Strong Brand Value. Leader in Distribution Channel. Corporate Social Responsibility. Professional Team with Commitment.

Transcription

1 ANNUAL REPORT 2008

2 Humming Bird Humming Bird is a kind of powerful bird especially gifted by nature with the most graceful and amazing ways of flying. Even though tiny in size and cute in appearance, it can fly for longer time and with farther distance than other larger fowls, and brave enough to fight against foes that are several times larger in size. It is also intelligent to choose and eat only the food what are good for its health. Strong Brand Value Strategic Business Partnership Leader in Distribution Channel Quality Product for Quality of Life Corporate Social Responsibility Professional Team with Commitment Hyacinth the symbol of new birth Hyacinth is a kind of flower that has the shape of a tiny bell when budding, and later resembles a fiveray star when burst forth in full blooms. With its outstanding quality of sweet fragrant smell, Hyacinth was highly popular in the Royal Courts of Europe.

3 Contents Report of Board of Directors Board of Directors and Executives General Information Summary of Financial Data of Company Type of Business Risk Factors Shareholding Structure and Management Related Transactions Explanation and Analysis of Financial Position and Operating Performance Report of Board of Directors Responsibilities for Financial Statements Report of the Audit Committee Report of Independent Auditor Financial Statements

4 Board of Directors

5 Report of Board of Directors Operating Performance for 2008 Year 2008 records another successful year for Premier Marketing Public Co., Ltd. Apart from being approved by Securities and Exchange Commission to list and traded in the Stock Exchange of Thailand on 27 May 2008, the overall performances of the parent company and its subsidiaries remain in a highly satisfactory level. Considering the Shareholders Equity, the Board of Directors had a resolution to increase its capital from 500 Mil Baht to 650 Mil Baht by issuing 150 millon new ordinary shares at 1 Baht par value to the public. The capital increase had received a good response from both the institutional investors as well as the retail investors, resulting in a strong financial status in terms of loan prepayment and financial cost reduction, in addition to the increase in working capital to generate future revenues. With reference to the operating performance of 2008, the teams of Premier Marketing Public Co., Ltd. and its subsidiaries have delivered impressive results. These reflect from the increase in total revenues of 3, Mil Baht, an increase of 19.89% yoy, leading to net profit of Mil Baht, an increase of 47.69% yoy from This amount is classified into profit from normal operations of Mil Baht and profit from loan prepayment (a discount) of Mil Baht. Furthermore, the financial position of the parent company and its subsidiaries as of 31 December 2008 has been improved with total assets of 1, Mil Baht, total liabilities of Mil Baht, and total shareholders equity of Mil Baht. Though the economic downturn and negative factors may cause some threats to the current operations, however, strength and potential of the company workforce showing for the past performances make the Board of Directors believe that the business will be able to go through all the obstacles and grow continuously. Finally, may we take this opportunity to thank all the shareholders, customers, business partners, employees, and all the related parties for your consistent support and trust in the company. Board of Directors Premier Marketing Public Co., Ltd.

6 Board of Directors and Executives Details of Directors and Executives Mr. Vichien Phongsathorn Chairman Age 52 years Present Position Chairman Education Bachelor s degree of Nuclear Engineering and Master s degree of Business Administration Rensselaer Polytechnic Institute, Troy, New York, U.S.A. Percentage of Shareholding (%) None Relationship with Company s Executive(s) None Experiences over the Past 5 Years Present President, Premier Group of Companies Present Director, Companies in Premier Group of Companies Present Director, Chiangmai Night Bazaar Co., Ltd. Present Director, Calbee Tanawat Co., Ltd. Mrs. Duangthip Eamrungroj Director Age 53 years Present Position Director Education Bechelor s degree of Mechanical Engineering, Chulalongkorn University Master s degree of Business Administration, Thammasart University Diploma in Clinical Organizational Psychology, INSEAD, France Training on Director Accreditation Program (DAP) Course, Batch 22 Year 2004 from Thai Institute of Directors (IOD) Percentage of Shareholding (%) None Relationship with Company s Executive(s) None Experiences over the Past 5 Years Present President, Support Line of Premier Group of Companies Present Director, Companies in Premier Group of Companies Mr. Udom Chatiyanont Director Age 72 years Present Position Director Education Bachelor s degree Faculty of Commerce and Accountancy, Thammasart University Training on Director Accreditation Program (DAP) Course, Batch 37 Year 2005 from Thai Institute of Directors (IOD) Percentage of Shareholding (%) None Relationship with Company s Executive(s) None Experiences over the Past 5 Years Nov 1992 Present Independent Director and Chairman of the Audit Committee, Premier Technology (Public) Co., Ltd. Jul 1993 Present Director, Premier Enterprise (Public) Co., Ltd Present Independent Director and Chairman of the Audit Committee, Singer (Thailand) Public Co., Ltd. Present Director, Suvitdumri Group Co., Ltd. Present Director, Chiangmai Night Bazaar Co., Ltd Present Director and Managing Director, Fivetor Co., Ltd.

7 Mr. Katiya Greigarn Independent Director and Chairman of Audit Committee Mr. Wichai Hirunwong Independent Director and Audit Committee Miss Naengnoi ChaiOnnom Independent Director and Audit Committee Age 56 years Present Position Independent Director and Chairman of Audit Committee Education Bachelor s degree of Electrical Engineering, Chulalongkorn University Master s degree of Electrical Engineering, University of MissouriRolla, U.S.A. Doctorate of Electrical Engineering, University of MissouriRollar, U.S.A. Training on Director Accreditation Program (DAP) Course, Batch 37 Year 2005 from Thai Institute of Directors (IOD) Training on Financial Statement for Directors (FSD)Course, Batch 3 Year 2008 from Thai Institute of Directors (IOD) Training on Director Certification Program (DCP) Course, Batch 110 Year 2008 from Thai Institute of Directors (IOD) Percentage of Shareholding (%) None Relationship with Company s Executive(s) None Experiences over the Past 5 Years Mar 2005 Present Independent Director and Audit Committee, Premier Technology (Public) Co., Ltd. Mar 2006 Present Director, The Federation of Thai Industries Feb 2006 Present President, Electrical Industry Group, The Federation of Thai Industries Jan 2006 Present Director, Electrical and Electronics Institute (EEI), Ministry of Industry 2007 Present Director, National Nanotechnology Center (NANOTEC) Jan 2007 Present Director, National Electronics and Computer Technology Center (NECTEC) Jan 2007 Present Director, Telecommunications Research and Industrial Development Institute Jan 1989 Present Director and General Manager, KV Electronics Co., Ltd. Mar 2006 Present Director, ChokeUdom Property Co., Ltd. Mar 2006 Present Director, SubUdom Property Co., Ltd. Feb 2006 Present Director, Mekfah Real Estate Co., Ltd. May 2006 Present Director, Viptel Co., Ltd. Age 62 years Present Position Independent Director and Audit Committee Education Bachelor s degree of Laws, Thammasat University Bachelor s degree of Economics, Thammasat University Master s degree of Economics, Pittsburg State University, U.S.A. Training on Director Accreditation Program (DAP) Course, Batch 67 Year 2007 from Thai Institute of Directors (IOD) Training on Financial Statement for Directors (FSD) Course, Batch 3 Year 2008 from Thai Institute of Directors (IOD) Training on Director Certification Program (DCP) Course, Batch 110 Year 2008 from Thai Institute of Directors (IOD) Percentage of Shareholding (%) None Relationship with Company s Executive(s) None Experiences over the Past 5 Years Present Director and Treasurer, Puey Ungphakorn Institute Present Vice President, Thammasat Alumni Econ Association Present Faculty Director,Graduate Voluntee Center, Thammasart University Present Director planning opinions on urgent public issues for presentation to National Economic and Social Advisory Council Director, Library and Chronicle, Bank of Thailand Director, Money Market Management Operation Department, Bank of Thailand 2002 Senior Executive, Money Market Credit Division, Bank of Thailand 2001 Senior Executive, Strategic Communication Planning Division Media Communication Office, Bank of Thailand Age 66 years Present Position Independent Director and Audit Committee Education Bachelor s degree of Commerce, Thammasat University Bachelor s degree of Accounting, Thammasat University MBA (Accounting), University of Detroit, U.S.A. Training on Director Accreditation Program (DAP) Course, Batch 73 Year 2008 from Thai Institute of Directors (IOD) Percentage of Shareholding (%) None Relationship with Company s Executive(s) None Experiences over the Past 5 Years 2002 Present Dean, Faculty of Business, University of Thai Chamber of Commerce 1997 Present Chairman, Measures Supervision on Faculty of Accounting, North Eastern University 2002 Present Women, Youth and Family Working Team, The Foundation of Islamic Center of Thailand 2002 Present Director, Institute of Trade Strategies, Thai Chamber of Commerce 2004 Present Director, Accounting Education and Technology, Federation of Accounting Professions 2004 Present SubCommittee, Qualifications of Candidate for Certified Public Accountant of Federation of Accounting Professions 2005 Present President, Accounting SubCommittee and Academic and Education Assurance Committee, Association of Private Higher Education Institution of Thailand 2005 Present Professional, Academic Evaluation, Faculty of Businsess Administration, National Institute of Development Administration 2005 Present Professional Team, Investment Project of Managerial Accounting System Installation and Human Resource System Planning, Port Authority of Thailand Director, The Institute of Certified Accountants and Auditors of Thailand Director and Member of the Audit Committee, Asset Management Corporation Dean, Faculty of Commerce and Accountancy, Thammasart University

8 Mrs. Nangnoi Bunyasaranand Director Age 63 years Present Position Director Education Bachelor s degree of Accounting, Chulalongkorn University Certificate Dynamic Management, Syracuse University, New York, U.S.A. Senior Executive Program SASIN Training on Director Accreditation Program (DAP) Course, Batch 67 Year 2007 from Thai Institute of Directors (IOD) Percentage of Shareholding (%) None Relationship with Company s Executive(s) None Experiences over the Past 5 Years Present Director, Premier Capital (2000) Co., Ltd Present Managing Director, Premier Inter Leasing Co., Ltd. Present Director, Premier LMS Co., Ltd. Present Director, Premier Brokerage Co., Ltd Present Director, Premier Resort Krabi Co., Ltd. Present Director, Raya Heritage Co., Ltd. Present Director, Sea Harrier Co., Ltd. Mr. Somchai Choonharas Director, Managing Director Age 58 years Present Position Director, Managing Director Education Bachelor s degree of General Business Management, Ramkhamhaeng University Advanced Certificate in Marketing (MIM), Faculty of Commerce and Accountancy, Thammasat University Master s degree of Business Administration, Faculty of Commerce and Accountancy, Thammasat University Doctoral degree of Organization Psychology, California School of Professional Psychology, Los Angelis, U.S.A. Training on Director Accreditation Program (DAP) Course, Batch 68 Year 2008 from Thai Institute of Directors (IOD) Percentage of Shareholding (%) None Relationship with Company s Executive(s) None Experiences over the Past 5 Years 2003 Present Director, P.M. Food Co., Ltd Present Director, Premier Canning Industry Co., Ltd Present Director, Premier Frozen Products Co., Ltd Present Director, Premier Fission Capital Co., Ltd Executive Director, The Thai Chamber of Commerce & Board of Trade of Thailand List of Companies in the Premier Group of Companies 1. Premier Fission Capital Co., Ltd. 16. Raya Heritage Co., Ltd. 2. Premier Enterprise Public Co., Ltd. 17. Seri Premier Co., Ltd. 3. Premier Capital (2000) Co., Ltd. 18. Seri Properties Holding Co., Ltd. 4. Premier Inter Leasing Co., Ltd. 19. Moo Ban Seri Co., Ltd. 5. Premier Brokerage Co., Ltd. 20. Premier TDO Co., Ltd. 6. Premier LMS Co., Ltd. 21. Seri Assets Co., Ltd. 7. Premier Motors Co., Ltd. 22. Premier Global Capital Co., Ltd. 8. Premier Products Co., Ltd. 23. Premier Capital Co., Ltd. 9. Premier Manufacturing Co., Ltd. 24. Premier Pet Products Co., Ltd. 10. Premier Home Appliance Co., Ltd. 25. Sarasuk Co., Ltd. 11. Imperial Eagle Co., Ltd. 26. Premier Sukhumvit Center Co., Ltd. 12. Premier Alternative Motors Co., Ltd. 27. Premier Planner Co., Ltd. 13. Premier Technology Public Co., Ltd. 28. Premier Metro Bus Co., Ltd. 14. Datapro Computer Systems Co., LTd. 29. Sea Harrier Co., Ltd. 15. Premier Resort Krabi Co., Ltd.

9 Present Director, Premier Brokerage Co., Ltd Present Director, Premier Resort Krabi Co., Ltd. Present Director, Raya Heritage Co., Ltd. Present Director, Sea Harrier Co., Ltd. Details of Manager and Executives Age 66 years Present Position Deputy Managing Director Sales Education Mathayom 8, Assumption College Percentage of Shareholding (%) None Relationship with Company s Executive(s) None Experiences over the Past 5 Years 2005 Jun 2007 Deputy Managing Director Sales, Premier Marketing Co., Ltd Assistant Director of Sales, Burli Jucker (Public) Co., Ltd. Mr. Suthep Vangtal Deputy Managing Director Sales Age 44 years Present Position Deputy Managing Director Marketing 1 Education Master s degree of Business Administration, Bangkok University Percentage of Shareholding (%) None Relationship with Company s Executive(s) None Experiences over the Past 5 Years Mar2007 Jun 2007 Deputy Managing Director Marketing 1, Premier Marketing Co., Ltd Assistant Deputy Manager Marketing 1, Premier Marketing Co., Ltd. Mr. Pornsak Sinkanarak Deputy Managing Director Marketing 1 Age 54 years Present Position Deputy Managing Director Personnel and Administration Education Master s degree of Industrial Education, King Monkut s Institute of Technology, Lat Krabang Percentage of Shareholding (%) None Relationship with Company s Executive(s) None Experiences over the Past 5 Years 2002 Jun 2007 Deputy Managing Director Personnel and Administration, Premier Marketing Co., Ltd. Mr. Sarawut Jornjit Deputy Managing Director Personnel and Administration Age 47 years Present Position Assistant Managing Director Marketing 2 Education Master s degree of Business Administration, Thammasat University Percentage of Shareholding (%) None Relationship with Company s Executive(s) None Experiences over the Past 5 Years 2002 Jun 2007 Assistant Managing Director Marketing 2, Premier Marketing Co., Ltd Marketing Manager, Better Way (Thailand) Co., Ltd. Miss Malee Sukareechai Assistant Managing Director Marketing 2 Mrs. Somjai Boonrawdchu Assistant Managing Director Finance and Accounting Age 52 years Present Position Assistant Managing Director Finance and Accounting Education Bachelor s degree of Accounting, Thammasat University Percentage of Shareholding (%) None Relationship with Company s Executive(s) None Experiences over the Past 5 Years Jul 2007 Present Assistant Managing Director Finance and Accounting, Premier Marketing Public Co., Ltd Jun 2007 Assistant Managing Director Finance and Accounting, Premier Marketing Co., Ltd Manager Finance and Credit, Premier Marketing Co., Ltd Manager Finance and Accounting, P.M. Food Co., Ltd.

10 General Information Premier Marketing Public Co., Ltd. : Company Registration No Address : No. 1, Premier Corporate Park, Soi Premier 2 Sinakharin Road, Nong Bon Subdistrict Prawet District, Bangkok Telephone : , Fax : Home Page : Type of Business : Distribute and sales of consumer products Registered Capital : 650,000,000 Baht No. of Ordinary Shares Issued : 650,000,000 Shares Over 10% of Shareholding in Juristic Persons P.M. Food Co., Ltd. : Company Registration No Address : No. 1, Premier Corporate Park, Soi Premier 2 Sinakharin Road, Nong Bon Subdistrict Prawet District, Bangkok Factory Address : No. 505, Moo 9, Nong Ki Subdistrict Kabin Buri District, Prachin Buri Telephone : , Fax : Type of Business : Manufacture snack Taro Registered Capital : 140,000,000 Baht No. of Ordinary Shares Issued : 14,000,000 Shares No. of Shares Holding : 13,999,994 Shares Premier Canning Industry Co., Ltd. : Company Registration No Address : No. 1, Premier Corporate Park, Soi Premier 2 Sinakharin Road, Nong Bon Subdistrict Prawet District, Bangkok Factory Address : No. 326, Village No. 1, Rattanarach Road Bang Bo Subdistrict, Bang Bo District Samut Prakan Province Telephone : Fax : Type of Business : Manufacture ketchup and chilli sauce under King s Kitchen Manufacture readytoeat pouched tuna and canned tuna, and tuna pet food products Registered Capital : 93,000,000 Baht No. of Ordinary Shares Issued : 930,000 Shares No. of Shares Holding : 929,994 Shares

11 Premier Frozen Products Co., Ltd. : Company Registration No Address : No. 1, Premier Corporate Park, Soi Premier 2 Sinakharin Road, Nong Bon Subdistrict Prawet District, Bangkok Factory Address : No. 98/1, Village No. 12, Soi Wat Bang Phli Yai Bang NaTrat KM. 13 Road, Bang Phli Yai Subdistrict Bang Phli District, Samut Prakan Province Telephone : , Fax : Type of Business : Manufacture frozenfood products and operate cold storage business Provide factory, machinery and cold storage rental services Registered Capital : 230,000,000 Baht No. of Ordinary Shares Issued : 230,000 Shares No. of Shares Holding : 229,994 Shares Other References (1) Securities Registrar Thailand Securities Depository Co., Ltd. The Stock Exchange of Thailand Building No. 62, Ratchadaphisek Road, Khlong Toei Subdistrict, Khlong Toei District, Bangkok Telephone Fax (2) Auditor Miss Siraporn Ouaanunkun CPA Registration No or Mr. Supachai Phanyawattano CPA Registration No or Miss Thipawan Nananuwat CPA Registration No Ernst & Young Office Limited 33rd Lake Ratchada Office Complex, 193/136137, New Ratchadaphisek Road, Bangkok Telephone , Fax , (3) Consultant or Manager under Management Contract Management and Business Consulting Contract Premier Fission Capital Co., Ltd. No. 1, Premier Corporate Park, Soi Premier 2, Srinakarin Road Nong Bon Subdistrict, Prawet District, Bangkok Telephone Fax

12 Strong Brand Value Strong Brand Value Strong Brand Value Quality Product for Quality of Life Quality Product for Quality of Life Professional Team with Commitment Professional Team with Commitment Leader in Distribution Channel Leader in Distribution Channel Strategic Business Partnership Strategic Business Partnership Corporate Social Responsibility Market Share Profit Sales Customer Satisfaction New Customers Employee Happiness Shareholder Return Business Partner Relationship Environment Concern Corporate Social Responsibility

13 Summary of Financial Data (Unit : Mil Baht) Financial Data Total Assets 1, , , Total Liabilities , , Shareholders Equity (capital deficit) (69.74) (267.37) Sales and Service Revenues 3, , , Total Revenues 3, , , Gross Profit Net Profit (Loss) Financial Ratio Gross Profit Margin (%) Net Profit Margin (%) Return on Equity (%) n.m. n.m. Return on Assets (%) Earnings (Deficit) per Share (Baht) * 0.35 Dividend per Share (Baht) * On 20 July 2007, the company registered the change of share price from 100 Baht per share to 1 Baht per share. Therefore, number of shares increased from 5 million shares to 500 million shares. And the company increased its registered capital from 500 Million Baht to 650 Million Baht by issuing the new 150 million ordinary shares at 1 Baht per share.

14 Leader in Distribution Channel Strategic Business Partnership Professional Team with Commitment Quality Product for Quality of Life Corporate Social Responsibility Strong Brand Value

15 Type of Business Premier Marketing Public Co., Ltd. ( Company ) was established on 28 July It was later registered as a public company on 20 July 2007 and was listed in Stock Exchange of Thailand on 27 May The company has a registered and paidup capital of 650 Mil Baht. Regarding progress in its operations, in addition to introducing the new products in 2008, the company has been appointed as a representative to distribute Body Shape Coffee Mix of Body Shape Corporation Group Co., Ltd. and Dailio Cookies of S&P Syndicate (Public) Co., Ltd. as well. The company distributes and is the distributor to sell consumer products such as snack, food and beverage, confectionery, nutritional food and pastille, personal care, and household products, etc. The company has 3 subsidiariy companies consisting of P.M. Food Co., Ltd. (PMF), Premier Canning Industry Co., Ltd. (PCI), and Premier Frozen Products Co., Ltd. (PFP) manufacturing and selling food products i.e. fish snack under Taro brand, tuna products, chilli sauce and ketchup, and frozen readytoeat foods.

16 Revenue structure of the company and its subsidiaries: Type of Revenues Operated by Shareholding % Mil Baht % Mil Baht % Mil Baht % 1. Sales and distribution Company 1, , , Tuna and sauce products PCI , , Fish snack for export 1/ PMF Frozen foods PFP Rental, services and other income e.g. interest income, gain from debt forgiveness, gain on sales of investment in associated company Total Revenues 3, , , / Revenue from sales of fish snack is the part that PMF sells to outside parties. Competition and Product Procurement of the Company can be summarized as follows: Industrial Competition At present, Premier Marketing Public Co., Ltd. is one of the leading distributors of consumer products in Thailand. Direct competitors are for example Diethelm Co., Ltd., Berli Jucker (Public) Co., Ltd. Each of them is skillful possessing remarkable experiences in product distribution and comprehensive distribution network nationwide. Therefore, new entrepreneur entry into this zone may be painstaking since the acquisition of consumer base and distribution channels with retailers require longterm and good relationship with the customers. In addition, investment in the strong distribution network construction requires the professional sales team and marketing strategies, which are significant parts to the success of distribution and agent business. The snack industry is highly competitive with major players being the leaders in each type of snack. For example, FritoLay Co., Ltd. is the leader in potato chip segment. P.M. Food Co., Ltd., manufacturer of fish snack under Taro brand, is the leader in fish snack category. Each market leader holds the highly strong brand position. Therefore, the new comer entering into this business needs a big amount of investment and marketing expense for advertising and sales promotion activities to gain acceptance from consumers. In addition, major selling point in the snack market is to present the good taste, premium to motivate children and teenagers who are the target groups to buy more. Therefore, new product introduction into the market is another method to stimulate sales and create brand recognition among consumers in the long run.

17 Industry Trend and Competition In response to the consistent change in consumers needs, the manufacturers, especially of consumer products, are expected to introduce new products to the market and widely distribute them. Therefore, these manufacturers may realize the necessity of hiring professional distributor in order to better control its sales and marketing expenses e.g. listing fee in modern trade, distribution expense, sales promotion expense, etc. In addition, trend in healthy food consumption requires brand owners to improve or develop new products in response to this sophisticated eating behavior. In another aspect of the competition, manufacturers of various kinds of snacks may have to consider the surrounding factors that may affect the market growth i.e. strict measures on snack products issued by The Food and Drug Administration or FDA e.g. no advertisement is allowed for kids broadcast program and no giveaway is allowed in the package. These are the famous marketing strategies used in the industry which have been a major impact in previous years. However, fish snack under Taro brand is not affected since the product is made of fish, which has nutritional values with rich of proteins and are healthy product. Therefore, it receives a favourable response and serves the health conscious demands at present. Product Selection and Handling Products distributed by the company are manufactured by its affiliated companies and from external parties. However, the company has policies in emphasizing the distribution and sales of quality and variety of products. The company will select its manufacturers based on their capabilities, potential, product quality, and policies on support of sales promotion and marketing activities. Some manufacturers have been in business alliances with the company for many years. Some are new partners to the company. However, the company will consider quality of longterm relationship rather than number of trading partners, which leads to the good support from the partners in terms of operations and problem solving. When purchasing the goods from manufacturers to distribute to consumers, the company has placed advance purchase orders with appropriate quantities based on its inventories, trends of market demand, and related sales promotion activities. This will be a good preparation for sufficient distribution volume to meet each sales cycle and reduce opportunity loss from shortages stock. At the same time, the company needs to control in order not to have excess inventories, which will result in damages from obsolete products. The followings are the list of manufacturers or principals Manufacturer s name Type of products 1. P.M. Food Co., Ltd. Fish Snack 2. Calbee Tanawat Co., Ltd. Fried Potato Stick, Green Peas, Prawn Cracker 3. Namchow (Thailand) Ltd. Rice Cracker 4. Premier Canning Industry Co., Ltd. Tomato Ketchup and Chili Sauce 5. Lampang Food Product Co., Ltd. Pickled Food 6. Osotspa Co., Ltd. Confectionaries, Food Supplements and Medicine 7. Rubia Industries Ltd. Confectionaries 8. P Z Cussons (Thailand) Ltd. Household and Personal Care Products 9. 3 M Food Products Co., Ltd. Chewy Tamarind 10. San Miguel Marketing (Thailand) Ltd. Fruit Juice 11. S&P Syndicate Public Co., Ltd. Cookies 12. Body Shape Corporation Group Co., Ltd. Instant Coffee The Company is the authorized distributor for the above manufacturers or principals with agreed distribution fees and conditions provided in the agreement except for our own brands and trade marks CoryfinC, the confectionary products produced by Rubia Industries Ltd. and other products produced by affiliated companies.

18 Quality Moral & Ethic Premier People Efficiency The will to Learn

19 Risk Factors Risk Factors 1. Operation Risk Sales and Distribution Business 1.1 Risk from NonRenewal of Sales Agent Contract In rendering sales agent services, the company will consult with its trading partners for the operating guidelines in order to have clear objectives and mutual benefits in the long run. However, The Distributorship Agreement is an important tool for product distribution service. Normally, each contract will last 35 years and provide clear terms and conditions for renewal process. The company may have some risks that the other party does not renew or cancel the contract when it becomes due, which leads to the loss of income from not being the sales agent for particular products. In addition, it may be possible that the other party may request for changes in terms and conditions upon contract renewal, which may bring disadvantages or decrease in returns to the company. The abovementioned operating guidelines with the trading partners for mutual benefits in the long run help reduce the chance of losing trading partners by contract cancellation or nonrenewal. Moreover, the company has diversified its risks by distributing products from several manufacturers under several brands, including products mainly manufactured by its subsidiaries. During the past years, the company and the manufacturers or product owners who are the trading partners worked together for a long time. The company strictly complies with terms and conditions as indicated in the contract, which gains trustworthiness from its trading partners in reviewing the contract. The company can negotiate for appropriate return rate as well. 1.2 Risk from Obsolete or Expired Products The company is the distributor for consumer products whose quality relates to their product shelf life. The company takes some risks if the products expire prior to reaching to ultimate consumers. However, the company determines policies and management control system for the circulation of goods placed in the retail stores to remain fresh all the time. Planning emphasizes on the control of product life starting from storage in the company s warehouse, delivery to retail stores, circulation of goods in the market, and frequent inspection of products in the retail stores by sales persons in order to learn the movement of goods and the control of their shelf life in compliance with predetermined policies. The company has never experienced any problem or petition from consumers regarding obsolete or expired product. Food Manufacturing Business 1.3 Risk from Price Volatility and Raw Material Supply Products of the subsidiaries must rely on major raw materials like tuna, shrimp, squid and frozen minced fish meat. Such raw materials are natural products depending on seasonalities, weather, natural phenomena, natural disaster, etc. Prices are volatile based on market demand and supply. Any events that affect the raw material supply will rapidly change their related price as well, which leads to production cost. Thus, effective management of raw material costs will reduce the volatility risk of raw materials. Persons in charge of raw material purchase must closely monitor related news and information. Experiences and skills in business operations over the long period will facilitate the prompt forecast and decisionmaking under such changes. In addition, the subsidiaries will coordinate with the trading partners in terms of production and raw material reserves at appropriate volumes and prices in the long run. 1.4 Exchange Rate Risk The company and its subsidiaries earn export revenues at the proportions of 33.70% and 32.34% from total revenues in 2007 and 2008 respectively. Major revenues are in US dollars. Therefore, the business exposes to foreign exchange risk,

20 especially, in the event of high exchange rate volatility which affects its revenues and profits. However, for imported raw materials and packaging, the company will match the collection of sales revenues with the payment of raw materials and packaging (natural hedge). This will partly help reduce the risk from exchange rate volatility. Furthermore, the company closely follows up related news and buy forward contracts in dealing with exchange rate volatility at each appropriate interval. 1.5 Risk from Dependence on Major Customers and Export to Japan Major export market for tuna and pet food products of the subsidiary company is Japan. This may affect in the event of economic downturn, which leads to the business revenues. However, related businesses have not yet experienced such problems. On the contrary, good relationship and coordination from the business partners provides consistent growth in export, good returns, and new product development with the partners under the company s principles of emphasizing consumers confidence on quality and food safety. 2. Risk from Not Receiving Dividend As of 31 December 2007, the company had retained deficits valuing Mil Baht and a decrease to Mil Baht on 31 December Parts of the decrease are from its profits valuing Mil Baht and the transfer of reserves from share premium valuing Mil Baht upon the resolution from the extraordinary shareholders meeting on 19 December The Company expects that its continuous operating profits over the past years in combination with the attempt to win over all the manageable external impacts can possibly wipe out the existing retained loss within This will finally bring back the strong financial position in order to pay dividends to the shareholders.

21 Shareholding Structure and Management Shareholding Structure and Management 1. Shareholders 1.1 Top 10 Shareholders Details of the top 10 shareholders whose names are shown in the shareholder register as of 31 December 2008 are as follows: Name 1. Premier Fission Capital Co., Ltd. 2. Bangkok Insurance (Public) Co., Ltd. 3. TaibJaic Asian Balanced Private Equity Fund 4. Premier Pet Products Co., Ltd. 5. Thai Capital Fund 6. Mrs. Arthittaya Yiamwech 7. MAI SCB Longterm Equity Open Fund 8. Mr. Umpon Deelerdwongse 9. Mr. Somchai Tharapaisarnsuk 10. Mr. Wichit Shinnawongworagul Total Major Shareholders No. of Shares 424,999,400 10,500,000 10,000,000 9,999,200 5,813,200 4,848,700 4,834,600 3,100,000 3,039,700 2,326, ,461,400 Shareholding % Remark: No. of shares counted from related shareholders under Securities and Exchange Act B.E Section Major shareholders who are related persons participating in the company management are as follows: Name Type of Business Related Persons 1. Premier Fission Capital Co., Ltd. 2. Premier Pet Products Co., Ltd. Business management service and investment Factory rental Mr. Vichien Phongsathorn Mrs. Duangthip Eamrungroj and Mr. Somchai Choonharas are codirectors Mr. Vichien Phongsathorn and Mrs. Duangthip Eamrungroj are codirectors 2. Management 2.1 Organization Structure The company has 2 sets of committee consisting of Board of Directors Committee and Audit Committee with the following details: Board of Directors As of 31 December 2008, the company had 8 directors as follows: 1. Mr. Vichien Phongsathorn Chairman 2. Mr. Udom Chatiyanont Director 3. Mr. Katiya Greigarn Independent Director and Chairman of Audit Committee 4. Mr. Wichai Hirunwong Independent Director and Audit Committee 5. Miss Naengnoi ChaiOnnom Independent Director and Audit Committee 6. Mrs. Duangthip Eamrungroj Director 7. Mrs. Nangnoi Bunyasaranand Director 8. Mr. Somchai Choonharas Director and Managing Director Mrs. Suchada Samaisut works as Committee Secretary and Corporate Secretary.

22 Board of Directors Term In the annual general meeting every year, onethirds of the directors must give up their offices. If the numbers of directors cannot be divided into 3 equal portions, then take the nearest numbers of onethirds to leave the post. The directors, who leave the post in the first and the second years after the company registration, use draw a lot method to choose those to leave first. In the following years, the directors who stay longest are the first to leave. Directors who have left the post may be reelected in the future. Scope of Responsibilities of Board of Directors 1. Manage the company in compliance with law, objectives and articles of association as well as the resolution from the shareholders meeting, except for the issues that must be approved by the shareholders meeting before implementation e.g. issues required the resolution from the shareholders meeting by law, related transactions, and purchase or sales of significant assets under the criteria of Stock Exchange of Thailand or as determined by other government agencies, etc. 2. Review and approve significant issues e.g. policies, plans and budget, organization structure, management powers in the company, corporate governance policies, and other items as determined by Stock Exchange of Thailand or by law. 3. Monitor the executives to comply with the approved policies, plans and budget. 4. Appoint the qualified person who does not possess prohibited characters as specified in Public Company Limited Act B.E (including the revised Act), securities and exchange laws, notification, related rules and/or regulations in the case that there is a vacation of office by other reasons apart from term expiration. 5. Appoint Audit Committee and other sub committee. 6. Prepare reliable accounting system, financial report and audit as well as effective and efficient internal control system and internal audit. 7. Ensure that the company has comprehensive risk management system, risk management process, effective report and followup. 8. Report Board of Directors responsibilities in preparing financial report in comparison with report of the independent auditors in the annual report. 9. Monitor major shareholders and minority shareholders benefits moderately; provide fair treatement to major shareholders, minority shareholders and stakeholders rights; take into consideration conflict of interest, operating transparency and sufficient information disclosure. 10. The following authorities can be exercised upon receiving prior approval from the shareholders meeting. However, directors or any persons, who have conflicts, stakes or any other conflicts of interests in the company or subsidiaries (if any), have no rights to vote on certain issues. (a) Transactions requiring the resolution from the shareholders meeting by law (b) Transactions that the directors have some interests and in the scope that require the shareholders meeting approval in compliance with laws or SET requirements. 11. The Board of Directors may assign one or more director(s) or any other person to carry out particular activities for the Board. However, the abovementioned authorization excludes authorizing or subauthorizing the director(s) or appointee(s) to approve transactions that he/she/they may have conflicts, stakes or any other conflicts of interests in the company or subsidiaries. Approval from the shareholders meeting is required for related transactions, acquisition or sales of the company s significant assets in compliance with Stock Exchange of Thailand s requirement.

23 In 2008, there were 7 Board s meetings. Attendance of each director can be summarized as followed: List of Board of Directors 1. Mr. Vichien Phongsathorn 2. Mr. Udom Chatiyanont 3. Mr. Katiya Greigarn 4. Mr. Wichai Hirunwong 5.* Miss Naengnoi ChaiOnnom 6. Mrs. Duangthip Eamrungroj 7.** Mrs. Nangnoi Bunyasaranand 8. Mr. Somchai Choonharas Attendance / Total Number of Meetings (times) 6/7 6/7 6/7 7/7 5/6 6/7 4/4 7/7 Remark: * has been the company s director since 21 January 2008 ** has been the company s director since 24 April Audit Committee As of 31 December 2008, 3 members of the Audit Committee consist of: 1. Mr. Katiya Greigarn Chairman of Audit Committee 2. Mr. Wichai Hirunwong Audit Committee 3. Miss Naengnoi ChaiOnnom Audit Committee possessing skills and experiences in reviewing the company s financial statements Mrs. Suchada Samaisut is the secretary to the Audit Committee Member of the Audit Committee Term Members of the Audit Committee can remain in the post for 3 years. In the event that members of the Audit Committee resign from the post prior to the term expiry, the newly appointed director(s) can sit in the office for the remaining period of the resigned director(s). Scope of Responsibilities of Audit Committee Audit Committee have the following scope, duties and responsibilities as assigned by Board of Directors: 1. Review that the company has accurate financial reports and sufficient disclosure by coordinating with the external auditors and the executives in charge of preparing both quaterly and annual financial reports. 2. Review that the company has appropriate and effective internal control system and internal audit. 3. Review the company s performance to comply with securities and exchange laws, requirements of the exchange or laws related to the company s businesses. 4. Recruit and propose the company s external auditor as well as the auditor s remuneration to the Board of Directors for further appointment from the shareholders meeting. 5. Disclose the accurate and complete company s information regarding related transactions or conflicts of interest to further present to the Board s meeting and/or the shareholders meeting. 6. Prepare and disclose the report regarding Audit Committee s activities in the company s annual report by affixing Chairman of the Audit Committee s signature in such report. Such report should contain the following information: Opinion on the company s financial reports preparation procedures and disclosure. Opinion on the company s sufficient internal control system. Opinion on compliance to securities and exchange laws, requirements of the exchange or laws related to the company s businesses.

24 Any other reports that the shareholders or general investors should acknowledge under the scope, duties and responsibilities as assigned by the Board of Directors. 7. Any other transactions as appropriately assigned by the Board of Directors. For implementation in compliance with the scope, duties and responsibilities, the Audit Committee has the power to invite the executives, manager or employees of the related companies to report their opinion, attend the meeting, or submit related information if necessary. However, Board of Directors has the power to change the Audit Committee s scope, duties, and responsibilities as deemed appropriate. In 2008, there were 5 Audit Committee s meetings. Attendance of each director can be summarized as followed: 1. Mr. Katiya Greigarn List of Audit Committee Attendance / Total Number of Meetings (times) 5/5 2. Mr. Wichai Hirunwong 3.* Miss Naengnoi ChaiOnnom 5/5 4/4 Remark: * has been members of the Audit Committee since 24 January Management Team As of 31 December 2008, the management team consisted of 6 members in the following list: 1. Mr. Somchai Choonharas Managing Director 2. Mr. Suthep Vangtal Deputy Managing Director Sales 3. Mr. Pornsak Sinkanarak Deputy Managing Director Marketing 1 4. Mr. Sarawut Jornjit Deputy Managing Director Personnel and Administration 5. Miss Malee Sukareechai Assistant Managing Director Marketing 2 6. Mrs. Somjai Boonrawdchu Assistant Managing Director Finance and Accounting Authorities and Responsibilities of Managing Director Managing Director has power and duties to manage the company s businesses as assigned by the Board of Directors, which includes the following transactions or activities: 1. Administer and/or manage the company s daily activities. 2. Prepare policies, plans and budget organization structure and management powers in the company for presentation to the Board of Directors for approval. 3. Operate or implement in compliance with the approved policies, plans and budget. 4. Approve the budgeted investment for the amount not exceeding 10 Mil Baht per project and approve the nonbudgeted investment or expenses over budgeted amount of not more than 2 Mil Baht per year. 5. Develop the organization and personnel with consistent quality and effectiveness. 6. Act as the company s authorized person in administering related activities to meet the objectives, rules, policies, regulations, requirements, orders, resolution from the shareholders meeting and/or resolution from Board s meeting. 7. Monitor and maintain corporate image. 8. Perform any other duties as assigned by the Board of Directors and/or Audit Committee. However, Managing Director s power or assignment to other persons as deemed appropriate will not include power or authorization to approve any transactions that he/she or related persons may have conflicts, stakes or any other conflicts of interests in the company or subsidiaries or any transactions not under normal business practice. The approval of such transactions must be presented for consideration and approval from the Board s meeting and/or the shareholders meeting as determined in the articles of association or related laws.

25 2.2 Director and Executive Nomination Method The company does not appoiont Director and Executive Nomination Committee but has the directors and executives selection and appointment criteria as found below: Board of Directors In selecting the persons to be appointed as directors, Board of Directors will consider various qualifications e.g. education, experiences and skills from various professions before presenting to the shareholders meeting for approval. Appointment of company s directors will follow the procedures as indicated in articles of association as found below: 1. Not fewer than 5 Board members approved by the shareholders meeting and not fewer than half of all the residential directors are authorized to approve this transaction. 2 The shareholders meeting elect the directors based on the following criteria and procedures: (1) One shareholder has one vote. (2) Each shareholder must use all of his/her votes in (1) to elect one or many person(s) to be the company s director(s). However, the votes for each candidate will be the equal. (3) The person earning highest votes in respective order will be elected as directors by the number of directors expected in each election. In the event that the elected persons in the subsequent order get equal votes which results in excess director expected in such election, Chairman of the meeting will have a casting vote. 3. In the annual general meeting every year, onethird of the directors must give up their offices. If the numbers of directors cannot be divided into 3 equal portions, then take the nearest numbers of onethird to leave the post. The directors, who leave the post in the first and the second years after the company registration, use draw a lot method to choose those to leave first. In the following years, the directors who stay longest are the first to leave. Directors who have left the post may be reelected in the future. 4. Any director to be leaving the office must submit letter of resignation to the company. Resignation is effective from the date that resignation letter received by the company. Director resigning in the first paragraph will inform his/her resignation to the registrar as well. 5. In the case that there is a vacation of office by other reasons apart from term expiration, the Board of Directors may select its qualified member who possesses characters by law to replace the vacant seat in the next Board Meeting. Unless the term of the resigned director is less than 2 months, the newly appointed director(s) can sit in the office for the remaining period of the resigned director(s). Resolution from Board s meeting in paragraph 1 must consists of the votes from not fewer than threeforths of the remaining directors. 6. Shareholders Meeting may have a resolution to remove certain director from his office before his term expiration with the constitution of threefourths majority of the votes from shareholders and proxy attending the meeting and who hold more than half of the outstanding shares held by shareholders and proxy (if any) in that particular Meeting. Independent Director Board of Directors or the shareholders meeting (depending on the case) will appoint independent directors to participate in Board of Directors activities. However, the company sets up policies to appoint independent directors from not fewer than onethird of the Board members and have at least 3 independent directors. Independent directors selection criteria are based on selection criteria for Board of Directors. Qualifications of the candidates who will work as independent directors will be considered from the qualified person who does not possess prohibited characters as specified in Public Company Limited Act and Securities and Exchange laws, including notification, related rules and/or regulations. In selecting the persons to be appointed as independent directors, Board of Directors will be presented with information regarding qualifications e.g. education, specific skills, experiences and other appropriate factors for consideration for further appointment as the company s directors in the following period. However, in the case that there is a vacation of office of any independent director by other reasons apart from term expiration, the Board of Directors may appoint the qualified independent director who possesses qualifications as mentioned above to replace the vacant seat for the remaining period of the resigned independent director. Member of the Audit Committee Board of Directors appoints at least 3 members of the Audit Committee to work for the company. Each member of the Audit Committee must be an independent director. Members of the Audit Committee must possess the qualifications as specified in Securities and Exchange laws, including Stock Exchange of Thailand notification, related rules and/or regulations specifying the following qualifications and scope of operations of Audit Committee:

26 1. Hold not more than 1% of the paidup capital of the company, company(ies) in the group, affiliated company(ies) or related company(ies), including the shares held by related persons as well. 2. Become a director(s) who do(es) not participate in administering the company, company(ies) in the group, affiliated company(ies), related company(ies) or major shareholder(s). 3. Become a director(s) who is (are) not worker(s), employee(s) or consultant(s) receiving permanent salaries from the company, company(ies) in the group, affiliated company(ies), related company(ies) or major shareholder(s). 4. Become a director(s) who do(es) not have direct or indirect financial and administrative interests or stakes in the company, company(ies) in the group, affiliated company(ies) or major shareholder(s). 5. Become a director(s) not having interests or stakes similar to the above mentioned characters 1 year prior to the appointment as member of the Audit Committee, except for the case that the Board of Directors consider that having the particular interests or stakes do not affect the duties and independence. 6. Become a director(s) not being related person(s) or close relative(s) to the company s executive(s) or major shareholder(s). 7. Become a director(s) not appointed as a representative(s) to maintain the interests of the company s director(s), major shareholder(s) or shareholder(s) being related person(s) to the company s major shareholder(s). 8. Can perform duties, opinions or performance reports as per the assigned duties from the company s Board of Directors not under the supervision of the company s executive(s) or major shareholder(s), including related person(s) or close relative(s) to such persons. However, at least 1 member of the Audit Committee must be a skilful or sufficiently experienced person in the finance or accounting area who can review the reliability of the financial statements and other functions as a member of the Audit Committee. Executive The company does not have Executive Nomination Committee. However, the company sets up policies to nominate the executives by selecting the person with skills, capabilities and experiences related to the business. Selection procedures are in compliance with the human resource regulations and must be approved from Board of Directors and/or the person assigned by the Board of Directors. 2.3 Executive s Remuneration Monetary Remuneration (1) Directors In the annual general shareholders meeting for 2008 dated 24 April 2008, there was a resolution to pay remuneration to the directors not participating in the management funtions for the amount not exceeding 1 Mil Baht by assigning the directors who do not have stakes to consider payment criteria as deemed appropriate. In 2008, the company paid remuneration to the directors not participating in the administration, which consists of 1 director and 3 independent directors in the forms of meeting allowance and pension as follows: Name 1. Mr. Udom Chatiyanont 2. Mr. Katiya Greigarn 3. Mr. Wichai Hirunwong 4. Miss Naengnoi Chaionnom Total Remuneration (Baht) 175, , , , ,000 For the remuneration that 3 directors receive from Premier Fission Capital Co., Ltd. when performing manage ment duties for the company e.g. Mr. Vichien Phongsathorn Mrs. Duangthip Eamrungroj and Mrs. Nangnoi Bunyasaranand receive the total remuneration of 600,000 Baht. This remuneration is displayed in the employment contract. Premier Fission Capital Co., Ltd. provides management service, consulting service and other supporting services.

27 (2) Executives In 2008, the company paid the following remuneration to the executives: Remuneration No. of Executive 2008 Remuneration (Baht) Salaries and Bonus Contributtion to Provident Fund Total ,574,836 1,024,940 21,599, Other Remunerations NA 2.4 Corporate Governance The company emphasizes on good corporate governance because it is important and necessary for business operations to grow with sustainability. The company identifies the following policies for its good corporate governance: 1. Running business with honesty, fairness and transparency which can be audited and disclosed to all related parties. 2. Providing internal control system for risk managemeng with appropriate and effective internal audit. 3. Emphasizing shareholders rights with equal treatment to the shareholders and fairness to every party. 4. Complying with related laws, rules and business ethics for the rights of every group of stakeholders. 5. Organizing structure, roles and responsibilities of each director group clearly. By principle, the company s good corporate governance comply with good corporate governance guidelines as determined by Stock Exchange of Thailand which cover 5 chapters of principles with the following operating guidelines: Chapter 1 The Rights of Shareholders The company realizes and emphasizes on various basic rights of the shareholders both as securities investors and as the company s owners e.g. rights to trade, transfer the holding securities, rights to receive profit appropriation from the company, rights to receive sufficient information of the company, rights in the shareholders meeting, rights to express opinion, rights to make joint decision for the company s important issues e.g. appropriation of deividend, director appoint ment or withdrawal, auditor appointment, approval of important transactions influencing directions of business operations, change of memorandum of association and articles of association, etc. In addition to basic rights as mentioned above, the company has performed other transactions to promote and facilitate the utilization of shareholders right as found below: 1. The company will send a notice summoning the meeting together with supplemental documents related to the agenda to the shareholders at least seven days prior to the meeting; or by the methods in compliance with the requirements of Office of Securities and Exchange Commission and Stock Exchange of Thailand, and advertise in the newspapers for at least 3 consecutive days prior to the meeting. Opinion of the directors will be attached to each agenda and such information will be disclosed on the company s website so that the shareholders can have sufficient time to study the information prior to the meeting. 2. In the event that the shareholder cannot attend the meeting by himself, the company gives an opportunity to the shareholder to authorize the independent directors or any persons to sit in the meeting for him by using any form of letter of attorney that the company attaches to the invitation letter to the meeting. In addition, the shareholder can also download letter of attorney via the company s website as well.

28 3. The meeting opens an opportunity to the shareholders to send opinion, recommendation, questions prior to the meeting. 4. The meeting opens an opportunity to the shareholders with the equal rights to express their opinion, recommendation or questions independently before making any resolution to each agenda. However, the shareholders meeting consists of related directors and executives to answer questions to the meeting and will take records of significant questions and opinions in minutes of the meeting which can be examined by the shareholders. 5. After the meeting, the company will prepare minutes of the meeting exhibiting accurate and complete information for the shareholders to examine. Minutes of the meeting will be disseminated via the company s website. Chapter 2 The Equitable Treatment of Shareholders The company sets up policies to build up egalitarium among every and every group of shareholder, especially minority group by providing opportunities to the minority group to propose the name of representation from minority group in the meeting agenda in order to be selected as a director in the annual general shareholders meeting. In 2008, the company gave the said opportunity to the shareholders since 17 November 2008 to 15 January 2009 and disseminate criteria and operating procedures via the company s website and through Stock Exchange of Thailand. In each meeting the company provides equal opportunity to every shareholder. Before the meeting, Chairman of the meeting will explain voting rights, shareholder votes counting for each agenda. Every participant at the meeting is encouraged to express his/her opinion, recommendations, question for each agenda appropriately and sufficiently. Chairman of the meeting will preside the meeting by order of the agenda and will not add any agenda not informed to the shareholders in advance, especially agenda significant to the shareholders may take time to study before making decisions. In the event that the shareholder cannot attend the meeting, the company allows the shareholder to authorize independent directors or any persons to sit in the meeting for him/her by using any form of letter of attorney that the company attaches to letter of invitation to the meeting. In determining measures on the utilization of insider trading for the management s or employees benefits in an unethical manner (see details in 2.5. Supervision on Inside Information Utilization,page 30). Chapter 3 The Role of Stakeholders The company emphasizes on the rights of every stakeholder group, no matter internal stakeholders e.g. executives, employees or external stakeholders e.g. creditors, customers, etc. The company realizes that support and opinion from each stakeholder group will benefit the company s operations and business development. The company will comply with related laws and requirements so that such stakeholders will be properly treated. In addition, in running the company s business, the company takes into consideration the rights of each stakeholder by using the following guidelines: Shareholders : Perform duties with honesty, transparency, benefits to the company and shareholders. Customers : Take care and be responsible for customers, manufacture and distribute goods/ services of quality standards, safety and strictly comply with conditions and agreements to the customers. Trading partners : Run business with honesty, fairness, respect and compliance with the conditions as and creditors specified in the contract. Competitors : Trade competition under good competition rules. Employees : Treat employees equally and fairly in terms of opportunity, return, potential, confidence in quality of life, and safety in working environment. Society and : Be responsible to the community and society s environment and set up policies to donate environment for education to poor students in the provinces via Yuwaphat Foundation. Chapter 4 Disclosure and Transparency Board of Directors emphasize on disclosing accurate, complete and transparent information, financial report and general information based on S.E.C. and Stock Exchange of Thailand s criteria. Other significant information affecting the securities price influences decisionmaking process of the investors and stakeholders. The company has disclosed its information to the shareholders, investors and the public via various channels and media of Stock Exchange of Thailand and the company s website.

29 For investor relations function, the company has not yet set up specific unit for this purpose. But the company has assigned Managing Director to communicate with institutional investors, shareholders, analysts and related government bodies. Board of Directors are responsible for the company s and its subsidiaries consolidated financial statements and financial information as exhibited in annual report. Such financial statements are prepared based on the generally accepted accounting standards in Thailand by selecting appropriate accounting policies and practice them consistently, including sufficient disclosure in the financial statements. In this case, the Audit Committee will review financial report quality, internal control system and sufficient disclosure in notes to financial statements and report to Board of Directors. Chapter 5 Responsibilities of the Board of Directors 1. Board of Directors Structure Board of Directors consists of skilful and capable persons, holding experiences beneficial to the company, who have important roles in determining corporate policies and overview as well as in monitoring the audit and assessing the company s operating performance to follow the plans. Board of Directors structure consists of 1/3 of independent directors so as to balance the voting rights for several issues. The Audit Committee consists of 3 independent directors. At present, there are 8 members in the Board of Directors, consisting of 7 nonexecutive Board members and 1 company s executives i.e. Managing Director and 3 qualified independent directors in compliance with the criteria as specified by S.E.C. The articles of association require that in the annual general meeting every year, onethirds of the directors must give up their offices. If the numbers of directors cannot be divided into 3 equal portions, then take the nearest numbers of onethird to leave the post. The directors, who leave the post in the first and the second years after the company registration, use draw a lot method to choose those to leave first. In the following years, the directors who stay longest are the first to leave. Directors who have left the post may be reelected in the future. In addition, Board of Directors have appointed the Audit Committee to perform specific duties and present them to the Board of Directors for consideration and acknowledgement. The Audit Committee has rights and responsibilities as determined in Authorization of the Audit Committee. The company does not clearly segregate duties and responsibilities between Board of Directors and executives. The Board of Directors determine policies and monitor the executives operations in the policy level. The executives administer various aspects of the companies performance in compliance with the predetermined policies. Therefore, Chairman and Managing Director must be different persons. However, the company has Corporate Secretary responsible for running Board s meeting and shareholders meeting; preparing minutes of the Board s meeting, minutes of the shareholders meeting, annual report; filing documents as required by law; supporting the Board of Directors job regarding legal requirement and related rules and regulations. 2. Board of Directors Roles, Duties and Responsibilities Board of Directors consider and approve significant issues regarding the company s operations e.g. vision and mission, strategies, risks, plans and budgets and moniture that the management comply with the specified policies and plans effectively and efficiently.

30 Corporate Governance Policies The company prepared its own corporate governance policies in writing, which was approved by the Board s meeting on 22 August However, the Board of Directors frequently review the policies and compliance to such policies. Business Ethics Board of Directors insists in accurate and fair business operations and has specified the following 7 guidelines in writing so that the executives and employees can use as implementation principles: 1) Guidelines for customers 2) Guidelines for trading partners and accounts payable 3) Guidelines for trading competitors 4) Guidelines for shareholders 5) Guidelines for society 6) Guidelines for employees 7) Guidelines among employees The company announces and informs every employee to strictly acknowledge and comply to such guidelines above. Conflicts of Interest Board of Directors determine policies on conflicts of interest with the principles that any decisions on business operations must be for the company s ultimate benefits only and should avoid any actions which may create conflicts of interest. The policies determine related persons or related transactions that must be considered. The company then must inform Board member s related transactions and the related Board members must not participate in the decisionmaking and must not approve such transactions. Audit Committee will present related transactions and conflicts of interest to the Board of Directors, who will carefully consider the appropriateness and compliance with the criteria as determined by Stock Exchange of Thailand. This information will also be disclosed in the annual report and annual information presentation (Form 561) as well. Internal Control System (See details in 2.6. Internal Control page 30) Risk Management Board of Directors emphasize on risk management in the overall corporate image, assess risks and manage corporate risks in order to maintain them in acceptable levels. The company prepares control self assessment both at management level and operating level in order to jointly assess risks/obstacles, uncertainty affecting operations to meet the company s objectives, events resulting in business opportunities loss, probable internal and external risks. The criteria specify that should there be any risk which may obstruct the business operations from reaching the planned targets, the company will have measures on risk management, support and stimulate everyone to build the cultures that realize the importance of risks, understand causes of risks and perform corrective actions e.g. appropriate improvement of operating procedures and resource utilization to meet the objectives of protection and probable loss. On the other hand, the above systematic operations will result in ultimate new business opportunities to the company, which will further create values to the organization. In 2008, the company assessed its risk and sufficiency of the existing internal control system in order to find guidelines for operation improvement so as to have more efficiency. The topics cover administration, management, marketing, sales, inventories, logistics and human resources. However, the company assigns and follows up with the responsible executives in each division, implements the specified improvement guidelines and related persons as operating guidelines in order to have more effective operating performance.

31 Report of the Board of Directors Board of Directors are responsible for the company s and its subsidiaries consolidated financial statements, including financial information technology (report of Board of Directors responsibilities for the financial report) as appeared in the annual report. Such financial statements are prepared in accordance with the accounting standards accepted and audited by the external auditor. Significant disclosure on information technology including financial and nonfinancial information is based on the complete and consistent fact. Board of Directors appointed the Audit Committee responsible for reviewing the financial report from the joint meeting between the accounting department and the auditor before presenting the financial report to the Board of Directors every quarter. 3. Board s Meeting Members of the Board must hold a Board Meeting once every three months and may hold extraordinary meeting as found necessary. Agenda must be clearly identified. Related documents must be submitted in advance so that the Board of Directors have enough time to study prior to the meeting, except for the urgent case. Minutes of the meeting will be taken and certified minutes will be filed for further reference and audit. In addition, the company prepares operating performance reports to the Board of Directors every month so that the Board of Directors can monitor the management s performance consistently and in time. In the meeting, Chairman and Managing Director jointly determine the agenda and related issues. The Board s meeting will give opportunities to each director to present any issues which may be considered as meeting agenda. Upon the consideration, Chairman acting as Chairman of the Meeting will give opportunities to the directors to share their opinion independently. In certain agenda, the top executives, as the related persons, may participate in the meeting in order to provide additional detailed information beneficial to the meeting. The meeting will directly acknowledge the policies so as to implement them effectively. However, a resolution from the Board Meeting must constitute of a majority of the votes cast by the remaining member of the Board. One director has one vote. Director having stakes in the transaction will not attend the meeting and/or will not exercise his/her voting rights on certain issue. In the case of an equality of votes, Chairman of the Meeting shall have an additional vote as a casting vote. In each meeting, the company will send supplemental documents of the meeting agenda in advance so that the directors can have enough time to study the details. In each Board s meeting, corporate secretary will also attend and take minutes of the meeting before sending to Chairman for certifying the accuracy before presenting to the next meeting for approval. Corporate secretary will also file information and documents related to the meetings for future search and reference. Normally, all members of the Board of Directors will attend the meeting, except for special case, they will inform to the meeting in advance. Moreover, Board of Directors set up policies for the directors who are not executives to have joint meetings among themselves as found necessary in order to discuss any problems relating to any management topics of interest without any participation from the management before informing Managing Director results of the meeting. However, participation of each Board member has been disclosed in Board of Directors page Remuneration Determinaton of directors and executives remuneration is not approved by Remuneration Committee since the company has not yet appointed such committee. However, the company has policies to pay remuneration to the directors and executives at the appropriate level considering the company s operating performance in comparison with the same industry as reference as well as appropriateness to each director s and executive s responsibilities. Remuneration is in the form of pension, meeting allowance, salaries and bonus. Details of remuneration expense for each director and executive in 2008 are exhibited on page 24.

32 5. Development of Director and Executive Board of Directors set up policies promoting and facilitating training courses and knowledge to the directors and related persons regarding the company s corporate governance system e.g. directors, members of the Audit Committee, executives, corporate secretary, etc. in order to consistently improve the operations. In the event of changing directors or having new directors, the management will prepare documents and information beneficial to the new directors duties, including provide recommendation of business type and business operation guidelines to the new directors as well. 2.5 Supervision on Inside Information Utilization For transparency and prevention of seeking personal benefits from inside information utilization for the information not yet disclosed to the public as well as for avoidance of criticism regarding appropriateness of insider s securities trading, the company issued rules and regulations for the directors, executives and employees to follow as found below: 1) Directors, executives and employees must keep company s secrets and/or inside information and will not disclose or take benefits for themselves or for others either directly or indirectly. They must not trade, transfer or receive the company s securities by means of using the company s secrets and/or inside information and/or enter into any transactions by using the company s secrets and/or inside information, which may incur loss to the company either directly or indirectly. 2) Directors, executives and employees in the organizations receiving the company s inside information must not use such information prior to disclosure to the public and must not trade, transfer or receive the company s securities within 1 month prior to the disclosure of quarterly financial statements and annual financial statements to the public. However, such requirements include the company directors, executives and employees spouses and dependent child(ren). In violation of such requirements, punishment by the company s rules and/or by laws must be implied depending on each case. The company provides information regarding the directors and executives whose responsibilities are to report the holding of company s securities and punishment term based on Securities and Exchange Act B.E and Stock Exchange of Thailand s requirements. In the event that the directors or executives trade the company s securities, they must report their, their spouses, and their dependents holding of company s securities in accordance with Section 59 of Securities and Exchange Act B.E within 3 days to S.E.C. for further dissemination to the public. 2.6 Internal Control The company realizes the importance of risk management and good internal control system, which will enhance the accurate, transparent operations that can be audited and can diminish or prevent probable risks. Consistent development of effective and efficient internal control system in coordination with Internal Audit Department independent from the executives to examine and review the system as well as the evaluation of effective operations in various organizations will ensure that every employee has complied with the internal control system determined by the company. The report should be submitted to the Audit Committee and the Board of Directors for acknowledgement and consider approve any corrective actions. In 2008, assessment results of the company s internal control system dividing into 5 major parts i.e. organization and environment, risk management, the executives operation control, information technology system, communication and followup system can be concluded that the company has sufficient and appropriate internal control system as well as operations monitoring system that can protect the company and its subsidiaries asset arising from the misuse or unauthorization implementation by the executives. 2.7 Dividend Payment Policy The company and its subsidiaries set up policies for paying dividends to the shareholders at the rate of not less than 50% of net profit after income tax and legal reserve. However, such dividend payment policies may be changed based on the necessary and appropriate plan in the future. Resolution from the Board of Directors approving dividend payment must be presented to shareholders meeting for approval, except for the interim dividend payment, which must be authorized by the Board of Directors with a report informing the shareholders meeting in the next meeting date.

33 Related Transactions Related Transactions 1. Related Transactions with Persons with Mutual Benefits During the year, the company and its subsidiaries had the following businesses with the related comapanies (related by common shareholders and/or directors) e.g. Premier Fission Capital Co., Ltd. Premier Enterprise (Public) Co., Ltd. Premier Manufacturing Co., Ltd. Premier Pet Products Co., Ltd. Premier CE Co., Ltd. Calbee Tanawat Co., Ltd. Premier Resort Krabi Co., Ltd. IQA Laboratory Co., Ltd. Premier Products Co., Ltd. Premier Inter Leasing Co., Ltd. Imperial Eagle Co., Ltd. Brand Connections Co., Ltd. Datapro Computer Systems Co., Ltd. Premier Capital (2000) Co., Ltd. Seri Center Management Co., Ltd. Seri Properties Holding Co., Ltd. and KV Electronics Co., Ltd. Currently (Quarter 3/2008), IQA Laboratory Co., Ltd. is no longer the related company due to the sales of investment to external parties and in Quarter 4/2008, Seri Center Management Co., Ltd. is no longer the related company due to the sales of all investments to other parties. Such related transactions are based on trade conditions and criteria in the contracts agreed between the company as those related companies e.g. sales Interest income, gain from debt forgiveness, dividend income, goods purchase, management expense, selling and administrative expense and remuneration from accounts payable transfer, such related transactions of which are explained in No. 8 of notes to financial statements for Related Transactions of the Company and Its Subsidiaries The company had related transactions with the affiliated companies. Such transactions incurred during normal business practice e.g. sales and service income, management income/expense, interest income, selling and administrative expense and interest expense, etc. Such transactions are explained in no. 8 of notes to financial statements for Measures or Procedures for Related Transaction Approval Approval of related transactions of the companies and/or its subsidiaries must comply with securities and exchange laws, Office of Securities and Exchange Commission requirement. In order to consider doing the related businesses, take into consideration the benefits of the company and its subsidiaries. If there is any related transactions of the company or its subsidiaries with the person having conflict of interest, stakes, or future conflict of interest, the company will request an approval from the Board s meeting where member of the Audit Committee will give opinion on the necessity and appropriateness of such transactions. Directors who have interest in the transactions will not voting rights for such transactions. In the event that the Audit Committee have no skills in determining the probable related transactions, the company will request the independent expert or the company s external auditor to provide opinion on such related transactions for the Board of Directors or shareholders decision making as deemed appropriate. However, the company will disclose related transactions in notes to financial statements, which will be audited by the company s external auditor. 4. Policies or Trends of Related Transactions in the Future The company and/or its subsidiaries expect that in the future related transactions still remain based on normal business practice or normal business support e.g. purchase of goods for resale, leasehold amortization, service on office space rental contract, management under management and consulting contract, information technology service contract, car rental for business operations and accounts receivable discount, etc. All of the related transactions will incur as necessary and for business operation effectiveness within the group. Pricing policies are clearly determined based on the appropriate and fair price and conditions by significantly considering the company s benefits. However, the company s Audit Committee will review related transactions as normal business practice or normal business support every quarter. Borrowings between the company and its subsidiaries incur as necessary for business operations and as working capital. Contract with clear and fair terms and conditions are prepared. However in the future, the company and its subsidiaries have no borrowing policies for persons who may have conflicts of interest. Probable related transactions in the future, which are not of normal business practice, are based on the company s reasons and necessity by significantly considering the company s benefits.

34 The company s policy is to request the Audit Committee to consider and provide opinion for such transactions before making the transactions. In the mean time, for related transactions that may incur conflict of interest in the future, it requires that the Board of Directors must comply to securities and exchange laws and Office of Securities and Exchange Commission s rules, notification, order and requirement. The company must also follow requirements on disclosure regarding related transactions, acquisition and sales of the company s and its subsidiaries assets as well as the accounting standards as determined by The Institute of Certified Accountants and Auditors of Thailand.

35 Explanation and Analysis of Financial Position and Operating Performance Explanation and Analysis of Financial Position and Operating Performance 1. Operating Performance In 2008, the company and its subsidiaries had operating profit valuing Mil Baht derived from sales revenue, rental revenue and service revenue valuing 3, Mil Baht, interest revenue valuing Mil Baht, other revenues valuing Mil Baht and profit from loan prepayment (a discount) valuing Mil Baht, gross profit from sales and services valuing Mil Baht equivalent 24.3% of profit, selling and administration expense valuing Mil Baht, other expenses valuing 4.96 Mil Baht, financial expense valuing Mil Baht, appropriation of loss from investment in affiliated companies valuing 1.25 Mil Baht, and corporate income tax valuing Mil Baht. Changes in financial position and operating performance for 2008 in comparison with 2007 exhibit Mil Baht increase in net profit in 2007 when the company had gains from sales of investment valuing Mil Baht, transfer impairment of investment valuing Mil Baht for The company had the increase in gain from debt compromise valuing Mil Baht, increase in gross profit from sales and services valuing Mil Baht, increase in selling and administrative expense and other expense valuing Mil Baht, decrease in financial expense valuing 5.51 Mil Baht, increase in appropriation of loss from investment in affiliated companies valuing 6.33 Mil Baht and increase in corporate income tax valuing Mil Baht. 2. Financial Position Total Assets 1, Mil Baht with an increase of Mil Baht consisting of increase in cash and cash equivalent valuing Mil Baht, increase in shortterm investment valuing Mil Baht, increase in accounts receivable valuing Mil Baht, decrease in shortterm borrowings and advances to related businesses valuing Mil Baht, increase in inventories valuing Mil Baht, increase in current assets valuing 5.54 Mil Baht, increase in reserves for debt repayment valuing 4.74 Mil Baht, increase in longterm investment valuing Mil Baht, decrease in longterm borrowings to related businesses valuing Mil Baht, decrease in investment in debtors acquiring related business valuing 4.30 Mil Baht, decrease in investment in affiliated companies valuing 1.38 Mil Baht, decrease in property, plant and equipment valuing Mil Baht, decrease in nonoperating assets valuing 3.58 Mil Baht, increase in advance expense valuing Mil Baht and decrease in noncurrent assets valuing 4.16 Mil Baht. Total Liabilities Mil Baht with a decrease of Mil Baht consisting of increase in bank overdraft valuing Mil Baht, increase in accounts payable valuing 6.89 Mil Baht, decrease in longterm borrowings from financial institutions and longterm borrowings for debt restructuring from financial institutions valuing Mil Baht, increase in accrued corporate income tax valuing Mil Baht, increase in estimates of shortterm liabilities and other noncurrent liabilities valuing 9.81 Mil Baht. Total Shareholders Equity Mil Baht with an increase of Mil Baht consisting of subscription of capital increase valuing 150 Mil Share at 3.10 Baht per share resulting in an increase in ordinary share capital valuing 150 Mil Baht, an increase in discrepancy from reorganization of business operations in the group valuing Mil Baht, a decrease in premium from assets revaluation valuing Mil Baht, an increase in retained earnings valuing Mil Baht derived from the transfer of share premium to offset retained deficits valuing Mil Baht and net profit of the company and its subsidiaries valuing Mil Baht in 2008.

36 Report of Board of Directors Responsibilities for Financial Statements Report of Board of Directors Responsibilities for Financial Statements Board of Directors are responsible for the financial report as prepared by Premier Marketing Public Co., Ltd. and its subsidiaries in order to ensure the accurate and reasonable presentation of financial position, revenues and expenses and statement of cash flow. The presentation reflects accurate, complete and sufficient data entry of assets; prevents frauds and abnormal business operations. In preparing the financial report, appropriate accounting policies have been practiced consistently and in compliance with the generally accepted accounting standards. Significant information has also been sufficiently disclosed in notes to financial statements and the auditors provided their opinion in Report of the Independent Auditors Board of Directors appointed Audit Committee consisting of the independent directors monitoring the financial report and assessing the internal control system, which have been approved by Audit Committee as appeared in Report of the Audit Committee, which has been exhibited in the annual report. (Mr. Vichien Phongsathorn) Chairman (Mr. Somchai Choonharas) Managing Director

37 Report of the Audit Committee Report of the Audit Committee Board of Directors of Premier Marketing Public Co., Ltd. appointed Audit Committee in 2007, which consisted of 3 independent directors. At present, the company s Audit Committee consists of Mr. Katiya Greigarn as Chairman of the Audit Committee, Mr. Wichai Hirunwong and Miss Naengnoi Chaionnom as members of the Audit Committee. The Audit Committee comply to scope, duties and responsibilities as assigned by the Board of Directors in compliance with Stock Exchange of Thailand s requirements. In 2008 Audit Committee held a total of 5 meetings with the executives, external auditor and internal auditor, which can significantly be summarized as follows: 1. Review quarterly financial statements and annual financial statements 2008 by asking and listening to the executives and the auditor s explaination regarding the accuracy and completeness of financial statements as well as the sufficiency of disclosure that the Audit Committee express their opinions in compliance with the auditor that the substances of such financial statements are appropriately accurate following the generally accepted accounting standards. 2. Review and provide opinion on related transactions or transactions that may result in conflicts of interest including disclosure of such transaction in compliance with the requirement of Stock Exchange of Thailand and Office of Securities and Exchange Commission, which the auditor express their opinion that significant transactions with related companies has already been disclosed and presented in the financial statements and notes to financial statements. The Audit Committee express their opinion in the same direction as the external auditor and that such transactions are reasonable and beneficial to the company. 3. Review the sufficiency of internal control system considering results from the examination of Internal Audit Department, which the Audit Committee conclude that the company has sufficient and appropriate internal control system regarding the business type and that significant weaknesses have not been found. 4. Consider internal audit plan and advise the internal auditor to perform their jobs effectively and efficiently. 5. Review its compliance with securities and exchange laws, Stock Exchange of Thailand requirement and laws related to the company s businesses, which the Audit Committee conclude that significant issues regarding noncompliance with laws and requirements have not been found. 6. The Audit Committee report results of the performance as well as recommendations to the Board of Directors every time in the Board s meeting. The Audit Committee present to the Board of Directors to further present to the shareholders meeting to appoint Miss Siraphon Ueaanankun or Mr. Supphachai Panyawatthano or Miss Thipphawan Nananuwat from Ernst & Young Office Limited to be the company s external auditor for On behalf of Audit Committee (Mr. Katiya Greigarn) Chairman of the Audit Committee

38 Report of Independent Auditor Premier Marketing Public Company Limited and its subsidiaries Report and consolidated financial statements 31 December 2008 and 2007 Report of Independent Auditor To the Shareholders of Premier Marketing Public Company Limited I have audited the accompanying consolidated balance sheets of Premier Marketing Public Company Limited and its subsidiaries as at 31 December 2008 and 2007, the related consolidated statements of income, changes in shareholders equity and cash flows for the years then ended, and the separate financial statements of Premier Marketing Public Company Limited for the same periods. These financial statements are the responsibility of the management of the Company and its subsidiaries as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Premier Marketing Public Company Limited and its subsidiaries and of Premier Marketing Public Company Limited as at 31 December 2008 and 2007, the results of their operations and cash flows for the years then ended, in accordance with generally accepted accounting principles. Siraporn Ouaanunkun Certified Public Accountant (Thailand) No Ernst & Young Office Limited Bangkok: 20 February 2009

39 Premier Marketing Public Company Limited and its subsidiaries Balance sheets As at 31 December 2008 and 2007 Financial Statements Note Consolidated financial statements Separate financial statements (Unit: Baht) Assets Current assets Cash and cash equivalents 88,907,835 45,327,369 29,333,777 26,758,259 Current investment 6 48,744,197 48,744,197 Trade accounts receivable Related parties 8 1,439 Unrelated parties 377,336, ,003, ,823, ,880,721 Total trade accounts receivable 377,337, ,003, ,823, ,880,721 Less: Allowance for doubtful accounts (7,013,005) (1,848,711) (1,658,234) (790,330) Trade accounts receivable net 7 370,324, ,154, ,165, ,090,391 Interest receivable from related parties 8, 9 320,808 54, ,808 Amounts due from related parties 8 751,399 2,975,278 6,738,777 2,977,584 Shortterm loans to related parties 8, 9 80,145,144 Advance payment to related parties 8, 10 20,000,000 Receivable from sale of investment related parties 18,400,000 18,400,000 Less: Allowance for doubtful accounts (18,400,000) (18,400,000) Receivable from sale of investment related parties net 8 Inventories net ,550, ,227,951 25,286,693 21,564,613 Other current assets Receivable from Revenue Department 4,080,228 4,846,036 Prepaid expenses 5,155,774 3,779, , ,817 Other receivable 19,031,242 14,368,035 18,655,214 13,277,287 Others 9,403,481 9,132,733 5,671,761 4,593,058 Total other current assets 37,670,725 32,126,474 24,561,514 18,586,162 Total current assets 715,949, ,132, ,030, ,297,817 Noncurrent assets Escrow account for debt repayment 12 4,908, ,818 4,908, ,818 Restricted bank deposits 13 2,838,732 2,764,940 Longterm investment 14 50,871,567 50,871,567 Longterm loans to related parties 8, 15 18,349,000 18,349,000 Interest receivable from related parties 8, 16 2,255,962 2,255,962 2,255,962 2,255,962 Investment in receivable purchased related parties 8, 16 55,861,906 60,158,976 55,861,906 60,158,976 Investments in subsidiaries net ,220, ,220,200 Investment in associated company net 18 44,746,503 46,128,506 36,766,046 36,766,046 Other longterm investments net 19 19,206,600 19,206,600 Property, plant and equipment net ,983, ,648,469 5,208,053 4,502,924 Nonoperating assets net 21 35,588,479 39,170,770 Other noncurrent assets Prepaid rent net 8, 22 62,211,763 4,384,338 62,211,763 4,384,338 Others 8,543,094 12,699,592 6,972,772 11,004,379 Total other noncurrent assets 70,754,857 17,083,930 69,184,535 15,388,717 Total noncurrent assets 729,016, ,931, ,276, ,806,643 Total assets 1,444,965,945 1,244,064, ,306, ,104,460 The accompanying notes are an integral part of the financial statements.

40 Premier Marketing Public Company Limited and its subsidiaries Balance sheets (continued) As at 31 December 2008 and 2007 Note Consolidated financial statements (Unit: Baht) Separate financial statements Liabilities and shareholders' equity Current liabilities Bank overdrafts Trade accounts payable Related parties Unrelated parties Total trade accounts payable Current portion of restructured longterm loans financial institutions Current portion of longterm loans financial institutions Current portion of restructured longterm loans related parties Amounts due to related parties Shortterm provisions Other current liabilities Accrued interest to financial institutions Accrued expenses Corporate income tax payable Other payable Others Total other current liabilities Total current liabilities Noncurrent liabilities Restructured longterm loans from financial institutions net of current portion Longterm loans from financial institutions net of current portion Restructured longterm loans from related parties net of current portion Total noncurrent liabilities Total liabilities , , 24 19,945,967 62,431, ,770, ,201,662 7,574,493 27,774,418 91,738 4,728, ,710 65,687,354 51,534,146 21,482,253 10,151, ,011, ,328, ,081,182 25,472, ,554, ,882,690 8,496,216 47,395, ,917, ,313,217 79,004,943 27,813,335 1,001,535 1,013,913 61,087,509 7,582,134 26,015,354 4,275,688 99,974, ,603, ,974,627 53,228, ,203,217 1,313,807,061 69,235,136 81,020, ,256,025 2,177,219 5,286, ,063 4,728, ,972 37,922,254 16,038,279 7,531,195 5,906,658 67,543, ,165,515 37,814,233 84,718, ,532, ,697, ,344,869 81,686, ,030,963 2,177,219 5,286, , ,811 38,696,574 3,162,808 8,870,757 2,615,234 53,491, ,712,591 39,769, ,294, ,063, ,775,871 The accompanying notes are an integral part of the financial statements.

41 Premier Marketing Public Company Limited and its subsidiaries Balance sheets (continued) As at 31 December 2008 and 2007 Note Consolidated financial statements (Unit: Baht) Separate financial statements Shareholders' equity Share capital Registered 650,000,000 ordinary shares of Baht 1 each Issued and fully paid up 650,000,000 ordinary shares of Baht 1 each (31 December 2007: 500,000,000 ordinary shares of Baht 1 each) Unrealized gain (loss) Difference on reorganisation of business of group companies Revaluation surplus on assets Retained earnings (deficit) Total shareholders' equity (capital deficit) Total liabilities and shareholders' equity ,000, ,000,000 (124,855,178) 244,440,681 22,497, ,083,255 1,444,965, ,000, ,000,000 (143,255,178) 285,730,831 (712,218,121) (69,742,468) 1,244,064, ,000, ,000,000 (89,390,974) 560,609, ,306, ,000, ,000,000 (500,671,411) (671,411) 642,104,460 The accompanying notes are an integral part of the financial statements.

42 Premier Marketing Public Company Limited and its subsidiaries Income statements For the years ended 31 December 2008 and 2007 Note Consolidated financial statements (Unit: Baht) Separate financial statements Revenues Sales Rental and service income Interest income Gain from debt forgiveness Gain on sales of investment in associated company Reversal of allowance for impairment in value of investments Reversal of allowance for doubtful accounts Other income Total revenues Expenses Cost of sales and services Selling expenses Administrative expenses Other expenses Total expenses Income before finance cost and corporate income tax Finance cost Share of income (loss) from investment in associate Income before corporate income tax Corporate income tax Net income for the year ,022,585,772 15,224,583 10,934, ,880,561 17,857,555 3,343,482,927 2,299,838, ,875, ,013,888 4,961,054 2,805,688, ,793,972 (25,926,641) (1,253,576) 510,613,755 (78,377,278) 432,236,477 2,634,962,078 33,204,861 11,710,892 6,356,485 72,033,346 14,093,434 16,332,814 2,788,693,910 1,993,415, ,295, ,992,102 12,567,867 2,453,270, ,423,384 (31,433,734) 5,075, ,065,486 (16,407,499) 292,657,987 1,887,900,410 41,094 12,716,019 18,400,000 87,918,496 2,006,976,019 1,444,114, ,765, ,840,536 16,072,009 1,844,791, ,184,054 (17,518,025) 144,666,029 (35,864,988) 108,801,041 1,610,832, ,135 11,411,462 6,356,485 72,033,346 12,523,745 17,733,142 1,731,245,844 1,174,350, ,693, ,694,812 2,015,243 1,512,754, ,491,732 (15,485,645) 203,006,087 (8,887,414) 194,118,673 Basic earnings per share Net income Weighted average number of ordinary shares (shares) 592,622, ,000, ,622, ,000,000 The accompanying notes are an integral part of the financial statements.

43 Premier Marketing Public Company Limited and its subsidiaries Statements of changes in shareholders' equity For the years ended 31 December 2008 and 2007 Issued and fully paidup share capital Balance as at 31 December 2006 Income and expenses recognised directly in equity: Difference on reorganisation of business of group companies (Note 17) Cash receipt from sale of investment related parties Amortisation of revaluation surplus on assets (Note 28) Net income and expenses recognised directly in equity Net income for the year Total income and expenses for the year Offsetting legal reserve with deficit (Note 29) Balance as at 31 December ,000, ,000,000 Balance as at 31 December 2007 Income and expenses recognised directly in equity: Reversal of allowance for doubtful accounts (Note 17) Amortization of revaluation surplus on assets (Note 28) Net income and expenses recognised directly in equity Net income for the year Total income and expenses for the year Issuance of share capital during the year (Note 27) Offseting share premium with deficit (Note 27) Balance as at 31 December ,000, ,000, ,000,000 The accompanying notes are an integral part of the financial statements. Share premium 302,479,396 (302,479,396) Consolidated financial statements Difference on reorganisation of business of group companies Revaluation surplus on assets Appropriated statutory reserve Retained earnings Unappropriated (Deficit) (83,265,178) 320,775,305 1,000,000 (1,005,876,108) (60,000,000) 10,000 (59,990,000) (35,044,474) (35,044,474) (59,990,000) (143,255,178) (35,044,474) 285,730,831 (1,000,000) 292,657, ,657,987 1,000,000 (712,218,121) (143,255,178) 285,730,831 (712,218,121) 18,400,000 18,400,000 18,400,000 (124,855,178) (41,290,150) (41,290,150) (41,290,150) 244,440, ,236, ,236, ,479,396 22,497,752 (Unit: Baht) Total (267,365,981) (60,000,000) 10,000 (35,044,474) (95,034,474) 292,657, ,623,513 (69,742,468) (69,742,468) 18,400,000 (41,290,150) (22,890,150) 432,236, ,346, ,479, ,083,255

44 Premier Marketing Public Company Limited and its subsidiaries Statements of changes in shareholders' equity (continued) For the years ended 31 December 2008 and 2007 Balance as at 31 December 2006 Income and expenses recognised directly in equity: Set up allowance for impairment in value of investment (Note 17) Net income and expenses recognised directly in equity Net income for the year Total income and expenses for the year Offsetting legal reserve with deficit (Note 29) Balance as at 31 December 2007 Balance as at 31 December 2007 Net income for the year Total income and expenses for the year Issuance of share capital during the year (Note 27) Offsetting share premium with deficit (Note 27) Balance as at 31 December 2008 Separate financial statements Issued and fully paidup Share premium Retained earnings share capital Appropriated Unappropriated statutory reserve (Deficit) 500,000,000 1,000,000 (635,790,084) 500,000,000 (1,000,000) (60,000,000) (60,000,000) 194,118, ,118,673 1,000,000 (500,671,411) 500,000, ,000, ,000, ,479,396 (302,479,396) (500,671,411) 108,801, ,801, ,479,396 (89,390,974) (Unit: Baht) Total (134,790,084) (60,000,000) (60,000,000) 194,118, ,118,673 (671,411) (671,411) 108,801, ,801, ,479, ,609,026

45 Premier Marketing Public Company Limited and its subsidiaries Cash flow statements For the years ended 31 December 2008 and 2007 (Unit: Baht) Consolidated financial statements Separate financial statements Cash flows from operating activities Net income before tax Adjustments to reconcile net income before tax to net cash provided by (paid from) operating activities: Share of (income) loss of associated company Depreciation and amortisation Allowance for doubtful accounts Increase (decrease) in allowance for stock obsolescence Allowance for impairment in value of investments Reversal of allowance for impairment in value of investments Reversal of allowance for impairment of assets Reversal of allowance for doubtful accounts Realised deferred gain from debt restructuring (Gain) loss on sales of equipment Gain on sales of investment in associated company Gain from debt forgiveness Accrual of provisions Unrealised gain (loss) on exchange rate Dividend received from other longterm investments Interest income Interest expenses Income from operating activities before changes in operating assets and liabilities Operating assets (increase) decrease Trade accounts receivable Amounts due from related parties Inventories Other current assets Other noncurrent assets Operating liabilities increase (decrease) Trade accounts payable Amounts due to related parties Other current liabilities Cash flows from (used in) operating activites Cash paid for corporate income tax Net cash flows from (used in) operating activities 510,613,755 1,253,576 30,179,316 5,276,078 1,044, ,427 (516,551) (7,195,850) (118,950) (276,880,561) 4,728,850 3,644,738 (171,090) (10,934,456) 22,277, ,328,736 (61,230,284) 2,223,879 (38,366,697) (5,299,035) (55,883,826) 3,031,570 (909,797) 6,275, ,169,550 (35,572,435) 97,597, ,065,486 (5,075,836) 31,188,596 1,620,838 (558,368) 7,655,000 (14,093,434) 1,024,808 (72,033,346) (6,356,485) (1,105,559) (171,000) (11,710,892) 28,241, ,691,291 (42,024,301) 1,146,760 (24,118,840) (3,959,088) (725,748) 69,922, ,454 (12,210,631) 256,572,450 (10,050,944) 246,521, ,666,029 5,091, ,687 1,692,752 16,000,000 (18,400,000) (23,101) 4,728,850 (929) (12,716,019) 16,585, ,603,599 (56,057,913) (3,761,193) (5,414,832) (5,334,941) (57,148,030) (276,774,009) (556,371) 1,177,541 (245,266,149) (22,989,517) (268,255,666) 203,006,087 4,932, ,257 1,295,518 (12,523,745) (77,950) (72,033,346) (6,356,485) (11,411,462) 14,692, ,124,874 (28,585,061) 1,146,050 (8,804,695) (6,690,178) (1,964,464) 40,559, ,153 (8,868,757) 109,545,458 (5,724,606) 103,820,852 The accompanying notes are an integral part of the financial statements.

46 Premier Marketing Public Company Limited and its subsidiaries Cash flow statements (continued) For the years ended 31 December 2008 and 2007 (Unit: Baht) Consolidated financial statements Separate financial statements Cash flows from investing activities Increase in current investment and longterm investment Decrease in receivable from sales of investment related parties (Increase) decrease in loans and interest receivable from related parties Decrease in longterm loans from related parties Increase in restricted bank deposits Decrease in investment in receivable purchased related parties Proceeds from sales of investment in associated company Interest income Dividend received Proceeds from sales of equipment Acquisition of equipment Net cash flows from (used in) investing activities Cash flows from financing activities (Increase) decrease in advance payment to related parties Increase in escrow account for debt repayment (Increase) decrease in bank overdrafts Decrease in factoring payable Repayment of restructured longterm loans from financial institutions Repayment of longterm loans from financial institutions Repayment of restructured longterm loans from related parties Net cash received from issuance of ordinary shares Interest expenses Net cash flows from (used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year (99,335,449) 18,400,000 18,669,808 (73,792) 4,297,070 10,013, , ,406 (14,289,464) (62,024,601) 20,000,000 (4,743,540) 11,449,751 (413,479,020) (25,800,000) 452,479,396 (31,898,635) 8,007,952 43,580,466 45,327,369 88,907,835 10, ,703 (100,967) 4,297,070 80,207,264 11,420, ,000 1,231,831 (15,941,556) 81,695,840 (20,000,000) (14,638) (3,786,685) (73,195,657) (146,176,325) (25,802,453) (52,821,859) (321,797,617) 6,419,729 38,907,640 45,327,369 (99,335,449) 18,400,000 (80,145,144) 18,349,000 4,297,070 12,061,512 25,327 (2,443,360) (128,791,044) (4,743,540) (1,954,885) (29,576,000) 452,479,396 (16,582,743) 399,622,228 2,575,518 26,758,259 29,333,777 10, ,703 4,297,070 80,207,264 11,121,065 90,642 (2,061,855) 94,064,889 (14,638) (73,195,657) (88,589,814) (2,330,400) (25,556,584) (189,687,093) 8,198,648 18,559,611 26,758,259 Supplemental cash flows information: Noncash items Investing activities Purchases of investments of which payment was made by debt offset Amortisation of revaluation surplus on assets Debt collection by receiving equipment 41,290,150 1,003,000 60,000,000 35,044,474 3,000 60,000,000 The accompanying notes are an integral part of the financial statements.

47 Premier Marketing Public Company Limited and its subsidiaries Notes to consolidated financial statements For the years ended 31 December 2008 and General information 1.1 Corporate information Premier Marketing Public Company Limited ( the Company ) is a public company incorporated and domiciled in Thailand. Its parent company is Premier Fission Capital Company Limited, which was incorporated in Thailand. The Company is principally engaged in the distribution of consumer products and its registered address is 1 Premier Corporate Park, Soi Premier 2, Srinakarin Road, Kweang Nongbon, Khet Prawet, Bangkok. 1.2 Economic crisis The financial crisis experienced by the United States of America over the past year has had a far reaching adverse effect on the global economy as evidenced by sharp falls in share prices worldwide, a tight squeeze on credit including interbank lending, failures of large financial institutions and reduced consumer confidence. The crisis has substantially affected the business and financial plans of Thailand enterprises and asset value. Despite efforts made by governments of many countries to contain the crisis, it remains uncertain as to when the global economy will return to normalcy. These financial statements have been prepared on the bases of facts currently known to the Company, and on estimates and assumptions currently considered appropriate. However, they could be adversely affected by an array of future events. 2. Basis of preparation 2.1 The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Profession Act B.E and their presentation has been made in compliance with the stipulations of the Notification of the Department of Business Development dated 14 September 2001, issued under the Accounting Act B.E The financial statements in Thai language are the official statutory financial statements of the Company. The financial statements in English language have been translated from such financial statements in Thai language. The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies. 2.2 Basis of consolidation a) The consolidated financial statements include the financial statements of Premier Marketing Public Company Limited ( the Company ) and the following subsidiary companies ( the subsidiaries ): Company s name Nature of business Country of incorporation Percentage of shareholding 2008 Percent 2007 Percent Assets as a percentage to the consolidated total assets as at 2008 Percent 31 December 2007 Percent Revenues as a percentage to the consolidated total revenues for the year ended 31 December 2008 Percent 2007 Percent 1. Premier Frozen Manufacturer and distributor Thailand Products Company Limited of frozen products and rent out space 2. Premier Canning Manufacturer and distributor Thailand Industry Company Limited of canned food and sauces 3. P.M. Food Manufacturer and distributor Thailand Company Limited of snack foods

48 b) In December 2006, the Company sold all direct investment in a subsidiary, Premier Pet Products Company Limited, to the parent company, Premier Fission Capital Company Limited, at the price of Baht million. Because the sale of these shares was made for the purpose of organisational restructuring within the group companies, the result of the above transaction is considered to be Difference on reorganisation of business of group companies and presented in the shareholders equity in the balance sheets. c) In December 2006, the Company purchased two previous indirect investments in subsidiaries, Premier Frozen Products Company Limited and Premier Canning Industry Company Limited, from Premier Pet Products Company Limited, at the prices of Baht million and Baht million, respectively. As a result, its shareholding in these two subsidiaries is 100 percent. Because the purchase of these shares was made for the purpose of organisational restructuring within the group companies, the results of the above transactions are considered to be Difference on reorganisation of business of group companies and presented in the shareholders equity in the balance sheets. d) In August 2007, the Company purchased investment in P.M. Food Company Limited, of which was the Company s indirect investment in 2006, from Premier Pet Products Company Limited, at a price of Baht 60.0 million. As a result, its shareholding in this subsidiary is 100 percent. Because the purchase of these shares was made for the purpose of organisational restructuring within the group companies, the result of the above transaction is considered to be Difference on reorganisation of business of group companies and presented in the shareholders equity in the balance sheets. This investment purchase is made for the purpose of organisational restructuring within the group companies, the consolidated income statement for the year ended 31 December 2007 thus included the operating results of P.M. Food Company Limited since 1 January 2007, ignoring the actual date of the business combination under common control (the date of acquiring shares of the subsidiary). e) Subsidiaries are fully consolidated as from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. f) The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent significant accounting policies. g) Material balances and transactions between the Company and its subsidiary companies have been eliminated from the consolidated financial statements. h) Investments in the subsidiaries as recorded in the Company's books of account are eliminated against the equity of the subsidiaries. 2.3 The separate financial statements, which present investments in subsidiaries and associated company presented under the cost method, have been prepared solely for the benefit of the public. 3. Adoption of new accounting standards 3.1 Accounting standards which are effective for the current year The Federation of Accounting Professions has issued Notifications No. 9/2550, 38/2550 and 62/2550 mandating the use of new accounting standards as follows: TAS 25 (revised 2007) Cash Flow Statements TAS 29 (revised 2007) Leases TAS 31 (revised 2007) Inventories TAS 33 (revised 2007) Borrowing Costs TAS 35 (revised 2007) Presentation of Financial Statements TAS 39 (revised 2007) Accounting Policies, Changes in Accounting Estimates and Errors TAS 41 (revised 2007) Interim Financial Reporting TAS 43 (revised 2007) Business Combinations TAS 49 (revised 2007) Construction Contracts TAS 51 Intangible Assets These accounting standards become effective for the financial statements for fiscal years beginning on or after 1 January The management has assessed the effect of these standards and believes that TAS 33, TAS 49 and TAS 51 are not relevant to the business of the Company, while TAS 25, TAS 29, TAS 31, TAS 35, TAS 39, TAS 41 and TAS 43 do not have any significant impact on the financial statements for the current year.

49 3.2 Accounting standards which are not effective for the current year The Federation of Accounting Professions has also issued Notification No. 86/2551 mandating the use of the following new accounting standards: TAS 36 (revised 2007) Impairment of Assets TAS 54 (revised 2007) Noncurrent Assets Held for Sale and Discontinued Operations These accounting standards will become effective for the financial statements for fiscal years beginning on or after 1 January The management has assessed the effect of these standards and believes that they will not have any significant impact on the financial statements for the year in which they are initially applied. 4. Significant accounting policies 4.1 Revenue recognition Sales of goods Sales of goods are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are the invoiced valued, excluding value added tax, of goods supplied after deducting discounts and allowances. Rental income Rental income is monthly recognised as revenue at the amount as fixed under the related rental agreement. Rendering of services Service revenue is recognised when service have been rendered. Interest income Interest income is recognised on accrual basis based on the effective interest rate. Dividends Dividends are recognised when the right to receive the dividends is established. 4.2 Cash and cash equivalents Cash and cash equivalents consist of cash in hand, cash at banks, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions. 4.3 Trade accounts receivable and allowance for doubtful accounts Trade accounts receivable are stated at the net realisable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection experience and analysis of debt aging. 4.4 Inventories and allowance for stock obsolescence Finished goods and work in process are valued at the lower of cost (first infirst out method and average method) and net realisable value. Cost includes all production costs and attributable factory overheads. Other inventories are valued at the lower of cost (Average method and weighted average method) and net realisable value and are charged to production costs whenever consumed. Allowance for stock obsolescence is set up for old, obsolete, slowmoving or deteriorated inventories. 4.5 Investments a) Current investment and longterm Investment, which represent investments in debt securities, both due within one year and expected to be held to maturity, are recorded at amortised cost. The premium/discount on debt securities is amortised by the effective rate method with the amortised amount presented as an adjustment to the interest income. b) Investments in nonmarketable equity securities, which the Company classifies as other investments, are stated at cost net of allowance for loss on diminution in value (if any). c) Investment in associated company is accounted for in the consolidated financial statements using the equity method. d) Investments in subsidiaries and associated company are accounted for in the separate financial statements using the cost method. The weighted average method is used for computation of the cost of investments.

50 4.6 Investment in receivable purchased Investment in receivable purchased, which is classified as other investments, is valued at acquisition cost net of allowance for impairment (if any). Losses on impairment of investment are included in determining income. 4.7 Property, plant and equipment/depreciation Land is stated at cost or revalued amount. Buildings and equipment are stated at cost or revalued amount less accumulated depreciation and allowance for loss on impairment of assets (if any). Land, buildings and equipment of subsidiaries are initially recorded at cost on the acquisition date, and subsequently revalued by an independent professional appraiser to their fair values. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from fair value at the balance sheet date. Differences arising from the revaluation are dealt with in the financial statements as follows: When an asset s carrying amount is increased as a result of a revaluation of the subsidiaries assets, the increase is credited directly to equity under the heading of Revaluation surplus on assets. However, a revaluation increase will be recognised as income to the extent that it reverses a revaluation decrease of the same asset previously recognised as an expense. When an asset s carrying amount is decreased as a result of a revaluation of the subsidiaries assets, the decrease is recognised as an expense in the income statement. However, a revaluation decrease is to be charged directly against the related Revaluation surplus on assets to the extent that the decrease does not exceed the amount held in the Revaluation surplus on assets in respect of those same assets. Any excess amount is to be recognised as an expense in the income statement. Depreciation of plant and equipment is calculated by reference to their costs or the revalued amounts on the straightline basis over the following estimated useful lives: Land improvement 5 20 years Buildings and structures 5 25 years Machinery 3, 5 15 years Improvement of leased building 20 years Tools and equipment 5 10 years Furniture, fixtures and office equipment 3, 5 10 years Motor vehicles 5 years The depreciation is dealt with in the financial statements as follows: Depreciation attributed to the original cost portion is included in determining income. Depreciation attributed to the surplus portion is deducted against revaluation surplus on assets in shareholders equity. No depreciation is provided on land, construction in progress and machinery under installation. 4.8 Prepaid rent and amortisation Prepaid rent, which represents office rent from the related company, is stated at cost less accumulated amortisation. Amortisation is calculated by reference to cost on a straightline basis over the expected future period of 20 years, for which the assets are expected to generate economic benefit. The amortisation is included in determining income.

51 4.9 Related party transactions Related parties comprise enterprises and individuals that control, or are controlled by, the Company, whether directly or indirectly, or which are under common control with the Company. They also include associated company and individuals which directly or indirectly own a voting interest in the Company that gives them significant influence over the Company, key management personnel, directors, and officers with authority in the planning and direction of the Company s operations Foreign currencies Transactions in foreign currencies are translated into Baht at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Baht at the exchange rate ruling at the balance sheet date. Gains and losses on exchange are included in determining income Impairment of assets At each reporting date, the Company and its subsidiaries perform impairment review in respect of the property, plant and equipment whenever events or changes in circumstances indicate that an asset may be impaired. An impairment loss is recognised when the recoverable amount of an asset, which is the higher of the asset s fair value less costs to sell and its value in use, is less than the carrying amount. In determining value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by a valuation model that, based on information available, reflects the amount that the Company and its subsidiaries could obtain from the disposal of the asset in an arm s length transaction between knowledgeable, willing parties, after deducting the costs of disposal. Impairment losses are recognised in the income statement. However in cases where property, plant and equipment was previously revalued and the revaluation was taken to equity, a part of such impairment is recognised in equity up to the amount of the previous revaluation. incurred Employee benefits Salaries, wages, bonuses and contributions to the social security fund and provident fund are recognised as expenses when 4.13 Provisions Provisions are recognised when the Company and its subsidiaries have a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation Income Tax Income tax is provided in the accounts based on taxable profits determined in accordance with tax legislation Troubled debt restructuring The Company and its subsidiaries adopt an accounting policy related to troubled debt restructuring whereby, when the debt restructuring involves the amendment of repayment conditions, the Company and its subsidiaries record the impact of the debt restructuring from the date of restructuring to the maturity date under the new conditions. If the book value of the debt is less than the amount to be paid in the future under the new conditions, the book value of the debt as at the date of the debt restructuring is not changed. The Company and its subsidiaries record interest expenses by multiplying the effective interest rate by the book value of the debt as at the beginning of each period.

52 5. Significant accounting judgments and estimates The preparation of financial statements in conformity with generally accepted accounting principles at times requires management to make subjective judgments and estimates regarding matters that are inherently uncertain. These judgments and estimates affect reported amounts and disclosures and actual results could differ. Significant judgments and estimates are as follows: Leases In determining whether a lease is to be classified as an operating lease or finance lease, the management is required to use judgment regarding whether significant risk and rewards of ownership of the leased asset has been transferred, taking into consideration terms and conditions of the arrangement. Allowance for doubtful accounts In determining an allowance for doubtful accounts, the management needs to make judgment and estimates based upon, among other things, past collection history, aging profile of outstanding debts and the prevailing economic condition. Impairment of equity investments The Company and its subsidiaries treat availableforsale investments and other investments as impaired when the management judges that there has been a significant or prolonged decline in the fair value below their cost or where other objective evidence of impairment exists. The determination of what is significant or prolonged requires judgment. Property plant and equipment/depreciation In determining depreciation of plant and equipment, the management is required to make estimates of the useful lives and salvage values of the Company and its subsidiaries plant and equipment and to review estimate useful lives and salvage values when there are any changes. The subsidiaries measure land, buildings and machineries at revalued amounts. Such amounts are determined by the independent valuer using the market approach for land and the depreciated replacement cost approach for buildings and machineries. The valuation involves certain assumptions and estimates. In addition, the management is required to review property, plant and equipment for impairment on a periodical basis and record impairment losses in the period when it is determined that their recoverable amount is lower than the carrying amount. This requires judgments regarding forecast of future revenues and expenses relating to the assets subject to the review. Postretirement benefits Postretirement benefits are provided in the accounts by reference to the provisions of labour laws and the Company and its subsidiaries personnel regulations, and are assumptions as to the employees retirement age. 6. Current investment As at 31 December 2008, the Company has an investment in Bank of Thailand bond with a face value of Baht 50 million, maturing in October 2009 and no interest bearing (2007: Nil).

53 7. Trade accounts receivable The balances of trade accounts receivable as at 31 December 2008 and 2007, aged on the basis of due dates, are summarised below. (Unit: Baht) Consolidated financial statements Separate financial statements Age of receivables Not yet due 359,283, ,111, ,138, ,387,390 Past due Up to 3 months 10,576,373 6,266,486 9,562,816 5,015, months 741,703 4,431, , , months (61,168) 2,905,646 (61,168) 900,246 Over 12 months 6,796, ,831 1,441, ,150 Total 377,337, ,003, ,823, ,880,721 Less: Allowance for doubtful accounts (7,013,005) (1,848,711) (1,658,234) (790,330) Trade accounts receivable net 370,324, ,154, ,165, ,090, Related party transactions During the years, the Company and its subsidiaries had significant business transactions with related parties. Such transactions, which are summarised below, arose in the ordinary course of business and were concluded on commercial terms and bases agreed upon between the Company and those related parties. Consolidated financial statements Separate financial statements Pricing policy (Unit: Million Baht) Transactions with parent company Administrative expenses Transactions with subsidiaries (eliminated from the consolidated financial statements) Interest income Other income Purchases of goods Interest expenses Contract price 4.55 percent per annum Contract price Cost plus a certain margin MLR rate per annum Transactions with associated company Interest income Administrative expenses Interest expenses percent and MLR rate per annum Contract price MLR rate plus 0.5 percent per annum Transactions with related companies Interest income Gain from debt forgiveness Dividend income Purchases of goods Selling expenses Administrative expenses Other expenses Interest expenses Purchases of equipment to 15.0 percent and MLR rate per annum Contract price Announced rate Cost plus a certain margin Contract price Contract price Market price MLR rate plus 0.5 percent per annum Market price

54 As at 31 December 2008 and 2007, the balances of the accounts between the Company and those related companies are as follows: (Unit: Baht) Consolidated financial statements Separate financial statements Trade accounts receivable related parties Related company Premier Resort Krabi Limited 1,439 Interest receivable from related parties Subsidiary P.M. Food Company Limited 54,590 Associated company Premier Enterprise Public Company Limited 320, ,808 Total interest receivable from related parties 320,808 54, ,808 Amounts due from related parties Subsidiary P.M. Food Company Limited 5,987,378 2,306 Related company Calbee Tanawat Company Limited 751,399 2,975, ,399 2,975,278 Total amounts due from related parties 751,399 2,975,278 6,738,777 2,977,584 Shortterm loans to related parties Subsidiary P.M. Food Company Limited 80,145,144 Advance payment to related parties Related company Premier CE Company Limited 20,000,000 Receivable from sale of investment related parties Parent company Premier Fission Capital Company Limited 18,400,000 18,400,000 Less: Allowance for doubtful accounts (18,400,000) (18,400,000) Receivable from sale of investment related parties net Longterm loans to related parties Related companies Premier Manufacturing Company Limited 18,349,000 18,349,000 Interest receivable from related parties Associated company Premier Enterprise Public Company Limited 2,255,962 2,255,962 2,255,962 2,255,962 Investment in receivable purchased related parties Associated company Premier Enterprise Public Company Limited 55,861,906 60,158,976 55,861,906 60,158,976

55 (Unit: Baht) Consolidated financial statements Separate financial statements Trade accounts payable related parties Subsidiaries Premier Canning Industry Company Limited 6,803,766 7,049,584 P.M. Food Company Limited 290,899,500 Total trade accounts payable subsidiaries 6,803, ,949,084 Related companies Calbee Tanawat Company Limited 50,421,066 47,395,785 50,421,066 47,395,785 Brand Connections Company Limited 12,010,304 12,010,304 Total trade accounts payable related companies 62,431,370 47,395,785 62,431,370 47,395,785 Total trade accounts payable related parties 62,431,370 47,395,785 69,235, ,344,869 Restructured longterm loans from related parties Subsidiaries Premier Canning Industry Company Limited 84,046,829 87,912,829 P.M. Food Company Limited 5,957,333 31,667,333 Total restructured longterm loans from related parties 90,004, ,580,162 Amounts due to related parties Subsidiaries Premier Canning Industry Company Limited 26,974 57,861 P.M. Food Company Limited 55,351 21,255 Total amounts due to subsidiaries 82,325 79,116 Related companies Datapro Computer Systems Company Limited 62, ,699 62, ,699 Premier Brokerage Company Limited (12) (12) Premier Pet Products Company Limited 2,900 Premier Products Company Limited 229,862 Premier Inter Leasing Company Limited 4,756 62,649 4,756 4,869 Imperial Eagle Company Limited 24,582 22,553 24,582 22,553 IQA Laboratory Company Limited 62,884 Total amounts due to related companies 91,738 1,001,535 91, ,109 Total amounts due to related parties 91,738 1,001, , ,225 During the year, the Company has entered into an office rental agreement with a related company, by which the Company has paid the prepaid rent to such related company amounting to Baht 59.6 million. The office rental agreement covers the rental period of twenty years, starting from June 2010 to June 2030.

56 During 2008, movements of loans to related parties were as follow: Balance as at 1 January 2008 Consolidated financial statements Longterm loans to related parties Related companies Premier Manufacturing Company Limited 18,349,000 Investment in receivable purchased related parties Associated company Premier Enterprise Public Company Limited 60,158,976 Increase During the year Decrease (18,349,000) (4,297,070) (Unit: Baht) Balance as at 31 December ,861,906 (Unit: Baht) Balance as at 1 January 2008 During the year Increase Decrease Balance as at 31 December 2008 Separate financial statements Shortterm loans to related parties Subsidiary P.M. Food Company Limited Longterm Loans to related parties Related company Premier Manufacturing Company Limited 18,349, ,525,105 (160,379,961) (18,349,000) 80,145,144 Investment in receivable purchased related parties Associated company Premier Enterprise Public Company Limited 60,158,976 (4,297,070) 55,861,906 Directors and management s remuneration In 2008, the Company and its subsidiaries paid salaries, bonus, meeting allowances and gratuities to their directors and management totaling Baht 35.6 million (2007: Baht 33.4 million) and for the Company Only Baht 22.4 million (2007: Baht 20.7 million). 9. Shortterm loans to related parties The balance of shortterm loans to related parties as at 31 December 2008 is an uncollateralised loan to P.M. Food Company Limited in the form of a promissory note, carrying interest at a rate of 4.55 percent per annum. The loan amounts to Baht 80.1 million and is repayable at call. 10. Advance payment to related parties P.M. Food Company Limited, a subsidiary, intended to repay the loans before maturity dates by the amount equal to the present value of the debt which was arrived from discounted the current balance of loan by the discount rate as agreed by the lender. According to the memo dated 1 August 2007, the subsidiary assigned a related company to proceed this matter. If a deposit was involved in the process, the subsidiary paid the deposit to the creditors through the related company. And if the negotiation process succeeded, the subsidiary paid the remuneration to the related company at a mutually agreed rate. The subsidiary also received all discounts which the creditors granted to the related company. Two creditors agreed with the offered conditions and signed the agreements for transfer of rights in indebtedness to the related company in early October The subsidiary paid a deposit of Baht 20 million to the related company to proceed this matter. As at 31 December 2007, such deposit was presented under the caption of Advance payment to related parties in the balance sheet.

57 Subsequently, in January 2008, the related company repaid loans of such subsidiary to two financial institutions, and the right to collection of the subsidiary s indebtedness was transferred to such related company. Subsequently, the subsidiary and the related company mutually agreed in the memorandum dated 1 March 2008 which stipulated that the subsidiary repaid loans of Baht million to the related company by way of offsetting the loans with the advance payment as per the memorandum dated 1 August After the subsidiary repaid the loans, the related company was to forgive the remaining loans of Baht 85.0 million, which it received as a discount from such financial institutions, to the subsidiary. In March 2008, the subsidiary had repaid such loans and paid remuneration to the related company. The discount received was recorded as Gain from debt forgiveness in the income statement since the first quarter of the current year. 11. Inventories Consolidated financial statements (Unit: Baht) Allowance of diminution in value of inventory Cost Stock obsolescence Inventory net Finished goods 29,887,462 Work in process 19,807,819 Raw materials 89,220,980 Packing materials 30,231,474 Factory supplies 5,454,889 Other supplies 275,881 Goods in transit 923,377 Total 175,801,882 27,605,919 11,478,499 71,803,794 22,939,946 5,400, , ,457,648 (752,513) (338,690) (1,382,315) (1,303,690) (2,474,063) (6,251,271) (994,381) (657,606) (1,161,591) (1,635,350) (2,780,769) (7,229,697) 29,134,949 19,469,129 87,838,665 28,927,784 2,980, , , ,550,611 26,611,538 10,820,893 70,642,203 21,304,596 2,619, , ,227,951 Cost Separate financial statements Allowance of diminution in value of inventory Stock obsolescence Inventory net (Unit: Baht) Finished goods 25,842,497 22,450,127 (555,804) (885,514) 25,286,693 21,564, Escrow account for debt repayment As at 31 December 2008, the Company s bank deposit of approximately Baht 4.9 million (2007: Baht 0.2 million) has been committed in respect of repayment of loans in accordance with the debt restructuring agreement dated 3 September 1999 of Baht 0.2 million and pensions of Baht 4.7 million (2007: Baht 0.2 million and Nil, respectively). 13. Restricted bank deposits Deposits of the subsidiaries have been pledged as security against bank guarantees issued by the banks on behalf of the subsidiaries and as security required in the normal course of business of the subsidiaries. 14. Longterm investment As at 31 December 2008, the Company has investment in a government bond with a face value of Baht 50 million, maturing in March 2013 and carrying interest rate at 4.25% per annum (2007: Nil).

58 15. Longterm loans to related parties The balance of longterm loan to related parties as at 31 December 2007 was the loan to Premier Manufacturing Company Limited in the form of promissory note, carrying interest rate at 15.0 percent per annum, amounted to Baht 18.3 million, and was repayable at call. This loan was secured by the mortgaged land and the structures of Premier Pet Products Company Limited. In addition, the Company and Premier Pet Products Company Limited entered into a guarantee agreement, in which Premier Pet Products Company Limited guaranteed the above loan repayment of Premier Manufacturing Company Limited. In the third quarter of the current year, the Company received full repayment of loan from Premier Manufacturing Company Limited. In December 2008, the Company released the collateral to Premier Pet Products Company Limited. 16. Investment in receivable purchased related parties In the fourth quarter of 2005, the Company purchased debts of an associated company amounting to Baht million from a financial institution at a price of Baht million. From this purchase, the Company received repayment from that associated company in a form of million ordinary shares of the associated company while the remainder amounting to Baht 64.5 million will be repaid in accordance with the repayment schedule, commencing from the year 2007 to 2015, carrying interest at the rates of 4.5% per annum for the year 2006 and 2007 and at MLR afterwards. In 2006, the Company received interest from such associated company at the rate of 1.0% per annum and the remaining interest of 3.5% per annum will be received with the final repayment in the year 2015 which is in accordance with the rehabilitation plan of such associated company. 17. Investments in subsidiaries Details of investments in subsidiaries as presented in separated financial statements are as follows: (Unit: Baht) Company s name Paidup capital Shareholding percentage Cost (%) (%) Premier Frozen Products Company Limited 230,000, ,000, ,699, ,699,369 Premier Canning Industry Company Limited 93,000,000 93,000, ,999,200 92,999,200 P.M. Food Company Limited 140,000, ,000, ,499, ,499,812 Total 463,000, ,000, ,198, ,198,381 Less: Loss from impairment in value of investments (211,775,181) (211,775,181) Total 375,423, ,423,200 Less: Allowance for impairment in value of investments (210,203,000) (194,203,000) Investments in subsidiaries net 165,220, ,220,200 The Company s Board of Directors meeting No.3/2006 on 15 December 2006 passed the resolution approving the Company s sale of all direct investments in a subsidiary, Premier Pet Products Company Limited, to Premier Fission Capital Company Limited, a parent company, at the price of Baht million. In addition, the meeting of the Company s Board of Directors passed the resolution approving the Company s purchases of two previous indirect investments in Premier Frozen Products Company Limited and Premier Canning Industry Company Limited from Premier Pet Products Company Limited at the price of Baht million and Baht million, respectively. Subsequently, the Company s Board of Directors meeting No.1/2007 on 22 August 2007 passed the resolution approving the Company s purchase of the previous indirect investment in P.M. Food Company Limited from Premier Pet Products Company Limited at the price of Baht 60.0 million. Because the sale and purchase of these shares were made for the purpose of organisational restructuring within the group companies, the Company therefore presents original investment costs of these subsidiaries as the investment costs since these three subsidiaries were purchased from Premier Pet Products Company Limited and have been the subsidiaries of the Company since the beginning, and the results of the sale and purchase transactions are considered to be Difference on reorganisation of business of group companies and presented in the shareholders equity in the balance sheets.

59 Repayment conditions of the purchase and sale of investments made on 15 December 2006 were in accordance with the purchase and sale of investment agreement dated 29 December 2006, whereby purchase and sale transactions were offset. The Company was to receive payment from Premier Fission Capital Company Limited amounting to Baht 18.4 million, after transaction offsetting occured. This debt was to be repaid in June Therefore, the Company set up an allowance for doubtful account for receivable from sale of investment until the payment was received in full. This allowance set was recorded as Difference on reorganisation of business of group companies, and presented in the balance sheets by deducting this amount from Receivable from sale of investment related parties. Subsequently, in June 2007, Premier Fission Capital Company Limited sent a letter to the Company requesting to extend the repayment date to be 30 June 2008, and issued promissory note to the Company. This promissory note amounted to Baht 18.4 million, with the maturity date on 30 June 2008, and bared interest rate of MLR of a commercial bank. The collateral was the secondary mortgage in land with the structures of Premier Pet Products Company Limited. In January 2008, Premier Fission Capital Company Limited renewed promissory note to the Company. The promissory note amounted to Baht 18.4 million, with the maturity of repayable at call and bared interest rate of percent per annum. In addition, repayment conditions for the purchase of investment made on 22 August 2007 are in accordance with the purchase and sale of investment agreement dated 31 August The repayment was made by the offsetting of Baht 9.8 million against loan to Premier Pet Products Company Limited, and the Company transferred to Premier Pet Products Company Limited its rights to receive loan payment from Premier Manufacturing Company Limited as settlement of the remaining Baht 50.2 million. Subsequently, in June 2008, the Company received the payment relating to the sale of investment amounted to Baht 18.4 million from Premier Fission Capital Company Limited. As a result, the Company made a reversal on the allowance for doubtful account for the receivable from sale of investment against the caption of Difference on reorganisation of business of group companies in the balance sheet. In the separate financial statements, the Company had receivable from sale of investment amounting to Baht 18.4 million. The Company set up an allowance for doubtful account until the payment was received in full, and the allowance was presented in the balance sheets by deducting this amount from Receivable from sale of investment related parties. Subsequently, in June 2008, the Company received the payment relating to the sale of investment amounted to Baht 18.4 million from Premier Fission Capital Company Limited. As a result, the Company made a reversal on the allowance for doubtful account for the receivable from sale of investment, and the reversal amount had been separately shown in the income statement since the second quarter of the current year. On 28 June 2007, the Company s Extraordinary General Meeting of Shareholders No. 2/2007 passed the resolution approving offsetting premium from sale of investment with deficit. Premier Frozen Products Company Limited, Premier Canning Industry Company Limited and P.M. Food Company Limited did not declare a dividend during the current year. The outstanding balances of Difference on reorganisation of business of group companies as at 31 December 2008 and 2007 are presented as follows: Consolidated financial statements (Unit: Baht) Difference on reorganisation of business of group companies Less: Allowance for doubtful accounts, presented deducting from "Receivable from sale of investment related parties" Add: Reversal of allowance for doubtful account Difference on reorganisation of business of group companies, presented in shareholders' equity (124,855,178) (18,400,000) 18,400,000 (124,855,178) (124,855,178) (18,400,000) (143,255,178)

60 18. Investment in associated company 18.1 Details of associated company: Company s name Premier Enterprise Public Company Nature of business Investing Country of incorporation Thailand Shareholding percentage 2008 (%) ,065,416 Cost 2007 (%) ,065,416 44,746,503 (Unit: Baht) Carrying amounts based on equity method ,128,506 Limited in various businesses Less: Allowance for impairment in value of investment (145,141,174) (145,012,746) Investment in associated company net 40,924,242 41,052,670 44,746,503 46,128,506 (Unit: Baht) Separate financial statements Company s name Nature of business Country of incorporation Shareholding percentage 2008 (%) 2007 (%) Cost Allowance for impairment of investment Carrying amounts based on cost method net Premier Enterprise Public Investing in Thailand ,766,046 36,766,046 36,766,046 36,766,046 Company Limited various businesses 18.2 Share of income/loss and dividend received During the year, the Company has recognised its share of net income/loss from investments in associate company in the consolidated financial statements and dividend income in the separate financial statements as follows: (Unit: Baht) Company s name Consolidated financial statements Share of income/loss from investment in associated company during the year Separate financial statements Dividend received during the year Premier Enterprise Public Company Limited (1,253,576) 5,075,836

61 18.3 Fair value of investment in listed associate In respect of investment in associated company that is listed company on the Stock Exchange of Thailand, the fair value is as follows: (Unit: Million Baht) Company s name Fair value as at 31 December Premier Enterprise Public Company Limited Summarised financial information of associated company Financial information of the associated company is summarised bellows: (Unit: Million Baht) Company s name Paidup capital as at 31 December Total assets as at 31 December Total liabilities as at 31 December Total revenues for the year ended 31 December Net income (loss) for the year ended 31 December Premier Enterprise Public Company Limited 800 8,000 1, , (4) In 2007, the Company sold certain investment in the associated company, at the sale value of approximately Baht 80.2 million and had gain from sales of Baht 72.0 (2008: Nil). 19. Other longterm investments Paidup capital 2008 (Thousand Baht) 2007 (Thousand Baht) Consolidated financial statements Separate financial statements Shareholding Cost percentage Cost 2008 (%) 2007 (%) 2008 (Baht) 2007 (Baht) 2008 (%) 2007 (%) 2008 (Baht) 2007 (Baht) Suvitdumri Group Company 1,000 1, , , , ,000 Limited Calbee Tanawat Company 18,000 18, ,861,600 26,861,600 Limited Total 26,961,600 26,961, , ,000 Less: Allowance for impairment in value of investments (7,755,000) (7,755,000) (100,000) (100,000) Total other longterm investments net 19,206,600 19,206,600

62 20. Property, plant and equipment Consolidated financial statements (Unit: Baht) Revaluation basis Cost basis Land Land improvement Buildings and Machinery structures Improvement of leased building Tools and equipment Furniture, fixtures and office equipment Motor vehicles Construction in progress and Total machinery under installation Cost/Revalued amount: As at 31 December 2007 Additions Disposals Transfer in Transfer out Writeoff As at 31 December 2008 Accumulated depreciation: As at 31 December 2007 Depreciation for the year Amortisation of revalued properties Depreciation for transfer out Depreciation on disposals Depreciation on writeoff assets As at 31 December 2008 Allowance for impairment loss: As at 31 December 2007 Decrease during the year As at 31 December 2008 Net book value: As at 31 December 2007 As at 31 December 2008 Depreciation for the year 221,065, ,065, ,065, ,065,000 2,863,300 2,863,300 1,879, ,283 1,989, , , ,715, , , ,193, ,045,568 11,006,865 8,947, ,999, ,669, ,194, ,782,840 1,493,221 (307,790) 8,999,108 (7,302,700) 376,664, ,581,725 6,404,984 32,233,838 (6,903,388) (307,784) 324,009,375 81,201,115 52,655, (Baht 15.9 million included in manufacturing cost, and the balance in administrative expenses) 2008 (Baht 14.5 million included in manufacturing cost, and the balance in administrative expenses) 7,822,707 (147,700) 7,675,007 6,762, ,698 (80,608) 7,068,808 1,059, ,199 45,640,588 1,863,827 (1,373,521) 295,628 (697,975) 45,728,547 36,942,274 2,481,585 (279,763) (1,373,283) 37,770,813 8,698,314 7,957,734 37,516,075 1,270,247 (1,558,387) (877,382) 36,350,553 34,543,119 1,043,018 (1,555,719) (876,220) 33,154,198 2,972,956 3,196,355 9,960,628 1,421,400 (221,202) 11,160,826 8,160, ,226 (221,201) 8,633,091 1,800,562 2,527,735 10,732,253 8,945,696 (9,486,976) (265,446) 9,925,527 8,535,090 (516,551) 8,018,539 2,197,163 1,906,988 1,067,098,784 15,280,291 (3,460,900) 9,486,976 (17,487,651) (1,290,528) 1,069,626, ,915,225 22,017,376 41,290,150 (7,183,151) (3,457,987) (956,828) 619,624,785 8,535,090 (516,551) 8,018, ,648, ,983,648 22,876,680 22,017,376

63 (Unit: Baht) Separate financial statements Improvement of leased building Furniture, fixtures and office equipment Motor vehicles Total Cost: As at 31 December ,822,707 11,133,823 9,739,426 28,695,956 Additions 1,024,960 1,421,400 2,446,360 Disposals (1,041,921) (1,041,921) Writeoff (147,700) (877,382) (1,025,082) As at 31 December ,675,007 10,239,480 11,160,826 29,075,313 Accumulated depreciation: As at 31 December ,762,718 9,491,449 7,938,865 24,193,032 Depreciation for the year 386, , ,226 1,670,751 Depreciation on disposals (1,039,695) (1,039,695) Depreciation on writeoff asset (80,608) (876,220) (956,828) As at 31 December ,068,808 8,165,361 8,633,091 23,867,260 Net book value: As at 31 December ,059,989 1,642,374 1,800,561 4,502,924 As at 31 December ,199 2,074,119 2,527,735 5,208,053 Depreciation for the year 2007 (included in administrative expenses) 1,676, (included in administrative expenses) 1,670,751 The subsidiaries arranged for the independent professional valuers to appraise the value of certain assets in December 2007 on an assetbyasset basis. The basis of the revaluation was as follows: Land was revalued using the market approach. Buildings and machinery were revalued using the depreciated replacement cost approach.

64 follows: A breakdown of property, plant and equipment carried on the revaluation basis and their accumulated depreciation is as (Unit: Baht) Consolidated financial statements Land Land improvement Buildings and structures Machinery Land Land improvement Buildings and structures Machinery Original cost 129,232,055 1,770, ,230, ,932, ,232,055 1,770, ,752, ,050,599 Surplus from revaluation 91,832,945 1,092,827 84,962,957 87,732,241 91,832,945 1,092,827 84,962,957 87,732,241 Revalued amount 221,065,000 2,863, ,193, ,664, ,065,000 2,863, ,715, ,782,840 Accumulated depreciation on original cost 1,770, ,523, ,647,212 1,770, ,516, ,453,400 Accumulated depreciation on surplus from revaluation 218,566 16,476,091 57,362, ,283 7,529,062 25,128,325 Accumulated depreciation on revalued amount 1,989, ,999, ,009,375 1,879, ,045, ,581,725 In October 2006, the Federation of Accounting Professions issued Notification No. 25/2006 allowing entities which carry their property, plant and equipment at revalued amounts to calculate depreciation to be charged to the income statements based on the historical costs of the assets instead of on the revalued amounts. The subsidiaries have decided to follow the notification. However, had the depreciation charge been calculated based on the revalued amounts, net income and earnings per share would have been changed to the following: Consolidated financial statements Net income (Baht) Basic earnings per share (Baht per share) 390,946, ,613, The subsidiaries have mortgaged their land with structures thereon and pledged/mortgaged most of their machinery with a total net book value (revalued amount) as at 31 December 2008 of Baht million (2007: Baht million) as collateral for liabilities according to the conditions stipulated in the debt restructuring agreements from financial institutions, the longterm loans, credit facilities and bank guarantees granted to the subsidiaries by banks. As at 31 December 2008, certain equipment items of the Company and its subsidiaries have been fully depreciated but are still in use. The original cost of those assets amounted to approximately Baht million (2007: Baht 74.0 million) and for the Company Only approximately Baht 14.5 million (2007: Baht 15.8 million).

65 21. Nonoperating assets (Unit: Baht) Consolidated financial statements Land Buildings and building improvement ,319,476 61,031,829 24,319,476 61,031,829 Machinery, tools and equipment Total 142,910, ,261, ,959, ,311,246 Less: Accumulated depreciation (190,820,833) (179,288,325) Allowance for impairment of assets (1,852,151) (1,852,151) Nonoperating assets net Impairment loss included in the income statements for the year 35,588,479 4,399,272 39,170,770 4,877,000 Nonoperating assets comprise the land, buildings and building improvement, machinery, tools and equipment of three subsidiaries used in nonoperational sections, a closed plant and a new project which has not yet started. During 2006, some of these assets were appraised by an independent appraiser and their value was not lower than their carrying costs presented in the financial statements. Subsidiaries have mortgaged their land with structures thereon and pledged/mortgaged most of their machinery with a total net book value as at 31 December 2008 of Baht 34.6 million (2007: Baht 37.7 million) as collateral for liabilities according to the conditions stipulated in the debt restructuring agreements from financial institutions, the longterm loans, credit facilities and bank guarantees granted to the subsidiaries by banks. 22. Prepaid rent Prepaid rent Consolidated and Separate financial statements ,847,465 (Unit: Baht) 36,206,258 Less: Accumulated amortization Prepaid rent net Amortisation expenses included in the income statements for the year (33,635,702) 62,211,763 1,813,782 (31,821,920) 4,384,338 1,808,826

66 23. Bank overdrafts (Unit: Baht) Interest rate (percent per annum) Consolidated financial statements Bank overdrafts MOR 19,945,967 8,496,216 Bank overdrafts are secured by the mortgage of the subsidiaries land with structures thereon and pledged/mortgaged most of their machinery, as mentioned in Note 20 and Note 21 to the financial statements. 24. Restructured longterm loans In 1999, the Company entered into debt restructuring agreements with the financial institution creditors. The debt repayment schedules and related interest rates are as follows: 1. Interest rates MLR for bank overdrafts and loans 2. Repayment schedules Principal Quarterly, from March 2001 to December 2007 Quarterly, from September 2005 to December 2014 Accrued interest Within 2014 Interest Monthly In addition, in July 2007, the Company has successfully negotiated with such related parties by amending repayment conditions. Conditions after debt restructure are as follows: 1. Interest rates MLR (KTB) 2. Repayment schedules Principal Quarterly, from September 2007 to December 2016 Accrued interest Within December 2016 Interest Monthly In September 2008, the Company repaid full amount of the loan from P.M. Food Company Limited and debt of Baht 3.5 million was forgiven. The discount received was recorded as Gain from debt forgiveness in the income statement. Subsequently, there was an amendment to such loan repayment for the sake of the Company and such subsidiary in order to comply with the restructuring agreement. As a result, as at 31 December 2008, the Company has outstanding balance of loan from such subsidiary amounting to Baht 6.0 million, of which Baht 2.5 million is the principal and Baht 3.5 million is the discount (the Company made a reversal of the Debt forgiveness in the fourth quarter of this year). Such discount will be forgiven when the Company repays the principal in full.

67 In 2002 and 2003, P.M. Food Company Limited, a subsidiary, defaulted on the payments of principal and related interest due under its debt restructuring agreement dated 3 September During 2003, this subsidiary filed a petition for business rehabilitation with the Court and consequently in December 2003, the Court issued an order approving the business rehabilitation plan of the above subsidiary. The business rehabilitation plan mainly involves the restructuring of debts. The subsidiary recorded the accounts of year 2003 in accordance with such business rehabilitation plan. The business rehabilitation plan of the subsidiary expired on 21 December The subsidiary filed a petition to the Court to cancel the business rehabilitation, by which the Court schedules the hearing in March Since December 2007, P.M. Food Company Limited, a subsidiary, stopped repaying the due loan principal amounting to Baht 16.7 million to two financial institutions since these two financial institutions are in the process of transferring the rights in indebtedness to a related company. In the first quarter of the current year, such financial institutions transferred the right to collection of the subsidiary s indebtedness to such related company. The subsidiary repaid such loans and paid remuneration to the related company and received debts forgiveness of Baht 85.0 million as discussed in Note 10 to the financial statements. In the current year, P.M. Food Company Limited repaid the full amount of loans from six financial institutions, and received the discounts totaling Baht million. The discount received was recorded as Gain from debt forgiveness in the income statement of the current year. Conditions of longterm loans according to the business rehabilitation plan of P.M. Food Company Limited are as follows: 1. Interest rates MLR (KTB) for creditors group one, group two/one and group four/one 2 % per annum for creditors group two/two and group four/two 2. Repayment schedules Principal and accrued interest Creditor group one Principal: Biannually, from June 2004 to June 2009 Accrued interest : December 2010 Creditors group two/one and group four/one Principal: Biannually, from June 2004 to June 2011 Creditors group two/two and group four/two Principal and accrued interest: December 2015 Interest Monthly Note Credit group one : Credit group two : Credit group four : Loan from financial institution creditor with collateral Loans from financial institutions with secondary mortgage Loan from related company creditor with secondary mortgage Details of longterm loans as at 31 December 2008 and 2007 are as follows: (Unit: Baht) 31 December December 2007 Consolidated financial statements Separate financial statements Consolidated financial statements Separate financial statements Financial institutions Related companies Financial institutions Related companies Financial institutions Related companies Financial institutions Related companies Long term loans 116,655,675 39,991,452 90,004, ,979,570 41,946, ,580,162 Less: Current portion of longterm loans (7,574,493) (2,177,219) (5,286,000) (79,004,943) (2,177,219) (5,286,000) Long term loans net of current portion 109,081,182 37,814,233 84,718, ,974,627 39,769, ,294,162

68 Movements in the longterm loans account during the current year ended 31 December 2008 are summarised below. (Unit: Thousand Baht) Consolidated financial statements Separate financial statements Financial institutions Related companies Financial institutions Related companies Balance as at 1 January ,979,570 41,946, ,580,162 Less: Repayment (413,479,020) (1,954,885) (29,576,000) Less: Realised deferred gain from debt restructuring (13,964,314) Less: Gain from debt forgiveness (276,880,561) Balance as at 31 December ,655,675 39,991,452 90,004,162 Some parts of longterm loans have been guaranteed by the associated company and the mortgage of land and buildings and the pledge of some part of the subsidiary s machinery, as mentioned in Note 20 and Note 21 to the financial statements. 25. Longterm loans from financial institutions Longterm loans as at 31 December 2008 are loans from financial institutions of Premier Canning Industry Company Limited (a subsidiary). During 2003, this subsidiary entered into agreements with all financial institution creditors to repay restructured longterm loans according to the debt restructuring agreement date 3 September The subsidiary repaid principal and all related interest to two financial institution creditors totaling approximately Baht 118 million in March 2003 and repaid principal and partial related interest to the remaining financial institution creditors in April The remaining interest of Baht million according to the debt restructuring agreement will be repaid during the period of seven years without interest. In addition, such subsidiary entered into longterm loan and credit facilities agreement with a financial institution. Under the longterm loan and credit facilities agreement, such subsidiary is required to comply with certain conditions stipulated in the agreement. Details of the longterm loan agreements of Premier Canning Industry Company Limited are as follows: 1. Principal Baht 200 million 2. Interest rates MLR (KTB) 3. Repayment schedules Principal Payable on a monthly basis for an amount of not less than Baht 2.15 million per month, starting from April 2003 (Total 84 months) Remaining interest Payable on a monthly basis Baht 0.16 million per month, starting from April 2003 Interest Monthly basis (Total 84 months), no interest charged Details of longterm loans as at 31 December 2008 and 2007 are as follows: Consolidated financial statements (Unit: Baht) Longterm loans Remaining interest Less: Current portion of longterm loans Longterm loans net of current portion 50,784,048 2,463,326 (27,774,418) 25,472,956 76,584,048 4,457,877 (27,813,335) 53,228,590

69 Under this longterm loan agreement and credit facilities agreement with this financial institution, the subsidiary is to comply with certain conditions stipulated in the agreement as follows: 1. The subsidiary is not allowed to pay dividend, make any allocation to shareholders and/or subsidiary if the subsidiary has deficit (according to the annual financial statements). 2. The subsidiary is not allowed to grant loans to related companies, except for those provided in the ordinary course of business. 3. The subsidiary is not allowed to invest or establish any subsidiary or grant loans thereto. 4. The subsidiary is not allowed to lend, make commitments and guarantees within a period of three years starting from the loan agreement date except in the ordinary course of business or the subsidiary is able to maintain the debt to equity ratio of no higher than 3:1 according to the annual financial statements. If the subsidiary does not comply with conditions in longterm loan agreement, the conformity violated longterm loan agreement and all liabilities on credit facilities of the above condition will immediately repay. Longterm loans granted by financial institutions are secured by the mortgage of all of the subsidiary s land with structures thereon, the pledge/mortgage of most of its machinery (as mentioned in Note 20 and Note 21 to the financial statements) and the mortgage of land with structures thereon of another subsidiary. 26. Shortterm provision The balance of shortterm provision is as follows: (Unit: Baht) Consolidated and Separate financial statements Pensions 4,728, Share capital On 28 June 2007, the Company s Extraordinary General Meeting of Shareholders No. 2/2007 passed the resolution approving the followings: Change the par value of the Company s shares from 5 million ordinary shares of Baht 100 each to 500 million ordinary shares of Baht 1 each. The Company registered the change in the par value of its shares with the Ministry of Commerce on 20 July Increase the Company s registered share capital from Baht 500 million to Baht 650 million through the issuance of 150 million new ordinary shares with a par value of Baht 1 each. These shares are to be allocated, in whole or in part, to the public. The Company registered the increase in its registered share capital with the Ministry of Commerce on 20 July During 14 to 16 May 2008, the Company made a public offering of the 150 million additional shares at a price of Baht 3.1 per share, or for a total of Baht 465 million, and on 20 May 2008 received payment of this share capital increment. All expenses related to the share offering amounting to Baht 12.5 million are presented as a deduction from the share premium. The Company registered the increase in its paidup capital with the Ministry of Commerce on 20 May On 27 May 2008, the Board of the Stock Exchange of Thailand ordered the listing of the Company s ordinary shares on the Stock Exchange of Thailand. On 19 December 2008, the Company s Extraordinary General Meeting of Shareholders No. 1/2008 passed the resolution approving offsetting premium on share capital with deficit.

70 28. Revaluation surplus on assets This represents surplus arising from revaluation of property, plant and equipment. Movements during the year are as follows: (Unit: Baht) Consolidated financial statements Balance beginning of year Less: Amortisation of the year Balance end of year 285,730,831 (41,290,150) 244,440, ,775,305 (35,044,474) 285,730,831 The revaluation surplus on assets can neither be offset against deficit nor used for dividend payment. 29. Statutory reserve Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a statutory reserve at least 5 percent of its net income after deducting accumulated deficit brought forward (if any), until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution. On 28 June 2007, the Company s Extraordinary General Meeting of Shareholders No. 2/2007 passed the resolution approving offsetting legal reserve with deficit. 30. Expenses by nature Significant expenses by nature are as follow: Consolidated financial statements (Unit: Baht) Separate financial statements Salary and wages and other employee benefits 259,551, ,772, ,927, ,244,035 Depreciation 26,416,648 27,753,680 1,670,751 1,676,355 Amortisation expenses 3,762,668 3,434,916 3,352,212 3,256,038 Loss on exchange 12,588,531 1,240 Rental expenses 26,460,197 23,210,856 16,646,898 16,904,013 Purchases of goods 717,887,275 1,207,713,256 1,467,590,901 1,208,774,826 Raw materials and consumables used 1,303,829,207 1,139,011,360 Changes in inventories of finished goods and work in process (11,143,957) (1,540,718) (3,392,370) (7,603,963)

71 31. Earnings per share Basic earnings per share is calculated by dividing net income for the year by the weighted average number of ordinary shares in issue during the year. 32. Promotional privileges A subsidiary has been granted the following promotional privileges under the Investment Promotion Act B.E by the Board of Investment. Company Number Date granted Business P.M. Food Company Limited 1478/ / June September 1997 Manufacturing of snacks Manufacturing of snacks Subject to certain imposed condition, the privileges include the followings: 32.1 Exemption from corporate income tax on net income for period of 8 years, commencing as from 4 June 1996 and 1 December 1998, respectively (the date of first earning operating income) and these privileges expired on 3 June 2004 and 30 November 2006, respectively A fifty percent reduction of corporate income on net income for a period of 5 years after the expiration of the corporate income tax exemption period as mentioned in Note Permission for foreign technicians and experts to work in positions as approved by the Board Exemption from import duty on machinery and equipment as approved by the Board Dividends paid from the income of promoted operations which are exempted from corporate income tax, are in turn exempted from inclusion in the determination of corporate income tax Permission to double deduct the cost of transportation, electricity and water supply for corporate income tax purpose for a period of 10 years commencing from the date of earning operating income and these privileges of certificate no 1572/2540 expired on 30 November Permission to deduct 25 percent of the cost of public utilities, in addition to normal depreciation charges.

72 33. Segment information The Company and its subsidiaries business operations involve three principal segments: (1) distribution of consumer products (2) manufacture of food and (3) rent out space and services. These operations are mainly carried on in Thailand. Below is the consolidated financial information for the years ended 31 December 2008 and 2007 of the Company and its subsidiaries Distribution of consumer products segment For the years ended 31 December Manufacture Rent out space Elimination of of food and services intersegment segment segment revenues (Unit: Million Baht) Consolidation Revenues from external customers Local 1,888 1, ,957 1,728 Export 1, , Total revenues from external customers 1,888 1,611 1,135 1, ,038 2,668 Intersegment revenues (760) (620) Total revenues 1,888 1,611 1,885 1, (760) (620) 3,038 2,668 Segment income Unallocated income and expenses: Interest income Gain from debt forgiveness Gain on sales of investment in associated company 72 Reversal of allowance for impairment in value of investments 14 Other income Selling expenses (276) (252) Administrative expenses (225) (195) Other expenses (5) (12) Finance cost (26) (31) Share of income (loss) from investment in associated company (1) 5 Corporate income tax (78) (16) Net income Distribution of consumer products segment Manufacture of food segment As at 31 December Rent out space and services segment Elimination of intersegment revenues (Unit: Million Baht) Consolidation Property, plant and equipment net Other assets (331) (579) 1, Total assets (331) (579) 1,445 1,244 Transfer prices between business segments are as set out in Note 8 to the financial statements.

73 34. Provident fund The Company and the subsidiaries and their employees have jointly established separate provident funds in accordance with the Provident Fund Act B.E The Company, the subsidiaries and their employees contributed to the fund monthly at the rate of 5 percent of basic salary. The funds, which are managed by TISCO Asset Management Company Limited, will be paid to employees upon termination in accordance with the fund rules. During the year 2008, the Company and its subsidiaries contributed Baht 5.7 million (2007: Baht 5.3 million) to the funds, with the Company Only contributing Baht 3.0 million (2007: Baht 2.7 million). 35. Commitments and contingent liabilities 35.1 Operating lease commitments The Company and its subsidiaries have entered into several lease agreements in respect of lease of office space, warehouse, motor vehicles, and equipment with related parties and other companies. The terms of the agreements are generally between 1 year and 5 years. As at 31 December 2008, future minimum lease payments required under these operating lease contract were as follows: Payable within: Consolidated financial statements (Unit: Million Baht) Separate financial statements Less than 1 year to 5 years 35.2 Longterm service commitments The Company and its subsidiaries have entered into several longterm service agreements in respect of computer services, consultancy services, advertising fees, and other services with related parties and other companies As at 31 December 2008, future minimum longterm service payments required under these agreements are as follows: (Unit: Million Baht) Payable within: Less than 1 year 1 to 5 years More than 5 years Consolidated financial statements Separate financial statements

74 35.3 Guarantees (a) A subsidiary and the associated company have guaranteed bank credit facilities of another subsidiary amounting to Baht million and Baht 0.5 million, respectively. (b) As at 31 December 2008, there were outstanding bank guarantees of approximately Baht 13.2 million issued by the banks on behalf of the subsidiaries in respect of certain performance bonds as required in the normal course of business. These included letters of guarantee amounting to Baht 8.1 million to guarantee import duty and Baht 5.1 million to guarantee electricity use. 36. Financial instruments 36.1 Financial risk management The Company and its subsidiaries financial instruments, as defined under Thai Accounting Standard No. 48?Financial Instruments: Disclosure and Presentations?, principally comprise cash and cash equivalents, trade accounts receivable, loans, investments, and shortterm loans and longterm loans. The financial risks associated with these financial instruments and how they are managed is described below. Credit risk The Company and its subsidiaries are exposed to credit risk primarily with respect to trade accounts receivable, loans, receivable from sale of investment related parties and investment in receivable purchased related parties. The Company and its subsidiaries manage the risk by adopting appropriate credit control policies and procedures and therefore do not expect to incur material financial losses. In addition, the Company and its subsidiaries do not have high concentration of credit risk since they have large customer bases. The maximum exposure to credit risk is limited to the carrying amounts of trade accounts receivable, loans, receivable from sale of investment related parties and investment in receivable purchased related parties as stated in the balance sheet. Interest rate risk The Company and its subsidiaries exposure to interest rate risk relates primarily to their cash at banks, bank overdrafts, shortterm and longterm borrowings. However, since most of the Company and its subsidiaries financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate, the interest rate risk is expected to be minimal. Significant financial assets and liabilities as at 31 December 2008 classified by type of interest rates are summarised in the table below, with those financial assets and liabilities that carry fixed interest rates further classified based on the maturity date, or the repricing date if this occurs before the maturity date. Consolidated financial statements Fixed interest rates Within 1 year 15 years Floating interest rate (Million Baht) Noninterest bearing Total Interest rate (% p.a.) Financial assets Cash and cash equivalents Current investment Trade accounts receivable Escrow account Restricted bank deposits Longterm investment Investment in receivable purchased related parties MLR Financial liabilities Bank overdrafts MOR Trade accounts payable Restructured longterm loans from financial institutions MLR, 2.0 Longterm loans from financial institutions MLR

75 Separate financial statements Fixed interest rates Within 1 year 15 years Floating interest rate (Million Baht) Noninterest bearing Total Interest Rate (% p.a.) Financial assets Cash and cash equivalents Current investment Trade accounts receivable Shortterm loans to related parties Escrow account Longterm investment Investment in receivable purchased related parties MLR Financial liabilities Trade accounts payable Restructured longterm loans from financial institutions MLR Restructured longterm loans from related parties MLR Foreign currency risk The subsidiary s exposure to foreign currency risk arises mainly from trading transactions that are denominated in foreign currencies. The balances of financial assets and liabilities denominated in foreign currencies of the subsidiary as at 31 December 2008 which are unhedged are summarised below. Foreign currency Financial assets Financial liabilities Exchange rate as at 31 December 2008 US dollar and Japanese yen

76 36.2 Fair values of financial instruments Since the majority of the Company and its subsidiaries financial instruments are shortterm in nature or bear floating interest rates, their fair value is not expected to be materially different from the amounts presented in the balance sheets. A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm s length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument. 37. Capital management The primary objective of the Company s capital management is to ensure that it has an appropriate financial structure and preserves the ability to continue its business as a going concern. was 0.6:1. According to the balance sheet as at 31 December 2008, the Group s debttoequity ratio was 0.8:1 and the Company s 38. Credit facilities Credit facilities (bank overdrafts, loans from financial institutions, bank guarantees, trust receipts and letters of credit etc.) provided by financial institutions to the subsidiaries are secured by the pledged deposits at financial institutions of the subsidiaries and the mortgage of the subsidiaries land and structures thereon and the mortgage/pledge of most of subsidiaries machinery. 39. Approval of financial statements These financial statements were authorised for issue by the Company s Board of Directors on 20 February Remuneration of the Auditor 1. Remuneration for Auditing (Audit Fee) The company and its subsidiaries pay auditing remuneration to Ernst & Young Office Limited, which includes the audit office supervising the auditors, personnel or businesses related to the auditors and the audit office in the previous year is equivalent to 3,635,000 Baht. 2. Other Fees (NonAudit Fee) The company and its subsidiaries do not acquire any other services from Ernst & Young Office Limited, which includes the audit office supervising the auditors, personnel or businesses related to the auditors and the audit office in the previous year.

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78 No. 1, Premier Corporate Park, Soi Premier 2, Sinakharin Road, Nong Bon Subdistrict, Prawet District, Bangkok