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Annual Report 2011


Contents

Company Background Vision / Mission Summary Financial Information......................................................................................1 Message from the Chairman.........................................................................................2 Board of Director..............................................................................................................4 Corporate Social Responsibility....................................................................................8 General Information....................................................................................................... 11 Nature of Business.......................................................................................................... 14 Risk Factors....................................................................................................................... 16 Shareholders and Management................................................................................. 20 Related Party Transactions............................................................................................ 31 Corporate Governance................................................................................................. 34 Control of Internal Information..................................................................................... 42 Corporate Governance Report on Audit Committee............................................. 44 Nomination and Remuneration Committee’s Report.............................................. 46 Board of Director’s Responsibility for Financial Report......................................... 47 Management’s Discussion and Analysis................................................................... 48 Auditor’s Report............................................................................................................... 51 Financial Statement......................................................................................................... 52


Company Background

Thai Rung Union Car Plc. has long been established in the business of motor vehicle assembly Originally founded as a limited partnership under the name Thai Engineering in 1967 by Mr. Vichien Phaoenchoke, its business success eventually led to its become a listed company on the Stock Exchange of Thailand in 1994 under the current name, Thai Rung Union Car Public Company Limited. For the last forty years, until the present, Thai Rung Union Car Plc., a Thai-owned company, ranging from product design and development through the production of dies and jigs and the manufacture of automotive metal and plastic parts, automotive seats to Contract vehicle painting and assembly, vehicle modification into multi-purpose vehicles and special purpose vehicle using its expertise in the design, development and assembly of motor vehicles based on the skills and capabilities of its Thai personnel. In the present, the Company’s having adapted its strategy to focus on OEM parts making and contract assembly and painting, which together now account for some 80% of total revenue, plus the Company’s success in expanding its customer base to other industries in order to reduce the risk of over-reliance on the automotive industry. These new customer segments include manufacturers of industrial and agricultural machinery and construction equipment, and also premium motorcycles, a high added value niche market that looks set to continue growing. The Company also invested in expanding the throughput capacity of its machinery and equipment in order to cater to increase volumes of customer orders. We are thus confident that the Company’s results for 2012 and beyond will rapid growth along with the Thai automotive industry.


Vision / Mission

Vision

To be at the pinnacle of the Thai auto industry, devloping, designing and producing a comprehensive rang of products; with our own brand, to build optimum customer satisfaction through world-class quality and service.

Mission

1. To be a leader in the design, development and production of innovative automotive products: multi-purpose and specialty vehicles, parts, dies, jigs and accessories. 2. To maximise customer satisfaction by providing world-class quality, price, delivery and service. 3. To focus on continuous improvement in product and service quality through the efficient use of fl exible, speedy production and management processes and up-to-date engineering technology. 4. To build own brand image and loyalty. 5. To establish and expand marketing and sales networks at home and abroad. 6. To pay close attention to the development and welfare of our human resources, so as to enable them to compete at world level and to be happy and proud to work for the organisation. 7. Continuously to enhance the stability of the organisation by making profits and providing fair remuneration for shareholders, business partners and employees. 8. To ensure that products, production and work processes all take due account of our responsibilities towards environment, community and society through principles of good corporate governance.


Summary Financial Information

2011 Consolidated, as at 31st December

2010

(Unit : Million Baht) 2009

Operating Performance Sales and Service Income 2,054.78 1,970.21 1,353.07 Total Revenues 2,263.10 2,091.30 1,428.37 Total Expenses 1,996.30 1,925.29 1,554.99 Earnings (loss) before financing cost 266.80 223.74 (113.90) and income tax Net Earnings (loss) attributable to 186.22 186.37 (111.70) equity holders of the Company Financial Position Current Assets 1,083.10 1,285.69 1,025.49 Total Assets 3,004.26 2,987.51 2,581.42 Total Liabilities 362.18 384.50 243.32 Shareholders’ Equity 2,642.08 2,603.02 2,338.10 Per Share Data (Unit: Baht) Earnings (loss) per Share (EPS) 0.38 0.37 (0.21) Dividend per Share 0.25 0.25 Book Value per Share 5.37 5.29 4.66 Financial Ratios (Unit : %) Net Earnings margin 8.23 8.67 (7.75) Return on Equity (ROE) 7.32 7.78 (4.81) Return on Asset (ROA) 8.91 7.49 (4.25)

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Thai Rung Union Car Public Company Limited


Message from the Chairman

In 2011 the Thai automotive industry set a production target of 1.8 vehicles, and in the first quarter performance looked to be on track, with several new model launches, particularly “eco cars” which are gaining popularity with consumers, but an unexpected event in the form of the earthquake and tsunami in Japan in the second quarter caused production and sales figures to dip somewhat, although they recovered in the third quarter until the widespread flooding in Thailand in the fourth quarter, which led to overall vehicle production falling to 1,457,795 units, 11% down on the previous year. Vehicle sales in the domestic market totalled 795,250 units (1% down on previous year), while 735,627 units were exported, representing a decrease of 18% on the previous year. This situation affected the results of nearly all companies in the Thai automotive and parts industries. However parts and vehicle plants are expected to return to normal in the early part of 2012. Turning to the Thai Rung Group’s results for 2011, total consolidated revenues were up by 5% on the previous year and net income of Bt.186 million was unchanged from 2010. The fact that the Company performed better than the automotive industry as a whole is due to its having adapted its strategy to focus on OEM parts making and contract assembly and painting, which together now account for some 80% of total revenue, plus the Company’s success in expanding its customer base to other industries in order to reduce the risk of over-reliance on the automotive industry. These new customer segments include manufacturers of industrial and agricultural machinery and construction equipment, and also premium motorcycles, a high added value niche market that looks set to continue growing. The Federation of Thai Industries has estimated that the Thai automotive industry will produce between 2,000,000 and 2,100,000 vehicles in 2012, representing an increase of between 38% and 44% on 2011. This growth is expected to come as a result of several auto makers such as Mitsubishi, Suzuki and Ford moving production bases to Thailand, and of various other manufacturers increasing their production capacity in order to supply both domestic and export markets with new models. Much of this increase will be for the ‘eco car’, Annual Report 2011

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which looks set to become Thailand’s new champion product. A further significant factor is the recovery of the automotive industry following the flooding that affected much of the country, and this is further helped by the government’s economic stimulus policy of refunding excise tax to first-time car buyers. In view of all these factors it is possible that in 2012 the Thai automotive industry will achieve an all-time record output of between 2 million and 2.1 million units in 2012. These trends present significant opportunities for Thai auto parts makers, including the Company, to win additional orders for both metal and plastic parts, contract painting and assembly work, which together account for the Company’s core revenue. The Company has invested in expanding its parts production capacity by building a new factory in Rayong province, the machinery will be installed up to full capacity during 2012. The Company also invested in expanding the throughput capacity of its paint shop and in various other additions to machinery and equipment in order to cater to increase volumes of customer orders. We are thus confident that the Company’s results for 2012 and beyond will show rapid growth along with the Thai automotive industry. The Company continues to seek alliances with a view to joint investment and expanding into other areas that are related to its current business in order to develop additional future sources of revenue for the Company, as well as boosting production efficiency and determinedly reducing costs to improve the Company’s results in accordance with principles of good corporate governance, and to attach importance to its responsibilities towards society community and the environment and to all stakeholder groups in accordance with principles of social responsibility, conducting its business in an ethical manner so as to ensure the Company’s sustainable success. In this regard the Company was assessed as “very good” for the third year in a row by the Thai Institute of Directors in its Corporate Governance Report of Thai Listed Companies 2011. The Company’s policy is to continue improving the standard of corporate governance. On behalf of the Company’s Board of Directors I should like to thank our customers, our shareholders, the various organisations and departments both governmental and private, and all our stakeholders for their constant support, which is a driving force. I should also like to thank all our executives and employees for their fine cooperation in implementing the Company’s policies. All the Directors and I will strive wholeheartedly to lead the Company constantly forward and develop and expand its business in a sustainable manner.

Dr. Pranee Phaoenchoke Chairman

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Board of Directors

Dr. Pranee Phaoenchoke Chairman of the Board of Directors & President

Mr. Sompong Phaoenchoke Director & Managing Director

Age : 73 Academic qualifications: • Honorary doctorate in Business Administration, American Coastline University, U.S.A. • Honorary doctorate in Industrial Engineering, Ramkhamhaeng University • Honorary Master’s Degree in Commerce and Accountancy Thammasart University Present Position : • Chairman of the Board of Directors & Chairman of the Executive Committee of Thai Rung Union Car Plc. • Director & Chairman of Thai Rung Tools and Dies Co. Ltd. Thai V.P. Auto Service Co. Ltd. Thai Auto Pressparts Co. Ltd. Thai Ultimate Car Co. Ltd. Isuzu Chaicharoenkij Motors Co. Ltd. Thai V.P. Corporation Co. Ltd. Chaicharoenkij Motors Co. Ltd. Lexus Auto City Co. Ltd. Isuzu V. Motor Co. Ltd. V.P. Auto Enterprise Co. Ltd. V.P.K. Auto Co., Ltd. First Part Co. Ltd. Sinthoranee Property Co. Ltd. • Director of Delta Thairung Co.,Ltd. Shareholding as of 16 March 2012: 246,387,500 shares (49.12%)

Annual Report 2011

Age : 51 Academic qualifications: • Master’s degree in Industrial Engineering, Keio University, Japan • National Defence College Class of 2006 • Capital Market Academy No.8 • National Defence College Course in high level security management and administration (class of 2010) Present Position : • Director & Managing Director, Chairman of Risk Management Committee of Thai Rung Union Car Plc. • Director & Vice President of Thai Ultimate Car Co. Ltd. Delta Thairung Co. Ltd. Isuzu Chaicharoenkij Motors Co. Ltd. Thai V.P. Corporation Co. Ltd. First Part Co. Ltd. V.P. Auto Enterprise Co. Ltd. Isuzu V. Motor Co. Ltd. Lexus Auto City Co. Ltd. • Director & Managing Director of Thai Rung Tools and Dies Co. Ltd. Thai V.P. Auto Service Co. Ltd. Thai Auto Pressparts Co. Ltd. • Director of Thai Auto Conversion Co. Ltd. Chaicharoenkij Motors Co. Ltd. Sinthoranee Property Co. Ltd. Director Certification Program 26/2003: IOD Shareholding as of 16 March 2012: 35,386,100 shares (7.05%) (including shareholdings of related persons as per Section 258 of the SEC Act)

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Ms. Kaewjai Phaoenchoke Director

Mr. Wuttichai Phaoenchoke Director

Age : 47 Academic qualifications: • Bachelor Degree in Financial Administration University of New England Australia Present Position : • Director & Executive Board of Thai Rung Union Car Plc. • Director & Chief Executive Officer of Thai V.P. Corporation Co. Ltd. Thai Ultimate Car Co. Ltd. Isuzu Chaicharoenkij Motors Co. Ltd. First Part Co. Ltd. Isuzu V. Motor Co. Ltd. V.P. Auto Enterprise Co. Ltd. V.P.K. Auto Co., Ltd. • Director of Thai V.P. Auto Service Co. Ltd. Thai Rung Tools and Dies Co. Ltd. Thai Auto Pressparts Co. Ltd. Chaicharoenkij Motors Co. Ltd. Sinthoranee Property Co. Ltd. Director Certification Program 29/2003: IOD Shareholding as of 16 March 2012: 32,639,450 shares (6.51%)

Annual Report 2011

Age : 41 Academic qualifications: • Master’s degree in Automotive Engineering, Coventry University, U.K. Present Position : • Director and Executive Board of Thai Rung Union Car Plc. • Director & Managing Director of Isuzu Chaicharoenkij Motors Co. Ltd. Chaicharoenkij Motors Co. Ltd. Isuzu V. Motor Co. Ltd. Sinthoranee Property Co. Ltd. • Director & Deputy Managing Director of Thai V.P. Auto Service Co. Ltd. • Director of Thai Rung Tools and Dies Co. Ltd. Thai Auto Pressparts Co. Ltd. Thai Ultimate Car Co. Ltd. V.P. Auto Enterprise Co. Ltd. Thai V.P. Corporation Co. Ltd. Shareholding as of 16 March 2012: 31,201,500 shares (6.22%)

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Mr. Somkiat Nimrawee Independent Director

Mr Pricha Attavipach Independent Director & Chairman, Audit Committee

Age : 74 Academic qualifications: • Bachelor’s Degree in industrial engineering Chulalongkorn University • Master’s Degree (MS) in engineering (Industrial Engineering & Management) Oklahoma State University, U.S.A. • National Defence College of Thailand, Class of 1989 Present Position : • Independent Director & Chairman, Audit Committee and Nomination & Remuneration Committee of Thai Rung Union Car Plc. • Director and Member of the Audit Committee of Siam Cement Plc. • Chairman of Thai Sugar Terminal Plc Ruamkijaungthong Warehouse Co Ltd Pan-Paper 1992 Co Ltd Ekaratpattana Co Ltd T.S.G. Assets Co Ltd T.S. Flour Mill Plc T.S. Oil Industry Co Ltd T.S. Transport & Logistics Co Ltd Kaset Thai Sugar Co Ltd Thai Identity Sugar Factory Co Ltd Ruamphol Enterprise Nakorn Sawan Co Ltd • Director of H.C. Starck (Thailand) Co Ltd Siam P.P. International Co Ltd • Specialist Senior Engineering (Industrial Engineer), Council of Engineers • Law Councillor, Ministry of Labour • Academic Director of the Safety and Health Vocational Management System, The Engineering Institute of Thailand • Chairman of the Council, Chao Phraya University • Chairman, Khunying Phancheun Reunsiri Foundation • Chairman, Ajarn Lai-arj Phamarapa Foundation • Chairman, Industrial Development Foundation Director Certification Program 39/2004: IOD Finance for Non-Finance Directors 8/2004: IOD Shareholding as of 16 March 2012: 280,000 shares (0.06%)

Age : 60 Academic qualifications: • Bachelor’s degree in Finance & Accounting, Thammasart University Present Position : • Independent Director, Member of Risk Management Committee, Executive Board and Nomination & Remuneration Committee of Thai Rung Union Car Plc. • Managing Director of Dan-Thai Equipment Co. Ltd. Dan-Thai Handing System Co. Ltd. Dan-Thai Engineering Co. Ltd. Director Accreditation Program 10/2004: IOD Shareholding as of 16 March 16 2012: 80,000 shares (0.02%)

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Mr. Kavee Vasuvat Independent Director & Member, Audit Committee

Age : 76 Academic qualifications: • Bachelor’s degree in Electrical Engineering Royal Melbourne Institute of Technology, Australia Present Position : • Independent Director & Member, Audit Committee and Nomination & Remuneration Committee of Thai Rung Union Car Plc. • Independent Director & Chairman Audit Committee and Member Remuneration Committee of Thai Steel Cable Plc. • Chairman of Q.E.D. Creation Co. Ltd. Director Forum Program 1/2000 : IOD Director Accreditation Program 23/2004 : IOD Director Certification Program 58/2005 : IOD Finance for Non-Finance Directors 18/2005 : IOD Audit Committee Program 10/2005 : IOD Shareholding as of 16 March 2012: None

Mr. Suvait Theeravachirakul Independent Director & Member, Audit Committee

Age : 53 Academic qualifications: • Bachelor’s degree in Business Administration, Accounting, Ramkhamhaeng University • Master’s degree in MBA, Wagner College, New York NY, U.S.A. • Capital Market Academy No.10 Present Position : • Independent Director & Member, Audit Committee and Risk Management Committee of Thai Rung Union Car Plc. • Director & President of MBK Plc. • Director of Royal Orchid Hotel (Thailand) Plc. • Director of IFS Capital (Thailand) Plc. • Executive Director of Patum Rice Mill and Granary Plc. • Executive Director of Siam Piwat Co. Ltd. • Director of Vachirachart Consultant Co.,Ltd. Director Certification Program 9/2001 : IOD Audit Committee Program 15/2006 : IOD Shareholding as of 16 March 2012: 15,012 shares (0.003%)

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Mr. Damri Tunshevavong Independent Director

Age : 58 Academic qualifications: • Becheor’s degree in electrical engineering, Chulalongkorn University • Advanced Management Program Harvard University, USA. • Capital Market Academy (class of 2009) Director Certification Program 106/2008 : IOD Audit Committee Program 24/2008 : IOD Role of the Chairman Program 22/2009 : IOD Role of Compensation Committee 10/2010 : IOD Present Position : • Independent Director of Thai Rung Union Car Plc. • Advisor to the President & CEO of Siam Cement Group Plc • Vice Chairman of Aira Capital Plc • Director of Thai Cane Paper Plc • Director of Yamato Kogyo Plc (Japan) • Director of Iron and Steel Institute of Thailand Shareholding as of 16 March 2012: None

Thai Rung Union Car Public Company Limited


Corporate Social Responsibility The Company attaches great importance to conducting its business in accordance with ethical principles and principles of good corporate governance, and in a socially and environmentally responsible manner, which accords with the Company’s philosophy “Think right, do right, talk right”. It promotes and supports educational, religious, social and environmental activities for the benefit of society both within and beyond the organisation and among all stakeholders aimed at achieving sustainable development. The following were some of the main activities organised by the Company during the year under review. Youth and Educational Activities The Company supports youth and educational activities on an ongoing basis, with a view to instilling healthy attitudes in today’s younger generation and helping them grow develop the qualities they will need to lead the country’s future development. Here are some of the activities of the past year. 1. Dr.Pranee Phaoenchoke Chairman, Mr Sompong Phaoenchoke Managing Director of Thai Rung Union Car Plc together with other senior executives presented scholarship grants to children and descendants of employees on the occasion of Thai Rung Day, the anniversary of the death of Mr Vichien Phaoenchoke, the founder of Thai Rung. Since 1985 until now the Company has awarded 1,355 scholarships to children of employees, worth more than Bt.3.85 million. 2. The Company attaches great importance to children, who will grow up to be the future of the nation, and accordingly supports and encourages employees wishing to volunteer by establishing the Thai Rung Group Development Volunteers Association which cooperates with government and private sector organisations for the upkeep and repair of school buildings, free school lunches and making financial grants and supplying essential educational materials and equipment to pupils of Ban Ko Sadeung School, Sangkhlaburi District, Kanchanaburi Province, the Ban Huay Phark Infants Development Centre and Ban Nong Tadang Infants Development Centre, Suan Pheung District, Ratchaburi Province. This project is carried out every year in an effort to supply basic essentials to underprivileged schoolchildren in remote areas. 3. Dr. Pranee Phaoenchoke Chairman of Thai Rung Union Car Plc together with Miracle of Life Foundation and the Nong Khame Association presented 300 scholarships to diligent but impoverished students of three schools in Amphoe Photharam, Ratchaburi Province.

4. Dr. Pranee Phaoenchoke, Chairman, together with other senior executives of Thai Rung Union Car Plc presented warm clothing, sports equipment and study materials and hosted a lunch for hill tribe children at Ban Puykham School in Tambol Pa O Don Chai and Maemonwittaya School in Tambol Huay Chompoo, both in Amphoe Meuang, Chiang Rai Province.

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Social and Environmental Activities The Company supported various charitable organisations and associations in aid of people with problems and socially underprivileged people. Examples included: 5. Dr. Pranee Phaoenchoke, Chairman and Ms Kaewjai Phaoenchoke, Director of Thai Rung Union Car Plc took part in the opening ceremony of the Miracle of Life building graciously presided over by its Patron Princess Ubolratana Rajakanya at Suan Rot Fai, Chatuchak District, Bangkok, and donated a TR Adventure vehicle for use in the Foundation’s various charitable activities.

6. Dr. Pranee Phaoenchoke, Chairman, together with Directors and other senior executives of Thai Rung Union Car Plc and the Miracle of Life Foundation and other partners solidarity actions and donation of supplies to flood victims though government agencies in various provinces, charities, hospitals and temples, communities, neighbours and employees. Items donated and produced by the Company itself included 600 boats, 97 floating toilets and 9,000 toilet chairs. The Company also arranged for large trucks to run on five routes transporting employees and neighbours during the floods when the surrounding roads were impassable to smaller vehicles.

7. Mr Sompong Phaoenchoke, Managing Director of the Thai Rung Group of companies, presented a MUV4 to the Governor of Ang Thong Province for use in helping food victims, and Mrs Kaewkao Phaoenchoke, Assistant Managing Director of the Thai Rung Group of companies, together with the Miracle of Life Foundation and the Channel 3 Kaow 3 Miti news programme organised a rubbish clearing project involving exchange for bags of emergency supplies and making a transportable foam raft for collecting rubbish from various communities at the time of the floods.

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Religious Activities The Company is convinced that a liveable and sustainably developing Thai society needs to be firmly underpinned by religion. The following are examples of the religious activities which it organised over the course of the year to promote goodness and virtue. 8. Senior executives and employees make merit together by giving food to monks and listen to a sermon at the beginning of each New Year, so that they start the year’s work with a positive attitude. Employees are also given the opportunity to make merit together on a regular basis by feeding monks who come to the Company every Tuesday.

9. On Friday evenings the “Mens Sana in Corpore Sano” project, started by Assistant Managing Director Ms Kaewkao Phaoenchoke, brings together senior executives, employees and members of the public for a session of meditation and to hear a sermon by a monk on a different theme each week. (Activities) 10. Senior executives of the Thai Rung Union Car Plc received a special honour for having won the Outstanding Workplace 2011 Award in the category Labour Relations and Welfare for five successive years (20072011) and Thai Rung Tools and Dies Co Ltd also won the Outstanding Workplace 2011 Award in the category Labour Relations and Welfare for the fourth successive year, from the Department of Labour Protection and Welfare at the Santimaitree Building, Government House. 11. Thai Rung Union Car Plc received the “Excellent Delivery Reward, Excellent Quality Reward and Excellent Good-Cooperation Reward 2011” from Kawasaki Motors Enterprise (Thailand) Co Ltd on 3 February 2012.

12. Mrs Kaewkao Phaoenchoke, Assistant Managing Director of Thai V.P Auto Service Co Ltd (a subsidiary) received the “Outstanding Insurance Repair Centre 2010” award from Prime Minister Yingluck Shinawatra at the Santimaitree Building, Government House on 1 September 2011

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General Information

Listed Company

Thai Rung Union Car Public Company Limited Companies Register Number 0107536001435

Registered share capital Bt.524,996,497 divided into 524,996,497 ordinary shares of Bt.1 each. Paid-up share capital

Bt.501,589,497

Business Activities

-

Address

28/6 Moo 1, Phetkasem Road Soi 81, Nongkhangplu, Nong Khaem, Bangkok 10160 Tel: 0-2431-0071-2, 0-2431-0065, 0-2420-0076 Fax: 0-2812-0844, 0-2814-5030, 0-2420-3664

Website

http://www.thairung.co.th

Product design, research and development Manufacture of dies and jigs Manufacture of automotive parts and seats Contract vehicle painting and assembly, vehicle modification

Securities Registration Thailand Securities Depository Company Limited 62, Stock Exchange of Thailand Building, Rachadaphisek Road, Klong Toey, Bangkok 10110 Tel: 0-2229-2800, 0-2654-5599 Fax: 0-2359-1259 Auditors

Mr Atipong Atipongsakul CPA No. 3500 and/or Mr Prawit Viwanthananut CPA No. 4917 and/or Mr Bunjong Pichayaprasat CPA No. 7147 and/or Mr Vichai Ruchitanont CPA No. 4054 and/or Mr Sathien Vongsnan CPA No. 3495 ANS Audit Co Ltd 100/72, 22nd Floor, 100/2 Vongvanij Building B, Rama 9 Road, Huaykwang Bangkok 10310 Tel: 0-2645-0109 Fax: 0-2645-0110

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Group Structure of Thai Rung Union Car Public Company Limited and subsidiaries as at 8 March 2012

Thai Rung Union Car Plc. (TRU)

Thai Rung Tools and Dies Co., Ltd. 94%

Thai Auto Conversion Co., Ltd. 20%

Thai Auto Pressparts Co., Ltd. 91%

Delta Thairung Co., Ltd. 30%

Thai V.P. Auto Service Co., Ltd. 94%

Thai Ultimate Car Co., Ltd. 99.53%

General Information on Subsidiaries and Joint Venture Companies Subsidiary Companies

• Thai Rung Tools and Dies Co Ltd Registered share capital Bt.27,000,000 issued and fully paid up, divided into 270,000 ordinary shares of Bt.100 each Business Activities Manufacture of dies and jigs. Address 28/22 Moo 1, Phetkasem Rd. Soi 81, Nongkhangplu, Nong Khaem, Bangkok 10160 Tel: 0-2431-0071-2, 0-2431-0065, 0-2420-0076 Fax: 0-2814-5030, 0-2420-3664 • Thai Auto Pressparts Co Ltd Registered share capital Bt.400,000,000 issued and fully paid up, divided into 4,000,000 ordinary shares of Bt.100 each Business Activities Manufacture of automotive body parts Address Amata City Industrial Estate 7/122 Moo 4, National Highway 331, Tambol Marpyarngphorn, Amphoe Pluak Daeng, Rayong 21140 Tel: (038) 956-156, 956-239-42 Fax: (038) 956-169

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• Thai V.P. Auto Service Co Ltd Registered share capital Bt.25,000,000 issued and fully paid up, divided into 250,000 ordinary shares of Bt.100 each Business Activities Sale of spare parts and accessories, after-sales service centre, installation of LPG and CNG vehicle conversion units. Address 151 Macharoen Rd., Nongkhangplu, Nong Khaem, Bangkok 10160 Tel: 0-2420-6708, 0-2420-4823, 0-2812-1445-6 Fax: 0-2420-1601 Website www.trservice.in.th • Thai Ultimate Car Co Ltd Registered share capital Business Activities Address

Bt.25,000,000 issued and fully paid up, divided into 25,000 ordinary shares of Bt.1,000 each Providing automotive, consulting and general administrative and organisational services 28/22 Moo 1, Phetkasem Rd. Soi 81, Nongkhangplu, Nong Khaem, Bangkok 10160 Tel: 0-2431-0071-2, 0-2431-0065, 0-2420-0076 Fax: 0-2812-1992

Joint Venture Companies

• Thai Auto Conversion Co Ltd Registered share capital Bt.74,500,000 issued and fully paid up, divided into 74,500 ordinary shares of Bt.1,000 each Business Activities Product development and fitting of special accessories for special purpose vehicles. Address 159, Moo 16, Thaeparak Road, Tambol Bang Sao Thong, Amphoe Bang Sao Thong, Samut Prakarn Province 10540 Tel. 0-2313-1371-8 Fax 0-2313-1380 • Delta Thairung Co Ltd Registered share capital Bt.300,000,000 issued and fully paid up, divided into 3,000,000 ordinary shares of Bt.100 each Business Activities Manufacture of auto seats and parts and other equipment for vehicles Address Amata City Industrial Estate 7/150 Moo 4, Tambol Marpyarngphorn, Amphoe Pluak Daeng, Rayong 21140 Tel: (038) 650-398-400 Fax (038) 650-400 Note: Delta-TR Co Ltd, a joint venture, filed for dissolution with the Department of Business Development of the Ministry of Commerce on 6 March 2012.

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Nature of Business General Business Overview of the Company, its Subsidiaries and Joint Ventures Thai Rung Union Car Public Co Ltd is in the motor vehicle industry. Its main business activities are product design, research and development, manufacture of tools, dies and jigs, manufacture of metal and plastic parts, contract vehicle painting and assembly and modification of vehicles, including multi-purpose vehicles and special purpose vehicles such as TR Exclusive Limousine, Military Utility Vehicle 4 (MUV4) and rapid response rescue vehicles. The Company has six subsidiary and joint venture companies, which are engaged in related or supporting businesses and which enable the group to provide a full range of services as well as spreading the business risks. Details are as follows. • Thai Rung Union Car Plc. has three business units as follows; o Product design, research and development and contract research, design and modification of various types of vehicles for domestic and overseas customers. o Pressed metal and plastic parts and seats for car, truck and motorcycle manufactures, parts for construction tools, industrial and agricultural machinery, or other businesses beyond the auto industry such as electronic components, as well as for use in its own internal production processes. o Contract assembly and modification of vehicles, including multi-purpose vehicles and special purpose vehicles such as TR Exclusive Limousine, Military Utility Vehicle 4 (MUV4) and rapid response rescue vehicles. • Thai Rung Tools and Dies Co Ltd (TRT) makes dies and jigs. It has received BOI promotional privileges for investments. • Thai Auto Pressparts Co Ltd (TAP) started business in June 2002 at its factory at Amata City Industrial Estate, Amphoe Pluak Daeng, Rayong Province, thus considerably expanding the group’s parts production capacity. Thai Auto Pressparts, which has been granted BOI promotional privileges for its investments, supplies automotive parts to the customer group formed by auto and motorcycle manufacturers in the Eastern Seaboard and surrounding areas, and also caters to the export market. Towards the end of 2010 it started to invest in expanding its production capacity by building a new factory and acquiring additional machinery in order to cater to the increased volume of orders from customers, a process which should be completed in 2012. • Thai V.P. Auto Service Co Ltd (TVS) provides after-sales service for Thai Rung’s multi-purpose vehicles. In 2005 it expanded its activities to include plastic accessories under the name “Parto”. In 2008 it extended its range of services to include the installation of LPG and CNG vehicle conversion units • Thai Ultimate Car Co Ltd (TUC) a subsidiary of TVS which it acquired in 2001. Its current activity consists of providing automotive consulting and general administrative and organisational services. • Thai Auto Conversion Co Ltd (TAC) is a joint venture with the Toyota Motor Group for product development and fitting of accessories for special purpose vehicles. Annual Report 2011

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• Delta Thairung Co Ltd (DTC) is a joint venture with Delta Kogyo of Japan, newly established in 2007 to manufacture auto seats and parts and other equipment for vehicles. Its factory is at Amata City Industrial Estate, Amphoe Pluak Daeng, Rayong Province. The Company’s group policy is for each subsidiary to strive to operate profitably in its own right and to be self-sufficient in its particular activities within the overall policy of the parent. • Breakdown of Total Revenues, Thai Rung Union Car Plc and Subsidiaries, 2009-2011 Unit: million baht Product/Service

Performed by

% of shares held 94, 99.53*

2009 2010 2011 Million Million Million % % % baht baht baht 375.16 26.03 168.63 7.85 116.30 5.14

Sale of vehicles, including cost of asTRU,TVS, sembly and equipment and accessories TUC fitted Sale of parts, contract parts assembly TRU,TAP 91 786.09 and other contract service Contract production of dies and jigs TRT,TAP 94, 91 81.86 Sale of spare parts and accessories and TVS, TUC 94, 99.53* 109.96 After sale service Other revenue 75.30 Share of profit from investment in associated companies 12.75 Total Revenues 1,441.12

54.55 1,455.04 5.68 7.63

253.04 93.50

5.23 121.09 0.88 57.73 100.00 2,149.03

67.71 1,689.60 11.77 4.35

74.66

190.92 57.96

8.44 2.56

5.63 150.57 2.69 57.75 100.00 2,263.10

6.65 2.55 100.00

* TRU holds 94% of the shares in TVS, which in turn holds 99.53% of the shares in TUC. • Industry trends and future competitive situation The Federation of Thai Industries has estimated that the Thai automotive industry will produce between 2,000,000 and 2,100,000 vehicles in 2012, representing an increase of between 38% and 44% on 2011. This growth is expected to come as a result of several auto makers such as Mitsubishi, Suzuki and Ford moving production bases to Thailand, and of various other manufacturers increasing their production capacity in order to supply both domestic and export markets. Much of this increase will be for the ‘eco car’, which looks set to become Thailand’s new champion product as it gains popularity with consumers and encounters positive market response. A further significant factor is the recovery of the automotive industry following the flooding that affected much of the country, as a result of which the demand that was pent up in the latter part of 2011 is now once more finding expression. This is further helped by the government’s economic stimulus policy of refunding excise tax to first-time car buyers up to a limit of Bt.100,000 per vehicle until 31 December 2012, with a target of 500,000 units under the Bt.30 billion facility, encouraging consumers to bring forward their purchasing decisions, while other factors such as interest rates and fuel prices are likely to incline consumers towards smaller, more fuel-efficient and/or hybrid vehicles. In view of all these factors, the growth of the Thai automotive industry in 2012 presents significant opportunities for Thai auto parts makers, including the Company, to win additional orders for both metal and plastic parts, contract painting and assembly work. At present some 80% of the Company’s revenues comes from OEM parts making and contract assembly and painting work for auto makers and manufacturers of industrial and agricultural machinery. We are confident therefore that the Company will grow steadily in step with the Thai automotive industry through 2012 and into the future.

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Risk Factors

The Company attaches importance to applying the principles of risk management as a tool in managing the organisation to world standards. A Risk Management Committee is responsible for overseeing and controlling compliance with risk management policies and rules, monitoring any significant risks that arise and taking steps to ensure that the organisation has in place risk management systems that are adequate and appropriate to its business and enable it to meet its objectives. The Company has established a risk management plan which is continuously aligned with its strategic and business plans, examples being the revision of practical manuals to keep them up to date and thus able to support improvement drives throughout the organisation, the establishment and review of clear roles, duties and responsibilities of executives and employees and continuous performance evaluation aimed at incentivising employees and boosting efficiency. In 2011 the Company stood up well against the dual problems of the economy and the floods that struck Thailand. This was partly due to the fact that its management and planning took account of risk management and prevention. This was particularly so in the case of risk management to mitigate the effect of the floods. The Company took protective measures one month in advance, setting up a structure and a special team and assigning clear responsibilities to executives and employees. The perimeter walls were inspected, repaired and reinforced, additional defences were constructed, the drainage system was improved and, when the floods actually arrived, there was good understanding and cooperation between top management and personnel aimed at safeguarding the Company’s assets Throughout the whole month for which the Company was surrounded by water, this spirit of solidarity and understanding at all levels enabled us to prevent the water from flooding the factory and so to be able to continue operating at full capacity, supplying our customers and producing faster than our competitors. 1. Business Risks - Multi-purpose vehicles - Brand owners who already produce multi-purpose vehicles, and new entrants attracted into the market by the high value of the station wagon type segment. - the implementation of free trade under AFTA coming into effect from 1 January 2010 brings import duty down to zero, increasing opportunities for foreign brands to establish themselves in the Thai market, which would increase competition. - higher oil prices have increasingly focused the market’s attention on small cars that use alternative energy sources and/or are fuel efficient, which could have an impact on the pick-up truck market and the Company’s multi-purpose vehicle business. In order to spread the risk and mitigate any effect that might arise from the various risk factors in the multi-purpose vehicle business the Company has established guidelines as follows:

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- The Company focuses on the area of multi-purpose vehicle research and development, striving for modern features and quality in line with its target customer groups’ needs. The Company has also conducted studies on developing a business for various kinds of special purpose vehicles such as TR Exclusive Limousine, Military Utility Vehicle 4 (MUV4), rapid emergency vehicles in order to expand its market and its target customer groups, taking advantage of its flexibility in terms of adapting its production processes. - The Company further developed its Phetkasem Road ‘Thairung Centre’ product presentation outlet in order to maximise end-user awareness, and held events and road shows in various provinces to boost sales opportunities. Apart from this emphasis was also given to sales to the various government departments and bodies. - The Company put additional measures in place throughout the organisation to reduce costs and save on expenses, both in the factory and in sales and support areas, so as to streamline costs so as to be able to compete and survive the economic crisis. - Auto Parts and Contract Assembly the implementation of free trade under AFTA coming into effect from 1 January 2010 brings import duty down to zero and thus increases manufacturers’ options in terms of importing parts instead of having them made in Thailand. Thai auto parts makers are faced with tougher competition on price and quality, from both domestic and foreign producers. In order to spread the risk and mitigate any effect that might arise from the various risk factors in the parts making and contact assembly business the Company has established guidelines as follows: - The Company continues to foster its relationships with its long-standing major customers, whilst at the same time seeking new customers from other sectors such as premium level motorcycles, which is a niche market with high added value, parts for construction tools, industrial and agricultural machinery, or other businesses beyond the auto industry such as electronic components, and also to broaden the customer base to other countries such as China, India and Australia so as to spread the risks in terms of sources of work. It also arranges programmes of marketing activities aimed at enhancing customer relations in general throughout the year, as well as establishing new target customer groups every year. - We provide a one stop service for plastic parts, painting, contract assembly and modification work from research and design through to finished parts. - The Company is always on the lookout for possible foreign business alliances with a view to increasing its know-how in the areas of production technology and more efficient machinery so as to prepare for the future, and to joint investment and expanding into additional related businesses, its policy being to seek work with high added value. - Due to the fast grew up of automotive industry, automaker had inadequate capacity then we have the opportunity to propose service for painting and contract assembly. - Dies and Jigs the implementation of free trade under AFTA coming into effect from 1 January 2010 brings import duty down to zero and thus increases manufacturers’ options in terms of importing dies and assembly equipment instead of having them made in Thailand. Annual Report 2011

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Several automakers will launch new models in 2012, so they had the necessary tooling and jigs and fixtures made in 2011. Consequently the volume of work will be less in 2012, with very few new models planned for next year: this means we must find work from overseas, or from automakers moving their production bases to Thailand, or from makers of construction, industrial or agricultural machinery and other non-automotive customers. In order to spread the risk and mitigate any effect that might arise from the various risk factors in the die and jig making business the Company has established guidelines as follows: - The Company has carried out investments to improve the efficiency of the production process so as to meet the many and varied customer requirements and at the same time to improve chances of winning the big size of die that have the high value added and less competitor. - The Company has a project to increase automation of the production process so as to lessen the impact of shortages of skilled labour, and has also arranged training courses aimed at enhancing personnel capability. - To build dies and jigs on a tier-two basis for tier-one suppliers overseas, e.g. Europe, America, who need to outsource work to countries with lower production costs. - To provide a one stop service for research, design, modification, right through to dies, jigs and other production equipment. - Boost level of die and jig design and production for turn-key projects through alliance with foreign partner so as to be able to enter more overseas tenders - Build up a network of business allies in Thailand so as to cater to the volume of new projects coming on stream, increase production capacity and be able to take on turn-key projects overseas Nevertheless in order to spread the risks in all three business units, the Company also strives to diversify its business, both to reduce the risk of business concentration and to broaden the revenue base. Examples are: o Expanding the business to include the production and sale of blow mould and vacuum mould plastic parts including plastic accessories under the name “Parto�, a proprietary brand owned by the Company, including growing sales on an OEM basis, so as to respond comprehensively to customers’ needs. o The Company is a leader in the design and development of flat deck cargo boxes for pick-up trucks, which it sells to a number of truck makers for distribution in the domestic market ad overseas. 2. Financial Risks 2.1 Credit risk The Company and subsidiaries are exposed to credit risk primarily with respect to trade accounts receivable, loans, and other receivables. The Company and subsidiaries manage the risk by adopting appropriate credit control policies and procedures and therefore does not expect to incur material financial losses. In addition, the Company and its subsidiaries do not have high concentration of credit risk since they have a large customer base.

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2.2 Interest rate risk The Company’ and subsidiaries’ exposures to interest rate risk relate primarily to their cash at banks, current investments and short-term loans. However, since most of the Company’s and subsidiaries’ financial assets and liabilities have been repaid within one year, the interest rate risk is expected to be minimal.

Please refer to details in Note 28 to the Financial Statements for the year ended 31 December 2011.

3. Legal risk This concerns the risk of being sued by consumers on grounds of product quality and possibly having to pay damages under product liability legislation as result of auto parts made by the Company being used to assemble vehicles for sale domestically or abroad. A customer could sue a distributor for damages caused by a faulty vehicle, and if it could be shown that the problem was caused by a defective part made by the Company, we could in turn be sued for damages, and depending on the court’s decision might suffer loss as a result. The Company takes this risk seriously and consequently trains senior executives and personnel on points of law and enforces strict compliance with the ISO/TS 16946 quality standard so as to ensure that production processes are efficient, traceable and auditable, right up to pre-delivery inspection so as to guarantee that customers receive quality product. The target claim rate is zero. 4. Safety, environmental and community risks The Company attaches importance to its human resources and stakeholders, striving to manage its business in such a way as to reduce all kinds of risks that affect people’s quality of life, as well as fulfilling its responsibilities towards society and building good relations with its neighbouring community, through the following measures: - Annual review of safety and environmental policies and quarterly activity meetings to inform supervisors of monitoring results - Stress on employee awareness of and attention to safety and environmental issues, all employees being obliged to follow the CCCF (Completely Check, Completely Find Out) procedure and the ISO14001 environmental management standard, as well as other activities such as “White Factory” “Drive Safely”, “Don’t Drink and Drive” and “Give up Alcohol for Lent”. - Responsibility towards society, such as solidarity actions and donation of supplies to flood victims though government agencies in various provinces, charities, hospitals and temples, communities, neighbours and employees. Items donated included 600 boats, 97 floating toilets and 9,000 toilet chairs. The Company also arranged for large trucks to run on five routes transporting employees and neighbours during the floods when the surrounding roads were impassable to smaller vehicles. - Annual scholarship awards to children of employees who achieve a certain standard, and study and ethical training scholarships for young people in Ban Karuna, Ban Mudhita and Ban Ubekkha youth training centres, for example. - Good community relations, with annual joint activities such as relaxed gatherings where a prominent monk is invited to address employees and neighbour who are interested on a range of ethical and religious topics.

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Shareholders and Management

• Shareholders Major Shareholders as at 16 March 2011, last date on which the share register was closed. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Name

Shares % of total shares Dr Pranee Phaoenchoke 246,387,500 49.12% Mr Sompong Phaoenchoke* 35,386,100 7.05% Ms Kaewjai Phaoenchoke 32,639,450 6.51% Mr Wuttichai Phaoenchoke 31,201,500 6.22% Citibank Nominees Singapore Pte Ltd.-S.A. PBG Clients SG 24,691,925 4.92% Mr Arnan Tantijarascheb 12,000,000 2.39% Mr Pattanasorn Phaoenchoke 10,000,000 1.99% Thai Rung Union Car Plc 9,216,700 1.84% Tisco Securities Co Ltd 9,000,000 1.79% Mr Wongwaris Phaoenchoke 9,000,000 1.79% TOTAL 419,523,175 83.64% Note * Mr Sompong Phaoenchoke holds 27,136,100 shares, his wife Mrs Kaewkao Phaoenchoke holds 2,250,000 shares and his minor child Mr Korrawut Phaoenchoke holds 6,000,000 shares. • Management 1. Management Structure 1.1 Structure of Company’s Board of Directors The Company has the following five boards and committees: Board of Directors, Audit Committee, Executive Committee, Risk Management Committee and Nomination and Remuneration Committee, each committee having the powers and duties as follows: 1) Powers and Duties of the Board of Directors 1. To carry out its duties in accordance with the Company’s’ laws, objectives and regulations, including resolutions of shareholders’ meetings, in accordance with the law, with integrity, ethically, prudently and with due regard to the Company’s best interests. 2. To arrange for a shareholders’ meeting to be held at least once a year, to report to shareholders on the Company’s performance and to seek shareholders’ approval for matters which exceed the authority or duties of the board of directors. 3. To hold a meeting of the Board of Directors at least once every three months. 4. To take all necessary steps to ensure that financial and other information provided to shareholders is at all times correct, complete and transparent. 5. To ensure that the Company has efficient internal control and audit systems in place. 6. To consider and make decisions on important matters such as policies, business plans, administrative Annual Report 2011

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powers, large investment projects, related party transactions, acquisitions or disposals of assets of the listed company as covered by the regulations of the Stock Exchange of Thailand, and any other matters stipulated by law. 7. To ensure that the Company’s business dealings are carried out in an ethical manner. 8. The Board of Directors may delegate its powers and duties to one of more Directors or to other individual(s) as it sees fit, authorizing such person or persons to act on its behalf with whatever powers and duties it may chose to assign. 9. The Board of Directors has the power to appoint and to change authorised signatories empowered legally to bind the Company on its behalf. 10. To consider the payment of interim dividends to shareholders. 11. To establish the Company’s policies and working guidelines and to monitor administrative departments’ efficient and effective implementation of such policies with a view to maximizing growth and economic value for shareholders. 12. To give advice to the Managing Director on administration and on decisions likely to have important consequences for the Company. 13. To avoid conflicts of interest amongst Company stakeholders. The scope of the powers and duties mentioned shall not extend to: 1. Matters subject by law to a resolution of a shareholders’ meeting, such as capital decrease or increase or amendments to the Company’s Memorandum or Articles of Association. 2. The authorisation of any related party transaction or acquisition or disposal of listed Company’s assets, which require approval by a meeting of shareholders in accordance with the regulations of the Stock Exchange of Thailand. 3. The authorisation of any transaction in which a Director is an interested party or has a conflict of interest, which requires approval by a meeting of shareholders. 2) Powers and duties of the Audit Committee 1. To ensure that the Company’s financial reporting is accurate and adequate. 2. To ensure that the Company’s internal control and internal audit systems are appropriate and effective, to consider the independence of the Internal Audit department and to give its opinion on the appointment, transfer or dismissal of the Head of the Internal Audit Department or such other department as has responsibility for internal audit. 3. To ensure that the Company operates in accordance with the law relating to securities and the stock exchange and with regulations of the Stock Exchange and laws relating to the Company’s business. 4. To consider the selection and nomination of independent individuals to perform duties as the Company’s auditors, and to propose their remuneration; to attend meetings with the auditors, without management departments being present, at least once a year. 5. To consider related party transactions and transactions likely to give rise to a conflict of interest so as to ensure that they are conducted in accordance with the law and with regulations of the Stock Exchange of Thailand so as to provide confidence that such transactions are fitting and proper and in the Company’s best interests. 6. To deliver a report on the Audit Committee’s activities for publication in the Company’s Annual Report, such report to be signed by the Chairman of the Audit Committee and must contain at least the following information: Annual Report 2011

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(a) Its opinion on the accuracy, completeness and reliability of the Company’s financial statements (b) Its opinion on the adequacy of the Company’s internal control systems (c) Its opinion on the Company’s compliance with the law relating to securities and the stock exchange and with regulations of the Stock Exchange and laws relating to the Company’s business (d) Its opinion on the suitability of the auditors (e) Its opinion on likely to give rise to a conflict of interest (f) The number of times the Audit Committee has met, together with individual attendance details (g) Its opinion or general observations based on the performance of its duties as per its charter (h) Any other matters that it considers shareholders and investors generally should know within the scope of action, duties and responsibilities assigned to it by the Company’s Board of Directors. 7. To carry out any other duties assigned to it by the Company’s Board of Directors with the agreement of the Audit Committee 3) Powers and Duties of the Executive Committee 1. To control and take care of the general conduct of the Company’s business and perform duties assigned to it by the Company’s Board of Directors in order to achieve the Company’s objectives. 2. To direct and monitor the successful implementation of policies and working plans assigned by the Company’s Board of Directors to the various administrative departments. 3. To examine, consider and authorise important and urgent business within the scope of its powers and duties and monetary limitation determined by the Company’s Board of Directors but in any case not exceeding Bt.400m. 4. To establish financial policies and supervise and monitor the administration of all financial work, including all business conducted with financial institutions, with a view to optimising efficiency. 5. To consider and authorise transactions within the Company’s scope of business. 6. To perform such other duties as may be assigned by the Company’s Board of Directors. The scope of the powers and duties mentioned shall not extend to the authorisation of any transaction in which the executive board or an individual is an interested party or involving a conflict of interest on the part of the executive board or an individual, nor any related party transaction nor the acquisition or disposal of listed Company’s assets, in accordance with the regulations of the Stock Exchange of Thailand 4) Powers and duties of the Risk Management Committee 1. To establish a policy and framework for managing the Company’s overall risk situation, covering the various risks that might affect the Company’s results and reputation. 2. To establish strategies which are in accordance with the Company’s overall risk management policy and which enable risks to be gauged, monitored, taken care of and kept at appropriate levels, including the setting up of advance warning systems. 3. To review the adequacy and effectiveness of risk management policies and systems and monitor adherence to those policies on an ongoing basis so as to enhance the prudence, security and efficiency of the Company’s overall risk management. 4. The Risk Management Committee has the power to establish and define the roles of sub-committees and working committees for managing the various kinds of risk as it sees fit, and all such committees shall report directly to the Risk Management Committee. Annual Report 2011

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5. The Committee is empowered to call for documents and information and to require individuals to provide facts for consideration so as to be able to achieve its objectives. 6. To communicate with the Audit Committee in order to ensure that risk management systems are in line with internal controls and in accordance with policies and strategies that have been established. 7. To report to the Board on risks and risk management. 5) Powers and duties of the Nomination and Remuneration Committee 1. To select persons with characteristics appropriate to the position of Company Director using transparent criteria and considering any names put forward by shareholders for nomination to the Board of Directors. 2. To select persons with characteristics appropriate to the position of Chairman of the Executive Committee and Managing Director in the event of their being a vacancy, for nomination to the Board of Directors for their consideration, and to prepare a succession plan for senior executive positions. 3. To set policies, methodology and criteria for establishing Directors’ remuneration fairly and in consonance with the Company’s results and with each individual’s performance. 4. To consider, review and present proposals for establishing Directors’ remuneration. 5. To present reports and proposals of the Nomination and Remuneration Committee to meetings of the Company’s Board of Directors for their consideration. 6. To perform such other duties as the Company’s Board of Directors may from time to time assign to it. 1.2 List of names of Company Directors 1) Board of Directors As at 28 February 2012 all nine positions on the Board of Directors were occupied as follows. Name Position Dr Pranee Phaoenchoke Chairman of the Board Mr Sompong Phaoenchoke Director Ms Kaewjai Phaoenchoke Director Mr Wuttichai Phaoenchoke Director Mr Pricha Attavipach Independent Director Mr Kavee Vasuvat Independent Director Mr Suvait Theeravachirakul Independent Director Mr Somkiat Nimrawee Independent Director Mr Damri Tunshevavong* Independent Director Mr Sakchai Komgris Company Secretary and Secretary to the Board of Directors * Note: Mr Damri Tunshevavong was appointed a Director to replace Mr Anthony Farquhar McDonald who resigned from his position as Director effective 28 February 2012. Quorum for Board Meetings 1. A quorum for a meeting of the Board of Directors is constituted by not less than half the total number of Board of Directors. 2. Resolutions are passed by a simple majority of votes by Directors present, each Director having one vote. 3. At each Annual General Meeting of the Company at least one third of the Directors, or if the number of Annual Report 2011

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Directors is not divisible by three then the nearest number to one third, must retire, the longest serving Directors retiring first. Directors retiring by rotation may be re-appointed for a further term of office. 2) Audit Committee As at 31 December 2011 the Company’s Audit Committee was composed of three independent directors as follows. Name Position Mr Pricha Attavipach Chairman of the Audit Committee Mr Kavee Vasuvat Member of the Audit Committee Mr Suvait Theeravachirakul* Member of the Audit Committee Mr Phakkawat Suwanmajo Secretary to the Audit Committee Note: * Mr Suvait Theeravachirakul is a member of the Audit Committee with knowledge and experience in examining companies’ financial statements Members of the Audit Committee serve for a term of two years. A quorum for a meeting of the Audit Committee is constituted by not less than half the total number of Committee Members. Resolutions are carried by the affirmative votes of not less than half the total number of Members present. 3) Executive Committee As at 31 December 2011 the Company’s Executive Committee consisted of five Directors, as follows: Name Position Dr Pranee Phaoenchoke Chairman of Executive Committee Mr Sompong Phaoenchoke Managing Director Ms Kaewjai Phaoenchoke Member of Executive Committee Mr Wuttichai Phaoenchoke Member of Executive Committee Mr Somkiat Nimrawee Member of Executive Committee Mr Sakchai Komgris Secretary to the Executive Committee Directors on the Executive Committee serve for a term of three years. A quorum for a meeting of the Executive Committees is constituted by not less than half the total number of Directors. Resolutions are carried by the affirmative votes of not less than half the total number of Directors present. 4) Risk Management Committee As at 28 February 2012 the Company’s Risk Management Committee was composed of six members, as follows: Name Position Mr Sompong Phaoenchoke Chairman of the Risk Management Committee Mr Somkiat Nimrawee Member of the Risk Management Committee Mr Suvait Theeravachirakul Member of the Risk Management Committee Mr Sakchai Komgris Member of the Risk Management Committee Mrs Kaewkao Phaoenchoke Member of the Risk Management Committee Mr Phakkawat Suwanmajo Member of and Secretary to the Risk Management Committee Annual Report 2011

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Members of the Risk Management Committee serve terms of two years. A quorum for a meeting of the Risk Management Committee is constituted by not less than half the total number of Members. Resolutions are carried by the affirmative votes of not less than half the total number of Members present. 5) Nomination and Remuneration Committee As at 31 December 2011 the Company’s Nomination and Remuneration Committee was composed of three independent directors as follows: Name Position Mr Pricha Attavipach Chairman of the Nomination and Remuneration Committee Mr Kavee Vasuvat Member of the Nomination and Remuneration Committee Mr Somkiat Nimrawee Member of the Nomination and Remuneration Committee Mr Sakchai Komgris Secretary to the Nomination and Remuneration Committee Members of the Nomination and Remuneration Committee serve terms of two years. A quorum for a meeting of the Remuneration Management Committee is constituted by not less than half the total number of Members. Resolutions are carried by the affirmative votes of not less than half the total number of Members present. Directors’ signing powers Directors’ signatory powers to bind the Company as recorded in the Company’s registry. At present such powers are as follows: Any one of the following Directors, acting alone, may bind the Company with his or her signature and the Company seal: Dr Pranee Phaoenchoke Mr Sompong Phaoenchoke Ms Kaewjai Phaoenchoke Mr Wuttichai Phaoenchoke (Memorandum of Association amended 16 March 2012) 1.3 Criteria for Appointment of Independent Directors The selection process for Independent Directors can be seen in the heading concerning criteria for selection of Directors and Administrators. Independent Directors must have qualities in accordance with the Company’s definition of Independent Director which in turn is in accordance with that of the SEC, as follows. Characteristics and definition of independent director of Thai Rung Union Car Plc 1. Does not hold more than 1% of the total number of voting shares in the parent Company, or of any of its subsidiaries or joint venture companies or in any entity likely to give rise to a conflict of interest, shares held by related persons to be included in the calculation in accordance with directive 258 of the Securities Act. 2. Does not take part in administering the work, is not a contractor or an employee or consultant in receipt of a regular salary and is not in a position to exert control over the Company, its subsidiaries, joint ventures or fellow-subsidiaries or on any entity likely to give rise to a conflict of interest (at present, and in the two years prior to his appointment.)

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3. Does not have business dealings with the Company: 3.1 Is not an auditor of the Company. 3.2 Does not provide other professional services to the Company such as legal or financial consultancy or appraisal worth more than Bt.2m per year. 3.3 Does not have habitual related party transactions by way of rent or lease, whether as lessor or lessee, of real estate, or concerning assets/services or the receipt or provision of financial assistance with a value exceeding Bt.20m or 3% of NTA, whichever is the lower, including transactions carried out in the one year prior to the carrying out of any given transaction. He must not have business relations as defined in 3.1 to 3.3 above at present, nor in the two years prior to his appointment except where there is necessary and proper reason and in any case not continuously or constantly. An Independent Director or Audit Committee Member may have relations that go beyond those stipulated while performing his office, but only after obtaining the unanimous prior approval of the Company’s Board of Directors and subject to the relationship being disclosed per Form 56-1, in the Annual Report and in the letter of invitation to the Shareholders’’ Meeting in the event that the Shareholders’ Meeting is to be asked to renew the term of office of the Independent Director or Audit Committee Member concerned. 4. Is not related by blood or marriage to (i.e. is not the father, mother, spouse, sibling or child of or the spouse of a child of an Administrator, major shareholder or other person in a position of authority or candidate as Administrator or person in a position of authority of the Company or any of its subsidiaries. 5. Has not been appointed to represent a Director or major shareholder or other shareholder that is a related party to a major shareholder. 6. Does not have any other characteristic limiting his independence. 7. An Independent Director having the characteristics set out in points 1 to 6 above may be given powers by the Board of Directors to decide on matters involving the Company, its subsidiaries, its joint ventures or fellow-subsidiaries or entities likely to have a conflict of interest on a collective decision basis 1.4 Number of Board Meetings held and individual Directors’ attendance record The following table shows a summary of the number of meetings held in 2011 – Board meetings, meetings of Board Committees and Meetings of Shareholders - and individual Directors’ attendance record.

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Meetings attended / Meetings held

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

Name

Company Board of Directors

Executive Committee

Dr Pranee Phaoenchoke Mr Sompong Phaoenchoke Ms Kaewjai Phaoenchoke Mr Wuttichai Phaoenchoke Mr Anthony Farquhar McDonald Mr Somkiat Nimrawee Mr Pricha Attavipach Mr Kavee Vasuvat Mr Suvait Theeravachirakul Mrs Kaewkao Phaoenchoke Mr Sakchai Komgris (Secretary) Mr Likhit Laobawornseadthee Mr Phakkawat Suwanmajo

4/4 4/4 2/4 2/4 2/4 4/4 4/4 4/4 3/4 4/4 -

3/3 3/3 3/3 3/3 3/3 3/3 -

Nomination Risk Attendance at Audit and Management Shareholders’ Committee Remuneration Committee Meetings Committee

4/4 4/4 3/4 -

2/2 2/2 2/2 2/2 -

4/4 4/4 3/4 2/4 4/4 3/4 4/4

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

1.5 Company Administrators As at 31 December 2011 The Company’s Administrators as per the SEC definition were as follows: Name Position 1. Dr Pranee Phaoenchoke President 2. Mr Sompong Phaoenchoke Managing Director 3. Mr Somchai Kirtitilaka Deputy Managing Director 4. Mr Wuttichai Phaoenchoke Assistant Managing Director, Research & Development line 5. Mrs Kaewkao Phaoenchoke Assistant Managing Director, Business line 6. Mr Sakchai Komgris Assistant Managing Director, Administration line and Company Secretary Managing Director’s Powers and Duties 1. To control and oversee the pursuance of the Company’s business in general and to perform duties assigned by the Company’s Board of Directors or Executive Committee, ensuring that objectives are met. 2. To follow up and monitor the implementation of policies and working plans, ensuring that the administrative departments concerned duly perform the various tasks assigned them by the Company’s Board of Directors or Executive Committee, with the desired results. 3. To consider and, if appropriate, approve important and urgent transactions within the scope of his powers and duties and such monetary limits as the Company’s Board of Directors may establish, up to a maximum of Bt.200 million. 4. To control and oversee financial administration, including dealings with financial institutions, ensuring that it is in accordance with financial policies and as efficient as possible in accordance with assignments from the Company’s Board of Directors or Executive Committee. 5. To consider and, if appropriate, approve business transactions within the Company’s authorised areas of business. 6. To perform such other duties as may be assigned by the Company’s Board of Directors or Executive Committee. Annual Report 2011

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Thai Rung Union Car Public Company Limited


The scope of the powers and duties mentioned shall not extend to the authorisation of any transaction in which the Managing Director or an individual with a possible conflict of interest is an interested party or where there is a conflict of interest regarding the benefits of a related party transaction, or the acquisition or disposal of the listed Company’s assets, in accordance with the regulations of the Stock Exchange of Thailand. 1.6 Business dealings or professional services between Independent Directors and the Company During the year 2011 no Independent Director had any business relations with or provided professional services to the Company, its subsidiaries or joint ventures or juristic persons with possible conflicts of interest for a value exceeding that stipulated in the SEC’s recent announcement regarding application for and granting of authorisation to offer new shares for sale. 2. Nomination of Directors and Administrators The Company appointed a Nomination and Remuneration Committee on 13 August 2009, assigning additional powers and duties relating to nomination to the members of the existing Remuneration Committee (details of scope of powers and duties of the Committee can be seen under the heading Structure of Company Boards and Committees.) In the process for selecting individuals to be appointed as Directors includes, Independent Director and Company Administrators consideration of a number of characteristics including skills, experience and capability, especially in areas that are of the greatest benefit to the Company, and integrity. In fairness to shareholders Independent Directors must have qualities in accordance with the Company’s definition of Independent Director which in turn is in accordance with that of the SEC (details of the Company’s definition of Independent Director can be seen under the heading concerning criteria for selection of Independent Directors) each individual should be able to dedicate the necessary time to attending board meetings on a regular basis, and thus no individual should hold directorships of several listed companies at same time. Finally the individual must not possess any of the qualities or characteristics prohibited by the Listed Companies Act. The Company has extended the opportunity to shareholders to put forward suitable names to be considered for nomination as Directors of the Company in advance, in accordance with criteria laid down by the Company and published through the SET and the Company’s website, for the Nomination and Remuneration Committee to first consider the qualities of those put forward as possible Directors or Independent Directors of the Company, prior to submitting selected names to the Company’s Board of Directors, which in turn proposes appointments to the General Meeting of Shareholders. Approval is by simple majority of votes of those shareholders present or duly represented at the meeting and in possession of voting rights, as follows: 1. Each share confers the right to one vote. 2. Each shareholder who votes must use all his votes as per (1) above for a single individual or for a number of individuals together, but may not allocate votes individually. 3. The individuals receiving the highest number of votes will be selected in descending order for appointment as Directors of the Company depending on the number of Directors to be appointed on each occasion. In the event that two candidates receive the same number of votes and that appointing them both would lead to exceeding the required number of Directors, the Chairman of the meeting shall exercise a casting vote.

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Thai Rung Union Car Public Company Limited


3. Directors’ and Administrators’ Remuneration 3.1 Monetary remuneration (a) Board of Directors Total remuneration received by all nine Directors from the Company in their capacity as Directors by way of Directors’ stipends and meeting fees in 2011 a total of Bt.4,470,000 Details are as follows: 1. 2. 3. 4. 5. 6. 7. 8. 9.

Director’s Name Dr Pranee Phaoenchoke Mr Sompong Phaoenchoke Ms Kaewjai Phaoenchoke Mr Wuttichai Phaoenchoke Mr Anthony Farquhar McDonald Mr Pricha Attavipach Mr Kavee Vasuvat Mr Suvait Theeravachirakul Mr Somkiat Nimrawee Total

2011 (Baht) 720,000 560,000 490,000 440,000 340,000 710,000 390,000 400,000 420,000 4,470,000

2010 (Baht) 590,000 430,000 360,000 350,000 280,000 610,000 340,000 330,000 360,000 3,650,000

(b) Administrators (excluding Directors) 2011 2010 Number Total Number Total of Amount of Amount persons (Baht) persons (Baht) 7 14,805,860 7 14,555,680 7 3,389,395 7 2,825,772 7 602,460 7 490,662 1 84,000 1 84,000

Salaries* Annual remuneration* Living Allowances Company Secretary’s position allowance Total 18,881,715 17,965,114 Notes The monthly and annual remuneration of the President and the Managing Director have been considered by the Nomination and Remuneration Committee and approved by the Company’s Board of Directors. 3.2 Non-monetary remuneration (a) Directors None (b) Administrators Company car • Dividend Policy of Company and Subsidiaries (a) Payment of dividends by the Company to Shareholders TRU’s dividend policy is to pay a dividend each year of approximately 40% of its consolidated net earnings of the previous year, subject to TRU and its affiliates’ cash flow and investment plans, and other future considerations as to necessity and appropriateness. Annual Report 2011

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Thai Rung Union Car Public Company Limited


(b) Payment of dividends by Subsidiaries to the Company Subsidiary companies Thai Rung Tools and Dies Co. Ltd., Thai V.P. Auto Service Co. Ltd., Thai Auto Pressparts Co. Ltd., and Thai Ultimate Car Co. Ltd. consider their policy year by year in light of their investment requirements and other circumstances as appropriate. • Auditors’ Remuneration a) Audit fees Audit fees paid to ANS Audit Co Ltd by the Company and its subsidiaries in 2011 were as follows, with comparative figures for 2010. Baht Company 2011 2010 Thai Rung Union Car Plc. 570,000 570,000 Thai V.P. Auto Service Co Ltd 230,000 230,000 Thai Rung Tools and Dies Co Ltd 200,000 200,000 Thai Auto Pressparts Co Ltd 250,000 250,000 Thai Ultimate Car Co Ltd 350,000 350,000 Total 1,600,000 1,600,000 b) Non-audit fees Non-audit fees paid to ANS Audit Co Ltd by the Company and its subsidiaries in 2011 were as follows, with comparative figures for 2010. Baht Item Payer 2011 2010 Other service charges* Company 67,560 51,590 Other service charges* Subsidiaries 61,710 68,540 Special service fees in Thai Auto 40,000 40,000 accordance with BOI Pressparts instructions Co Ltd Total 169,270 160,130 Notes Other service charges such as travelling, accommodation, telephone and photocopying expenses, cost of binding for Financial Statements, files, etc., invoiced as incurred.

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Thai Rung Union Car Public Company Limited


Related Party Transactions

(1) Related Party Transaction with entities having a possible conflict of interest Transactions during the past year with parties having possible conflicts of interest Related company Isuzu Chaicharoenkij Motor Co Ltd

Chaicharoenkij Motors Co.,Ltd Isuzu V. Motor Co Ltd

Firstpart Co Ltd

V.P. Auto Enterprise Co Ltd

VPK Auto Co Ltd

Thai V.P. Corporation Co Ltd

Phothiphoom Co Ltd V.P. Capital Assets Co Ltd Sinthoranee Land and Construction Co ltd Lexus Auto City Co Ltd

Main type of Business Isuzu dealer Sale of spare parts After-sales service Isuzu dealer Sale of spare parts After sales service Sale of spare parts & accessories Auto repair & maintenance Ford dealer Sale of spare parts After sales service

Ford dealer Sale of spare parts After sales service Vehicle rental

Thai Rung Group Counterparty TRU, TUC TVS TVS TRU TUC TVS TVS

0.00 0.14 0.60 0.93 0.84 0.02 0.02

TUC, TVS

Sale of spares

0.29

TVS TUC, TVS TUC

Purchase of spares and payment for service Sale of spare parts Income from rental of land and showroom Income from utility charges and administartion fees Cost of leasing land

1.23 0.01 1.32 0.11

Trade debtors Trade creditors

0.59 0.14

0.60

Trade creditors

0.01

Vehicle rental

2.56

Trade debtors

0.32

0.40 1.68 0.52

Other debtors Trade creditors Other creditors

0.30 0.16 0.78

TAP TUC

Sale of spare parts Income from rental of land and showroom Income from utility charges and administartion fees Cost of leasing land Cost of leasing land

TVS

Purchase of spares and payment for service

0.19 1.20 0.02

Other creditors Trade creditors

0.05 0.01

TUC

Income from lease of land and showroom

1.89

Trade debtors Other creditors

0.16 0.08

TRU

TRU, TAP, TUC, TVS, TRT TVS, TUC TUC TRU, TRT, TVS

Real estate Real estate Real estate Lexus dealer

Note Thai Rung Tools and Dies Co. Ltd. Thai Auto Pressparts Co. Ltd.

Related Party Transactions 2011 (Baht millions) Sale of accessories Purchase of spares, vehicle repairs Sale of spare parts Interest received Cost of leasing land Sale of spare parts Purchase of spares and payment for service

TRT TAP

Balance sheet item (Baht millions) Trade debtors 0.05 Trade creditors 0.02 Other creditors 0.13 Other creditors Trade debtors

0.12 0.00

-

Thai V.P. Auto Service Co. Ltd. TVS Thai Ultimate Car Co. Ltd. TUC

Nature of relationships 1. TRT, TVS and TAP are subsidiaries of TRU, in which the Phaoenchoke group hold directorships and are the major shareholders. 2. TUC is a subsidiary of TVS, which holds 99.53% of the shares, the Phaoenchoke group holding the remaining 0.47%. 3. The above listed companies having possible conflicts of interest are related companies in which members of the Phaoenchoke group are both directors and major shareholders as follows Annual Report 2011

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Thai Rung Union Car Public Company Limited


Related Companies

Shares held by Phaoenchoke group

Directorship held in Related Companies

ICCK

TVP

Others

Dr. Pranee

Mr. Sompong

Ms. Kaewjai

Mr. Wuttichai

Isuzu Chaicharoenkij Motors Co., Ltd.

100.00%

-

-

-

C

D

D

D,MD

Chaicharoenkij Motors Co., Ltd.

100.00%

-

-

-

C

D

D

D,MD

-

-

C

D

D

D,MD

Isuzu V. Motor Co., Ltd.

0.001% 99.999%

Firstpart Co., Ltd.

100.00%

-

-

-

C

D

D,MD

-

V.P. Auto Enterprise Co., Ltd.

0.20%

-

99.80%

-

C

D

D,MD

D

VPK Auto Co., Ltd.

0.00%

-

82.00%

18.00%

C

-

D,MD

-

Thai V.P. Corporation Ltd

100.00%

-

-

-

C

D

D,MD

D

Phothiphoom Co., Ltd.

100.00%

-

-

-

C

D

D

D,MD

V.P. Capital Assets Co., Ltd.

100.00%

-

-

-

C

D

D

D,MD

Sinthoranee Land and Construction Co., Ltd.

100.00%

-

-

-

C

D

D

D,MD

90.00%

-

-

10.00%

C

D

-

-

Lexus Auto City Co., Ltd.

Note 1. “Phaoenchoke group” consist of Dr. Pranee Phaoenchoke, Mr. Sompong Phaoenchoke, Ms.Kaewjai Phaoenchoke and Mr. Wuttichai Phaoenchoke 2. ICCK = Izusu Chaicharoenkij Motor Co., Ltd., TVP = Thai V.P. Corporation Ltd. 3. C = Chairman of the Board D = Director MD = Managing Director or CEO (2) Necessity and Propriety of Related Party Transactions 1. Buying and selling accessories and spare parts and providing and receiving vehicle repair services are all normal business transactions of the Company, performed at cost plus a profit margin. 2. The leasing of land and office and showroom space together with utilities is at prices stipulated in mutual contracts, which are in line with actual or estimated market prices. 3. Vehicles rented from a related company are for use in the business. Rates and terms are similar to those applied to unrelated parties. 4. Loans to related companies are for use in sales support for the Group’s vehicles. Interest is charged at the average of the five major commercial banks’ one-year fixed deposit rates plus 1%. The above Related Party Transactions were considered with regard to their necessity, appropriateness and overall benefit to the Company and its shareholders. Most of them were normal business transactions or were in support of such normal business transactions, and they were conducted on normal commercial terms, without giving rise to any profit diversion, and were conducted at arm’s-length prices and on similar terms to those applied to non-related parties. The non-executive Directors’ opinion does not differ in any respect from the relevant resolutions of the Board of Directors. (3) Policy and approach with regard to future Related Party Transactions As regards any future Related Party Transactions the Company will act in accordance with all relevant laws, and with all relevant orders, proclamations and regulations of the Stock Exchange of Thailand, including regulations regarding the disclosure of information on Related Party Transactions and on the acquisition or disposal of significant assets by the Company or its subsidiaries. The Company’s Board of Directors has

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Thai Rung Union Car Public Company Limited


established guidelines for the consideration of related party transactions and of acquisitions and disposals of Company assets as follows. - In the event that, the size of the transaction having been calculated in accordance with Stock Exchange of Thailand criteria it transpires that the transaction requires approval by the Company’s Board of Directors, then the transaction must be submitted to the Board of Directors for their consideration. In the event that the Audit Committee disagrees, the proposal can nevertheless be placed before the Board and an appropriate record made in the minutes. - In the event that, the size of the transaction having been calculated in accordance with Stock Exchange of Thailand criteria, it transpires that the transaction requires approval by a meeting of shareholders, then the transaction must first be submitted to the Audit Committee for consideration and, if approved, onward submission to the Board of Directors who in turn will, if approved, propose it to a meeting of shareholders.

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Thai Rung Union Car Public Company Limited


Corporate Governance

Principles of corporate governance are guidelines for doing business and administering organisations, which are becoming more and more widely known and accepted. In accordance with these principles the Board of Directors has a very important role to play in running the organisation, by focusing on responsibilities towards all parties with which it has dealings, both inside and outside the organisation, and by emphasizing the importance of ethical dealings, transparency, efficiency, adequate disclosure of information that can be examined, the protection of shareholders’ rights and attention to their remuneration, and responsibilities towards society and the nation. The Company is very well aware of the importance of these guidelines and adheres to them strictly, so as to inspire confidence in shareholders and everyone with whom it has dealings and to form a solid base for the growth of the business. The Company is committed to applying the principles of corporate governance on an ongoing basis to the running of the Company’s business. Thanks to which the Company was assessed as ‘Excellent’ for the fourth year running in the joint SEC-TIA (Thai Investors Association) ‘AGM check-list’ and as ‘Very Good’ for the third year in a row by the Thai Institute of Directors’ ‘Corporate Governance Report of Thai Listed Companies 2011.’ The Company’s policy is to continue improving the standard of corporate governance. 1. Shareholders’ Rights The policy laid down by the Company’s Board of Directors is to look after shareholders’ basic rights. The Board considers the equitable safeguarding of the interests of all groups of shareholders to be an important duty and responsibility, in order to ensure that shareholders are treated fairly and that they have confidence in how business is conducted by the Company and its Directors. 1. The Company’s Board of Directors has established a corporate governance policy in writing, which must be strictly adhered to, as follows. 1. Rights and equitable treatment of Shareholders and other Stakeholders • The Company deals fairly and impartially with shareholders and other stakeholders such as employees and contractors, trading partners, the public, competitors, and creditors. • The Company endeavours to arrange shareholders’ meetings at the most convenient times possible for shareholders and to give shareholders equal opportunities to voice their opinions and ask questions. 2. Board of Directors - structure, role, duties and responsibilities, independence • The Board of Directors should play a leading role, have vision, and be independent in its decision making, for the overall maximum benefit of the Company and its shareholders. • The Board of Directors, management and shareholders should consider prudently how best to solve problems arising through any conflict of interest, with sincerity and integrity, rationally and independently within the framework of best ethical practice. • At least one third of the total number of Directors, but in any case not less than three, shall be Independent Directors. Annual Report 2011

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Thai Rung Union Car Public Company Limited


• The Board of Directors and the management team have agreed a system for the clear sharing of function, duties and responsibilities, and the Board has established a number of committees to help it study and scrutinise work in light of policies and to provide clear monitoring and follow-up. Committees currently include the Executive Committee, the Audit Committee, the Risk Management Committee and the Nomination and Remuneration Committee. The Board may consider setting up further committees as and when appropriate. • Directors are expected to attend all Board meetings. Each year the Company fixes such meeting in advance, at least one every three months, with additional, special meetings being called as and when necessary. The Company discloses the number of meetings attended by each Director in its Annual Report. 3. Disclosure and Transparency • The Board shall perform its duties with transparency, such that its actions can be examined, and shall disclose of correct and complete information, in a timely manner, to all interested parties. The Company has appointed the persons to be responsible for communicating with shareholders, institutional investors, stock analysts, and relevant government departments. • The Company has established a Nomination and Remuneration Committee whose duty is to seek out people with appropriate qualities to occupy the position of Director, Chairman of the Executive Committee and Managing Director in the event of a vacancy and to establish Directors’ remuneration fairly and reasonably. The establishment of Directors’ remuneration is subject to approval by a general meeting of shareholders, and is published in the Company’s Annual Report. 4. Control and Management of Risk • The Company attaches importance to the implementation of internal controls and audits, and has accordingly established an internal audit department to ensure that basic working practices and important financial transactions are conducted in accordance with established guidelines and in an efficient manner, reporting direct to the Audit Committee. 5. Business Ethics • The Company has issued to all Directors, administrators, managers and employees a written code of ethics to which they must adhere in performing their duties. 2. The Company’s Board of Directors has determined that an Annual General Meeting of Shareholders be held each year within four months of the close of business of the previous accounting year, and that the Company inform time, place and agenda of the meeting and provide relevant information and give Directors’ opinion as regards each agenda item in the letter of invitation to the shareholders’ meeting, which shall be in both Thai and English, and attach a form of proxy together with explanations as to registration for the meeting and granting of proxy are sent to shareholders at least fourteen days in advance and posted on the Company’s website beforehand, so as to give shareholders sufficient opportunity to study the information in advance of the meeting. 3. The Company’s Board of Directors has established criteria and procedures for extending the opportunity to minority shareholders to put forward names of suitable individuals to be considered for nomination as Directors of the Company and to propose agenda items for ordinary general meetings of shareholders in advance, in the period from October to December each year, in accordance with the criteria laid down by the Company and published through the SET Community Portal (SCP) and the Company’s website. In addition to this, the Company gives shareholders the opportunity of querying information relating to agenda items or of submitting questions to the Company in advance of the meeting by e-mail or fax, to promote shareholders’ opportunities to express their opinions to the Company. Annual Report 2011

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Thai Rung Union Car Public Company Limited


4. The Company’s Board of Directors treats all its shareholders impartially, endeavours to arrange shareholders’ meetings at convenient and appropriate venues and opens for registration well before the meeting starts, while shareholders who are unable to attend in person can appoint another person as proxy and can also choose to appoint one of the Company’s independent directors to act as proxy. Before the meeting starts, all rules and procedures governing the meeting are announced and clearly explained, including the method used to count shareholders’ votes on each agenda item. The Company hands out voting registration cards for each agenda item, while for any proposed appointment of Directors there is a card for each individual candidate, allowing shareholders to vote on each individual separately if they so wish. Throughout the meeting shareholders are welcome to express their opinions and to ask questions, all of which are answered. Complete and accurate minutes are taken of each meeting, which is also recorded on video, and are made available for shareholders’ inspection. 5. The Company’s Board of Directors attaches great importance to shareholders’ meetings, and all Directors endeavour to attend every such meeting, particularly the President of the Board of Directors and the Chairmen of the various committees, so as to facilitate questions and answers on matters relating to each one. 2. Equitable Treatment of Shareholders The policy of the Company’s Board of Directors is to treat all shareholders equally and fairly so as to safeguard their basic rights. 1. The Company’s Board of Directors accommodates shareholders who are unable to attend meetings in person, enabling them to vote by proxy. The Company also makes available the name of at least one independent Director whom shareholders have the option of appointing as their proxy, and provides as part of the letter of invitation to the meeting, information on each one, comprising name, age, address, positions held, academic record, work experience, shareholding in the Company and whether the Director is an interested party with regard to any particular agenda items. The Company makes available a form of proxy which enables shareholders to give instructions on how votes are to be cast on each item; however shareholders are free to use any form that complies with the criteria published by the Department of Business Development of the Ministry of Commerce. 2. The Company’s Board of Directors arranges for voting registration cards to be handed out for each agenda item, while for any proposed appointment of Directors there is a card for each individual candidate, allowing shareholders to vote on each individual separately if they so wish, and facilitating transparency and ease of examination in the event of any subsequent dispute. Information on individuals to be proposed for appointment as Directors is disclosed in the letter of invitation to the shareholders’ meeting, the information comprising name, photograph, age, academic record and Directors’ training courses, work experience and shareholding in the Company, for shareholders to study before reaching a decision. 3. In meetings of the Board of Directors or of shareholders, any Director, Administrator or shareholder who is an interested party in any agenda item must disclose to the meeting information on his or her own interest and those of related parties, and will not be entitled to vote on that particular agenda item, so that the meeting can consider transactions that might involve conflicts of interest and reach decisions in the overall best interests of the Company. 4. A shareholder who is also an Administrator may not raise any additional agenda item at a meeting of shareholders unless such item has been communicated in advance, even if the item is not so important as to require shareholders to spend time studying it before reaching a decision. Annual Report 2011

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Thai Rung Union Car Public Company Limited


5. The Company’s Board of Directors attaches great importance to the safekeeping and protection of confidential internal information and has therefore established written guidelines for guarding against the use of internal information for personal benefit. For details please refer to Control of Internal Information. 6. The Board of Directors has resolved that Directors and Administrators who are obliged by law to report their shareholdings must submit these reports to the Company’s Board of Directors each time. The Board of Directors has further determined that shareholdings of Directors and Administrators be reported every quarter to the Board. 3. Stakeholders The Company attaches importance to dealing with all its stakeholders, including shareholders, customers, trading partners and creditors, competitors, employees, the environment, the community and society with sincerity, honesty and impartiality. 1. The Company’s Board of Directors has produced and issued to all Directors, Administrators and employees a written Code of Ethics or Statement of Business Conduct to which they must adhere in performing their duties in accordance with the Company’s mission, as follows. • Shareholders The Company attaches great importance to its shareholders and other stakeholders, and carries on its business with sincerity, integrity and fairness, treating all parties concerned equitably, for the greater benefit of all concerned. • Employees The Company is confident that its employees constitute the organisation’s most valuable resource, and is therefore determined to recruit and look after good people with know-how, capability and integrity, and also focuses on developing individuals’ potential to help employees advance, while providing them with appropriate and fair remuneration and various welfare benefits aimed at promoting a cooperative work atmosphere in which initiative and creativity can thrive to the benefit of the organisation. • Customers The Company is devoted to and responsible to its customers, supplying them with quality standard goods, and respecting their confidentiality. • Trading Partners The Company can demonstrate that its procurement practices are in accordance with commercial conditions and that its financial borrowings, repayments and guarantee transactions are all in accordance with terms and conditions agreed with creditors. • Competitors The Company operates within a framework of fair competition, adhering to best practice principles and avoiding any unethical practices aimed at harming competitors. • Community and Society The Company cares about the environment, and takes steps to reduce and avoid creating pollution in its production processes that could affect the environment or the community, promotes community relations activities, helps society consistently to the best of its ability, and is always ready to listen to warnings or suggestions from the community so as to be more environmentally friendly, to improve the state of the environment and make it more liveable.

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Thai Rung Union Car Public Company Limited


2 The Company attaches importance to playing a useful role as regards the community, society and religion, for example through financial or material donations in support of various charitable organisations, granting scholarships every year to children of the Company’s employees and pupils of schools located near the Company, supporting the Buddhist religious clubs in the Company, arranging important religious activities in the Company on an ongoing basis throughout the year. 3 The Company pays close attention to the health and safety of all its employees concerning its policies on safety and health at work and the work environment, for all employees to cooperate in strict observance. 4 The Company attaches great importance to its employees, who constitute one of its most important resources. It has a policy of looking after its employees consistently, and has arranged to provide various appropriate welfare benefits such as buses to transport workers to and from the factory, a canteen, uniforms, accident insurance, annual health checks, a clinic and a library. 5 The Company has made arrangements for channels of communication to enable it to receive opinions and suggestions from all stakeholder groups, with a view to improving and developing its products, services and organisation, making it stable, able to compete successfully in the on term. One example is the employee suggestion scheme, in which each employee has a target of six suggestions per year, and suggestions go straight from the suggestion box to the Managing Director. Another is the facility for customers, shareholders, or the general public to submit suggestions and recommendations through the Company’s website. 4. Disclosure and Transparency The Company’s policy as established by the Board of Directors is one of transparency and of complete and timely disclosure to all interested parties of correct, readily accessible, consistent, reliable and checkable information, whether financial or non-financial. 1. The Company has set up a ‘Share Register and Investor Relations Department’ within the Office of the Managing Director, whose duty it is to disclose correct, complete, transparent information, whether financial or of a general nature, as well as being responsible for communicating with outside parties such as shareholders, institutional and other investors, analysts and relevant government departments in a fair and equitable manner. Investors can request further information about the Company by contacting: Share Register & Investor Relations Department, Office of the Managing Director Tel: 0-2420-0076 ext. 321 or 359, Fax: 0-2812-0844 e-mail: naiyana@thairung.co.th or omd_ir@thairung.co.th or by visiting the Company’s website: http://www.thairung.co.th 2. The Company has disclosed information in accordance with the criteria established using the Stock Exchange of Thailand’s SET Community Portal (SCP) system by way of Form 56-1 for the disclosure of annual information, as well as submitting its Annual Report and disclosing important information in both Thai and English on the Company’s website. 3. The Board of Directors has disclosed the roles and duties of the Board and of the various Committees and the number of times each board and committee met during the year and individual attendance records in Form 56-1 for annual information and in the Company’s Annual Report. (For details please refer to Structure of Company’s Board of Directors and Number of Board Meetings held and individual Directors’ attendance record)

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Thai Rung Union Car Public Company Limited


4. In accordance with Section 89/14 of the Securities and Exchange Act and SEC Announcement Thor Jor 2/2009 which came into force on 1 July 2009, the Company requires its Directors and senior executives to report to the Company any interests of their own or of related persons that relate to their administration or management of the business of the Company or its subsidiaries, so that the Company shall have the necessary information for proceeding in accordance with rules regarding related party transactions where conflicts of interest might arise to the detriment of the Company and its subsidiaries. 5. Responsibilities of the Board of Directors The Company’s Board of Directors is well aware of the important role it plays in controlling and monitoring business for the greatest possible good of the Company, and of its answerability to shareholders for the consequences of its actions in carrying out its duties. It operates independently from management. Details are as follows. 1. Structure of Company’s Board of Directors 1.1 The Board of Directors of the Company consists of nine persons, at least one third of whom must be independent directors. At present the Company has five independent directors. The characteristics of independent directors are as defined by the Company. (details as per heading re criteria for appointment of Independent Directors) 1.2 The Chairman is not the same person as the Managing Director, and the Board of Directors of the Company has clearly defined the Managing Director’s powers and duties so that no single person has unlimited power. (For details please see re Company Administrators) This arrangement makes for better checks and balances and control. 1.3 The Company’s Board of Directors appointed a Company Secretary on 15 May 2008 to perform the duties of setting up and maintaining a register of Directors, arranging letters calling Board meetings, minutes of Board meetings, letters of invitation to and minutes of shareholders’ meetings and to keep records of Directors’/Administrators’ interests and perform such other duties as may be established by securities legislation. 1.4 The Board of Directors of the Company has not so far established on how many company boards each director can sit, nor has it established clear policies or guidelines on the question of seats on boards of other companies being occupied by the Managing Director and senior Administrators of the Company. The Company’s Board of Directors will consider these matters in due course. 2. Other Boards and Committees 2.1 The Board of Directors has established four other boards and committees: the Audit Committee, the Executive Committee, the Risk Management Committee and the Nomination and Remuneration Committee in order to help study details and scrutinise work as necessary according to the situation, to lighten the workload of the Board of Directors, to provide clear arrangements for the consideration of each particular type of subject, and to accord with good corporate governance practices. (For names of members, powers and duties and other information on each board and committee please refer to headings re structure of the Company’s Board of Directors and list of names of Company Directors) The Company does not have a nomination committee but it does have a process for the selection of directors and administrators in accordance with established methods and criteria. (For details please see Nomination of Directors and Administrators.) 2.2 The Chairman of the Board of Directors of the Company cannot be a chairman or member of any other board or committee. The majority of members of other boards and committees are independent directors, including the chairmen of the Audit Committee and of the Nomination and Remuneration Annual Report 2011

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Thai Rung Union Car Public Company Limited


Committee, so as to ensure transparency and independence in carrying out their duties. 3. Role, Duties and Responsibilities of the Board of Directors 3.1 The Board of Directors plays a part in establishing the Company’s vision, mission and business strategies and also in ensuring independently that administrative departments proceed in accordance with work plans efficiently and effectively for the overall benefit of the Company and its shareholders. In addition the Board establishes internal control systems and an effective internal audit, and constantly monitors them though meetings of the Audit Committee. 3.2 The Board of Directors has established written corporate governance policies and a Code of Ethics or Statement of Business Conduct (see details as per the section headed Corporate Governance, paragraph 1, shareholders’ rights), and it reviews these policies and monitors compliance with them consistently. 3.3 The Company’s Board of Directors has established guidelines for the careful consideration of transactions involving possible conflicts of interest for the Company and its shareholders, whereby anyone having an interest in any agenda item must disclose such interest to the meeting, and foregoes the right to take part in taking a decision on that item. The Company’s Board of Directors has established guidelines for the consideration of related party transactions and of acquisitions and disposals of Company assets, details as per the Policy and approach with regard to future related party transactions. 3.4 The Company’s Board of Directors attaches considerable importance to risk control and management systems, and has accordingly established a Risk Management Committee to establish duties and policies and a framework for managing the Company’s overall risk situation, covering the various risks that might affect the Company’s results and reputation, as well as establishing an internal audit department to ensure that basic working practices and important financial transactions are conducted in accordance with established guidelines and in an efficient manner. In order to make sure that the internal audit department can perform properly and independently, the Board has instructed it to report direct to the Audit Committee. (For details please refer to Internal Controls.) 4. Board Meetings 4.1 The Company’s Board of Directors establishes a schedule of Board meetings in advance for each year. Meetings take place at least once a quarter, with additional special meetings being held as and when necessary. The Company informs all Directors in advance of the schedule of meetings referred to above so as to enable them to plan their time and make themselves available for the meetings. Directors attach great importance to Board meetings and endeavour always to attend. Letters of invitation are sent at least seven days in advance clearly setting out the agenda. Each Director is free to suggest topics for the agenda, and to request additional information from the Managing Director or the Secretary to the Board of Directors. 4.2 At meetings of the Company’s Board of Directors, the President of the Board ensures that sufficient time is made available for Directors to discuss important problems thoroughly together, and the Managing Director always invites senior Administrators to attend Board meetings in order to provide additional detailed information to the extent that it is directly relevant to problems. One of the items on the agenda at all regular quarterly meetings of the Board is the following up of outstanding issues. Directors can express their opinions openly and freely. A written record is made of each meeting and, once the minutes have been approved by the Board, they are kept available for Directors and other concerned parties to examine. 5 Board Self-Assessment In 2008 the Company’s Board made a start with assessing its own overall performance, using the form provided by the Listed Companies Supervision Development Centre of the Stock Exchange of Thailand, to Annual Report 2011

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Thai Rung Union Car Public Company Limited


allow all members of the board to consider the board’s performance and solve any problems they may have, and arranged for the self-assessment to take place on a regular annual basis. 6 Remuneration The Company has established a Nomination and Remuneration Committee, which is chaired by an independent director and is charged with setting policies, methodology and criteria for establishing the remuneration of Directors, the President and the Managing Director fairly, transparently, in consonance with the Company’s results and each individual’s performance, in line with industry norms, and sufficient to reward directors having the desired characteristics. Directors’ remuneration is subject to approval by a meeting of shareholders of the Company and to disclosure in the Company’s Annual Report and in Form 56-1 as required by the SEC. (For details please refer to Directors’ and Administrators’ Remuneration.) 7 Development of Directors and Administrators 7.1 The Company’s Board of Directors facilitates and supports training and study for Directors and members of the Audit Committee by way of regular attendance of various courses run by the Institute of Directors (IOD). At present 78% of Directors have attended these courses. Details are as follows. Name Course 1. Mr Sompong Phaoenchoke Director Certification Programme 26/2003 2. Ms Kaewjai Phaoenchoke Director Certification Programme 29/2003 3. Mr Somkiat Nimrawee Director Accreditation Programme 10/2004 4. Mr Pricha Attavipach Director Certification Programme 39/2004 Finance for Non-Finance Directors 8/2004 5. Mr Suvait Theeravachirakul Director Certification Programme 9/2001 Audit Committee Programme 15/2006 6. Mr Kavee Vasuvat Director Forum Programme 1/2000 Director Accreditation Programme 23/2004 Director Certification Programme 58/2005 Finance for Non-Finance Directors 18/2005 Audit Committee Programme 10/2005 7. Mr Damri Tunshevavong Director Certification Program 106/2008 Audit Committee Program 24/2008 Role of the Chairman Program 22/2009 Role of Compensation Committee 10/2010 7.2 The Company introduced new Directors to the nature of its business and guidelines for conducting its affairs. 7.3 With regard to the preparation of a plan for developing and testing the work of the Managing Director and top level Administrators, no action has yet been taken, however the Nomination and Remuneration Committee will consider this matter on due course.

Annual Report 2011

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Thai Rung Union Car Public Company Limited


Control of internal information

The Company is acutely aware of the importance of safeguarding the confidentiality of internal information and therefore has strict policies guarding against the use by Directors and employees of internal information for their personal benefit. Important internal information is revealed only to individuals directly concerned, such as auditors or legal counsel. The Company releases information to shareholders only as and when appropriate. The Board of Directors has resolved that Directors and Administrators of the Company and the Manager of Accounting & Finance Department, together with their spouses, parents, children and siblings, must refrain from buying or selling securities from at least five working days before the Company discloses its financial statements to the stock exchange. The Company has also informed them of their obligation to report their shareholdings in the Company and those of their spouses and of any children who are still minors, including the reporting of any changes in their shareholdings to the SEC and the SET in accordance with article 59, subject to penalties for non-compliance as per article 275 of the Securities and Stock Exchange Act 1992, and has assigned the Share Register and Investor Relations Department to inform them in advance of the periods during which they should refrain from trading in securities each quarter. The Company has set out the basic principles of control of internal information in the form of an article in the Company’s code of business ethics, to ensure that all employees adhere to them. The Board of Directors has resolved that Directors and Administrators who are obliged by law to report their shareholdings must submit these reports to the Company’s Board of Directors each time. The Board of Directors has further determined that shareholdings of Directors and Administrators be reported every quarter to the Board. Additionally, the Company’s Board of Directors requires Directors and senior executives to submit a Form for Reporting Interests of Directors and Executives, reporting to the company any interests of their own or of related persons that relate to their administration or management of the business of the Company or its subsidiaries, pursuant to Section 89/14 of the Securities and Exchange Act of 2008 and SEC Announcement Thor Jor 2/2009. The report must be submitted whenever there is a change in circumstances and in any case annually as at 1 July to provide assurance that Directors and senior executives are performing their duties with due care and integrity (fiduciary duties) and taking decisions without being interested parties, whether directly or indirectly and discharging their duties in the best interests of the Company and its shareholders. Internal Controls From Board Meetings during 2011 which were attended by all members of the Audit Committee, the Company’s Board of Directors and the Audit Committee are of the opinion that the Company’s internal control systems are adequate and appropriate. The following is a summary. Organizational Control and Environmental Measure The Company has clear business objectives with ongoing assessment of results, and has adapted its organisational structure to make it appropriate to current business conditions so as to support the administration department and enable it to work efficiently. Annual Report 2011

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Thai Rung Union Car Public Company Limited


Additionally, the Company has established a policy and working plan focused on product quality and price and fair service to customers. It has written procedures that serve as guidelines aimed at producing ordered work according to standards, and there are mechanisms for inspecting and monitoring working practices in the fields of finance and purchasing, administration generally, production and marketing in order to provide assurance that working practices are in accordance with established policies and that there are no practices likely to damage the Company’s reputation or interests. Risk Management Measure The Company attaches importance to managing risks that can affect its business, and has a Risk Committee to oversee and assess risk factors and possible sources of risk as well as analysing the consequences of such risks and alerting Administrators or operatives and together establishing measures and guidelines to protect against such risks, monitoring compliance with such measures so as to keep risks at acceptable levels. Management Control Activities The Company has established the scope and powers and duties and monetary limits in writing for each level of the administrative departments. There is clear division and separation of duties, approvals, recording of transactions and safeguarding of assets. Business dealings with major shareholders, Directors, Administrators or related parties are duly authorised, being considered by Independent Directors who are not interested parties, and monitored for compliance with terms and conditions. Investments in subsidiaries or joint ventures are monitored and overseen on an ongoing basis. With regard to the operation of the various departments, audits by the internal audit department have found that operations in general are in accordance with the rules and working systems established, with no instances of illegal or irregular conduct being detected. Information and Communication Measure For each regular Board meeting the Company prepares documentary information of various kinds to support the agenda items so as to enable the Directors to have sufficient information on which to base their decisions. Resolutions are summarised and adequately recorded in minutes which are available for inspection at all times. Recording of accounting entries is in accordance with generally accepted principles and supporting documentation is gathered together in categories and properly stored for the legally established periods. There is also a procedure for fully following up on improvements recommended by the Company’s duly authorised auditors in their reports. Monitoring System The Company arranges regular quarterly Board Meetings, with special ad hoc meetings of senior executives on an ongoing basis to consider and follow up on the work of the administration departments to ensure that it is in line with objectives or, if it is not, to establish corrective guidelines. As for internal control, a plan is established for the examination of working practices to ensure that they are consistently in accordance with the Company’s rules and regulations and a report on any significant deficiencies is submitted to the Audit Committee and the Board of Directors at a meeting which is arranged to coincide with the quarterly Board meeting, for them to decide on any corrective and follow-up measures. Any event of misconduct or illegal act is reported immediately to the Board of Directors. Annual Report 2011

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Thai Rung Union Car Public Company Limited


Corporate Governance Report on Audit Committee

In 2011, The Audit Committee which is composed of three non-executive Independent Directors carried out their duties in accordance with the Audit Committee Regulations and the guidelines of the SET in examining the efficiency and adequacy of the Company’s internal control systems, and made various recommendations to administrative departments with a view to maximising working efficiency and effectiveness. It also monitored compliance with principles of good corporate governance and risk management, so as to enhance the value of the organisation to its shareholders and other stakeholders. The main items can be summarised as follows: 1. Examination of the Company’s quarterly and annual financial statements for 2011 by seeking explanations from administrators concerning their accuracy and completeness and adequacy of information disclosed. The Audit Committee is of the opinion that the said financial statements are accurate in all material respects in accordance with generally accepted accounting principles. 2. Examination of the Company’s internal control systems in accordance with guidelines laid down by the SEC. The Audit Committee is of the opinion that the Company has adequate, appropriate and efficient mechanisms for supervising and controlling its work processes. 3. Monitoring compliance with securities legislation, stock exchange regulations and other legislation relevant to the Company’s business. The Audit Committee is of the opinion that the Company correctly and appropriately complies with the aforementioned laws and regulations. 4. Considering the organisational structure and manpower of the Internal Audit Department, which reports directly to the Audit Committee, giving its opinion on the mission, scope of duties, responsibilities, independence and reporting of the Internal Audit Department to the Audit Committee and approving the annual audit plan. 5. Meeting with the Company’s auditors, ANS Audit Co Ltd without the presence of company officers, to confer on major points relating to financial statements and ensure that the auditors’ accounting and financial reports are comprehensive and detailed. 6. Selection and establishment of Company’s external auditors for 2011. We proposed to the Board of Directors that ANS Audit Co Ltd be appointed as the Company’s auditors. The Audit Committee considered their work and independence, and the appropriateness of their remuneration, and found it appropriate that Mr Atipong Atipongsakul, CPA No. 3500 and/or Mr Prawit Viwanthananut, CPA No. 4917 and/or Mr Bunjong Pichayaprasat, CPA No. 7147 and/or Mr Vichai Ruchitanont, CPA No. 4054, and/or Mr Satien Wongsanan, CPA No. 3495 all from ANS Audit Co Ltd be appointed and their remuneration established at Bt.0.57m for the year. (unchanged from last year)

Annual Report 2011

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Thai Rung Union Car Public Company Limited


7. During 2011 the Audit Committee met four times. On the first three occasions all members of the Audit Committee were present. At the fourth meeting two of the three were present, one being excused due to a business engagement. 8. In the course of the past year the Company carried out related party transactions or transactions likely to involve a conflict of interest as per the stipulations of the SET and the SEC. The Audit Committee is of the opinion that the aforementioned transactions were proper and appropriate and fully and accurately disclosed. In conclusion the Audit Committee generally carried out its duties in accordance with the Audit Committee’s charter as approved by the Company’s Board of Directors. The Audit Committee is of the opinion that the Company reports financial and business information accurately, that it has internal control systems and that it complies fully with the law concerning the disclosure of related party transactions and with rules for good corporate governance in a transparent and reliable manner.

Pricha Attavipach Chairman of the Audit Committee

Annual Report 2011

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Thai Rung Union Car Public Company Limited


Nomination and Remuneration Committee’s Report

The Nomination and Remuneration Committee, composed of three non-executive independent Directors, is charged with selecting individuals with appropriate qualities for occupying the position of Company Director in a proper and transparent manner, including from among any names proposed by shareholders, for onward submission to the Company’s Board of Directors and in turn to the shareholders for their approval, and with selecting persons with characteristics appropriate to the position of President and Managing Director in the event of their being a vacancy, for nomination to the Board of Directors for their consideration, and to prepare a succession plan for senior executive positions. It is also responsible for the setting policies, methodology and criteria for establishing, and for considering and reviewing the establishment of remuneration of Directors, the President and the Managing Director fairly, transparently and in consonance with the Company’s results and each individual’s performance. It reports independently to the Board of Directors so as to ensure that remuneration is established in a way that is appropriate and fair to all interested parties whilst safeguarding shareholders’ interests, in accordance with the Company’s principles of good corporate governance. In 2011 the Nomination and Remuneration Committee met to consider the following matters 1. Establishment of remuneration for the year 2011 and monthly remuneration for 2012 for the President and the Managing Director 2. Establishment of remuneration for the year 2011 for individual Company Directors based on the performance of the Company and the duties and responsibilities and performance of each individual Director within an overall monetary limit to be approved by the shareholders. 3. Directors’ remuneration for 2012 for proposal to the Company’s Board of Directors and subsequently to the General Meeting of Shareholders for their approval, the Nomination and Remuneration Committee considering that the proposed remuneration was in line with the scope of duties and responsibilities of the Directors and with remuneration paid in comparable industries. 4. The appointment of a new Director to replace a Director resigning from his position and the appointment of Directors to replace those retiring by rotation, for submission to the Board of Directors and in turn to the general meeting of shareholders. In summary, the Nomination and Remuneration Committee fully discharged its duties as assigned by the Company’s Board of Directors. Shareholders may this rest assured that the nomination of Directors and the establishment of their remuneration was carried out in a proper, appropriate and transparent manner and in accordance with the Company’s principles of good corporate governance.

Pricha Attavipach Chairman of the Nomination and Remuneration Committee Annual Report 2011

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Thai Rung Union Car Public Company Limited


Board of Directors’ Responsibility for Financial Reports

The Company’s Board of Directors is responsible for the consolidated financial statements of Thai Rung Union Car Public Co. Ltd. and its subsidiaries and for the financial information which appears in the Annual Report. The financial statements were prepared in accordance with generally accepted accounting standards, applying appropriate and consistent accounting policies and with careful, prudent consideration and best possible estimates, making adequate disclosure of information by way of notes to the financial statements. The Board of Directors has put in place and maintains effective internal control systems which provide reasonable assurance that the recording of transactions in the Company’s books is correct and complete, as well as adequately protecting the Company’s assets and ensuring that any weak points can be detected and any misconduct or significant abnormal occurrence thus prevented. The Company’s Board of Directors has appointed an Audit Committee consisting of non-executive directors, which is responsible for monitoring the quality of financial reports and internal control systems. The Audit Committee’s opinion on these matters appears in the Report of the Audit Committee. The Board considers that the Company’s internal control systems are at an appropriate level and provide sufficient assurance in terms of the reliability of the financial statements of the Company and its subsidiaries as at 31 December 2011.

Dr. Pranee Phaoenchoke Chairman of the Board

Annual Report 2011

Mr. Sompong Phaoenchoke Managing Director

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Thai Rung Union Car Public Company Limited


Management’s Discussion and Analysis

Management’s Discussion and Analysis (Based on Consolidated Financial Statements as at 31 December 2011) In 2011 Thailand’s total vehicle production amounted to 1,457,795 units, representing a decrease of 11% on the previous year. Total domestic vehicle sales 795,250 units (1% down on previous year), whilst 735,627 units were exported, representing a decrease of 18% on the previous year as a result of two major events: the earthquake and tsunami in Japan in the second quarter, and the widespread flooding in Thailand in the fourth quarter which slowed vehicle production as several parts factories were flooded. However parts and vehicle plants are expected to return to normal in the early part of 2012 and pent-up demand will return at the same time thanks to the government’s ‘first car’ economic stimulus policy together with the favourable market response to the introduction of new models, particularly ecocars. As for the Thai Rung group of companies, total consolidated revenues in 2011 amounted to Bt.2,263.10m, up 5% from the previous year, basically due to the Company’s adjusting its strategy to put more stress on revenues from the sale of parts and contract assembly and painting work for both existing and new customers and to extend its customer base to take in industrial and agricultural machinery manufacturers, as a result of which the Company was not much affected when compared with the auto industry as a whole. Details of Company’s performance and financial situation are as follows. Results Consolidated Revenues Total consolidated revenues for 2011 were Bt.2,263.10m representing an increase of Bt. 114.07 m. or 5% compared with 2010, details as follows. 2011

Type of Revenue Sale of vehicles, including cost of assembly and equipment and accessories fitted Sale of parts, contract parts assembly and other contract service Contract production of dies and jigs Sale of spare parts, accessories and after sale service Total Revenue from Sales and Service Other Revenue Share of profit from investment in associated companies Total Consolidated Revenue

Annual Report 2011

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Bt. Millions 116.30

2010

% 5%

1,689.60 75% 190.92 8% 57.96 3% 2,054.78 91% 150.57 7% 57.75 3% 2,263.10 100%

Bt. Millions 168.63

% 8%

1,455.04 68% 253.04 12% 93.50 4% 1,970.21 92% 121.09 6% 57.73 3% 2,149.03 100%

Change Bt. % Millions (52.33) -31% 234.56 (62.12) (35.54) 84.57 29.48 0.02 114.07

Thai Rung Union Car Public Company Limited

16% -25% -38% 4% 24% 0% 5%


The overall increase in sales and service revenues is mainly due to higher volumes of customer orders for parts and contract assembly, and also for dies and jigs, revenues from which are recognised on a percentage completed basis. These orders came both from existing customers, reflecting the Company’s constant endeavours to enhance its production capabilities so as to ensure consistently high quality products. Other Income was up by Bt.29.48m or 24.35% on the previous year due to increased revenues from sales of scrap, with higher volumes in line with production, and share of profit from investments in three associates, together at a similar level to that of the previous year. Expenses Cost of sales and service Cost of sales and service for the year, at Bt.1,760.79m, was up by Bt.106.39m or 6.43% compared with the previous year, in line with higher sales volumes, particularly of parts and contract assembly. As a proportion of sales for the year 2011 it was 85.69%, up by 1.72% on the previous year as a result of the effects of the flooding on production and the adoption of new and amended financial reporting standards. Selling and administrative expenses Selling and administrative expenses for the year 2011 amounted to Bt.235.51m, down by Bt.35.38m or 13.06% on the previous year, due to lower selling expenses as a result of there being no new model launches, a successful strategy of cost control in the various areas and the adoption of new and amended financial reporting standards such as those on depreciation of buildings and installations. Net income (loss) The Company posted a net profit attributable to equity holders of the company of Bt.186.22m for the year 2011, representing 8.23% of total revenue and a decrease of Bt.0.15m or 0.08% on the previous year’s result. Balance Sheet Assets As a result of the adoption of newly issued and amended financial reporting standards which are applicable to financial statements for accounting periods starting on or after 1 January 2011, as well as IAS 12 Income Tax, the Company’s deferred tax assets (non-current assets) increased by Bt.34.70m as at 31 December 2011 and Bt.91.97m as at 31 December 2010, the reduction being due to changes in temporary differences and tax losses that are tax deductible in the statement of comprehensive income, which together amounted to Bt.70.32m and Bt.32.93m respectively. Total consolidated assets as at 31 December 2011 and 31 December 2010 stood at Bt.3,004.26m and Bt.2,987.51m respectively, representing an increase of Bt.16.75m or 0.56%, due to increases in accrued income on work completed but not yet due for payment and capital expenditure on plant and equipment aimed at boosting production capacity. Trade Receivables Net trade receivables as at 31 December 2011 and 31 December 2010 amounted to Bt.342.34m and Bt.410.25m respectively, representing a decrease of Bt.67.91m or 16.55%, in line with the decline in sales and service revenues in the fourth quarter as a result of the floods. There were no significant overdue items. Net balances of trade receivables as at 31 December 2011 and 31 December 2010 reflect average collection periods of 62.59 and 59.28 days respectively. Annual Report 2011

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Thai Rung Union Car Public Company Limited


Accrued Income Accrued Income as at 31 December 2011 and 31 December 2010 amounted to Bt.343.69m and Bt.216.64m respectively, representing an increase of Bt.127.05m or 58.65%. Investments Investments as at 31 December 2011 and 31 December 2010 amounted to Bt.220.45m and Bt.217.01m respectively, representing an increase of Bt.3.44m or 1.59% as a result of the Company’s recognising its share in the profits of joint venture companies. Property, plant and equipment Property, plant and equipment as at 31 December and 31 December 2010 stood at Bt.1,311.21m and Bt.1,060.43m respectively, representing an increase of Bt.250.78m or 23.65% as a result of the construction of a new factory building and the acquisition of plant and equipment to expand the production base to cater to increased volume of contract painting work and other new projects . Liabilities In the first quarter of 2011 the Group estimated liabilities associated with post employment benefits as at 1 January 2011 in accordance with IAS 19 Employee Benefits, opting for the method whereby in the period in which the change in method of recognition of liabilities associated with employee benefits takes place, the resulting amount, calculated using the actuarial method, is debited to retained earnings as at the date the accounting standard is first applied (1 January 2011). As at 31 December 2011 the Group’s liabilities associated with employee benefits totalled Bt.49.26m. Total consolidated liabilities as at 31 December 2011 and 31 December 2010 stood at Bt.362.18m and Bt.384.49m respectively, representing a decrease of Bt.22.31m or 5.8%, due mainly to a decrease in trade payables Shareholders’ Equity Shareholders’ Equity as at 31 December 2011 and 31 December 2010 stood at Bt.2,642.08m and Bt.2,603.02m respectively, representing an increase of Bt.39.06m or 1.5% as a result of the net effect of profits recognised during the year less the dividend paid in the second quarter. As at 31 December 2011 the Company thus had consolidated liabilities of Bt.362.18m and shareholders’ equity of Bt.2,642.08m, giving a net debt to equity ratio or gearing of about 0.14:1, compared with 31 December 2010 when gearing stood at 0.15:1, the difference being 0.01 times. Cash flow statement The consolidated cash flow statement for the year ended 31 December 2011 shows that net cash from operating activities was Bt.117.48m, net cash used in investing activities was Bt.221.57m reflecting capital expenditure on the construction of a new factory and plant and equipment for it, while at the same time the Company received cash in the form of dividends from joint venture companies, and net cash used in financing activities amounted to Bt.127.20m relating to the payment of dividends.

Annual Report 2011

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Thai Rung Union Car Public Company Limited


Auditor’s Report

To the Shareholders and the Board of Directors of Thai Rung Union Car Public Company Limited I have audited the accompanying consolidated statement of financial position of Thai Rung Union Car Public Company Limited and its subsidiaries as at December 31, 2011, the related consolidated statement of comprehensive income, the consolidated statement of changes in shareholders’ equity and the consolidated statement of cash flows for the year then ended, and the separate financial statements of Thai Rung Union Car Public Company Limited for the same period. These financial statements are the responsibility of the management of the Company and its subsidiaries as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audit. The consolidated financial statements of Thai Rung Union Car Public Company Limited and its subsidiaries and the separate financial statements of Thai Rung Union Car Public Company Limited for the year ended December 31, 2010 (before restatement), as presented herein for comparative purposes, were audited by another auditor of our firm, whose report dated February 23, 2011, expressed a qualified opinion on those statements regarding the Company’s consolidated financial statements as included investments in three associated companies accounted for under the equity method. These were recorded based on financial statements prepared by the management of such associated companies, which were not audited by their auditors. Except as discussed in the next paragraph, I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provide a reasonable basis for my opinion. The Company’s consolidated financial statements as at December 31, 2011, and for the year then ended, included investments in three associated companies accounted for under the equity method amounting to Baht 220.45 million and shares of profit from these companies amounting to Baht 57.75 million (as discussed in Note 7 to the financial statement). These were recorded based on financial statements prepared by the management of such associated companies, which were not audited by their auditors. In my opinion, except for the effect of any adjustments that may result from the matter as described in the preceding paragraph, the financial statement referred to above present fairly, in all material respects, the financial position of Thai Rung Union Car Public Company Limited and its subsidiaries and of Thai Rung Union Car Public Company Limited as at December 31, 2011, and the result of their operations and cash flows for the year then ended, in accordance with generally accepted accounting principles. As explained in the Note 2 to the financial statements, the Company and its subsidiaries have adopted new accounting policy “Income tax” for the preparation of the accompanying financial statements. As a result, the consolidated and separate financial statements for the year ended December 31, 2010 as presented herein for comparative propose, have been restated for the effects of the change in the accounting policy which I have audited such adjustments and in my opinion these adjustments are appropriate and properly applied. Moreover, during the year ended December 31, 2011, the Company and its subsidiaries have adopted new and revised Thai Financial Reporting Standards which are issued by the Federation of Accounting Professions and effective for the financial statements for the period beginning on or after January 1, 2011 for the preparation and presentation of these financial statements. The financial statements for the year ended December 31, 2010 which have been presented herewith for comparative proposes are newly presented in accordance with the financial statements for the year ended December 31, 2011. The Company and its subsidiaries have adjusted employee benefits obligations according to the application of TAS 19 by reflecting to the retained earnings as at January 1, 2011. ANS Audit Co., Ltd. Bangkok, February 28, 2012 Annual Report 2011

Sathien Vongsnan Certified Public Accountant (Thailand) Registration No. 3495

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Thai Rung Union Car Public Company Limited


Statements of Financial Position

Thai Rung Union Car Public Company Limited and Its Subsidiaries As at December 31, 2011 and 2010

(Unit : Baht) Consolidated financial statements Separate financial statements Note 2011 2010 2011 2010 (Restated) (Restated) Assets Current assets Cash and cash equivalents 195,695,091 426,988,087 108,473,151 234,758,753 Trade and other receivables - net 4, 5 342,344,083 410,249,033 234,936,180 297,911,912 Unbill receivable 343,686,259 216,636,149 - Short-term loans to related parties 4 - 46,500,000 355,500,000 88,500,000 Inventories - net 6 201,370,700 185,321,528 99,490,168 86,032,158 Total current assets 1,083,096,133 1,285,694,797 798,399,499 707,202,823 Non-current assets Investments in associated companies 7 220,453,009 217,006,948 121,550,000 121,550,000 Investments in subsidiaries 8 - - 412,880,000 412,880,000 Other long-term investment - net 9 - - - Investment property - net 2, 10 247,065,157 249,109,753 - Property, plant and equipment - net 2, 11 1,311,215,621 1,060,426,051 719,538,591 713,577,205 Deferred tax assets 2, 12 34,702,940 91,972,456 13,011,253 41,259,194 Other non-current assets - net 13 107,727,149 83,304,475 90,907,036 77,867,552 Total non-current assets 1,921,163,876 1,701,819,683 1,357,886,880 1,367,133,951 Total assets 3,004,260,009 2,987,514,480 2,156,286,379 2,074,336,774

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Thai Rung Union Car Public Company Limited


Statements of Financial Position (Continue)

Thai Rung Union Car Public Company Limited and Its Subsidiaries As at December 31, 2011 and 2010

(Unit : Baht) Consolidated financial statements Separate financial statements Note 2011 2010 2011 2010 (Restated) (Restated) Liabilities and shareholder’s equity Current liabilities Trade and other payables 4, 15 305,390,253 383,949,551 246,831,595 175,223,060 Current portion of liabilities under finance leases 2,402,250 - - - Short-term loans from related parties 4 - - - 46,000,000 Current income tax payable - 546,015 - Total current liabilities 307,792,503 384,495,566 246,831,595 221,223,060 Non-current Liabilities Long-term liabilities under finance leases 3,352,592 - - Deferred tax liabilities 2, 12 1,774,914 - 591,260 Employee benefit obligations 2, 16 49,260,074 - 28,867,504 - Total non-current Liabilities 54,387,580 - 29,458,764 Total Liabilities 362,180,083 384,495,566 276,290,359 221,223,060 Shareholder’s equity Share capital Authorized 524,996,497 ordinary shares, Baht 1 par value 524,996,497 524,996,497 524,996,497 524,996,497 Issued and paid up 501,589,497 ordinary shares, Baht 1 per share 501,589,497 501,589,497 501,589,497 501,589,497 Treasury shares 17 (47,950,454) (47,950,454) (47,950,454) (47,950,454) Additional paid-in capital - - - Premium on ordinary shares 727,144,000 727,144,000 727,144,000 727,144,000 Retained earnings - - - Appropriated - - - Legal reserve - the Company 18 52,499,649 52,499,649 52,499,649 52,499,649 - Subsidiaries 16,793,902 16,793,902 - Treasury share reserve 18 47,950,454 47,950,454 47,950,454 47,950,454 Unappropriated 2 1,263,840,816 1,226,139,502 598,762,874 571,880,568 Total shareholders’ equity of the Company 2,561,867,864 2,524,166,550 1,879,996,020 1,853,113,714 Non-controlling interests 2 80,212,062 78,852,364 - Total shareholder’s equity 2,642,079,926 2,603,018,914 1,879,996,020 1,853,113,714 Total liabilities and shareholder’s equity 3,004,260,009 2,987,514,480 2,156,286,379 2,074,336,774

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53

Thai Rung Union Car Public Company Limited


Statements of Comprehensive Income

Thai Rung Union Car Public Company Limited and Its Subsidiaries For Each of the Years Ended December 31, 2011 and 2010

(Unit : Baht) Consolidated financial statements Separate financial statements Note 2011 2010 2011 2010 (Restated) (Restated) Revenues 4, 22 Sales of goods 1,496,253,530 1,558,031,920 875,921,492 922,506,205 Rendering of services 558,522,955 412,176,287 346,051,823 140,504,456 Total revenues 2,054,776,485 1,970,208,207 1,221,973,315 1,063,010,661 Cost 2, 4, 16, 20 Cost of sales (1,211,770,284) (1,374,912,128) (737,725,764) (759,966,086) Cost of rendering of services (549,016,711) (279,483,520) (230,716,720) (107,124,020) Total cost (1,760,786,995) (1,654,395,648) (968,442,484) (867,090,106) Gross profit 293,989,490 315,812,559 253,530,831 195,920,555 Dividend income 4, 7, 8 - - 91,907,062 35,443,044 Other income 4, 19 150,571,825 121,094,360 115,038,741 82,500,824 Selling expenses 2, 4, 16, 20 (35,020,933) (51,307,882) (65,006,840) (48,592,114) Adminstrative expenses 2, 4, 16, 20 (200,490,778) (219,584,305) (196,009,648) (120,307,512) Financing cost (238,211) (21,487) (153,408) (449,151) Share of profit from investments in associated companies 7 57,753,123 57,727,854 - Profit before income tax expenses 266,564,516 223,721,099 199,306,738 144,515,646 Income tax expenses 2, 12, 21 (75,693,598) (33,638,620) (34,987,036) (30,943,438) Profit for the year 190,870,918 190,082,479 164,319,702 113,572,208 Other comprehensive income for the year - - - - Total comprehensive income for the year 190,870,918 190,082,479 164,319,702 113,572,208 Profit attributable to Equity holders of the Company 2 186,218,794 186,374,382 164,319,702 113,572,208 Non-controlling interests 4,652,124 3,708,097 190,870,918 190,082,479 Earnings per share Basic earnings per share Profit attributable to equity holders of the Company (Baht) 2 0.38 0.37 0.33 0.23 Weighted average number of ordinary shares (shares) 492,372,797 499,699,972 492,372,797 499,699,972

Annual Report 2011

54

Thai Rung Union Car Public Company Limited


Annual Report 2011

55

Thai Rung Union Car Public Company Limited

Balance as at December 31, 2010 Effects of deferred tax accounting Balance after restated as at December 31, 2010 Effects of changes in accounting policies Balance as at January 1, 2011 Changes in equity for the year 2011 : Dividend paid by subsidiaries Dividend paid Total comprehensive income for the year 2011 Balance as at December 31, 2011

Balance as at December 31, 2009 Effects of deferred tax accounting Restated balance Changes in equity for the year 2010 : Dividend paid by subsidiaries Treasury shares Treasury shares reserve Total comprehensive income for the year 2010 Balance as at December 31, 2010

Note

26

2

2

17 18

2

(47,950,454) (47,950,454) (47,950,454) (47,950,454)

501,589,497

(47,950,454) (47,950,454)

501,589,497 501,589,497 501,589,497 501,589,497

-

Treasury shares

501,589,497 501,589,497

Issued and paid-up share capital

727,144,000

727,144,000 727,144,000 727,144,000

727,144,000

52,499,649

52,499,649 52,499,649 52,499,649

52,499,649

16,793,902

16,793,902 16,793,902 16,793,902

16,793,902

47,950,454

47,950,454 47,950,454 47,950,454

47,950,454 47,950,454

(123,092,449) 186,218,794 1,263,840,816

1,137,515,966 88,623,536 1,226,139,502 (25,425,031) 1,200,714,471

(47,950,454) 186,374,382 1,226,139,502

(Unit: Baht) Consolidated financial statements Equity attributable to equity holders of the Company Retained earnings Appropriated Treasury Statutory reserve share reserve Premium on ordinary The The shares Company Subsidiaries Company Unappropriated Restated 727,144,000 52,499,649 16,793,902 966,163,404 121,552,170 727,144,000 52,499,649 16,793,902 - 1,087,715,574

Thai Rung Union Car Public Company Limited and Its Subsidiaries For Each of the Years Ended December 31, 2011 and 2010

(123,092,449) 186,218,794 2,561,867,864

2,435,543,014 88,623,536 2,524,166,550 (25,425,031) 2,498,741,519

(47,950,454) 186,374,382 2,524,166,550

2,264,190,452 121,552,170 2,385,742,622

Total

(2,400,000) 4,652,124 80,212,062

75,503,444 3,348,920 78,852,364 (892,426) 77,959,938

(2,115,000) 3,708,097 78,852,364

73,910,347 3,348,920 77,259,267

Noncontrolling interests

Statements of Changes in Shareholder’s Equity

(2,400,000) (123,092,449) 190,870,918 2,642,079,926

2,511,046,458 91,972,456 2,603,018,914 (26,317,457) 2,576,701,457

(2,115,000) (47,950,454) 190,082,479 2,603,018,914

2,338,100,799 124,901,090 2,463,001,889

Total shareholder’s equity


Annual Report 2011

56

Thai Rung Union Car Public Company Limited

Balance as at December 31, 2011

Total comprehensive income for the year 2011

Dividend paid

Changes in equity for the year 2011 :

Balance as at January 1, 2011

Effects of changes in accounting policies

26

2

-

Effects of deferred tax accounting

501,589,497

-

-

501,589,497

-

501,589,497

501,589,497

Balance as at December 31, 2010

Balance after restated as at December 31, 2010

501,589,497

-

-

-

Balance as at December 31, 2010

2

18

Treasury shares reserve

Total comprehensive income for the year 2010

17

Treasury shares

Changes in equity for the year 2010 :

501,589,497

-

2

Effects of deferred tax accounting

Restated balance

501,589,497

Balance as at December 31, 2009

Note

Issued and paid-up share capital

Thai Rung Union Car Public Company Limited and Its Subsidiaries For Each of the Years Ended December 31, 2011 and 2010

-

-

-

(47,950,454)

-

-

(47,950,454)

-

(47,950,454)

-

(47,950,454)

(47,950,454)

-

-

(47,950,454)

Treasury shares

727,144,000

-

-

727,144,000

-

727,144,000

-

727,144,000

727,144,000

-

-

-

727,144,000

-

727,144,000

Premium on ordinary shares

52,499,649

-

-

52,499,649

-

52,499,649

-

52,499,649

52,499,649

-

-

-

52,499,649

-

52,499,649

statutory reserve

-

-

-

-

47,950,454

-

-

47,950,454

-

47,950,454

-

47,950,454

47,950,454

-

47,950,454

Treasury share reserve

Appropriated

Retained earnings

Separate financial statements

(Unit: Baht)

(Continue)

598,762,874

164,319,702

(123,092,449)

557,535,621

(14,344,947)

571,880,568

41,259,194

530,621,374

571,880,568

113,572,208

(47,950,454)

-

506,258,814

72,202,632

434,056,182

Unappropriated

Statements of Changes in Shareholder’s Equity

1,879,996,020

164,319,702

(123,092,449)

1,838,768,767

(14,344,947)

1,853,113,714

41,259,194

1,811,854,520

1,853,113,714

113,572,208

-

(47,950,454)

1,787,491,960

72,202,632

1,715,289,328

Total shareholder’s equity


Cash Flow Statements

Thai Rung Union Car Public Company Limited and Its Subsidiaries For Each of the Years Ended December 31, 2011 and 2010

(Unit : Baht) Consolidated financial statements Separate financial statements 2011 2010 2011 2010 (Restated) (Restated) Cash flows from operating activities Net profit before income tax expenses 266,564,516 223,721,099 199,306,738 144,515,646 Adjustments to reconcile net income before tax to Net cash provided by (paid from) operating activities: (Reversal) allowance for diminution in value of inventories 12,944,678 (11,699,269) 3,120,000 (10,060,691) Write-off inventories - 14,026,362 - 12,896,364 Share of profit from investments in associates (57,753,123) (57,727,854) - Allowance for devaluation of dies and deferred cost of dies 7,696,822 2,818,857 4,140,000 Depreciation 82,803,028 96,087,376 42,410,439 46,016,459 Write-off fixed assets 55,410 6,136,353 55,410 Amortisation of leasehold rights 523,304 523,304 - Employee benefit expense 12,804,497 - 8,374,723 Gain on sales of fixed assets (1,321,312) (1,391,160) (5,390,521) (1,040,875) Dividend income - - (91,907,062) (35,443,044) Interest income (5,719,834) (6,220,465) (7,663,847) (5,033,792) Interest expense 238,211 21,487 153,408 449,151 Profit from operating activities before changes in operating assets and liabilities 318,836,197 266,296,090 152,599,288 152,299,218 Operating assets (increase) decrease Trade and other receivable -net 67,297,448 (102,148,167) 64,603,897 (117,892,837) Inventories (28,993,850) (15,425,679) (16,578,010) 19,414,557 Unbilled receivables (127,050,112) (202,841,357) - Other non-current assets (30,772,498) (13,293,630) (14,888,787) (7,413,642) Operating liabilities increase (decrease) Trade and other payables (76,730,350) 138,882,103 73,526,241 47,679,137 Employee benefit obligations (1,140,791) - - -

Annual Report 2011

57

Thai Rung Union Car Public Company Limited


Cash Flow Statements

Thai Rung Union Car Public Company Limited and Its Subsidiaries For Each of the Years Ended December 31, 2011 and 2010

(Unit : Baht) Consolidated financial statements Separate financial statements 2011 2010 2011 2010 (Restated) (Restated) Cash flows from operating activities Cash paid for interest expense Cash received from income tax refund Cash paid for corporate income tax Net cash flows from operating activities Cash flows from investing activities Increase in short-term loans to related parties Proceeds from short-term loans to related parties Proceeds from sales of fixed assets Interest received Dividend from subsidiaries and associated company Acquisition of fixed assets Net cash flows used in investing activities Cash flows from financing activities Increase in short-term loans from related parties Payment on short-term loans from related parties Finance lease liabilities payment Paid for treasury shares Dividend paid Dividend paid by subsidiaries to non-controlling interests Net cash flows used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Annual Report 2011

121,446,044 - 15,852,408 (19,815,346) 117,483,106

71,469,360 259,262,629 (21,487) (371,345) 2,928,494 12,615,256 (11,296,105) (10,765,954) 63,080,262 260,740,586

(10,000,000) 56,500,000 1,466,139 6,508,658 54,307,062 (330,355,992) (221,574,133)

(58,000,000) (344,500,000) (107,500,000) 60,906,875 77,500,000 68,406,875 3,645,837 5,540,678 3,114,572 6,171,513 5,900,638 5,048,676 2,308,044 91,907,062 35,443,044 (88,408,446) (54,147,082) (61,957,880) (73,376,177) (217,798,704) (57,444,713)

- - - - (1,709,520) (156,437) - (47,950,454) (123,092,449) - (2,400,000) (2,115,000) (127,201,969) (50,221,891) (231,292,996) (60,517,806) 426,988,087 487,505,893 195,695,091 426,988,087

58

94,086,433 (505,041) (4,624,246) 88,957,146

7,000,000 20,000,000 (53,000,000) (61,000,000) (135,035) (156,437) - (47,950,454) (123,092,449) - - (169,227,484) (89,106,891) (126,285,602) (57,594,458) 234,758,753 292,353,211 108,473,151 234,758,753

Thai Rung Union Car Public Company Limited


Notes to Consolidated Financial Statements Thai Rung Union Car Public Company Limited and Its Subsidiaries For Each of the Years Ended December 31, 2011 and 2010 1.

GENERAL INFORMATION

Thai Rung Union Car Public Company Limited (“The Company”) is a public company incorporated and domiciled in Thailand. The Company is principally engaged in car assembly and modification, and the manufacture and distribution of parts and mold. Its registered address is located at 28/6 Moo 1, Petchakasem Road, Khwaeng Nongkangploo, Khet Nongkaem, Bangkok.

2.

BASIS OF PREPARATION

The financial statements are prepared in accordance with Thai Financial Reporting Standards (“TFRS”) including related interpretations and guidelines promulgated by the Federation of Accounting Professions (“FAP”) in accordance with generally accepted accounting principles in Thailand.

The presentation of the financial statements has been made in compliance with the stipulations of the Notification of the Department of Business Development dated September 28, 2011, issued under the Accounting Act B.E. 2543.

The financial statements issued for Thai reporting purposes are prepared in the Thai language. This English translation of the financial statements has been prepared for the convenience of readers not conversant with the Thai language.

The preparation of the financial statements in conformity with Thai Financial Reporting Standards requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying amounts of assets and liabilities that are not readily apparent from other sources. Subsequent actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised, if the revision affects only that period, and in the period of the revision and future periods, if the revision affects both current and future periods.

Basis of consolidation

The consolidated financial statements include the financial statements of Thai Rung Union Car Public Company Limited (“the Company”) and the following subsidiary companies (“the subsidiaries”):

Annual Report 2011

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Thai Rung Union Car Public Company Limited


Company’s name

Subsidiaries directly held by the Company Thai V.P. Auto Service Co., Ltd. Thai Rung Tools and Dies Co., Ltd. Thai Auto Pressparts Co., Ltd.

Nature of business

Incorporation

Sales of cars, spare parts and car service centers Mold making service Manufacture of vehicle’s body parts

Thailand

94

94

Thailand Thailand

94 91

94 91

Thailand

99.53

99.53

Subsidiaries held by Thai V.P. Auto Service Co., Ltd. Thai Ultimate Car Co. Ltd. Sales of cars, spare parts and accessories and car service centers

of shareholding 2011 2010 Percent Percent

On February 15, 2011, Thai Ultimate Car Co., Ltd. (Subsidiary held by Thai V.P. Auto Service Co., Ltd.) had registered to engage more services operation which are the services in legal, accounting, commercial, industrial, and such services and others related to business and tax administration of large organization.

All significant intercompany transactions and accounts were eliminated in preparing the consolidated financial statements.

Subsidiary is an entity controlled by the Company. Control exists when the Company has the power, directly or indirectly through other subsidiaries, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of the subsidiary are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The preparations of the consolidated financial statements have been based on the same accounting policies for the same or similar accounting transactions or accounting events.

Transition to new and revised TFRS

During 2010 and 2011, the Federation of Accounting Professions (“FAP”) has issued Notifications, mandating the use of new and revised Thai Accounting Standards (“TAS”), Thai Financial Reporting Standards (“TFRS”), Thai Financial Reporting Interpretation (“TFRI”), Thai Interpretation (“TI”) and guidelines which are effective for the financial statements for the period beginning on or after January 1, 2011 as follows:

TAS/TFRS/TFRI/TI/FAP’s Topic Announcements TAS 1 (revised 2009) Presentation of Financial Statements TAS 2 (revised 2009) Inventories TAS 7 (revised 2009) Statement of Cash Flows TAS 8 (revised 2009) Accounting Policies, Changes in Accounting Estimates and Errors TAS 10 (revised 2009) Events After the Reporting Period TAS 11 (revised 2009) Construction Contracts TAS 16 (revised 2009) Property, Plant and Equipment TAS 17 (revised 2009) Leases TAS 18 (revised 2009) Revenue TAS 19 Employee Benefits TAS 23 (revised 2009) Borrowing Costs TAS 24 (revised 2009) Related Party Disclosures TAS 26 Accounting and Reporting by Retirement Benefit Plans TAS 27 (revised 2009) Consolidated and Separate Financial Statements Annual Report 2011

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Thai Rung Union Car Public Company Limited


TAS/TFRS/TFRI/TI/FAP’s Topic Announcements TAS 28 (revised 2009) Investments in Associates TAS 29 Financial Reporting in Hyperinflationary Economies TAS 31 (revised 2009) Interests in Joint Ventures TAS 33 (revised 2009) Earnings per Share TAS 34 (revised 2009) Interim Financial Reporting TAS 36 (revised 2009) Impairment of Assets TAS 37 (revised 2009) Provisions, Contingent Liabilities and Contingent Assets TAS 38 (revised 2009) Intangible Assets TAS 40 (revised 2009) Investment Property TFRS 2 Share – Based Payments TFRS 3 (revised 2009) Business Combinations TFRS 5 (revised 2009) Non-current Assets Held for Sale and Discontinued Operations TFRS 6 Exploration for and Evaluation of Mineral Resources TFRI 15 Agreements for the Construction of Real Estate TI 31 Revenue - Barter Transactions Involving Advertising Services No. 16/2554 Disclosure Guidance on Related Party Transactions with Government No. 17/2554 Transitional Procedures for Other Long-term Employee Benefits No. 18/2554 Accounting Guidance on Revaluation of Assets No. 19/2554 Accounting Guidance for Condominiums

During 2011, the Company and its subsidiaries have adopted new and revised TFRS which are effective for the financial statements for the period beginning on or after January 1, 2011. Such transition affected the presentation of the consolidated and separate financial statements for the year ended December 31, 2010 which have been presented herewith for comparative purposes in conformity with the presentation of the financial statements for the year ended December 31, 2011 and the Group’s overall financial position and financial performance as follows:

The Statements of Comprehensive Income Decrease in depreciation expenses Increase in employee expenses Increase in income tax expenses Decrease in profit attributable to non-controlling interests Decrease in profit attributable to Equity holders of the Company Decrease in basic earnings per share (Baht per share) The Statements of financial position Increase in investment property Decrease in property, plant and equipment-net Increase in deferred tax assets Increase in deferred tax liabilities Increase in employee benefit obligations Increase in non-controlling interests Increase (decrease) in retained earnings Unappropriated

Annual Report 2011

(Unit: Baht) Consolidated Separate financial financial statements statements 2011 2010 2011 2010 8,874,568 11,663,706 70,323,340

32,928,634

2,956,301 8,374,723 34,987,036

30,943,438

2,091,388

-

-

-

71,021,090

32,928,634

40,405,458

30,943,438

0.14

0.07

0.08

0.06

247,065,157 249,109,753 247,065,157 (249,109,753) 34,702,940 91,972,456 1,774,914 49,260,074 365,105 3,348,920 (7,822,585) 88,623,536

13,011,253 591,260 28,867,504 (13,491,210)

41,259,194 41,259,194

61

Thai Rung Union Car Public Company Limited


The details of the effect regarding the above transactions are as follows:

TAS 1 (revised 2009) - Presentation of Financial Statements

Under the revised standard, a set of financial statements comprises: • • • • •

Statement of Statement of Statement of Statement of Notes to the

financial position; comprehensive income; changes in shareholders’ equity cash flows; and financial statements

Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on reported profit or earnings per share.

TAS 12 - Income taxes

The Company and its subsidiaries have adopt Thai Accounting Standards - Income Taxes, impact to the beginning balance of retained earnings as at December 31, 2010 and 2009 and statement of comprehensive income for the year ended December 31, 2010 as follows:

Statement of financial position Beginning balance of retained earnings as at December 31, 2009 Balance as reported before restated Adjustment to deferred tax assets as at December 31, 2009 Restated balance

1,040,073,751 124,901,090 1,164,974,841

434,056,182 72,202,632 506,258,814

(Unit: Baht) Consolidated financial statements Equity holders of Non-controlling the Company interests Total

. Statement of financial position Beginning balance of retained earnings as at December 31, 2009 Balance as reported before restated Adjustment to deferred tax assets as at December 31, 2009 Restated balance

Annual Report 2011

(Unit: Baht) Consolidated Separate financial financial statements statements

62

966,163,404 121,552,170

73,910,347 3,348,920

1,040,073,751 124,901,090

1,087,715,574

77,259,267

1,164,974,841

Thai Rung Union Car Public Company Limited


Beginning balance of retained earnings as at December 31, 2010 Balance as reported before restated Adjustment to deferred tax assets as at December 31, 2010 Restated balance as at December 31, 2010 Adjustment to employee benefit net by deferred tax assets as at January 1, 2011 Beginning balance of retained earnings as at January 1, 2011 Balance as reported before restated

(Unit: Baht) Consolidated Separate financial financial statements statements 1,213,019,410 91,972,456 1,304,991,866 (26,317,457)

530,621,374 41,259,194 571,880,568 (14,344,947)

1,278,674,409

557,535,621

(Unit: Baht) Consolidated financial statements Equity holders of Non-controlling the Company interests Total

. Beginning balance of retained earnings as at December 31, 2010 Balance as reported before restated Adjustment to deferred tax assets as at December 31, 2010 Restated balance as at December 31, 2010 Adjustment to employee benefit and deferred tax assets as at January 1, 2011 Beginning balance of retained earnings as at January 1, 2011 Balance as reported before restated

1,137,515,966

75,503,444

1,213,019,410

88,623,536 1,226,139,502 (25,425,031)

3,348,920 78,852,364 (892,426)

91,972,456 1,304,991,866 (26,317,457)

1,200,714,471

77,959,938

1,278,674,409

Statement of comprehensive income for the year ended December 31, 2010 Comprehensive income for the year Balance as reported before restated Adjustment to deferred tax Restated balance Earnings per share Decrease in basic earnings per share (Baht per share)

(Unit: Baht) Consolidated Separate financial financial statements statements 223,011,113 (32,928,634) 190,082,479

144,515,646 (30,943,438) 113,572,208

0.07

0.06

TAS 16 (revised 2009) - Property, Plant and Equipment

The main changes of TAS 16 (revised 2009) and affecting the Company and its subsidiaries as follows:

The Company and its subsidiaries reviewed the estimated useful life and residual value of the assets because of the change in capacity of such assets. Therefore, the Company and its subsidiaries changed the estimated useful life of assets from 20 years to 30 years for office building and improvement since January 1, 2011. The effect of such changes in useful life resulted to decrease in depreciation expense for the year ended December 31, 2011 Baht 8.87 million in the consolidated financial statements and Baht 2.96 million in the separate financial statements, respectively. Annual Report 2011

63

Thai Rung Union Car Public Company Limited


TAS 19 (revised 2009) - Employee Benefits

The management of the Company and its subsidiaries have determined that the liability incurred from the employee benefits as at January 1, 2011 for post-employment benefits is the amount of Baht 37.60 million in the consolidated financial statements and Baht 20.49 million in the separate financial statements which applied a transitional provision that such liability is recognized and accounted for immediately in retained earnings at the transition date. The change will have the effect of decreasing in the retained earnings as at January 1, 2011 in the amount of Baht 26.32 million in the consolidated financial statements and Baht 14.34 million in the separate financial statements and increasing in the deferred tax assets as at January 1, 2011 in the amount of Baht 11.28 million in the consolidated financial statements and Baht 6.15 million in the separate financial statements and increasing in the employee benefit liability as at January 1, 2011 in the amount of Baht 37.60 million in the consolidated financial statements and Baht 20.49 million in the separate financial statements.

TAS 40 (revised 2009) - Investment Properties

The Company and its subsidiaries have selected the cost model for accounting for its investment properties under the TAS 40 (revised 2009). The change in accounting policy has been applied retrospectively. The Company and its subsidiaries have reclassified carrying amount of investment properties from “property, plant and equipment” in the amount of Baht 249.11 million in the consolidated financial statements to a separate account “investment properties” in the statement of financial position as at December 31, 2010. The change in accounting policy has no material impact on the statement of comprehensive income.

Adoption of new and revised Thai Financial Reporting Standards

During 2010 and 2011, the Federation of Accounting Professions (“FAP”) has issued new and revised Thai Accounting Standards (“TAS”), Thai Interpretations (“TI”) which are effective for the financial statements for the period beginning on or after January 1, 2013 as follows:

TAS/TI Topic TAS 20 (revised 2009) Accounting for Government Grants and Disclosures of Government Assistance TAS 21 (revised 2009) The Effects of Changes in Foreign Exchange Rate TI 10 Government Assistance - No Specific Relation to Operating Activities TI 21 Income Taxes - Recovery of Revalued Non-Depreciable Assets TI 25 Income Taxes - Changes in the Tax Status of an Enterprise or its Shareholders

The management of the Company is assessing the impacts of these standards and interpretations on the financial statements for the year in which they are initially applied.

3.

SIGNIFICANT ACOUNTING POLICIES

Cash and cash equivalents

Cash and cash equivalents in the statements of cash flows comprise cash balances, call deposits and highly liquid short-term investments with an original maturity of three months or less and not subject to withdrawal restrictions. Bank overdrafts that are repayable on demand are a component of financing activities for the purpose of the statement of cash flows.

Trade and other accounts receivable

Trade and other accounts receivable are stated at their invoice value less allowance for doubtful accounts.

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Thai Rung Union Car Public Company Limited


The allowance for doubtful accounts is assessed primarily on analysis of payment histories and future expectations of customer payments. Bad debts are written off when incurred.

Inventories

Inventories are measured at the lower of cost and net realisable value.

Cost is calculated using the weighted average cost principle, and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured inventories and work-in-progress, cost includes an appropriate share of production overheads based on normal operating capacity and is calculated using standard cost adjusted to approximate average cost.

Finished goods and work in process are valued at the lower of standard cost (which approximates actual cost) and net realisable value. Standard cost includes all production costs and attributable factory overheads.

Raw materials and parts are valued at the lower of standard cost (which approximates actual cost) and net realisable value and are charged to production costs and cost of services whenever consumed.

Spare parts of car service centers are valued at the lower of cost (moving average method) and net realisable value.

Cars purchased for sales are valued at the lower of cost (specific identification method) and net realisable value.

Allowance for diminution in value of inventories is recorded by considering old, slow-moving and obsolete inventories.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to complete and to make the sale.

Investments

Investments in subsidiaries and associates

Investments in subsidiaries and associates in the separate financial statements of the Company are accounted for using the cost method net of allowance for loss on diminution in value (if any). Investments in associates in the consolidated financial statements are accounted for using the equity method.

Investment properties

Investment properties are properties which are held to earn rental income, for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes.

Investment properties are stated at cost less accumulated depreciation and less allowance for impairment loss (if any).

Depreciation

Depreciation is computed by the straight–line method based on the useful lives of assets of 20 and 30 years

Depreciation is included in determining operating result and no depreciation is provided on land and property in progress.

Annual Report 2011

65

Thai Rung Union Car Public Company Limited


Repairs and maintenance are charged to the statement of income during the financial years in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset.

Reclassification to property, plant and equipment

When the use of a property changes such that it is reclassified as property, plant and equipment, its fair value at the date of reclassification becomes its cost for subsequent accounting.

Property, plant and equipment

Owned assets

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses of assets (if any).

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of selfconstructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Cost also may include transfers from other comprehensive income of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income in profit or loss. When revalued assets are sold, the amounts included in the revaluation reserve are transferred to retained earnings.

Leased assets

Leases in terms of which the Company and its subsidiaries substantially assume all the risk and rewards of ownership are classified as finance leases. Property, plant and equipment acquired by way of finance leases is capitalised at the lower of its fair value and the present value of the minimum lease payments at the inception of the lease, less accumulated depreciation and impairment losses. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the profit or loss.

Subsequent costs

The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its subsidiaries, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

Depreciation

Depreciation is calculated based on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value. Annual Report 2011

66

Thai Rung Union Car Public Company Limited


Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. The estimated useful lives are as follows: Depreciation method Land improvement Buildings and building improvement Office buildings and building improvement Machinery, factory equipment and tools (excluded molds and jigs) Machinery, factory equipment and tools acquired before 1999 and molds and jigs Office equipment acquired before July 2007

Straight-line Straight-line Straight-line Straight-line

method method method method

Useful life (years) 20 20 30 10, 15

Declining method (Double declining method) Declining method (Double declining method) Straight-line method Declining method (Double declining method) Straight-line method

Office equipment Motor vehicles acquired before July 2007 Motor vehicles

5 5 5 5 5

No depreciation is provided on land or assets under construction.

Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

Land and building leasehold rights

Land and building leasehold rights are stated at cost less accumulated amortisation. Amortisation of land and building leasehold rights is calculated by reference to their costs on a straight-line basis over the periods of lease agreements.

Intangible assets

Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in profit or loss as incurred.

Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company and its subsidiaries intend to and have sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use, and capitalised borrowing costs. Other development expenditure is recognised in profit or loss as incurred.

Impairment

The carrying amounts of the Company’s and its subsidiaries’ assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated.

An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount. The impairment loss is recognised in profit or loss unless it reverses a previous revaluation credited to equity, in which case it is charged to equity.

Annual Report 2011

67

Thai Rung Union Car Public Company Limited


Trade and other accounts payable

Trade and other accounts payable are stated at cost.

Employee benefits

Short-term benefits

The Company and its subsidiaries recognize salaries, wages, bonus and social security contribution as expenses on an accrual basis.

Post-employment benefits - defined contribution plan

The Company and its subsidiaries have established a provident fund that is a defined contribution plan. The assets of which are held in a separate trust fund. The provident fund is funded by the contribution from employees and the Group. Contributions to the provident fund are charged to the statement of income in the period to which they relate.

Post-employment benefits - defined benefit plan

The employee benefits liabilities in relation to the severance payment under the labor law and is recognised as a charge to results of operations over the employee’s service period. It is calculated by the estimation of the amount of future benefit to be earned by the employee in return for the service provided to the Group through the service period up to the retirement age and the amount is discounted to determine the present value. The reference discount rate is the yield rate of government bonds as at the reporting date. The calculation is based on the actuarial technique using the Projected Unit Credit Method.

When the employee benefits are improved, the portion of the increased benefit relating to past service rendered by employee is recognized in the statement of income on a straight-line basis over the average period until the benefits become vested.

When the actuarial assumptions are changed, the Company and its subsidiaries recognize actuarial gains or losses in the profit or loss in the period in which they arise.

Provisions

A provision is recognised if, as a result of a past event, the Company and its subsidiaries have a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

Treasury shares

When share capital recognised as equity is repurchased, the amount of consideration paid, including directly attributable costs, is classified as treasury shares and recognised as a deduction from equity. An equal amount is appropriated from retained earnings and taken to a reserve for treasury shares within equity. When treasury shares are sold, the amount received is recognised as an increase in equity by crediting the cost of the treasury shares sold, calculated using the weighted average method, to the treasury shares account and transferring the equivalent amount back from reserve for treasury shares to retained earnings. Surpluses on the sale of treasury shares are taken directly to a separate category within equity, ‘Surplus on treasury shares’. Net deficits on sale or cancellation of treasury shares are debited to retained earnings after setting off against any remaining balance of surplus on treasury shares.

Annual Report 2011

68

Thai Rung Union Car Public Company Limited


Revenue

Revenue excludes value added taxes and is arrived at after deduction of trade discounts and volume rebates.

Sale of goods and services rendered

Revenue is recognised in profit or loss when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there is continuing management involvement with the goods or there are significant uncertainties regarding recovery of the consideration due, associated costs or the probable return of goods.

Service revenue is recognised when services have been rendered taking into account the stage of completion.

Rental income

Rental income from investment property is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income over the term of lease. Contingent rentals are recognised as income in the accounting period in which they are earned.

Dividend income

Dividend income is recognised in the statement of income on the date the Company and its subsidiaries’ right to receive payments is established.

Interest income

Interest income is recognised in the statement of income as it accrues.

Income tax

Income tax expense for the year comprises current and deferred tax. Current and deferred tax are recognised in profit or loss.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

In determining the amount of current and deferred tax, the Company and its subsidiaries take into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Company and its subsidiaries believe that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Company and its subsidiaries to change their judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net Annual Report 2011

69

Thai Rung Union Car Public Company Limited


basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Earnings per share

The Company and its subsidiaries presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company and its subsidiaries by the weighted average number of ordinary shares outstanding during the year, adjusted for own shares held.

Foreign currencies

Foreign currency transactions

Transactions in foreign currencies are translated to Thai Baht at the foreign exchange rates ruling at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to Thai Baht at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognised in profit or loss.

Non-monetary assets and liabilities measured at cost in foreign currencies are translated to Thai Baht using the foreign exchange rates ruling at the dates of the transactions.

4.

RELATED PARTY TRANSACTIONS

Related parties are those parties linked to the Company and its subsidiaries as shareholders or by common shareholders or directors. Transactions with related parties are conducted at prices based on market prices or, where no market price exists, at contractually agreed prices.

Annual Report 2011

70

Thai Rung Union Car Public Company Limited


4.1 Significant transactions for each of the years ended December 31, 2011 and 2010 with related parties were as follows: (Unit: Million Baht) Consolidated financial Separate financial statements statements 2011 2010 2011 2010

Transactions with subsidiaries Purchases of goods and services Purchases of assets Purchases of fixed assets Electricity expense

Transfer pricing policy

-

-

19 3 17

11 6 1 17

Transportation expense Management fee Commission and promotion expenses Sales of goods Sales of oil Land and office rental income Management service income

-

-

22 72 5 84 7 4 19

3 149 3 12

Rendering of services Utilities, transportation income and sales of supplies Dividend income Interest income Transactions with associated companies Purchases of goods and services Sales of goods Rendering of services Consulting service income

-

-

-

1

-

-

5 38 3

3 33 -

Cost plus margin As declared 1.00% - 2.25% p.a.

3 35 7 2

6 46 5

3 27 2

6 35 5

Land and showroom rental income Management service income

3 6

3 16

3 6

3 16

Utilities, transportation income and sales of supplies Dividend income Transactions with related companies Purchases of goods and services Land rental expense and amortisation of leasehold rights Car rental expense Commission and promotion expenses Sales of goods Land and showroom rental income Utilities, transportation income and sales of supplies Interest income

3

4

3

3

Cost plus margin Cost plus margin Cost plus margin As agreement without contract (2010 : contract price) Contract price As agreement without contract (2010 : contract price) Cost plus margin

-

-

54

2

As declared

2 3

2 2

1 1

-

Cost plus margin Contract price

3 2 5 1

2 8 62 7 -

2 -

1 8 42 -

Contract price Contract price Cost plus margin Contract price Cost plus margin

1

2

1

2

3.70% - 4.00% p.a. (2010: 1.00% - 3.75% p.a.)

-

3

-

3

As agreement

Transactions with director Purchases of fixed assets

Annual Report 2011

71

Cost plus margin Cost plus margin Carrying value plus margin Cost plus gross profit margin not more than 5% As agreement without contract As agreement without contract Contract price Cost plus margin Cost plus margin Contract price As agreement without contract (2010 : contract price) Cost plus margin

Thai Rung Union Car Public Company Limited


4.2 Key management personnel compensation

Key management personnel compensation for each of the years ended December 31, 2011 and 2010 consisted of: (Unit: Baht) Consolidated financial statements 2011 2010 43,020,725 38,375,500 6,641,916 49,662,641 38,375,500

Short-term benefits Post-employment benefits Total key management personnel compensation

Separate financial statements 2011 2010 23,123,146 17,819,112 6,333,890 29,457,036 17,819,112

4.3 As at December 31, 2011 and 2010, the balances of the accounts between the Company and related companies are as follows: (Unit: Baht) Consolidated Separate financial statements financial statements 2011 2010 2011 2010

Trade accounts receivable - related parties Subsidiaries Thai Rung Tools and Dies Co., Ltd. Thai V.P. Auto Service Co., Ltd. Thai Ultimate Car Co., Ltd. Associated companies Delta-TR Co., Ltd. Delta-Thairung Co.,Ltd. Thai Auto Conversion Co., Ltd. Related companies Isuzu Chaicharoenkij Motor Co., Ltd. Isuzu V Motor Co., Ltd. Thai V.P. Corporation Co., Ltd. Firstpart Co., Ltd. V.P.K. Auto Co., Ltd. Center Car Rent Co., Ltd. V.P. Auto Enterprise Co., Ltd. Lexus Auto City Co., Ltd. Total trade accounts receivable - related parties Amounts due from related parties Subsidiaries Thai Rung Tools and Dies Co., Ltd. Thai V.P. Auto Service Co., Ltd. Thai Auto Pressparts Co., Ltd. Thai Ultimate Car Co., Ltd. Annual Report 2011

72

-

-

288,558 545,911 10,211,356 11,045,825

101,603 1,899,039 59,038,785 61,039,427

8,011,344 699,267 35,471 8,746,082

7,077,476 692,642 356,365 8,126,483

865,884 35,470 901,354

7,068,011 98,975 56,859 7,223,845

49,681 285 323,540 315,100 586,725 157,500 1,432,831 10,178,913

159,616 8,672 170,160 13,106,295 17,768 13,462,511 21,588,994

93,883 315,100 408,983 12,356,162

5,457 5,457 68,268,729

-

-

27,863,117 25,092,108 738,128 53,693,353

18,806,217 245,000 9,600,000 28,651,217

Thai Rung Union Car Public Company Limited


(Unit: Baht) Consolidated Separate financial statements financial statements 2011 2010 2011 2010

Associated company Delta - TR Co., Ltd. Delta-Thairung Co.,Ltd. Related companies Isuzu Chaicharoenkij Motor Co., Ltd. V.P. Auto Enterprise Co., Ltd. Lexus Auto City Co., Ltd. Firstpart Co., Ltd. Thai V.P. Corporation Co., Ltd. Center Car Rent Co., Ltd. Total amounts due from related parties Short-term loans to related parties Subsidiaries Thai Rung Tools and Dies Co., Ltd. Thai Auto Pressparts Co., Ltd. Related companies Isuzu Chaicharoenkij Motor Co., Ltd. Total short-term loans to related parties Trade accounts payable - related parties Subsidiaries Thai Rung Tools and Dies Co., Ltd. Thai Ultimate Car Co., Ltd. Associated company Delta - TR Co., Ltd. Related companies Isuzu Chaicharoenkij Motor Co., Ltd. Thai V.P. Corporation Co., Ltd. Chaicharoenkij Motor Co., Ltd. V.P. Auto Enterprise Co., Ltd. V.P.K. Auto Co., Ltd. Sinthoranee Property Co., Ltd. Firstpart Co., Ltd. Total trade accounts payable - related parties Amounts due to related parties Subsidiaries Thai Rung Tools and Dies Co., Ltd. Thai Ultimate Car Co., Ltd. Thai V.P. Auto Service Co., Ltd. Thai Auto Pressparts Co., Ltd.

Annual Report 2011

73

5,871,186 180,456 6,051,642

4,783,304 7,190,400 11,973,704

5,848,546 180,456 6,029,002

4,744,959 7,190,400 11,935,359

303,784 342,228 646,012 6,697,654

518,912 129,206 456,750 1,667,604 577,663 142,438 3,492,573 15,466,277

59,722,355

518,912 518,912 41,105,488

-

- 133,000,000 - 222,500,000 - 355,500,000

42,000,000 42,000,000

-

46,500,000 46,500,000 355,500.000

46,500,000 88,500,000

-

-

-

1,558,910 76,953 1,635,863

463,802

1,580,510

455,372

1,579,537

17,820 163,963 2,009 142,936 5,350 6,291 338,369 802,171

102,976 23,112 34,433 5,350 155,683 321,554 1,902,064

455,372

3,215,400

-

-

3,591,750 75,755,469 1,078,211 80,425,430

1,644,829 4,106,018 2,296,667 169,890 8,217,404

Thai Rung Union Car Public Company Limited


(Unit: Baht) Consolidated Separate financial statements financial statements 2011 2010 2011 2010

Related companies Isuzu Chaicharoenkij Motor Co., Ltd. Thai V.P. Corporation Co., Ltd. Chaicharoenkij Motor Co., Ltd. V.P. Auto Enterprise Co., Ltd. Firstpart Co., Ltd. Phothiphumi Co. Ltd. V.P. Capital Asset Co.,Ltd Lexus Auto City Co., Ltd. Total amounts due to related parties Short- term loan from related parties Subsidiaries Thai Rung Tools and Dies Co., Ltd. Thai Auto Pressparts Co., Ltd. Thai V.P. Auto Service Co., Ltd. Total short-term loan from related parties

131,965 783,065 120,000 54,603 84,284 1,173,917 1,173,917

277,832 549,913 240,000 5,056 7,665 95,000 38,578 1,214,044 1,214,044

131,965 534,877 54,603 84,284 805,729 81,231,159

277,832 138,230 5,056 7,665 38,578 467,361 8,684,765

-

-

-

26,000,000 20,000,000 46,000,000

4.4 During the year of 2011, movements of short-term loans to and loans from related parties were as follows: (Unit: Million Baht)

Short-term loans to related parties Consolidated financial statements Related company Isuzu Chaicharoenkij Motor Co., Ltd. Separate financial statements Subsidiaries Thai Rung Tools and Dies Co., Ltd. Thai Auto Pressparts Co., Ltd. Related company Isuzu Chaicharoenkij Motor Co., Ltd. Short-term loans from related parties Separate financial statements Subsidiaries Thai Auto Pressparts Co., Ltd. Thai V.P. Auto Service Co., Ltd.

January 1, 2011

During the year Increase Decrease

December 31, 2011

Interest rate

47

10

(57)

42 -

112 222.5

(21) -

47

10

(57)

- 3.7%-4.0% p.a., at call

26 20

7

(26) (27)

- 0.75% p.a., at call - 0.75%-2.20% p.a., at call

Annual Report 2011

74

- 3.7%-4.0% p.a., at call 133 1.0%-2.25% p.a., at call 222.5 2.0%-2.25% p.a., at call

Thai Rung Union Car Public Company Limited


4.5 Guarantee Obligations with related parties

As at December 31, 2011 and 2010 the Company has outstanding guarantee obligations with subsidiaries as follows:

a)

The Company has obligations of Baht 45 million and 110 million, respectively, in respect of its guarantee of credit facilities provided by two local banks to Thai V.P. Auto Service Co., Ltd. (a subsidiary). b) The Company has obligations of Baht 195 million in respect of its guarantee of credit facilities provided by three local banks to Thai Rung Tools and Dies Co., Ltd. (a subsidiary). c) The Company has obligations of Baht 110 million and 70 million, respectively, in respect of its guarantee of credit facilities provided by two local banks to Thai Auto Pressparts Co., Ltd. (a subsidiary). d) The Company has obligations of Baht 75 million, in respect of its guarantee of credit facilities provide by a local bank to Delta Thairung Co., Ltd. (an associated). The Company has not charged a guarantee fee to its subsidiaries and associates. 5.

TRADE AND OTHER RECEIVABLES - NET

Trade and other receivables as at December 31, 2011 and 2010 consisted of: (Unit: Baht) Consolidated Separate financial statements financial statements 2011 2010 2011 2010 286,584,082 352,418,581 158,642,498 183,195,767 10,178,913 21,588,994 12,356,162 68,268,729 (859,885) (1,902,085) 295,903,110 372,105,490 170,998,660 251,464,496

Trade accounts receivable – unrelated parties Trade accounts receivable – related parties Less: Allowance for doubtful accounts Total trade accounts receivable - net Other receivables Amounts due to related parties Input tax refundable Input tax suspense Prepayment Accrued interest income Others Total other receivables Trade and other receivables - net

Annual Report 2011

6,697,654 15,466,277 59,722,355 41,105,488 30,368,775 12,878,519 78 4,331 2,432,329 1,117,001 369,841 236,057 4,719,288 4,905,685 2,903,448 2,441,884 15,780 14,692 183,780 2,207,147 3,776,061 927,106 2,475,876 46,440,973 38,143,543 63,937,520 46,447,416 342,344,083 410,249,033 234,936,180 297,911,912

75

Thai Rung Union Car Public Company Limited


The balances of trade accounts receivable as at December 31, 2011 and 2010, aged on the basis of due dates, are summarised below. (Unit: Baht) Consolidated Separate financial statements financial statements 2011 2010 2011 2010

Trade accounts receivable - unrelated parties Age of receivables Not yet due Past due Up to 3 months 3 - 6 months 6 - 12 months Over 12 months Total Less: Allowance for doubtful accounts Total trade accounts receivable - unrelated parties, net Trade accounts receivable - related parties Age of receivables Trade accounts receivable - subsidiaries Not yet due Past due Up to 3 months 3 - 6 months 6 - 12 months Over 12 months Total trade accounts receivable - subsidiaries Trade accounts receivable - associates Not yet due Past due Up to 3 months Total trade accounts receivable - associates Trade accounts receivable - related companies Not yet due Past due Up to 3 months 3 - 6 months 6 - 12 months Over 12 months Total trade accounts receivable - related companies Total trade accounts receivable - related parties

Annual Report 2011

76

210,483,922

250,637,085

133,723,441

154,995,206

72,400,536 1,725,242 978,293 996,089 286,584,082 (859,885)

99,742,957 96,721 5,209 1,936,609 352,418,581 (1,902,085)

24,875,869 20,034 23,154 158,642,498 -

28,093,406 107,155 183,195,767 -

285,724,197

350,516,496

158,642,498

183,195,767

-

-

834,469

22,190,402

-

-

1,216 941,600 7,486,990 1,781,550 11,045,825

24,050,855 14,478,170 320,000 61,039,427

8,431,796

7,008,894

587,081

6,114,794

314,286 8,746,082

1,117,589 8,126,483

314,273 901,354

1,109,051 7,223,845

759,968

852,145

408,983

-

447,933 107,443 117,487 1,432,831 10,178,913

27,033 2,027,502 10,555,831 13,462,511 21,588,994

408,983 12,356,162

5,457 5,457 68,268,729

Thai Rung Union Car Public Company Limited


6.

INVENTORIES - NET

Inventories as at December 31, 2011 and 2010 consisted of:

Finished goods Work in process Raw materials Total

(Unit: Baht) Consolidated financial statements Cost Stock obsolescence 2011 2010 2011 2010 93,302,753 103,253,124 (40,664,393) (31,789,497) 43,559,314 42,661,783 (2,358,198) (3,427,767) 127,376,246 89,284,556 (19,845,022) (14,660,671) 264,238,313 235,199,463 (62,867,613) (49,877,935)

Cost Finished goods Work in process Raw materials Total

2011 14,777,151 25,294,324 78,139,625 118,211,100

2010 9,759,509 24,150,482 67,723,099 101,633,090

7.

INVESTMENTS IN ASSOCIATED COMPANIES

Details of associates consisted of:

Inventory-net 2011 2010 52,638,360 71,463,627 41,201,116 39,234,016 107,531,224 74,623,885 201,370,700 185,321,528

(Unit: Baht) Separate financial statements Stock obsolescence 2011 2010 (1,385,596) (2,380,125) (679,073) (1,748,894) (16,656,263) (11,471,913) (18,720,932) (15,600,932)

Inventory-net 2011 2010 13,391,555 7,379,384 24,615,251 22,401,588 61,483,362 56,251,186 99,490,168 86,032,158

(Unit: Baht) Consolidated financial Separate financial statements statements Company

Delta-TR Co., Ltd. Thai Auto Conversion Co., Ltd. Delta Thai Rung Co., Ltd.

Nature of business

Manufacture of vehicle parts Manufacture of vehicle parts

Country of incorporation

Thailand

Shareholding percentage 2011 2010 % % 46 46

Thailand

30

30

Manufacture of Thailand auto seats and parts and other equipment for vehicles Total investments in associated companies

30

30

Annual Report 2011

Carrying amounts based on equity method 2011 2010

Cost 2011

2010

23,712,273

55,542,964

9,200,000

9,200,000

58,133,789

52,306,138

22,350,000

22,350,000

138,606,947 109,157,846

90,000,000

90,000,000

220,453,009 217,006,948 121,550,000 121,550,000

77

Thai Rung Union Car Public Company Limited


During the year, the Company has recognised its share of net profit from investments in associated companies in the consolidated financial statements and dividend income in the separate financial statements as follows:

(Unit: Baht) Consolidated Separate financial statements financial statements Share of profit (loss) from investments in associates Dividend received during during the year the year 2011 2010 2011 2010 (4,230,691) 3,330,749 27,600,000 17,534,714 19,259,890 11,707,062 2,308,044 44,449,100 35,137,215 15,000,000 57,753,123 57,727,854 54,307,062 2,308,044

Company Delta-TR Co., Ltd. Thai Auto Conversion Co., Ltd. Delta ThaiRung Co., Ltd. Total

Financial information of the associated companies is summarised below. (Unit: Million Baht)

Company Delta-TR Co., Ltd. Thai Auto Conversion Co., Ltd. Delta ThaiRung Co., Ltd.

Paid-up capital as at December 31, 2011 2010 20 20 75 75 300

300

Total assets as at December 31, 2011 2010 77 166 341 253 525

472

Total liabilities as at December 31, 2011 2010 25 46 148 66 86

108

Total revenues for the years ended December 31, 2011 2010 231 336 815 517 839

820

Net profit for the years ended December 31, 2011 2010 (9) 7 58 64 135

117

Shares of profit from investments in three associated companies, included in the consolidated statements of comprehensive income for the year 2011 and 2010, amounting to Baht 57.75 million and Baht 57.73 million, respectively, were calculated based on financial statements prepared by the management of those companies and not audited by their auditors.

After the reporting date, the Company sells 7,450 ordinary shares in Thai Auto Conversion Co.,Ltd. representing 10% of the registered shares at a price of Baht 3,094 per share, giving a total of Baht 23.05 million. This price was calculated using the discounted cash flow method as agreed between the two parties which after selling the shares referred to the Company will still hold 20% of the registered share capital of Thai Auto Conversion Co.,Ltd.

Annual Report 2011

78

Thai Rung Union Car Public Company Limited


8.

INVESTMENTS IN SUBSIDIARIES

Details of investments in subsidiaries as presented in separate financial statements are as follows: Company’s name

Paid up 2011 Million Baht

Thai V.P. Auto Service Co., Ltd. and its subsidiaries 25 Thai Rung Tools and Dies Co., Ltd. 27 Thai Auto Pressparts Co., Ltd. 400 Total investments in subsidiaries

capital 2010 Million Baht

(Unit: Baht)

Shareholding percentage 2011 2010 % %

2011

Cost

Dividend received during the year 2011 2010

2010

25

94

94

23,500,000

23,500,000

37,600,000

14,100,000

27

94

94

25,380,000

25,380,000

-

19,035,000

400

91

91

364,000,000 364,000,000 412,880,000 412,880,000

37,600,000

33,135,000

9.

OTHER LONG-TERM INVESTMENT - NET

Other long-term investment as at December 31, 2011 and 2010 consisted of: (Unit: Baht)

2011 24,000 (24,000) -

Investment in LP Land and Housing Development Co., Ltd. Less: Allowance for impairment Other long-term investment - net

2010 24,000 (24,000) -

10. INVESTMENT PROPERTIES - NET

Investment properties as at December 31, 2011 consisted of:

Cost As at December 31, 2010 Increase As at December 31, 2011 Accumulated depreciation As at December 31, 2010 Depreciation for the year As at December 31, 2011 Net book value As at December 31, 2010 As at December 31, 2011 Depreciation for the years 2010 2011 Annual Report 2011

Land

(Unit: Baht) Consolidated financial statements Building Building improvement

Total

214,995,500 214,995,500

86,493,852 86,493,852

49,721,226 49,721,226

351,210,578 351,210,578

-

66,897,456 1,217,234 68,114,690

35,203,369 827,362 36,030,731

102,100,825 2,044,596 104,145,421

214,995,500 214,995,500

19,596,396 18,379,162

14,517,857 13,690,495

249,109,753 247,065,157 7,385,803 2,044,596

79

Thai Rung Union Car Public Company Limited


Investment property comprises a number of commercial land and building that are leased to third parties. Each of the leases contains an initial non-cancellable period of 1-10 years. Subsequent renewals are negotiated with the lessee.

The subsidiaries transferred building from property, plant and equipment to investment properties because the building were no longer used by the subsidiaries and as such it was decided that the building would be leased to the third party.

As at December 31, 2011, subsidiaries’ company certain investment properties of items have been fully depreciated but are still in use. The original cost of those assets amounted to approximately Baht 0.2 million (2010: Baht 0.2 million).

As at December 31, 2011, a subsidiary’s (Thai Ultimate Car Co., Ltd.) land and building constructed thereon at net book value of Baht 56.64 million has been mortgaged with a bank to secure the subsidiary’s credit facilities of Baht 80 million as granted by the bank.

As at the reporting date, the Company’s management is in process to provide its fair value.

11. PROPERTY, PLANT AND EQUIPMENT - NET

Property, plant and equipment as at December 31, 2011 consisted of: (Unit: Baht) Consolidated financial statements Machinery, factory equipment Office Motor and tools equipment vehicles

Buildings Land and and land building improvement improvement Cost December 31, 2010 547,607,328 507,517,787 Acquisitions 5,935,277 Transfer in (transfer out) 808,000 Disposals December 31, 2011 547,607,328 514,261,064 Accumulated depreciation December 31, 2010 10,185,259 291,625,327 Depreciation for the year 449,461 16,379,208 Depreciation on disposals December 31, 2011 10,634,720 308,004,535 Allowance for impairment December 31, 2010 Increase December 31, 2011 Net book value December 31, 2010 537,422,069 215,892,460 December 31, 2011 536,972,608 206,256,529 Depreciation for the years 2010 (Baht 67 million included in manufacturing cost, 2011 (Baht 62 million included in manufacturing cost,

Work in progress

Total

1,725,353,995 38,056,854 18,416,941 (25,313,405) 1,756,514,385

215,136,288 6,510,349 (157,413) 221,489,224

92,177,016 12,136,555 292,325 (18,212,012) 86,393,884

45,190,146 3,132,982,560 277,258,827 339,897,862 (21,916,814) (2,399,548) (123,438) (43,806,268) 300,408,721 3,426,674,606

1,489,175,962

199,865,983

73,604,947

- 2,064,457,478

50,266,061

5,791,836

7,871,866

(25,219,200) 1,514,222,823

(108,687) 205,549,132

(16,668,069) 64,808,744

7,623,031 4,140,000 11,763,031

-

-

228,555,002 230,528,531

15,270,305 15,940,092

18,572,069 21,585,140

-

- (41,995,956) - 2,103,219,954 476,000 476,000

80

8,099,031 4,140,000 12,239,031

44,714,146 1,060,426,051 299,932,721 1,311,215,621

and the balance in administrative expenses) and the balance in administrative expenses)

Annual Report 2011

80,758,432

Thai Rung Union Car Public Company Limited

88,701,573 80,758,432


(Unit: Baht) Separate financial statements Machinery, factory equipment Office Motor and tools equipment vehicles

Buildings Land and and land building improvement improvement

Cost December 31, 2010 469,814,801 332,517,129 Acquisitions 5,935,276 Transfer in (transfer out) Disposals December 31, 2011 469,814,801 338,452,405 Accumulated depreciation December 31, 2010 10,185,259 210,285,557 Depreciation for the 449,461 9,439,559 year Depreciation on disposals December 31, 2011 10,634,720 219,725,116 Allowance for impairment December 31, 2010 Increase December 31, 2011 Net book value December 31, 2010 459,629,542 122,231,572 December 31, 2011 459,180,081 118,727,289 Depreciation for the years 2010 (Baht 31 million included in manufacturing cost, 2011 (Baht 27 million included in manufacturing cost,

Work in progress

Total

1,449,028,683 34,378,557 17,553,099 (25,294,761) 1,475,665,578

116,423,838 4,383,599 (129,140) 120,678,297

84,740,426 3,200,697 292,325 (18,212,011) 70,021,437

23,603,116 2,476,127,993 8,820,428 56,718,557 (20,244,972) (2,399,548) (123,438) (43,759,350) 12,055,134 2,486,687,652

1,359,845,445 22,759,845

107,855,103 3,806,448

66,280,393 5,955,126

- 1,754,451,757 - 42,410,439

(25,203,676)

(80,421)

(16,668,069)

1,357,401,614

111,581,130

55,567,450

7,623,031 4,140,000 11,763,031

-

-

476,000 476,000

8,099,031 4,140,000 12,239,031

81,560,207 106,500,933

8,568,735 9,097,167

18,460,033 14,453,987

23,127,116 11,579,134

713,577,205 719,538,591

-

(41,952,166)

- 1,754,910,030

and the balance in administrative expenses) and the balance in administrative expenses)

46,016,459 42,410,439

As at December 31, 2011, certain plant and equipment items have been fully depreciated but are still in use. The original cost of those assets amounted to approximately Baht 1,762 million (2010: Baht 1,650 million) (Separate financial statements: Baht 1,503 million, (2010: Baht 1,481 million)).

12. DEFERRED TAX

Deferred tax as at December 31, 2011 and 2010 consisted of: (Unit: Baht) Consolidated financial Separate financial statements statements 2011 2010 2011 2010 (Restatedŕšˆ) (Restatedŕšˆ) 34,702,940 91,972,456 13,011,253 41,259,194 (1,774,914) (591,260) 32,928,026 91,972,456 12,419,993 41,259,194

Deferred tax assets Deferred tax liabilities Total

Annual Report 2011

81

Thai Rung Union Car Public Company Limited


Movements in deferred tax assets and deferred tax liabilities during the year were as follows: (Unit: Baht) Consolidated financial statements Separate financial statements January Profit December January Profit December 1, 2011 (loss) 31, 2011 1, 2011 (loss) 31, 2011 (restated) (restated) Deferred tax assets Allowance for decline in value of 14,586,216 (2,012,694) inventory Allowance for impairment of investment 7,200 (2,400) Allowance for bad debt 75,433 Provision for employee benefit liabilities 11,278,910 (1,426,895) Loss carry forward 77,379,040 (65,181,870) Total 103,251,366 (68,548,426) Deferred tax liabilities Depreciation - (1,774,914) Total - (1,774,914)

12,573,522 4,800 75,433 9,852,015 12,197,170 34,702,940

4,680,279

(936,092)

3,744,187

7,200 (2,400) 6,147,835 (374,335) 36,571,715 (33,082,949) 47,407,029 (34,395,776)

4,800 5,773,500 3,488,766 13,011,253

(1,774,914) (1,774,914)

-

(591,260) (591,260)

(591,260) (591,260)

 

(Unit: Baht) Consolidated financial statements Separate financial statements January Profit December January Profit December 1, 2010 (loss) 31, 2010 1, 2010 (loss) 31, 2010 Deferred tax assets Allowance for decline in value of 18,220,585 (3,634,369) inventory Allowance for impairment of 7,200 investment Loss carry forward 106,673,305 (29,294,265) Total 124,901,090 (32,928,634)

14,586,216

7,698,487

(3,018,208)

4,680,279

7,200

7,200

-

7,200

64,496,945 (27,925,230) 72,202,632 (30,943,438)

36,571,715 41,259,194

77,379,040 91,972,456

13. OTHER NON-CURRENT ASSETS (Unit: Baht)

Land and building leasehold rights - net Withholding tax deducted at source Deferred cost of dies - net Other non-current assets Total

Annual Report 2011

Consolidated financial statements 2011 2010 2,354,718 2,878,022 21,908,555 24,177,750 70,959,106 41,367,577 12,504,770 14,881,126 107,727,149 83,304,475

82

Separate financial statements 2011 2010 15,390,149 17,239,452 64,022,126 45,939,776 11,494,761 14,688,324 90,907,036 77,867,552

Thai Rung Union Car Public Company Limited


14. BANK FACILITIES

As at December 31, 2011, the Company and its subsidiaries have bank overdraft facilities and other shortterm loan facilities amounting to Baht 98 million and Baht 1,218 million, respectively (Separate financial statements: Baht 28 million and Baht 505 million, respectively) which are guaranteed by the Company and its directors, and secured by the mortgage of land with structures thereon of the subsidiary.

15. TRADE AND OTHER PAYABLES

Trade and other payables as at December 31, 2011 and 2010 consisted of: (Unit: Baht)

Trade accounts payable – unrelated parties Trade accounts payable – related parties Total trade accounts payable Other payables – related parties Accrued expenses Accounts payable - Revenue Department Advance from customers Output tax suspense Accrued project costs Other payables – unrelated parties Others Total other payables Total trade and other payables

Consolidated financial statements 2011 2010 205,054,780 294,633,134 802,171 1,902,064 205,856,951 296,535,198 1,173,917 1,214,044 13,924,207 15,503,705 2,980,000 2,637,017 3,149,615 493,502 4,013,069 3,198,695 15,932,196 41,060,049 40,919,271 11,524,506 17,441,027 11,782,835 99,533,302 87,414,353 305,390,253 383,949,551

Separate financial statements 2011 2010 131,452,620 137,025,743 455,372 3,215,400 131,907,992 140,241,143 81,231,159 8,684,765 10,031,231 9,157,606 2,828,344 2,021,317 3,254,418 3,090,299 13,717,295 6,320,835 3,861,156 5,707,095 114,923,603 34,981,917 246,831,595 175,223,060

16. EMPLOYEE BENEFITS OBLIGATION

Employee benefits obligation in the statements of financial position as at December 31, 2011 consisted of: (Unit: Baht) Post-employment benefit plan Consolidated Separate financial financial statements statements 49,260,074 28,867,504

Present value of obligation

The Company and its subsidiaries made defined benefit plan in accordance with severance payment as the labor law which entitled retired employee within work service period in various rates, such as more than 10 years to receive severance payment not less than 300 days or 10 months of the last month salary.

Annual Report 2011

83

Thai Rung Union Car Public Company Limited


Movement of the present value of employee benefits obligation for the year ended December 31, 2011 as follows:

Employee benefits obligation as at January 1, 2011 Benefit paid Current service cost Interest cost Employee benefits obligation as at December 31, 2011

Employee benefit expenses in the statements of comprehensive income for the year ended December 31, 2011 consisted of: (Unit: Baht) Post-employment benefit plan Consolidated Separate financial financial statements statements 10,605,423 7,118,508 2,199,074 1,256,215 12,804,497 8,374,723

Current service cost Interest from obligation Total employee benefits expenses

(Unit: Baht) Post-employment benefit plan Consolidated Separate financial financial statements statements 37,596,368 20,492,781 (1,140,791) 10,605,423 7,118,508 2,199,074 1,256,215 49,260,074 28,867,504

Employee benefit expenses for the year ended December 31, 2011 as shown in the statements of comprehensive income are as follows: (Unit: Baht) Post-employment benefit plan Consolidated Separate financial financial statements statements 792,876 1,918,028 (19,249) (70,876) 12,030,870 6,527,571 12,804,497 8,374,723

Cost of sales Selling expenses Administrative expenses Total employee benefit expenses

Principal actuarial assumptions as at December 31, 2011 (expressed as weighted averages) as follows: Consolidated and separate financial statements 2011 5% 4% Mortality table year 2008

Discount rate at December 31 Future salary increases Mortality rate Annual Report 2011

84

Thai Rung Union Car Public Company Limited


The actuarial assumption of discount rate is estimated from weighted average of yield rate of government bonds as at the end of reporting date that reflects the estimated timing of benefit payments.

The actuarial assumption of mortality rate for reasonable estimation of probability of retirement in the future is estimated from mortality table.

17. TREASURY SHARES

According to the board of directors’ meeting of the Company No.2/2010 held on May 4, 2010, the Company’s directors resolved to approve the share repurchase program for financial management purpose in accordance with the Section 66/1(2) of the Public Limited Company Act (No. 2) B.E. 2544 in the amount not exceeding Baht 150 million. The number of ordinary shares to be repurchased is not exceeding 50.16 million shares (par value of Baht 1 per share); equal to 10% of the total number of paid-up share capital of the Company. The Company shall repurchase its ordinary shares through the main board of the Stock Exchange of Thailand during the period from May 27, 2010 to November 26, 2010, the Company determine the share resale procedures through the Stock Exchange of Thailand, or by public offering and the period for share resale within 3 years and 6 months after the date of completion of repurchase.

The Company repurchased a total of 9,216,700 ordinary shares during the period from May 27, 2010 to November 26, 2010, for a total consideration of Baht 47.95 million and during the same period the Company appropriated Baht 47.95 million from its retained earnings as a treasury shares reserve for the repurchased shares.

18. RESERVES

Reserves comprise:

Appropriations of profit and/or retained earnings

Legal reserve

Section 116 of the Public Companies Act B.E. 2535 Section 116 requires that a public company shall allocate not less than 5% of its annual net profit, less any accumulated losses brought forward, to a reserve account (“legal reserve”), until this account reaches an amount not less than 10% of the registered authorised capital. The legal reserve is not available for dividend distribution.

Treasury shares reserve

The treasury shares reserve represents the amount appropriated from retained earnings equal to the cost of the Company’s own shares held by the Company. The treasury shares reserve is not available for dividend distribution.

Annual Report 2011

85

Thai Rung Union Car Public Company Limited


19. OTHER INCOME

Other income for each of the years ended December 31, 2011 and 2010 consisted of: (Unit: Baht)

Scrap sales Interest income Utilities, transportation service and sales of supplies Consulting fee Others Total

Consolidated financial statements 2011 2010 103,974,215 63,681,403 5,719,834 6,220,465

Separate financial statements 2011 2010 43,125,430 21,519,804 7,663,847 5,033,792

3,457,329 1,818,000 35,602,447 150,571,825

7,064,476 1,818,000 55,366,988 115,038,741

5,870,024 5,118,000 40,204,468 121,094,360

6,295,169 5,118,000 44,534,059 82,500,824

20. EXPENSE BY NATURE

Significant expenses by nature are as follows: (Unit: Baht) Consolidated financial statements 2011 2010 Salary and wages and other employee benefits Depreciation and amortization Raw materials and consumables used Changes in inventories of finished goods and work in process

Separate financial statements 2011 2010

413,618,517 83,326,332 1,220,641,829

308,685,437 96,610,680 1,167,402,209

240,412,782 42,410,439 678,202,731

191,006,180 46,016,459 582,714,584

27,326,881

24,445,624

(6,161,484)

50,397,814

21. INCOME TAX EXPENSES

Income tax expenses for each of the years ended December 31, 2011 and 2010 consisted of: (Unit: Baht) Consolidated financial statements 2011 2010 Current tax expense Current period Deferred tax expense Movements in temporary differences Benefit of tax losses recognised Income tax reduction Total

Annual Report 2011

Separate financial statements 2011 2010

(5,370,258)

(709,986)

-

-

6,111,416 (59,765,871) (16,668,885) (70,323,340) (75,693,598)

(3,634,369) (29,294,265) (32,928,634) (33,638,620)

2,857,157 (32,021,151) (5,823,042) (34,987,036) (34,987,036)

(3,018,208) (27,925,230) (30,943,438) (30,943,438)

86

Thai Rung Union Car Public Company Limited


Reconciliation of effective tax rate Consolidated financial statements 2011 Rate (%) Profit before total income tax expense Income tax using the corporate tax rate Income tax reduction - current Income tax reduction - deferred Income not subject to tax Expenses not deductible for tax purposes Recognition of previously unrecognised tax losses Total

2010 (Unit: Baht) 266,564,516 93,527,215 15,745,787 (27,572,119) (756,845) (5,250,440)

Various rate

23.91%

75,693,598

Rate (%)

(Unit: Baht) 223,721,099 39,616,850 503,035 (8,860,761) 4,606,351 (2,226,855)

Various rate

18.18%

33,638,620

Consolidated financial statements 2011 Rate (%) Profit before total income tax expense Income tax using the corporate tax rate Income tax reduction - current Income tax reduction - deferred Income not subject to tax Expenses not deductible for tax purposes Recognition of previously unrecognised tax losses Total

30%

17.55%

2010 (Unit: Baht) 199,306,738 59,792,022 5,823,042 (27,572,119) 944,069 (3,999,978) 34,987,036

Rate (%) 25%

(Unit: Baht) 144,515,646 36,128,911 503,035 (8,860,761) 3,172,253 -

21.41%

30,943,438

Income tax reduction - current

Royal Decree No. 475 B.E. 2551 dated 6 August 2008 grants companies listed on the Stock Exchange of Thailand a reduction in the corporate income tax rate from 30% to 25% for taxable profit not exceeding Baht 300 million for the three consecutive accounting periods beginning on or after January 1, 2008.

Income tax reduction - deferred

Royal Decree No. 530 B.E. 2554 dated December 14, 2011 grants a reduction in the corporate income tax rate from 30% to 23% on net profit for the accounting period 2012 ending on or after December 31, 2012, and will be reduced to 20% on net profit for the two consecutive accounting periods beginning on or after January 1, 2013 onwards. The effect of the said change will reduce deferred tax assets in the consolidated and separate statements of financial position as at December 31, 2011 by net approximately Baht 15.75 million and Baht 5.82 million, respectively and an increase in income tax expense on the related consolidated and separate statements of comprehensive income by approximately Baht 15.75 million and Baht 5.82 million, respectively. Annual Report 2011

87

Thai Rung Union Car Public Company Limited


The current tax expense in the statement of comprehensive income is less than the amount determined by applying the corporate tax rate to the accounting profit for the period principally because: (a) a significant portion of the Company and its subsidiaries’ profit was derived from promoted activities for which concessionary tax rates apply. (b) The Company and its subsidiaries have unutilised tax losses brought forward from the previous year which have been utilised during the period to set-off against the current year’s tax charge.

The Company is not liable to corporate income tax for the years 2011 and 2010 because the Company has dividend income, which is tax-exempted income, and tax loss brought forward.

Corporate income tax of the subsidiaries, in the consolidated financial statements for the years 2011 and 2010 has been calculated at rate of 15% and 30% on the net income from non-promoted activities, after adding back certain provisions and expenses which are disallowable for tax computation purposes.

A subsidiary has been granted the promotional privileges discussed in Note 22, including exemption from corporate income tax on net income from promoted activities.

22. PROMOTIONAL PRIVILEGES

A subsidiary was granted investment promotional privileges by the Board of Investment (BOI). Important tax privileges company are summarised below.

Thai Auto Pressparts Co., Ltd. Manufacture of metal vehicle body parts, plastic and fiber glass vehicle parts, and the manufacture and maintenance of molds and jigs

Exemption from corporate income tax for 8 years commencing from

Exemption from 50% reduction of corporate income tax rate for 5 years commencing from

June 3, 2002

June 3, 2010

During the year 2011, Thai Auto Presspart Co., Ltd. was granted a new investment promotional privileges by Board of Investment (BOI) on the business unit of body parts and mold which effective from March 22, 2011.

23. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net profit for the year by the weighted average number of ordinary shares in issue during the year. (Unit: Baht)

Profit for the years attributable to equity holders of the Company

Consolidated financial statements 2011 2010 (restated)

Separate financial statements 2011 2010 (restated)

186,218,794

164,319,702

186,374,382

113,572,208

Annual Report 2011

88

Thai Rung Union Car Public Company Limited


Weighted average number of shares outstanding during the years ended December 31, 2011 and 2010 calculated as follows (Unit : Thousand shares) Consolidated financial statements 2011 2010 499,700 501,589

At January 1, Weighted average number of treasury shares outstanding during the years Weighted average number of ordinary shares outstanding during the years

Separate financial statements 2011 2010 499,700 501,589

(7,328)

(1,889)

(7,328)

(1,889)

492,372

499,700

492,372

499,700

24. SEGMENT INFORMATION

The Company’s and its subsidiaries’ business operations involve three principal segments: (1) car assembly and other related car services (2) manufacture of equipment for production of car accessories (comprising the manufacture of molds and jigs and manufacture and sales of car accessories and spare parts) and (3) sales of cars and car service centre business. These operations are mainly carried on in Thailand. Below is the consolidated financial information for each of the years ended December 31, 2011 and 2010 of the Company and its subsidiaries by segment.

Revenue from external customers Intersegment revenues Total revenues Segment income Unallocated income and expenses: Other income Selling expenses Administrative expenses Share of profit from investments in associated companies Corporate income tax Net profit Investment property Property, plant and equipment Unallocated assets Total assets

Car assembly and other related car services 2011 2010 (re stated) 753 632 83 836 201

469

149 781 129

499

Manufacture of equipment for production of car accessories 2011 2010 (re stated) 1,131 1,125 127 1,258 100

780

Annual Report 2011

152 1,277 113

511

89

(Unit : Million Baht) Sales of cars and car service centre 2011 2010 (re stated) 171 213 146 317 128

247 68

8 221 32

249 56

Elimination of inter-segment revenues 2011 2010 (re stated) (356) (356) (136)

(6)

(309) (309) 42

(5)

Consolidation 2011 2010 (re stated) 2,055 1,970 2,055 293

1,970 316

151 (35) (200) 58

121 (51) (220) 58

(76) 191

(34) 190

247 1,311 1,446 3,004

249 1,061 1,678 2,988

Thai Rung Union Car Public Company Limited


The Company’s and its subsidiaries’ transfer prices between business segments are as set out in Note 4.

According to the minute of the board of directors meetings of Thai Ultimate Car Co., Ltd. (a subsidiary) No. 4/2009 held on November 12, 2009, a resolution unanimously approve to terminate its land rover dealership and after-sales service centre agreement with City Automobiles Co., Ltd with effective from March 1, 2010.

On February 15, 2011, Thai Ultimate Car Co., Ltd. (Subsidiary held by Thai V.P. Auto Service Co., Ltd.) had registered to engage more services operation which are the services in legal, accounting, commercial, industrial, and such services and others related to business and tax administration of large organization.

25. PROVIDENT FUND

The Company and its subsidiaries and their employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. The funds are monthly contributed to by employees at the rates of 3-5 percent of their salaries, and by the Company and its subsidiaries at the rates of 0-100 percent of the employees’ contribution. The fund is managed by CIMB Thai Bank Public Company Limited, except that of a subsidiary (Thai Ultimate Car Co., Ltd.) is managed by Kasikorn Asset Management Co., Ltd. The funds will be paid to the employees upon termination in accordance with the rules of the funds. During the year 2011, the Company and its subsidiaries contributed Baht 8 million (2010: Baht 6 million) to the funds.

26. DIVIDENDS PAID

According to the annual general meeting of the shareholders of the Company for the year 2011 held on April 26, 2011, the shareholders approved the appropriation of dividend for the year 2010 of Baht 0.25 per share, amounting to Baht 123.09 million. The dividend was paid to shareholders within May 25, 2011.

27. COMMITMENTS AND CONTINGENT LIABILITIES 27.1 Operating lease commitments

The Company and its subsidiaries have entered into several lease agreements in respect of the lease of land, office building space, motor vehicles and equipment. As at December 31, 2011, future minimum lease payments required under these operating lease contracts were as follows. (Unit: million Baht) Consolidated Separate financial statements financial statements

Payable Within 1 year 1 to 5 years

2 4

-

27.2 Bank guarantees

As at December 31, 2011, the Company and its subsidiaries have outstanding bank guarantees issued by banks as follows:

Annual Report 2011

90

Thai Rung Union Car Public Company Limited


Consolidated financial statements (Unit: million Dollars) (Unit: million Baht) 1 10

Purchase of goods Electricity use, among others

Separate financial statements (Unit: million Baht) 3

28. FINANCIAL INSTRUMENTS

28.1 Financial risk management

The Company’s and its subsidiaries’ financial instruments, as defined under Thai Accounting Standard No. 32 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equivalents, trade accounts receivable, other receivables, loans, investments, trade accounts payable and other payables. The financial risks associated with these financial instruments and how they are managed is described below.

Credit risk

The Company and subsidiaries are exposed to credit risk primarily with respect to trade accounts receivable, loans, and other receivables. The Company and subsidiaries manage the risk by adopting appropriate credit control policies and procedures and therefore does not expect to incur material financial losses. In addition, the Company and its subsidiaries do not have high concentration of credit risk since they have a large customer base. The maximum exposure to credit risk is limited to the carrying amounts of receivables, loans, and other receivables as stated in the Statement of financial position.

Interest rate risk

The Company’ and subsidiaries’ exposures to interest rate risk relate primarily to their cash at banks, current investments and short-term loans. However, since most of the Company’s and subsidiaries’ financial assets and liabilities have been repaid within one year, the interest rate risk is expected to be minimal.

Foreign currency risk

A subsidiary’s exposures to foreign currency risk arise mainly from trading transactions that are denominated in foreign currencies. The subsidiary seeks to reduce this risk by entering into forward exchange contracts when it considers appropriate. Generally, the forward contracts mature within one year.

28.2 Fair values of financial instruments

Since the majority of the Company’s and subsidiaries’ financial instruments are short-term in nature, and current investments and loans bear interest at rates close to market rate, their fair value is not expected to be materially different from the amounts presented in the Statement of financial position.

A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument.

Annual Report 2011

91

Thai Rung Union Car Public Company Limited


29. CAPITAL MANAGEMENT

The primary objectives of the Company’s capital management is to ensure that it has an appropriate financing structure and preserves the ability to continue its business as a going concern.

According to the Statement of financial position as at December 31, 2011, the Company’s and its subsidiaries’ debt-to-equity ratio was 0.14:1 (2010: 0.16:1) and the Company’s was 0.15:1 (2010: 0.12:1).

30. RECLASSIFICATION OF ACCOUNTS

Certain accounts in the statement of financial position as at December 31, 2010 and the statement of comprehensive income for the year ended December 31, 2010, which are included in the 2011 financial statements for comparative purposes, have been reclassified to conform to the presentation in the 2011 financial statements. These reclassifications have principally been made following changes in accounting policies consequent to the adoption of new and revised TFRS as disclosed in note 2. Other significant reclassifications were as follows:

Before reclassify Statements of financial position Trade accounts receivable – unrelated parties - net Trade accounts receivable – related parties Amounts due from related parties Accrued income Other current assets Trade and other receivable - net Unbilled receivables Investment property - net Land not held for operations Property, plant and equipment- net Trade accounts payable - unrelated parties Trade accounts payable - related parties Amounts due to related parties Accrued project costs

After reclassify

350,516,496

(350,516,496)

-

21,588,994 15,466,277 217,204,320 22,109,095 15,906,400 1,293,629,404 294,633,133 1,902,064 1,214,045 41,060,049

(21,588,994) (15,466,277) (217,204,320) (22,109,095) 410,249,033 216,636,149 249,109,753 (15,906,400) (233,203,353) (294,633,133) (1,902,064) (1,214,045) (41,060,049)

410,249,033 216,636,149 249,109,753 1,060,426,051 -

45,686,275 -

(45,686,275) 383,949,551 546,015 -

383,949,551 546,015

198,584,187 38,375,500

38,375,500 (38,375,500) -

236,959,687 -

Other current liabilities Trade and other payables Current income tax payable Statement of comprehensive income Administrative expenses Management remuneration

(Unit: Baht) Consolidated financial statements Reclassify

Annual Report 2011

92

Thai Rung Union Car Public Company Limited


Before reclassify

(Unit: Baht) Separate financial statements Reclassify

After reclassify

Statements of financial position Trade accounts receivable - unrelated - net Trade accounts receivable - related parties Amounts due from related parties Accrued income

183,195,767 68,268,729 41,105,488 183,780

(183,195,767) (68,268,729) (41,105,488) (183,780)

-

Other current assets Trade and other receivables - net Trade accounts payable - unrelated parties Trade accounts payable - related parties Amounts due to related parties Other current liabilities Trade and other payables

5,158,148 137,025,744 3,215,400 8,684,765 26,297,151 -

(5,158,148) 297,911,912 (137,025,744) (3,215,400) (8,684,765) (26,297,151) 175,223,060 -

297,911,912 175,223,060

755,084,598 107,369,888 17,819,112

2,835,673 14,983,439 (17,819,112)

757,920,271 122,353,327 -

Statement of comprehensive income Cost of sales Administrative expenses Management remuneration

31. APPROVAL OF FINANCIAL STATEMENTS

These financial statements were authorised for issue by the Company’s Board of Directors on February 28, 2012.

Annual Report 2011

93

Thai Rung Union Car Public Company Limited


TRU: Annual Report 2011 EN