Modernform Group Public Company Limited Minutes of the Annual Ordinary General Shareholders Meeting No. 1/2010

Transcription

1 Modernform Group Public Company Limited Minutes of the Annual Ordinary General Shareholders Meeting No. 1/2010 Date, Time and Place The Meeting was held on Wednesday April 28, 2010 at 10:30 hours on the 25 th floor Corporate Head Office of Modernform Tower 699 Srinakarindr Rd., Suanluang, Bangkok Mrs.Somrak Chotibhongs, the Company Secretary, announced that as there were 44 shareholders present in person, 102 by proxies, and total of 61 persons attending the meeting, representing 55,397,836 shares or 66.56% of the total issued share of the Company of 83,235,372 shares, a quorum was thus constituted in compliance with the Company s Articles of Association item 36: There shall be shareholder and proxies (if any) attending at a shareholder meeting amounting to not less than 25 persons and not less than one-third of the total number of shares sold of the Company (enclosure 7). The Chairman then declared the Meeting duly convened to consider the agenda of the day:- Mr.Chareon Usanachitt, the Chairman of the Meeting, welcome the shareholders and introduced Directors, Independent Directors and Company's Auditor as follows:- 1. Mr.Chareon Usanachitt Chairman 2. Mr.Thaksa Busayapoka Chief Executive Director 3. Mr.Yothin Nerngchamnong Director 4. Mr.Somsak Varikarn Director 5. Mr.Thanachai Theerapatvong Independent Director & Chairman of Audit Committee 6. Mr.Suchart Thammapitagkul Independent Director & Audit Committee Director 7. Mr.Supparerk Mallikamarl Independent Director & Audit Committee Director 8. Mr.Kavivud Nerngchamnong Director 9. Mr.Chaiyot Paporn Director 10. Mr.Patana Usanachitt President and Mrs.Sirirat Suemanotham Finance Division Manager Ms.Rungnapa Lertsuwankul Company s auditors from Ernst & Young Company Limited present in the Shareholders Meeting. Prior the meeting, the Chairman informed that all the documents pertaining to the meeting today had been posted earlier on the Company s website since March 19, 2010 and an announcement was also made to invite shareholders to propose an agenda or send in question in advance, if any, to the Company from December 1, 2009 until February 8, But there was no proposed agenda or question received so far. The Chairman informed the Meeting of the voting procedures in compliance with the Company s Articles of Association and the principles of good corporate governance of shareholder s meeting for listed companies recommended by the Stock Exchange of Thailand as follows: Page 1 of 13

2 In compliance with the Company's Article of Association item 39: one share is entitled to one vote. A Shareholder is entitled to the same number of votes as the number of shares or proxies he is holding. For every agenda of today except agenda no.7, majority of the votes are needed to pass a resolution. In case of equal votes, the Chairman has the casting vote to decide. As for agenda no.7 2/3 of the votes from the attending shareholders who have the right to vote are needed according to the Public Companies Limited Act. For the counting of votes the Company has employed the bar code reading device and system for speed and accuracy. As for the counting of votes only numbers of objection votes and abstention votes are counted for each agenda from the raised hands from whom the Company personnel will collect the ballot. These votes are deducted from the total attending votes leaving number of votes of approval each agenda. For all the proxies registered with the Company prior to the meeting with details of the votes, the number of votes appeared on the proxies will also be included for each agenda. Before the voting is called for each agenda, question or comment is invited. The person who has question or comment is kindly asked to identify himself. For each agenda the Chairman will ask the Secretary to declare the outcome of the voting with details of numbers of acknowledgement objection, or abstention. The numbers of votes are counted from the voting of the attending shareholders which could be different for each agenda depending on numbers of shareholders who join the meeting later after the opening. After the meeting, the Company personnel will collect all the ballots for later reference. Ms. Nongluck Leelakul the Company s Internal Audit Manager will be responsible to see that the meeting is conducted in a transparent manner and according to the rules of law and Company s Article. The accuracy in the counting of proxies, quorum, and votes for each agenda is assured. After that the Chairman convened the Meeting according to the agenda as follows:- 1. Chairman s note to the Meeting. The chairman informed that the Share Repurchase Program No.2 (Treasury Stock) for financial management. The Company has repurchased totally 3,235,300 shares or equal to 3.9% of the total paid up capital with the amount of Baht 92,404,570 and presently in the period for the resale of share from November 25, 2009 to May 24, The Meeting acknowledged. 2. To review and approve the minutes of the Annual Ordinary General Shareholders Meeting No. 1/2009 (Enclosure 1) The Chairman proposed to the Meeting the previous minutes of the Annual Ordinary General Shareholders Meeting No.1/2009 on April 23, Details of which could be found in enclosure 1 for consideration. Page 2 of 13

3 After considering into details, the Meeting resolved to adopt the minutes. During this agenda there was 1 additional shareholder with 76,600,shares. The agenda was passed with 55,474,436 approval votes or 100 percent votes. 3. Report on the Company's performance for the fiscal year 2009 and the Company s Annual Report. (Enclosure 2) The Chairman requested Mr.Thaksa Busayapoka, the Chief Executive Director of the Company, to report to the Meeting the operation for the year Mr.Thaksa Busayapoka, the Chief Executive Director reported to the Meeting the Company's operation for the year 2009 details of which could be found in the Company's Annual Report sent earlier to the shareholders as follows:- Operating results of the Company In general, the operation result in 2009 was not as good as the year before especially for the first 3 quarters of the year. However the sales had picked up in the 4 th quarter resulting in a total year sales revenue of approximately 2,400 mil. baht with net profit of mil. baht which was less than the year before of mil. baht representing a decrease of 21%. Since the 4 th quarter of 2009 until present sales has been increasing and this year sales is expected to be no less than that of Other aspects of the operation can be summarized as follows: Research and Development. Modernform always gives importance to research and development which is considered as one of the core missions. In 2009, our Product Development Center has continued developing standard products of all brands and also products for projects including consumer housing, corporate enterprises, and various financial institutes. New products and innovation have also been introduced such as Bathique by Modernform the premium bathroom furniture collection and Readydor by Modernform the standardized door system. Other than that, our PDC has given priority to the registration of our patented design of new products not just for the protection of our right but also for the added value of the product. The company was granted the IP Champion Award for being a successful entrepreneur in new creation and best effort in protection intellectual property for the commercial purpose with outstanding efficiency from the Intellectual Property Bureau. The Company has always been focusing on the quality of the product and has been awarded a certification of ISO/IEC 17025:2005 for the standards of its test lab which is considered as the first awarded test lab in the furniture industry. As for the year 2010, PDC plans upgrade the structure, design process, and management for the improvement in its efficiency to maintain the leadership in design. Production. In 2009 production output has dropped by approximately 20% as a result of sales decrease. The project Modernform Quality has been implemented for all product groups. As for 2010, an expansion plan is in the pipeline for additional capacity to cope with the increasing orders since the 4 th quarter Page 3 of 13

4 together with the development of new technology to respond to the increasing competition and the special needs of customers for specific projects. Marketing, Sales, and Distribution. The Company had to adjust its strategy in 2009 under the highly competitive situation and the sluggish business condition by placing more emphasis on designing with differentiation and added value, brand premium image, new products introduction, together with focus on projects rather than retail market which had been shrinking. The proportion sales was 70% project with 30% retail. Office represented 36%, household 39%, home decorative products 23% and export only 2%. Other than that, various promotional activities have been launched to stimulate sales throughout the year including new campaigns, magazine ads, and TV ads to reinforce the Modernform brand. The Annual Sales, Sofa Sensation, Smarter Living-the concept of furnishing a room with limited space but complete with necessary function, and participation in TIFF 2009 with the collection Beyond Simplicity were all part of the activities. The opening of the New Modernform Furinture Shopping Gallery at Crystal Design Center on Ramindra Rd. with the space of 2,000 sqm. displaying the complete range and presenting the Furniture Learning and Resource Center on the 2 nd floor for students and general public. Services. The Partnership Service Program has been carried out providing check-up service, maintenance, change of parts, reupholstering service, and express service. Besides, the Modernform Customer Online Service was also launched on the internet for project customers increasing the convenience in ordering process, data management, and online after sales service. A learning and training center was also set up for both theoretical and practical lessons to upkeep the standards of the service. International Operation. Various problems and obstacles in the international markets have caused a negative impact on the export revenue of the Company during the first half of the year. However the situation has improved since the last quarter of In the 1 st quarter of 2010, export has picked up as a result of the implementation of AFTA and ATIGA agreements. Competition has also intensified in the Asean region. But the Company has prepared for the situation by focusing on projects, designs, and quality with differentiation including a closer cooperation with the local dealers. Import and Distribution of Furniture and interior fittings and supplies under Home Decorative Products Division. HDP Division has been able to perform reasonably well under the unfavorable situation of the past year. The division has added new distribution channel such as new retail superstores and architectural firms. New products have been introduced in the imported fitting line and Readydor by Modernform, the new standardized door system, has also been launched. In 2010, a new product for flooring other than carpet tile and composite marble will be introduced as part of the search for new innovation. IT Development New operation systems have been developed other than MOS (Modernform Operation System) such as the E-business System, Knowledge Management, Document Management, Internal Audit, including the efficiency expansion program in internal and external communication system. New IT Page 4 of 13

5 development systems will be adopted to prepare the Company to move into becoming the Digital Enterprise. Human Resource Development. The Company gives importance to human resource development for its employees which consist of 2,400 headcounts at the moment by planning its strategy to correspond with the Company s business objectives for the long-term growth of the organization. The SLP (Spirit of Leadership Program) has been carried out for the new breed of young leaders to develop their management and leadership skills. Grid Works Course was also introduced for successful managing of works and human resource. The corporate theme V Spirit was launched for 2009 to inspire a teamwork with spirit from all employees to work through all the obstacles during the year. As for 2010 which is the 30 th anniversary for the Company, the new corporate vision is introduced with the new corporate theme Work with Modernform Spirit to drive the Company forward. Corporate Social Responsibility Activities. The Company continued to commit to various activities to be part of the society development such as donation for student scholarships and training and education courses including lectures on furniture design and function for various educational institutes. To support and promote Thai designers, the Company has donated part of the income from the sales of the Elegance of Simplicity collection under the Designer Series Program to the Hall of Arts and Culture Foundation of Bangkok. After the report from Mr.Thaksa Busayapoka, the chief Executive Director, on the Company s operation, questions from shareholders were invited. There were following questions and answers under this agenda: - Shareholder: What is the present backlog order quantity? How much will the impact be after the expiry of the tax reduction on property stimulus package from the government? - Mr.Thaksa: At present the backlog for this year and next year delivery stands at around 800 mil. baht. The expiry of the stimulus package will not impact the Company s sales substantially. - Shareholder: What is the proportion between householder and office furniture sales? What is our market share? Who are the first 3 household furniture project clients and are they buying from Modernform only? - Mr. Patana: Household vs. office is around 50:50. Company s market share in office is around 30%. Household is around 12-15%. The top 3 clients are Sansiri, Land and House, and Ananda. Each of them is not buying Modernform only. - Shareholder: Does the Company have to bid for every project and does the developer always award the lowest bidder? - Mr. Patana: There are always competition from other players. But the developer does not always choose the lowest bidder. Developer from low market may base their decision on prices but developer from mid to up market makes their decision on concept, design, reliability of the sales and service team. - Shareholder: Our competitive edge? - Mr.Patana: Our competitive edge is our 30-year brand image of good design, quality, and strong teamwork. Page 5 of 13

6 - Shareholder: At present the Company has less showrooms reducing the exposure of the Company-not corresponding with the branding policy? Any benefit of the expansion into sub brands. - Mr.Patana: It is the Company s policy to focus on project sales due to its lower cost and less competition. At the same time we open showrooms at more selective locations such as Modernform Tower and CDC Center instead of at various shopping centers where rent and expenses are high and sales are insufficient. Company always places high priority on brand image when it comes to branding strategy. The introductions of sub brands are meant for business horizontal expansion covering other lines outside furniture such as Bathique by Modernform and Readydor by Modernform. - Shareholder: What will be income from Readydor for 2009 and 2010? What is the margin? - Mr.Thaksa: Readydor products have just been launched. Expect to realize some incomes in the 3 rd and 4 th quarters from property projects which have great potential. This product could become one of our main items giving us same level of margin as other existing products. - Shareholder: How is CDC showroom doing? - Mr.Patana: We were invited to join the CDC project which aims to become a design center for all home decorative products. We want the showroom to be a concept showroom which not just focus on sales but also on teaching and training and giving information for architects and students. - Shareholder: What is the trend on hospital and education markets? - Mr.Thaksa: The Company has expanded into the hospital and education markets for many years. Two years ago we have expanded into healthcare furniture by opening up Modernform Health and Care Co., Ltd. a subsidiary, who has entered into the hospital market and been growing ever since. As for the education market, we have penetrated into various institutes locally as well as abroad. - Shareholder: Impact of AFTA agreement on export business? - Mr.Thaksa: The AFTA agreement with the result of 0% import tax on furniture has both positive and negative impacts. On the negative side, more competitors import in furniture from countries under AFTA. But on the positive side, we are able to source furniture parts at a lower price than we are producing by ourselves. - Shareholdr: What is the present rate of outsourcing? - Mr.Thaksa: We are outstanding at the rate of 20-25% and increasing. - Shareholder: Impact from the political protests? Any policy to lay off employees? - Mr.Thaksa: A slight impact the temporary closure of our showrooms at Siam Paragon and Central World. But customers still contact their account salespersons who have moved to work at Srinakarin Head Office. We have no policy to lay off this year. Even during last year under the poor economic condition we did not lay off any employee but instead we raised salary and gave bonus as usual. The sales for this 1 st quarter should be better than last year. - Shareholder: Which Enterprise Resources Planning system the Company has used? - Mr.Thaksa: At present we use MOS (Modernform Operating System) which has been developed by our own IT team in place of the standardized program we used to use. Page 6 of 13

7 When there was no further question, the Chairman asked for resolution. After due consideration, the Meeting acknowledged report from the Board of Directors on 2009 Company s performance and future business plans. During this agenda there was 2 additional proxies who came to the meeting with additional 28,700 votes. The agenda was passed with 55,503,136 approval votes or 100 percent votes. 4. To review and approve the audited Balance Sheet, and the Profit and Loss Statement for the year ended on December 31, 2009 (Enclosure 2) The Chairman presented to the Meeting the Company's Financial Statements and Consolidated Financial Statements as of December 31, 2009 which had been audited and certified by the Company's auditor, Ms.Rungnapa Lertsuwankul, auditor of Ernst and Young, on February 25, 2010 details can be found in the Annual Report which has been distributed to shareholders along with the Meeting invitations, for the Meeting's review of the Balance Sheet and Statement of Earnings ending 31 December Modernform Group Public Company Limited Balance Sheets: Total assets Baht 2,586.6 million consisting of total current assets Baht 1,489.7 million, total investments Baht million,loans to related parties Baht million. Property, plant, leasehold rights and equipment net Baht million, intangible assets Baht 5.1 million and other assets Baht 45.1 million. Liabilities and Shareholders Equity: Totally Baht 2,586.6 million consisting of total liabilities Baht million, and total shareholders equity Baht 2,034.4 million consisting of paid up share capital Baht million, premium on common stocks Baht million, revaluation deficit Baht 6.8 million. Appropriated statory reserve Baht 90 million and others Baht 92.6 million. Unappropriated retained earning Baht million. Profit and Loss Statement : Total revenues Baht 2,314.0 million consisting of sales revenues Baht 2,208.0 million, gain on sales of leasehold rights Baht 11.2 million, share of profit from investments in related parties Baht 51.9 million, interest income Baht 12.7 million and other incomes Baht 30.2 million. Cost of sales Baht 1,408.6 million, gross profit 36.2%, selling and administration expenses Baht million. Total expenses Baht 2,057.8 million. Financial Cost Baht 4.3 million, corporate income tax Baht 49.3 million. Net income after interest expenses and corporate income tax Baht million. Earnings per share Baht Unappropriated retained earnings at the beginning of year Baht million, dividend payment Baht million, treasury stocks reserve Baht 47.8 million. Total unappropriated retained earnings Baht million. Modernform Group Public Company Limited and its Subsidiary Companies Balance Sheet :Total Assets Baht 3,171.0 million consisting of total current assets Baht 1,552.5 million, total investments Baht million. Property, plant leasehold rights and equipment net Baht million and other assets Baht 48.6 million. Liabilities and Share holder s Equity consisting of total liabilities Baht million and total shareholders equity Baht 2,558.0 million. Profit and Loss Statement : Total Revenues Baht 2,396.4 million consisting of sales Baht 2,264.2 million, interest and other incomes Baht million. Total expenses Baht 2,135.2 million consisting of cost of sales Baht 1,441.6 million, cost of services Baht 13.1 million, selling and Page 7 of 13

8 administration expenses and others Baht million, finance cost Baht 5.2 million, corporate income tax Baht 64.8 million, and share of income from investments in associates Baht million. Minority interests Baht 2.8 million. Net income for the year Baht million. Earnings per share Baht Unappropriated retained earnings at the beginning of year Baht million. Dividend payment Baht million. Treasury stocks revenue 47.8 Baht million. Total unappropriated retained earnings Baht million. The Chairman asked the meeting for any question. There were the following questions and answer under this agenda: - Shareholder: What is the policy on gross profit margin and net profit margin? - Mr.Thaksa: For the past several years the Company has been able to maintain gross profit at the rate of 36-38% while the furniture business has a high operating expense causing the net profit to fluctuate. However both the financial ratios of ROA and ROE are in the satisfactory range. - Shareholder: What is the Company s plan for cashflow utilization as at the end of 2009 the cash balance stands at 251 mil.baht. - Mr.Thaksa: Part of it will be for dividend payment. Another part for new investments both in the country and abroad. As for capital expenditure, there is no major project involving substantial budget. - Shareholder: How does the Company manage the long outstanding receivables? - Mrs.Sirirat: The receivables over 6 months have increased due to the large number of major project customers who generally require 6-7 months of delivery, inspection, and acceptance process. As for receivables over 12 months is from the same old customer and still in the process of installment payment of which 100% has been reserved. - Shareholder: With the 48% shareholding in TPAC, the Company has enjoyed the high share of profit amidst the poor economic condition. What made TPAC better? - Mr.Thaksa: In general TPAC has had a better performance from the increased in production efficiency, sales, and management. When there was no further question, the Chairman asked for resolution. After review, the Meeting has approved the Company's Balance Sheet and Statement of Earnings for the year ending 31 December 2009 which have been audited and certified by the Company's auditors, as proposed by the Chairman with 55,503,136 approval votes or 100 percent votes. 5. To consider and approve the appropriation of Company's earning for the year ended and the annual dividend payment for the fiscal year (Enclosure 3) The Chairman stated that according to the company performance which had been already presented to the Meeting on item 4 that the company earned a net profit for the year of Baht million. Unappropriated retained earnings at the end of year Baht million. The Chairman proposed the Meeting to consider the unappropriated retained earnings as follows:- Page 8 of 13

9 The appropriation for Statutory Reserve The Chairman stated that since registered capital of the Company was Baht million and the existing statutory reserve Baht 90 million, so the Company is not required to appropriate as a statutory reserve fund any more: Annual Dividend: The Chairman stated that according to the Audited Balance Sheet and Profit and Loss Statement for the year ended on December 31, 2009 which had been already presented to the Meeting on item 4 unappropriated retained earning at the beginning of the year was Baht million, and the net profit of the year of Baht million. Annual dividend payment on May 2009 was Baht million, and interim dividend payment was Baht 80.0 million, total dividends were Baht million. Treasury stocks reserve Baht 47.8 million. Therefore unappropriated retained earnings at the end of the year was Baht million. As the Company's policy of dividend payment is no less than 60 % of net profit, and the fact that the Company has sufficient cash flow, and no financial liability. The Board of Director s Meeting No. 1/2010 on Feb. 25, 2010 then reached a resolution to pay dividend at the rate of Baht 3.00 per share or 80.2% of net profit of the fiscal year Since the interim dividend has been paid at the rate of Baht 1.00 per share on October 2009, the rest value of Baht 2.00 per share will be paid on May 27, 2010 to the shareholders listed on the record date on May 11, Also May 12, 2010 shall be the book closing date on which the shareholder list as specified in section 225 of the Securities and Exchange Act shall be complied. The Chairman asked if there was any question. There were the following questions and answer under this agenda: - Shareholder: The dividend payment rate has been quite stable for the last 3-4 years in the range of around 3 baht per share. What is the Company s policy on dividend payment? - Mr.Thaksa: It has been the Company s policy to pay dividend of no less than 60% of net profit since our listing in the SET. In reality we have paid more than 70% all along. It all depends on operation results, cashflow, and investment policy of each year. - Shareholder: Is it possible to pay dividend faster than before due to high liquidity of the Company? - Mr.Chareon: Will take that into consideration. When there was no further question, the Chairman asked for resolution. After due consideration, the Meeting unanimously resolved to approve the annual dividend at the rate of Baht 3.00 per share less Baht 1.00 per share paid as interim dividend, the rest value of Baht 2.00 per share will be paid to the Shareholders listed on the record date on May 11, And dividend payment will be made on May 27, 2010 with 55,503,136 approval votes or 100 percent votes. 6. Election of Directors to replace those retired by rotation. (Enclosure 4) The Chairman stated that in compliance with the Company's Article of Association Chapter 4: Directors: No.19. "At every annual general meeting one third of the directors, or if their number is not a Page 9 of 13

10 multiple of three then the number nearest to one third, must retire from office. Any retiring director is eligible for reelection" At present there are 11 directors, the 4 directors to retire by rotation comprised of : 1. Mr. Cheroen Usanachitt Chairman 2. Mr. Thaksa Busayapoka Chief Executive Director 3. Mr. Kavivud Nerngchamnong Director and 4. Mr. Chaiyot paporn, Director The Company has attached the credentials of directors as enclosure 4. The Board of Directors has considered the qualifications of all retiring directors, the experiences, business skills, and individual performance during the serving terms and has agreed to propose the Meeting to approve the four above mentioned retiring directors Mr.Chareon Usanachitt, Mr.Thaksa Busayapoka, Mr.Kavivud Nerngchamnong and Mr.Chaiyot Paporn to be reelected as the Company's directors. Other than those directors retired by rotation, the Chairman welcome any proposal from the shareholders, if any, to nominate new prospective directors. When there was no other proposal, the Chairman asked for voting on individual director. The Meeting votes for reelected directors individually as follows:- 1. Mr. Chareon Usanachitt approved 55,503,136 votes or 100 percent votes 2. Mr. Thaksa Busayapoka approved 55,503,136 votes or 100 percent votes 3. Mr. Kavivud Nerngchamnong approved 55,503,136 votes or 100 percent votes 4. Mr. Chaiyot Paporn approved 55,503,136 votes or 100 percent votes The Chairman proposed the meeting to consider appointing an additional independent director to comply with the regulation of the SEC and SET which requires the listed company to have at least one third of the members to be independent directors. At present the Company has 3 independent directors which represent 27% of all the members, so an additional independent director is needed. The Chairman proposed the meeting to elect Mr. Chaiyot Paporn as the new independent director, as he is not an executive director and has all the properties of an independent director as required by the regulation according the attached document. After due consideration, the Meeting approved to appoint Mr.Chaiyot Paporn as an additional independent director with 55,503,136 approval votes or 100 percent votes. For the signatory authorization of Company the Chairman informed that the Board of Director shall have approve to designate name of directors authorized to sign for the Company with the common seal in appliance with the Company s Article of Association item To determine the Director's remuneration for year (Enclosure 5) The Chairman stated that the Shareholders Meeting No.1/2009 had approved to maintain the director's remuneration for year 2009 to 11 directors in amount of Baht 45,000 per quarter for each director and Baht 60,000 per quarter for Chairman. For year 2010, the Board of Directors Meeting No.1/2010 dated on February 25, 2010 gave approval to maintain the remuneration for 11 directors; for Chairman the amount of Baht 60,000 per quarter and for each director the amount of Baht 45,000 per quarter. The rate is compatible with the current rate paid by listed companies in the same industry, and Page 10 of 13

11 the country s unclear economic and political situation in 2010 have also been taken into consideration. For 3 independent and audit committee directors, besides the director s remuneration, the Board of Directors proposed to pay the same rates of an additional Baht 20,000 per month for Chairman of Audit Committee and Baht 17,000 per month in car allowance to each director in year The Directors do not receive any more of meeting allowance or any annual bonus as well. The Chairman asked if there was any question. When there was no further question, the Chairman asked for resolution. The Company secretary indicated that according to the Public Company Limited Act. a ratio of not less than 2 to 3 of the total member of shareholders attending the Meeting who have the right to vote for this resolution to be passed. The Meeting approved the proposal to remain the annual remunerations for year 2010 in amount of Baht 45,000 per quarter for each director, Baht 60,000 per quarter for Chairman and additional Baht 20,000 per month in car allowance for Chairman of Audit Committee and Baht 17,000 per month for each audit committee directors with 55,503,136 approval votes or 100 percent votes. 8. Appointment to the Company's Auditor for year 2010 and to determine the remuneration (Enclosure 6) The Chairman stated that incompliance with the Public Companies Limited Act. The Annul General Shareholders Meeting will appoint the Company s auditor and determine the auditor s remuneration. The Company had appointed Ms.Rungnapa Lertsuwankul CPA no.3516 or Ms.Visuta Jariyatanakorn, CPA no.3853 or Ms.Sumalee Reewarabandith CPA no. 3970, Ernst and Young Office Limited as Company's Auditor for year 2009 with the Auditor s remuneration at Baht 1,430,000 for 3 quarterly review of Q1, Q2, and Q3 and 1 year-end review and audit. As for 2010, in the Director s Meeting no. 1/2010, a resolution was reached after the proposal and approved by the Company s Audit Committee to appoint Ms.Rungnapa Lertsuwankul CPA.No.3516 or Ms.Visuta Jariyatanakorn, CPA no.3853 or Ms.Sumalee Reewarabandith CPA no.3970, Ernst and Young Office Limited as Company's Auditor for year 2010 considering the independence and performance of the Auditor in the past year according to the evaluation standards of SEC and comparison with other auditor s fees. The remuneration is at Baht 1,430,000 the same amount as year 2009 (details enclosure 6). Besides the Ernst and Young Office Limited is also the auditor of the subsidiaries and affiliated companies for year 2010 totaling 4 companies. The Company and its subsidiaries do not use any other services from Ernst and Young Co., Ltd. aside from annual auditing The Chairman asked if there was any question. When there was no further question, the Chairman asked for resolution. After consideration, the Meeting resolved to approve the appointment of Ms.Rungnapa Lertsuwankul or Ms.Vissuta Chariyatanakan or Ms.Sumalee Reevarabundit from Ernst and Young Office Limited as Company s Auditor with the same amount annual remuneration for year 2010 of Baht 1,430,000. During this agenda there was 1 additional shareholder with 2,700 shares. The agenda was passed with 55,505,836 approval votes or 100 percent votes. Page 11 of 13

12 9. Other matters (if any) The Chairman invited shareholders to ask questions on any subject. Under this agenda there were the following questions and answer: - Shareholder: From the past 10-year statistics, the sales peaked in 2005 and have dropped until now which stands at around 2,400 mil.baht. What will be the trend for the next 3-5 years in terms of income? - Mr.Thaksa: In fact the total income has not dropped. The income figure in the consolidated statement showed a decrease since year 2006 because the shareholding of the Company in TPAC has changed from 60% to 48%, from being a subsidiary to an associated company and since then the consolidation has not included TPAC sales figure. If the sales figure of TPAC is included, the total consolidation sales in 2006 should show a slight increase. As for the trend in 3-5 years ahead, it depends a lot on economic condition however the Company gives more emphasis on net profit than the sales figure. We expect business to be better from the new ventures and overall sales and profit should be higher this year. - Shareholder: What is the Company s capital expenditure budget? - Mr.Thaksa: The Company has set a yearly budget of around 100 mil. baht for capital expenditure on new machinery, replacement, maintenance, showroom expansion and improvement, and new investment in IT. This has been the same budget for the last 3-4 years. - Shareholder: What is the production capacity utilization rate? - Mr.Thaksa: For the past few years the utilization rate has been below 100%. But at present the rate is much higher from the improved business condition since the 4 th quarter of last year. Some departments in the factory have to open 24 hours a day. - Shareholder: In the situation of declining sales what could the Company do to reduce costs? - Mr.Thaksa: Cost management is one of the priorities of the Company. We look at keeping the cost of production down in the manufacturing process, raw material purchasing, and cost-saving design. - Shareholder: Policy on promoting brand awareness and brand recognition. - Mr. Patana: We constantly conduct market research to monitor market movements and carry on CRM activities to serve the Company s objectives such as Designer Day event, direct mailing for designers, advertising signage and billboard, digital media, and TV ads. - Shareholder: Giving emphasis on R&D, is the additional investment in Xteria beneficial to the Company s design aspects? - Mr.Thaksa: Investment in Xteria which was originally a manufacturer and distributor of outdoor furniture was meant to expand our existing line of products to cover more of the architectural projects. But now Xteria has changed to Rafa Associates Co. and other 4 subsidiary companies having Modernform as major shareholder putting emphasis on architectural design projects, landscape design, and construction consulting works to complete the whole cycle. It does not design furniture for Modernform. We have our own Product Design and Development Center. Page 12 of 13

13 - Shareholder: Looking at the ROE for the past 3 years, will the Company be able to maintain this ratio at 15% for the next years to come? - Mr.Thaksa: We are doing our best to maintain this two-digit rate and expect this year to be better than last year. - Shareholder: What is the Company s policy on share repurchase? - Mr.Chareon: The Company has already done share repurchase twice in the past. These were for a better reflection of the reasonable market price of our share which in some occasions had been lower than what it should have been and for our cashflow management purpose due to our high accumulated earning and high liquidity position. This is also for the benefit of the shareholders since return to equity will be higher once there is a reduction in capital from the shares left from selling back in the stock market. - Shareholder: Does the Company have the policy regarding retirement of the directors? - Mr.Chareon: The Company has set the retirement for employees and management at the age of 60. As for the directors, we do not have a retirement age. It all depends on each individual executive director and the board s approval. - Mr.Thaksa: The Compay does have a succession plan for the potential successors to replace the retiring executive once it is needed. When there was no further question, the Chairman advised that shareholders who were interested could send enquiries to the address: enquiry@modernform.co.th or could see more information at website and the Company will post the Shareholders Meeting Minutes in 14 days from the Meeting date at the company website. The Chairman thanked all shareholders and declared meeting adjourned at hrs. Mr.Chareon Usanachitt (Mr.Chareon Usanachitt) Chairman of the Meeting Page 13 of 13