Financial Highlight

  (A) Auditor report

The auditor has reported the financial statements of Pato Chemical
Industry Public Co.,Ltd. as of 31 December of 1998, 1999, 2000 and 2001
without any conditions.

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

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

  -------------------------------------- ------------ -------- ------------ -------- ------------ -------- ------------ ------------ --------
                                         1998                  1999                  2000                               2001         

                                         Amount       %        Amount       %        Amount       %                     Amount       %

  Assets                                                                                                                             

  CURRENT ASSETS                                                                                                                     

  Cash in hand and at Bank               1,087        0.24     70,151       14.46    9,377        2.29                  12,894       3.63

  Short-term investment                                                                                                              

  Fixed deposit                          35,593       7.91     359          0.07     25,558       6.25                  17,789       5.01

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

  Investment in listed company           -            -        2,020        0.42     -            -                     -            -

  Accounts and note receivable -net      139,345      30.95    118,314      24.39    139,419      34.08                 115,476      32.51

  Inventories                            133,305      29.61    147,034      30.32    88,267       21.58                 90,479       25.47

  Other current assets                                                                                                               

  Vat receivable                         -            -        -            -        -            -                     -            -

  Others                                 7,777        1.73     7,974        1.64     6,349        1.55                  6,446        1.81

  Total current assets                   317,107      70.44    345,852      71.31    268,970      65.75                 243,084      68.44

  Investment in subsidiary                                                                                                           

  Loan to Subsidiary                     -            -        6,000        1.24     9,262        2.26                  4,600        1.30

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

  Investment in subsidiary               -            -        -            -        22,557       5.51                               

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

  Property, Plant and Equipment Net      113,925      25.31    115,849      23.89    107,966      26.39                 99,134       27.91

  Excess of Cost of Investment Over      -            -        -            -        -            -                     -            -

  Other Assets                                                                                                                       

  Refundable income tax                  -            -        -            -        -            -                     6,489        92.99

  Deposit with financial institutions    15,543       3.45     15,543       3.20     -            -                     -            -

  Deposits and guarantee                 541          0.12     140          0.03     220          0.05                  130          0.04

  Deferred charge                        3,089        0.69     1,632        0.34     74           0.02                  359          0.10

  Total other assets                     19,173       4.26     17,315       3.57     294          0.07                  6,978        1.96

  Total assets                           450,205      100.00   485,016      100.00   409,049      100.00                355,203      100

  Liabilities and Shareholders' Equity                                                                                               

  Current Liabilities                                                                                                                

  Bank Overdrafts and loans from bank    -            -        55,805       11.51    1,629        0.40                  23,892       6.73

  Accounts and notes payable – Associate 91,177       20.25    57,861       11.93    63,689       15.57                 14,558       4.10
  Company                                                                                                                            

  - Other Companies                      15,548       3.45     13,902       2.87     17,406       4.26                  11,594       3.26

  Current portion of long-term loans     -            -        5,053        1.04     295          0.07                  973          0.27

  Short Term Loans from Subsidiary       -            -        -            -        -            -                     -            -
  Company                                                                                                                            

  Other current liabilities                                                                                                          

  Accrued income tax and accrued         7,453        1.66     7,256        1.50     8,007        1.96                  5,906        1.66
  expenses                                                                                                                           

  Other                                  3,144        0.70     138          0.03     264          0.06                  148          0.04

  Total Current Liabilities              117,322      26.06    140,015      28.87    91,290       22.32                 570,71       16.07

  Loan from assocoate company            -            -        -            -        -            -                     -            -

  Long Term Loans                        -            -        100          0.02     -            -                     526          0.15

  Provision for loss in a subsidiary     202          0.04     2,463        0.51     -            -                     -            -
  company                                                                                                                            

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

  Total Liabilities                      117,524      26.10    142,578      29.40    91,290       22.32                 57,597       16.22

  Minority Interest                      -            -        -            -        -            -                     -            -

  Shareholders' equity                                                                                                               

  Share capital-common share Bht. 10 par                                                                                             
  value                                                                                                                              

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

  Issued and fully paid-up share capital 140,000      31.10    140,000      28.87    140,000      34.23                 140,000      39.41
  14,000,000 shares                                                                                                                  

  Premium on share capital               135,000      29.99    135,000      27.83    135,000      33.00                 135,000      38.01

  Retained earning                                                                                                                   

  Appropriated for reserve fund          10,730       2.38     14,000       2.89     14,000       3.42                  140,000      3.94

  Unappropriate                          46,951       10.43    53,418       11.01    28,759       7.03                  8,606        2.42

  Unrealised gain on securities held as  -            -        20           0.00     -            -                     -            -
  available-for-sale                                                                                                                 

  Total Shareholders' Equity             332,681      73.90    342,438      70.60    317,759      77.68                 297,606      83.78

  Total Liabilities and Shareholders'    450,205      100.00   485,016      100.00   409,049      100.00                355,203      100.00
  Equity                                                                                                                             

  Book value per share(baht)             23.76                 24.46                 22.70                              21.26        

  Par Value                              10                    10                    10                                 10           

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

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

                                         1998                  1999                  2000                  2001                      

                                         Amount       %        Amount       %        Amount       %        Amount                    %

  Revenues                                                                                                                           

  Sales                                  519,522      92.33    520,219      98.46    508,478      97.29    435,576                   97.94

  Share of profit(loss)in subsidiary     6,692        1.19     -            -        5,019        0.96     -                         -

  Profit from exchange rate              19,826       3.52     -            -        -            -        1,804                     0.41

  Other income                           16,653       2.96     8.152        1.54     9,153        1.75     7,357                     1.65

  Total Revenues                         562,693      100.00   528,371      100.00   522,650      100.00   444,737                   100.00

  Expenses                                                                                                                           

  Cost of sales                          452,662      80.45    440,408      83.35    446,658      85.46    371,492                   83.53

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

  Bad debt and doubtful debt             14,445       2.57     3,861        0.73     1,611        0.31     1,889                     0.42

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

  Others                                 34,086       6.06     43,252       8.19     43,721       8.37     41,277                    9.28

  Loss from exchange rate                -            -        7,094        1.34     7,456        1.43     -                         -

  Share of loss in subsidiary            -            -        2,261        0.43     -            -        9,018                     2.03

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

  Interest Expenses                      10,282       1.83     401          0.08     1,453        0.28     270                       0.06

  Directors remuneration                 256          0.05     356          0.07     600          0.11     859                       0.19

  Total Expenses                         511,731      90.94    497,633      94.18    501,499      95.95    436,891                   98.24

  Net Income(Loss) before Income Tax and 50,962       9.06     30,738       5.82     21,151       4.05     7,846                     1.76
  extraordinary                                                                                                                      

  Income Tax                             -            -        -            -        (3,810)      (0.73)   -                         -

  Net Income (Loss) from operation       50,962       9.06     30,738       5.82     17,341       3.32     7,846                     1.76

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

  Net Income (Loss) before extraordinary 50,962       9.06     30,738       5.82     17,341       3.32     7,846                     1.76
  item                                                                                                                               

  Loss on exchange rate from adoption                                                                                                
  the manage float                                                                                                                   

  The company and subsidiary             -            -        -            -        -            -        -                         -

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

  Net income (loss)                      50,962       9.06     30,738       5.82     17,341       3.32     7,846                     1.76

  Earning per share                      3.64                  2.20                  1.24                                            

  Par value                              10.00                 10.00                 10.00                 10.00                     

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

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

  Statement of Cash Flows for the Year                                   
  Ended December 31                                                      

                                         1998      1999       2000       2001

  Cash Flows from Operating Activities                                   

  Net Income                             50,962    30,738     17,341     7,846

  Adjustments to reconcile net income to                                 
  net cash                                                               

  provided by operating activities                                       

  Unrealized gain on exchange rate       (6,970)   (2,642)    37         187

  Unrealized loss on exchange rate       -         -          -          -

  Gain on disposal of short-term         (4,460)   -          -          -
  investment                                                             

  Minority interest                      -         -          -          -

  Share of (profit) loss in subsidiary   (6,692)   2,261      (5,019)    9,018

  Short-term Investment                  37,560    -          -          12,086

  Provision for absolence                -         -          -          -

  Depreciation and amortization          14,982    12,501     13,995     12,432

  Allowance for doubtful accounts        14,445    3,860      1,611      1,889

  Gain on disposal of fixed assets       (700)     (2,346)    -          (557)

  Gain on disposal of investments in     -         -          -          -
  subsidiary                                                             

  Excess of cost of investment over the  -         -          -          -
  net book                                                               

  Income from operating before changing                                  
  in operating                                                           

  assets and liabilities                 61,567    44,372     27,965     42,901

  (Increase) decrease in operating                                       
  assets                                                                 

  Account and note receivables           1,985     17,170     (22,716)   22,053

  Inventories                            45,712    (13,728)   58,767     (2,212)

  Other current assets                   (1,238)   (198)      1,626      (51)

  Refundable Income Tax                  -         -          -          (6,489)

  Other assets                           (816)     456        (143)      (196)

  Increase(decrease) in operating                                        
  liabilities                                                            

  Notes and account payable              92,513    9,331      9,331      (54,975)

  Accrued income tax and accrued         1,631     751        751        (2,100)
  expenses                                                               

  Other current liabilities              1,379     (3,007)    126        (116)

  Net cash provided by(use in) operating 202,733   11,119     75,707     (1,185)
  activities                                                             
  -------------------------------------- --------- ---------- ---------- ----------

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

  Statement of Cash Flows for the year                                     
  ended December 31                                                        

                                         1998        1999       2000       2001

  Cash Flows from Investing Activities                                     

  Increase in called and fixed deposit   -           -          (5,098)    (12,130)

  Increase in short-term investment      60,800      (2,000)    2,000      -

  (Increase)decrease in deposit with     (15,543)    -          15,543     -
  financial institution                                                    

  Proceeds from sale of fixed assets     920         2,663      -          -

  Acquisition of fixed assets            (9,157)     (8,186)    (9,349)    (3,939)

  Decrease in loans to                   -           (6,000)    (3,262)    9,262

  (Increase) in Loan to related company  -           -          -          (4,600)

  (Increase) in investment in subsidiary -           -          (20,000)   1,406

  (Increase) in investment in related    -           -          -          (1,406)
  company                                                                  

  Cash received from disposal of assets  -           -          -          896

  Net cash used in investing activities  37,020      (13,523)   (20,166)   (10,511)

  Cash Flows from Financing Activities                                     

  Increase(decrease)I in bank overdrafts (201,212)   57,235     (54,214)   22,110
  and loan                                                                 

  (Increase) decrease in loans to        -           -          -          -
  associated company                                                       

  Increase in loan from subsidiary       (2,000)     -          -          -

  Increase in long-term loans            -           -          -          -

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

  Cash received from minority interest   -           -          -          -

  Increase in premium and share capital  -           -          -          -

  Dividend paid                          -           (21,000)   (42,000)   (28,000)

  Minority interest                      -           -          -          -

  Net cash provided by (used in)         (203,212)   36,235     (96,214)   (4,686)
  financing activities                                                     

  Increase(decrease) in cash             36,541      33,831     (40,673)   (16,382)

  Cash beginning of year                 139         36,680     70,510     34,935

  Cash end of year                       36,680      70,511     29,837     18,553
  -------------------------------------- ----------- ---------- ---------- ----------

(c) Financial Ratio

Pato Chemical Industry Public Co.,Ltd. Financial Ratio 1998-2001

  ------------------------------------- ---------- --------- --------- ---------
                                        1998       1999      2000      2001

  Liquidity Ratio                                                      

  Current Ratio (Time)                  2.70       2.47      2.95      4.26

  Quick Ratio (Time)                    1.50       1.36      1.91      2.56

  Cash Flow Ratio (Time)                1.14       0.09      0.65      (0.02)

  Receivable Turnover (Time)            3.52       4.04      3.95      3.42

  Collection Period (Day)               102        89        91        105

  Inventory Turnover (Time)             2.90       3.14      3.80      4.16

  Inventory T/Period (Day)              124        114       95        87

  Account Payable Turnover (Time)       7.08       4.93      5.82      6.93

  Payment Period (Day)                  51         73        62        52

  Cash Cycle (Day)                      175        130       124       140

  Profitability Ratio                                                  

  Gross Profit Margin (%)               12.87      15.34     12.16     14.71

  Profit from operation (%)             3.48       6.22      3.12      4.61

  Other profit (%)                      5.84       0.03      1.01      (2.75)

  Cash (%)                              1,121.75   34.38     476.50    (5.91)

  Net Profit Margin (%)                 9.06       5.82      3.32      1.76

  Return on Equity (%)                  16.59      9.11      5.25      2.55

  Efficiency Ratio                                                     

  Return on Total Assets (%)            10.50      6.57      3.88      2.05

  Return on Fixed Assets (%)            55.97      36.42     26.55     19.58

  Assets Turnover (Time)                1.16       1.13      1.17      1.16

  Financial Ratio                                                      

  Debt to Equity (Time)                 0.35       0.42      0.29      0.19

  Interest Coverage (Time)              20.72      28.73     55.73     (3.39)

  Cash Basis (Time)                     0.90       0.37      0.57      (0.05)

  Payout Ratio (%)                      41.21      136.36    161.47    98.14

  Per Share (Baht)                                                     

  Book Value (Baht)                     23.76      24.46     22.70     21.26

  Earning per Share (Baht)              3.64       2.20      1.24      0.56

  Dividend per Share (Baht)             1.50       3.00      2.00      0.55

  Growth Rate                                                          

  Total Sale (%)                        (13.52)    7.73      (15.66)   (13.16)

  Cost of Goods Sold (%)                (50.80)    21.32     (35.97)   (36.91)

  Sales Revenue (%)                     38.43      0.13      (2.26)    (14.34)

  Selling & Admin Expense (%)           (47.73)    11.84     (2.15)    (17.54)

  Net Profit (%)                        140.69     (39.68)   43.58     (54.75)
  ------------------------------------- ---------- --------- --------- ---------

2) Management Discussion and Analysis

In the consolidated financial statement of Pato Chemical Industry Public
Co. Ltd. and its subsidiary companies, net profit (loss) totaled 30.74,
17.34 and 7.85 million baht in 1999 – 2001 respectively. These figures
represent an increase and reduction of (39.68%) , (43.58%) and (54.75%)
respectively.

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

As a result of a bid to control the effect of pesticides on the
environment, the Government enforced laws prohibiting the import and
sale of certain products, causing the company’s total sales to fall. It
was necessary for the company to urgently develop new products to
replace these prohibited products. The period was also marked by
competition from rivals with regard to quality and price. Price was used
as the basis for formulating competitive strategy. There were also
market expenses and increased costs for developing new products.
Agricultural produce prices fell in 2000 and 2001 as a result of floods
from heavy rain in the South and the Northeast which caused great damage
to farm produce. As a result, farmers had extremely less purchasing
power. At the same time, there were fluctuating effects from foreign
exchange rates and a weakened baht, causing prices for imported raw
materials to rise.

Sales revenue during 1999 – 2001 was 520.22, 508.48 and 435.58 million
baht respectively, representing increases (reductions) of 0.13%, (2.26%)
and (14.34%) respectively.

Total revenue during 1999 – 2001 was 528.37, 522.65 and 444.74 million
baht, representing increases (reductions) of (6.10%), (1.08%) and
(14.91%) respectively.

Sales costs in 1999 – 2001 were 440.41, 446.66 and 371.49 million baht,
representing increases (reductions) of (2.71%), 1.42% and (16.83%)
respectively.

In 1999, there was a continued slump in the economy and the baht, which
had become stronger, weakened somewhat. However, raw material prices
still fell by about 15% leading to more efficient administration of
production costs which in turn, lowered production costs. Meanwhile,
prices for agricultural products fell, causing sales revenue of the
company alone to increase only slightly by 0.13%.

In 2000, economic conditions still presented a major problem for
businesses, causing agricultural product prices to fall. Environmental
conditions, such as the flood and the effect of the laws mentioned
above, played a key role in causing total distribution of these products
to fall by 18.53% of total sales. By urgently developing new products as
replacement, this sparked competition with regard to price and market
expenses, including expenses for research and developing the new
products, thus leading to higher costs for these products. And as these
new products were still within the Introduction State, this meant a
smaller profit margin so as to compete with rivals in the market. The
weakened baht in 2000 made production costs higher.

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

Table showing rate of increases (reduction) during 1999-2001

+------+--------------------+-------------------+---------------------+
| Year | PATO               |                   |                     |
+------+--------------------+-------------------+---------------------+
|      | Sales Revenue      | Consolidated      | Cost of Sale        |
|      |                    | revenue           |                     |
+------+--------------------+-------------------+---------------------+
|      |                    |                   |                     |
+------+--------------------+-------------------+---------------------+
| 1999 | 0.13               | (6.10)            | (2.71)              |
+------+--------------------+-------------------+---------------------+
| 2000 | (2.26)             | (1.08)            | 1.42                |
+------+--------------------+-------------------+---------------------+
| 2001 | (14.34)            | (14.91)           | (16.83)             |
+------+--------------------+-------------------+---------------------+

Sales and services expenses during 1999-2001 totaled 47.47, 45.93 and
44.03 million baht, representing increases (reductions) of (2.70%),
(3.24%) and (4.15%) respectively, not including losses from foreign
exchange rates and interest payable.

Interest payable in 1999 – 2001 totaled 0.40, 1.45 and 0.27 million
baht, representing increases (reductions) of (96.10%), 262.34% and
(81.42%) respectively.

In 1999, there was only a slight reduction in sales and administrative
costs. However, revenue from sales increased by only 0.13% due to
extremely competitive market conditions regarding product prices. This
was coupled by the fact that agricultural product prices declined.
Therefore, the company focused on cash sales for its products in order
to reduce risk from bad debts. This pushed the company’s sales costs up
by 9.27 million baht for such costs as commission fees totaling 5
million baht, sales promotion costs of 2 million baht, 1.3 million baht
for salary and other costs totaling 1 million baht. These represented a
26.98% increase over last year’s sales costs. Due mainly to the
company’s policy for promoting cash sales of products. The company was
able to reduce its risk from bad debts to only 3.86 million baht , or a
reduction of 73.27%. The company therefore had very good liquidity,
while interest payable declined by 9.88 million baht, or 96.10%. This
came from effective administration according to set policy, leading the
company to enjoy better liquidity.

In 2000, sales and administrative costs decreased by 3.24% from a
reduction of bad debts which was down by 2.25 million baht from 1999, or
58.27%. The company had a cautious policy for releasing credit to
clients and making cash sales, emphasizing on discounts for payments
made on time. Meanwhile, interest payable increased by 1.05 million
baht, or 262.34%, because a total of 0.71 million baht of Krung Thai
promissory notes were sold off at a reduced price, and due to payable
interest for car hire-purchases totaling 0.23 million baht.

In 2001, sales and management costs decreased by 1.91 million baht, or
4.15%, due to efficient cost management policies which led to efficient
control and reduction. Sales costs and management costs mostly decreased
by 3.41 million baht. But at the same time, there was an increase for
certain types of costs such as for costs bank fees, which increased by
0.85 million from year 2000, director remuneration which rose by 0.20
million, cost for additional association members amounting to 0.18
million baht and an increase of 0.27 million in bad debts.

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

The above operational results led to initial profits during 1999 – 2001
to total 79.81, 61.82 and 64.08 million baht respectively, representing
a percentage of 15.34, 12.16 and 14.71, respectively.

Operational profits in 1999 – 2001 came to 32.34, 15.89 and 20.06
million baht respectively, representing percentage of 6.22, 3.13 and
4.61 respectively.

Net profits in 1999 – 2001 came to 30.74, 17.34 and 7.85 million baht,
or a percentage of 5.82, 3.32 and 1.76 respectively.

Return rate for shareholders during 1999 – 2001 were 9.11%, 5.25% and
2.55% respectively.

In 1999, the baht became stronger, cutting raw material costs by 15% and
increasing gross profit margin while sales revenue was slightly
increased. Efficient production management led to a cutting production
costs. Sales and administrative expenses were successfully controlled.,
increasing operational profit rates. But then the baht weakened, leading
to 7.10 million baht in foreign exchange losses or 1.34% of consolidated
revenue. In addition there was a sharing of loss from the subsidiary
company at 2.26 million baht or 0.43% of total revenue. This resulted in
the net profit to fall by 5.82%. As a result return on equity was at a
rate of 9.11%.

In 2000, total sales reduced by 2.26% and total revenue reduced by
1.08%. New products accounted for 18% of total sales, pushing product
sales costs higher. To remain competitive, it was necessary to reduce
gross profit margin of the products. This led to an overall reduction in
gross profit margins. S G & A reduced by 3.24%, however, profit was
reduced compared to 1999. Risk from forex was reduced by 7.45 million
baht or 1.43% with policy to take full 100% forward position. Sharing of
profit from subsidiary company was 5.10 million baht or 0.96 % of total
revenue. Net profit reduced by 3.32% and return on equity reduced by
5.25%.

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

Total assets in 1999-2001 amounting to 485.02, 409.05, and 355.20
million baht respectively, marked an increase (decrease) at a percentage
of 7.73, (15.66) and (13.16) respectively.

Total liabilities in 1999-2001 amounting to 142.58, 91.29 and 57.60
million baht, marked an increase (decrease) of 21.32%, (35.97%) and
(36.91%) respectively.

Shareholder equity in 1999-2001 amounting to 342.44, 317.76 and 297.61
million baht, marked an increase (decrease) of 2.93%, (7.21%) and
(6.34%) respectively.

In 1999, the company still emphasized a cash sales policy aimed at
reducing risk from doubtful debts and building up the company’s good
potential. As a result, total sales rose by 0.13% and sales costs
decreased, thus making gross profit margins higher.

Operational cash flow decreased by 94.52%, liquidity ratio was down to
2.70% from 2.47% in 1998. Quick ratio decreased from 1.50% in 1998 to
1.36% in 1999 due to an increase in overall distribution. But at the
same time, the debt collection period shortened from 102 days to 89 days
in 1999. Thus, total outstanding debtor accounts still decreased by as
much as 21.03 million baht or 15.09% from 1998. Product selling period
averaged at 114 days, a reduction from the 1998 figure of 124 days. This
led to a 10.30% increase in outstanding inventory. Debt repayment
periods expanded from 51 days in 1998 to 73 days in 1999, cutting the
cash cycle down to 130 days. The increase in sales from 1998 for 46.82
million baht or 12.43% which Pato was granted with longer credit term
for L/C, T/R from supplier increasing current liabilities from 1998 from
22.69 million baht or 19.34%. Consequently, liquidity ration was
reduced. The company acquired new transport to support the increase in
operations, and by doing so, permanent assets were increased 1.69%. The
company paid out 21 million baht in dividends. Bank overdrafts and
financial institution loans rose by 55.81 million baht.

In 2000, the company’s total distribution volume decreased by 2.26%
while operational cash flow increased by 508.88 %, with liquidity ratio
rising from 2.47 in 1999 to 2.95 in year 2000. Quick ratio rose from
1.36 in 1999 to 1.91 in 2000 because of the 17.84% increase in debtors
and 39.97% reduction in inventory stocks. Debt collection periods were
extended beyond 89 days in 1999, to 91 days in 2000. Products were also
sold within a shorter period of time, from within 114 days in 1999, to
95 days in 2000, while debts were repaid faster, from within 73 days in
1999, to 62 days in 2000, reducing the cash cycle to 124 days.
Commercial creditors increased by 13.00%. Because there was a preparing
of products to meet market demand, with consideration given to suitable
demand, inventory stocks decreased during the 1^(st) to 3^(rd) quarters,
to clear prior stocks first. . Particularly in the 4^(th) quarter, total
raw material orders rose in order to meet demand of the next year. Thus,
total raw material orders for 2000 decreased by a total of 70 million
baht, or 19.81%, from year 1999.

Cash flow from investment activities decreased by 49.21% from more
buying of fixed assets and sale of 15.54 million baht in promissory
notes at reduced price. Cash flow from procurement activities decreased
by 365.33% from repayment of 54.21 million baht in bank loans, dividend
payments totaling 42 million baht and the company also made increased
investment in 2 million shares in subsidiary companies, with price per
share at 10 baht, amounting to a total of 20 million baht.

In 2001, total distribution volume fell by 14.34% while operational cash
flow fell 101.57%, and liquidity ratio rose from 2.95 in 2000 to 4.26 in
2001. Quick ratio rose from 1.91 in 2000, to 2.56 in 2001. The 9.62%
reduction in circulating assets from 2000 and the 37.48% fall in
circulating liabilities, improved the liquidity ratio. While cash
liquidity ratio decreased because of faster payments to trade creditors,
with debt collection period extended from 91 days in 2000 to 105 days in
2001. Products were also sold within a shorter period of time, from
within 95 days in 2000, to 87 days in 2001, and debt repayments were
faster, from 62 days in 2000, to 52 days in 2001. Thus in 2001, Cash
Cycle increased to 140 days.

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

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

A study of the capital structure showed that debt to equity was 16.22%
to 83.78% in 2001, or a debt to equity ratio of 0.19% times. This is a
reduction from the preceding year and is a low ratio, and had come from
the company’s careful financial management, particularly in using
circulating liabilities to invest in inventory for highest return
possible. The ratio was also controlled not too rise too high that it
could cause financial risk.

The key factor that is important and will affect operations in 2002, is
that economic conditions are not yet expected to improve. This is
despite the fact that the government has tried to help farmers by giving
a 3-year debt moratorium, adopting a policy of intervention and
guarantee of rice prices through mortgaging, and providing a village
fund so as to promote liquidity or solve economic problems at the root
cause. The government, however has not achieved all set targets in the
one-village one-product project. It is only policy that affects farmers,
without helping the entire agricultural sector. With financial status ,
a key factor, farmers will have reduced purchasing power, leading to
reduced agricultural produce quality and ultimately, lower earnings for
the farmers due to lower prices for farm goods. Also, instability in the
baht’s value will affect raw material prices. The effect from foreign
exchange rates will be a crucial factor in pushing product prices
higher. These are outside factors that cannot be controlled. However,
risks can be reduced by such measures as:

1.  Company policy to undertake Forward Rate purchase on foreign
    exchange for raw material imports and distribution of exports to
    reduce risks.

2.  Practicing more caution when ordering raw materials, seeing that it
    concords with needs. This will reduce damage from excessive
    inventory.

3.  Making careful consideration before opening new trade accounts and
    expanding credit lines to prevent damage from bad debts.

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

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