Annual Report 2015 EN

Our vision is to become a lean green and happy world-class organization

with 4 fundamental values of Happy Customers, Happy Employees, Happy Shareholders, and Happy Public.

AAPICO

Content President没s Message Awards and Achievements AAPICO Key Milestones Corporate Social Responsibities AAPICO Products Location of Main Factories Company Holding Structure Revenue Structure Financial Highlights AAPICO Group Business Main Business Competition and Industrial Trend Business Operation Goals and Future Projects Risk Factors Shareholding Structure Organization and Management Board of Directors Corporate Governance Internal Control and Ris Manage ment Related Transactions Managemen Discussion and Analysis Report of the Audit Committee Report of Nomination and Remuneration Committee Company Contact Information Reference Corporate Information

2 4 6 8 10 12 13 14 15 16 17 23 26 28 33 37 38 45 61 64 67 73 75 76 79 80 AAPICO Hitech Public Company Limited

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Presidentûs Message The AAPICO Hitech Group did not perform well in 2015. The growth that was expected did not materialize. Major infrastructure projects were delayed and the only bright spot was the tourist industry, whilst the other sectors remained languid. The net profit of the Company was Baht 338 million as compared to Baht 386 million in 2014, a decrease of 12.4 percent year on year.

Thailand’s local vehicle sales dropped to 799,632 units from 881,832 units in 2014, a decline of 9.3 percent year on year. Vehicle production however grew slightly from 1.88 million units to 1.91 million units or 1.8 percent.

Healthy growth of export largely compensated for the continued tepid domestic market. The forecast for Thailand’s automotive industry in 2016 is expected at around 2.0 million units. The year on year increase is expected to be driven by export growth, which is forecasted to the tune of 1.25 million units in 2016, whilst local demand may remain weak. The new regime of excise tax based on CO2 emission instead of engine size, which cause new car price to increase may be another challenge and dampen overall sales numbers in 2016.

Based on the Bank of Thailand forecast, the Thai economy in 2016 is expected to grow by about 3 percent. This confidence comes from the fact that many major infrastructure projects that have been delayed are in the process of taking off. These projects will stimulate the economy. A stable environment with a working government are an added bonus for 2016.

AAPICOûs Vision

çOur vision is to become a lean green and happy world-class organization with 4 fundamental values of Happy Customers, Happy Employees, Happy Shareholders, and Happy Public.

é

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Annual Report 2015

AAPICO

AAPICO Group’s revenue for 2015 was Baht 15.0 billion, with profits at Baht 338 million. Group revenue fell from Baht 15.2 billion to Baht 15.0 billion compared to a year earlier, due to a negative impact of weaker Malaysian Ringgit which has depreciated against Thai baht by 11% compared to last year. On currency comparable, healthy growth was seen in the Malaysian car dealerships business.

The Group’s best performer was frame production where the volume is huge. Fortunately for us, Isuzu’s volume reduction was lower than the industry as a whole. This was, also, the case for Ford where demand has increased in certain models and we supply many parts. Plastics and forging, also, performed better, although still suffering losses. In any case, most companies are expected to improve in 2016.

In Malaysia where we sell Honda passenger vehicles, two dealerships reported healthy performance and profits. Sales increased from 3,447 units to 3,739 units compared to the previous year. This positive trend is expected to continue in 2016.

We have a new 20,000 square meters factory in China, which is still not fully utilized for producing forged and machining parts.

Current businesses occupy about 30 percent of the useful space. In 2015, our China operations had a loss. Our China business is poised to grow due to the country’s enormous market size of 25 million units of assembled cars, with the potential of further growth. The Group’s China operations is expected to perform better this year as plant space is not a constraint and we only need to install machinery in order to increase capacity when new orders are received.

Company debt continues to reduce, as bank loans are being prepaid. As at December 31, 2015, the debt to equity is 55 percent. Our debt reduction will allow us to gear up with lower risks if there is a need for capital expansion or acquisitions if there are good opportunities within our without. It is fortunate that the global economy in general is not too volatile and interest on borrowing still hovers in the 5 percent range. This makes the cost of funds reasonable.

2015 was a more stable year for Thailand and hopefully this trend will continue in 2016. We had very good co-operation and support from our associates, customers, other stakeholders and, also, our Board of Directors. I really appreciate all your kind support and would like to take this opportunity to express my sincere thanks and look forward to your continued support in 2016.

Mr. Yeap Swee Chuan President and CEO AAPICO HITECH Public Company Limited

AAPICO Hitech Public Company Limited

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Awards and Achievements AAPICO has been recognized for its high standard of quality and continuous improvement as well as commitments toward its employees and society.

Awards and achievements recived from customers and government offices in 2015 include the following :

6 Kunshan Chaitai-Xincheng Precision Forging

7 AAPICO Hitech Public Company Limited

Company Limited received the çOutstanding Contribution Supplieré for their excellent support and contribution from Changûan Ford Mazda Engine Company Limited, China.

was awarded the Winner of Advance Group at TCC-TPS Activity 2015 from Toyota Motor Asia Pacific Engineering & Manufacturing (TMAP-EM)

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6

4&5 Tenaga Setia Resources SDN. BHD. in Malaysia received the çHonda CEO › Top Sales 2015 Awardé, which was given to the top 5 dealers with the highest sales in 2015, and the çHonda CEO › Elite Dealer 2015 Awardé for their excellent performance from Honda Malaysia

5 4

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3 New Era Sales (Malaysia) SDN. BHD.

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in Malaysia received the çHonda CEO - Elite Dealer 2015 Awardé for their excellent performance from Honda Malaysia.

2 AAPICO Plastics Public Company Limited received çZero Accident Awardé from Department of Labor Protection and Welfare, Ministry of Labor.

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Annual Report 2015

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AAPICO

8&9 AAPICO Plastics Public Company Limited

10 AAPICO Hitech Public Company Limited

was the Winner of Grand Prix A-ABC Convention from Mazda and Auto Alliances (Thailand) Co., Ltd. and was invited to present their performance in Japan, and received the Q1 Award from Ford and Auto Alliances (Thailand) Co., Ltd. for the recognition in excellent quality, 100% on-time delivery, and continually improvement.

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10 9 8

was the 1st runner up for QA improvement from Toyota Co-operation Club for their commitment to quality improvement from Toyota Motor Asia Pacific Engineering & Manufacturing (TMAP-EM).

11 AAPICO Hitech Public Company Limited received the MATRADE Special Award for the recognition of their International Partnership from the National Trade Promotion Agency under The Ministry of International Trade and Industry Malaysia.

1 AAPICO Hitech Public Company Limited AAPICO Plastics Public Company Limited AAPICO Hitech Parts Company Limited AAPICO Hitech Tooling Company Limited were recognized for their commitments for the çSafety WorkplaceÊ Project in honor of HRH Princess Maha Chakri Sirindhorn from Ministry of Labor.

AAPICO Hitech Public Company Limited

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Key Milestones

Acquired 100% of Dana Corp. (USA) shares and renamed AAPICO Amata in Chonburi.

2003

Listed on the SET on October 17, 2002.

2002

1997 st

Established 1 JV with Sanoh Japan and completed factory in Hitech Industrial Estate, Ayutthaya.

2012

2013

1995

Established 4 JV companies with Lemtech (60%), Edscha (49%), Sumino (49%) and Sodecia (50%).

Signed Technical Agreement with Keylex Japan to produce fuel tanks for Ford and Mazda pickups in Ayutthaya.

1985 Registered Able Autoparts Industries Co., Ltd. and started as the Ford Assembler and Distributor.

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Annual Report 2015

Completed Kunshan new factory.

AAPICO

2005

Established strategic partnership with Sojitz Corp., Japan.

2006

2007

Acquired KPN PLC and renamed it AAPICO Forging PLC in Chonburi.

Acquired 60% of Able ITS, a car navigation company.

Established AAPICO Hitech Parts in Ayutthaya.

2008 Established JV (40% equity) with Minth Corp., China.

Expanded to China 2004 and acquired Kunshan Chaitai-Xincheng Precision Forging Co., Ltd.

2009

2010

Established AAPICO Structural Products in Chonburi.

2011

Established JV (49% equity) with Takagi Seiko, Japan.

Completed 3S Honda showrooms.

Flood 2011.

Acquired 25% equity in Quantum Inventions, Singapore. Set up Training Center in Nakornnayok.

2014

Organized non-core business activities.

Established TURBO target in 2020. ë Double Sales ë Net profit margin at 10%

2015

AAPICO Hitech Public Company Limited

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Corporate Social Responsibility AAPICO Hitech PLC engages in good governance and takes responsibility for society and all groups of its stakeholders. The Company encourages employees to involve and improve local community and supports the CSR projects where appropriate. Many of the Company’s projects concentrate on employees, society, environment and education. The CSR projects in 2015 includes the following:

Activities with Customers and Suppliers

The AAT-AAPICO Friendship Golf at Kiarti Thanee Country Club, Samutprakarn province The 2015 Annual Supplier Meeting

Company Visit at Uniroll factory

Orientation for new suppliers

Activities with Employees Songkran Day 2015

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Annual Report 2015

AAPICO Family CSR 2015 at Wat Tunghiang, Panutnikom, Chonburi province

AAPICO

Employee Development Organization Development #4 at Khungnam Resort, Nakornnayok province AAPICO Scholarship for the outstanding children of AAPICO employees.

Merit Making

Sending Employee to Travel Safely for the long holiday

5S Big Cleaning Day Activity

Leadership Training #2 at Peace Park, Nakornnayok province Team Development and Organizational Excellence Training at Chulachomklao Royal Military Academy, Nakornnayok province In-house training : On the Job Trainer Fire Evacuation Training in collaboration with Hitech Industrial Estate and Ban Wah subdistrict Safety Week Activities

Sport Day, Singing Competition and New Year Party

Activities relating to Environment and Society • • • •

Green Star Award 2015 from Industrial Estate Authority of Thailand CSR Activities at Wat Keereewan, Nakornnayok province Annual Blood Donation Activity Tree Planting at Peace Park, Nakornnayok province

AAPICO Hitech Public Company Limited

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Example of AAPICO Products

Suspension

Engine ë Connecting Rod ë Shaft Balance

Brake

Transmission

ë Piston

ë Input Shaft ë Companion Flange ë Gear, Clutch

Power train

Automobile picture is displayed for the purpose of illustration of automobile parts only.

Drive Wheel

Prop Shaft ë Tube Shaft ë Yoke Weld ë Tube Yoke

ë Wheel Hub ë Knuckle

Interior Parts Trim Pillar A,B,C Quarter trim Spoiler Protector

Door trim

Under Hood Parts

Exterior Parts

Radiator Cover Tail Lamp

Automobile picture is displayed for the purpose of illustration of automobile parts only.

Washer Tank systems Plastics Fuel Tank Seat Component

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Annual Report 2015

Cover Pass Air Bag Body side Molding

AAPICO

Crossmember Assy Front floor #4

Crossmember #4 Rear AXLE Housing

Crossmember #2.5

Sill-Side Inner

Automobile picture is displayed for the purpose of illustration of automobile parts only.

Crossmember #3

Reinf ASSY-Tunnel

Brake Assembly Mounting #2

Chassis Frame Component Automobile picture is displayed for the purpose of illustration of automobile parts only.

Assembly Jigs

Stamping Dies

AAPICO Hitech Public Company Limited

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Location of Main Facilities Kunshan, China Manufacture forged and machined parts and copper parts

Total Revenues 2015

Thailand

Car dealerships showroom and service center Kajung and Petaling Jaya

Hitech Industrial Estate, Ayutthaya Manufacture stamping parts, assembly jigs and stamping dies.

Bangplee Industrial Estate, Samutprakan Manufacture plastic parts.

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Annual Report 2015

Malaysia China

Amata Nakorn Industrial Estate, Chonburi Manufacture chassis frame, forging and machining parts.

Amata City Industrial Estate, Rayong Manufacture stamping parts and plastic fuel tank.

AAPICO

Company Holding Structure JV PARTNERS

AAPICO HITECH PUBLIC COMPANY LIMITED THAILAND

OVERSEAS

MANUFACTURING OF AUTOMOTIVE PARTS, JIGS AND DIES 51%

Sanoh Industrial (Japan) Minth Group (Hong Kong/China) Takagi Seiko Corporation (Japan) Edscha Holding Gmbh (Germany) Sumino Kogyo (Japan) Sodecia SGPS GSA (Portugal) Mitsuike Corporation (Japan) Lemtech Holding (Taiwan)

80% 60% 49% 51% 51% 50% 49% 40%

Able Sanoh Industries (1996) Co., Ltd. Sanoh Industries (Thailand) Co., Ltd. Minith AAPICO (Thailand) Co., Ltd. Thai Takagi Seiko Co., Ltd. Edscha AAPICO Automotive Co., Ltd. Sumino AAPICO (Thailand) Co., Ltd. AAPICO Sodecia (Thailand) Co., Ltd. AAPICO Mitsuike (Thailand) Co., Ltd. AAPICO Lemtech (Thailand) Co., Ltd.

46% 100% 20% 100% 40% 100% 49% 100%

AAPICO AMATA Co., Ltd.

Kunshan Chaital-Xincheng Precision Forging Co., Ltd. (China)

AAPICO Structural Product Co., Ltd.

AAPICO Hitech Toolings Co., Ltd. AAPICO Forging PLC.

49%

100%

AAPICO Precision Co., Ltd.

50%

100%

AAPICO Plastics PLC.

Katsuya (Thailand) Co., Ltd.

24%

60%

CAR DEALERSHIPS Sojitz Corporation (Japan)

70%

Hyundai Motor (Thailand) Co., Ltd.

100%

AAPICO Hitech Parts Co., Ltd.

49% 100%

51% 76%

100%

30% 100% 100%

49%

New Era Sales Co., Ltd. Able Motor Co., Ltd. 49%

Tenaga Setia Resources SDN. BHD. (Malaysia) New Era Sales (M) SDN. BHD. (Malaysia) AAPICO Engineering 51% SDN. BHD. (Malaysia)

49% 49%

CAR NAVIGATION SYSTEM A Maction Co., Ltd.

100% 60%

AAPICO ITS Co., Ltd. 49% 60%

AAPICO CO. SDN. BHD. (Malaysia) AAPICO QI. SDN. BHD. (Malaysia)

40%

OTHERS 100% 100% 88% 100% 100% 97%

AAPICO Engineering Co., Ltd. AERP Co., Ltd. AAPICO Training Center Co., Ltd.

ABLE ITS PTE. LTD. (Singapore) AAPICO Investment PTE. LTD. 100% (Singapore) Jackspeed Corporation 15% Limited (Singapore) Quantum Inventions 25% PTE. LTD.(Singapore)

AAPICO Technology Co., Ltd. Foton Passenger Vehicles Distribution (Thailand) Co., Ltd.

Information as of December 31, 2015

AAPICO HITECH PUBLIC COMPANY LIMITED

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Revenue Structure Dies Jigs and OEM Parts Manufacturing

Revenues Contribution

Design and manufacture of the following parts: • Jigs & Dies • Chassis Frame • Stamping and Welding Parts • Forging and Machining Parts • Plastic Parts and Fuel Tank Systems

Total Revenues 2012-2015 (Unit : Million Baht) 12,643

Chassis Frame 25.9%

12,310

9,542

9,661

2014

2015

Jigs % Dies 1.3%

Forged & Plastics 17.5%

Press Parts and Welding 19.8%

2012

2013

Car Dealerships

Revenues Contribution

Sales of automobiles and after-sales service for • Ford • Mitsubishi • Honda

Total Revenues 2012-2015 (Unit : Million Baht)

Car Dealership 35.2%

5,638

5,280

2014

2015

4,656

4,134

2012

2013

Car Navigation

Revenues Contribution

Manufacture and develop: • Maps and Car Navigation Software • Telematics and Technology

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ANNUAL REPORT 2015

Total Revenues 2012-2015 (Unit : Million Baht) Car Navigation 0.3%

34

50 28 13

2012

2013

2014

2015

AAPICO

Financial Highlights

2011

Consolidated Financial Statements 2012 2013 2014

2015

13,823 8,853 4,970

12,579 7,109 5,470

12,082 6,401 5,681

11,507 5,524 5,983

16,811 16,120 1,062 2,019 1,255 927 921 3.29

16,998 15,627 1,075 2,600 981 634 611 2.05

15,196 14,572 608 1,343 618 386 367 1.14

14,993 14,534 714 1,280 535 338 313 0.97

0.77 6.6% 5.7% 6.7% 18.5% 1.08 4.34 1.02 27.4%

0.83 6.9% 3.9% 4.8% 12.2% 0.85 3.59 1.47 25.9%

0.87 4.2% 2.5% 3.1% 6.9% 0.67 2.97 0.98 26.3%

0.99 4.9% 2.2% 2.9% 5.8% 0.55 3.15 1.17 30.9%***

Balance Sheet (Million Baht) Total Assets 11,557 Total Liabilities 7,416 Shareholder’s Equity 4,141

Profit and Loss Statements (Million Baht) Total Revenues 10,786 Sales and Service Income 10,356 Gross Profit (Loss) 764 EBITDA* 403 EBIT (59) Net Profit (Loss) of the Company (392) Net Profit (Loss) attributable to equity holders (390) Earning per share (1.72)

Financial Ratios Current Ratio (times) 0.67 Gross Profit Margin (%) 7.4% Net Profit Margin (%) -3.8% Return on Total Assets (%) -3.4% Return on Equity (%) -9.4% Debt to Equity (times)** 1.21 Interest Coverage Ratio (times) (0.25) Debt service Coverage Ratio (times) 0.37 Dividend Payout (% of Net Profit to equity holders) N/A

Unit : Million Baht

Net Profit (Loss) attributable to equity holders

Total Revenues 16,811 16,998 15,196 14,993

2012

2013

2014

2015

921

Total Assets 13,823

12,579 12,082 11,507

611

2012

2013

367

313

2014

2015

2012

2013

2014

2015

* Earnings before interest, tax, depreciation, amortization and goodwill impairment and includes associate income (loss). ** Debt to Equity = (Bank overdrafts + Bank Loans)/Total Equity. *** Dividend for the second haft of the year is pending for Shareholder’s meeting approval.

AAPICO HITECH PUBLIC COMPANY LIMITED

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ANNUAL REPORT 2015

THAILAND

Brazed Steel Tubing Sanoh Industries Co., Ltd.

AAPICO Amata Co., Ltd. Chassis Frame

AAPICO Structural Products Co., Ltd. AAPICO Forging PLC.

Forged and Machined Parts

AAPICO Precision Co., Ltd.

Fuel Lines, Brake Lines, Engine Parts Able Sanoh Industries (1996) Co., Ltd.

AAPICO Amata Co., Ltd.

AAPICO Hitech PLC. (Ayutthaya & Rayong) 1 OEM Auto Parts Manufacturing Metal Stamping and Welding Parts AAPICO Hitech Parts Co., Ltd.

AAPICO Mitsuike (Thailand) Co., Ltd.

AAPICO Lemtech (Thailand) Co., Ltd.

Sumino AAPICO (Thailand) Co., Ltd.

Welding and Assembly Body-in-White (BIW) AAPICO Sodecia (Thailand) Co., Ltd.

AAPICO Plastics PLC. Thai Takagi Seiko Co., Ltd.

Plastic Parts and Plastic Fuel Tank

Katsuya (Thailand) Co., Ltd.

Roof Ditch Molding, Belt Line Molding, Door Sash Minth AAPICO (Thailand) Co., Ltd.

Steel Fuel Tank System AAPICO Hitech PLC.

Door check,Door Hinges,Parking Brake Lever Edscha AAPICO Automotive Co., Ltd. 2 Design & Manufacture of Assembly Jigs AAPICO Hitech Tooling Co., Ltd. 3 Design & Manufacture of Stamping Dies AAPICO Hitech Tooling Co., Ltd.

Mitsubishi Dealer Able Motors Co., Ltd.

Ford Dealer New Era Sales Co., Ltd. 4 Car Dealership

Honda Dealer

Hyundai Distributor Hyundai Motor (Thailand) Co., Ltd.

AAPICO ITS Co., Ltd. 5 Car Navigation

Engineering Research & Development AAPICO Engineering Co., Ltd.

AAPICO Technology Co., Ltd.

Investment Activities, Merger & Acquisition Foton Passenger Vehicles Distribution 6 Others (Thailand) Co., Ltd.

Oracle System A ERP Co., Ltd.

Training Activities AAPICO Training Center Co., Ltd.

Manufacture of Accessories for Transporatation

The main business of the Company and its affiliates can be categorized as follows:

Business Units

AAPICO Group Business

Jackspeed Corporation Limited

AAPICO Investment Pte. Ltd. AAPICO Engineering Sdn. Bhd. Able ITS Pte. Ltd.

AAPICO ITS Sdn. Bhd. AAPICO QI Sdn. Bhd. Quantum Inventions Pte. Ltd.

Tenega Setia Resources Sdn. Bhd. New Era Sales (M) Sdn. Bhd.

Kunshan Chaitai-Xincheng Precision Forging Co., Ltd.

OVERSEAS

AAPICO

Main Business AAPICO HITECH PUBLIC COMPANY LIMITED [AH]

AAPICO Hitech PLC was established in 1996 and listed on the Stock Exchange of Thailand in 2002.

The Company’s main businesses initially were to design, produce, and install assembly jigs, stamping dies, and manufacture OEM auto-motive parts, including floor parts, cross members, pillars, brackets, clips, and fuel tanks. The Company has later progressed to produce plastic, forging, machining, and chassis frame components. In addition to its core operations, the Company has invested in other businesses associated with the automotive industry, namely car dealerships and car navigation system. As of today, the AAPICO Group is comprised of

37 subsidiary and associate companies (27 in Thailand and 10 overseas). The Company’s main customers

are leading automotive assemblers in Thailand.

AAPICO Hitech PLC has a paid-up capital of Baht 322.58 million. The Company’s major shareholders are Mr. Yeap Swee Chuan and family holding 39.85% of total outstanding shares and Sojitz Corporation holding 15.76% of total outstanding shares. The Company has two factories located at Hitech Industrial Estate in Ayutthaya province and Amata City Industry Estate in Rayong province. Its main customers are Toyota Motor Asia Pacific Engineering & Manufacturing Co., Ltd. and Isuzu Motor Co., (Thailand) Ltd., etc.

OEM AUTOMOTIVE PARTS MANUFACTURING AAPICO AMATA COMPANY LIMITED [AA]

AAPICO Amata Company Limited’s main products are chassis frame of Isuzu D-Max pick-up truck model for Isuzu and axle housing complete for American Axle & Manufacturing. The Company is

a wholly owned subsidiary of AAPICO Hitech PLC

with a paid-up capital of Baht 800 million.

AAPICO HITECH PARTS COMPANY LIMITED [AHP]

AAPICO Hitech Parts Company Limited manufactures pressed and stamped automotive parts, such as

floor parts, brackets, etc. for OEM automakers.

The Company is a wholly owned subsidiary of

AAPICO Hitech PLC with a paid-up capital of Baht 120 million. Its main customers are Nissan.

AAPICO FORGING PUBLIC COMPANY LIMITED [AF]

AAPICO Forging PLC manufactures automotive forged parts, such as parts in transmission system, power train system, steering and suspension system, engine parts, wheel hubs, etc. The Company is a wholly owned subsidiary of AAPICO Hitech PLC

with a paid-up capital of Baht 500 million. Its main customers are Auto Alliance (Thailand), GKN Driveline (USA and Sweden), Dana Spicer, THK Rhythm (Thailand), NTN Manufacturing, and American

Axle & Manufacturing.

AAPICO HITECH PUBLIC COMPANY LIMITED

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AAPICO LEMTECH (THAILAND) COMPANY LIMITED [AL]

AAPICO Lemtech (Thailand) Company Limited is

a joint venture between AAPICO Hitech PLC and Lemtech Holding of Taiwan with equity participation of 60% and 40% respectively. Its main business is to manufacture high speed OEM automotive pressed parts and electronic parts. Major customers are Edscha AAPICO, Fujikura Electronics and LDC Precision.

AAPICO MITSUIKE (THAILAND) COMPANY LIMITED [AMIT]

AAPICO Mitsuike (Thailand) Company Limited is a joint venture between AAPICO Hitech PLC and Mitsuike Corporation of Japan with equity participation of 51% and 49% respectively. The Company was established to focus on engineering and marketing of pressed parts for sales to Nissan.

The Company has paid-up capital of Baht 33 million.

AAPICO PLASTICS PUBLIC COMPANY LIMITED [AP]

AAPICO Plastics PLC produces plastic parts for automotive and electronic industry including plastic fuel tank. Its main customers are Auto Alliance (Thailand), Ford, Thai Yamaha Motor and Asian Honda Motor. The Company is a subsidiary of AAPICO Forging PLC, a wholly owned subsidiary of AAPICO Hitech PLC, with registered and paid-up capital of Baht 150 million. It has two branches, located at Bangplee Industrial Estate in Samut Prakan province and at Amata City Industrial Estate in Rayong province.

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ANNUAL REPORT 2015

AAPICO PRECISION COMPANY LIMITED [APC]

AAPICO Precision Company Limited is a subsidiary of AAPICO Forging PLC. The Company was established in 2014, with a paid-up capital of Baht 150 million, to focus on the automotive machined parts. Its main customers are GKN Driveline (USA and Sweden), Dana Spicer, and American Axle & Manufacturing.

AAPICO SODECIA (THAILAND) COMPANY LIMITED [ASD]

AAPICO Sodecia (Thailand) Company Limited is a joint venture of 50% equity each between AAPICO Hitech PLC and Sodecia (Thailand) Company Limited, a wholly owned unit of Sodecia SGPS S.A. of Portugal. The Company’s main businesses are to develop the business activities of chassis cradles for passenger cars, cross car beams and welded assemblies for Body in White (BIW). It was registered with a capital of Baht 120 million.

EDSCHA AAPICO AUTOMOTIVE COMPANY LIMITED [EA]

Edscha AAPICO Automotive Company Limited is a joint venture between AAPICO Hitech PLC and Edscha Holding GmbH of Germany, with equity of 49% and 51% respectively. It has registered capital of Baht 40 million. The Company’s main business is the manufacturing, development, assembly and sales of automotive parts of high quality door, hood, trunklid and liftgate hinges and door checks (Hinge Systems) and parking brake levers and pedal

boxes (Driver controls). Its main customers are Auto Alliance (Thailand), Isuzu, General Motors and Mitsubishi.

AAPICO

AAPICO STRUCTURAL PRODUCTS COMPANY LIMITED [ASP]

AAPICO Structural Products Company Limited manufactures chassis frame for both new and old model of Isuzu D-Max pick-up truck. The Company is a wholly owned subsidiary of AAPICO Hitech PLC with a paid-up capital of Baht 200 million.

ABLE SANOH INDUSTRIES (1996) COMPANY LIMITED [ASICO]

Able Sanoh Industries (1996) Company Limited is the manufacture of brake lines, fuel lines, and engine parts for automotive assemblers in Thailand. Its main customers are Toyota, Auto Alliance (Thailand), Honda, Mitsubishi and Nissan. Major shareholders are AAPICO Hitech PLC and Sanoh Industrial (Japan) with equity participation of 46% and 51% respectively.

KATSUYA (THAILAND) COMPANY LIMITED [KT]

Katsuya (Thailand) Company Limited’s main products are surface treatment-water printing for plastic products and fabric flocking for automotive interior panels. The Company has paid-up capital of Baht 28.5 million and is jointly owned by AAPICO Hitech PLC and AAPICO Plastics PLC, with shareholding of 76% and 24% respectively.

SANOH INDUSTRIES (THAILAND) COMPANY LIMITED [SI]

Sanoh Industries (Thailand) Company Limited produces Fulton brazed steel tubing for major OEM automakers both domestic customers and export to ASEAN countries. The Company has paid-up capital of Baht 146.25 million and 20% of its shares are held by AAPICO Hitech PLC.

KUNSHAN CHAITAI-XINCHENG PRECISION FORGING COMPANY LIMITED [KCX] - China

Kunshan Chaitai-Xincheng Precision Forging Company Limited is a wholly owned subsidiary of AAPICO Hitech PLC in China. The Company’s main business is to manufacture the automotive components such as engine connecting rod and copper parts such as electrical switch contactors. Its main customers are leading automotive assemblers in China such as SAIC, SAIC-GM-Wuling Automobile, Chery, etc., and Schneider Electric (China).

MINTH AAPICO (THAILAND) COMPANY LIMITED [MA]

Minth AAPICO (Thailand) Company Limited’s main businesses are to design, produce, and sell automotive components including door sash, trim parts, decorative parts and roof racks. It is a joint venture between AAPICO Hitech PLC and Minth Group (China), with equity participation of 40% and 60% respectively. The Company has paid-up capital of Baht 378.5 million. Its main customers are Isuzu, Nissan, General Motors and Ford (India and Thailand).

SUMINO AAPICO (THAILAND) COMPANY LIMITED [SA]

Sumino AAPICO (Thailand) Company Limited is a joint venture between AAPICO Hitech PLC and Sumino Kogyo of Japan, with equity participation of 49% and 51% respectively. The Company’s main products are precision press welding parts of medium and small articles of cars. The Company was established initially to support the business expansion in Thailand of its main customer, Mazda Motor Corporation. It has registered capital of Baht 200 million and its factory is located at Amata Nakorn Industrial Estate in Chonburi province.

AAPICO HITECH PUBLIC COMPANY LIMITED

19

THAI TAKAGI SEIKO COMPANY LIMITED [TTSC]

Thai Takagi Seiko Company Limited’s business is

to produce plastic molding and plastic parts for customers in automotive industry, such as Thai Suzuki Motor, Suzuki Motor (Thailand), Kawasaki Motors Enterprise (Thailand), Thai Honda Manufacturing and Keihin (Thailand). The Company is jointly owned

by AAPICO Hitech PLC, Takagi Seiko Corporation and Sojitz Management (Thailand) Co., Ltd., with equity participation of 49%, 49% and 2% respectively.

JACKSPEED CORPORATION LIMITED [JCL] - Singapore

Jackspeed Corporation Limited is a company listed in the stock exchange of Singapore with paid-up capital of SGD 21.8 million. Its main business is to manufacture leather seats and accessories for the automotive industry.

ASSEMBLY JIGS AND STAMPING DIES AAPICO HITECH TOOLING COMPANY LIMITED [AHT]

AAPICO Hitech Tooling Company Limited’s main businesses are the design and manufacture of assembly jigs and stamping dies. Its products are used to support the production of AAPICO Group

and export to car automakers. Its customers include Volvo Truck Corporation Sweden, Volvo passenger cars in Malaysia, Renault Brazil, Auto Alliance (Thailand), Ford and Isuzu in Thailand. The Company is a wholly owned subsidiary of AAPICO Hitech PLC with paidup capital of Baht 65 million. Its factory is located at the Hitech Industrial Estate in Ayutthaya province.

CAR DEALERSHIPS ABLE MOTORS COMPANY LIMITED [AM]

Able Motors Company Limited is a car dealer

with sales and after-sales services for Mitsubishi vehicles. The Company has two showrooms and service centers located at Navanakorn in Pathumthani province and at Ladprao district in Bangkok. The Company is wholly owned by AAPICO Hitech PLC with paid-up capital of Baht 20 million.

NEW ERA SALES COMPANY LIMITED [NESC]

New Era Sales Company Limited is a car dealer

with sales and after-sales services for Ford vehicles.

The Company has two showrooms and service 20

ANNUAL REPORT 2015

centers on Ramindra road, Bangkok and in Samut Prakan province. The Company is wholly owned by AAPICO Hitech PLC with paid-up capital of Baht

20 million.

NEW ERA SALES (M) SDN. BHD. [NESM] - Malaysia

New Era Sales (M) Sdn. Bhd. is a car dealer providing sales and after-sales services for Honda cars in Malaysia. Its showroom and service center is located in Kajang area. The Company has paid-up capital of RM 1.5 million and is owned by AAPICO Hitech PLC and Tenaga Setia Enterprise Sdn. Bhd., with equity participation of 49% and 51% respectively.

AAPICO

TENAGA SETIA RESOURCES SDN. BHD. [TSR] - Malaysia

Tenaga Setia Resources Sdn. Bhd. is a car dealer providing sales and after-sales services for Honda cars in Malaysia. Its showroom and service center is located in Petaling Jaya. The Company has paid-up capital of RM 6 million and is jointly owned by AAPICO Hitech PLC and YLN Enterprise Sdn. Bhd., with equity participation of 49% and 51% respectively.

HYUNDAI MOTOR (THAILAND) COMPANY LIMITED [HM]

Hyundai Motor (Thailand) Company Limited is a sole distributor responsible for manufacturing, marketing, sales and after-sales service for both CKD and CBU model of Hyundai cars in Thailand. The Company has paid-up capital of Baht 550 million and is jointly owned by AAPICO Hitech PLC and Sojitz Corporation, with equity participation of 30% and 70% respectively.

CAR NAVIGATION AND TECHNOLOGY AAPICO ITS COMPANY LIMITED [AITS]

AAPICO ITS Company Limited’s business is to provide navigation system with traffic information in every platform. The Company’s main products are comprising of both software and map under the brand “POWERMAP”, as well as telematics, real-time services and data analytics services. With the expertise in Geographic Information System (GIS) services and the proven record of experience in the analysis of big traffic data, AITS embarks on the Smart Cities technology, which has shown a success in Singapore. The customer segments vary from individual, dealers, corporations and government sectors. The POWERMAP car navigation system is installed as the OEM products in Mitsubishi, Hyundai, Proton and MG cars. It is also marketed to all other major automotive brands through various brands of hardware, which can be found in accessories dealers, such as Blaupunkt, JVC, Zulex, etc., throughout the country.

AAPICO QI SDN. BHD. [AQI] - Malaysia

AAPICO QI Sdn. Bhd. was established in 2013

to consolidate the market of POWERMAP and GALACTIO car navigation system in Malaysia.

POWERMAP as an OEM product, while GALACTIO as an aftermarket product installed in various hardware and marketed in most major automotive brands in Malaysia.

QUANTUM INVENTIONS PRIVATE LIMITED [QI] - Singapore

Quantum Inventions Private Limited is in the business of providing mobility intelligence to consumer, corporations and governments, leveraging on the integrated suite of mobility applications, enterprise logistics and analytics platform. AAPICO Hitech PLC has acquired 25% equity in Quantum Inventions Pte. Ltd., with its shareholding under the name of AAPICO Investment Pte. Ltd.

AAPICO HITECH PUBLIC COMPANY LIMITED

21

OTHERS A ERP COMPANY LIMITED [AERP]

A ERP Company Limited is established to support the Oracle implementation for the AAPICO Group.

The Company has paid-up capital of Baht 1.25 million and is owned by AAPICO Hitech PLC at 88% equity.

AAPICO INVESTMENT PRIVATE LIMITED [AIPL] - Singapore

AAPICO Investment Private Limited was established with the purpose of carrying on transactions related to merger and acquisition. The Company has a paidup capital of SGD 6.97 million and is wholly owned

by AAPICO Hitech PLC.

AAPICO TRAINING CENTER COMPANY LIMITED [ATC]

AAPICO Training Center Company Limited was established in 2014 with a purpose to organize training activities for employees of AAPICO Group. It is a wholly owned subsidiary of AAPICO Hitech PLC.

22

ANNUAL REPORT 2015

AAPICO ENGINEERING COMPANY LIMITED [AE]

AAPICO Engineering Company Limited focuses on CAE (Computer Aided Engineering), programming, engineering, consultancy, engineering design and engineering research & development. The Company is wholly owned by AAPICO Hitech PLC with paid-up capital of Baht 10 million.

AAPICO ENGINEERING SDN. BHD. [AEM] - Malaysia

AAPICO Engineering Sdn. Bhd. is set up for future business potential. Currently, it owns a showroom which is rented to Honda dealer in Malaysia. The Company has paid-up capital of RM 1 million and is jointly owned by New Era Sales (M) Sdn. Bhd. and Tenaga Setia Resources Sdn. Bhd., with equity participation of 51% and 49% respectively.

AAPICO

Competition and Industry Trend

Year 2015 has been overall a challenging year in all the major markets AAPICO Hitech group is active in. They are namely, Thailand, Malaysia, and China.

Thailand In Thailand, actual vehicle production recorded a mere 1.8% increase year on year to 1,913,002 units. Of this number, export volume dominated nearly 1.201 million units (63%) and domestic sales took up 0.712 million

units (37%). Healthy growth of export largely compensated for continued tepid domestic market.

Thailand Vehicle Production in 2005-2015

unit : thousand

3,000 2,500 2,000 1,500 1,000 500 0

848

889

972

993

278

299

315

401

2005

2006

2007

2008

686 313

2009

Passenger Car

1,091

920

554

538

2010

2011

1,496

1,386 1,137

958

1,071

743

761

2012

2013

2014

2015

1,152

1 Ton Pick-up/PPV and others

Source: The Federation of Thai Industry

After recording no growth in 2014, exports grew 6.8% year on year in 2015. Thailand continues to play an important role as a production and export hub for the OEMs which have taken root here. With the dawn of AEC, it is believed that Thailand’s position as the leading automotive manufacturing hub in ASEAN

will be strengthened. Thailand is forecasted to export

more cars in 2016 to the tune of 1.25 million units, which reflects an increase of 3.7% compared to 2015, despite the clouds hanging over the world economy.

Less encouraging is the domestic market situation. It is showing a continued downward trend, albeit less severely.

2015 saw a drop of 9.3% from the previous year. 2014 had seen a dramatic dip of 33.7%. Various factors contributed to the weak demand, driven mainly by

the general pessimistic view of the national economy.

Thailand is still reeling from the negative implications

of the last political upheaval in 2014. The military government’s management of the economy has not been convincing since its takeover of civilian rule, prompting it to install a new economic team during the last quarter of 2015. Pressing household debts and low agriculture produce prices are dampening consumer sentiments. The negative effects of the 1st car campaign still linger on 3 years after it has ended, with many purchases having brought forward and depriving the domestic market of the needs and spending power.

In addition, a new regime of excise tax based on CO2 emission instead of engine size effective from Jan 2016 will cause 80% of new car prices to increase 5-10%, further affecting market demand. 2016 is forecasted

to see a further decrease in overall sales numbers from 799,592 in 2015 to 720,000 in 2016. This translates

into a drop of 6.2%.

AAPICO HITECH PUBLIC COMPANY LIMITED

23

Thailand Total Industry Volume in 2005-2015

unit : thousand

1,600 1,400 1,200 1,000 800 600 400 200 0

764 515

490

188

192

2005

2006

461 170

2007

388 227

2008

319 230

2009

Passenger Car

454

434

347

362

2010

2011

699 512

500

672

631

370

299

2012

2013

2014

2015

1 Ton Pick-up/PPV and others

Source: The Federation of Thai Industry

Thailand Automotive Production Capacity 2015 Passenger Pick-up Others Total Car Truck

Car Maker

Toyota 280,000 660,000 Mitsubishi 150,000 250,000 Isuzu 330,000 30,000 Auto Alliance Thailand 150,000 150,000 Nissan 140,000 80,000 Honda 300,000 Ford 200,000 General Motors 40,000 160,000 Suzuki 80,000 SAIC Motors CP 50,000 Total 1,390,000 1,630,000 30,000

Investment (million 2016/2017 baht)

940,000 10,400 400,000 12,600 360,000 360,000 300,000 12,000 240,000 6,000 300,000 8,100 200,000 18,000 200,000 80,000 8,400 50,000 7,600 3,070,000 83,100

1,000,000 500,000 320,000 300,000 420,000 200,000 200,000 100,000 100,000 3,500,000

Malaysia Looking further south of Thailand, Malaysia recorded the highest ever Total Industry Volume (TIV) of 666,674 in 2015. This is a 0.17% increase from the previous year. A trend indicating a slowdown in the automotive market is clearly discernable with growth reducing

from 4.6%, 4.47%, 1.48% and lastly 0.17% in the past 4 years.

As with Thailand, various factors have caused the general gloom in the Malaysian market, chiefly because of political uncertainty and equally of the dramatic fall 24

ANNUAL REPORT 2015

in the price of oil, which is a main income earner of Malaysia. The main victim of this double whammy is the Malaysian currency, Ringgit, which is one of the main losers in 2015 with depreciation against the

US Dollar exceeding 20% at its height. The volatility

of the Ringgit and the implementation of the Goods and Service Tax of 6% in April 2015 both greatly affected market sentiments and are expected to continue to cast their shadows over the overall economy in 2016. A dip in TIV in 2016 is expected especially with the pent up sales in December 2015

AAPICO

because of announced price increase by most major car brands for January 2016.

The Malaysian automotive market continues to show the domination of Perodua, which increased its market share to 32%, followed by Proton at 15.3%. The latter continues to lose market share from 17.4% from the previous year. Honda dislodged Toyota from the

first place of foreign brand, earning at 14.2% market share versus Toyota’s at 14.1%.

Looking forward, foreign brands will continue to gain strength as their pricing become more competitive due to gradual dismantling of preferential protective policies for the local marques.

China

Moving further north of Thailand to the biggest automotive market in the world. China’s economy recorded the slowest annual GDP growth in recent memory at 6.9%.

It is predicted that growth will continue to decelerate, entering into the “new normal”, where growth rates of 8% and more will be a thing of the past.

The automotive industry recorded a 3.25% in production growth and a 4.68% sales growth in 2015, in contrast with 7.29% and 6.85% respectively in 2014. This is

in tandem with the overall economy trend. Total production units amounted to 24.5 million and units sold were 24.59 million. This also marked the seventh time in a row that China’s vehicle sales emerged as

the highest in the world, 21.5 million of those being passenger cars.

It is interesting to observe that the SUV and MPV segments registered strong growths at 52.7% and 10.1% respectively, while sedans’ share decreased

by 5.4%. Overall, sales of domestic passenger vehicles is forecasted to increase 7.8% in 2016, due to solid economic fundamentals and strong personal income growth especially. Commercial vehicles, however, will see negative growth of 5%, due to the overall slowing down of economy. Worth noting is the growing segment of alternative energy vehicles, which is forecasted to reach 700,000 units in 2016. This segment will be the next big thing in the future, especially with the current emphasis in China on environmental protection.

AAPICO HITECH PUBLIC COMPANY LIMITED

25

Business Operation Goals and Future Projects The overall Thailand economy in 2015 has been moving slowly after a slump in 2014. Various factors have contributed to the weak demand, driven mainly by

the general pessimistic view of the national economy and the uncertainty of political situation after the takeover of military government in 2014. The effects of the 1st car campaign, which have brought forward car demands and advance purchases in 2012-2013, still negatively impact the domestic market of the needs and spending power. This was due to the mandatory holding period of 5 years before the car can be resale.

High household debts and low farm income has dampen the consumer sentiments. Thailand’s gross domestic product (GDP) in 2015 has shown a growth of 2.8%, which has recovered from 2014 at the 0.8% growth.

Thailand automotive industry in 2015 posted a slow rebound with a modest growth of total vehicle production volume at 1.8% year on year after a dramatic decline in 2014 at 23.5%. Compensating for weaken domestic demands, exports grew year on year, increasing its share to 63% of total vehicle production volume in 2015.

Thailand still plays an important role as a major base for manufacturing and research and development and export hub for leading car automakers as their biggest production base. With the AEC become effective as of January 2016, Thailand’s position as a primary manufacturing center for South East Asia is expected to be strengthen. The eco-car program phase 2, which requires a minimum production volume of 100,000 units per year to be entitled for privileges, is foreseen to be another booster for growth, driving total vehicle production volume to reach 3 million units in 2020.

Thailand is known for the skills and proficiency of labors and has been widely accepted by leading automakers for the excellent quality of automotive part products, second only to Japan. AAPICO Hitech PLC, 26

ANNUAL REPORT 2015

as one of major tier 1 suppliers, has put great emphasis on continuous development and the strong alliances. The Company has formed joint venture with strong partners from Japan and Europe to improve its efficiency and enhance existing technology, empowering its own inner potential to be recognized as a trusted brand in the global arena.

AAPICO Hitech PLC has its beginning in the design and manufacturer of automotive assembly jigs, before it ventured further afield into the production of dies and OEM parts, car dealerships, as well as car navigation and technology. Today, it is recognized as a worldclass automotive part supplier, where it continues to garner capabilities and technology across the world.

The Company is poised to attain its dual goals of steady growth and seizing new opportunities to foster its success as a leading automotive part manufacturer in Thailand.

The Company sets a vision and a simple philosophy of being a lean, green, and happy organization and operates in compliance with the good corporate governance principles. The Company sets its goals by applying the SQCDEM criteria, which can be described as follows: S: Safety Safety always come first.

Q: Quality Quality built-in process, strive to achieve “0” PPM. C: Cost Competitive pricing at reasonably low cost.

D: Delivery 100% on-time delivery with Just-InTime philosophy.

E: Engineering Kaizen mind in engineering and production process.

M: Management Competent, Transparent, and hands on management.

Today, the Company is widely recognized for excellent production process according to the SQDEM principles.

AAPICO

This is in lines with its business strategy to become leading automotive part manufacturer in South

East Asia and a Thailand footprint for the global

part suppliers.

Future Projects

Thailand automotive industry is seen to remain static with the no growth forecast of domestic sales in 2016.

A new regime of excise tax based on CO2 emission instead of engine size will cause more than 80% of car prices to increase by 5-10%, hence some advance purchases of cars were already recorded in the last quarter of 2015. Export volume is forecasted at around 3-4% growth, contributing to total vehicle production volume of around 2 million units in 2016.

The continuing political uncertainty and weak economy have contributed to the delay of automotive investments, particularly the eco-car program phase 2, and is anticipated to further delay the growth of total vehicle production volume to reach 3 million units in 2020.

The Company has been entrusted to supply parts for new car models by many major car manufacturers, namely Ford, General Motors, Nissan, Mazda, Honda, Toyota, and Mitsubishi. The Company has been producing parts to Auto Alliances (Thailand) Co., Ltd., which is the first company that has started the production under the eco-car program phase 2 for Mazda 2 in November 2014, and has continuously developed its manufacturing processes and innovation to support increasing demands in coming years from other leading automakers.

AAPICO Hitech PLC and its subsidiaries have been recognized from its customers for excellent quality, efficient production process and continuous development. The major awards and certificates received in 2015 were the Q1 award, given to AAPICO

Plastics PLC, from Auto Alliances (Thailand) Co., Ltd. The Q1 award is given to Ford and Mazda suppliers

in recognition for the excellent quality standard.

AAPICO Plastics PLC is the third company of the AAPICO Group to be qualified, following AAPICO Hitech PLC and AAPICO Forging PLC that had received their Q1 certificate in 2014. AAPICO Plastics PLC was also the Grand Prix winner at the A-ABC 3rd Joint Report event from Mazda Corporation in Japan.

Furthermore, AAPICO Hitech PLC has won the first prize of the advance group for the Toyota Production System for the second consecutive year and was the first runner-up for the QA improvement, of which both awards are presented by Toyota Motor Asia Pacific Engineering and Manufacturing (TMAP-EM).

For overseas operations, Malaysian car dealers also received the Honda CEO awards for the top 5 sales performance and Elite Dealer award. The Malaysian Honda dealers have been receiving these awards for 3 years consecutively. As for China operations, the company has been selected as the outstanding contribution supplier from Chang’an Ford Mazda Engine Co., Ltd. These awards are proven records for the Company’s commitments for excellence and continuous improvement and hence a guarantee for continuing orders from the car manufacturers.

In 2015, the Company has announced a “TURBO” plan, where the Company’s management has set the target for its own operations and subsidiaries to double the sales, either organically or with acquisitions, and improve net profit margin to reach 10% of total revenues. The Company and its subsidiaries aim to achieve this target by 2020, through its continuing effort on cost reduction and the product innovation that enable the Company to use resources effectively in order to grow sustainably and generate appropriate returns to shareholders.

AAPICO HITECH PUBLIC COMPANY LIMITED

27

Risk Factors At AAPICO, we realized the importance of risk management as a foundation that facilitates the

good corporate governance principles of the overall organization. The Board of Directors therefore has

been giving their attention on the risk management process, and has assigned the Risk Management Committee to be responsible for the supervision of

the organization’s risk management measures in a systematic manner. The Company has put in place

the framework for risk management strategy, in compliance with the international guidelines, aiming

to support business growth and ensuring its sustainable profitability and returns to shareholders and investors.

In 2015, the Risk Management Committee continuously develops and improves the risk management strategy and implements risk management practices across

the organization. The committee meets on quarterly basis to consider the corporate risk factors and review risk management measures in relation to the enterprise risk management framework. The committee also

has reviewed the risk management policy and anticorruption policy in compliance with the Company’s direction to fight against corruption, which will be

used as a guideline across organization.

On annual basis, the Risk Management Committee considers and reviews various risk factors, posing

as possible threats to the Company’s operations in responses to changes in economy and business environment, as well as the control measures to reduce the impact of these risks to an acceptable level.

For 2015, the Committee has reviewed the Company’s major risk factors as follows:

Country Risks

Country risk is the risk associated to changes in situations in the country that the Company operates, which may adversely affect the Company’s operating profits or the value of its assets. The Company identified two major country risks, which are: 28

ANNUAL REPORT 2015

Political Risk The Company identified political risk as one of its major risk factors as it impacts the overall economy and hence the Company and the automotive industry.

In the past, the political instability has affected

the Company from the unrest activities and delays

of the government spending plans, which resulted

in the slowdown of economy, weak domestic demand consumption, and hamper the growth of automotive industry.

It is hard to predict the ferocity of any political disturbance due to the on-off political conflicts, which has not been resolved over the past years. The Company however has assessed this risk and has concluded that the impact on operations may be insignificant despite the moderate likelihood of occurrence. The close monitoring of political situations in Thailand is seen to be an appropriate measure

under given circumstances. Moreover, diversification and growth of business overseas has helped reducing the impact on the Company’s profitability.

Risk from natural disaster Natural disasters can happen anywhere and often without warnings. It is caused by environmental

factors that injure people and damage property. The Company had been affected by natural disasters

on its operations and profitability during the past

5 years, namely Tsunami in Japan which indirectly impacted the Company’s operations due to shortage

of supply parts and steels which is the main component, causing the delay of the production, and the major flood in Thailand that put the Company’s main factory under 2.2 meters of water, causing the damage of machines, inventories and buildings, additional costs

to protect property and recover the operations, as

well as business interruption and loss of revenue due to the shutdown of operations and productions after the flood.

AAPICO

Risk relating from the country concentration of customers The Company identified a business risk relating to

the country concentration of its customer base. The Company is seen to be heavily relied on the Japanese economy as its revenues are largely from Japanese automakers. The failure of Japanese economy will have an impact on Japanese automakers and therefore affect the Company and the Thailand automotive industry. This may result in business interruption and revenue losses.

The Company has set up control measures to keep track of news, updates and trend of the economy worldwide in order to respond to these changes Business Risks appropriately and on timely manner. The risk may not Risk from reliance on major customers Due to a relatively small number of automakers in be fully mitigated given that Japanese automakers

Thailand, the Company is inevitably exposed to are key players in the automotive market. The customer concentration risk in the automotive parts Company however expects that the growth of its business segment. With a large portion of its revenues oversea businesses can help diversify its products and contributed by three major customers, namely Isuzu, customer base and therefore reducing the impact of AAT and Nissan, which comprised more than 50% this risk on its operations. of total revenues, the Company is exposed to risk

from reliance on these few customers. This implies that Risk from the competition in the automotive industry the Company’s performance is closely linked with The automotive part business can be highly competitive the operating performance and the market positions of as the car automakers demand for high standard of these customers and its profitability can be materially operations and quality from their part suppliers. For affected if the Company loses orders from one of these each car model, the automotive part suppliers would strive to win as many projects as possible from car customers. automakers as this can guarantee income for the

This customer concentration risk is however expected company over a lifetime of car model line. The to be partially lessen as the chance that the Company continuation of order for the next generation model may loses customer orders is somewhat low. The also reflects the credibility and reliability of the automobile part orders from customers are given for company in maintaining its high standards of quality, the lifetime of the car model and are likely to continue cost, and delivery. Losing orders will impact the for the next generation of that model. In the past, the Company’s profitability and its reputation and will be a Company had no record of losing orders. In addition, disadvantage for future projects. the Company continuously improves and maintains the high standards of quality, punctual delivery and The Company has long-standing relationship and good competitive pricing to reassure the customer for track records with car automakers. Its high standards of quality, competitive pricing and punctual delivery, continuation of orders in the future.

The Company has contemplated on the consolidated risk from natural disaster and established protective and preventive measures to limit and reduce the

impact of this risk on the Company’s operations to

an acceptable level, and enable the Company to recuperate its operations back to normal business in the fastest possible manner. These measures include the preservation of dyke surrounded the area of Hitech Industrial Estate, the negotiation on insurance coverage of all factories to cover all industrial risks including business interruption, and the maintenance of multiple facilities in several locations for possible relocation

if one would be affected by natural disaster.

AAPICO HITECH PUBLIC COMPANY LIMITED

29

have been recognized by most global car automakers.

Therefore, the likelihood of losing customer orders

for the Company is considered very unlikely. The certifications and quality awards received in the past are also proven records of the Company for its excellence in operations and production.

Operational Risks

Risk from fluctuation of raw material price For the automotive part business, the Company

is exposed to the fluctuation in demands and

supplies of steels in the market worldwide. As steel

is the primary raw material which accounts for approximately 75% of product cost, the impact of

the price volatility on the Company’s profitability

can be substantial.

To manage this risk, the Company has adopted a centralized purchasing policy where the Company purchases raw materials from the approved suppliers

at the price which have been agreed upon with customers. When the material price moves, the product price will be adjusted or compensated accordingly.

The Company therefore pass on the risk of steel price fluctuation to car automakers and hence reduce such impact on the Company’s profitability.

Risk related to labor relations A large employee population can pose risk to the organization from various labor issues. Poor relations and efficient communication with employees can cause many problems, either small or severe issues and

labor strike, which will affect the production and delivery, hence damaging the credibility and reputation of the company.

The management has emphasized on the sufficient communication and appropriate employees’ welfares and benefits as a key to reduce people conflicts

and labor disputes in the organization. With the management’s attention on labor issues, the Company has encountered very few dispute cases to date.

30

ANNUAL REPORT 2015

Apart from labor issues within the organization, the Company can be affected by labor disputes in other organizations in the supply chain. However, such event is expected with low possibility of occurrence and

the effect on the Company’s operations should be temporary and immaterial.

Risk related to quality issue Quality is a very important factor for the automotive business. Every parts produced must be at 100% as any defects or errors can be potential cause of accidents and consequence will be severe. The Company will be losing its reputation and customers and may be sued by customers for damages arising from unsafe products.

The Company has put great emphasis on quality control and set a target for zero defective parts. The Company has been certified for the quality control standard (ISO/TS16949) for all its part companies and continuously improves on controlling the product quality. It can be assured that the risk related to quality control will be continually reduced. The Company

also has set up provisions for warranty claims for defective parts according to its purchase contract with customers and has purchased insurance on product liability to mitigate the financial impact of this risk.

Management Risks

Risk from reliance on only a single Top management person The Company may be potentially at risk from reliance on the President/CEO and founder of AAPICO Group, Mr. Yeap Swee Chuan. With strong leadership and

his dedication and passion in the automotive business, Mr. Yeap’s presence has been an image of the AAPICO Group. His vision and strong presence has been one

of key success factors for the Company’s growth and profitability. His retirement may affect the business as the relationship with customers may be weaken and the Company may lose new orders in such an intense competitive business environment.

AAPICO

The Board of Directors has addressed this concern

and considered the succession plan to mitigate impact of this risk. In short-term, Mr. Yeap will continue to support the business operationally and gradually increase his focus in the area of strategic planning

and advisory role for AAPICO group. Heads of subsidiary companies are empowered to be responsible for its performance and profitability and reported

to the President and CEO. The Company has also structured training and development programs for managers.

Financial Risks

Risk from fluctuation of interest rates The Company has engaged credit facilities

agreements with banks to finance its investments.

These agreements have different terms and conditions, some at fixed interest rate and a large portion is at floated rate. The Company is therefore exposed to interest risk where any changes of interest rates has direct impact on the cost of capital.

The Company has established risk management measures by entering interest rate swap agreement

to allocate some portion of outstanding loans at

fixed interest rate and engage new term loans with fixed interest rate. In 2015, the Company has issued a 3 year corporate debentures at fixed interest rate. All these measures help reducing the floated interest rate portion of outstanding loans to approximately 57% of total long-term loan outstanding as of December 2015, hence reducing impact on the Company’s profitability.

Foreign Exchange Rate Risk The Company is exposed to risk from fluctuation of foreign currency exchange rate from export revenues and expenses in foreign currency, mainly the purchase of machineries and raw materials. However, this risk

is considered to be insignificant as the portion of foreign currency transactions is limited due to the Company’s businesses are mainly conducted in Thai Baht currency.

The Company has a policy to naturally hedge the foreign exchange rate risk by matching income and payments in the same currency. The Company also considers using forward or option contract to eliminate this risk where appropriate.

Other Risks

Risk related to safety, environment and communities The Company encounters the risks associated with health, safety, and environment from its operations

and manufacturing processes. The impact of these risks can be significant. If without good management, the organization may be badly affected and incurred losses due to serious accidents. Therefore, the Company continually reviews and ensures that the policy and procedures concerning employee health, safety and environmental management are executed in all departments and entities.

The management has placed importance on safety of its employees. Employees are given orientation and trainings to create good understanding and awareness for their own safety. The Company has been promoting activities, such as Completely Check Completely Find out (CCCF) and 5S, to create a safe, clean and easy to detect environment in the workplace. It continually supports campaigns related to safe driving and drug free workplace. The Company maintains a strict maintenance scheduling of equipment, arranges annual health check-up for employees, and ensures the compliance of relevant laws and quality and environmental standards in all entities. The continual certification on ISO/TS16949 and ISO14001 is a proven record for its credibility on quality and environmental management.

Risk related to investments in other countries With a goal to become a leading automotive part manufacturer in Asia, AAPICO also looks for good investment opportunities. Business dealings in other countries can pose risk to the Company due to level of uncertainty of the projects, regulations and other risks relating to the country that the Company will invest in.

AAPICO HITECH PUBLIC COMPANY LIMITED

31

The Board of Directors has set guidelines for management to conduct a feasibility study for every new projects. This information will be considered

by the Board of Directors to evaluate return on investments so that the Company can allocate its funding resources in the most effective and efficient manner and generate returns back to its shareholders.

Risk related to joint venture partner Due to a number of joint venture companies that

the Company has invested in the past, it is exposed

to possible risks which can be arisen from the performance of joint venture and the relationship between the Company and joint venture partners.

These risks can result in a loss to the Company’s financials. If these joint ventures’ operations are not running well, the Company may have to account for losses. In the worst case, the Company may have to set up impairment if problems cannot resolved and reducing the value of its investments.

The Company has managed this risk from the start where the management carefully select their joint venture partners in every project. To become JV partner, the management must ensure that both companies share the same vision and have respect for each other. The scope of control and terms and conditions must be discussed and agreed for each party’s responsibilities. The Company also monitors the JV performance and provide management support as deemed necessary.

Risk from credit facilities with banks The Company is exposed to the risk that the bank may call back its credit facilities or demand for its loan to the Company to be repaid at high interest rate, due to the breach of terms and conditions with banks.

Although the Company has diversified its funding portfolio with the issuance of debentures in the year 2015, bank loans are still a major funding source for the Company. With a sizable amount of bank loans outstanding of around Baht 2.5 billion as of December 32

ANNUAL REPORT 2015

2015, the impact on the Company’s profitability and liquidity can be substantial.

The Company carefully and cautiously negotiates

terms and conditions with banks. Before signing on any credit facilities agreement, the Company ensures that its cash flow will be sufficient for loan repayment and all required conditions and financial covenants can

be achieved and maintained over the tenor of the loan agreements. In the unforeseen event that the Company cannot fulfil any conditions, the Company quickly inform and seek waiver from banks to evade the stage of default which give the right for bank to call back its loans.

Risk related to corruption and misconducts The Company is firmly opposed to all forms of corruption and encourages and supports its employees at all levels to focus with conscious mind to fight against corruption. The Company ensures that relationships and business dealings are conducted

and managed with integrity and are bounded by laws.

Given that there were no severe cases of misconducts in the past year, the Risk Management Committee

has reviewed and concluded that impact of such risk to the Company is minimal and not significant.

Shareholding Structure As of December 31, 2015, AAPICO Hitech PLC has registered and paid-up capital of Baht 322,583,844,

all of which are ordinary shares at par value of Baht

1 each.

During the year, the Company has made a domestic offering in Thai Baht with a nominal value of Baht 1,000

Type of Debenture Tenor Currency

Issue Size Maturity Date Conditions for prepayment

Interest rate and Interest peried Status of the Debenture

AAPICO

(one thousand baht) each, in the total aggregate principal amount of Baht 800,000,000 (Eight Hundred Million Baht) namely, “The Debenture of Aapico

Hitech Public Company Limited No.1/2558 Due B.E. 2561� to Qualified Investors (Institutional Investors

and High Net Worth Investors: II&HNW) on April 29, 2015. The details are as follows:

Senior, unsecured, unsubordinated and specify debenture holders 3 years from the issue date Thai Baht Baht 800,000,000 (Eight Hundred Million Baht) April 29, 2018 Issuer has no right to redeem the debenture prior to maturity date, except in the case of bond repurchase as defined in the Terms and Conditions. Debentureholders also have no right to require the issuer to redeem the debenture prior to maturity date.

Fixed rate at 4.34% (Four point three four percent). Interest payment shall be made every 6 months on April 29 and October 29 of every year until the maturity date of debenture.

The debenture constitutes direct, general, unconditional and unsubordinated obligations of the Issuer which with at all times rank pari passu among themselves and at least pari passu with all other present and future unsecured and unsubordinated obligations of the Issuer, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application.

Apart from the aforementioned debenture, the Company does not have any other securities with terms and conditions different from ordinary shares, such as preferred shares, etc. The Company has

registered the transfer of preferred shares to ordinary shares on August 2, 2013. As a result, the Company

no longer has preferred shares on its account.

AAPICO HITECH PUBLIC COMPANY LIMITED

33

Top 10 Shareholders of the Company The top 10 major shareholders of the Company at the closing of share register book on March 23, 2016, are listed in the below table.

No. Shareholders Number of shares Holding % 1 Mr. Yeap Swee Chuan 40,971,379 12.70 Mrs. Teo Lee Ngo 31,811,346 9.86

Mr. Yeap Swee Chuan Group 72,782,725 22.56

2 SAIT Company Limited 25,924,320 8.04 Sojitz Automotive Investment Pte. Ltd. 24,907,680 7.72

Sojitz Corporation Group 50,832,000 15.76

3 Ms. Yeap Xin Yi 30,114,640 9.34 4 Ms. Yeap Xin Rhu 25,646,760 7.95 5 Phatra Capital Public Company Limited 14,550,600 4.51 6 Mr. Pichai Wijakkapan 12,270,640 3.80 7 Thai NVDR Company Limited 8,859,571 2.75 8 Mr. Sompong Paoenchoke 6,819,040 2.11 9 Mr. Nattapat Rangsun 5,740,000 1.78 10 Ms. Sunee Sereepanu 5,550,000 1.72 Others 89,417,868 27.72

Sum Total 322,583,844 100.00

Source: Thailand Depository (Thailand) Co., Ltd. (Information at the closing of share register book on March 23, 2016) Remark: Mr. Yeap Swee Chuan and Mrs. Teo Lee Ngo are considered acting in concert group according to the

SEC definition.

The major shareholder with management control

on the Company are Mr. Yeap Swee Chuan Group,

of which Mr. Yeap Swee Chuan and Mrs. Teo Lee Ngo are the Company’s authorized directors.

The Company does not have any shareholder’s agreement among major shareholders. However, Sojitz Corporation, being the second major shareholder,

has 2 representatives in the Board of Directors of

the Company in the position of non-executive director.

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ANNUAL REPORT 2015

Limitation of foreign shareholder The threshold limit of foreign holding is at 49%

of total shares as required by law. At the closing of

share register book on March 23, 2016, the foreign shareholding of the Company has reached its maximum limit at 49% of total registered and paid-up capital.

AAPICO

Debentures As of December 31, 2015, the Company has an outstanding debenture which has been listed and being traded on the Thai Bond Market Association or “Thai BMA”, with details as follows: which has details as the following:

The Debenture of Aapico Hitech Public Company Limited No.1/2558 Due B.E. 2561 Senior, unsecured, unsubordinated and specify debenture holders Type of Debenture 3 years from the issue date Tenor Baht 800,000,000 (Eight Hundred Million Baht) Issue Size 800,000 Units Issue Unit Baht 1,000 (One Thousand Baht) Par Value Baht 1,000 (One Thousand Baht) Issue Price April 29, 2015 Issue Date April 29, 2018 Maturity Date Interest rate and Fixed rate at 4.34% (Four point three four percent). Interest payment shall be made every 6 months on April 29 and October 29 of every year until the maturity date of debenture.

Interest period Bangkok Bank Public Company Limited Registrar Debentureholders’ Bangkok Bank Public Company Limited Representative 800,000 Units (Information as of December 31, 2015) Outstanding Unit Outstanding Value Baht 800,000,000 (Information as of December 31, 2015) Conditions for prepayment Issuer has no right to redeem the debenture prior to maturity date, except in the case of bond repurchase as defined in the Terms and Conditions. Debentureholders also have no right to require the issuer to redeem the debenture prior to maturity date.

Status of the Debenture The debenture constitutes direct, general, unconditional and unsubordinated obligations of the Issuer which with at all times rank pari passu among themselves and at least pari passu with all other present and future unsecured and unsubordinated obligations of the Issuer, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application.

Credit Rating BBB+ / Stable (TRIS Rating)

AAPICO HITECH PUBLIC COMPANY LIMITED

35

Dividend Policy The Company has a policy to pay dividend at the rate of not less than 10% of net profit after taxes to its shareholders. However, the decision for dividend payment is subjected to future investment plan and other necessities as the Company deems appropriate. The Company must also have fully allocated its retained earnings up to 10% of registered capital for legal reserves and thus no additional reserve is required.

An overview of dividend payment in the last 5 years

Unit: in Baht or in percentage 2011 Earnings per share (EPS) Dividend per share (DPS) Dividend Payout Ratio (%)

-1.72 0.161 -11.0%

The dividend payment must be approved by the shareholders’ meeting except for the interim dividend payment, which can be approved by the Board of Directors, given that the Company has sufficient liquidity.

In the past 5 years, the Company has paid dividend to its shareholders, on average, at the rate ranging from

25% to 35% of net profit attributable to equity holders after taxes, as shown in the table below.

2012

2013

2014

2015

4.050 0.938 27.4%

2.05 0.49 25.9%

1.14 0.30 26.4%

0.97 0.302 30.9%

Note: 1 Dividend in 2011 was paid from the performance of the 1st half of the year due to the flood in the 2nd half of the year.

2

Dividend in 2016 is pending for approval from the Annual General Meeting of Shareholders.

Dividend Policy for Subsidiary Company For subsidiary company under the Company’s management control, the payment of dividend would

be considered based on the performance, liquidity

and financial position of the Company, as well as the future investment plan and other necessities as the company deems appropriate. The company must also have fully allocated its retained earnings up to 10%

36

ANNUAL REPORT 2015

of registered capital for legal reserves and thus

no additional reserve is require, before considering

the dividend payment to the Company and other shareholders. The Company has no policy that could pose a manipulative benefits to a lack of transparency on good corporate governance in any way.

AAPICO

Organization and Management Organization Chart of AAPICO Hitech Public Company Limited as of December 31, 2015

Board of Directors AAPICO HITECH PLC Nomination and Remuneration Committee

Audit Committee

Risk Management Committee 1

Internal Auditor President and CEO Mr. Yeap Swee Chuan

2

3

Finance and Administration Mrs. Teo Lee Ngo 4

Finance & Accounting

Manufacturing and Operations Mr. Veera B.

5

Ms. Yeap Xin Rhu

6 7

Sales & Marketing Project Engineering MIS Mr. Roengsuk V. Mr. Sattha P. Mr. Kawee W.

Accounting

IT

Production

Maintenance

Purchasing

Treasury

IR

Logistics Quality

Human Resources HR Development

1 - 7 is the management according

to the SEC definition.

AAPICO HITECH PUBLIC COMPANY LIMITED

37

Board of Directors Mr. Yeap Swee Chuan Age 68 years

President and Chief Executive Officer / Authorized Director Date of appointment: 1 August 2002 AH Shareholding: 12.70% Education: Bachelor Degree, Technology (Industrial Management),

Massey University, New Zealand Training: Director Certification Program (DCP108/2008), Thai Institute of Directors Work Experience in the past 5 years: 2010 - Present Director, Board of Trade 2010 - Present Vice Chairman, Peace Network of Thailand 2005 - Present Chairman, Malaysian Thai Chamber of Commerce 2000 - Present Director, Audit Committee, Goodyear (Thailand) PLC 1996 - Present President and CEO, AAPICO Hitech PLC

Mrs. Teo Lee Ngo

Age 66 years

Executive Director / Authorized Director Date of appointment: 1 August 2002 AH Shareholding: 9.86% Education: Bachelor of Commerce (Industrial and Business Management)

Nanyang University, Singapore Work Experience in the past 5 years: 1996 - Present Executive Director, AAPICO Hitech PLC 1996 - Present Director, Able Sanoh Industries (1996) Co., Ltd.

Mr. Mikihisa Takayama Age 55 years

Non-Executive Director / Member of Risk Management Committee Date of appointment: 14 May 2015 AH Shareholding: - Education: Bachelor of Foreign Studies, Kobe City University of Foreign Studies, Japan Work Experience in the past 5 years: 2015 - Present Director, AAPICO Hitech PLC 2013 - Present General Manager, Automotive 3 Department, Sojitz Corporation 2010 - 2013 President, Autrans (Thailand) Co., Ltd. 2008 - 2010 Deputy General Manager, Automotive 3 Department, Sojitz Corporation

Mr. Hideo Hatada

Age 51 years

Non-Executive Director / Member of Risk Management Committee Date of appointment: 14 August 2013 AH Shareholding: - Education: Bachelor of Electrical and Electronics Engineering,

Faculty of Science and Technology, Sophia University, Japan Work Experience in the past 5 years: 2013 - Present Director, AAPICO Hitech PLC 2013 - Present President, Autrans (Thailand) Co., Ltd. 2012 - Present Director, Sojitz Automotive Investment PTE LTD 2011 - 2013 Deputy General Manager, Automotive Dept.3, Sojitz Corporation 2009 - 2011 Manager, Automotive Dept.1, Sect.1, Sojitz Corporation 2008 - 2009 Manager, Automotive Dept.1, Sect.3, Sojitz Corporation

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ANNUAL REPORT 2015

AAPICO

Mr. Pipat R. Punya Age 67 years

Independent Director / Chairman of Audit Committee / Chairman of Nomination and Remuneration Committee Date of appointment: 1 August 2002 AH Shareholding: - Education: Bachelor of Laws, Thammasat University, Thailand

Master of Public and Private Management, NIDA, Thailand Training: Director Accreditation Program (DAP11/2004), Thai Institute of Directors

Role of Chairman (RCP35/2014, Thai Institute of Directors Work Experience in the past 5 years: 2004 - Present Director, Villa Comforta Co., Ltd. 1996 - Present Director, AAPICO Hitech PLC 1988 - Present Director, Go Thailand Tour Co., Ltd. 1983 - Present Partner and Managing Director, Nitipat Law Office Co., Ltd.

Mr. Kenneth Ng

Age 47 years

Independent Director / Member of Audit Committee / Member of Nomination and Remuneration Committee Date of appointment: 1 December 2008 AH Shareholding: - Education: Bachelor of Sciences (Honor), Biotechnology,

Graduated uppersecond, King’s College London University, UK

Qualified Chartered Accountant (Institute of England & Wales) Training: Director Certification Program (DAP189/2014), Thai Institute of Directors Work Experience in the past 5 years: 2008 - Present Director, AAPICO Hitech PLC 2005 - Present Director, KNKN Co., Ltd. 2005 - Present Director, NT Asset (Thailand) Co., Ltd.

Mr. Wichian Mektrakarn Age 62 years

Independent Director / Member of Audit Committee / Member of Nomination and Remuneration Committee Date of appointment: 27 April 2015 AH Shareholding: - Education: Bachelor of Science in Electrical Engineering,

California State Polytechnic University, Pomona, USA Training: Director Certification Program (DAP107/2008), Thai Institute of Directors Work Experience in the past 5 years: 2015 - Present Director, AAPICO Hitech PLC 2009 - 2014 Chief Executive Officer, Advanced Info Service PLC 2006 - 2009 President, Advanced Info Service PLC

Mr. John Parker

Age 69 years

Independent Director / Chairman of Risk Management Committee Date of appointment: 26 April 2011 AH Shareholding: - Education: Bachelor of Engineer, Port Elizabeth College of Education

Cost and Management Accounting, University of South Africa Work Experience in the past 5 years: 2014 - Present Director, Asian Advisory Board, Pinnacle Engines Inc. 2011 - Present Director, AAPICO Hitech PLC 2006 - 2010 Executive Vice President, Asia Pacific and Africa, Ford Motor Company AAPICO HITECH PUBLIC COMPANY LIMITED

39

Board of Directors The Board of Directors of AAPICO Hitech Public Company Limited is comprising of 8 qualified directors, who have knowledge and experience in the automotive

industry or in related fields, which are beneficial to

the Company. The list of Board of Directors and its กรรมการ กรรมการสรรหาและ committees in 2015 is described in the tableกรรมการ below.

Name Board of Directors Audit Nomination & Risk Management

Committee Remuneration Committee Committee 1 Mr. Yeap Swee Chuan Chairman &

Executive Director 1 Executive Director Mrs. Teo Lee Ngo Mr. Pipat R. Punya Independent Director Chairman Chairman 2 Independent Director Member Member Mr. Kenneth Ng Mr. Wichian Mektrakarn Independent Director Member Member Mr. John Parker Independent Director Chairman Mr. Hideo Hatada Non-Executive Director Member Mr. Mikihisa Takayama Non-Executive Director Member Remark: 1 Mr. Yeap Swee Chuan and Mrs. Teo Lee Ngo are authorized directors jointly signed together on behalf of the Company with the Company’s seal affixed.

2

Mr. Kenneth Ng is the member of Audit Committee with background in finance and/or accounting.

The Board of Directors is appointed and approved

by the shareholders’ meeting to have the power

and duties to appoint the Company’s management, senior executives and directors, and to monitor the Company’s activities and performance. Roles and responsibilities between the Board of Directors and

the executive management have been clearly defined

and are conformed to laws, regulations, code of conducts and business ethics.

In 2015, the Company had organized 13 meetings for the Board of Directors and its committees, including the shareholders’ meetings. An overview of meetings and directors’ attendance is described below.

Board of Audit

Name Directors Committee

Nomination & Remuneration Committee

Risk Management Committee

- - 1/1 1/1 - - - -

3/4 - - - - 4/4 4/4 1/3

Mr. Yeap Swee Chuan Mrs. Teo Lee Ngo Mr. Pipat R. Punya Mr. Kenneth Ng Mr. Wichian Mektrakarn1 Mr. John Parker Mr. Hideo Hatada Mr. Mikihisa Takayama1

4/4 3/4 4/4 4/4 3/3 4/4 4/4 1/3

- - 4/4 4/4 3/3 - - -

Shareholder’ Meeting AGM EGM 1/1 1/1 1/1 1/1 1/1 1/1 1/1 -

1/1 1/1 0/1 1/1 - 0/1 1/1 -

Note: Directors absent from the meetings in 2015 were due to overseas trips.

1 Remark: Mr. Wichian Mektrakarn was appointed by AGM on April 26, 2015. Mr. M. Takayama was appointed on May 14, 2015.

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ANNUAL REPORT 2015

AAPICO

Top Management The management team of AAPICO Hitech Public Company Limited as of December 31, 2015, according to the definition of Security and Exchange Commission, is listed in the following table.

Rank

1.

2.

3.

4.

5.

6.

7.

Name Mr. Yeap Swee Chuan Mrs. Teo Lee Ngo Mr. Veera Buanwongse Ms. Yeap Xin Rhu Mr. Roengsuk Viphoonitisilkul Mr. Kawee Wasaruchareekul Mr. Sattha Peth-in

Position President and CEO Executive Director, Finance and Administration Department Director, Manufacturing Department Director, Finance & Accounting and Purchase Department General Manager, Sales and Marketing Department General Manager, Project Engineering Department Assistant General Manager, MIS Department

The Management of Major Subsidiary Companies The Company has the policy to empower the management of its subsidiaries. The following diagram provides an overview of the head of major subsidiary companies.

Mr. Yeap Swee Chuan President and CEO [AH]

Mr. Veera B. Director

Mr. Yong P. COO

Mr. Gao Xue Guang COO

Aapico Hitech Parts Aapico Lemtech

Aapico Amata Aapico Structural Products

Kunshan Chaitai-Xincheng Precision Forging (China)

Ms. Yeap Xin Rhu COO

Mr. Teoh Seng Leong Managing Director Aapico Plasctics PLC

Mr. Chigira Kiyoshi General Manager

Aapico Hitech Toolings

Mr. Yugijo Daud General Manager

Ms. Tang Kim Koh General Manager

Ms. Tang Kim Koh General Manager

Aapico Forging PLC

Aapico ITS

Able Motors New Era Sales (TH)

New Era Sales (MY) Tenaga Setia Resources

Company Secretary The Board of Directors has appointed Ms. Phanthip Sintawanarong as the Company Secretary, responsible for organizing the Board of Directors and its committees’ meeting and shareholders’ meeting, as well as preparing

for notice and minute of meeting. The Company Secretary is also responsible for the filing of documents as stipulated by laws, SET and SEC.

AAPICO HITECH PUBLIC COMPANY LIMITED

41

The Board of Directors’ remuneration The remuneration of the Board of Directors and its committees was considered and proposed by the Nomination and Remuneration Committee, taking into account the scope of responsibilities and performance of the directors and the comparison of directors’ remuneration of other listed companies engaged in the

same industry having similar business size, performance, and directors’ accountability. The Annual General Meeting of Shareholders shall consider and approve the directors’ remuneration, which are comprising of the annual remuneration and attendance fee. There are no other benefits provided to the directors other than those mentioned in the following table.

Directors’ Remuneration Annual Remuneration For the year 2015 (per person/per year) Board of Directors (BOD) Independent Director Baht 275,000 Audit Committee (AC) Chairman Baht 50,000

Member Baht 25,000 Nomination and Remuneration Committee (NRC) - Risk Management Committee (RM) - The payment of each director was varied according to their responsibilities and attendance. The directors’ remuneration in 2015 was paid to independent directors only, as the remuneration for executive directors is included as part of the management’s compensation Directors’ Remuneration For the year 2015 Mr. Pipat R. Punya Mr. Kenneth Ng Mr. Supasak Chirasavinuprapand1 Mr. John Parker Mr. Wichian Mektrakarn1

Annual Remuneration 325,000 300,000 300,000 275,000 -

Attendance Fee (per person/per meeting) Baht 15,000 Baht 10,000 Baht 10,000 Baht 7,500 Baht 7,500

and non-executive directors, as a representative of major shareholder, are not entitled for directors’ remuneration.

The payment of directors’ remuneration to each director is summarized in the table below.

BOD 60,000 60,000 25,000 60,000 45,000

Attendance Fee Total AC NRC RM (in baht) 40,000 7,500 - 432,500 40,000 7,500 - 407,500 - - - 325,000 - - 30,000 365,000 30,000 - - 75,000

Remark: 1 Mr. Supasak Chirasavinuprapand has retired as from April 26, 2015 and has been replaced by Mr. Wichian Mektrakarn.

Executives’ remuneration The remuneration for executives is in the form of salaries, bonuses, and provident fund. In 2015, there were 23 executives in the position of manager level and above, and total remuneration paid was at Baht 35.17 million.

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ANNUAL REPORT 2015

Executives’ Remuneration Year 2014 Year 2015 For the year 2015 (million baht) (million baht) Salary 28.47 29.30 Bonus 6.98 4.75 Provident Fund 1.03 1.12 Total Amount 36.48 35.17 Number of Executives 24 people 23 people

AAPICO

Employees’ remuneration The Company provides compensation and benefits to

its employees in the form of salaries, wages, bonuses, contribution to social security and provident fund, as well as welfares and other benefits. The remuneration paid to employees in 2015 in the form of cash and cash equivalent was in a total amount of Baht 1,354 million, as compared to Baht 1,335 million in 2014.

Other Benefits

gratuity benefits to employees upon retirement. The payment is made in compliance with labor laws.

Employee Joint Investment Program (EJIP) The Company had initiated the Employee Joint Investment Program (EJIP), where employee and the Company join on voluntarily basis to regularly invest

in the Company’s stock, as an incentive scheme to motivate and create sense of ownership for employees.

This program was offered to employees in the position of manager level and above, who has been with the Company for at least 1 year on the application date.

The program period was 2 years and had ended in September 2014. There were 44 employees participated in this program.

Provident Fund The Company has jointly established provident fund

with its employees, where both parties contribute to

the funds on monthly basis at the rate of 3%-7% of wage or basic salary. The contribution for the year 2015 was approximately Baht 22 million, as compared to

Employees Baht 21 million in 2014.

As of December 31, 2015, AAPICO Hitech PLC and its major

subsidiaries have in total 3,991 employees, which can be Long-term employee benefits The Company also provides severance payments and classified by country and by product segment as follows:

Product / Business

Jigs and Dies Automotive Parts Car Dealerships Other1 Total

Thailand Malaysia China 2014 2015 2014 2015 2014 2015 129 130 3,040 3,124 461 314 158 155 117 149 120 116 3 3,447 3,525 117 152 461 314

Total 2014 2015 129 130 3,501 3,438 275 304 120 119 4,025 3,991

Remark: 1 include employees in the car navigation and technology and shared resources for supporting departments.

Human Resources Development At AAPICO, employees are an important factor for the sustainable growth of the Company. The Company’s management therefore has put great emphasis on the development of its employees. It has focused and committed to develop and improve the abilities and skills of its employees to reach their full potential and to meet the changing requirements of the industry for the high standards of quality and processes.

The Company has arranged trainings and development programs for employees in all levels, under the arrangement of the AAPICO Training Center, which

was established in 2014. Throughout the year, the Company arranges trainings where expertise in various fields are invited to teach and share their knowledge and experience with employees. These programs can be described in main category as follows: AAPICO HITECH PUBLIC COMPANY LIMITED

43

Employee Orientation The employee orientation program is aimed for employees to understand and become accustomed

and conform to the Company’s policies. It is a mandatory program for every employees. The session is organized at the beginning of each month, covering the information of the Company, its business, the company’s policies, the safety principles, code of conducts, and welfares and benefits for employees.

Technical Skills Development This program aims to improve employee skills in the areas that are directly relevant to their work, such as quality training, safety training, etc.

Supervising Skills Development This program aims to develop coaching skills for managers in order to prepare for leading role in the management level.

Quality Management System This program involves the policy and the compliance

to the standard of quality management system, namely ISO/TS16949 or ISO standards, in order to create awareness to employees for the standard of quality work, which is an important key factor for the automotive business.

Safety and Environment Management This program focuses on employees’ awareness for their safety at work in order to create safe workplace environment and identify preventive measures before the accidents.

Management Information System This program educates employees to operate on the ORACLE system and to use and utilize the information

44

ANNUAL REPORT 2015

technology to manage their work effectively and efficiently and comply to applicable laws related to computer and information technology. Training courses are arranged on regular basis or upon the request from department heads.

Quality of Life Training This program attaches great importance to the development of self-discipline, teamwork and good leadership, and continuous encouragement at becoming a good person, which will lead a person to become a strong contributor to the organization and society. This is in line with the Company’s vision to create a happy workplace environment, as the employees’ quality of life has an impact on the quality of their work. This training is set up by the Company with a qualified team of trainers and lecturers from Thailand Develop Club. The outline of the course encourages remembering and practicing the fundamental of life, refraining from vices, encouraging love and understanding within family, understanding the real root cause of daily problems and working out the way to resolve and improve their quality of life.

Management Seminar The management seminar is arranged twice a year, normally in the month of January and July, where managers and executives are joining for acquaintance and updates on the Company’s performance, strategy and directions. In the dinner set up atmosphere, notable speakers who are known for their managerial and leadership role are invited to share their knowledge and experience with the Board of Directors and the Company’s executives. In 2015, the Company arranged the management seminar on January 31, 2015 and July 18, 2015.

Corporate Governance

AAPICO

The Board of Directors of AAPICO Hitech Public Company Limited has placed importance on having good corporate governance as a foundation for long term sustainable and profitable growth for Company.

Over the years, the Board of Directors has continuously developed the Company’s corporate governance principles and has applied the best practices wherever possible and practical to the Company.

The corporate governance policy provides the guideline in directing the affairs of the Company to conduct its business with transparency, honesty, and ethically. The Company has demonstrated its commitment to adhere to guidelines for listed companies and regulations of the SET and SEC and seek for improvements to its solid foundation in good corporate governance.

Thailand. In any cases that shareholders are not able to participate in the shareholders’ meeting, the Company encourages shareholders to appoint independent director or any individual as their proxy. The proxy form, which shareholders can specify their vote on each agenda, is delivered to shareholder together with the notice of the meeting and can be downloaded from the company website.

Before the meeting, the Company prepared and published notice of the meeting to shareholders in a clear and timely manner. The notice of meeting explicitly indicated time, date, venue, and the matters to be tabled at the meeting including the board’s opinion on each agenda. Sufficient information was attached with the notice, which was delivered by post mail to shareholders 7 days prior to the meeting. The same 1. Right of Shareholders information was also made available on the company’s The Company operates with consideration to the rights website, in both Thai and English language, allowing of shareholders and refrain from limiting shareholders sufficient time for shareholders to review information to have access to the company information. Shareholders before the meeting. receive their basic rights, which include the right to freely buy, sell, and transfer shares, the right to For the AGM 2015, the Company provided opportunity adequately receive news and information in a timely to shareholders to propose agenda items or nominate manner and on regular basis, the right to participate qualified candidates to be appointed as the Company’s and vote in the shareholders’ meeting to elect or director for the board’s consideration during October

remove board members, appoint external auditor and to December 2014, with detailed criteria and procedure receive share of profit, and the right to approve the publicly available on the company website under amendments to the company’s articles of association investor relations section. Shareholders were also given or memorandum of association, etc. The Company opportunity to submit inquiries through the same encourages shareholders to attend the shareholders’ channel. However, there were no proposal from meeting and exercise their rights, and prohibits any shareholders for the board’s consideration of any additional agenda items or director nominees. actions that could violate shareholders’ rights.

The Company has the policy to promote and facilitate On the meeting day, the Company used an online shareholders’ participation, including institutional registration tool to facilitate the registration process. investors, at the general meeting of shareholders by Shareholders and proxy holders were requested to selecting the venue, time and date at the convenient of verify their identity as prescribed in the registration shareholders to attend the meeting. In 2015, the Annual procedure provided with the notice of the meeting. The General Meeting of shareholders was held on Monday, Company also provided stamp duty for proxy holders April 27, 2015 at 14.30 Hrs. at the Stock Exchange of at their convenience.

AAPICO HITECH PUBLIC COMPANY LIMITED

45

Before the meeting is convened, the Chairman clearly advised the quorum, voting procedures and voting count method to the meeting prior to the discussion of the agenda items. Shareholders are allowed to attend the meeting after it has been convened, however, their votes would be counted as quorum as from time they attend the meeting and would be entitled only for pending agendas that have not yet resolved. Directors are advised to join the shareholders’ meeting. At the AGM 2015, 7 out of 8 directors (87.5%) attended

the meeting, which included the Chairman of the Board of Directors, the Chairman of Audit Committee and Nomination and Remuneration Committee and the Chairman of Risk Management Committee. External auditors also attended the meeting and witnessed the vote counting.

The Company discussed the matters in the AGM in sequence as given in the notice of the meeting.

Shareholders are encouraged to express their opinions and suggestions, as well as raising questions to the Board of Directors. There were no matters other than those specified in the notice of the meeting. For the election of director, the Company provided that shareholders to elect the Company’s director on individual basis. Voting cards used at the meeting were kept for evidence and verification.

After the meeting day, the Company published the resolution of the meeting for each agenda before 9:00 a.m. of the following working day through SET portal.

The minute of the meeting was prepared in accurate detail and was made available to public on the company website within 14 days after the meeting.

2. Equitable Treatment of Shareholders

The Company has the policy to treat each and every shareholder fairly and equally regardless of the percentage of shareholding, gender, age, race, nationality, religion, beliefs, political opinions or physical abilities. The Company’s shareholders’ meeting is open 46

ANNUAL REPORT 2015

for all shareholders. Each shareholder has their right according to number of shareholding. One share per one vote. There are no shares of any privileges over other shareholders. Minority shareholders have equal rights to express their opinions, propose meeting agenda and nominate the Company’s directors. The Company has clearly stated timeline, process, and criteria on the company website under the investor relations section. Shareholders can also request for meetings or company visit.

The Company always follows requirements of SEC and SET regarding the dealing of related transactions. The business transactions with related parties must be fair and at arm’s length and bases agreed upon the Company and those related parties. Directors are required to report to the Board of Directors of their conflict of interest in the meeting agenda and shall abstain from participating and voting as they cannot express their opinion freely.

The Use of Insider Information The Board of Directors has established the guideline for the use of insider information to prevent directors and executives from taking advantages of inside information and from dishonest dealing for themselves and their related parties. Insider trading or the use of inside information for personal or others’ gain is strictly prohibited. In addition, the Board of Directors has established the guideline concerning the report of the changes of ownership of the Company’s shares of directors and executives, which can be summarized as follows: 1. The use of insider information for personal or others’ gain is strictly prohibited.

2. The inside information both financial and

non-financial which has not been disclosed to public and may affect the business or stock price must be kept strictly confidential and must not disclose to any parties not involving in such transactions.

AAPICO

3. Directors and executives who have access to inside information shall refrain from trading

the Company’s securities for a period of one month prior to and within 24 hours after the announcement of the Company’s results of operations to the Stock Exchange of Thailand.

4. Directors and executives shall inform the company secretary of their trading of the Company’s securities at least one day prior to the transaction date. The Company Secretary has duty to report these changes to the Board of Directors at the next board meeting.

5. Directors and executives are responsible to report the changes of security holding under their names and their related persons to the Office of the Securities and Exchange Commission as follows: a. Acquisition of the Company’s securities for the first time must be reported within 30 days after the closing date of the offering

of securities to the public or the date of appointment of the director or executive (Form 59-1). b. Changes in securities holding resulting from disposition, transfer or being transferred

for securities must be reported within

3 working days after transaction date (Form 59-2 or Form 246-2).

The Company has disclosed this policy to its directors, executives, and employees of the Company and subsidiaries to act in compliance with this policy. Any violation to this policy resulting in derogation or damage to the Company are subjected to penalty measures and possibly legal actions taken by relevant regulatory authorities.

3. Roles of Stakeholders

The Company recognizes the rights and different needs and interests of each stakeholders and therefore has carefully defined the policy to meet the needs of its stakeholders, either by law or by agreement with the Company. The Company’s stakeholders can be classified into the following groups:

Shareholders The Company aims to achieve growth in earnings and generate appropriate returns to shareholders in the long run. The Board of Directors and executives shall ensure to conduct the business as effectively and efficiently and in a transparent and auditable manner. The Company shall carry on its operations in consideration to the best interests of shareholders and shall comply with the good corporate governance principles. The reporting and disclosure shall be made on consistent basis, completely and truthfully reflect the status of the company, its operating results, financial position, and other reports. There shall be no disclosure of inside information to individuals which caused damage to shareholders as a whole.

Customers The Company places the highest value on its customers.

The Company focuses on excellent production process according to the SQCDEM principles and has firm commitment to continuously develop and improve the quality of its products and services to meet or exceed customers’ expectations. It ensures the continuation of production and just in time delivery for the effectiveness of the overall automotive supply chain management.

The continuing accreditation to the quality management system and awards and achievements from customers over the years has been a guarantee for the Company’s commitment toward excellence.

The Company strictly keeps the confidentiality of information of each customer. It does not share the customer information to its competitors or to the public.

In addition, the Company has a policy on the use of intellectual property and copyrights, where it shall operate in compliance with all regulations or contractual requirements governing the use of such property. The use of computer and information technology shall also be conformed to the Computer Related Act and other local intellectual property and copyright laws.

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Business Partners and Joint Venture Integrity is a vital part of AAPICO’s business. The Company considers the equality and honesty as

virtues among its core values for long term business relationship. The Company treats its business partners and joint venture with fairness and integrity, and requires both parties to honor the shareholder’s agreement and strictly comply with business ethics, restrictions, applicable rules and laws of the country they operate in. To its best knowledge, the Company ensures that its business partners are reputable and

do not risk the Company being associated with corrupted activities.

Suppliers The selection of suppliers shall also be treated fairly and openly that no parties are having the unfair advantage of separate, prior, closed-door negotiations for the contract. The purchase and hire of material and service is considered for its quality, price, service, and delivery in accordance with the product requirements and shall never be based on the receipt of gift, hospitality or favors of any kind from suppliers or business partners. All employees must conform to the Company’s policy regarding the gift policy and the

anti-corruption policy.

In order to conform to the Company’s quality system standards, the Company performs yearly audit on all its OEM suppliers as to ensure that its suppliers are committed to the same level of quality-cost-delivery standard and that the products outsourced to suppliers meet the customer’s requirements.

Competitors The Company shall operate with open, fairness, and integrity by adhering to honesty and fair competition.

It shall operate under no circumstances cause or be part of any breach of general or special competition regulations, such as illegal cooperation in pricing, illegal market sharing or any behavior that is in breach of 48

ANNUAL REPORT 2015

relevant competition law, intellectual and business laws and code of conducts, and shall not use dishonest method to discredit a competitor.

Creditors The Company shall operate in compliance with terms and conditions agreed upon with creditors, both trading partners and financial institutions. The Company shall report its financial position as required by creditors and shall notify in advance of any issues that may have resulted in a breach of agreements or financial covenants to resolve issues.

Employees The Company places importance on the well-being of its employees as they are considered a key foundation for the Company’s long term success and sustainable growth. The Company has been focusing on enhancing employees’ knowledge and well-being according to

the Company’s vision and considers the employee satisfaction as the utmost importance. The Company ensures the employees’ compensation and welfare are reasonable and appropriate according to their capabilities and able to maintain their motivation. It encourages employees to continually improve their knowledge and skills by attending various seminars or training courses arranged internally or by other organizations.

The Company has put the health and safety of employees at high priority. It ensures the safe and proper workplace in order to reduce risks related to safety and accidents for its employees. It has implemented the 5S principle throughout the organization and has arranged necessary safety trainings to all employees to create awareness and maintain high standards of safety and discipline in the workplace.

The Company promotes mutual respect among employees and treats each and every employee fairly and equally. The Company upholds human right in all activities and will not act in violation of human right

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laws or child labor protection both local and international. Over the years, the Company has received a recognition for its intention and commitment on employee well-being such as the Happy Workplace for Sustainability, the White Factory award, etc.

Community The Company continually supports and contributes

to community and society where it operates. The corporate social responsibility has been put on the management’s agenda. Every year the Company has made contributions and donations to community projects as well as providing supports to employees who are involved in improving the quality of life of the community that the Company is present. These charitable contributions shall be legal and ethical under local laws and practices.

The Company adheres and complies with social and environment protection laws and related regulations

as required by the Labor and Social Welfare Ministry, the Industrial Ministry, the announcement of the Industrial Estate Authority of Thailand and other relevant agencies. It strongly encourages its subsidiary and associate companies to use resources efficiently and effectively for energy conservation and aim for environmental protection in every parts of its operations.

In 2014, the Company has announced the “Green” vision as one of the key mission of the Company, whereby the Company encourages and continuously implements ideas to use the minimum input of the natural resources to achieve the maximum output.

Anti-Corruption and Misconducts At AAPICO Hitech, the Company intended to do business and operate with integrity, honesty, fairness and transparency. It aims to be a responsible partner and acts with integrity towards employees, customers, business partners, shareholders, as well as the wider community. The Company is firmly opposed to all forms of corruptions. It supports and encourages every

employees at all levels to focus with conscious mind to fight against corruption. The Company has formulated the anti-corruption policy, which is used as a tool to govern business decisions and is applied equally to corporate actions throughout organization and to the behavior of individual employees in conducting the Company’s businesses.

The anti-corruption policy sets out the standard practices and responsibilities in preventing corruption in business transactions and provides framework and guidance to employees on how to recognize and deal with bribery and corruption issues to ensure that decision making that could lead to corruption are performed with due care and conscientiousness. The Company takes zero-tolerance approach to bribery and corruption and has provided trainings to all employees especially those operate in areas that are perceived

as high risk. It also communicates to all suppliers, customers, contractors, agents, and business partners of the Company’s anti-corruption policy.

The Company has joined the Thailand’s Private

Sector Collective Action against Corruption (CAC) since 2014 and reaffirms its commitment to fight against corruption in all business operations. The Company

has continually streamlined its processes across organization to assure the certification from CAC.

Whistle Blower Policy The Company encourages employees and third

parties to raise concerns about any issues or suspicion of malpractices at the earliest possible stage. The Company provides a communication channel for employees and all group of stakeholders to raise concerns or report complaints and any misconduct

or illegal acts directly to the Company’s executives

or to the Chairman of Audit Committee by sending a letter or electronic mail to AC@aapico.com. The Audit Committee, as assigned by the Board, reviews all comments and complaints and delegate to the AAPICO HITECH PUBLIC COMPANY LIMITED

49

executive management to investigate further on the in a timely manner so that stakeholders can base their reported issues. These issues and the follow up decision. The Company commits to make its best effort progress are informed to the Board of Directors at the to disclose information in all possible channels to allow quarterly meeting. In 2015, the Company has received equal access to all stakeholders. Information is primarily no reports of misconducts or disputes relating to fraud, managed through SET portal and the Company’s website corruption, any breach of contract or violation against and is provided in both Thai and English language.

applicable laws and regulations.

The Board of Directors ensures that the Company’s The Company aims to encourage openness and will financial statements were prepared fairly and accurately support anyone who raises the genuine concerns in according to the general accepted accounting principle good faith. The Company commits to ensure that no and has been audited by external auditor, who were one will suffer from any unfair treatment as a result of authorized and approved by the shareholders’ meeting. refusing to take part in bribery or corruption, or All reports, being the quarterly financial statements,

because of reporting their suspicion that an actual or the annual statement (56-1) and annual report (56-2), potential bribery or other corruption offense has taken are provided in a complete and accurate manner and place or may be taken place. It also has a policy to made available on-time as required by the SEC and SET. The report of changes in the holding of the protect confidentiality of whistleblower.

Company’s shares of directors and executives have 4. Disclosure and Transparency been disclosed and reported to the SEC in a timely The Company ensures the disclosures of the Company’s manner. The overview of the Company’s’ shareholding information is clear and transparent, which reflects true by directors and executives in 2015 is provided in the status of the Company’s performance, and is reported table below.

Name Position

Mr. Yeap Swee Chuan President and CEO/Executive Director Mrs. Teo Lee Ngo Executive Director Mr. Pipat R. Punya Independent Director Mr. Kenneth Ng Independent Director Mr. Wichian Mektrakarn Independent Director Mr. John Parker Independent Director Mr. Yoshiki Kishimoto Non-Executive Director Mr. Hideo Hatada Non-Executive Director Mr. Veera Buanwongse Director Ms. Yeap Xin Rhu Director Mr. Roengsuk Viphoonitisilkul General Manager Mr. Kawee Wasaruchareekul General Manager Mr. Sattha Peth-in Assistant General Manager Remark:

50

1

No. of shares at Increases / No. of shares at the book closing (Decreases) the book closing on March 30, 2015 during the year on March 23, 2016 40,847,873 31,811,346 - - - - - - - 25,646,760 - 18,729 85

123,5061 - - - - - - - - - - - -

40,971,379 31,811,346 - - - - - - - 25,646,760 - 18,729 85

the change in securities holding of Mr. Yeap Swee Chuan was the transfer from NVDR to Foreign Holding account.

ANNUAL REPORT 2015

AAPICO

The Company has emphasized the role of Investor Relations as a primary contact window for investors, shareholders, analysts, and general public. The IR team is responsible for the publication of the Company’s news and updates of corporate information in an accurate and timely manner according to the SET requirements and regulations, and respond to any questions or concerns from interested parties.

To enhance the accessibility of stakeholders, the Company always participates in meetings or events where possible and appropriate, both local and abroad, to increase interaction with all groups of stakeholders.

In 2015, the Company has participated in the Opportunity Day by SET every quarter, the SET Thai Corporate Day, Thailand Focus, as well as conference and roadshows in Hong Kong, Japan and Malaysia. It also arranged analysts’ meeting, a factory visit for shareholders, as well as meetings with journalists and individual investors.

5. Responsibilities of the Board of Directors

The Board of Directors has its roles and responsibilities in providing guidance and direction to the Company’s management and assuring that the Company’s businesses are operated for the best interest of shareholders in the long run. The Board of Directors

is comprised of respected, knowledgeable and competent individuals with various skills and experience in areas that are beneficial to the Company.

Structure of the Board of Directors The Company has set the Board of Directors an appropriate number of members to the size of business. Each director holds qualifications as

defined by the Public Limited Company Act and

has no manners indicating a lack of fit to be

entrusted with the administration of the company

by law or requirements of the Securities and

Exchange Commission.

For the year 2015, the Board of Directors consists

of eight (8) members, which are the Chairman and executive director, an executive director, two nonexecutive directors, and four independent directors (of which one independent director has been in a position for longer than nine years). In compliance with good corporate governance principle, the Company has plan to adjust its board composition upon the retirement of the directors where appropriate.

Qualification of Director The Board of Directors has defined the qualification of the Company’s directors as follows: 1) Possess qualification according to the rules and regulations by the Securities and Exchange Act, the Stock Exchange of Thailand, the Public Company Act B.E.2535 and have no prohibited characteristics or manners indicating a lack of trustworthiness to manage the Company from the view of shareholders by law or by the Company’s Articles of Association.

2) Not disqualified under Section 68 of the Public Companies Act B.E. 2535.

3) Have knowledge, skills, or experience in the automotive industry and/or capable to perform directors’ duties with diversified background which are beneficial to the Company’s business.

4) Able to devote time especially for making key decision and handle duties for the best interest of the Company and able to participate in all the board meetings and shareholders’ meetings unless necessary or emergency.

5) Do not perform any actions in a way that affect the interest or benefit of the Company or in a way that would be beneficial to particular individual of entity for oneself or other persons’ benefits.

Qualification of Independent Director Independent director is a director who does not have any related business or work that may affect his or her

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independent decision. The Board of Directors has defined the qualification of independent director in compliance with the minimum requirement of the Offices of Securities and Exchange Commission and the Stock Exchange of Thailand. The Company’s independent director shall comply with, but not

limited to, the following requirements: 1) Shall not hold shares exceeding one percent

of total number of voting shares of the Company, subsidiary, associate, major shareholders, including shares held by related persons of such independent director.

2) Shall not be or have been an executive director, employee, staff member, advisor who receives salary of the Company, subsidiary, associate, major shareholders, or juristic person with conflict of interest.

3) Shall not be a person related by blood or legal registration as father, mother, spouse, sibling, or child, including spouse of child, of the Company’s executive or major shareholders.

4) Shall not be or have been an auditor of the Company, subsidiary, associate, major shareholders, unless foregoing relationship has ended not less than two years prior to the date of becoming an independent director.

5) Shall not be or have been a provider of any professional services including legal advisor or financial advisor who receives service fees exceeding Baht 2 million per year from the Company, subsidiary, associate, major shareholders, unless the foregoing relationship has ended not less than two years prior to the date of becoming an independent director.

6) Shall neither have nor ever had a business relationship with the Company, subsidiary, associate, major shareholders, unless the foregoing relationship has ended not less than two years prior to the date of becoming an independent director. The term “business relationship” refers to any normal

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ANNUAL REPORT 2015

business transactions in the amount more than Baht 20 million or more than 3% of net tangible assets after deducting the liabilities and equity of minority shareholders, whichever is lower.

7) Shall not be a director appointed as representative of the Company’s directors or major shareholders.

8) Shall not operate or be part of business that operates in the same industry or in a direct competition with the Company’s operations.

9) Shall be capable to perform duties, give opinions, and report results of work performance according to the duties entrusted by the Board independently from the control of management or major shareholders of the Company

Terms of Service for Directors Years of Service in each rotation The Company’s Articles of Association indicates the number of years served on the Board of Directors in accordance with the Public Limited Company Act, which specifies that one-third of total number of directors must retire from the office at the Annual General Meeting. If it is not possible to divide total number of directors evenly by three, the number closest to one-third is applied. In choosing directors to retire, the directors who have served the longest years are the most eligible to retire. Nevertheless, the retiring directors are eligible for re-election.

Apart from the aforementioned retirement by rotation, directors may be removed from the office by the following reasons.

• Death • Resignation (with effect from the date the Company receives the resignation letter) • Being disqualified or being under any of the prohibition under the Public Company Act and laws governing securities and stock exchange • Removal by a resolution of shareholders’ meeting • Removal by a court order

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Number of Consecutive Terms of Service The Company’s directors have been approved by shareholders’ meeting and are highly qualified individuals with knowledge and expertise beneficial

to the Company’s business. These directors are also respected for their morality and ethics, as well as consistent good performance of duties. If shareholders continue to trust the directors and re-appoint them

to the Board, the Company shall respect the right of shareholders. Therefore, the Company does not clearly specified the term of service of each director.

However, the Board of Directors has plan to nominate new directors to replace long-serving independent directors and is committed on the renewable tenure

of independent director to no more than nine (9) consecutive years.

Limitation of positions held by Directors in the listed companies The Board of Directors has set a policy to limit number of holding positions in the board of listed companies, other than its own subsidiaries, for not more than five (5) companies, and shall not sit in the board of the Company that operates in the same industry or in direct competition with the Company’s operations. This policy aims to ensure that directors can devote time to perform their duties effectively. The holding of positions of directors shall also be reported to the Board of Directors for acknowledgement.

Company Secretary The Board of Directors has assigned the duties and responsibilities of company secretary to organize meetings for the board and its committees, shareholders’ meeting, as well as coordinates activities and trainings for directors. Company secretary is also responsible for preparing notice to the meetings, minute of meetings, annual report, as well as filing of documents as required by law and relevant regulations by the SEC and SET. The Board of Directors has considered the

qualification of company secretary to have but not limited to knowledge in law and/or finance and accounting.

Roles and Responsibilities of the Board of Directors The Board of Directors has its roles and responsibilities separately from the Company’s management as to ensure that businesses are conducted in a lawful and ethical manner and that operations are run efficiently and effectively. The roles and responsibilities of the Board of Directors include but not limited to the following: 1) Review and approve key business matters such as the Company’s vision and mission, business strategy and financial targets, risks relating to operations and annual operation plan and budget, as well as monitoring that management has followed the business plan effectively and efficiently.

2) Consider and review the Company’s corporate governance policy and monitor the compliance to the policy at least once a year.

3) Promote the Company’s code of conducts in writing and make sure that directors, executives and employees at all levels are aware and adhere to the Company’s ethical standards and act in compliance with the code of conducts.

4) Define a guideline for the consideration of transactions with conflict of interests for the benefits of the Company and shareholders, where persons with vested interest cannot participate in the voting or decision-making process of that issue. Ensure that the Company complies with the regulations and that disclosure of transactions with conflict of interests are correct and complete.

5) Ensure that internal control system is in place and effective and financial reporting and operations are in compliance with rules and regulations, and assign a responsible person or unit to independently audit and report on the Company’s internal control system to the Board of Directors at least once a year.

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6) Establish the risk management policy for the organization and assign the management to manage the Company’s risks and look for business opportunities that may arise from these risks and report to the Board of Directors on regular basis.

7) Provide adequate communication channels for shareholders and ensure that disclosure of information is correct, concise, transparent and reliable.

8) Understand the roles and responsibilities of the Board of Directors and the Company’s nature of business and always express own opinion independently.

9) Perform duties with honesty and care, taking into account the best interest of the Company and fair treatment of shareholders.

10) Oversee and monitor business operations by requiring financial report that is accurate and complete and devote sufficient time and effort to the Company.

Board of Directors’ Meetings The regular Board of Directors’ meetings are scheduled in advance for the entire year. Each director is informed of the meeting schedule and is responsible to manage time to attend meeting accordingly. The Board of Directors holds at least four (4) meetings in a year to consider and approve the Company’s financial statements. Directors are also invited to participate in the management review meeting at least twice a year to approve the business plan and review performance of the Company’s subsidiaries. Each director shall have their meeting attendance of at least 75% of total meetings in a year. In 2015, seven (7) directors have their attendance of at least 75% of total meetings in 2015. The director who did not fulfill this requirement was due to other obligations overseas.

Before each meeting, the Chairman set the agenda

of the meeting. The notice of meeting and relevant 54

ANNUAL REPORT 2015

documents of each agenda will be sent to directors for consideration at least 7 days prior to the meeting date.

The Chairman ensures that number of directors attending the meeting satisfy the quorum as specified in the Company’s Articles of Association to convene the meeting. During the meeting, the Chairman allows sufficient time to consider and discuss each agenda carefully and thoroughly. Directors are encouraged and able to express their opinion freely and independently before casting their votes. Each director is counted as one vote. At least two-third of total number of directors shall be present for the voting of each agenda.

However, director with vested interest in particular agenda shall be excused or abstained from voting for that agenda.

Board of Directors’ Performance Evaluation The Board of Directors conducts the assessment of

the board performance on annual basis. The selfassessment criteria is based on the good corporate governance guidance from the SET, which considers the board structure and performance in 6 categories, which are: 1. Structure and characteristics of the Board 2. Roles and responsibilities of the Board 3. Board meetings 4. The Board’s performance of duties 5. Relationship with management 6. Self-development of directors and executive

development

In 2015, the Board of Directors conducted three

sets of self-assessment for the Board of Directors,

as a whole and on individual basis, and for the

sub-committees. All eight (8) directors have completed

the self-assessment questionnaires.

The assessment results of the Board of Directors as

a whole has improved year on year in all areas,

with an average score of 4.11 (82%) in 2015, as compared to 3.85 (77%) in 2014. Of total 6 categories,

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the excellent score (above 80%) was given in

4 categories, with the highest score in the relationship with management. The lowest score was still the roles and responsibilities of the Board, despite being the most improvement of the year. The assessment results of Audit Committee, Nomination and Remuneration Committee, and Risk Management Committee were also in good level with the score of 4.05 (81%), 3.89 (78%), and 3.74 (75%) respectively. The assessment result of directors on individual basis was an average of 4.17 (83%). The Board of Directors have discussed recommendations and suggestions to continually improve its performance in coming year.

Remuneration for Board of Directors and Executives The remuneration of the Board of Directors and its committees has been set according to the policy and recommendation from the Nomination and Remuneration Committee within the framework and limit as approved by the shareholders’ meeting. The remuneration of directors is considered based on the scope of responsibilities and performance of the directors, the comparison of directors’ remuneration of other listed companies engaged in the same business regarding the performance, business size, directors’ accountability, with reference to the report on directors’ remuneration conducted by the Thai Institute of Directors (IOD).

Upon the board approval, the proposal is passed to the Annual General Meeting of shareholders for approval.

The remuneration of executives is considered based

on their responsibilities and accountabilities, individual performance as well as operational results of the business. The payment is approved by the President and Chief Executive Officer of the Company.

Board of Director’s Trainings and Development The Board of Directors encourages the directors to continuously develop and improve their skills and knowledge in relation to their duties and responsibilities.

Directors are provided with relevant information to

perform their duties, which includes an introduction to the Company and its businesses and roles and responsibilities of the Board of Directors and its committees.

The Company encourages directors to attend training courses upon the SEC recommendations. The independent director is required to attend the fundamental courses organized by the Thai Institute of Directors, namely the Director Accreditation Program (DAP) or the Director Certification Program (DCP), as details of the program provide essential information for directors to perform their duties effectively. The Company’s directors who have attended these courses are as follows: 1. Mr. Yeap Swee Chuan attended the Director Certification Program (DCP108/2008) 2. Mr. Pipat R. Punya attended the Director Accreditation Program (DAP11/2004) and Role of Chairman Program (RCP35/2014) 3. Mr. Kenneth Ng attended the Director Certification Program (DCP189/2014) 4. Mr. Wichian Mektrakarn attended the Director Certification Program (DCP107/2008)

There were no attendance of the fundamental training in 2015, due to the timing and availability of training courses did not match their requirements for English course. However, directors and executives are encouraged to attend the seminar organized by SEC, SET and other organization, which relates to the Company’s business in order to perform their duties completely and effectively. The seminars and trainings attended in 2015 include the Breakfast Talk (SEC), Tone at the Top series 1/2015: Ethical Leadership - Creating a sustainable culture (IOD), the CG report evaluation (SET), etc.

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Power and Duties of the Board of Directors The Board of Directors shall ensure that the Company is operating in compliance with laws, the Articles of Association and resolution of shareholders with honesty and care, and acts in accordance with criteria and regulations of the Stock Exchange of Thailand and the Securities and Exchange Commission for the best interests of the Company and shareholders.

In line with the good governance principles, the Board of Directors shall have the authority and responsibility in approval of the following matters.

1) The quarterly business performance and financial statements of the Company in comparison to

the forecast and budget and the consideration of future trends of the year.

2) Related party transactions among the Company, subsidiary companies, associate companies, and related companies or individuals that do not violate the regulations of the Stock Exchange

of Thailand and the Securities and Exchange Commission.

3) Any transactions that would highly affect the Company’s capital structure, financial status, business operation, strategy and the Company’s’ reputation.

4) Payment of interim dividends.

5) Employment of the President and senior executives.

6) Determination and change of the approval authority of the Company.

7) Acquisitions and disposals of business and assets and participation in joint venture projects that

do not violate any rules of the Stock Exchange

of Thailand and have value of transaction which requires the board approval according to the announcement of the Stock Exchange of Thailand relating to the acquisition and disposal of assets and connected transactions.

8) Contracts that are not related to an ordinary course of business or contracts that are significant in value and materiality to the Company’s business.

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ANNUAL REPORT 2015

9) The change of policy and operations that have material impact on accounting, risk management, and internal audit.

10) The appointment and determination of authority of the sub-committees.

11) The proposal, appointment, and termination of the Company’s directors and secretary status.

12) Any other actions in accordance with laws, objectives, the Articles of Association, and resolutions of the shareholders’ meetings.

The Board of Directors may authorize directors or

sub-committee to perform any acts on their behalf, except the following subjects, which can be done only upon the approval from shareholders’ meeting.

1) The subject which the law requires of the approval from shareholders’ meeting.

2) Transactions which the directors have interests therein and that the law or regulations of the Stock Exchange of Thailand requires the resolution of shareholders’ meeting. The director who has vested interest in the issues or have conflict of interest with the Company or affiliated company shall be excused or abstained from voting right.

The following cases must be approved by the Board

of Directors and the shareholders’ meeting with a vote of not less than 3/4 of total votes of the shareholders attending and entitled to vote for: 1) Any sale or transfer of the entire or significant part of the Company’s business.

2) Any purchase or taking over of other firms by

the Company.

3) Any making, amendment or termination of contracts with respect to the granting of a lease of the whole or significant part of the business of the Company, the assignment of the management of the business of the Company to any other person or the amalgamation of the business with other persons with the purpose of profit and loss sharing.

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4) The amendment to the Memorandum of Association and Article of Association.

5) The increase and decrease of capital, the issuance of debentures, the amalgamation or dissolution of the Company.

The Sub-Committees

The Board of Directors has delegated some of its duties and responsibilities to its committees to assist the Board in reviewing and providing their independent opinions on particular matters. These committees are Audit Committee, Nomination and Remuneration Committee and Risk Management Committee.

The sub-committees are comprised of directors

who are experts in particular areas. In 2015, due

to the retirement by rotation of Mr. Supasak Chirasavinuprapand, the Board of Directors has appointed Mr. Wichian Mektrakarn to be the member

of the Audit Committee and the member of Nomination and Remuneration Committee with effective as from May 14, 2015. On the same date, the Board of Directors has appointed Mr. Mikihisa Takayama in

the position of director and the member of Risk Management Committee, replacing Mr. Yoshiki Kishimoto who resigned from his position.

Audit Committee

The Audit Committee comprises of three (3) independent directors, as follows: 1. Mr. Pipat R. Punya Chairman 2. Mr. Kenneth Ng Member 3. Mr. Wichian Mektrakarn Member

Where Mr. Kenneth Ng, with his background and experience in finance and accounting, has the sufficient knowledge to review the reliability of financial statements.

Power and Duties of the Audit Committee The Audit Committee’s duties and responsibilities can be described as follows: 1) Ensure that the Company maintains accurate and sufficient financial statements in accordance with the general accepted accounting standards and relevant laws.

2) Ensure that the Company’s internal control and internal audit is sufficient and efficient, and operations have been carried out in compliance with rules, policies and relevant guidelines.

Evaluate the independence of internal audit function by reviewing performance report and the organization structure of internal audit. Approve the appointment and termination of internal auditor as well as evaluate their performance.

3) Consider and propose the appointment of external auditor and audit fee to the Board of Directors, by taking into account the performance and independence of auditor. Arrange meeting with auditor without the management presence at least once a year in order to seek the objectivity of auditor’s opinion.

4) Ensure that the Company’s operations are carried out in accordance with laws and regulations of the SEC and SET, as well as laws concerning the business of the Company.

5) Define the Company’s corporate governance policy to be in line with good governance guidelines from the SET. Review the policy and operations at least once a year.

6) Review disclosure of information, particularly matters that may constitute related transaction or transactions that have conflict of interest, to be complete and accurate.

7) Review complaints and concerns from stakeholders and report to the Board of Directors.

8) Perform any other matters as assigned by the Board of Directors.

9) Report the Audit Committee’s performance to the Board of Directors every quarter.

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10) Consider and review duties and responsibilities

of the Audit Committee and evaluate the performance of the committee on annual basis,

as well as prepare the report of Audit Committee and disclose in the Company’s annual report.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee comprises of three (3) independent directors, which are the same group as the Audit Committee. The scope of duties and responsibilities delegated by the Board of Directors are as follows.

Power and Duties of the Nomination and Remuneration Committee 1) Establish the policy, criteria and procedures for the nomination of director and top executives of the Company and determine criteria and type of remunerations and other benefits for the Board of Directors and its committees and propose for approval to the Board of Directors and to the shareholders’ meeting respectively.

2) Select and nominate qualified individuals to be the Company’s directors and top executives.

3) Ensure that size and elements of the Board of Directors is suitable to the Company’s business and that adjustments are appropriate in response to the changing environment.

4) Define the self-assessment criteria of the Board of Directors and their annual remuneration by considering the duties, responsibilities and risks involved.

5) Review succession plan for management in key positions and re-confirm the list of qualified candidates.

6) Perform any other matters as assigned by the Board of Directors.

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ANNUAL REPORT 2015

Risk Management Committee

The Risk Management Committee, reporting to the Audit Committee, comprises of three (3) directors, of which the Chairman is an independent director and two members are non-executive directors as follows.

1. Mr. John Parker Chairman 2. Mr. Hideo Hatada Member 3. Mr. Mikihisa Takayama Member

Power and Duties of the Risk Management Committee a. Establish the Company’s risk management policy and determine the risk appetite. Consider the risk management plan for the organization as a whole and ensure that control measures are adequate and appropriate. b. Consider and recommend to the Board of Directors regarding the strategy, direction and resources used in the Company’s risk management process, as well as the risk tolerance level for approval. c. Conduct risk assessment and review corporate risks at least once a year and ensure that the organization has implemented the risk management actions according to plan. d. Review and recommend to the Board of Directors on overall risk management and standard practices in order to improve the risk management processes of the organization.

The Nomination of the Board of Directors and Top Executives

The Appointment of Directors According to the Company’s Articles of Association,

the Board of Directors shall comprise of at least five (5) directors and not less than half of whom shall

have residence in Thailand. The Nomination and Remuneration Committee is responsible for selecting qualified candidates to be the Company’s directors,

AAPICO

replacing the directors who are retiring on rotation at the end of their terms, or whatever the case may be, and proposing a list of candidates to the Board of Directors for approval and subsequently for resolution at the shareholder’s meeting. The Nomination and Remuneration Committee selects candidates based on their knowledge, experience, expertise, a proven record of ethics and integrity, and the ability to share their opinion independently and devote sufficient time to the Company. The Company also gives the right to shareholders to nominate qualified individuals to be the Company’s director.

The number of nominated directors generally is equal to the number of retiring directors or resigned directors, whatever the case may be. The appointment of the Company’s directors must receive more than half of the voting rights of shareholders who attend the meeting in person or by proxy. The directors shall be elected at the shareholders’ meeting in accordance with the following rules and procedures: 1. Each shareholder shall have a voting right equal to one share per one vote.

2. Each shareholder may exercise all the votes

he/she has under 1) to elect one or several persons as director or directors but cannot split share voting.

3. The candidates shall be ranked in descending order, from the highest to the lowest number of votes, and shall be appointed in that order until

all the director positions are filled. Where there

is an equality of votes cast for candidates causing the number of directors to be exceeded, the Chairman of the meeting shall have a casting vote.

In case that director leaves their position for the reasons other than retirement by rotation, the Board of Directors may appoint qualified individuals to replace the resigned director at the next Board of Directors’

meeting, given that remaining terms of service must be longer than 2 months. The appointment of replacing directors must receive more than 3/4 of the votes of the remaining directors, and the replacing directors are eligible to stay in the board up to the remaining terms of service of the resigned directors.

The Appointment of Executives The appointment of executive is considered by the Company’s management, who takes the lead in nominating and selecting with the qualified candidates with knowledge, skills, and experiences that are suitable to the Company’s operations, and having good understanding of the nature and business cycle of the industry to be able to drive the business growth and achieve the Company’s objective.

The Governance of Subsidiary and Associate Company The Company controls and manages the operations of its subsidiary and associate companies through its representative in the management team, whereby the number of directors appointed by the Company as representative may vary according to the Company’s shareholding or the agreement between the Company and other shareholders.

The management of the company has duties and responsibilities to carry out operations according to the policy and drive overall performance to achieve the target, such as sales growth, cost reduction, and investments to be in line with the business plan. They are also responsible to manage human resources and resolve problems or conflicts that may impact the operations, and ensure effective communication throughout the organization.

For subsidiaries that the Company exercises its

control, the scope of authority of executive directors

is defined within the scope of the SEC notification.

The management of subsidiary companies shall ensure

AAPICO HITECH PUBLIC COMPANY LIMITED

59

that transactions between related parties are handled correctly and completely, and that the same disclosure policy as the parent company is applied. The financial reporting of subsidiary must also be auditable and provided on time for the Company for consolidation purpose.

Auditor and Auditors’ remuneration For the year 2015, the Board of Directors, with the shareholders’ approval, has appointed EY Office Limited to be the auditor to audit the Company’s financial statements for the fiscal year ended as of December 31, 2015, given their past performance records and level of professional and independency.

Audit fee The Company paid the audit fee in 2015 for the audit of the financial statements of the Company and its major subsidiaries at the total amount of Baht

60

ANNUAL REPORT 2015

8,640,000, of which the audit fee for the Company only is amounted to Baht 1,800,000.

However, the subsidiaries of the Company are not all using the auditing service from EY Office Limited as some of the businesses are not complicated and the contribution to the group is not significant. Therefore the Company decides to use local auditing firm where costs are more appropriate.

Non-Audit fee In addition to audit fee, the Company and some of its subsidiary companies have engaged non-audit service from EY Office Limited, which is the compliance audit to the conditions stipulated in the investment promotion certificate (BOI audit). The total amount for this nonaudit service in 2015 was a total of Baht 500,000, of which include the non-audit fee for the Company only of Baht 100,000.

Internal Control and Risk Management In accordance with the good corporate governance principle, the Board of Directors continuously put emphasis on the effective and adequate internal

control and the risk management of the Company

and thereby assigned the Audit Committee to

assess the adequacy of the Company’s internal control

system. The Company has contracted internal auditor to review the Company’s operations and work processes of key risk areas according to the annual audit plan. The internal auditor is an independent

party reporting directly to the Audit Committee at

the review meetings on quarterly basis.

The Audit Committee reviews the report from internal auditor on their findings and recommendations, which summarize the compliance of key activities in line

with the established system and applicable laws and regulations, and the follow up of corrective actions.

The Audit Committee also considers the evaluation of the sufficiency of the Company’s internal control based

on the assessment of internal auditor, which can be summarized in 5 areas as follows:

Control Environment

The Board of Directors and the Company’s management has set policies and guidelines based on the good corporate governance principle for employees to conduct business in an efficient and ethical way with transparency. Employees are well informed of the Company’s policies and code of conducts at the orientation and shall be complied with applicable laws and regulations. Any malpractices or unlawful acts would be penalized according to the severity of the issue.

The Company has defined its management structure, allowing the Board of Directors to oversight the management performance independently for the highest benefits of shareholders. It also has clearly segregated

AAPICO

the duties, responsibilities, accountabilities of the

Board of Directors, its committees, the management and employees in the organization structure, and has engaged independent external parties to monitor

and review the compliance to the working procedures and ensure the effectiveness of operations.

The Company believes that a good control environment involve a good control of working processes and skills and discipline of employees. The Company has developed its manufacturing processes toward the quality standards and has adopted the quality management system (ISO/TS16949) and environmental management (ISO14001) as the control framework. The Company has set up training center to manage and provide sufficient trainings to employees in order to develop their skills and adapt to changing environment.

Incentives are appropriately set up and reviewed based on the agreed performance target.

Risk Assessment The Company places importance on risk management process as a key foundation for good corporate governance. The Risk Management Committee, assigned by the Board of Directors, has played a key role in driving the overall risk management process.

The committee meets on quarterly basis to identify

and review issues or events that may impact the Company’s business and its operations and define appropriate measures to manage these impact to an acceptable level.

Corresponding to the changing business environment and economic factors, the Risk Management Committee reviews the Company’s risk, both internal and external factors, on annual basis. The committee also reviews the adequacy of the risk management policy and other relevant policies for effective internal control system of the Company.

AAPICO HITECH PUBLIC COMPANY LIMITED

61

62

Control Activities

Information and Communication

The Company has formulated work instructions as a guideline for employees to operate in a correct, effective and efficient manner and without errors. These work instructions are provided for every key processes, covering activities in the manufacturing, sales and marketing, purchasing, financing and reporting, as well as general management, where appropriate controls are embedded in the procedure in order to prevent the misconducts or corruption issues. Responsible units have been assigned to undertake the inspection and monitor the operations in compliance with work instructions and relevant regulations.

The Company has set up the scope and the approval authority of the management in each level. Duties and responsibilities are clearly defined between staffs, supervisors, managers, and executives. Employees’ access to the Company’s operating system are carefully created, controlled and reviewed on regular basis, especially those involving in the authorization, recording and custody of assets.

The Company has emphasized the strong control in the misuse of the assets for the benefits of directors and executives. Transactions which may cause conflict of interests are carefully considered and approved at arm’s length basis. Major contracts and agreements, particularly those involving major shareholders, directors, and executives have been duly authorized and approved with the consideration of independent directors who have no vested interests in that subject.

Investments and joint venture are monitored the performance through the monthly financial review meetings, where head of operations report and present their performance to the Company’s management.

The Company has systematic and effective communications within the organization. Employees are well informed of the Company’s events and trainings via bulletin board, intranet, emails and group meetings.

For the Board of Directors, the company secretary arranges the board meeting and ensures that important information requiring the directors’ attention are sent

to directors at least 7 days in advance of the meeting

in order for directors to have sufficient information

for their decisions. The company secretary also arranges the minute of meeting to be recorded and documented in a complete and accurate manner for future reference.

The disclosure of information to public has been arranged through various channels, whereby the Company’s website at www.aapico.com, SET portal system, and SET Opportunity Day are the primary communication channel for general information and the Company’s news and announcements to investor community. The Company has instituted and emphasized the role of investor relations as the primary contact window for investors, analysts and shareholders in case of questions that need further clarification. The Company always welcome for visits or meetings with shareholders or investors.

The Board of Directors has established a reporting channel for employees or third parties to raise genuine concerns or report misconducts, corruptions, or violation of laws directly to the Audit Committee. The Company encourages and supports the anti-corruption actions and commits to ensure that no one would suffer from detrimental treatments as a result of reporting their suspicion of wrongdoings.

ANNUAL REPORT 2015

AAPICO

Monitoring Activities The Company schedules several meetings throughout

the year to monitor and follow up on its operations

as to ensure that each operating unit is performing well, both financially and non-financially, according to plan. The performance of each subsidiary are reviewed and reported to management at the monthly review meeting, and the consolidated results of the Company are presented to the Audit Committee and the Board

of Directors for review on quarterly basis before disclosing to public.

On quarterly basis, the Board of Directors also schedules a review of internal control system in key areas, namely production, purchasing, sales and marketing, and human resources. At this meeting, internal auditor reports directly to Audit Committee their findings on the assessment of compliance to working procedures, as well as recommendations and the follow up on corrective actions. In case of matters requiring immediate attentions, internal auditor can inform the management to discuss and resolve the problems at any time.

For the review of production processes, the quality assessment function is assigned to inspect and monitor the compliance to the policies and regulations and work instructions. In addition, the Company employs external party (e.g. TUV) to audit and certify that its productions are conformed to the quality management standards (ISO/TS16949) and environment standards (ISO14001). Customers also request a regular audit as to ensure that production processes are carried out according to agreed procedures and that there are no changes in the processes without prior notification.

AAPICO HITECH PUBLIC COMPANY LIMITED

63

Related Transactions The Company had business transactions with related parties, who are mainly subsidiary and associate companies, joint venture, and directors of the AAPICO Group. These related transactions arose in the ordinary Type of Transactions Sales and Purchases of goods and services Sales and Purchases of machinery and equipment Rental income

Management Fee Interest income

Dividend income

course of business and were concluded on the commercial terms and bases agreed upon between the Company and related parties, which can be described as follows:

Description Sales of automobile parts and stamping dies among the Company, subsidiary and associate companies.

Sales and transfers of machines and equipment among the Company and subsidiary companies.

Rental charge for the use of premises among the Company, subsidiary and associate companies.

Shared management costs among the Company, subsidiary and associate companies.

Interest charge for the loans to and from subsidiary companies for the purpose of providing working capital and cash flow support.

Dividend received from its subsidiary or associate companies.

The significant transactions with related parties in the year 2015 can be summarized in the table below:

64

(Unit : Million Baht) Consolidated Separate financial statements financial statements Transfer Pricing Policy 2015 2014 2015 2014

Transactions with subsidiaries (eliminated from the consolidated financial statements) Sales of goods and services Cost plus margin Sales of machinery and equipment Cost plus margin Interest income 0.01%-5.10% p.a.

Dividend income As declared Rental income Close to rental rates for other building in vicinity Management fee income Approximate cost Other income Approximate cost Purchases of goods and services Cost plus margin Purchases of machinery and equipment Cost plus margin Interest expense 1.00%-5.10% p.a.

Other expense Approximate cost Transactions with associate and joint venture Sales of goods and services Cost plus margin Dividend income As declared Rental income Close to rental rates for other building in vicinity Management fee income Approximate cost Other income Approximate cost Purchases of goods and services Cost plus margin Other expenses Approximate cost Transactions with related parties Purchase of machinery and equipment Cost plus margin

ANNUAL REPORT 2015

- - - - - - - - - - -

- - - - - - - - - - -

197 1 139 258 4 65 10 329 13 9 15

462 16 140 345 4 61 10 320 5 4 16

209 - 7 4 14 261 11

159 - 5 4 9 217 1

1 136 - 4 7 167 8

1 137 3 4 1 178 1

-

29

-

-

AAPICO

Loans to and from related parties The Company has a policy of centralized financial management in order to effectively control and manage the Company’s cost of capital, and hence maximizing returns for the benefits of the Company and its shareholders. Under this policy, financial transactions and funding for investments and working capitals are managed centrally by corporate office. The financial

services and credit facilities are made by the Company and the Company then lends out to subsidiary companies.

As at December 31, 2015 and 2014, the balances of accounts and the balances of loans between the Company and those related parties are summarized as follows:

(Unit : Thousand Baht) Consolidated Separate financial statements financial statements Transfer Pricing Policy 2015 2014 2015 2014 Trade and other receivables Subsidiaries Associates Joint venture Related companies Total Trade and other payables Subsidiaries Associates Related companies Total Short term loans to: New Era Sales Co., Ltd. Subsidiary Able Motors Co., Ltd. Subsidiary Katsuya (Thailand) Co., Ltd. Subsidiary Aapico Hitech Parts Co., Ltd. Subsidiary Aapico Hitech Tooling Co., Ltd. Subsidiary Aapico Forging PLC Subsidiary Aapico Amata Co., Ltd. Subsidiary Kunshan Chaitai-Xincheng Precision Forging Co., Ltd. Subsidiary Dee Mak SDN. BHD. Common director Total Long term loans to: New Era Sales Co., Ltd. Subsidiary Able Motors Co., Ltd. Subsidiary Katsuya (Thailand) Co., Ltd. Subsidiary Aapico Hitech Parts Co., Ltd. Subsidiary Aapico Hitech Tooling Co., Ltd. Subsidiary

- 60,103 696 2,846 63,645

- 345,141 249,822 64,174 9,754 12,431 1,277 32 3 2,297 339 339 67,748 355,266 262,595

- - 42,573 50,017 12,428 181,698 55,001 231,715

41,201 73,144 27,733 27,875 - - 68,934 101,019

- - - - - - - - - -

- 12,000 14,000 - 18,000 29,000 - 600 803 - 60,000 139,000 - 36,000 29,000 - 288,000 192,500 - 18,000 114,670 - 71,847 - 702 - - 702 504,447 518,973

- - - - -

- 250,000 260,000 - 87,000 35,000 - 3,200 3,000 - 215,000 120,000 - 38,700 70,000

AAPICO HITECH PUBLIC COMPANY LIMITED

65

(Unit : Thousand Baht) Consolidated Separate financial statements financial statements Transfer Pricing Policy 2015 2014 2015 2014

Aapico Forging PLC Subsidiary Aapico Amata Co., Ltd. Subsidiary Kunshan Chaitai-Xincheng Precision Forging Co., Ltd. Subsidiary Aapico Investment Pte. Ltd. Subsidiary Foton Passenger Vehicles Distribution (Thailand) Co., Ltd. Subsidiary Total Short term loans from: Aapico Engineering Co., Ltd. Subsidiary Aapico Structural Products Co., Ltd. Subsidiary Dee Mak SDN. BHD. Common director Directors of the Group Total

Necessity and Justification for Related Transactions

- - - - - -

- 1,921,100 1,920,000 - 42,970 - - - 65,626 - 86,267 84,271 - - 1,000 - 2,644,237 2,558,897

- - 1,686 12,932 14,618

- 9,200 9,200 - 252,300 218,000 1,211 - - 15,902 - - 17,113 261,500 227,200

The Audit Committee, assigned by the Board of Directors, ensures that the Company will conduct The Audit Committee considered the Company’s related transactions with transparency and in related transactions in 2015 and found that these compliance to the Company’s good governance, and transactions be reasonable, and transactions that the strictly following applicable rules and regulations by

Company invested had a good tendency, would be the Stock Exchange of Thailand and the Securities

profitable to the Company as a whole, and were and Exchange Commission. These related transactions conducted fairly and at the arm’s length basis. shall be prepared in accordance with the generally

accepted accounting principles.

Policies or Trends relating to Future Related Transactions In the case that related transactions may involve

The Company tends to continue these related with potential conflict of interests, the Audit Committee transactions incurred for the ordinary course of shall consider and provide its opinion on the necessity business and in line with the centralized financial and justification of such transactions. In the situation management policy. These transactions include but where the Audit Committee does not possess sufficient not limited to sales and purchases of goods and knowledge or expertise on the subjects, the Audit services, loans to and from related parties and interest Committee may seek advice from experts or assign an payment, rental of premises, management services and independent party to express opinion on tht transaction dividend income. Transfer pricing policy applied for to support their decision. related transactions shall be concluded on commercial terms, which are comparable to market price or at arm’s length basis, and bases agreed upon between the Company and related parties.

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ANNUAL REPORT 2015

AAPICO

Management Discussion and Analysis Overview of Business in 2015

The Automotive Industry in Thailand

AAPICO Hitech Public Company Limited is principally engaged in the manufacture and distribution of automobile parts, including pressed parts, forged parts, machined parts and plastic parts, as well as the design of stamping dies and assembly jigs for the automobile production. The Company also operates car dealerships and supplies car navigation system and technology under the brand “POWERMAP”.

The Company has main factories and facilities in three countries, namely Thailand, Malaysia and China.

Total Revenues

2015 2014 2014 2015

35% 37% 63% 65%

Auto Parts Car Dealers

The Company’s total revenues come mainly from the automobile parts business and the car dealerships business. The revenue from car navigation system and technology was nominal and hence was included as part of the revenue from the automobile parts segment.

In 2015, the revenue composition of the automobile parts and car dealership segment was at the ratio of 65:35, as compared to the ratio of 63:37 in the year 2014.

Total vehicle production volume in Thailand in 2015 grew marginally by 1.8% compared to 2014, from 1.880 million units in 2014 to 1.913 million units in 2015. Of this volume, the production for export was at 1.201 million units (63%) and domestic sales at 0.712 million units (37%). The production of passenger cars and commercial cars both increased year on year by 2.43% and 0.09% respectively.

Domestic demands in 2015 continued to be weak, posting a 9.3% decline year on year, driven mainly by the slowdown of economy and dampen consumer sentiments due to low agriculture produce prices, high household debts and negative effect of the 1st car campaign, with many purchases had been brought forward and hence depriving the domestic market needs and spending power. Offsetting this decline was a solid export volume growth at 6.8% year on year.

Overview of Thailand Automotive

(unit : million)

Production Domestic Export 3.0

2.5 2.0 1.5

1.0 0.5 0.0

2554

2555

2556

2557

2558

AAPICO HITECH PUBLIC COMPANY LIMITED

67

Sales and service income in 2015 posted a nominal For the year 2015, the Company reported a total revenue decline by Baht 38 million or by 0.3%. Solid growth of Baht 14,993 million and net profit attributable to was seen in Thailand at a 4.2% increase year on year, equity holders of Baht 313 million, as compared to driven by the increases of vehicle production volume, Baht 15,196 million and Baht 367 million respectively which grew 1.8% year on year, and some tooling for the year 2014. The decrease of profit, and hence income in 2015. This growth however was offset by a earnings per share, compared to last year was mainly sale decline in China due to the slowdown of economy due to lower income and foreign currency exchange and lower revenue from Malaysia which was impacted fluctuation, despite improved gross profit margin, higher by the weaker currency translation rate as compared to share of profit from associates and lower financing costs. 2014.

Sales and Service Income by segment Revenues Sales from the automobile parts segment grew year

Unit : Million Baht Y2014 Y2015 Change % on year by 2.8%, driven by higher sales in the OEM Sales and segment in Thailand and tooling income from the

service income 14,572 14,534 (38) -0.3% plastic division. This growth, however, was largely offset

Other income 614 459 (155) -25.2% by lower sales of forged and machined parts in China, Exchange gains 10 - (10) -100% due to the slowdown of economy, and lower sales from Total Revenues 15,196 14,993 (203) -1.3% assembly jigs and stamping die business.

Total revenue of the Company in 2015 decreased Baht 203 million or by 1.3% compared to 2014, primarily Contrary to the growth in the automotive parts segment, due to lower income from scrap sales as a result of a sales of the car dealerhips segment posted a decline

slump steel price and partly due to lower sales. Other of 5.7% year on year. This decline was mainly due to income in 2014 also included a tooling income of Baht the impact of weaker currency exchange rate, where 97 million and a Baht 10 million exchange rate gain Malaysian Ringgit has depreciated against Thai Baht

related to the derivative agreements in 2014, as by about 11% compared to last year. After the adjustment of this currency impact, sales grew compared to an exchange loss in 2015. marginally by 0.8%. A healthy growth from Honda car

sales in Malaysia was largely offset by weak domestic Unit : Million Baht Y2014 Y2015 Change % Thailand 10,130 10,559 429 4.2% demands in Thailand.

Malaysia 3,741 3,393 (348) -9.3%

Sales and Service Income China 701 582 (119) -17.0%

Sales and (unit : in million baht) service income 14,572 14,534 (38) -0.3% 2014 2015

Profit and Loss Analysis

9.07

9.33 5.50

Auto Parts

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ANNUAL REPORT 2015

5.20

Car Dealers

AAPICO

Gross Profit

Unit : Million Baht Y2014 Y2015 Change % Sales and

service income 14,572 14,534 (38) -0.3%

Cost of sales & service 13,964 13,820 (144) -1.0% Gross Profit 608 714 106 17.4%

Gross Profit Margin 4.2% 4.9% 0.7%

Despite the sales decline, gross profit increased by 17.4% year on year. Gross profit margin improved

from 4.2% of sales in 2014 to 4.9% of sales in 2015, driven by profit from tooling income and efficiency improvement.

The margin improvement was seen from the automotive parts segment, driven by tooling income profit and improved inventory control in plastic parts business.

Improvement was also seen in jigs and dies products, pressed parts and forged and machined parts in Thailand, while forged parts in China reported lower gross profit, mainly as a result of lower sales.

The gross profit margin for the car dealerships segment was lower than last year, as the margin in Thailand was pressured by lower sales. This was partly compensated by better margin in Malaysian car dealers, driven by higher car sales.

Selling and Administrative Expenses Selling and administrative expenses increased by 5.6% year on year, mainly attributable to increased level of fixed costs in the automotive parts segment and a Baht 22 million exchange rate loss related to the derivative agreements in 2015, as compared to a gain recorded as other income in 2014. The cost level of the car dealerships segment remained relatively stable compared to last year.

Earnings Earnings before interest and taxes (EBIT) decreased year on year, from Baht 488 million in 2014 to Baht 387 million in 2015. In percentage of revenue, EBIT margin also decreased from 3.2% in 2014 to 2.6% in 2015. This reduction of earnings was mainly due to lower sales, lower scrap income, and an exchange rate loss.

Earnings before interest and tax

(unit : in million baht)

2014 2015

376 283

112 104

Auto Parts Car Dealers

After adjustment for depreciation expense and

include associate income, EBITDA in 2015 was Baht 1,280 million, compared to Baht 1,343 million in 2014.

EBITDA margin in 2015 was at 8.5% of revenue, compared to 8.8% of revenue in 2014.

Share of profit from investments in associates and joint venture

Unit : Million Baht Y2014 Y2015 Change %

Hyundai 107 89 (18) -17% Sanoh Able 20 74 54 270% Thai Takagi Seiko 3 (20) (23) -767% Quantum Inventions (1) 8 9 900%

Other (5) (3) 2 40%

Associate income 129 148 19 14.7%

Major contributors of profit in 2015 were Hyundai and Able Sanoh. Compared to 2014 performance, Able Sanoh’s profit notably increased, driven by higher sales, which were partly due to some new projects in 2015, followed by better results from Quantum Inventions.

These increases were partly offset by lower profit from Hyundai, which was effected by weak domestic demand and a loss from Thai Takagi Seiko.

AAPICO HITECH PUBLIC COMPANY LIMITED

69

Finance Costs and Income Tax Expenses

Unit : Million Baht Y2014 Y2015 Change %

Finance costs 208 170 (38) -18%

Income tax expenses 23 27 4 17% Finance and Tax 231 197 (34) -14.7%

The Company has continuously reduced its finance costs over the years and recorded a reduction of Baht 38 million in 2015. This was mainly due to the reduction of interest bearing debts level as well as low interest rate on new fundings, both from banks and from the issuance of debenture in 2015.

Income tax expenses, largely related to the Malaysian car dealerships operations, increased by Baht 4 million compared to 2014.

Net Profit Unit : Million Baht Y2014 Y2015 Change % Profit Net 386 338 (48) -12.4% Net Profit Margin % 2.5% 2.3% -0.3%

Minority Interest 25 6 31.6% 19 Net Profit to

Equity Holders 367 313 (54) -14.7%

Net Profit Margin % 2.4% 2.1% -0.3%

EPS 1.14 0.97 (0.17) -14.7%

Net profit of the Company decreased year on year

by Baht 48 million, almost all of which attributable to lower profit in the automotive parts segment, as a result of lower scrap income and foreign currency exchange fluctuation, despite improved gross profit margin, lower interest costs, and higher share of profit from associates.

Excluding the minority interest portion, net profit attributable to equity holders in 2015 were Baht 313 million or at 2.1% of revenue. On a per share basis, earnings were at Baht 0.97 per share in 2015.

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ANNUAL REPORT 2015

Financial Standing Analysis As of December 31, 2015, the Company has total assets of Baht 11,507 million, comprising of total liabilities of Baht 5,524 million and shareholders’ equity of Baht 5,983 million.

Assets

Unit : Million Baht Y2014 Y2015 Change %

Receivable 1,900 1,912 12 0.6%

Inventories 1,209 1,109 (100) -8.3%

Current Assets 3,822 3,683 (139) -3.6% Investment in associates 1,384 1,445 61 4.4% Goodwill 235 235 - 0.0%

PPE 6,318 5,847 (471) -7.5%

Non-Current Assets 8,260 7,824 (436) -5.3%

Total Assets 12,082 11,507 (575) -4.8%

Total assets decreased by Baht 575 million, mainly

from decreases of property, plant and equipments, primarily as a result of depreciation, and lower inventory level compared to last year.

In 2015, the Company has continued monitoring the control of inventories and receivables. The average collection period hence further improved by 4 days, from 51.7 days in 2014 to 47.4 days in 2015, and

the average inventory holding period was shorten by

1 day, from 31.3 days to 30.2 days.

Liabilities and Shareholders’ Equity Total liabilities decreased by Baht 877 million, mainly attributable to a Baht 515 million decrease of debt

level and decreases of trade and other payable.

The average payable period was slightly faster than last year by 1 day, from 57.3 days in 2014 to 56.0 days in 2015.

The loan outstanding with banks has continuously decreased during the year to Baht 2,483 million at the

AAPICO

Unit : Million Baht Y2014 Y2015 Change % Trade and Other Payables 2,318 1,978 (340) -14.7% Short-Term borrowings 737 655 (82) -11.1% Current portion of 923 (245) -21.0% LT loans 1,168 Long-term Loans 1,891 905 (986) -52.1% Debenture - 798 798 Interest-bearing Debts 3,796 3,281 (515) -13.6% Total Liabilities 6,401 5,524 (877) -13.7% Total Shareholders’ Equity 5,681 5,983 302 5.3%

end of 2015. This was due to prepayment of long term loans, in addition to the regular repayment schedule,

as a measure to reduce financing costs. Offsetting

the decrease of bank loans, was the issuance of the

3 year debenture at a nominal value of Baht 800 million in April 2015, according to the Company’s finance strategy to diversify its source of funds portfolio. This debenture will be due in full amount in 2018.

Total shareholders’ equity increased by Baht 302 million, maily attributable to retained profit for the

year. In 2015, the Company has paid out dividend at the amount of Baht 64 million.

Key Financial Performance

Profitability Ratio Y2014 Y2015 Change

3.1% 2.9% -0.3% Return on Assets (%) Return on Equity (%) 6.9% 5.8% -1.1%

The Company’s return on assets (ROA) and return on equity (ROE) have declined year on year, mainly due to lower profit of the Company, which has decreased

from Baht 386 million to Baht 338 million.

Liquidity Ratio Y2014 Y2015 Change

0.67% 0.55% (0.12)% Debt : Equity Ratio (time) Current Ratio (time) 0.87% 0.99% 0.13%

Despite the weaker profitability performance, the Company has continuously improved its liquidity

management with the reduction of obligations with banks. The interest bearing debt to equity ratio has improved to 0.55 times in 2015, achieving the Company’s target of long term funding structure at around 0.5-0.6 times. The current ratio has improved from 0.87 times in 2014 to 0.99 times in 2015, with the reduction of current obligations to match its liquid funds.

Debt Service Ratio Y2014 Y2015 Change

Interest Coverage 2.97% 3.15% 0.18%

Debt Service Coverage 0.98% 1.17% 0.20%

The Company also improved its ability to service debt obligation. Despite the weaker profitabilty performance, the improvement was entirely attributable to the reduction of debt obligations at the beginning of the year and hence reducing interest expenses. As a result, the interest coverage ratio has improved from 2.97 times in 2014 to 3.15 times in 2015.

The debt service coverage ratio (DSCR) has also improved from 0.98 times in 2014 to 1.17 times in 2015. The DSCR in 2015 was still below the banks’ requirement, which requires the Company to maintain this ratio at above 1.2 times, and the Company has received the bank waiver for the breach of financial covenants for the year 2015.

Cash Flow Analysis

The Company’s cash and cash equivalent amount increased by Baht 24 million, from Baht 314 million

in 2014 to Baht 338 million in 2015.

Unit : Million Baht Y2014 Y2015 Change %

Cash from Operating 1,637 927 (710) -43.4% Cash from Investing (376) (144) 232 -61.7% from Financing (1,162) (745) Cash 417 -35.9% 10 -43.5% Translation adjustments (23) (13) Net cash increase 76 25 (51) -67.1%

Cash Balance 314 338 24 7.6%

During the year, cash flow from operations decreased AAPICO HITECH PUBLIC COMPANY LIMITED

71

by Baht 710 million, mainly due to lower earnings, as compared to 2014 and partial receipt of cash from insurance income in 2014. The lower cash flow from operations was compensated by decreases of cash used in investing and financing activities by Baht 232 million and Baht 417 million respectively. Main activities that used lower cash were the decrease of capital expenditures by Baht 187 million, the decrease of net repayment of debts by Baht 318 million, the decrease of interest payment by Baht 47 million and lower dividend payment in 2015 by Baht 45 million.

Major factors and influences potentially affecting future operations or financial standing The financial results and operations of the Company and its subsidiaries are greatly attached to the development of automotive industry and car markets in Thailand and Malaysia. The demand for vehicle production volume is an important driver for the manufacture of automotive parts business in Thailand, where its performance is inclinded to move in the same trend as the industry’s performance. The trend of domestic demand is an indicator for the car dealerships business in Thailand and Malaysia.

Looking forward, Thailand’s total vehicle production volume is forecasted to reach 2 million units in 2016, representing an increase of 4-5% year on year. This increase is expected to be driven by export growth, which is forecasted to increase to 1.25 million units in 2016. With the implementation of AEC, it is believed that Thailand’s position as the leading automotive

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ANNUAL REPORT 2015

manufacturing hub in ASEAN will be strengthen.

Thailand’s domestic car market is however less encouraging. The negative effects of the 1 st car campaign is expected to still linger on in 2016, as well as the high household debt and weak agriculture produce price. The latter may also be further impacted by the draught issue. In addition, a new regime tax based on CO2 emission instead of engine size effective from January 2016 is also expected to affect market demand, as an anticipated higher car price may further decrease an overall sales numbers in 2016.

For the Malaysian market, it is anticipated that the volatility of Ringgit and the implementation of Goods and Service Tax in 2015 will have an impact over the overall economy in 2016. The announced car price increases by most major brands for January 2016 may result in a dip in TIV in 2016.

The Company closely monitors the development of economy and the automotive industry and preparing

for challenges ahead. The Company will continue its focus on controling cost activities and cost reduction measures, as well as efficiency improvement in order

to achieve a lean and cost effective manufacturing process. The Company is also seeking new opportunities and exploring new markets for profitable growth, either throught is own investments or with joint venture partners. The Company is also gearing towards sustainability growth with emphasis on quality, cost, delivery, management and engineering innovation to achieve customers’ targets, and as well as continuous improvements in all companies.

Report of Audit Committee

AAPICO

The Audit Committee of Aapico Hitech Public Company Limited is comprised of 3 qualified independent directors according to the definition and requirements of the Securities and Exchange Commission and the Stock Exchange of Thailand. Mr. Pipat R. Punya acts as the Chairman of the committee with Mr. Kenneth Ng and Mr. Wichian Mektrakarn (appointed as of May 14, 2015) as the member of the committee.

The Board of Directors has delegated its responsibilities to the Audit Committee to carry out its duties, which include reviewing the financial statements and disclosure of notes to financial statements, good corporate governance practices, assessment of internal control and internal audit, compliance to laws and related regulations, assessment of risks, as well as proposing the appointment of external auditor.

In the year 2015, the Audit Committee held 4 meetings to perform its duties and the proceedings from each meeting were reported to the Board of Directors. Under its scope of authorities and responsibilities, the Audit Committee meetings were conducted to give fair opinion which can be summarized as follows: The reviews of quarterly and annual financial statements were performed by considering financial reports, significant items, accounting policies, disclosure of information in notes to financial statements and compliance with financial reporting standards and regulatory requirements. The committee reviewed with the management

that the financial statements were prepared in accordance with the Thai Financial Reporting Standards (TFRS), and that there was sufficient disclosure in the notes to financial statements, adequate internal control in a good level and no material issues concerning the non-compliance to related regulations. After the review, the Audit Committee thereby approved the financial statements, which external auditors reviewed and audited without reservation.

The review of the effectiveness and adequacy of internal control system and internal audit were conducted by considering the report from internal auditor and the assessment of internal control system. Upon reviewing,

the committee has concluded that the Company’s internal control system is in place without significant deficiencies. The report from internal auditor also reflected that the compliance of policies and procedures was

at a good level. The committee also gave recommendations to the management to enhance greater efficiency

of the Company’s internal control process.

The review of the Company’s operations and reporting was in compliance with laws and regulations concerning the SEC and SET requirements and other regulations relating to the Company’s business. There were no reporting of any misconducts in the year 2015.

The assessment of risks and the risk management process were conducted by the Risk Management

Committee and reported to the Audit Committee. The Company’s risk factors were classified into country risk, market risk, operational risk, financial risk and other risks and are reviewed on annual basis in response to changes in the economy both domestically and globally.

AAPICO HITECH PUBLIC COMPANY LIMITED

73

The Audit Committee has evaluated the performance of the Company’s external auditor, EY Office Limited, for the year 2015 and considered that their service and level of independence to be of value to the Company’s operations. Based on the satisfactory results and their widely recognized audit standard and experience, the Audit Committee recommended the reappointment of EY Office Limited as the Company’s external auditor for the year 2016 to the Board of Directors for consideration and concurrence for submission to the Annual General Meeting of Shareholders for approval.

For matters of potential conflict of interest transactions, the Audit Committee reviewed the Company’s financial statements and the audit report and ensured that these transactions are properly reviewed and disclosed in compliance with regulatory requirements and good corporate governance principles.

The Audit Committee has performed its duties prudently and independently and issued its opinion for the benefit of Aapico Hitech PLC. From the review and supervision under the scope of responsibilities in the aforementioned topics, it can be summarized that the Company’s financial statements are accurate and reliable and in compliance with financial reporting standards and regulatory requirements, and that the Company is operated under an environment with appropriate risk management, effective and adequate internal control system which is suitable to the business environment, and in compliance with laws and relevant regulatory requirements.

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ANNUAL REPORT 2015

(Mr. Pipat R. Punya) Chairman of Audit Committee

AAPICO

Report of Nomination and Remuneration Committee The Nomination and Remuneration Committee of Aapico Hitech PLC is comprised of 3 independent directors, namely Mr. Pipat R. Punya (Chairman of the committee), Mr. Kenneth Ng and Mr. Wichian Mektrakarn (appointed as of May 14, 2015). As assigned by the Board, the committee has the duties and responsibilities in formulating the policy, criteria and procedures for the nomination and remuneration of the Board of Directors and its committees, in line with the business strategy and direction of the Company.

The Nomination and Remuneration Committee has responsibility to consider qualification of candidates nominated for the position of the Company’s director. They shall ensure that these candidates are qualified by not having characteristics that are prohibiting them from holding a directorship, and their background, knowledge and experience are benefiting the Company’s operations. The committee shall ensure that the composition of the Board of Directors is suitable to the Company’s business with appropriate proportion, size and diversity. In the year 2015, the committee has nominated Mr. Wichian Mektrakarn for the position of the Company’s director, member of Audit Committee and member of Nomination and Remuneration Committee, replacing Mr. Supasak Chirasavinuprapand who had retired by rotation. This nomination was approved by the Board of Directors and the 2015 Annual General Meeting of Shareholders, as proposed.

The Nomination and Remuneration Committee has carefully considered the remuneration of the Board of Directors and its committees, in comparison with the directors’ remuneration of other listed companies with similar

size, profitability and accountability. For the year 2015, the committee proposed to maintain the annual remuneration and attendance fee of the Board of Directors and its committee at the same rate as in the year 2014. This proposal was also approved by the 2015 Annual General Meeting of Shareholders, as proposed.

The Nomination and Remuneration Committee has performed its duties prudently within the scope of responsibilities as delegated by the Board of Directors. The Nomination and Remuneration Committee also

has disclosed the remunerations and benefits to the Board of Directors in the Annual Report and Form 56-1

for transparency purpose.

(Mr. Pipat R. Punya) Chairman of Nomination and Remuneration Committee

AAPICO HITECH PUBLIC COMPANY LIMITED

75

Company Contact Information Country Company Address Contact OEM Auto Parts Manufacturing Thailand AAPICO Hitech Public 99 Moo 1 Hitech Industrial Estate Tel : (66) 35 350 880 Company Limited Tambol Banlane Ampur Bang Pa-in Fax : (66) 35 350 881

Ayuthaya Province 13160 www.aapico.com nd Tel : (66) 38 650 888 [2 Factory] 7/289 Moo 6 Amata City Industrial Estate Tambol Mabyangporn Ampur Pluakdaeng Fax : (66) 38 036 228

Rayong Province 21140 [Corporate Office] Room 2812, 28th Floor, The Offices at Central World Tel : (66) 2 613 1504 999/9 Rama I Road Kwaeng Pathumwan Fax : (66) 2 613 1508 Khet Pathumwan Bangkok 10330 AAPICO Amata 700/483 Moo 2 Amata Nakorn Industrial Estate Tel : (66) 38 717 200 Company Limited Tambol Bankao Ampur Panthong Fax : (66) 38 717 187 Chonburi Province 20160 AAPICO Forging Public 700/20 Moo 6 Amata Nakorn Industrial Estate Tel : (66) 38 213 355 Company Limited Tambol Nongmaidaeng Ampur Mueng-Chonburi Fax : (66) 38 213 360 Chonburi Province 20000 AAPICO Hitech Parts 99/2 Moo 1 Hitech Industrial Estate Tel : (66) 35 350 880 Company Limited Tambol Banlane Ampur Bang Pa-in Fax : (66) 35 350 881 Ayuthaya Province 13160 AAPICO Plastics Public 358-358/1 Moo 17 Bangplee Industrial Estate Tel : (66) 2 315 3456 Company Limited Taparuk Road Tambol Bangsaothong Fax : (66) 2 315 3334

Ampur Bangsaothong Samutprakarn Province 10540 Tel : (66) 38 650 888 [2nd Factory] 7/288 Moo 6 Amata City Industrial Estate Tambol Mabyangporn Ampur Pluakdaeng Fax : (66) 38 650 804 Rayong Province 21140 AAPICO Precision 700/16 Moo 6 Amata Nakorn Industrial Estate Tel : (66) 38 213 355 Company Limited Tambol Nongmaidaeng Ampur Mueng-Chonburi Fax : (66) 38 213 360 Chonburi Province 20000 AAPICO Structural Products 700/16 Moo 6 Amata Nakorn Industrial Estate Tel : (66) 38 717 200 Company Limited Tambol Nongmaidaeng Ampur Mueng-Chonburi Fax : (66) 38 717 187 Chonburi Province 20000 Katsuya (Thailand) 229/104-105 Moo 1 Taparuk Rd., Tel : (66) 2 706 5915-9 Company Limited Tambol Bangsaothong Ampur Bangsaothong Fax : (66) 2 706 5910 Samutprakarn Province 10540 AAPICO Lemtech (Thailand) 56 Moo 9 Tambol Tanoo Ampur U-thai Tel : (66) 35 741 808 Company Limited Ayuthaya Province 13160 Fax : (66) 35 719 383 AAPICO Mitsuike (Thailand) 99 Moo 1 Hitech Industrial Estate Tel : (66) 35 350 880 Company Limited Tambol Banlane Ampur Bang Pa-in Fax : (66) 35 350 881 Ayuthaya Province 13160

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ANNUAL REPORT 2015

AAPICO

Country Company

Address

Contact

Thailand Able Sanoh Industries 98 Moo 1 Hitech Industrial Estate Tel : (66) 35 350 880 (1996) Company Limited Tambol Banlane Ampur Bang Pa-in Fax : (66) 35 350 881 Ayuthaya Province 13160 Edscha AAPICO Automotive 99/2 Moo 1 Hitech Industrial Estate Tel : (66) 35 350 880 Company Limited Tambol Banlane Ampur Bang Pa-in Fax : (66) 35 350 881 Ayuthaya Province 13160 Minth AAPICO (Thailand) 7/290 Moo 6 Amata City Industrial Estate Tel : (66) 38 650 865-7 Company Limited Tambol Mabyangporn Ampur Pluakdaeng Fax : (66) 38 650 864 Rayong Province 21140 Sanoh Industries (Thailand) 7/209 Moo 6 Amata City Industrial Estate Tel : (66) 38 956 250 Company Limited Tambol Mabyangporn Ampur Pluakdaeng Fax : (66) 38 956 252 Rayong Province 21140 Sumino AAPICO 700/706 Moo 3 Amata Nakorn Industrial Estate Tel : (66) 38 447 628 (Thailand) Company Limited Tambol Bankao Ampur Panthong Fax : (66) 38 447 632 Chonburi Province 20160 Thai Takagi Seiko 358-358/1 Moo 17 Bangplee Industrial Estate Soi 7/1 Tel : (66) 2 705 8800-01 Company Limited Theapharuk Road Tambol Bangsaothong Fax : (66) 2 705 8808 Ampur Bangsaothong Samutprakarn Province 10540 China Kunshan Chaitai-Xincheng Economic and Technological Development Zone Tel : (86) 512 5767 1757 Precision Forging Company 405 Yunque Road Kunshan City Fax : (86) 512 5767 0964 Limited Jiangsu Province 215331 China

Design and Manufacture of Assembly Jigs Thailand AAPICO Hitech Tooling 99/1 Moo 1 Hitech Industrial Estate

Tel : (66) 35 350 880 Company Limited Tambol Banlane Ampur Bang Pa-in Fax : (66) 35 350 881

Ayuthaya Province 13160

Car Dealerships

Thailand Able Motors 14/9 Moo 14 Phaholyothin Road Tel : (66) 2 908 6001-7 Company Limited Tambol Klong Neung Ampur Klong Luang Fax : (66) 2 908 6009

Pathumthani Province 12120 [Office branch] 2418-2420 Ladprao Road

Kwaeng/Khet Wangthonglang Bangkok New Era Sales 97 Ramindra Road Kweang Ramindra Tel : (66) 2 519 5800-4 Company Limited Khet Kannayao Bangkok 10230 Fax : (66) 2 946 5107 [Office branch] 89/89 Moo 5 Srinakarin Road

Tambol Bangmuang Ampur Bangsaothong

Samutprakarn Province 10270 Malaysia New Era Sales (M) Lot 39821, Jalan Semenyih Tel : (60) 3 8737 0403 SDN. BHD. 43000 Kajang Selangor Fax : (60) 3 8737 7406 Tenaga Setia Resources No. 10 Jalan 51/217 Section 51 Tel : (60) 3 7784 8411 SDN. BHD. 46050 Petaling Jaya Selangor Fax : (60) 3 7784 7411

AAPICO HITECH PUBLIC COMPANY LIMITED

77

Country Company Car Navigation

Address

Contact

Thailand AAPICO ITS 141 Thailand Science Park, Phahonyothin Road, Tel : (66) 35 350 880 Company Limited Tambol Khlong Nueng, Ampur Khlong Luang, Fax : (66) 35 350 881 Pathumthani Province 12120 www.powermap.in.th Malaysia AAPICO ITS Co. No. 10 Jalan 51/217 Section 51 Tel : (60) 3 7785 5158 SDN. BHD. 46050 Petaling Jaya Selangor Fax : (60) 3 7781 6158 AAPICO QI SDN. BHD. 38-1, Jalan Mega Mendung, Off Jalan Klang Lama,

58200 Kuala Lumpur Singapore Able ITS PTE. LTD. 745 Lorong 5 Toa Payoh The Actuary #03-01 Tel : (65) 6836 1919 Singapore 319455 Quantum Inventions Block 71 Ayer Rajah Crescent #03-23/24

Private Limited Singapore 139951

Others Thailand AAPICO Engineering 99 Moo 1 Hitech Industrial Estate Tel : (66) 35 350 880 Company Limited Tambol Banlane Ampur Bang Pa-in Fax : (66) 35 350 881 Ayuthaya Province 13160 A ERP Company Limited 99 Moo 1 Hitech Industrial Estate Tel : (66) 35 350 880 Tambol Banlane Ampur Bang Pa-in Fax : (66) 35 350 881 Ayuthaya Province 13160 AAPICO Training Center 99 Moo 1 Hitech Industrial Estate Tel : (66) 35 350 880 Company Limited Tambol Banlane Ampur Bang Pa-in Fax : (66) 35 350 881 Ayuthaya Province 13160 AAPICO Technology 99 Moo 1 Hitech Industrial Estate Tel : (66) 35 350 880 Company Limited Tambol Banlane Ampur Bang Pa-in Fax : (66) 35 350 881 Ayuthaya Province 13160 Malaysia AAPICO Engineering No. 10 Jalan 51/217 Section 51 Tel : (60) 3 7784 8411 SDN. BHD. 46050 Petaling Jaya Selangor Fax : (60) 3 7784 7411 Singapore AAPICO Investment 745 Lorong 5 Toa Payoh The Actuary #03-01 Tel : (65) 6836 1919 Private Limited Singapore 319455 Jackspeed Corporation 221 Henderson Road #06-15 Tel : (65) 6273 0386 Limited Singapore 159557 Fax : (65) 6273 0396

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ANNUAL REPORT 2015

AAPICO

Reference Security Depository Registrar : Thailand Securities Depository Company Limited Address Telephone Fax

: 93 Ratchadapisek Road, Dindaeng, Bangkok 10400 Thailand : (66) 2 009-9000, (66) 2 009-9999 : (66) 2 009-9991

Auditor

: EY Office Limited

Address :

Telephone : Fax :

Lake Rajada Office Complex, Floor 33, 193/136-137 Rajadapisek Road, Klongtoey, Bangkok 10110 (66) 2 264-0777 (66) 2 264-0789

Company Credit Rating For the year 2015, TRIS Rating affirms the company rating and the senior unsecured debenture rating of Aapico Hitech PLC at “BBB+”. The rating reflects

the Company’s strong business profile as a Tier-1 automotive part manufacturer in Thailand, its strong relationships with major automakers, high barrier to entry in the Tier-1 automotive part industry, and strong fundamentals of the automotive production in Thailand.

These strength are however partially weighted down

by the relatively thin profit margin of its stamped

products and car dealership segments, high customer concentration due to the character of industry which has small number of major automakers in Thailand, and cyclical nature of the automotive industry.

TRIS Rating has given the rating outlook at “Stable”, which reflects its expectation that the Company will be able to maintain its strong market position in its core lines of business and will continue to maintain its financial strength.

AAPICO HITECH PUBLIC COMPANY LIMITED

79

Corporate Information Information as at December 31, 2015

Abbreviation AH Registration Number 0107545000179 Type of Business Design, produce, and install assembly jigs and stamping dies, and produce OEM automotive parts, which include floor parts, brackets, chassis frames, forged and machine parts including steering and suspension system, cross members, pillars, clips, and fuel tank to leading automobile assemblers in Thailand, as well as car dealerships and car navigation businesses.

Website www.aapico.com Established 1996 First day of Trading 17 October 2002 in SET Address 99 Moo 1 Hitech Industrial Estate Tambol Ban Lane Amphur Bang Pa-in Ayutthaya Province 13160 Registered Capital Baht 322,649,160 Consist of Ordinary 322,649,160 shares* Paid Up Capital Baht 322,583,844 Consist of Ordinary 322,583,844 shares* *Par Value at 1 baht per share

Accounting Cycle 1 January- 31 December Major Shareholders Major shareholders are Mr. Yeap Swee Chuan and family with shareholding of 39.85% and Sojitz Corporation with shareholding of 15.76% of the total outstanding shares.

Remaining shares are held by institutional and individual investors.

AH Stock Trading History for 2007-2015

Share Volume

30,000 25,000 20,000 15,000 10,000

Volume (Share)

Closed Price

40 35 30 25 20 15 10 5

0

0

3/1/2007 27/2/2007 27/4/2007 26/6/2007 22/8/2007 16/10/2007 13/12/2007 11/2/2008 8/4/2008 9/6/2008 5/8/2008 3/9/2008 25/11/2008 26/1/2009 23/3/2009 26/5/2009 23/7/2009 17/9/2009 11/12/2009 1/12/2010 7/9/2010 11/2/2010 29/12/2010 25/2/2011 27/4/2011 27/6/2011 24/8/2011 18/10/2011 15/12/2011 10/2/2012 10/4/2012 11/6/2012 6/8/2012 1/10/2012 26/11/2012 24/1/2013 21/3/2013 22/5/2013 18/7/2013 13/9/2013 8/11/2013 9/1/2014 6/3/2014 7/5/2014 7/7/2014 3/9/2014 29/10/2014 25/12/2014 23/2/2015 24/4/2015 24/6/2015 21/8/2015 15/10/2015 14/12/2015 9/2/2016

5,000

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ANNUAL REPORT 2015

Closed Price (Baht)

หน่วย : 1,000 35,000

NEW ERA SALES (M) SDN. BHD. KAJANG SELANGOR

TENAGA SETIA RESOURCES SDN. BHD PETALING JAYA

MINTH AAPICO (THAILAND) CO., LTD. RAYONG

AAPICO ITS CO., LTD. A MACTION CO., LTD. AYUTHAYA

ABLE MOTORS CO., LTD. PATHUMTHANI

AAPICO HITECH PLC, AAPICO PLASTICS PLC, RAYONG

AAPICO FORGING PLC. CHONBURI

AAPICO HITECH PARTS CO., LTD. AAPICO MITSUIKE (THAILAND) CO., LTD. AYUTHAYA AAPICO AMATA CO., LTD. CHONBURI AAPICO HITECH PLC. AAPICO HITECH TOOLING CO., LTD. AYUTHAYA

NEW ERA SALES CO., LTD. BANGKOK AAPICO PLASTICS PLC. SAMUTPRAKARN

AAPICO STRUCTURAL PRODUCTS CO., LTD. CHONBURI

ABLE SANOH INDUSTRIES (1996) CO., LTD. AYUTHAYA

KUNSHAN CHAITAI-XINCHENG PRECISION FORGING CO., LTD. KUNSHAN