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Annual Report 2009 Ekarat Engineering Public Company Limited


Annaul Report 2009

Ekarat Engineering Public Company Limited

Contents Financial Highlights

3

Message from the Chairman and CEO

5

Audit Committeeรปs Report

6

General Information

7

Nature of Business

8

Market Conditions and Competition

9

Related Party Transactions

11

Risk Factors

13

Structure of Shareholding and Management

18

Board of Directors

46

Management Team

47

Management Discussion and Analysis

48

The Board of Directorsรปobligation for the Financial Statements

51

Auditorรปs Report and the Companyรปs Subsidiaryรปs Financial Statements

52


Annaul Report 2009

Ekarat Engineering Public Company Limited 3

Financial Highlights Summary of Financial Information of Ekarat Engineering Public Company Limited

Items

Units†

2009

2008

Revenue from the sale of goods Revenue from services and repairing Revenue from construction Gross Profit Net Profit

(Million Baht) (Million Baht) (Million Baht) (Million Baht) (Million Baht)

1,145.42 131.58 3.21 292.04 (165.53)

1,514.36 149.07 272.41 457.34 142.85

Total Assets Total Liabilities Total ShareholdersĂť Equity Paid-up share capital

(Million Baht) (Million Baht) (Million Baht) (Million Baht)

1,612.66 493.28 1,119.38 790.17

2,031.67 667.81 1,363.86 790.17

(Baht) (Baht) (Baht)

1.00 (0.209) 1.42

1.00 0.181 1.73

(%) (%) (%) (%)

22.81 -12.93 -10.26 -14.79

23.63 7.38 7.03 10.47

Par Value Earning Per Share Book Value per Share Gross Profit Margin Net Profit Margin ROA ROE

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Annaul Report 2009

Ekarat Engineering Public Company Limited 4

Summary of Financial Information of Ekarat Engineering Public Company Limited and Subsidiary

Items

Unitsâ&#x20AC; 

2009

2008

Revenue from the sale of goods Revenue from services and repairing Revenue from construction Gross Profit Net Profit

(Million Baht) (Million Baht) (Million Baht) (Million Baht) (Million Baht)

1,304.16 137.08 3.21 218.48 (245.79)

1,920.72 150.78 272.41 398.56 (47.54)

Total Assets Total Liabilities Total ShareholdersĂť Equity Paid-up share capital

(Million Baht) (Million Baht) (Million Baht) (Million Baht)

2,272.22 1,523.01 749.21 790.17

2,759.44 1,685.49 1,073.94 790.17

(Baht) (Baht) (Baht)

1.00 (0.311) 0.95

1.00 (0.06) 1.36

(%) (%) (%) (%)

15.13 -17.02 -10.82 -32.81

17.00 -2.03 -1.80 -4.18

Par Value Earning Per Share Book Value per Share Gross Profit Margin Net Profit Margin ROA ROE

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Annaul Report 2009

Ekarat Engineering Public Company Limited 5

Message from the Chairman and CEO

The World economic crisis had begun in Quarter 4 Year 2008 through Year 2009, and political uncertainty including with the problem of Map Ta Phut industrial estate affected the decreasing of transformer demand. The revenue from the sell of the goods of the Company in Year 2009 decrease 25% compared to Year 2008. In Year 2010, the Company set the goal to increase the revenue 20% compare to Year 2009 because of Thai没s economic recovery. In term of operating cost, the company has the plans and activities to reduce the operating cost which will make the profit increase. The Company is doing business by concentrate in the importance of good corporate governance and law. The Company focuses the quality of the products by continuously improving the engineering procedure for the customer confident, impression, and acceptable. In additional, the company will establish a new related business for the continuous growth of revenue and profit. Finally, The Company would like to extend our appreciation to the Shareholders, Strategic Partners, Customers, Suppliers, Staffs, and Financial Institutions for the best support. The Board of Directors and Management of the Company hopefully to receive the best cooperation forever.

Mr. Viset Choopiban Chairman

Mr. Kietphong Noichaiboon Chief Executive Officer << Back to contents >>


Annaul Report 2009

Ekarat Engineering Public Company Limited 6

Audit Committee's Report The Audit Committee of Ekarat Engineering Public Company Limited was appointed by the resolution of the Board of Director on February 18, 2005. The members of the Audit Committee are Mr. Chalit Satidthong as the Chairman of the Committee, Mr. Pairoj Boonkongchuen, and Mr. Wara Tongprasin as the Audit Committee members, and Mrs. Suwannee Sujaritvanichpong - Internal audit Manager, as the secretary of the Audit Committee. Each of the Audit Committee members is not the executive or staff or related person with the company. Since January 1 - December 31, 2009, the Audit Committee held 11 meetings. The Audit Committee has invited the management and/or the company's auditors to attend the meeting for discuss or inform the board as the agenda required. The Audit Committee's meeting considered the subjects as stipulated duties as follows : 1. Reviewed, commented, and provided suggestion, the company's quarterly and annually financial statements before submitting to the Board of Directors for approval. 2. Consider the related transactions between the company, the subsidiaries and the person who might have the conflict of interests. The Audit Committee did not find any transactions that might indicate the conflict of interests. 3. Presented the Internal audit reports and corrective suggestions to the Board of Directors. 4. Evaluated the company's and subsidiaries' internal controls, which comprise the organization and environment, risk management, management operation control, information system and communication, and monitoring system. The Audit Committee will present to the board for consideration in the said matters 5. Recommended Office of DIA International Auditing to be the company's auditors for the year 2010 including company's auditor remuneration. 6. The Audit Committee considered the Corporate Governance and Risk Management system and agreed that the Corporate Governance and Risk Management system of the company is efficient. 7. The Audit Committee evaluated the operation of Audit Committee time by time and adjusted the Audit Committee charter to conform to related rules and regulations. On behalf of the Audit Committee,

(Mr. Chalit Satidthong) Chairman of the Audit Committee << Back to contents >>


Annaul Report 2009

Ekarat Engineering Public Company Limited 7

General Information General Information Company name Address

: :

Registration No. Website Registered Capital Paid-up Capital Telephone No. Fax. No.

: : : : : :

Ekarat Engineering Public Company Limited 9/291 Floor 28th, U.M. Tower, Ramkamhaeng Road, Suanluang, Bangkok 10250 0107537002711 www.ekarat-transformer.com Baht 790,173,640 divided into 790,173,640 Ordinary shares at Par value of 1 Baht each Baht 790,173,640 divided into 790,173,640 Ordinary shares at Par value of 1 Baht each 02-719-8777 (Automatic 30 lines) 02-719-8760

Securities Registrar Company Name Address

: :

Telephone No. Fax. No.

: :

Thailand Securities Depository Company Limited 62 The Stock Exchange of Thailand Building, Rachadapisek Road Klongtoey, Bangkok 10110, Thailand 0-2229-2800, 0-2654-5999 0-2359-1262-3

Auditor Auditors

:

Company Name Address Telephone No. Fax. No.

: : : :

Mrs. Suvimol Krittayakiem C.P.A No. 2982 or Mrs. Vilairat Rojnuckarin C.P.A No. 3104 or Miss Somjintana Pholhirunrat C.P.A. No. 5599 Office of D I A International Auditing 316/32 Sukhumvit Soi 22 Sukhumvit Rd., Klongtoey, Bangkok, Thailand 10110 0-2259-5300 0-2260-1553

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Annaul Report 2009

Ekarat Engineering Public Company Limited 8

Nature of Business Products and Services The company products and services can comprise of 2 activities. : 1) Distribution Transformer - The Company is the Distribution Transformer manufacturer and distributor. The Company can produce either Oil Type Distribution Transformer or Dry Type Distribution Transformer which have the electric power between 1 kVA. to 20,000 kVA. 2) Services - The Company has 10 sell representatives through out the country. The service provided to the customer is Distribution Transformer Maintenance and Repairing service and Electric system Maintenance service. Furthermore, the subsidiary of the Company (Ekarat Solar Co., Ltd.) is the manufacturer of Solar Module and Solar Cell which has the capacity of 12 Mw. per year and 25 Mw. per year, respectively. The Solar Cell we produce can be use as the raw material for Solar Module assembly and for sell as the merchandise both local market and foreign market.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 9

Market Conditions and Competition Distribution Transformer Ekarat Engineering Public Company Limited is concentrated in manufacture the high quality Distribution Transformer and Transformer parts. The factors that support quality of Ekaratรปs transformer are Design with computer programs, used of high quality raw materials. The Company use the Copper strips instead of Copper wires which made Ekaratรปs transformer can endure the electric shock. Ekaratรปs staffs are experience and skillful and with the modern technology of machinery, the Company can also produce Hermetically Sealed Oil Type Distribution Transformer and Dry Type Cast Resin, which received the technology from Starkstrom-Geratebau GmbH, Germany. The company was the leader in Thailand to use the Water-Based Paints technology from Germany in the production of Transformer Tank. The said technology is friendly to the environment because there is no toxic chemical in the paints. The customer of Distribution Transformer can be divided into 3 categories, Public sector (Metropolitan Electricity Authority and Provincial Electricity Authority), Private sector (Contractors, Others company) and Foreign sector. In 2009, the company has the proportion of Public to Private to Foreign sector equal to 52 : 39 : 9 percentage respectively. The demand of Distribution Transformer is depend on the increasing of demand on electrical power which is conforming to the GDP. The electric power peak demand in year 2007, 2008, and 2009 is 22,513, 23,957, and 25,225 Mw., respectively or equal to the growth rate of 6.88, 6.41, and 5.29 percentages, respectively. The increasing in GDP in year 2007, 2008, and 2009 is percentage of 4.8, 5.0, and 5.2, respectively. The company is the leader in the Distribution Transformerรปs market share. The average of market share from 2005-2009 is about 20% and the companyรปs major competitors are Thai Maxwell Electric Co., Ltd., Tirathai Public Company Limited, and Charoenchai Transformer Co., Ltd. Services The service, we offer to the customer is maintenance and repairing the distribution transformer and with the vast network of representatives, the company can also sale the distribution transformer to replace the damage of broken transformer through the representatives. The growth of Service has a direct variation to the sale of distribution transformer and it can also grow with the service in electric system for a huge manufacturer plant. The competition in Services is not desperate; the strength of the company has the number of representatives in the industry. The company has 10 representatives throughout the country. The competitors of Services are Thai Maxwell Co., Ltd., R. Support Co., Ltd., A.B.B. Co., Ltd., Charoenchai Transformer Co., Ltd., and Tirathai Public Co., Ltd.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 10

Solar Energy Business Ekarat Solar Co.,Ltd. (The subsidiary) is a manufacturer and distributor of Solar Module (Crystalline Silicon). The capacity of the module we can produce is from 30 Watts to 200 Watts depend on customer demand. Ekarat Solar没s Solar Module has the efficiency about 12%-15% for changing the solar energy to electric energy. The module can be use for 20-25 years and we test the module before deliver to the customers. The price of the module has direct variation to the price of raw materials likes Solar cell because the solar cell is the main raw material and the cell has the highest price. Ekarat Solar Co., Ltd. has the customer in both local and overseas that operated the business by distributing the solar module or solar module installation including with supply the module to Ekarat Engineering Public Co., Ltd. to install the solar energy system to the customer. The subsidiary started the commercial run for Solar Cell production since 2008. The Solar Cell that the subsidiary produce will use as raw material for assemble Solar module which is the main product of the subsidiary. 95% of Solar Cell that the subsidiary produced will use in the production of Solar module and the remaining will sell to the customer. The efficiency of the Solar Cell produced by the subsidiary in term of converting of Solar energy to electric energy per 1 sq. m. is 17.5% which is in the top rank in the world. The trend of the demand in solar cell for local market is increasing due to the production capacity of the local suppliers likes Solartron Public Co., Ltd., Bangkok Solar Co., Ltd. etc. The local suppliers have the capacity to produce about 74 Mw. per year, which greater than the local demand that very unstable. The marker of Ekarat Solar Co., Ltd. is mostly the overseas market. The world market average growth between years 1997 to 2008 is about 40% From 2003, the affect from the increasing of oil price and environmental concern including with the government policies that support the electric generated from Solar energy likes Electric generated from Solar energy Project. For the competition in the solar energy business, despite to the high jump in the growth of the industry, the company has the opportunity in the market and new companies also have chance in this market. These will made this market a high competition, but Ekarat Engineering has several advantages above the competitors. For example, the subsidiary is supplied by itself which made the cost controllable.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 11

Related Parties Transactions TRANSACTIONS WITH RELATED PARTIES A portion of the Company's assets, liabilities, revenues, and expenses of the Company was derived from its related parties. These companies are related to the Company through the co-shareholders and/or co-directors. The financial statements are reflected the effects of these transactions on the basis determined by the normal course of business with related parties at the same rate applicable to other parties. Type of business

Relationship

Ekarat Solar Co., Ltd. Manufacture and distributor of solar cell

Subsidiary/directorship

Ploenchit Capital Co., Ltd.

Directorship

The Company has determined the pricing policy as follow :

Type of transaction

Pricing policy

Trading price

Base on market price

Rental and service income

At agreed rate indicated in agreement

Interest income

At agreed rate on the basis of market interest rate (MLR of SCIB)

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Annaul Report 2009

Ekarat Engineering Public Company Limited 12

As at December 31, 2009 and 2008, significant transactions with related parties are as follows : (Unit : Baht) 2008 Ekarat Solar Co., Ltd. Trade accounts receivable Other receivables Loans Accrued interest income Trade accounts payable

0.00 6,373,917.55 143,879,445.37 4,473,192.25 200,753.30

Separate financial statements Increase Decrease

2009

55,816,015.00 (15,408.00) 55,800,607.00 3,495,102.41 (5,366,277.55) 4,502,742.41 55,800,000.00 0.00 199,679,445.37 11,057,280.43 (9,430,794.93) 6,099,677.75 80,857,118.02 (73,158,047.32) 7,899,824.00

Significant revenues and expenses in the statements of income for the year ended December 31, 2009 andâ&#x20AC; 2008 are as follows : (Unit : Baht) Separate financial statements 2009 2008 Ekarat Solar Co., Ltd. Sales of goods and services 52,404,370.00 5,818,300.00 Purchases of assets 74,328,400.00 0.00 Other income 1,884,230.09 1,982,766.41 Rental 1,200,000.00 1,200,000.00 Interest income 11,057,280.43 13,171,279.72 Other expenses 1,239,000.00 303,000.00 Ploenchit Capital Company Limited Advisory Fee 500,000.00 0.00

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Annaul Report 2009

Ekarat Engineering Public Company Limited 13

Risk factors The company is aware of the important of risk management of the organization by forming the Risk Management Committee to evaluate the potential risk and assign the strategies to conform to the objectives and goals of the company. However, even the company has the Risk Committee to prevent the risk, but in 2009 the company and its subsidiary still have the risk factors as shown below : 1. Distribution Transformer Business Risk 1.1 Risk related to relying on specific Distribution Transformer没s customer Most of the company没s revenue came from the sale of Distribution Transformer. In year 2007, 2008, and 2009, the company had the sale revenue from sales of Distribution Transformer to the Metropolitan Electric Authority and the Provincial Electric Authority in the amount of Baht 300.01 million, Baht 439.16 million, and 422.29 million or 20.27%, 26.40%, and 33.06%, respectively, of the Transformer revenue and Services revenue of the company. If the company lost the orders from these two state enterprises, the company revenues will drop critically. However, the company has a very small chance to lose these two state enterprises because the company always improves the quality of the Distribution Transformer, the experience, and the company has become the supplier to these 2 state enterprises since 1986. These made the company have the advantage over the competitors. 1.2 Risk related to the unstable of Distribution Transformer没s raw materials price In 2009, the company has the major revenue from the sale of Distribution Transformer. In the production of Distribution Transformer used the local raw material and import material likes Silicon steel, Copper wire, Copper plate, etc. The cost of raw material is 80% of cost of production of Distribution Transformer. Therefore, the company may affect from the unstable of the material price in the global market. However, from the experience of the company in manufacture the Distribution Transformer more than 25 years make the company understand the cycle of material price and the company can plan and stock the material for the production for next 3 months. The unstable of the materials price do not only effect to the company but also affect every business in this sector.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 14

1.3 Risk related to the quality of the Distribution Transformer没s raw material Distribution Transformer is a very important part in the electricity system. If the transformer malfunctions the effect will cause the damage of the industry and resident. Therefore, we need to select the raw material likes Silicon steel, Copper wire, Copper plate, Insulator paper, transformer oil, and transformer tank, in the production of high quality distribution transformer. To avoid the risk from low quality of raw material, the company has the procedure follow ISO 9001 standard which comprise with Design, assign the characteristic of raw materials, monitoring and testing. The company also carefully selects the supplier to make the company confident that the raw material meets the standard qualification. 1.4 Risk related to relying on skilled staffs to produce the Distribution Transformer In 2009, 89.69% of the revenue from sale of Distribution Transformer and Services came from the sale of Distribution Transformer which is rely on the experience staffs to produce and develop the quality of Distribution Transformer to be accepted. Therefore, relying on the skilled staffs in specific field of work is important to producing Distribution Transformer and operation of the company. Anyway, with the good operation system awarded ISO 9001, ISO standard has the operating manual, training, and operation process. In case of the company recruit a new staff, the standard will help the new comer to understand the process of work which will make a new staff can operate soon. In additional, the company has the training program to develop the staff continuously. The company also awarded the benefit or has the policy to stimulate the staffs. For example, Provident Fund, Bonuses, Loyalty awards, this will reduce the turn over rate of the staffs. 2. Solar Energy Business Risk 2.1 Risk related to raw materials insufficient and raw material price unstable In the operation of Ekarat Solar Co., Ltd. (the subsidiary), 80% of the cost structure is raw material cost and about 60-70% of cost of production is from the cost of Silicon wafer which need to import from overseas. In the past, Silicon wafer production industry produce Silicon wafer to serve to semiconductor industry which needs very pure silicon and the rest will serve to Solar Cell industry. However, in present, the number of Silicon producer is increasing especially in Asia, Russia, and U.S.A. territory. The increasing in number of Silicon producer will raise the quantity of Silicon wafer and beat the demand begin in 2010. Therefore, the shortage of Silicon which the main material of Silicon wafer will be solved and the subsidiary has a good relationship with the producers of Silicon wafer in many countries. The subsidiary use the short-term, medium term, and long-term procurement to prevent the instable of Silicon wafer price and the secure the quantity of the Silicon wafer. << Back to contents >>


Annaul Report 2009

Ekarat Engineering Public Company Limited 15

2.2 Risk related to low quality of raw material and defect from production From the said above, 60-70% of main material is Silicon wafer. Therefore, if the Silicon wafer is in unacceptable condition, the result will be affect to production and quality of the product especially with the high quantity order. For the confident of the quality of the Silicon wafer, the subsidiary will place the order direct to the dependable suppliers and test the efficiency of Silicon wafer until the subsidiary confident that the suppliers are trust worthy and make a long-term contract. For each order, the company has the testing agent and randomly checks the quality of the Silicon wafer to conform to the procedure. For the production of Solar Cell of the company, we use the modern technology and computerize production in every process, if the machine produce the Solar wafer which is not acceptable, the affect will cause the damage to the customer. The company has system control by the professional in every single machine and the staffs have to be train often. If there are any potential problems, the report will be made to prevent by the cooperation between the companyรปs staff and the machine producer to give the access to monitor the process via the internet for the details. This will make the subsidiary confident with the process of production that under the controllable situation. 2.3 Risk related to relying on only the customer in German As to the Germanรปs government has the supporting policies in use of Solar energy, install the Solar energy system on the roof of the buildings and properties, code the law to buy back the electric from the electric generator from the Solar energy system. These make the market in Solar energy user highly expand. Ekarat Solar Co., Ltd. received the order from Germanรปs customer due to the expansion in Germanรปs market. If the Germanรปs government cancelled all support policies in used of Solar energy, the affect will occur to the revenue of Ekarat Solar Co., Ltd. But the supported and promoted in the use of Solar energy is clearly code in the law, the cancellation of law is difficult and Ekarat Solar Co., Ltd also has the market in Switzerland, Italy, France, and Spain. However, in the present, Thailand have a new policy to promote the very small power producer (VSPP) by increase the adder and the term of promotion since August 2009. Ekarat Solar Co., Ltd. conducted new market strategy to expand the market channel to the said VSPP.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 16

3. Financial Risk 3.1 Interest rate Risk The company has the risk due to the uncertainty of the interest rate in the market due to the company has the bank deposit and credit line in a commercial bank. The bank code the interest rate as follow : 1. Facilities limit, which the rate of MLR per year 2. L/C and/or T/R and/or short term loan or L/G, if the loan is Baht currency the rate is MOR per year; and if the loan is foreign currency the rate might be SIBOR or LIBOR from the highest rate which the bank offer or determine by the bank in each time in the day before the beginning of interest terms on each term 2 working days. Therefore, the company might have the uncertainty of the interest rate that might change from the situation of the market. The interest rate in 2008 and 2009 for MLR is 7.5% and 7.75% per annum; MOR is 6.25% and 6.75% per annum, respectively. The change in the said interest rate is very low therefore the company doesn没t use the financial derivative to protect the said risk. 3.2 Foreign exchange rate risk The company order the material to produce the Distribution Transformer from overseas likes Silicon steel, Coil Cast Resin and Ekarat Solar Co., Ltd. (subsidiary), the player in Solar Energy Business, import the main material, Silicon Wafer, include with others material. The quote price will be paid mainly in U.S. Dollar and EURO. The company and subsidiary made a Forward contract which can be execute to prevent the exchange rate risk in the amount of $3.1 million with a commercial bank and closely monitor the exchange rate. In the additional, the company determines other related factors to reduce the exchange rate risk and increase the efficiency in financial management.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 17

4. Economy and Political Risk Recently, the important factor that affects the business in Thailand is the affect from world economic crisis and Thailand political crisis. In year 2009, Maptaphut industrial estate problem which affect the environment and social health is the new risk factor for Thai economy. The said problem affects the investment confidential and economic especially in Export sector and consumption sector. The growth of Thai economy depends on the investment in large industry. The political situation in Thailand is also a factor to determine, the instable situation of the political will effect to the investment credits rating of Thailand and tourism sector. All of the said problems will result to high unemployment rate and make the decreased in purchasing power. From the crisis said above, the company has prepared the strategies by rise the proportion of the foreign market especially in Asia territory and Government project including with improving the efficiency to increase the competition ability. However, the economic crisis and political crisis might effect the operation of the company but the company has the strong fundamental and the sturdy structure of the country including with the economic; The company forecast that Thai economy situation in year 2010 will recover and expand from the recover of global economy and foresee that the company operation will improve continuously.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 18

Structure of Shareholding and Management Dividend Payment Policy The company and the subsidiary have the dividend policy to pay the dividend to the shareholders about 50% of Net profit after corporate income tax and legal reserve each year. Therefore, the company没s Board of Directors is able to acts inappropriate with this policy time by time under the condition to use the profit in the best interest for the shareholders likes pay back the loan, use for investment or other subject related to the company operation. However, the dividend payment must approve by the Annual General Meeting and approved by the Board of Directors. Shareholders List of top 10 Shareholders as of January 29, 2010/1 Shareholders没 Name

Shares

%

100,000,000

12.66

2. Mr. Manus Kamnerdngarm

79,570,032

10.07

3. Mr. Chulchit Bunyaketu

40,000,000

5.06

4. Mr. Katapol Kanokpruk

32,087,700

4.06

5. Mr. Pakorn Makarananda

25,301,780

3.20

6. Mrs. Parnit Apaiwong

25,101,400

3.18

7. Mr. Opas Rangchaikul

16,824,350

2.13

8. Mr. Nirut Raksriaksorn

14,242,700

1.80

9. Miss Napasorn Haemasukontamas

13,967,223

1.77

10. Miss Pojanalai Boonkan

12,899,000

1.63

Total

359,994,185

45.56

1. KV Assets Co., Ltd.*

/1Data

from Thailand Securities Depository Co., Ltd. for the depositor << Back to contents >>


Annaul Report 2009

Ekarat Engineering Public Company Limited 19

Remarks : * List of KV Asset Co., Ltd. shareholders Shareholders没 Name

Shares

%

1. Miss Rompissri Noichaiboon

11,950

29.88

2. Miss Chompicha Noichaiboon

9,950

24.88

3. Mr. Wiwat Sangtian

6,000

15.00

4. Mrs. Yupin Topongkasame

4,000

10.00

5. Mr. Danucha Noichaiboon

4,000

10.00

6. Mrs. Daranee Kantamara

2,000

5.00

7. Mr. Daroonwat Noichaiboon

2,000

5.00

8. Mr. Kietphong Noichaiboon

100

0.25

40,000

100.00

Total

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Annaul Report 2009

Ekarat Engineering Public Company Limited 20

Number of Company没s Stock holding by the Directors as of January 29, 2010 Name - Surname Mr. Viset Choopibarn

Position Independent Director/ Chairman of the Board of Directors

Mr. Kietphong Noichaiboon

Director/ Remuneration Committee/ Chief Executive Officer

Mr. Wiwat Sangtian

Director/ Chairman of Risk Management Committee/ Managing Director

Mr. Chalit Satidthong

Independent Director/ Chairman of Audit Committee

Mr. Pairoj Boonkongcheun

Independent Director/ Audit Committee/ Remuneration Committee

Mr. Wara Tongprasin

Mr. Prinya Nakchatree

Independent Director/ Audit Committee Independent Director/ Remuneration Committee/ Chairman of Nomination Committee

Shared

%

-

-

-

-

1,202,780

0.15

1,500,000

0.19

-

-

-

-

-

-

269,320

0.03

Mr. Pitak Chaicharoen

Director/ Chairman of Remuneration Committee

Mr. Kanoksakdi Bhinsaeng

Independent Director/ Nomination Committee

-

-

Mr. Anan Santichewasatian

Director/ Nomination Committee

-

-

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Annaul Report 2009

Annaul Report 2009

Ekarat Engineering Public Company Limited

Ekarat Engineering Public Company Limited 21

22

Management Organization Chart as of December 31, 2009

Board of Directors Remuneration Committee Auditor Committee Risk Management Committee

Executive Directors Internal Audit Managing Directors Md没s Office Safety Committee

Chief Financial Officer Quality Control Department Quality Management Department

Deputy Managing Directors Finance & Accounting

Deputy Managing Directors Sales & Marketing

Deputy Managing Directors Production

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Deputy Managing Directors General Administration

Deputy Managing Directors Service

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Annaul Report 2009

Ekarat Engineering Public Company Limited 23

1. Board of Directors There were 10 Directors in the Board of Directors at December 31, 2009 as follow : 1. Mr. Viset Choopibarn Independent Director/Chairman of the Board 2. Mr. Kietphong Noichaiboon Director/CEO 3. Dr. Wiwat Sangtian Director/Managing Director 4. Mr. Prinya Nakchatree Independent Director 5. Mr. Chalit Satidthong Independent Director/Chairman of Audit Committee 6. Mr. Pairoj Boonkongcheun Independent Director/Audit Committee 7. Mr. Wara Tongprasin Independent Director/AuditCommittee 8. Mr. Anan Santichewasarian Director 9. Mr. Pitak Chaicharoen Director 10. Mr. Kanoksakdi Bhinsaeng Independent Director The director No. 2 or 3 or 8 or 9, authorized to sign on behalf of the company where by two of them must co-sign and affix with company seal, having Miss Nuanchan Sirikul to act as secretary of the company. In 2009, Mr. Chulchit Bunyaketu and Mr. Panya Tantiyawarong resigned from the position. The effective date was on May 11, 2009 and May 18, 2009, respectively. Scope of power and duties of the Board of Directors The directors shall sincerely and faithfully perform their duties and carefully act in the best interest of the company to be in accordance with the objectives, rules and regulations of the company and the resolution of the shareholders没 meeting and the matter legally required the approval of the shareholders没 meeting. The conclusion of scope of power and duties of the Board of Directors are as follow : 1. Prescribe the Corporate Governance of the company and establish the unit to monitor the overall operation conforms to the company没s policies. 2. Consider, and assign the management policies and examine, and monitor the company performance. 3. Determine the Organization Structure. 4. Consider, and determine the company rules, codes and regulations. 5. Address the Annual General Meeting at least once a year and Board of Directors meeting at least once a quarter.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 24

6. Appoint the Risk Management Committee. 7. Determine the company annual budget which comprise with operation budget and investing budget. 8. Issue the Balance sheet and Income statement as of the end of company account period which audit by the company auditor and submit to the shareholdersû meeting for the approval. 9. Determine and approve for the fund rising, issue the debenture and present to the shareholdersù meeting. 10. Give the opinions in every agendas of shareholdersû meeting for approval. 11. Report the correct and complete in both Board of Directors meeting minutes and shareholdersû meeting minutes. 12. Approve the appointment, transfer, and dismissal of Deputy Managing Director or above positions. 13. Appoint and authorize one or many directors or the third party to perform an action for the Board of Directors under the control of the Board of Directors; or gland the power to a person to perform as the Board of Directors in the period of time including the demotion and modification of the power. 14. Consider, determine, and approve the company important transactions or the Board of Directors agree to take the action for the benefit of the company. By the power and authorities mentioned above, the power and authorities is not include the related transaction, alien of enterprise, acquisition and disposition of assets by rules and regulations of The Stock Exchange of Thailand and the company must respect the rules and regulation of The Stock Exchange of Thailand in the matter of transactions. Furthermore, the power and authorities above are not include to others transaction that conduct by the companyùs rule and regulations which need the approval of shareholdersû meeting.

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Ekarat Engineering Public Company Limited 25

Audit Committee As of December 31, 2009, the member of Audit Committee is as follow : 1. Mr. Chalit

Satidthong

Chairman of the Audit Committee

2. Mr. Pairoj

Boonkongcheun

Audit Committee

3. Mr. Wara

Tongprasin

Audit Committee

Secretary of the Audit Committee is the manager of Internal Audit Department, Mrs. Suwannee Sujaritvanitchpong. In 2009, Mr. Panya Tantiyawarong and Mr. Kanoksakdi Bhinsaeng resigned from the position. The effective date was on May 18, 2009 and June 17, 2009, respectively. Scope of power and duties of the Audit Committee 1. To review the Company没s financial statements to ensure they are accurate, complete, and reliable. 2. To review the efficiency and effectiveness of the Company没s Internal Controls and Internal Audit procedures by included the bellowing topics. 2.1 Give the consent to appointed, rotated, layoff, and determine to reward the head of Internal Audit. 2.2 Determine the independent of Internal Audit Division, in term of operation, reporting and structure. 3. To review the efficiency and effectiveness of the Company没s risk management systems. 4. To review practices to ensure compliance with rules and regulations of the Stock Exchange of Thailand, and other related authorities. 5. Determine and selected to nominate and remunerate the company auditor and considering the independent of company auditor which might give the company other services. 6. Meeting with the company auditor without the management for receive the comment from auditor at least once a year. 7. To review and submit an opinion on Internal Audit plans, practices of the Internal Audit group and coordinate with external auditors and report the performance of Audit Committee to the Board of Directors at least 4 times a year. 8. To consider disclosure of corporate information so it is reliable and adequate especially in the case of any related transactions or potential conflict of interest.

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Ekarat Engineering Public Company Limited 26

9. To prepare a report on corporate governance reviewed by the audit committee and signed by the Chairman of the Audit Committee for disclosure in the Company没s annual report. The information including with : - The accuracy, completion, and reliable of Company financial report. - The adequacy of internal control system. - To review practices to ensure compliance with rules and regulations of the Stock Exchange of Thailand, and other related authorities. - The suitability of the external auditor. - Conflict of interest transactions. - Opinions or comments received by applying follow the AC没s charter. 10. To perform other tasks assigned by the Board of Directors and Audit committee approved. The responsibility of the Audit Committee The Audit Committee has the responsible to the Board of Directors in terms of the duties received from the Board of Directors but the responsibility in the activities, which the company get involve, with other party is the Board of Directors obligation.

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Ekarat Engineering Public Company Limited 27

Remuneration Committee As of December 31, 2009, there were 4 members of the Remuneration Committee as follow : 1. Mr. Pitak

Chaicharoen

Chairman of the Remuneration Committee

2. Mr. Prinya

Nakchatree

Remuneration Committee

3. Mr. Pairoj

Boonkongcheun

Remuneration Committee

4. Mr. Kietphong

Noichaiboon

Remuneration Committee

Secretary of the Remuneration Committee is the Deputy Managing Director of Accounting and Finance, Mr. Danucha Noichaiboon In 2009, Mr. Panya Tantiyawarong and Mr. Kanoksakdi Bhinsaeng resigned from the position. The effective date was on May 18, 2009 and June 17, 2009, respectively. Scope of power and duties of the Remuneration Committee 1. Broach with the rules of Board of Directors compensation, Executive Board compensation, Others Committee, and the advisor of the company to approve by the Board of Directors. For the Managing Director, Deputy Managing Director or above positions, and Internal Audit Department Manager compensation is determine by the Chief Executive Officer and pass through the Remuneration Committee to accept and pass through the Board of Directors to approve. 2. Broach with the rules of Board of Directors annual compensation to approve by the Board of Directors before the shareholders没 meeting approval. 3. Determine the employee没s bonus to approve by the Board of Directors. 4. Determine the employee没s annual adjusted salary to approve by the Board of Directors. 5. Determine the rules and regulations of the company that concern to the benefit of the employee by the order of the Board of Directors.

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Ekarat Engineering Public Company Limited 28

Risk Management Committee As of December 31, 2009, there were 8 members in the Risk Management Committee as follow : 1. Dr. Wiwat

Sangtian

Chairman of the Risk Management Committee

2. Mr. Anan

Santichewasatian

Risk Management Committee

3. Mr. Danucha

Noichaiboon

Risk Management Committee

4. Mr. Saotong

Hong-in

Risk Management Committee

5. Mr. Ekasak

Chiemcharoen

Risk Management Committee

6. Mr. Attayut

Wuttummee

Risk Management Committee

7. Mr. Somphong

Rob-loak

Risk Management Committee

8. Mr. Surachart

Vishuthiratsopon

Risk Management Committee and Secretary

Scope of power and duties of the Risk Management Committee 1. Evaluate, analyze, and develop the framework of risk management and the method of risk evaluation in the future. 2. Assign the policies of overall risk management of the company which include any important type of risk likes business risk, competitive, production, procurement, credit risk, liquidity risk, and exchange rate risk. 3. Assign the conform strategies with the company risk management policies which can be evaluate, monitor, and control the risk 4. Assign the sufficient policies and risk management including with the efficiency of the system and follow the policies. 5. Report the result of approach to the Board of Directors to modify direct to the policies and regulations of risk management and notice to the Audit Committee for the proper audit. The Risk Management Committee has the meeting at least once in 3 months. The quorum is comprised at least half of the total number of Risk Management Committee and the meeting use the majority vote of the committee attend the meeting. Therefore, the Risk Management Committee must report to the Board of Directors every 6 months.

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Ekarat Engineering Public Company Limited 29

Nomination Committee As of December 31, 2009, there were 3 members in the Nomination Committee as follow : 1. Mr. Prinya

Nakchatree

Chairman of the Nomination Committee

2. Mr. Kanoksakdi

Bhinsaeng

Nomination Committee

3. Mr. Anan

Santichewasatian

Nomination Committee

In 2009, Mr. Panya Tantiyawarong and Mr. Pairoj Boonkongcheun resigned from the position. The effective date was on May 18, 2009 and June 17, 2009, respectively Scope of power and duties of the Nomination Committee 1. Assign the policies, qualification, and procedure for the nomination of the director and management level. 2. Determine the nomination policies for the benefit of the company. 3. Nominate and select the qualify person follow the related rules and regulations and present to the Board of Directors for the appointment of Director or management level. 4. Control and monitor the suitable size and structure of the Board of Directors and adjust the size and structure to conform to the changing environment. 5. Present to the Board of Directors for the nomination of the directors replacing the resigned directors from the articles of association. 6. Give the proposal and evaluation of the management level. 7. To perform other tasks assigned by the Board of Directors.

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Ekarat Engineering Public Company Limited 30

The Executive Board As of December 31, 2009, there were 3 members in the Executive Board as follow : 1. Mr. Kietphong

Noichaiboon

Director/Chief Executive Officer

2. Dr. Wiwat

Sangtian

Director/Managing Director

3. Mr. Anan

Santichewasatian

Director/Chief Financial Officer

Scope of power and duties of the Executive Board 1. Report and present the business policies, Goals, operation plan, business strategies, and annual budgeting of the company for the Board of Directors approval. 2. Control and monitor the company没s operation to go along with rules, regulations, business policies, business plan, and business strategies by the resolution of the Board of Directors and/or the resolution of the shareholders没 meeting 3. Determine and assign the Human Resource Management policies, IT Technology, expand the businesses, Personal Relations, and regulated the operation to meet the company没s goal. 4. Determine and approve to bid in the project or be a contractor for the agencies or the person. 5. Approve the appoint, hire, dismiss, assign fees, compensation, bonus, and workfare for the employee and Management team, except for appoint, hire, transfer, and dismiss Internal Audit Department Manager and officer which need the approval of the Audit Committee. For the appointment, hire, transfer, and dismiss of Deputy Managing Director and higher positions and the advisors, the Remuneration Committee will be determine and pass the subject to the Board of Directors to approve. The Executive Board is authorized to perform the financial transactions : 5.1 If conducted in the business plan or budget which is already approved, the Executive Board can use in the line that already approved. 5.2 If not in concern with 5.1 above, the Executive Board can approve the financial amount not over Baht 20 million and the amount mentioned is include with the financial transactions, capital expenditure and can approve for the financial obligations (Loan) in any kind of financial tools which not over Baht 20 million and the affiliate, when the transaction is finish, the Executive Board need to report the conclusion to the Board of Director.

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Ekarat Engineering Public Company Limited 31

6. The Executive Board has the power to authorize one or more than one person to perform an action for the Executive Board which the action is under the control of the Executive Board within the period of time and the Executive Board can cancel of modify the authority or power. 7. Perform the tasks received from the Board of Directors. In order that, the authorities give to the Executive Board will act under the regulations and law and rules and regulation of the company; In case of any actions which develop the conflict of interest to any member of the Executive Board or the conflict person (Notification from SEC). The executive have the authority to present the subject to the Audit Committee and the Board of Director will approve by voting, the director and the person who connect to the subject cannot vote for the approval.

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Ekarat Engineering Public Company Limited 32

Management Team As of December 31, 2009, there were 10 members of the Management Team as follow : 1. Mr. Kietphong

Noichaiboon

Chief Executive Officer

2. Dr. Wiwat

Sangtian

Managing Director

3. Mr. Anan

Santichewasatian

Chief Financial Officer

4. Mrs. Daranee

Kantamara

Deputy Managing Director of General Administration Division

5. Mr. Danucha

Noichaiboon

Deputy Managing Director of Accounting and Finance Division

6. Mr. Vithep

Vachirabhahu

Deputy Managing Director of Marketing Division Deputy Managing Director of Sales Division Act as Deputy Managing Director of Service Division

7. Mr. Saotong

Hongin

Factory Manager (Operation)

8. Mr. Ekasak

Chiamcharoen

Factory Manager (Technic)

9. Mr. Daroonwat

Noichaiboon

Service Senior Manager

Scope of power and duties of Chief Executive Officer 1. Bring forward the policies from the Board of Directors and assign the operation plan. 2. Assign the strategies to meet the goal for operation and policies 3. Assign the third party by the approval of CEO to manage and operate for the CEO in the necessary matters and not over the budget 4. Approve the important investment that code in the annual budget which approved from the Board of Directors. 5. Monitor the work of employee in accordant to the ethics, laws, morals, and cultural to the stockholders, customers, employees and related person. 6. Support and encourage the education and develop new technology to increase the production and develop the business by using the resources in full capability. 7. Act with honestly and carefully for the best of company. << Back to contents >>


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Ekarat Engineering Public Company Limited 33

Scope of power and duties of Managing Director 1. Responsible for all of the management received from the Executive Board. 2. Approve the operation plan and the policies in each division, also monitor the operation of the company to conform to the plan and policies. 3. Issue orders, rules, notices, memo for the benefit of the company and the organization tidiness. 4. Approve to appoint, hire, transfer, and dismiss of the employee whose position below the Deputy Managing Director. 5. Assign the third party, by approval of Managing Director, to manage and operate for the Managing Director in the necessary matter and not above authorized financial amount 6. Determine and bring forward the expenditure budget for the approval of the Board of Directors. 7. Approve the important investment which declared in the annual budget approved by the Board of Directors. 8. Conduct the employees to work with ethics, morals, laws, and cultural to the shareholders, customers and employees and related person. 9. Operated in the normal manner of the company, and in case of the important subject, Managing Director must present to the Board of Directors or the Executive Board for the approval. 10. Support and develop the organization and employees in term of skill and the cultural of organization. 11. Support and encourage the education and develop new technology to increase the production and develop the business by using the resources in full capability. 12. Act with honest and carefully for the best of company. In order that, the authorities give to Managing Director will act under the regulations, law and rules and regulation of the company; In case of any actions which develop the conflict of interest to Chief Executive Officer or any related person (Notification from SEC).

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Ekarat Engineering Public Company Limited 34

2. Recruitment of Directors 1. Board of Directors The Company has the policy to recruit by consideration on several factors, such as, knowledge, capability and experience related to the business, etc. and has prescribed principles to appoint and withdraw the directors as follows : 1. The Board of Directors is consisted of at least 5 persons and not less than half of total directors must domicile in the kingdom and duly qualified according to the requirement of the law. 2. The shareholders没 meeting shall appoint the directors based on majority votes according to the principles and methods as follows : 2.1 One shareholder shall have one share per one vote. 2.2 The shareholder shall vote to elect the director individually. 2.3 The person earned highest mark respectively shall be elected as director equal to the number of directors required or elected in such election. In case of equal vote, the Chairman shall cast the final vote. 3. In every annual ordinary meeting, 1/3 of directors shall be resigned from their position. In case of number of directors are not equally separated into 3 parts, the nearest number to 1/3 of the directors resigned in first or second years after company formation shall be resigned by mean of lot drawing. For subsequent year, the directors assuming his position for the longest time shall be resign; such resigned director may be re-elected to assume the position. 4. Not only the directors resign from the assign period, but also can be dismissing from the position if : 4.1 Pass away 4.2 Quit 4.3 Lack of the qualification or not pass the qualification of Public Company Law 4.4 The shareholders没 meeting vote for resignation of the directors by the meeting must have half of the voting rights. 4.5 Judge by the court. 5. If the director wishes to quit from the position, the letter of resignation must be applied to the company and the effective date will be the date that the company received the letter and the resigned director can notice to the registrar. 6. In case of vacancy by any reason other than the rotation, the Board of Directors shall elect any qualified person who is not prohibited by law to assume such position in the following meeting except in case of the remaining period is less than 2 months, such elected director shall retain the position only for such remaining period.

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Ekarat Engineering Public Company Limited 35

7. In case of the Board of Directors is resign, the directors must act for the operation of the company as necessary until the new Board of Directors is selected, except the court order if resign from 4.5 The resigned Board of Directors will conduct the shareholders没 meeting to appoint the new Board of Directors within 1 month after the resigned date and send the notification appointment to shareholders at least 14 days before the meeting. 8. In case of the directors is not enough to form a quorum; the remaining directors can act for the company in the matter of conducting the shareholders没 meeting to elect the directors in the available position. The shareholders没 meeting will be held within 1 month from the date that the number of the directors cannot form a quorum. The replacing director(s) remaining period is equal to the remaining time of resigned director(s). 2. Audit Committee The company has the criteria to select the Audit Committee and Independent Directors by determine the minimum qualification assigned by SEC. Furthermore, the selection will be made based on experience, education, and renowned person for the best image of company. The selected person must not have direct or indirect conflict of interest with the company, subsidiaries, affiliate, or major shareholders. The selected person is independence, free from the control of the Management team, major shareholders and its relative and one of the members in Audit Committee must expertise in Accounting and Finance. The term of Audit Committee is 3 years and the Chairman will be select by the member of the Committee.

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Ekarat Engineering Public Company Limited 36

3. Remuneration of the Board of Directors and the Management Team A. Remuneration of the Board of Directors and the Committees 1. Monthly Allowance 1.1 Chairman of the Board

Baht 40,000 per month

1.2 Directors

Baht 20,000 per month

1.3 Chairman of the Audit Committee

Baht 20,000 per month

1.4 Audit Committees

Baht 10,000 per month

2. Allowance for each meeting 2.1 Chairman of the Remuneration Committee

Baht 15,000 per meeting

2.2 Remuneration Committees

Baht 10,000 per meeting

2.3 Chairman of the Risk Management Committee Baht 15,000 per meeting 2.4 Risk Management Committees (Directors)

Baht 10,000 per meeting

2.5 Risk Management Committees

Baht 5,000 per meeting

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Ekarat Engineering Public Company Limited 37

Remuneration of the Management A. Remuneration of the Board of Directors and the Committees Name-Surname

Position

Mr. Viset Choopibarn

Independent Director/ Chairman of the Board of Directors Director/ Remuneration Committee/ Chief Executive Officer Director/ Chairman of Risk Management Committee/ Managing Director

Amount Appointed (in Thousand) Date 2008 2009 160 Jun. 17, 09

1981

410

380

1992

400

420

Apr. 3, 09

-

230

Dec. 29, 04

410

380

Independent Director/ Audit Committee Independent Director/ Remuneration Committee/ Chairman of Nomination Committee

Jun. 17, 09

-

140

Jun. 17, 09

-

80

Mr. Pitak Chaicharoen

Director/ Chairman of Remuneration Committee

Feb. 21, 07

220

255

Mr. Kanoksakdi Bhinsaeng

Independent Director/ Nomination Committee

Mar. 3, 08

240

290

Mr. Anan Santichewasatian

Director/ Nomination Committee

Jan. 31, 07

285

280

Mr. Chulchit Bunyaketu*

480

340

Mr. Panya Tantiyawarong*

555

285

Mr. Opas Rangchaikul

240

160

Mr. Kietphong Noichaiboon

Mr. Wiwat Sangtian Mr. Chalit Satidthong

Mr. Pairoj Boonkongcheun Mr. Wara Tongprasin

Mr. Prinya Nakchatree

*Remark

Independent Director/ Chairman of Audit Committee Independent Director/ Audit Committee/ Remuneration Committee

Mr. Chulchit Bunyaketu resigned from the position on May 11, 2009 Mr. Panya Tantiyawarong resigned from the position on May 18, 2009

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Ekarat Engineering Public Company Limited 38

B. Remuneration of the Management Team Remuneration

2008

Number of person Salaries Bonuses Provident Fund Others Benefit

2009

7 6 17,104,400 16,514,000 2,421,520 2,508,000 513,132 495,420 Car, Fuel Expense, and Mobile Expense

Number of the Meeting and number of Directors attended the Meeting in Year 2009 Name of Director Mr. Viset Choopibarn* Mr. Kietphong Noichaiboon Mr. Wiwat Sangtian Mr. Chalit Satidthong Mr. Pairoj Boonkongcheun Mr. Wara Tongprasin* Mr. Prinya Nakchatree* Mr. Pitak Chaicharoen Mr. Kanoksakdi Bhinsaeng Mr. Anan Santichewasatian Mr. Chulchit Bunyaketu* Mr. Panya Tantiyawarong* Mr. Opas Rangchaikul

No. 1

No. 2

No. 3

No. 4

No. 5

No. 6

No. 7

No. 8

No. 9

/ / / / / / / / /

/ / / / / / / / /

/ / / / / / / / /

x / / / / / / / x / -

/ / / / / / / / / / -

/ / / / / / / / x / -

/ / / / x / / / x / -

/ / / / / / / / / / -

/ / / / / / / / / / -

No. 10 / / / / / / / / / / -

Total 6/10 10/10 10/10 7/10 9/10 6/10 6/10 10/10 8/10 10/10 3/10 4/10 3/10

/ means Attended the Meeting X means Absented the Meeting Remarks

1. Mr. Chulchit Bunyaketu resigned from the position on May 11, 2009 2. Mr. Panya Tantiyawarong resigned from the position on May 18, 2009 3. Mr. Viset Choopibarn was appointed on June 17, 2009 4. Mr. Chalit Satidthong was appointed on April 3, 2009 5. Mr. Wara Tongprasin was appointed on June 17, 2009

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Ekarat Engineering Public Company Limited 39

4. Corporate Governance Ekarat Engineering Public Company Limited recognizes the importance of the operation principles. The Board of Directors have the policy to behave under the best practices for the Director which conducted from Code of Best Practices for Directors of Listed Company that governed by The Stock Exchange of Thailand. The assigned principles must able to do practically. The company applied the Good Corporate Governance to develop the policies which will increase the ability to the competition, management, and operation for the value added and efficiency of the company which will give the security and confidential to the stakeholders. 4.1 Rights of the Shareholders 1. The company gives the equal treatment for all shareholders as the right to vote in the annual general meeting of Shareholders and right to receive the dividend as the number of holding company没s stock. 2. The company must proposes the remuneration of the Directors to the Shareholders in the annual general meeting of Shareholders in every year and the Remuneration Committee will consider for the rules and reason for the remuneration of the directors and others committee. 3. The company has the policy in the subject of the remuneration for each committee and declares in the Annual Report. The shareholders are able to acknowledge the principle and the approach of the Remuneration Committee. 4. For the agenda of the director(s) appointment, the company has given the opportunity to the shareholders to consider and voting for each nominee. 5. The company gives the opportunity to the shareholders to propose the agenda and nomination of new board members by shareholders in every year. The requirement and procedure are declared on the website of the company and notify to the shareholders via the website of SET. 6. The company has the minimum requirement for the Annual General Meeting of Shareholders没 appointment letter as follow : 6.1 In the event of AGM, the company must declare the information of the nominee who will be elected by the shareholders. The information consist of Name and Surname, Education, Work Experience, Number of the company directed, and if the nominee is the ex-director the detail of the Board of Directors meeting attended will be acquire in the said letter. 6.2 In the agenda of appointing the company没s auditor, the company must declare the name of the auditor(s), the company of the auditor(s), the independent of the auditor(s), and the auditor(s) fee. 6.3 In the agenda of approving the dividend paid to the shareholders, the company must declare the dividend policy, the dividend rate, and the reasons will be acquired if the agenda is subject to refrain from paying the dividend. << Back to contents >>


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Ekarat Engineering Public Company Limited 40

6.4 The objective and reasons will be acquired in each agenda. 6.5 The Board of Directorsû opinions is declared in each agenda. 7. The company has the minimum requirement for the Annual General Meeting of Shareholdersû minute as follow : 7.1 The detail of the voting and counting procedure 7.2 The details of questions and answers during the meetings 7.3 The resolutions of the meeting and the record of voting in each agenda 8. The record of directorsû name who attended the AGM is acquired in the Annual report. 9. In the AGM, the company has the policy that the Chairman of the Board, the Chairman of the committees, Directors, and the Executives attend the meeting to answer the question from the shareholders. 10. The AGMûs agenda cannot be added if not declared in the AGMûs appointment letter. 11. The AGMûs appointment letter and other documents will be made in English for the convenience of foreign shareholders.

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4.2 Equal treatment for the Shareholders 1. In AGM, each shareholder has the voting right of one share one vote. 2. The company gives the opportunity to the shareholders to propose the agenda and nomination of new Board members via the channel conduct by the company. 3. The company has the policy to prevent the executives or the employees from using the company information trading the companyûs stock. The punishment will be made if the executives or the employees use the company information trading the companyûs stock. 4. In case of the related transaction(s) occur, the company will follow the rules of SET and declare the information, detail, and reasons to the public. 5. The company and the subsidiary will reveal and verify the related transaction(s). 6. The company provided the proxy form attached with the AGMûs appointment letter for the convenience of the shareholders who cannot attend the AGM. 7. The company will notify the shareholders of the evident, and documents which apply with the proxy form in the AGMûs appointment letter. 8. For the convenience of the shareholders, the company used the minimum requirement of the documents acquire for the proxy voting. 9. The company must send the AGMûs appointment letter to the companyûs registrar before the AGM 21 days. 10. In year 2008, the company has declared the AGMûs schedule and appointment letter on the companyûs website in advance. The investors and shareholders can access to download the documents before the AGM 21 days. 11. The company uses the Cumulative Voting for the agenda of nomination of new Board members in AGM. 12. The company has a subsidiary and the company holds 99.99% of register capital in the subsidiary. Therefore, the company is necessary for the company to give the loan to the subsidiary.

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4.3 Role of Stakeholders 1. The company has the policy of the safety, welfare, and benefit, including with the working procedure for the employee as the employee manual. 2. The company has the provident fund to sustain the employees in the long-term and raise the morale of the employees. 3. The company has promoted and developed personal and training to educated the staffs and develop the organization. 4. The company has the policy to acts with honestly, equally, and responsible to the customers. Therefore, the customers can trust and confident to do business with the company and for a long-term relationship. 5. The company realized the important of community and environment by assign the practical of working and awarded ISO 9001:2000, ISO 14001 and others certificates as prove of social responsibility. 6. The company has the policy to acts with honestly to the suppliers and applied the standard to do business with the suppliers. 7. The company has the policy to acts with honestly and equally to the shareholders by notifies the information and gives the opportunity to propose the comment. 8. The company acts with honestly to the creditors and conforms to the creditors没 term. The working procedure of the company states the procedure of payment which will be made to the creditors. 9. The company has the channel for the shareholders to propose complain and report any matters to the investor relations unit of the company. The information will be gathering and report to the secretary of the Board of Director to be proposes to the Board of Directors meeting for consideration.

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4.4 Disclosure and Transparency 1. The company disclosed the organization chart and structure of shareholders in the annual report for the shareholder to understand the structure of the company. The information must include the number of stock holding by the directors and executive management. 2. The annual report of the company consist of Financial Highlights, Message from the Chairman, Message from the CEO, Audit Committeeûs Report, General Information, Nature of Business, Market Conditions and Competition, Related Party Transactions, Risk Factors, Structure of Shareholding and Management, Board of Directors, Management Team, Management Discussion and Analysis, The Board of Directorsû obligation for the Financial Statements, and Auditorûs Report and the Companyûs and Subsidiaryûs Financial Statements. 3. The company disclosed the related party transaction of the company and subsidiary in the company annual report and form 56-1. 4. The company has the policy subject to trading and transfer of companyûs stock. The Directors who traded the companyûs stock must report the transaction to the related unit to report to SEC. 5. The company has appointed the Audit Committee to consider and select the auditor of the company in every year and the auditor selected by the Audit Committee must pass the requirement of SEC. 6. The company has the mediums to communicate with the public likes Annual Report, Company Visit by the Analyst, Press release. 7. The company has the policy to report the Financial Statement comply with the rules and regulations appointed by SET, SEC, and Ministry of Commerce. 8. The company must report the Financial Report not later than the last date of sending the report directed by SET, SEC and Ministry of Commerce. 9. The company has the channel to propose the companyûs news via the companyûs website for the investor to reach the information. 10. The company has the Investor Relations unit to provide the information and communication with the shareholders and related agency. 11. The Financial Report of the company must review or audited without qualifying clause by the companyûs auditor. The investor can be assuring of using the information to make a decision.

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4.5 The Directorsû Responsibility 1. The Board of Directors of the company conducted the Good Governance Policy by subject to transparency, accountability, fair treat to related party. 2. The Board of Directors of the company conducted the Business Ethics Policy and Ethical manual for the Directors, Executive, and employees to be a guideline. 3. The Board of Directors has appointed the quality management team to set the Vision and Mission of the company to achieve the Goal. 4. The company has the internal audit unit to monitor partial unit of the company and the internal audit has the duty to report directly to the Audit Committee of the company. 5. The Audit Committee of the company has to notify the Board of Directors in the subject of Duty report, Number of meeting of the Audit Committee, Evaluate and Review the internal audit system, Monitoring the operation, the companyûs auditor consideration, Financial Report review, and Monitor and Comment for the overall operation. 6. The Board of Directors has appointed the Risk Management Committee to set the policy for risk management and suggest the risk preventive proposal. 7. For the effective operation, the company clearly divided the role and decision power between the Director and Executive. 8. The company has set the Audit Committeeûs role and responsibility and the members of the Audit Committee are the Independent Directors. 9. The company has appointed the Remuneration Committee and clearly set the role and responsibility. 10. The Board of Directors conducted çThe Board of Directorsû obligation for the Financial Statementsé in every year. The investor can be assuring of the correction and completion of the companyûs Financial Report.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 45

5. Overseeing the internal information utilization The company has the rules and regulations to prevent the employee and management, who know the internal information related to the company performance, to trade the stock of the company since the day that received the information until the information was send to the public. Any news or information that affected to the price of stock is prohibited. The company has the policies to honest to the customers, allies, and shareholders. The employees of management, who used the internal information personally or publicly or builds the conflict of interest, will be punished. The company is notify to the Director and Management Team of the company about the duty to report amount of company stock each director or management holding including their spout and their minor child. Furthermore, the change in amount of holding stock must be report to the SEC in the next official day.

6. Human Resources The policies of Human Resource Management The company has the policies to develop the staffs for the operational potential and reasonable benefit for every employee. The company also concern about the working environment which will be safe for life and property of the employee. Job promotion, rotation, awarded, and penalty will be applied. The development of staff experience and skills by give the opportunity to the employee is the way the company used. The company applied for the Provident fund which is the benefit of the employee by deduct 3% of the salary and the company will double the amount, and the employee will get 100% of the total amount if work not less than 5 years or 75% if work not less than 3 years.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 46

Board of Directors 01

08

01.

Mr. Viset

Choopibarn

06.

Independent Director/Chairman of the Board

02.

Mr. Kietphong

Noichaiboon

Dr. Wiwat

07.

Mr. Prinya

Sangtian

08.

Mr. Chalit

05

06

07

09

10

Mr. Pairoj

Boonkongcheun

Mr. Wara

Tongprasin

Nakchatree

Mr. Anan

Santichewasarian

Director

09.

Independent Director

05.

04

Independent Director/AuditCommittee

Director/Managing Director

04.

03

Independent Director/Audit Committee

Director/CEO

03.

02

Mr. Pitak

Chaicharoen

Director

Satidthong

Independent Director/Chairman of Audit Committee

10.

Mr. Kanoksakdi

Bhinsaeng

Independent Director

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Annaul Report 2009

Ekarat Engineering Public Company Limited 47

Management Team 01

08

01.

Mr. Kietphong

Noichaiboon

Dr. Wiwat

06.

Sangtian

Mr. Anan

Santichewasatian

Chief Financial Officer

04.

Mrs. Daranee Mr. Danucha

05

06

07

Mr. Vithep

Vachirabhahu

07.

Mr. Saotong

Hongin

Factory Manager (Operation)

Kantamara

Deputy Managing Director of General Administration Division

05.

04

Deputy Managing Director of Marketing Division Deputy Managing Director of Sales Division Act as Deputy Managing Director of Service Division

Managing Director

03.

03

09

Chief Executive Officer

02.

02

Noichaiboon

Deputy Managing Director of Accounting and Finance Division

08.

Mr. Ekasak

Chiamcharoen

Factory Manager (Technic)

09.

Mr. Daroonwat

Noichaiboon

Service Senior Manager

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Annaul Report 2009

Ekarat Engineering Public Company Limited 48

Management Discussion and Analysis Financial analysis and Performance of year 2009 compared to year 2008 In year 2009, the economy of Thailand was depressed and reflects to the diminishing in the consumption of electric power. The demand in Distribution Transformer is depend on the demand in electric power. Therefore, the company没s revenue from the sales of goods decreased about 24.36%. The company had the revenue from the sales of goods in year 2008 and 2009 of Baht 1,514.36 million and Baht 1,145.42 million, respectively. The company Gross Profit Margin in year 2008 and 2009 is 23.63% and 22.81%, respectively. The Net Profit(Loss) (before tax) Margin of the company in year 2008 and 2009 is 9.98% and -11.33%, respectively. The Net Profit(Loss) in year 2008 and 2009 show the amount of Baht 142.85 million and Baht (165.53) million, respectively. Operation Analysis Revenues The company has the revenues comprised in 3 activities Distribution Transformer, Service, and Substations Construction Project. The revenue from the sales of goods in year 2008 and 2009 is Baht 1,514.36 million and Baht 1,145.42 million, respectively or decrease 24.36%. The said revenue in year 2009 decreased from the depressed in economy which reflex to the company没s revenue. The revenue from Service of the company in year 2008 and 2009 is Baht 149.07 million and Baht 131.58 million, respectively or decrease 11.73% The revenue from Substations Construction Project in year 2009 is Baht 3.21 million. Cost of sales The company has the cost of the sale of goods in year 2008 and 2009 of Baht 1,120.33 million and Baht 902.39 million, respectively. The proportion of Cost of the sale of goods to the revenue from the sale of goods in year 2008 and 2009 is 73.98% and 78.78%, respectively. The proportion of Cost of the sale of goods to the revenue from the sale of goods in year 2009 is higher if compare to year 2008. The Cost of the sale of Services in year 2008 and 2009 is Baht 98.24 million and Baht 80.47 million, respectively. The proportion of Cost of the sale of Services to the revenue from the sale of Services in 2008 is 65.90 higher than year 2009 which is 61.16. The company has the proportion of Cost of Substations Construction Project to the revenue from Substations Construction Project in 2009 about 165.42% due to the retention of the said project. << Back to contents >>


Annaul Report 2009

Ekarat Engineering Public Company Limited 49

Selling and Administration Expenses The company has the Selling and Administration Expenses in year 2008 and 2009 of Baht 260.17 million and Baht 226.64 million, respectively. The proportion of the Selling and Administration Expenses to Total revenues in year 2008 and 2009 is 13.44% and 17.70%, respectively. Gross Profit The company has the gross profit margin from the sale of goods in year 2008 and 2009 of 26.02% and 21.22%, respectively. The gross profit margin from Services in year 2008 and 2009 is 34.10% and 38.84%, respectively. Net Profit The company has the net profit(loss) before the corporate income tax in year 2008 and 2009 of Baht 193.12 million and Baht (145.11) million, respectively or decreases 175.14% due to loss on impairment of investment in the amount of Baht 211.04 million. The company has the corporate income tax paid in year 2008 and 2009 of Baht 50.27 million and Baht 20.42 million. The net profit(loss) in year 2008 and 2009 is Baht 142.85 million and Baht (165.53) million decreased Baht 308.38 million or 215.88% compared to year 2008. Financial Analysis Assets At December 31, 2008 and 2009, the company has the total assets of Baht 2,759.44 million and 2,272.22 million, respectively or decreases Baht 487.22 million or -17.66%. The company没s Account Receivable and Note Receivable (net), Other current assets, and Current assets decrease Baht 462.13 million; this conform to the decreasing in revenue of the company in year 2009. Land, Buildings and Equipments, and Others non-current assets of the company decrease Baht 25.09 million. Account Receivable At December 31, 2008 and 2009, the company has Account Receivable and Note Receivable after deducted allowance for doubtful debt of Baht 360.12 million and Baht 200.04 million, respectively conform to the decrease in the company revenues. The company has the credit terms for the customer about 60-90 days. The average collection days in year 2008 and 2009 are 65 and 105 days, respectively.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 50

Inventories The company has the Inventories (Net) after deducted the allowance for devaluation of inventories at December 31, 2008 and 2009 of Baht 636.85 million and Baht 449.47 million, respectively. In year 2009, the Inventories comprise in Finished goods deducted the allowance for devaluation of inventories Baht 129.16 million, Work in process Baht 113.66 million, Raw Material Baht 194.93 million, and Supplies Baht 10.27 million. The inventories turnover ratio in year 2008 and 2009 is 9.42 and 5.98 times which show the efficiency of the inventories management of the company. Liabilities At December 31, 2008 and 2009, the company has the liabilities of Baht 1,685.49 million and Baht 1,523.01 million, respectively or decrease Baht 162.48 million. The cause of the decreasing of the Liabilities of the company is due to the decreasing in sales that need less working capital. Therefore, the most of the decreasing Liabilities cause from increasing of the Bank Overdraft and short-term loan. Account Payable At December 31, 2008 and 2009, the company has the Account Payable of Baht 231.28 million and Baht 131.32 million, respectively and the decreasing in Account Payable is conform to the decrease in the revenues of the company. The company received the credit terms from the creditor about 30-60 days. The average repayment days of year 2008 and 2009 are 37 and 55 day, respectively. Shareholdersรป Equity At December 31, 2008 and 2009, the company shareholdersรป equity is Baht 1,073.94 million and Baht 749.21 million, respectively or decrease Baht 324.73 million due to the increase of the companyรปs revenues and profit from operation of Baht 45.51 million, but the subsidiary generated the Net Loss of Baht 288.78 million, and the company paid the dividend to the shareholders in year 2008 of Baht 79.01 million. Capital Structure Suitability The companyรปs Debt to Equity (D/E) ratio at December 31, 2008 and 2009 is 1.57 and 2.03 times, respectively. The D/E ratio increase from the decreased in Shareholdersรป Equity which cause by the Loss from operation in subsidiary.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 51

The Board of Directors没 obligation for the Financial Statements The Board of Directors of Ekarat Engineering Public Company Limited concerned to the duty and responsibility of the completeness and accuracy of the financial statements. The financial statements of Ekarat Engineering Public Company Limited were prepared in accordance with the rules and regulations of the company and generally accepted accounting standards in Thailand. Appropriate accounting policies were selected and applied consistently and were accompanied by careful judgment. All of the important data is disclosed in Notes to financial statements accurately which audited by Certified Public Accountant and reviewed by the Audit Committee. The Board of Directors has appointed the Audit Committee, which comprised with the Independent Directors, to review and responsible for the quality of the financial statements and Internal audit. The observation of Audit Committee related to these matters is appeared in the Audit Committees没 Report which is in this annual report. The Board of Directors has ensured the accuracy and appropriated disclosure of the Company没s financial statements disclosed in the annual report year 2009 and the financial statements were prepared in accordance with the generally accepted accounting standards. The Internal audit of the company was accurate and appropriated.

Mr. Viset Choopiban Chairman

Mr. Kietphong Noichaiboon Chief Executive Officer

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Auditor没s Report and The Company没s and Subsidiary没s Financial Statements


Annaul Report 2009

Ekarat Engineering Public Company Limited 53

AUDITOR'S REPORT To The Shareholders of EKARAT ENGINEERING PUBLIC COMPANY LIMITED I have reviewed the consolidated balance sheets of EKARAT ENGINEERING PUBLIC COMPANY LIMITED AND SUBSIDIARY and the separate balance sheets of EKARAT ENGINEERING PUBLIC COMPANY LIMITED as at December 31, 2009 and 2008, the related statements of income, statements of changes in shareholders没 equity, and statements of cash flows for the years then ended. These financial statements are the responsibility of the Company's management as to their correctness and 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 as to 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 fianancial statements. An audit also includes assessing the accounting principles use and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the consolidated financial statements and separate financial statements referred to above present fairly in all material respect, the consolidated financial position of EKARAT ENGINEERING PUBLIC COMPANY LIMITED AND SUBSIDIARY and the separate financial position of EKARAT ENGINEERING PUBLIC COMPANY LIMITED as at December 31, 2009 and 2008, the results of their and its operations and cash flows for the years then ended in conformity with generally accepted accounting principles.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 54

Without qualifying opinion on the financial statements, I draw your attention to notes 22 to financial statements, subsidiary has defaulted on payment for loans and was sued by the bank for making repayment in total amount of Baht 933.45 million. At present, the case is still pending the Court没s consideration, the ultimate outcome has not been known. In addition, subsidiary has operating loss for consecutive years, and also has net loss for the year ended December 31, 2009 and 2008 amount of Baht 288.78 million and Baht 190.37 million and current liabilities exceeded current assets as at December 31, 2009 and 2008 amount of Baht 1,117.02 and 228.13 million, respectively. The continuity of subsidiary没s operation is dependent upon the ability to solve the financial problem and negotiate for debt restructuring. However, subsidiary没s financial statements have been prepared on the assumption that subsidiary will continue its operation as a going concern, therefore, do not make any adjustments the valuation of assets at the salable price, liabilities at repayable amount and reclassification that might be necessary should the subsidiary be unable to continue its operation as a going concern.

Office of D I A International Auditing

(Mrs. Vilairat Rojnuckarin) C.P.A. (Thailand) Registration No. 3104 February 26, 2010

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Annaul Report 2009

Ekarat Engineering Public Company Limited 55

EKARAT ENGINEERING PUBLIC COMPANY LIMITED AND SUBSIDIARY BALANCE SHEETS AS AT DECEMBER 31, 2009 AND 2008 Assets

Note

Current assets Cash and cash equivalents Current investment - net Trade accounts and notes receivable and accrued service income - net Trade accounts receivable from related party Construction accounts receivable and unbilled completion works Loan to subsidiary company Inventories - net Other current assets Revenue Department receivable Prepaid expenses Accrued interest incomes - related party Construction retentionâ&#x20AC;  Other current assets Total current assets

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

7 8

37,633,863.10 329,124.91

67,475,208.10 263,750.71

33,459,106.05 329,124.91

56,697,241.86 263,750.71

9 10

200,038,126.29 0.00

360,118,907.99 0.00

174,234,989.86 60,303,349.41

325,577,355.29 6,373,917.55

11 23 12

0.00 0.00 449,466,506.22

11,499,612.79 0.00 636,851,156.37

0.00 199,679,445.37 316,420,461.88

11,499,612.79 143,879,445.37 443,511,400.03

23 11

10,007,251.49 7,520,966.12 0.00 1,498,428.00 9,048,484.93 715,542,751.06

3,661,252.11 15,513,779.65 0.00 63,182,849.29 19,100,537.37 1,177,667,054.38

0.00 7,216,997.29 6,099,677.75 0.00 6,296,714.74 804,039,867.26

0.00 13,283,120.64 4,473,192.25 46,002,822.29 11,344,955.80 1,062,906,814.58

Note to financial statements are parts of these financial statements.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 56

EKARAT ENGINEERING PUBLIC COMPANY LIMITED AND SUBSIDIARY BALANCE SHEETS (CONTINUED) AS AT DECEMBER 31, 2009 AND 2008 Assets (Cont.)

Note

Non-current assets Investment in subsidiary company - net 13 Long-term investment in other companies - net 14 Assets for rent - net 15 Property, plant and equipment - net 16 Property, machinery and equipment not used for operation - net 17 Intangible assets - net 18 Withholding income tax Other non-current assets Total non-current assets Total assets

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

0.00 0.00 8,885,488.32 1,531,284,367.84

0.00 0.00 11,856,318.47 1,540,384,280.54

488,963,172.00 0.00 8,885,488.32 306,936,346.06

699,999,930.00 0.00 11,856,318.47 240,407,338.50

1,678,243.96 12,876,945.13 0.00 1,952,683.74 1,556,677,728.99 2,272,220,480.05

4,636,384.49 14,794,762.38 8,025,720.89 2,072,407.88 1,581,769,874.65 2,759,436,929.03

1,678,243.96 1,865,242.69 0.00 290,533.30 808,619,026.33 1,612,658,893.59

4,636,384.49 3,551,854.89 8,025,720.89 290,533.30 968,768,080.54 2,031,674,895.12

Note to financial statements are parts of these financial statements.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 57

EKARAT ENGINEERING PUBLIC COMPANY LIMITED AND SUBSIDIARY BALANCE SHEETS (CONTINUED) AS AT DECEMBER 31, 2009 AND 2008 (Unit : Baht)

Liabilities and shareholders' equity

Note

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

Current liabilities Overdrafts and short-term loans from financial institutions 19 Other short-term loans 20 Trade accounts and notes payable Trade accounts payable from related party 23 Current portion of financial leaseâ&#x20AC;  contracts payable 21 Current portion of long-term loans 22 Accrued expenses Accrued interest expenses Accrued corporate income tax Construction payable Goods & Service income received in advance Other payables Other current liabilities Total current liabilities

276,121,927.19 28,355,000.00 131,324,898.28 0.00

411,692,320.93 0.00 231,282,048.42 0.00

203,977,410.05 28,355,000.00 118,798,934.17 7,899,824.00

273,425,950.67 0.00 182,372,831.84 200,753.30

4,539,625.78 821,448,572.31 45,068,780.32 125,264,603.23 1,482,952.18 2,455,382.24 37,185,986.82 21,343,767.80 9,575,560.04 1,504,167,056.19

5,249,086.63 145,100,000.00 59,998,890.34 9,198,374.65 28,387,957.27 26,245,834.78 31,111,744.79 13,563,547.62 18,828,052.33 980,657,857.76

4,039,126.22 7,800,000.00 42,780,629.44 915,618.44 1,482,952.18 2,455,382.24 29,953,520.55 21,160,382.18 5,449,844.44 475,068,623.91

4,789,236.64 5,100,000.00 54,495,505.24 3,514,364.14 28,387,957.27 26,245,834.78 30,487,776.97 13,563,547.62 15,182,826.12 637,766,584.59

Non-current liabilities Financial lease contracts payable - net Long-term loans - net Total non-current liabilities Total liabilities

5,197,119.48 13,650,000.00 18,847,119.48 1,523,014,175.67

9,736,745.00 695,098,572.31 704,835,317.31 1,685,493,175.07

4,557,015.42 13,650,000.00 18,207,015.42 493,275,639.33

8,596,141.40 21,450,000.00 30,046,141.40 667,812,725.99

21 22

Note to financial statements are parts of these financial statements.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 58

EKARAT ENGINEERING PUBLIC COMPANY LIMITED AND SUBSIDIARY BALANCE SHEETS (CONTINUED) AS AT DECEMBER 31, 2009 AND 2008 (Unit : Baht)

Liabilities and shareholders' equity (Cont.) Note Shareholders' equity Share capital Authorized share capital 27 790,173,640 common shares of Baht 1.00 each Issued and paid-up share capital 790,173,640 common shares of Baht 1.00 each Premium on share capital Unrealized loss on securities available for sale Retained earnings (Deficit) Appropriated Legal reserve 28 Unappropriated Total shareholders' equity Total liabilities and shareholders' equity

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

790,173,640.00

790,173,640.00

790,173,640.00

790,173,640.00

790,173,640.00 296,582,130.18 (88,515.60)

790,173,640.00 296,582,130.18 (153,889.80)

790,173,640.00 296,582,130.18 (88,515.60)

790,173,640.00 296,582,130.18 (153,889.80)

33,595,149.58 (371,056,099.78) 749,206,304.38 2,272,220,480.05

33,595,149.58 (46,253,276.00) 1,073,943,753.96 2,759,436,929.03

33,595,149.58 (879,149.90) 1,119,383,254.26 1,612,658,893.59

33,595,149.58 243,665,139.17 1,363,862,169.13 2,031,674,895.12

Note to financial statements are parts of these financial statements.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 59

EKARAT ENGINEERING PUBLIC COMPANY LIMITED AND SUBSIDIARY STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Unit : Baht)

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

Revenues Revenue from sales of goods Revenue from services and maintenance Revenue from construction Total revenues

1,304,158,783.74 137,076,712.37 3,211,285.91 1,444,446,782.02

1,920,716,115.13 150,782,138.03 272,406,166.93 2,343,904,420.09

1,145,419,287.88 131,578,443.78 3,211,285.91 1,280,209,017.57

1,514,356,883.94 149,066,960.36 272,406,166.93 1,935,830,011.23

Cost Cost of sales Cost of services and maintenance Cost of construction Total cost

1,135,590,160.28 85,060,118.18 5,312,168.18 1,225,962,446.64

1,589,337,599.44 98,777,060.78 259,920,063.15 1,948,034,723.37

902,389,901.57 80,465,902.85 5,312,168.18 988,167,972.60

1,120,331,877.40 98,241,522.14 259,920,063.15 1,478,493,462.69

Gross profit Other income Reversed (loss) on devaluation of goods Loss on impairment of investment Selling expenses Administrative expenses Management benefit expenses Directors' remuneration Finance costs Profit (Loss) before corporate income tax Corporate income tax Net profit (loss)

218,484,335.38 19,848,400.25 (24,397,585.03) 0.00 (101,653,735.99) (142,488,295.84) (28,638,475.00) (3,995,000.00) (162,524,560.42) (225,364,916.65) (20,420,543.13) (245,785,459.78)

395,869,696.72 16,372,757.33 4,603,785.63 (2,726,400.00) (135,139,986.79) (144,615,165.69) (31,095,533.00) (4,165,000.00) (96,379,054.21) 2,725,099.99 (50,265,309.23) (47,540,209.24)

292,041,044.97 29,298,305.47 (5,353,422.59) (211,036,758.00) (91,888,222.49) (108,586,627.01) (22,620,910.00) (3,540,000.00) (23,419,792.29) (145,106,381.94) (20,420,543.13) (165,526,925.07)

457,336,548.54 26,817,899.19 3,429,229.69 (2,726,400.00) (125,923,241.04) (107,625,604.21) (23,138,600.00) ((3,470,000.00) (31,584,006.99) 193,115,825.18 (50,265,309.23) 142,850,515.95

Note to financial statements are parts of these financial statements.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 60

EKARAT ENGINEERING PUBLIC COMPANY LIMITED AND SUBSIDIARY STATEMENTS OF INCOME (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Unit : Baht)

Consolidated financial statements 2009 2008 Attributable to: Equity holders of the parent Minority interest

Separate financial statements 2009 2008

(245,785,459.78) 0.00 (245,785,459.78)

(47,540,209.24) 0.00 (47,540,209.24)

(165,526,925.07) 0.00 (165,526,925.07)

142,850,515.95 0.00 142,850,515.95

(0.311)

(0.060)

(0.209)

0.181

790,173,640

790,173,640

790,173,640

790,173,640

Basic earnings per share Profit (Loss) of equity holders of the parent Weighted average number of common shares (unit : share)

Note to financial statements are parts of these financial statements.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 61

EKARAT ENGINEERING PUBLIC COMPANY LIMITED AND SUBSIDIARY STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Unit : Baht) Note

Balance as at January 1, 2008

Issued and paid-up share capital common share

Premium on share capital

Consolidated financial statements Unrealized loss on Retained earnings (Deficit) securities available Appropriated Unappropriated for sale Legal reserve

Total

790,173,640.00

296,582,130.18

(39,130.98)

26,452,623.78

87,446,823.04 1,200,616,086.02

0.00

0.00

0.00

0.00

(79,017,364.00)

(79,017,364.00)

0.00

0.00

(114,758.82)

0.00

0.00

(114,758.82)

0.00

0.00

0.00

7,142,525.80

(7,142,525.80)

0.00

0.00

0.00

0.00

0.00

(47,540,209.24)

(47,540,209.24)

790,173,640.00

296,582,130.18

(153,889.80)

33,595,149.58

0.00

0.00

0.00

0.00

(79,017,364.00)

(79,017,364.00)

0.00

0.00

65,374.20

0.00

0.00

65,374.20

0.00

0.00

0.00

790,173,640.00

296,582,130.18

(88,515.60)

Increase (Decrease) during the year Dividend paid

29

Unrealized loss on securities available for sale Legal reserve

28

Net loss

Balance as at December 31, 2008

(46,253,276.00) 1,073,943,753.96

Increase (Decrease) during the year Dividend paid

29

Unrealized loss on securities available for sale Net loss

Balance as at December 31, 2009

0.00 (245,785,459.78) (245,785,459.78)

33,595,149.58 (371,056,099.78)

749,206,304.38

Note to financial statements are parts of these financial statements.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 62

EKARAT ENGINEERING PUBLIC COMPANY LIMITED AND SUBSIDIARY STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Unit : Baht) Note

Balance as at January 1, 2008

Issued and paid-up share capital common share

Premium on share capital

Separate financial statements Unrealized loss on Retained earnings (Deficit) securities available Appropriated Unappropriated for sale Legal reserve

Total

790,173,640.00

296,582,130.18

(39,130.98)

26,452,623.78

186,974,513.02 1,300,143,776.00

0.00

0.00

0.00

0.00

(79,017,364.00)

(79,017,364.00)

0.00

0.00

(114,758.82)

0.00

0.00

(114,758.82)

0.00

0.00

0.00

7,142,525.80

(7,142,525.80)

0.00

0.00

0.00

0.00

0.00

142,850,515.95

142,850,515.95

790,173,640.00

296,582,130.18

(153,889.80)

33,595,149.58

0.00

0.00

0.00

0.00

(79,017,364.00)

(79,017,364.00)

0.00

0.00

65,374.20

0.00

0.00

65,374.20

0.00

0.00

0.00

790,173,640.00

296,582,130.18

(88,515.60)

Increase (Decrease) during the year Dividend paid

29

Unrealized loss on securities available for sale Legal reserve

28

Net profit

Balance as at December 31, 2008

243,665,139.17 1,363,862,169.13

Increase (Decrease) during the year Dividend paid

29

Unrealized loss on securities available for sale Net loss

Balance as at December 31, 2009

0.00 (165,526,925.07) (165,526,925.07)

33,595,149.58

(879,149.90) 1,119,383,254.26

Note to financial statements are parts of these financial statements.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 63

EKARAT ENGINEERING PUBLIC COMPANY LIMITED AND SUBSIDIARY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Unit : Baht)

Consolidated financial statements 2009 2008 Cash flows from operating activities Profit (Loss) before income tax Reconciliation of net profit (loss) to cash provided by (used in) from operating activities : Bad debt and doubtful accounts Loss on devaluation of goods Loss on impairment of investment Amortized intangible assets Write off assets Write off liabilities Depreciation of assets Depreciation of assets for rent Depreciation of non-operating machinery and equipment Sales promotion income Interest income Dividend income (Gain) Loss on sales of assets Unrealized (gain) loss on exchange rate Interest expenses Profit from operating activities before change in assets and liabilities

Separate financial statements 2009 2008

(225,364,916.65)

2,725,099.99

(145,106,381.94)

193,115,825.18

422,909.20 24,397,585.03 0.00 3,729,358.98 2,619,360.97 (4,727,047.64) 117,503,520.63 4,265,332.95

2,011,184.05 (4,603,785.63) 2,726,400.00 3,538,169.17 75,769.09 0.00 108,162,844.07 4,395,883.79

789,351.20 5,353,422.59 211,036,758.00 1,805,247.43 132,481.49 (3,665,178.40) 46,732,188.27 4,265,332.95

145,754.10 (3,429,229.69) 2,726,400.00 2,347,069.13 0.00 0.00 42,251,492.08 4,395,883.79

106,393.69 (255,000.00) (159,452.86) (9,650.97) (2,332,399.30) (693,726.79) 158,247,779.83

139,018.38 0.00 (385,061.23) (19,301.94) (1,482,590.67) (3,928,399.03) 91,116,150.47

106,393.69 (255,000.00) (11,196,569.15) (9,650.97) (2,333,011.86) (794,418.25) 19,381,371.36

139,018.38 0.00 (13,459,053.73) (19,301.94) (1,482,590.67) (233,288.89) 26,890,408.73

77,750,047.07

204,471,380.51

126,242,336.41

253,388,386.47

Note to financial statements are parts of these financial statements.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 64

EKARAT ENGINEERING PUBLIC COMPANY LIMITED AND SUBSIDIARY STATEMENTS OF CASH FLOWS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Unit : Baht)

Consolidated financial statements 2009 2008 (Increase) Decrease in trade accounts receivable, notes receivable and accrued service income (Increase) Decrease in trade accounts receivable from related parties (Increase) Decrease in construction accounts receivable and unbilled completion works (Increase) Decrease in inventories (Increase) Decrease in Revenue Department receivable (Increase) Decrease in prepaid expenses (Increase) Decrease in construction retention (Increase) Decrease in withholding income tax (Increase) Decrease in other current assets (Increase) Decrease in other non-current assets Increase (Decrease) in trade accounts and notes payable Increase (Decrease) in accounts payable from related parties Increase (Decrease) in accrued expenses Increase (Decrease) in construction payable Increase (Decrease) in service income received in advance Increase (Decrease) in other payables Increase (Decrease) in other current liabilities Interest paid Corporate income tax paid Net cash provided by (used in) operating activities

Separate financial statements 2009 2008

159,499,444.02

(24,905,603.07)

150,503,681.01

618,764.80

0.00

0.00

(53,929,431.86)

(5,595,785.90)

11,499,612.79 165,556,730.38 (6,345,999.38) 7,058,904.53 61,684,421.29 7,949,604.38 7,121,888.26 0.00

(11,127,433.41) (191,584,685.04) 4,599,024.29 6,920,323.19 (48,870,926.44) 0.00 5,913,113.56 (667,237.12)

11,499,612.79 122,072,883.44 0.00 6,066,123.35 46,002,822.29 7,949,604.38 2,080,507.30 0.00

(11,127,433.41) (142,065,115.28) 0.00 5,082,631.55 (31,690,899.45) 0.00 6,770,344.25 30,000.00

(99,405,261.47)

122,057,430.07

(63,071,827.82)

75,791,336.63

0.00 (10,310,288.43) (23,790,452.54)

0.00 15,016,653.66 20,147,664.76

7,699,070.70 (8,049,697.40) (23,790,452.54)

86,794.45 13,082,298.26 20,147,664.76

6,173,983.23 7,119,445.48 (9,249,422.46) (42,181,551.25) (47,325,548.22)

(17,761,220.02) (1,657,650.04) 7,378,472.13 (101,097,033.26) (53,934,098.01)

(534,256.42) 7,119,445.48 (9,732,981.68) (21,980,117.06) (47,325,548.22)

(18,239,802.24) (666,501.03) 4,499,365.92 (24,775,929.69) (53,934,098.01)

272,805,557.68

(65,101,824.24)

258,821,774.15

91,402,022.08

Note to financial statements are parts of these financial statements.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 65

EKARAT ENGINEERING PUBLIC COMPANY LIMITED AND SUBSIDIARY STATEMENTS OF CASH FLOWS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Unit : Baht)

Consolidated financial statements 2009 2008 Cash flows from investing activities Increase (Decrease) in loan to subsidiary company Increase (Decrease) in deposits for assets Payments for purchase of intangible assets Increase (Decrease) in assets payable Payments for purchase of assets for rent Payments for purchase of property, plant and equipment Proceeds from sales of assets Dividend income Interest income Net cash provided by (used in) investing activities Cash flows from financing activities Increase (Decrease) in overdraft and short-term loan from financial institutions Received other short-term loans Repayment for financial lease contracts payableâ&#x20AC;  Received long-term loans Repayment for long-term loans Dividend paid Net cash provided by (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year

Separate financial statements 2009 2008

0.00 0.00 (1,636,285.31) (825,296.93) (4,646,139.51)

0.00 (3,110,261.68) (5,305,241.32) (771,811.87) (3,903,505.13)

(55,800,000.00) 0.00 (126,764.43) (825,296.93) (4,646,139.51)

(152,000,000.00) (3,110,261.68) (454,510.00) (771,811.87) (3,903,505.13)

(102,460,310.37) 3,331,794.38 9,650.97 161,528.20

(45,751,757.07) 1,807,962.64 19,301.94 395,446.04

(103,574,621.01) 3,331,242.98 9,650.97 9,572,158.99

(29,884,016.07) 1,807,962.64 19,301.94 2,762,970.74

(106,065,058.57)

(56,619,866.45)

(152,059,768.94)

(185,533,869.43)

(135,570,393.74) 28,355,000.00 (5,249,086.37) 0.00 (5,100,000.00) (79,017,364.00)

282,695,039.80 0.00 (6,977,194.45) 4,860,000.00 (81,050,000.00) (79,017,364.00)

(69,448,540.62) 28,355,000.00 (4,789,236.40) 0.00 (5,100,000.00) (79,017,364.00)

185,419,108.07 0.00 (5,542,647.83) 4,860,000.00 (1,050,000.00) (79,017,364.00)

(196,581,844.11)

120,510,481.35

(130,000,141.02)

104,669,096.24

(29,841,345.00) 67,475,208.10 37,633,863.10

(1,211,209.34) 68,686,417.44 67,475,208.10

(23,238,135.81) 56,697,241.86 33,459,106.05

10,537,248.89 46,159,992.97 56,697,241.86

Note to financial statements are parts of these financial statements.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 66

EKARAT ENGINEERING PUBLIC COMPANY LIMITED AND SUBSIDIARY NOTES TO FINANCIAL STATEMENTS AS AT DECEMBER 31, 2009 AND 2008 1. GENERAL INFORMATION Registration

: The Company was registered as a company limited on June 24, 1981, Registration No. 0105524014004 and was registered as a public company limited on December 9, 1994, Registration No. 0107537002711 and was listed companies in The Stock Exchange of Thailand on August 7, 2006.

Head office

: 9/291 UM Tower, 28th Floor, Ramkhamhaeng Road, Suanluang, Suanluang, Bangkok.

Factory

: 190/1 Moo 6 Hoklee Canal, Bangpakong River, Thasa-An Sub - District, Bangpakong District, Chachoengsao.

Type of business

: To manufacture and sell of distribution transformers.

2. BASIS OF FINANCIAL STATEMENTS PREPARATION The financial statements have been prepared in conformity with generally accepted accounting principles enunciated under the Accounting Professions Act B.E. 2547 and presented in accordance with the notification of Department of Business Development by Ministry of Commerce dated January 30, 2009 regarding the condensed form should be included in the financial statements B.E. 2552 and the regulation of the Securities and Exchange Commission regarding to preparation and presentation of the financial reporting under the Securities and Exchange Act B.E. 2535. The financial statements have been prepared under the historical cost convention, except as transaction disclosed in related accounting policy. 3. BASIS OF CONSOLIDATED FINANCIAL STATEMENTS PREPARATION 3.1† These financial statements are consolidated by including the accounts of Ekarat Engineer Public Company Limited and its subsidiary , Ekarat Solar Company Limited in which has shareholding at 99.99 percent. 3.2† Transaction between the Company and its subsidiaries have been eliminated under the equity method. And investment in subsidiary was eliminated with the subsidiary shareholders' equity in preparing consolidated financial statements. 3.3† The consolidated financial statements have been prepared in conformity with the same accounting policy for the accounts and accounting events of the Company and subsidiary.

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4. NEW ACCOUNTING STANDARDS ISSUANCE The revised Accounting Standards which is effective in 2009 In accordance with the notification No. 86/2551 and No. 16/2552 issued by the Federation of Accounting Professions, pertaining to the Accounting Standards announced in the Government Gazette, required to adopt the revised Accounting Standards as following : 4.1 Accounting standards, financial reporting standard and accounting treatment guidance which are effective for the current year Framework for Preparation and Presentation of Financial Statements (Revised 2007) TAS 36 (Revised 2007) Impairment of Assets TFRS 5 (Revised 2007) Non-current Assets Held for Sale and Discontinued Operations (Formerly TAS No. 54) Accounting Treatment Guidance for Leasehold Right Accounting Treatment Guidance for Business Combination under Common Control These accounting standards, financial reporting standard and accounting treatment guidance became effective for the financial statements for the period beginning on or after January 1, 2009. The Company's management has assessed the effect of these standards and believes that TFRS 5 (Revised 2007) and Accounting Treatment Guidance for Business Combination under Common Control are not relevant to the Company's business, while Framework for Preparation and Presentation of Financial Statements (Revised 2007), TAS 36 (Revised 2007) and Accounting Treatment Guidance for Leasehold Right will not have any material impact on the financial statements for the current period. 4.2 Accounting standards which are not effective for the current year TAS 20 Accounting for Government Grants and Disclosure of Government Assistance

Effective date January 1, 2012

TAS 24 (Revised 2007) Related Party Disclosures

January 1, 2011

TAS 40 Investment Property

January 1, 2011

The management of the Company evaluated that these three accounting standards will not have material impact on the financial statements for the year in which they are initially applied.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 68

5. SUMMARY OF SINGIFICANT ACCOUNTING POLICIES 5.1 The realization of revenues and expenses - Revenue from the sales of goods is recognized when the goods were delivered and transferred the right of ownership to the customers. - Revenue from services and repairing is recognized after the services rendered and complying with the service contracts. - Construction income is recognized according to constance contractual price using percentage of completion method by using ratio of the actual construction cost accrued until present and estimated total construction cost. - Rental income is recognized according to the rental agreement. - Interest income is recognized on a time proportion basis that takes into account the effective yield on the asset. - Other revenues and expenses are recognized on the accrual basis. 5.2 Cash and cash equivalents Cash and cash equivalents include cash on hand and at bank which are due within three months without obligation. 5.3 Allowance for doubtful accounts Allowance for doubtful accounts are considered of each respective account receivable anticipated of uncollectibility and considered from classification of outstanding aging accounts receivable as at period end. Allowance for doubtful accounts will be provided in full for trade accounts and notes receivable due over 1 year. 5.4 Inventories Inventories are stated at cost or net realizable value, whichever is lower as follows - Finished goods and work in process calculated the cost by using the specific method. - Raw material calculated the cost by using the FIFO method. - Allowance for devaluation of goods is considered from the actual obsolete and depreciated inventories, and an estimate from the selling price and direct cost related to events after the financial statements date, as well as the slow-moving inventories. 5.5 Investment in subsidiary Investments in the subsidiary and the associate in the separate financial statements were recorded as net costs from allowance for impairement of the investment. The change in value of the investment in the statements of income will be recognized upon the distribution or impairement of the investments incurred. << Back to contents >>


Annaul Report 2009

Ekarat Engineering Public Company Limited 69

5.6 Investment 5.6.1 Short-term investments in marketable equity securities available for sales are stated at fair value. The differences between book value and fair value are stated as unrealized gain or loss in shareholders' equity. 5.6.2 Long-term investments in non-marketable equity securities represents as general investments are stated at cost less with provision for impairment of investment. 5.7 Assets for rent Assets for rent are inventories for rent or lend to customer. Depreciations are calculated by the straight-line method over the useful life for 5 years. 5.8â&#x20AC; Property, plant and equipment Land is stated at cost. Building and equipment are stated at cost less accumulated depreciation and provision for impairment of assest (if any). Depreciations are calculated by the straight-line method over the estimated useful life of assets as follows : Number of years Buildings and improvements 20 Machinery tools and equipment 5-18 Furniture and office equipment 3-5 Vehicles 5 Other fixed assets 5 Interests incurred from loans for construction were capitalized as part of the cost of construction until those constructions are ready to be used. 5.9 Intangible assets - net Intangibles are amortized by the straight-line method. Compris of :â&#x20AC;  Number of years Computer software 5-10 Certificate 5

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5.10†Impairment of assets The Company and subsidiary has considered the impairment of assets for investment, property, plant and equipment whenever events or changes indicate that the carrying amount of an asset exceeds its recoverable value (net selling price of such assets under current operations or its utilization value, whichever is higher). The Company will consider the impairment for each asset item or each asset unit generating cash flows, whichever is practical. In case the carry amount of an asset exceeds its recoverable value, the Company will recognize an impairment loss in the statements of income. The Company will reverse the impairment loss whenever there is an indication that there is no longer impairment or reduction in impairment as recorded in statements of income. 5.11 Provident fund The Company has established provident fund under the defined contribution plan. The fundûs assets are separated entities which are administered by the outsider fund manager. The Company and employees made contribution into such provident fund. The Companyûs contribution payments to the provident fund were recorded as expenses in statements of income in the period in which they are incurred. 5.12 Retirement benefit This obligation is to provide retirement benefit to retired employees under the defined retirement plan, determined by the labor law. The Company will record the retirement cost in the period in which the employees retired. 5.13 Transactions in foreign currencies The Company records its transactions in foreign currencies converting into Thai Baht by using the exchange rates ruling on the transactions date. The outstanding balance of accounts in foreign currencies as at the Balance Sheets date are converted into Thai Baht by using the exchange rates ruling on the same date. Gain or loss on exchange rate are taken into income or expense incurred. 5.14 Corporate income tax Corporate income tax is recognized as an expense by calculating with 25 per cent of the net profit, and adding back the reserves and expenses which have not been permitted for tax calculation according to the Revenue Code. The subsidiary has not tax incidence due to its financial shortfall.

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Annaul Report 2009

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5.15 Earnings per share Earnings per share presented in the statements of income is the basic earnings per share, computing by dividing the net profit for the year by the weighted average number of common shares issued and paid-up for the year ended. 5.16 Use of accounting estimates Preparation of financial statements in conformity with generally accepted accounting principles required the management to make estimates and assumption which affected the amounts in the financial statements and notes related thereto. Consequent actual results may differ from these estimates which may be required to make adjustment to the assets in the next financial year related to allowance for doubtful accounts, depreciation, provision for devaluation of inventories and provision for impairment of assets. Other estimates are described in the corresponding disclosures. 5.17 Provision for liabilities The Company recognizes a provision for liabilities when an entity has a present legal or constructive obligation as a result of a past event. It is probable that an outflow of economic benefits resources will be required to settle the obligation and reliable estimate can be made of the amount of the obligation. If some or all the expenditure is required to settle a provision, is expected to be reimbursed when it is virtually certain that reimbursement will be received if the Company settles the obligation. The amount recognized should not exceed the amount of the provision. 6. SUPPLEMENTAL OF CASH FLOWS INFORMATION 6.1 As at December 31, 2009, the Company has non-monetary transactions are as follows : 1. In the consolidated financial statements, the Company and subsidiary have transferred other raw materials and solar cell to be construction in progress total amount of Baht 3.35 million (Baht 1.23 million for subsidiary). 2. In the separate financial statements, the Company transferred transformer to be assets for rent amount of Baht 1.15 million. 3. In the consolidated financial statements, the increase of the Company and subsidiary没s machinery and equipment in the amount of Baht 4.64 million and quality certificate amount of Baht 0.18 million derived from provide assets payable amount of Baht 1.83 million and transferred deposits to be assets amount of Baht 2.99 million. 4. In the consolidated financial statements, the Company has transferred assets for rent amount of Baht 3.60 million and subsidiary transferred machinery and work in process amount of Baht 3.69 million to be inventories total amount of Baht 7.29 million.

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5. In the consolidated financial statements, the increase of the Company's land amount of Baht 2.85 million derived from transferring unused land in operation since the Company used such land for construct solar farm project. 6.2 As at December 31, 2008, the Company has non-monetary transactions are as follows : 1. The Company transferred inventories amount of Baht 1.53 million to be construction in progress. 2. The Company transferred short-term loans to subsidiary company amount of Baht 191.32 million and accrued interest income amount of Baht 8.68 million to be investment in subsidiary amount of Baht 200.00 million. 3. In the separate financial statements, long-term investment in other company increase amount of Baht 2.73 million by receiving trade accounts receivable and transferred the trade account receivable to other receivables according to business recovery plan amount of Baht 4.02 million. 4. In the consolidated financial statements, the Company and subsidiary transferred computer software recorded as fixed assets in the net book value of Baht 8.17 million (amount of Baht 4.32 million in the separate financial statements) to be intangible assets. 5. In the consolidated financial statements, the increase of the Company and subsidiary's machinery and vehicles amount of Baht 8.78 million (amount of Baht 5.74 million in the separate financial statements) derived liability under financial lease agreement. 6. The subsidiary transferred inventories used in test run machinery which used to record as the construction in process amounted to Baht 34.86 million to be inventories, and tranferred the solar cell inventory and other raw materials into construction in process and equipment amounted to Baht 11.23 million. 7. The subsidiary transferred construction in progress amount of Baht 5.43 million to be other current assets since the Company filed to refund duties tax from imported machinery. 8. The subsidiary has recorded the amount of Baht 84.91 million paid by bank as the long-term loan from financial institutions and decreased the assets payable amount of Baht 88.16 million and had gain on exchange rate amount amount of Baht 3.25 million. 7. CASH AND CASH EQUIVALENTS Comprise of :

Cash Current accounts Savings deposit Total

Consolidated financial statements 2009 2008 812,801.00 817,420.80 1,592,935.93 17,592,629.28 35,228,126.17 49,065,158.02 37,633,863.10 67,475,208.10

(Unit : Baht) Separate financial statements 2009 2008 722,801.00 725,800.80 1,581,216.21 14,025,736.98 31,155,088.84 41,945,704.08 33,459,106.05 56,697,241.86

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8. CURRENT INVESTMENT-NET Comprise of : (Unit : Baht) Consolidated and Separate financial statements 2009 2008 417,640.51 417,640.51 (88,515.60) (88,515.60) 329,124.91 329,124.91

Investment in trust unit Less Provision for investment devaluation Investment in trust unit - net

9. TRADE ACCOUNTS RECEIVABLE, NOTES RECEIVABLE AND ACCRUED SERVICE INCOME - NET Comprise of : Consolidated financial statements 2009 2008 Trade notes receivable Due 2,441,297.29 Due not over 3 months 14,528,245.97 Due over 3 months 0.00 Trade accounts receivable and accrued service income Undue 133,428,370.61 Overdue not over 3 months 29,535,308.69 Overdue over 3 months but not over 6 months 5,926,177.43 Overdue over 6 months but not over 12 months 9,463,112.73 Overdue over 12 months 17,332,011.92 Total 212,654,524.64 Less Allowance for doubtful accounts (12,616,398.35) Net 200,038,126.29

(Unit : Baht) Separate financial statements 2009 2008

8,092,719.46 49,777,246.63 236,256.00

2,441,297.29 14,528,245.97 0.00

8,092,719.46 18,043,347.13 236,256.00

212,027,215.86 67,721,461.77

111,494,003.68 26,599,228.69

210,455,632.01 67,721,461.77

6,476,862.29

4,995,841.93

5,306,951.04

7,026,198.37 22,466,763.43 373,824,723.81 (13,705,815.82) 360,118,907.99

9,463,112.73 15,830,669.97 185,352,400.26 (11,117,410.40) 174,234,989.86

6,990,000.27 20,571,373.48 337,417,741.16 (11,840,385.87) 325,577,355.29

As at December 31, 2009, the Company hs discounted trade accounts receivable amount of Baht 35.44 million (note 21).

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10. TRADE ACCOUNTS RECEIVABLE FROM RELATED PARTY Comprise of :

Undue Overdue not over 3 months Overdue over 3 months but not over 6 months Overdue over 6 months but not over 12 months Overdue over 12 months Total

(Unit : Baht) Separate financial statements 2009 2008 268,739.00 35,188,296.00 5,848,417.39 6,913,861.50 250,341.16 15,681,939.22 6,420.00 1,441,737.14 0.00 1,077,515.55 6,373,917.55 60,303,349.41

11. CONSTRUCTION ACCOUNTS RECEIVABLE AND UNBILLED COMPLETION WORKS Comprise of :

Revenue from construction Less Amount invoiced by employers Unbilled completion works Add Output tax for submit Unbilled completion works Add Billed construction accounts receivable without payment received Total

(Unit : Baht) Consolidated and Separate financial statements 2009 2008 3,211,285.91 272,406,166.93 (3,211,285.91) (267,030,292.02) 5,375,874.91 0.00 376,311.24 0.00 5,752,186.15 0.00 5,747,426.64 0.00 0.00 11,499,612.79

Construction accounts receivable are receivables from the electricity substation construction agreement with the Provincial Electricity Authority since 2007 which values in amount of Baht 431.83 million. For the year ended December 31, 2008, the Company had assigned construction work and already realized income, and additionally collected revenue in 2009 in amount of Baht 3.21 million. The retentions deducted by the employers as at December 31, 2008 amounted to Baht 46.00 million already recived in full amount in 2009.

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12. INVENTORIES - NET

Consolidated financial statements 2009 2008 167,700,774.48 240,827,051.48 113,659,965.44 87,270,619.32 194,933,281.91 312,910,721.45 10,271,154.39 7,236,557.20 1,436,526.27 2,743,818.16 488,001,702.49 650,988,767.61

(Unit : Baht) Separate financial statements 2009 2008 66,261,364.67 159,201,454.91 113,471,065.17 80,445,408.87 141,186,709.45 206,151,413.75 8,082,053.04 5,066,937.95 1,300,498.09 1,173,990.50 330,301,690.42 452,039,205.98

Finished goods Work in process Raw materials Supplies Raw materials in transit Total Less Allowance for loss on devaluation of inventories (38,535,196.27) (14,137,611.24) (13,881,228.54) Net 449,466,506.22 636,851,156.37 316,420,461.88

(8,527,805.95) 443,511,400.03

13. INVESTMENTS IN SUBSIDIARY - NET (Unit : Baht) Separate financial statements Company's name Paid-up capital Proportion of investment Cost method Subsidiary 2009 2008 2009 2008 2009 2008 Ekarat Solar Co., Ltd. 700,000,000 700,000,000 99.99% 99.99% 699,999,930.00 699,999,930.00 Less Provision for impairment (211,036,758.00) 0.00 Investment in subsidiary-net 488,963,172.00 699,999,930.00 As at December 31, 2009, the Company has recorded provision for impairment of investment in subsidiary in the amount of Baht 211.04 million by assessing present value of cash flows estimated from operation in the future. As at December 31, 2008, the Company has additional invested in subsidiary for the amount of Baht 200 million by converting debt into capital as stated in note 27. Investment in such subsidiary was pledged as collateral for loans facility with a domestic bank as stated in note 22.

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14. LONG - TERM INVESTMENT IN OTHER COMPANIES - NET As at December 31, 2009 and 2008, investment in other companies consist of investments in the following companies' common shares : Paid-up capital Company's shareholding proportion 2009 2008 2009 2008 Thousand Baht Thousand Baht Percent Percent G.E.C. Engineering Co., Ltd. 230,000.00 230,000.00 1.19 1.19 Saha Karn Engineering Co., Ltd. 402,979.00 402,979.00 0.04 0.04 (Unit : Baht) Consolidated and Separate financial statements 2009 2008 Cost of investment : G.E.C. Engineering Co., Ltd. Saha Karn Engineering Co., Ltd. Total Less Provision for impairment Other long - term investments-net

2,726,400.00 158,849.10 2,885,249.10 (2,885,249.10) 0.00

2,726,400.00 158,849.10 2,885,249.10 (2,885,249.10) 0.00

In 2008, the Company had received additional common shares from an account receivable whose business is rehabilitated the with outstanding balance amount of Baht 6.75 million under the rehabilitation plan of such receivable approved by the court. The Company in being accounts payable shall receive the repayments by cash in the amount of Baht 1.40 million beginning from 2010 to 2014. The remaining amount of Baht 5.35 million shall be converted debt into capital in 2008, 2010 and 2012. As at Decmber 31, 2009 and 2008, the Company has obtained share capital from converted debt into capital in the amount of Baht 2.73 million and the outstanding balance which were not exercised amount of Baht 4.02 million presented as the other receivables in the other non-current assets.

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15. ASSETS FOR RENT - NET (Unit : Baht) Consolidated and Separate financial statements Repurchased Transformer Transformer for Total Transformer

Reserved at Center

borrow - rent

Cost : As at December 31, 2008 Purchases Transfer in Sales Transfer out/transfer to production As at December 31, 2009

17,584,786.70 3,740,316.51 9,298,852.33 (1,091,050.20) (12,786,146.06) 16,746,759.28

2,655,346.42 0.00 1,137,600.63 (59,820.79) (1,372,487.24) 2,360,639.02

8,412,017.02 935,127.14 15,040,023.68 0.00 (14,577,132.33) 9,810,035.51

28,652,150.14 4,675,443.65 25,476,476.64 (1,150,870.99) (28,735,765.63) 28,917,433.81

Accumulated depreciation : As at December 31, 2008 Purchases Transfer in Sales Transfer out/transfer to production As at December 31, 2009

(8,368,001.15) (2,806,748.18) (6,650,502.51) 194,414.11 6,685,444.66 (10,945,393.07)

(2,145,104.99) (177,287.66) (1,095,903.21) 28,222.26 1,313,204.29 (2,076,869.31)

(6,282,725.53) (1,281,297.11) (9,339,528.14) 0.00 9,893,867.67 (7,009,683.11)

(16,795,831.67) (4,265,332.95) (17,085,933.86) 222,636.37 17,892,516.62 (20,031,945.49)

5,801,366.21 9,216,785.55

283,769.71 510,241.43

2,800,352.40 2,129,291.49

8,885,488.32 11,856,318.47

Net book value : As at December 31, 2009 As at December 31, 2008 Depreciation in statements of income : For the year ended December 31, 2009 For the year ended December 31, 2008

4,265,332.95 4,395,883.79

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Annaul Report 2009

Ekarat Engineering Public Company Limited 78

16. PROPERTY, PLANT AND EQUIPMENT - NET (Unit : Baht)

Consolidated financial statements Land and land improvement

Building and Machinery, tools Furniture and construction

Vehicles

and equipment office equipment

Work under

Total

contruction

Cost : As at December 31, 2008

69,939,300.50 574,994,621.38 1,291,053,005.81

82,950,316.04 43,458,951.73

22,541,561.85 2,084,937,757.31 91,956,633.93 107,098,677.99

Purchases

0.00

222,126.50

14,083,834.40

746,863.16

89,220.00

Transfer in

2,851,745.84

16,664,851.24

13,294,124.64

4,166,668.37

0.00

Sales/write off

0.00

0.00

(6,799,969.60)

Transfer out

0.00

0.00

(4,912,072.85)

(71,400.93) (8,794,343.62) (9,226,049.13)

3,327,688.06

40,305,078.15

0.00 (15,665,714.15)

0.00 (25,055,384.98) (39,193,506.96)

78,566,397.51 34,753,828.11

92,770,498.86 2,177,482,292.34

As at December 31, 2008

0.00 (170,373,508.50) (275,007,714.90) (67,598,592.25) (30,301,259.37)

0.00 (543,281,075.02)

Depreciation for the year

0.00 (29,455,749.38) (77,479,617.93)

(5,279,458.66) (5,288,694.66)

0.00 (117,503,520.63)

Transfer in

0.00

(7,647,844.22)

(2,261,119.45)

(209,924.66)

0.00

0.00 (10,118,888.33)

Sales/write off

0.00

0.00

6,687,632.36

70,235.97

8,775,783.69

0.00

15,533,652.02

Transfer out

0.00

0.00

1,560,028.24

8,884,280.96

0.00

0.00

10,444,309.20

As at December 31, 2009

0.00 (207,477,102.10) (346,500,791.68) (64,133,458.64) (26,814,170.34)

As at December 31, 2009

72,791,046.34 591,881,599.12 1,306,718,922.40

Accumulated depreciation :

0.00 (644,925,522.76)

Provision for impairment of assets : As at December 31, 2008

0.00

0.00

0.00

0.00

0.00

(1,272,401.74)

(1,272,401.74)

As at December 31, 2009

0.00

0.00

0.00

0.00

0.00

(1,272,401.74)

(1,272,401.74)

As at December 31, 2009

72,791,046.34 384,404,497.02 960,218,130.72

14,432,938.87

7,939,657.77

91,498,097.12 1,531,284,367.84

As at December 31, 2008

69,939,300.50 404,621,112.88 1,016,045,290.91

15,351,723.79 13,157,692.36

21,269,160.11 1,540,384,280.54

Net book value :

Depreciation in statements of income For the year ended December 31, 2009

117,503,520.63

For the year ended December 31, 2008

90,435,458.00

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Annaul Report 2009

Ekarat Engineering Public Company Limited 79

(Unit : Baht)

Separate financial statements Land and land improvement

Building and Machinery, tools Furniture and construction

Vehicles

Work under

and equipment office equipment

Total

contruction

Cost : As at December 31, 2008

43,454,095.50 254,238,461.81 268,542,115.87

74,859,361.53

41,158,951.73

12,580,100.59 694,833,087.03 93,218,990.16 108,212,988.64

Purchases

0.00

222,930.00

14,033,076.90

648,771.58

89,220.00

Transfer in

2,851,745.84

9,796,031.54

13,294,124.64

745,329.60

0.00

Sales/write off

0.00

0.00

(6,799,969.60)

(70,000.00)

(8,794,343.62)

Transfer out

0.00

0.00

(1,518,089.04) (9,226,049.13)

As at December 31, 2009

2,098,462.80

28,785,694.42

0.00 (15,664,313.22)

0.00 (13,038,697.12) (23,782,835.29) 32,453,828.11

94,858,856.43 792,384,621.58

As at December 31, 2008

0.00 (144,309,783.70) (214,365,805.19) (64,583,711.45) (29,894,046.45)

0.00 (453,153,346.79)

Depreciation for the year

0.00 (12,820,854.80) (25,667,911.53) (3,414,727.10)

(4,828,694.84)

0.00 (46,732,188.27)

Transfer in

0.00

(7,647,844.22)

(2,261,119.45)

(208,721.94)

0.00

0.00 (10,117,685.61)

Sales/write off

0.00

0.00

6,687,632.36

69,999.00

8,775,783.69

0.00

15,533,415.05

Transfer out

0.00

0.00

1,409,650.88

8,884,280.96

0.00

0.00

10,293,931.84

As at December 31, 2009

0.00 (164,778,482.72) (234,197,552.93) (59,252,880.53) (25,946,957.60)

0.00 (484,175,873.78)

46,305,841.34 264,257,423.35 287,551,258.77

66,957,413.58

Accumulated depreciation :

Provision for impairment of assets : As at December 31, 2008

0.00

0.00

0.00

0.00

0.00

(1,272,401.74) (1,272,401.74)

As at December 31, 2009

0.00

0.00

0.00

0.00

0.00

(1,272,401.74) (1,272,401.74)

As at December 31, 2009

46,305,841.34

99,478,940.63

53,353,705.84

7,704,533.05

6,506,870.51

93,586,454.69 306,936,346.06

As at December 31, 2008

43,454,095.50 109,928,678.11

54,176,310.68

10,275,650.08

11,264,905.28

11,307,698.85 240,407,338.50

Net book value :

Depreciation in statements of income For the year ended December 31, 2009

46,732,188.27

For the year ended December 31, 2008

42,251,492.08

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Annaul Report 2009

Ekarat Engineering Public Company Limited 80

As at December 31, 2008, in the consolidated financial statements, a part of assets under construction was interest expenses for funding the investment in the assets of subsidiary amounted to Baht 3.18 million. As at December 31, 2009 and 2008, part of land with its construction, building and machinery in the consolidated financial statements, was pledged as collaterals against long-term loans and credit facilities received from a commercial bank as stated in note 19 and 22. As at December 31, 2009 and 2008, in the consolidated and separate financial statements, building and construction, machinery, furniture, office equipment and vehicles at cost of Baht 230.46 million and Baht 237.53 million, respectively were fully depreciated but still in use. As at December 31, 2009 and 2008, in the consolidated financial statements, the Company and subsidiary's machinery and vehicles at cost of Baht 22.75 million and Baht 25.34 million, respectively, in the separate financial statements amounted to Baht 20.45 million and Baht 23.04 million are assets under financial lease contracts signed with several local companies as stated in note 21. As at December 31, 2009, the Company has recorded the transferring unused land in operation amount of Baht 2.85 million as "property, plant and equipment"since the Company used such land for construction Solar farm project as stated in note 17. 17. NON - OPERATING LAND, MACHINERY AND EQUIPMENT - NET (Unit : Baht) Consolidated and Separate financial statements Land Machinery and Total equipment Cost: As at December 31, 2008 Sales Transfer out As at December 31, 2009

16,149,381.84 0.00 (2,851,745.84) 13,297,636.00

20,015,019.16 (845,000.00) 0.00 19,170,019.16

36,164,401.00 (845,000.00) (2,851,745.84) 32,467,655.16

Accumulated depreciation : As at December 31, 2008 Depreciation for the year Sales As at December 31, 2009

0.00 0.00 0.00 0.00

(19,867,068.51) (106,393.69) 844,999.00 (19,128,463.20)

(19,867,068.51) (106,393.69) 844,999.00 (19,128,463.20)

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Annaul Report 2009

Ekarat Engineering Public Company Limited 81

(Unit : Baht) Consolidated and Separate financial statements Land Machinery and Total equipment Provision for impairment of assets : As at December 31, 2008 As at December 31, 2009 Net book value : As at December 31, 2009 As at December 31, 2008 Depreciation in statements of income For the year ended December 31, 2009 For the year ended December 31, 2008

(11,660,948.00) (11,660,948.00)

0.00 0.00

(11,660,948.00) (11,660,948.00)

1,636,688.00 4,488,433.84

41,555.96 147,950.65

1,678,243.96 4,636,384.49

106,393.69 139,018.38

As at December 31, 2009, land not used in operation in the amount of Baht 2.85 million was used for construction Solar farm project, therefore, the Company recorded such land as "property, plant and equipment" as stated in note 16. As at December 31, 2009 and 2008, part of land not used in operation in the amount of Baht 0.32 million and Baht 3.18 million, respectively was pledged as guarantee against liabilities with a commercial bank as stated in note 19 and 22. Part of land not use in operation at cost of Baht 12.42 million had NorSor. 3 for 121 plots with the areas 136 rais 1 ngan and 67 square wah that the Company has jointly registered the ownership of such land with a related party in proportion at 12.42:5.50, respectively.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 82

18. INTANGIBLE ASSETS - NET Comprise of : (Unit : Baht) Consolidated financial statements Computer software Quality certificate Total At January 1, 2009 Purchases Transfer in Transfer out Less Amortized in the period At December 31, 2009

10,482,425.92 916,128.43 9,493.15 (17,622.35) (2,767,102.24) 8,623,322.91

4,312,336.46 903,542.50 0.00 0.00 (962,256.74) 4,253,622.22

14,794,762.38 1,819,670.93 9,493.15 (17,622.35) (3,729,358.98) 12,876,945.13 (Unit : Baht)

Separate financial statements Computer software Quality certificate At January 1, 2009 Purchases Transfer in Transfer out Less Amortized in the period At December 31, 2009

3,551,854.89 126,764.43 9,493.15 (17,622.35) (1,805,247.43) 1,865,242.69

0.00 0.00 0.00 0.00 0.00 0.00

Total 3,551,854.89 126,764.43 9,493.15 (17,622.35) (1,805,247.43) 1,865,242.69

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Annaul Report 2009

Ekarat Engineering Public Company Limited 83

19. OVERDRAFTS AND SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS

Consolidated financial statements 2009 2008 Bank overdrafts Loans from banks - Promissory notes - Trust receipts Total

(Unit : Baht) Separate financial statements 2009 2008

44,886,571.23

25,157,281.80

19,272,054.09

0.00

162,010,000.00 69,225,355.96 276,121,927.19

213,339,000.00 173,196,039.13 411,692,320.93

115,480,000.00 69,225,355.96 203,977,410.05

135,109,000.00 138,316,950.67 273,425,950.67

As at December 31, 2009 and 2008, the Company and subsidiary have credit line for overdrafts and loans from several local banks in total amount of Baht 1,145 million and Bath 1,245 million, respectively. Overdrafts and short-term loans of subsidiary amount of Baht 445 million was extinguished by a local bank and prosecute for demanding total debt repayment since subsidiary defaulted on payment for long-term loans as stated in note 22. As at December 31, 2009 and 2008, subsidiary's overdrafts and short-term loans of subsidiary amounted to Baht 72.14 million. Such overdrafts and short-term loans are guaranteed by mortgaging land with its construction and machinery as stated in note 16 and 17 and guaranteed by pledging share capital of subsidiary held by the Company and the Company's guarantee in fully amount. 20. OTHER SHORT-TERM LOANS (Unit : Baht) Consolidated and Separate financial statements 2009 2008 Kasikorn Factoring Company Limited Total

28,355,000.00 28,355,000.00

0.00 0.00

As at December 31, 2009, the Company entered into a factoring agreement with a factoring company by discounting domestic trade accounts receivables amount of Baht 35.44 million. The Company has credit line for discount amount of Baht 145 million at the interest rate of MOR - 0.75%

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Annaul Report 2009

Ekarat Engineering Public Company Limited 84

21. LIABILITIES UNDER FINANCIAL LEASE CONTRACTS - NET Details of leased assets under financial lease contracts are as follows :

Vehicles Machinery Accumulated depreciation Net book value

Consolidated financial statements 2009 2008 20,259,009.35 22,853,009.35 2,490,000.00 2,490,000.00 (13,523,729.31) (10,019,093.59) 9,225,280.04 15,323,915.76

(Unit : Baht) Separate financial statements 2009 2008 17,959,009.35 20,553,009.35 2,490,000.00 2,490,000.00 (12,656,516.57) (9,611,880.67) 7,792,492.78 13,431,128.68

The minimum amounts to be paid under financial lease contracts are as fofllows :

Within 1 year Over 1 year less than 3 years Over 3 year less than 5 years Less Future interest to be paid under financial lease contract Total

Consolidated financial statements 2009 2008 6,361,767.36 5,163,278.86 8,699,273.55 5,598,094.55 2,062,099.64 0.00 10,761,373.41 17,123,140.55 (1,024,628.15) 9,736,745.26

(2,137,308.92) 14,985,831.63

(Unit : Baht) Separate financial statements 2009 2008 5,791,257.55 4,590,109.72 7,550,040.88 4,925,721.37 1,965,790.00 0.00 9,515,831.09 15,307,088.43 (919,689.45) 8,596,141.64

(1,921,710.39) 13,385,378.04

Liabiliteis under financial lease contracts excluding future interest are as fofllows : Consolidated financial statements 2009 2008 Liabilities under financial lease contracts 9,736,745.26 14,985,831.63 Less Liabilities under financial lease (4,539,625.78) (5,249,086.63) contracts due within 1 year Liabilities under financial lease 9,736,745.00 5,197,119.48 contracts - net

(Unit : Baht) Separate financial statements 2009 2008 8,596,141.64 13,385,378.04 (4,039,126.22)

(4,789,236.64)

4,557,015.42

8,596,141.40

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Annaul Report 2009

Ekarat Engineering Public Company Limited 85

22. LONG-TERM LOANS - NET Comprise of : Consolidated financial statements 2009 2008 835,098,572.31 840,198,572.31 Long-term loans Less Current portion of long-term loans (821,448,572.31) (145,100,000.00) 13,650,000.00 695,098,572.31 Net

(Unit : Baht) Separate financial statements 2009 2008 21,450,000.00 26,550,000.00 (7,800,000.00) (5,100,000.00) 13,650,000.00 21,450,000.00

The Company As at December 31, 2009 and 2008, the Company had a long-term loan from a local commercial bank with a credit line of Baht 27.60 million for the purpose of factory construction and purchase of machinery and equipment in note 16, with interest rate at MLR - 1.00% per annum . The interest must be paid at the end of every month. The principal must be completely repaid within 5 years, commencing from the agreement date by making quarterly payments through 16 installments at amount of Baht 1.05 million each for the 1st - 4th installment and Baht 1.95 million each for the 5th - 16th installment. The first installment is in December 2008.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 86

Subsidiary As at December 31, 2009 and 2008, long-term loan from a local bank for credit line of Baht 900 million for the purpose of factory construction, purchase of land and machinery with the interest rate at MLR-0.25%. On April 1, 2008, the subsidiary made additional agreement by transferring amount of Baht 84.91 million paid for letter of credit which was recorded as assets payable to be a part of long - term loan and by changing the repayment condition to be total 19 installments of Baht 20 - 80 million each, and the first payment is in March 2008. Moreover, the Company is required to increase share capital in the subsidiary for another amount of Baht 200 million, total share capital will be Baht 700 million as required by the Company as stated in note 27 and the subsidiary's share capital must be increased in amount of Baht 600 million within December 2008 as required; therefore, it issued a letter to extend the period to increase the share capital within six months or June 30, 2009 but subsidiary could not proceed the increasing. In December 2008, subsidiary has defaulted on repayment of principal and could not comply with the increase share capital condition that the bank charged interest at the defaulted rate (15.50% per annum) and on June 3, 2009, the Company and subsidiary was sued by the bank for making total debt settlement which had the debt value due to writ of prosecution on June 2, 2009 amount of Baht 933.45 million. The Court appointed for taking of evidence of the plaintiff and defendant on November 18 and 19, 2010. At present, subsidiary is under the negotiation for debt restructuring and submitted the debt restructuring plan to bank's consideration. As at December 31, 2009, there is debt from the principal of Baht 813.65 million and accrued interest expenses of Baht 124.35 million. Subsidiary transferred total principal to be current portion of long-term loans in full amount. Such loans are guaranteed by mortgaging land, building and machinery as stated in note 16 and pledging subsidiary's shares possessed by the parent company and guarantee by the parent company in full amount.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 87

23. TRANSACTIONS WITH RELATED PARTIES A portion of the Company's assets, liabilities, revenues, and expenses of the Company was derived from its related parties. These companies are related to the Company through the co-shareholders and/or co-directors. The financial statements are reflected the effects of these transactions on the basis determined by the normal course of business with related parties at the same rate applicable to other parties. Type of business Ekarat Solar Co., Ltd.

Manufacture and distributor of solar cell

Ploenchit Capital Co., Ltd.

Relationship Subsidiary/directorship Directorship

The Company has determined the pricing policy as follow :

Type of transaction

Pricing policy

Trading price

Base on market price

Rental and service income

At agreed rate indicated in agreement

Interest income

At agreed rate on the basis of market interest rate (MLR of SCIB)

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Annaul Report 2009

Ekarat Engineering Public Company Limited 88

As at December 31, 2009 and 2008, significant transactions with related parties are as follows : (Unit : Baht) 2008 Ekarat Solar Co., Ltd. Trade accounts receivable Other receivables Loans Accrued interest income Trade accounts payable

0.00 6,373,917.55 143,879,445.37 4,473,192.25 200,753.30

Separate financial statements Increase Decrease

2009

55,816,015.00 (15,408.00) 55,800,607.00 3,495,102.41 (5,366,277.55) 4,502,742.41 55,800,000.00 0.00 199,679,445.37 11,057,280.43 (9,430,794.93) 6,099,677.75 80,857,118.02 (73,158,047.32) 7,899,824.00

Significant revenues and expenses in the statements of income for the year ended December 31, 2009 andâ&#x20AC; 2008 are as follows : (Unit : Baht) Separate financial statements 2009 2008 Ekarat Solar Co., Ltd. Sales of goods and services 52,404,370.00 5,818,300.00 Purchases of assets 74,328,400.00 0.00 Other income 1,884,230.09 1,982,766.41 Rental 1,200,000.00 1,200,000.00 Interest income 11,057,280.43 13,171,279.72 Other expenses 1,239,000.00 303,000.00 Ploenchit Capital Company Limited Advisory Fee 500,000.00 0.00

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Annaul Report 2009

Ekarat Engineering Public Company Limited 89

24. PRESENTATION OF SEGMENT FINANCIAL INFORMATION The segment financial information for the year ended December 31, 2009 and 2008, are as follows : (Unit : Million Baht) Consolidated financial statements Construction Services Goods production and distribution 2009 2008 2009 2008 2009 2008 272.41 137.08 150.78 1,304.16 1,920.72 Revenues from sales and services 3.21 (2.10) 12.49 52.02 52.01 168.57 331.38 Gross profit Selling and administrative expenses Profit (Loss) from operation Other income Finance costs Corporate income tax Net profit (loss) Fixed assets Other assets Total assets

Total 2009 1,444.45 218.49 (301.17) (82.68) 19.85 (162.53) (20.42) (245.78) 1,531.28 740.94 2,272.22

2008 2,343.91 395.88 (317.74) 78.14 20.97 (96.38) (50.27) (47.54) 1,540.38 1,219.05 2,759.43

(Unit : Million Baht) Construction 2009

2008

Revenues from sales and services 131.58 Gross profit 51.11 Selling and administrative expenses Profit (Loss) from operation Other income Finance costs Corporate income tax Net profit (loss) Fixed assets Other assets Total assets

272.41 12.49

Separate financial statements Services Goods production and distribution 2009 2008 2009 2008 1,145.42 243.03

149.07 50.83

0.00 0.00

1,514.35 394.02

Total 2009

2008

1,277.00 294.14 (443.03) (148.89) 292.04 (3.54) (145.11) (5.49) 306.94 1,305.72 1,612.66

1,935.83 457.34 (262.88) 194.46 30.24 (31.58) (50.27) 142.85 240.41 1,791.26 2,031.67

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Annaul Report 2009

Ekarat Engineering Public Company Limited 90

25. COMMITMENT AND CONTINGENT LIABILITIES 25.1 The Company has commitment and contingent liabilities as follows : 25.1.1 As at December 31, 2009 and 2008, the Company has contingent liabilities on guarantee the using of credit line of subsidiary with a local bank in the amount of Baht 1,350 million as stated in note 19 and 22. On June 3, 2009, the bank sued subsidiary and the Company in being guarantor to make debt repayment total amount of Baht 933.45 million since the subsidiary defaulted on debt payment as stated in note 22. At present, they are under the negotiation for debt restructuring. 25.1.2†As at December 31, 2009 and 2008, the Company has contingent liabilities with two banks issuance letters of guarantee for electricity usage, bid and guarantee for sales and services per unit to government and private sectors in total amount of Baht 238.24 million and Baht 291.53 million, respectively. 25.1.3†As at December 31, 2009 and 2008, the Company has contingent liabilities on letters of credit amount of Baht 65.34 million and Baht 56.33 million, respectively. The contingent liabilities are guaranteed by land, building and equipment as stated in note 16. 25.1.4†As at December 31, 2009 and 2008, the Company has commitment on payment under assets rental and other service agreements with the amount of Baht 10.95 million and Baht 12.80 million, respectively. 25.2 Subsidiary The subsidiary has commitment and contingent liabilities as follows: 25.2.1†As at December 31, 2009 and 2008, the subsidiary has contingent liabilities on two local banks issuance letter of guarantee for electricity usage to the Provincial Electricity Authority, for the advance received for goods to a private company and for services to a government sector in total amount of Baht 1.46 million and Baht 11.59 million, respectively. 25.2.2†As at December 31, 2008, the subsidiary has contingent liabilities on opened letter of credit in amount of Baht 32.67 million for import raw materials and machinery, guaranteed by land, building and equipment as stated in note 16. 25.2.3†On February 28, 2007, the subsidiary entered into the agreement to purchase and to sell gases and chemical for the 60 months period, start from January 2008. The agreement was stipulated the minimum purchasing price and order quantity, and in case of the purchasing order is lower than the minimum quantity, the seller demand to pay the monthly management fee for the first 12 months, for the chemicals in amount of Baht 242,500.00 and for the gas in amount of Baht 194,600.00 and for the gas in amount of of Baht 143,300.00 each for the following months.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 91

25.2.4â&#x20AC; As at December 31, 2009 and 2008, the subsidiary has commitment on payment under assets rental and other service agreements with the amount of Baht 9.07 million and Baht 4.46 million, respectively. 25.2.5â&#x20AC; As at December 31, 2009, the subsidiary has commitment on obtaining the purchase order from the several buyers by receiving the payment in advance for goods in the amount of Baht 7.39 million, the remaining of Baht 47.14 million and the subsidiary has to produce and deliver the products to the buyers as agreed. 26. FINANCIAL INSTRUMENTS Policy to manage financial risk The Company and subsidiary exposure to the risk from change in market interest rate and foreign currency exchange rate and from failure to discharge obligations by counterparties. The Company and subsidiary will consider using derivative instruments, when it considers appropriate to manage such risks. However, the Company and subsidiary have no policy to hold or issue any financial instruments for speculation. Risk on interest rate The Company and subsidiary had short-term and long-term loans obtained from a financial institution with floating interest rate that may fluctuate based on the market situation and may incur risk when the interest rate is higher. Besides, subsidiary was sued for making debt settlement (as stated in 22). At present, it is under the negotia for debt restruting, the ultimate outcome has not been known. Therefore, interest rate may be changed depends on the success of negotiation for debt restructurinig. Risk on exchange rate Risks on exchange rates mainly involve with sales of goods and import of machines made in foreign currencies. As at December 31, 2009 and 2008, the Company and subsidiary's assets and liabilities denominated in foreign currencies which were not entered into the forward contract to hedge against exchange rates risk as follows :

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Annaul Report 2009

Ekarat Engineering Public Company Limited 92

Consolidated financial statements Trade accounts receivable Trade accounts payable 2009 2008 2009 2008 US Dollar Singapore Dollar Euro

16,274.70 0.00 527,500.00

374,081.84 6,369.44 95,000.00

17,679.53 0.00 446,136.88

897,425.00 0.00 59,173.44

Separate financial statements Trade accounts receivable Trade accounts payable 2009 2008 2009 2008 US Dollar Singapore Dollar Euro

16,274.70 0.00 70,400.00

374,081.84 6,369.44 95,000.00

4,259.53 0.00 440,508.80

2,175.00 0.00 30,748.00

Hedge against risk on exchange rate On November 14, 2008, the Company entered into forward contract with a commercial bank to hedge against such exchange rates risk from debt payment denominated in foreign currencies. The subsidiary company has not recorded the said financial liabilities in the financial statements. The payment maturity of the forward contracts are remained not greater than 6 months which the detail as at December 31, 2008 can be summarized as follows: Separate financial statements Foreign currency Baht under contract Fair value Euro 868,000.00 38,782,240.00 43,097,502.00 Credit risk The Company has credit risk as to trade accounts receivable and loans to subsidiary. However, since the Company peruse conservative lending policy and the several number of debtors, the Company does not anticipate any material damage from debt collections. Fair value Financial assets and liabilities shown in the balance sheets have book values closed to approximate fair values since these financial assets and liabilities are short-term and bearing interest rate close to market rate.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 93

27. SHARE CAPITAL Subsidiary According to the minutes of shareholders' extraordinary meeting no. 1/2008 held on February 5, 2008 and the shareholders' extraordinary meeting no. 2/2008 held on February 20, 2008 unanimously passed the resolution to increase its share capital from Baht 500 million to Baht 1,500 million amounting to Baht 1,000 million. The subsidary has registered the increase in share capital with the Ministry of Commerce on March 21, 2008. According to the minutes of shareholders' general meeting for the year 2008 held on April 30, 2008 unanimously passed the resolution to convert its debts to be capital by transferring debts from loans to subsidiary to be investment in subsidiary amount of Baht 200 million by issuing newly 20 million ordinary shares of Baht 10.00 each, the total paid-up share capital amounting to Baht 700 million. The subsidiary has registered the increase in share capital with the Ministry of Commerce on June 27, 2008. 28. LEGAL RESERVE In accordance to the Public Company Act B.E. 2535, the Company has to appropriate part of the annual net profit as legal reserve at the rate not less than 5% of the annual net profit deduction with deficit (if any) until this legal reserve reachs an amount 10% of the registered capital. This legal reserve is not available for dividends distribution. As at December 31, 2008, the Company appropriated its net profit for additional legal reserve amount of Baht 7.14 million. 29. DIVIDEND PAID According to the minutes of shareholders' general meeting for the year 2009 and 2008 held on April 3, 2009 and April 4, 2008, the Company passed the resolution to pay dividend to the shareholders for 790.17 million shares at Baht 0.10 each, amounting to Baht 79.02 million which was paid on April 30, 2009 and on May 2, 2008. The Company has paid such dividend in whole amount.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 94

30. EXPENSES ANALYZED BY NATURE The significant expenses analyzed by nature for the year ended December 31, 2009 and 2008 are as follow : Consolidated financial statements 2009 2008 Changes in inventories of finished goods and work in progress, increase (decrease) Raw materials and consumables used Loss on devaluation of goods (reversal) Employees benefit expenses Management benefit expenses Depreciation and amortization Advisory fee Commission

(46,736,930.88) 159,120,781.78 849,630,939.71 1,598,493,783.41 24,397,585.03 (4,603,785.63) 202,858,768.50 222,001,409.81 28,638,475.00 31,095,533.00 124,642,349.51 98,421,384.48 22,492,414.96 19,210,280.38 68,165,124.79 89,587,582.77

Separate financial statements 2009 2008

(59,914,433.94) 110,951,162.82 655,438,393.08 1,177,516,005.45 5,353,422.59 (3,429,229.69) 172,423,021.28 188,796,094.23 22,620,910.00 23,138,600.00 52,909,162.34 49,133,463.38 9,620,000.00 10,771,200.00 64,862,930.56 88,285,223.87

31. REGISTERED PROVIDENT FUND The Company and subsidiary has a contributory provident fund covering all employee which established provident fund under the Provident Fund Act B.E. 2530. Membership is voluntary upon attaining permanent status. Under the regulations of the fund, members are required to make monthly contribution to the fund at 3% of their basic salaries and the Company and subsidiary is required to make monthly contribution to the fund at the same rate. The employees are entitled the benefits on their death, resignation from the fund, resignation from their work or dissolution of fund. The fund is managed by American International Company Assurance company, Limited. As at December 31, 2009 and 2008, in the consolidated financial statements, the Company and subsidiary paid contributions to the fund amounted to Baht 4.95 million and Baht 4.72 million, respectively and Baht 4.23 million and Baht 4.12 million, respectively in the separate financial statements. 32. MANAGEMENT BENEFIT EXPENSES Management benefit expenses focuses expenses relating to salaries, remunerations and other benefits to the directors and management, in accordance with the definitions of the Office of the Securities and Exchange Commission. Management under definition includes a chief executive officer, the next four executive levels immediately below that chief executive officer, all persons in positions comparable to these fourth executive levels and includes the accounting and financial executive officer, the manager level above or persons in position comparable.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 95

33. DIRECTORS没 REMUNERATION The directors没 remuneration is benefits paid to directors of the Company as per section 90 of the Public Companies Limited Act excluding salaries and related fringe benefits paid to executive directors. 34. CAPITAL MANAGEMENT The objective of financial management of the Company and subsidiary is to maintain the continuity of operation capability and capital structure to be properly appropriated. 35.INVESTMENT PROMOTION PRIVILEGES The subsidiary company is granted certain right and privileged as a promoted industry from the Board of Investments under the Promotion of Investment Act B.E. 2520 for manufacturing of solar cells and solar modules type 5.5 the business of manufacturing electronic parts and equipment with the certificate no. 1367 (7)/2549 dated March 14, 2007. The tax incentives are extended to receive the rights and privileges as follows : - Exemption from payment of corporate income tax on net profit derived from the promoted activity for the period of 8 years from the date of income earnings and the comply with the promotion certificate must be met. - Exemption on dividends derived from the promoted activity granted an exemption of corporate income tax shall be exempted from computation of taxable income throughout the period of the promoted receives the exemption of corporate income tax. - In the case where a loss has been incurred during the period of receiving exemption of corporate income tax. The promoted subsidiary is granted permission to deduct such annual loss from the net profits accrued after the expiration of the period of exemption of corporate income tax for a period of not more than 5 years from the expiry of such period. - Fifty per cent reduction of the normal corporate income tax rate on the profits from the promoted activity for a period of 5 years after the expiry of the corporate income tax exemption period. - Double deduction from taxable income of transportation, electricity and water costs for the period of 10 years after the expiry of the exemption period. - Exemption of import duty on raw and essential materials used in the manufacturing of export products for a period of 5 years from the first import date. - Exemption of import duty on items which the promoted subsidairy imports for re-export for the period of 5 years from the first import date. The subsidiary company must comply with the certain conditions and term contained in the promotion certificate.

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Annaul Report 2009

Ekarat Engineering Public Company Limited 96

Significant revenue and expenses for the year ended December 31, 2009 and 2008 from the promoted activity granted as follows : (Unit : Baht) 2009 Consolidated financial statements Promoted Non-promoted Total Revenue from sales and services Other income Total revenues Cost of sale Selling and administrative expenses Finance costs Total expenses Net loss

89,684,829.58 0.00 89,684,829.58 143,988,014.82 14,503,381.69 61,012,903.83 219,504,300.34 (129,819,470.76)

131,332,641.18 3,473,905.30 134,806,546.48 148,891,065.14 55,532,593.62 89,339,249.53 293,762,908.29 (158,956,361.81)

221,017,470.76 3,473,905.30 224,491,376.06 292,879,079.96 70,035,975.31 150,352,153.36 513,267,208.63 (288,775,832.57)

(Unit : Baht) 2008 Consolidated financial statements Promoted Non-promoted Total Revenue from sales and services Other income Total revenues Cost of sale Selling and administrative expenses Finance costs Total expenses Net loss

189,741,024.36 0.00 189,741,024.36 233,902,874.53 18,747,233.29 35,646,204.68 288,296,312.50 (98,555,288.14)

225,304,106.23 4,708,904.27 230,013,010.50 244,449,946.14 35,055,353.34 42,320,122.26 321,825,421.74 (91,812,411.24)

415,045,130.59 4,708,904.27 419,754,034.86 478,352,820.67 53,802,586.63 77,966,326.94 610,121,734.24 (190,367,699.38)

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Annaul Report 2009

Ekarat Engineering Public Company Limited 97

36. RECLASSIFICATION The 2008 financial statements have been reclassified to conform to the presentation of the 2009 financial statements. 37. SUBSEQUENT EVENTS On February 12, 2009, the Company received the purchase order for transformer from Provincial Electricity Authority total selling price amount of Baht 104.08 million, by assigning within 4 months from signing date. At present, the contract is awaiting for the signature. 38. FINANCIAL STATEMENTS APPROVAL These financial statements were authorized for issue by the Company's Board of directors on February 26, 2010.

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Ekarat Engineering Public Company Limited 9/291 U.M.Tower 28th Floor, Ramkamhaeng Rd., Suanluang District Bangkok 10250 Thailand.


Akr 09