaket, Surin,
    Roi-et, Khonkaen, and Buriram, which were center for wet season rice
    plantation of the country.

The average price of agricultural products that increased were rice,
maize, and cassava, which increased by 37.64, 28.15, and 52.75 %,
respectively, due to the increasing demand of foreign market, the
expansion of animal feed industry, measures on maize purchasing in order
to maintain the price stability, and inadequate supply of cassava. The
average price of agricultural products that decreased were sugar cane,
pineapple, rubber sheet, and palm oil, which decreased by 22.57, 42.54,
27.99, and 24.54 % respectively due to the oversupply of products.

3.  Public sector provides assistance to farmers by announcing measures
    to help farmers and maintain the stability of rice price for the
    production year 2018/2019. There were 3 marketing projects: Giving
    credit to delay selling paddy and assistance in harvesting and
    quality improvement for farmers who plant wet-season rice in order
    to delay selling of jasmine rice paddy, sticky rice paddy, round
    shaped rice paddy, and Phathumthani 1 rice paddy. Another project is
    to provide credit in order to collect rice and add more value by
    giving credit to Farmers Institute in order to collect rice paddy to
    sell or process. This way we can prevent oversupply of rice paddy.

4.  The export value of Thai agricultural product during January –
    October 2018 decreased by 2.10 % when comparing to the same period
    of 2017. Especially, the export value of maize, sugar, and rubber
    products has decreased due to the continual domestic demand for
    agricultural products, measures of exporting partners to delay
    importing, and high competition in the exporting market. The export
    value of all kinds of rice, cassava, and palm oil has increased due
    to the continual demand of international market together with the
    decreasing of quality and price to the same level of global market
    price.

5.  The demand for using pesticide has decreased due to the demand and
    supply factors and other obstacles in producing agricultural
    products including the decline of product quality, which affected in
    the decreasing of product price.

From the aforementioned reasons, it caused a decreasing of financial
liquidity of farmers, which led to the decrease of purchasing power and
demand of products. There is an intense competition in the market among
competitors in all aspects such as price and promotion in order to
maintain market share.

The sales of all products including commodity product and specialty
product have increased, especially major products using in rice
plantation. This accounted for 66 % of 2018 annual sale, which increased
by 18.92 % comparing to the sales of 2017, except for the sales of
pesticide products, which have decreased due to less fungi and insect
pest epidemic.

In terms of overall product quantity, it decreased according to the
sales ratio, while the foreign exchange rate of the baht kept fluctuated
throughout the year and depreciated a lot during the 3^(rd) quarter and
started to appreciate during the 4^(th) quarter, which is similar to the
foreign exchange rate of the baht in the beginning of 2018. There is a
tendency for increasing in the price of imported raw materials.
Moreover, the market price of the raw material started to increase due
to the enforcement of law related to pollution and environment in China,
which is the main raw material producer. This caused the limitation in
the raw material quantity or some of the raw material sources were
closed down and could not produce or need to improve the production
process to meet the requirements, which led to a higher cost in
production process. For this reason, the quantity of products has
decreased and the price of raw material rose.

At the same time, adequate labor force was required in the production
process. Therefore, it requires for labor outsourcings. At the current
situation, this caused a small decrease in labor cost comparing to the
previous year. The production expenses also have a small decrease. From
the effects on the decreasing of production quantity and other factors,
it caused the cost of sales to reduce by 2.00 % when comparing to last
year. This was an important reason causing a decrease in 2018 gross
profit from 275.68 million baht or accounted as 33.76 % of the sales by
39.97 million baht or equivalent to 12.66 % comparing to last year gross
profit. As the rate of reduction in 2018 cost of sales was lower than
the rate of reduction in sales, it shows that the company still needs to
bear the increasing in capital from the external factors, which led to
the decreasing of gross profit.

Other income in 2018 amount 6.03 million baht decreased by 4.91 million
baht or 44.88 % lower, in comparison to last year, which caused by the
decreased in return on investment due to the effects from the huge
decrease of investment in stock market throughout the year. This caused
the return on investment amount 4.74 million baht, which mainly includes
profit and loss from disposal of investment, unrealized gain (loss) from
the changes in investment value, dividend receivable, and interest
receivable to decrease by 5.88 million baht or 55.35 %. The loss in
exchange rate was caused by the fluctuation of the exchange rate
throughout the year, even though the company has a preventive policy by
doing forward contract. The loss of the exchange rate still continues to
increase. Other income has increased from the selling of cars and old
forklift, and trade in office equipment and old package.

In 2019, the Thai economy continued to expand slightly, which has been
impacted by the global economic conditions occurring in foreign
countries such as the United States, the European Union, Japan, China
and ASEAN-5 as mentioned above. This sent the direct negative effects to
the value of agricultural exports and Thai products to decrease and
therefore, affecting the Thai economy, across the whole agricultural
sector, which increase only 0.5% compared to 2018. In addition, Thailand
also encountered various negative factors such as the drought, causing
insufficient rainfall as well as the water in the irrigation systems
causing the water shortage crisis between the end of August and
September 2019. Moreover, in the northeastern and of the northern
regions. by tropical Storm “Podul” causing flooding problems and
resulting in damages to cultivated areas. Lastly, outbreaks of diseases
and pests that caused decreasing in the production. Therefore, the
government has taken the corrective actions by formulating policies and
measures to help agriculture, such as developing Smart Farmer program to
support farmers to increase production efficiency, reduce production
costs, facilitate farmers to have better processing and marketing by
using new technology and innovation. This is to ensure that the
agricultural products will in line with the market demands and have high
standard quality.

From the above factors, sales in the year 2019 were 568.24 million-baht,
30.42% decrease, the cost of sales was 397.71 million-baht, decrease of
26.49%, resulting in a gross profit of 170.52 million baht, decrease of
38.14%. The summary of the main reasons can be summarized as follows:

1. The decrease of sales in 2019 was due to the slight economic growth.
This is the impact from the global economy. Water shortage crisis,
insufficient water for cultivation from the inadequate amount of rain.
In addition, some cultivated regions were flooded causing damages.
Because of bad weather, the cultivated areas were limited for arable
crops such as in-season rice, off-season rice, and maize. The decrease
was 0.03, 8.88 and 0.78%, respectively. However, there was increase of
cultivated area for cassava, sugarcane, rubber plant and oil palm by
4.07, 2.45, 4.75 and 4.66 respectively, in comparison with 2018 (Source:
Agricultural Information Center, Office of Agricultural Economics)

2. The increase in agricultural production of major crops such as
cassava, rubber plant, oil palm, which increased by 6.06, 4.80 and
7.97%, respectively. The increase of cultivated land was to replace
other crops. On the other hand, there were the reduction in agricultural
product such as in-season rice, off-season rice, and maize, sugarcane,
and pineapple, which decreased by 3.20, 9.97, 2.59, 12.96 and 28.48%
respectively. Due to the drought crisis, farmers cannot grow rice and,
in some areas, damaged by flooding resulting in reduced rice production
and also the cause of the incentives, therefore, farmers switched to
cultivate other crops instead.

On the other hand, the average prices of some agricultural products have
increased such as pineapples price increased 91.64% due to less
production, while there was continued needs from factories. The rise in
this year price has contrasted with last year slump. However, other the
market prices of agricultural products were fell, namely, rice, cassava,
maize, sugarcane, unsmoked rubber sheet, oil palm. The price decreased
by 2.44, 7.66, 2.03, 20.13, 20.88 and 0.63 respectively. The fallen
prices were due to fewer orders and less demands from trade policies in
foreign countries. Still, the products were released to the market as
well as imported from foreign countries.

3. The government sector aided farmers by establishing agricultural
development policies that focus on farmers and emphasis on the
importance to the operation sector. This is for the farmers to receive
the most benefits, including the promotion of farmer development and
cooperative systems, to develop knowledge and new technology to
facilitate the production, processing, marketing, therefore increase the
potential to help the community. This is to achieve the self-sustain and
lead to “Smart Farmer”. The aid also providing financial support for
debt and production by giving loans as working capital and compensating
to small-scale farmers through cooperative farmers groups. The
small-scale farmers that is in debt and experiencing natural disasters
received moratorium, write-off the debts, manufactured interest and
redeem the mortgage, repurchase or redemption and, not allowing the
creditors to enforce the debt under the law.

4. The exports of agricultural products and Thai products during January
to October 2019, decreased 7.0% compared to the same period in 2018,
with declined in all major export markets including ASEAN, China, Japan,
the United States and the European Union due to the impact from the
trade protectionism measures and uncertainties in trade policy of
partner countries causing the demand of trading partner countries to
decrease. In addition, the competition in the export market has
increased.

The export value decreased in the agricultural products and major
exported products such as rice, cassava, rubber, palm oil and fruit
products due to lower demand in foreign markets as well as lower product
quality and reduced price. Moreover, Thai Baht appreciation causing the
export market to further decrease in value.

5. Demand for chemicals decreased due to demand and supply factors from
various obstacles which caused production problems both quantity and
quality not meet the standard requirements resulting in reduced
agricultural product prices.

From the above reasons, the financial liquidity of farmers decreased and
reduced purchasing power resulting in decreased demand for chemical
products. The competition in the market between the competitors were
more intense in all aspects such as price and sales promotion.to
maintain their market share in addition to the effect of the abolition
of the use of three chemical substances, namely, paraquat glyphosate and
chlorpyrifos.

Sales of all other of products including commodity products and
specialty products decreased in all categories due to various factors
mentioned above including less overall outbreak of pests such as insect
pests, weeds, fungi and mites when comparing to the previous year.

As for the overall product quantity, the production decreased in
proportion to sales while the Thai baht appreciates throughout the year
causing the price of imported raw materials to tend to decrease and also
the overall market price of imported raw materials began to decline
slightly due to the enforcement of pollution and the environment laws of
China last year that the main raw material manufacturers begin to
improve the production process to comply with the law. Therefore, some
manufacturers can re-start producing products that have previously been
limited and be able to deliver to the customer.

While the production process needs sufficient labor to, therefore it is
required to secure external labor force. Due to the current situation,
the labor costs decreased by 10.76%. Production overhead expenses also
decreased by 9.88% compared to the previous year. This is because the
decrease in production process and other factors which caused the cost
of sales decreased by 26.49% compared to last year. Therefore, this is
the main reason that the gross profit in the year of 2019 is 170.52
million baht or 30.01%, decreasing by 150.16 million baht or 38.14% when
compared to the previous year. The rate of decrease in cost of sales in
2019 is less than the rate of sales decline demonstrated that the
company still obligated to bear the higher cost burden from the above
factors, therefore resulting in reduced gross profit.

In term of other incomes in the year 2019 as of 12.85 million baht,
increase of 6.82 million baht or 113.26% compared to the previous year,
consisted of the gain in investment income due to the fluctuation in the
stock market, which increased in the first half of the year and
decreased during the second half. The Stock Exchange of Thailand Index
on December 30, 2019 closed at 1,579.84 points, resulting in investment
income, most of which were profits from sales of investments and
unrealized profits from increased investment value changes while the
dividends decreased. Therefore, the investment income of 6.25 million
baht which has been increased by 1.50 million baht or 31.71%. Foreign
exchange rate gain is 4.24 million baht, an increase of 4.42 million
baht or 2,544.26% thanked to hedge policy to prevent the exchange rate
volatility throughout the year by using Forward Contract and T/R to
reduce the impact from exchange rate including the baht value in the
year 2019, appreciating on average, closing at 30.3313 baht, resulting
in increased exchange rate profits. Moreover, other income also extended
to the sale of used vehicles, selling 657 square wah of land in Samut
Prakan province at a price of 9.855 million baht with a profit after
deducting expenses of 1.99 million baht and trade in office supplies and
selling of old packing materials.

Financial Cost and Corporate Tax from 2017-2019

Unit : Million

[TABLE]

In 2017, when each type of account in 2017 is considered, we can see
that selling expenses stand at THB 43.63 million, an increase of THB
13.78 million over the previous year, or an equivalent of 46.15%. This
is due to the fact that the demand of the product in the market has
increased from rainfalls and the sufficient water supply for the
cultivation. In addition, market competition was less intense. However,
the company had to maintain or increase market share causing the selling
expenses to increase accordingly, such as sale promotion expenses of THB
12.93 million, an increase of THB 10.24 million or 381.20%. Commission
and transportation expenses increased in line with the increase in sales
volume. The expenses on registration fee increased due to new products
etc.

Administrative expenses in 2017 are at THB 41.22 million, an increase of
THB 2.29 million over the previous year, or an equivalent of 5.89%. This
slight change stems from the increase in salary and welfare for
employees.
The increase in selling and administrative expenses of THB 16.07 million
or an increase of 23.36% y-o-y under the increase in sales volume shows
the effective financial management in term of cost savings, and thus the
Company is able to enjoy the increase in revenue.

Financial costs in 2017 stand at THB 0.62 million, an increase of THB
0.14 million over the previous year, or an equivalent of 27.77%, all of
which are T/R interest from the order of raw materials from other
countries. With currency strengthen from the impacts of world economy
and the USA monetary policy led to worries among investors. Foreign
capital flows into other regions including Thailand shows the sign of
better economic situation. Capital flows into both the capital and bond
markets, the Thai baht appreciated. The payment for T/R debts has to
take into consideration the situation at that particular moment to
achieve the maximum benefits in terms of financial costs by paying
according to the term or extending the payment term by T/R. In 2017,
Thai baht continues to appreciate from THB 36.02 to 32.68 to a dollar.
As a result, T / R payments are faster in order to reduce T / R interest
burden and reduce the impact of exchange rate fluctuations. The company
also has a policy to do forward contract to reduce risk in financial
costs to a minimum.

Corporate income tax in 2017 is at THB 46.40 million, an increase of THB
15.86 million over the previous year, or an equivalent of 51.95%. Since
the sales volume has increased, the profit before corporate income tax
deduction stands at THB 241.74 million, an increase of THB 73.42 million
over the previous year, or an equivalent of 43.62%. The Company has
included the right to exclude tax from dividends from investment units
that meet the conditions of holding period and profits from the
valuation of trading securities (investment units) etc.

In 2018, when considering on types of sales expenses of 2018 amount
42.97 million baht decreased by 0.66 million baht or decreased by 1.52 %
of the previous year. The sales volume decreased due to aforementioned
factors, which caused less demand of the products in the market and high
competitiveness according to market mechanism. For this reason, the
company was required to preserve and increase market share, which led to
higher expenses in sales promotion cost 14.61 million baht. The cost of
sales promotion increased by 1.68 million baht or 12.96 %. However,
there was a minor reduction in overall expenses.

Administrative expenses of 2018 was 40.57 million baht, which decreased
by 0.66 million baht or 1.59 % when comparing to the previous year. This
was due to the decrease in employee welfare expenses.

The reduction of sales expenses and administrative expenses, which
occurred within the decreasing of sales, shows that the company could
manage the capital in terms of expenses effectively, especially in terms
of sales promotional cost in order to stimulate market demand. Regarding
the expenses in other forms, the investment was done economically and
worthy with the concern of effectiveness maximizing income.

Financial capital of 2018 was 1.67 million baht, which increased by 1.05
million baht or increased by 168.21 % when comparing to the previous
year. All of these were T/R interest from the increasing of importing
raw material from abroad during the period when the exchange rate was
fluctuating. This caused by the effects of global economic situation,
which led to the flow of foreign investment in Thailand. Later, there
was an outflow of investment, when the Federal Reserve raised policy
interest rate, which caused Thai baht to depreciate during the second
quarter. Therefore, debt settlement management was required to consider
on the current situation in order to create the least financial burden
cost. Especially, when considering on payment according to the TERM
received from sellers or postponed the TERM by conducting T/R. Moreover,
policy on presenting risk from the effects of exchange rate by
conducting forward contract or T/R on Thai baht at a proper exchange
rate in order to T/R support debt settlement with the lowest cost.
However, in 2018, there was an increase in T/R interest rate from 1.62 %
to 2.54 %, which resulted in higher financial capital.

Corporate income tax of 2018 was 38.49 million baht, which decreased by
7.91 million baht or decreased by 17.05 % when comparing to the previous
year of 2017, due to the decrease of sale. Profit before deducting
income tax was 196.50 million baht, which decreased by 45.24 million
baht or decreased by 18.71 %. The company was entitled to exempt from
dividend tax of the investment units which relevant to possession
conditions and profit from adjusting available for sales securities
(investment unit).
In 2019, when considered the expense transaction account of selling for
2019 was 32.41 million baht, decreased by 10.50 million baht or 24.57%
compared to the previous year. It was found that the reduced sales due
to various factors as mentioned above has impacted the market demands to
decrease while increase the market competition, which the company needed
to maintain and increased the market share. Therefore, there was the
need for investing in the form of promotion expenses commissions,
transportation costs, etc. cause the cost of sales to fall at a rate
lower than the rate of sales decreased.

The administrative expenses in the year 2019, was 41.84 million baht, an
increase of 1.27 million baht or 3.14% compared to the previous year due
to the increase of employee salary and benefits. In the 2nd quarter, the
company provided the retirement benefit of 3.95 million baht as a result
of the current labour protection law regarding the retirement
compensation. This is for employees who have worked for 20 years or
more, the compensation benefits were calculated as 400 days. Previously,
any employees who have worked for 10 years or more only entitle for
compensation benefits for 300 days.

Reduction in selling costs and administrative expenses, which occurred
under the decrease in sales exhibited that managing investment in the
form of expenses, especially in terms of sales promotion to stimulate
the demand for products in the market. Other forms of expenses is the
investment that is economical and worthwhile under the efficiency so the
company can generate full income.

Financial costs in 2019 of 1.69 million baht, increased 0.02 million
baht or 1.18% compared to the previous year. All of which were T / R
interest from the purchase of raw materials from overseas while the Thai
baht exchange rate fluctuates, and Thai baht appreciated. The company
has a policy to delay debt repayment by doing T/R to wait for a good and
appropriate opportunity. Also, a forward contract to protect against
risk and the effects of exchange rates due to the said policy, it takes
longer time including the increase of T/R interest rates resulting in
increased financial costs

The corporate income tax in 2019 was 20.70 million baht, decreased by
17.79 million baht or 46.21% compared to the previous year due to the
decline of sales. As a result, the profit before tax in 2019 was 107.43
million baht, decreased by 107.59 million baht or 89.07%. The company is
entitled to tax exemption from dividends of the investment units that
meet the holding criteria and profit from revaluation of trading
securities (investment units).

Operational Profits/ Net Profits/ Return on Equity from 2017-2019
Unit : Million Baht

  ----------------- --------- ------- -------- ------- ---------- ---------
                    2017              2018             2019       

                    Amount    %       Amount   %       Amount     %

  Operational       230.80    26.60   192.14   23.53   96.27      16.94
  Profits                                                         

  Net Profits       194.72    22.44   158.01   19.35   86.73      15.26

  Consolidated Net  194.89    22.46   146.18   17.90   82.82      14.58
  Profits                                                         

  Return on Equity  33.34%            26.27%           15.56%     
  ----------------- --------- ------- -------- ------- ---------- ---------

In 2017, the sales volume in 2017, increased by 22.31%, is the result of
no more drought crisis and sufficiency of rainfalls and water supply for
cultivation. The amount of main agricultural products greatly increased
such as, off-season rice, maize, sugarcane, pineapple, para-rubber, palm
oil, and so on. Unfortunately, in-season rice fields were affected by
floods in many areas, the yield decreased. However, the external factors
of the world economy continue to expand, leading to improved trade
partners. As a result, exports of agricultural products increased. Price
of main domestic agricultural commodities such as rice paddy, sugarcane
and raw rubber sheet have increased. The financial liquidity of the
farmers improved accordingly. The policies to help farmers supported by
the government on both production, finance, including debt repayment for
farmers led to increasing in purchasing power. Demand in the market
increased.

Market competition become less intensified. The company still maintains
its marketing policy in all aspects, such as price and promotion to
maintain the market share of the Company. Sales of all products of the
Company, such as Commodity Product and Specialty Product, especially the
main products used in rice fields accounted for 55.50% of total sales in
2017, increased by 18.72% y-o-y. While the cost of production such as
cost of raw materials kept increasing due to factors affecting the raw
material producers, resulting in rising prices. Labor and overheads cost
increased in line with the production. However, the increase was at the
lower rate of the increase in sales resulting in a higher gross profit
compared to 2016.

Selling expenses and administrative expenses in 2017 increased by
23.36%. Since the company’s sales volume has increased, the company is
committed to operating wisely and effectively in order to generate
highest revenues possible in line with current situation. As the
competition in the today’s market still exist, promotion strategies in
stimulating consumer demand are needed. In 2017, the company spent THB
12.93 million in promotion strategies, an increase of THB 10.24 million
over the previous year, or an equivalent of 381.20% y-o-y. However, the
company still made a profit of THB 230.80 million from its operations in
2017, or an equivalent of 26.60%, an increase of THB 74.70 million over
the previous year, or an equivalent of 47.85%.

From the aforementioned factors, the company’s operating results in the
current situation are satisfactory, which leads to the company’s net
profit of THB 194.72 million in 2017, or an equivalent of 22.44%. Return
of Equity (ROE) for shareholders stands at 33.34%, increased from 25.79%
in 2016.

In 2017, the company invested in available-for-sale securities for THB
7.53 million, in which fair value was adjusted as of 31 December 2017,
the company gained the profit from change for THB 3.24 million. The
profit from the change of fair value of investment in available-for-sale
securities in 2017 is THB 5.79 million due to the improvement of the
Stock Market. Deferred tax stated under the topic of profit (loss) on
the measurement of total investment for the year 2017 amounting to THB
2.59 million and the new valuation of the post-employment benefit
obligation as per the actuarial loss amounted to THB 2.42 million.
Therefore, the total comprehensive income for the year 2017 stands at
THB 194.89 million or an equivalent of 22.46%.

In 2018, the sale decreased by 5.88 %, even though the weather,
rainfall, and water level in reservoirs were suitable for additional
plantation in many areas, caused the increase in various crop
productions, for example, off-season rice, maize, sugar cane, rubber,
and palm oil. However, during 2018, there were still many areas affected
by flood, drought, and delay of rain. So, it caused the decrease of
agricultural products in those areas. However, external factors such the
rigid expansion of global economy that led to the delay of placing
purchasing order of trade partner countries due to the decrease of
demand in foreign market. This is the cause for the reduction of export,
which affected domestic agricultural product price to have a higher
average price namely, rice, maize, and cassava. Some agricultural
product such as sugar cane, pineapple, rubber sheet, and palm oil
average price decreased. From all these, it caused low financial
liquidity of farmers, which public sector realized the problems. So,
there was a policy to assist famers with the said problems.

In terms of marketing, there was decrease of product demand and high
competitiveness in all aspects including price and sales promotion; this
is to preserve the market share. At the same time, the cost of raw
material was increased due to the factors on exchange rate and the
effects from environmental policy of China. So, the company had to bear
the higher cost of raw materials including the labor cost. Moreover, the
production expenditure slightly decreased, which caused sales capital to
decrease in the lower ratio than the ratio of sale. Thus, gross profit
of 2018 decreased.

Sales and administrative expenses of 2018 slightly decreased. From the
decrease of sale, the company still continued managing policy that
emphasizes on expense investment that was cost saving, worthy, and most
effective in order to maximize profit in current situation. While the
marketing competition was getting more and more intense, the company was
required to proceed on the policy to stimulate the demand for the
products with different strategies in order to create customer
motivation. Due to the increase of sales promotional expenses, the
company gained operational profit of 192.14 million baht in 2018, which
accounted for 23.53 % of net sale. This decreased by 38.66 million baht
or decreased by 16.75 % comparing to the previous year.

From the aforementioned factors, the company’s overall operation was
considered to be satisfactory in the current situation, which brought
158.01 million baht or accounted for 19.35 % of profit in 2018. This
resulted in the rate of return for the shareholders became 26.27 %,
which decreased by 33.34 % from 2017.

In 2018, the company increased the investment on available for sales
securities by 25.50 million baht. As of 31 December 2018, there was an
adjustment on fair value of investment on available for sales
securities. The adjustment was 10.88 million baht. This caused the value
of available for sales securities to decrease by 5.09 %. Due to the
decreasing in stock market throughout 2018 more than 200 points, this
caused the loss as stated. The loss in investment on available for sales
securities was 8.71 million baht and on value adjustment of
post-employment benefits obligation due to loss forecasted according to
Actuarial Science amount 3.12 million baht. Therefore, the comprehensive
profit and loss of 2018 was 146.18 million baht or accounted for 17.90
%.

In 2019 sales decreased by 30.42% due to the slow economy growth that
was impacted from global economy resulting from trade protectionism
measures and the uncertainty of trade policy of trading partner
countries. Demands in foreign markets decreased, causing export value to
drop. The problem was also including the drought, insufficient water
causing water shortage crisis for cultivation. On the other hand, during
the 3rd quarter, some cultivated areas experienced flooding disaster
resulting from storms causing damage to agricultural products in term of
both quantity and quality. This was directly impacted to the average
price of major crops in the country, such as rice, cassava, maize,
sugarcane, unsmoked rubber sheet, palm oil, except for pineapples having
higher average price. All those causes resulting in the financial
liquidity of farmers to decrease, which the government sector is aware
of the problems occurring, therefore, have various policies helping the
farmers as mentioned above

In term of marketing, when the demand for products in the market
decreases, the market competition between competitors has become more
intense in all aspects such as price and promotion. In order to maintain
the company's market share, as well as the impact of uncertainty to ban
the use of three chemicals while the cost of raw materials in the
production process to those who are likely to decrease due to the
appreciation of Thai baht exchange rate factor and the implementation of
environmental laws of China which the manufacturers have improved the
production process under the applicable laws and be able to increase the
production resulting in better availability of raw materials that used
to be limited to customers. Moreover, the reduction costs of labour and
production overhead causing the cost of sales to decrease at a rate that
is less than the rate of sales decline causing gross profit in 2019 to
decrease.

Selling and administrative expenses in 2019 of 74.25 million baht, the
decrease of 9.29 million baht or 11.12% compared to the previous year
due to the decrease in sales. The company policy still focusing on
investment in the form of various expenses by managing the expenses to
be the most cost effective and efficient in economic sense to create
maximum income under the current situation while the competition in the
market continues to intensify, the company has implemented the policy to
stimulate market demand with various strategies to motivate customers.
In terms of promotion expenses and higher welfare benefits, which
resulting from the new labour protection law enforcement, therefore,
increasing the retirement compensation. Profit from operations in 2019
was 96.27 million baht, equivalent to 16.94% of net sales which
decreased by 95.87 million baht or 49.90% compared to the previous year.

With the main factors as mentioned above, the company has achieved
satisfactory performance in the current situation. Leading to the net
profit in the year 2019 of 86.73 million baht, equivalent to 15.26% and
the return rate to shareholders equal to 15.56%.

At the same time, the company has invested in available-for-sale
securities as of 31 December 2019, the fair value of investments in
available-for-sale securities has changed by receiving a loss of 3.83
million baht in fair value changes due to the fluctuations in the stock
market throughout the year by increasing in the first half and decreased
in the second half and re-valuation of post-employment benefit
obligations with the actuarial losses of 1.05 million baht, resulting in
total comprehensive income for the year 2019 of 82.82 million baht or
14.58%.  

Total Assets/ Total Liabilities/ Shareholdres’ Equities 2017-2019

Unit : Million Baht

[TABLE]

Cash Flows 2017-2019

Unit : Million Baht

  ------------------------- ----------- -------------- ------------------
                            2017        2018           2019

  Cash Flows from Operation 237.68      25.16          109.49

  Cash flows from           (95.18)     52.19          25.22
  Investment                                           

  Cash flows from financing (152.13)    (102.37)       (184.18)
  activities                                           
  ------------------------- ----------- -------------- ------------------

Finacial Ratio 2017-2019

  --------------------------- ------------ --------------- ---------------
                              2017         2018            2019

  Liquidity Ratio                                          

  Current Ratio (Times)       6.22         3.46            5.56

  Quick Ratio (Times)         4.47         1.91            3.01

  Cash Flow Ratio (Times)     2.11         0.18            1.39

  Collection Period (Days)    51           59              66

  Inventory Turnover (Days)   120          151             238

  A/C Payable Turnover (Days) 59           79              113

  Cash Cycle (Days)           112          131             191

  Efficiency Ratio                                         

  Return on Total Assets (%)  27.57        20.89           12.1

  Return on Fixed Assets (%)  361.33       288.79          179.37

  Return on Current Assets    124.39       108.77          81.08
  (Times)                                                  

  Financial Ratio                                          

  Debt to Equity Ratio        0.17         0.35            0.22
  (Times)                                                  

  Interest Coverage (Times)   457.72       39.11           128.70
  --------------------------- ------------ --------------- ---------------

In 2017, with the increased sales volumes, the Company’s operating
results boast net profit of THB 194.72 million, causing its balance
sheet to be significantly different from that of 2016. The world economy
from aforementioned situation caused the Company’s total assets to
increase to a total of THB 721.44 million, an increase of THB 30.13
million is an equivalent of 4.36 %, when compared to the previous year.
Major sections that increased (decreased) are cash and cash deposits
which increased for THB 75.65 million or a different of 33.13% y-o-y.
Accounts receivable and other receivable decreased by THB (15.03)
million or an equivalent of (11.54) %. Inventory decreased by THB
(39.72) or an equivalent of (19.54) % y-o-y. Available-for-sales
securities increased from new investment and unrealized profits from the
change of fair value totaled THB 10.39 million, an equivalent of 25.15%
y-o-y. An increase in property, plant and equipment for THB 4.20 million
was an equivalent of 7.82 % from investment of factory building and
machinery with replacement and renovation, new vehicles to replace
obsolete ones. Intangible assets, and Deferred Tax for THB (5.33)
million or an equivalent of (15.47) % from selling of some assets and
the cancellation of new product registration that does not meet market
demand or products that were not allowed to be registered any more.

The company’s total liabilities of THB 105.51 million, deceased of THB
(33.78) million, or an equivalent of (24.25) %, when compared to that of
the previous year. This amount includes an increase (a decrease) in
short term loan from financial institutions (T/R creditors) for THB
(20.45) million or an equivalent of (60.19) %, trade account payable and
other creditors for THB (18.22) million or an equivalent of (24.17) %,
and income tax payable for THB 1.19 million or an equivalent of 5.72%.
The employee benefit obligation increased by THB 3.81 million or 47.49%
due to the increase in service cost and interest from obligation of THB
0.82 million. The loss on the actuarial valuation was THB 2.89 million.

Shareholder’s equity of THB 615.93 million, increased for THB 63.91
million, or an equivalent of 11.58%, when compared to that of the
previous year. This amount comes from an increase in unappropriated
retained earnings for THB 61.31 million, or an equivalent of 26.50% from
the increase in net profit and other components of shareholder’s equity
which includes surplus on revaluation of fair value of
available-for-sale of THB 2.59 million, or an equivalent of 127.07%.
The changes in the balance sheet come from the increase in sales volume
from various factors such as favorable irrigation water, weather causing
proper cultivation. The increase in agricultural products especially
off-season rice led to the higher demand in agro chemical products. Due
to the less competitive market but the competition still exist as per
market mechanism, the Company had to prepare raw materials for
production in 2017 at appropriate quantity for market demand.

Therefore, the cash and cash equivalents, short-term investments
increased while accounts receivable and inventories decreased with a
faster collection period and sales period. As the baht strengthens, the
company needs reduce the impact of exchange rates by covering the
exposure with forward contracts at appropriate rate and speeding up T/R
payment, short-term loan form financial institution reduced
consequently. Account payables for raw materials and domestic packaging
materials reduced. As a result, average payment period was faster. As
for financial liquidity management, the Company bought and sold
temporary investments for debt repayment. The investments in various
forms was to increase revenue.

Therefore, from the Company’s operating results in 2017, the cash flows
increased by 47.37 %. As for financial ratio, the liquidity ratio
increased from 4.28 times in 2016, to 6.22 times in 2017, and the quick
liquidity ratio increased from 2.73 times in 2016, to 4.47 times in
2017. At the same time, the cash flow liquidity ratio increased from
1.29 times in 2016 to 2.11 times in 2017, and the average collection
period reduced from 65 days in 2016, to 51 days in 2017. The average
sale period decreased from 149 days in 2016, to 120 days in 2017, while
the accounts payable payment period reduced from 79 days in 2016, to 59
days in 2017, leaving the cash cycle to be better from 135 days in 2016
to 112 days in 2017.

The Company’s cash flows from the investment decreased by (401.49) %,
when compared to the previous year. The Company applied a policy to
lengthen payment term and increase investment in temporary investment
for THB 81 million and investment in available-for-sale securities for
THB 7.53 million and received dividend for THB 6.42 million. The Company
bought machineries and vehicles for THB 11.01 million and paid for
expenses related to the registration for the new license according to
Hazard Substances Act, which is under operation, for THB 2.25 million.

Cash flows from financing activities reduced by 31.84% when compared
with the previous year since the order of raw materials from other
countries increased from that of 2016, causing more T/R creditors. The
Company applied a policy to lengthen payment term in 2017. Due to the
strengthen baht and to prevent risk from forex loss, the Company covered
exposure with forward contract and fastened T/R paid off period to
reduce financial cost and led to cost savings and to get the most out of
current situation, causing its short-term loans from the financial
institutions to reduce. The Company also paid for dividends for THB
131.02 million. Cash and cash equivalents by the end of the year then
equal to THB 46.83 million. A difference of THB 9.63 million was
equivalent to 17.06% y-o-y.

The Company’s capital structure comprises debt-to-equity ratio, which
was 0.25 times for 2016 and 0.17 times in 2017. The company is able to
manage and control effective financial position under improving
operational by decreasing payables burden significantly. As a result,
payout reduced, and this ratio level is considered very well.

Interest coverage ratio increased from 394 times in 2016 to 456.72 times
in 2017. From the aforementioned operation result, the Company saw
operation cash flow increased THB 237.06 million, an increase of
THB76.21, or an equivalent of 47.37 %. The pay-off T/R creditor in
advance slightly helped financial cost to increase slightly compared
with the previous year. Therefore, interest coverage increased
accordingly.

Meanwhile, the Company’s operating results increased causing its net
profit to increase. Therefore, its return on assets increased from
20.62% in 2016 to 27.57% in 2017; its return on fixed assets increased
from 292.36% in 2016 to 361.33% in 2017, and its asset turnover ratio
increase from 108.40 times in 2016 to 124.39 times in 2017. All in all,
this indicates that the ability in profit generation from the wise and
efficient use of assets has increased in accordance with current
situation when compared with the previous year.

In 2018, with the decreased sales volumes, the Company’s operating
results see net profit of THB 158.01 million, causing its balance sheet
to be significantly different from that of 2017. The world economy from
aforementioned situation caused the Company’s total assets to increase
to a total of THB 791.31 million, an increase of THB 69.87 million is an
equivalent of 9.69 %, when compared to the previous year. Major sections
that increased (decreased) are cash and cash deposits which decreased
for THB (96.83) million or a different of (31.85)% y-o-y. Accounts
receivable and other receivable increased by THB 36.17 million or an
equivalent of 31.41 %. Inventory increased by THB 127.19 million or an
equivalent of 77.75 % y-o-y. Available-for-sales securities increased
from new investment and unrealized profits from the change of fair value
totaled THB 5.44 million, an equivalent of 10.52% y-o-y. A decrease in
property, plant and equipment for THB (1.44) million was an equivalent
(2.49)% from the purchasing new machine and new forklift to replace old
one. Intangible assets decreased by THB(3.90) million was an equivalent
of (13.98) % from trade off some assets, the cancellation of product
registration that did not respond to the market and products that were
not allowed to be registered any more. Deferred Tax increased by THB
3.12 million or an equivalent of 257.71% from loss of value changes of
available-for-sale securities due to the stock market conditions which
decreased throughout the year 2018. The actuarial estimates of employee
benefit obligations was another reason for the decrease.

The company’s total liabilities of THB 204.32 million, increased for THB
98.81 million, or an equivalent of 93.65%, when compared to that of the
previous year. This amount includes an increase (a decrease) in short
term loan from financial institutions (T/R creditors) for THB 73.85
million or an equivalent of 545.82%, trade account payable and other
creditors increased for THB 22.44 million or an equivalent of 39.26%.
Income tax payable decreased for THB (2.15) million or an equivalent of
(9.75)%. The employee benefit obligation increased by THB 4.70 million
or 39.67% due to the increase in service cost and interest from
obligation and the loss on the actuarial valuation from the change of
assumption.

Shareholder’s equity of THB 586.99 million, a decrease of (28.93)
million or an equivalent of (4.70)%, when compared to that of the
previous year. This amount came from a decrease in unappropriated
retained earnings for THB (20.23) million, or an equivalent of (6.91)%
from the decrease in net profit and other components of shareholder’s
equity which includes loss on revaluation of fair value of
available-for-sale of THB (4.07) million, a decrease of (8.71) or an
equivalent of (187.81)%.
The changes in the balance sheet came from the decrease in sales volume
from various factors that affect farmers’ financial liquidity, market
demand decreased consequently. The competition intensified as per market
mechanism. There were shortage of some raw materials due to strict
enforcement of environmental laws in China. The Company had to prepare
more raw materials in Q4 for production in 2019 at appropriate quantity
for market demand.

Therefore, the cash and cash equivalents, short-term investments
decreased while accounts receivable and inventories increased with a
slower collection period and sales period. As the baht fluctuated, the
company needs reduce the impact of exchange rates by covering the
exposure with forward contracts at appropriate rate for T/R payment.
Meanwhile, the demand of raw materials to fulfill production in
accordance with the situation, the company had to place orders from
China and account payables for raw materials increased by 33.43% from
raw material and local packaging material purchased. As a result,
average payment period was slower. As for financial liquidity
management, the Company bought and sold temporary investments for debt
repayment. The investments in various forms was to increase revenue.

From the Company’s operating results in 2018, the cash flows decreased
by 89.41 %. As for financial ratio, the liquidity ratio decreased from
6.22 times in 2017, to 3.46 times in 2018, and the quick liquidity ratio
decreased from 4.47 times in 2017, to 1.9 times in 2018. At the same
time, the cash flow liquidity ratio deceased from 2.11 times in 2017 to
0.18 times in 2018, and the average collection period increased from 51
days in 2017, to 59 days in 2018. The average sale period increased from
120 days in 2017, to 151 days in 2018, while the accounts payable
payment period increased from 59 days in 2017, to 79 days in 2018,
leaving the cash cycle to increase from 112 days in 2017 to 131 days in
2018.

The Company’s cash flows from the investment increased by 154.84 %, when
compared to the previous year. The Company applied a policy to manage
financial liquidity by increasing investment in temporary investment for
THB 69.10 million and increase investment in available-for-sale
securities for THB 14.51 million and received dividend for THB 5.61
million. The Company bought machineries and vehicles for THB 4.32
million and paid for expenses related to the registration for the new
license for THB 3.69 million.

Cash flows from financing activities reduced by (32.71%) when compared
with the previous year since the order of raw materials from other
countries increased from that of 2017, causing more T/R creditors. Due
to the fluctuated baht and to prevent risk from forex loss, the Company
covered exposure with forward contract and applied for appropriated T/R
paid off period and led to cost savings and to get the most out of
current situation. Interest rate for T/R increased from 1.62% per year
to 2.54% and short-term loan from financial institution increased. The
Company also paid for dividends for THB 175.13 million and financial
cost of THB 1.67 million. Cash and cash equivalents by the end of the
year then equal to THB 21.81 million. A difference of THB 25.02 million
was equivalent to 53.43% y-o-y.

The Company’s capital structure comprises debt-to-equity ratio, which
was 0.17 times in 2017 and 0.25 times in 2018. The company managed to
purchase raw materials to fulfill 2019 market demand and led to the
increase in liabilities. With the increase in employee benefit
obligation mentioned earlier and the decrease in operational result
compared to 2017, the company was still being able to manage and control
effective financial position, as a result, debt-to-equity ratio
reasonably increased but still at a low level and this ratio level is
considered very well.

Interest coverage ratio decreased from 457.72 times in 2017 to 39.11
times in 2018. From the aforementioned operation result, the Company saw
operation cash flow of THB 25.16 million, a decrease of THB 212.52
million, or an equivalent of 89.41 %. The policy to increase the raw
material purchase and the pay-off T/R creditor led to the increase in
financial cost. The increase in T/R interest rate in 2018 resulting in
the interest coverage decreased accordingly.

The 2018 Company’s operating results saw a decrease in net profit.
Therefore, its return on assets decreased from 27.57% in 2017 to 20.89%
in 2018; its return on fixed assets decreased from 361.33% in 2017 to
286.79% in 2018, and its asset turnover ratio decreased from 124.89
times in 2017 to 108.77 times in 2018. All in all, this still indicates
the ability in profit generation from the wise and efficient use of
assets in accordance with current situation when compared with the
previous year.

In 2019, with the decreased sales volumes, the Company’s operating
results see net profit of THB 86.73 million, causing its balance sheet
to be significantly different from that of 2018. The world economy from
aforementioned situation caused the Company’s total assets to decrease
to a total of THB 642.12 million, a decrease of THB 149.19 million is an
equivalent of 18.85%, when compared to the previous year. Major sections
that increased (decreased) are cash and cash deposits, temporary
investment which increased for THB 11.21 million or a different of 5.41%
y-o-y. Accounts receivable, other receivable, and inventory decreased by
THB (92.75) and (56.72) million or an equivalent of (61.29) and (19.51)%
respectively. Available-for-sales securities, property, plant and
equipment decreased for THB (3.83), (7.62) and (1.64) million were
equivalent to (6.70), (13.49), and (6.83)% respectively. Deferred Tax
increased by THB 2.24 million or an equivalent of 51.75% from loss of
value changes of available-for-sale securities due to the stock market
fluctuated conditions throughout the year 2019. The actuarial estimates
of employee benefit obligations was another reason for the decrease.

The company’s total liabilities of THB 114.62 million, decreased for THB
89.65 million, or an equivalent of 43.88%, when compared to that of the
previous year. This amount includes an increase (a decrease) in short
term loan from financial institutions (T/R creditors), trade account
payable and other creditors, and income tax payable for THB (40.53),
(44.64) and (10.64) million or an equivalent of (46.38), (56.09), and
(53.07) respectively. The employee benefit obligation increased by THB
6.22 million or 37.61% due to the effectiveness of the current Labor
Protection Law regarding retirement compensation for employees which the
compensation benefit calculated change from 300 days to 400 days led to
record of administrative cost and loss on the actuarial valuation from
the change of assumption.

Shareholder’s equity of THB 527.45 million, a decrease of (59.54)
million or an equivalent of (10.14)%, when compared to that of the
previous year. This amount came from a decrease in unappropriated
retained earnings for THB (56.49) million, or an equivalent of (20.73)%
from the decrease in net profit and other components of shareholder’s
equity which includes loss on revaluation of fair value of
available-for-sale of THB 7.13 million, an increase of THB 3.06 million
or an equivalent of 75.18%.
The changes in the balance sheet came from the decrease in sales volume
from various factors that affect farmers’ financial liquidity, market
demand decreased consequently. The competition intensified as per market
mechanism. There were shortage of some raw materials due to strict
enforcement of environmental laws in China. In addition, the ban of 3
agrochemicals, the Company had to reduce raw materials imported for
production at appropriate quantity for market demand.

Therefore, the cash and cash equivalents, short-term investments
increased while accounts receivable and inventories decreased with a
slower collection period and longer sales period. As the baht
fluctuated, the company needs reduce the impact of exchange rates by
covering the exposure with forward contracts at appropriate rate for T/R
payment. Meanwhile, the demand of raw materials to fulfill production in
accordance with the situation in China. The ban of 3 agrochemical led to
a decrease in market demand. Import of raw materials decreased by 51.61%
y-o-y. As a result, short term loan from financial institution
significantly decreased. Account payables for raw materials and local
packaging material purchased decreased. Average payment period was
slower and financial liquidity increased.

From the Company’s operating results in 2019, the cash flows increased
by 235.17%. As for financial ratio, the liquidity ratio, the quick ratio
and the cash flow liquidity ratio increased by 5.56, 3.01, and 1.39
times respectively. The average collection period, the average sale
period, the accounts payable period, and the cash cycle increased to 66,
238, 113 and 191 days respectively.

The Company’s cash flows from the investment decreased by 51.68 %, when
compared to the previous year. The Company applied a policy to manage
financial liquidity by increasing investment in temporary investment for
THB 21.50 million and received dividend for THB 4.82 million. The
Company bought machineries, used motor vehicle and selling of 657 square
wah land of Samuthprakarn Province for THB 2.15 million and paid for
expenses related to the registration for the new license for THB 3.47
million.

Cash flows from financing activities reduced by (79.92%) when compared
with the previous year since the order of raw materials from other
countries decreased from that of 2018. Due to the fluctuated baht and to
prevent risk from forex loss, the Company covered exposure with forward
contract and applied for appropriated T/R paid off period and led to
cost savings and to get the most out of current situation. Interest rate
for T/R increased to 2.00 to 2.80% per year causing higher financial
cost. The Company also paid for dividends for THB 142.38 million. Cash
and cash equivalents by the end of the year then equal to THB 53.34
million. The increase of THB 31.53 million was equivalent to 144.59%
y-o-y.

The Company’s capital structure comprises debt-to-equity ratio, which
was 0.22 times in 2019. The company managed to purchase raw materials to
fulfill reduced market demand. Various factors affected sales revenue
led to lower current liabilities. With the increase in employee benefit
obligation mentioned earlier and the decrease in operational result
compared to 2019, the company was still being able to manage and control
effective financial position, as a result, debt-to-equity ratio
reasonably decreased to a low level and this ratio level is considered
very well.

Interest coverage ratio decreased from 128.70 times in 2019. From the
aforementioned operation result, the Company saw operation cash flow
increased. The policy to reduce the raw material purchase and the
appropriate pay-off T/R creditor, the increase in T/R interest rate led
to the increase in financial cost. The interest coverage increased when
compared to the previous year.

The 2019 Company’s operating results saw a decrease in net profit.
Therefore, its return on assets, return on fixed assets decreased to
12.10%, and 179.37% respectively. The asset turnover ratio decreased to
81.08 times. All in all, this still indicates the ability in profit
generation from the wise and efficient use of assets in accordance with
current situation when compared with the previous year.

From the capital structure shown, the Company still has the policy to
carefully manage its finance in order to achieve maximum returns, while
keeping risks that may impact its operation to a minimum. The Company
still places emphasis on investment in wise and efficient spending to
achieve highest revenue possible. To this end, the Company set the
policy to properly order raw materials in terms of quantity, quality and
price, to be in accordance with the market situation at that particular
moment. In terms of exchange rate risk, which is outside factor that may
impact the Company’s operating results, the Company has set the policy
to prevent risk from fluctuation. To doing so, the Company has managed
foreign debt payment term in order to achieve the lowest cost capital
possible by doing forward contract to reduce its risks.

The Company has continuously recognized the importance of financial
stability. Therefore, the Company has a policy to carefully manage its
finance by using its current liabilities to invest in current assets in
order to achieve financial liquidity and maximum returns while making
the most efficient use of financial capital possible. This goal is to
generate the highest returns to shareholders while keeping important
financial ratios in good levels, which can be seen in the operating
results of 2019, as mentioned earlier.

Important key factors that have impact to the operation in the year
2020, Thai economy has a tendency that there are limitations from the
conditions and risk factors from the fluctuations of the global economy,
which is expected to continue to grow continuously in a narrow range
under support factors from:

1. Improving income base in the economy, employment, inflation and low
interest rates including government’s measures to take care of
low-income people. These are supporting factors to the continuously
expansion of household spending.

2. Private investment is likely to expand clearly in the machinery and
tools categories, which generates higher utilization rate of production
capacity in the industry. This will encourage the manufacturing sector
to invest more to expand production capacity. In addition, important
infrastructure investment projects of the government sector have also
progressed continuously.

3. Government investment is likely to expand faster than the year 2019
due to an increase in budget expenditures under investment which can be
disbursed faster and continue to increase the budget overlap for years.
As well as the progress of major infrastructure investment projects,
especially projects under the Transport Operations Plan.

4. The expansion of the tourism sector that was affected by temporary
factors. It is expected that the tourism sector will return to normalcy
and support the expansion of the Thai economy in the second half of
2020.

5. Changing the direction of trade, production and international
investment which will help reduce the impact of the global economic
slowdown. This is in part caused by trade barriers in the United States
and China, thus causing the idea to avoid the effects of trade barriers
such as relocation of production from affected countries, adjusting the
direction of trade and the production belt between such countries. Apart
from reducing the impact of trade barriers, while the global economy
slows down, it is also a good opportunity for exports and investment to
increase the potential for economic expansion as well.

However, there are still risk factors of the economic system that would
cause lower expansion than expected and the risks of volatility in the
global economy still expect to be high. These factors are including the
results of trade negotiations between the US and China, US trade barrier
against various countries, Chinese economic slowdown that may occur
sooner than expected, and the economic instability caused by the
imbalance of the economy resulting from the movements of capital and
production bases due to trade barriers, the impact of the withdrawal of
the United Kingdom the European Union. Direction and policy of the
government will help give confidence of investors and in tourism sector.
Thus, there is a possibility that the annual budget expenditure process
and approval of investment projects of the year 2020 could be delayed.

The trend of the agricultural economy in 2020 is expected to expand with
low rate, which in all branches of production has expected to be
slightly increased (Source: Agricultural Economic Status, 2019 and
Trends in 2020 from the Agricultural Policy and Development Plan
Department, the Office of Agricultural Economics) with supporting
factors such as agricultural policy and measures that continues to
benefits farmers. This is the collaboration between the government, the
private sector and civil society that will help push for more efficient
agricultural production. These factors will strengthen the farmer
sectors in the production planning that are in line with marketing needs
resulting in more stable income for farmers.

General weather and water content are still favorable to agricultural
production during the second half, with the government planning to use
water from irrigation projects throughout the country. This is for the
sufficiency of dry season crops together with the forecast that the
climate in 2020 will continue to be favorable for crop cultivation and
not to experience severe natural disasters. Furthermore, the public and
private sectors encourage farmers to grow crops in appropriate areas and
also facilitate the development of production, processing and marketing
of agricultural products. Altogether, this will help to increase the
efficiency of production process. However, it still needs to monitor
various situations and factors that may have impact the crops
cultivation in the country including the water content in major dams,
climate variability as well as the outbreaks of various pests and plant
diseases.

The production of agricultural products that are expected to be
increased, namely in-season rice, maize, cassava, rubber, oil palm, and
pineapple, in contrary, the agricultural products that are expected to
be decreased, namely off-season rice, and sugar cane.

In terms of market price, it is expected that rice, maize, longan,
durian, mangosteen and rambutan will be in good price. This is due to
the demand of both domestic and international markets continuously,
together with the farmers having more knowledge and understanding in
developing product quality to meet the needs of consumers.

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, let market
forces operate on their own, and seeking market channel aboard.

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
and allow farmers to easier fund accessibility.

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.

Raw material prices rising higher with world market conditions are a
risk factor, making the cost price of products higher. The fluctuation
of oil prices, THB fluctuation and weakening, drought and flooding, and
the new regulation from the government 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 and the using of forward contract
to reduce risks with prudent 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.  Arrange enough budget to handle with the Hazardous substance Act
    (No.3) B.E. 2551 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.