11. Financial Highlight

(1) Financial statements

  The company paid 480,000 Baht to the auditor for audit fee. There was
  no non-audit fee.

  Auditor report

The auditor has reported the financial statements of Pato Chemical
Industry Public Co., Ltd. as of 31 December of 2009-2012 without any
conditions.

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

  Pato Chemical Industry Public Company Limited And Subsidiary

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

  Separated Financial Statements Consilidated

  -------------------------------- ------------- --------- -------- ------- --------- ------------- -------- -------- ------------- --------- -------- -------- --------- ------------- -------- -------------- ------------- -------- ------------- --------
                                                 2009                       2010                                                    2011                        2012                                            2011                   2012          

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

  ASSETS                                                                                                                                                                                                                                             

  CURRENT ASSETS                                                                                                                                                                                                                                     

  Cash and cash equivalents                      37,187    5.95             33,388                           4.50                   181,028            31.09    11,105                  2.08                    185,992       31.95    15,993        3.00

  Short - term investments                       253,486   40.59            295,198                          39.78                  178,930            30.73    275,431                 51.68                   178,930       30.73    275,431       51.59

  Trade accounts receivable                      161,177   25.81            163,006                          21.97                  52,173             8.96     62,698                  11.74                   54,413        9.35     62,698        11.74

  Inventories                                    102,674   16.44            175,274                          23.62                  84,941             14.59    90,960                  17.03                   84,941        14.59    90,960        17.04

  Assets held for sale                           -         -                -                                -                      500                0.09     -                       -                       500           0.09     -             -

  Advances for inventories                       -         -                2,577                            0.35                   -                  -        -                       -                       -             -        -             -

  Other current assets                           2,495     0.40             1,937                            0.26                   2,240              0.38     -                       -                       -             -        -             -

  Total current assets                           557,019   89.19            671,380                          90.47                  499,812            85.84    440,194                 82.43                   504,776       86.70    445,082       83.30

  NON - CURRENT ASSETS                                                                                                                                                                                                                               

  Available-for sale investment                                                                                                                                 8,998                   1.09                    -             -        8,998         1.69

  Investment in subsidiary                       -         -                -                                -                      5,000              0.86     5,000                   0.94                    -             -        -             -

  Property, plant and equipment -                67,380    10.79            64,012                           8.63                   60,421             10.38    53,501                  10.02                   60,421        10.38    53,501        10.02
  net                                                      14.07                                                                                                                                                                                     

  Intangible assets                              -         -                6,155                            0.83                   15,101             2.59     24,079                  4.51                    15,101        2.59     24,131        4.52

  Other non - current assets                     120       0.02             567                              0.08                   1,903              0.33     2,224                   0.42                    1,903         0.33     2,224         0.42

  Total other assets                             67,500    10.81            70,734                           9.53                   82,425             14.16    93,802                  17.57                   77,425        13.30    88,854        16.64

  Total Assets                                   624,519   100.00           742,114                          100.00                 582,237            100.00   533,996                 100.00                  582,201       100.00   533,935       100.00

  LIABILITIES AND SHAREHOLDERS'                                                                                                                                                                                                                      
  EQUITY                                                                                                                                                                                                                                             

  CURRENT LIABILITIES                                                                                                                                                                                                                                

  Short - term loans from                        80,440    12.88            127,698                          17.21                  -                  -        36,219                  6.78                    -             -        36,219        6.78
  financial institutions                                                                                                                                                                                                                             

  Trade accounts payable - related               -         -                -                                -                      -                  -        19,288                  3.61                    20,983        3.80     19,318        3.62
  companies                                                                                                                                                                                                                                          

  Statements of Financial Position                                                                                                                                                               Consolidated                                        
  (Con) Separate Financial                                                                                                                                                                                                                           
  Statements                                                                                                                                                                                                                                         

  Current portion of hire-purchase 87                               0.01              -             -                 -                       -                           -             -                       -             -        -             -
  contracts payable                                                                                                                                                                                                                                  

  Accrued income tax               27,287                           4.37              33,099        4.46              22,132                  3.80                        7,499         1.40                    22,132        3.60     7,499         1.40

  Accrued expenses                 14,644                           2.34              26,181        3.53              21,138                  3.63                        -             -                       -             -        -             -

  Advanced receive from assets     -                                -                 -             -                 5,000                   0.86                        -             -                       5,000         .86      -             -
  held for sale                                                                                                                                                                                                                                      

  Others current liabilities       202                              0.03              398           0.05              281                     0.05                        613           0.11                    537           0.09     613           0.11

  Total Current Liabilities        156,344                          25.03             223,196       30.08             48,632                  8.35                        63,619        11.91                   48,652        8.36     63,649        11.92

  NON - CURRENT LIABILITIES                                                                                                                                                                                                                          

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

  Employee benefit obligations     -                                -                 -             -                 8,109                   1.39                        8,097         1.52                    8,109         1.39     8,097         1.52

  Total Liabilities                156,344                          25.03             223,196       30.08             56,741                  9.75                        71,716        13.43                   56,761        9.75     71,746        13.44

  SHAREHOLDERS' EQUITY                                                                                                                                                                                                                               

  Share capital-common share Bht.                                                                                                                                                                                                                    
  10 par value                                                                                                                                                                                                                                       

  (2009 : Share capital-common                                                                                                                                                                                                                       
  share Bht. 1.00 par value)                                                                                                                                                                                                                         

  Authorized share capital         140,000                          -                 140,000       -                 140,000                 -                           142,800       -                       140,000       -        142,800       -
  14,000,000 shares                                                                                                                                                                                                                                  

  (2012 : Authorized share capital                                                                                                                                                                                                                   
  1421414222222222221140,000,000                                                                                                                                                                                                                     
  shares)                                                                                                                                                                                                                                            

  Issued and fully paid-up share   140,000                          22.42             140,000       18.87             140,000                 24.05                                                                                                  
  capital 14,000,000 shares                                                                                                                                                                                                                          

  (2009 : Issued and fully paid-up                                                                                                                                        140,000       26.22                   140,000       24.05    140,000       26.22
  share capital 140,000,000                                                                                                                                                                                                                          
  shares)                                                                                                                                                                                                                                            

  (2012 : Issued and fully paid-up                                                                                                                                        135,000       25.28                   135,000       23.19    130,000       25.28
  share                                                                                                                                                                                                                                              

  Premium on share capital         135,000                          21.62             135,000       18.19             135,000                 23.19                       2,660         0.50                                           2,660         0.50

  Retained earning                                                                                                                                                                                                                                   

  Appropriated for legal reserve   14,000                           2.24              14,000        1.89              14,000                  2.40                        14,280        2.67                    140,000       2.40     14,280        2.67

  Un-appropriated                  179,175                          28.69             229,918       30.98             236,496                 40.62                       170,340       31.90                   236,440       40.61    170,250       31.89

  Total Shareholders' Equity       468,175                          74.97             518,918       69.92             525,496                 90.25                       462,280       86.37                   525,440       90.25    462,190       86.56

  Total Liabilities and            624,519                          10.00             742,114       100.00            582,237                 100.00                      533,996       100.00                  582,201       100.00   533,936       100.00
  Shareholders' Equity                                                                                                                                                                                                                               

  Book value per share ( baht )    3.34                                               3.71                            3.75                                                3.30                                  3.75                   3.30          

  Par Value                        1                                                  1                               1                                                   1                                     1                      1             

  Common Share                     140,000,000                                        140,000,000                     140,000,000                                         140,000,000                           140,000,000            140,000,000   
  -------------------------------- ------------- --------- -------- ------- --------- ------------- -------- -------- ------------- --------- -------- -------- --------- ------------- -------- -------------- ------------- -------- ------------- --------

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

  Separate Financial Statements Consolidated

[TABLE]

  Pato Chemical Industry Public Company Limited And Subsidiary

  Statements of Comprehensive Income the year ended December 31 Unit :
  Thousand

  Separate Financial Statements Consolidated

  ----------------- --------- ------- --------- ------- --------- ------- -------- ------- -- --------- ------- -------- -------
                    2009              2010              2011              2012                2011              2012     

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

  Profit for the    157,139   18.24   183,743   20.18   172,415   17.93   85,324   20.39      172,357   17.92   85,291   20.38
  year                                                                                                                   

  Other                                                                                                                  
  comprehensive                                                                                                          
  income:                                                                                                                

  Gain on           -         -       -         -       -         -       2,660    0.64       -         -       2,660    0.64
  remeasuring                                                                                                            
  available-for                                                                                                          
  –sale                                                                                                                  

  Total             157,139   18.24   183,743   20.18   172,415   17.93   85,324   20.39      172,357   17.92   85,291   20.38
  comprehensive                                                                                                          
  income for the                                                                                                         
  year                                                                                                                   

  Profit attribuble                                                                                                      
  to                                                                                                                     

  Equity holders of 157,139   18.24   183,743   20.18   172,415   17.93   85,324   20.39      172,357   17.92   85,291   20.38
  the parent                                                                                                             

  Non-controlling   -         -       -         -       -         -       -        -          -         -       -        -
  interreats                                                                                                             

  Total             157,139   18.24   183,743   20.18   172,415   17.93   85,324   20.39      172,357   17.92   85,291   20.38
  comprehensive                                                                                                          
  income for the                                                                                                         
  year                                                                                                                   
  ----------------- --------- ------- --------- ------- --------- ------- -------- ------- -- --------- ------- -------- -------

[TABLE]

(c) Financial Ratio

Pato Chemical Industry Public Company Limited And Subsidiary Financial
Ratio 2009-2012

  Separate Financial statements Consolidated

  ---------------------- -------- -------- --------- ---------- --- --------- ----------
                         2009     2010     2011      2012           2011      2012

  Liquidity Ratio                                                             

  Current Ratio (Time)   3.56     3.01     10.28     6.92           10.38     6.99

  Quick Ratio (Time)     2.89     2.20     8.47      5.49           8.62      5.56

  Cash Flow Ratio (Time) 1.97     0.69     2.41      (0.38)         2.41      (0.38)

  Receivable Turnover    6.70     5.53     8.88      5.65           8.79      5.65
  (Time)                                                                      

  Collection Period      54       65       41        64             41        64
  (Day)                                                                       

  Inventory Turnover     4.24     4.10     4.84      2.75           4.84      2.75
  (Time)                                                                      

  Inventory T/Period     85       88       74        131            74        131
  (Day)                                                                       

  Account Payable        7.74     4.10     7.71      8.70           6.83      8.70
  Turnover (Time)                                                             

  Payment Period (Day)   47       88       47        41             53        41

  Cash Cycle (Day)       92       65       68        153            63        153

  Profitability Ratio                                                         

  Gross Profit Margin    30.49    36.45    33.99     25.42          33.99     25.42
  (%)                                                                         

  Profit from operation  22.26    25.95    25.40     4.15           25.39     4.13
  (%)                                                                         

  Other profit (%)       1.04     1.55     0.70      22.51          0.70      22.52

  Cash (%)               111.19   56.54    137.87    (159.30)       134.89    (160.24)

  Net Profit Margin (%)  18.24    20.18    17.93     20.39          17.92     20.38

  Return on Equity (%)   35.54    37.23    33.02     17.28          33.01     17.27

  Efficiency Ratio                                                            

  Return on Total Assets 28.61    26.89    26.04     15.29          26.03     15.28
  (%)                                                                         

  Return on Fixed Assets 252.29   298.67   295.16    169.15         295.07    169.09
  (%)                                                                         

  Assets Turnover (Time) 156.86   133.24   145.22    75.00          145.23    75.00

  Financial Ratio                                                             

  Debt to Equity (Time)  0.33     0.43     0.11      0.16           0.11      0.16

  Interest Coverage      271.59   127.87   224.51    1.44           224.49    1.41
  (Time)                                                                      

  Cash Basis (Time)      1.79     0.92     1.98      (0.13)         1.98      (0.14)

  Payout Ratio (%)       84.64    85.34    87.70     98.45          87.72     98.49

  Per Share (Baht)                                                            

  Book Value (Baht)      3.34     3.71     3.75      3.30           3.75      3.30

  Earnings per Share     1.12     1.31     1.23      0.61           1.23      0.61
  (Baht)                                                                      

  Dividend per Share     9.50     1.12     1.08      0.60           1.08      0.60
  (Baht)                                                                      

  Growth Rate                                                                 

  Total Sale (%)         31.77    18.83    (21.54)   (8.29)         (21.55)   (8.30)

  Cost of Goods Sold (%) 170.00   42.76    74.58     26.39          (74.57)   26.44

  Sales Revenue (%)      12.35    5.25     6.53      (66.04)        6.53      (66.04)

  Selling & Admin        9.68     0.26     7.33      (56.36         7.34      (56.36)
  Expense (%)                                                                 

  Net Profit (%)         39.34    16.93    6.17      (50.51)        (6.20)    (50.53)
  ---------------------- -------- -------- --------- ---------- --- --------- ----------

2) Management Discussion and Analysis (Unit : 1,000 Baht)

The financial statement of Pato Chemical Industry Plc. only is used for
the comparison of figures during fiscal year 2010 while the financial
statement of Pato Chemical industry Plc. and subsidiary is used for the
comparison in the fiscal year 2011 and 2012.

The performance of Pato Chemical Industry Plc and subsidiary indicated
net profit (loss) totaled 183.74, 172.35, and 85.29 million baht in 2010
– 2012 respectively. These figures represent an increase or a reduction
percentage of 16.93, (6.20), and (50.53) respectively.

In 2010, overall economic situation had recovered from pending economic
depression since the end of the year 2009. Upon monetary and financial
policy and measures of the countries all over the world helped boost the
world economy in the first half of the year 2009, and continuously
influenced to the second half of the year which made overall economic
situation were in the state of further expansion.

The economic situation of Thailand had still expanded corresponding with
global economic situation resulting from domestic consumption growth
rate and export of private sector as well as the higher growth of
tourism. The economic growth rate was at 7.8 % despite of the draught
crisis where water levels of many major dams were at their minimum
levels at the beginning of the year, the pest outbreak causing damage to
agricultural product, and the heavy flood at the end of the year in the
provinces all over the country. Concert effort of both public and
private sector were made for emergency aid and assistance. The public
sector implemented various kinds of policies and measures, the
relaxation for debts burden, compensation, low interest rate loan, price
guarantee for agricultural product and farmers, for instance. Overall
affected agricultural product had caused lower production rate. However,
higher demand for agricultural products locally and worldwide help push
up its prices. (Office of Agricultural Economics reported a reduction of
agricultural production index by 2.1% in 2009 to 109.9 in 2010, and an
increase of agricultural product price index by 22.8% in 2009 to 155.4
in 2011)

In 2011, global economic growth continued to increase slightly from
various factors both inside and outside the country which affected the
global economy eg., in the United states and in European countries.
Political issues, financial crisis, inflation, public debts crisis
coupled with great earthquake and Tsunami in March caused the world fell
into a recession.

Thailand saw an economic improvement in accordance with the world
economy with a development in local consumption, export, and tourism
industry during the first 3 quarters. The last quarter was affected by
flooding led to a halt in Thai economic process such as manufacturing
process, agriculture, traveling, household spending, and investment. The
economic growth rate increased only by 0.1% in 2011. All relevant
sectors, both public and private implemented urgent assistance. The
government launched policies and measures to ease the debt burden;
compensation for damages, low-interest loans, and the pledge of
agricultural produce were for instances. Though the flood damaged
agricultural land and various agricultural produce which led to lower
yield, the domestic and world demand increased. As a result,
agricultural economy expanded by 2.2% in 2011.

In 2012, the global economy had still struggled with a minor growth
ratio. Overall, it was affected by several significant events taking
place in America, Europe, as well as Asia, for example, a political
problem caused a switch a leader of financial team in US, triggering
Quantitative Easing policy (QE); or Europe also started QE to solve
their economic crisis; Fiscal Cliff; ballooned inflation, public debt
crisis, including several earthquakes and tsunamis around the world.
These events slowed the word economic growth.

Inevitably, Thailand was one of the countries which were affected by
such events; however, the overall Thai economic growth was still 5.9%
(projected by Bank of Thailand) which was higher than the world economy,
as a result of quick responses after the flood crisis in late 2011,
especially the private industrial sector expanded their investment in
manufacturing and machinery to set off the loss, and increase their
manufacturing capacity. With the high investment by the private sector,
the private expenses grew continually. Meanwhile, the public sector set
out policies to aid and solve in the short and long run i.e.
compensation provided for flood victims, debt relief, loans with low
interest, increase in salary of government officials, pledges of
agricultural products, water management project, etc. These measures
were implemented to boost Thai economy in the short and long terms. Thai
export was also affected by the slow-down in the global economy and Euro
debt crisis, resulting in the less export value than the expected
target, but still in a range of 3.5% growth, and the lower-than-average
inflation rate owing to the government’s price control measure on
consumer products and diesel. The agricultural market environment in
2012 expanded some 4 % as the production of agricultural produces was
generally back on track after the flood crisis in late 2011. The
favorable weather also favored the expansion in productions.

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

Sales revenue during 2010 – 2012 was 896.36, 954.92, and 324.33 million
Baht respectively, representing increases (decreases) of 5.25%, 6.53%,
and (66.04) respectively.

Total revenue during 2010 – 2012 was 910.48, 961.64, and 418.49 million
Baht, representing increases (decreases) of 5.68%, 5.62%, and (56.47)
respectively.

Cost of Sales in 2010 – 2012 was 569.65, 630.31, and 241.87 million
Baht, representing increases (decreases) of (3.77%), 10.65%, and (61.63)
respectively.  

In 2010, the world economy was still growing from the end of 2009 and
the growth rate of Thai economy was higher resulting from both external
and internal factors which affected the structure of Thai agricultural
products immensely. The demand of consumption of the international and
local market increased while production of agricultural product such as
rice, palm oil and cassava were affected by the drought, the outbreak of
pest, and disease during the first half of 2010. Besides severe floods
during the second half of the year resulted in the decrease of
agricultural production especially yearly paddy and off-season paddy.

From the abovementioned factors which led to the decrease of
agricultural products, but since the consumption demand was increasing
helping to maintain the good price especially for rubber, factory cane
and palm oil. On the contrary, the rice prices reduced as a result of
the lower prices abroad. The sales volume in 2009 thus totaled 896.36
million Baht, an increase of 44.74 million Baht or 5.25 % year-on year.

The cost of sales in 2010 amounted to 569.65 million Baht, a decrease of
22.32 Baht or 3.77 %. It was found that the cost of sales were lower
when compared with the increase of sales volume showing the efficiency
of the policy and cost management undertaken including other factors
causing lower cost of sales. The purchase of raw materials led to the
sufficient inventory to meet the market demands.

The fluctuation of the prices of raw materials variable by the oil
prices in the world market which tended to increase, made the average
prices of raw materials excluding the purchase order cost higher by
10-15 % year-on year. Accordingly, the economic problems in US economy
led to Baht strong against the dollar. Since the beginning of the year,
the average exchange rate was at 33.52 Baht to a dollar. It was until
the end of the year, the average exchange rate was at 30.29 Baht to a
dollar causing the prices of raw materials from overseas were between
slightly increase and downward trend. The prices of some raw materials
were not changed but the influence of the strong Baht causing the cost
of raw materials used for production lower by 11.14 % when comparing
with last year. As for labor cost and production costs, the Company set
the most economical, effective and efficient policy and management for
current economic situation. In 2010, the number of employees increased
to meet production process needs. Thus labor cost for production
increased by 8.93 % and the production cost increased by 9.82 % year-on
year. This increase came from labor cost, overtime cost and diligent
allowances as well as employee benefit. Meanwhile, the increase in other
production costs incurred from electricity and water fees, material
waste expenses and machine repairing expenses. Such increases are from
the reason of higher total sales volume under market circumstances of
high competition coupled with increase in market demands after the
draught and flood. It is necessary for the Company to maintain the
market share. Furthermore, the currency exchange rate which affected the
average cost of raw materials was reduced resulting production and sales
costs to be reduced by 0.29 and 3.77 % respectively. The gross profit
for 2010 amounted to 36.45 %, an increase of 25.84 % from 2009.

As for other incomes for 2010 amounted to 7.75 million Baht, an increase
of 1.93 million Baht or 33.16 % which originated from an increase of
investment in bonds and income from the sale of used vehicles.

In 2011, the world economy during the first half of 2011 continued to
expand and resulted in the growth rate of Thai economy. Both internal
and external factors which were the increase of domestic and world
demand led to the significant structure expansion of agricultural
production. There was a high growth in agricultural sector accordingly.
The weather were favorable with sufficient rain for cultivation during
the first half of the year and it was until the third quarter that the
floods largely expanded in the northern, the north-eastern, and the
central part of the country and damaged agricultural sector and
agricultural products. The agricultural sector continually shrank from
the third to the forth quarter in a higher degree. While Thai economy
continued to grow during the second quarter from higher volume and value
of exports, domestic demand and private consumption slowed down from the
effect of flooding. The demand for the products of the company
consequently decreased from August onwards.

The effect from the enforcement of the Hazardous Substance Act (No.3)
B.E. 2551, a revision of the previous Hazardous Substance Act B.E. 2535
on August 23, 2008 resulted in the expiration of import, formulation,
and export permit on August 22, 2011. (Three years from the enforcement
date) The company is not able to import or formulate any products but is
able to sell remaining finished products for another 2 more years and
thus demand increased significantly before August 22, 2011.

The above factors led to sales revenue for the first 3 quarters to be
882.71 million baht, an increase of 191.23 million baht year-on-year, or
a difference of 27.66 %. The sales declined in the forth quarter due to
the floods. Total sales revenue for 2011 was 954.92 million baht. An
increase of 58.56 million baht represented a difference of 6.53%.

Cost of sales in 2011was 630.11 million baht, an increase of 60.66
million baht or 10.65% different. Cost of sales increased at the higher
rate than the sales revenue. Cost of raw materials increased by the
volatility of world oil price affected from the political unrest in the
Middle East. Prices of raw materials increased by about 5-20% compared
to 2010.

The fluctuation of the exchange rate of the baht weakened against the
U.S. dollar was another factor. The averaged exchange rate was 30.16
baht to the dollar by the beginning of the year and it was averaged at
31.86 baht to the dollar by the end of the year resulting in price of
imported raw materials to increase. The total value of raw materials
purchase orders rose by 20.02% compared to the previous year. As for
labor and overhead cost, the company set a policy that emphasized the
most economic, cost-effective and efficient management under the current
economic conditions at the time. As a result, in 2011 there was only a
slight increase in the number of workers to meet production process
needs and the enforcement of the Hazardous Substance Act. (No.3) B.E.
2551 which resulted in the end of production on August 22, 2011. Thus,
labor costs rose by 16.96% and overhead cost rose by 5.76% compared to
the previous year. This increase came from wages, overtime costs and
employee benefits. As for the increase in overhead costs, this came from
the increasing in sales and the speeding up of production to keep up on
the enforcement of the mentioned Act. Moreover, the company wanted to
keep stocks to meet market demand and to maintain market share. Thus,
production and sales costs rose by 19.43% and 9.80% respectively. Gross
profit margin in 2011 was 33.99% or a decrease of (0.64)% year-on-year.

Other income in 2011 was 6.72 million baht. A decrease of (7.41) million
baht represented a difference of (52.44)%. This income was from
investment in debt securities, interest receivable, and the selling of
old cars.

In 2012, the global economy had still been stagnant with a small growth
ratio, attributed to the significant economic factors in US, Europe and
Asia as stated above, as well as the natural disaster which still
affected the overall global economy and Thai markets. Consequently, the
Thai national market expanded 5.9% (projected by BOT). Both external and
internal factors significantly impacted the structure of Thai
agricultural production capacity, but the global and domestic demands
increased, contributing to higher expansion in crop production as the
agricultural sector generally recovered from the 2011 flood crisis,
favored by the weather and the expansion in cropping lands in late 2012.
For rice, the major reason was that the attractive price from the
government’s rice pledging scheme, resulting in the expansion of farming
lands.

In terms of export, the volume and value increased, reflecting the
demands in overseas market. Meanwhile, the volumes and values of rice,
palm oil and rubber declined as a result of decreasing price in the
global market affected by the world economic downturn mainly due to the
global economic problem. Therefore, the overseas customers purchased
such products from other countries who offered the lower price, for
example, they bought rice from India and Vietnam. Consequently Thailand
lost the title as the world’s top rice exporter, falling behind Vietnam.
In addition, there were impacts from the Act of Hazardous Substances
(the 3^(rd)) B.E. 2551 which was issued to improve the Act of Hazardous
Substances B.E. 2535, and came in to effect on August 23, 2008.
According to the new Act, the license to manufacture, import and export
the hazardous substances could have been valid until August 22, 2011
(three years after the declaration of the Act), therefore, the trader
neither imported nor manufactured the hazardous products, but was still
permitted to distribute the existing stocks for 2 years.

Currently, the Company has already applied to register the pesticide and
herbicides as the same number of products that they used to distribute,
together with additional products. On December 31, 2012, the Company has
been granted the permit to import 37 products and manufacture for 50
trade names. The Company is confident that they will continually obtain
the permit for the registration of several pesticide and herbicide
products from Department of Agriculture. However, the process of
registration takes complicated steps with many documents involved, and
must be considered by Department of Agriculture, resulting in delay in
issuing the permit and leading the declining number of products
distributed in the market. Therefore, the sales turnover in 2012 dropped
to THB324.33 million, changing by THB(630.59), or 66.04%.

In terms of the cost of goods sold in 2012, it stood at THB 241.87
million, dropping by THB (388.44) million, or (61.63). It was founded
that the declination of the cost was lower when compared with the
decrease in sales turnover. The significant factor of the cost was a
higher cost of raw materials owing to the import of finished products
instead of Technical Grade which will be repackaged to small units, and
volatility of the oil price in the global market caused by the political
uncertainty in Middle East countries.

Besides, the volatile exchange rate of Baht gave a side effect. At the
beginning of the year, the average exchange rate stood at THB31.83
/dollar, and then appreciated to THB 30.77 a dollar at the late of the
year, causing a small decrease in the cost of raw materials which
favored to the cost of productions to reduce by (74.45)% compared with
the earlier year; while the labor cost and operating cost declined
(53.84)% and (53.01)% respectively.

The Company has set out the policy and management strategies in line
with the current market situation with the highest cost effectiveness
and efficiency. In 2012, the production volume declined; therefore, the
Company reduced the number of production staff members in consistence
with the production capacity. Such impact was attributed to the
declaration of Hazardous Substance Act (the 3^(rd)) B.E. 2551. While the
Company has been await the approval of the registration of the chemical
substances, the sales turnover has declined, and the cost of production
and sales decreased by (72.87)% and (61.63)% respectively, resulting in
the gross profit margin as of 2012 at 25.42%, dropping by (74.60)%
compared with 2011.

The other incomes in 2012 was THB94.26 million, increasing by THB 87.54
million, or 1,302.68% due to the investment in debt securities at THB
30.27 million, profits from sales of assets at THB 61.55 million which
consisted of sales of 10-3-04 rai plot of land at Minburi Plant for THB
65 million and sales of old cars at THB 0.58 million, profit from
exchange rate at THB 2.24 million and others incomes at THB 0.20
million.

Table showing rate of increases (reduction) during 2010 – 2012

+-----------+-------------------+------------------+------------------+
|           |  PATO             |                  |                  |
+-----------+-------------------+------------------+------------------+
| Year      | Sales Revenue     | Total revenue    | Cost of Sale     |
+-----------+-------------------+------------------+------------------+
| 2010      | 5.25              | 5.68             | (3.77)           |
+-----------+-------------------+------------------+------------------+
| 2011      | 6.53              | 5.62             | 10.65            |
+-----------+-------------------+------------------+------------------+
| 2012      | (66.04)           | (56.47)          | (61.63)          |
+-----------+-------------------+------------------+------------------+

Sales and General Administrative expenses during 2010-2012 totaled
94.10, 82.16, and 69.06 million Baht, representing increases (decreases)
of 34.31%, (12.69%), and (15.94%) respectively, not including financial
cost.

Financial cost in 2010 – 2012 totaled 1.52, 1.80, and 0.64 million Baht,
representing increases (decreases) of 63.20%, 18.42%, and (64.44%)
respectively.

In 2010, cost of sales totaled 58.76 million Baht, representing an
increase of 20.08 million Baht or an increase of 51.91 % compared with
the previous year. As a result of the increase in total sales volume,
there was a rise in various costs particularly those involving
commission, transportations, vehicle, and sales promotion and marketing
totaled 29.83 million Baht or an increase of 3.68 million Baht
representing an increase of 14.07 compared to the previous year. The
increases in administrative expenses were from employee benefits,
miscellaneous expenses, donation for education, and a recoverable amount
from bad debts of 1.18 million Baht.

Management remunerations in 2010 totaled 5.52 million Baht or an
increase of 0.28 million Baht representing an increase of 5.34 % in line
with company’s policy to adjust the management salary by 5 %.

As for profit (loss) from exchange rates in 2010 totaling 6.37 million
Baht booked in a part of revenue, this showed an increase of 2.26
million Baht or 54.99 % compared to the previous year. This resulted
from the US economy which led to a fluctuating exchange rate throughout
the year. The Baht strengthened at 30.29 Baht to the dollar by the end
of 2010. The company booked a realized forex gain of 3.48 million Baht
and (1.22) million Baht unrealized loss resulting from exchange rate
adjustment by T/R payables left at year end.

Financial cost in 2010 totaled 1.52 million Baht, reflecting an increase
of 0.59 million Baht or 63.20 % compared to the previous year. The
consequence of the strengthening of the Baht against dollar made a
prudent and appropriate management of T/R payables in light of the
financial situation and fluctuating Baht value at the time was
implemented to economize and to maximize the company’s interest. This
was arranged by making performance in accordance with the terms of
payment or otherwise extension of terms of payment which may lead to a
slightly increase of interest payable burden. However, this was more
beneficial to the company as it was able to pay the interest at a lower
rate of exchange.

In 2011, based on the types of transactions, cost of sales totaled 45.13
million baht, a decrease of (13.63) million baht represented a 23.20%
decrease compared to the previous year. This was because during the
second half of 2011 total sales decreased from the effect of the
Hazardous Substance Act.(No. 3) B.E. 2551. Sales mainly rose in the
second quarter and dropped in the third and forth quarters. It was found
that cost of sales and marketing decreased on sales promotion,
commission, transportation, and vehicles expenses. Administrative
expenses totaled 31.33 million baht, an increase of 1.69 million baht
represented an increase of 4.78% year-on-year. The increase were from
increase in charity donation, miscellaneous expenses and employee’s
salaries

Profit (loss) from exchange rate in 2011 totaled (2.21) million baht
shown in balance sheet on other income. A decrease of (8.59) million
baht marked a decrease of (134.71)% compared to the previous year. This
came from the fluctuations in the exchange rate throughout the year due
to the uncertainty in the global economic problems in many countries and
caused the baht to weaken. At the end of the year, the exchange rate was
31.86 baht to the dollar, led to a forex lox in 2011.

Financial costs in 2011 totaled 1.80 million baht. The 0.28 million baht
difference marked an increase of 18.42% compared to the previous year.
This was due to the depreciation of the baht. The management made a
prudent and appropriate management of T/R payables in light of the
financial situation and fluctuating baht value at the time to economize
and maximize the company’s interest on financial costs. This was done by
arranging terms of payment considering to pay on due date or to extend
the term of which may lead to a slightly increase of interest payable
burden. However, this was more beneficial to the company as it was paid
at a lower rate of exchange.

In 2012, considered the classification of accounting entries, the cost
of sales as of 2012 stood at THB 18.35 million, declining by (26.78)%,
or (59.34)% compared the past year. This was because the sales turnover
of 2012 was in the wane at (66.04)% against the year earlier, caused by
the impact from the Hazardous Substance Act (The 3^(rd)) B.E 2551. The
Company has taken up the process of registration for the chemical
substances and waited for the approval. The volumes of the production
and sales significant dropped, resulting in the declination of sales and
market cost i.e. sales promotion cost, commission, transportation and
vehicle cost etc.

Meanwhile, the administration cost for 2012 was at THB 38.10 million,
increasing by THB 1.07 million, or 2.89% against the year earlier. Such
increase resulted from the benefit welfares of the employees.

Regarding the cost incurring from the interruption of production during
the first quarter of 2012, it stood at THB 12.60 million mainly owning
to the announcement of Hazardous Substance Act (the 3^(rd)) B.E. 2551.
The Company had to destroy the packaging whose the registration expired
and could not be manufactured in amount of THB 5.40 million, and the
production-related cost was THB 7.2 million as the Company has not been
granted the permit and could not start the manufacturing.

The financial cost as of 2012 was recorded at THB 0.64 million,
declining by THB (1.16) million, or (64.44)% compared with the previous
year, mainly due to the decrease in T/R interest from the declining
order of raw materials from overseas, as well as the volatility of
exchange rate caused by the global economic downtrend in many countries,
especially US. Therefore, the management of T/R settlement must have
been depended on the current market situation in order to maintain the
most economical and efficient financial cost, especially to make a
payment on specific term basis, or extend the term which might lead to
more burden in payment, but the Company would pay with the lower
exchange rate.

The above operational results led to gross profit during 2009-2011 to
total 326.70, 324.62, and 82.46 million Baht respectively, representing
a percentage of 36.45, 33.99, and 25.42 respectively.

Operational profits in 2010–2012 came to 232.60, 242.45, and 13.40
million Baht respectively, representing a percentage of 25.95, 25.39,
and 4.13 respectively.

Net profits in 2010 – 2012 came to 183.74, 172.36, and 85.29 million
Baht, or a percentage of 20.18, 17.92, and 20.38 respectively.

Return on equity during 2010 – 2012 were 37.23, 33.01%, and 17.27%
respectively.

In 2010, the overall economic situation expanded by 7.8 % as a result of
the increase of domestic consumption, export of private sector and
tourism. There were internal and external factors affecting the
structure of Thai agricultural production, however, the consumption
demand of the international and local market increased. Production
sector confronted with the drought, the outbreak of pest and diseases,
and severe floods in many areas resulting in lower production especially
yearly paddy and off-season paddy.

Consumption demand was still high leading to high agricultural product
prices particularly for sugarcane and palm oil. On the contrary, prices
of paddy were reduced due to the decline of the prices in the world
market. Floods during the end of Q4 resulting the delay in cultivation
season and thus affected Q4 sales of the company. However, total sales
still increased by 5.25 %. Meanwhile, aforementioned production factors
coupled with policies set on management, production and marketing
situation which was at high competition on prices, it was inevitable for
the company to use marketing strategy in sales promotion and others to
maintain the market share as much as possible. The company also focused
on efficient and cost-effective management along with current situation,
in order to be competitive cost-wise and to effectively maintain market
share. This led to a rise (fall) of raw material cost, labor cost and
overhead cost by (11.4), 8.93, and 9.82 % respectively. Production cost
and selling cost decreased by 0.29 and 3.77 % respectively. The changing
rate of selling cost was at the lower rate more than the increase of
total sales volume. This made gross profit rate in 2010 was equal to
326.70 million Baht or 36.45 % of net sales volume. The increase amount
of 67.8 million Baht reflected an increase of 25.84 % from the previous
year.

Selling and administration expenses in 2010 showed an increase of 20.08
million Baht and 3.68 million Baht or 51.91 and 14.07 % respectively
from the previous year. The result of the increase of total sales volume
and the marketing policy able to compete with competitor helped the
company to maintain market share. The company policy on efficient and
cost-effective management to maximize revenue and sales promotion to
stimulate product demand in every quarter led to an operational profit
of 232.60 million Baht or an increase of 25.95% in 2010. The 43.04
million Baht represented a 22.71 % increase over last year.

Profit from exchange rates increased from the continuing appreciation of
the Baht value. Performance management on T/R payables in light of the
financial situation and the Baht value at the time was implemented for
forex gain. Therefore, the management of the terms of payment may lead
to some increase of interest payable burden, on the other hand, it was
found worth doing so when compared to forex gain.

Corporate income tax increased by 20.04 million Baht or an increase of
48.39 million Baht over last year. There was a tax credit of 34.22
million Baht in 2009 from an execution of the legal case. In 2010, there
was repayment of bad debt totaled 1.18 million Baht. In addition, the
good operational result made an increase of higher profit before
taxation and thus led to a higher corporate income tax in 2010.

As a result of these main factors, the company had good operational
results leading to a net profit of 183.74 million Baht, representing a
percentage of 20.18 of total revenue. The increase of 26.60 million Baht
over 2009 operation results represented a percentage of 16.93%. Return
on shareholder’s equity was 37.23 %, an increase from the previous year.

In 2011, Thailand economic growth rate increased only by 0.01% from
domestic consumption, export of private sector, and tourism rose during
the first 3 quarters. The forth quarter was affected by the floods in
wide range of agricultural area in the northern, the north-eastern and
the central regions and caused significant damages to agricultural
productions. In consequence, manufacturing, tourism, household spending,
and investment sector were slowed down.

The significant effect was from the enforcement of the Hazardous
Substance Act (No.3) B.E. 2551, a revision of the previous Hazardous
Substance Act B.E. 2535 on August 23, 2008 resulted in the expiration of
import, formulation, and export permit on August 22, 2011. (Three years
from the enforcement date) The company is not able to import or
formulate any products but is able to sell remaining finished products
for another 2 more years.

The 2 major factors, economic and natural disaster factor and the
enforcement of the mentioned Act. caused structural changes in demand of
company’s products. Before the enforcement date, August 22, 2011 the
demand of the products increased dramatically during the second quarter
causing total sales to rise by 54.92% compared to the previous year. The
sales started to slow down in the third quarter and declined further to
the lowest position in the forth quarter.

Total sales of 2011 increased by only 6.53% compared to the previous
year. Production was affected by the volatility of the world oil price
causing the prices of raw materials to rise. The enforcement of the Act.
caused the company to accelerate the timely production. The company had
to bear burden of fixed costs incurred after the date stopping of
production and import causing the increasing rate in cost of sales
higher than the increasing rate in sales. However, the company
efficiently manage production costs with save and most cost-effective in
line with the current economic situation in order to maintain market
share as possible. Because of the sales and cost of sales discussed
above, the gross profit was 324.62 million baht, representing 33.99% of
net sales. The (2.08) million baht represent a slightly decrease of
(0.64)% compared to the previous year.

Selling and administrative expenses in 2011 dropped by (11.93) million
baht or a decrease of (12.68) % compared to last year resulted from the
decrease in sales. The company devised the policy to maintain market
share and administrative policy to generate worthwhile and efficiency
income from investment. The profit from operations in 2011 was 242.45
million baht or 25.39%. The difference of 9.85 million baht marked an
increase of 4.23% compared to the previous year.

Profit (loss) from the exchange rate, incurred due to the
all-year-fluctuation, was the influence of the world economy. Such
phenomenon had affected several regions of the world and led to the
constant weakness of the Baht value. Hence, the management of debt
payment to creditors T/R as well as to foreign creditors must rely on
with financial market and the Baht value situations at that time and
that led to the loss from the exchange rate.

The corporate income tax in 2011 was 75.01 million baht. An increase of
13.55 million baht marked an increase of 22.05 % compared to last year.
The corporate income tax rate in 2011was 30 % of the net profit while
that in 2010 was only 25 % of the net profit. When considering the net
profit prior to the income tax in 2011, it increased by 2.16 million
baht marked or 0.88 %. Due to the aforementioned factors, the corporate
income tax in 2011 increased.

According to the main aforementioned factors, the company then has a
satisfied performance and this led to 172.36 million baht for the net
profit in 2011which was 17.92 % of the total revenue- a decrease of
11.38 million baht or 6.17% when compared with that in 2010. As a
result, the return on equity decreased slightly to 33.01%.

In 2012, the overall Thai economic expanded only 5.9% (projected by
BOT), due to the recovery from the flood crisis in late 2011. For the
industrial sector, they had to invest in machinery to increase the
production capacity, resulting in the private sector to expand their
business. At the same time, the public sector laid down various policies
to support and solve the problem in the short and long term. In
connection with the Hazardous Substance Act (the 3^(rd)) B.E. 2551), the
Company was unable to import the raw materials to manufacture the
products, incurring the cost caused by the stoppage of production.

Affected by the global economic downturn and the declaration of
Hazardous Substance Act (the 3^(rd)) B.E. 2551, the structure of
manufacturing and distribution has been changed, affecting the demands
in the market. Consequently, the sales turnover of 2012 receded (66.04)%
compared with the previous year; meanwhile, the cost of production and
sales ballooned as the volumes of products in 2012 manufactured shrank,
compared with those in 2011; therefore, the cost per unit was higher. In
addition, the registration process was involved with complicated steps
and time consumption. This affected and changed the manufacturing
structure, i.e., from mixing to repackaging with smaller units,
resulting in higher cost of raw materials. Nevertheless, the Company has
still focused the policy to manage the production cost with
cost-effectiveness and efficiency under the current market environment
in order to catch up with the competitors and maintain the market
shares. On the ground of the sales turnover and cost of goods sold as
stated above, the gross profit margins of 2012 was at THB 82.46 million
or 25.42 of net sales, receding by THB (242.15) million, or (74.60)%
compared with the earlier year.

The cost of sales and administration, including the cost of production
interruption as of 2012 has declined amounting to THB (13.10) million,
or (15.94) % as a result of the significant decrease in sales amount. In
addition, the Company has still followed the marketing policy to save
the market shares, and focused on the administration action plan to
invest the business with the highest economy, cost-effectiveness and
efficiency, to generate the top profits under the restricted market
environment. The profit from the operation in 2012 was at THB 13.40
million, or 4.13% of the net sales amount, which decreased by THB
(229.05) million or (94.47)% compared with the previous year.

The profit in 2012 has waned considerably reflecting the declining sales
turnovers, as a result of the above-mentioned factors. The Company has
still required generating incomes from the existing resources, while
waiting for the permits of chemical substance registration. The
financial position of the Company was on the solid ground, especially
the Company has had a number of cash flow and deposited in banks, as
well as temporary investment. The Company efficiently managed the money
and generated the profit of THB 30.27 million, increasing by THB 24.07
million or 388.42%. In 2012, the Company sold the 10-3-04 rai plot of
land at an old Minburi Plant, earning the profit of THB 60.96 million,
and sold an old car amounting to THB 0.58 million. Besides, the Company
could earn the profits from the foreign exchange rate amounting to THB
2.24 million, increasing by THB 4.45 million or 201.36 compared with the
previous year.

Regarding the corporate tax in 2012, it was THB 21.73 million,
decreasing by THB (53.28) or (71.03)% compared to the earlier year. It
was noted that the rate of corporate tax as of 2011 was equivalent to
30% of the net profit; meanwhile the corporate tax rate of 2012 was at
23%of net profits. The receding sales turnovers also contributed to the
decrease in net profits; consequently, the corporate tax in 2012 was
smaller.

Under the current restriction of the major factors as stated above, the
Company could earn the satisfactory result of THB 85.29 million net
profits for 2012, accounting for 20.38% of the total income, decreasing
by THB(87.07) million , or (50.52)% . Consequently, the return margin
for the shareholders was at 17.27 %, decreasing from 33.01% of 2011.

In 2012, the Company invested in available-for-sales securities
amounting to THB 8.99 million. On December 31, 2012, the investment
amount of the available-for-sales securities have been changed its fair
value, and the Company could earn the profits from such change in amount
of THB2.66 million, or increasing by 29.56%. Therefore, the
comprehensive loss/profits for 2012 amounted to THB 87.95 million,
equivalent to 21.01 % of the total revenue.

Total assets in 2010-2012 amounting to 742.11, 582.20, and 533.94
million Baht respectively, marked an increase (decrease) at a percentage
of 18.23, (21.55), and (8.29) respectively.

Total liabilities in 2010-2012 amounting to 223.20, 56.76, and 71.74
million Baht, marked an increase (decrease) of 42.76%, (74.57), and
26.39 respectively.

Shareholder equity in 2010-2012 amounting to 518.92, 525.44, and 462.19
million Baht, marked an increase (decrease) of 10.84%, 1.26, and
(12.03%) respectively.

In 2010, as sales revenue rose only by 5.25%, operational cash flow thus
decreased by 37.61%, with current ratio decreased from 3.56 times in
2009 to 3.01 times in 2010. Quick ratio decreased from 2.89 times in
2009 to 2.20 times in 2010. Cash flow ratio decreased from 1.97 times in
2009 to 0.69 in 2010. Average debt collection period rose from 54 days
in 2009 to 65 days in 2010. Average inventory turnover period rose from
85 days in 2009 to 88 days in 2010. Average payment period rose from 47
days in 2009 to 88 days in 2010, thus making cash cycle equal to 65
days.

Analysis of the current ratio showed a downward trend as inventories in
2010 totaled 175.27 million baht, or an increase of 70.71% compared to
the previous year. The procurement of raw material in 2010 amounting to
596.05 million baht showed an increase of 25.26% compared to 2009. Most
of them were made in Q4 totaling 195.52 million baht which represented
32.80 of the whole year purchase. They still remained under T/R and
outstanding overseas accounts payable which resulted in an increase in
current liabilities in 2010. Liquidity ratio and cash flows from
operating activities tended to decrease consequently. Debt collection
period and inventories turnover were slow down and resulting in lower
cash cycle. The main reasons were for the stocking up of raw materials
to meet production demand under new Hazardous Substance Act (No.3) B.E.
2551, the revision of Hazardous Substance Act B.E. 2535, enforced on
August 23, 2008 provided that manufacturing permit, import permit,
export permit and having in possession permit will be valid through the
expiration date of such permits. Certificate of hazardous substance
registration, certificate of notification for production, import, export
or having in possession will be valid for another 3 years from the date
of effectiveness. In 2011, all certificates and permits will be expired,
the company has to purchase raw materials to fulfill production and
marketing demand before the expiration date of permits and certificates.
However, most liquidity ratio tended to drop only slightly.

Cash flow from investing activities decreased by 63.24% compared to the
previous year. The company increased a temporary financial investment in
2010 by 37 million Baht, a purchase of additional equipment machinery
and vehicles by 6.23 million baht, and expenses for the new registration
according to new above mentioned act by 6.16 million Baht.

Cash flow from financing activities rose by 80.16% compared to the
previous year due to raw material procurement orders from abroad rose in
Q4. In addition, there was a 133 million Baht dividend payout, a higher
amount than the previous year.

The investment structure consisted a debt to equity ratio rose from 0.33
times in 2009 to 0.43 times in 2010. This came from T/R payables and
other account payables for the procurement of raw materials during
second half of the year, coupled with the increase in accrued corporate
income tax and outstanding expenses from the increase in total revenue.
The company saw an increase in shareholders’ compared to the previous
year. The said ratio is considered to be very low and is in good
position.

The interest coverage ratio dropped from 271.59 times in 2009 to 127.87
times in 2010. cash flows form operating activities decreased immensely
from the policy to purchase raw materials and thus led to an increase in
financial cost and a decrease in interest coverage. The return on assets
decreased from 28.61% in 2009 to 26.89 in 2010. The returned on fixed
assets increased from 252.29 % in 2009 to 298.67 % in 2010 due to a
slightly increase in machinery, equipments, and vehicles. The return on
assets ratio decreased from 156.86 times in 2009 to 133.24 times in
2010. Although there was a slight decrease in efficiency ratio, the
company is still able to generate income resulting in efficiency
operating result.

From above mentioned investment structure, the company manages to lay
down a policy for the most cautious and efficient financial management,
bearing in mind low risk and the most worthwhile returns in current
situation for temporary investments and plan set for the purchasing of
raw materials of low price but at good quality. The company also bear in
mind internal and external factors such as exchange rates, payment term
management, T/R payables and outstanding overseas accounts which will
lead to financial cost in the future. Forward Contracts are applied to
avoid risks at appropriate period for the most benefit.

The company still has the policy of bringing current liabilities for
investment in current assets in order to achieve the highest return and
reduce financial costs, while shareholders are still given the highest
return. Key financial ratios are also maintained to their best. Thus
operational results in 2010 were achieved as mentioned above.

In 2011, from the increase of the sale figure at 6.53 %, the company’s
net profit in 2011 was 172.36 million baht. This led to the significant
change in the balance sheet from that of 2010 because of the
aforementioned natural disaster as well as the new Hazardous Substance
Act. So, the total asset and total debt decreased to (159.91) million
baht and (166.44) million baht or ( 21.55๗ % and (74.57) % respectively.
When compared with that of last year, it decreases in the sections
account receivables, inventory, short-term loan from the financial
institutions, and account payables, etc.

Hence, from the performance in 2010, the cash flow from operations
increased by148.70 % with an increase in the current ratio from 3.01
times from that in 2010 and to 10.38 times in 2011. Quick ratio
increased from 2.20 times in 2010 to 8.62 times in 2011. The liquidity
of cash flow increased from 0.69 % in 2010 to 2.41 % in 2011. The
average collection period decreased from 65 days in 2010 to 41 days in
2011. The average inventory turnover period decreased from 88 days in
2010 to 74 days in 2011. The average payment period decreased from 88
days in 2010 to 53 days in 2011 and this made the cash cycle equaled 63
days. From the operations, it was clearly shown that the liquidity
ratios were better than those of the former years. The effect of the new
Hazardous substance Act was that the production had to be temporarily
paused during the new license registration process. The company then had
no purchasing order for raw material as well as the materials used in
production. Moreover, the sale figure before August 22, 2011 and the
demand for goods in the market abnormally increased and this changed the
goods from being bought on credit term to be bought in cash in order to
have goods sold to the agriculturists. Due to all factors, trade account
receivable, inventory, account payables, T/R creditors decreased while,
the cash and the cash equivalents including short-term investment
increased and finally led the increase of the cash flow from operating
activities.

The cash flow from the investment activities increased by 322.34 % when
compared with that of last year. The company had sold the short-term
investment to promote the liquidity for 120 million baht in 2011, had
purchased the machines, the equipments as well as the vehicles for 6
million baht. Moreover, the company had paid for the on-process
registration fee due to the Hazardous Substance Act mentioned above for
9 million baht.

The cash flow from the financing activities increased by 231.59 % when
compared with that of last year since the payment for T/R creditors
which ended in the fourth quarter and the dividend payment of 156.80
million baht which was an increase from last year.

When considering the capital structure, it was found that the debt to
equity ratio decreased from 0.43 time in 2010 to 0.11 time in 2011. The
decrease of current liabilities from the trade account payables and the
T/R creditors led to a decrease in such ratio and it was considered
very-good level.

The interest coverage ratio increased from 127.87 times in 2010 to
224.49 times in 2011. The cash flow from operations increased rather a
lot. From the changing policy in selling goods based on the market
demand, the sale figure increased and the company’s liquidity also
increased a lot and this led to the increase of the ability to pay off
interest.

At the same time, the company’s performance was at a very-good level and
thus minimizing the decrease in profit. With the current economy
situation affected by the flood as well as the effective of the
Hazardous Substance Act, the return on assets decreased from 26.89 % in
2010 to 26.03 % in 2011 and the return on fixed assets decreased from
298.67 % in 2010 to 295.07 % in 2011.

Assets turnover increased from 133.24 times in 2010 to 145.23 times in
2011due to the investment in fixed assets. The efficiency ratio
decreased a bit but it was able to generate profit and led to a
satisfied operating result.

From the investment structure shown, the company also set a prudent and
efficient financial management policy with consideration on all risks
and expenses that may occur to minimize the effect to the company
performance, for example, expenses incurred from the investment in
product re-registration as a result of the new Hazardous Substance Act.
The company also carries out the production plans including setting the
policy in purchasing appropriate raw materials in quantity, price, and
quality to comply with the on-process of the license registration.
Moreover, the company still conducts the marketing plans as well as
marketing strategies to stay competitive in the highly competitive
market. Various internal and external factors are also considered either
the fluctuation of the exchange rate and term of payment for T/R which
will cause the financial cost burden in the future. These must be
planned in order to avoid risks that may occur as well as to be able to
comply with the financial situation at that time for the ultimate
economy and benefit.

The company also puts the strong emphasis on financial stability by
bringing current liabilities and investing in current assets for
liquidity and the ultimate benefit. This will cause the most economical
financial costs in order to achieve highest return on shareholders’
equity and this will sustain the significant financial ratios as shown
in the aforementioned performance of 2011.

In 2012, the sales turnover decreased (66.04) %, generating the 2012
profit of THB 85.29 million. As a result, the Company’s financial
statement was significantly changed from 2011, attributed to the impact
from the market environment and the Hazardous Substance Act as mentioned
earlier. Consequently, the total assets decreased by THB(48.26) million,
or (8.29) % compared with the previous year, i.e. the cash flow and cash
deposited in banks decreased by THB (170) million, and the temporary
investment increased by THB 96.50 million, trade receivables and other
receivables were at THB 8.28 million, the inventory stock was in value
of THB 6.02 million, investment for available-for-sales securities was
worth of THB 8.99 million, and the Non-current assets amounted to THB
11.43 million.

The total debt increased by THB 14.98 million, or 26.39 %, compared to
the previous year, mainly due to the increase in the short-term loans
granted from financial institution (creditor T/R) in amount of THB 36.22
million, and decrease in the trade account payable and income tax
payable in amount of THB (16.30) million, and drop of others in value of
THB (4.92) million.

Therefore, as a result of the performance as of 2012, the cash flow
decreased by (106.57) %, consisting of the decrease in the liquidity
from 10.38 times in 2011, to 6.99 times in 2012. The quick ratio
decreased from 8.62 times in 2011 to 5.56 times in 2012. The cash ratio
decreased from 2.4 times in 2011 to (0.38) times in 2012, the average
collection period increased from 41 days in 2011 to 64 days in 2012, the
average holding period increased from 74 days in 2011 to 131 days in
2012, the payment period decreased from 53 days in 2011 to 41 days in
2012, therefore, the cash cycle remained 153 days. It was noted that the
liquidity ratio decreased, but was still in a good range, mainly due to
the declaration of Hazardous Substance Act, causing the decrease in
sales amount, and production interruption while the permit of
registration was in process. The raw materials were not ordered from
overseas suppliers and only the raw materials and packaging was
purchased from the local suppliers to brace for the production after the
permit is granted. Until the 2^(nd) quarter of 2012, the Company
received the permits of chemical substances for pesticide and herbicide,
and started its production process, and ordered a few raw materials from
overseas suppliers as per the permit granted. Consequently, in 2012, the
Company still maintained a large amount of cash, cash deposited in
banks, and temporary investment, and there were a few of T/R creditors.
However, the Company was still required to pay a large amount of
corporate tax, resulting in the decrease in the operating cash flow.

The cash flow from the investment activities decreased by (130.47)%,
compared with the previous year. The Company allocated more in the
temporary investment amounting to THB 91.10 million in 2012. The Company
sold the plot of land at Minburi plant and old car, and earned the
dividends from the temporary investment. The Company also purchased
machinery and vehicles in amount of THB 4.11 million, and settled the
operating cost for registration process amounting to THB 9.2 million,
and unearned revenue from the asset disposal in amount of THB 6.33
million.

The cash flow in income earning activities also lessened (59.58) %
compared with the earlier year as the there was a purchase of raw
materials from overseas, and there were T/R creditors in 2012, amounting
to THB 151.20 million, and the settlement period and dividend payment
has not been due yet

In connection with the sales turnovers which decreased (66.04) %, the
cash or cash equivalent was at THB (169.99) million, lessening by THB
(322.60) million, or 211.39%

The capital structure was composed of the liability ratio against the
portion of shareholders increasing from 0.11 in 2011 to 0.16 in 2012,
due to the increase in the current liability incurred from T/R
creditors. The liability ratio slightly expanded, but it was still
considered in a good shape.

EBITDA decreased from 224.51 times in 2011, to 1.41 times in 2012. The
operating cash flow significantly reduced from the shrinking sales
turnover. Consequently, the Company’s liquidity became lessening,
affecting the EBITDA coverage ratio.

Simultaneously, the Company’s overall operating result declined
significantly. Due to the current market environment and Hazardous
Substance Act, the sales turnover decreased, nevertheless, the Company
still managed their finance stance efficiently and enabled to make
profits from the limited resources, including asset disposal. The
Company’s yields on assets reduced from 26.03% in 2011 to 15.28% in
2012, and the yields on fixed assets declined from 295.07% in 2011 to
169.09% in 2012, and the total asset turnover ratio lessened from 145.23
times in 2011 to 75 times in 2012, reflecting the decrease in the asset
investment and the Company’s operating result under the declaration of
Hazardous Substance Act.

Based on the capital structure, the Company laid down a financial policy
prudently and effectively to earn the highest yields with minimum risks,
and also took the investment-related expenses into account. For example,
the registration for chemical substance was considered as sizeable
investment; the policy, action plan and management for registration of
chemical substances were set out to obtain the permits as soonest as
possible; the policy for raw material supplies was considered to
purchase with appropriate quantity, quality and price in line with the
current situation and registration progress, as well as the action plan
and market strategies were also set forth to respond to the high
competitive market; various external and internal factors must be taken
into consideration, i.e. volatility of currency and the management of
overseas settlement terms, in order to hedge the possible risks and cope
with the financial situation appropriately with the highest economy and
efficiency.

The Company has still put a strong emphasis on the financial stability
by investing the current liabilities in the current assets in order to
strengthen the liquidity and earn the highest yields. This resulted in
the most economic financial cost in order to earn the highest yields for
the shareholders, and also maintain the important financial ratio in the
best levels, as shown in the performance as of 2012 as explained above.

Regarding the significant factors which has still impacted on the
Company’s performance in 2013, the national economy has continually
expanded in the range of 4.50 – 5.00% under the low volatility in
agriculture sector, including the natural disaster, and the global
economy has started to be seen as low risk since those various countries
have been able to tackled their financial problems. Meanwhile the
foreign exchange has still affected the Thai Baht appreciation which is
required closely monitoring, as the QE policy will cause volatility of
capital transfer, and oil price which depends on the unrest in Middle
East. These will impact against Thai export and price of domestic
agricultural products, especially the production cost which may be
higher.

Nevertheless, the agriculture economy in 2013 is expected a 3.5 – 4.5 %
growth under the mentioned factors. Under a favorable weather, the
majority of the price of agriculture produces will likely remain
unchanged or tend to be marginal higher than the previous year as the
domestic and overseas demands increase since some countries have been
affected from the natural disaster and need to purchase from Thailand.
In terms of the production, the contributing factors still exist, i.e.
drought, flood, and outbreak of pest, as well as the execution of
Hazardous Substance Act. The registration for the new products has been
in progress, which affects the demands and supplies. However, this issue
will become better and better as the new permits will be granted and the
sales turnover of 2013 will increase, compared with those of 2012.
However, there are favorable factors to give positive influence on the
agriculture sector in both terms of production and pricing, mostly from
the Government’s policy and measures, enabling the farmers to access
into the fund sources, i.e. Farmer Credit Card, aide funds for the
farmers who are impacted by the natural disaster, etc. in order to
leverage the quantity of production and agricultural produce price, and
encourage the farmers’ spirits.

In agricultural sector production, the Government will continue to
provide its full support in all areas such as:

  1.   Technology development - Developing production technology by
educating farmers and providing good plant breeds in order to further
develop quality of output and create competitive capability.

2.   Marketing - Helping to sustain agricultural prices by providing
farmers with loans using their agricultural goods as collateral. This
will keep agricultural prices from falling too low and let market forces
operate on their own.

3.   Finances – Providing loan support which might be in the form of a
village fund, low-interest loans so as to create opportunity for farmers
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. Higher oil
prices, Baht 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.