Page 1


Contents Important Financial Information

1

Message from the Chairman

2

Board of Directors

3

General Information

8

Nature of Business

11

Risk Factors

38

Organization Chart

40

Management

41

Board of Directors and Management Profiles

56

Related Transactions

60

Major Shareholders

62

Corporate Social Responsibility

64

Report of Audit Committee to Shareholders

71

Management Discussion and Analysis of the Consolidated Financial Statements 73 Auditors Report

75

Consolidated and Company’s Financial Statements

77

Notes to Consolidated and Company’s Financial Statements

91


1 Annual Report 2012 PAE Thailand Company Limited

Important Financial Information (Unit: Million Baht) 2012

2011

2010

1,668.74

1,487.45 

640.42

1,695.78

1,497.01

659.77

(194.58)

127.94

(0.823)

(331.32)

36.98

(107.26)

Operating Performance  Revenue from Sales and Services Total Revenue Gross Profit (Loss) Net Profit (Loss)

 

Financial Status  Total Assets Total Liabilities Total Shareholders’ Equity

1,878.66

1,356.39 

764.19

1,763.47

1,314.91

759.69

115.19

41.48

4.50

 

Financial Ratios  Liquidity Ratio Debt/Equity Ratio Gross Profit (Loss) (%) Net Profit (Loss) (%) Net Profit/Share (THB) No. of Paid-up Shares (million shares)

0.97

0.77 

0.73

15.31

31.87

12.97

(11.66)

8.60

(0.13)

(19.85)

2.49

(16.75)

(0.44)

0.06

(0.17)

1,350.08

675.04

675.04


2 Annual Report 2012 PAE Thailand Company Limited

Message From the Chairman

(Apisit Rujikeatkamjorn) Chairman of the Board of Directors

Dear Shareholders:  Back in year 2012, PAE (Thailand) Public Company Limited has gained a trust from many leading company related to Energy and Petrochemical Industry such as PTT Exploration and Production Public Company Limited, IRPC Public Company Limited and Chevron Thailand Exploration and Production Company Limited etc. As a result of great development and company’s high competency, the company has received many projects of Oil & Gas and Natural Gas totally worth 1,500 million baht during year 2012. The company, the management and staff are committed to operate all the projects effectively and efficiently to be accepted in the industry. In Year 2013, the company aim to improve and develop the business continuously with the main focus on expansion of company’s core businesses which are Oil & Gas, Petrochemical and Upstream to Downstream Process of Natural Gas. In addition, the company determine to maximize the financial capability, including overall operation development to be more effective as to increase the company’s competitiveness. On behalf of all management of PAE, I would like to thank for the cooperation of all parties involved; the management team, executive and our staff who dedicated to work in full capacity as well as clients and business partners. In particular, thank our shareholders for their trust and support operations of the Company. Finally, I am confident that PAE (Thailand) Public Company Limited and our subsidiaries would grow further and make a profit under good governance.


3 Annual Report 2012 PAE Thailand Company Limited

Board of Directors

       

Mr. Apisit Rujikeatkamjorn Chairman of the Board of Directors Nationality: Thai Shareholding Proportion: 1,000,000 (0.15%)

Miss Thipawan Uthaisang Chairman of the Executive Committee Nationality: Thai Shareholding Proportion: -

Education - Master of Civil Engineering, Lamar University, TEXAS, U.S.A - Bachelor of Engineering, Khonkaen University Curriculum Training DAP -Directors Accreditation Program 27/2004 from IOD FND - Finance for Non–Finance Directors 24/2005 from IOD UFS - Understanding the fundamental of financial Statement 5/2006 from IOD ACP - Audit Committee Program 22/2008 from IOD RCP- Role of the Chairman 26/2011 from IOD DCP- Director Certification Program 166/2012 from IOD Experience - Chairman of Board of Directors of PAE (Thailand) PLC. - Director of Thai Oil PLC. - Board of Director, Thai lube Base PLC. - Chairman of the Board, Siam Global House PLC. - Director of Thai Rotary Engineering Co.,Ltd. - Director, Sakari Resources Ltd. ( Listed Company in Singapore) - Chairman of Board of Director, Seaoil PLC. - Chairman of the Board of Director,Ecolighting Co.,Ltd

 

Education - Master in Business Management (MBA),Thammasat University - Bachelor of Account, Thammasart University - Bachelor of Law, Sukhothai thammathirat University Curriculum Training DAP – Directors Accreditation Program 29/2003 from IOD ACP – Audit Committee Program 23/2008 from IOD Experience Present - Chairman of Executive Director, PAE (Thailand) PLC - Executive Director, Papermate (Thailand) Co.,Ltd - Audit Committee, Eason Paint PLC - Audit Committee, Pailin Booknet Co., Ltd - Audit Committee, Ladprao General Hospital Past - CEO of Papermate (Thailand) Co., Ltd - CEO and President, International Engineering PLC. - Managing Director, IEC Internet - Deputy Managing Director, Data General (Thailand)Co., Ltd.


4 Annual Report 2012 PAE Thailand Company Limited

Sub. Lt. Saroj Sawangridhi Chairman of Audit Committee /Director Nationality: Thai Shareholding Proportion: -

Education - LLB. Thammasat University - Barrister at Law (Thai Bar)

Mr. Ratanaphon Wongnapachant Executive Director / Managing Director Nationality: Thai Shareholding Proportion: 153,117,199 (11.34%)

Education - BA. Marketing Research Seattle University

Curriculum Training DAP– Directors Accreditation Program 56/2006 from IOD Experience Present - Chairman of Audit Committee/Independence Director, PAE (Thailand) PLC. Past - Army Commander, Security Center Office of Supreme Commander of the Armed Force - Director, Alumni Association of Amnuaysilpa College - Secretary to the Metropolitan Electric Club Armed Force - Director, Metropolitan Rapid Transit Authority - Director, Bangkok Thanakom Co., Ltd. - Deputy Governor Business, The Metropolitan Electricity Authority

   

Experience Present - Executive Director/ Managing Director PAE (Thailand) PLC. - Managing Director PAE Technical Service Co.Ltd. Past - Director, Shinawatra Home Co.,Ltd. - Director, MR Consultanty Co.,Ltd - Director, Sunshine Corporation Co., Ltd - Director, Small and Medium Enterprise Development Bank of Thailand - Director, S.W. Signature Co.,Ltd.


5 Annual Report 2012 PAE Thailand Company Limited

 

Mr. Ian Francis Prescott Executive Director Nationality: English Shareholding Proportion: -

Mrs. Chintana Kaweewong Executive Director/ Senior Vice President Nationality: Thai Shareholding Proportion: 67,482,750 (4.99%)

Education - Bachelor in Education, Chiangmai University

Curriculum Training DAP - Directors Accreditation Program 47/2005 from IOD FND - Finance for Non – Finance Directors 25/2006 from IOD CSP - Company Secretary Program 24/2007 from IOD DCP - Director Certification Program 104/2008 from IOD

Education - MBA, Bond University, Australia - B.A. (Engineering with Honor), University of Teesside University, England

Experience Present - Executive Director, PAE (Thailand) PLC. - Chief Executive Officer of Experience Global Process System Inc. Present - Executive Director and Senior Vice President, Past Corporate Affair Department - Regional Director, Aker Kvaerner Pty Ltd, PAE (Thailand) PLC. Queensland, Australia - Director, Spin Biz Co., Ltd - Director, Aker Kvaerner Pty Ltd, Brisbane Branch, Past Australia - Managing Director, Prompiman Real Estate and Development Co., - Project Director, Aker Kvaerner Pty Ltd, Brisbane Ltd. Branch, Australia - Chief of Export Negotiation Division, Export Department Bangkok Bank PLC.


6 Annual Report 2012 PAE Thailand Company Limited

Mrs. Urairat Boonakas Executive Director Nationality: Thai Shareholding Proportion: Education - Master of Public Administration, National Institute of Development Administration - Bachelor of Account, Chiang Mai University Curriculum Training DAP – Directors Accreditation Program 70/2008 from IOD Experience Present - Executive Director, PAE (Thailand) PLC. - Director, Government Savings and Development Foundation - Director, Government Savings Bank Information Technology Development Management. - Director, Government Savings Bank Information Technology Project Steering Committee - Director, Government Savings Bank Change Management Committee - Consultant, Government Savings Bank - Consultant of Board of Directors of Diphaya Insurance PLC Past - Senior Executive Vice President of Government Savings Bank - Director, Thai Smart Card Co., Ltd. - Director, G. Capital Co.Ltd. - Director, Thanachart Fund Management PLC. - Director, Diphaya Insurance PLC.

Mr. Thavisakdi Tanta-Nanta Director/ Audit Committee Nationality: Thai Shareholding Proportion: -

Education - LL.B Thammasat University Curriculum Training DAP – Directors Accreditation Program 24/2004 from IOD Experience Present - Audit Committee/ Independent Director, PAE (Thailand) PLC. - Committee, Natural Park PLC. Past - Vice President, Marketing and Management, Thai Airways International PLC. - GM, Thai Airways International, People’s Republic of China - Director, Sales and Marketing, Thai Airway International, Head Office - GM, Thai Airways International, Gulf, Sultanate of Oman, Taiwan and Nepal  


7 Annual Report 2012 PAE Thailand Company Limited

                                                                          

Mr. Apiporn Pasawat Director/ Audit Committee Nationality: Thai Shareholding Proportion: -

Mr. Vincent D’Rozario Director Nationality: Australian Shareholding Proportion: -

Education - MBA. (Production), University of Wisconsin, USA. - M.S. (Chemical Engineering ) University of Wisconsin, USA - B.Eng. Chemical Engineering, The Faculty of Science (Second Class Honor), Chulalongkorn University

Education - Bachelor of Electrical Engineering, Victoria University of Technology, Australia

Curriculum Training DAP–Directors Accreditation Program 39/2005 from IOD Experience Present - Audit Committee/Independent Director of PAE (Thailand) Plc. - Chairman of the Board of Directors Nok Air Company Limited - Chairman of Executive Committee and Director of Apexcela Co., Ltd - Advisor of CPB Equity Co., Ltd. - Chairman of Executive Committee and Director of Siam Bioscience Co., Ltd - Director of Thai Airways International Public Co., Ltd. - Chairman of Executive Committee and Director of Linde (Thailand) PLC. - Director of The Petroleum and Petrochemical College, Chulalongkorn University Past - Director of National Petrochemical Public Co., Ltd. - President of Cementhai Chemicals Co., Ltd. - Director of Thai Plastic Chemical PLC. - Director of Bangkok Synthetics Co., Ltd - Director of BST Elastomers Co., Ltd.

Experience Present - Director, PAE (Thailand) PLC. - Director and General Manager, Global Process Systems Pte Ltd, Singapore - Director and General Manager, PT Global Process Systems, Indonesia - Director and General Manager, Innovative Technologies Pte Ltd, Singapore - Director and General Manager, PT Innovative Technologies, Indonesia Past - Business Manager – PCS, Aker Solutions Pty Ltd (Australia) - Operations Manager, Aker Solution Pty Ltd, Brisbane Branch Australia - Engineering Manager, Aker Solution Pty Ltd, Brisbane Branch, Australia - Operation Manager, OGS JV (Aker Solutions / United Group), Adelaide Australia


8 Annual Report 2012 PAE Thailand Company Limited

General Information Business Type

- Engineering Design, Procurement and Construction or (EPC) particularly for Oil &Gas and Petrochemical Industry. - Electrical & Instrument (E & I) or Plant Electrical Systems - Engineering Construction: Civil and Infrastructure - NDT (Non-Destructive Testing System)

Registration No.

Bor. Mor. Jor. 0552

Address Head Office (PAE Thailand)

Rayong Branch Sriracha Branch

69 Soi Onnuch 64 (Suksaman), Srinakarin Road, Suanluang, Suanluang, Bangkok 10250 164/6 Moo 6 Tumbol Huakhao, Ampur Singhanakorn, Songkhla 90280 88/2 Moo 5, Tambol Makamkoo, Amphur Nikompattana, Rayong 21180 300/117 Moo 5, Rayong City Park Village, Tambol Choeng Noen, Amphur Muang, Rayong 21000 98/1 Moo 2, Tambol Lan Krabue, Amphur Lankrabue,Kamphaengphet 69 Soi Onnuch 64 (Suksaman), Srinakarin Road, Suanluang, Suanluang, Bangkok 10250 67/8 Hadsaithong Rd, Map Ta Phut, Muang, Rayong, 21150 53/150 Sukhumvit Rd, Thungsongkhla, Sriracha, Chonburi 20230

Contact Telephone (Head Office) Facsimile (Head Office) Email address Company Website

0-2322-0222 0-2322-2970-1 paethai@pae.co.th www.pae.co.th

Stock Registrar Name Location Telephone Facsimile

Thailand Securities Depository Company Limited 62 Ratchadaphisek Road, Klongtoey, Klongtoey, Bangkok 10110 0-2229-2800 0-2359-1262-3

Songkhla Branch Office Rayong Branch Office 1 Rayong Branch Office 2 LanKrabue Branch Office PAE Techical Services

Auditor Name of Auditor Name of Office Location Telephone Facsimile

Ms. Wanraya Puttasatiean Authorized Auditor No. 4387 S.K. Accountant Services Company Limited 128/150-153, Phayathai Plaza Floor 14, Phayathai Road, Rajthavee, Bangkok 02 214-6464 02 215-4772


9 Annual Report 2012 PAE Thailand Company Limited

Company Information Information of Company and Subsidiaries

PAE (Thailand)  Public Company  Limited 

PAE Technical Services Company Limited (99.99%)

Non-Destructive Testing of Steel use in Construction Business including Industrial Steel Pipes and X-ray pipes and gas tanks.

PAE Construction Resources Company Limited (99.99%)

Supply of Manpower Service for Construction Business in local and oversea

Oasis Development Company Limited (54.99%)

Real Estate


10 Annual Report 2012 PAE Thailand Company Limited

Business Type and Shareholding Structure of Company and Subsidiaries Company

Type of Business

Registered Capital

Par Value (THB)

(THB Millions)

PAE Construction Resources Company Limited*

Overseas personnel supply for construction services and welders Non-Destructive Testing of Steel PAE Technical Service use in Construction Business Company Limited including Industrial Steel Pipes and X-ray pipes and gas tanks. Oasis Development Real Estate Company Limited**

Shareholding Proportion (THB millions) (%) Paid-up Capital

5.00

100.00

5.00

99.99

35.00

10.00

35.00

99.99

1.00

100.00

1.00

54.94

Remark: * Currently, this Company was not run any business ** Currently, this Company was not run any business

The Company’s capital as of 31st December 2012 Registered Capital 1,350,075,000 Baht Paid-up Capital 1,350,075,000 Baht


11 Annual Report 2012 PAE Thailand Company Limited

Nature of Business PAE (Thailand) Public Company Limited (“the Company”), has been a well known corporation in the EPC services for almost 50 years which provide all process of Engineering Design, Procurement and Construction particularly for Energy Indusrty, Oil & Gas Industry and Petrochemical. The Company had a good development of Oil & Gas industry as well as Non-Destructive Testing System or NDT. In 2012, the Company remains focused on EPC Services (Engineering, Procuremnet and Construction) including maintenance for serving both onshore and offshore Oil and Gas Productions for world class valued customers, utilizing strict quality and safety standards of the offshore industry. Furthermore, the Company has been providing a large number of skilled technical personnel to work on both onshore and offshore and onshore facilities. The company’s operating units are grouped into two major business areas: 1. Oil & Gas, Petrochemical (Hydrocarbon Business) The term “Hydrocarbon” refers to services related to Oil and Gas, and Petrochemical Industries, which include engineering and fabrication of a wide range of process equipment; plant design and modification; erection and construction; operation and maintenance for offshore facilities. Over four decades, the Company has been accepted for professional services that meet the client requirements; for example, Company’s ability to undertake any assigned project, meeting deadlines within the allocated budget. The skilled engineers and technicians have high experiences in petrochemical complexes, power plants, refineries to meet with the highest international standards. In addition, PAE Technical Services Company Limited, a wholly owned subsidiary, is one of the leading non-destructive testing companies offering a wide range of third party inspection services to construction and maintenance activities.

2. Infrastructure Business In addition to the Hydrocarbon business, the Company also operates on an Non-Hydrocarbon business unit such as Civil Engineering for Infrastructure, , Power Plant and Industrial , Office Building and Residential . As our expertise and experience on turnkey projects as a result that the Company has been trustworthy , realiable and acceptance from the valued customers unitl the present.  


12 Annual Report 2012 PAE Thailand Company Limited

 

Revenue Structure  Revenue Structure of the Company and its subsidiaries are divided into two categories as shown on the revenue value of each department during a three-year period as below table :

Revenue Structure (Company and Subsidiaries)

% Shareholder of Company

2012 Thousand Baht

2011 %

Thousand Baht

2010 %

Thousand Baht

%

1. Hydrocarbon Business Unit PAE (Thailand) Public Company Limited 1.1 Electrical & Instrument 1.2 Oil & Gas 1.2.1 Fabrication, Rayong 1.2.2 Fabrication, Songkhla 1.2.3 Fabrication, Lankrabue PAE Technical Services Co.,Ltd PAE Construction Resources Co.,Ltd.

99.99 99.99

Total 2. Infrastructure Business Unit PAE (Thailand) Public Company Limited OASIS Development Co.,Ltd Sri-U Thong and PAE Joint Venture

Total Grand Total

54.94 70.00

767,646 109,789 159,893 426,593 73,371 151,952 -

46.12 6.58 9.58 25.56 4.40 9.11 -

702,063 47,971 154,570 432,317 67,205 111,078 -

47.20 3.23 10.39 29.06 4.52 7.47 -

318,359 62,437 125,399 64,350 66,173 56,415 -

49.71 9.75 19.58 10.05 10.33

921,598

55.23

813,141

54.67

374,774

58.52

747,026

44.77

664,973

44.71

224,997

35.13

120 -

0.00 -

70 9,265

0.00 0.62

180 29,760

0.03 4.65

747,146 1,668,744

44.77 100.00

674,308 1,487,449

45.33 100.00

254,937 629,711

39.81 98.33

8.81 -


13 Annual Report 2012 PAE Thailand Company Limited

Product and Services 1. Hydrocarbons Business Hydrocarbons Business is divided into 3 categories, which are consists of Engineering, Procurement, and Construction. Specifically, the Company targeted on fabrication and installation work. The Hydrocarbon business of the Company will be seperarted pursuant to operation type and location of customers in principle to support customers effectively. 1.1 Engineering Department Our engineering design teams work closely with specialists from Global Process System Inc (GPS), the Company’s major shareholder, who is experienced in producing Oil and Gas production equipments, which help to enhance the engineering team to work efficiently as a one-stop-service, specifically with Survey, Conceptual Design, Front End Engineering Design (FEED), Detailed Design, Manpower Supply, Procurement and Project Management.


14 Annual Report 2012 PAE Thailand Company Limited

1.2

Fabrication Shop

The Company had expanded the fabrication facility to accommodate the work facilities in the Rayong branch which will increases the Company’s capabilities in fabrication and installation. Moreover, the Company expanded the facilities at Songkhla and Lankrabue Branch which served our valued customers and providing services and support of Offshore Facilities for the Gulf of Thailand. The facilities include various services such as manpower supply, procurement assistance, cutting and punching, forming, welding, blasting and painting services which considered to be the best service provider in Songkhla area. In year 2012, the Company has received the project Vapor Recovery Unit from PTTEP Global Chemical (Public) Company Limited, Value 203 million baht.  Fabrication Shop Rayong

Project: Vapor Recovery Unit


15 Annual Report 2012 PAE Thailand Company Limited

 Fabrication Shop Lankrabue ( Kamphangphet Province) Recently, the Company has built the new fabrication shop in Lankrabue area, Kamphangphet province in order to accommodate construction and modification as well as civil, mechanical, electrical and instrument which is seprated as field and in-house fabrication shop. Field Works: Involves in construction task such as location and equipment preparations in order to setup the new oil drilling site including maintenancing existing drilling sites. Modification job involves modifying the oil production equipment at each site as well as to provide necessary equipment and machinery based on PTTEP requirement In-house Fabrication: The job includes the part assembling and welding which are being used in the oil drilling station and other operations. The In-House Fabrication site comprises with mechanical shop, civil shop, hydrotest shop, electrical and instrument shop, radio graphic test shop, blasting and painting shop, and more.


16 Annual Report 2012 PAE Thailand Company Limited

1.3 Oil & Gas Services Department The Company has been supplying manpower to onshore and offshore operators for more than 20 years. The Company commits to excellence in terms of safety and work quality. In general, the manpower supply takes place in Songkhla, serving major customers such as Chevron (Thailand) Exploration Ltd. and Chevron Offshore (Thailand) Ltd. This service is to supply engineers and technicians to stand-by and be responsible for assigned tasks on rigs. In terms of revenue generated, this section generates approximately 70% of total revenue from Songkhla branch. Besides, the Company provides rental equipment services; specifically well maintained specialist tools and equipment are available for fast mobilization, to both onshore and offshore operators. 1.4

Non-Destructive Testing Services NDT is operated by PAE Technical Services Company Limited, which offers fully experienced personnel capable of performing major onshore and offshore inspections. It provides both incompound and onsite testing and inspection services with fully equipped mobile units, highly trained operators, and high qualified NDT and Welding Inspectors. The inspection teams were strategically placed throughout Thailand to furnish prompt service to the nation’s industrial center. Customers can be assured of fast and quality results for all inspection needs. All NDT personnel are certified per company written practice (control manual number QCP-13 (Rev-02), which is to control NDT personnel and administration of NDT personnel). This manual is equivalent to the American Society for Non-Destructive Testing (ASNT SNT-TC-1A), Recommendation for Personnel Qualification and Certification Current Editions. Currently, all NDT personnel are accepted worldwide by our customers.

2. Infrastructures Business The Company has been a leading provider of engineered construction services, planning, costing, and execution for civil projects. In order to provide the highest quality and professional commitments to the domestic and international customers, the Company delivers and implements tailored made products based on customers’ requirements, with high concerns on safety, quality, integrity, and cost-effectiveness. As the Company strongly emphasizes the importance of safety first and foremost, the engineers at all sites ensure the safety and quality meets the requirements and the work progress follows the agreed timeline The Company offers construction services on various sectors such as buildings, airport runways, and logistics infrastructure. We decide on suitability, resource availability, and cost-effectiveness at the time of projects whether to be a contractor or sub-contractors. Either way, the Company appoints responsible engineers to control the quality and work progress of the construction.


17 Annual Report 2012 PAE Thailand Company Limited

Venezia HuaHin Project (Value 325 MB)

Assakarn Place Project (Value108 MB)

Niche Car Project (Value 74.9 MB)


18 Annual Report 2012 PAE Thailand Company Limited

Element Project (Value 567 MB)

Graceland Khaolak Phangnga (Value 620 MB)

Industry and Competition Situation 1. Policy and Market Strategies 1.1 Competition Strategies The Company emphasizes service quality, both before and after sales. The marketing strategies can be summarized as below: A. Company Reputation The Company has been operating for more than 40 years. The Company’s performances were qualified in accordance with customers’ requirements, specified timeframe, and budget. This can be evidenced from the acceptance and trust from customers, both in Thailand and foreign countries. B. Quality of Employees It is essential in the construction business to apply knowledge and expertise of personnel in different fields, starting from engineering level down to temporary employees. The Company gives importance to the efficiency of personnel and always provides employees the opportunity to attend outside seminars/training regarding new knowledge and technologies, including giving remuneration in the form of monthly salary and welfare at a satisfactory level. In addition, as the Company was granted a license from Ministry of Labor as an authorized trainer to test and issue certificates for welders and


19 Annual Report 2012 PAE Thailand Company Limited

engineers, the Company has an opportunity to select capable and experienced personnel to work within the Company. C. Safety during Work The type of business the Company operates requires a high level of capability, expertise, and care. Until present; the Company has been successful in the area of work safety, by executing work without accidents in the vast majority of completed projects. Besides, the Company has a safety unit directly responsible on this issue, as the Company gives high priority to the employees’ health and safety. D. Products Differentiation The Company has its partner, GPS, who specializes in technology, especially manufacturing equipment in Oil and Gas products, causes the Company to differentiate from its competitors. In addition, the Company holds the ISO 9001 System as priority importance by focusing on planning in operational standards, documentation systems, including human resource training in services so that the customer feels and receives its services differential. E. Industrial Focus The Company has much experience in producing and rendering Oil and Gas and petrochemical services. Thus, choosing to target these industries will give the Company a long advantage over its competitors. F. Resource Center Due to the Company’s major shareholder’ network, as well as its management team having overseas experiences in the Oil and Gas and petrochemical industries, the Company can place its position as the resource center for GPS. 1.2 Customer Type and Target Customers The Company’s customers can be categorized into 2 businesses, which are hydrocarbons and infrastructure. They consist of domestic and overseas governmental and private sectors customers. The Company has been trusted and accredited in its quality of works so far. As the customers always vary from time-to-time, therefore the Company’s operation will not rely upon any specific group of customers. Apart from its capability and experience in infrastructure works. Target customer groups are mostly in Oil and Gas exploration, refinery, petrochemical and other heavy industry sectors. In the past, the majority of the projects were assigned by private organizations. This was due to the fact that the Company has restructured and reorganized to heavily focus on providing services to the hydrocarbon business sector. A number of Oil and Gas companies set standards for all contractors


20 Annual Report 2012 PAE Thailand Company Limited

to achieve before allowing them to win or bid work. Thus, the Company has been continually developing itself to successfully meet the standard. This guarantees that the Company would service more Oil and Gas companies from now on. 1.3 Channels of Distribution The majority of projects for industrial services and construction works will be obtained from participating in tenders, both with government authorities and private sector companies. The projects targeted are both in Thailand and other countries. Some projects are granted from customers who have gained trust in the company’s performances via past business relationships. Primarily, the Company will be the main contractor, obtaining work directly from project owners and frequently performs all construction, without the assistance of subcontractors. Customers frequently classify tenders in different sections, such as construction work, procurement of raw materials, or manpower. Hence, the Company will participate in the tender for the part that it is specialized and has the relevant experience. As a result, the Company might obtain the work for more than one section in the same project, such as construction work, installation of machinery or equipment, and manpower supply and/or procurement. 1.4 Company Policy The Company’s current focus on hydrocarbon business requires the Company to operate within a contract price or the value of works awarded. In this regards, the Company considers main operating costs as well as current market price, competitors’ price, difficulty and technology required, projects length, and terms of payment. 1.5 SWOT Analysis Strength  Management of Company have a global vision, be familiar with this business as well as has strong reputation.  The Company has an excellent experience services for more than 45 years and worldwide business networking.  Be the Global business alliance with the world’s leading companies in order to take the opportunity to exchange the knowledge and new technology for developing human resource.  One-Stop-Service for the EPC: Engineering, Procurement and Construction. Weakness  The Company has quickly expanded in each project as a result of insufficient of employee recruitment and fund sourcing as requirements.


21 Annual Report 2012 PAE Thailand Company Limited

Opportunities  Since Thailand is famous in its tourism industry of which the trends are heavily rely on the island vacations. As the result, the power usage on the isolated islands is expected to become higher altogether with the opportunity for the company to rent out mobile generator  The government has injected infrastructure budget and basic constructions such as public train, high speed train, road cut between provinces and neighboring countries. This has become major opportunity for the company to participate in these projects  The opportunity to participate in PTT Group project as it has plans to increase gas production capacity as well as oil and petrochemical in a large amount Threats  Increase in minimum wage by government policy lead to increase cost of the company. As listed company, we may not win the bid because the price is higher than general company.  The strengthening of Thai baht in the auction of foreign country which effected in higher prices when compare to competitor in that country. 2. Competitive Situation 2.1 Number and Condition of Competition in Industry More than 600 construction companies in Thailand, they are both Thai and Foreign companies and Joint ventures. Therefore, the raw materials, reputation, expertise, and good mutual relationship are very importance in terms of competition within the industry. 2.2 Size of Company compared to its Competitors The Company is in position as a niche player in an expanding market. The Company has a competitive advantage when compared to its competitors, due to the vast array of services available from the Company, not currently matched by our competitors. In the near future, the Company plans to expand scope and size of works to support larger projects from government authorities.


22 Annual Report 2012 PAE Thailand Company Limited

2.3 Problems on Raw Materials In general, raw materials used in construction depend on customers’ requirements, which mostly could be purchased in the market or substituted. Together with large numbers of suppliers, the Company does not experience difficulty in purchasing raw materials. For special raw materials, the Company often prefers Thai suppliers to foreign. The payment is made in either cash or depending on credit agreements signed with suppliers. The Company has a policy to minimize raw materials cost and controls cost to be within budget to avoid the impact of less profit in the case of raw materials price fluctuation. 2.4 Working Capital Generally, when a company has been operating under the EPC contract, Company will be paid in advance (Advance Payment) from client valued at approximately 10 to 15% of the cost of providing working capital for procurement of raw materials and deposit of construction equipment. The company must use the Advance Payment Bond in exchange for the quarantee, the company must have a letter of guarantee contract (Performance Bond) with the client throughout the project. After installation has completed and delivered to the customer, company also need to guarantee the maintenance (Maintenance Bond) to the contractor. The three types of guarantees must be issued by a financial institution which will affect on the performance of the company of which the company has received support from the Islamic Bank of Thailand and Government Savings Bank. 3. Product and Supply for its Distribution 3.1 Key Elements of Products Characteristic 3.1.1. Power of Production and Quantity The Company’s Procedures are as follows: The Company procedure is both main contractor and subcontractor which it has been worked by contacting to the Contractor directly such bid submission method or management connection and they are responsible for seeking the project or client contact directly. However, the Company will be received any information on following the other sources; then, the Company agrees to award as following procedures:


23 Annual Report 2012 PAE Thailand Company Limited

1. Bidding: the Company will follow up on the announcement in the newspapers or consultancy or design company and then assigns it to estimator for calculated the cost control and incurs expenses. In addition, the Company will submit bidding as stipulated by client procedures: 2. Negotiation: The company will first negotiate without bidding announcement such offering work or some projects are granted from clients who have gained trust in the Company’s performance via past business relationship. Primarily, the Company will be the main contractor who obtains the work directly from project owners. When both parties agree with the contract price and conditions, then, they will sign it contract The Company’s Procedures after project award are as following: 1. Work Distribution The Company will consider from work categories and assigns to related department such as procurement, machinery, and other material as well as personnel 2. Project Manager Appointment Project Manager is to be responsible all projects by controlling the progress of project as scheduled. 3. Project Planning: Project Manager will specify the project schedule for suitable with the terms and conditions as well as budgeting estimation include manpower loading in accordance with the work categories of worker. Apart from, Project Manager will be responsible for details of work schedule interval of each project. 4. Construction Operations During construction operations, Project Manager has a duty to control and follow up work progress. 5. The record to report process The related person in each department will be reported directly to the head of department with regarding to the details of work, material, cost control, quality and quantity 6. Follow up and inspection Project Manager will receive the report from related person together with inspection when it compares with the schedule plan. 7. Checking before delivering In case of work default, Project Manager will solve the problem of default and then check it before delivering.


24 Annual Report 2012 PAE Thailand Company Limited

Sub-Contractor Procedures: After the Company has been selected to be a Main Contractor, then, the Company will seek for the Sub Contractor based on work categories by considering the potential of subcontractor or quality of subcontractor performance. However, the Company will select the Contractor by considering the best condition together with control all expenses within the project budget. Sub Contractor Procedure will be divided into 2 parts as follows: 1. Price Comparison and Technical Proposal The Company will request the sub contractor to propose the market price which it has been estimated by seeking the sub contractor who proposed the lowest cost as well as technical proposal which is comprised of sub contractor's credibility 2. Company Negotiation The Company will bargain over the price reduction as the company budget terms and conditions. 4. Raw Materials and Suppliers The majority of Hydrocaorbon raw materials will be supplied by the project owners. For the construction part, the Company will negotiate at the time of receiving the contract with various suppliers to make a pre-project comparison on rates and terms for the purchase of materials such as Steel, Cement to control costs. 5. Environmental impact The Company has concerned on safety of construction includes others on environmental impact by providing permanent staff in each project for the purpose of inspection and control the construction method as well as waste disposal and management in order not to impact on pollution and environmental.


25 Annual Report 2012 PAE Thailand Company Limited

PROJECT LISTS AS OF 31 DECEMBER 2012

Construction

No

Project

Scope of Work

Contract Value (MB)

1*

Navanakorn Privacy (* The project was delayed)

Construction of Commercial Building and 8storey Residental Building for 10 Towers (Commercial Building and 3 towers of Residential Building have been submitted)

253

2

Graceland Project, Khaolak

Construction for resort and hotel

3

Assakarn Place

Construction for 678 Units, Condominium. One 7 -Storey Building and one 8- Storey Building

4

Modus Beachfront Condominium& Fresco Resort Hotel

Construction of two 7-Storey Condominium Building, two 5-storey Condominium Building and one 4 –Storey Building

131.82

5

Elements Srinakarin

Construction for 7 and 8 Storey Condominium Building for 9 Towers

567

6

Ramada Plaza Hotel

A 7-Storey Hotel Building with 3 underground level

202

7

Niche Cars,Phase 1

Showroom Construction

74.90

8

Art’e Condominium

Residence Property Construction

135

9

The Capital Condominium

Residence Property Construction

425

10

The Venezia Hua-Hin

Shopping Mall

325

620.60 108


26 Annual Report 2012 PAE Thailand Company Limited

Industrial Services No

Project

Scope of Work Engineering & Design

Contract Value (MB)

1.

BEWW Infill Project.

2.13

2.

Manpower Services for CHEVRON Upstream Services, Manpower supply to Thailand, Sedco, KCA Deutag/ offshore and equipment rental Swiber/ Transocean

3.

Construction for Vapor Recovery Unit

Vapor Recovery System (VOC)

203

4.

Installation of Flame Scanner

Supply and installation of Flame Scanner

23.33

5.

Oil Water Treatment Packages

System work for oil extraction

606.29

6

Green AVS Expansion (ABS6)

Supply Construction System, Instruments and Electrical System

92

7

Engineering & Other Services

Engineering Design

5

8

Provide Senior Process Engineering

System Work

240.00

4.54

9

Engineering work for GLCC Procurement and Installation installation detailed engineering for PMWI-KPWC & YAWD

2.6

10

Engineering Procurement and Construction work for Hatyai West Water Treatment Plant

Procurement and Construction

33.5

11.

Procurement for Flare Tips Replacement Benchamas Production Platform

Procurement of Engineering

17

12.

Engineering work for Flare Tips Replacement Benchamas Production Platform

Engineering and Design

4.2


27 Annual Report 2012 PAE Thailand Company Limited

No

Project

Scope of Work

Contract Value (MB)

13.

Engineering work for GLCC Engineering Design installation detailed engineering for 8 Platform

7.1

14.

Engineering work for Pig Receiver & Launcher Piping Modification

Engineering Design

0.95

15.

Engineering work for Benchamas flow line hook up

Engineering Design

0.695

16

Engineering work for FULQHVAC Engineering Design Upgrade Phrase 3 Detailed Design

3.2

Engineering work for SALQ & SALQ HVAC Upgrade Phrase 3 Detailed Design

4.1

17

18

Engineering work for Installation the 4th PWIP system at Plathong Gas II

Engineering Design

Engineering Design

1.825

19

Engineering work for NKWA Use IG UG Casing Gas with Emergency N2

Engineering Design

0.375

20

NDT Service Year 2011

Welding inspector including steel pipes and structures used in Oil Refinery Industry, High Rise Buildings, Factories, XRay pipes and Gas Tanks.

154


28 Annual Report 2012 PAE Thailand Company Limited

ON-GOING PROJECT On-going projects as of 31st of December 2012 as follows:

No.

Project

Scope of Work

Contract Value (MB)

1*

Navanakorn Privacy

Construction of Commercial Building and 8-storey Residental Building for 10 Towers

253

2

Graceland Project, Khaolak

Construction for resort and hotel

43.44

3

Elements Srinakarin

445.17

4

Ramada Plaza Hotel

Construction for 7 and 8 Storey Condominium Building for 9 Towers A 7-Storey Hotel Building with 3 underground level

5

Niche Cars,Phase 1

Showroom Construction

19.77

6

Art’e Condominium

Condominium Construction

98.79

7

The Capital Condominium

Residence Condominium

343.57

8

The Venezia Hua-Hin

Shopping Mall Construction

34

9

Green ABS Expansion (ABS6)

Procurement and Electrical & Instrument System Construction

70

10

FULQ HVAC

Engineering Design

2.1

11

SALQ & SALQ

Engineering Design

2.6

12

Hatyai West Water

Engineering Design

33.5

Water Waste Management System Pipeline & Machinery Installation Engineering Design and Calculation

11.86

Engineering Design and Calculation

2.53

System work for oil extraction

21

13 14

WWTP, HTY Siemens HP/LP Flare Tip Replacement on BEPP

15

Engineering work for GLCC installation detailed engineering for 8 Platform 16** Oil Water Treatment Packages *The project was delayed **The project waiting to be deliver

90.88

4.14


29 Annual Report 2012 PAE Thailand Company Limited

17

Construction for Vapor Recovery Unit

Vapor Entrapment System Installation

17

18

Chevron Offshore Thailand Co.,Ltd

Upstream Petrochemical Industry

8.00

19

NDT Services Year 2012

Non-destructive testing of steel used in the Construction business, including steel pipes and structures used in Oil Refinery Industry, High-Rise Buildings, Factories, X-Ray Pipes and Gas Tanks

12.9

PROJECT LISTS OF COMPANY PERFERENCE DURING FIVE-YEAR PERIOD (2008-2012)

No.

Supplier/Client/Project

Total Value (MB) 305.215

Project Period

1

Chevron Offshore (Thailand) Co.,Ltd

2

FPSO Rubicon – Vantage

14

3

Chevron Thailand, Sedco, KCA Deutag/ Swiber/ Transocean

200

4

Clients from Petrochemical Company

76

Long term project

Design, Procurement and Installation in Electrical and Instrument

5

Toyo Thai Plc.

20.54

Jul 2009-Feb 2010

Instrument Installation

6

IRPC PLC

97

Feb 2011 - Present

7

J.Ray McDermott (for Chevron)

55.75

Design , Procurement and Installation in Electrical and Instrument Dec 2009– Jun 2010 Platong Gas II Project: Chemical Injection Package and Atmospheric Tanks

8

Provincial Electricity Authority

357.7

Jul 2009- Jun 2010

6.15

Since Year 2006

Scope of Work Manpower supply

May 2008 -July 2008 Manpower, equipment rental, installation and commissioning assistance Long term project Upstream services: Manpower, fabrication and equipment rental

Supply and construction of 230/115 KV Udon Thani 3 Substation Project Dec 2010 - Jan 2011 Supply and Installation Flame Scanner


30 Annual Report 2012 PAE Thailand Company Limited

9

Navanakorn Privacy Project

594.2

Aug.2008 -May 2011

Construction (Market) 3 and Condominium 8 floor 10 buildings

10

Graceland Khaolak project

620.60

Aug.2010 - Dec.2011

Construction for resort and hotel.

11

Samsung Heavy Industry (Thailand) Co.,Ltd

91.71

Sept.2010 -Dec.2010

Construction Relay for 4 Building at Tha Ta Khro Railway Station, Nakornsawhan Province

12

Provincial Electrial Authority

6.15

Dec 2010 - Jan2011

Supply and Installation Flame Scanner

Feb - Dec 2011

Construction for 678 Units, Condominium. One 7 -Storey Building and one 8- Storey Building

13

Assakarn Co.,Ltd

108

14

Kwinwitch Co.,Ltd

131.82

15

Country Group Development Co.,Ltd

567

July 2011- 6 Aug 2013 Construction for 7 and 8 Storey Condominium Building for 9 Towers

16

Sin Sae Yer Pao

17.06

Aug 2011 - Nov 2011

17

Nich Car Co.,Ltd

74.9

Oct 2011– Aug 2012

18

Kitsompong Co.,Ltd

202

July 2011 - Oct 2012

19

Perfect Prestige Property Co.,Ltd

135

Nov 2011 - March2013 Condominium Construction

20

KPN Group Corporation Co.,Ltd

425

May 2012-Mar 2014

Residence Property Construction

21

Fashion Village Development Co.,Ltd

325

Jun 2012 - Mar 2013

Shopping Mall Construction

22

Chevron Offshore (Thailand)

4.54

Jan 2012 – Dec 2012

Provide Senior Process Engineering

23

Chevron Thailand Exploration and Production Ltd

2.6

Feb 2011 – Apr 2012

Engineeering work for GLCC installation detailed engineering for PMWI-KPWC & YAWD

24

Siemens (Thailand) Ltd.

33.5

March 2011-Jan2012

Aug 2012 – Mar 2013

Construction of two 7-Storey Condominium Building, two 5-storey Condominium Building and one 4 –Storey Building

Office Renovation for space of 1,480 Square meters Showroom Construction A 7-Storey Hotel Building with 3 underground level

Engineering Procurement and Construction work for Hatyai West water Treatment Plant Procurement for Flare Tips


31 Annual Report 2012 PAE Thailand Company Limited

Replacement Benchamas Production Platform

25

Chevron Offshore (Thailand) Ltd.

17

Apr 2012 – Dec 2012

26

Chevron Offshore (Thailand), Ltd.

4.2

Apr 2012 – Dec 2012

Engineering work for Flare Tips Replacement Benchamas Production Platform

27

Chevron Thailand Exploration and Production Ltd.

7.1

Jun 2012- Feb 2013

Engineering work for GLCC installation detailed engineering for 8 Platform

28

Chevron Thailand Exploration and Production Ltd.

0. 95

Aug2012 – Aug2013

Engineering work for Pig Receiver & Launcher Piping Modification

29

Chevron Offshore (Thailand), Ltd.

0. 695

Aug2012 - Dec2012

Engineering work for Benchamas flow line hook up

30

Chevron Thailand Exploration and Production Ltd.

3.2

Aug 2012 - May2013

Engineering work for FULQ HVAC Upgrade Phase 3 Detailed Design

31

Chevron Thailand Exploration and Production Ltd.

4.1

Aug 2012 - May2013

Engineering work for SALQ & SALQ HVAC Upgrade Phase 3 Detailed Design

32

Chevron Thailand Exploration and Production Ltd.

1.825

Nov2012 - Dec2012

Engineering work for Installation the 4th PWIP system at Plathong Gas II

33

Chevron Thailand Exploration and Production Ltd.

0.375

Nov2012 - Dec2012

Engineering work for NKWA Use IG UG Casing Casing Gas with Emergency N2

34

PetroGreen Co.

606.28

Jun 2011 - Mar2012

Supply skid packages

35

PTTAR (PTTGC)

203

Oct 2011 - Oct 2012

Supply includes engineering,supply of materials, fabrication, testing, inspection, performance guarantee and delivery complete

36

PTTEP

904

Sep 2012 - Sep 2015

Oil Field Facilities

37

Other Clients

Long term project

Non-Destructive Testing Services NDT and Welding Inspector Engineering and Design Construction

303.67


32 Annual Report 2012 PAE Thailand Company Limited

Progress of Changing and Development The Company has been changed and developed its business and management during past period as below details: Year 2008  The Company has arranged for the personnel and document system in connection with ISO includes inspection to support the system of certify body TUV-SUV which has passed the inspection examination. Then, the Company has been certified in Design , Fabrication , Procurement and Commissioning in Oil and Gas filed and industrial continuation. Nevertheless, the effective date of Certificate is on 2nd July 2009 and shall be extended in every 3 years.  The Company had increased capital to 406,606,362 shares, at a par value of THB 1 in the amount of 981,106,362 shares are as following :1. To offer GPS in the amount of 100,537,500 shares, at par value of THB 1.10 per share. 2. To support of issuing and offering the warrant to purchase the Company’s ordinary shares to GPS in the amount of 254,363,862 shares as well as specify the right to purchase the ordinary share at the rate of warrant 1 unit per 1 ordinary share with the price of 1.32 THB . The term of warrant is 1 year, expiration date on 22nd February 2009. 3. To support issuing and offering the warrant in order to purchase the company’s ordinary share for Directors and employees in the amount of 51,705,000 shares by stipulated the right to purchase the company’s ordinary shares. The exercise ratio of warrant 1 unit : 1 ordinary share with the exercise price 1.65 THB, the term of warrant is 5 years.  PAE Construction Company Limited, our subsidiaries has registered to amend the company name to be PAE Construction Company Limited date on 21st December 2007 and re-registered the company name to be PAE Construction Resources Company Limited date on 6th June, 2008.  In August 2008, Pacific Resources International Company Limited has purchased WNSR Pacific Engineering Company Limited which it has an expertise in Electrical and Instrument includes equipment services in the areas of Petrochemical, Refinery as well as Electricity Production, Industrialization Estate Zone. The list of value are 123.70 MB (comprised of liabilities in the amount of 88.2 MB and cash 35.5 MB) and registered for new name amendment to be WNSR Pacific Company Limited date on 2nd September 2008.  In December 2008, there was a restructuring shareholder of WNSR Pacific Company Limited which Innovative Technologies (iNe) Ltd. (Cayman), GPS subsidiaries hold 30% of shares while Khun Sopha


33 Annual Report 2012 PAE Thailand Company Limited

Sa-Nghuanhong. Executive Director of WNSR pacific Co.,Ltd , the former Managing Director of WNSR Engineering Co.,Ltd. hold 9.9 % of shares Year 2009  The Company has improved and expanded its potentially of 2 Fabrications both Rayong and Songkhla for the purpose of supporting the market growth  The adverse of impact on economic crisis has an effect to the World Stock Market including Stock Exchange of Thailand which was the main factor of the company share market value was lower than 1.32 THB per share as stipulated in the warrant certificate. As above situation, GPS has considered to waive its warrant as scheduled. Consequently, the expansion plan and investment of company has been suspended due to GPS has changed decision of investment as our expectation.  The Company has applied for the Promotion Certificate with Thailand Board of Investment date on 5th January 2009 by applying for Rayong Fabrication to be the first line of steel structures for Construction and fabrication industry type 4.19 so as to supporting the industrial business growth in the Rayong area and Industrial Estate including expansion of market both local and oversea. Afterward, the Company has achieved and obtained the BOI Certificate No. 1476(2)/2009 date on 12th June 2009 which it has been approved by Secretary General. The Promotion Privileges are consisted of :1. Permission to deduct the import tax for half of machinery especially import tax at the rate of 10% 2. Exemption of corporate income tax and net profit from the business activities not exceeding at the rate of 100% of investment excluding property fee and turn over within 3 years from the date of income of business activities. 3. Exemption of import tax from raw material , essential material imported from oversea especially in production for export within 1 year from the initiate date of import As above privileges, the Company has a confidence in our potentially to competition within the market; Moreover, the Company has been arranging to apply for BOI Certificate at Songkhla in order to support the market growth of South and Gulf of Thailand such as Chevron and PTTEP etc. Year 2010  The Company has been trusted and accredited in its quality of work so far through work with Chevron (Thailand) Exploration Limited, Songkhla for more than 20 years as a result that Rayong Fabrication has an opportunity to obtain a newly project from Chevron Offshore Company Limited concerning Petrochemical and Natural Gas for rigs in this area of Chevron North Thailand. In addition, Chevron has driven the process of Preventive maintenance Program which it has prepared a long term forecast of


34 Annual Report 2012 PAE Thailand Company Limited

demand for its products. Apart from, the company has planned for providing manpower, equipment and tools for Songkhla branch and Rayong branch in order to get maximize benefit in this corporation between the Company and Chevron and its results are decisive for the continuation of the project in the near future.  Recently, the company has been signed the Contract with Chevron (Thailand) Exploration and Production Co.,Ltd (“Chevron”) for Design and Engineering Services in October 2010 through September 2014. The scope of work is to design in offshore which it has a minor competitors in this field. This section is generated in high revenue.  The Company has improved and expanded the facility at Songkhla branch and Rayong branch which served its value clients with various services since 2009. In the present, the Fabrication has ready to services and also in the past year, the Company has been awarded by PTTEP for Call-Out Services Project in terms of quality assurance, quality control including Quality of Health Safety and Environment Policies, and readiness of personnel, tools and equipments. Anyhow, PTTEP major client has continued expansion project as a result of high revenue for the Company’s sustainable growth.  The Company has recognized the importance of quality system in order to identify vision, mission and goal by efficiency and effectiveness. Besides, the Company has developed and improved operation to be consistent with policy and ISO. In the present, the company has achieved and obtained International Organization of Standardization 9001:2008 Certification.  Due to loss of continuity for 3 years, the Company has made a decision to sell the whole of WNSR ordinary share which the Company hold 60%.The reason of selling is to reduce the obligation of the Company. Year 2011  PAE has expanded the Fabrication, Rayong to meet growing demands of our clients especially Chevron and PTT Group. Presently, Oil and Gas Department has been planning to set up the Operation Unit aims to support the main client such PTTEP especially S1 project at Lan Krabue, Kampaengphet including Pittsanulok, Pichit and Sukhothai. S1 Project has been established since 1982 and the concessionaire will be expired 2021. Oil production capability of S1 currently is at 2.4 MM barrels per day as well as has been planning to expand the oil production to be 3 MM Barrels per day within 1-2 years in the near future.  PAE has focus on client needs, therefore, we invested in highly focus on E & I by expanding the scope of services especially Engineering for the purpose of integrating of EPC or One Stop Services which we have provided our services both onshore and offshore, comprises on Piping, Process , Electrical & Instrumentation and Structural through calculation, design and survey. Besides, our main clients such CHEVRON and IRPC Group remain trust in our high quality and service.


35 Annual Report 2012 PAE Thailand Company Limited

 PAE has been recently awarded by PTT Global Chemical Plc, for EPC contract to construct the Vapor Recovery Unit (VRU) at Aromatic Refineries (AR2) in Rayong, Thailand. PAE’s scope of the supply includes engineering,supply of materials, fabrication, testing, inspection, performance guarantee and delivery complete with all required internals and accessories to PTTGC designated fabrication yard, Rayong with totaling over 203 MB of Contract value for the period of 16 months , starting from 17th October 2011 until 16th December 2012 .  We realize that the telecommunication is highly important for making the profit for the Company in the present as well as we have remained the expertise employee for telecommunication filed. As a result of establishing the Telecom Department in this year in order to provide fully support in telecom business which we had an experience and expertise in telecommunication in the past.  WE has been achieved in many construction projects such Ramada Plaza Hotel. Element Srinakarin, Niche Car including Modus Pattaya, Colgate Plamolive and Sin Sia Yer Pao. Total value of construction are approximately 900 Million Baht.  PAE has an opportunity to join with the investor activities 3 times in year 2011 namely “Opportunity Day” , organized by The Stock Exchange of Thailand (SET). Year 2012  The Company has received a contract from PTTEP in the New Facilities Construction and Modification Work which is to expand the production process of Oil & Natural Gas at the source of Queen Sirikit, Lankrabue, Kamphangphet Province and neighboring provinces. The contract called “The S1 Project” value of 904 million baht in period of 3 years duration+ 1. The job describtion is the Construction and Modification including Civil, Mechanical, Electrical and Instrument work which can be classified into Field work and In-House Fabrication. 1. Field Work Field works involves in construction task such as location and equipment preparations in order to setup the new oil drilling site including maintenancing existing drilling sites. Modification job involves modifying the oil production equipment at each site as well as to provide necessary equipment and machinery based on PTTEP requirement 2. In-House Fabrication In-house Fabrication job includes the part assembling and welding which are being used in the oil drilling station and other operations. The In-House Fabrication site comprises with Mechanical Shop, Civil Shop, Hydrotest Shop, Radio Graphic Test Shop, Blasting and Painting Sop and more.


36 Annual Report 2012 PAE Thailand Company Limited

 The company has signed a contract with Thai ABS Company Limited which is a subsidiary of IRPC Public Company Limited holding 99.9% shareholder worth of 100 million baht on month in June 2011. The work involve the PC work which is the Procurement and Contruction for all electrical system of the Thai ABC Plant Phrase 6, located in IRPC Rayong which is the expanding of the plastic resins production plant of Thai ABS. The contract ended in January 2011 but has extended the contract until May 2013.  The company has reduced the registered capital of 981,106,362 Baht to 675,037,500 Baht with the par value of 1 Baht by cutting ordinary shares issued for the exercise of warrants that the company has not yet issued offered to the consultant and employees of the company. And cutting the ordinary shares issued for the exercise of warrants offered to GLOBAL PROCESS SYSTEMS INC.  The company has increased registered capital of 675,037,500 Baht to 1,350,075,000 by issuing 675,037,500 new shares of common stock, par value of 1 bath per share offer to existing shareholders in proportion to the shares of the Company at a 0.60 Baht per share.  The General Meeting of Shareholders approved the issuance of convertible bonds specifically to foreign investors. Private Placement or Advance Opportunities Fund is a fund manage by Advance Capital Partners Ltd. The fund shall not exceed 20 (twenty) million Singapore dollars or the equivalent in any other currency and approval of the increase of the company’s registered capital amount of 450,000,000 bath (Four Hundred Fifty Million Bath) from 1,350,075,000 (One Thousand Three Hundred Fifty Five Thousand and Seventy Thousand Million Bath) with the new registered capital of 1,800,075,000 (One Billion Eight Hundred Million and Seventy Five Thousand Bath). The issuance of shares of 450,000,000 shares (Four Hundred and Fifty Million Shares) with a par value of 1.00 bath per share to support the exercise conditions of the convertible bonds.  The company has a project of installing pipeline system and steel equipment of Waste Water Treatment Process (Waste Water Treatment Plant) for Michelin Thailand Company Limited which the main contractor is Siemens (Thailand). This project is located in the southern province of Songkhla worth 33.5 million bath.  The company also have many projects of engineering design for construction and improvemnet of production process of oil and gas production platform in the Gulf of Thailand for Chevron (COTL / CTEP).


37 Annual Report 2012 PAE Thailand Company Limited

Company Goals Maintain the leadership in providing EPC in Thailand The Company has set up the goal to be a turnkey projects leading provider for EPC (Engineering, Procurement and Construction) that provide all steps of engineering including Engineering Design, Procurement and Construction. The company also provide services for energy industry clients such as Oil & Gas and Petrochemical which is the core business of the company. Apart from, the Company has served the clients in regard to infrastructure such as building construction. The Company has been leading provider of construction in Thailand especially engineering and construction services by co-business alliance with GPS who has supported us for high technology in order to carry on capability of engineering and supply equipment in oil and gas products to meet the needs of clients both domestic and international growth. To become a leading provider of EPC Service accepted in the International In addition, with the benefit of become an affiliate with GPS (Major Shareholder) which is one of the leading company with experiences and worldwide reputation. With this, GPS can provide support in supply projects to the company and provide support of technology and knowledge to engineer team in order to improve employee’s competency thus increase the company’s capabilities to be the leader in engineering and construction of petrochemical industry. The company aims to become one of the leading provider for EPC services and to expand in the international market which work on the small to large scale project with a value of 1oo million US dollar to increase opportunities for business growth in the future. Business Development Strategy The 2 latest company’s business strategies for expansion are as follow: The Contractor for EPC – Company has a long term plan to expand the business in the international market within next year Production and Human Resource Development -- Company has focused in developing Human Resources capabilities of current employees and the new comer in order to increase overall competencies in compliance with the company’s goal. The Company has also promoting the use of technology, particularly information technology to increase the performance and competitiveness of the company. The company has sent engineer staff to study and work with GPS for preparation to support projects in the Middle East. Management Principles of Corporate Gorvernance -- The Company has emphasized in good management standard to comply with Corporate Governance Principles an promote the Company’s good management transparency which will be beneficial to shareholders, employees and also for the economic growth of the country.


38 Annual Report 2012 PAE Thailand Company Limited

Risk Factor The Company has been realized on Risk Management under change the way a business operates, both in internal and external factors. The Company, therefore, arranges the Risk Management Procedure to be consistent with the international standard especially for Engineering, Procurement, and Construction to brainstorm of risk management and propose to the management to overview of the risk management in each project which are deemed to be a duty and responsibility of each units to manage and control the risks to an acceptable level. For the investor’s consideration concerning on risk factors of each company, the Company suggest that the investor should consider the major risks of the business of the company which are devided into five main types of risk as follows: 1.

Risk on Operating Performance in Petroleum and Petrochemial Business

The main objective of the Company is to supply EPC for Petroluem and Petrochemical fields for more than 45 years. Hence, the income and performace of the Company has a direct relationship with other projects in Petroluem and Petrochemical fields especially, the investment budget to expand the production base for new plant and to enhance the capacity for the existing plant. Provided that Thailand economic year 2013 remains continually grow in consistency with the world economic, this will enable the company to have more projects from the main clients such as PTT and Chevron etc. On the other hand, as a result of natural disasters or the world’s economic problems would effect to the company’s overall projects or decrease in revenue of the company. Risk Mitigation Method The Company has stipulated the strategy and business plans to expand the services to international market such as Myanmar, The Philipines and Middle East Countries and also provide many forms of services such as Rental of Electric Generator at Samui Island or Alternative Energy eg. Power Plant Waste etc. 2.

Risks on Changing the Cost of Raw Materials, Equipments and Machineries

For EPC Project, the Company will bids the contract value of the project on fixed price since the duration of the auction until completion of projects. Generally, the proposed price cannot be changed unless in case that specified in the terms and conditions of price adjustment in the contract. However , most of company projects has the operational period of more than 1 year which will directly effected to company profit and cost in case there are variation of the costs of machinery, equipment and construction estimated during the submission of auction.


39 Annual Report 2012 PAE Thailand Company Limited

Risk Mitigation Method The Company has issued the policies to manage, control and prevent the costs variation of machineries, equipments and raw materials by way of project evaluation cost prior to bid submission. Moreover, the Company will check and request the quotation for the machineries, equipments and constructions in each supplier in order to ensure pricing accuracy. In case of issuing the Letter of Intent (LOI) by client, our legal department will process to issue the contract according to the Company’s Terms and Conditions together with the purchase order to the supplier with fixed price in advance so as to prevent of price variation risks. 3. Risk of Human Resources The expertise and capabilities of personnel is another important factors to the success of the company especially for the operation of construction work. Thus, increase the confidentiality of the clients that our company can work on the project completely. Risk Mitigation Method Company has arranged the employee’s performance evaluation and competency in order to increase the effectiveness and efficiency of the employee. The company also arrange the training program to increase the knowledge and expertise in working skill. This includes arranging employees to attend training courses and seminars to ensure that employee’s skill will improve with the change of circumstances. For example, the seminar for the welders, training course for the preparation to join the Basic Offshore Safety Training or the invitation of famous speakers/trainers provide training to our employees. In addition, the company has the safety measure for its employees, educate employees in case of unpredictable circumstances in order to reduce the risk that might happen during work.


40 Annual Report 2012 PAE Thailand Company Limited

Organization Chart


41 Annual Report 2012 PAE Thailand Company Limited

Management 1. Management Structure The Company’s Management Structure is including the Board of Directors and 2 sub-committees i.e. the Executive Committees, and the Audit Committees. The Board of Directors as of 31st December 2012 1. Mr. Apisit 2. Ms. Thipawan 3. Sub.Lt. Saroj 4. Mr. Ratanaphon 5. Mrs. Urairat 6. Mrs. Chintana 7. Mr. Ian Francis 8. Mr. Thavisakdi 9. Mr. Apiporn 10.Mr. Vincent

Rujikeatkamjorn Uthaisang Sawangridhi Wongnapachant Boonakas Kaweewong Prescott Tanta-nanta Pasawat D’Rozario

Chairman of the Board of Directors Chairman of Executive Committee Chairman of Audit Committees Executive Committee and Managing Director Executive Committee Executive Committee Executive Committee Director and Audit Committee Director and Audit Committee Director

1.1 Authorities and Responsibilities of the Board of Directors In accordance with the Regulations of the Company, the Board of Directors has authorities and responsibilities to manage the Company according to the objectives, regulations, and resolutions of shareholders’ meetings with honesty, maintaining the best interests of the Company. The Board of Directors might assign one or more directors, or other persons to perform activities on their behalf, except in matters regulated by law where they must receive resolutions from shareholders’ meetings prior to performing the activities, such as sale or transfer of the overall business or a major part of the business, or an increase or decrease of capital of the Company. The Board of Directors should have to meet at least 1 time in 3 months. The meeting location should be at the head office, nearly province, of other appropriate place which Chairman and representative from the Chairman will be arranged.


42 Annual Report 2012 PAE Thailand Company Limited

1.2 Authorized Directors Directors who are authorized to sign on behalf of PAE (Thailand) Public Company Limited are two of four of Mrs. Chintana Kaweewong, Mrs. Urairat Boonakas, Ms. Thipawan Uthaisang, and Mr. Ratanaphon Wongnapachant joining two of four sign with the Company’s seal. 1.3 Elements and Appointment of the Board of Directors The Board of Directors must not be less than 5 persons which appointed by shareholders’ meeting. Half of the number of directors must have residence in the Kingdom of Thailand with appropriate qualification. The election of the Board of Directors shall be followed as procedure: (1) One shareholder has the voting right equivalent to 1 share per 1 vote (2) Each shareholder must exercise all votes to elect one person or several persons to be the directors, but the shareholder could not divide one’s votes between directors (3) The nominees who receive the highest votes are the persons elected as the directors of the Company. In case nominees are elected by equal votes and exceed number of approved directors, the Chairman of the Board will exercise the final vote. During the annual general meeting every year, one-third of the directors will be rotated out of the position. In case the number of directors could not be divided into exactly three parts, the number to be rotated will be as close to one-third as possible. For the directors who would be rotated out of the position during the first and second year after registering the Company, the drawing lots method will be applied to assign who will be rotated. For subsequent years, the director who has been in the position for the longest term will be rotated out. The directors who are rotated according to the term may be reelected. In case that there is any director resign by other reason out of rotation, directors should elect an appropriate person who has more experience, knowledge, and have no legal prohibition to be replaced in the next meeting, except the director will be remaining in position only 2 months. The replacement director will be in term of position only as the remaining of resigned director. The resolution for appointment by the Board of Directors should not be at least of third-forth of remaining directors at that time. 1.4 The Audit Committees (as of 31st December 2012) 1. Sub.Lt. Saroj Sawangridhi Chairman of the Audit Committees 2. Mr. Thavisakdi Tanta-nanta Audit Committee 3. Mr. Apiporn Pasawat Audit Committee


43 Annual Report 2012 PAE Thailand Company Limited

The term of the Audit Committees is 2 years per period which will be expired on 31st December 2013. 1.5 The scope of duties and responsibilities of the Audit Committees to the Board of Directors are as the following matters: 1. To review the Company’s financial reporting process to ensure that it is accurate and adequate; 2. To review the Company’s internal control system and internal audit system to ensure that there are suitable and efficient; to determine an internal audit unit’s independence, as well as to approve the appointment, transfer and dismissal of the chief of an internal audit unit or any other unit in charge of an internal audit; 3. To review the Company’s compliance with the law on securities and exchange, the exchange’s regulations, and the laws relating to the Company’s business; 4. To consider, select and nominate an independence person to be the Company’s auditor, and to propose such person’s remuneration, as well as to attend a non-management meeting with an auditor at least once a year; 5. To review the Connected Transactions, or the transactions that may lead to conflicts of interests, to ensure that they are in compliance with the laws and the Exchange’s regulations, and are reasonable and for the highest benefit of the Company; 6. To prepare and to disclose in the Company’s annual report, an audit committee’s report which much be signed by the audit committee’s chairman and consist of at least the following information: a. an opinion on the accuracy, completeness, and creditability of the Company’s financial report, b. an opinion on the adequacy of the Company’s internal control system, c. an opinion on the compliance with the law on securities and exchange, the exchange’s regulations, or the laws relating to the Company’s business, d. an opinion on the suitability of the auditor, e. an opinion on the transaction that may lead to conflicts of interests, f. the number of the audit committee meetings, and the attendance of such meetings by each committee member, g. an opinion or overview comment received by the audit committee from its performance of duties in accordance with the charter; and h. other transactions which, according to the audit committee’s opinion, should be known to the shareholders and general investors, subject to the scope of duties and responsibilities assigned by the Company’s Board of Directors. 7. To perform any other act as assigned by the Company’s Board of Directors, with the approval of Audit Committees.


44 Annual Report 2012 PAE Thailand Company Limited

1.6

Name of Independent of Director (as of 31 December 2012) : 1. 2. 3. 4.

Mr. Apisit Mr. Apiporn Sub.Lt. Saroj Mr. Thavisakdi

Rujikeatkamjorn Pasawat Director Sawangridhi Tanta-nanta

Independent of Director Independent of Director Independent of Director Independent of Director

1.7 Qualifications, Selection Procedures, and Criteria for Selecting Independent Directors / Audit Committees: 1. The shareholders will make the selection by considering from outsiders who have knowledge and capability that will be useful to the Company. 2. Use the majority votes of the shareholders whom attended the shareholder meeting. 1.8 Number of Board of Directors’ Meetings Held and Attended by Each Director : In year 2012, there is the Board of Directors’ Meeting for 8 times as these following details:

Name of the Board of Directors 1. Mr. Apisit Rujikeatkamjorn 2. Mr. Thavisakdi Tanta-nanta 3. Sub. Lt. Saroj Sawangridhi 4. Ms. Thipawan Uthaisang 5. Mr. Ratanaphon Wongnapachant 6. Mrs. Chintana Kaweewong 7. Mrs. Urairat Boonakas 8. Mr. Ian Francis Prescott 9. Mr. Apiporn Pasawat 10. Mr. Vincent D’Rozario

1 2 3

Number of Attendant/ Number of Meeting in whole year1 11/12 12/12 12/12 10/12 10/12 12/12 12/12 4/12 9/12 10/12

Due to there are directors resigned and appointed during year, therefore the total number of meetings held unequal Due to there are Audit Committees resigned and appointed during year, therefore the total number of meetings held unequal Please find attachment no. 1 concerning management.


45 Annual Report 2012 PAE Thailand Company Limited

1.9 Number of Executive Committees’ Meetings Held and Attended by Each Director : In year 2012, there is the Executive Committees’ Meeting for 6 times as these following details: Number of Attendant/ Name of the Board of Directors Number of Meeting in whole year2 1. Ms. Thipawan Uthaisang 6/6 2. Mr. Ratanaphon Wongnapachant 5/6 3. Mrs. Urairat Boonakas 6/6 4. Mrs. Chintana Kaweewong 6/6 5. Mr. Ian Francis Prescott 0/6 1.10 Number of Audit Committees’ Meetings Held and Attended by Each Director : In year 2012, there is the Audit Committees’ Meeting for 4 times as these following details: Number of Attendant/ Name of the Audit Committees Number of Meeting in whole year 1. Sub. Lt. Saroj Sawangridhi 9/9 2. Mr. Thavisakdi Tanta-nanta

9/9

3. Mr. Apiporn Pasawat

6/9

1.11 The Management (as of 31st December 2012 4)

3 4

1. Mr. Ratanaphon

Wongnapachant

Managing Director

2. Mrs. Chintana

Kaweewong

Senior Vice President of Corporate Affairs

3. Mrs. Urairat

Boonakas

Company ‘s Consultant

4. Mr. Ratchai

Pichayapoom

Assistant to Senior Vice President of Finance and Account

5. Mrs. Sujing

Ratanapakorn

Vice President of Finance and Account Department

6. Mr. Tana

Iamchinvuth

Vice President of Construction Department

7. Mr. Gumpol

Kupadakvinij

Vice President of Oil and Gas Services Department

8. Mr. Pragart

Chantapet

Vice President of Business Development 1 Department

9. Mr. Kasem

Viriyaskulthorn

Vice President of Business Development 2 Department

Due to there are directors resigned and appointed during year, therefore the total number of meetings held unequal Please find attachment no. 1 concerning management.


46 Annual Report 2012 PAE Thailand Company Limited

1.12 Scope of Duties and Responsibilities of Management : 1. To perform according to the targets and directions for operating the business of the Company and to correspond with the policies regulated by the Board of Directors of the Company. 2. To set up regulations and criteria concerning the operation of the Company. 3. To set up the regulations concerning to the work of employees. 4. To determine the criteria and selection of the projects in which the Company will participate in bidding for proposal to the Executive Board. 5. To consider and agree for the issues concerning appointment, transfer, withdrawal of employees in at management level, supervisor, staff. 6. To consider and agree for the issues concerning the rate adjustment of wages, salary, and other remunerations. 7. To consider and approve for bidding and job operation of each department or personal. 8. To process other issues assigned by the Board of Directors of the Company. 2. The Selection of Directors and Management Regarding the procedure for selecting persons to be appointed as directors, the shareholders will select the appropriate persons who have experiences, knowledge, and ability that will be advantage to the Company to be the directors. The resolution of shareholders’ meeting will take the majority votes of the shareholders whom attended the meeting and have voting rights. 3. Remuneration for the directors and managements The Company has regulated the remuneration for directors precisely, by requesting for approval from the shareholders’; and for the remuneration for directors, it will be in accordance with the principles and policies regulated by the Board of Directors. Therefore, this is done in accordance with the Principles of Good Corporate Governance, Clause 10, concerning the set up of remuneration for management. In 2010, the amount of remuneration of directors and management were as stated below: 

The remuneration of the Board of Directors and Audit Committees for 22 persons (including directors resignation during year 2012) consist of monthly remuneration, meeting allowance, in year 2012 total amount THB 19,875,466 baht ( Nineteen Million Eight Hundred Seventy Five Thousand and Four Hundred Sixty Six baht only) Other Remunerations -None-


47 Annual Report 2012 PAE Thailand Company Limited

4. Corporate Governance The Stock Exchange of Thailand has passed the good governance policy for the Company’s Board of Directors in order to comply with the good management standards as well as to gain the confidence of shareholders, investors, and all related parties. The Board of Directors realizes the importance of such objectives, and has complied with the above-mentioned guidelines as per the details stated below: 4.1 Policy on Good Corporate Governance The Board of Directors complies with the principles of good corporate governance and good guidance for directors in accordance with the guidelines of the Stock Exchange of Thailand. In addition, the Company regularly prepares for the development and revision of the business operation as well as personnel development to be advantage to the Company and shareholders. 5. Right of Shareholders 5.1 Primary Right of Shareholders The Company gives precedence to the primary right of shareholders i.e. purchasing and transferring shares, participating and voting in the meeting, making decision in the important agendas of the Company (e.g. appointing directors, setting directors’ remuneration, appointing the Company’s auditor and setting remuneration, etc.), and right to receive accurate and obvious information of the Company. 5.2 Shareholders’ Meetings The Board of Directors arranges the annual general shareholders’ meeting within 4 months from the fiscal year-end, and may call for extraordinary shareholders’ meeting if required the shareholders’ consideration. Previously, the procedures of Shareholders’ meeting are as follows:  Prior to the Shareholders’ Meeting The Company has called the Board of Directors’ Meeting to consider the date, place, and agenda of Annual General Shareholders’ Meeting and Record Date for kept the right of meeting participation of shareholders. Prior to the meeting date, the Company sent the meeting invitation letter to shareholders more than 7 days in advance, also announce through newspaper 3 days consecutively and more than 3 days before meeting date, in order to be considered in details of agenda by shareholders before making decision in the meeting. The meeting invitation letter consisted of meeting agenda, detail in each agenda, directors’ opinion, and other related documents e.g. proxy form, CD of Annual Report in Thai and English version (If shareholders would like to receive the


48 Annual Report 2012 PAE Thailand Company Limited

Book of Annual Report, they can request through Corporate Secretary and Corporate Affairs Department as specify in the meeting invitation letter), etc.  During the Shareholders’’ Meeting Shareholders who are unable to attend the meeting by themselves are allowed to design another person as their proxy by fill proxy information in document which attached in the invitation letter and should attach the related documentation as require, then send to the Company as specify date or submit in the meeting date to attend the meeting. In the meeting, the Board of Director opens an opportunity to shareholders to give independent comments and suggestions in order to receive accurately and obviously information before exercise votes for resolution in each agenda. Moreover, the Board of Director also opens an opportunity to shareholders to ask for suspicious information after meeting. The Chairman, directors, and/or related responsible persons (in case that there are technical details of answer) will be answer to all questions obviously. To voting for resolution, one shareholder has the voting right equivalent to 1 share per 1 vote; resolution is depending on majority votes. In case that there are equal votes in agenda, the Chairman will exercise the final vote. However, the meeting uses Thai language, the English document and translator are required for foreign shareholders.  After the Shareholders’ Meeting The Company sent resolution of the Annual General Shareholder’s Meeting within the meeting day, and minutes of the Annual general Shareholder’s Meeting, which was reviewed by directors and signed by Chairman and Corporate Secretary, to the Stock Exchange of Thailand the within 14 days after meeting date. 6. Right and Equality of Shareholders 6.1 Designation of Proxies to the Annual General Shareholders’ Meeting Shareholders who are unable to attend the meeting by themselves are allowed to design another person or the relevant independent director, the full personal detail was attach with meeting invitation letter, as their proxy.


49 Annual Report 2012 PAE Thailand Company Limited

6.2 Voting Card Used in the Annual General Shareholders’ Meeting The Company provides voting card for shareholders to be vote in each agenda conveniently. Shareholders can votes for approve, disapprove, or abstain in voting card equally to their shares. The officer will collect and count from disapprove and abstain voting in each agenda and deduct from the total shares, then announce to the meeting after each agenda. 6.3 Rights to propose agendas, name of directors, and asking questions to the Annual General Shareholders’ Meeting Before voting in each agenda, the Chairman will open an opportunity to shareholders to give ask for related suspicious information as appropriate. Shareholders should specify their name to the meeting before asking questions or give any comment. Moreover, for the director election agenda, the Chairman will also open an opportunity to shareholders to propose the name of director to be appointed, and propose other agenda to the meeting as appropriate. 7. Role of Stakeholders 7.1 Right of Different Groups of Stakeholders The Company monitors and sets up the management systems by respecting the rights and provides consideration to all groups of stakeholders: customers, creditors, suppliers, alliances, competitors, employees, shareholders, etc.  Customers The customers are a heart of the Company irrespective of minor or major customers as seems that the Company offers good service and quality to customers. There are many clients of the Company, especially Chevron, which has reliable to work together for a long time. Previously, the Company has developed in Fabrication Shop, blasting, painting, and expands shop area to support widely customers group and also support of increasing work to current customers. However, the Company still develops business operation and attempts to build more clients; last year, the Company has signed Call-out Services Contract with PTTEP which is a good opportunity to be trusted and reliable to offer more project operation from them.


50 Annual Report 2012 PAE Thailand Company Limited

 Creditors and Suppliers The Company gives obviously information, attempt to pay debt, and follow the purchasing condition of creditors; although the Company is in financial crisis situation last year. The Company performs many solutions to pay creditors legally and accurately. For suppliers, the Company has set policy of operation and purchasing as appropriate, accurate, and reliable which able to be audit.  Alliances and Competitors The Company is always running business with honest, fairness, and respect to all alliances and competitors. Moreover, the Company will not use the information of alliances and competitors to get any advantage to the Company dishonestly as seems that the company never has any accusation with alliances and competitors.  Employees Employees are also heart of the Company to running business effectively. The Company realizes and support to activities which can improve their skills and knowledge for using in the Company’s business or related operation. Due to the Company is running business of engineering and construction, petrochemical industry, and oil and gas services to governments and private companies; therefore, all employees should have more experience, knowledge, and expert skill to satisfy customers’ need. The Company has send employees to train, seminar, and exam to obtain certification. Last year, the Company had set Team Building activity between employees, managements, and directors including stimulating activity in order to show that everyone can work effectively with their skills and knowledge and also be a part of the Company’s success.  Shareholders The Company gives precedence to shareholders by attempting to running business for shareholders’ advantage with effective internal controls. The Company has disclosing transparency and accurately information which shareholders can audit. Shareholders are able to a part of making decision by participate in shareholders’ meeting or contact to the Company in many channel.


51 Annual Report 2012 PAE Thailand Company Limited

8. Disclosure and Reveal Information The Company discloses all transparency and accountability information following the rules and regulation of the Stock Exchange of Thailand and Securities and Exchange Commission i.e. Company Annual Report (Form 56-1), Annual Report, Financial Statement in each quarter, Auditors’ Report, and related transaction of conflict of interest of which will affect to the Company and/or shareholders. Moreover, the Company has disclosed the information of resignation of appointment directors and managements, or assets disposition to public through the following channel:  News and report through the Stock Exchange of Thailand and Securities and Exchange Commission  the Company’s website is www.pae.co.th in topic of Investor Relations 9. Control System and Internal Audit System The Company supports an internal audit system for efficient investigation of the overall organization, but still maintains the smoothness of work flow and practices risk management to inform the Board of Directors regularly. 10. Directors’ Report The Board of Directors should do report includes the balance sheet and income statement as of the most recent fiscal year-end date in the annual report to present at the shareholders’ meeting as regulated by law. In addition, they also include explanations to the financial statements together with the report of the auditor tin the annual report. 11. Responsibilities of the Board of Directors 11.1 Board of Directors Structure  Number of Directors and Position Term The Board of Directors consists of a director who has skills, knowledge, and more experiences in many kinds of business e.g. financial, management, accounting, and auditing which has trained and certificated by institutes which were reputation and reliable in Thailand’s business and also benefit for the Company’s management and governance. Moreover, the Company did not set the specify position term, therefore, in Annual General Shareholders’ Meeting, the onethird of total directors should be rotated. The directors who are rotated according to the term may be re-elected as appropriate and agreed by directors and shareholders.


52 Annual Report 2012 PAE Thailand Company Limited

 Balance of Power for Non-executive Directors The Company sets the elements of directors to be appropriate number, consisting of directors who are representatives of shareholders, directors from internal management, and independent directors in the proportion of one-third each of the total number of Board of Directors.  Segregation of positions The Chairman of the Board of Directors, The Chairman of Executive, The Chairman of Audit Committee, and Managing Director should not be the same person. 11.2 Sub-committees The Company sets up sub-committees to oversee specific issues in order to study the details and work in-depth as necessary, such as Audit Committee has the duty to report the operating performance to the Board of Directors within the specified period and its term is one year. 11.3 Leadership and Vision The Board of Directors has a duty to set up the vision, mission, and policies for operating the business to be able to compete, by having the duties and responsibilities to operate the business to be stable for the balanced and endurable interests of all related parties, as well as continuously creating value for the shareholders. 11.4 Remuneration for Directors and Management The Company pays remuneration to directors in the form of monetary value and other remunerations by comparison within the same industry. Such remunerations have to receive the agreement from the shareholders, and will be disclosed in the annual reports. 11.5 Board of Directors’ Meetings The Board of Directors sets up the meetings at least 4 times per year, and setting the meeting agenda in advance for the whole year. The directors will receive complete information 7 days prior to the meeting date to enable them to make consideration and give ideas circumspectly. 12. Usage of Internal Information Policies and Procedure to Oversee the Management for Using Internal Information The Board of Directors has set up a policy concerning good corporate governance as they recognize that this is an important and necessary issue for the business operation to grow, to inspire confidence, and to comply with such principles.


53 Annual Report 2012 PAE Thailand Company Limited

The Board of Directors has set up the policy and direction for the company by giving importance to the creation of the control system and internal audit to oversee the managements’ efficient performance in accordance with the policy and the interest of the shareholders under the relevant laws and good business ethics. 13. Human Resources As of December 31, 2012, the Company has total number of 1,611 employees; Male and Female employess of 1,138 and 473 accordingly. There were shown number of employee by category as follow: Permanent Montly Employee Temporary Contract Employee Daily Worker

180 Person 117 Person 1,254 Person

The total number of PAE Technical Services Co.,Ltd employees as of December 31, 2012 is 220 person and divived into the following category: Permanent Monthly Employee Temporary Contract Employee Daily Worker

173 Person 4 Person 43 Person

The total number of PAE Construction Resources Co.,Ltd employees as of December 31, 2012 None The transition of employees of PAE Thailand Public Co.,Ltd for the past 3 years: December 2010 Total Employee Number 631 Person December 2011 Total Employee Number 1,178 Person December 2012 Total Employee Number 1,611 Person The transition of employees of PAE Technical Services Co.,Ltd for the past 3 years: December 2010 Total Employee Number 163 Person December 2011 Total Employee Number 181 Person December 2012 Total Employee Number 220 Person The transition of employees of PAE Construction Resources Co.,Ltd for the past 3 years: December 2010 – December 2012 0 Person


54 Annual Report 2012 PAE Thailand Company Limited

14 . Total of remuneration and the employee remuneration The Company has pay the remuneration in salary, overtime, cost of living, traveling expenses and accommodation in case of working in domestic and international including the provident fund as employee capabilities. In year 2012, the Company and its subsidiaries has an employee’s expense in totally 146,978,455.33 million baht (includes daily and monthly rate of the company and its subsidiaries) 15.

Human Resource Development Policy The Company has emphasized on personnel whether management , employee, qualified technician or other workers by providing on new technology accessibility to implement on management administration includes safety training in order to betterment in the quality of environment among its employees. The Company has organized the seminar and training course within company and support the employees to train outside the company. Year 2012, the Company and its subsidiaries have organized the yearly seminar so as to develop the skill manage quality of life and also team building for efficiency and effectively to better equip them for the future.

16.

The Company and its subsidiaries have arranged for employees to attend training course both in-house and outside courses totaling THB 2,436,515.64. Management Process for Quality, Health, Safety and Environmental (QHSE) We, PAE (Thailand) Public Company Limited, strive for Quality Health Safety and Environmental and including Energy Conservation in the Business Operations to ensure that the operation and activities are met the QHSE standard requirement, No injury, No harm to health, No impacts to environment & community and optimize an energy and resource usage. We establish and implement the Health Safety Environment Management System (HSE MS) in our business and comply with standard operating procedures as well. Health Safety and Environment Committee, HSEC PAE has set up the Health Safety and Environmental Committee (HSEC) that consist of representative of employees and employers in equal 50/50 as regulatory requirement. To encourage the employees involvement and support in Health Safety and Environmental by "Everyone" is able to sharing and suggest on Health Safety and Environmental (HSE) to develop and improve our HSE performance. Health Safety and Environmental Performance Indicator To manage the Health Safety and Environmental (HSE) meet PAE's HSE Policy with effectiveness. We set up the Safety Targets for achievement by. 1. No Loss Time Injury Case 2. Total Recordable Injury Rate < 0.5 per 200,000 worked hours.


55 Annual Report 2012 PAE Thailand Company Limited

HSE Performance Achievement and Contribution with Customers By PAE management commitment and support to Health Safety and Environment in 2012. Health Safety and Environmental Performance of PAE is outstanding with No Loss Time Injury, No Spill and No Major Accident from our activities including Customer services such as PTTGC VRU Project, PTTEP S1 Project. As mentioned, PTTEP rewarded the 2012 CEO Contractor Award for SSHE Excellence to PAE (Thailand) Public Company Limited to recognize the HSE is not only for the Company but also our value customers as well.

Legal Disputes during Three years period As of 31 December 2012, the Company has legal dispute with 2 employees in year 2008-2009, By the implementation of the contract, the company had to lay off foreign workers and employ qualified Thai workers instead. Due to the refusal of the foreign workers which lead to the case prosecuted between 2 parties; the Company and the Plantiff as follow: Case 1 : Labor case - Black Case No. 4910/2009 Chaeng Hin Seng (“the Plantiff”) has filed the claim to the Company (“”the Defendant”) for salary and compensation of alleged unfair termination and others of THB 1,684,520.00 million. The company has counter claim for paying indemnity THB 8,684,520 million due to loss of reputation of the Company and liquidated damages in the project as result of the customer claims to the Company. On January 31, 2012, Central Labor Court had judged the company to paid 186,473 bath together with 15% interest per annum of the funds 181,125 bath and 7.5% interest per annum of the funds of 5,348 to the plaintiff from Aug 6, 2010. The case is during trail and both parties are entitled to appeal to the Supreme court. Case 2 : Labour case - Black Case No. 2232/2010 Gregrory Alan Macatry (“the Plantiff”) has filed the claim to the Company (“”the Defendant”) for salary and compensation of alleged unfair termination and others of THB 620,180 baht. The Labour Court has considered date on 29 March 2011 that Company has compensated in the amount of 125,000 THB with 15% interest per annum from 31 Mar 2010. The case is during trial and both parties are entitled to appeal to the Supreme Court. (Labour Department)


56 Annual Report 2012 PAE Thailand Company Limited

Management Profile

1.Mr. Ratanaphon Wongnapachant 2. Mrs. Chintana Kaweewong 3.Mr. Ratchai Pichayapoom 4.Mrs. Sujing Ratanapakorn Executive Director Executive Director Assistant to CFO Account & Finance Managing Director Senior Vice President Vice President Corporate Affair Dept

5.Mr. Tana Iamchinwuth 6. Mr. Gumpon Kupadakvinij 7. Mr. Pragart Chanpet Construction Vice President Oil & Gas Services Vice President Vice President of Business Development 1

8. Mr. Kasem Viriyaskulthorn Vice President of Business Development 2


57 Annual Report 2012 PAE Thailand Company Limited

1. Mr. Ratanaphon Wongnapachant Executive Director / Managing Director Nationality: Thai

2. Mrs. Chintana Kaweewong Executive Director/ Senior Vice President Corporate Affair Dept. Nationality: Thai

Education - BA. Marketing Research Seattle University

Education - Bachelor in Education, Chiangmai University

Experience Present - Executive Director/ Managing Director PAE (Thailand) PLC. - Managing Director PAE Technical Service Co.Ltd. Past - Director, Shinawatra Home Co.,Ltd. - Director, MR Consultanty Co.,Ltd - Director, Sunshine Corporation Co., Ltd - Director, Small and Medium Enterprise Development Bank of Thailand - Director, S.W. Signature Co.,Ltd.

Curriculum Training DAP - Directors Accreditation Program 47/2005 from IOD FND - Finance for Non â&#x20AC;&#x201C; Finance Directors 25/2006 from IOD CSP - Company Secretary Program 24/2007 from IOD DCP - Director Certification Program 104/2008 from IOD

No family Relationship among the management

Experience Present - Executive Director and Senior Vice President, Corporate Affair Department - Director, Spin Biz Co., Ltd Past - Managing Director, Prompiman Real Estate and Development Co., Ltd. - Chief of Export Negotiation Division, Export Department Bangkok Bank PLC. No family Relationship among the management


58 Annual Report 2012 PAE Thailand Company Limited

3. Mr. Ratchai Pichayapoom Assistant to CFO Nationality: Thai Education M.B.A.( Finance ), Utah State University, Utah, USA Bachelor of Business Administration, Kasetsart University Experience Present - Assistant to CFO, PAE (Thailand) PLC. Past - Assistant Vice President,Venture Capital Fund Department, One Asset Management Limited - Assistant Vice President Capital Market Department, Securities One Plc. - Vice President Credit and Marketing Department, Siam Panich Leasing Public Co., Ltd - Assistant to Credit Division Head, Thai Farmers Bank - Manager of Kanchanaburi Branch, SME Bank No family Relationship among the management -

5. Mr. Tana Iamchinwuth Construction Vice President Nationalty: Thai Education Bachelor Degree : B.Eng.(Civil) Chiengmai University English Language Diploma, New York University, New York, U.S.A Experience Present - Construction Vice President, PAE (Thailand) PLC Past - Project Manager, Premsiri Condominium, Dheerapan Panich Co., Ltd. - Executive, Second Banknotes Printing Work Construction Project, Nakornpathom - Engineering Officer, Plant and Storage Construction Project, Dragonholding Co., Ltd. - Site Office Manager, Kohlerâ&#x20AC;&#x2122;s Factory Project - Consultant, Iota (Thailand) Co., Ltd. - Managing Director, Splendy Tees Co., Ltd. (Contractor) No family Relationship among the management

4. Mrs. Sujing Ratanapakorn Account & Finance Vice President Nationality: Thai Education M.B.A.( Accounting ),The University of the Thai Chamber of Commerce Bachelor of Accounting ( Auditing ), The University of the Thai Chamber of Commerce Experience Present - Account & Finance Vice President, PAE (Thailand) PLC. Past - Financial Controller, PAE (Thailand) PLC. - Financial Controller, Nithi Venture PLC. - Account and Finance Manager, Thai Video Industries Ltd. - Accounting and Finance Manager Thai Nippon Concrete Co.,Ltd. - Assistant Account and Finance Manager, Hana Micro PLC. - Accounting Manager, Seagate (Thailand) Co.,Ltd No family Relationship among the management -

6. Mr. Gumpon Kupadakvinij Oil & Gas Services Vice President Nationality: Thai Education Master in Business Management, Asian Institute of Management, Makati, Philippine Bachelor of Science in Industrial Engineering, California Polytechnic State University, San Luis Obispo, California, U.S.A Experience Present - Oil & Gas Services Vice President, PAE (Thailand) PLC Past - Director, Industrial Services, PAE (Thailand) PLC. - Business Development & Marketing Manager, PAE (Thailand) PLC., - Managing Director, APEX Health Care Co., Ltd. - Managing Director, Marble & Stone Co., Ltd.

No family Relationship among the management


59 Annual Report 2012 PAE Thailand Company Limited

7. Mr. Pragart Chanpet Business Development 1 Vice President Nationality: Thai

8. Mr. Kasem Viriyaskultorn Business Development 2 Vice President Nationality: Thai

Education M.B.A. , Thammasat University B.A. Mechanical Engineering, Kasetsart University

Education B.A, Majoring Social Science and Humanity, Thammasart University

Experience Present - Business Development1Vice President, PAE (Thailand)Co.,Ltd. Past - Royal Thai Naval Academy - System Engineer, Seagate Technology Co., Ltd. - Project Coordinator, Wattana Engineering Co., Ltd. - Assistance to Managing Director, Thai Cranes International Co., Ltd. - General Manager, Solitech Co., Ltd.

Experience Present - Business Development 2 Vice President, PAE (Thailand) PLC. Past - Human Resource Vice President, PAE (Thailand) PLC. - Human Resource Manager, Okata (Thailand) Co., Ltd. - Assistant Personal Manager, Pioneer (Thailand) Co., Ltd. - Personnel Staff, Central Trading Co., Ltd.

No family Relationship among the management

No family Relationship among the management


60 Annual Report 2012 PAE Thailand Company Limited

Related Transaction Policy and outlook on related parties’ transactions For any potential related party transaction, the Audit Committee will have to follow the procedures ruled out, and the committee must not approve any transaction that could potentially lead to a conflict of interests including an issue of proxy. Furthermore, the Company will reveal any potential related party transaction to the Board members to ensure those transactions comply with laws issued under the Securities and Exchange Commission, the Stock Exchange of Thailand and Thai GAAP. Under normal trading circumstance, the Company and its related parties set prices according to the market conditions. Like other transactions, all the cases will be reviewed by the Audit Committee. In case where the Audit Committee is required to provide opinions on related party transactions, but committee does not have the expertise – the Company will hire an external expert to review the issue (such as asset valuations). The expert’s report will be used in conjunction with decision making of the Audit Committee. This ultimately ensures that there will be no improper transfer pricing among related parties. There is a related transaction in 2012 as follows: 1. General Information:

To extend the loan repayment period to GPS

Related Party (Loaner): Global Process System Inc. (“GPS”) Relationship with the Company: GPS is major shareholder of the Company who hold 201,075,000 shares, 29.79% of paid-up capital Principle of Loan Outstanding loan - NONE (as of 31st December 2012) Size of Transaction: The transaction is related transaction as rule of the Stock Exchange of Thailand regarding to the disclosure of information and business operation of the listed companies concerning the related transactions B.E. 2546 stated that the related transaction of financial support which is not over 20 MB which the condition of transaction payment is not different from the condition of financial institution, the Company have to inform to the Stock Exchange of Thailand. Condition of transaction: Interest rate 5.0% per year without guarantee, the accumulated interest will be include as a part of total principle paid in next month. On July 31, 2011, the interest was paid and compound interest was discontinued. Reason and Necessity: To extend loan repayment period with Global Process Systems Inc. due to the Company’s illiquidity. On December 25, 2012, the repayment of the principal and interest was paid and compound interest was discontinued.


61 Annual Report 2012 PAE Thailand Company Limited

2. General Information: 2.1 Related Party (Loaner): Relationship with the Company: Principle of Loan Size of Transaction:

Directorâ&#x20AC;&#x2122;s Loan Mrs. Urairat Boonakas Executive Director Outstanding loan 0.54 MB (as of 31st December 2012) The transaction is related transaction as rule of the Stock Exchange of Thailand regarding to the disclosure of information and business operation of the listed companies concerning the related transactions B.E. 2546 stated that the related transaction of financial support which is not over 20 MB which the condition of transaction payment is not different from the condition of financial institution, the Company have to inform to the Stock Exchange of Thailand. Condition of transaction: Interest rate 5.0% per year without guarantee, the accumulated interest will not be calculated total principle paid in next month. Reason and Necessity: The Company has manay project coming; meanwhile, the Company need the funds to purchase the equipments and reserves for labor cost. 2.2 Related Party (Loaner): Mrs.Chintana Kaweewong Relationship with the Company: Executive Director Principle of Loan Outstanding loan 2.62 MB (as of 31st December 2012) Size of Transaction: The transaction is related transaction as rule of the Stock Exchange of Thailand regarding to the disclosure of information and business operation of the listed companies concerning the related transactions B.E. 2546 stated that the related transaction of financial support which is not over 20 MB which the condition of transaction payment is not different from the condition of financial institution, the Company have to inform to the Stock Exchange of Thailand. Condition of transaction: Interest rate 5.0% per year without guarantee, the accumulated interest will not be calculated total principle paid in next month. Reason and Necessity: To reserve for purchase equipment and other projects coming. 2.3 Related Party (Loaner): Mr.Ratanaphon Wongnapachant Relationship with the Company: Managing Director and Executive Director Principle of Loan Outstanding loan 86.90 MB (as of 31st December 2012) Size of Transaction: The transaction is related transaction as rule of the Stock Exchange of Thailand regarding to the disclosure of information and business operation of the listed companies concerning the related transactions B.E. 2546 stated that the related transaction of financial support which is lower 20 MB which the condition of transaction payment is not different from the condition of financial institution, the Company have to inform to the Stock Exchange of Thailand. Condition of transaction: Interest rate 5.0% per year without guarantee, the accumulated interest will not be calculated total principle paid in next month and from July 1, 2012 . Reason and Necessity: To reserve for purchase equipment and other projects coming.


62 Annual Report 2012 PAE Thailand Company Limited

Major Shareholders Equity of the Company General Shares As of 31st December 2012, the Company has registered capital at the amount of 1,350,075,000 Baht with share value 1 Baht; it is paid-up capital at the amount of 1,350,075,000 Baht. Shareholders Top ten major shareholders of the Company, number of shares held, and percentage of shares as of 12th Dec, 2012 are as follows:

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

Name of Shareholders

Number of Shares (Shares)

%

Global Process Systems Inc. (GPS)

201,075,000

14.88

Mr. Ratanaphon Wongnapachant

153,117,199

11.34

MR Consultancy Company Limited

87,243,288

6.46

Mrs. Chintana Kaweewong

67,482,750

4.99

Mr. Sonthat Lappanitpoonpol

37,119,000

2.75

Thai NVDR Co.,Ltd

30,431,500

2.25

Mr. Watchara Kaewsawang

30,000,000

2.22

Mr. Voraphol Thangsombat

26,967,500

1.99

Mr. Atchada Kesornsook

26,300,000

1.94

Mr. Puttipat Ariyatanapark

17,426,500

1.29 50.11

Total Source: Thailand Securities Depository Company Limited as of 12th December 2012

677,162,737


63 Annual Report 2012 PAE Thailand Company Limited

The Company’s Policy on Dividend Payment The Company’s Board of Directors has a policy to propose to the Company’s meeting of the shareholders to pay dividends to the shareholders when the Company does not have accumulated loss. The payment of dividends would be divided according to the number of shares, each at equal amount. The Company may pay interim dividends to the shareholders from time to time when it is deemed that the company has made a reasonable profit to do so, and will report this to the next meeting of shareholders for information; provided that there is no other contingency and the payment of dividends does not materially impact on the normal operation of the Company. Subsidiary Company’s Policy on Dividend Payment The dividend payment policy of the subsidiary companies depends on the results of the respective company’s operation, the need of working capital, and the liquidity of the subsidiary companies in that particular year of operation.


64 Annual Report 2012 PAE Thailand Company Limited

Corporate Social Responsibility Corporate Social & Environmental Responsibility The Company appreciates the opportunity to be in business and is indebted to be given that opportunity. Considered as one of its priority, the company, together with the employees and their families, joins in and supports activities that would benefit the community, society and country in which it operates. Developing and producing process with modern technology that meet customer requirements and expectations is among one of the company priorities. Our qualified employees who are expert in their respective fields work towards achieving and cooperatives with customer to ensure growth and sustainability of the business and industry. All social and environmental activities organized and managed by the company are voluntary and truly for the benefits and betterment of the society. The company does not expect any financial gains from these beneficent activities which are conducted continually in any social & environmental related activities. Above all, our social activities shall be within the scope of good corporate governance which is the key to any long-term and lasting corporate social & environmental responsibility in various prospects as follows:


65 Annual Report 2012 PAE Thailand Company Limited

Employee: The Company is committed to raise labor standard and quality of life for the employees by ensuring a safe work environment and fair treatment to conform to the legal included employee development that the employee are the Company’s most valuable asset and critical factor to its success. The competency model was selected to Human Resource Management so that to maintain and develop our employee. The Company is committed to foster core corporate values and to create friendly work environment and encourage teamwork. Employees are coached to be courteous and to respect each other’s individual rights The Company is committed to developed competency and established corporate value, culture and good work environment with the team effectiveness and respected to the human rights i.e. the company was conduct 5S and Safety week on 17-21 September 2555 that got the good involved from employee. The Company is not support to any exclusion or discrimination in term of nationality, race, religion, language, age, gender, marital status, disability, sexual attitudes, most popular political party or the other personal mind. Moreover, our Human Resource Department was conduct the employee relation i.e. 

Birthday activity for employee in each months to have a birthday cake together and got blessing from Management.

Pour water ceremony on Songkran Day to ask for blessing from the management and to let employee participate and carry on the good culture of Thailand.

Business Operation: Stock Exchange of Thailand has provided the useful information for the registered of listed company for the purpose of good governance guideline which it expressed that the directors has strictly complied with good management standard so as to be trusted by our shareholders , investor and related parties.


66 Annual Report 2012 PAE Thailand Company Limited

Directors of PAE (Thailand) Public Company Limited has recognized on the importance and advantage as above mentioned ; therefore, our Directors has operated it as described in their regulation . For instance , Audit Committee will assist the Board of Directors in providing such information and material of financial statement and related report for internal control with supporting by our auditor and internal audited. Directors has performed their duty with integrity, transparency at their fully capabilities and do not involve in any business with conflict of interest to the Company to comply with the good governance handbook and to be trusted by our shareholders, investor and other related parties as follows:  Equitable treatment to all stakeholders.  Vision to create a long term value and transparency information disclosure in order to maximize advantage to shareholders.  Transparency information disclosure and able to scrutinize to the related parties.  Risk Management Procedure.  Business Ethics. Moreover, PAE was selected by Social Security Office as 1 of 4 company in Bangkok Area 8 and also as 1 of 92 company in Bangkok and perimeter to receipt the prestige prize from Assistant Labor Minister (Mr. Anusorn Kraivatnusorn) in the Free of Debt Road Project 2012 at Social Security Office - Head Office on 28 January 2013.


67 Annual Report 2012 PAE Thailand Company Limited

Customer: The Company is determined to create the outstanding customer satisfaction and confidence in receiving the best quality product and services in order to maintain and develop the quality standard as comply with ISO 9001:2008 (Quality Management System) Community & Environmental: The Company operates and crates the accountability to the society and to support the company employees by offering the opportunity for its employees knowledge , capability as well as drive towards the company’s business which is useful activities to the society and environment. Moreover, the Company has a plan to implement ISO14001 in 2013. Public Welfare:  PAE Caring Team was donated and conduct activity for orphan elder at Elder Orphanage Rangsit Klong 5, Prathumthani province on 8 April 2012.

 PAE Caring Team was donated money and necessary to HIV/AIDS patients at Phrabatnampu Temple, Lopburi province on 7 October 2012 .


68 Annual Report 2012 PAE Thailand Company Limited

ď&#x201A;ˇ Management and Employee was make merit and offer the year candle as the Buddhist Lent Day at Kajornsiri Temple, Soi. On-nuch 45, Bangkok on 26 July 2012.

Energy and Environment Conservation: In order to promote conscious and endorse activities in relation to safety environmental and energy, the Company is aware of conserving the environmental and the quality of life, therefore, the Company has issued the policy concerning global warming by requesting the employees corporation to turn off the electricity and unnecessary electricity includes support to use recycle paper. Safety: The Company has been dedicated for business sustainable growth with efficiency of customers, employees and related parties especially for the betterment of community in the factory area and construction project. The company has approached to corporate responsibility in order to consistent with global standard, policy and other terms. In 2012, PAE (Thailand) at Rayong Fabrication Yard achieved the Outstanding HSE Performance by Working with No Loss Time Injury One Million (1,000,000) Worked Hours. This achievement is presented the HSE commitment from Everyone and PAE (Thailand) Public Company.


69 Annual Report 2012 PAE Thailand Company Limited

In 2012, PAE (Thailand) at Bangkok Head Office conducted the Basic Fire Fighting Training and Fire Drill to educate all employees are able to response an emergency fire case with safety. All employees have attend and participated the program meet the objectives and regulatory requirement.

Labor and Human Rights Employment The Company has 1,611 employees, all of whom are Thai nationals (as of December 2012). There is a diversity of age, gender, educational background and work specifications, as well as the equality of gender, race, religion and culture. In 2012, in order to meet the requirements posed by the project and increase efficiency in the operation of various units, the Company recruited more employees based on recruitment standards of written tests and interviews. Therefore, the number of employees exceeded that of last year. Employee by Level  Management Level  Manager Level  Supervisor Level  Operation Level

10 persons 30 persons 22 persons 1,549 persons


70 Annual Report 2012 PAE Thailand Company Limited

Employee by Location  Head Office 99 persons  Songkhla branch 289 persons  Rayong branch 189 persons  Kampeangpetch (Lankrabue) 265 persons  Construction Project (All) 769 person Turn Over Rate  2010 turnover rate 1.8%  2011 turnover rate 3.9%  2012 turnover rate 4.1% Human Rights The Company respects human rights and abides by labor laws. Its employees and contract employees must be at least 18 years old. It has no policy of hiring child labor or practicing forced labor or gender discrimination As for contract employees, it requires that contractors treat their workers as required by labor laws, social security, compensation laws and others related to labor protection. Otherwise, contractors will be regarded as violating their contracts, for which the Company can revoke their contracts without prior notice. Compensation Management The Company’s compensation management is administered with fairness, suitability to the employees’ responsibilities and competence. The Company has also adjusted its compensation to compete with peer companies and attract competent people to work with it and stimulate current employees to improve their performances. Employee Development Its culture is based on the concept of “being virtuous, knowledgeable and contributive to the society”, leading to a company of excellence. In addition, the Company regards it as everyone’s responsibility to develop and promote knowledge sharing among its personnel.


71 Annual Report 2012 PAE Thailand Company Limited

Report of Audit Committees to Shareholders Good corporate governance has always been prioritized by the Audit Committee as its operation target whether it is statutory provisions, rules and regulations set forth by other relevant agencies and internal guidelines adopted by the Company so as to base the Company’s businesses on ethical principles and to satisfy stakeholders. The Audit Committee by 3 independent members holding qualifications as required by the criteria set out by the SET as follows: 1. Sub.Lt.Saroj Sawangridhi Chairman 2. Mr. Thavisakdi Tanta-nanta Member of the Committee 3. Mrs. Apiporn Pasawat Member of the Committee During the fiscal year 2012, the Audit Committee held ninth meetings with the attendance of the Company’s top management and head of internal audit section in the purpose of reviewing and verifying the findings of the report including recommendation and exchanging comments. Moreover, the Company’s auditors also were invited to attend the meetings in order to express their opinion on the Company Financial Statements. The Audit Committee had performed activities which can be concluded as following: 1. Reviewed of quarterly, annual, and consolidated financial statements of 2012 in respect of accuracy and completeness of the financial statements and sufficiency of information disclosure. These questions ensured that the prepared financial statements complied with legal and accounting standard requirements under the generally accepted accounting principles. 2. Reviewed the compliance with the provisions of laws on securities and exchange and the relevant rules and regulations on business, included systematically conducted in accordance with the good internal control system and the corporate governance is transparent. 3. Monitored the Company’s internal audit activities are sufficient, proper, and efficient in accordance with the international standards. 4. Assessed the Company’s internal control system and informed management for responses if issues found, which some issues are on corrective action. The Audit Committee also supports the internal control system development in order to gain more efficiency and effectiveness within the system.


72 Annual Report 2012 PAE Thailand Company Limited

5. Considered the related transactions or the transactions which may have conflict of interest, including having suitable disclosure. The Audit Committee provided an opinion that such transactions are reasonable and for the optimum benefit to the Company’s business operations and all stakeholders to comply with the Stock Exchange of Thailand’s regulations. 6. With respect to the audit on financial statements and audit fee for 2013, the Audit Committee had considered qualifications of the auditors approved by the SEC and was of the view that Ms.Wanraya Puttasatiean, CPA registration No. 4387 or Ms.Chantra Wongsriudomporn, CPA registration No. 4996 from S.K. Accountant Services Ltd. should be nominated to the shareholders’ meeting to be appointed as the Company’s auditor for fiscal year 2013. The Committee attaches great importance to good internal control so that PAE may command good corporate governance, sufficient internal control compatible with its business of optimum benefits for all stakeholders.

Dated 27 February 2013 On behalf of the Audit Committee                                               ( Sub.Lt.Saroj Sawangridhi ) Chairman of the Audit Committee PAE (Thailand) Public Company Limited


73 Annual Report 2012 PAE Thailand Company Limited

Management Discussion and Analysis of the Consolidate Financial Statement

Operating Performance Assets As of December 31st 2012, the company and its subsidiaries had the total asset of 1,878.65 MB. The amount had increased from 2011 by 38.50%. By this, the current assets had been increased from 1,057.96 MB in 2011 to 1,468.73 MB in 2012 due to the increase of accounting receivables and other debtors on the net amount of 103.50 MB and the increasing of undue account receivables on the net amount of 224.09 MB while non-current securities had increased from 298.42 MB in 2011 to 409.93 MB at the end of 2012 mostly due to the increase of the property, building and equipments in total amount of 112.62 MB. Liabilities As of December 31st, 2012, the company and its subsidiaries had the total liabilities of 1,763.47 MB, the percentage of which increased by 34.11%. The current liabilities had increased from 1,102.72 MB in 2011 to 1,512.37 MB in 2012. The current liabilities from trade account payable had increased from 2011 to 2012 for 163.67 MB, the short term loan liabilities had increased to 41.94 MB and the customerâ&#x20AC;&#x2122;s advance payment amount increased to 34.59 MB. On the other hand, the amount of non-current liabilities in 2012 were 251.09 million baths which had increased from 2011 by 212.18 MB. By this, the non-current liabilities that had increased was the long-term loan from financial institution with the amount of 182.22 MB while the long-term loan affiliate loans was reduced by 148.95 MB. Shareholders As of December 31st 2012, the company and its subsidiaries were having 115.19 MB worth of shareholders. The amount had increased from 2011 by 73.40 MB. The majority of the turnovers were coming from the company and its subsidiaries and also the increase of capital to an existing shareholders offer at 0.60 baht per share in total value of 405.02 MB. On the other hand, the trade deficits in 2012 is 331.32 MB. Operating Performances In 2012, the company had the revenues from sales and services for 1,668.74 MB and in 2011 for 1,487.45 MB with the differences of 181.29 MB. The majority of the revenues were from construction businesses for 747.03 MB, engineering and oil & gas businesses for 495.12 MB, and the fabrication and installation business for 426.59 MB. In 2012, the company had an amount of 1,863.32 on sales and service cost or 111.66% on the total revenues. The construction cost accounted for 1,022.88 MB, by this, there were 3 completed construction projects incurred cost more than the value of the engineering project value and oil & gas service values of 427.68 MB as well as the fabrication and installation for 412.76 MB.


74 Annual Report 2012 PAE Thailand Company Limited

In 2012, the company had an amount of 3.89 MB on expense from sales and services. The management expense amounted 92.38 MB increased by 13.13 MB from the end of year 2011 and the company had doubtful debt in amount of 21.68 MB in year 2012. Liquidity In 2011, the company and subsidiaries had a net deficit of 331.32 million baths. In this deficits, there are depreciation expenses for 41.15 MB, doubtful debts (Reversal) of 17.64 MB as non-cash deficits, the company and affiliates operational cash for 365.82 million baths while the company and affiliates had current cash flow for investment activities for 73.27 million baths, and the cash flow from provisional activity 426.14 million baths which also include the raise of capital amount of 405.00 MB. These had made cash balance and equivalent reduced by 12.96 million baths. Audit Fee (Unit: THB)

Company

Audit Fee (Quarterly Review) 3 Quarters

Audit Fee (Annual 2012)

PAE (Thailand) Public Company Limited PAE Technical Service Company Limited Oasis Development Company Limited PAE Construction Resources Company Limited Pacific Resources International Limited (BVI) Joint Venture PAE and Sri-uthong

450,000 192,000 15,000 15,000 15,000 15,000

550,000 130,000 15,000 15,000 5,000 15,000


75 Annual Report 2012 PAE Thailand Company Limited

Auditor’s Report To the Shareholders and Board of Directors of PAE (THAILAND) PUBLIC COMPANY LIMITED I have audited the accompanying consolidated and separate financial statements of PAE (THAILAND) PUBLIC COMPANY LIMITED and its subsidiaries and of PAE (THAILAND) PUBLIC COMPANY LIMITED, which comprise the consolidated and separate statements of financial position as of December 31, 2012, and the consolidated and separate statements of comprehensive income, the consolidated and separate statements of changes in shareholders’ equity and the consolidated and separate statements of cash flow for the year then ended, and a summary of significant accounting policies and explanatory information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error. Auditor’s Responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.


76 Annual Report 2012 PAE Thailand Company Limited

Opinion In my opinion, the consolidated and separate financial statements present fairly, in all material respects, the financial position of PAE (THAILAND) PUBLIC COMPANY LIMITED and its subsidiaries and of PAE (THAILAND) PUBLIC COMPANY LIMITED as of December 31, 2012, and their financial performance and cash flows for the year then ended in accordance with Financial Reporting Standards

S.K. ACCOUNTANT SERVICES COMPANY LIMITED

(Wanraya Puttasatiean) Authorized Auditor No. 4387

Bangkok, February 28, 2013


77 Annual Report 2012 PAE Thailand Company Limited

Financial Statement PAE (THAILAND) PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As of December 31, 2012 and 2011 As of December 31 As of January 1 Notes 2012 2011 2011 Baht Baht Baht ASSETS CURRENT ASSETS Cash and Cash Equivalents 7 13,623,928.32 26,581,148.61 31,185,561.79 Trade and Other Receivables - Net 8 306,552,923.07 203,056,404.48 201,573,144.29 Unbilled Receivables 9 780,718,379.09 556,625,055.69 164,355,872.94 Retention Receivables as Contracts 81,747,547.73 33,195,451.50 17,232,509.54 Account Receivables, Short - Term Loans and Accrued Interest Income to Other Parties 10 Net Short - Term Loans to Subsidiary Companies and Joint Ventures - Net 31.2 401,287.16 2,214,432.26 Inventories - Net 11 226,430,936.66 228,578,272.13 49,563,654.71 Other Current Assets 59,652,918.18 9,524,894.41 6,530,430.64 TOTAL CURRENT ASSETS 1,468,726,633.05 1,057,962,513.98 472,655,606.17 NON - CURRENT ASSETS Restricted Deposits Investments in Joint Ventures Investment Property - Net Property, Plant and Equipment - Net Intangible Assets - Net Other Non - Current Assets TOTAL NON - CURRENT ASSETS TOTAL ASSETS

13 14 15 16

5,017,371.34 39,822,066.72 353,871,652.44 8,492,267.39 2,725,391.40 409,928,749.29

5,964,315.87 39,258,369.40 241,256,769.78 9,352,290.73 2,591,285.94 298,423,031.72

5,564,547.64 39,932,072.08 233,477,920.80 10,933,311.02 1,627,459.00 291,535,310.54

1,878,655,382.34

1,356,385,545.70

764,190,916.71


78 Annual Report 2012 PAE Thailand Company Limited

Notes LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Bank Overdrafts and Short - Term Borrowings from Financial Institutions Trade and Other Payables Advances Received from Construction Contracts Retention for Construction Unbilled Cost Current Portion of Long - Term Liabilities Long - Term Borrowings from Financial Institutions Long - Term Borrowings from Related Parties Finance Lease Liabilities Short - Term Borrowings from Other Parties and Persons Short - Term Borrowings from Related Persons Current Income Tax Payable Other Current Liabilities

17, 18 19

TOTAL NON - CURRENT LIABILITIES

TOTAL LIABILITIES

As of January 1 2011 Baht

116,203,178.88 490,648,828.64

202,036,004.58 326,977,374.93

108,509,337.59 194,425,742.80

164,815,534.61

130,266,571.87

95,158,416.84

32,901,909.38 464,527,021.06

25,245,878.34 293,694,692.12

19,089,530.23 18,892,691.25

113,427,619.09

40,626,105.44

57,428,681.74

-

-

138,926,238.50

22

2,489,612.93

1,712,963.70

2,585,459.29

20

34,354,783.50

31,389,587.58

30,144,179.98

31.2

92,563,771.00

50,625,000.00

2,625,000.00

64,253.10 373,270.35 1,512,369,782.54

64,253.10 82,298.28 1,102,720,729.94

64,253.10 79,999.00 667,929,530.32

21

238,600,714.19

56,382,329.88

90,664,394.36

31.2

-

148,952,695.80

-

22 23

4,080,717.28 8,417,703.80 251,099,135.27 1,763,468,917.81

2,808,625.30 4,041,132.17 212,184,783.15 1,314,905,513.09

1,097,643.96 91,762,038.32 759,691,568.64

21

TOTAL CURRENT LIABILITIES

NON - CURRENT LIABILITIES Long - Term Borrowings from Financial Institutions - Net Long - Term Borrowings from Related Parties Finance Lease Liabilities - Net Employee Benefit Obligation

As of December 31 2012 2011 Baht Baht


79 Annual Report 2012 PAE Thailand Company Limited

As of December 31 Notes SHAREHOLDERS' EQUITY Share Capital Authorized Share Capital 24 1,350,075,000 Ordinary Shares @ Baht 1.00 981,106,362 Ordinary Shares @ Baht 1.00 Issued and Paid - Up Share Capital 1,350,075,000 Ordinary Shares @ Baht 1.00 675,037,500 Ordinary Shares @ Baht 1.00 Share Premium Account Discount on Issue of Share Retained Earnings Other Components of Equity SHAREHOLDERS' EQUITY OF THE COMPANY

Non-Controlling Interests TOTAL SHAREHOLDERS' EQUITY TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

2012 Baht

As of January 1

2011 Baht

2011 Baht

1,350,075,000.00

-

-

-

981,106,362.00

981,106,362.00

1,350,075,000.00

-

-

10,053,750.00 (496,615,000.00) (821,041,236.85) 72,694,344.88

675,037,500.00 10,053,750.00 (226,600,000.00) (488,365,320.77) 71,659,540.80

675,037,500.00 10,053,750.00 (226,600,000.00) (526,896,850.33) 72,904,948.40

115,166,858.03

41,785,470.03

4,499,348.07

19,606.50 115,186,464.53

(305,437.42) 41,480,032.61

4,499,348.07

1,878,655,382.34

1,356,385,545.70

764,190,916.71


80 Annual Report 2012 PAE Thailand Company Limited

PAE (THAILAND) PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES SEPARATE STATEMENTS OF FINANCIAL POSITION As of December 31 As of January 1 Notes 2012 2011 2011 ASSETS Baht Baht Baht CURRENT ASSETS Cash and Cash Equivalents 7 8,632,425.58 19,009,184.83 26,295,749.27 Trade and Other Receivables - Net 8 276,916,692.61 177,336,022.59 204,474,801.52 Unbilled Receivables 9 772,497,965.36 549,175,425.05 137,976,691.68 Retention Receivables as Contracts 81,521,209.41 32,453,875.64 15,179,096.86 Account Receivable, Short - Term Loans and 10 Accrued Interest Income to Other Party - Net Short - Term Loans to Subsidiary Companies 31.2 1,337,623.88 4,771,251.80 and Joint Ventures - Net 11 222,575,143.96 226,191,064.78 42,565,357.63 Inventories - Net 59,652,918.17 9,524,894.41 3,908,906.26 Other Current Assets TOTAL CURRENT ASSETS 1,421,796,355.09 1,015,028,091.18 435,171,855.02 Restricted Deposits Investments in Subsidiaries - Net Investments in Joint Ventures Investment Property - Net Property, Plant and Equipment - Net Intangible Assets - Net Other Non - Current Assets TOTAL NON - CURRENT ASSETS TOTAL ASSETS

12 13 14 15 16

4,000,000.00 35,000,000.00 35,562,945.76 310,107,969.93 8,272,796.12 2,033,041.40 394,976,753.21

4,201,001.28 35,000,000.00 35,585,545.76 221,040,965.77 9,089,970.27 440,384.49 305,357,867.57

4,001,001.28 35,000,000.00 35,585,545.76 219,466,474.89 10,628,170.55 58,020.00 304,739,212.48

1,816,773,108.30

1,320,385,958.75

739,911,067.50


81 Annual Report 2012 PAE Thailand Company Limited

Notes LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES

As of December 31 2012 2011 Baht Baht

As of January 1 2011 Baht

17 Bank Overdrafts and Short - Term Borrowings from Financial Institutions Trade and Other Payables

18 19 Advances Received from Construction Contracts Retention for Construction Unbilled Cost Current Portion of Long - Term Liabilities Long - Term Borrowings from Financial 21 Institutions Long - Term Borrowings from Related Parties Finance Lease Liabilities 22 Short - Term Borrowings from Related Persons 31.2 Other Current Liabilities TOTAL CURRENT LIABILITIES NON - CURRENT LIABILITIES Long - Term Borrowings from Financial Institutions - Net 21 Long - Term Borrowings from Related Parties 31.2 Finance Lease Liabilities - Net 22 Employee Benefit Obligation 23 TOTAL NON - CURRENT LIABILITIES TOTAL LIABILITIES

112,923,998.07 466,090,859.01 164,815,534.61 32,865,029.48 464,527,021.06

199,081,229.73 306,082,851.88 130,266,571.87 25,116,498.44 293,694,692.12

108,218,615.64 158,073,657.66 95,158,416.84 19,052,650.33 18,892,691.25

110,559,245.41

38,124,331.25

55,319,320.33

1,127,352.94 90,063,771.00 373,134.92 1,443,345,946.50

600,642.45 50,625,000.00 82,299.93 1,043,674,117.67

138,926,238.50 1,936,022.64 2,625,000.00 80,000.00 598,282,613.18

230,913,201.63 1,776,418.81 5,519,249.40 238,208,869.84

54,731,113.78 148,952,695.80 1,055,550.00 2,611,619.20 207,350,978.78

88,478,453.94 192,042.46 88,670,496.40

1,681,554,816.34

1,251,025,096.45

686,953,109.58


82 Annual Report 2012 PAE Thailand Company Limited

Notes SHAREHOLDERS' EQUITY Share Capital Authorized Share Capital 1,350,075,000 Ordinary Shares @ Baht 981,106,362 Ordinary Shares @ Baht Issued and Paid - Up Share Capital 1,350,075,000 Ordinary Shares @ Baht 675,037,500 Ordinary Shares @ Baht Share Premium Account Discount on Issue of Share Retained Earnings TOTAL SHAREHOLDERS' EQUITY

As of December 31 2012 2011 Baht Baht

As of January 1 2011 Baht

24 1.00 1.00

1,350,075,000.00 -

981,106,362.00

981,106,362.00

1.00 1.00

1,350,075,000.00 10,053,750.00 (496,615,000.00) (728,295,458.04) 135,218,291.96

675,037,500.00 10,053,750.00 (226,600,000.00) (389,130,387.70) 69,360,862.30

675,037,500.00 10,053,750.00 (226,600,000.00) (405,533,292.08) 52,957,957.92

1,816,773,108.30 1,320,385,958.75

739,911,067.50

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


83 Annual Report 2012 PAE Thailand Company Limited

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

Notes Revenue from Sales and Services Cost of Sales and Services GROSS PROFIT (LOSS) Other Income Selling Expense Administrative Expense Doubtful Debts Reversal for Doubtful Debts Finance Costs PROFIT (LOSS) BEFORE INCOME TAX Tax Expense 26 PROFIT(LOSS) FOR THE YEAR

CONSOLIDATED FINANCIAL STATEMENTS 2012 2011 Baht Baht

SEPARATE FINANCIAL STATEMENTS 2012 2011 Baht Baht

1,668,744,456.10

1,487,449,756.59

1,516,671,791.26

1,367,531,133.61

(1,863,322,324.63)

(1,359,511,576.53)

(1,744,959,751.05)

(1,279,090,485.60)

(194,577,868.53) 27,031,017.08 (3,887,684.62) (92,380,176.87) (21,680,216.98)

127,938,180.06 9,555,406.91 (5,565,729.07) (77,567,084.36) (6,012,877.05)

(228,287,959.79) 29,465,890.32 (3,887,684.62) (78,011,635.38) (16,778,794.78)

88,440,648.01 13,653,412.94 (5,565,729.07) (66,213,549.70) (4,650,820.04)

1,782,874.58

22,104,007.96

340,661.25

20,156,649.91

(44,957,230.99)

(30,371,227.60)

(42,005,547.34)

(29,417,707.67)

(328,669,286.33)

40,080,676.85

(339,165,070.34)

16,402,904.38

(3,681,585.83) (332,350,872.16)

(1,854,584.71) 38,226,092.14

(339,165,070.34)

16,402,904.38

OTHER COMPREHENSIVE INCOME Exchange Differences on Translating Financial Statement Foreign Operation 1,034,804.08

(1,245,407.60)

-

-

(331,316,068.08)

36,980,684.54

(339,165,070.34)

16,402,904.38

(332,675,916.08) 325,043.92 (332,350,872.16)

38,531,529.56 (305,437.42) 38,226,092.14

TOTAL COMPREHENSIVE INCOME (EXPENSES) FOR THE YEAR

Profit(Loss) Attributable to Equity Holders of the PAE (THAILAND) PUBLIC COMPANY LIMITED

Non - Controlling Interests


84 Annual Report 2012 PAE Thailand Company Limited

Total Comprehensive Income (Expense) Attributable to Equity Holders of the PAE (THAILAND) PUBLIC (331,641,112.00) COMPANY LIMITED Non - Controlling Interests 325,043.92 (331,316,068.08) BASIC EARNING (LOSS) PER SHARE OF PAE (THAILAND) PUBLIC COMPANY LIMITED

27

(0.44)

37,286,121.96 (305,437.42) 36,980,684.54

0.06

(0.45)

0.02


85 Annual Report 2012 PAE Thailand Company Limited

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011 CONSOLIDATED FINANCIAL STATEMENTS

Notes

Balance as of December 31, 2010

-

Issued and Paid - up Share Capital

Share Premium Account

Discount on Issue of Share

(Deficits)

Baht

Baht

Baht

Baht

675,037,500.00

10,053,750.00

Total Comprehensive Income (Expense) for the Year Balance as of December 31, 2011 Capital Increase

24 -

675,037,500.00

10,053,750.00

675,037,500.00

-

Total Comprehensive Income (Expense) for the Year Balance as of December 31, 2011

-

1,350,075,000.00

10,053,750.00

(226,600,000.00) (526,896,850.33) -

38,531,529.56

(226,600,000.00) (488,365,320.77)

Other Components of Equity Exchange Differences on Transalating Total Financial Statement Foreign Operation

NonControlling Interests

Total

Baht

Baht

Baht

Baht

72,904,948.40

4,499,348.07

-

4,499,348.07

(1,245,407.60)

37,286,121.96

(305,437.42)

36,980,684.54

71,659,540.80

41,785,470.03

(305,437.42)

41,480,032.61

(270,015,000.00)

-

-

405,022,500.00

-

405,022,500.00

-

(332,675,916.08)

1,034,804.08

(331,641,112.00)

325,043.92

(331,316,068.08)

(496,615,000.00) (821,041,236.85)

72,694,344.88

115,166,858.03

19,606.50

115,186,464.53


86 Annual Report 2012 PAE Thailand Company Limited

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011 SEPARATE FINANCIAL STATEMENTS

Notes

Balance as of December 31, 2010

-

Issued and Paid - up Share Capital Baht 675,037,500.00

Share Premium Account

Discount on Issue of Share

(Deficits)

Total

Baht 10,053,750.00

Baht (226,600,000.00)

Baht (405,533,292.08)

Baht 52,957,957.92

(389,130,387.70) -

16,402,904.38 69,360,862.30 405,022,500.00 (339,165,070.34)

(728,295,458.04)

135,218,291.96

Total Comprehensive Income (Expense) for the Year

-

-

24 Balance as of December 31, 2011 Capital Increase Total Comprehensive Income (Expense) for the Year

675,037,500.00 675,037,500.00

10,053,750.00 -

(226,600,000.00) (270,015,000.00) -

1,350,075,000.00

10,053,750.00

(496,615,000.00)

Balance as of December 31, 2012


87 Annual Report 2012 PAE Thailand Company Limited

STATEMENTS OF CASH FLOW FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011 CONSOLIDATED SEPARATE FINANCIAL STATEMENTS FINANCIAL STATEMENTS Notes 2012 2011 2012 2011 Baht Baht Baht Baht CASH FLOW FROM OPERATING ACTIVITIES Profit(Loss) before Income Tax (328,669,286.33) 40,080,676.85 (339,165,070.34) 16,402,904.38 Adjustment to Profit(Loss) before Income Tax for Cash Received (Paid) from Operations Depreciation-Property, Plant and 38,952,326.08 28,028,308.43 33,168,447.91 23,039,455.02 Equipment Depreciation-Investment Property 673,702.68 673,702.68 Amortization Expense - Intangible 1,532,609.58 1,358,491.15 1,489,760.39 1,315,671.14 Assets (Reversal) Loss from Impairment (13,069,904.42) (1,009,086.09) (13,105,500.00) Property, Plant and Equipment Reversal Loss from Impairment (3,256,000.00) (1,996,000.00) Investment Property (Reversal)Doubtful Debts-Trade and 17,640,396.62 (16,924,813.28) 14,126,298.15 (16,425,588.72) Other Receivables Doubtful Debts - Accrued Interest 2,143,814.08 833,682.37 2,111,084.68 801,042.39 Income Other Related Companies Doubtful Debts - Accrued Interest 87,619.00 118,716.46 Income Subsidiary Company Doubtful Debts - Retention 113,131.70 113,131.70 Receivables as Contracts (Reversal) Loss from Decline in Value (341,959.45) (341,959.45) of Inventories Gain from Sales of Fixed Assets (1,728,848.15) 762,288.63 (679,918.02) Loss from Written - off of Fixed Assets 3,278.58 3,278.58 Loss from Written - off of Intangible 912,742.90 912,742.90 Assets Employee Benefit Obligation 4,492,571.63 4,041,132.17 2,907,630.20 2,611,619.20 Fine Fee Construction Delaying

26,925,091.76

-

26,925,091.76

-


88 Annual Report 2012 PAE Thailand Company Limited

CASH FLOW FROM OPERATING ACTIVITIES (CONTINUE) (Gain) Loss from Unrealized 3,930.23 772,275.99 Exchange Rate Interest Income (2,659,407.84) (5,053,806.60) Interest Expense 44,957,230.99 30,371,227.59 Profit (Loss) from Operating Activities before Changes in Operating (211,945,362.81) 84,504,863.34 Assets and Liabilities (Increase) Decrease in Operating Assets Trade and Other Receivables (104,336,901.06) 10,842,223.77 Unbilled Receivables (224,093,323.40) (392,269,182.75) Retention Receivable as Contracts (48,665,227.93) (15,962,941.96) Inventories (31,477,408.07) (178,672,657.97) Other Current Assets (50,128,023.77) (2,994,463.77) Other Non - Current Assets (1,984,105.46) (963,826.94) Increase (Decrease) in Operating Liabilities Trade and Other Payables 113,176,835.38 128,129,228.28 Advances Received from 34,548,962.74 35,108,155.03 Construction Contracts Retention for Construction 7,656,031.04 6,156,348.16 Unbilled Cost 170,832,328.94 274,802,000.87 Other Current Liabilities 290,972.07 2,299.28 Cash Received (Paid) from (346,125,222.33) (51,317,954.66) Operating Activities Cash Received from Interest Income 570,905.47 577,831.27 Cash Payment in Employee Benefit (116,000.00) Obligation Cash Received in Income Tax 30,625,294.13 Cash Payment in Income Tax (20,152,114.56) (27,572,920.68) Net Cash Provided (Used) from (365,822,431.42) (47,687,749.94) Operating Activities

3,097.64

772,275.99

(2,567,744.84) 42,005,547.34

(4,862,613.98) 29,417,707.67

(234,573,245.85)

53,761,973.00

(95,024,084.21) (223,322,540.31) (49,180,465.47) (30,008,822.72) (50,128,023.76) (1,592,656.91)

38,903,490.74 (411,198,733.37) (17,274,778.78) (183,283,747.70) (5,615,988.15) (382,364.49)

109,128,924.23

145,334,988.95

34,548,962.74

35,108,155.03

7,748,531.04 170,832,328.94 290,834.99

6,063,848.11 274,802,000.87 2,299.93

(361,280,257.29)

(63,778,855.86)

531,934.77

366,320.93

-

-

(18,579,012.54)

30,625,294.13 (25,689,376.50)

(379,327,335.06)

(58,476,617.30)


89 Annual Report 2012 PAE Thailand Company Limited

CASH FLOW FROM INVESTING ACTIVITIES (Increase) Decrease in Restricted 946,944.53 Deposits Cash Received from Short-Term Loans to Joint Ventures 401,287.16 Cash Payment from Short-Term Loans to Joint Ventures Cash Payment from Short-Term Loans to Subsidiary Companie Cash Received from Short-Term Loans to Subsidiary Companie Cash Received from Short-Term Loans and Accued InterestIncome of Other Parties Cash Reveived from Sales of Fixed Assets 2,460,502.15 Cash Payment from Purchase of Fixed Assets (76,406,022.30) Cash Reveived from Purchase Intangible Assets (672,586.24) Net Cash Provided (Used) from Investing Activities (73,269,874.70) CASH FLOW FROM FINANCING ACTIVITIES Increase (Decrease) in Bank (85,832,825.70) Overdrafts and Short - Term Borrowings from Financial Institutions Cash Received from Short - Term Borrowings from Other Persons 8,500,000.00 Cash Payment from Short - Term Borrowings from Other Persons (4,500,000.00) Cash Received from Short - Term Borrowings from Subsidiary Companies Cash Payment from Short - Term Borrowings from Subsidiary Companies -

(399,768.23)

201,001.28

(200,000.00)

3,631,648.93

1,337,623.88

7,386,590.91

(1,818,503.83)

-

(3,992,126.74)

-

-

2,000,000.00

-

(87,619.00)

(2,079,552.71)

3,040,000.00

-

3,040,000.00

393,278.08

1,365,000.00

(32,614,732.20)

(50,937,125.24)

(22,497,123.46)

(690,213.76)

(672,586.24)

(690,213.76)

(28,458,291.01)

(48,793,705.32)

(17,032,425.76)

93,526,666.99

(86,157,231.66)

90,862,614.09

6,000,000.00

-

-

(6,000,000.00)

-

-

-

5,400,000.00

-

-

(5,400,000.00)

-

-


90 Annual Report 2012 PAE Thailand Company Limited

CASH FLOW FROM FINANCING ACTIVITIES (CONTINUE) Cash Payment from Long - Term Borrowings and Accrued Interest Expense from Related Parties (155,667,776.35) Cash Received from Long - Term Borrowings from Financial Institutions 333,816,897.95 2,363,380.00 Cash Payment from Long - Term Borrowings from Financial Institutions (78,796,999.99) (53,448,020.78) Cash Received from Long - Term Borrowings from Related Persons 137,812,800.00 60,550,000.00 Cash Payment from Long - Term Borrowings from Related Persons (95,874,029.00) (12,550,000.00) Cash Payment from Finance Lease Liabilities (3,161,237.63) (2,339,996.32) Cash Payment from Interest Expense (35,184,243.45) (16,560,402.12) Cash Received from Increase Capital 405,022,500.00 Net Cash Provided (Used) from Financing Activities 426,135,085.83 71,541,627.77 Net Increase (Decrease) in Cash and Cash Equivalents (12,957,220.29) (4,604,413.18) Cash and Cash Equivalent at the Beginning of the Period 7 26,581,148.61 31,185,561.79 Cash and Cash Equivalent at the Ending of the Period 7 13,623,928.32 26,581,148.61

(155,667,776.35)

-

324,516,897.95

-

(75,899,895.94)

(50,942,329.24)

131,312,800.00

60,550,000.00

(91,874,029.00)

(12,550,000.00)

(1,419,748.01)

(2,246,917.01)

(32,089,235.85)

(17,450,889.22)

405,022,500.00

-

417,744,281.13

68,222,478.62

(10,376,759.25)

(7,286,564.44)

19,009,184.83

26,295,749.27

8,632,425.58

19,009,184.83


91 Annual Report 2012 PAE Thailand Company Limited

Notes for Financial Statement 1. General Information The Company was registered as a public company in accordance with the code of civil and commercial law on May 29, 1995, registration number 0107538000291 (Bor Mor Jor 552) with its registered head office located at 69 Soi On-nuch 64, Srinakarin Road, Suanluang, Bangkok. The principal business operations of the group are civil construction, engineering and industrial services. Financial Position For the year ended December 31, 2012, the Group Company has net loss according to the consolidated and separate financial statements amount of Baht 332.35 million and Baht 339.17 million, respectively and as of December 31, 2012, the Group Company has current liabilities in excess of current assets according to the consolidated and separate financial statements amount of Baht 43.64 million and Baht 21.55 million, respectively, as of December 31, 2011, the Group Company has current liabilities in excess of current assets according to the consolidated and separate financial statements amount of Baht 44.76 million and Baht 28.65 million, respectively. However, the Company has investment in fixed asset and emphasized business that generates profit , for design engineering sector, service rendered to petrol and gas business sector, maintenance sector and non-destructive examination service sector (Non Destructive Testing) and the company has been auction for Oil and Gas Exploration. The project will generate more profit to the Company. In respect of solving the financial status and liquidity, the Company has considered to raise fund by right offering for common stocks, to expand credit line with banks and to search for new source of funds. Therefore, the Company’s financial statements are in accordance with generally accepted accounting principles in ongoing basis.

2. Basis of Preparation 2.1

2.2

2.3

2.4

The financial statements have been prepared in accordance with Financial Reporting Standards of Thailand including related interpretations and guidelines promulgated by the Federation of Accounting Professions, applicable rules and regulations of the Securities and Exchange Commission and The Stock Exchange of Thailand. The financial statements were presented in compliance with the notifiaction of Department of Business Development regarding “Brief particulars must be contained in financial statements B.E. 2554” dated on September 28, 2011, notified according to Accounting Act B.E. 2543. In order to prepare the financial statements to comply with financial reporting standards, the Company’s management had to make some estimates and suppositions which may have an effect on the amount shown for revenues, expenses, assets and liabilities and also on the disclosures concerning assets and contingent liabilities, therefore the actual result may differ from the estimated amount. For the convenience of the user, an English translation of the consolidated and separate financial statements has been prepared from the statutory financial statements that are issued in Thai language.


92 Annual Report 2012 PAE Thailand Company Limited

3. Basis of Consolidation 3.1

In preparation of the consolidated financial statements, the Company will only take its subsidiary companies which is under the main control of PAE (THAILAND) PUBLIC COMPANY LIMITED into account, after having eliminated the remaining balances and transactions among themselves, The Company holds shares in subsidiary companies with the percentage of shareholdings in subsidiary companies as follows: Companyâ&#x20AC;&#x2122;s Name

PAE Construction Resources Company Limited PAE Technical Service Company Limited Pacific Resources International Limited (BVI)

Oasis Development Company Limited 3.2

Country of Registration

Percentage of Shareholdings As of December 31

Nature of Business

2012

2011

Thailand

99.99

99.99 Recruiting

Thailand

99.99

99.99 Construction and hire of work

The British

100.00

100.00 Construction and supply

Virgin Islands Thailand

manpower 54.94

54.94 Rental apartment

Consolidated financial statements combine accounting transactions of joint ventures where the Company is a party to the joint venture in such entity. The Company signed in the contract of joint venture as follows: Joint Venture

The Joint Venture of Sri U-Thong and PAE

Type of Business Construction

Type of Joint venture Mutually Controlled Entity

Percentage of Country of Holding Registration 70 %

Thailand

3.3

Accounting policy for subsidiary companies will utilize the same policy as the PAE PUBLIC COMPANY LIMITED.

3.4

In the preparation of the consolidated financial statements, the accounting period of subsidiary companies are ended at the same period of PAE (THAILAND) PUBLIC COMPANY LIMITED. The


93 Annual Report 2012 PAE Thailand Company Limited

percentage of shareholding at 99.99% of the subsidiary companies, the Company is treated as holding of 100% of consolidated financial statements.

4. New Financial Reporting Standard New accounting standard which is effective for accounting period beginning on or after January 1, 2012, is as follow: TAS 20

Accounting for Government Grants and Disclosure of Government Assistance The above accounting standard has no impact on these financial statements.

5. New Financial Reporting Standards Not Yet Effective New accounting standards, financial reporting standards, interpretations accounting standards, interpretations financial reporting standards and accounting guidance, which are effective for accounting periods beginning on or after January 1, 2013 and 2014, that the Company has not adopted, are as follow: Effective on or after January 1, 2013 Transfer of Financial Asset Accounting Guidance Income Taxes TAS 12 Accounting for Government Grants and Disclosure of Government Assistance TAS 20 (revised 2009) The Effects of Changes in Foreign Exchange Rates TAS 21 (revised 2009) Operating Segments TFRS 8 Government Assistance – No Specific Relation to Operation Activities TSIC 10 Income Taxes – Recovery of Revalued Non-Depreciable Assets TSIC 21 Income Taxes – Changes in Tax Status of an Enterprise or its Shareholder TSIC 25 Effective on or after January 1, 2014 Determining Whether an Arrangements Contains A Lease TFRIC 4 Service Concession Arrangement TFRIC 12 Customer Loyalty Programs TFRIC 13 Disclosure - Service Concession Arrangement TSIC 29 The management of the Company believes that above financial reporting standards will not have any impact on the financial statements when they are applied. Except, TAS 12 “Income Taxes” requires the Company to specify the temporary difference occurring from the difference in the value of assets and liabilities between the accounting criteria and tax for the acknowledgement on the tax impact which is the deferred tax assets or liabilities following the specified criteria. Currently, the management of the Company is assessing the impacts on the financial statements for the period when the accounting standard is applied.


94 Annual Report 2012 PAE Thailand Company Limited

6. Significant Accounting Policies 6.1 Measurements bases used in the Preparation of Financial Statements Measurement bases used in the preparation of financial statements are historical cost measurement basis and combination of variety measurement bases used. Some assets and liabilities that use other measurement bases have been disclosed the measurement bases used in the particular accounting policies. 6.2 Items denominated in Foreign Currencies Items denominated in foreign currencies are recorded in Baht at the prevailing exchange rate when the transactions occur, and their balances of assets and liabilities at the ended of period are converted into Baht at the prevailing exchange rate on that date. Profit or loss arising from such conversion is shown as revenues or expenses in the statements of comprehensive income for that period. 6.3 Financial Instruments Financial instruments, financial assets were shown in the statements of financial position composed of cash and cash at banks, investments and trade and other receivables. Financial liabilities were shown in the statements of financial position composed of trade and other payables and borrowings. The accounting policy of each item would be disclosed in separated items. 6.4 Cash and Cash Equivalents Cash and cash equivalents includes bank deposit in type of saving accounts, current accounts and 3-months fixed accounts without guarantee obligation. 6.5 Trade and Other Receivables Trade and other receivables are stated at the net realizable value. 6.6 Inventories Inventory is reflected by value in accordance with the cost price under first-in first-out methed or net realizable value whichever is lower. 6.7 Investments According to the separate financial statements the investments in subsidiaries and investments in joint ventures are recorded at cost method deducted by allowance for impairment of investments. 6.8 Investment Property The Group investment property is their owned land and building without specific purpose of use in the future and/or exploiting for rental income or appreciation of the asset. The Group measures the investment property by the cost value, deducted the accumulated depreciation and the allowance for impairment, (if any) and calculated depreciation on a straight-line method over their approximate usefullife as 20 years, except for land which is considered to have an indefinite life. 6.9 Property, Plant and Equipment Land is recorded at cost price. Plant and equipment are recorded at cost price after deduction of accumulated depreciation and calculated depreciation on a straight-line method over their approximate useful-life as follows:


95 Annual Report 2012 PAE Thailand Company Limited

Building 20 Building Improvements 8-20 Machinery and Equipment 8-20 Office Equipment 5 Vehicles 5-8 The Group did not carry depreciation for land and asset being construction.

Years Years Years Years Years

Gain or loss from disposal of property, plant and equipment is computed from discrepancy between net cash received and book value and recognized as other revenue or other expense in the statements of comprehensive income. 6.10 Intangible Assets Software Royalty are recorded at cost less accumulated amortization expenses and calculated on a straight-line method over their approximate useful-life 5 - 10 years. 6.11 Impairment The carrying amounts of assets are assessed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the assetâ&#x20AC;&#x2122;s recoverable amounts are estimated of asset or its cash-generating unit to which the asset is included in the recognition of an impairment loss when the recoverable amount less than the carrying amount of the asset or its cash generating unit. Impairment loss is recognized as expenses in profit or loss immediately. Calculation of Recoverable Amount - The recoverable amount is the higher of the assetâ&#x20AC;&#x2122;s fair value less cost to sell of asset or the cashgenerating unit or its value in use. - In assessing value in use of an asset by estimating the present value of future cash flows generated by the asset, discounted using a pre-tax discount rate which reflects current market assessments of the time value of money and the risks specific to the asset. - The asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Reversals of Impairment Loss - The loss on impairment of assets excluding goodwill recognized in the prior period will be reversed if the estimation for indicated net realizable value changes since the last impairment loss was recognized. The carrying amount of the asset not exceed just to be the carrying amount that would have been (net of depreciation or amortization), if no impairment loss had been recognized. - Reversals of impairment loss will be recognized as income in profit or loss immediately. 6.12 Trade and Other Payables Trade and other payables were shown in cost value.


96 Annual Report 2012 PAE Thailand Company Limited

6.13 Employee Benefit Short-Term Employee Benefits The Group is recognized salary, wage, bonus, and social security fund are expenses on date when the transactions occur. Long-Term Employee Benefits The Group provides for post employment benefits to or retirement indemnity employees under the labor laws applicable in Thailand. The Group has recorded the liabilities in respect of employee benefit obligations calculated by the Group’s management in accordance with the actuarial technique and the present value of the defined benefit obligations are determined by discounting estimated future cash flows using yields on the government bonds which have terms to maturity approximating the terms of related liability. The estimated future cash flows shall reflect employee salaries, turnover rate, mortality, length of service and other. The Group recorded provision of employee benefit is non – current liabilities. The costs associated with providing these benefits are charged to the statements of comprehensive income so as to spread the cost over the employment period during which the entitlement to benefits is earned. 6.14 Provision of Liabilities The Group are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. 6.15 Recognition of Revenues - Revenues from construction are recognised on a percentage of completion basis based on the assessment of the Company and its subsidiaries’ engineers. The recognised revenue which is not yet due per the contracts has been presented under the caption of “Unbilled receivables” in the statement of financial position. - Revenues from sales are recognized when goods are delivered to customers. - Revenue from service are recognized when the service has been provided to customer. - Other Revenues are recognized on accrual basis. 6.16 Recognition of Expenses - Costs of construction are recognized in accordance with the percentage of work completed based on total estimated costs. Provision for anticipated losses on construction projects is made in the accounts in full when the possibility of loss is ascertained. Differences between the estimated costs and the actual costs are recognized as current assets of current liabilities in the statement of financial position. - Other Expenses are recognized on accrual basis. - Payments made under operating leases are recognized as expense on a straight line basis of the lease.


97 Annual Report 2012 PAE Thailand Company Limited

6.17 Income Tax Income tax expenses are recognized as expenses in profit or loss as income tax to be paid, using tax rates enacted at the end of each reporting period. 6.18 Basic Earnings (Loss) per Share Basic earnings (loss) per share is calculated by dividing net profit (loss) with weighted average the number of issued and paid-up shares. The Company did not calculate the fully diluted earnings per share since it has no ordinary share equivalent. 6.19 Significant Accounting Judgments and Estimates In order to prepare the financial statements to comply with financial reporting standards, the Company’s management had to make some judgment and estimates which may have an effect on the amount shown in financial statements and notes to financial statements, therefore the actual result may differ from the estimated amount. Significant estimates and provisions are as follows:  Construction Contracts The Company recognizes construction income by reference to the stage of completion of the construction contract activity, when the outcome of a construction contract can be estimated reliably. The stage of completion is measured by reference to surveys of works and estimates performed by project management. The management is required to make judgment and estimates based on past experience and information obtained from the project management.  Estimated Construction Project Costs The Company and its subsidiaries estimates costs of construction projects based on details of the construction work, taking into account the volume and value of construction materials to be used in the project, labour costs and other miscellaneous costs to be incurred to complete the construction service, taking into account the direction of the movement in these costs. Estimates are reviewed regularly or whenever actual costs differ significantly from the figures used in the original estimates.  Provision for Losses on Construction Projects Management applied judgment in estimating the loss they expect to be realised on each construction project, based on estimates of anticipated costs that take into account the progress of the project and actual costs incurred to date, together with fluctuations in costs of construction materials, labour and the current situation.  Lease In determining whether a lease is to be classified as an operating lease or finance lease, the management is required to use judgment regarding whether significant risk and rewards of ownership of the leased asset have been transferred, taking into consideration terms and conditions of the arrangement.


98 Annual Report 2012 PAE Thailand Company Limited

 Allowance for Doubtful Accounts –Trade and Other Receivables In determining an allowance for doubtful accounts-trade and other receivables, the management needs to make judgment and estimates based upon, among other things, past collection history, aging profile of outstanding debts and the prevailing economic condition.  Reduction of Inventories to become Net Realizable Value In estimating the reduction of inventories to become net realizable value, the management uses the discretion in estimating the net realizable value of inventories. The sum of money expected to receive from inventories is considered from the change in sale price or cost directly related to the events occurring after of report period.  Allowance of Impairment of Investment The Company treats investments as impaired when there has been a significant or prolonged decline in the fair value below their cost or where other objective evidence of impairment exists. The determination of what is “significant” or “prolonged” requires judgment of the management.  Investment Property and Property, Plant and Equipment and and Depreciation In determining depreciation of plant and equipment and investment property, the management is required to make estimates of the useful lives and residual values of the Company’s plant and equipment and investment property and to review estimate useful lives and residual values when there are any changes. In addition, the management is required to review plant and equipment and investment property for impairment on a periodical basis and record impairment losses in the period when it is determined that their recoverable amount is lower than the carrying amount. This requires judgments regarding forecast of future revenues and expenses relating to the assets subject to the review.  Intangible Assets and Amortization Intangible assets are systematically amortized over their estimated useful lives, and are subject to impairment if there is an indication they may be. Impaired  Post Employment Benefits The obligation under defined benefit plan is determined based on actuarial valuations. Inherent within these calculations are assumptions as to discount rates, future salary increases, mortality rates and other demographic factors. In determining the appropriate discount rate, an independent actuary selects an interest rate that reflects the current economic situation. The mortality rate is based on publicly available mortality tables for the country. However, actual post-retirement costs may ultimately differ from these estimates.


99 Annual Report 2012 PAE Thailand Company Limited

ď&#x201A;ˇ Litigation The Company have contingent liabilities as a result of litigation. The management has used judgment to assess of the results of the litigation and believes that no loss will result. Therefore no contingent liabilities are recorded as at the end of reporting period.

7. Cash and Cash Equivalents Consolidated Financial Statements As of December 31 2012 2011 Baht Baht Cash 5,595,872.16 3,147,948.47 Cheque Received 829,871.12 452,628.28 Cash Deposit - Current Account (12,364,664.13) (9,029,897.84) Cash Deposit - Saving Account 9,562,818.47 32,010,469.70 Cash Deposit - Fixed Account 10,000,030.70 Total 13,623,928.32 26,581,148.61

Separate Financial Statements As of December 31 2012 2011 Baht Baht 5,430,822.23 3,059,123.83 (12,396,364.13) (8,843,197.84) 5,597,936.78 24,793,258.84 10,000,030.70 8,632,425.58 19,009,184.83

8. Trade and Other Receivables - Net

Trade Receivables-Domestic Trade Receivables-Oversea Less Allowance for Doubtful Accounts Trade Receivables-Net Other Receivables Less Allowance for Doubtful Accounts Other Receivables -Net Total

Consolidated Financial Statements Separate Financial Statements As of December 31 As of December 31 2012 2011 2012 2011 Baht Baht Baht Baht 199,584,449.19 133,805,156.30 157,757,391.24 100,508,080.50 13,149,868.81 12,149,656.32 12,847,616.72 12,149,656.32 (42,132,712.39) (29,919,751.19) (33,477,434.65) (22,141,925.43) 170,601,605.61 147,221,523.25 (11,270,205.79)

116,035,061.43 137,127,573.31 90,515,811.39 93,538,306.57 165,970,611.51 110,210,914.48 (6,516,963.52) (26,181,492.21) (23,390,703.28)

135,951,317.46 87,021,343.05 306,552,923.07 203,056,404.48

139,789,119.30 276,916,692.61

86,820,211.20 177,336,022.59


100 Annual Report 2012 PAE Thailand Company Limited

Aging of trade receivables are as follows: Consolidated Financial Statements As of December 31 2012 2011 Baht Trade Receivables Baht within due period over due period 46,608,664.72 36,337,992.31 less than 3 months 3 - 6 months 6 - 12 months more than 12 months Total Less Allowance for Doubtful Accounts Net

Separate Financial Statements As of December 31 2012 2011 Baht Baht 29,059,769.83

25,449,961.40

97,853,494.86 55,018,361.25 83,747,140.67 45,254,447.92 19,352,405.74 10,815,994.47 16,178,577.22 3,326,879.70 9,915,024.32 8,492,024.42 7,000,585.19 6,579,787.75 39,004,728.36 35,290,440.17 34,618,935.05 32,046,660.05 212,734,318.00 145,954,812.62 170,605,007.96 112,657,736.82 (42,132,712.39) (29,919,751.19) (33,477,434.65) (22,141,925.43) 170,601,605.61

116,035,061.43

137,127,573.31

90,515,811.39

Other receivables as of December 31, 2012 and 2011 consisted of:

Account Receivables â&#x20AC;&#x201C; Revenue Department Prepaid Income Tax Prepaid Expense Advance Payment Other Receivables Total Less Allowance for Doubtful Accounts Net

Consolidated Financial Statements As of December 31 2012 2011 Baht Baht 9,655,592.95 556,413.70

Separate Financial Statements As of December 31 2012 2011 Baht Baht 9,655,592.95 556,413.70

77,952,923.12 24,153,527.65 22,268,286.69 13,191,192.84 147,221,523.25 (11,270,205.79)

60,489,158.15 12,840,885.43 9,166,643.84 10,485,205.45 93,538,306.57 (6,516,963.52)

77,952,923.12 14,500,728.19 21,955,624.45 41,905,742.80 165,970,611.51 (26,181,492.21)

59,373,910.58 3,774,453.35 16,279,293.78 30,226,843.07 110,210,914.48 (23,390,703.28)

135,951,317.46

87,021,343.05

139,789,119.30

86,820,211.20


101 Annual Report 2012 PAE Thailand Company Limited

For the years ended December 31, 2012 and 2011, the movement of allowance for doubtful accounts was as follows:

Beginning Balance

Consolidated Financial Statements For the years ended December 31 2012 2011 Baht Baht (36,436,714.71) (53,361,527.99)

Separate Financial Statements For the years ended December 31 2012 2011 Baht Baht (45,532,628.71) (61,958,217.43)

Increase within Period

(19,423,271.20)

(1,479,194.68)

(14,466,959.40)

(31,061.19)

Reverse within Period

1,782,874.58

18,404,007.96

340,661.25

16,456,649.91

Written off as Bad Debt

674,193.15

-

-

-

(53,402,918.18)

(36,436,714.71)

(59,658,926.86)

(45,532,628.71)

Ending Balance

For the consolidated and separate financial statements as of December 31, 2012 a part of trade receivables in amount of Baht 11.68 million has be transferred the right of collection to one financial institution according to Note 21. The Company still has to take responsibility in the trade receivables if the financial Institution uncollected debt repayment in accourdance with such trade receivables.

9. Unbilled Receivables Consisted of: Consolidated Financial Statements As of December 31 2012 2011 Baht Baht 2,369,551,970.71 1,404,098,040.53 (158,277,668.39) 58,069,412.10

Separate Financial Statements As of December 31 2012 2011 Baht Baht 2,369,551,970.71 1,404,098,040.53 (158,277,668.39) 58,069,412.10

Contract costs to date Recognized profit (losses) to date Contract cost incurred and recognized losses to date 2,211,274,302.32 1,462,167,452.63 2,211,274,302.32 1,462,167,452.63 Less Progress billings (1,952,657,211.55) (1,250,592,918.38) (1,952,657,211.55) (1,250,596,918.38) Total 258,617,090.77 211,574,534.25 258,617,090.77 211,570,534.25 Add Service income Unbilled receivables 522,101,288.32 345,050,521.44 513,880,874.59 337,604,890.80 Total unbilled receivables 780,718,379.09 556,625,055.69 772,497,965.36 549,175,425.05 Consisted of: - third parties 780,718,379.09 549,545,055.69 772,497,965.36 542,095,425.05 - related parties (Note 31.2) 7,080,000.00 7,080,000.00


102 Annual Report 2012 PAE Thailand Company Limited

10. Account Receivables, Short - Term Loans and Accrued Interest Income to Other Parties - Net Consisted of:

Trade Receivables Short â&#x20AC;&#x201C; Term Loans Other Receivables Accrued Interest Income Total Less Allowance for doubtful accounts Net

Consolidated Financial Statements As of December 31 2012 2011 Baht Baht 2,334,419.47 2,334,419.47 55,979,079.72 55,979,079.72 18,573,598.81 18,573,598.81 16,822,615.07 14,678,800.99 91,565,898.99 93,709,713.07 (93,709,713.07) -

(91,565,898.99) -

Separate Financial Statements As of December 31 2012 2011 Baht Baht 55,571,079.72 55,571,079.72 18,573,598.81 18,573,598.81 16,665,894.88 14,554,810.20 90,810,573.41 88,699,488.73 (90,810,573.41) -

(88,699,488.73) -

For the year ended December 31, 2012 and 2011, the movement of allowance for doubtful accounts was as follows:

Beginning Balance

Consolidated Financial Statements For the year ended December 31 2012 2011 Baht Baht (91,565,898.99) (90,732,216.62)

Separate Financial Statements For the year ended December 31 2012 2011 Baht Baht (88,699,488.73) (87,898,446.34)

Increase within Period

(2,143,814.08)

(4,533,682.37)

(2,111,084.68)

(4,501,042.39)

Decrease within Period

-

3,700,000.00

-

3,700,000.00

(90,810,573.41)

(88,699,488.73)

Ending Balance

(93,709,713.07)

(91,565,898.99)

As of December 31, 2012 and 2011, short term loans and accrued interest income to other parties is debt burden that the W.N.S.R. Pacific Co., Ltd., obliges to the Company. On November 30, 2010, the Company has fully disposed investment in the W.N.S.R. Pacific Co., Ltd. However, the Company has maked debt administration contract with one company to pursuance press the claim debt for the Company in some debt value amount of Baht 86.69 million. On January 23, 2012, the Company has transferred the right for all debt of the that is in the W.N.S.R. Pacific Co., Ltd., to the assignee according to the condition of the contract as of January 18, 2011.


103 Annual Report 2012 PAE Thailand Company Limited

11. Inventories - Net Consisted of:

Consolidated Financial Statements As of December 31 2012 2011 Baht Baht 46,676,058.84 71,071,097.45 184,461,170.70 162,213,467.56

Separate Financial Statements As of December 31 2012 2011 Baht Baht 42,423,413.09 68,287,037.05 184,461,170.70 162,213,467.56

Finished Goods Work in Process Less Allowance for Decline in Value of Inventories (4,706,292.88) (4,706,292.88) (4,309,439.83) (4,309,439.83) 228,578,272.13 222,575,143.96 226,191,064.78 Net 226,430,936.66 For the year ended December 31, 2012 and 2011, the movement of allowance for doubtful accounts was as follows:

Beginning Balance

Consolidated Financial Statements As of December 31 2012 2011 Baht Baht (4,706,292.88) (5,048,252.33)

Increase within Period

-

Decrease within Period

-

Ending Balance

(4,706,292.88)

-

Separate Financial Statements As December 31 2012 2011 Baht Baht (4,309,439.83) (4,651,399.28) -

341,959.45

-

-

(4,706,292.88)

341,959.45

(4,309,439.83)

(4,309,439.83)

12. Investments in Subsidiaris - Net Separate Financial Statements Cost Method Shareholder Issued & Paid up Holding Share Capital Equity Interest PAE Construction Resources Company Limited Pacific Resources International Limited (BVI) PAE Technical Service Company Limited Oasis Development Company Limited Total

As of December 31 2012 Baht

2011 Baht

5.00

99.99

4,999,400.00

4,999,400.00

86.68

100.00

86,680,600.00

86,680,600.00

35.00 0.54

99.99 51.94

35,000,000.00 549,400.00 127,229,400.00

35,000,000.00 549,400.00 127,229,400.00


104 Annual Report 2012 PAE Thailand Company Limited

Less Allowance for Impairment Investment in Subsidiary Companies Total Investments in Subsidiary Companies - Net

(92,229,400.00)

(92,229,400.00)

35,000,000.00

35,000,000.00

For the year ended December 31, 2012 and 2011, the movement of allowance for impairment was as follows: Separate Financial Statements For the year ended December 31 2012 2011 Baht Baht (92,229,400.00) (92,229,400.00)

Beginning Balance Increase within Period

-

-

Decrease within Period

-

-

Ending Balance

(92,229,400.00)

(92,229,400.00)

13. Investments in Joint Ventures Summarised financial information of joint ventures as follows: As of December 31 2012 2011 Baht Baht Proportionate Statement of Financial Position Current Assets Current Liabilities Net Assets

3,105,939.63 (2,841,813.14) 264,126.49

8,343,784.51 (4,760,094.51) 3,583,690.00

For the Year Ended December 31 2012 2011 Baht Baht Proportionate Statement of Comprehensive Income Revenue Expense Profit (Loss) Before Income Tax Tax Expense Profit (Loss) for the Year

22,523.54 (3,342,087.05) (3,319,563.51) (3,319,563.51)

9,653,338.44 1,283,139.54 10,936,477.98 10,936,477.98


105 Annual Report 2012 PAE Thailand Company Limited

14.

Investment Property-Net Consisted of : Consolidated Financial Statements Building and Land Building Total Improvements Baht Baht Baht

As of December 31, 2010 Cost 51,985,484.44 Less Accumulated Depreciation Less Allowance for Impairment of Assets (14,635,938.68) 37,349,545.76 Book value Transactions during the year ended December 31, 2011 Depreciation for the year Ending book value 37,349,545.76 As of December 31, 2011 Cost 51,985,484.44 Less Accumulated Depreciation Less Allowance for Impairment of Assets (14,635,938.68) 37,349,545.76 Book value Transactions during the year ended December 31, 2012 Purchase Transfer out (13,398,538.68) Depreciation for the year Reverse of Allowance for Impairment of Assets 3,256,000.00 Transfer out Allowance for Impairment of Assets 11,379,938.68 Ending book value As of December 31, 2012 Cost Less Accumulated Depreciation Less Allowance for Impairment of Assets

38,586,945.76

Book value

38,586,945.76

13,474,052.53 65,459,536.97 (10,891,526.21) (10,891,526.21) (14,635,938.68) 2,582,526.32 39,932,072.08 (673,702.68) 1,908,823.64

(673,702.68) 39,258,369.40

13,474,052.53 65,459,536.97 (11,565,228.89) (11,565,228.89) (14,635,938.68) 1,908,823.64 39,258,369.40

(13,398,538.68) (673,702.68) (673,702.68) 3,256,000.00 11,379,938.68 1,235,120.96

39,822,066.72

38,586,945.76 13,474,052.53 52,060,998.29 (12,238,931.57) (12,238,931.57) 1,235,120.96

39,822,066.72


106 Annual Report 2012 PAE Thailand Company Limited

Separate Financial Statements Land Baht As of December 31, 2010 Cost Less Allowance for Impairment of Assets Book value Transactions during the year ended December 31, 2011 Purchase Sale Ending book value As of December 31, 2011 Cost Less Allowance for Impairment of Assets Book value Transactions during the year ended December 31, 2012 Purchase Transfer out Reverse of Allowance for Impairment of Assets Allowance for Impairment of Assets Transfer out Ending book value As of December 31, 2012 Cost Less Allowance for Impairment of Assets Book value

48,961,484.44 (13,375,938.68) 35,585,545.76

35,585,545.76

48,961,484.44 (13,375,938.68) 35,585,545.76 (13,398,538.68) 1,996,000.00 11,379,938.68 35,562,945.76 35,562,945.76 35,562,945.76


107 Annual Report 2012 PAE Thailand Company Limited

For the consolidated financial statements as of December 31, 2012 and 2011, the Company and its subsidiary companies has mortgaged land and building the book value in amount of Baht 39.37 million and Baht 37.35 million, respectively, as collateral against the credit facility from a commercial bank as per Note 17.For the separate financial statements as of December 31, 2012 and 2011, the Company has mortgaged land and building the book value in amount of Baht 35.11 and Baht 35.59 million, respectively, as collateral against the credit facility from a commercial bank as per Note 17. For the consolidated and separate financial statements as of December 31, 2012 and 2011, the investment property of the Company and its subsidiary companies is land and buildings held to earn rental and land held for currently undetermined future use. The Company and its subsidiary companies has appraised the investment property by the independent appraiser by market comparison approach, the fair value of land and buildings is the consolidated financial statements in amount of Baht 59.82 million and Baht 44.25 million respectively and the separate financial statements in amount Baht 48.79 million and Baht 35.59 respectively and for the consolidated and separate financial statements investment property book value amount of Baht 0.46 million annum equally for two years , pending for independent appraiser.


108 Annual Report 2012 PAE Thailand Company Limited

15. Property, Plant and Equipment â&#x20AC;&#x201C; Net Land As of December 31, 2010 Cost Less Accumulated Depreciation

Baht 158,152,108.50 -

Consolidated Financial Statement Building and Machines and Furniture and Construction in Vehicles Total Improvement Equipment equipment Progress Baht Baht Baht Baht Baht Baht 173,749,017.16 213,815,123.82 29,802,128.32 27,327,387.10 484,975.00 603,330,739.90 (90,873,159.01) (175,508,195.05) (23,636,113.62) (19,683,176.88) - (309,700,644.56)

Less Allowance for Impairment (37,843,608.50) of Assets Book value 120,308,500.00 Transactions during the year ended December 31, 2011 Purchase 4,100,00.00 Transfer in/(Transfer out) Sale Depreciation for the year Depreciation for Sale/Written-off Assets (Reversal)Allowance for Impairment of Assets

(18,611,585.46)

(2,996,294.78)

(599,994.00)

(100,691.80)

-

(60,152,174.54)

64,264,272.69

35,310,633.99

5,566,020.70

7,543,518.42

484,975.00

233,477,920.80

(9,509,376.96) -

25,447,262.02 (2,056,068.14) (13,393,941.96) 1,411,677.32

Ending book value

54,745,895.73

124,408,500.00

-

2,593,616.81 2,897,153.06 616,822.44 (1,304,101.74) (1,008,698.72) (2,190,220.12) (2,934,769.39) 963,181.08 838,443.49

568,397.29

339,997.00

100,691.80

47,287,960.52

6,585,316.17

7,436,338.66

298,783.70 35,336,815.59 616,822.44 (4,368,868.60) (28,028,308.43) 3,213,301.89 -

1,009,086.09

783,758.70 241,256,769.78


109 Annual Report 2012 PAE Thailand Company Limited

As of December 31, 2011 Cost 162,252,108.50 173,749,017.16 237,206,317.70 31,708,465.83 Less Accumulated Depreciation (100,382,535.97) (187,490,459.69) (24,863,152.66) Less Allowance for Impairment (37,843,608.50) (18,611,585.46) (2,427,897.49) (259,997.00) of Assets Book value

124,408,500.00

Land As of December 31, 2011 Cost Less Accumulated Depreciation Less Allowance for Impairment of Assets Book value Transactions during the year ended December 31, 2012 Purchase Transfer in/(Transfer out) Sale Depreciation for the year

Baht

54,745,895.73

Building and Improvement Baht

47,287,960.52

29,215,841.44 (21,779,502.78) -

783,758.70 634,915,509.33 (334,515,651.10) (59,143,088.45)

7,436,338.66

783,758.70 241,256,769.78

6,585,316.17

Consolidated Financial Statements Machines and Vehicles Furniture and Construction in Equipment equipment Progress Baht Baht Baht Baht

162,252,108.50 173,749,017.16 237,206,317.70 (100,382,535.97) (187,490,459.69) (37,843,608.50) (18,611,585.46) (2,427,897.49) 124,408,500.00

54,754,895.73

47,287,960.52

8,529,750.00 13,398,538.68 (5,458.54)

362,248.03 (9,523,031.60)

27,793,929.45 16,079,442.58 (1,552,735.72) (23,142,614.64)

31,708,465.83 29,215,841.44 (24,863,152.66) (21,779,502.78) (259,997.00) 6,585,316.17

7,436,338.66

Total Baht

783,758.70 634,915,509.33 (334,515,651.10) (59,143,088.45) 783,758.70

241,256,769.78

5,508,831.80 2,051,851.66 57,854,528.45 (3,900.00) 19,033,052.93 (1,984,276.65) (177,899.09) (3,112,669.44) (3,168,551.86) -

101,738,891.36 48,869,382.22 (3,714,911.46) (38,952,326.08)


110 Annual Report 2012 PAE Thailand Company Limited

Depreciation for Sale/Written-off Assets Loss from Impairment Transfer in Allowance for Impairment (Reversal)Allowance for Impairment of Assets Ending book value As of December 31, 2012 Cost Less Accumulated Depreciation Less Allowance for Impairment of Assets Book value

-

-

841,144.09

1,966,665.85

176,070.94

-

2,983,880.88

-

-

-

-

(35,595.58)

-

(35,595.58)

(11,379,938.68)

-

-

-

-

-

(11,379,938.68)

13,105,500.00 148,056,891.46

45,594,112.16

67,307,126.28

8,963,867.73

6,278,314.73

-

13,105,500.00

77,671,340.08

353,871,652.44

184,180,397.18 174,111,265.19 279,526,954.01 35,233,020.98 31,085,894.01 77,671,340.08 781,808,871.45 (5,458.54) (109,905,567.57) (209,791,930.24) (26,009,156.25) (24,771,983.70) (370,484,096.30) (36,118,047.18) (18,611,585.46)

(2,427,897.49)

(259,997.00)

(35,595.58)

-

(57,453,122.71)

148,056,891.46

67,307,126.28

8,963,867.73

6,278,314.73

77,671,340.08

353,871,652.44

45,594,112.16


111 Annual Report 2012 PAE Thailand Company Limited

Land Baht As of December 31, 2010 Cost Less Accumulated Depreciation Less Allowance for Impairment of Assets Book value Transactions during the year ended December 31, 2011 Purchase Transfer in Depreciation for the year Ending book value As of December 31, 2011 Cost Less Accumulated Depreciation Less Allowance for Impairment of Assets Book value

Building and Improvement Baht

Separate Financial Statements Machines and Vehicles Furniture and Construction in Equipment equipment Progress Baht Baht Baht Baht

158,152,108.50 172,409,308.81 181,365,271.57 19,186,901.31 23,825,310.87 (90,739,188.21) (155,752,147.51) (15,734,381.47) (17,276,490.02) (37,843,608.50) (18,611,585.46)

-

-

-

Total Baht

484,975.00 555,423,876.06 (279,502,207.21) -

(56,455,193.96)

120,308,500.00

63,058,535.14

6,548,820.85

484,975.00 219,466,474.89

120,308,500.00

21,461,732.17 2,535,391.29 616,822.44 (9,442,391.56) (10,004,585.60) (1,075,177.27) (2,517,300.59) 53,616,143.58 37,070,270.63 2,994,165.01 6,566,911.55

23,997,123.46 616,822.44 (23,039,455.02) 484,975.00 221,040,965.77

158,152,108.50 172,409,308.81 202,827,003.74 19,803,723.75 26,360,702.16 (100,181,579.77) (165,756,733.11) (16,809,558.74) (19,793,790.61)

484,975.00 580,037,821.96 (302,541,662.23)

(37,843,608.50) (18,611,585.46) 120,308,500.00

53,616,143.58

25,613,124.06

37,070,270.63

3,452,519.84

2,994,165.01

6,566,911.55

-

(56,455,193.96)

484,975.00 221,040,965.77


112 Annual Report 2012 PAE Thailand Company Limited

Separate Financial Statements Total Land Building and Machines and Vehicles Furniture and Construction in Improvement Equipment equipment Progress Baht Baht Baht Baht Baht Baht Baht 158,152,108.50 172,409,308.81 202,827,003.74 19,803,723.75 26,360,702.16 484,975.00 580,037,821.96 (100,181,579.77) (165,756,733.11) (16,809,558.74) (19,793,790.61) (302,541,662.23)

As of December 31, 2011 Cost Less Accumulated Depreciation Less Allowance for Impairment of (37,843,608.50) Assets Book value 120,308,500.00 Transactions during the year ended December 31, 2012 Purchase Transfer in/(Transfer out) 13,398,538.68 Sale Depreciation for the year Depreciation for Sale/Written-off Assets Transfer in Allowance for (11,379,938.68) Impairment (Reversal)Allowance for Impairment of Assets 13,105,500.00 Ending book value 135,432,600.00 Cost 171,550,647.18 Less Accumulated Depreciation Less Allowance for Impairment of Assets (36,118,047.18) Book value 135,432,600.00

(18,611,585.46) 53,616,143.58

37,070,270.63

2,994,165.01

-

-

6,566,911.55

(56,455,193.96)

484,975.00 221,040,965.77

21,524,993.45 2,948,504.68 1,225,763.60 48,475,707.36 74,174,969.09 16,079,442.58 (3,900.00) 17,545,300.96 47,019,382.22 (700,000.00) (700,000.00) (9,442,391.51) (19,515,736.07) (1,530,399.28) (2,679,921.05) (33,168,447.91) -

14,918.02

-

-

-

-

621.42 -

-

15,539.44

-

(11,379,938.68)

44,173,752.07 54,473,888.61 4,412,270.41 5,109,475.52 66,505,983.32 172,409,308.81 239,731,439.77 22,752,228.43 27,582,565.76 66,505,983.32 (109,623,971.28) (185,257,551.16) (18,339,958.02) (22,473,090.24) (18,611,585.46) 44,173,752.07 54,473,888.61 4,412,270.41 5,109,475.52 66,505,983.32

13,105,500.00 310,107,969.93 700,532,173.27 (335,694,570.70) (54,729,632.64) 310,107,969.93


113 Annual Report 2012 PAE Thailand Company Limited

For the consolidated financial statements as of December 31, 2012 and 2011, the Company and its subsidiary companies has mortgaged land and building the book value in amount of Baht 145.52 million and Baht 124.41 million respectively, as collateral against the credit facility from a commercial bank as per Note 17. For the consolidated financial statements as of December 31, 2012 and 2011, the Company and its subsidiary companies has the assets which had not the depreciation but they still used. The cost price was Baht 227.28 million and the book value was Baht 328,158.01 and the cost price was Baht 220.09 million and the book value was Baht 320,246.57 respectively. For the separate financial statements as of December 31, 2012 and 2011, the Company has mortgaged land and building the book value in amount of Baht 133.41 million and Baht 120.31 million respectively, as collateral against the credit facility from a commercial bank as per Note 17. For the separate financial statements as of December 31, 2012 and 2011, the Company has the assets which had not the depreciation but they still used. The cost price was Baht 205.86 million and the book value was Baht 327,780.00 and the cost price was Baht 200.34 million and the book value was Baht 320,038.55 respectively.

16.

Intangible Assets - Net Consisted of : Consolidate

Separate

Financial Statements

Financial Statements

Software

Software

Baht

Baht

As of December 31, 2010 Cost

14,119,240.89

13,691,040.89

Less Accumulated Amortization

(3,185,929.87)

(3,062,870.34)

Book value

10,933,311.02

10,628,170.55

690,213.76

690,213.76

(912,742.90)

(912,742.90)

(1,358,491.15)

(1,315,671.14)

9,352,290.73

9,089,970.27

Transactions during the year ended December 31, 2011 Purchase Transfer out Amortization Expenses Ending book value As of December 31, 2011


114 Annual Report 2012 PAE Thailand Company Limited

Cost

13,896,711.75

13,468,511.75

Less Accumulated Amortization

(4,544,421.02)

(4,378,541.48)

9,352,290.73

9,089,970.27

672,586.24

672,586.24

(1,532,609.58)

(1,489,760.39)

8,492,267.39

8,272,796.12

Cost

14,569,297.99

14,141,097.99

Less Accumulated Amortization

(6,077,030.60)

(5,868,301.87)

8,492,267.39

8,272,796.12

Book value Transactions during the year ended December 31, 2012 Purchase Amortization Expenses Ending book value As of December 31, 2012

Book value

17.

18.

Credit and Guarantees As of December 31, 2012 and 2011, the Company and the subsidiary companies have credit in the form of bank overdrafts, letters of guarantee, promissory notes, forward contracts and letters of credit from commercial banks that are collateralized by land and building, fixed deposits and directorâ&#x20AC;&#x2122;s pledges. Bank Overdrafts and Short - Term Borrowings from Financial Institutions Consisted of :

Bank overdrafts Short - Term Borrowings Account Payable Factoring

Consolidated Financial Statements As of December 31 2012 2011 Baht Baht 33,279,180.81 33,321,166.06 71,245,923.45 168,714,838.52 11,678,074.62 116,203,178.88 202,036,004.58

Separate Financial Statements As of December 31 2012 2011 Baht Baht 30,000,000.00 30,366,391.21 71,245,923.45 168,714,838.52 11,678,074.62 112,923,998.07 199,081,229.73

For the consolidated and separate financial statements as of December 31, 2012 and 2011, short - term borrowings from financial institutions are comprised of promissory notes and T/R, bearing interest at the rates of 8% and 7% respectively.


115 Annual Report 2012 PAE Thailand Company Limited

For the consolidated and separate financial statements as of December 31, 2012, account payable factoring of the Company took a part of account receivable to discount with the commercial banks are carried by interest rates of MOR per annum.

19.

Trade and Other Payables Consisted of:

Trade Payables â&#x20AC;&#x201C; Domestic Trade Payables - Oversea Other Payables Total

Consolidated Financial Statements As of December 31 2012 2011 Baht Baht 339,312,709.94 273,014,341.50 507,858.14 27,007,918.43 150,828,260.56 26,955,115.00 490,648,828.64 326,977,374.93

Separate Financial Statements As of December 31 2012 2011 Baht Baht 334,369,524.13 239,561,580.74 507,858.14 27,007,918.43 131,213,476.74 39,513,352.71 466,090,859.01 306,082,851.88

Other payables as of December 31, 2012 and 2011 consisted of: Consolidated Financial Statements As of December 31 2012 2011 Baht Baht Payables for Assets 20,952,703.74 Fine Fee Construction Delaying 26,925,091.76 Accrued Expenses 42,153,877.09 23,673,001.63 Other Payables 60,796,587.97 3,282,113.37 26,955,115.00 Total 150,828,260.56

Separate Financial Statements As of December 31 2012 2011 Baht Baht 20,952,703.74 26,925,091.76 31,694,323.16 13,069,020.96 51,641,358.08 26,444,331.75 131,213,476.74 39,513,352.71


116 Annual Report 2012 PAE Thailand Company Limited

20.

Short - Term Borrowings from Other Parties and Persons Consisted of : Consolidated Financial Statements As of December 31 2012 2011 Baht Baht

Short - Term Borrowings from Other Parties Short - Term Borrowings from Other Persons Net

Separate Financial Statements As of December 31 2012 2011 Baht Baht

29,914,783.50

31,389,587.58

-

-

4,440,000.00 34,354,783.50

31,389,587.58

-

-

For the consolidated financial statement as of December 31, 2012 and 2011, the whole amount of short term borrowings from other parties is liabilities of one subsidiary company with WNSR Pacific Company Limited have not a contract and interest. The whole amount of changing in short - term borrowings from other parties have been exchange difference foreign currencies. For the consolidated financial statements as of December 31, 2012, the whole amount of short - term borrowings from other persons is loans for operation of the subsidiary companies by makes the loan contract and promissory note carried interest rate of 2% per annum without collateral.

21.

Long - Term Borrowings from Financial Institutions - Net Consisted of : Consolidated Financial Statements As of December 31 2012 2011 Baht Baht 352,028,333.28 97,008,435.32

Long - Term Borrowings Less Current Portion of Long - Term Borrowings (113,427,619.09) Net 238,600,714.19

Separate Financial Statements As of December 31 2012 2011 Baht Baht 341,472,447.04 92,855,445.03

(40,626,105.44) (110,559,245.41) 56,382,329.88 230,913,201.63

(38,124,331.25) 54,731,113.78


117 Annual Report 2012 PAE Thailand Company Limited

The change in long - terms borrowings for the year ended December 31, 2012 and 2011, as follows:

Beginning Balance Received Long-Term Borrowings Repayment to Long-Term Borrwings Ending Balance

Consolidated Financial Statements For the year ended December 31 2012 2011 Baht Baht 97,008,435.32 148,093,076.10 333,816,897.95 2,363,380.00 (78,796,999.99) 352,028,333.28

Separate Financial Statements For the year end December 31 2012 2011 Baht Baht 92,855,445.03 143,797,774.27 324,516,897.95 -

(53,448,020.78) (75,899,895.94) (50,942,329.24) 97,008,435.32 341,472,447.04 92,855,445.03

As of December 31, 2012 and 2011, the Company has outstanding loans in amount of Baht 341.47 million and Baht 92.85 million respectively, are loans from commercial banks for construction and acquisition of equipment for the fabrication shop in Songkhla. Loans are due for repayment in installments starting from November 30, 2008, until May 31, 2017, bearing interest at the rate as referred to Standard Profit Rate Longterm (SPRL) plus 0% to 0.5% per annum. The subsidiary company has syndicate loans as follows: The first loan as of December 31, 2012 and 2011, has outstanding loan in amount of Baht 1.61 million and Baht 4.15 million respectively, which are loan from one merchant bank in form of loans contract that will paid for principle and interest every months of Baht 15,000-127,481.08 per month and Baht 278,387.33 per month respectively, for the period of 3 years are carried by interest rate of 7.25-7.75% per annum equally for two years by subsidiary company has transferred the right to receive for service expenses as collateral according to Note no.8 and the parent company pledges. The second loans as of December 31, 2012 has outstanding loan in amount of Baht 4.73 million, has term of repayment for principle and interest every months of Baht 110,000.00 per month for the period of 5 years are carried by interest rate of MLR-0.50% per annum by the parent company pledges. The third loans as of December 31, 2012, has outstanding loans in amount of Baht 4.21 million, has term of repayment for principle and interest every months of Baht 74,000.00 per month for the period of 7 years are carried by interest rate of MLR+1.75% per annum by the parent company pledges.


118 Annual Report 2012 PAE Thailand Company Limited

22.

Finance Lease Liabilities - Net Consisted of : Consolidated Financial Statements As of December 31 2012 2011 Baht Baht

Liabilities under financial lease agreement Less Deferred Interest Expenses

Separate Financial Statements As of December 31 2012 2011 Baht Baht

7,347,552.99 (777,222.78) 6,570,330.21

5,214,318.61 (692,729.61) 4,521,589.00

3,380,689.99 (476,918.24) 2,903,771.75

2,061,917.99 (405,725.54) 1,656,192.45

Less Current Portion of liabilities under financial lease agreement (2,489,612.93) Net 4,080,717.28

(1,712,963.70) 2,808,625.30

(1,127,352.94) 1,776,418.81

(600,642.45) 1,055,550.00

The aggregate minimum lease payments under leases agreements as follows: Consolidated Financial Statements As of December 31 2012 2011 Baht Baht Less than 1 year 2,847,318.02 2,560,718.61 More than 1 year but less than 5 4,500,234.97 2,653,600.00 years Total 7,347,552.99 5,214,318.61

23.

Separate Financial Statements As of December 31 2012 2011 Baht Baht 1,312,335.02 735,117.99 2,068,354.97 3,380,689.99

1,326,800.00 2,061,917.99

Employee Benefit Obligation The group company have unrecognised part of transitional liability the consolidated financial statements of Baht 7,416,281.00 and separate financial statements of Baht 4,562,681.00 is recognised on a straight-line basis over 5 years, the consolidated financial statements of Baht 1,483,256.20 per year and separate financial statements of Baht 912,536.20 per year since 1 January 2011.


119 Annual Report 2012 PAE Thailand Company Limited

Employee Benefit Obligation were as follows: Consolidate Financial Statements

Separate Financial Statements

For the years ended December 31 For the years ended December 31

Unrecognised part of transitional liability as Beginning Less Recognised part of transitional liability in current period Unrecognised part of transitional liability as Ending

2012

2011

2012

2011

Baht

Baht

Baht

Baht

5,933,024.80

7,416,281.00

3,650,144.80

4,562,681.00

(1,483,256.20)

(1,483,256.20)

(912,536.20)

(912,536.20)

4,449,768.60

5,933,024.80

2,737,608.60

3,650,144.80

Consolidate Financial Statements

Separate Financial Statements

For the years ended December 31 For the years ended December 31 2012

2011

2012

2011

Baht

Baht

Baht

Baht

Present value of the obligation as Beginning 4,041,132.20 2,611,619.20 Recognised part of transitional liability incurrent period 1,483,256.20 1,483,256.20 912,536.20 912,536.20 Current service cost 2,590,400.81 2,246,392.17 1,732,099.91 1,507,450.40 Interest Expense 418,914.59 311,483.80 262,994.09 191,632.60 Less Paid in the period (116,000.00) Present value of the obligation as Ending 8,417,703.80 4,041,132.17 5,519,249.40 2,611,619.20 The principal assumptions used for the purposes of the actuarial valuation were as follows: Discount rate Salary increase rate Employee turnover rate Mortality rate Retirement age

4.20 % 0.00 % â&#x20AC;&#x201C; 5.00 % 0.00 % â&#x20AC;&#x201C; 20.00 % 60.00 % 60 years


120 Annual Report 2012 PAE Thailand Company Limited

24.

Share Capital and Discount on Issue of Share For the year ended December 31, 2012 and 2011, authorized share capital and issued and paid-up share capital have the movement as follows: For the year ended

For the year ended

December 31, 2012

December 31, 2014

Par Value of Share Number of Share

Value

Number of Share

Value

(Baht)

Share

(Baht)

Shares

(Baht)

1.00

981,106,362

981,106,362.00

981,106,362

981,106,362.00

Less Decrease Ordinary Shares

1.00

(306,068,862)

(306,068,862.00)

-

-

Add Increase Ordinary Shares

1.00

675,037,500

675,037,500.00

-

-

Ending Ordinary Shares

1.00

1,350,075,000

1,350,075,000.00

981,106,362

981,106,362.00

Authorized Share Capital Beginning Ordinary Shares

Issued and Paid-up Share Capital Beginning Ordinary Shares

1.00

675,037,500

675,037,500.00

675,037,500

675,037,500.00

Add Increase Ordinary Shares

1.00

675,037,500

675,037,500.00

-

-

Ending Ordinary Shares

1.00

1,350,075,000

1,350,075,000.00

675,037,500

675,037,500.00

For the year ended December 31, 2012 and 2011, Discount on Issue of Share the movement of transaction are as fllows:

Beginning Discount on Issue of Share

For the year ended December

For the year ended

Par Value

December 31, 2012

December 31, 2011

of Share

Value

Value

(Baht)

(Baht)

(Baht)

(226,600,000.00)

(226,600,000.00)


121 Annual Report 2012 PAE Thailand Company Limited

Add Discount on Issue of Shares Ending Discount on Issue of Share

For the year ended December

For the year ended

Par Value

December 31, 2012

December 31, 2011

of Share

Value

Value

(Baht)

(Baht)

(Baht)

0.40

(270,015,000.00)

-

(496,615,000.00)

(226,600,000.00)

According the resolution of Extra Shareholder Meeting no 1/2012 dated November 2, 2012, which could be summarized a significant resolution as follows:

- Approve to cancle the issuance and offer the warrant to purchase the ordinary share to directors -

25.

consultants and employees of Company. Approve to decrease the registered capital from Baht 981,106,362 to Baht 675,037,500 par value of Baht 1.00 per share by excise registered capital that not distribution of 306,068,862 shares with the par value of Baht 1.00 per share. Approve the amendment of the Memorandum of Association in accordance to decrease the registered capital. Approve to increase the registered capital from Baht 675,037,500 to Baht 1,350,075,000 by issuing 675,037,500 new ordinary shares with the par value of Baht 1.00 per share to the former shareholders of the Company in accordance with the proportion of shareholding 1 existing share to 1 new share. The offering price is Baht 0.60 per share. Approve the amendment of the Memorandum of Association in accordance to increase the registered capital.

Capital Management The primary objectives of the Companyâ&#x20AC;&#x2122;s and its subsidiaries capital management are to maintain their abilities to continue as a going concern and to maintain an appropriate capital structure. As of December 31, 2012 and 2011, debt to equity ratio in the consolidated financial statements are 15.31 : 1 and 31.70 : 1, respectively, and the separate financial statements are 12.44 : 1 and 18.04 : 1, respectively.

26.

Tax Expense For the year ended December 31, 2012 and 2011, the Company and its subsidiaries calculates income tax at 23% and 30% respectively, of accounting net profit after adding adjusted transactions in accordance with the Revenue Code. The significant plus or minus of the adjustment transactions are carry forward loss no exceed 5 years, premium on vehicle depreciation, doubtful accounts, charity and loss from decline in value of inventories etc.


122 Annual Report 2012 PAE Thailand Company Limited

27.

Basic Earnings (Loss) per Share For the year ended December 31, 2012, the Company calculates the basic earnings (loss) per share by dividing profit (loss) for the year with weighted average number of ordinary shares as follows: Consolidated and Separate Financial Statements For the year ended December 31, 2012 Issued and PaidDays Weighted number of up Share Capital Ordinary Share

Date

Jan 1, 2012 – Nov 19, 2012 Nov 20, 2012 – Dce 31, 2012

675,037,500 1,350,075,000

Profit (Loss) for the year (Baht) Weighted Average Number of Ordinary Share ( Shares) Basic Earnings (Loss) Per Share (Baht)

28.

324/366 42/366

597,574,180.33 154,926,639.34 752,500,819.67

Consolidated and Separate Financial Statements For the year ended December 31, 2012 (332,675,916.08) (339,165,070.34) 752,500,819.67

752,500,819.67

(0.44)

(0.45)

Expenses by Nature Consisted of : Consolidated Financial Statements Separate Financial Statements For the year ended December 31 2012 2011 2012 2011 Baht Baht Baht Baht

Changes in Inventories and Work in Progress 2,147,335.47 (179,014,617.42) 3,615,920.82 (183,625,707.15) Raw Materials and 1,205,435,932.5 1,365,422,582.76 1,235,394,331.85 1,304,733,883.93 Consumables Used 4 (Gain) Loss in Value of (341,959.45) (341,959.45) Inventories Employee Expense 494,503,687.18 308,681,108.48 433,316,765.76 261,772,066.56 Management’s 25,037,912.65 24,296,674.40 20,941,859.25 21,141,428.00 Remuneration


123 Annual Report 2012 PAE Thailand Company Limited

Depreciation and Amortizatio 41,158,638.34 30,060,502.26 34,658,208.30 24,355,126.16 Expense Doubtful Debts (Reversal) 19,897,342.40 (16,091,130.91) 16,438,133.53 (15,505,829.87) Fee Expense 8,127,638.45 3,810,879.34 8,044,193.66 3,748,227.17 Other Expense 23,192,391.27 19,757,470.50 21,548,239.33 18,384,650.54 Total 1,979,487,528.52 1,426,553,259.05 1,843,297,204.58 1,335,363,934.50

29.

Segment Information Information on business sector operations is as follows: Consolidated Financial Statements For the year ended December 31, 2012 Civil Oil and Gas Installation and Engineering (Thousand Baht) Construction Service Assembly Work Service Total

Revenue from Sales and Services

747,026

Cost of Sales and Services (1,022,877) Gross Profit (Loss)

(275,851)

385,337

426,592

109,789

1,668,744

(327,265)

(412,762)

(100,418)

(1,863,322)

58,072

13,830

9,371

(194,578) 27,031

Other Income Seling and Administrative Expense

(116,165)

Finance Costs

(44,957)

Profit (Loss) before Income Tax

(328,669)

Tax Expense

(3,682)

Non - Controlling Interests Loss of PAE (THAILAND) PUBLIC COMPANY LIMITED

(325)

Segment Fixed Assets

152,741

91,458

(332,676) 87,224

22,448

353,871

Unallocated Assets

1,524,784

Total Assets

1,878,655


124 Annual Report 2012 PAE Thailand Company Limited

Consolidated Financial Statements For the year ended December 31, 2011 Civil Oil and Gas Installation and Engineering (Thousand Baht) Construction Service Assembly Work Service Total Revenue from Sales and Services

674,346

332,815

432,317

47,971

1,487,449

Cost of Sales and Services

(608,291)

(263,223)

(444,867)

(43,130)

(1,359,511)

66,055

69,592

(12,550)

4,841

127,938

Gross Profit (Loss)

9,555

Other Income Seling and Administrative Expense

(67,042)

Finance Costs

(30,371)

Profit (Loss) before Income Tax

(40,080)

Tax Expense

(1,854) 305

Non - Controlling Interests Profit of PAE (THAILAND) PUBLIC COMPANY LIMITED Segment Fixed Assets

107,501

56,125

38,531 69,877

7,754

241,257

Unallocated Assets

1,115,129

Total Assets

1,356,386

30.

Financial Instruments 30.1 Policy of Financial Risk Management The Group has no policy to hold or issue financial instruments for speculation or for commercial operation. 30.2 Interest Rate Risk The interest rate risk derives from the change of interest rates in the future which will affect the results operations and their cash flows of the Group. The Group has assets and liabilities which may have interest rate risk as follows:


125 Annual Report 2012 PAE Thailand Company Limited

Consolidated Financial Statements Amount

Annual Interest Rate

As of December 31

As of December 31

2012

2011

2012

2011

Million Baht

Million Baht

%

%

Cash Deposit - Saving Account

9.56

32.01

0.63-0.80

0.75 - 0.85

Cash Deposit - Fix Account

10.00

-

1.75

-

Restricted Deposit

5.02

5.96

2.25

3.37

Financial Institutions

116.20

202.04

8.00

7.00

Short - Term Borrowings from Other Persons

4.44

2.00

-

Short - Term Borrowings from Related Parties

92.56

50.63

2.00 - 5.00

5.00 - 8.00

352.03

97.01

Short - Term Borrowings from

-

Long - Term Borrowings from Financial Institutions Long - Term Borrowings from Related Parties

-

SPRL+0.00-0.05 SPRL+0.00-0.05

148.95

-

5.00 - 8.00

Separate Financial Statements Amount

Annual Interest Rate

As of December 31,

As of December 31,

2012

2011

2012

2011

Million Baht

Million Baht

%

%

Cash Deposit - Saving Account

5.60

24.79

0.63-0.80

0.75 - 0.85

Cash Deposit - Fix Account

10.00

-

1.75

-

Restricted Deposit

4.00

4.20

2.25

3.37

Financial Institutions

112.92

199.08

8.00

7.00

Short - Term Borrowings from Related Persons

90.06

50.63

5.00

5.00 - 8.00

Short - Term Borrowings from


126 Annual Report 2012 PAE Thailand Company Limited

Long - Term Borrowings from Financial Institutions

341.47

Long - Term Borrowings from Related Parties

-

92.86

SPRL+0.00- 0.05 SPRL+0.00- 0.05

148.95

-

5.00 - 8.00

30.3 Foreign currency risk The Companyâ&#x20AC;&#x2122;s exposure to foreign currency risk relates to its assets and liabilities which are not hedged by derivative financial instruments, however the management of the Company believed that does not effect significantly to the financial statement. As of December 31, 2012 and 2011, the Group had assets and liabilities that were not hedged by derivative financial instruments were as follows: Consolidated Financial Statements Separate Financial Statements As of December 31 2012

As of December 31

2011

2012

2011

Assets that were not Hedged by Derivative Financial Instruments US dollar

3,727.21

98,365.10

3,727.21

98,365.10

HKD dollar

77,091.36

-

-

-

14,336.50

330,754.05

14,336.50

330,754.05

Liabilities that were not Hedged by Derivative Financial Instruments US dollar MYR

-

20,277.78

-

20,277.28

30.4 Credit Risk The Company has the credit risk related to account receivable which the Company has several and various customers. However, the Company has a comprehensive credit policy thus the Company expects no significant damage from collecting debt of such account receivable. The Company also estimate the allowance for doubtful accounts based on the management appraisal regarding the account receivables' debt service ability in the past which the management believes it is sufficient. 30.5 Fair Value The financial assets and liabilities are mainly short term type and some loans have an low interest rate. The Company believes that book values of assets and liabilities do not significantly differ from their fair values. .


127 Annual Report 2012 PAE Thailand Company Limited

31.

Inter - Transaction In the year, the Company constitutes important business transaction with subsidiary, the related companies and the related persons. Such business transactions are complied with trading term and criteria as per mutually agreed between the Company and related companies which is complied with the normal course of business whereby it can be summarized as follows: 31.1 Related Revenues and Expenses

Consolidated Financial Statements Separate Financial Statements For the year ended December 31 Pricing Policy 2012 2011 2012 2011 Baht Baht Baht Baht Inter-Company Transaction with Subsidiary (Eliminated in the Consolidated Financial Statement) Revenue from Agreed price and Sales and 4,399.00 145,249.25 contract price Services Cost of Sales and Agreed price and 1,647,624.60 17,500.00 Service contract price Agreed price and Other Income 4,723,336.67 4,689,646.94 contract price Interest Income Interest rate 23,890.41 8-10% per annum Selling and Agreed price and Administrative 313,936.90 contract price Expense Interest Expense Interest rate 8,292.35 5 % per annum Inter - Transactions with The Joint Venture Other Income Agreed price 515,151.52 1,717,171.72 Interest Income Interest rate 8-10% 32,551.73 261,694.09 9,765.52 78,508.23 per annum


128 Annual Report 2012 PAE Thailand Company Limited

Inter - Transactions with Related Companies Cost of Service Agreed price 225,183,617.95 351,177,445.35 225,183,617.95 351,177,445.35 Interest Expense Interest rate 6,715,080.55 10,048,411.27 6,715,080.55 10,048,411.27 5 - 10 % per annum Inter - Transactions with Related Persons 3,381,570.14 1,483,427.95 Interest Expense Interest rate 3,381,570.14 1,483,427.95 5 - 10% per annum 31.2 Inter - Assets and Liabilities Consolidated Financial Statements Separate Financial Statements As of December 31 2012 2011 2012 2011 Baht Baht Baht Bah Trand Receivables The Related Companies Global Process Systems Inc. Innovative Technologies (iNe) Ltd (Cayman) The Joint Venture The Joint Venture of Sri U-Thong and PAE Total Less Allowance for Doubtful Accounts Net Unbilled Receivables The Joint Venture The Joint Venture of Sri U-Thong and PAE Total Other Receivables The Subsidiary Company PAE Technical Service Co., Ltd. The Related Companies Pacific Resources International Limited (BVI)

10,069,162.55

9,398,202.15

10,069,162.55

9,398,202.15

494,842.17

494,842.17

494,842.17

494,842.17

1,357,607.15

1,573,664.84

4,525,357.15

5,245,549.46

11,921,611.87 (956,453.54) 10,965,158.33

11,466,709.16 15,089,361.87 15,138,593.78 (494,842.17) (2,033,546.74) (494,842.17) 10,971,866.99 13,055,815.13 14,643,751.61

7,080,000.00

-

-

7,080,000.00

10,965,158.33

18,051,866.99 13,055,815.13 21,723,751.61

-

-

-

-

9,982,502.35

6,957,592.47

10,798,314.67

10,798,314.67


129 Annual Report 2012 PAE Thailand Company Limited

Consolidated Financial Statements Separate Financial Statements As of December 31 2012 2011 2012 2011 Baht Baht Baht Bah The Joint Venture The Joint Venture of Sri UThong and PAE Total Less Allowance for Doubtful Accounts Net Advance Payment The Subsidiary Company PAE Construction Resources Co., Ltd. Less Allowance for Doubtful Accounts Net Accrued Interest Income The Subsidiary Companies PAE Construction Resources Co., Ltd. The Joint Venture The Joint Venture of Sri UThong and PAE Total Less Allowance for Doubtful Accounts Net

23,502.34

23,502.34

78,341.14

78,341.14

23,502.34

23,502.34

20,859,158.16

17,834,248.28

-

-

(10,798,314.67)

(10,793,764.67)

23,502.34

23,502.34

10,060,843.49

7,040,483.61

-

-

7,388,200.56

7,392,750.56

-

-

(7,388,200.56)

(7,392,750.56)

-

-

-

-

-

-

4,574,993.05

4,574,993.05

10,136.98

32,719.36

33,789.93

109,064.54

10,136.98

32,719.36

4,608,782.98

4,684,057.59

(4,574,993.05)

(4,574,993.05)

33,789.93

109,064.54

10,136.98

32,719.36


130 Annual Report 2012 PAE Thailand Company Limited

Consolidated Financial Statements Separate Financial Statements As of December 31 2012 2011 2012 2011 Baht Baht Baht Bah Short - Term Loans The Subsidiary Companies PAE Construction Resources Co., Ltd. Balance as of Beginning Increase during the period Decrease during the period Balance as of Ending Allowance for Doubtful Accounts Balance as of Beginning Increase during the period Decrease during the period Balance as of Ending Net The Subsidiary Companies Pacific Resources International Limited(BVI) Balance as of Beginning Increase during the period Decrease during the period Balance as of Ending Allowance for Doubtful Accounts Balance as of Beginning Increase during the period Decrease during the period Balance as of Ending Net The Subsidiary Companies Oasis Development Co., Ltd. Balnce as of Beginning Increase during the period Decrease during the period Balance as of Ending

-

-

20,501,650.00 36,991.00 20,538,641.00

20,475,000.00 26,650.00 20,501,650.00

-

-

(20,501,650.00) (36,991.00) (20,538,641.00) -

(20,475,000.00) (26,650.00) (20,501,650.00) -

-

-

34,068,655.93 20,000.00 34,088,655.93

34,048,655.93 20,000.00 34,068,655.93

-

-

(34,068,655.93) (20,000.00) (34,088,655.93) -

(34,048,655.93) (20,000.00) (34,068,655.93) -

-

-

14,842,199.77 30,628.00 14,872,827.77

14,809,297.06 32,902.71 14,842,199.77


131 Annual Report 2012 PAE Thailand Company Limited

Consolidated Financial Statements Separate Financial Statements As of December 31 2012 2011 2012 2011 Baht Baht Baht Bah Short – Term Loans (Continue) Allowance for Doubtful Accounts Balance as of Beginning Increase during the period Decrease during the period Balance as of Ending Net PAE Technical Service Co., Ltd. Balance as of Beginning Increase during the perio Decrease during the period Balance as of Ending The Joint Venture The Joint Venture of Sri UThong and PAE Balance as of Beginning 401,287.16 Increase during the period Decrease during the period (401,287.16) Balance as of Ending Total Short – Term Loans - Net Trade Payables The Subsidiary Companies PAE Technical Service Co., Ltd. PAE Construction Resources Co., Ltd Oasis Development Co., Ltd. The Related Companies Innovative Technologies (iNe) Ltd (Cayman) Sri U Thong Co., Ltd. The Joint Venture The Joint Venture of Sri UThong and PAE 5,298.29

-

(14,842,199.77) (30,628.00) (14,872,827.77) -

-

(14,770,133.31) (72,066.46) (14,842,199.77) 2,000,000.00 (2,000,000.00) -

2,214,432.26 1,818,503.83 (3,631,648.93) 401,287.16 401,287.16

1,337,623.88 (1,337,623.88) -

4,732,088.05 3,992,126.74 (7,386,590.91) 1,337,623.88 1,337,623.88

-

1,829,876.44

171,200.00

-

134,883.70

134,883.70

-

204,300.00

14,300.00

453,871.97

-

453,871.97

1,178,590.69

-

-

5,298.29

17,661.00

17,661.00


132 Annual Report 2012 PAE Thailand Company Limited

Total

Consolidated Financial Statements Separate Financial Statements As of December 31 2012 2011 2012 2011 Baht Baht Baht Bah 5,298.29 1,637,760.95 2,186,721.14 791,916.67

Unbilled Cost The Related Companies Global Process Systems Inc. 180,714,110.77 Other Payables The Related Companies Global Process Systems Inc. Accrued Interest Expense The Related Companies PAE Technical Service Co., Ltd. The Related Persons Mrs.Urairat Boonakas 2,495,225.05 Mr. Ratanaphon 1,540,717.72 Wongnapachant Mrs.Chintana Kaweewong 100,945.49 Total 4,136,888.26 Short â&#x20AC;&#x201C; Term Borrowings The Subsidiary Companies PAE Technical Service Co., Ltd. Balance as of Beginning Increase in the period Decrease in the period Balance as of Ending The Related Persons Mrs.Urairat Boonakas Balance as of Beginning 29,600,000.00 Increase in the period 28,032,800.00 Decrease in the period (57,093,950.00) Balance as of Ending 538,850.00 Mr.Ratanaphon Wongnapachant Balance as of Beginning 18,400,000.00 Increase in the period 82,000,000.00 Decrease in the period (13,500,079.00)

232,912,395.21

180,714,110.77

232,912,395.21

26,487,429.95

-

26,487,429.95

-

11,930.70

3,638.35

957,533.16

2,495,225.05

957,533.16

218,260.28

1,540,717.72

218,260.28

475,122.68 1,650,916.12

100,945.49 4,136,888.26

475,122.68 1,650,916.12

-

5,400,000.00 (5,400,000.00) -

-

37,730,000.00 (8,130,000.00) 29,600,000.00

29,600,000.00 28,032,800.00 (57,093,950.00) 538,850.00

37,730,000.00 (8,130,000.00) 29,600,000.00

18,400,000.00 -

18,400,000.00 82,000,000.00 (13,500,079.00)

18,400,000.00 -


133 Annual Report 2012 PAE Thailand Company Limited

Consolidated Financial Statements Separate Financial Statements As of December 31 2012 2011 2012 2011 Baht Baht Baht Bah 86,899,921.00 18,400,000.00 86,899,921.00 18,400,000.00

Balance as of Ending Mrs.Chintana Kaweewong Balance as of Beginning 2,625,000.00 2,625,000.00 2,625,000.00 Increase in the period 19,280,000.00 4,420,000.00 19,280,000.00 Decrease in the period (19,280,000.00) (4,420,000.00) (19,280,000.00) Balance as of Ending 2,625,000.00 2,625,000.00 2,625,000.00 Short â&#x20AC;&#x201C; Term Borrowings (Continue) Mrs.Paveera Srikesem Balance as of Beginning Increase in the period 2,000,000.00 2,000,000.00 Decrease in the period (2,000,000.00) (2,000,000.00) Balance as of Ending Mrs.Patum Srikesem Balance as of Beginning Increase in the period 6,500,000.00 Decrease in the period (4,000,000.00) Balance as of Ending 2,500,000.00 Total 92,563,771.00 50,625,000.00 90,063,771.00 Long - Term Borrowings and Accrued Interest Expense The Related Party Global Process Systems Inc. 148,952,695.80 -

2,625,000.00 4,420,000.00 (4,420,000.00) 2,625,000.00

50,625,000.00

148,952,695.80


134 Annual Report 2012 PAE Thailand Company Limited

The change in long - terms borrowings and accrued interest expense for the year ended December 31, 2012 and 2011, as follows

Balance as of Beginning Increase during the period Decrease during the period Balance as of Ending

Consolidated Financial Statements Separate Financial Statements For the year ended December 31 2012 2011 2012 2011 Baht Baht Baht Baht 148,952,695.80 138,926,238.50 148,952,695.80 138,926,238.50 6,715,080.55 10,026,457.30 6,715,080.55 10,026,457.30 (155,667,776.35) (155,667,776.35) - 148,952,695.80 - 148,952,695.80

On November 12, 2009, the Company entered into a loan agreement with Global Process Systems Inc., a major shareholder, to restructure its outstanding short-term loans with Global Process Systems Inc. by fixing the repayment schedule. In accordance with this agreement, a monthly installment payment of Baht 10 million will commence on June 2010, with the last installment payment in July 2011. The loans are bearing interest at the rate of 8% per annum. Any interest not paid shall be added to the principal amount every month. On June 27, 2010, Global Process Systems Inc., has extended its debt to the Company. The first installment will be paid on January 2012, and the last installment will be paid on April, 2013 totalling 16 months. Later on November 30, 2010, there has been contract correction while there is fully loan plus interest repayment schedule in November, 2011. And then on June 15, 2011, there has been contract correction while there is fully loan plus interest repayment schedule on May, 2012. In the 4th quarter 2011, the Company operates with the reduction of interest, the methold of calculation and the extension of repayment. Later on January 26, 2012, there has been contract correction while there is fully loan plus interest repayment schedule in April, 2013, and the method of calculation interest and interest as described above interest at the rate of 5% per annum. The amount of principal and interest outstanding as of September 1, 2011, The interest that is not considered a principal part of the following month. Later on December 25, 2012, the Company paid loans and accrued interest expenses in full. 31.3 Key Management Personnel Compensation

Short-Term Employee Benefits Post-Employment Benefits

Consolidated Financial Statements Separate Financial Statements For the year ended December 31 2012 2011 2012 2011 Baht Baht Baht Baht 23,224,401.25 22,603,466.00 19,593,401.25 19,875,466.00 1,813,511.40 1,693,208.40 1,348,458.00 1,265,962.00 25,037,912.65 24,296,674.40 20,941,859.25 21,141,428.00


135 Annual Report 2012 PAE Thailand Company Limited

Management benefit expenses represent the benefits paid to the Company’s management and directors, including monetary benefits such as salaries, related benefit and directors’ remuneration, including the benefit paid by other means. The Company’s management are the persons who are defined under the Securities and Exchange Act. 31.4 Relationship among the Companies and Persons consisted of: Company ’s name and related persons PAE Construction Resources Company Limited Pacific Resources International Limited (BVI) PAE Technical Service Company Limited Oasis Development Company Limited Global Process Systems Inc. Innovative Technologies (iNe) Ltd. (Cayman) The Joint Venture of Sri U-Thong and PAE Sri U Thong Co., Ltd. Mrs.Chintana Kaweewong Mrs.Urairat Boonakas Mr. Ratanaphon Wongnapachant Mrs.Paveera Srikesem Mrs.Patum Srikesem

32.

Nature of relationship Subsidiary by Direct Shareholding Subsidiary by Direct Shareholding Subsidiary by Direct Shareholding Subsidiary by Direct Shareholding Shareholder Company Commom Shareholder Joint Venture Venture Company’s Director Company’s Director Company’s Director Subsidiary’s Director Related Persons with Director

Non- Cash Transactions Consolidated Financial Statements Separate Financial Statements For the year ended December 31 2012 2011 2012 2011 Baht Baht Baht Baht

- Property, Plant and Equipments Increase from Transfer to Settle the Debt from Purchases Assets with Credit from Finance Lease Liabilities from Investment Property from Inventories from Non Current Assets - Write off Trade Receivable to Bad Debt

20,952,703.74 4,380,168.33 2,018,600.00 33,624,743.54 1,850,000.00 674,193.20

616,822.44 -

20,952,703.74

2,722,083.39 2,285,140.11 2,018,600.00 33,624,743.54 -

-

616,822.44 1,500,00.00 -


136 Annual Report 2012 PAE Thailand Company Limited

33.

Obligations and Contingent Liabilities In addition to the liabilities shown in the statements of financial position, the Group had other obligation and contingent liabilities as fol1ows: 33.1 The Company had other obligations related to employment subcontractors as follows: Consolidated/Separate Financial Statements As of December 31 Currencies (Million) 2012 2011 THB 246.22 668.77 USD 10.78 15.68 33.2 The Company and the subsidiaries have commitments regarding to the agreements for construction in progress are as follows: Consolidated Financial Statements Separate Financial Statements As of December 31 Currencies (Million) 2012 2011 2012 ,2011 THB 1,007.01 1,489.94 994.11 1,468.94 USD 11.12 16.17 11.12 16.17 33.3 The Company and the subsidiaries have obligations to banks a letter of guarantees issued by the banks favor collateral as follows: Consolidated Financial Statements Separate Financial Statements As of December 31 2012 2011 2012 2011 Million Baht Million Baht Million Baht Million Baht Bank guarantees 639.91 521.08 639.00 518.97 Aval 28.50 54.51 28.50 54.51 33.4 The Company have contingent liabilities with commercial banks as follows: Consolidated and Separate Financial Statements As of December 31 2012 2011 Million Baht Million Baht - Letter of Credit Credit Line Baht 31.00 Million, Unused 15.03 Credit Line Baht 45.00 Million, Unused 34.18 33.5 As of December 31, 2012 and 2011, the subsidiaries have obligation in the future under construction contract assets will payment of Baht 1.31 million and Baht 7.40 million, respectively.


137 Annual Report 2012 PAE Thailand Company Limited

34.

Reclassification of Accounts The Company reclassified some items in comparative financial statements in order to comply with the present financial statement, which does not have any affects on net profit (loss) or shareholderâ&#x20AC;&#x2122;s equity already presented. The details of reclassification are as follows: Consolidate Financial Statements As Previously Reported

Reclassified

As Currently Reported

Baht

Baht

Baht

Statement of Financial Position as of January 1, 2011 Trade and Other Receivables - Net Trade Receivables - Net 99,544,443.93 Unbilled Receivables 152,628,244.48 Trade and Unbilled Receivables Related 47,648,409.08 Parties- Net Other Current Assets 24,680,137.63 Withholding Income Taxes 47,958,212.67 Retention Receivables as Contracts 16,846,837.32 Other Non-Current Assets 2,013,132.30 Trade and Other Payables Advances Received from Construction Contracts Retention for Construction Trade Payables 99,041,642.99 Unbilled Cost 27,198,713.29 Trade Payables - Related Parties 5,234,288.80 Advance from Customers 98,389,434.00 Current Income Tax Payable Other Current Liabilities 97,846,555.14 Statement of Financial Position as of December 31, 2011 Trade and Other Receivables - Net Trade Receivables - Net 105,063,194.49 Unbilled Receivables 549,545,055.69 Trade and Unbilled Receivables Related 18,051,866.99 Parties- Net Retention Receivables as Contracts 33,635,835.99 Withholding Income Taxes 61,323,612.84 Other Current Assets 31,312,867.65 Other Non-Current Assets 6,060,658.37

201,573,144.29 (99,544,443.93) 11,727,628.46 (47,648,409.08)

201,573,144.29 164,355,872.94 -

(18,149,706.99) (47,958,212.67) 385,672.22 (385,673.30) 194,425,742.80 95,158,416.84

6,530,430.64 17,232,509.54 1,627,459.00 194,425,742.80 95,158,416.84

19,089,530.23 (99,041,642.99) (8,306,022.04) (5,234,288.80) (98,389,434.00) 64,253.10 (97,766,556.14)

19,089,530.23 18,892,691.25 64,253.10 79,999.00

203,056,404.48 (105,063,194.49) 7,080,000.00 (18,051,866.99)

203,056,404.48 556,625,055.69 -

(440,384.49) (61,323,612.84) (21,787,973.24) (3,469,372.43)

33,195,451.50 9,524,894.41 2,591,285.94


138 Annual Report 2012 PAE Thailand Company Limited

Trade and Other Payables

-

326,977,374.93

326,977,374.93

Consolidate Financial Statements As Previously Reported

Reclassified

As Currently Reported

Baht

Baht

Baht

Statement of Financial Position as of December 31, 2011 (continue) Advances Received from Construction 130,266,571.87 Contracts Retention for Construction 25,245,878.34 Trade Payables 241,560,073.55 (241,560,073.55) Trade Payables - Related Parties 1,637,760.95 (1,637,760.95) Unbilled Cost 60,782,296.91 232,912,395.21 Unbilled Cost Related Parties 232,912,395.21 (232,912,395.21) Advance from Customers 130,266,571.87 (130,266,571.87) Current Income Tax Payable 64,253.10 Other Current Liabilities 109,171,970.12 (109,089,671.84)

130,266,571.87 25,245,878.34 293,694,692.12 64,253.10 82,298.28

Separate Financial Statements As Previously Reported

Reclassified

As Currently Reported

Baht

Baht

Baht

Statement of Financial Position as of January 1, 2011 Trade and Other Receivables - Net Trade Receivables - Net 72,818,877.90 Unbilled Receivables 126,249,063.22 Trade and Unbilled Receivables Related 71,225,911.01 Parties- Net Retention Receivables as Contracts 15,772,977.80 Other Current Assets 26,851,030.71 Withholding Income Taxes 47,881,178.29 Other Non-Current Assets 798,477.39 Trade and Other Payables Advances Received from Construction Contracts Retention for Construction -

204,474,801.52 (72,818,877.90) 11,727,628.46 (71,225,911.01)

204,474,801.52 137,976,691.68 -

(593,880.94) (22,942,124.45) 47,881,178.29 (740,457.39) 158,073,657.66 95,158,416.84

15,179,096.86 3,908,906.26 58,020.00 158,073,657.66 95,158,416.84

19,052,650.33

19,052,650.33


139 Annual Report 2012 PAE Thailand Company Limited

Trade Payables 91,601,708.24 Trade Payables - Related Parties 757,920.60 Advance from Customers 95,158,416.84 Other Current Liabilities 84,846,679.14 Statement of Financial Position as of December 31, 2011 Trade and Other Receivables - Net Trade Accounts Receivables - Net 75,872,059.78 Unbilled Receivables 542,095,425.05 Trade and Unbilled Receivables Related 21,723,751.61 Parties- Net Other Current Assets 34,176,685.68 Withholding Income Taxes 59,373,910.58

91,601,708.24 757,920.60 95,158,416.84 84,766,679.14

80,000.00

177,336,022.59 (75,872,059.78) 7,080,000.00 (21,723,751.61)

177,336,022.59 549,175,425.05 -

(24,651,791.27) (59,373,910.58)

9,524,894.41 -

Separate Financial Statements As Previously Reported

Reclassified

As Currently Reported

Baht

Baht

Baht

Statement of Financial Position as of December 31, 2011 (continue) Retention Receivables as Contracts 33,047,756.58 (593,880.94) Other Non-Current Assets 2,641,012.90 (2,200,628.41) Trade and Other Payables - 306,082,851.88 Advances Received from Construction - 130,266,571.87 Contracts Retention for Construction 25,116,498.44 Trade Payables 239,290,152.55 (239,290,152.55) Trade Payables - Related Parties 791,916.67 (791,916.67) Unbilled Cost 60,782,296.91 232,912,395.21 Unbilled Cost Related Parties 232,912,395.21 (232,912,395.21) Advance from Customers 130,266,571.87 (130,266,571.87) Other Current Liabilities 91,199,581.03 (91,117,281.10)

32,453,875.64 440,384.49 306,082,851.88 130,266,571.87 25,116,498.44 293,694,692.12 82,299.93


140 Annual Report 2012 PAE Thailand Company Limited

35.

Legal Proceedings As of December 31, 2012 and 2011, the Group is involved in a number of legal proceedings, the results of which have yet to be finalised as follows: (1) Labour case Black Number

Is Was Plaintiff called In charge of defendant prosecuted or mistake No. for damage No. No.

Adjudication The case is currently under investigation by the Court of Supreme The case is currently under investigation by the Court of Supreme The Counrt of First Instance had dismissed the case. It is under extension of appeal. The Company has performed compromise contract in Legal, the Company accept to pay Baht 10.90 million. (record in amount of Baht 10.55 million) The Company has performed compromise contract in legal.

4910/2009

Civil

1

Infringe

Baht 1.68 million

2232/2010

Civil

1

Infringe

Baht 0.89 million

659/2012

Civil

1

Infringe

Baht 7.57 million

ŕ¸&#x2022;660/2012

Civil

1

Infringe

Baht 11.46 million

66/2012

Civil

1

Infringe

Baht 1.33 million

1140/2012

Civil

1

Return bank Baht 3.74 million guarantees

It is under extension of appeal.

1306/2012

Civil

1

The goods Baht 0.40 million

The case is currently under investigation by the Court of Civil


141 Annual Report 2012 PAE Thailand Company Limited

(2) Lawyer fee case - Black Case No. 5439/2007 and Red Case No.4351/2008 A company filed a claim against the Company for a default of lawyer fee amount of Baht 1.20 million. The Court dismissed the case as Red Case 4351/2008. However, the plaintiff subsequently filed a petition with the Court of Appeal. The case is currently under consideration by the Court of Supreme.

36.

Events After the Reporting Period According the resolution of Extra Shareholder Meeting no 1/2013 dated January 20, 2013, which could be summarized a significant resolution as follows:

- Approve to the issuance and offering for sale of convertible debentures to foreign specific investor (Private Placement) in the amount not exceeding SGD 20 million or in the equivalent amount of other currencies, and also the issuance and offering for sale of convertible debentures which has the determination method of the conversion price possibly to result the conversion price lower than 90% of the market price. - Approve to the increase the registered capital of the Company in amount of Baht 450,000,000 from in amount of Baht 1,350,075,000 to the new registered capital in amount of Baht 1,800,075,000 by newly issued ordinary shares of 450,000,000 shares with the par value of Baht 1.00 per share. - Approve the amendment of the Memorandum of Association in accordance to increase the registered capital. - Approval of the allotment of 450,000,000 newly issued ordinary shares at a par value of Baht 1.00 per share to reserve for the exercise of right of convertible.

37.

Approval of the Financial Statements The financial statements have been approved to issue by the board of directorsâ&#x20AC;&#x2122; the Company on Febuary, 28, 2013.


Pae 12  

PAE_2012 PAE (THAILAND) PCL Annual Report 2012

Read more
Read more
Similar to
Popular now
Just for you