SECTION 1 : EXECUTIVE SUMMARY

Serm Suk Public Company Limit was established in 1952 (B.E. 2495) to
manufacture and distribute carbonated soft drinks under the brand names
Pepsi, Mirinda, Seven-Up, Mountain Dew, and Club under the license from
Pepsi-Cola International Co., Ltd., New York. With over 50 years of
experience, the Company has developed its products, expanded the
manufacturing base and consumer market. Today, the Company gains
approximately 50 % market share in the soft drink market and is the
market leader in the cola segment. Besides the carbonated soft drinks,
the Company is also the manufacturer and distributor of Crystal drinking
water, Crystal soda water, Lipton Ice Tea, and Gatorade Sport Drink.

For distribution, at present, the Company is the distributor of “Red
Carabao” and “Carabao XO” for Carabao Tawandang Co., Ltd., and “Oishi”
green tea for Oishi Trading Co., Ltd., Lipton ready to drink tea in cans
and PET bottles for Pepsi Lipton International Co., Ltd., and Tropicana
Twister fruit juice for Pepsi-Cola (Thai) Trading Co., Ltd.

The Company has distributed its products through several channels, i.e.
direct sales to the consumers, direct orders from hypermarkets and
modern trades, and through the appointed agents, etc.

There are approximately 268,644 customers all over the country composing
of direct consumers purchasing from sales trucks, retailers, convenient
stores, supermarkets, superstore, hyper markets, restaurants, food
shops, and entertainment complex. Currently the Company’s production
capacity is estimated at 560,041 bottles per hour with 5 production
plants in Pathumthani, Nakornratchasima, Nakornsawan, Suratthani and
Chonburi, and 46 warehouses all over the country.

The Company’s performance in 2006 was crucially affected by the increase
of costs and overheads. Despite retail price increase for soft drinks
granted by the internal trade department for the first time in the past
7 years, the extra revenues from price increase still could not offset
the increase of costs and expenses. In 2006, sales revenues registered
at Baht 18.65 billion, increased by Baht 2.616 billion or 16 percent
from year before. The increase was due mainly to higher sales volume of
all beverages, particularly soft drinks and Crystal drinking water, the
launches of new products, and price increase as from May onwards. Cost
of goods sold increased by 22 percent, higher than percentage increase
in sales, as a result of cost increase of major raw materials such as
sugar and concentrate, packaging materials, fuel price, production
wages, and excise tax. On selling and administrative expenses, the
increase of diesel price was the major factor for higher transportation
costs, in addition to annual wage and salary adjustment. The strong
market competition also required the company to increase its advertising
and sales promotion spending to protect and gain shares of its products.
All these increases and the increase of other necessary expenses led to
6% increase of selling and administrative expenses. The Company’s net
profit registered at Baht 521 million, Baht 10 million or 2 percent
higher than last year.

However, the Company still has a strong financial position and high
liquidity. As at December 31, 2006, the Company has cash balance of Baht
935 million available as operating fund.