TRU : Annual Report 2006 by sarunya dareephat

Financial Highlights Message from the Chairman Board of Directors and Audit Committee Social Activities 2006 General Information Nature and Scope of Business Risk Factors Shareholders and Management Corporate Governance Related Party Transactions Audit Committee’s Report Remuneration Committeels Report Board of Director’s Responsibility for Financial Report Management’s Comments and Analysis Report of Independent Auditor Financial Statements

2 3 4 7 9 12 14 16 24 31 35 36 37 38 41 42

* ¢éÍÁÙÅµèÍËØé¹ (Ë¹èÇÂ : ºÒ·)

In 2006 the Thai automotive industry grew by 6% compared with the year before, with a total of 1,188,044 vehicles being produced. Total domestic vehicle sales reached 682,161 units, representing a 3% drop, while 538,966 units were exported an increase of 22%. The fall in domestic sales is attributable to general economic slow-down, political uncertainty and fluctuating oil prices, which rose considerably between April and August, plus the impact of a natural disasters which struck several areas of the country in the period August to October. In any case auto exports look set to continue their sustained upward trend. Looking forward into 2007, the Federation of Thai Industries expects modest growth in the overall vehicle market, with the domestic market growing very little but exports of vehicles and parts performing strongly, propelled by free trade agreements. We can expect to see more low cost cars from China and India making an appearance in our market. Players in the Thai industry will have to accelerate the adaptation of their production cost structures in order to be able to compete, and will also have to seek out new business opportunities and strategic partners. In any case Thailand still has an important role to play, and is ready to become an ASEAN production hub, as evidenced by the fact that several major global automakers have increased their capacity and transferred their production bases here with a view to using Thailand as their worldwide export production hub. For, 2006 Thai Rung was a difficult year. Sales of the Company’s multi-purpose vehicles were hit by ever-fiercer competition in the market, higher oil prices and political uncertainty. Sales of the TR Bangkok Limousine under the joint Thai taxi development project with SME Bank are still below target due to the big rise in the price of diesel fuel. As a result, the Company’s performance for 2006 was disappointing. Nevertheless we succeeded in expanding income from our parts business and from contract assembly work by over 30% on the previous year, and should continue to show sustained growth going forward. Turning to the business outlook for 2006, the Company remains determined to develop its multi-purpose vehicles and special purpose vehicles to meet customer requirements and offer a wider variety of products. The Company has joined hands with a new business partner to develop a new model of multi-purpose vehicle based on the Chevrolet Colorado pickup truck, which will be launched in early 2007, opening up another customer group and a new outlet channel for the Company’s multi-purpose vehicles. The Company is constantly on the look-out for possible new alliances with foreign partners to invest together in expanding production capacity for both metal and plastic parts and for opportunities for contract assembly of various makes of vehicles for sale both at home and abroad. We will also continue to push our dies and jigs business so as to take advantage of the overall sustained growth of the high value automotive and auto parts industries, focusing at the same time on ensuring that product quality is up to international standards, that our prices are right, and that we can remain competitive into the future. The Company attaches great importance to, and consistently adheres to the principles of good corporate governance in order to assure the Company’s ongoing progress, growth and stability under efficient and transparent management and to bolster the confidence of all stakeholders, for the greatest benefit of the Company and its shareholders. In 2006 the Company was assessed as ‘good’ by the Thai Institute of Directors’ ‘Corporate Governance Report of Thai Listed Companies 2006’, and was also assessed as ‘good’ in the joint SEC-BOI ‘AGM check-list’. The Company will continue to strive to improve 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 employees and stakeholders who are a driving force in their constant support. We count on the continued support of all concerned in further developing the Company’s growth and future success.

Pranee Phaoenchoke Chairman

1. :

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1. Mrs. Pranee Phaoenchoke Chairman of the Board of Directors & President Academic qualifications: Honorary doctorate in Business Administration, American Coastline University, U.S.A. Honorary MasterGs Degree in Commerce and Accountancy Thammasart University Work Experience: - Chairman of the Board of Directors & President of Thai Rung Union Car Plc. - Director & President of Chaicharoenkij Motors Co. Ltd. Thai V.P. Corporation Co. Ltd. Thai Rung Tools and Dies Co. Ltd. Thai V.P. Auto Service Co. Ltd. Thai Ultimate Car Co. Ltd. V.P. Auto Enterprise Co. Ltd. Sinthoranee Property Co. Ltd. First Part Co. Ltd. Isuzu Chaicharoenkij Motors Co. Ltd. Delta-TR Co. Ltd. Thai Auto Pressparts Co. Ltd. Thai Auto Body Assembly Co.Ltd. Europe Thai Car Rent Co. Ltd. Isuzu V. Motor Co. Ltd. Lexus Auto City Co. Ltd. TRU Leasing Co. Ltd. Shareholding as of January 31, 2007 : 245,387,500 shares (48.92%)

2. Mr. Sompong Phaoenchoke Director & Managing Director Academic qualifications: MasterGs degree in Industrial Engineering, Keio University, Japan Work Experience: - Director & Managing Director of Thai Rung Union Car Plc. - Chairman of Risk Management Committee of Thai Rung Union Car Plc. - Director & Vice President of Thai V.P. Corporation Co. Ltd. Thai Ultimate Car Co. Ltd. V.P. Auto Enterprise Co. Ltd. First Part Co. Ltd. Isuzu Chaicharoenkij Motors Co. Ltd. Europe Thai Car Rent 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. Delta-TR Co. Ltd. Thai Auto Pressparts Co. Ltd. TRU Leasing Co. Ltd. - Director of Chaicharoenkij Motors Co. Ltd. Sinthoranee Property Co. Ltd. Thai Auto Body Assembly Co. Ltd. Thai Auto Conversion Co. Ltd. Director Certification Program 26/2003: IOD Shareholding as of January 31, 2007: 25,715,000 shares (5.13%)

3. Mr. Somkiat Nimrawee Director Academic qualifications: BachelorGs degree in Finance & Accounting, Thammasart University Work Experience: - Director, Executive Board, Member of Remuneration Committee and Risk Management Committee of Thai Rung Union Car Plc. - Managing Director of Dan-Thai Equipment Co. Ltd. Director Accreditation Program 10/2004: IOD Shareholding as of January 31, 2007: 80,000 shares (0.02%)

4. '( : Bachelor Degree in Financial Administration University of New England Australia : - ( $ .# *) + ) " - ( $ $ , , ) .# " .# .& . " ' ) . 1 & . //+ ' . .& . ! , 0 #& . ! -# " , . //+ . / ! , / ,

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6. *' + ! $ ' :

\ * ! MS (Industrial Engineering & Management) Oklahoma State University $ % , * ' ( . ) 32) : - $, $ ( $ $ X ") ( . # *) + ) " - ( $ . + / # - $ . ) ) * *" * ", . *) " ] . & .& . ' ) ( .(& ( 1992) . 0 # 0 & & ( .' *& & "( . %& ^ - @+', X & $ ^ _ - & ) * $ *( ** ( $ *" - ' $ ` ' ( $" _ " { ( )* $ # + Director Certification Program 39/2004 : IOD + Finance for Non-Finance Directors 8/2004 : IOD ( 31 .". 2550) : 230,000 , (0.03%)

4. Ms. Kaewjai Phaoenchoke Director Academic qualifications: Bachelor Degree in Financial Administration University of New England Australia Work Experience: - Director & Executive Board of Thai Rung Union Car Plc. - Director & Chief Executive Officer of Thai Ultimate Car Co. Ltd. Thai V.P. Corporation Co. Ltd. First Part Co. Ltd. Isuzu Chaicharoenkij Motors Co. Ltd. V.P. Auto Enterprise Co. Ltd. Europe Thai Car Rent Co. Ltd. Isuzu V. Motor Co. Ltd. Lexus Auto City Co. Ltd. - Director of Chaicharoenkij Motors Co. Ltd. Thai V.P. Auto Service Co. Ltd. Thai Rung Tools and Dies Co. Ltd. Sinthoranee Property Co. Ltd. Thai Auto Pressparts Co. Ltd. Thai Auto Body Assembly Co. Ltd. TRU Leasing Co. Ltd. Director Certification Program 29/2003: IOD Shareholding as of January 31, 2007: 27,191,250 shares (5.42%)

5. Mr. Wuttichai Phaoenchoke Director Academic qualifications: MasterGs degree in Automotive Engineering, Coventry University, U.K. Work Experience: - Director, Executive Board and Member of Risk Management Committee of Thai Rung Union Car Plc. - Director & Managing Director of Sinthoranee Property Co. Ltd. Isuzu Chaicharoenkij Motors Co. Ltd. Chaicharoenkij Motors Co. Ltd. Isuzu V. Motor Co. Ltd. - Director and Deputy Managing Director of Thai V.P. Auto Service Co. Ltd. - Director of Thai Ultimate Car Co. Ltd. Thai Auto Pressparts Co. Ltd. Thai V.P. Corporation C0. Ltd. Thai Auto Body Assembly Co. Ltd. V.P. Auto Enterprise Co. Ltd. Thai Rung Tools and Dies Co. Ltd. TRU Leasing Co. Ltd. Delta-TR Co. Ltd. Europe Thai Car Rent Co. Ltd. Shareholding as of January 31, 2007: 22,500,000 shares (4.49%)

6. Mr. Pricha Attavipach Independent Director & Chairman, Audit Committee Academic qualifications: BachelorGs Degree in industrial engineering Chulalongkorn University MasterGs Degree (MS) in engineering (Industrial Engineering & Management) Oklahoma State University, U.S.A. National Defence College of Thailand, Class of 1989 Work Experience: - Independent Director & Chairman, Audit Committee and Remuneration Committee of Thai Rung Union Car Plc. - Director and Member of the Audit Committee, Siam Cement Plc. - Chairman of Ruamkijaungthong Warehouse Co. Ltd. Tongkah Harbour Plc. SIAM P.P. International Co.Ltd. Pan-Paper 1992 Co.Ltd. Environment Pulp and Paper Co. Ltd. Chaiyananbangplee Parkland Co. Ltd. Ekaratpattana Co. Ltd. - Specialist Senior Engineering (Industrial Engineer), Council of Engineers - Law Councilor of Ministry of Labour - Academic Director of the Safety and Health Vocational Management System, The Engineering Institute of Thailand Under H.M. The KingGs Patronage Director Certification Program 39/2004: IOD Finance for Non-Finance Directors 8/2004: IOD Shareholding as of January 31, 2007 : 230,000 shares (0.03%)

7. - % / !' " ! " : ! Bachelor Degree in Financial Administration University of New England Australia : - .# *) + ) " - @+ , . Astudo Holding ( 31 .". 2550) : # )

8. : B.S. in Business Administration, Boston University School of Management, U.S.A. : - $ .# *) + ) " - $ . ('* - !] 0 . ' " ' ) . ] , ! ! ( $ # ) .# ,X & - . } . . ! $ .!] ! /0 ( 31 .". 2550) : # )

9. ' ' '$! $ ' : Electrical Engineering Royal Melbourne Institute of Technology, Australia : - $, ( $ X ") ( .# *) + ) " - $ , $ ( $ X ") ( . # " - $ ." . . . " ' ) + 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 {) ` ( 31 .". 2550) : # )

10. '-# ' $ ' : ! Wagner College NY New York U.S.A. : - $, ( $ " ) * .# *) + ) " - / @+ , X . 0 " - . ! *( " ( $ # ) . # / ( (

. & + Director Certification Program 9/2001 : IOD + Audit Committee Program 15/2006 : IOD {) ` ( 31 .". 2550) : 15,012 , (0.003%)

7. Mr. Anthony Farquhar McDonald Director Academic qualifications: MasterGs degree in Marketing Thammasart University Bachelor Degree in Financial Administration University of New England Australia Work Experience: - Director of Thai Rung Union Car Plc. - Managing Director of Astudo Holding Co. Ltd. Shareholding as of January 31, 2007: None

8. Mr. Phong Sarasin Independent Director Academic qualifications: B.S. in Business Administration, Boston University School of Management, U.S.A. Work Experience: - Independent Director of Thai Rung Union Car Plc. - Chairman of Shangri-la Hotel Plc. Shin Corporation Plc. Honda Cars Mfng. (Thailand) Co. Ltd. Thai Namthip Co. Ltd. - Director of Fajeep Plc. Sammakorn Plc. Rojana Industrial Park Plc. Home Product Center Plc. Shareholding as of January 31, 2007: None

9. Mr. Kavee Vasuvat Independent Director & member, Audit Committee Academic qualifications: BachelorGs degree in Electrical Engineering Royal Melbourne Institute of Technology, Australia Work Experience: - Independent Director & Member, Audit Committee and 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 January 31, 2007 : None

10. Mr. Suvait Theeravachirakul Independent Director & member, Audit Committee Academic qualifications: MasterGs degree in MBA, Wagner College, New York NY, U.S.A. Work Experience: - 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. Patum Rice Mill and Granary Plc. Siam Piwat Co. Ltd. Director Certification Program 9/2001: IOD Audit Committee Program 15/2006: IOD Shareholding as of January 31, 2007: 15,012 shares (0.003%)

Â°â&#x20AC;&#x2DC;ÂŽÂ°â&#x2C6;&#x161;â&#x2C6;&#x161;ÂĄÂŞâ&#x20AC;&#x2122; 2549

: SOCIAL ACTIVITIES 2006 . ! "# ( ) " $ % &'

* + ,"* -/ *0 , !% 1 / 2 " / 3 - / Mrs. Pranee Phaoenchoke, President of the Thai Rung Union Car group of companies, donated a pickup truck to the Somdej Phrapiyamaharaj Rommaneeyakhate Hospital foundation for use in carrying out its mission

5 6 ! "# ( ) # $ TR ADVENTURE 39 "# 5 2 -& 5 + + - & / " :* : ; / * + ! " ! , % *0 # % &% / / " " % % &$< (ARRIVE ALIVE) 0 5 15 5 2549 /< + / / # ; On 15th December 2006 in the Santimaitri Building, Government House, Mr. Wuttichai Phaoenchoke, Director of Thai Rung Union Car Plc, was received by Prime Minister Surayud Chulanont who took delivery of two TR Adventure 39th Anniversary Version station wagons donated to the JIf you drink, donKt driveQ foundation for use in the New Year JArrive aliveQ accident reduction campaign. + * ! &" '$ - 5 / 5 $ + ! 7 / 5" Z % Z 39 (TR ADVENTURE 39thAnniversary Version) ' +0 5 & / " . " # ! [! / ! ' "# 5 % * Managing Director Mr. Sompong Phaoenchoke gave a press conference on the occasion of the launch of the new-look seven-seater TR Adventure 39th Anniversary Version. The conference was also attended by Dr. Prajin Uiemlumnao, Chairman of Grand Prix International.

' &5 & &" 5 ! "# ( ) , / 5' 5 J+$ " "# 2549Q & ' + * !' & +5 + ' " +5 + ' & ' 5 ' ' +5 + + & % & 2 + /

Mrs. Kaewkao Phaoenchoke, General Manager of Thai Rung Union Car Plc, took possession of the Outstanding Workplace Award 2006 in the categories worker relations and workersK welfare from the Department of Labor Protection and Welfare of the Ministry of Labor in the big meeting room , 2nd floor, Sahaprachachat building.

! "# ( ) & 5 J $ /! ' 2549Q (Car of the Year 2006) + - 5 / (Thai Innovation Award) " :* : + "< 0 " ; / % / ! ' / ! 5! & 27 , 5 Car of the Year 5 [ & "< , 0 / &5 /2 ^! : , 5 / 5 5& & / 0 Thai Rung Union Car Plc received the Car of the Year 2006 award in the category Thai Innovation from Deputy Prime Minister Suriya Jungrungreangkit at the 27th Bangkok International Motor Show. This is the fifth consecutive year that the Company has received the award, which says a lot about its product innovation and quality. . " # " / ! ' / ! 5! % & / , % * 5 $&5 * " + ,"* + + ` ' % z / % &' & z' & -& % 5 ' $ /! TAS Contest & 4 5 23 2549 / ! ' / ! 5! & 27 Dr. Prajin Uiemlumnao, Chairman of the Bangkok International Motor Show, did us the honor of chairing the ceremony in which the Royal Cup, from His Royal Highness the Crown Prince, was presented to winners of the 4th TAS auto design competition on 23rd March 2006 at the 27th Bangkok International Motor Show, and of conversing with the winners and other competitors. ! "# ( ) 5 ! ! / ! ' "# &" / ! ' / ! 5! ' /! + ' z % * $ 2! " 5 ' $ /! TAS Contest & 5 % 5-& JShall we go Dad?Q J $ 5 % * / Q Thai Rung Union Car Plc together with Grand Prix International Co. Ltd., organizers of the Bangkok International Motor Show, and the Royal Automobile Association of Thailand under Royal Patronage, held the fifth TAS auto design contest under the headings JShall we go Dad?Q and JNew age green-powered family carQ.

2 + * z ;! & 5 & " ! "# ( ) -& 5 * ' $ : % 5 * / 9 +& $5 * * 5 5' z ' . " # ! [! / ! ' "# & + 5 Mr. Noppadol Suplaset, Assistant Managing Director of Thai Rung Union Car Plc, joined the starting ceremony of a Thai Rung Rally to celebrate H.M. the KingKs JThailand Grand Invitation 2006Q initiative, together with the Tourism Authority of Thailand and Dr. Prajin Uiemlumnao, Chairman of Grand Prix International, at the Sanam Luang.

GENERAL INFORMATION

Listed Company Companies Register Number Registered share capital Paid-up share capital Business Activities

Address Tel : Fax : Website Securities Registration

Auditors

Thai Rung Union Car Public Company Limited 0107536001435 Bt.524,996,497 divided into 524,996,497 ordinary shares of Bt.1 each. Bt.501,589,497 (as at 31st January 2007) - Product design, research and development - Manufacture of dies and jigs - Manufacture of automotive parts - Vehicle assembly and modification 28/6 Moo 1, Phetchkasem Road Soi 81, Nongkhangphloo, Nong Khaem, Bangkok 10160 0-2431-0071-2, 0-2431-0065, 0-2420-0076 0-2812-0844, 0-2814-5030, 0-2420-3664 http://////www.thairung.co.th Thailand Securities Depository Company Limited 62, Stock Exchange of Thailand Building, Rachadaphisek Road, Klong Toey, Bangkok 10110 Mr. Songdej Pradisthsamaanon, CPA. No. 2349 or Mr. Sophon Phermsiriwanlot, CPA. No. 3182 or Miss Sumalee Reewarabandith, CPA. No. 3970 Ernst & Young Office Ltd., 193/136-137 Lake Rachada Building, 33rd Floor, Rachadaphisek Road, Klong Toey, Bangkok 10110 Tel: 0-2264-0777, 0-2661-9190 Fax: 0-2264-0789-90, 0-2661-9192

Group Structure of Thai Rung Union Car Public Company Limited and subsidiaries as at 31st December 2006

* Thai Rung Tools and Dies Co., Ltd., formerly called Thai Rung General Motor Co., Ltd., registered its change of name on 3rd March 2006.

General Information on Subsidiaries and Joint Venture Companies Subsidiary Companies Thai Rung Tools and Dies Co., Ltd. Registered share capital Address Tel: Fax: Business Activities

Bt.27,000,000 issued and fully paid up, divided into 270,000 ordinary shares of Bt.100 each 28/22 Moo 1, Phetchkasem Rd. Soi 81, Nongkhangphloo, Nong Khaem, Bangkok 10160 0-2431-0071-2, 0-2431-0065, 0-2420-0076 0-2814-5030, 0-2420-3664 Manufacture of dies and jigs.

Thai V.P. Auto Service Co., Ltd. Registered share capital Address Tel: Fax: Business Activities

Bt.25,000,000 issued and fully paid up, divided into 250,000 ordinary shares of Bt.100 each 17/22 Moo 2, Phetchkasem Rd. Soi 81, Nongkhangphloo, Nong Khaem, Bangkok 10160 0-2420-6708, 0-2420-4823, 0-2812-1445-6 0-2420-1601 Sale of spare parts and accessories, after-sales service centre

Thai Auto Pressparts Co., Ltd. Registered share capital Factory Address Tel: Fax: Business Activities

Bt.400,000,000 issued and fully paid up, divided into 4,000,000 ordinary shares of Bt.100 each Amata City Industrial Estate 7/122 Moo 4, National Highway 331, Tambol Marpyarngphorn, Amphoe Pluak Daeng, Rayong (038) 956-156, 956-239-42 (038) 956-169 Manufacture of automotive body parts

Thai Ultimate Car Co., Ltd. Registered share capital Address Tel: Fax: Business Activities

Bt.25,000,000 issued and fully paid up, divided into 25,000 ordinary shares of Bt.1,000 each 371 Vibhavadee Rangsit Road, Khwaeng Samsennai, Khet Phayathai, Bangkok 10400 0-2616-1040-59 0-2616-1063 Vehicle dealership, after-sales service, sale of spare parts.

TRU Leasing Co., Ltd. Registered share capital Address Tel: Fax: Business Activities

Bt.60,000,000 issued and fully paid up, divided into 600,000 ordinary shares of Bt.100 each 28/6 Moo 1, Phetchkasem Rd. Soi 81, Nongkhangphloo, Nong Khaem, Bangkok 10160 0-2812-2930, 0-2812-2940 0-2812-2909 Purchase, sale, rental, leasing and hire-purchase finance of motor vehicles

Thai Auto Body Assembly Co., Ltd. (not yet active) Registered share capital Address Business Activities

Bt.12,000,000 of which 25% issued and paid up, divided into 120,000 ordinary shares of Bt.100 each 68 Moo 1 Chonburi-Ban Bung Rd., Tambol Nongsamsark, Amphoe Ban Bung, Chonburi Assembly of various kinds of auto bodies for commercial use.

Joint Venture Companies Delta-TR Co., Ltd. Registered share capital Address Tel: Fax: Business Activities

Bt.20,000,000 issued and fully paid up, divided into 200,000 ordinary shares of Bt.100 each 28/23 Moo 1, Phetchkasem Rd. Soi 81, Nongkhangphloo, Nong Khaem, Bangkok 10160 0-2431-0071-2, 0-2431-0065, 0-2420-0076 0-2812-4302 Manufacture of automotive seats and related components.

Thai Auto Conversion Co., Ltd Ltd. Registered share capital Address Tel: Fax: Business Activities

Bt.74,500,000 issued and fully paid up, divided into 74,500 ordinary shares of Bt.1,000 each 700/182 Moo 1, Tambol Ban Kao, Amphoe Phan Thong, Chonburi 20160 (038) 457106-110 (038) 457112 Product development and fitting of special accessories for special purpose vehicles.

Nature of Business General Business Overview of the Company, its Subsidiaries and Joint Ventures Thai Rung Union Car Public Company Limited is in the motor vehicle industry. The Company’s subsidiaries are: Thai Rung Tools and Dies Co., Ltd. (formerly called Thai Rung General Motor Co., Ltd.), Thai Auto Press Parts Co., Ltd., Thai V.P. Auto Service Co., Ltd., and Thai Auto Body Assembly Co., Ltd. and its joint venture companies are Delta-TR Co., Ltd. and Thai Auto Conversion Co., Ltd. Their activities are as follows. Thai Rung Union Car Plc. has three main areas of business: product design and development, particularly for modified vehicles of various kinds; production of metal and plastic parts, for supply to auto and motorcycle manufacturers and for the Company’s own internal use, including parts exported for modified vehicles to be assembled overseas; and the third important area of activity is the contract assembly and modification of a range of vehicles including station wagons, seven-seater multi-purpose vehicles and special purpose vehicles such as rapid response rescue vehicles, buses, vans, ambulances, refrigerated trucks and minibuses. Thai Rung Tools and Dies Co., Ltd. (formerly called Thai Rung General Motor Co., Ltd.), a subsidiary, makes dies and jigs. It has received BOI promotional privileges for investments. Thai Auto Press Parts Company Limited, a subsidiary, 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 Press Parts, 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. In 2005 it broadened its activities to include the manufacture and sale of plastic parts. Thai V.P. Auto Service Company Limited, another subsidiary, provides after-sales service for the Thai Rung’s multi-purpose vehicles. In 2005 it expanded its activities to include plastic accessories under the name “Parto”. Thai V.P. Auto Service Co., Ltd. has two subsidiaries. Thai Ultimate Car Company Limited, which it acquired in 2001 in order to expand into vehicle distribution, is a dealer and provider of after-sales service for Land Rover vehicles. It also sells equipment and accessories for multi-purpose vehicles, and spare parts. TRU Leasing Company Limited, established in 2005 to carry on finance business, initially concentrating on supporting the group’s business by providing hire purchase finance for the parent Company’s TR Bangkok Limousine. Thai Auto Body Assembly Co., Ltd, a subsidiary, is located at Ban Beung, Chonburi Province. Its purpose is the modification of bodies for various kinds of commercial and special purpose vehicles such as rapid response rescue vehicles, buses, vans, refrigerated trucks, trailers, and ambulances. The company is not yet active. Delta-TR Company Limited is a joint venture with a Japanese company for the manufacture of auto seats and related components. Thai Auto Conversion Co., Ltd. is a joint venture with the Toyota Motor Group for product development and fitting of accessories for special purpose vehicles. 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, 2004-2006 Product / Service

Performed % of shares 2004 by held Revenue %

Contract vehicle assembly including 99.53* 1,663,863 41.91 cost of quipment and accessories fitted TRU,TUC Sale of vehicles (includes a portion of income from assembly and cost of TRU,TVS, equipment and accessories fitted) TUC 94, 99.53* 1,092,153 27.51 Sale of parts, income from sub-assembly of parts TRU,TAP 91 641,379 16.17 Sales of dies and jigs TRT 94 110,133 2.77 Sale of spare parts and accessories TRU,TVS, and other service income TUC 94, 99.53* 342,635 8.63 Share of profit from investments accounted for under equity method 7,995 0.20 Other Income 111,708 2.81 Total Revenues 3,969,864 100.00

Unit: baht 000s

2005 Revenue %

2006 Revenue %

681,707 22.35

169,428

840,689 27.57

559,830 23.19

7.03

943,156 30.93 1,191,116 49.34 142,467 4.67 115,245 4.77 357,614 11.72

267,372 11.08

10,909 0.45 84,148 2.76 100,002 4.14 3,049,781 100.00 2,413,903 100.00

* 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 Thailandâ&#x20AC;&#x2122;s total vehicle production for 2006 amounted to 1,188,044 units, representing a 6% increase on the previous year, with 682,161 units being sold in the domestic market (a 3% drop on the previous year) and a further 538,966 being exported, representing an increase of 22% on the prior year. Of the total production figure, a record total of 866,769 or 73% were one-ton pickup trucks, an increase of 5% on the previous year, thanks to market growth both at home and abroad. Looking forward into 2007, prospects for the Thai automotive industry are for continued growth. The Federation of Thai Industries expects modest growth in the overall vehicle market, with the domestic market growing very little but exports of vehicles and parts performing strongly, propelled by free trade agreements, and is estimating total production of 1,280,000 units for 2007, of which 678,000 for the domestic market (700,000 including imports) and 606,000 for export. Oil prices are not expected to have very much effect on total vehicle sales, however they will affect purchasing decisions in terms of vehicle type and model. Low cost cars from China and India can be expected to make an appearance in our market. Players in the Thai industry will have to accelerate the adaptation of their production cost structures in order to be able to compete, and will also have to seek out new business opportunities and strategic partners. In any case Thailand still has an important role to play, and is ready to become an ASEAN production hub, as evidenced by the fact that several major global automakers have increased their capacity and transferred their production bases here with a view to using Thailand as their worldwide export production hub. The next step for the automotive industry must be to develop its ability to compete, in terms of design engineering, research and development, and reaching and maintaining global standard levels. Players in the Thai automotive industry need to improve continuously and rapidly, in terms of quality, costs and technology, in order to reach and maintain global standard levels and thus meet the ever growing competition as auto assemblers and parts makers from America, Europe and Japan continue to move their production bases to Thailand, and to cope with changing global terms of trade under WTO, AFTA and bilateral free trade agreements. 13

Risk Factors 1. Business Risks, by Business Type Multi-purpose vehicles - Risks arising from the fact that the distribution channel for Isuzu pick-ups modified by the Company is limited to dealers of Tripetch Isuzu Sales Co., Ltd. Income from this business accounted for roughly 20% of total consolidated revenues in 2006. - 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. Auto Parts - Bargaining power affected by weight of major customers Aapico Amata Co., Ltd. and Isuzu Motors (Thailand) Co., Ltd., who together accounted for about 20% of total consolidated income in 2006. - The growth of the automotive and parts industries for supply to both domestic and export markets, as seen from the fact that several major auto makers have expanded their production capacity and others have moved their production bases from overseas to Thailand, leads to ever more competitors in the auto parts industry, both big and small, old and new. Dies & Jigs - Increasing competition both from existing manufacturers expanding production capacity so as to be able to take on more orders, and from new entrants from overseas coming to take a share of the work available, could have an effect on the volume of work in the future .In 2006 income from dies and jigs accounted for approximately 5% of total consolidated revenues. - Shortage of skilled die-making technicians, leading to poaching of capable personnel.

Risk Management In order to spread risk and lessen the possible impact of the various risk factors, the Company has laid down policy guidelines for each business unit, as follows. Multi-purpose Vehicles - The Company places emphasis on research and development of multi-purpose vehicles, focusing on up-to-date styling and on quality to match requirements of target customer groups. At the same time studies are under way aimed at developing a line of business in special purpose vehicles of various kinds such as taxis and rapid response rescue vehicles, so as to expand the market and target customer groups by taking advantage of the Company’s flexibility in adapting its production processes. - The Company has joined hands with a new business partner to develop a new multi-purpose vehicle based on the Chevrolet Colorado pickup truck, which will go on sale in early 2007, opening up an additional group of customers and additional sales outlets for multi-purpose vehicles, as well as seeking alliances with producers of chassis and sales outlets for other brands which do not yet produce multi-purpose vehicles or ‘PPVs’ (Pickup-Passenger Vehicles.) - The Company has further developed its ‘TR Center’ product presentation outlets, in order to maximize customer and end-user awareness, opening three new branches in 2006, at Phetchkasem, Rattanathibet and Rama IV. - The Company has established TRU Leasing Co., Ltd. in order to support sales of its taxi product to customers who are not included in the SME Bank’s “Thai Taxi Development Project.”

Parts making - 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 motorcycles, industrial machinery, electrical appliances and agricultural machinery, so as to spread risk. The Company set up an all year round program of marketing activities aimed at fostering good customer relations, and also established new target customer groups for plastic parts and window regulators. - The Company expanded its business into the production and sale of blowmold and vacuum-formed plastic parts, including plastic accessory parts under the name Parto. - Expansion of customer base to overseas markets such as Vietnam, Malaysia, Indonesia, India, Egypt, Australia and U.S.A. - The Company is constantly on the look-out for possible new alliances with foreign partners to invest together in expanding production capacity for both metal and plastic parts so as to cater to the growing volume of work resulting from the sustained growth of the automotive industry, its policy being to focus on high value-added work. - Development of new variants of the Companyâ&#x20AC;&#x2122;s existing â&#x20AC;&#x2DC;flat deckâ&#x20AC;&#x2122; to cater to the pick-up industry at home and abroad in the future. Dies & Jigs - 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 high value orders. - The Company has a project to increase automation of the production process so as to lessen the impact of shortages of skilled labor, and has also arranged training courses aimed at enhancing personnel capability. 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: - Thai Ultimate Car Co., Ltd. is a dealer and after-sales service provider for the Land Rover brand of vehicles. - TRU Leasing Co., Ltd. provides financial services by way of automotive hire purchase.

1.2 Financial Risks Please refer to details in Note 28 to the Financial Statements for the year ended 31st December 2006.

Shareholders and Management Shareholders Major Shareholders as at 31st January 2007, last date on which the share register was closed, when paid up capital was Bt.501,589,497 No. 1 2 3 4 5 6 7 8 9 10

Name Mrs. Pranee Phaoenchoke Ms. Kaewjai Phaoenchoke Mr. Sompong Phaoenchoke* Citibank Nominees Singapore Pte Ltd. S.A., PBG Clients SG Quam Securities Nominees (Singapore) Pte. Ltd. Mr. Wuttichai Phaoenchoke TISCO Bank Plc. Coutts Bank Von Ernst Ltd., Singapore Branch Gerlach & Co-Dimensional Emerging Markets Value Fund Inc. Thai Thai NVDR Co., Ltd. Total

Percentage of Number of shares shares held 245,387,500 48.92% 27,191,250 5.42% 25,715,000 5.13% 24,691,925 4.92% 24,483,000 4.88% 22,500,000 4.49% 15,025,000 3.00% 14,596,900 2.91% 5,386,250 1.07% 4,190,100 0.84% 409,166,925 81.58%

* Mr. Sompong Phaoenchoke holds 23,465,000 shares and his wife Mrs. Kaewkao Phaoenchoke holds 2,250,000 shares. Investors wishing to see information on current shareholders can do so by visiting the Companyâ&#x20AC;&#x2122;s website before the Annual General Shareholdersâ&#x20AC;&#x2122; Meeting.

Management Management Structure The Company has the following five boards and committees: Board of Directors, Audit Committee, Executive Board, Risk Management Committee and Remuneration Committee, details as follows: 1 Board of Directors As at 31st December 2006 ten of the eleven positions on the Board of Directors were occupied as follows. A suitable candidate was being sought for the vacant position. Name 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Position

Mrs. Pranee Phaoenchoke President of the Board Mr. Sompong Phaoenchoke Director Ms. Kaewjai Phaoenchoke Director Mr. Wuttichai Phaoenchoke Director Mr. Somkiat Nimrawee Director Mr. Anthony Farquhar McDonald Director Mr. Pong Sarasin Independent Director Mr. Pricha Attavipach Independent Director Mr. Kavee Vasuvat Independent Director Mr. Suwate Theerawachirakul Independent Director Secretary to the Board of Directors: Mr. Sakchai Komgris*

Note * Mr. Sakchai Komgris was appointed Secretary to the Board of Directors and to the Executive Board effective 13th November 2006.

Characteristics and definition of independent director of Thai Rung Union Car Plc Two of the four independent directors hold industrial qualifications and the other two are qualified in administration. An independent director of the Company is an outside individual, not contracted or otherwise employed by the Company, independent of any major shareholder in the Company, and not himself holding more than 5% of the total number of shares with voting rights, nor holding shares in any group company, and not having any business dealings with the Company, whether direct or indirect, nor having any relationship with any individual who provides professional services to the Company or to any group company, and as such is qualified to represent the interests of minority shareholders. The above definition of Independent Director complies with the relevant SEC regulations. A quorum for a meeting of the Board of Directors of the Company is constituted by not less than half the total number of Directors, resolutions are taken by simple majority vote of those present, each Director having one vote. At each Annual General Meeting of the Company at least one third of the Directors, or if the number of Directors is not divisible by three then the nearest number to one third, must retire, the longest serving Directors retiring first.

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 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 authorized 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 authorization 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 authorization 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. 17

2. Audit Committee As at 31st December 2006 the Company’s Audit Committee was composed of three members: Name

Position

1. Mr. Pricha Attavipach Chairman of the Audit Committee 2. Mr. Kavee Vasuvat Member of the Audit Committee 3. Mr. Suwate Theerawachirakul Member of the Audit Committee Secretary to the Audit Committee: Mr. Phakkawat Suwanmajo 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. Powers and duties of the Audit Committee 1. To review the Company’s financial statements and ensure that they are correct and complete and present a true picture of the Company’s financial position. 2. To review the Company’s internal control procedures and ensure that they are appropriate and efficient. 3. To select, review and recommend appointment of Company’s external auditors and establishment of their remuneration. 4. To monitor the Company’s compliance with all relevant laws and regulations. 5. To consider and review any transactions likely to give rise to a conflict of interest. 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. 7. To carry out such other duties as may from time to time be assigned the Company’s Board of Directors.

3. Executive Board As at 31st December 2006 the Company’s Executive Board consisted of five Directors, as follows: 1. 2. 3. 4. 5.

Name Position Mrs. Pranee Phaoenchoke Chairman of the Board Mr. Sompong Phaoenchoke Managing Director Ms. Kaewjai Phaoenchoke Director Mr. Wuttichai Phaoenchoke Director Mr. Somkiat Nimrawee Director Secretary to the Executive Board: Mr. Sakchai Komgris

Directors on the Executive Board serve terms of three years. A quorum for a meeting of the Executive Board 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. Powers and Duties of the Executive Board 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 authorize 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 optimizing efficiency. 18

5. To consider and authorize 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 authorization 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. Risk Management Committee As at 31st December 2006 the Company’s Risk Management Committee was composed of six members, as follows: 1. Mr. Sompong 2. Mr. Somkiat 3. Mr. Wuttichai 4. Mrs. Kaewkao 5. Mr. Suwate Mr. Noppadol

Name Position Phaoenchoke Chairman of the Risk Management Committee Nimrawee Member of the Risk Management Committee Phaoenchoke Member of the Risk Management Committee Phaoenchoke Member of the Risk Management Committee Theerawachirakul Member of the Risk Management Committee Suplaset** Member of and Secretary to the Risk Management Committee

Note: ** Mr. Noppadol Suplaset was appointed Member of and Secretary to the Risk Management Committee effective 13th November 2006. 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. The scope of duties and responsibilities of the Risk Management Committee is as follows: 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. 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. Remuneration Committee As at 31st December 2006 the Company’s Remuneration Committee was composed of three members, as follows: Name Position 1. Mr. Pricha Attavipach Chairman of the Remuneration Committee 2. Mr. Kavee Vasuvat Member of the Remuneration Committee 3. Mr. Somkiat Nimrawee Member of the Remuneration Committee Secretary to the Remuneration Committee: Mr. Viruch Kulsri Members of the Remuneration Management 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.

The scope of duties and responsibilities of the Remuneration Committee is as follows: 1. 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. 2. To consider, review and present proposals for establishing Directors’ remuneration. 3. To present reports and proposals of the Remuneration Committee to meetings of the Company’s Board of Directors for their consideration.

Directors’ signing powers Directors’ signatory powers to bind the Company must be granted by a general meeting of shareholders and 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: 1. Mrs. Pranee Phaoenchoke 2. Mr. Sompong Phaoenchoke 3. Ms. Kaewjai Phaoenchoke The following two Directors, acting together, may jointly bind the Company with their signatures and the Company seal: 4. Mr. Wuttichai Phaoenchoke 5. Mr. Somkiat Nimrawee

Company Administrators As at 31st December 2006 Company Administrators were as follows: Name Position 1. Mrs. Pranee Phaoenchoke Chairman of the Executive Board 2. Mr. Sompong Phaoenchoke Managing Director 3. Mr. Prakarn Cheunchokesan Deputy Managing Director 4. Mr. Viruch Kulsri Senior Assistant Managing Director 5. Mr. Noppadol Suplaset Assistant Managing Director 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 Board, 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 Board, 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, as efficient as possible in accordance with assignments from the Company’s Board of Directors or Executive Board. 5. To consider and, if appropriate, approve business transactions within the Company’s authorized areas of business. 6. To perform such other duties as may be assigned by the Company’s Board of Directors or Executive Board. The scope of the powers and duties mentioned shall not extend to the authorization 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.

Nomination of Directors and Administrators The Company does not have a nominating committee, but the process for selecting individuals to be appointed as Directors includes 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, 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 Board of Directors undertakes an initial assessment of possible candidates for the position of Company Director, and then selects the most suitable candidate(s) to place before a meeting of shareholders for their consideration. 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.

Administrators’ Remuneration (A) Monetary remuneration

No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Directors and Audit Committee Total remuneration received by all ten Directors from the Company in their capacity as Directors by way of Directors’ stipends and meeting fees in 2006 was Bt.3,050,000.- Details are as follows: Director’s Name Remuneration paid in 2006 (Baht) Mrs. Pranee Phaoenchoke 330,000 Mr. Sompong Phaoenchoke 310,000 Ms. Kaewjai Phaoenchoke 260,000 Mr. Wuttichai Phaoenchoke 240,000 Mr. Pricha Attavipach 850,000 Mr. Somkiat Nimrawee 250,000 Mr. Anthony Farquhar McDonald 190,000 Mr. Phong Sarasin 120,000 Mr. Kavee Vasuvat 250,000 Mr. Suvait Theeravachirakul 250,000 Total 3,050,000 21

Administrators (excluding Directors) 2006 Salaries Bonus Living Allowances Total

Number of persons 4 4 2

Remuneration (baht) 9,827,999 619,615 283,884 10,731,498

(B) Non-monetary remuneration Directors Stock options conferring the right to buy ordinary shares of the Company under the ESOP 2003 program which runs for five years, the total number of stock options being 24,999,000 and the exercise price Bt.5.00* per unit. The numbers of units allocated to each Director are as follows. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Name Mrs. Pranee Phaoenchoke Mr. Sompong Phaoenchoke Ms. Kaewjai Phaoenchoke Mr. Wuttichai Phaoenchoke Mr. Pricha Attavipach Mr. Anthony Farquhar McDonald Mr. Somkiat Nimrawee Mr. Kavee Vasuvat Mr. Phong Sarasin Mr. Suvait Theeravachirakul

Position President Managing Director Director Director Director Director Director Director Director Director

Number of stock options allocated

As % of total project

7,900,000 5,300,000 4,700,000 4,300,000 300,000 200,000 200,000 150,000 150,000 150,000

31.6 21.2 18.8 17.2 1.2 0.8 0.8 0.6 0.6 0.6

Note* On 24th April 2006 a meeting of the Companyâ&#x20AC;&#x2122;s shareholders resolved to authorize a change in the exercise price of the common stock options from Bt.8.00 per unit to Bt.5.00 per unit with effect from June 2006. Administrators Company car

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 form 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.

Dividend Policy of Company and Subsidiaries (a) Payment of dividends by the Company to Shareholders

The Company’s policy is to pay a dividend each year of approximately 40% of net earnings of the previous year.

(b) Payment of dividends by Subsidiaries to the Company

Subsidiary companies Thai Rung Tools and Dies Co., Ltd. (formerly called Thai Rung General Motor Co., Ltd.), Thai V.P. Auto Service Co., Ltd., Thai Auto Press Parts Co., Ltd., Thai Auto Body Assembly Co., Ltd. and Thai Ultimate Car Co., Ltd. and TRU Leasing Co., Ltd. consider their policy year by year in light of their investment requirements and other circumstances as appropriate.

Auditors’ Remuneration (a) Audit fees

During the year the Company and its subsidiaries paid a total of Bt.1,820,000 to the Company’s Auditors, Ernst & Young Office Ltd. as per the following details. Thai Rung Union Car Plc Thai V.P. Auto Service Co., Ltd. Thai Rung Tools and Dies Co., Ltd. Thai Auto Press Parts Co., Ltd Thai Ultimate Car Co., Ltd. Thai Auto Body Assembly Co., Ltd. TRU Leasing Co., Ltd. Total

Baht 600,000 250,000 220,000 240,000 420,000 30,000 60,000 1,820,000

(b) Non-audit fees - In the course of the year 2006 the Company and its subsidiaries paid Ernst & Young Office Ltd. a total of Bt.103,464 by way of other representation and service charges such as hotel and travel expenses, postal charges, photocopying expenses and certification costs. - In the course of the year 2006 Thai Rung Union Car Plc paid Bt.50,000 to Ernst & Young Office Ltd. by way of fees for a special audit to verify selling expenses on industrial machinery acquired for use in the BOI-supported project of Thai Auto Press Parts Co., Ltd. - In the course of the year 2006 Thai Auto Press Parts Co., Ltd. paid Bt.70,000 to Ernst & Young Office Ltd. by way of special service fees in accordance with BOI instructions.

Corporate Governance Principles of corporate governance are guidelines for doing business and administering organizations, 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 organization, by focusing on responsibilities towards all parties with which it has dealings, both inside and outside the organization, 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 this commitment the Company was assessed as ‘good’ by the Thai Institute of Directors’ ‘Corporate Governance Report of Thai Listed Companies 2006’ and was also assessed as ‘good’ in the joint SEC-BOI ‘AGM check-list’. 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 per Company Announcement No. 37/2004 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 endeavors 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. 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 scrutinize work in light of policies and to provide clear monitoring and follow-up. Committees currently include the Executive Board, the Audit 24

Committee, the Risk Management Committee and the 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 Remuneration Committee whose duty is 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 treats all its shareholders impartially, endeavors 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 and are made available for shareholders’ inspection. The Company’s Board of Directors has not so far made arrangements allowing shareholders to submit questions in advance of the meeting, but will consider doing so in due course. 4. The Company’s Board of Directors attaches great importance to shareholders’ meetings, and all Directors endeavor 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. 25

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 tostudy 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. 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. 7. The Company has so far not put in place arrangements to facilitate minority shareholders’ proposing additional agenda items or putting forward candidates’ names for appointment as Directors in advance of shareholders’ meetings, but the Board of Directors will take these matters under consideration in due course.

3. Stakeholders

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, with sincerity, honesty and impartiality in all dealings with the Company and with all groups of stakeholders including shareholders, customers, trading partners and creditors, competitors, employees, the environment, the community and society. The Company communicates regularly with employees and monitors compliance. 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 organization’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 organization. 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 livable. The Company has arranged channels through which suggestions from all groups of stakeholders can be heard, for example the employee suggestion box scheme, and customer recommendations which are used for product and service improvement and development, thus strengthening the Company and its competitive capability and building a base for long-term success.

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 affair 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 prepared a report on the Board’s responsibility for financial statements, which is shown together with the Auditor’s Report in Form 56-1 for annual information and in the Company’s Annual Report. 4. The Board of Directors has disclosed the roles and duties of the Board and of the various Committees in Form 56-1 for annual information and in the Company’s Annual Report. (For details please refer to Management Structure.) Details concerning the number of times each board and committee met during 2006 and individual attendance records are as follows. 27

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

Mrs. Pranee Phaoenchoke Mr. Sompong Phaoenchoke Ms. Kaewjai Phaoenchoke Mr. Wuttichai Phaoenchoke Mr. Somkiat Nimrawee Mr. Pricha Attavipach Mr. Anthony Farquhar McDonald Mr. Pong Sarasin Mr. Kavee Vasuvat Mr. Suwate Theerawachirakul Mrs. Kaewkao Phaoenchoke Mr. Noppadol Suplaset **

Company Board of Directors 6/6 6/6 5/6 4/6 6/6 6/6 3/6 6/6 6/6 -

Executive Board

Audit Committee

4/4 4/4 4/4 4/4 0/4 0/6 -

5/5 5/5 4/5 -

Meetings attended / Meetings held Remuneration Risk Committee Management Committee 1/1 1/1 2/2 1/1 2/2 - 2/2 1/1 1/1 0/0

Note: ** Mr. Noppadol Suplaset was appointed Member of and Secretary to the Risk Management Committee effective 13th November 2006.

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. Board Structure

1.1 The Board of Directors of the Company consists of ten persons, at least one third of whom must be independent directors. At present the Company has four independent non-executive directors. The characteristics of independent directors are as defined by the Company. (For details please see Management Structure.) 1.2 The President 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 Management Structure.) This arrangement makes for better checks and balances and control. 1.3 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, nor has it so far appointed a Company Secretary. All these matters are important and complex and require patient study before proceeding. In any case 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 Board, the Risk Management Committee and the Remuneration Committee in order to help study details and scrutinize 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 Management Structure.) 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 President of the Board of Directors of the Company can not 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 Remuneration 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, and it reviews policies and monitors compliance on a regular basis. 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 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. 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.

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 endeavor 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. 29

5. Assessment of Board’s Performance The Company’s Board of Directors has not so far set up a system for assessing the Board’s overall performance nor its performance in specific areas, nor for regular self assessment by the Board. The Board will give consideration to these matters in due course.

6. Remuneration The Company has established a 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 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. 7.2 As for recommending types of business and guidelines for doing business to new Directors, and establishing development and transition plans for the jobs of the Managing Director and senior Administrators, so far no action has been taken; however the Board of Directors will consider these matters in due course.

Related Party Transactions (1) Related Party Transaction with entities having a possible conflict of interest In the course of the year 2006 the Company conducted transactions with related companies as disclosed in Note 8 to the Financial Statements for the year ended 31st December 2006. Material transactions between the Company and subsidiaries and related companies in the period under review were as follows.

1. Goods & Services Purchased Buyer

Seller

Nature of main transactions

Value / Baht Policy for establishing price millions

Thai Rung Union Car Plc

Isuzu Caicharoenkij Motors Co., Ltd.

Payment for spare parts and repairs to company vehicles.

0.12

Cost plus profit margin.

Thai Rung Union Car Plc

Delta-TR Co., Ltd.

Payment for vehicle seats and various items of equipment related to vehicle assembly.

9.50

In line with arms-length market prices.

Thai Rung Union Car Plc

Thai Auto Press Parts Co., Ltd.

Payment for spare parts and repairs to company vehicles.

0.30

Cost plus profit margin.

Thai Ultimate Car Co., Ltd. Isuzu Caicharoenkij Motors Co., Ltd.

Cost of dealer sales promotions.

3.51

In line with sales promotion policy as applied to unrelated parties.

Thai Ultimate Car Co., Ltd. Delta-TR Co., Ltd.

Payment for vehicle seats and various items of equipment related to vehicle assembly.

3.57

In line with arms-length market prices.

0.89

Based on average cost of funds of all companies in the group.

Thai Ultimate Car Co., Ltd. Thai V.P. Corporation Ltd. Consultancy fees for administration, management audit and personnel. Thai Ultimate Car Co., Ltd. Thai Auto Press Parts Co., Ltd.

Cost of spare parts and sundry equipment for motor vehicles.

13.01

In line with arms-length market prices.

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

Isuzu Caicharoenkij Motors Co., Ltd.

Cost of spare parts and repairs for customers’ vehicles.

0.12

Cost plus profit margin.

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

Delta-TR Co., Ltd.

Cost of seats and related equipment for repairs to customers’ vehicles.

0.22

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

Cost of spare parts and other equipment for repairs to customers’ vehicles.

0.29

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

Thai Auto Press Parts Co., Ltd.

Cost of spare parts and other equipment for repairs to customers’ vehicles.

1.43

Total

32.96

In line with arms-length market prices.

2. Rental of land and amortization of land lease rights Buyer

Seller

Nature of main transactions

Value / Baht millions

Thai Rung Union Car Plc

V.P. Auto Enterprise Co., Ltd.

Rental of land for TRU showroom.

Thai Rung Union Car Plc

Phothiphoom Co., Ltd.

Rental of land at site of TRU’s headquarters.

Thai Ultimate Car Co., Ltd.

Phothiphoom Co., Ltd.

Rental of land at site of TUC’s Nong Khaem Branch.

7.87

Thai Ultimate Car Co., Ltd.

Chaicharoenkij Motors Co., Ltd.

Rental of land at site of TUC’s office and service center.

0.96

Thai Ultimate Car Co., Ltd.

Sinthoranee Construction & Land Co., Ltd.

Rental of land at site of TUC’s office and service center.

2.40

Thai V.P. Auto Service Co., Ltd. Sinthoranee Construction & Land Co., Ltd.

Policy for establishing price

0.36 24.00 As agreed in contracts, in line with market rates applied to transactions with unrelated parties.

Rental of land and leasehold rights for 4.53 building housing Buyer’s offices and service center. Total

40.12

3. Service Income Buyer

Seller

Isuzu Chaicharoenkij Motors Thai Rung Union Car Plc Co., Ltd. Isuzu V. Motor Co., Ltd. Thai Rung Union Car Plc Delta-TR Co., Ltd. Thai Rung Tools & Dies Co., Ltd. Isuzu Chaicharoenkij Motors Thai Ultimate Car Co., Ltd. Co., Ltd. Thai V.P. Corporation Ltd. Thai Ultimate Car Co., Ltd. V.P. Auto Enterprise Co., Ltd. Thai Ultimate Car Co., Ltd. First Parts Co., Ltd. Thai Ultimate Car Co., Ltd. Isuzu Chaicharoenkij Motors Thai V.P. Auto Service Co., Ltd. Co., Ltd. Isuzu V. Motor Co., Ltd. Thai V.P. Auto Service Co., Ltd. Thai V.P. Corporation Ltd. Thai V.P. Auto Service Co., Ltd. V.P. Auto Enterprise Co., Ltd. Thai V.P. Auto Service Co., Ltd.

Nature of main transactions Vehicle assembly

Policy for establishing price

26.26

Vehicle assembly Construction of dies and jigs

1.33 0.01

Fitting of automotive equipment and accessories Service center vehicle repair charges Service center vehicle repair charges Service center vehicle repair charges Service center vehicle repair charges

3.43

Service center vehicle repair charges

0.05

Service center vehicle repair charges

0.04

Service center vehicle repair charges

0.10

Total

Value / Baht millions

0.05 0.04 0.25 0.08

31.64

Transactions represent normal business activities and were conducted at cost plus profit margin.

4. Sale of Goods Buyer

Nature of main transactions

Seller

Isuzu Chaicharoenkij Motors Thai Rung Union Car Plc Co., Ltd. Thai Auto Conversion Co., Ltd. Thai Rung Union Car Plc Delta-TR Co., Ltd. Thai Rung Union Car Plc Thai Auto Conversion Co., Ltd. Thai Auto Press Parts Co., Ltd. Isuzu Chaicharoenkij Motors Thai Ultimate Car Co., Ltd. Co., Ltd. Isuzu V. Motor Co., Ltd. Thai Ultimate Car Co., Ltd. Thai V.P. Corporation Ltd. Thai Ultimate Car Co., Ltd. First Parts Co., Ltd. Thai Ultimate Car Co., Ltd. Isuzu Chaicharoenkij Motors Thai V.P. Auto Service Co., Ltd. Co., Ltd. Isuzu V. Motor Co., Ltd. Thai V.P. Auto Service Co., Ltd. V.P. Auto Enterprise Co., Ltd. Thai V.P. Auto Service Co., Ltd. Thai V.P. Corporation Ltd. Thai V.P. Auto Service

Co., Ltd.

Value / Baht millions Policy for establishing price

Vehicle assembly Vehicle assembly Construction of dies and jigs Fitting of automotive equipment and accessories Service center vehicle repair charges

172.50 0.43 28.46 0.88 73.08

Service center vehicle repair charges Service center vehicle repair charges Service center vehicle repair charges Service center vehicle repair charges

2.82 0.33 24.00 2.45

Service center vehicle repair charges

0.08

Service center vehicle repair charges

0.22

Service center vehicle repair charges

0.08

Total

Transactions represent normal business activities and were conducted at cost plus profit margin.

305.33

Nature of relationships 1. TRT, TVS, TAP and TAB 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. TRL is a subsidiary of TVS, which holds 90% of the shares, the Phaoenchoke group holding the remaining 10%. 4. DTR is a joint venture in which TRU holds 46% and TVP holds 5% of the shares. 5. TAC is a joint venture in which TRU holds 30% of the shares. 6. ICCK, TVP, CCK, FP, Phothiphoom, Sinthoranee Construction & Land and V.P. Auto Enterprise are all related companies in which the Phaoenchoke group holds directorships and is the majority shareholder.

Key to Abbreviations Thai Rung Union Car Plc. Thai Rung Tools & Dies Co., Ltd. Thai V.P. Auto Service Co., Ltd. Thai Auto Press Parts Co., Ltd. Thai Auto Body Assembly Co., Ltd. Thai Ultimate Car Co., Ltd. TRU Leasing Co., Ltd.

TRU TRT TVS TAP TAB TUC TRL

Delta-TR Co., Ltd. Thai Auto Conversion Co., Ltd. Isuzu Chaicharoenkij Motors Co., Ltd. Thai V.P. Corporation Ltd. Chaicharoenkij Motors Co., Ltd. First Part Co., Ltd.

DTR TAC ICCK TVP CCK FP

(2) Necessity and Propriety of Related Party Transactions Related Party Transactions as per item (1) 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 arms-length prices and on similar terms to those applied to non-related parties. The non-executive Directorsâ&#x20AC;&#x2122; opinion does not differ in any respect from the relevant resolutions of the Board of Directors.

(3) Authorization Procedure for Related Party Transactions Information on Related Party Transactions is submitted by the Manager of Accounting & Finance Department to the Managing Director, who in turn asks the Board of Directors or a meeting of shareholders to consider authorizing the proposed transaction(s), in accordance with the criteria set out by the Stock Exchange of Thailand in the article relating to disclosure of information on related party transactions and material acquisitions or disposals of assets of the company or its subsidiaries. The Board of Directors has established the following guidelines for considering related party transactions. 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 Companyâ&#x20AC;&#x2122;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. Any person who is an interested party must declare such interest to the meeting and will not take part in the decision making process for that particular agenda item, leaving it to Directors who have no such interest to give their opinions as to the need for and the appropriateness and propriety of the transaction in the overall best interests of the Company and its shareholders. Related Party Transactions are disclosed in a Note to the audited annual financial statements and in Form 56-1 for annual reporting of information, as well as in the Annual Report.

(4) 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. For details please refer to (3) above: Authorization Procedure for Related Party Transactions.

Audit Committee’s Report The Audit Committee, composed of three non-executive independent Directors, examined the appropriateness and efficiency of the Company’s internal control systems, collating information from the internal audit department, the external auditors’ report and the administration department, and made various recommendations to administrative departments with a view to improving 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 organization to its shareholders and other stakeholders. In 2006 the Audit Committee met five times and considered and dealt with the following matters. 1. Examination of the Company’s quarterly and annual financial statements to ensure that they were prepared in accordance with generally accepted accounting principles and that they disclosed adequate information in a timely manner. 2. Evaluation of the Company’s internal control and audit systems, validation of the annual audit plan and monitoring of its implementation, including making recommendations aimed at improving working efficiency. 3. Monitoring compliance with securities legislation, stock exchange regulations and other legislation relevant to the Company’s business, and of adherence to principles of good corporate governance. 4. Ensuring the accuracy and completeness of Company information disclosed in cases of related party transactions or transactions involving a possible conflict of interest. 5. Selection, review and recommendation for appointment of Company’s external auditors and establishment of their remuneration. The Audit Committee met and exchanged opinions with the Board of Directors and with the internal audit department in order to evaluate the adequacy of the Company’s internal control systems. The Audit Committee and the Board of Directors are of the opinion that the Company’s internal control systems are on the whole adequate, without any significant defects.

Pricha Attavipach Chairman of the Audit Committee

Remuneration Committee’s Report The Remuneration Committee, composed of three non-executive independent Directors, is charged with 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 2006 the Remuneration Committee met to consider the following matters. 1. Individual stipends for 2006 for Company Directors and Members of the Audit Committee, taking into account the performance of the Company and the duties, responsibilities and performance of each person. 2. Remuneration for 2006 of Company Directors and Members of the Audit Committee, to ensure that this was at an appropriate level, for submission to the Board of Directors for their onward proposal to a meeting of shareholders for their approval.

Pricha Attavipach Chairman of the Remuneration Committee

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 Company Limited 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 31st December 2006.

Pranee Phaoenchoke President

Sompong Phaoenchoke Managing Director

Management’s Comments and Analysis (Based on Consolidated Financial Statements as at 31st December 2006) In 2006 Thailand’s total vehicle production amounted to 1,188,044 units, representing an increase of 6% on the previous year. Total domestic market sales reached 682,161 units (3% down on previous year), whilst 538,966 units were exported, representing an increase of 22% on the previous year. As for the Thai Rung group of companies, total consolidated revenues in 2006 amounted to Bt.2,413.91 million, down 20.85% on the previous year, the decrease being due mainly to sales of the Company’s multi-purpose vehicles falling short of target due to ever fiercer competition, fluctuating oil prices and political uncertainty. Nevertheless in 2006 the Company succeeded in boosting revenues from sales of automotive parts and assembly work of various kinds by more than 30% on the previous year, and in 2007 the Company aims to boost income from metal and plastic parts sales and contract assembly work dies jigs, profiting from the general trend of the automotive and auto -parts industry. Details of Company’s performance and financial situation are as follows.

Results

Consolidated Revenues Total consolidated revenues for 2006 were Bt. 2,413.91m., representing a decrease of Bt.635.87m. or 20.85% compared with 2005, details as follows. Total Sales & Service Income was Bt.2,302.99m., down Bt.662.64m. or 22.34% on the prior year, breakdown being as follows: - Income from vehicle modification and assembly including equipment and accessories amounted to Bt.169.43m., or 7.36% of total Sales & Service Income, representing a decrease of Bt.512.28m. or 75.15% on the prior year, due to ever fiercer competition in the relevant sector. - Income from vehicle sales (which includes an element of assembly charges and cost of equipment and accessories) totaled Bt.559.83m., 24.31% of total Sales & Service Income and Bt.280.86m. or 33.41% down on the prior year, due to ever fiercer competition in the relevant sector. - Income from sales and sub-assembly of parts totaled Bt.1,191.11m. or 51.72% of total Sales & Service Income, an increase of Bt.247.96m. or 26.29% on the prior year. - Domestic parts sales grew by Bt.252.97m. or 26.98%. - Exports of parts fell by Bt.5.01m. or 88.36%. - Income from sale of dies and jigs totaled Bt.115.25m. or 5% of total Sales & Service Income, Bt.27.22m. or 19.11% down on the prior year. - Other Sales & Service Income amounted to Bt.267.37m., representing 11.61% of total Sales & Service Income, down Bt.90.24m. or 25.23% on the prior year, due to: - Income from service centers fell by Bt.28.63m. or 13.57% due to lower spare parts sales at a group company. - Income from other services fell by Bt.61.61m. or 42.03% due to lower volumes of pickup cargo boxes for contract painting.

Other income, at Bt.100 m., was Bt.15.85m. up on the prior year, main items being: - Interest and dividend income from investments in mutual funds was up by Bt.8.52m. due to investments in promissory notes and bonds. - Income from export tax refunds rose by Bt.0.18m. - Income from sale of scrap increased by Bt.3.96m. - ‘Other’, net, rose by Bt.3.19m. due to profits on disposal of assets and sale of investment units. Share of profit from investments accounted for under equity method was Bt.10.91m., up by Bt.13.44m. or 531.23% on the prior year, thanks to an increase of Bt.3.39m. in share of profits of Delta-TR Co., Ltd. and an increased of Bt.7.52m. in share of profits of Thai Auto Conversion Co., Ltd.

Cost of Sales, Expenses

Total consolidated cost of sales and expenses for the year, including interest paid and corporate income tax, amounted to Bt.2,430.96m., representing a decrease of Bt.489.55m. or 16.76% on the prior year. Details are as follows: Cost of sales and service was Bt.1,992.41m., representing 86.51% of Sales & Service Income, this ratio being 6.21% higher than in the previous year, reflecting the impact on unit costs of the big drop in sales. Selling and administrative expenses, at Bt.431.49m. were Bt.73.4m. or 14.54% less than in the previous year. Significant items are as follows: - Advertising & sales promotion expenses down Bt. 51.46 m. - Inventory obsolescence provision down Bt. 2.85 m. - Vehicle repair and maintenance down Bt. 6.09 m. - Employee bonuses down Bt. 4.90 m. - Directors’ fees and meeting allowances down Bt. 5.12 m. - Other selling & administrative expenses, net down Bt. 2.98 m. Interest expense of Bt.4.5m. was Bt.4.51m. or 50.06% down on prior year, reflecting repayment of loans from financial institutions by the Company and its subsidiaries. Corporate income tax, at Bt.2.56m., was down by Bt.20.24m. or 88.77% on the previous year.

Net Profit (Loss)

The Company recorded a net loss for the year of Bt.26.16m., giving an EPS of (Bt.0.05) compared with Bt.0.24 for the previous year.

Financial Situation Assets

Total consolidated assets as at 31st December 2006 amounted to Bt.2,803.88m., representing a decrease of Bt.685m. or 19.63% compared with 2005. Major changes were as follows: - Cash and cash equivalents rose by Bt.150.76m. or 40.71%, Bt.528.19m. being generated by operating activities, a further Bt.110.53m. coming from investment activities, and Bt.487.96m. being used in financing activities. - Current investments reduced by Bt.214.23m. or 47.63% due to expiry of mutual fund units held to maturity. - Net trade debtors decreased by Bt.39.97m. or 12.06% in line with lower sales volumes. - Related party trade debtors and short-term loans decreased by Bt.142.27m. or 60.72% in line with payments for goods received. - Net inventories fell by Bt.394.97m. or 50.9%. - Input tax refundable decreased by Bt.7m. or 100%. - Input tax suspense was Bt.11.34m. or 72.03% lower, due to payment by a group company of service charges in the first quarter of 2006. - Prepaid expenses fell by Bt.2.5m. or 39.39%. - Other current assets rose by Bt.0.26m. or 5.28% - Investments accounted for under equity method increased by Bt.9.95m. or 18.85% due to an increase of Bt.3.39m. in share of profits recorded on the Company’s investment in Delta-TR Co., Ltd., an increase of Bt.7.52m. in share of profits on its investment in Thai Auto Conversion Co., Ltd., and a decrease of (Bt.0.96m.) in dividends received from Delta-TR Co., Ltd. 39

- Other long-term investments reduced by Bt.0.42m. or 100% due to the establishment of a provision for loss on investment. - Net property, plant and equipment was down by Bt.51.82m. or 4.46%, reflecting acquisitions of Bt.114.67 m. and disposals of (Bt.3.4m.) during the year, with depreciation at (Bt.155.47m.) and the establishment of a provision for asset devaluation in the amount of (Bt.7.62m.) - Net leasehold rights reduced by Bt.1.5m. or 15.2% in line with normal amortization during the year. - Income tax withheld at source rose by 17.02m. or 71.57% due to tax withheld at source being higher than the amount of corporate income tax due. - Other non-current assets decreased by Bt.1.71m. or 10.76%.

Liabilities

Total consolidated liabilities per 31st December 2006, at Bt.315.34m., were down by Bt.598.71m. or 65.5% compared with 31st December 2005, the main changes being: - Bank overdrafts and short-term borrowings from financial institutions fell by Bt.420m. or 100% due to repayments of loans from financial institutions. - Trade creditors decreased by Bt.103.67m. or 31.5%, reflecting the payment of Bt.71.23m. of trade debt and a Bt.32.44m. fall in raw material purchases, in line with lower sales volumes. - Related Party trade creditors decreased by Bt.6.27m. or 29.36%. - Other Related Party creditors increased by Bt.11.29m. or 207.17%. - Corporate income tax payable showed a decrease of Bt.1.54m. or 88.19%, reflecting much lower results compared to the previous year. - Output tax suspense fell by Bt.20.92m. or 77.41% in line with sales receipts. - Accrued expenses decreased by Bt.18.52m. or 48.07% reflecting payment of Directors’ fees, payment of interest on loans from financial institutions, and the payment of various other expenses incurred in 2005. - Other Liabilities decreased by Bt.39.09m. or 55.13% due to payment of Bt.21m. cost of assets, while unearned income fell by Bt.14m. due to the fact that income based on actual completion rates of work in progress on dies and jigs was more than the income previously recorded in advance.

Shareholders’ equity

Shareholders’ equity as at 31st December 2006 stood at Bt.2,488.54m., representing a decrease of Bt.86.29m. or 3.35% reflecting the payment of a dividend and the recording of results for the year 2006.

Cash Flow Statement Cash and cash equivalents held by the Company and its subsidiaries as at 31st December 2006 were Bt.150.76m. or 40.71% higher than at 31st December 2005, as per the following analysis. - Net cash from operating activities was Bt.528.19m., Bt.145.89m. of this being generated by actual operating activities before taking into account changes in assets and liabilities, and a further Bt.561.02m. coming from reductions in trade debtors, minus a reduction in trade creditors of 178.71m. - Net cash from investment activities was Bt.110.53m., salient items being as follows. - Bt.216.8m. from disposal of short term investments - Repayment by related company of Bt.0.5m. short term loan - Bt.0.96m. dividend received from joint venture company - Acquisitions (Bt.114.67m.) and disposals - Bt.7.08m.- of assets - Payment for leasehold rights (Bt.0.15m.) - Net cash used in financing activities Bt.487.96m. composed of payment of a dividend to shareholders in the amount of Bt. 67.96 m. and repayment of loans from financial institutions in the amount of Bt.420m.

Report of Independent Auditor To The Board of Directors and Shareholders of Thai Rung Union Car Public Company Limited

I have audited the accompanying consolidated balance sheets of Thai Rung Union Car Public Company Limited and its subsidiaries as at 31 December 2006 and 2005, and the related consolidated statements of income, changes in shareholdersâ&#x20AC;&#x2122; equity and cash flows for the years then ended, and the separate financial statements of Thai Rung Union Car Public Company Limited for the same periods. These financial statements are the responsibility of the Companyâ&#x20AC;&#x2122;s management as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Thai Rung Union Car Public Company Limited and its subsidiaries and of Thai Rung Union Car Public Company Limited as at 31 December 2006 and 2005, and the results of their operations and cash flows for the years then ended, in accordance with generally accepted accounting principles.

Ernst & Young Office Limited Bangkok: 28 February 2007

Sumalee Reewarabandith Certified Public Accountant (Thailand) No. 3970

THAI RUNG UNION CAR PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT 31 DECEMBER 2006 AND 2005 (Unit: Baht) CONSOLIDATED ASSETS Current assets Cash and cash equivalents Current investments Trade accounts receivable - others,net Trade accounts receivable - related parties Amounts due from related parties Short-term loans to related parties Inventories - net Other current assets Total current assets Non-current assets Investments accounted for under equity method Other long - term investments Property, plant and equipment - net Land and building leasehold rights - net Other non-current assets Total non-current assets TOTAL ASSETS

Note

2006

2005

2006

6 7 7,8 8 8 9 10

521,091,366 235,577,905 291,470,757 70,441,315 2,082,352 19,500,000 381,016,912 47,174,886 1,568,355,493

370,328,550 449,810,295 331,438,771 213,264,909 1,025,113 20,000,000 775,988,945 63,010,785 2,224,867,368

255,394,744 212,796,112 113,680,867 100,660,502 11,497,030 62,500,000 200,744,518 11,437,054 968,710,827

96,652,812 401,674,459 118,151,808 392,107,031 986,803 54,000,000 449,195,538 12,461,658 1,525,230,109

62,727,108 1,109,468,827 8,360,278 54,976,845 1,235,533,058 2,803,888,551

52,779,601 1,106,552,470 424,000 1,161,292,303 388,674,737 9,858,579 25,000 39,660,130 51,698,888 1,264,014,613 1,546,951,095 3,488,881,981 2,515,661,922

1,214,560,460 424,000 413,643,191 39,358,540 1,667,986,191 3,193,216,300

11 12 13 14

The accompanying notes are an integral part of the financial statements.

THE COMPANY ONLY 2005

THAI RUNG UNION CAR PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS (Continued) AS AT 31 DECEMBER 2006 AND 2005 (Unit: Baht) CONSOLIDATED Note LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term loans from financial institutions 15 Trade accounts payable - others 8 Trade accounts payable - related parties Amounts due to related parties 8 8 Short-term loans from related parties 16 Other current liabilities Total current liabilities Shareholders' equity Share capital 17 Registered 524,996,497 ordinary shares of Baht 1 each Issued and paid up 501,589,497 ordinary shares of Baht 1 each Additional paid - in capital Premium on ordinary shares Surplus on changes in value of investments Retained earnings Appropriated Statutory reserve - the Company 19 - subsidiaries Unappropriated Total equity attributable to Company's shareholders Minority interest - equity attributable to minority shareholders of subsidiaries Total shareholders' equity Total Liabilities and Shareholdersâ&#x20AC;&#x2122; equity

THE COMPANY ONLY

2006

2005

2006

2005

225,384,666 15,078,720 16,745,875 58,134,098 315,343,359

420,000,000 329,051,274 21,345,739 5,451,615 138,203,598 914,052,226

80,509,784 3,920,602 6,716,334 24,909,541 116,056,261

360,000,000 151,739,360 29,738,083 3,678,388 105,000,000 65,885,549 716,041,380

524,996,497

501,589,497

727,144,000 -

727,144,000 1,250,335

727,144,000 -

727,144,000 1,250,335

52,499,649 11,414,029 1,106,958,486 2,399,605,661

50,158,949 5,251,012 1,191,781,127 2,477,174,920

52,499,649 1,118,372,515 2,399,605,661

50,158,949 1,197,032,139 2,477,174,920

88,939,531 2,488,545,192 2,803,888,551

97,654,835 2,574,829,755 3,488,881,981

2,399,605,661 2,515,661,922

2,477,174,920 3,193,216,300

The accompanying notes are an integral part of the financial statements.

THAI RUNG UNION CAR PUBLIC COMPANY LIMITED AND SUBSIDIARIES INCOME STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005 (Unit: Baht) CONSOLIDATED Note

2006

2005

2006

2005

1,935,855,921 367,135,616 100,002,398

2,395,009,460 570,623,702 84,147,512

675,486,909 275,478,402 58,990,591

616,826,445 769,222,579 42,007,261

10,908,907 2,413,902,842

3,049,780,674

124,415,679 1,134,371,581

108,352,085 1,536,408,370

1,992,409,906 431,495,611

2,381,280,037 504,889,577

910,036,454 245,284,319

1,141,164,133 264,722,117

2,423,905,517

2,531,097 2,888,700,711

1,155,320,773

1,405,886,250

(10,002,675) (4,501,849) (2,564,511) (17,069,035) (9,091,139) (26,160,174)

161,079,963 (9,014,694) (22,802,722) 129,262,547 (9,479,562) 119,782,985

(20,949,192) (5,210,982) (26,160,174) (26,160,174)

130,522,120 (7,504,753) (3,234,382) 119,782,985 119,782,985

Earnings (loss) per share 23 Net income (loss) Weighted average number of ordinary shares (shares)

(0.05) 501,589,497

0.24 501,496,565

(0.05) 501,589,497

0.24 501,496,565

Diluted earnings (loss) per share 23 Net income (loss) Weighted average number of ordinary shares (shares)

(0.05) 501,589,497

0.24 501,496,565

(0.05) 501,589,497

0.24 501,496,565

Revenues Sales Service income 20 Other income Share of income from investments accounted for under equity method Total revenues Expenses Cost of sales and services Selling and administrative expenses Share of loss from investments accounted for under equity method Total expenses Income (loss) before interest expense and corporate income tax Interest expense Corporate income tax Income (loss) after corporate income tax Net income attributable to minority interest Net income (loss) for the year

The accompanying notes are an integral part of the financial statements.

THE COMPANY ONLY

17 26 7,420,000 727,144,000 727,144,000

501,589,497 501,589,497

719,724,000 -

Premium on ordinary shares

1,060,000 -

500,529,497 -

The accompanying notes are an integral part of the financial statements.

Balance as at 31 December 2004 Appropriated to statutory reserve Increase in share capital and premium on ordinary shares from exercised warrants Dividend paid by the Company Dividend paid by subsidiaries Increase in share capital of a subsidiary by minority interest Surplus on changes in value of investments Investment in subsidiary by minority interest Net income for the year Net income attributable to minority interest Balance as at 31 December 2005 Appropriated to statutory reserve Dividend paid by the Company Dividend paid by subsidiaries Surplus on changes in value of investments Net loss for the year Net income attributable to minority interest Balance as at 31 December 2006

Note

Issued and paid-up share capital

1,250,335 1,250,335 (1,250,335) -

Surplus on changes in value of investments

50,158,949 2,340,700 52,499,649

50,052,949 106,000

The Company

5,251,012 6,163,017 11,414,029

3,200,000 2,051,012

Subsidiaries

CONSOLIDATED Retained Earnings Appropriated - statutory reserve

THAI RUNG UNION CAR PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005

119,782,985 1,191,781,127 (8,503,717) (50,158,750) (26,160,174) 1,106,958,486

(300,928,498) -

1,375,083,652 (2,157,012)

1,200,000 6,845 6,000,000 9,479,562 97,654,835 (17,799,600) (6,843) 9,091,139 88,939,531

(18,141,200)

99,109,628 -

Minority interest -equity attributable to minority shareholders Unappropriated of subsidiaries

1,200,000 1,257,180 6,000,000 119,782,985 9,479,562 2,574,829,755 (50,158,750) (17,799,600) (1,257,178) (26,160,174) 9,091,139 2,488,545,192

8,480,000 (300,928,498) (18,141,200)

2,747,699,726 -

Total

(Unit: Baht)

17 26

The accompanying notes are an integral part of the financial statements.

Balance as at 31 December 2004 Appropriated to statutory reserve Increase in share capital and premium on ordinary shares from exercised warrants Dividend paid Surplus on changes in value of investments Net income for the year Balance as at 31 December 2005 Appropriated to statutory reserve Dividend paid Surplus on changes in value of investments Net loss for the year Balance as at 31 December 2006

Note

1,060,000 501,589,497 501,589,497

500,529,497 -

Issued and paid-up share capital

7,420,000 727,144,000 727,144,000

719,724,000 -

Premium on ordinary shares

1,250,335 1,250,335 (1,250,335) -

50,158,949 2,340,700 52,499,649

50,052,949 106,000

(300,928,498) 119,782,985 1,197,032,139 (2,340,700) (50,158,750) (26,160,174) 1,118,372,515

1,378,283,652 (106,000)

Surpluson Retainedearnings changes in value Appropriated of investments statutory reserve Unappropriated

THE COMPANY ONLY

THAI RUNG UNION CAR PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Continued) FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005

8,480,000 (300,928,498) 1,250,335 119,782,985 2,477,174,920 (50,158,750) (1,250,335) (26,160,174) 2,399,605,661

2,648,590,098 -

Total

(Unit: Baht)

THAI RUNG UNION CAR PUBLIC COMPANY LIMITED AND SUBSIDIARIES CASH FLOWS STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005 (Unit: Baht) CONSOLIDATED 2006 2005 Cash flows from operating activities Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by (paid from) operating activities: Net income attributable to minority interest Share of loss (income) from investments accounted for under equity method Allowance for doubtful accounts Allowance for diminution in value of inventories Depreciation Allowance for impairment loss of assets Written off equipment and other assets Written off other long-term investment Amortisation of land and building leasehold rights Gain on sales of equipment Loss (gain) on sales of current investments Unrealised gain on changes in value of investments Income (loss) from operating activities before changes in operating assets and liabilities Operating assets (increase) decrease Trade accounts receivable - others and related parties Amounts due from related parties Inventories Other current assets Other non-current assets Operating liabilities increase (decrease) Trade accounts payable - others and related parties Amounts due to related parties Other current liabilities Net cash from (used in) operating activities

THE COMPANY ONLY 2006 2005

(26,160,174)

119,782,985

(26,160,174)

119,782,985

9,091,139

9,479,562

(10,908,907) 564,350 9,348,420 155,471,686 8,047,031 6,295,962 1,648,301 (3,682,864) (3,828,339) -

2,531,097 (124,415,679) (108,352,085) 624,495 16,015,223 7,157,638 3,653,057 170,154,234 115,965,772 139,314,740 8,047,031 508,889 6,295,962 500,000 1,946,845 125,000 (3,866,942) (565,074) (3,102,608) 114,878 (2,266,362) 114,878 (1,906,499)

(1,717,803)

145,886,605

315,260,272

(15,191,391)

149,693,164

182,227,258 (1,057,239) 385,623,613 15,835,899 (21,612,677)

6,625,201 7,970,777 (97,866,753) 12,409,838 (29,383,801)

295,292,975 (93,245,644) (10,510,227) 4,372,297 241,293,382 (199,774,955) 1,024,604 9,915,572 (18,636,310) (29,496,723)

(109,933,627) 11,294,260 (80,069,500) 528,194,592

21,069,059 1,881,146 (102,522,088) 135,443,651

(97,047,057) 1,075,399 3,037,946 2,739,615 (40,976,008) (455,162) 358,287,914 (155,176,437)

The accompanying notes are an integral part of the financial statements.

THAI RUNG UNION CAR PUBLIC COMPANY LIMITED AND SUBSIDIARIES CASH FLOWS STATEMENTS (Continued) FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005 (Unit: Baht) CONSOLIDATED 2006 2005 Cash flows from investing activities Proceeds from sales of current investments Refund (payment) of short-term loans to related parties Net cash payment for purchase of investment in subsidiary Dividend received from subsidiaries and associated company Proceeds from sales of equipment Acquisition of building and equipment Acquisition of building leasehold right Net cash from (used in) investing activities Cash flows from financing activities Increase (decrease) in short-term loans from financial institutions Increase (decrease) in short-term loans from related parties Dividend paid by the Company Share capital received from exercised warrants Share capital of a subsidiary received from minority interest Dividend paid by subsidiaries to minority interest Net cash from (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental cash flows information: Cash paid during the year for Interest expense Corporate income tax Non-cash item Surplus on changes in value of investments

216,803,551 500,000

5,945,946 29,251,000

189,996,243 (8,500,000)

5,945,946 (54,000,000)

(18,800,000)

961,400 849,160 7,081,614 5,656,630 (114,669,991) (170,153,288) (150,000) 110,526,574 (128,450,552)

232,321,800 260,927,160 681,544 4,308,517 (98,736,819) (121,482,434) (150,000) 315,612,768 76,899,189

(420,000,000)

(360,000,000)

(50,158,750) (17,799,600) (487,958,350) 150,762,816 370,328,550 521,091,366

281,983,138

360,000,000

(105,000,000) 85,000,000 (300,928,498) (50,158,750) (300,928,498) 8,480,000 8,480,000 7,200,000 (18,141,200) (21,406,560) (515,158,750) (14,413,461) 158,741,932 384,742,011 96,652,812 370,328,550 255,394,744

9,809,590 21,126,131

3,777,860 136,679,913

10,414,390 14,918,699

1,027,423

The accompanying notes are an integral part of the financial statements.

THE COMPANY ONLY 2006 2005

152,551,502 74,274,254 22,378,558 96,652,812 2,304,085 28,140,778 918,710

THAI RUNG UNION CAR PUBLIC COMPANY LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005 1. GENERAL INFORMATION Thai Rung Union Car Public Company Limited (“The Company”) was incorporated as a limited public company under Thai laws and listed on the Stock Exchange of Thailand in 1994. The Company operates its business in Thailand and its principally engaged in the car assembly and modification, and the manufacture and distribution of parts and mold. Its registered address is located at 28/ 6 Moo 1, Petchkasem Road, Khwaeng Nongkangploo, Khet Nongkaem, Bangkok.

2. BASIS OF PREPARATION The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Profession Act B.E. 2547. The presentation of the financial statements has been made in compliance with the stipulations of the Notification of the Department of Business Development dated 14 September 2001, issued under the Accounting Act B.E. 2543. The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies.

3. BASIS OF CONSOLIDATION 3.1

The consolidated financial statements include the financial statements of Thai Rung Union Car Public Company Limited and the following subsidiary companies, which existing under Thai laws:

Nature of business

Assets as a percentage Revenues as a Percentage to the consolidated to the consolidated total Percentage total assets as at revenues for the year of shareholding 31 December ended 31 December 2006 2005 2006 2005 2006 2005 Percent Percent Percent Percent Percent Percent

Subsidiaries directly held by the Company Sales of cars, spare parts and car service centers 94 Thai Rung Tools and Dies Co., Ltd. Mold making service 94 Thai Auto Pressparts Co., Ltd. Manufacture of vehicle’s body parts 91 Thai Auto Body Assembly Co., Ltd. Manufacture of parts and assembly of special car (not yet operated) 91 Subsidiaries held by Thai V.P. Auto Service Co., Ltd. Thai Ultimate Car Co. Ltd. Sales of cars, spare parts 99.53 and accessories and car service centers TRU Leasing Co., Ltd. Hire purchase of cars 90 (not yet operated) ่

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

94 94

7 5

10 6

8 5

11 4

99.53

On 3 March 2006, Thai Rung General Motor Co., Ltd. registered the change of its name to Thai Rung Tools and Dies Co., Ltd. with the Ministry of Commerce. 3.2

Material balances and transactions between the Company and its subsidiary companies have been eliminated from the consolidated financial statements.

3.3

Investments in the subsidiary companies as recorded in the Company’s books of account are eliminated against the equity of the subsidiary companies.

4. ADOPTION OF NEW ACCOUNTING STANDARD In October 2006, the Federation of Accounting Professions issued Notification No. 26/2006 regarding Accounting Standard No. 44 “Consolidated Financial Statements and Accounting for Investments in Subsidiaries” (Amendment No. 1), under which investments in subsidiaries, jointly controlled entities and associates are to be presented in the separate financial statements under the cost method rather than the equity method. Entities which are not ready to adopt the cost method in 2006 can continue to use the equity method through the end of 2006 and adopt the cost method as from 1 January 2007. In this regard, the Company has elected to adopt the change in 2007. Adoption of the change in 2007 will necessitate the restatement of the Company’s 2006 separate financial statements to be presented for comparative purposes along with the financial statements for 2007. The restatement will have the effect of increasing net income in the Company’s separate financial statements for 2006 by approximately Baht 108 million (Baht 0.22 per share) and decreasing net worth in the Company’s separate financial statements at 31 December 2006 by approximately Baht 659 million.

5. SIGNIFICANT ACCOUNTING POLICIES 5.1

Revenue recognition

a) Sales of goods Sales of goods are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are the invoiced value, excluding value added tax, of goods supplied after deducting discounts and allowances. b) Rendering of services Service revenue is recognised when services have been rendered taking into account the stage of completion. c) Interest income Interest income is recognised as interest accrues based on the effective rate method. d) Dividends Dividends are recognised when the right to receive the dividends is established. 5.2

Cash and cash equivalents Cash and cash equivalents consist of cash in hand, cash at bank, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions.

5.3

Trade accounts receivable and allowance for doubtful accounts Trade accounts receivable are stated at the net realisable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection experiences and analysis of debtor aging.

5.4

Inventories and allowance for diminution in inventory value a) 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. b) 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. c) Spare parts of car service centers are valued at the lower of cost (moving average method) and net realisable value. d) 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.

5.5

Investments a) Investments in subsidiary and associated companies are accounted for under the equity method. b) Investments in unit trusts of funds equivalent to marketable securities are held as available-for-sale securities, and stated at fair value. The fair value of unit trusts is determined from their net asset value. The weighted average method is used for computation of the cost of investments. Changes in the carrying amounts of securities are recorded as a separate items in shareholders’ equity until securities are sold, the change are then included in determining income. c) Investments in debt securities, both due within one year and expected to be held to maturity, are recorded at amortised cost. The premium/discount on debt securities is amortised by the effective rate method with the amortised amount presented as an adjustment to the interest income. d) Investments in non-marketable equity securities, which the Company classifies as other investments, are stated at cost net of allowance for loss on diminution in value (if any). Property, plant and equipment/Depreciation

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

Double declining method Double declining method

○

20 years 20 years 10, 15 years 5 years 5 years 5 years

○

○ ○ ○ ○ ○ ○ ○ ○ ○

Straight-line method Straight-line method Straight-line method Double declining method

○ ○ ○ ○ ○

Land improvement Buildings and building improvement Machinery, factory equipment and tools Machinery, factory equipment and tools acquired from since 1999 onwards Office equipment Motor vehicles

Estimated useful lives

○

Depreciation method

○

Land is stated at cost. Buildings and equipment are stated at cost less accumulated depreciation and allowance for loss on impairment of assets (if any). Depreciation of buildings and equipment is calculated by reference to their costs as follows: -

○

5.6

Depreciation is included in determining income. No depreciation is provided on land and work in progress.

5.7 Land and building leasehold rights/Amortisation 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. Amortisation is included in determining income. 5.8 Related party transactions Related parties comprise enterprises and individuals that control, or are controlled by, the Company, whether directly or indirectly, or which are under common control with the Company. They also include associated companies and individuals which directly or indirectly own a voting interest in the Company that gives them significant influence over the Company, key management personnel, directors and officers with authority in the planning and direction of the Companyâ&#x20AC;&#x2122;s operations. 5.9 Foreign currencies Foreign currency transactions are translated into Baht at the exchange rates ruling on the transaction dates. Assets and liabilities denominated in foreign currencies outstanding at the balance sheet date are translated into Baht at the exchange rates ruling on the balance sheet date. Gains and losses on exchange are included in determining income. 5.10 Impairment of assets The Company and subsidiaries assess at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, the Company and subsidiaries make an estimate of the assetâ&#x20AC;&#x2122;s recoverableamount. Where the carrying amount of the asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses are recognised in the income statement. An assetâ&#x20AC;&#x2122;s recoverable amount is the higher of fair value less costs to sell and value in use. 5.11 Employee benefits Salary, wages, bonuses and contributions to the social security fund and provident fund are recognised as expenses when incurred. 5.12 Provisions Provisions are recognised when the Company and subsidiaries have a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. 5.13 Income tax Income tax is provided for in the accounts based on the taxable profits determined in accordance with tax legislation. 5.14 Use of accounting estimates Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions in certain circumstances, affecting amounts reported in these financial statements and related notes. Actual results could differ from these estimates.

6. CURRENT INVESTMENTS

(Unit: Baht) CONSOLIDATED 31 December 31 December 2006 2005

Available-for-sale securities Unit trusts Lum-Ka Fund Three Asset Select Dividend Fund REGCO Loan Fund (1) Unrealised loss on changes in value of investments Available-for-sale securities-net Investments in debt securities to be held to maturity Bonds-Bank of Thailand Total investments in debt securities to be held to maturity Total current investments

THE COMPANY ONLY 31 December 31 December 2006 2005

199,736,367 242,938,821 8,965,779 451,640,967

171,455,671 223,192,395 8,965,779 403,613,845

(1,830,672) 449,810,295

(1,939,386) 401,674,459

235,577,905 235,577,905 235,577,905

449,810,295

212,796,112 212,796,112 212,796,112

401,674,459

As at 31 December 2005, the Company and subsidiaries hold investments in Asset Select Dividend Fund and Lum-Ka Fund Three more than 50 percent of the total units issued by that fund. However, the Company and subsidiaries intend to hold that investment units as current investments with a view to their subsequent disposals in the near future. The Company has no control over the management of that fund. Consolidation of investments in that fund is therefore not presented.

7. TRADE ACCOUNTS RECEIVABLE The outstanding balances of trade accounts receivable as at 31 December 2006 and 2005 are aged, based on due date, as follows:

Age of receivables Trade accounts receivable - others Not yet due Past due Up to 3 months 3 - 6 months 6 - 12 months Over 12 months Total Less: Allowance for doubtful accounts Trade accounts receivable - others, net

CONSOLIDATED 31 December 31 December 2006 2005

(Unit: Baht) THE COMPANY ONLY 31 December 31 December 2006 2005

236,687,675

227,437,449

103,170,330

95,619,547

46,210,968 7,463,405 2,030,054 292,392,102 (921,345) 291,470,757

101,442,110 1,389,231 772,188 1,022,288 332,063,266 (624,495) 331,438,771

10,487,383 23,154 113,680,867 113,680,867

22,145,443 384,047 2,771 118,151,808 118,151,808

(Unit: Baht) CONSOLIDATED 31 December 31 December 2006 2005 Trade accounts receivable - related parties Not yet due Past due Up to 3 months 3 - 6 months 6 - 12 months Over 12 months Total Less: Allowance for doubtful accounts Trade accounts receivable - related parties, net

THE COMPANY ONLY 31 December 31 December 2006 2005

51,639,985

160,062,085

45,037,614

183,072,886

8,937,678 2,685,505 5,801,807 1,643,840 70,708,815 (267,500) 70,441,315

29,180,449 1,858,341 14,702,620 7,461,414 213,264,909 213,264,909

9,026,627 20,852,986 12,262,311 13,480,964 100,660,502 100,660,502

111,161,811 30,879,345 44,283,121 22,709,868 392,107,031 392,107,031

8. RELATED PARTY TRANSACTIONS During the years, the Company and its subsidiaries had significant business transactions with related parties, which have been concluded on commercial terms and bases agreed upon in the ordinary course of businesses between the Company and those companies. Below is a summary of those transactions. (Unit: Million Baht) CONSOLIDATED

THE COMPANY ONLY

2006

2005

2006

2005

Transactions with subsidiaries (eliminated from consolidated financial statements) Purchases of goods and services Purchases of fixed assets Electricity expense

35 39 14

35 26 15

Interest expense Sales of goods Sales of fixed assets Service income Technical service income

1 30 1 9 39

1 156 50 289

Transfer Pricing policy

Cost plus margin Carrying value plus margin Cost plus gross profit margin not more than 5 percent 1.50 - 5.45 percent per annum Cost plus margin Carrying value plus margin Cost plus margin In accordance with the contract price at the following rates:1)Technical service fee fixed rate per unit 2) Management service fee fixed rate per month 3) Commission not more than 4 percent of sales revenue (2005: Commission not more than 9 per cent of sales revenue)

CONSOLIDATED

Building and factory rental income Land and building rental income Management service income Utilities, transportation income and sales of supplies Interest income Dividend income Transactions with related parties Purchases of goods and services Land rental expense and amortisation of leasehold rights Car rental expense Showroom rental expense Purchases of fixed assets Service income Sales of goods Sales of fixed assets Consulting service income Utilities, transportation income and sales of supplies Land and showroom rental income Interest income Dividend income

THE COMPANY ONLY

(Unit: Million Baht) Transfer Pricing policy

2006

2005

2006

2005

1 2 10 9

1 2 8

2 231

1 260

4.73 - 6.00 percent per annum As declared

33 40

96 41

10 24

52 24

Cost plus margin Contract price

4 1 1 32 305 5 5 6

5 1 3 84 399 5 5

2 1 27 201 5 4

3 3 75 175 5 3

Contract price Contract price Carrying value plus margin Cost plus margin Cost plus margin Carrying value plus margin Contract price Cost plus margin

6 1 1

4 1 1

1 1

Contract price 1.50 - 5.45 percent per annum As declared

Contract price Contract price Contract price Cost plus margin

The balances of the accounts as at 31 December 2006 and 2005 between the Company and those related companies are as follows: (Unit: Baht) CONSOLIDATED THE COMPANY ONLY 2006 2005 2006 2005 Trade accounts receivable - related parties Related companies Isuzu Chaicharoenkij Motor Co., Ltd. 48,819,793 184,425,194 34,753,660 115,590,783 Delta-TR Co., Ltd. 7,525,266 7,535,566 6,999,248 7,409,250 Isuzu V Motor Co., Ltd. 1,676,338 2,825,551 680,480 990,720 Thai V.P. Corporation Co., Ltd. 2,531,314 5,236,199 V.P. Auto Enterprise Co., Ltd. 70,287 94,747 Firstpart Co., Ltd. 9,978,639 12,957,083 Thai Auto Conversion Co., Ltd. 107,178 190,569 22,475 74,103 70,708,815 213,264,909 42,455,863 124,064,856 Less: Allowance for doubtful accounts (267,500) 70,441,315 213,264,909 42,455,863 124,064,856 Subsidiaries Thai Rung Tools and Dies Co., Ltd. 1,421,567 492,379 Thai V.P. Auto Service Co., Ltd. 20,209,354 84,405,995 Thai Ultimate Car Co., Ltd. 36,514,558 183,143,801 Thai Auto Pressparts Co., Ltd. 59,160 58,204,639 268,042,175 Total 70,441,315 213,264,909 100,660,502 392,107,031 Amounts due from related parties Related companies Isuzu Chaicharoenkij Motor Co., Ltd. 37,397 183,305 37,397 Bhoti Phum Co., Ltd. 126,000 126,000 V.P. Auto Enterprise Co., Ltd. 333,071 656,924 Lexus Auto City Co., Ltd. 300,000 Firstpart Co., Ltd. 882,814 127,355 Thai V.P. Corporation Co., Ltd. 390,266 51,195 Isuzu V Motor Co., Ltd. 12,804 4,334 Firstpart Auto Co., Ltd. 2,000 2,082,352 1,025,113 163,397 Subsidiaries Thai Rung Tools and Dies Co., Ltd. 357,000 357,000 Thai Auto Pressparts Co., Ltd. 9,437,400 TRU Leasing Co., Ltd. 1,498,000 Thai V.P. Auto Service Co., Ltd. 41,233 629,803 11,333,633 986,803 Total 2,082,352 1,025,113 11,497,030 986,803 Short-term loans to related parties Related company Isuzu Chaicharoenkij Motor Co., Ltd. 19,500,000 20,000,000 19,500,000 Subsidiary Thai V.P. Auto Service Co., Ltd. 43,000,000 54,000,000 Total 19,500,000 20,000,000 62,500,000 54,000,000 56

(Unit: Baht) CONSOLIDATED 2006 2005 Trade accounts payable - related parties Related companies Isuzu Chaicharoenkij Motor Co., Ltd. Delta-TR Co., Ltd. Thai V.P. Corporation Co., Ltd. V.P. Auto Enterprise Co., Ltd. Firstpart Co., Ltd. Subsidiaries Thai Rung Tools and Dies Co., Ltd. Thai V.P. Auto Service Co., Ltd. Thai Ultimate Car Co., Ltd. Thai Auto Pressparts Co., Ltd. Total Amounts due to related parties Related companies Isuzu Chaicharoenkij Motor Co., Ltd. Isuzu V Motor Co., Ltd. Delta-TR Co., Ltd. Thai V.P. Corporation Co., Ltd. Sinthoranee Land and Construction Co., Ltd. Sinthoranee Property Co., Ltd. Chaicharoenkij Motor Co., Ltd. V.P. Auto Enterprise Co., Ltd. Lexus Auto City Co., Ltd. Bhoti Phum Co., Ltd. Firstpart Co., Ltd. Subsidiaries Thai Auto Pressparts Co., Ltd. Thai Rung Tools and Dies Co., Ltd. Thai V.P. Auto Service Co., Ltd. Total Short-term loans from related parties Subsidiaries Thai V.P. Auto Service Co., Ltd. Thai Auto Pressparts Co., Ltd. Total

THE COMPANY ONLY 2006 2005

10,157,185 891,859 64,130 3,965,546 15,078,720

135,663 12,664,005 44,973 32,563 8,468,535 21,345,739

284,038 284,038

9,002,004 1,920 81,121 9,085,045

15,078,720

21,345,739

800,555 2,836,009 3,636,564 3,920,602

15,991,350 4,378,097 36,720 246,871 20,653,038 29,738,083

9,571,594 20,653 300,000 3,205,002 1,200,000 960,000 201,000 7,088 1,280,538 16,745,875

813,971 300,000 332,526 900,000 6,790 240,000 298,239 1,900,000 660,089 5,451,615

37,539 20,653 1,085,868 201,000 7,088 210,186 1,562,334

813,971 247,550 6,790 270,000 1,900,000 3,238,311

16,745,875

5,451,615

294,000 4,860,000 5,154,000 6,716,334

125,343 294,000 20,734 440,077 3,678,388

40,000,000 65,000,000

105,000,000

During 2006, movement of loans to and loans from related parties were as follows: 1 January

During the year

31 December

2006

Increase Decrease

2006

(Unit: Million Baht) Interest rate

Consolidated Short-term loan to related company Isuzu Chaicharoenkij Motor Co., Ltd.

(51)

The Company Only Short-term loan to related company Isuzu Chaicharoenkij Motor Co., Ltd.

1.50 - 5.45 percent per annum, due in 1 month

(31)

4.00 - 5.45 percent per annum, due in 1 month

137

(148)

Thai Rung Tools and Dies Co., Ltd.

(50)

Thai Auto Pressparts Co., Ltd.

(15)

Short-term loans from subsidiaries Thai V.P. Auto Service Co., Ltd.

4.73 - 5.45 percent per annum, due in 6 months 6.00 percent per annum, due in 2 months 6.00 percent per annum, due in 2 months

(79)

(50)

(65)

Short-term loans to subsidiaries Thai V.P. Auto Service Co., Ltd.

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

4.73 - 5.45 percent per annum, due in 3 months 2.75 - 3.25 percent per annum, due in 2 months 1.50 - 2.75 percent per annum, due in 3 months

Directors and managementâ&#x20AC;&#x2122;s remuneration In 2006, the Company and subsidiaries paid salaries, meeting allowances and gratuities to their directors and management totaling Baht 29 million (The Company only: Baht 14 million) (2005: Baht 52 million, The Company only: Baht 25 million). Guarantee obligations with related parties As at 31 December 2006 and 2005, the Company has outstanding guarantee obligations with subsidiaries as follows. a) The Company has obligations of Baht 80 million in respect of a guarantee of payment for goods provided to a supplier on behalf of Thai V.P. Auto Service Co., Ltd. (a subsidiary), in order to support on the subsidiaryâ&#x20AC;&#x2122;s business. However, on 31 December 2006 and 2005, the subsidiary has no outstanding debt to that supplier. b) The Company has obligations of the guarantee it provided to a local bank in respect of credit facilities of Thai Ultimate Car Co., Ltd. (a subsidiary) amounting to USD 1.5 million. c) The Company has obligations of Baht 30 million in respect of a guarantee of loans from a local bank on behalf of Thai V.P. Auto Service Co., Ltd. (a subsidiary). The Company has not charged guarantee fee to its subsidiaries.

9. INVENTORIES

(Unit: Baht) CONSOLIDATED

Finished goods Work in process Raw materials and supplies Total Less: Allowance for diminution in value of inventories Inventories - net

THE COMPANY ONLY 2006 2005

2006

2005

190,758,763 67,816,031 161,499,748 420,074,542

361,782,777 96,090,230 347,825,148 805,698,155

91,681,351 28,850,771 93,564,264 214,096,386

88,740,543 39,862,564 326,786,661 455,389,768

(39,057,630) 381,016,912

(29,709,210) 775,988,945

(13,351,868) 200,744,518

(6,194,230) 449,195,538

10. OTHER CURRENT ASSETS 2005

(Unit: Baht) THE COMPANY ONLY 2006 2005

29,345,634 6,696,362 15,745,274 6,348,974 4,874,541 63,010,785

244,290 7,325,596 3,867,168 11,437,054

CONSOLIDATED 2006 Accrued income Input tax refundable Input tax suspense Prepayment Other current assets Total

29,303,918 4,403,852 8,849,756 4,617,360 47,174,886

37,101 3,444,333 2,527,948 2,825,527 3,626,749 12,461,658

11. INVESTMENTS ACCOUNTED FOR UNDER EQUITY METHOD There represent investments in ordinary shares in the following subsidiary and associated companies. Investment as at 31 December Investment Paid upcapital proportion 2006 2005 2006 2005

Companyâ&#x20AC;&#x2122;s name

Million BahtMillion Baht

Consolidated Associated companies Delta-TR Co., Ltd. Thai Auto Conversion Co., Ltd. Total The Company Only Subsidiaries Thai V.P. Auto Service Co., Ltd. and its subsidiaries Thai Rung Tools and Dies Co., Ltd. Thai Auto Pressparts Co., Ltd. Thai Auto Body Assembly Co., Ltd.

Cost method 2006 2005

20 75

46 30

9,200,000 22,350,000 31,550,000

23,500,000

25,380,000

400 3

91 91

91 364,000,000 364,000,000 91 2,730,000 2,730,000

Equity method 2006 2005

37,010,204 25,716,904 62,727,108

34,578,191 18,201,410 52,779,601

574,153,402 579,368,831

(Unit: Baht) Dividend for the years ended 31 December 2006

2005

961,400 -

849,160 -

3,290,000 101,520,000

60,651,228 139,287,366 141,620,400 129,438,000 406,014,269 440,159,935 3,006,463 2,964,727

86,450,000 -

29,120,000 -

961,400 -

849,160 -

415,610,000 415,610,000 1,043,825,362 1,161,780,859 Associated companies Delta-TR Co., Ltd. 20 Thai Auto Conversion Co., Ltd. 75 Total

20 75

46 30

9,200,000 9,200,000 37,010,204 34,578,191 22,350,000 22,350,000 25,716,904 18,201,410 31,550,000 31,550,000 62,727,108 52,779,601 447,160,000 447,160,000 1,106,552,470 1,214,560,460

On 19 April 2005, the Extraordinary Gerneral Meeting of the shareholders of a subsidiary (Thai V.P. Auto Service Co., Ltd.) passed a special resolution to increase its registered share capital from Baht 5 million to Baht 25 million by issuing an additional 200,000 shares with a par value of Baht 100 each. The new shares were to be allocated to the existing shareholders in proportion to their holdings. The subsidiary registered the increase in its share capital with the Ministry of Commerce on 4 May 2005. In October 2005, Thai V.P. Auto Service Co., Ltd. (a subsidiary) invested Baht 54 million to acquire 90 percent of the registered capital of TRU Leasing Co., Ltd., which was established under Thai laws.

12. PROPERTY, PLANT AND EQUIPMENT

(Unit: Baht) CONSOLIDATED

Land and Buildings and land building improvement improvement Cost 31 December 2005 Acquisition Transfer in (out) Disposals 31 December 2006 Accumulated depreciation 31 December 2005 Depreciation for the year Depreciation on disposals 31 December 2006 Allowance for impairment loss 31 December 2005 Increase during the year 31 December 2006 Net book value 31 December 2005 31 December 2006

Machinery, factory equipment and tools

Office equipment

Motor vehicles

Total

353,319,002 274,502 353,593,504

588,820,285 1,934,240 78,298,980 (242,840) 668,810,665

1,467,451,197 37,381,292 43,190,803 (11,621,447) 1,536,401,845

179,355,013 10,375,259 645,000 (4,434,309) 185,940,963

95,603,559 11,118,339 66,019 (13,388,707) 93,399,210

171,812,871 53,586,359 (122,200,802) 103,198,428

2,856,361,927 114,669,991 (29,687,303) 2,941,344,615

7,345,938 1,487,113 8,833,051

292,840,668 30,301,724 (17,165) 323,125,227

1,168,808,026 98,631,182 (10,879,725) 1,256,559,483

151,386,685 17,442,682 (4,059,996) 164,769,371

74,688,307 7,608,985 (11,331,667) 70,965,625

1,695,069,624 155,471,686 (26,288,553) 1,824,252,757

(7,623,031) (7,623,031)

298,643,171 272,219,331

27,968,328 21,171,592

20,915,252 22,433,585

171,812,871 103,198,428

345,973,064 344,760,453

295,979,617 345,685,438

Depreciation for the years 2005 (Baht 137 million included in manufacturing cost, and the balance in selling and administrative expenses) 2006 (Baht 114 million included in manufacturing cost, and the balance in selling and administrative expenses)

Work in progress

1,161,292,303 1,109,468,827 170,154,234 155,471,686

(Unit: Baht) CONSOLIDATED Land and land improvement

Buildings and building improvement

Machinery, factory equipment and tools

Office equipment

Motor vehicles

Cost 31 December 2005 60,805,477 237,095,124 1,316,284,655 86,967,644 65,155,790 Acquisition 1,423,853 31,778,127 6,480,546 7,040,226 Transfer in (out) 75,999,137 7,997,825 645,000 66,019 Disposals (670,796) (119,179) (717,325) 31 December 2006 60,805,477 314,518,114 1,355,389,811 93,974,011 71,544,710 Accumulated depreciation 31 December 2005 8,531,036 143,045,248 1,130,303,268 75,831,246 49,394,163 Depreciation for the year 302,015 11,476,407 91,572,619 6,634,708 5,980,023 Depreciation on disposals (670,709) (72,728) (647,393) 31 December 2006 8,833,051 154,521,655 1,221,205,178 82,393,226 54,726,793 Allowance for impairment loss 31 December 2005 Increase during the year (7,623,031) 31 December 2006 (7,623,031) Net book value 31 December 2005 52,274,441 94,094,876 185,981,387 11,136,398 15,761,627 31 December 2006 51,972,426 159,996,459 126,561,602 11,580,785 16,817,917 Depreciation for the years 2005 (Baht 127 million included in manufacturing cost, and the balance in selling and administrative expenses) 2006 (Baht 103 million included in manufacturing cost, and the balance in selling and administrative expenses)

Work in progress

Total

54,439,462 52,014,067 (84,707,981) 21,745,548

1,820,748,152 98,736,819 (1,507,300) 1,917,977,671

1,407,104,961 115,965,772 (1,390,830) 1,521,679,903

(7,623,031) (7,623,031)

54,439,462 21,745,548

413,643,191 388,674,737 139,314,740 115,965,772

As at 31 December 2006, certain plant and equipment items have been fully depreciated but are still in use. The original cost of those assets amounted to approximately Baht 1,084 million (2005: Baht 1,053 million) (The Company only: Baht 975 million, 2005: Baht 872 million). As at 31 December 2006, a subsidiaryâ&#x20AC;&#x2122;s (Thai Ultimate Car Co., Ltd.) land and building constructed thereon at net book value of Baht 72 million (2005: Baht 75 million) have been mortgaged with a bank to secure the subsidiaryâ&#x20AC;&#x2122;s credit facilities of Baht 80 million as granted by the bank.

13. LAND AND BUILDING LEASEHOLD RIGHTS

Cost of land and building leasehold rights Less: Accumulated amortisation Net Amortisation expenses included in the income statements for the year

CONSOLIDATED 2006 2005 61,612,872 61,462,872 (53,252,594) (51,604,293) 8,360,278 9,858,579 1,648,301

1,946,845

(Unit: Baht) THE COMPANY ONLY 2006 2005 150,000 (125,000) 25,000 125,000

14. OTHER NON-CURRENT ASSETS

Withholding tax deducted at source Other non-current assets Total

(Unit: Baht) CONSOLIDATED 2006 2005 40,810,101 23,786,034 14,166,744 15,874,096 54,976,845 39,660,130

THE COMPANY ONLY 2006 2005 38,697,070 23,778,371 13,001,818 15,580,169 51,698,888 39,358,540

15. SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS Short-term loans from financial institutions as at 31 December 2005 carried interest at rates of 3.50 - 5.45 percent per annum

16. OTHER CURRENT LIABILITIES Corporate income tax payable Output tax suspense Accrued expenses Other current liabilities Total

CONSOLIDATED 2006 2005 205,830 1,743,383 6,106,843 27,028,218 20,009,818 38,530,785 31,811,607 70,901,212 58,134,098 138,203,598

(Unit: Baht) THE COMPANY ONLY 2006 2005 5,298,796 17,230,486 4,473,709 15,145,495 15,137,036 33,509,568 24,909,541 65,885,549

17. SHARE CAPITAL

(Unit: Shares)

Reconciliation of number of issued and paid-up ordinary shares Number of ordinary shares as at 1 January Increase due to exercised warrants Number of ordinary shares as at 31 December

2006 501,589,497 501,589,497

2005 500,529,497 1,060,000 501,589,497

18. WARRANTS On 16 July 2004, the Company issued 24,999,000 warrants to subscribe to the Companyâ&#x20AC;&#x2122;s ordinary shares (ESOP 2003), to be allotted to directors, advisors and/or employees of the Company and its subsidiaries at Baht 0 per unit. These 5-year warrants, expiring on 15 July 2009 have an exercise ratio of 1 warrant to 1 new ordinary share and the exercise price is Baht 8 per share. The exercise periods are as follows: - In the first year, no more than 40% of the total warrants any individual received from the Company. - In the second year, no more than an additional 30% of the total warrants any individual received from the Company. - After the second year, all remain warrants can be exercised. The ESOP 2003 warrants are not listed on the Stock Exchange of Thailand. 62

On 18 December 2003, an Extraordinary General Meeting of the Company’s shareholders approved the allocation of 24,999,000 of its new ordinary shares to be reserved for the exercise of the warrants. On 24 April 2006, the Annual General Meeting of the shareholders of the Company approved the amendment of the exercise price of the warrants to subscribe to the Company’s ordinary shares from Baht 8 per share to Baht 5 per share. The Company already implemented the procedures stipulated under Notification Gor. Jor. 36/2544 of the Office of the Securities and Exchange Commission and the Company adjusted the exercise price with effect from June 2006. Movement of the warrants are as follows: -

(Units) 2006 23,407,000 23,407,000

Balance of warrants as at 1 January Warrants exercised during the year Balance of warrants as at 31 December

2005 24,467,000 (1,060,000) 23,407,000

19. STATUTORY RESERVE Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a statutory reserve at least 5 percent of its net income after deducting accumulated deficit brought forward (if any), until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution. As at 31 December 2006, the statutory reserve reaches 10 percent of the Company’s registered capital.

20. OTHER INCOME

Scrap sales Interest and dividend income Campaign support income Utilities, transportation service and sales of supplies Consulting fee Export subsidies Unrealised gain on changes in value of investments Others Total

(Unit: Baht) CONSOLIDATED 2006 2005 28,762,334 24,798,369 21,744,321 13,225,004 10,028,348 10,293,178

THE COMPANY ONLY 2006 2005 18,677,043 10,805,574 -

6,910,884 4,980,000 183,281

10,049,322 4,980,000 -

27,654,294 5,890,000 183,281

17,671,931 4,980,000 -

27,393,230 100,002,398

1,906,499 18,895,140 84,147,512

6,585,973 58,990,591

1,717,803 6,831,953 42,007,261

21. NUMBER OF EMPLOYEES AND RELATED COSTS

Number of employees at end of year (persons) Employee costs for the year (Thousand Baht)

CONSOLIDATED 2006 2005 1,464 1,756 320,843 354,739

THE COMPANY ONLY 2006 2005 853 1,062 185,345 210,987

22. PROMOTIONAL PRIVILEGES The three subsidiaries were granted investment promotional privileges by the Board of Investment (BOI). Important tax privileges granted to the companies are summarised below. Exemption from corporate income tax for 8 years commencing from

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

15 September 2000

3 June 2002

3 June 2010

The date the promoted operations commenced generating revenues (the subsidiary had no revenue from its promoted operations)

Exemption from corporate income tax for 3 years commencing from Thai Rung Tools and Dies Co., Ltd. Manufacture and maintenance of molds and jigs 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 Thai Auto Body Assembly Co., Ltd. Manufacture of metal vehicle and truck body parts, and plastic and fiber glass vehicle parts

23. EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is calculated by dividing the net income (loss) for the year by the weighted average number of ordinary shares in issue during the year. Diluted earnings (loss) per share is calculated by dividing net income (loss) for the year by the weighted average number of ordinary shares in issue during the year plus the weighted average number of ordinary shares which would need to be issued to convert all dilutive potential ordinary shares into ordinary shares. The calculation assumes that the conversion took place either at the beginning of the year or on the date the potential ordinary shares were issued. Reconciliation between basic earnings (loss) per share and diluted earnings (loss) per share is presented below. For the years ended 31 December Weighted average Net income (loss) number of shares Earnings (loss) per share 2006 2005 2006 2005 2006 2005 Baht Baht Shares Shares Baht Baht Basic earnings (loss) per share Net income (loss) Effect of dilutive potential ordinary shares Warrants to subscribe to the Companyâ&#x20AC;&#x2122;s ordinary shares, to be allotted to directors, advisors and/or employees of the Company and its subsidiaries (ESOP 2003 - 23,407,000 warrants*) Diluted earnings (loss) per share Net income (loss) of ordinary shareholders assuming the conversion of dilutive potential ordinary shares

(26,160,174)

119,782,985

501,589,497

501,496,565

(26,160,174)

119,782,985

501,589,497

501,496,565

(0.05)

0.24

(0.05)

0.24

* No calculation of diluted earnings (loss) per share is required for the years 2006 and 2005 since the exercise price of the warrants is in excess of average fair value of the Companyâ&#x20AC;&#x2122;s ordinary shares. 64

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 the years ended 31 December 2006 and 2005 of the Company and its subsidiaries by segment. (Unit : Million Baht) Consolidated financial statements for the years ended 31 December 2006 and 2005 Car assembly and Manufacture of Sales of cars Elimination of other related equipment for production and car service inter-segment car services of car accessories centre revenues Total 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 Revenue from external customers Intersegment revenues Total revenues Segment income (loss) Unallocated income and expenses: Interest and dividend income Other income Selling and administrative expenses Share of income of associated companies Interest expense Corporate income tax Minority interest Net income (loss)

765 85 850 122

Property, plant and equipment Unallocated assets Total assets

260

1,078 571 1,649 718

215

969 34 1,003 133

548

983 39 1,022 65

631

569 27 596 58

355

905 40 945 85

369

(146) (146) (3)

(54)

(650) (650) (284)

(54)

2,303 2,303 310

2,966 2,966 584

22 78 (431)

13 71 (505)

11 (4) (3) (9) (26)

(2) (9) (23) (9) 120

1,109 1,695 2,804

1,161 2,328 3,489

Transfer prices between business segments are as set out in Note 8 to the financial statements.

25. PROVIDENT FUND The Company, 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 BankThai Plc., 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 2006, the Company contributed Baht 7 million (2005: Baht 7 million) to the funds.

26. DIVIDENDS Dividends of the Company which were declared in 2006 and 2005 consist of the following: (Unit: Baht) Total dividends

Approved by Final dividends on 2004 income Total for 2005 Final dividends on 2005 income

Annual General Meeting of the shareholders on 25 April 2005 Annual General Meeting of the shareholders on 24 April 2006

Total for 2006

Dividend per share

300,928,498 300,928,498

0.60

50,158,750 50,158,750

0.10

27. COMMITMENTS AND CONTINGENT LIABILITIES 27.1 Operating lelease ase commitments The Company and its subsidiaries have entered into several lease agreements in respect of the lease of land, office building space, factory building and machineries and equipment. Future minimum rentals payable under these leases as at 31 December 2006 are as follows: Payable within 1 year 2 to 5 years

Million Baht 67 19

27.2 Bank guarantees As at 31 December 2006, the Company and its subsidiaries had outstanding bank guarantees of Baht 55 million (2005: Baht 123 million) and Baht 24 million for the Company only (2005: Baht 82 million). They were issued by the banks on behalf of the Company and its subsidiaries in respect of certain performance bonds as required in the ordinary course of businesses of the Company and its subsidiaries.

28. FINANCIAL INSTRUMENTS 28.1 Financial risk management The Company’s and subsidiaries’ financial instruments, as defined under Thai Accounting Standard No. 48 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equivalents, current investments, trade accounts receivable and payable, short-term loans receivable, investments, and short-term loans payable. 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, other receivables and notes receivable as stated in the balance sheet. 66

Interest rate risk The Company’ and subsidiaries’ exposures to interest rate risk relate primarily to their cash at banks and short-term borrowings. However, since most of the Company’s and subsidiaries’ financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate, the interest rate risk is expected to be minimal. Significant financial assets and liabilities as at 31 December 2006 classified by type of interest rates are summarised in the table below, with those financial assets and liabilities that carry fixed interest rates further classified based on the maturity date, or the repricing date if this occurs before the maturity date.

Financial assets Cash and cash equivalent Trade accounts receivable and other receivables Current investments Short-term loans to related parties Financial liabilities Trade accounts payable and other payables

Fixed interest rates within 1 year

Non-interest bearing (Million Baht)

212 235 20 467

309 364 673

521 364 235 20 1,140

4.75 - 4.91 4.75 - 4.91 1.50 - 5.45

257 257

Total

Interest rates (Percent per annum)

Fore ign currency risk Foreign The Company’s and subsidiaries’ exposures to foreign currency risk arise mainly from trading transactions that are denominated in foreign currencies. However, the Company and subsidiaries have not entered into any forward contract. The balances of financial liabilities denominated in foreign currencies as at 31 December 2006 are summarised below. Foreign currency

Financial liabilities

Average exchange rate as at 31 December 2006 (Baht per 1 foreign currency unit)

USD AUD GBP MYR

1,711 747 28,490 340

36.2308 28.8025 71.2418 10.4992

28.2 Fair values of financial instruments Since the majority of the Company’s and subsidiaries’ financial instruments are short-term in nature or bear floating interest rates, their fair value is not expected to be materially different from the amounts presented in the balance sheets. A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument.

29. RECLASSIFICATION Certain amounts in the financial statements for the year ended 31 December 2005 have been reclassified to conform to the current year’s classifications, with no effect on previously reported net income or shareholders' equity.

30. APPROVAL OF FINANCIAL STATEMENTS These financial statements were authorised for issue by the Company’s Board of Directors on 28 February 2007.