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Message from the Chairman of the Board of Directors Dear Shareholders: Fiscal 2007 was a remarkable year for Body Glove (Thailand) Public Company Limited. It was our third consecutive year of the record high profitability and industry – leading performance. We delivered strong results, while also investing in the future growth within our core brand “Body Glove”. Our performance in 2007 reflected the strength of the Body Glove brand, driven by our relentless customer focus, as well as the depth and diversity of talents within our team. By making appropriate investments in the areas of research, design, quality assurance and merchandising, we have further strengthened the “ever – important connection” with our customers and our ability to deliver “on – trend assortments” with a “high quality-to-price value” ratio. I would like to put a highlight on an important milestone that took place near the end of 2007. On December 11th , Body Glove (Thailand ) Public Company’s common stock began trading on the Market for Alternative Investment (mai) under the symbol “BGT”. Joining The Stock Exchange of Thailand was a significant true mark of our progress in building a Body Glove brand and delivering successful financial performance. I thank all of our BGT associates whose effort over the years has contributed to our achievements.

BODY GLOVE (THAILAND) PUBLIC CO., LTD

ANNUAL REPORT 2007


At BGT, we are passionate about providing support to worthy causes and giving back to our societies, we have donated both cash and clothing to various non-profit organizations across the country over the years. As we look toward 2008, we are excited about our plans to maximize the growth of the Body Glove brand by expand new stores, step into other territories and further strengthen our financial performance. I am confident that our effort to forge a strong connection with customers, our commitment to operating disciplines, talent and energy of our team will deliver profitable growth to our shareholders for years to come. On behalf of the Board of Directors, I would like to take this opportunity to express my sincere gratitude to all our stockholders, customers and business alliances for continuous support the Company’s business operations, and extend my appreciation to the Board members, executives and employees for their hard work and full dedication. Sincerely,

Nopdol Tumwattana Chairman of the Board of Directors

BODY GLOVE (THAILAND) PUBLIC CO., LTD

ANNUAL REPORT 2007


Message from the CEO

Dear Shareholders: BGT marketing mission is to be the most relevant, valuable and important Surf lifestyle brand among our targeted customers. We will never stop learning about what’s important to our customers – investing in focus groups, fit clinics and customer intercepts to sharpen our awareness of their passions, perspectives and preferences. Underlying everything we do at BGT is a strong commitment to operating discipline and solutions that contribute to our growth by enhancing the customer experience and promoting advances in productivity and cost-efficiency.

BGT is well-positioned to sustain strong performance up 28% and High Dividend. Total revenue reached 485 million baht for 2007, up 28% from the prior year. Contributing to the record sales, comparable shops sales rose 19% and our counters sales rose 61%. Our operating profit was 12%, an improvement over last year’s record 18%, reflecting our efforts to deliver a strong merchandise margin and a commitment to operational excellence. Net profit for 2007 increased 54% to THB 40 million, or THB 0.64 per share. We also strengthened the company’s cash position to THB 100 million at year-end, while continuing to invest in our growth initiatives.

BODY GLOVE (THAILAND) PUBLIC CO., LTD

ANNUAL REPORT 2007


The Board recommended a final dividend of THB 0.25 per share for the total of 80,000,000 shares approval by the shareholders at the forthcoming Annual General Meeting. BGT to pay dividend greater than its 40% dividend payout policy which we would be 50%. As we look ahead, we are confident that Body Glove is well-positioned to sustain strong performance. We are excited about our growth strategies and continue to invest in talent and strengthen our operations with new systems and upgraded facilities.

Reformulated marketing Strategy driving up net profit 54% from prior year and ROE above 26% We are driving growth through selectively opening new stores and upgrading existing locations. In 2007, new Body Glove stores continued to perform extremely well, quickly achieving sales productivity comparable to our mature stores, and ROE of more than 26% and net profit was increase 54% from prior year. We also focused on maximizing existing real estate by increasing the size of our smaller Body Glove stores, as well as relocating stores to better sites. This strategy not only benefited sales productivity, but also had a meaningful lift to store profitability.

BODY GLOVE (THAILAND) PUBLIC CO., LTD

ANNUAL REPORT 2007


Base on positive results, BGT plans to utilize its IPO proceeds to open not less 20 branches in 2008. From the current 71 retail shops and counters, this would help BGT to better penetrate its targeted market segment. On top of this, BGT will benefit from economy of scale, which will become a key growth driver over the next three years.

Body Glove No.1 surf lifestyle apparel in Thailand and Asia In 2004 we celebrated a major milestone with launch of “Body Glove Surf & Trend Apparel line� our new intimates line. Our collection feature surf and trendy wear with a comfortable, trend, cool and sweetly sexy feeling for the 15 to 25 year-old BG Girls and Guys. Customer have responded enthusiastically to BG Surf & Trend line, which is offered today in all Body Glove 41 stand alone shop and 30 counters at Departmental store. Our new easy lifestyle line category launched in 2005, represents an important long-term growth opportunity. Target at 20 to 35 year-olds. BG lifestyle line provides this underserved demographic with sportswear-influenced fashion that can go effortlessly from the workplace to leisure activities. As with any new line collection, there are elements that have been well-received and others that we are refining. Based on the response from customer, we are confidence that the brand, demographic and store environment are right on the target. We also have opportunities to build the brand further by expanding our collection line and adding categories. We are excited about the growth potential of this business.

BODY GLOVE (THAILAND) PUBLIC CO., LTD

ANNUAL REPORT 2007


Building powerful brand-defining categories is at the heart of our Destination BGT strategy. Building powerful brand-defining categories that resonate with our customers is at the heart of our “Destination Body Glove� strategy. A perfect example is our Value to Buy yarn dye Combo Polo Tee business. Over the past several years, we have established a dominant position in round neck hi-tech surf printed Tee, which have become a cornerstone for the Body Glove brand, driven by consistent fits, on-trend styles and a strong value and quality offering. Looking ahead, we will continue to build upon our number one market share position by offering innovation and newness in Polo Tee that is on-target for the Body Glove customer. We will also pursue similar growth in categories such as woven tops, jeans, slipper, boxer pant, mask snorkel combo, swimwear, hard goods and accessories, where we see meaningful opportunity to be the brand-of-choice. To build these categories, we are devoting extensive resources in merchandising, design and sourcing to offer our customers on surf-trend styling combined with unsurpassed quality and value.

I thank you for your support of BGT and look forward to sharing our achievements with you in the future. Sincerely,

Goh Kok Cheng, Dickson Chief Executive Officer & Executive Director

BODY GLOVE (THAILAND) PUBLIC CO., LTD

ANNUAL REPORT 2007


Financial Highlights PROFIT AND LOSS (In million baht)

Total Revenues

YEAR ENDED 2007

YEAR ENDED 2006

YEAR ENDED 2005

485.30

379.65

277.43

27.83%

36.84%

81.36%

483.48

378.59

276.10

57.49

48.84

18.89

EBIT growth (%)

17.71%

158.55%

N.A.

Gross profit margin (%)

53.80%

54.31%

53.73%

12.43

16.67

0.00

5.47

6.43

5.22

39.60

25.74

13.67

Net profit growth (%)

53.87%

88.31%

N.A.

Net Profit Margin (%)

8.16%

6.78%

4.93%

404.37

241.28

209.29

12.27%

11.42%

7.51%

Total Liabilities

188.58

154.77

148.52

DE ratio (time)

0.87

1.79

2.44

215.79

86.51

60.77

26.20%

34.95%

25.34%

Revenue growth (%) Revenue from sale Profit before Interest exp. and Income tax

Income tax Interest expenses Net Profit

BALANCE SHEET

Total Assets Return on Asset (%)

Total Shareholders’ equity Return on Equity (%)

BODY GLOVE (THAILAND) PUBLIC CO., LTD

ANNUAL REPORT 2007


DIRECTORS, OFFICERS & CORPORATE INFO BOARD OF DIRECTOR

EXECUTIVE OFFICERS

CORPORATE INFORMANTION

Mr. Nopdol Tumwattana

Mr. Nopdol Tumwattana

Share Registrar

Chairman of The Board

Chairman of The Board and Executive Director

Mr. Goh Kok Cheng, (Dickson)

Mr. Goh Kok Cheng, (Dickson)

Director

Chief Executive Officer and Executive Director

Mr. Goh Kok Beng

Ms. Waristha Thapanasakulwong

Thailand Securities Depository Co.,Ltd. Capital Market Academy Building 2/7 Moo.4 ( North Park Project ) Vibhavadi- Rangsit Rd. Tung Song Hong Laksi Bangkok 10210 Tel : 66 (0) 2596-9000 Fax : 66 (0) 2832-4994-6

Director

Chief Financial Officer

Mrs. Mallika Leeraphante

Ms. Dolnapa Tumwattana

Director

Operation Director

Asso. Prof. Nantarika Chansue

Mrs. Nuttamon Bualah

Director

Personnal Assistant to CEO ( Sales Dept. )

Pol. Gen. Sereepisuth Temeeyaves

Ms. Mathira Thongsuwan

Chairman of the Audit Committee and Independent Director

Senior Accounting Manager

Prof.Dr. Surapone Virulrak Audit Committee and Independent

Mr. Chai Ratanamahawong Senior Financial Manager

Director

Mrs. Arthivon Bunnag

Mrs. Thanamon Ekthanutt

Audit Committee and Independent Director

Product Manager

A.M.T. Associates 491/27 Silom Plaza Silom Road Bang Ruk Bangkok 10550 Tel : 66 (0) 2234-1676 Fax : 66 (0) 2237-2133

Legal Advisor International Legal Counsellors Thailand Co.,Ltd. No. 175 Sathorn City Tower 18Fl. South sathorn Rd. Bangkok 10120 Tel : 66 (0) 2697-6005 Fax : 66 (0) 2697-6041

Registered Office 299/9 Moo 7 , Phaholyothin Rd. Anusawaree Bangkhen Bangkok 10220 Thailand Tel : 66 (0) 2972-3460 Fax : 66 (0) 2972-3479

Mrs. Thanya Thungvachiragun

Corporate Website

HR&Admin. Manager

www.bodyglove.co.th

Mr. Thammarak Khunying Warehouse Manager

Mr. Thanawoth Chaikrue Regional Sales Manager

Ms. Nattanant Simsa Assistant Area Manager

Mr. Thamrongpon Limratanapant Assistant Area Manager

BODY GLOVE (THAILAND) PUBLIC CO., LTD

Auditor

ANNUAL REPORT 2007


MAJOR SHAREHOLDERS No.

Stockholder name

No. of shares (As per 29

th

Feb 2008 )

1

MS.

DOLNAPA

TUMWATTANA

20,130,000

2

MR.

GOH KOK

BENG

13,006,100

3

MR.

GOH KOK

CHENG, DICKSON

12,756,100

4

MR.

NOPDOL

TUMWATTANA

9,736,000

5

MR.

TAWAT

TASSANEEPONG

2,990,000

6

THAI N VDR CO.,LTD.

7

MR.

WITIT

PONGPIRODOM

8

MR.

PISIT

SOTIPANCHAI

725,000

9

MR.

SIEW THEAM

HEE

700,000

10

MR.

LIEW KIAN

HUAT

600,000

11

MR.

MATTHEW D.

WALDEN

600,000

12

MRS.

NUNTARIKA

CHANSUE

500,000

13

MRS.

SOMLUX

CHINDAPAN

400,000

14

MR.

PITIRAT

OSOTSAPA

374,300

15

MR.

SUWAT

MEKPATTANAPINYO

300,000

16

MR.

PISIT

RUNGSIWATTANA

263,000

17

MRS.

JINSUPANG

KOSOLPAN

232,000

18

HELLO BANGKOK TRIVISION CO.,LTD.

200,000

19

MRS.

MEENA

AWASDANON

200,000

20

MS.

BRIGIT

SAISAMORN

200,000

21

MR.

KOSAK

SIRITO

200,000

22

MR.

SOMJET

LIMNARAPORN

200,000

23

MR.

ORLAN

PAYAKKAPORN

200,000

24

MR.

TANUN

TANASANPISUT

200,000

25

MRS.

MANOON

POTIPAK

200,000

26

MS.

LADDAWAN

CHUEPETCH

200,000

27

MISS

LAI KUEN

FONG

200,000

28

MS.

PRAPASSORN

INGKANUN

200,000

29

MR.

PANTEP

KEERATIPOJ

192,800

30

MR.

PRASERT

JIARAWONG

190,000

31

MS.

WARITTHA

THAPANASAKULWONG

190,000

32

MR

WASIN

PATIKULSET

180,000

33

MR.

SOPHON

TAVORNKIJPANICH

175,000

34

MS.

KORNVIPA

SRICHAMROEN

170,300

35

MS.

NOPPAPOON

JITTRATORN

170,000

36

MS.

NITTAYA

SUWANNIKKA

160,000

37

MRS.

ARPORN

WATCHARA

150,000

38

MRS.

KORAKAN

ANUPONGRAT

148,000

39

MR.

SOMCHAI

PENSIRINAPA

138,000

40

MR.

PIPAT

PARUSMETHEEKUL

130,000

2,103,600 1,050,000

BODY GLOVE (THAILAND) PUBLIC CO., LTD

ANNUAL REPORT 2007


Global Shop Image

BODY GLOVE Stakeholder Priviledge Card Receive your Stockholder Plantinum Card on the Thai version side.

BODY GLOVE (THAILAND) PUBLIC CO., LTD

ANNUAL REPORT 2007


Annual Report 2007

 pages

Audit Committee’s Report Financial Highlights Profile of Board of Directors and Executives Major Shareholders Nature of Business Management’s Discussion and Analysis Risk Factors Connection Transactions Management Financial Statements Remuneration of the Auditor Company Profile

3 5 6 16 17 28 33 37 48 61 82 83

Body Glove (Thailand) Public Company Limited

page 1


Annual Report 2007

page 2

Body Glove (Thailand) Public Company Limited


Annual Report 2007

         The Audit Committee is consisted of three independent directors, tenure a term of two years each. The Audit Committee was appointed through the Board of Directors resolution to promote and encourage the company to fulfill its responsibilities of listed company; to monitor corporate compliance; to advise the Board of Director and Executives on risk management and internal control system; to assure that the Company’s internal control department is assigned to ensure that the Company’s internal control systems are adequate and systematically operated; and to provide follow-up reports subsequent to the internal audit to the Audit Committee on a regular basis. In 2007, the Audit Committee of Body Glove (Thailand) Public Company Limited, held 5 meetings to review and consider the relevant matters appertained to its duty and responsibility including other matters in view of the regulations and guidelines provided by the Stock Exchange of Thailand which could be summarized as follows: ƒ Review the Company’s financial reports, quarterly and annual financial statements with Internal Audit and Certified Public Accountant to ensure compliance with the generally accepted accounting standards and disclosure of adequate key information. ƒ Review connected transactions and other transactions which may be perceived as potentially causing conflicts of interest between the Company and concerned individuals to determine appropriate and transparent disclosure of information to be in complete compliance with all rules and regulations and to ensure that no transaction had significant impact to the Company. ƒ Review the risk management system to ensure it is appropriate and effective. Report the appraisal on the performance of the internal control system to the Board of Directors and avail to make comments during each Board of Director meeting including follow-up on the set up of the internal control system and assessment program to be in line with the rules and regulations of the Stock Exchange of Thailand. ƒ Review regularly with the Internal Audit to ensure that the Company performs in accordance with a corporate governance role and in compliance with the regulations, “Code of Best Practice for the Company’s Executives and Employees” as submitted to the Board of Directors. ƒ Consider and approve the internal audit plan and annual budget to assure that the objective and scope of work govern the significant risk appertain to business operation. ƒ Consider and nominate the Company’s Certified Public Accountant and the remuneration for approval of the Ordinary General Shareholder’s Meeting. At all Board of Directors Meetings, the Audit Committee and Internal Audit Department prepared summary reports on the assessment of the internal control systems with recommendations on related activities occurred during the fiscal year for submission to the Board of Directors Meeting in order to acknowledge the performance of the Audit Committee and to prevent any error in management by the Executives.

Pol.Gen. …............................................................. (Sereepisuth Taemeeyaves) Chairman of Audit Committee

Body Glove (Thailand) Public Company Limited

page 3


Annual Report 2007

      1987

1988 1991 1994 2000 2007

Body Glove Thai Segway International Co., Ltd., has evolved from a joint investment of Mr. Nopdol Tumwattana and Mr. Mark J. Walden, an American business entrepreneur with the objective of being the manufacturer of readymade apparel under the trademarks of Walt Disney and Body Glove to the U.S. based companies. As a result, Mr. Nopdol Tumwattana has gained a reputable business relationship with the Body Glove trademark owner. The Company was established on March 31st, 1988 with registered capital of Baht 10 million, with the objective of being the distributor of readymade apparel and accessories under the Body Glove trademark . The Company was awarded the Body Glove trademark from IP Global Investments America, INC. (“IPG”). The Company increased its share capital to support the Company’s business expansion from Baht 10 million to Baht 20 million. The Company increased its share capital to support the Company’s business expansion from Baht 20 million to Baht 40 million. The Company increased its share capital to support the Company’s business expansion from Baht 40 million to Baht 60 million. ƒ On June 29th, 2007, the Company increased its share capital to support the Company’s business expansion from Baht 60 million to Baht 80 million, and changed the name from Body Glove (Thailand) Co., Ltd. to Body Glove (Thailand) Public Company Limited. ƒ On November 23rd, 26th and 27th, 2007, the Company had made the initial public offering of 20 million shares at par value Baht 1.00, public offered at Baht 4.70 per share. ƒ Registered Paid-up Capital of Baht 80 million with Ministry of Commerce on November 30th, 2007. ƒ On December 11th, 2007, the Company’s share capital was established as registered securities in the MAI

During the year 1988 to May 2nd, 2007, the Company was awarded by IPG for the distribution of readymade apparel and accessories under the trademark of Body Glove without any agreement whereas the Company had been paying for the copyright or Body Glove trademark rights regularly. On May 3rd, 2007, the Company had entered and duly signed the Master Licensing Agreement and Rights to Body Glove trademark with IPG and later on June 1st, 2007, the Company had duly signed the Addendum to the Master Licensing Agreement and Rights to Body Glove Trademark with IPG. Throughout the years, the Company had constantly developed and introduced new designs of readywear and related accessories under the trademark of Body Glove to match the Company’s target group customer’s preference and demand at different times. At the beginning, Body Glove readywear sold in Thailand were emphasized on the bright and colorful design pattern and later developed new pattern to match the target group customer’s preference and lifestyle under the concept of Surf Fashion & Easy Lifestyle. As a result, the Company’s product had gained a broaden popularity among the target group customer extensively. The Body Glove trademark rights awarded to the Company was the exclusive rights that extended to the retails operation and being a representative of the manufacturer and distributor of readywear apparel including other related products under the trademark of Body Glove in 6 countries such as Thailand, Vietnam, Burma, Laos, Cambodia and the Philippines. Moreover, the Company was granted the right to extend such rights of Body Glove trademark to other individuals as deem appropriate,

page 4

Body Glove (Thailand) Public Company Limited


Annual Report 2007 Financial Highlights Balance Sheet (Btm)

2005

2006

2007

Total Assets

209.29

241.28

404.37

Total Liabilities

148.52

154.77

188.58

60.77

86.51

215.79

Total Shareholders' equity P/L (Btm)

2005

2006

2007

Revenue from selling

276.10

378.59

483.48

Total Revenues

277.43

379.65

485.30

Cost of sale of goods

(127.75)

(172.97)

(223.37)

Selling and administrative expenses

(126.65)

(152.16)

(190.69)

Total Expenses Profit before Interest exp.and Income tax

(258.54)

(330.81)

(427.80)

18.89

48.84

57.49

0.00

(16.67)

(12.43)

Interest expenses

(5.22)

(6.43)

(5.47)

Net Profit

13.67

25.74

39.60

Income tax expenses

Finacial Ratios

2005

Revenue growth (%)

81.36%

2006

2007

36.84%

27.83%

Net profit growth (%)

N.A.

88.31%

53.87%

EBIT growth

N.A.

158.55%

17.71%

53.73%

54.31%

53.80%

4.93%

6.78%

8.16%

DE ratio (time)

2.44

1.79

0.87

ROA

(%)

7.51%

11.42%

12.27%

ROE

(%)

25.34%

34.95%

26.20%

(%)

Gross profit margin (%) Net Profit Margin

(%)

Business Highlights

Body Glove (Thailand) Public Company Limited

page 5


page 6

Body Glove (Thailand) Public Company Limited

Note: * Authorized Persons

- M.A. Education, California Polytechnic University, Pomona, USA - B.A. Education, Chiangmai University

54

2. Mrs. Mallikar Leelaphan*(Director)

Education

- M.A. Political Science, Political Management Program, Ramkhamhaeng University - Bachelor of Law, Ramkhamhaeng University - Passed the Advocacy Traaining from the Institute of Advocacy Training, Lawyer Council of Thailand, Class 23, Y2004 - Business Administration Degree South Plains College, Texas, U.S.A. - Attended Director Accreditation Program, Class 50/2006 on February 25th, 2006

Age (Yrs.)

56

Name Position

1. Mr.Nopdol Tumwattana* (Chairman and Executive Chairman)

No.

Profiles of Board of Directors and Executives

-

12.17% 9,736,000 shares

Updated Feb 29,2008

No. of shares ( in ratio )

Mr. Nopdol Tumwattana’s sister and Miss Dolnapa Tumwattana’s aunt

Mrs. Mallikar Leeraphan’s brother and Miss Dolnapa Tumwattana’s father

Relationship

Director Executive Chairman

Managing Director Evensway (Thailand) Co., Ltd. Chairman

1992-present 1991-present 1989-present 1988-2006

Body Glove (Thailand) Public Company Limited

Mallikar Development Co., Ltd. Body Glove (Thailand) Co., Ltd.

Director Director Director Director Director

June 2007 present 2005-present 2004-present 2004-present 2003-present

2000-May 2007 Director

Pang Yim Co., Ltd.

Yentafo 2004 Motorway Co., Ltd.

Yentafo 2005 Changwattana Co., Ltd.

Body Glove (Thailand) Co., Ltd.

1988-May 2006 Chairman

TSI International Co., Ltd.

Gold Master (Public) Co., Ltd.

Gold Master International Co., Ltd.

Major Arrow Business Co., Ltd.

Executive Chairman

June 2006 present

Body Glove (Thailand) Public Company Limited

Chairman and Executive Chairman

June 2007 present

Period

Working Experience Position Company

Annual Report 2007


Name Position

Note: * Authorized Persons

3. Asst. Prof. Dr. Nantarika Chansue* (Director)

No.

-

-

-

-

PhD. Marine Science (Immunotoxicology), College of William and Mary, U.S.A. M.A. Political Science, Ramkhamhaeng University MBA, Assumption University B.S. Veterinary Medicine, Chulalongkorn University Bachelor of Law, Ramkhamhaeng University Diploma of Accredited Gemologist, Asian Institute of Gemological Sciences Attended Director Accreditation Program, Class 50/2006 on February 25th, 2006

46

-

Education

Age (Yrs.)

Profiles of Board of Directors and Executives

0.63 % 500,000 shares

Updated Feb 29,2008

No. of shares ( in ratio ) -

Relationship

Director Director Director Director Asst. Prof. C9

June 2007 present 2004-present 2001-present 2000-present 1989-present

Period

Aquatic Animal Medicine Unit, Department of Medicine, Faculty of Veterinary Medicine, Chulalongkorn University.

Education First Co., Ltd.

The Education Alliance Co., Ltd.

Body Glove (Thailand) Co., Ltd.

Body Glove (Thailand) Public Company Limited

Working Experience Position Company

Annual Report 2007

Body Glove (Thailand) Public Company Limited

page 7


page 8

Name Position

Body Glove (Thailand) Public Company Limited

Note: * Authorized Persons

4. Mr. Goh Kok Cheng, Dickson* (Director / Chief Executive Officer / Director of Sales and Marketing Operation)

No.

40

Age (Yrs.)

Education

- Chung Ling High School (A Level) - Attended Director Accreditation Program, Class 65/2007 on August 7th, 2007

Profiles of Board of Directors and Executives

-

shares

15.95 % 12,756,100

Updated Feb 29,2008

No. of shares ( in ratio ) Mr. Goh Kok Beng’s brother

Relationship

Director and Chief Body Glove (M) Sdn Bhd Executive Officer Yen Club Asia Sdn Bhd Yen Group Holding Corporation Sdn Bhd Yen Group Properties (M) Sdn Bhd Idaman Berlian Sdn Bhd Yen Shoes (M) Sdn Bhd Yogen Fruz (M) Sdn Bhd Irama Pilihan Sdn Bhd Sunshine Square Jewellers Sdn Bhd

Director Director Director Director Director Director Director Director

2002-2006 2002-present 2002-present 1999-present 1995-present 1995-present 1995-present 1995-present 1995-present

2004-May 2007 Director / President / Body Glove (Thailand) Co., Ltd. Director of Sales and Marketing

Neo Static Limited

Director / Chief Body Glove (Thailand) Public Executive Officer / Company Limited Director of Sales and Marketing Operation

2005-Mar 2007 Director

June 2007 present

Period

Working Experience Position Company

Annual Report 2007


4. (Contd.)

Name Position

Note: * Authorized Persons

No.

Age (Yrs.)

Profiles of Board of Directors and Executives Education Updated Feb 29,2008

No. of shares ( in ratio )

Relationship

Director Director Director Director Director Director Director

1991-present 1991-present 1990-present 1989-present 1988-present 1986-present 1986-present

Period

Takeaway Fashion Sdn Bhd

Hoo Hwa Construction Sdn Bhd

Triple G Holding Sdn Bhd

Yen Group Goldsmith (M) Sdn Bhd

Image Network Sdn Bhd

Grand Components Sdn Bhd

Suntech Enterprise Sdn Bhd

Working Experience Position Company

Annual Report 2007

Body Glove (Thailand) Public Company Limited

page 9


page 10

Name Position

Body Glove (Thailand) Public Company Limited

Note: * Authorized Persons

5. Mr. Goh Kok Beng Director

No.

46

Age (Yrs.)

Education

- Attended Director Accreditation Program, Class 65/2007 on August 7th, 2007

- Chung Ling High School (A Level)

Profiles of Board of Directors and Executives Relationship Period

Director Director Director Director Director Director Director Director Director Director Director Director Director

2002-present 2002-present 1999-present 1995-present 1995-present 1995-present 1991-present 1991-present 1990-present 1989-present 1988-present 1986-present 1986-present

Hoo Hwa Construction Sdn Bhd

Takeaway Fashion Sdn Bhd

Triple G Holding Sdn Bhd

Yen Group Goldsmith (M) Sdn Bhd

Image Network Sdn Bhd

Suntech Enterprise Sdn Bhd

Grand Components SDN.BHD.

Yogen Fruz (M) Sdn Bhd

Irama Pilihan Sdn Bhd

Yen Shoes (M) Sdn Bhd

Yen Group Properties (M) Sdn Bhd

Yen Club Asia Sdn Bhd

Yen Group Holding Corporation Sdn Bhd

Body Glove (Thailand) Co., Ltd.

Body Glove (Thailand) Public Com[any Limited

Working Experience Position Company

16.26 % Mr. Goh Kok Cheng’s June 2007Director 13,006,100 brother present shares 2004-May 2007 Director

Updated Feb 29,2008

No. of shares ( in ratio )

Annual Report 2007


Name Position

Note: * Authorized Persons

6. Pol.Gen. Sereepisuth Taemeeyaves (Director, Independent Director and Chairman of Audit Committee

No.

59

Age (Yrs.)

Education

- Attended Director Accreditation Program, Class 62/2006

- B.S. Public Administration (Royal Police Cadet Academy, Thailand)

Profiles of Board of Directors and Executives

-

Updated Feb 29,2008

No. of shares ( in ratio ) -

Relationship

Body Glove (Thailand) Public Director, Company Limited Independent Director and Chairman of Audit Committee Director, Body Glove (Thailand) Co., Ltd. Independent Director and Chairman of Audit Committee Airport of Thailand Co., Ltd. IRPC (Public) Co., Ltd. Royal Thai Police Royal Thai Police Royal Thai Police

Director Director National Police Chief National Jaray Police Deputy National Police Chief

June 2007present

January 2007May 2007

Present Present 2007-present 2004 October 17th , 1998

Period

Working Experience Position Company

Annual Report 2007

Body Glove (Thailand) Public Company Limited

page 11


page 12

Body Glove (Thailand) Public Company Limited

6. (Contd.)

Name Position

Note: * Authorized Persons

No.

Age (Yrs.)

Profiles of Board of Directors and Executives Education Updated Feb 29,2008

No. of shares ( in ratio )

Relationship

Deputy Police Chief Royal Thai Police Royal Thai Police Commissioner, Central Investigation Bureau Royal Thai Police Commissioner, Royal Police Cadet Academy, Thailand Deputy Royal Thai Police Commissioner,Central Investigation Bureau

October 2nd, 1998 December 6th, 1997 October 6th, 1997 March 16th, 1995

Period

Working Experience Position Company

Annual Report 2007


Name Position

Body Glove (Thailand) Public Company Limited

Note: * Authorized Persons

8. Mrs. Artivon Bunnag (Director, Independent Director and Audit Committee)

7. Professor Emeritus Dr. Surapone Virulrak (Director, Independent Director and Audit Committee)

No.

- MBA Business Administration University of Arkansas at Little Rock, U.S.A. - Attended Director Accreditation Program, Class 61/2006

- Ph. D. (Drama and Theatre), University of Hawaii, U.S.A. - M.A. (Drama and Theatre), University of Washington, U.S.A. - Attended Director Accreditation Program, Class 62/2006

63

37

Education

Age (Yrs.)

Profiles of Board of Directors and Executives

-

Updated Feb 29,2008

No. of shares ( in ratio ) -

Relationship

Director, Body Glove (Thailand) Co., Ltd. Independent Director and Audit Committee Director

January 2007May 2007 July 1995 present

Director, Body Glove (Thailand) Public Independent Company Limited Director and Audit Committee

Assistant to CEO Kantana Group (Public) Co., Ltd. (Investor Relations) Assistant to CEO Trinity Advisory (2001) Co., Ltd.

2004-2006 2001-2004

Triwantra Co., Ltd.

Director

2006-present

January 2007 - Director, Body Glove (Thailand) Co., Ltd. May 2007 Independent Director and Audit Committee

June 2007 present

October 25th, Professor Emeritus Faculty of Commercial Arts, 1967 – Chulalongkorn University September 30th, 2004

Gold Master (Public) Co., Ltd.

Director, Body Glove (Thailand) Public Independent Company Limited Director and Audit Committee

June 2007 present

Period

Working Experience Position Company

Annual Report 2007

page 13


page 14

Body Glove (Thailand) Public Company Limited

Note: * Authorized Persons

44

10. Miss Waristha Thapanasakulvong (Chief Finance Officer)

Age (Yrs.)

26

Name Position

9. Miss Dolnapa Tumwattana (Operations Director)

No.

Education

- B.S. Business Administration, Management, Ramkhamhaeng University

- B.S. Business Administration, Marketing, University of San Francisco, California, U.S.A. - CA Professional Designation Degree, Major: Merchandising Product Development, Fashion Institute of Design & Merchandising (FIDM) Los Angeles, U.S.A.

Profiles of Board of Directors and Executives Relationship Period

0.24 % 190,000 shares

-

Body Glove (Thailand) Co., Ltd.

Internship

March-June 2003

1996-2006

Account Manager Body Glove (Thailand) Co., Ltd.

2006-May 2007 Finance Controller Body Glove (Thailand) Co., Ltd.

Body Glove (Thailand) Public Company Limited

Bisou Jeans / True Meaning, USA

Assistant Designer Internship

June-October 2004

Chief Finance Officer

Body Glove (Thailand) Co., Ltd.

Marketing and Operations Manager

June 2007 present

Body Glove (Thailand) Public Company Limited

Working Experience Position Company Operations Director

25.16 % Mr. Nopdol June 2007 20,130,000 Tumwattana’s present daughter and Mrs. shares Mallikar Leeraphan’s 2004-May 2007 niece

Updated Feb 29,2008

No. of shares ( in ratio )

Annual Report 2007


Name Position

Body Glove (Thailand) Public Company Limited

Note: * Authorized Persons

12. Miss Methira Thongsuwan(Senior Account Manager)

11. Mr. Chai Ratanamahawong (Senior Finance Manager)

No.

- B.S. Business Administration, Department of Accounting, Ramkhamhaeng University

- B.S. Business Administration, Finance and Banking, Assumption University

40

39

Education

Age (Yrs.)

Profiles of Board of Directors and Executives

-

-

Updated Feb 29,2008

No. of shares ( in ratio )

-

-

Relationship

Senior Finance Manager

Body Glove (Thailand) Public Company Limited

Senior Account Manager

Body Glove (Thailand) Public Company Limited

Financial Analyst Tuntex (Thailand) Public Co., Ltd.

1991-May 2007 Account Manager Body Glove (Thailand) Co., Ltd.

June 2007present

2001-2005

2006-May 2007 Finance Manager Body Glove (Thailand) Co., Ltd.

June 2007present

Period

Working Experience Position Company

Annual Report 2007

page 15


Annual Report 2007

 

List of the top 10 shareholders as shown in the Share Registration Book as of February 29th, 2008



1. Miss Dolnapa Tumwattana 2. Mr. Goh Kok Beng 3. Mr. Goh Kok Cheng, Dickson 4. Mr. Nopdol Tumwattana 5. Mr. Tawat Tassaneepong 6. Thai N VDR Co.,Ltd. 7. Mr. Witit Pongpirodom 8. Mr. Pisit Sotipanchai 9. Mr. Siew Them Hee 10.Mr. Liew Kian Huat

Total Shares





20,130,000 13,006,100 12,756,100 9,736,000 2,990,000 2,103,600 1,050,000 725,000 700,000 600,000

25.16 16.26 15.95 12.17 3.74 2.63 1.31 0.91 0.88 0.75

63,796,800

79.76

The groups of major shareholders responsible for setting company policies are consisted of members of Tumwattana’s Family being Mr. Nopdol Tumwattana as Directors in addition to members Malaysian Investors being Mr. Goh Kok Cheng, Dickson and Mr. Goh Kok Beng.

page 16

Body Glove (Thailand) Public Company Limited


Annual Report 2007

      Body Glove (Thailand) Public Company Limited operate a retail business on the distribution of readywear apparel and related accessories under the trademark of Body Glove with Hand Device. The high quality product at affordable price being distributed by the Company under the trademark of Body Glove consisted of readywear apparel for men and women, ages 15 – 35 years including related accessories such as back pack, shoulder bag, traveling bag, wallet, pencil case, cap and socks. The Company constantly developed store expansion to cover all regions during the year 2007 by adding more flagship stores and outlets in the department stores including regularly redecorated the existing flagship stores in terms of design and uniqueness to be in line with the new stores. In addition, the Company also placed high emphasis on the selection of new location for flagship stores in terms of prime location and to be in line with the demand of the market region. As at December 31st, 2007, the Company sold the product through 41 Body Glove flagship stores situated in prime business locations and through 30 counters in the leading department stores. The said flagship stores and Body Glove counters are situated in Bangkok and major provinces in all regions of the country such as Nonthaburi, Chiangmai, Chiangrai, Chonburi, Chanthaburi, Rayong, Kanchanaburi, Ayudhya, Phetchaburi, Nakhon Ratchasima, Ubon Ratchatani, Udon Thani, Nongkhai, Konkaen, Prachuap Khiri Khan, Surat Thani, Phuket, Krabi, Songkhla, Nakhon Si Thammarat, Chumphon, Lampang and Nakhon Sawan. Moreover, the Company also has one warehouse situated at No. 299/9 Moo 7, Phahonyothin Road, Bangkean, Bangkok, the area as the head office which is convenient for product distribution arrangement to various stores and to oversee the inventory. As at December 31st, 2007, the Company sold the product through local channels only through distribution channels as follows: (1) Distribution through 41 Body Glove Flagship Stores located major shopping mall in Bangkok and major provinces in all regions of the country.

Province Bangkok

No. of Outlets 17

Nonthaburi Chiangmai Chiangrai Chonburi

1 2 1 5

Address (1) MBK Center (2) Seacon Square (3) Fashion Island (4) The Mall Bangkapi (6) Central City Bangna (5) Cenral Plaza, Ladprao (8) Central Plaza, Rama 2 (7) Central Plaza, Pinklao (9) Central Plaza, Ratchada-Rama 3 (10) The Mall, Thapa (11) Tesco Lotus, Rama IV (12) Tesco Lotus, Laksi (13) Big C Supercenter, Rajdamri (14) Siam Square Soi 4 (16) Union Mall (15) Thaniya Plaza, BTS Wing (17) Central World Plaza (1) Central Town, Rattanathibet (1) Central Airport Chiangmai (2) Kad Suan Kaew Shopping Center (1) Big C Super Center, Chiangrai (2) Tesco Lotus, South Pattaya (1) Central Festival, Pattaya (3) Bang Lamung (4) Carrfourre (5) Royal Garden Body Glove (Thailand) Public Company Limited

page 17


Annual Report 2007 Province Ayudhya Phetchaburi Nakhon Ratchasima Ubon Ratchatani Udon Thani Nongkhai Konkaen Prachuap Khiri Khan Surat Thani Phuket Krabi Songkhla Nakhon Si Thammarat Nakhon Sawan Total

No. of Outlets 1 1 1

Address (1) Ayudhya Park (1) Premium Outlet Project – Cha-am (1) The Mall, Nakorn Ratchasima

2

(1) Big C, Ubon Ratchatani

(2) S K Shopping Center

1 1 1 1

(1) Charoensi Arcade (1) Big Chiang Shopping Center, Nongkhai (1) Com Building, Shopping Plaza, Konkaen (1) Hua-hin Market Village

1 1 1 1 1

(1) (1) (1) (1) (1)

1

(1) Fairyland

Tesco Lotus, Surat Thani Tesco aLotus, Phuket Tesco Lotus, Krabi Indra Hotel, Had Yai Carrfourre

41

(2) Distribution through 30 Body Glove Counters in leading department stores in Bangkok and major provinces in all regions of the country. Province No. of Outlets Address Bangkok 10 (1) Bangkok Tokyu Department Store Ltd., Mahboonkrong Center Building (2) Robinson Department Store, Ratchadaphisek Branch (Women’s Clothing Section) (3) Robinson Department Store, Sukhumvit Branch (4) Robinson Department Store, Bangrak Branch (5) Robinson Department Store, Ladya Branch (6) Robinson Department Store, Srinakarin Branch (7) Robinson Department Store, Silom Road Branch (8) Robinson Department Store, Ratchadaphisek Branch (Men’s Clothing Section) (9) The Mall Department Store, Bangka Branch (10) The Mall Department Store, Bangkapi Branch page 18

Body Glove (Thailand) Public Company Limited


Annual Report 2007 Province Nonthaburi

No. of Outlets 2

Pathum Thani Krabi Phuket

1 1 5

(1) (2) (1) (1) (1) (2) (3) (4)

Address Robinson Department Store, Rattanathibet Branch The Mall Department Store, Ngamwongwan Branch Robinson Department Store, Rangsit Branch Chokpatara Paisan Co., Ltd., Amphur Muang, Krabi Province Ocean Shopping Mall Phuket, Amphur Muang, Phuket Province Robinson Department Store, Amphur Muang, Phuket Province Ocean Plaza Pa Tong Co., Ltd., Amphur Kratu, Phuket Province Ocean Plaza Pa Tong Co., Ltd., Bang La Branch, 31 Tambol Kratu, Phuket Province Jangsilon, Amphur Kratu, Phuket Province. C R Hadyai (Thailand) Co., Ltd., Amphur Had Yai, Songkhla Province C R Nakhon Si Thammarat (Thailand) Co., Ltd., Amphur Muang, Nakhon Si Thammarat Province. Fairy Plaza Co., Ltd., Muang City Hall, Amphur Muang, Konkaen Province C R Chanthaburi (Thailand) Co., Ltd., Amphur Muang, Chanthaburi Province Sirat Theppratan Co., Ltd., Branch 4, Amphur Muang, Rayong Robinson Department Store, Ayudhya Branch Kanokphet Center Co., Ltd., Amphur Muang, Kanchanaburi Province Robinson Department Store, Chiangmai Branch Warehouse Plaza Department Store

Songkhla

1

(5) (1)

Nakhon Si Thammarat Konkaen

1

(1)

1

(1)

Chanthaburi

1

(1)

Rayong Ayudhya Kanchanaburi

1 1 1

(1) (1) (1)

Chiangmai Nakhon Ratchasima Lampang

1 1

(1) (1)

1 1 30

(1) Seri Department Store, Lampang (1) Ocean Department Store, Chumphon

Total

Body Glove (Thailand) Public Company Limited

page 19


Annual Report 2007

  

Product Characteristic The Company’s products are divided into 2 categories as follows: Readywear Apparel under Body Glove Trademark The Company is a distributor of readywear apparel for both men and women, ages 15 - 35 years. The product varieties include range of choices, captivating designs and colors, featuring high absorbance, soft and durable fabric, easy to wear and care with long lasting colors. The readywear apparels are allotted into 2 types as follows: (1) Surf & Trend – featuring readywear clothing with high emphasis on innovative and uniqueness of California Lifestyle with Body Glove trandemark imprinted on the product. Some of the products are T-shirt, V-neck T-shirt, sheer T-shit, seamless T-shirt, collared T-shirt, undershirt, tank top, 3 quarter shorts, 4 quarter shorts, casual shorts, nylon shorts, cargo shorts and other modern and trendy style fashion products, etc. The product price range is Baht 600 - 1,500 and the target group customers are youngsters and working professional. (2) Easy Lifestyle – featuring readywear clothing based on simplicity but stylish and trendy that can be worn in various occasions. The design highlights are kept at minimal, clear-cut, not flashy without emphasizing the Body Glove trandemark (the product may or may not have Body Glove trademark and hand logo imprinted). Some of the products are Polo shirt, shirt, long sleeves shirt, collared shirt, 5 pockets trousers, basic trousers,

jeans, etc. The product price range is Baht 400 - 1,000, and the target group customers are working professional. Accessories under Body Glove Trademark The products in this category have become a valuable component in the product mix which offer the widest range of accessories such as different types of bags, i.e., shoulder bag, backpack, traveling bag, wallet, pencil case, cap, socks, etc. The product price range is Baht 290 - 1,000, and the target group customers are yongsters and working professional. Market and Competitive Condition Industry Outlook Thai Garment Manufacturers Association had experienced a rapid growing rate which also spread over the readywear clothing for men, women and children. This phenomenon is believed to be new for Thai people as though the fashion product with trademark brand had launched its fist appearance in the Kingdom of Thailand during the past 25 years only. Presently, the Textile Industry of Thailand has played a significant role in the National Economy System, accountable for 17% of the National GDP, with total export value of US Dollar 6,842 million and total import value of US Dollar 3,453 in Y2006. Whereas the market section for readywear in the country is highly competitive among the local readywear entrepreneur, the importer of readywear apparel under international license trademark and the importer of low-cost readywear from China, Vietnam and India. However, there is no data collection from any trustworthy source to verify the total market value for the distribution of readywear apparel within the country. As for the distribution of readywear apparel featuring California Lifestyle in Thailand, no other entrepreneur has been awarded the license trademark directly from the trademark owner besides our company. During the past year, the market sector of readywear apparel of the country was steadily growing (Sources: page 20

Body Glove (Thailand) Public Company Limited


Annual Report 2007 Body Glove (Thailand) Public Company Limited) as a result of the market strategy conducted by each entrepreneur to build popularity in the Brand in addition to the greater number of distribution channels for consumers through stand alone Flagship Stores and Outlets in the department stores. The tendency for readywear industry outlook tends to expand at the close proximity as the rate of economic growth expansion. However, the competitive edge will remain at a highly competitive level for local entrepreneur and readywear importer. Therefore, each entrepreneur must place strong emphasis on product quality and design to match the preference of the target group customer, to build brand loyalty and to have different market strategies to win over the consumer, Market Conditions and Competition Policy (a) Competition Strategy - Product Quality The Company’s products are the products of unique identity with the accent of California Lifestyle in which the Company place a high emphasis on product selection to match the lifestyle of its target group customers. With this, the Company had developed its product to be in line with the target group customers’ demand under the concept of Surf Fashion & Easy Lifestyle. Therefore, the Company value the importance of product quality and only use first-class quality COTTON material that ensure high absorbency, soft and durable fabric, comfortable to wear, easily clean, with ranges of designs and colors to fulfil the needs of the target group customers whilst styles are modern and trendy to match everyday lifestyle. - Flagship Stores Environment The importance of Flagship Store environment was given to the Visual Merchandise Display (“VM Display”) which covered all area of store environment, product display, POP signage display, store arrangement and decoration equipment. Each Flagship Store will be arranged in standard uniformity to enhance brand recognition on the target group customers. The emphasis will be given to the modernity and unique identity of Body Glove. As for product presentation, there are 2 types of display as follows: 1. Arranged by color scheme such as cool, hot, pastel, bright, gray and displayed in terms of shade, i.e., light to dark, dark to light, light in the center, or dark in the center, etc. 2. Arranged by category according to the size of the store such as small-sized store, medium-sized store or large-sized store. VM Display is considered an effective way of product presentation due to (1) the format is clean, simple and clear that is easy to remember and select the merchandise; (2) the display of merchandise has clear dimension and easy to highlight the prominent product by using the light an color coordination; (3) able to present new collections continuously; and (4) able to display the product by Product Theme or Store Theme to emphasize the sales volume and brand image. - Service Area The Company emphasizes on the valued add service by serving the customers with highly trained staff to assure the customer excellent service. The staff will be able to respond to the requirement of the customer’s preference and can give useful product advice. The staff will be trained to invite the customers to try on the clothing and take care of the customers as deem appropriate in order to increase the customer satisfaction. Moreover, the Company had installed the internet web camera at various Flagship Stores and linked to the head office. As a result, the head office could follow-up on the services provided by the staff at each store location on a real-time basis. - Pricing Policy The pricing policy for the Company’s products is based on cost, type of product, model and gross profit margin as preliminary set wherein each store there is only One Price Policy which may be varied on store promotion at different intervals to match the requirement of each target group customer at each location. In addition, the Body Glove (Thailand) Public Company Limited

page 21


Annual Report 2007 Company’s policy is to offer a reasonable and competitive price to the customer. With this, the Company had launched a super value program by offering a Combo set or selling in pairs by applying to simple readywear clothing that are comfortable to wear, able to mix and match with other products easily, The program is a super value as the products are sold in pairs but can be sold separately as well, for example, Polo shirt, T-shirt, Mini Polo shirt, undershirt, tank top, etc. The price range for this product category is from Baht 250 to 400, and the target group customers are school and college students and young working professional. When compared the Company’s selling price to local brand distributor’s selling price, it was concluded that our company was in a highly competitive position and could compete in terms of “Combo” set products of the same price point as of those local brand due to the Body Glove Trademark was more universally accepted than local brand. - Market Support and Public Relations The Company had continued its market support through various advertising campaigns via mass media such as, radio, newspaper, magazines, leaflets, billboard at various locations and through event marketing in order to build brand awareness under Body Glove Trademark. Additionally, the Company had introduced its product through the company’s website <http://www.bodyglove.co.th/> to promote new products and news update to the customers. The Company also organized special activities, such as, launching seasonal and special holiday promotion, highlighting promotional area to attract the customer’s interest, offering the customer to buy special premium with regular purchased items, offering Gift Voucher during holiday season, PR on various promotions via different media, building strong relationship with other suppliers, i.e., joined with department stores in renting the area for product distribution and participated in the joint promotion, joined with the government and private entrepreneur for social contribution activities, etc. (b) Nature of Customer and Target Group Customer The Company separates its customers and target group customers into 2 major groups as follows: (1) school and college students, both men and women, ages 12-25 years. (2) young working professional and adults, both men and women, ages 25 years and over. The Company placed high emphasis on the continuity of product development to be in line with the requirement of both target group customers. During the previous 3 years, the Company had not sold to any one particular customer in excess of 30% of total sales revenues due to the nature of retails business operated by the Company. (c) Sales and Distribution Channels The Company’s distribution channels are through Flagship Stores and Outlets in department stores. The distribution through aforementioned channels during the past years are shown in ratio as follows: The total sales derived from Bangkok and its perimeter was accountable for 51% of total sales revenues.

Distribution Ratio Through Flagship Stores

Y2005 84%

Y2006 79%

Y2007 73%

Through Body Glove Counters in Department Stores Total

16%

21%

27%

100%

100%

100%

page 22

Body Glove (Thailand) Public Company Limited


Annual Report 2007

Revenue Structure Revenue structure of the company during 2005 â&#x20AC;&#x201C; 2007, classified by the product lines: Items

Operated by

1. Sales revenue 1.1 Clothing sales 1.2 Related product sales Total sales revenue 2. Foreign exchange gains 3. Other incomes Total revenue

Company Company Company Company Company Company

Year 2005 M.Baht % 256.77 19.33 276.10 1.33 277.43

Year 2006 M.Baht %

92.55 6.97 99.52 0.48 100.00

Year 2007 M.Baht %

352.09 92.74 26.50 6.98 378.59 99.72 0.54 0.14 0.52 0.14 379.65 100.00

433.05 50.43 483.48 1.07 0.75 485.30

89.23 10.39 99.63 0.22 0.15 100.00

Additional Explanation: - All sales revenue is from domestic sales - Related products include bag pack, bag, luggage, wallet, stationary bag, hat and socks. - Sales revenue for clothing and related products in 2005 and 2006 are estimate figures. However, the company starts collecting actual figures from 2007 onwards.

Revenue structure of the company during 2005 â&#x20AC;&#x201C; 2007, classified by geographical regions: Items

Operated by

1. Sales revenue 1.1 Sales revenue from Bangkok and Company Greater Bangkok 1.2 Sales revenue from provincial areas Company Total Sales revenue Company

2005 % M.Baht 185.73

67.27

90.37 32.73 276.10 100.00

2006 M.Baht % 213.79

2007 M.Baht %

56.47

243.63

50.39

164.80 43.53 378.59 100.00

239.85 483.48

49.61 100.00

Additional Explanation: - Sales revenue from Bangkok and boundaries during 2007 came from 19 shops and 14 department store counters. - Sales revenue from provincial areas during 2007 came from 22 shops and 16 department store counters.

Body Glove (Thailand) Public Company Limited

page 23


Annual Report 2007

              1. Summary of Financial Statements Balance Sheets, Statements of Income and Expenditure, and Statement of Cash Flows for the past three years for fiscal years ending December 31st , 2005, 2006 and 2007 are shown in the Tables hereunder: Body Glove (Thailand) Public Company Limited Balance Sheets As of December 31st , 2005, 2006 and 2007 (Unit: Baht Thousand) Y 2005 Amount % CURRENT ASSETS Cash on hand and at banks Accounts Receivablea – Connection Transactions Accounts Receivables – Others – net Inventories – net Other current assets Total Current Assets NON-CURRENT ASSETS Plant and equipment – net Trademark – net Other non-current assets – deposit Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Overdrafts and short-term borrowing from financial institutions Trade Accounts Payable – Connection Transactions Trade Accounts Payable – Others Current portion of liability under financial lease contract due within 1 year Current portion of long-term loan from related parties due within 1 year Other current portion of long-term loan due within 1 year Other current liabilities Other current liabilities - accrued Total Current Liabilities NON-CURRENT LIABILITIES Liabilities under financial lease contract Long-term loan from related parties Other long-term loan Other non-current liabilities Accrued Trademark Employee Bond Total Non-Current Liabilities TOTAL LIABILITIES SHAREHOLDERS’ EQUITY Share Capital Issued and Paid-up Share Capital Share Premium Retained Earning Appropriate – Legal Reserve Unappropriate Total Shareholders’ Equity TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

page 24

Y 2006 Amount %

Y 2007 Amount %

2,698 710 12,643 79,235 3,417 98,703

1.29 0.34 6.04 37.86 1.63 47.16

16,667 17,352 71,063 1,837 106,919

6.91 7.19 29.45 0.76 44.31

69,039 26,929 157,054 4,731 257,752

17.07 6.66 38.84 1.17 63.74

93,202 17,385 110,587 209,290

44.53 8.31 52.84 100.00

113,672 20,691 134,363 241,282

47.11 8.58 55.69 100.00

107,334 16,496 22,793 146,622 404,374

26.54 4.08 5.64 36.26 100.00

36,486

17.43

14,191

5.88

8,181

2.02

998 48,882 2,479

0.48 23.36 1.18

44,891 2,332

18.61 0.97

78,545 1,829

19.42 0.45

-

-

6,000

2.49

6,000

1.48

1,385

0.66

4,081

1.69

6,300

1.56

10,829 101,059

5.17 48.28

27,587 99,082

11.43 41.07

25,487 126,342

6.30 31.24

5,381 35,500 5,630

2.57 16.97 2.69

3,576 35,500 15,390

1.48 14.71 6.38

2,113 29,500 18,700

0.52 7.30 4.62

948 47,459 148,518

0.45 22.68 70.96

1,227 55,693 154,775

0.51 23.08 64.15

10,166 1,764 62,242 188,584

2.51 0.44 15.39 46.64

60,000 -

28.67 -

60,000 -

24.87 -

80,000 69.680

19.78 17.23

370 402 60,772 209,290

0.18 0.19 29.04 100.00

370 26,137 86,507 241,282

0.15 10.83 35.85 100.00

2,350 63,760 215,790 404,374

0.58 15.77 53.36 100.00

Body Glove (Thailand) Public Company Limited


Annual Report 2007

          ⌧           

REVENUES Revenues from selling Revenues from exchange rate Other revenues Total Revenues EXPENDITURE Cost of goods sold Selling and administrative expenses Total Expenditure Profit (loss) before interest and income tax expenses Interest expenses Income tax expense Net Profit (loss) Par Value (Baht) Net Profit per share (Baht)

(Unit: Baht Thousand) Y 2007 Amount %

Y 2005 Amount %

Y 2006 Amount %

276,103 1,328 277,431

99.52 0.48 100.00

378,588 537 522 379,647

99.72 0.14 0.14 100.00

483,479 1,071 746 485,296

99.63 0.22 0.15 100.00

127,745 130,795 258,540 18,891 5,225 13,666 1,000 227.77

46.05 47.14 93.19 6.81 1.88 4.93

172,968 157,835 330,806 48,841 6,431 16,674 25,735 1,000 428.92

45.56 41.57 87.14 12.86 1.69 4.39 6.78

223,373 204,429 427,801 57,494 5,466 12,426 39,602 1 0.64

46.03 42.12 88.15 11.85 1.13 2.56 8.16

Body Glove (Thailand) Public Company Limited

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Annual Report 2007

                     Y 2005 CASH FLOWS FROM OPERATING ACTIVITIES Net profit Adjustments for net profit (loss) of cash provided by (used in) operating activities: Depreciation Aloowance for bad debts and doubtful accounts Allowance for discount on outdated goods (reveral) Loss from amortization of fixed assets Unrealized loss (gain) on exchange rate Loss (gain) on disposal of fixed assets Accounts receivables – Connection Transactions (increase) Accounts receivables – Others decrease (increase) Inventories decrease (increase) Others current assets – credit on value added tax decrease (increase) - Others decrease (increase) Other non-current assets – deposit decrease (increase) Trade accounts payable – Connection Transactions increase (decrease) Trade accounts payable – others increase (decrease) Other current liabilities – Accrued income tax expense increase (decrease) Other current liabilities – Accrued expense increase (decrease) Other current liabilities – Assets payable increase (decrease) Other current liabilities – Others increase (decrease) Other non-current liabilities – Employee Bond increase (decrease) Net cash provided by (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Cash payment for purchase of plant and equipment Cash received from sales of plant and equipment Cash payment of initial fee for purchase of trademark Net cash provided by (used in) investing activites CASH FLOWS FROM FINANCING ACTIVITIES Overdrafts and short-term borrowing from financial institutions increase (decrease) Short-term borrowing from related party increase (decrease) Liability under financial lease contract increase (decrease) Long-term loan from related parties increase (decrease) Other long-term loan increase (decrease) Cash received from capital increase Net cash provided by (used in) financing activities Cash and Cash Equivalent Items increase (decrease) – Net Cash and Cash Equivalent Items as at the Beginning of the Year Cash and Cash Equivalent Items as at the End of the Year

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Body Glove (Thailand) Public Company Limited

Y 2006

(Unit: Baht Thousand) Y 2007

13,666

25,735

39,602

14,415 1,684 1,056 2,054 (710) 3,593 (30,545) 605 (6,751) 724 36,454

18,940 246 103 799 149 130 710 (4,955) 8,070 1,580 (3,307) (998) (4,137)

23,658 (239) 1,244 (237) (122) (9,577) (85,751) (2,598) 1,102 (2,101) 33,639

2,953 (1,751) (768) 249 36,927

13,524 (1,103) (1,209) 1,435 279 55,991

(8,668) 8,580 (4,108) (1,745) 536 (6,785)

(32,033) (32,033)

(36,785) 993 (35,792)

(15,254) 124 (6,945) (22,075)

403 (10,000) (2,144) 8,500 (1,348) (4,589) 305 2,393 2,698

(22,295) (2,390) 6,000 12,456 (6,230) 13,969 2,698 16,667

(6,011) (1,966) (6,000) 5,529 89,680 81,232 52,372 16,667 69,039


Annual Report 2007

                 Y 2005 Liquidity Ratio Liquidity ratio (time) Current liquidity ratio(time) Current accounts receivables ratio – (time) Average collection period (day) Current inventories (time) Average selling period – (day) Current accounts payable (time) Collection period – (day) Cash Cycle – (day)

Profitability Ratio) Gross profit margin (%) Profit from operation (%) Net profit (%) ROE (%)

Efficiency Ratio) ROA (%) Ratio of fixed assets (time)

Financial Policy Ratio DE ratio (time) Time interest earned (time) Share Profile Par value (Baht) Book value per share (Baht) Net profit (loss) per share (Baht)

Y 2006

Y 2007

0.98 0.16 3.60 101 1.73 211 2.56 143 169

1.08 0.34 5.23 70 2.34 156 3.55 95 131

2.04 0.76 5.12 71 1.98 184 2.84 129 126

53.73% 6.84% 4.93% 25.34%

54.31% 12.90% 6.78% 34.95%

53.80% 11.89% 8.16% 26.20%

7.51% 1.52

11.42% 1.68

12.27% 1.50

2.44

1.79

0.87

3.62

7.59

10.52

1,000.00 1,012.87 227.77

1,000.00 1,441.80 428.92

1.00 2.70 0.64

Body Glove (Thailand) Public Company Limited

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Annual Report 2007 2. Management Discussion and Analysis on Financial Status and Operating Results The Company’s operation results for the past three years (Y2005-2007) were relatively growing due to the increasing of sales growth in total revenues. The Company’s net profit before interest and income tax expenses for the fiscal year ending December 31st, 2007 was Baht 57.49 million. The interest expense was Baht 5.47 million and income tax expense was Baht 12.42 million; thus, net profit was Baht 39.60 million, increased Baht 13.87 million or 53.87% when compared to the previous year. Revenues In Y2007, the sales revenues was Baht 483.48 million, increasing 27.72% when compared to Y2006 sales revenues of Baht 378.59 million. The growth in sales revenues was due to the continuity of flagship stores and outlets expansion in the department stores. Such growth stems from 37 flagship stores and 22 outlets in the department stores in Y2006 to 41 stores and 30 outlets at the end of Y2007 respectively. The Company’s revenues from flagship stores were accounted for 73.03% and revenues from outlets in the department store were accounted for 26.97% of total sales revenues. The Company believes in the importance of the continuation of marketing activities and the selection of product that correspond to the demand of the target group customer. Meanwhile, the Company has constantly developed and introduced new design of modern and trendy readywear to match the customers’ needs whilst maintain the unique California Lifestyle of full color and texture that cultivating the customers’ admiration of “Body Glove” brand extensively. Cost of Goods Sold In Y2007, the cost of goods sold was Baht 223.37 million, increasing 29.14% when compared to Y2006 of Baht 172.97 million. The gross profit margins were 54.44% and 53.97% in Y2006 and Y2007, respectively due to the Company’s precedence on the cost of goods sold control policy to be at appropriate level. Trademark License In Y2007, The Royalty fee was Baht 13.74 million while in Y2006 was Baht 5.67 million which was increased by Baht 8.07million. This is due to increasing in sales growth. Since 1st July 2007 hereinafter (Operating License & Sublicense right agreement become effective) the company had paid for the royalty fee as set in the agreement in ratio which is compliance to the sale revenue with appropriate price. Selling and Administrative Expenses In Y2007, the selling and administrative expenses were Baht 190.69 million, increasing 25.32% when compared to Y2006 of Baht 152.16 million. The selling and administrative expenses was increased at a lower rate in relation to sales growth rate of 27.71%. This is due to some part of expense constant while sales revenue increased, together with the company’s cost control policy on selling and administrative expenses at appropriate level. Interest Expense In Y2007, the interest expense was Baht 5.47 million, or 1.13% of total revenues when compared to Y2006 of Baht 6.43 million, or 1.69% of total revenues. The decrease in interest expense of 15.02% in Y2007 was mainly due to the increase of liquidity of cash flows from flagship stores in addition to the cash received from capital increase from the sales of share capital of 20 million shares in November 2007, totaling Baht 29.19 million as cash flows. Net profit for Y2006 and Y2007 was equivalent to 6.78 percent and 8.18 percent respectively.

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Body Glove (Thailand) Public Company Limited


Annual Report 2007 Financial Status Assets The company has total assets as at the end of 2006 and 2007 of Baht 241.28 million and Baht 404.37 million, respectively. As the company operate finish cloth and related retailing buiness through many shops both in Bangkok and major provinces in the countries, assets comprised mainly of (1) building and equipment, such as right to shop lease, building and building improvement, building decoratives, office equipment and vehicles. As at the end of 2006 and 2007, the building and equipment – net were total of Baht 113.67 million and Baht 107.33 million, respectively. (2) 2006 and 2007 inventories-net, such as finished goods and raw materials were total of Baht 71.06 million and Baht 157.05 million, respectively. The current assets as at the end of 2006 and 2007 were at Baht 106.92 million and Baht 257.75 million, respectively. The current assets mainly composed of inventories, account receivable, cash and bank deposit. Right to shop lease as at the end of 2006 and 2007 were Baht 41.42 million and Baht 35.29 million, respectively. The decline in 2007 was due to long-term lease cancellation of the Living Asset Development’s project in Samui in October 2007. Asset quality The Company has other account receivable-net of Baht 17.35 million and Baht 26.93 million during 2006 and 2007, respectively. All receivables are from department stores. Details of receivable – other business as of the end of 2005, 2006 and 2007: (Unit: Baht)

Account receivable – Other businesses

As at 31 Dec. 2005

As at 31 Dec. 2006 As at 31 Dec. 2007

(Department store receivable) Not due

12,616,208.87

17,351,967.87

26,887,739.78

Less than 3 months

-

-

41,036.21

3 to 6 months

-

-

-

6 to 12 months

-

-

-

1,060,201.40

1,092,519.01

-

Total

13,676,410.27

18,444,486.88

26,928,775.99

Deduct Allowance for doubtful account

(1,033,673.91)

(1,092,519.01)

-

Receivable-other business – net

12,642,736.36

17,351,967.87

26,928,775.99

Overdue

Over 12 months

The company normally provides 60-day credit term for customers. During 2006 and 2007, the company has average collection period of 70 days and 71 days, respectively. The company has policy to collect debt according to the given credit term. The company never has collection problem. The company has policy to set aside allowance for doubtful account by considering customer’s current financial status and collection track record with specific customers. Then the company will estimate the amount that could be default. The company has already wrote down all allowance for doubtful account. The company has inventories-net as at the end of 2006 and 2007 of Baht 71.06 million and Baht 157.05 million, respectively. Inventories climbed during 2007 as the company prepare more goods to anticipate higher sales during 2008, and many producers took long holidays. The Company has set aside allowance for obsolete stock worth Baht 0.92 million. Body Glove (Thailand) Public Company Limited

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Annual Report 2007 Inventories as of 2005, 2006 and 2007 were as follow: (Unit: Baht)

Inventories Finished goods Raw materials (halogram, trademark tag) goods in transit Total Deduct Allowance for obsolete stock Inventories – net

As of 31 Dec.2005 As of 31 Dec. 2006 As of 31 Dec.2007 77,330,639.77 70,719,573.63 154,356,405.24 2,960,790.92 1,502,352.81 193,315.92 3,422,902.41 80,291,430.69 72,221,926.44 157,972,623.57 (1,055,946.88) (1,158,699.16) (919,086.78) 79,235,483.81 71,063,227.28 157,053,536.79

During 2006 and 2007, the company has average inventory turnover period of 156 days and 184 days, respectively. The company implements various marketing plans to fit specific product lines or designs, such as product sales or special prices in special time period, etc. To anticipate higher sales in 2008 and many producers went on long holidays, the company ordered more inventories. Trademark The company records Baht 17.36 million for the company’s trademark. The company has accounting policy for trademark by recording net cost from accumulated amortization, with amortization period over 10 years in straight - line method, starting from July 2007. As of 31 December 2007, the company recorded Baht 16.50 million worth of trademark, decreasing by Baht 0.87 million from amortization. Liquidity Changes in cashflow during each accounting period are as followed. During 2006, the company reported net profits of Baht 25.74 million, but the operating cash inflow was at Baht 55.99 million, mainly due to increasing in depreciation expenses of Baht 18.94 million and inventory decline of Baht 8.07 million. For investing cashflow in 2006, the company buy building and equipment worth Baht 36.79 million, which comprised of shop leasehold of Baht 19.68 million, decoratives and equipment of Baht 14.40 million, and vehicles of Baht 0.59 million. The financial cash flow during 2006 was Baht 6.23 million of cash outflow, mainly due to a Baht 22.30 million decline in overdraft and short-term loan from financial institutions, Baht 2.39 million falling financial and operating lease, while long-term borrowing from related person and long-term loans from financial institution rose Baht 6 million and Baht 12.46 million, respectively. During 2007, the company reported net profits of Baht 39.60 million, but the operating cash outflow was at Baht 6.79 million, mainly due to increasing in depreciation expenses of Baht 23.66 million and inventory increase of Baht 85.75 million as the company keep more inventories to anticipate higher sales in 2008 due to many producers went on long holidays. However, a Baht 33.64 million increases in account payable offset part of the cash outflow. For investing cashflow in 2007, the company bought building and equipment worth Baht 15.25 million, which comprised mostly of shop decoratives, initial fees and trademark fee which was worth Baht 6.94 million. The financial cash inflow during 2007 was Baht 81.23 million as the company sold 20 million shares to general public at Baht 4.70 a share, which make a total of Baht 94 million. 2006 and 2007 current ratios were at 1.08x and 2.04x, respectively. The liquidity improved in 2007 mainly due to Baht 94 million of capital raising during 2007. 2006 and 2007 quick ratios were at 0.34x and 0.76x, respectively. The quick ratio improved in 2007 mainly due to increases in the company’s current assets, such as cash, bank deposits and account receivable. page 30

Body Glove (Thailand) Public Company Limited


Annual Report 2007 2006 and 2007 cash cycles were at 131 days and 126 days, respectively. The cycle shortened due to (1) the company has average collection period of 70 days and 71 daysduring 2006 and 2007, respectively, which is consistent with the company’s credit term of 60 days. The company has policy to collect debt according to the given credit term. The company never has any collection problem. (2) During 2006 and 2007, the company has average inventory turnover period of 156 days and 184 days, respectively, which is consistent with the target turnover period of 4-6 months. The company implements various marketing plans to fit specific product lines or designs, such as product sales or special prices in special time period, etc. During 2007, the company has operating cash outflow of Baht 6.79 million, down from Baht 55.99 million in 2006. The decline was due to Baht 86 million increases in inventory. Moreover, the company begin to repay loans from related person since January 2007 for Baht500,000 a month. Sources of fund The company’s shareholders’ equity as at the end of 2006 and 2007 were at Baht 86.51 million and Baht 215.79 million, respectively. The increases were partly due to continually profitable operation. Moreover, during 23, 26 and 27 November 2007, the company increased paid-up capital from Baht 60 million to Baht 80 million by offering 20 million new shares to public with par value of Baht 1 a share. The shares were sold at Baht 4.70 a share, with a total of Baht 94 million. The company registered an increase capital to the Ministry of Commerce on 30 November 2007. The company’s funds are partly from profitable operation, and others from loans from directors and financial institutions and capital increase during late 2007. Debt to equity ratio as at the end of 2006 and 2007 were at 1.79x and 0.87x, respectively. Debt to equity ratio tended to decline. The company has following obligations as at the end of 31 December 2007: (1) The company has long-term lease obligations to lease shops with leasehold terms of 3-29 years, which could be classified into 37 short-term leases and 4 long-term leases, with expiration date ranging from 2007 to 2024. Moreover, company has a 3-year lease obligation on a land and a building, starting from May 2004 and March 2006, respectively, which belong to a related person. The term is extenable every 3 years with total lease no longer than 20 years. At the end of contract term in 2024, the company shall return right to warehouse to the lessor at the end of contract. The rental payment and minimum service fees are as follow: (Unit: Million Baht)

Year

Area of shop and service area as agreed with the outsider.

Land with building on the contract made with the related person.

Land (to build warehouse) as contracted with the person with potential conflict of interests.

Total

2008 2009 Afterward

39.84 1.20 0.60 41.64 24.64 1.35 0.68 26.67 26.22 27.23 13.61 67.06 (2) The company repay loans to director Mr. Noppadol Thammawattana with monthly installment of Baht 0.50 million for 7 years, starting from 1 January 2007. (3) The company paid initial fees in quarterly installment as determined in the contract. The payment started from April 2009 to January 2012. The additional royalty fee shall be paid base on the percentage of revenue as determined in the contract for any sales revenue starting from July 2007 onwards. The source funding shall come from working capital and/or loan and/or capital raising, depending on money and capital market conditions.

Body Glove (Thailand) Public Company Limited

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Annual Report 2007 Liabilities Total liabilities as at the end of 2006 and 2007 were Baht 154.77 million and Baht 188.58 million, respectively. Rising liabilities were used to finance rapid expansion and increased inventories. Liabilities were mainly comprised of overdraft, short-term loans from financial institutions, account payable-other parties, long-term loan from related person and other long-term loans with following details: (1) Overdraft and short-term loans from financial institution as at the end of 2006 and 2007 were Baht 14.19 million and Baht 8.18 million, respectively. The overdraft and short-term loans from local banks are guaranteed by directors and leasehold rights. (2) Account payable-other parties as at the end of 2006 and 2007 were Baht 44.89 million and Baht 78.54 million, respectively. The payable terms were 95 days and 129 days respectively. (3) Long-term loans from related person (including current portion of long-term loans) as at the end of 2006 and 2007 were Baht 41.50 million and Baht 35.50 million, respectively. (4) Other long-term loans (including current portion of long-term loans) as at the end of 2006 and 2007 were Baht 19.47 million and Baht 25.00 million, respectively. During the past, the company has strictly complied with the loan conditions and pay principal and repayments according to the repayment schedule. Factors that may affect business operation or future financial status The company operates finished clothing and related products retailing business under trademark â&#x20AC;&#x153;Body Glove.â&#x20AC;? The performance depends on clothing preference and life-style of the target market and their purchasing power. Therefore, the company must select the products to be consistent with the needs of prospective target group. The company must implement appropriate marketing strategies in term of product, pricing, penetrating distribution outlets, and promotion. Moreover, the company must control cost of sales and selling-related expenses. The company must utilize technology to ensure efficient inventories control and distribution process.

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Body Glove (Thailand) Public Company Limited


Annual Report 2007

  The Company’s risk factors are classified as follows: 1. Risk from Business Operation 1.1 Risk from breach of contract on significant terms The Master Licensing Agreement for the exclusive right in Body Glove Trademark entered by and between the Company and IP Global Investments America, Inc, (“IPG’), the contract party, have setforth the significant terms as follows: (1) The Company must pay a royalty fee which consisted of the initial fee and quarterly royalty fee based on the confirmed sales. The company paid part of the initial fees. The company is confident that it could pay the remaining initial fees and monthly royalty fees from an operating cash flow, as sales continued to grow. (2) Responsible for Brand Regional Marketing Contribution at the rate as agreed upon mutual determination between the Company and IPG as stated in the Agreement. Presently, such contribution for the said Brand Regional Marketing had been waived for the Company. (3) The expansion into authorized territories such as Vietnam, Burma, Laos, Cambodia and the Phillippines, any one country, within the first 3 years as of July 1st, 2007; in the event the Company cannot initiate business operation for the selling of Body Glove product in the said countries within the terms and conditions as setforth in the Agreement, the Company may receive a written notification to terminate one or more countries from the authorized list. However, in the event the Company is able to expand the business into the authorized territory within 6 months as from the date the written notification from IPG was received, it is considered as the Company had fulfil its task according to the terms as setforth in the Agreement. Moreover, in the event the Company closed the sales or its operation or failed to submit the sales reports appertained to the newly business operated in the authorized territory for a period of 6 months consecutively; the Company must continue to operate the business in such country within 6 months upon receipt of IPG’s written notification. If the Company failed to do so, the said country will be terminated from the authorized list. 1.2 Risk from Change of Target Group Customer Preference on Readywear Apparel The Company operates a retail business of readywear apparel and accessories under the Body Glove trademark where these readywear clothing and accessories are considered as fashionable items that tend to change with popularity and demand subject to personal preference and individual lifestyle of the target group customers. If the Company cannot produce the product to match the change of target group customer preference promptly, this may have an impact on Body Glove trademark due to disapproval of consumer which will have a negative effect on the sales volume as well as the Company’s operation and financial status of the company. Nevertheless, the Company has been operating its business under the concept of Surf Fashion and Easy Lifestyle for decade bywhich the Company has spent time on extensive research and study on the liftstyle pattern of the target group customers and the changes of readywear consumer popularity. Such study has been Body Glove (Thailand) Public Company Limited

page 33


Annual Report 2007 done continually whereas the findings have played a major factor on the selection of product design and development to correspond with the fashion trend and the requirement of the target group customer at different time period. The target group customers are divided into 2 major groups, for example, school and college students, both men and women, ages 12-25 years; and young working professional to adults, both men and women, ages 25 years and over. With this, the Company continues to change the products in terms of pattern, colors, design to be in line with the change of consumer preference every 4-6 month period. Additionally, the Company ensures that its products are of high quality fabric and material that provide comfort and easy care as it is the Company’s policy to deliver only the finest quality goods with the best service to the consumer. As a result, the Company have earned its reputation and continued support from the target group customer to date. 1.3 Risk from Renewal Contract of Flagship Store The major income proportion from the Company’s sales of more than 70% of total sales revenues derived from the sales through Flagship Stores. As these aforementioned stores are under lease agreement of 3 – 29 years term with contract ending date from year 2007 – 2025 onward, the Company may risk a chance of non-renewal lease agreement or risk from rental rate and service fee increase in proportion. However, all lease agreements authorized the Company the full right option to extend the term of the lease at the expiration period of the agreement where such clause relating to the rental adjustment are clearly stated. Throughout the past years, the Company had strictly followed the terms and conditions as set in the said agreements and never once an agreement were terminated by the lessor. In addition, the Flagship Stores located in the department stores help drawing the consumer’s attention to use the service from the department stores are offering which in turn benefiting both the department store business and the Company. Therefore, we believe that we will receive a continued support in extending the lease agreement from the lessor in the future. 2. Risk from Procurement and Product Accessibility Risk from Dependency on Suppliers The Company’s main operation is retail business of readywear apparel and accessories under the Body Glove trademark where the Company has no policy to manufacture its own clothing or accessories by oneself. However, it is the Company’s policy that all the clothings and accessories are purchased through the reputable suppliers under the Company’s direction on product design pattern. Additionally, each supplier must get an approval from IPG prior to the said arrangement. In the event the Company is unable to place product orders through quality suppliers, this may result in the shortage of different products and may have an effect on the quality of the Company’s products as a whole. If this happens, it will have negative impact on the Company’s reputation and Body Glove trademark as well as the sales volume. However, the Company has a policy to order products from various reputable and worthy suppliers, both domestic and oversea. Furthermore, the Company has a policy to build up strong relationship and commitment with each supplier on a continual basis and have never faced any problem about the suppliers in the past years.

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Body Glove (Thailand) Public Company Limited


Annual Report 2007 3. Risk from Management Administration 3.1 Risk in Control by Two Major Shareholder Groups with Total Shares Held Over 50% The Company has the Tumwattana family which consisted of Miss Dolnapa Tumwattana and Mr. Nopdol Tumwattana, and Malaysian Investors which consisted of Mr. Goh Kok Cheng and Mr. Goh Kok Beng as two major shareholder groups. If the shareholders of these two groups added up the vote at the Meeting, they can take control over the resolution of the Shareholder’s Meeting in almost all area including the appointment of directors or other decisions which require majority vote by shareholders with exception on the law or company’s regulations that require 3 out of 4 votes from the Shareholder’s Meeting. Hence, other shareholders may not be able to control the collective voting rights for inspection and control power balance with a majority shareholder. Nevertheless, the two groups of shareholders can control power balance over the management administration between them. In consideration of the Company’s operation structure which consisted of Board of Directors and Audit Committee, it clearly specifies the structure of management administration providing qualified individuals with scope of responsibilities and authorization levels of the Board of Directors and Audit Committee that clearly identified and transparent. As for the procedure on any connected transactions with the Board of Directors, major shareholders, the control power authority or any party which may be potentially causing the conflicts of interest, such individual will not be allow to authorize the respective transactions. It will be reported to the Audit Committee for control power balance to ensure transparency and confident of the shareholders whilst controlling power balance of the Company’s management administration. 3.2 Risk from Dependency on the Executives (a) Dependency on Loan from the Executive The Company received a loan from Mr. Nopdol Tumwattana who takes a position of the authorized signatory of the Company and postions of the Chairman and Executive Chairman, and also as a major shareholder. If the Company did not receive such loan, the result may have an impact of the Company’s cash flows. The aforementioned loan is a personal loan without guarantee in which the Company had entered a loan agreement with principle repayment of Baht 0.50 million per month for 7 years as from January 1st, 2007, and fixed interest charge at MOR rate provided by Kasikorn Bank PLC plus 0.25% per annum. The interest for such loan is payable every 3 month in which the Company has been able to pay the principle repayment and interest charges as setforth in the loan agreement in the past. As at 31st December 2007 , The company has an outstanding personal loan Baht 35.50 Million. As for the policy for the source of investment funds in the future, the Company has no policy to raise additional loans from the Executives. The Company’s policy for the source of investment funds is from working capital of the operation and/or to borrow the funds from financial institutions and/or through share capital by considering the appropriate proceeding for business operation and money market and capital market situations. (b) Dependency on Hire of Land, Building and Condominium from the Executive The Company hired a piece of land and partial building from Mr. Nopdol Tumwattana, a total area of 2,266 square meters with partial building on the land, i.e., a 2-storey office building for use mainly as a Head Office of the Company that is situated in a close proximity with Mr. Nopdol Tumwattana’s residence. However, the said Body Glove (Thailand) Public Company Limited

page 35


Annual Report 2007 piece of land and building was clearly separated and could be used as office building, with easy access to main public road. The land and building have been registered with the Department of Land under the lease right for the period of no longer than April 30th, 2024 at the rental rate that is lower than the rental rate for hire the land with building from surrounding area. The necessity and reasonableness of this transaction was due to the requirement of having a Head Office situated within a close proximity to the warehouse building to conveniently coordinating activities relating to product delivery to the stores as well as to perform physical inventory check respectively. The Company hired a piece of land from Mr. Nopdol Tumwattana, a total area of 954 square meters, to build a warehouse building in which the said land is situated in a close proximity with Mr. Nopdol Tumwattana’s residence. However, the land used to construct the warehouse building was clearly separated with easy access to main public road. The said land has been registered with the Department of Land under the lease right for the period ending April 30th, 2024. At the expiration of the lease right for the land, the Company agreed to waive the right of ownership of the warehouse building to the land owner, Mr. Nopdol Tumwattana. Although the rental rate for the said land is higher than the rental rate for the land in surrounding area, the lessee of the surrounding area land must pay advance rental on the date the lease right is signed. In the case of hiring the land from Mr. Nopdol Tumwattana, the Company did not have to pay any advance rental. The necessity and reasonableness of this transaction was due to the requirement of having a Head Office situated within a close proximity to the warehouse building to conveniently coordinating activities relating to product delivery to the stores as well as to perform physical inventory check respectively. The Company leased a condominium suite of President Park View Tower from Mr. Nopdol Tumwattana, a total area of 260.54 square meters including furniture and fixture with the objective of providing a resident for the Executive who is not a residence of Thailand. The lease agreement is for one year as from January 1st, 2007 to December 31st, 2007. Upon the expiration of the lease term, Mr. Nopdol Tumwattana agreed to extend the lease term for additional 2 periods of one year each. The rental rate is lower than the market rate when compared to the rental of the suite at surrounding area. The necessity and reasonableness of this transaction was due to the objective of providing accommodation facilities and welfare benefit to the Executive who is not a residence of Thailand. Therefore, the Company has a risk in dependency on the Executive, Mr. Nopdol Tumwattana, with respect to the hiring of land, building and the condominium. However, the concerned Executive was willing to allow the Company to hire the land, building (the Company has already registered the lease hold from Department of Land) and the condominium according to the conditions as setforth in the agreements. (c) Dependency on the Executives for Loan Collateral of the Company As at December 31st, 2007, Major Shareholders and/or the Company’s Executives who has put up collateral for the Company’s loan are as follows: (1) Mr. Nopdol Tumwattana and Mr. Goh Kok Cheng, put up joint collateral for company loan with a financial institution for a total credit of Baht 29.64 million; (2) Mr. Nopdol Tumwattana, Mr. Goh Kok Cheng and Mrs. Mallikar Leeraphan, put up joint collateral for company loan with a financial institution for a total credit of Baht 45 million; and (3) Mr. Nopdol Tumwattana and Mrs. Mallikar Leeraphan, put up a joint collateral for company’s bank overdraft with a financial institution for a total credit of Baht 6 million. Therefore, the Company has a risk in the event the aforementioned Executives withdrawn the collateral which may result in the denial of the loan and may have an impact on the financial liquidity of the Company. However, the aforementioned Company’s Executives are willing to put up the collateral for the Company’s loan without any fee.

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Body Glove (Thailand) Public Company Limited


PARTY WITH POTENTIAL CONFLICT 1. Mr. Nopdol Tumwattana

Mr. Nopdol Tumwattana is a Chairman and Executive Chairman of the Company and holds 12.17% of shares as at December 31st, 2007.

RELATIONSHIP

1.1 Mr. Nopdol Tumwattana provided land and building for hire by the Company to be used as the present Head Office of Body Glove (Thailand) Public Company Limited. The Title Deeds No.4386, 4387 (partial), 4388 (partial), 4407, 4408 are situated at Tambol Klong Tanon, Bangkhen, Bangkok, with total area of 2,266 square meters, and the building, i.e., a 2-storey office building. The lease agreement is for 3 years as from May 1st, 2004, and the monthly hire rate is Baht 64.48/sq.m./month per details hereunder: Period Hire Rate/Month 1 May 2004-31 Jul 2004 Baht 100,000 1 Aug 2004-28 Feb 2006 Baht 150,000 1 Mar 2006-28 Feb 2009 Baht 100,000 Payable within the 5th of every month. At the end of the expiration of the first term, the Lessor agrees to extend the agreement for the period of 3 years each, but not to exceed the total period of 20 years with the right to increase the hire rate for each 3 year extension agreement at the rate no more than 15% of the last month rent.

1. List of Hire

CONNECTION TRANSACTIONS

1.30

COMMENTS OF AUDIT COMMITTEE

1.20 1.1 The hire rate on these transactions are below market rate when compared to the hire rate of surrounding area which carry approximately Baht 302.11/sq.m./month

31 DEC 2006 31 DEC 2007

AMOUNT (Million Baht)

As at December 31st, 2007 and December 31st, 2007, the Company have Connection Transactions with Party with Potential Conflict as follows:

1.Connection Transactions

Annual Report 2007

Body Glove (Thailand) Public Company Limited

page 37


PARTY WITH POTENTIAL CONFLICT 1. (Contd.)

RELATIONSHIP

page 38

Body Glove (Thailand) Public Company Limited At the end of the expiration term, Mr. Nopdol Tumwattana agrees to extend the agreement for the period of 3 years each, but not to exceed the total period of 20 years with the right to increase the hire rate for each 3 year extension agreement at the rate no more than 15% of the last month rent.

AMOUNT (Million Baht) 31 DEC 2006 31 DEC 2007 1.2 Mr. Nopdol Tumwattana provided land 0.50 0.60 1.2 for hire by the Company to be used as the warehouse. The Title Deeds No. 4387 (partial), 4389 are situated at Tambol Klong Tanon, Bangkhen, Bangkok, with total area of 954 square meters. The lease agreement is for 3 years as from March 1st, 2004 to February 28th, 2009 and the monthly hire rate is Baht 50,000 or equivalent to Baht 76.88/sq.m./month payable within the 5th of every month. CONNECTION TRANSACTIONS The hire rate on these transactions are above market rate when compared to the hire rate of surrounding area which carry approximately Baht 52.71/sq.m./month. However, the aforementioned rate is exluded of the intial capital investment or advance deposit of Baht 10.37 million at the interest rate of 8% per annum.

COMMENTS OF AUDIT COMMITTEE

Annual Report 2007


PARTY WITH POTENTIAL CONFLICT 1. (Contd.)

RELATIONSHIP

AMOUNT (Million Baht) COMMENTS OF AUDIT COMMITTEE 31 DEC 2006 31 DEC 2007 1.3 Mr. Nopdol Tumwattana provided a 0.84 1.3 The hire rate on these transactions are condominium suite at President Park, below market rate when compared to the Park View Tower for hire by the hire rate of surrounding condominium Company, with total area of 260.54 which carry approximately Baht sq.m., situated at No. 25A Oak, No. 99 461.54/sq.m./month Sukhumvit 24, Klongton,Klongtoey, Bangkok, furnished with furniture and fixture, for the purpose of providing the accommodation for the Executive who is not a residence of Thailand. The lease agreement is for 1 year as from January 1st, 2007 to December 31st, 2007 and the monthly hire rate is Baht 70,000 (or equivalent to Baht 268.67/sq.m./month At the end of the expiration term, Mr. Nopdol Tumwattana agrees to extend the agreement for 2 more periods of 1 year each.

CONNECTION TRANSACTIONS

Annual Report 2007

Body Glove (Thailand) Public Company Limited

page 39


PARTY WITH POTENTIAL CONFLICT 1. (Contd.)

RELATIONSHIP

page 40

Body Glove (Thailand) Public Company Limited Interest paid

Accrued Interest - Beginning balance - (Paid) - Ending balance

- Beginning balance - (Paid) - Ending balance

2. Loans Transactions On April 1st, 2006, Mr. Nopdol Tumwattana provided a long-term loan for the Company in the amount of Baht 41,500,000 with interest rate MOR (refer to Kasikornbank PLC) + 0.25% per annun, subject to loan payment of Baht 500,000 on a monthly basis, with the first payment as from January 1st, 2007 and interest payable every 3 month. The Company must payback the loan and interest in full within the period of 7 years as from the first installment payment.

CONNECTION TRANSACTIONS

2.94

-

3.31

-

35.50

41.50

-

41.50 ( 6.00 )

31 DEC 2007

41.50 -

31 DEC 2006

AMOUNT (Million Baht)

Moreover, these transactions are without collateral, and carry the market interest rate MOR + 0.25% per annum.

2. These transactions benefit the operation of the Company, and stengthen the Companyâ&#x20AC;&#x2122;s liquidity in the operation.

COMMENTS OF AUDIT COMMITTEE

Annual Report 2007


PARTY WITH POTENTIAL CONFLICT 1. (Contd.)

RELATIONSHIP

3.1 Mr. Nopdol Tumwattana and Mr. Goh Kok Cheng, Dickson jointly put up a guarantee loan with a credit of Baht 14,638,700 with Thanachart Bank Public Company Limited dated August 22nd, 2006 3.2 Mr. Nopdol Tumwattana, Mr. Goh Kok Cheng, Dickson and Mrs. Mallikar Leeraphand jointly put up a guarantee loan with a credit of Baht 45 million with Siam Commercial Bank Public Company Limited dated October 28th , 2004 3.3 Mr. Nopdol Tumwattana and Mrs. Mallikar Leeraphand jointly put up a guarantee loan with a credit of Baht 6 million with Thanachart Bank Public Company Limited dated June 23rd , 2004 3.4 Mr. Nopdol Tumwattana and Mr. Goh Kok Cheng, Dickson jointly put up a guarantee loan with a credit of Baht 10 million with Thanachart Bank Public Company Limited dated September 19th, 2007 3.5 Mr. Nopdol Tumwattana and Mr. Goh Kok Cheng, Dickson jointly put up a guarantee loan with a credit of Baht 5 million with Thanachart Bank Public Company Limited dated September 19th, 2007

3. Guarantee Transactions

CONNECTION TRANSACTIONS

10.00

5.00

-

-

6.00

45.00

45.00

6.00

14.64

31 DEC 2007

14.64

31 DEC 2006

AMOUNT (Million Baht)

3. These guarantee transactions benefit the operation of the Company. Moreover, it is comply to the conditions of the financial institutions requiring the Board of Directors to put up collateral for these transactions.

COMMENTS OF AUDIT COMMITTEE

Annual Report 2007

Body Glove (Thailand) Public Company Limited

page 41


PARTY WITH POTENTIAL CONFLICT 2. TSI International Co., Ltd.

page 42

Presently, Mr. Nopdol Tumwattana holds 32% shares of TSI International Co., Ltd., as at December 31st, 2007.

TSI International Co., Ltd., and the Company have 1 Co-Director, Mr. Nopdol Tumwattana

RELATIONSHIP The Company purchased readywear apparel from TSI International Co., Ltd. (Supplier) - readywear products purchased - Accounts Payable

CONNECTION TRANSACTIONS

0.61 -

31 DEC 2006

31 DEC 2007

AMOUNT (Million Baht)

-

These transactions are in the normal course of business and carry a fair price when compared to other suppliers

COMMENTS OF AUDIT COMMITTEE

Annual Report 2007

Body Glove (Thailand) Public Company Limited


PARTY WITH POTENTIAL CONFLICT 3. Neo Static Limited

- Copyright Fee - Accrued Copyright Fee

1.77 0.50

0.50 -

However, following the agreement signed in the Master License Agreement effective as of July 1st, 2007.

The Royalty fee payable to IP Global Investments America, INC. which is in ratio that compliance to the sales revenue with appropriated price.

On May 3rd, 2007, the Company entered Mr. Goh Kok Cheng, Dickson was a the Operating, License and Sub-License former Director of Neo Static Limited Rights Agreement with IP Global and later resigned from the post on Investments America, INC. for the LongApril 13th, 2007. So Neo Static Limited Term Exclusive Copyright of Body Glove Trademark. is not considered as party with potential conflict effected from date as mentioned above.

Mr. Goh Kok Cheng, Dickson is a Director and Chief Executive Officer of the Company and holds 18.3125% of shares as at December 31st, 2007.

These transactions are comprised of copyright fee for Body Glove Trademark according to the conditions set by IP Global Investments America, INC. where there are no signed agreement involved.

In the past, the Company paid copyright fee for Body Glove Trademark to Neo Static Limited as stipulated by IP Global Investments America, INC. where there are no signed agreement involved.

COMMENTS OF AUDIT COMMITTEE

Mr. Goh Kok Cheng, Dickson formerly held 50% of Neo Static Limited shares and later sold all shares to outside individuals on August 1st, 2006

AMOUNT (Million Baht) 31 DEC 2006 31 DEC 2007

CONNECTION TRANSACTIONS

RELATIONSHIP

Annual Report 2007

Body Glove (Thailand) Public Company Limited

page 43


PARTY WITH POTENTIAL CONFLICT 4. Mr. Goh Kok Cheng , Dickson

page 44 CONNECTION TRANSACTIONS

Guarantee Transactions Mr. Goh Kok Cheng, Dickson is a Director and Chief Executive Officer 1.1 Mr. Goh Kok Cheng, Dickson and Mr. of the Company and holds 18.3125% Nopdol Tumwattana jointly put up a of shares as at December 31st, 2007. guarantee loan with a credit of Baht 14,638,700 with Thanachart Bank Public Company Limited dated August 22nd, 2006. 1.2 Mr. Goh Kok Cheng, Dickson Mr. Nopdol Tumwattana and Mrs. Mallikar jointly put up a guarantee loan with a credit of Baht 45 million with Siam Commercial Bank Public Company Limited dated October 28th, 2004. 1.3 Mr. Goh Kok Cheng, Dickson and Mr. Nopdol Tumwattana jointly put up a guarantee loan with a credit of Baht 10 million with Thanachart Bank Public Company Limited dated September 19th, 2007 1.4 Mr. Goh Kok Cheng, Dickson and Mr. Nopdol Tumwattana jointly put up a guarantee loan with a credit of Baht 5 million with Thanachart Bank Public Company Limited dated September 19th, 2007

RELATIONSHIP

10.00

5.00

-

45.00

45.00

-

14.64

14.64

AMOUNT (Million Baht) 31 DEC 2006 31 DEC 2007 These guarantee transactions benefit the operation of the Company. Moreover, it is comply to the conditions of the financial institutions requiring the Board of Directors to put up collateral for these transactions.

COMMENTS OF AUDIT COMMITTEE

Annual Report 2007

Body Glove (Thailand) Public Company Limited


PARTY WITH POTENTIAL CONFLICT 5. Mrs. Mallikar Leeraphand CONNECTION TRANSACTIONS

Mrs. Mallikar Leeraphand is a Director Guarantee Transactions 1.1 Mrs. Mallikar put up a guarantee loan of the Company with a credit of Baht 12 milliom with Kasikornbank PCL dated August 25th, 2000. 1.2 Mrs. Mallikar Leeraphand put up a guarantee promissory note with a credit of Baht 3.5 million with Kasikornbank PCL dated August 25th, 2000. 1.3 Mrs. Mallikar Leeraphand, Mr. Goh Kok Cheng, Dickson and Mr. Nopdol Tumwattan jointly put up a guarantee loan with a credit of Baht 45 million with Siam Commercial Bank Public Company Limited dated October 28th, 2004. 1.4 Mrs. Mallikar Leeraphand and Mr. Nopdol Tumwattana jointly put up a guarantee loan with a credit of Baht 6 million with Siam Commercial Public Company Limited dated June 23rd, 2003.

RELATIONSHIP

45.00

45.00

6.00

3.50

3.50

6.00

12.00

12.00

AMOUNT (Million Baht) 31 DEC 2006 31 DEC 2007

These guarantee transactions benefit the operation of the Company. Moreover, it is comply to the conditions of the financial institutions requiring the Board of Directors to put up collateral for these transactions.

COMMENTS OF AUDIT COMMITTEE

Annual Report 2007

Body Glove (Thailand) Public Company Limited

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page 46

Mrs. Waristha Thapanasakulvong holds 52.67 of Light Spot Plastic Co., Ltd. shares as at December 31st, 2007.

PARTY WITH RELATIONSHIP POTENTIAL CONFLICT 6. Light Spot Miss Waristha Plastic Co., Ltd. Thapanasakulvong is a Chief Finance Officer of the Company holds 0.2375% of shares as at December 31st, 2007. The Company purchased plastic bags from Light Spot Co., Ltd. - Expense - Accounts Payable

CONNECTION TRANSACTIONS

0.89 -

31 DEC 2006

31 DEC 2007

AMOUNT (Million Baht)

-

These transactions are in the normal course of business and carry a fair price when compared to other suppliers.

COMMENTS OF AUDIT COMMITTEE

Annual Report 2007

Body Glove (Thailand) Public Company Limited


Annual Report 2007

2. Necessity and Reasonableness of Transactions The Connection Transactions are based on the necessity and reasonableness of the ordinary course of business for the best interests of the Company operation and carry a fair price.

3. Procedures for the Approval of Connection Transactions

In the case of Connection Transactions, such consideration must be approved by the Board of Directors and the Shareholder’s Meeting, whichever case may be. The Board of Directors or the authorized persons from the Board of Directors are not allowed to participate in the decision on any transaction that a stake-holder or party with potential conflict having common interests or may have conflict of interest in any way with the Company or its subsidiaries. Moreover, the Company must comply with all legal orders concerning securities and the Stock Exchange. In the event the Company has registered securities in the Stock Exchange of Thailand, the Company shall comply with all regulations, announcements, orders or procedures of the Stock Exchange of Thailand in addition to the procedures on disclosure of information on the Connection Transactions and the acquisition or disposal of assets.

4. Policy on Connection Transactions in the Future

The Company has a policy that the future connection transactions may occur under the Board of Directors’ s consideration based on the necessity and reasonableness of the ordinary course of business and have prices comparable to prevailing market rates for the best interests of the Company. However, the Company may allow the Audit Committee or the Company’s Auditor or Independent Advisor to review and comment on the prices and the reasonableness of any future transaction. Whereas the Company shall comply with all legal and regulatory orders as stipulated by related departments on Connection Transactions, i.e., the Securities and Exchange Commission, the Stock Exchange of Thailand

Body Glove (Thailand) Public Company Limited

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page 48

Body Glove (Thailand) Public Company Limited INVENTORY CONTROL DEPARTMENT Manager

* The Company hires Independent Agency – A.A.C. AUDIT FIRM CO., LTD.

SENIOR FINANCE MANAGER (Mr. Chai Ratanamahawong)

CHIEF FINANCE OFFICER (Miss Waristha Thapanasakulvong)

HUMAN RESOURCE DEPARTMENT Manager

Management Structure of Body Glove (Thailand) Public Company Limited As at December 31st, 2007

Management Structure

SENIOR ACCOUNT MANAGER (Miss Methira Thongsuwan)

1.

Management

INFORMATION TECHNOLOGY DEPARTMENT Manager

PROCUREMENT DEPARTMENT Manager

Manager

Manager

SALES AND MARKETING DEPARTMENT

SALES AND MARKETING DIRECTOR (Mr. Goh Kok Cheng)

INTERNAL AUDIT TEAM*

AUDIT COMMITTEE

WAREHOUSE DEPARTMENT

OPERATIONS DIRECTOR (Miss Dolnapa Tumwattana)

CHIEF EXECUTIVE OFFICER (Mr. Goh Kok Cheng)

CHAIRMAN AND EXECUTIVE CHAIRMAN (Mr. Nopdol Tumwattana)

BOARD OF DIRECTORS

Annual Report 2007


Annual Report 2007 As at December 31st, 2007, the management structure of the Company comprised two sets of Committees, namely, the Board of Directors and the Audit Committee as follows: (a) The Board of Directors was comprised of 8 directors as follows: 1. Mr. Nopdol Tumwattana Chairman of the Board 2. Mrs. Mallikar Leeraphan Director 3. Asst. Prof. Dr. Nantarika Chansue Director 4. Mr. Goh Kok Cheng ,Dickson Director 5. Mr. Goh Kok Beng Director 6. Pol.Gen. Sereepisuth Taemeeyaves Director / Independent Director and Chairman of Audit Committee 7. Professor Emeritus Dr. Surapone Virulrak Director / Independent Director and Audit Committee Member 8. Mrs. Artivon Bunnag Director / Independent Director and Audit Committee Member with Miss Waristha Thapanasakulvong as Secretary to the Board of Directors Authorized Persons The names and number of authorized persons to sign on behalf of the Company are Mr. Nopdol Tumwattana or Mrs. Mallikar Leeraphand or Asst. Prof. Dr. Nantarika Chansue, either one director, to co-sign with Mr. Goh Kok Cheng, Dickson or Mr. Goh Kok Beng, either one director, total two persons and accompanied with a stamp of the Company’s Seal. Scope of Duties and Responsibility of Board of Directors The Board of Directors shall perform their duties and responsibility to carry out the Company’s business in compliance with the laws, the objectives, the Articles of Association of the Company, and the resolutions of Shareholder’s Meetings in good faith, with due diligence and care in the best interests of the Company. The importance scopes of responsibilities are as follows: (1) Conduct an Annual Shareholders Meeting within 4 months as from the last day of the Company’s fiscal year period. (2) Conduct a Board of Directors meeting at least once every three month. (3) Responsible and verify the Company’s financial statements with the Auditor at the end of fiscal year period and propose to the Shareholders Meeting for consideration and approval. (4) The Board of Directors may appoint one or more directors or other person to carry out any act on behalf of the Board and under the monitoring of the Board, or may appoint such person an authority in a specified period, which the Board deep appropriate. The Board of Directors may abrogate, revoke change or adjust the appointed authority as deem appropriate. With respect to the foregoing approval, a person or persons delegated shall not be able to approve any transaction in which he or any person may have conflict of interest or beneficiary’s conflict with the Company or its subsidiaries (if any), unless such approval is executed on general commercial terms in accordance with the policy and criteria approved by the Board of Directors except. (5) Define vision, mission, strategy, operating plan as well as budgetary plan of the Company including control and monitor administrative functions, and the Board of Directors operation in accordance to the Company’ s policy, with exception of the following which require consent from the Shareholders Meeting: capital increase; capital splitting; sales or transfer the Company operation, either whole or partial to other person; acquisition or transfer other company operation for the Company; or amend the Articles of Association or regulation, etc. In addition, the Board of Directors should control and monitor the Company’s operation to be in compliance with the law regarding the Securities and Stock Exchange policy and regulation such as making a transaction with respect to connected transactions or buying and selling significant assets in accordance to the SET policy and relating business transaction law. (6) Review the administrative structure, appointment of Chief Executive Officer and other Committee Member as may deem appropriate. Body Glove (Thailand) Public Company Limited

page 49


Annual Report 2007 (7) Monitor the operation performance to assure that it is in accordance to the plan and budgetary continuously. (8) The director shall not perform or involve in any similar business and/or compete with the Company; become a partner in an ordinary partnership with unlimited liability; or assume a director position in a private entrepreneur or other company with similar business and/or compete with the Company either for personal interest or others, except to acquire a consent from the Shareholders Meeting prior to the appointment. (9) The director must inform the Company without hesitation if there is any direct or indirect interest involving any contract conducted by the Company; or holds shares or bonds of the Company or its subsidiaries at an increasing or decreasing number. (b) Authorization from the Board of Directors At the Board of Directors Meeting No. 1/2007 held on February 23rd, 2007, with the presence of Independent Directors and Audit Committee; the Board had passed a resolution regarding scope of duties and responsibilitiy of the Executive Chairman and Chief Executive Officer as well as administrative authority for ordinary operation. The important responsibility and authority are summarized as follows: Scope of Duties and Responsibility of Executive Chairman (1) Monitor and follow-up on the Company’s operating results with the management. (2) Review annual budgetary plan as submitted by the management prior to submission to the Board of Directors for review and approval. (3) Monitor and follow-up on the Company’s operation as assigned by the Board of Directors. (4) Authorize to appoint, transfer, revoke or terminate the employment of the Executive level staff. (5) Approve and/or delegate authorities to approve acquisition of fixed assets other than ordinary business transaction within the credit limit of Baht 5 million per tranction. (6) Approve and/or delegate authorities to approve other ordinary transactions within the credit limit of Baht 10 million per transaction for the benefit of business liquidity. (7) Approve and/or delegate authorities to approve other ordinary transaction in business operation within the credit limit of Baht 100,000 per transaction. (8) Perform duties in good faith and utmost care for the benefits of the Company. The authority of Executive Chairman excludes an approval in any transaction, personal or person which may perceive as potentially causing conflict of interest or benefit with the Company or its subsidiary (if any) unless such approvals are deemed as ordinary course of business in accordance to the Company’s policy and criteria as have been approved by the Board of Directors. Scope of Duties and Responsibility of Chief Executive Officer (1) Execute and carry out ordinary coursee of business relating to the general operation of the Company. (2) Perform duties as assigned by the Board of Directors or the Executive Chairman. (3) Authorize to appoint, transfer, revoke, terminate, set and increase salary, allocate reward, compensation and bonus to all employee of the Company below management level, including appoint a representative of the employer as Provident Fund Committee of the Company. (4) Approve and/or delegate authorities to approve acquisition of fixed assets other than ordinary business transaction within the credit limit of Baht 5 million per tranction. (5) Approve and/or delegate authories to approve other ordinary transactions within the credit limit of Baht 10 million per transaction for the benefit of business liquidity. (6) Approve and/or delegate authorities to approve other ordinary transaction in business operation within the credit limit of Baht 100,000 per transaction. (7) Authorize to issue instructions, regulations, announcement, and memos to ensure the business operations are in compliance with the Company’s policy and its best interest, with exception of matters regarding employee benefits. (8) Authorize to act and represent the Company on related business activities that are of best interest to the Company. page 50

Body Glove (Thailand) Public Company Limited


Annual Report 2007 (9) Perform other duties as assigned by the Board of Directors from time to time. (10) Perform duties in good faith and utmost care for the benefits of the Company. However, the authority of Chief Executive Officer exclude an approval in any transaction, personal or person which may perceive as potentially causing conflict of interest or benefit with the Company or its subsidiary (if any) unless such approvals are deemed as ordinary course of business in accordance to the Company’s policy and criteria as have been approved by the Board of Directors (c) The Audit Committee was comprised of 3 members as follows: 1. Pol.Gen. Sereepisuth Taemeeyaves Chairman of Audit Committee 2. Professor Emeritus Dr. Surapone Virulrak Audit Committee Member 3. Mrs. Artivon Bunnag Audit Committee Member With Miss Chirapha Chansuta as the Secretary of Audit Committee. Term of Officer for Audit Committee Chairman of Audit Committee and Audit Committee members 2 yeats At the end of the term, Chairman of Audit Committ and Audit Committee members whose term is expired could be re-appointed as Audit Committee for the next term. Scope of Duties and Responsibility of Audit Committee (1) Review the accuracy of the Company’s financial reports and disclosure of information to ensure it is appropriate and effective with the Company’s Auditor and concerned Executive who is responsible for preparation of a quaterly and annually financial reports. The Audit Committee may suggest the Auditor to review or audit any transaction as may deem necessary and significant during the annual closing of the Company. (2) Review the Internal Control and Internal Audit systems joinly with the Company’s Auditor and Internal Auditor to ensure these are appropriate and effective. (3) Review and ensure that the Company performs in accordance with the laws governing Securities and Exchange, the regulations of the Stock Exchange of Thailand, and other laws applicable to the Company’s business. (4) Consider, select, propose the appointment and remuneration of the Company’s Auditor in which various criteria should be considered such as credibility, efficiency of resources, quantity of audit tasks applicable to such Audit Firm as well as knowledge and business-related experience the candidate being appointed to conduct the audit tasks of the Company must have. (5) Consider the disclosure of the Company data in case there is any related transaction or items that may lead to possible conflicts of interest to ensure it is appropriate and effective. (6) Perform other duties as assigned by the Board of Directors and the Audit Committee’s consent, i.e., review financial policy and risk management, review the management operation is under business code of ethics, review important transaction with Executive Directors which have to disclose to public according to the law such as Annual Report and Administrative Analysis, etc. (7) Prepare an annual disclosure report on the corporate governance of the Audit Committee to be included in the Annual Report, addixing the signature of the Chaiman of Audit Committee. (8) Report the performance of the Audit Committee to the Board of Directors at least once every quarter. (9) Consider and comment the performance appraisal, appointment, termination and remuneration of the Internal Auditor. (d) The Independent Directors Committee was comprised of 3 members as follows: 1. Pol.Gen. Sereepisuth Taemeeyaves Independent Director 2 Professor Emeritus Dr. Surapone Virulrak Independent Director 3. Mrs. Artivon Bunnag Independent Director

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Annual Report 2007 (e) The Executives Members were consisted of 6 persons as follows: 1. Mr. Nopdol Tumwattana Executive Chairman 2. Mr. Goh Kok Cheng, Dickson Chief Executive Officer and Sales & Marketing Director 3. Miss Dolnapa Tumwattana Operations Director 4. Miss Waristha Thapanasakulvong Chief Finance Officer 5. Mr. Chai Ratanamahavong Senior Finance Manager 6. Miss Methira Thongsuwan Senior Account Manager 2. Selection of Directors and Executives (a) Selection of Directors The Company has not appointed a Nomination Committee. In the selection of candidates, the directors shall be elected in accordance with the following rules and procedures: (1) The Board of Directors shall consist of at least five members being elected at the meeting of shareholders based on majority votes in accordance with the following criteria and methods: (1.1) each shareholder shall have a number of votes equal to the number of shares held; (1.2) each shareholder may exercise all the votes he or she has under (1.1) to elect one or several persons as director or directors, but may not allot his or votes to any person. (1.3) after the vote, the candidates shall be ranked in order descending from the highest number of votes received to the lowest, and shall be appointed as directors in that order, until all of the director positions are filled. Where there is an equality of votes cast for candidates in descending order causing the number of directors to be exceeded, the Chairman of the meeting shall cast one extra vote. (2) At every annual ordinary meeting of shareholders, one-third of the directors shall vacate in proportion where the Committee members who were in the post for the longest period shall be retired. If the number of directors is not a multiple of three, the number of directors closest to one-third shall vacate. (b) Selection of Independent Directors and Audit Committee The Independent Directors and Audit Committee shall be elected in accordance with the following criteria: (1) holding no more than 5% of the Companyâ&#x20AC;&#x2122;s paid up capital, or that of an affiliated company, a related company or an associate company, including the shares holding by related persons. (2) not involve in the day to day management of the Company, an affiliated company, a related company, an associate company; and not an employee, staff or an advisor receiving a regular salary from the company, an affiliated company, a related company, an associate company, or major shareholders of the Company. (3) no benefit or conflict of interest whether direct or indirect in terms of financial and administrative operation of the Company, an affiliated company, a related company, an associate company, or major shareholders of the Company; and have no benefit or conflict of interest with reference to the aforementioned during an accounting year prior to the appointment as Independent Directors or Audit Committee unless approved by the Board of Directors after careful consideration that such benefit or conflict of interest shall have no influence to the performance and ability to give opinion in an independent manner. (4) no relationship or being related to the Executives or major shareholders of the Company. (5) not be appointed as a representative or to safeguard the interests of the Companyâ&#x20AC;&#x2122;s directors, major shareholders or shareholders who are related to the Companyâ&#x20AC;&#x2122;s major shareholders. (6) must be capable of his or her performing duties, giving his or her opinions or reporting the results of work performance according to the duties delegated by the Board, free and clear of the control of management or major shareholders of the Company including related persons or close relatives of the said persons (c) Number of directors who are major shareholders Number of directos who are major shareholders are consisted to 5 directors as follows: Directors who are major shareholders from the Tumwattana group are Mr. Nopdol Tumwattana, Mrs. Mallikar Leeraphan and Asst. Prof. Dr. Nantarika Chasue. Directors who are major shareholders from Malaysian Investors are Mr. Goh Kok Cheng and Mr. Goh Kok Beng. page 52

Body Glove (Thailand) Public Company Limited


Annual Report 2007

3. Executive Remuneration (a)

Monetary Compensation - Directors NAME

1. 2. 3. 4. 5. 6. 7. 8.

Mr. Nopdol Tumwattana Mrs. Mallikar Leeraphan Asst. Prof. Dr. Nantarika Chansue Mr. Goh Kok Cheng, Dickson Mr. Goh Kok Beng Pol.Gen. Sereepisuth Taemeeyaves Professor Emeritus Dr. Surapone Virulrak Mrs. Artivon Bunnag Total

2007 DIRECTOR FEE (Baht) 120,000 100,000 220,000 120,000 275,000 180,000 220,000 1,235,000

DIRECTOR REMUNERATION (Baht) -

Remark: Directors No. 6 â&#x20AC;&#x201C; 8 assumed the position of Board of Directors on January 25th, 2007 At the Extraordinary Meeting of Shareholders No. 4/2007 held on June 14th, 2007, the Commiittee set the Director compensation for attendance of meeting as director fee, namely, Chairman Baht 20,000 per meeting, Director Baht 20,000 per person per meeting, Chairman of Audit Committee Baht 25,000 per meeting, Audit Committee Member Baht 20,000 per person per meeting whereas the total compensation for 8 Directors shall not exceed Baht 3 million per year.

- Management (Remuneration applied to Executives whose names are listed as Executive Members)

REMUNERATION

2007 NO. OF EXECUTIVES 6 6

Salary Bonus Accommodation Insurance Policy Entertainment Total

1 1 2 6

TOTAL REMUNERATION (Baht) 5,572,000 1,029,000 840,000 996,000 565,641 9,002,641

Remark: Two Executives, namely, Senior Account Manager and Senior Finance Manager assumed the Executive positions on June 1st, 2007.

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Annual Report 2007 (b) Other Moneraty Compensation The Company and its employee had established a Provident Fund in which the Company’s contribution equivalent 2 – 3% of monthly salary. The Company started to pay the said contribution for the executives and employees as from June, 2007 onward. 4. Corporate Governance The Company recognizes the importance of carry out the responsibilities of business operation, in nurturing a good corporate governance practice. Therefore, the Company strives to operate its business in compliance with the guidelines of the Stock Exchange of Thailand’s (SET) Code of Best Practice for Directors of Listed Companies. In addition, the Company resolved to adopt the Principle of Good Corporate Governance following the guidelines of the SET to ensure the highest benefits to the Company and to strengthen the transparency and efficiency of the management that could strengthen the confidence of the shareholders, investors and all related parties concerned as follows: Section 1 Rights of the Shareholders (1) The Company shall place utmost importance on the rights of every shareholder. On each Shareholders’ meeting, the Company shall send a written notice calling the meeting with relevant information to the shareholders not less than seven days prior to the date of the meeting. Moreever, in the event the Securities & Exchange Commission or the Stock Exchange of Thailand requiring that the Company should send a written notice calling the meeting to the shareholders more than seven days in advance, the Company shall promptly comply with such regulation, i.e., a written notice calling the meeting to consider connected transactions or acquisitions and dispositions of assets; or a written notice calling the meeting to consider Employee Stock Option Program, etc., the Company shall send such written notice calling the meeting of shareholders not less than 14 days prior to the date of the meeting. On the day of shareholders’ meeting, the Company shall provide equal opportunity for every shareholder to audit the Company’s performance and express opnion and comment freely and the Company shall prepare minutes of all shareholders’ meetings that are accurate and complete in order to be examined by the shareholders. (2) Shareholders’ Meeting At the Shareholders’ Meeting, the Chairman of the Meeting provides equal opportunity for every shareholder to examine the Company’s operation, to ask questions or comment on any suggestions. The Company recognizes the importance of the shareholders’ meeting; thus, it is the Company’s policy to prepare and provide sufficient and adequate information to the shareholders providing equitiable treatment to express their opinions and raise any questions at the shareholders’ meeting. The following procedures relating to preparation of the shareholders’ meeting are adopted by the Company, namely: (a) Receive Notice of the Meeting: The company shall prepare a written notice calling the meeting that indicate the place, date, time, agenda of the meeting and the matters to be proposed to the meeting together with sufficient detail to the shareholders not less than 14 days prior to the date of the meeting. The notice calling for the meeting shall also be posted in the Company’s website. (b) Conduct the Meeting: At the Shareholders’ Meeting, the Chairman of the Meeting shall explain the voting procedure and vote count prior to the commencement of the meeting, and provide opportunity for the shareholders to ask questions, express opinions and suggestions on various agendas in which significant topics in questions and suggestions will be recorded in the minutes of the meeting. In addition, the Company shall arrange to have representatives from the Board of Directors, the Management, the Audit Committee, the Auditor and Legal Advisor to attend the Shareholders’ Meeting for questions clarification. (c) Minutes of the Shareholders’ Meeting: The Company shall disclose the Minutes of the Shareholders/ Meeting via the Company’s website and shall propose to the shareholders to consider confirmation of the Minutes at the next meeting. The Company shall maintain the Minutes of Shareholders’ Meeting and keep them at a safe place for related party to examine. page 54

Body Glove (Thailand) Public Company Limited


Annual Report 2007 Section 2 Rights and Equitable Treatment (1) For shareholders who are unable to attend the meeting, the Company provides a proxy form to allow the shareholders to appoint an Independent Director or Audit Committee as a proxy to vote on behalf of the shareholders. (2) Control and Usage of Insider’s Information The Company place importance on the effective controlling system and the internal audit for both the Executives and operation level staff. Therefore, clear job descriptions and lines of authority and reporting and responsibilities for each unit are defined in writing to support the control and monitoring the use of company’s assets for the benefits of the Company. There are segregation of positions for operation staff, managment staff and performance appraisal staff to balance off the power and cross-examination as appropriate. In addition, there is an internal control system for Sales in which the Company has set up reporting system for submission to respective Executive for approval. With this, the Company has signed an agreement to appoint, A.C.C. Audit Firm, as the Company’s Internal Audit, with the scope of responsibility consisted of 4 systems as follows: 1. Sales and Collection System 2. Procurement and Payment System 3. Inventory Control and Warehouse System 4. Human Resources Management System The Company’s internal audit officer shall submit the report of performance appraisal on internal audit activities to the Audit Committee. Additionally, the Company’s internal audit officer shall review any significant connected transactions as assigned by the Audit Committee for submission to the Audit Committee. The secretary of Audit Committee shall act as a coordinator between an internal auditor and the Company’s Executive. The Board of Directors highly recognizes the importance of Risk Management. Therefore, the Company has set up a risk assessment for the operation and has set a preventive measurement and mitigation, including the risk that will have an impact on the Company’s business operation as specified in the risk factors. Section 3 Role to Stakeholders (1) Rights of Stakeholders The Committee assigns the highest priority to the rights of all stakeholders as follows: a) Employees: The Company treats all employees as equal, fair with reasonable compensation whilst continues to hold training and development on skilled knowledge and foreign lanquage. (b) Business Parters and Creditors: The Company strictly observes and adheres to all its obligations to partners and creditors on a fair basis in compliance with the commercial conditions and/or joint agreement for mutual benefits of both parties. (c) Customers: The Company is honest and sincere to the customers and continues to provide quality products whilst gathering feedback and comments from the customer. (d) Competitors: The Company abides by rules and ethics of fair competition, and will not destroy its competitors through unethical strategies. (e) Shareholders: The Company continues to develop the organization toward continuous growth for higher sales revenues and increase of net profit which shall benefit the shareholders in terms of reasonable return on investment based on the present business situation. (f) Society and Community: The Company continues to play an active role in the community environment and society, including takes part in social activities for the benefit of the community. Section 4 Disclosure of Information and Transparency (1) Corporate Governance Policy The Board of Directors adopted the principal good governance policy as it recognizes the significant roles in nurturing the practice which facilitating continous growth and stability. The Board is determined and intended to follow the principal by setting policy and direction for the Company’s operation to place importance Body Glove (Thailand) Public Company Limited

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Annual Report 2007 on the internal control system and the internal audit; to monitor the administrative management in carry out the operation effectively for the long-term benefit of the shareholders under the governing laws and business ethics including the disclosure of information and transparency and appropriate risk management. (2) Business Ethics The Company has clear regulations on Code of Ethics or Statement concerning the duty of the Board of Directors, the Executives and all employees of the Company, as guidelines in performing one’s duties with honesty, integrity and moral principles. The Company shall sincerely monitor and follow-up to encourage the best practice on Code of Ethics or Statement among the employees as well as the disciplinary action otherwise. (3) Investor Relation The Board of Directors understands the importance of disclosed the Company’s information regarding finance and non-finance information in terms of transparency and accuracy. Thus, the Company has appointed Miss Waristha Thapanasakulwong to be responsible for the disclosure of the Company’s important information, including creating a good relationship and communicate to investors, shareholders and other analysts. General investors can contact the Company for more information at Telephone: 02 - 972 - 3460 Ext.. 818 or http://www.bodyglove.co.th Section 5 Responsibilities of Board of Directors (1) The Board of Directors specifies the policy and participate in the consideration and approve to determines the vision, missions, strategies, business plan and budget of the Company, as well as having good corporate governance so that the executives perform the work under the policy as specified effectively and efficiency whilst increase more valued added at the height of the economy for the business and the highest stability for the shareholders. (2) Balance of Power for Non-Executive Directors There are eight persons on the Board of Directors, namely - 2 directors from the Executives - 3 directors not from the Executives - 3 directors as Independent Directors Therefore, the Company has 3 directors as Independent Directors who represent 37.5% of the whole Board of Directors. Moreover, the number of directors from major shareholders are consisted of 5 director, or 62.5% of the whole Board of Directors, namely (1) directors from major shareholders of Tumwattana’s Group are Mr. Nopdol Tumwattana; Mrs. Mallikar Leeraphan and Asst. Prof. Dr. Nantarika Chansue; and (2) directors from major shareholders of Malaysian Investors are Mr. Goh Kok Check and Mr. Goh Kok Beng. The directors from these two major shareholders groups can balance off the power of the administrative operation among themselves. (3) Aggregration or Segregation of Positions The Chairman is not the same person as the Chief Executive Officer as to clearly define and separate role of dties in directing the Company’s policies and management. (4) Conflict of Interest In order to prevent conflict of interest transaction, it is the Board of Directors’s authorization to specify that an authorized person shall not approve any transaction of his own or a person who may have conflict of interet or benefit unless such transaction is of ordinary business transaction of the Company under general commercial terms. In addition, the Company shall comply with the Security and Exchange of Thailand’s notification governing the connected transaction of the registered company, or on the acquisition or disposition of assets of the registered company, whichever case may be. Furthermore, the Company shall set policy and procedure that no members of the Executives or related parties can use non-disclosure information of the Company for personal benefit. - Potential conflict of interest transactions: The Board of Directors is well aware of any transaction which could lead to a potential conflict of interest, and, has considered very carefully with a view to full compliance and concludesthat the terms and prices in these transactions are comparative to other individuals. page 56

Body Glove (Thailand) Public Company Limited


Annual Report 2007 - The Company shall require that the Executives report changes of the securities hold to the Securities Exchange Commission, Section 59, of the Securities and Exchange Act, B.E. 2535 within three working days. In addition, The Directors, Executives or employees who receive the internal information are prohibited to disclose internal information to outside individual or non-related person, and the said Directors, Executives or employees must not buy or sell shares of the Company for a period of one month before the release of the Company’s financial statements to the public. The Company’s policy on transactions that may have potential conflict of interest or connected transactions are as follows: - to set a price and term following the same procedure as may be entered with other invidivual. - to strictly follow the procedures of the Stock Exchange of Thailand. - to disclose information on connected transactions in the Company’s Financial State ments, Annual Report and Information Disclosure Report (Form 56-1) for inspection by he shareholders (5) Remuneration for the Board of Directors and Executives Remuneration for the Board:: The Company has a clearly and transparently defined remuneration policy, with remuneration for directors reviewed and approved by the Shareholders’ Meeting. Remuneration is adequate, determined in a manner equitable with industry standards, and is performance-based as a way to motivate and retain qualified directors. Remuneration for the Executives: Remuneration for the Executives is in compliance with with the principle and policy as set by the Board of Directors which related to the Company’s performance and individual performance of the Executives. The Company has no Remuneration Committee at present. (6) Board of Directors Meeting The Board of Directors shall hold a meeting at least once every three month and hold additional meetings as deem necessary. The Company Secretary served a written notice, the agenda, and any documents to the directors not less than seven days prior to the date of the meeting to ensure sufficient time for the directors to study and review the agenda before attending the meeting. The Company shall maintain the minutes of meetings and keep the said documents receiving the confirmation from the Board of Directors for future examine by the Board or related party. In 2007, the Board of Directors held meetings as follows: BOARD OF DIRECTORS 2007 NO. OF MEETING / NO. OF ATTENDANCE Board of Directors Meeting Audit Committee Meeting 1. Mr. Nopdol Tumwattana 8/8 2. Mrs. Mallikar Leeraphan 8/7 3. Asst. Prof. Dr. Nantarika Chansue 8/8 4. Mr. Goh Kok Cheng, Dickson 8/8 5. Mr. Goh Kok Beng 8/ 6. Pol.Gen. Sereepisuth Taemeeyaves 6/6 5/5 7. Professor Emeritus Dr. Surapone Virulrak 6/5 5/4 8. Mrs. Artivon Bunnag 6/6 5/5 Remark: Reasons for absence of Mr. Goh Kok Beng were due to previous business engagements.

(7) Sub-Committee The Company appointed the Audit Committee to monitor and review the Company’s operation with clear scope of duties and responsibility of Audit Committee (details as shown in Item 1 (c)). The Company has no Remuneration Sub-Comiittee. However, the Company has taken appropriate procedure in consideration for the remuneration, and determined in a manner equitable with industry standards of approximately the size operation, and is performance-based. Body Glove (Thailand) Public Company Limited

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Annual Report 2007 (8) Board of Directors’s Report The Board of Directors is responsible for the financial statements of the Company and the fiancial information as shown in the Annual Report. The financial statements shall comply with the generally accepted accounting standards in Thailand, which considered appropriate for the Company. In addition, the Board of Directors is accountable for reviewing the accuracy of the Company’s financial statements and ensures there is adequate disclosure in notes to financial statements. 5. Internal Information Usage The Company has a concise policy and procedure on the control and usuage of internal information, especially the information on the Company’s financial status that must be audited / reviewed by the Certified Public Accountant and receive approval from the Audit Committee Meeting every time before propose to the Board of Directors and the Stock Exchange of Thailand or general public. The Company has come up with the rules to prevent the usage of internal data for personal benefits for the Board of Directors, Executives and employees as follows: (1) To prohibit the Board of Directors, Executives as well as their spouses and children under legal age the use of internal information for the purpose of acquisition, disposition, transfer or take over the securities of the Company before such information is disclosed to the general public, especially within 30 days before the disclosure of the Company’s financial statements to the public, Moreover, following the release of such information, the aforementioned individuals are prohibited to acquire or dispose of the securities of the Company until the public acknowledge the information receipt for appropriate time (7 days from the disclosure date) (2) To acknowledge the Board of Directors and Executives as well as their spouses and children under legal age to be aware of their dities that they have the duties to submit reports on the securities holding of the Company in accordance to the Securities and Exchange Commission Notification No. Sor. Jor. 14/2540, Re: Preparation and Disclosure of Reports on Securities Holding of directors, Executives and auditor of the company. In case of any violation of the aforementioned regulations, the Company shall proceed with a disciplinary action as may deem appropriate, i.e., verbal warning with written confirmation, deduction of salary, suspend, or termination of employment, etc. To prohibit the Board of Directors, Executives as well as their spouses and children under legal age the use of internal information for the purpose of acquisition, disposition, transfer or take over the securities of the Company before such information is disclosed to the general public, especially within 30 days before the disclosure of the Company’s financial statements to the public, Moreover, following the release of such information, the aforementioned individuals are prohibited to acquire or dispose of the securities of the Company until the public acknowledge the information receipt for appropriate time (7 days from the disclosure date) 6. Employees (a) Total number of employees as at December 31st, 2007 was 382 persons (b) Total remuneration and type of compensation provided to the employees (excluded Directors and Executives) TYPES OF REMUNERATION Salary / Wages Wages Employees benefits rpenses Total

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Body Glove (Thailand) Public Company Limited

2007 (Baht) 29,371,283.34 3,976,786.00 22,764,404.20 56,112,473.54


Annual Report 2007 (c) Policy on Human Resources Development As the Company’s operation is distribution of readywear apparel and accessories under Body Glove Trademark which place high emphasis on the continuation of product development and quality service to promote sales, the Company; therefore, recognizes the importance of Human Resources Deveopment to ensure the highest benefits for the Company and for the customer’s satisfacton on impressive service rendered. With this objectives, we strive to strengthen the effectiveness in various areas, such as, (1) the administrative management of Flagship Store and product presentation; (2) the complete quality service rendered by skillful staff who understand the products and brand trademark; (3) increment sales volumes and profits; and (4) building strong and binding relationship among co-workers and working effectively as teamwork. The Company’s Human Resrouces Department is in charge of the training, both in-house and public. For in-house training, the speaker is represented by the Company member and/or special guest speaker from outside. For public training, the Company will send the employees to attend courses by considering the position, duty and responsibility for selection of suitable courses and contents as well as the Training Institution for the benefit of the employee and the Company as a whole. 7. Internal Control The Company recognizes the importance of an internal control system with sufficiency to protect or minimize probable risks. Whereas the Board of Directors has established an Internal Audit Department by hiring an outside company, namely, A.A.C. Audit Firm, to review the operation systems in accordance to the annual audit plan as approved by the Audit Committee. It is the Company’s objectives to ensure and evaluate the efficiency and sufficiency of the Company Internal Control System; to ensure that all resources are utilized to full benefits whilst control on other company’s operations are in line with the law governing and the government regulations, and important financial transactions of the Company are conducted efficiently and accurately . Therefore, in order for the Internal Audit Department to be independet and to be able to assess and perform its checks and balances task, the Board of Directors has stipulated that the Internal Audit Department report directly to the Audit Committee. As for the Risk Management, the Company views the importance of the risk management procedure by consider the present risk factors and expected risk together and thus analyze probable impact or possibility that such risk will take affect in order to set a preventive measurement and manage such risk. After careful consideration, the Company has prepared a report on Risk Management and constantly follow-up on the results. For major Risk Factors of the Company, details are summarized in a separate topic under Risk Factors, page 33 to page 36 The Board of Directors and the Audit Committee had evaluated the Internal Control System in accordance to the Appraisal of the Sufficiency of Internal Control at the Board of Directors’ Meeting held on February 23rd, 2008 and concluded that the Company had sufficient Internal Control System and appropriate for the business operation. In addition, there was no significant faults relating to the Internal Control System and that the system can protect the Company’s assets from unjustify or wrongly usuage by the Executives. The Audit Committee Board had expressed that the Company develop the 15 Principles of Good Corporate Governance as set by the Stock Exchange of Thailand to the full extent. 8. Dividend Policy The Company has a policy of making annual dividend payment to its shareholders at a rate of no less than 40% of the Company’s net profit after deduction of income tax; however, are subject to change to a lower rate than aforementioned depending on the Company’s investment plan on business operation.

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Annual Report 2007

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Body Glove (Thailand) Public Company Limited


Annual Report 2007

                                    

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Annual Report 2007

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS’ REPORT To The Shareholders of Body Glove (Thailand) Public Company Limited (Formerly the name of Body Glove (Thailand) Company Limited) I have audited the accompanying balance sheets of Body Glove (Thailand) Public Company Limited as of December 31, 2007 and 2006, the related statements of changes in shareholders’ equity, income and 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 about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements present fairly, in all material respects, the financial position of Body Glove (Thailand) Public Company Limited as of December 31, 2007 and 2006, the results of its operations and its cash flows for the years then ended in conformity with the generally accepted accounting principles.

(KESREE NARONGDEJ) Certified Public Accountant Registration No. 76

A.M.T. & ASSOCIATES Bangkok, Thailand February 23, 2008 page 62

Body Glove (Thailand) Public Company Limited


Annual Report 2007 BODY GLOVE (THAILAND) PUBLIC COMPANY LIMITED (FORMERLY THE NAME OF BODY GLOVE (THAILAND) COMPANY LIMITED) BALANCE SHEETS AS OF DECEMBER 31, 2007 AND 2006

ASSETS BAHT CURRENT ASSETS Cash and cash equivalents Trade account receivables - net Inventories - net Other current assets Value added tax credit balance Others

NOTE

2007

3 4 5

69,039,344.66 26,928,775.99 157,053,536.79

16,667,014.05 17,351,967.87 71,063,227.28

2,597,856.62 2,132,814.96

1,836,589.60

257,752,329.02

106,918,798.80

107,333,772.98 16,495,515.00 22,792,799.58

113,671,815.20 20,691,674.76

146,622,087.56

134,363,489.96

404,374,416.58

241,282,288.76

Total Current Assets NON - CURRENT ASSETS Plant and equipment - net Trademark - net Other non - current assets - deposits Total Non - Current Assets TOTAL ASSETS

6,8,11 and 16 7 and 14

2006

Body Glove (Thailand) Public Company Limited

page 63


Annual Report 2007 BODY GLOVE (THAILAND) PUBLIC COMPANY LIMITED (FORMERLY THE NAME OF BODY GLOVE (THAILAND) COMPANY LIMITED) BALANCE SHEETS AS OF DECEMBER 31, 2007 AND 2006 LIABILITIES AND SHAREHOLDERS' EQUITY BAHT NOTE 2007 CURRENT LIABILITIES Bank overdrafts and short - term loan from financial institution Trade account payables Current portion of hire purchase and finance lease obligations Current portion of long - term loan from related person Current portion of other long-term loans Other current liabilities Accrued expenses Accrued income tax expenses Account payables - fixed assets Others

8

8,180,561.37 78,545,293.92

14,191,108.79 44,890,695.18

9

1,828,941.96

2,332,143.96

10 11

6,000,000.00 6,299,816.24

6,000,000.00 4,081,261.11

15,848,318.93 4,855,866.74 3,842,975.35 940,309.27

7,268,815.25 13,523,977.88 4,107,915.38 2,686,003.04

126,342,083.78

99,081,920.59

9 10 11

2,112,750.36 29,500,000.00 18,700,408.85

3,575,615.59 35,500,000.00 15,389,619.35

14

10,165,500.00 1,763,600.00

1,227,400.00

62,242,259.21

55,692,634.94

188,584,342.99

154,774,555.53

Total Current Liabilities NON - CURRENT LIABILITIES Hire purchase and finance lease obligations Long - term loan from related person Other long - term loans Other non - current liabilities Accrued trademark fee Employee deposits Total Non - Current Liabilities

Total Liabilities

page 64

2006

Body Glove (Thailand) Public Company Limited


Annual Report 2007 SHAREHOLDERS’ EQUITY Share capital Authorized share capital 80,000,000 ordinary shares of Baht

12

1.00 each as of December 31, 2007 and 60,000 ordinary shares of Baht 1,000.00 each as of December 31, 2006 Issued and paid - up share capital 80,000,000 ordinary shares of Baht 1.00 each as of December 31, 2007 and 60,000 ordinary shares of Baht 1,000.00 each as of December 31, 2006 Premium on share capital Retained earnings Appropriated - legal reserve Unappropriated Total Shareholders’ Equity TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

12 13

80,000,000.00

60,000,000.00

80,000,000.00 69,680,000.00

60,000,000.00 -

2,350,117.02 63,759,956.57

370,000.00 26,137,733.23

215,790,073.59

86,507,733.23

404,374,416.58

241,282,288.76

Body Glove (Thailand) Public Company Limited

page 65


Annual Report 2007 BODY GLOVE (THAILAND) PUBLIC COMPANY LIMITED (FORMERLY THE NAME OF BODY GLOVE (THAILAND) COMPANY LIMITED) STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 BAHT Issued and paid - up share capital

Premium on share capital

60,000,000.00

-

370,000.00

-

-

End balance as of December 31, 2006

60,000,000.00

Increased share capital

12

Premium on share capital

12

Note Beginning balance as of January 1, 2006 Net profit

Net profit Appropriated legal reserve

13

End balance as of December 31, 2007

page 66

Retained earnings Appropriated legal reserve Unappropriated

Total

402,450.57

60,772,450.57

-

25,735,282.66

25,735,282.66

-

370,000.00

26,137,733.23

86,507,733.23

20,000,000.00

-

-

-

20,000,000.00

-

69,680,000.00

-

-

69,680,000.00

-

-

-

-

-

80,000,000.00

69,680,000.00

Body Glove (Thailand) Public Company Limited

1,980,117.02 2,350,117.02

39,602,340.36

39,602,340.36

(1,980,117.02)

-

63,759,956.57

215,790,073.59


Annual Report 2007 BODY GLOVE (THAILAND) PUBLIC COMPANY LIMITED (FORMERLY THE NAME OF BODY GLOVE (THAILAND) COMPANY LIMITED) STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 BAHT Note

2007

2006 (Restated)

REVENUES Revenue from sale of goods Gain on exchange rate Other income

483,479,375.64 1,070,653.33 745,557.54

378,588,049.17 536,692.55 522,157.82

485,295,586.51

379,646,899.54

223,372,532.12 13,738,951.46 190,689,729.02

172,968,055.89 5,673,212.66 152,164,896.08

427,801,212.60

330,806,164.63

57,494,373.91

48,840,734.91

5,465,589.10

6,431,474.37

INCOME TAX EXPENSES

12,426,444.45

16,673,977.88

NET PROFIT

39,602,340.36

25,735,282.66

Total Revenues EXPENSES Cost of sale of goods Royalty fee Selling and administrative expenses

14

Total Expenses PROFIT BEFORE INTEREST AND INCOME TAX EXPENSES INTEREST EXPENSES

BASIC EARNINGS PER SHARE

2.10

THE WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES (SHARE)

2.10

0.64

61,666,667

0.43

60,000,000

Body Glove (Thailand) Public Company Limited

page 67


Annual Report 2007 BODY GLOVE (THAILAND) PUBLIC COMPANY LIMITED (FORMERLY THE NAME OF BODY GLOVE (THAILAND) COMPANY LIMITED) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 BAHT Note CASH FLOWS FROM OPERATING ACTIVITIES Net profit Adjustments to reconcile net profit to net cash provided by (used in ) from operating activities Depreciation and amortization Increase (decrease) in adjustment of doubtful accounts Increase (decrease) in adjustment of decline in value of obsolete inventories Unrealized loss (gain) on exchange rate Loss from fixed assets written - off Loss (gain) on sale of plant and equipment Decrease (increase) in trade account receivable - related party Decrease (increase) in trade account receivables - other parties Decrease (increase) in inventories Decrease (increase) in other current assets - value added tax credit balance Decrease (increase) in other current assets - others Decrease (increase) in other non - current assets - deposits Increase (decrease) in trade account payable - related party Increase (decrease) in trade account payables - other parties Increase (decrease) in other current liabilities - accrued expenses Increase (decrease) in other current liabilities - accrued income tax expenses Increase (decrease) in other current liabilities - accrued payables - fixed assets Increase (decrease) in other current liabilities - others Increase (decrease) in other non - current liabilities - employee deposits

2007

2006

39,602,340.36

25,735,282.66

23,658,174.86 -

18,940,131.59 246,239.70

(239,612.38) (236,621.05) 1,244,148.71 (121,854.53) (9,576,808.12) (85,750,697.13) (2,597,856.62) 1,102,130.80 (2,101,124.82) 33,638,499.79 8,579,503.68 (8,668,111.14) (4,107,915.38) (1,745,693.77) 536,200.00

102,752.28 148,537.01 799,330.74 129,763.21 710,034.46 (4,955,471.21) 8,069,504.25 1,580,419.82 (3,306,879.51) (997,609.02) (4,136,957.79) (1,102,810.98) 13,523,977.88 (1,209,142.37) 1,434,932.79 279,000.00

Net cash inflow (outflow) from operating activities

(6,785,296.74)

55,991,035.51

CASH FLOWS FROM INVESTING ACTIVITIES Payment for purchase of plant and equipment Proceeds from sale of plant and equipment Payment for initial upfront fee from purchase of trademark

(15,253,546.93) 123,924.30 (6,945,480.00)

(36,785,807.67) 993,364.47 -

Net cash inflow (outflow) from investing activities

(22,075,102.63)

(35,792,443.20)

Increase (decrease) in bank overdrafts and short - term loan from financial institution Increase (decrease) in hire purchase and finance lease obligations Increase (decrease) in long - term loan from related person Increase (decrease) in other long - term loans Cash received from share capital increase

(6,010,547.42) (1,966,067.23) (6,000,000.00) 5,529,344.63 89,680,000.00

(22,295,360.92) (2,390,401.91) 6,000,000.00 12,456,111.59 -

Net cash inflow (outflow) from financing activities

81,232,729.98

(6,229,651.24)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS - NET

52,372,330.61

13,968,941.07

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

16,667,014.05

2,698,072.98

69,039,344.66

16,667,014.05

CASH FLOWS FROM FINANCING ACTIVITIES

CASH AND CASH EQUIVALENTS, END OF YEAR

page 68

Body Glove (Thailand) Public Company Limited

3


Annual Report 2007 BODY GLOVE (THAILAND) PUBLIC COMPANY LIMITED (FORMERLY THE NAME OF BODY GLOVE (THAILAND) COMPANY LIMITED) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

BAHT 2007

2006

ACTIVITIES NOT AFFECTING CASH : Increase in account payables - fixed assets from purchase of plant and equipment

3,842,975.35

4,107,915.38

Increase in hire purchase and finance lease obligations from purchase of vehicles

-

438,878.50

Increase in trademark and accrued trademark fee under the license rights agreement

7,198,200.00

-

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION Cash paid during the year for Interest expenses Income tax expenses

5,503,425.06 21,094,555.59

6,663,964.51 3,158,588.07

Body Glove (Thailand) Public Company Limited

page 69


Annual Report 2007 BODY GLOVE (THAILAND) PUBLIC COMPANY LIMITED (FORMERLY THE NAME OF BODY GLOVE (THAILAND) COMPANY LIMITED) NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 1. GENERAL INFORMATION 1.1 General matter The Company was incorporated as a limited company under the Thai Civil and Commercial Code on March 31, 1988, and changed its status to a public limited company under the Public Limited Company Act on June 29, 2007 and the Company’s shares had been approved to be listed in the Market for Alternative Investment (MAI) on December 11, 2007. The address of its registered office is 299/9 Moo 7, Phaholyothin Road, Anusawaree, Bangkhen, Bangkok. The Company operates in Thailand, and its principal activities are retail of ready to wear clothes. As of December 31, 2007 and 2006, the Company’s employees and employee expenses are as follows : The number of employees at the end of year (persons) Employee expenses for the year (million Baht)

2007 382 63.71

2006 327 46.41

1.2 Basic for preparation and presentation of financial statements The financial statements of the Company are prepared in accordance with the generally accepted accounting standards and presented in brief in accordance with the Department of Business Development’s announcement on September 14, 2001. 1.3 Related parties 1.3.1 Related companies are related through joint directors and/or related through the key management personnel as follows: - Neo Static Ltd. (a related party through March 2007) - TSI International Co.,Ltd. - Light Sport Plastic Co., Ltd. 1.3.2 Related persons are the directors of company and/or the shareholders and/or the key manage ment personnel as follows: - Mr. Nopdol Tumwattana - Mr. Goh Kok Cheng - Ms. Mallika Leelaphan - Ms. Waristha Thapanasakulvong

page 70

Body Glove (Thailand) Public Company Limited


Annual Report 2007 1.4 Adoption of new accounting standards The Federation of Accounting Professions (FAP) has issued Notifications No. 9/2550, No. 38/2550 and No. 62/2550 regarding Accounting Standards, and these have been published in the Royal Gazette. The Notifications mandate the use of the Accounting Standards (Revised 2007) in place of the previous versions, which are cancelled. Accounting Standards (revised version) which are not effective for the current period are as follow : Accounting Standards No. 25 Cash Flows Statements (revised 2007) Accounting Standards No. 29 Leases (revised 2007) Accounting Standards No. 31 Inventories (revised 2007) Accounting Standards No. 33 Borrowing Costs (revised 2007) Accounting Standards No. 35 Presentation of Financial Statements (revised 2007) Accounting Standards No. 39 Accounting Policies, Changes in Accounting Estimates and Errors (revised 2007) Accounting Standards No. 41 Interim Financial Reporting (revised 2007) Accounting Standards No. 43 Business Combinations (revised 2007) Accounting Standards No. 49 Construction Contracts (revised 2007) Accounting Standards No. 51 Intangible Assets These accounting standards will become effective for the financial statements for fiscal years beginning on or after 1 January 2008. However, the management has assessed the effect of these revised accounting standards and believes that they will not have any significant impact on the financial statements for the period in which they are initially applied. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Revenues recognition The Company recognizes revenue from sale when goods are delivered and the risk and reward of goods ownership are transferred to customers. 2.2 Cash and cash equivalents Cash and cash equivalents are comprised of cash on hand, deposits at banks and highly liquid short term investment. 2.3 Allowance for doubtful accounts The Company provides allowance for doubtful accounts equal to an estimate of those amounts which may prove to be uncollectible based on historical collection experience and a review of the current status of the existing receivables. 2.4 Inventories Finished goods are stated at the lower of cost (moving average method) or net realizable value. Raw materials are stated at the lower of cost (First-in, First-out) or net realizable value.

Body Glove (Thailand) Public Company Limited

page 71


Annual Report 2007 2.5 Plant and equipment Leasehold right and building and building improvement are amortized by the straight-line method over the existing agreement term. Equipment are stated at cost net of accumulated depreciation. Depreciation is calculated on the straight-line method over the estimate of useful lives as follows: Note YEARS Leasehold right - shop area 16 Period of leasehold right (6 - 29) Building and building improvement 16 Period of land and construction lease agreement (20) Furniture, fixture and office equipment 5 Vehicles 5 2.6 Trademark Trademark is stated at cost net of accumulated amortization. Amortization is calculated on the straight line method over a period of 10 years commencing July 1, 2007. 2.7 Financial Leases The Company records vehicle under financial leases, as assets and liabilities in the balance sheets at amount equal to the fair value of the leased property at the inception of the lease or, if lower, at the present value of the minimum lease payments. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease. The interest charge is recorded to periods during the lease term based on the remaining balance of the liability for each period. 2.8 Foreign currency transaction Transactions in foreign currencies are converted at the exchange rate of the transaction date. Assets and liabilities in foreign currencies at the end of year are converted at average bank buying and selling rate at the date respectively. Gains or losses from the translations are included in determining earnings. 2.9 Financial instruments Financial instruments on the balance sheets include cash and deposits at banks, highly liquid short term investment, trade account receivables and payables, loan, accrued expenses, account payables - fixed assets, accrued trade mark fee and hire purchase and finance lease obligations. The particular recognition methods adopted are disclosed in the individual policy statements associated with each items. 2.10 Basic earnings per share Basic earnings per share is determined by dividing net profit by the weighted average number of ordinary shares outstanding. The Company had restated the weighted average number of ordinary shares used in computation of the basic earnings per share for the year 2006 from 60,000 shares to 60,000,000 shares to reflect the change in par value of the ordinary share as mentioned in notes to the financial statements 12. As a result, the earnings per share for the year 2006 had been changed from Baht 428.92 per share to Baht 0.43 per share.

page 72

Body Glove (Thailand) Public Company Limited


Annual Report 2007

3. CASH AND CASH EQUIVALENTS BAHT 2007 Cash and deposits at banks Highly liquid short - term investment - bill of exchange Total cash and cash equivalents

2006

9,039,344.66 60,000,000.00 69,039,344.66

16,667,014.05 16,667,014.05

4. TRADE ACCOUNT RECEIVABLES - NET As of December 31, 2007 and 2006, there are 1 and 3 trade account receivables respectively that have been overdued for payments, classified by aging as follows :

BAHT 2007 Not overdue Overdue Less than 3 months 3 months to 6 months 6 months to 12 months over 12 months Total Less Allowance for doubtful accounts Trade account receivables - net

2006

26,887,739.78

17,351,967.87

41,036.21 26,928,775.99 26,928,775.99

1,092,519.01 18,444,486.88 (1,092,519.01) 17,351,967.87

5. INVENTORIES - NET BAHT 2007 Finished goods Raw materials Goods in transit Total Less Provision for obsolete inventories Inventories - net

154,356,405.24 193,315.92 3,422,902.41 157,972,623.57 (919,086.78) 157,053,536.79

2006 70,719,573.63 1,502,352.81 72,221,926.44 (1,158,699.16) 71,063,227.28

Body Glove (Thailand) Public Company Limited

page 73


page 74

Body Glove (Thailand) Public Company Limited (17,478,613.27) (4,740,086.17) 1,001,643.84 (21,217,055.60)

41,427,112.73 35,288,670.40

ACCUMULATED DEPRECIATION As of December 31, 2006 Increase Decrease December 31, 2007

NET BOOK VALUE As of December 31, 2006

As of December 31, 2007

20,893,016.67

22,598,838.93

(2,530,034.63) (1,705,822.26) (4,235,856.89)

25,128,873.56 25,128,873.56

Building and building improvement

46,269,004.74

42,506,624.34

(31,350,474.83) (14,087,924.40) 9,289,575.32 (36,148,823.91)

73,857,099.17 19,096,522.28 (10,535,792.80) 82,417,828.65

BAHT Furniture, fixture and office equipment

4,883,081.17

7,139,239.20

(4,532,331.39) (2,256,157.03) 224,298.07 (6,564,190.35)

11,671,570.59 (224,299.07) 11,447,271.52

Vehicles

107,333,772.98

113,671,815.20

(55,891,454.12) (22,789,989.86) 10,515,517.23 (68,165,926.75)

169,563,269.32 19,096,522.28 (13,160,091.87) 175,499,699.73

Total

In year 2007 and 2006, the companyâ&#x20AC;&#x2122;s management had approved to write - off the retired from active use and unexisting fixed assets (net of accumulated depreciation) amounted to Baht 1.24 million and Baht 0.80 million respectively, which are included in determining earnings. Depreciation charge for the years amounted to Baht 22.79 million in year 2007 and Baht 18.94 million in year 2006 are included in determining earnings. As of December 31, 2007 and 2006, the Company has fully depreciated fixed assets but is still in use in the original cost of Baht 2.99 million and Baht 10.65 million respectively. Leasehold right and warehouse building are mortgaged to secure credit facilities of local banks.

58,905,726.00 (2,400,000.00) 56,505,726.00

Leasehold right - shop area

COST As of December 31, 2006 Increase Decrease As of December 31, 2007

6. PLANT AND EQUIPMENT - NET

Annual Report 2007


Annual Report 2007 As of December 31, 2007 and 2006, the Company has the assets under finance lease agreements in the original cost and its accumulated depreciation as follows :

BAHT 2007 Cost of finance lease assets Less Accumulated depreciation Net book value

2006

5,928,939.00 (2,709,669.49) 3,219,269.51

5,928,939.00 (1,518,467.16) 4,410,471.84

7. TRADEMARK - NET

BAHT Cost Less Accumulated amortization Trademark - net

2006 -

Increase 17,363,700.00

-

Decrease -

2007 17,363,700.00

-

(868,185.00) 16,495,515.00

(868,185.00)

8. BANK OVERDRAFTS AND SHORT - TERM LOAN FROM FINANCIAL INSTITUTION

BAHT Bank overdrafts Promissory note (bearing interest at the rate of MOR p.a.) Total

2007 3,180,561.37 5,000,000.00

2006 4,191,108.79 10,000,000.00

8,180,561.37

14,191,108.79

Bank overdrafts and short - term loan from financial institution are guaranteed by directors and parts of leasehold right.

9.

HIRE PURCHASE AND FINANCE LEASE OBLIGATIONS

BAHT 2007 Hire purchase and finance lease obligations - vehicles (bearing interest at the rate 2.70% - 4.20% p.a. with monthly repayment and the final payment due in year 2008 - 2010) Less Current portion Hire purchase and finance lease obligations - net

3,941,692.32 (1,828,941.96) 2,112,750.36

2006

5,907,759.55 (2,332,143.96) 3,575,615.59

The above obligations are guaranteed by a director of the Company.

Body Glove (Thailand) Public Company Limited

page 75


Annual Report 2007 10. LONG - TERM LOAN FROM RELATED PERSON BAHT

Principal Less Current portion Net

2006

Increase

Decrease

41,500,000.00 (6,000,000.00) 35,500,000.00

-

(6,000,000.00)

2007 35,500,000.00 (6,000,000.00) 29,500,000.00

On April 1, 2006, the Company had signed a loan agreement with a related person amounted to Baht 41.50 million, principal is repayable in monthly installments of Baht 0.50 million for 7 years commencing January 1, 2007 with interest at the rate of MOR plus 0.25% p.a. and interest is repayable in quarterly installments.

11. OTHER LONG - TERM LOANS BAHT 2007 Loans from local banks - bearing interest at the rate of MLR p.a. and repayable in monthly installments commencing year 2003 through year 2010 - bearing interest at the rate of MLR-1% p.a. and repayable in monthly installments commencing year 2006 through year 2011 - bearing interest at the rate of MLR p.a. and repayable in monthly installments commencing year 2007 through year 2012 Total Less Current portion Net

2006

4,249,135.65

5,683,829.84

11,050,262.11

13,787,050.62

9,700,827.33

-

25,000,225.09 (6,299,816.24)

19,470,880.46 (4,081,261.11)

18,700,408.85

15,389,619.35

The above loans are guaranteed by directors, mortgage of warehouse building on land lease and parts of leasehold right.

page 76

Body Glove (Thailand) Public Company Limited


Annual Report 2007 12. SHARE CAPITAL AND CHANGES OF THE COMPANY At the extraordinary shareholders’ meetings No. 3/2007 held on May 30, 2007 and No. 4/2007 held on June 14, 2007, the shareholders approved the special resolutions as follows : - Convert the Company to a public limited company and change the Company’s name from Body Glove (Thailand) Company Limited to Body Glove (Thailand) Public Company Limited. These were approved by the Ministry of Commerce on June 29, 2007. - Approve to list the Company in the Market for Alternative Investment (MAI). At the extraordinary shareholders’ meetings No. 4/2007 held on June 14, 2007, the shareholders approved to decrease the par value of the ordinary shares from Baht 1,000.00 per share to Baht 1.00 per share and increase the authorized share capital from Baht 60.00 million (60,000 ordinary shares at Baht 1,000.00 each) to Baht 80.00 million (80,000,000 ordinary shares at Baht 1.00 each). These were approved by the Ministry of Commerce on June 29, 2007. The allotment of the increased shares shall be offered to the general public as the Board deems appropriate. At the Board of Directors meeting No. 6/2007 held on November 14, 2007, the board approved the resolution to make the initial public offering of the increased 20 million share at Baht 4.70 per share resulting the premium on share capital of Baht 69.68 million (net of related expenses of Baht 4.32 million).

Body Glove (Thailand) Public Company Limited

page 77


Annual Report 2007 13. LEGAL RESERVE In accordance with the provisions of the Public Limited Company Act, the Company has to set aside a minimum of 5% of its net profit of each year after deduction of deficit (if any) until the reserve reaches 10% of authorized capital. The reserve is not available for dividend distribution. 14. OPERATION , LICENSE AND SUB-LICENSE RIGHTS AGREEMENT On May 3, 2007 , the Company has entered into the agreement with a foreign company to operate its retail and distribution business in the products in the countries as specified in the agreement under the license and sub-license rights in trademark â&#x20AC;&#x153;BODY GLOVEâ&#x20AC;? and the hand device. The said agreement terms are totaling 99 years by automatically renewal for 9 successive 10 year terms with a final term of 9 years. The said agreement shall be effective commencing July 1, 2007. Under the agreement, the Company has to pay the following fees : 1) Royalty fee at the rate with the minimum fee as specified in the agreement 2) Advertising contribution at the rate specified in the agreement 3) Initial upfront fee amounted USD 0.20 million (pay within 120 days following the date of the addendum) 4) Upfront fee amounted USD 0.30 million (pay amounted USD 25,000 in quarterly installments commencing April 2009 through January 2012) However, on December 31, 2007, the Company had been informed by the said foreign Company that, the Company does not require to set up the advertising fund as specified in the agreement. Should the fund need to be set up, the Company shall be noticed 90 days in advance by the said foreign company. As of December 31, 2007, the Company had recorded the accrued trademark fee for upfront fee of Baht 10.17 million (USD 0.30 million). 15. PROVIDENT FUND On June 15, 2007, the Company has joined and employee provident fund scheme with a local entity. The employee shall contributes at the rate of 2% - 3% of the gross salary and the Company contributes the same rate.

page 78

Body Glove (Thailand) Public Company Limited


Annual Report 2007 16. LONG - TERM LEASE AGREEMENTS The Company has entered into long - term lease agreements on shop area and services for 3 - 29 years with the expiration date range from year 2007 - 2024 and the Company has also entered into the land and construction lease agreement and land lease for warehouse construction agreement with a related person for 3 years commencing in May 2004 and March 2006 respectively, the said agreements shall be renewed for every 3 years with totaling rental period not exceed 20 years and the expiration date of the agreement is year 2024. Under the agreement, the ownership on warehouse building shall be transferred to the said related person when lease agreement is expired. Future minimum payments under operating leases are as follows :

Shop area and services 39.14 24.46 11.61 17.52

Year 2008 2009 2010 Thereafter

MILLION BAHT

Land and construction 1.20 1.35 1.38 25.85

Land (for warehouse construction) 0.60 0.68 0.69 12.92

Total 40.94 26.49 13.68 56.29

Rental and service expenses were Baht 50.71 million in year 2007 and Baht 49.96 million in year 2006

17. TRANSACTIONS WITH RELATED PARTIES The transactions with related parties as of December 31, 2007 and 2006 are as follows :

BAHT The outstanding balances Related company: Accrued expense - Neo Static Ltd. Related person Long - term loan from related person - Mr. Nopdol Tumwattana

2007

2006

-

0.50

35.50

41.50

Transactions with related parties for the years ended December 31, 2007 and 2006 are as follows : MILLION BAHT 2007 2006 Transfer pricing policy The transactions during the years Related companies

Purchase inventories - TSI international Co., Ltd.

-

0.61

- not different from unrelated parties

0.50

1.77

-

0.89

- at the rate agreed upon by both parties without contract arrangement - not different from unrelated parties

Interest expense - Mr. Nopdol Tumwattana

2.94

3.31

- at the rate of 7.35% - 8.25% p.a. in year 2007 and 7.00% - 8.25% p.a. in year 2006

Rental expenses - Mr. Nopdol Tumwattana

2.64

1.80

- at the rate specified in the agreements

Expenses - Neo Static Ltd. - Light Sport Plastic Co., Ltd. Related person

Body Glove (Thailand) Public Company Limited

page 79


Annual Report 2007

18. FINANCIAL INFORMATION BY SEGMENT The operations of the Company involve a single business segment, retail of ready to wear and are carried on in a single geographic area, Thailand. As a result, all of the revenues, operating profits and assets reflected in these financial statements pertain to the aforementioned business segment and geographic area.

19. FINANCIAL INSTRUMENTS Foreign currency risk As of December 31, 2007 and 2006, the Company is exposed to foreign currency risk primarily to foreign currency denominated liabilities, which currently are not hedged by any derivative financial instrument as follows: 2007 2006 Million Million Million Million USD MYR USD MYR

Foreign currency denominated liabilities Trade account payables Accrued expense Accrued trademark fee

0.39 0.18 0.30

0.07 -

0.04 -

0.87 -

Interest Rate Risk follows:

As of December 31, 2007 and 2006 the Company has financial assets and liabilities exposed to interest rate risk as 2007 Million Baht Fixed Interest Rate Maturing In: Floating 1 year over 1 to Interest Rate or less 5 years

Deposits at banks Bill of exchange Bank overdrafts and short - term loan from financial institution Hire purchase and financial lease obligations Long - term loan from related person Other long - term loans

page 80

Average Interest Rate (%) Floating

Fixed

0.28 -

0.43 60.00

-

2.00 -

2.00 - 2.375 4.125

8.18

-

-

7.125 - 7.50

-

-

1.83

2.11

-

2.70 - 4.20

35.50 25.00

-

-

7.35 6.00 - 7.00

-

Body Glove (Thailand) Public Company Limited


Annual Report 2007 2006 Million Baht Fixed Interest Rate Maturing In: Floating 1 year over 1 to Interest Rate or less 5 years Deposits at banks Bank overdrafts and short - term loan from financial institution Hire purchase and financial lease obligations Long - term loan from related person Other long - term loans

Average Interest Rate (%) Floating

Fixed

10.07

0.15

-

2.50

3.25 - 4.00

14.19

-

-

8.00 - 8.50

-

-

2.33

3.58

-

2.70 - 4.20

41.50 19.47

-

-

8.25 7.00 - 7.75

-

Credit risk Credit risk refers to the risk primarily deal with the trade account receivables. However, since the majority of sales are supplied to creditworthy customers, the Company does not anticipate material losses from their debt collection. In the case of recognized account receivables, the carrying amount of account receivables recorded in the balance sheet represents maximum exposure to credit risk. Fair value The managements believe that the fair value of the Companyâ&#x20AC;&#x2122;s financial assets and liabilities does not materially differ from their carrying value. 20. RECLASSIFICATION OF ACCOUNTS Certain accounts in financial statements as presented herein for comparative purpose have been reclassified to conform with the current year classifications, with no effect on the net profit or shareholdersâ&#x20AC;&#x2122; equity as previously reported. 21. APPROVAL OF FINANCIAL STATEMENTS The financial statements have been approved by the board of directors of the Company on February 23, 2008.

Body Glove (Thailand) Public Company Limited

page 81


Annual Report 2007 Remuneration of the Auditor During the fiscal year ending December 31st, 2007, the Company paid the remuneration to Companyâ&#x20AC;&#x2122;s Auditor, A.M.T. & Associates, in the amount of Baht 902,190.00 which consisted of audit fee of Baht 660,000, restatement fee of Baht 150,000 and other related expenses such as traveling and miscellaneous expenses, etc of Baht 92,190.00. In addition to the said remuneration, the Company had no other obligation to pay the Auditor, the Audit Firm of the Certified Public Accountant and individual or business relating to the Auditor or the Audit Firm of the Audifor.

page 82

Body Glove (Thailand) Public Company Limited


Annual Report 2007

  Name

: บริษทั บอดี้ โกลฟ (ประเทศไทย) จำกัด (มหาชน) Body Glove (Thailand) Public Company Limited

Type of Business

: The main business lies in readymade clothing and accessories for retail industry, i.e., back pack, shoulder bag, traveling bag, wallet, pencil case, cap, socks, etc., under the trademark of “Body Glove” and distinctively recognized “Hand Device” black on yellow background.

Head Office Address

: No. 299/9 Moo 7 Phaholyothin Road, Anusaowaree, Bangkhen, Bangkok 10220

Registration No.

: 0107550000106

Website

: www.bodyglove.co.th

Telephone:

: 66 (0) 2972-3460

Fax:

: 66 (0) 2972-3479

Capital as of December 31st,,2007 Authorized Capital : Baht 80,000,000 (Share Capital) 80,000,000 shares , par value Baht 1.00) Paid up Capital : Baht 80,000,000 (Share Capital) 80,000,000 shares, par value Baht 1.00 )

Body Glove (Thailand) Public Company Limited

page 83


Annual Report 2007 References (a)

Registrar Thailand Securities Depository Company Limited Capital Market Academy Building, 2nd Floor, 2/7 Moo 4 (North Park Project) Vibhavadi-Rangsit Road, Tung Song Hong, Laksi, Bangkok 10210 Telephone: 66 (0) 2596-9000 Fax: : 66 (0) 2832-4994-6

(b)

Auditors Mrs. Kesari Narongdej Certified Public Accountant No. 76 Mrs.Natsarak Sarachanunjeen Cetfified Public Accountant No. 4563 A. M. T. & Associates 491/27 Silom Plaza, Silom Road Bang Ruk, Bangkok 10550 Telephone: 66 (0) 2234-1676 Fax: 66 (0) 2237-2133

(c)

Legal Consultant Mr. Pradit Sahachaiyan International Legal Counsellors Thailand 18th Fl., Sathorn City Tower, 175 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Telephone: 66 (0) 2679 â&#x20AC;&#x201C; 6005 Fax: 66 (0) 2679 - 6041

page 84

Body Glove (Thailand) Public Company Limited


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