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Patkol Public Company Limited

Contents Financial Highlight ○

1 ○

Message from the Chairman of the Board ○

41

Auditûs Report and Financial Statement ○

38

Financial Position and Results of Operation ○

37

Result from Business Operation ○

36

Transaction with Related Parties ○

35

Major Shareholders ○

34

Audit Committee Corporate Governance Report ○

33

Internal Control ○

21

Organization Chart ○

19

Management ○

18

Risk Factors ○

17

Income Structure of Business Group ○

16

Business Operation ○

14

General Information ○

10

Major Events and Developments ○

4

Executive Committees ○

3

Board of Directors ○

2

Message from the President and Chairman of Management Committee ○

53

Annual Report 2007

88

As of 31 December 2007


Patkol Public Company Limited

Financial Highlight Comparative Data PATKOL PUBLIC COMPANY LIMITED †

2007

Total Assets Total Liabilities Total Shareholdersû Equity Sales and Service Income Total Revenue Gross Profit Net Profit Before Interest and Tax Net Profit (Loss) Net Profit Margin (%) Return on Total Assets (%) Net Profit Per Share (Baht) Dividend Per Share (Baht) Book Value Per Share (Baht)

3,022 2,597 425 3,549 3,591 31 (188) (289) (8.1) (9.5) (1.21) 0.15 1.78

Million Baht 2006 2005 3,087 2,337 750 3,621 3,664 301 149 61 1.7 2.2 0.26 0.10 3.14

2004

2,500 1,727 772 2,754 2,786 250 136 67 2.4 2.7 0.28 3.24

2,426 1,720 705 2,246 2,282 195 101 53 2.3 4.3 0.22 0.57 2.96

Million Baht 2006 2005

2004

Comparative Data PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES †

2007

Total Assets Total Liabilities Total Shareholdersû Equity Sales and Service Income Total Revenue Gross Profit Net Profit Before Interest and Tax Net Profit (Loss) Net Profit Margin (%) Return on Total Assets (%) Net Profit Per Share (Baht) Dividend Per Share (Baht) Book Value Per Share (Baht)

3,668 3,122 545 3,673 3,702 105 (161) (280) (7.6) (7.8) (1.18) 0.15 2.24

Annual Report 2007

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3,560 2,699 861 3,779 3,811 402 205 100 2.6 3.2 0.42 0.10 3.56

2,690 1,906 784 2,726 2,761 283 144 67 2.4 2.6 0.28 0.00 3.24

As of 31 December 2007

2,468 1,752 715 2,393 2,443 224 109 53 2.2 4.3 0.22 0.57 2.96


Patkol Public Company Limited

Message from the Chairman of the Board Dear Shareholders, It is well known to our local and international customers, and our share holders alike, that the Company Patkol is indeed a leading Thai engineering firm, dealing in the development, designing and fabrication of process equipment, components, production machines and state-of-the-art integration design to support the çprocess industriesé. Being founded some forty years ago by one enterprising engineer, who happens to be our present Managing Director, Dr. Piya Chongvatana, the company has a long tract record in producing ice-making machines and related equipment of various kinds and refrigeration system for preservation of food and of other perishable products. The tube-ice in your drinks that you may order from bars or restaurants in this country or in any asean countries are most likely produced by Patkolûs tube-ice making machines. The collective experiences and capacities of Patkolûs engineering, scientist, technical and business staff have subsequently been extended to cover other industrial production lines and other equipment and components, which present brighter business future to our firmûs port folio. However, in certain area of our venture, the firmû business during the last year has experienced a few hiccups, as you may see in this annual business report. Obviously, with businesses as concentrated, Patkol is indeed in a strategic position in overall Thai industrial structure, not only in creation of competitiveness of local process industry as a whole, but also with greater potential in earning foreign exchanges through exports of our engineering products and services. However, the firm has not ever received any preferential treatment from any governmental agencies, over and beyond the usual, common privileges. As our core products are no longer sold as çHot Cakeé as before, particularly in time of present slow-down in Thai and world economy, the management team, while maintaining the core businesses, has to gradually shift the companyûs efforts toward other high-valued sectors, in order to earn more and to provide adequate and respectable dividends to our share holders. The Board members and the management team of the company are optimistic of the companyûs future. The turnaround of the companyûs business performance is expected within a year or two, as the company is pushing harder for marketing abroad and shifting our businesses more toward energy and petro-chemical sectors. The success of our company is indeed our commitment.

Assoc. Prof. Dr. Somchob Chaiyavej Chairman

Annual Report 2007

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As of 31 December 2007


Patkol Public Company Limited

Message from the President and Chairman of Management Committee Dear Shareholders, This year, the management would like to inform you that the business performance of Patkol Public Company Limited has not met the expectation. The construction of an ethanol plant was not carried out as planned. The project valuation was mistaken due to the unfamiliarity and the surging prices of materials. The prices of steel and stainless dramatically changed at a rate of 80-100%. The ethanol project was therefore attributable to the losses. The sales of core businesses have also declined due to the nation没s economy adversely affected by the political situation. Nevertheless, the management found that even though the project of ethanol plant construction incurred losses the Company is heading to a positive direction. The continuous increase of oil prices assures that there will be more plant construction in Thailand. The Thai government has also expressed its intention to promote consumption of ethanol. The import tariff for automobiles with E 20 engine or fuel oil mixed with 20% ethanol is reduced. Bangchak Petroleum Plc. is further establishing more gas stations with E 85 or fuel oil mixed with 85% ethanol to promote ethanol consumption. For the existing businesses, Patkol has been trying to introduce new products as well as undertaking more equipment production for petrochemical plants, the same type of uses in ethanol plants, for which the Company has higher production capacity than that of ethanol. Moreover, Patkol has also increased sales abroad, particularly the tube ice making machine in Middle East countries. The products are well accepted in their world class and high quality. In 2008, the Company will still work harder to improve revenues as to compensate losses in 2007. The management will put the best efforts and endeavor possible to bring Patkol back to its profitability by 2009. The management wishes to inform that Patkol still has a promising opportunity for business growth and will do whatever it takes to lower the costs and gain revenues in the shortest time.

Dr. Piya Chongvatana (President and Chairman of Management Committee)

Annual Report 2007

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As of 31 December 2007


Patkol Public Company Limited

Board of Directors Name Assoc. Prof. Dr. Somchob Chaiyavej Age 71 Years Notionality Thai Position Chairman of the Board Date of Assuming of Office April 27,2006 Number of Years in the Office 1.8 Year Holding of Companyûs Share None Member of the Board of other businesses None In conflict of interest with the Companyûs Involvement in any lawsuits None during the past 10 years Highest Academic Qualification - Ph.D in Mechanical Engineering (Purdue University, USA.) - National Defense College, Class 28 Training Courses for Director - DAP Director Accreditation Program Employment Records Past - Instructor at the Thai-German Tech Institute (TGTI) - Deputy Director of TGTI - Dean, Faculty of Engineering, the King Mongkutûs Institute of Technology North Bangkok (KMITNB) - Vice President and President (KMITNB) - Member of the Board: University Education Bureau - Member of the Board of Investment (BOI) - Member: National Research Council in Science and Technology - Member of the Board: Thailand Institute for Science and Technology Research Present - Member: Steering Committee Thai-German Institute for Production Technology (Ministry of Industry) - Member: National Parliament Civil Service Council - Senior Advisor to Joint-Venture Fund çOneé for SME - Council President: North Bangkok College - Council Member: Rajmongkol (Tanya Buri) Technical University - Advisor to the Board of Investment - Advisor to the Board of Science and Technology Research Center(STRC) of King Mongkutûs Institute of Technology North Bangkok - Director, Dr.Piya Chongvatana Foundation Senior Professional Engineer (Mechanical Engineer)

Annual Report 2007

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As of 31 December 2007


Patkol Public Company Limited Name Miss Ratchanee Chongvatana Age 77 Years Notionality Thai Position Director Date of Assuming of Office June 28, 1993 Number of Years in the Office 15 Years Holding of Companyûs Share 28.879.942 Ordinary shares Member of the Board of other businesses None In conflict of interest with the Companyûs Involvement in any lawsuits None during the past 10 years Highest Academic Qualification - Bachelorû Degree in Electrical Engineering, Chulalongkorn University Employment Records Present - Chairman, Prepack Thailand Co., Ltd. - Director, Patkol (1984) Co.,Ltd. Senior Professional Engineer (Electrical Engineer ; Power) Name Dr. Piya Chongvatana Age 62 Years Notionality Thai Position President Date of Assuming of Office June 28, 1993 Number of Years in the Office 15 Years Holding of Companyûs Share 31,316,844 Ordinary shares Member of the Board of other businesses None In conflict of interest with the Companyûs Involvement in any lawsuits None during the past 10 years Highest Academic Qualification - Associated Degree in Applied Science in Air Conditioning Engineering Technology, Milwaukee School of Engineering, Milwaukee, Wisconsin, USA.. - Bachelorûs Degree in Mechanical Engineering, Chulalongkorn University - The Honorary Degree of Doctor of Engineering in Mechanical Engineer From King Mongkutûs Institute of Technology North Bangkok 2006 Employment Records Present - Chairman, Patkol Manufacturing Co.,Ltd. - Chairman, Patkol R&D Co.,Ltd. - Chairman, Patkol (1984) Co.,Ltd. - Chairman, Siam Patkol Co.,Ltd. - Chairman, Kaset Phet Co.,Ltd. - Director, PKB Enterprise Co.,Ltd. - Director, Prepack Thailand Co.,Ltd. - Advisor to the Board of Science and Technology Research Center(STRC) of King Mongkutûs Institute of Technology North Bangkok - Honorary President, Thai Refrigeration Association - Honorary Director of ASHRAE Thailand Chapter - Vice President , Thai - Bangladesh Chamber of Commerce - Director of The Federation of Thai Industries - Chairman, Dr. Piya Chongvatana Foundation Senior Professional Engineer (Mechanical Engineer) Annual Report 2007

5

As of 31 December 2007


Patkol Public Company Limited Name Mrs. Vipa Chulajata Age 73 Years Notionality Thai Position Director Date of Assuming of Office June 28, 1993 Number of Years in the Office 15 Years Holding of Companyûs Share 31,116,475 Ordinary shares Member of the Board of other businesses None In conflict of interest with the Companyûs Involvement in any lawsuits None during the past 10 years Highest Academic Qualification - Bachelorûs Degree M.A. (Honours) in Modern Languages, Edinburgh University Employment Records Former - Government official in Ministry of Education - Lecturer, Faculty of Liberal Arts, Thammasart University Present - Director, Prepack Thailand co., Ltd. - Director, Patkol (1984) Co.,Ltd. - Director, Siam Patkol Co., Ltd. - Director, Kaset Phet Co.,Ltd. - Director, PKB Enterprise Co.,Ltd. - Director, Dr.Piya Chongvatana Foundation Name Mr. Sangchai Chotechuangchutchaval Age 51 Years Notionality Thai Position Director Date of Assuming of Office May 26, 1998 Number of Years in the Office 9 Years Holding of Companyûs Share 25,773,303 Ordinary shares Member of the Board of other businesses None In conflict of interest with the Companyûs Involvement in any lawsuits None during the past 10 years Highest Academic Qualification - Bachelorûs Degree in Electrical Engineering, King Mongkutûs institute of Technology North Bangkok - Master Degree of Public Administration, national institute of Development Administration Employment Records Present - Director, Patkol Manufacturing Co.,Ltd. - Director, Patkol (1984) Co.,Ltd. - Director, Siam Patkol Co., Ltd. - Director, Kaset Phet Co.,Ltd. - Director, Patkol R&D Co.,Ltd.. - Director, Dr.Piya Chongvatana Foundation Professional Engineer (Electrical Engineer ; Power)

Annual Report 2007

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As of 31 December 2007


Patkol Public Company Limited Name Assoc. Prof. Noppavan Chongvatana Age 59 Years Notionality Thai Position Director Date of Assuming of Office June 16, 2000 Number of Years in the Office 8 Years Holding of Companyûs Share 12,624,151 Ordinary shares Member of the Board of other businesses None In conflict of interest with the Companyûs Involvement in any lawsuits None during the past 10 years Highest Academic Qualification - Master Degree, Library Studies and Demography, University of Hawaii (By Ford Foundation) - Masterûs Degree in Demography (Honour), Faculty of Political Science, Chulalongkorn University Employment Records Former - Asso.Prof Chulalongkorn University Present - Director, Patkol Manufacturing Co., Ltd. - Director, Patkol (1984) Co., Ltd. - Director, Siam Patkol Co., Ltd. - Director, Kaset Phet Co., Ltd. - Director, Patkol R&D Co.,Ltd. - Director, PKB Enterprise Co., Ltd. - Director and secretary , Dr.Piya Chongvatana Foundation Name Mr. Paradorn Chulajata Age 43 Years Notionality Thai Position Director Date of Assuming of Office June 28, 1993 Number of Years in the Office 15 Years Holding of Companyûs Share 2,649,500 Ordinary shares Member of the Board of other businesses None In conflict of interest with the Companyûs Involvement in any lawsuits None during the past 10 years Highest Academic Qualification - Masterûs Degree in Business Administration, Faculty of Finance, Eastern Michigan University, USA. Training Courses for Director - DCP Refresher Course Employment Records Former - Investment Banking Officer, Patra Thanakij Plc. - Vice President Financial, Patkol Plc. Present - Audit Committeeûs Consultant, Patkol Plc. - Managing Director, Prepack Thailand Co., Ltd. - Director, PKB Enterprise Co., Ltd.

Annual Report 2007

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As of 31 December 2007


Patkol Public Company Limited Name Mr. Suchart Sooksumitr Age 71 Years Notionality Thai Position Director Date of Assuming of Office May 28, 1996 Number of Years in the Office 12 Years Holding of Companyûs Share None Member of the Board of other businesses None In conflict of interest with the Companyûs Involvement in any lawsuits None during the past 10 years Highest Academic Qualification - Bachelorûs Degree of Law, Thammasart University ,ô‚arrister at Law Training Courses for Director - Accounting for Non-Accounting Audit Committee Employment Records Former - Judge, Ministry of Justice (26 years) last position, Judge of the Supreme Court of Thailand Present - Director and Chairman of Audit Committee, Patkol Plc. - Legal Advisor, Patkol Plc.

Name Mr. Virachai Srikajorn Age 54 Years Notionality Thai Position Director Date of Assuming of Office May 28, 1993 Number of Years in the Office 15 Years Holding of Companyûs Share None Member of the Board of other businesses None In conflict of interest with the Companyûs Involvement in any lawsuits None during the past 10 years Highest Academic Qualification - Masterûs Degree in Business Administration, South Eastern University, Washington DC, USA. Employment Records Present - Director and Audit Committee, Patkol Plc. - Managing Director, Chiangmai Medical Services Plc. - Managing Director, Thai Storage Battery Plc. Professional Engineer (Mechanical Engineer)

Annual Report 2007

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As of 31 December 2007


Patkol Public Company Limited Name Mr. Preecha Chantarangkul Age 64 Years Notionality Thai Position Director Date of Assuming of Office June 9, 1999 Number of Years in the Office 9 Years Holding of Companyûs Share None Member of the Board of other businesses None In conflict of interest with the Companyûs Involvement in any lawsuits None during the past 10 years Highest Academic Qualification - Bachelor of Business Administration, Faculty of Commerce and Accountancy, Thammasart University Training Courses for Director - Audit Committee Program Employment Records Present - Director and Audit Committee, Patkol Plc. Name Miss Nongluck Sakdakrai Age 33 Years Notionality Thai Position Director Date of Assuming of Office June 26, 2000 Number of Years in the Office 8 Years Holding of Companyûs Share 22,504,917 Ordinary shares Member of the Board of other businesses None In conflict of interest with the Companyûs Involvement in any lawsuits None during the past 10 years Highest Academic Qualification - Masterûs Degree in Perfect Management, George Washington University Training Courses for Director - DCP Refresher Course Employment Records Present - Vice President, Thai Ice Club limited Name Mrs. Anongsiri Chaiyakul Age 64 Years Notionality Thai Position Director Date of Assuming of Office January 14, 2004 Number of Years in the Office 4 Years Holding of Companyûs Share 64,799 Ordinary shares Member of the Board of other businesses None In conflict of interest with the Companyûs Involvement in any lawsuits None during the past 10 years Highest Academic Qualification - Bachelor of Accounting, Faculty of Commerce and Accountancy, Thammasart University Training Courses for Director - DAP Director Accreditation Program Employment Records Present - Director, Patkol Manufacturing Co., Ltd. - Director, Patkol (1984) Co., Ltd. - Director, Patkol R&D Co., Ltd. - Director, Kaset Phet Co., Ltd. - Director, Siam Patkol Co., Ltd. - Director, PKB Enterprise Co.,Ltd. - Director , Dr.Piya Chongvatana Foundation Annual Report 2007

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As of 31 December 2007


Patkol Public Company Limited

Executive Committee Name Age Nationality Position Highest Academic Qualification -

Dr. Piya Chongvatana 62 Years Thai President, Chairman of Management Committee Associated Degree in Applied Science in Air Conditioning Engineering Technology, Milwaukee School of Engineering, Milwaukee, Wisconsin, USA.. - Bachelor没s Degree in Mechanical Engineering, Chulalongkorn University - The Honorary Degree of Doctor of Engineering in Mechanical Engineer From King Mongkut没s Institute of Technology North Bangkok 2006 Employment Records Present - Chairman, Patkol Manufacturing Co., Ltd. - Chairman, Patkol R&D Co., Ltd. - Chairman, Patkol (1984) Co.,Ltd. - Chairman, Siam Patkol Co., Ltd. - Chairman, Kaset Phet Co., Ltd. - Director, PKB Enterprise Co., Ltd. - Director, Prepack Thailand Co., Ltd. - Advisor to the Board of Science and Technology Research Center(STRC) of King Mongkut没s Institute of Technology North Bangkok - Honorary President, Thai Refrigeration Association - Honorary Director of ASHRAE Thailand Chapter - Vice President, Thai - Bangladesh Chamber of Commerce - Director of The Federation of Thai Industries - Chairman, Dr.Piya Chongvatana Foundation Senior Professional Engineer (Mechanical Engineer)

Annual Report 2007

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As of 31 December 2007


Patkol Public Company Limited Name Age Nationality Position Highest Academic Qualification -

Mr. Sangchai Chotechuangchutchavai 51 Years Thai Executive Director-Business Unit Bachelor没s Degree in Electrical Engineering, King Mongkut没s institute of Technology North Bangkok - Master Degree of Public Administration, national institute of Development Administration Employment Records Present - Director, Patkol Manufacturing Co., Ltd. - Director, Patkol (1984) Co., Ltd. - Director, Siam Patkol Co., Ltd. - Director, Kaset Phet Co., Ltd. - Director, Patkol R&D Co., Ltd. - Director , Dr.Piya Chongvatana Foundatio Professional Engineer (Electrical Engineer ; Power)

Name Age Nationality Position Highest Academic Qualification Employment Records Former Present -

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Assoc. Prof. Noppavan Chongvatana 59 Years Thai Director Master Degree, Library Studies and Demography, University of Hawaii (By Ford Foundation) Master没s Degree in Demography (Honour), Faculty of Political Science, Chulalongkorn University Assoc. Prof Chulalongkorn University Director, Patkol Manufacturing Co., Ltd. Director, Patkol (1984) Co., Ltd. Director, Siam Patkol Co., Ltd. Director, Kaset Phet Co., Ltd. Director, Patkol R&D Co., Ltd. Director, PKB Enterprise Co., Ltd. Director and Secretary, Dr.Piya Chongvatana Foundation

As of 31 December 2007


Patkol Public Company Limited Name Age Nationality Position Highest Academic Qualification Employment Records Present -

Mrs. Anongsiri Chaiyakul 64 Years Thai Director Bachelor of Accounting, Faculty of Commerce and Accountancy, Thammasart University Director, Patkol Manufacturing Co., Ltd. Director, Patkol (1984) Co., Ltd. Director, Patkol R&D Co., Ltd. Director, Kaset Phet Co., Ltd. Director, Siam Patkol Co., Ltd. Director, PKB Enterprise Co., Ltd. Director, Dr.Piya Chongvatana Foundation

Name Age Nationality Position Highest Academic Qualification -

Mr. Sumet Jeambutr 54 Years Thai Executive Director - Technical and Development Bachelor of Mechanical Engineering (Honor) King Mongkut没s of Technology, North Bangkok Employment Records Present - Executive Director- Technical and Development, Patkol Plc. Senior Professional Engineer (Mechanical Engineer)

Name Age Nationality Position Highest Academic Qualification -

Mr. Sombatt Srichainont 59 Years Thai Ececutive Director - Production Bachelor没s Degree in Mechanical Engineering, King Mongkut没s institute of Technology North Bangkok Employment Records Present - Executive Director-Production, Patkol Plc. Asspcoate Engineer (Mechanical Engineer)

Annual Report 2007

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As of 31 December 2007


Patkol Public Company Limited Name Age Nationality Position Highest Academic Qualification -

Mr. Panet Chongvatana 32 Years Thai Executive Director - Administrator Bachelor of Mechanical Engineering, King Mongkut没s Institute of Technology Thonburi - Master Degree in Engineering Management New Jersey Institute of Technology, U.S.A. Employment Records Present - Executive Director-Administrator, Patkol Plc.

Name Age Nationality Position Highest Academic Qualification -

Miss Boonada Kuhakarn 36 Years Thai Director of Strategic office Bachelor of Accounting, Faculty of Business Administration Ramkamhaeng University - Master Degree in Accounting, Faculty of commerce and Accountancy, Chulalongkorn University Employment Records Present - Director of Strategic Office, Patkol Plc. Certified Professional Auditor

Name Age Nationality Position Highest Academic Qualification Employment Records Present Engineering License

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Mr. Kittisak Chaivut 39 Years Thai Executive Director - Production Bachelor of Mechanical Engineering, Chiang Mai University Master Degree in Business Law, Faculty of Business Administration, Ramkamhaeng University Executive Director - Production Patkol Plc. Project Manager, TPK Ethanol Project Mechanical Professional Engineer

As of 31 December 2007


Patkol Public Company Limited

Major Events and Developments Major events in the past 7 years ➣ In 2001 Ô Prime Ministerûs Export Award on Thai Owned Brand in which in 1999 the company received Prime Ministerû Export Award for own design category. ➣ In 2002 Ô Set up a new business unit to support the work on automation system control. Received permission from shareholders to issue debenture bond to exit from all debt restructuring contracts. ➣ In 2003 Ô Signed a long term contract for the amount of fl312 million and exited from all the debt restructuring contracts with creditors before due date. Launched new products in ice maker line, the nugget ice for consumption, capacity 60 and 200 Kgs./day and scale ice for sea food processing , capacity 2,500 Kgs./day. Set up new business unit çSpecial Project Unité to support the government enterprises business. ➣ In 2004 Ô Set up new factory at Petchburi Province under the name of çPatkol Manufacturing Co.,Ltd.é with registered capital of fl70 million and the company own 99.99% of shares. This new company is under BOI. privileges with 8 years income tax exemption. The budget for land, buildings and machineries of new factory is set at fl200 million and expected to be in operation by June 2005. In April 2004, set up a new company Patkol R&D Co., Ltd, with registered capital of fl5 million, and Patkol Plc. own 99.99% of shares. This company will concentrate on the technical and development of new products. Ô On October 19, 2004. Mr. Piya Chongvatana the companyûs President received the 2004 Outstanding Technologist Awards from Her Royal Highness Princess Maha Chakri Sirindhorn. ➣ In 2005 Ô Patkol Manufacturing Co., Ltd started the production as per privileges received from B.O.I. Ô One of the Companyûs affiliated firms, Patkol R&D Co.,Ltd., was listed as a firm capable to carry out the research and development according the Law, thus, allowing the 2 times reduction for all the expenses on research and development work Ô Siam Patkol Co., Ltd. terminate the rental of factory Premises and moved to Patkol Plc. Factory at Kingkaow Road., thus saving the rental fee fl 6 million a year, and to tranfer production unit ; Ice-cream showcase, eutectic freezer, eutectic pack to be under Patkol Plc. ➣ In 2006 Ô Dr. Piya Chongvatana, the Companyûs President, received the The Honorary Degree in Mechanical Engineering from King Mongkutûs Institute of Technology North Bangkok. Ô The Company Ceased operation of two companies in the group i.e. The Riple Plate Thailand Co.,Ltd. and P.K Business Solution Co.,Ltd. The company sold all the shares in both companies to private persons.

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As of 31 December 2007


Patkol Public Company Limited

Ô The Company had successfully diversified into renewable energy business by signing contracts for the construction of ethanol plants for 2 customers namely :1. Rajburi Ethanol Co., Ltd., capacity 150,000 liters/day, Project value : 500 million baht, Construction period :18 months 2. T.P.K. Ethanol Co.Ltd., Nakonrajsrima, capacity 1,020,000 liters/day Project value : 2,921 million baht Construction period : 20 months Ô The renewable energy business will boost the Companyûs growth and having broader market. ➣ In 2007 Ô In April, the Company increased the registered capital from 320 million baht to 325 million and issued 33.7 million preferential share capital at 3.62 baht per share or a total of 122 million baht specifically for the shareholders. Ô In September, Warrants PAKL-W1 was due for the 3 year period. Ô The two projects of ethanol plant construction delivered progress as planned. The Rachaburi Ethanol plant is reaching its completion and will be in operation by April 2008. The PK. Ethanol plant will also be in operation in June 2008. Ô Opened a representative office in Indonesia to facilitate the existing clients and to support the expansion of investment base of Thai and foreigner investors.

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Patkol Public Company Limited

General Information Company name Registered No. Company set up Types of Business

Head office Telephone Homepage E-Mail Registered Capital Past Record 12 February 1992 31 March 1992 28 June 1992 9 September 2005

Other References Auditors

Registrar

Patkol Public Co., Ltd. 0107536000587 (Bor Mor Jor 132) 28 November 1965 by the Chongvatana families. 1. Manufacturer of tube ice making machine, Block Ice Plant and small ice making machine. 2. Machineries and system for refrigeration industry. 3. Machineries and processor for liquid food (dairy and beverage) 4. Machineries and equipment for food processing industry. 5. Turnkey Project. 6. Electrical Automation System for Industrial 7. Service 348 Chalerm Prakiat Rama 9 Rd., Nongbon, Pravate, Bangkok 10250, Thailand. 662 3281032-49 Fax : 662 328-1058 , 662 328-1245 www.patkol.com sales@patkol.com 325,230,100 Baht with paid up capital of 272,230,101 Baht, divided into 238,486,001 general shares, 33,744,100 Prefer shares. Changed its name from Patanakolkarn Co., Ltd. To Patkol Co., Ltd. Registered for public company with the Security Exchange of Thailand. Registered as Public Company and changed its name to Patkol Plc. Changed address From 20/14-15 Moo 10 Chalerm Prakiat Rama 9 Rd., Nongbon, Pravate, Bangkok 10250, Thailand. To 348 Chalerm Prakiat Rama 9 Rd., Nongbon, Pravate, Bangkok 10250, Thailand. 1. Mrs. Suvimon Krittayakiern CPA No. 2982 2. Mrs. Vilairat Rojnuckarin CPA No. 3104 Office of DIA International Auditing 316/32 Sukhumvit Soi 22 Sukhumvit Rd., Klongtoey, Bangkok Thailand 10110 Tel : 02-259 5300 Fax : 02 260 1553 Thailand Securities Depository Company Limited 62 The Stock Exchange of Thailand Building, 4, 6-7 Floor, Ratchadapisek Rd., Kongteaw, Bangkok 10110. Tel : 02 359 1200-49 Fax : 02 359 1259

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Patkol Public Company Limited

Business Operation Patkol Public Company Limited 1. Ice Making Machine Business Unit : The product on tube ice making machines 1.5 - 80 tons, nugget ice machines 100-450 kgs. and block ice plant 100 - 2,400 cans. The ice machine business was still growing well in 2007 for domestic and abroad. We are exporting our machines to over 40 countries, majority in the Middle East. Our machines are manufactured to the ASME (American Society of Mechanical Engineering) standard. 2. Refrigeration Business Unit : This business unit is divided into large cold rooms section and small cold room section. The products indeed are IQF freezer Air Blast Freezer and spare parts. There are also the Evaporative condenser unit, in which Patkol was the first firm in the world who manufactured stainless steel evaporative condenser since 1990. Patkol is also supplying çBonneté refrigeration show-cases with well-known standard to all retail stores. 3. Liquid Food Machine Business Unit : The unit is divided into machine and system for machine for dairy and beverage industries. Patkol could design, manufacture and install the whole system as well as providing spare parts for milk plant, beverage industries in both alcohol and non-alcohol including stainless steel tank with CIP system. Patkol could also design, manufacture and install systems and machine for liquid chemicals, or providing only stainless steel tank and piping works; most of the major parts are manufactured at the Companyûs factory under ASME standard. 4. Solid Food Processing & Engineering Business Unit : The unit is divided into frozen food industry for meat, seafood, vegetable and fruit and canning industry for tuna, vegetable and fruit. Pakol could design conveyor units, install the system and providing spare parts to suit customersû enquiry, with efficient productivity and friendly to environment. Most of the machine parts are manufactured at the Companyûs factory with hygienic design and safety standards. 5. Turnkey Project Business Unit : Patkol had a lot of experience in the construction of food processing plant as turnkey project for both local market an aboard. With a team of more than 300 engineers in every fields to support the turnkey project by divided into 5 parts; civil construction, main machineries for production, supporting equipment, ethanol plant and project management. The Company had constructed an ethanol plant projects with the cooperation from Katzen International USA. on technology side. 6. Electrical System and Automation Business Unit : The company could provide the design and installation of electrical system and automation. The electrical system is divided into 2 types of work; manufacture the Switch Board or Main Distribution Board (MDB) and providing electrical system for machineries of other business units as well as for the turnkey projects. For the automation, the company could design, install, set up program and testing the automatic control of machines as well as acting as consultant for modernizing the old system to meet the international standard. 7. Services & Maintenance Business Unit : Patkol found that the maintenance and service could be greatly expanded as most customers begin to realize the importance of system maintenance and the small service provider could not give good program. The work of our Service Department has expended and it also gave us an opportunity to increase our sale as well.

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As of 31 December 2007


Patkol Public Company Limited

Income Structure of Business Group Income structure of business group (local and abroad) 2007 PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES † Groups of Business 1. Group Maker - Ice making machine

Operated by

Patkol Plc.

Total Income Total Income Total Income Other Income % Local Abroad flmillion % flmillion % flmillion % flmillion % 100%

2. Group Machineries and System for Refrigeration Industry - Cold room Patkol Plc. 100% - Cold room panels P.K.B.Enterprises Co., Ltd. 80% - others Patkol Manufacturing Co., Ltd. 99.99% 3. Group Machine &System for liquid Processing - Food & Dairy Machineries

Patkol Plc.

100%

4. Group Machineries and System for Food Processing - Food Processing Machineries

Patkol Plc.

100%

323 10% 323 10%

178 33% 178 33%

501 14% 501 14%

5 16% 5 16%

492 16% 111 4% 33 1% 636 21%

115 21% - 0% - 0% 115 21%

607 17% 111 3% 33 1% 751 21%

8 29% - 0% - 0% 8 29%

578 19% 578 19%

100 19% 100 19%

678 18% 678 18%

1 1

3% 3%

0% 0%

-

0% 0%

69 13% 1,368 37% 2 0% 194 5%

2 -

6% 0%

- 0% 23 1% 71 13% 1,585 43%

2

0% 6%

0 0% 41 1% 3 1% 39 1% - 0% - 0% - 0% - 0% 69 13% 69 2% 72 14% 149 4% 536 100% 3,673 100%

0 1% 12 42% - 0% - 0% 1 3% 13 46% 29 100%

9 9

0% 0%

5. Group Turnkey Project - Special Project Patkol Plc. 100% 1,299 41% - Construction, Electrical and Patkol Plc. 100% 192 6% Automation system - Special Project Patkol Manufacturing Co., Ltd. 100% 23 1% 1,514 48% 6. Group Maintenance and others - Services Patkol Plc. 100% 41 1% - Liquid filtration Patkol Plc. 100% 36 1% - Others Patkol (1984) Co., Ltd. 99.98% - 0% Siam Patkol Co., Ltd. 99.98% - 0% Patkol Manufacturing Co., Ltd. 99.99% - 0% † 77 2% √«¡ 3,137 100%

Annual Report 2007

18

-

0% 0%

As of 31 December 2007

9 9


Patkol Public Company Limited

Risk Factors Risks in Business Operations 1.

Risks from relying on major clients and suppliers

The Company had no risks from relying on major suppliers as it acquired raw materials both domestic and overseas. On the client aspect, the Company also had no risks for its core businesses which are ice making machine and refrigeration units because they are dispersed in various industries. Although last year the Company has expanded its business to alternative energy (Ethanol plant construction project), the largest project ever, the ratio of the project value was less than 15% of its total revenues.

2.

Risks from production

Fluctuating raw material prices Steel and stainless are crucial raw materials for the production. Their prices, however, changed in according to the global pricing. In the past, the prices had increased due to the higher demand for the products worldwide, especially from China and the United States. The Company, therefore, exposed to risks from the fluctuation. The construction projects of the ethanol plant also required steel and stainless in very high volume, thus adversely affecting the Company by the price fluctuation as it was not able to reserve all raw materials due to seasonal shortage. Technology in new construction project In mid-year, the Company undertaking the ethanol plant construction projects was its first step as a contractor. Such the projects required highly specific technology, causing the Company to expose to risks of meeting the clients没 needs. However, the Company had made a contract with Katzen International Co., Ltd., a world leading American company, to employ ethanol production technology using flour to maximize its capacity.

3.

Management Risk

On the personal skills, the Company managed to reduce risks by establishing Research and Development department as to study and develop new machinery and to be the technical support center for every department to enable employees to substitute other workers.

4.

Financial risks

Risks from currency exchange rates The Company partially imported raw materials, causing debts in foreign currencies. Meanwhile, it has also gained revenues from the export with the same currencies. As a result, the Company managed risks by making Natural hedges and Forward contracts to prevent potential risks from such exchange rates.

Annual Report 2007

19

As of 31 December 2007


Patkol Public Company Limited Risks from investing in warrant ĂŤ Risks from investing in warrant The Company adjusted the exercise price and ratio for the entire term of the warrant as stipulated under warrant correction conditions. The first exercise date was on November 25, 2003 and the final date was on September 21, 2007. Whereby, the exercise correction was based on the price and ratio as at the correction date, not on the time value of the warrant. The time value of the warrant declined in respect to the term of the warrant. In case the Company offers a warrant or future convertible assets, the warrantholders of the said, after the exercise correction, may receive inferior rights and benefits. ĂŤ Risks from the exercise price correction, resulting in lower value than the prescribed value of ordinary shares In case the correction of the exercise price and ratio as stipulated under correction conditions causes a change in the exercise price, resulting in a lower exercise price than the prescribed value of the ordinary share, such the new exercise price will be used unless otherwise prohibited by law in which the Company cannot issue shares with value lower than the prescribed value. It will be deemed that the prescribed value of the ordinary share is the new exercise price and therefore the warrantholders receiving inferior rights and benefits. Risks from convertible preferential shares The Company may expose to risks from issuing convertible preferential shares since they require the Company to pay cumulative dividend to such the shareholders at the rate of 7% per annum of the convertible preferential share offer price. The Company also has to compensate for the marginal amount in cash. The marginal amount from the market price of the CompanyĂťs ordinary share was lower than the convertible preferential share offer price (3.62 baht/ share). As of the conversion to ordinary shares date on December 31, 2007, the market price of the ordinary shares was 1.64 baht/share. Risks from Capital Flow Insufficiency The Company has invested in new technology research and purchased materials to responsibly serve the construction of the ethanol plants as well as other projects that it has not yet called for the substantial amount of debts. The Company was well aware of the risks and began to seek the sources of funding. One way was to receive loans from several banks to use in its operations. However, the Company has planned to increase the capital to reduce debts to shareholders ratio and to further its capabilities for the future projects.

Annual Report 2007

20

As of 31 December 2007


Patkol Public Company Limited

Management Board of Directors A.

The Companyรปs Board of Directors :- as of December 31, 2007 1. Mr.Somchob Chaiyavej Chairman, Independent Director 2. Miss Ratchanee Chongvatana Vice Chairman 3. Mr.Piya Chongvatana Director 4. Mrs. Vipa Chulajata Director 5. Mr. Sangchai Chotechuangchutchaval Director 6. Mr. Paradon Chulajata Director 7. Mr. Suchart Sooksumitr Independent Director 8. Mr. Virachai Srikajon Independent Director 9. Mr. Preecha Chantarangkul Independent Director 10. Miss Nongluck Sakdakrai Director 11. Mrs. Anongsiri Chaiyakul Director 12. Mrs. Noppavan Chongvatana Director and Company Secretary

B.

The body of the nomination Committee and its independency At present there are 12 directors, comprising of independent directors, representative of major shareholders and directors from the internal management. In order that the directors would work efficiently, it was set that at least in one year there shall be 5 directorsรป meeting. The agenda of each meeting shall be set up in advance and shall be sent to all the directors prior to each meeting. All the meeting consideration would be for the benefit of the shareholders with fairness and just to all involved. Each director would be allowed to give his opinion freely and between each agenda there would be sufficient time allowed for freely discussion. The chairman would look after the meeting to make sure of the appropriate time. C.

The Board of Directorsรป duty are :1. Set up the vision, missions and strategy on business operation for the companyรปs prosperity and stability as well as continuously increase the value for shareholders. 2. Dedicate himself and his time for the company, shall not seek self benefits and commit any conflict of interest. 3. Shall consider the operation plan and develop the company ability to be compatible internationally. 4. Check and follow up on the operation of business group and the company. There should be the regular reports as well as giving policy to develop and adjust the business operation and company personnel. 5. Look after the risk management including the good governance policy to make sure that they meet the international standard. 6. Act according to the law, companyรปs objectives and regulations and resolution of the shareholders with honest for the benefits of shareholders at present and in the future. 7. Act according to the good governance and good practice for the director of the listed company as stipulated by the Stock Exchange of Thailand and Securities and Exchange Commission.

Annual Report 2007

21

As of 31 December 2007


Patkol Public Company Limited 8. Evaluate the companyûs operation and work performance of the high level management staff. 9. Support the ethic and moral of employees in all levels and realize the important of the internal control system which would help reducing the risk on fraud, the over exercising of power as well as illegal practices. 10. Protecting the benefits of shareholders large and small according to their right and just. The shareholders should be able to exercise their right in protecting their benefits as well as receiving correct, complete, transparency and disclose information that could be checked. 11. The Board of Directors authorized the directors, Management Committee, sub-committees and any person or jurisdiction individually or jointly carry out any function according to the Companyûs objective at remuneration set by the Board of Directors. The Board of Directors has the right to change or revoke the authority given as well as to replace with more suitable person. The newly appointed person should carry out his study according to the order, regulation as well as the policy set by the Board of Directors. Managing Director : Scope of work of the Managing Director. The Managing Director has to manage the Companyûs general business which covers :1. Looking after the overall operation of the Company to meet the Companyûs objectives. 2. Consider and screening all types of investment before presenting them to the Board of Directors. 3. Consider, prepare and provide the annual budget to be presented to the Board of Directors. 4. Authorized the payment to projects that meet the approval of the Board of Directors. 5. Authorized the appointment of various consultants deemed necessary for the business operation as well as carry out other duties as authorized by Board of Director or directors, case by case. çHowever, the Managing Director is not allowed to approve any business that he, himself or conflict person may gain or loss, or causing the conflict of interest to the company on its affiliated firms. Unless it was approved by the Companyûs Board of Directors who had thoroughly considered the matter.é

Subcommittees The Board of Directors has appointed sub-committees to thoroughly and efficiently scrutinize crucial and specific operations and report to the Board. The sub-committees comprise of :1. Management Committees A. List of the management committee as of December 31, 2007 1. Dr. Piya Chongvatana Chairman of Management Committee President, Patkol Plc. 2. Mr. Sangchai Chotechuangchutchaval Vice Chairman of Management Committee Executive Director Business Unit 3. Asso. Prof. Noppavan Chongvatana Director 4. Mr. Sumet Jiambutr Executive Director - Techical & Development 5. Mrs. Anongsiri Chaiyakul Director 6. Mr. Sombatt Srichainont Executive Director - Production 7. Mr. Kittisak Chaivut Executive Director - Production 8. Mr. Panet Chongvatana Executive Director - Administrator 9. Miss Boonnada Kuhakarn Director of Strategic Office

Annual Report 2007

22

As of 31 December 2007


Patkol Public Company Limited B. The body of the management committee The Managing Director is the Companyûs highest management personnel and shall act as Chairman of the Management Committee, comprising of 9 persons (including the Managing Director). This 9 Management Committee will manage, look after and be responsible on the companyûs business operation as well as set up budget, controlling the expenses as well as put up policy on personnel under the agreement of the Companyûs Directors. C. Scope of work of Management Committee. The Management Committee is responsible for all general duty; from planning as well as follow up and analysis. However, the major decisions such as increase or reducing of investment, the investment, the investment in other companies, etc. the Management Committee has to ask the Board of Directors for their decision. 2.

The Audit Committee A. List of the audit committee as of December 31, 2007 1. Mr. Suchart Sooksumitr Chairman 2. Mr. Virachai Srikajon Director 3. Mr. Preecha Chantarangkul Director and Secretary B. The body of the audit committee The Company appointed the audit committee which consists of 3 independent directors who are not in executive positions and qualified in accordance with the regulations of the Stock Exchange of Thailand (SET). One of these must have the understanding and experience in accounting and finance. The audit committee will be in the office for indefinite term, unless otherwise terminated by retirement or discharged by the Board of Directors or relieved from the directorship. C. Scope of authorities of the Audit Committee 1.) To review the Companyûs financial statement for their accurate and adequate disclosure. 2.) To review the Companyûs internal control system, risk management, and internal audit for their appropriateness and efficiency. 3.) To review the Companyûs compliance with the Security Exchange law, SETûs regulations and other relevant laws. 4.) To determine, select, nominate, and propose remuneration for the Companyûs auditor. 5.) To determine the Companyûs information disclosure in relation with linked transactions or potential conflict of interest for their correctness and completeness. 6.) To act upon an assignment by the Board of Directors and approval by the audit committee. 7.) To prepare the audit committeeûs activities report by disclosing in the Companyûs annual report which is signed by the chairman of the audit committee. Responsibilities : The audit committee has direct responsibilities to the Board of Directors in connection with assigned duties and responsibilities. The Board of Director is also responsible for the Companyûs operations towards third parties. 3.

The Nominating Committee A. List of the appointment committee as of December 31, 2007 1. Miss Ratchanee Chongvatana Chairman 2. Asso.Prof.Dr.Somchob Chaiyavej Director 3. Miss Nongluck Sakdakrai Director

Annual Report 2007

23

As of 31 December 2007


Patkol Public Company Limited B. The body of the nomination committee The nomination committee comprises of 3 members of the Board of Directors, who are appointed by the Board in according to the good corporate governance to select a director to replace the director resigning by rotation or vacant directorship. C. Scope of authorities of the nomination committee 1. To select a qualified person for directorship or managing director. 2. To establish procedures and principles for the Companyûs director and managing director selection for its transparency. 3. To determine and select a qualified person for the directorship and managing director and propose to the Board of Directors meeting and/or the shareholders meeting for approval. Responsibilities : The nomination committee has direct responsibilities to the Board of Directors in connection with assigned duties and responsibilities. The Board of Director is also responsible for the Companyûs operations towards third parties. 4.

Remuneration Committee A. List of the remuneration committee as of December 31, 2007 1. Mr. Suchart Sooksumitr Chairman of the remuneration committee 2. Mr. Virachai Srikajon Remuneration director 3. Mr. Preecha Chantarangkul Remuneration director 4. Miss Nongluck Sakdakrai Remuneration director B. The body of the remuneration committee The Board of Directors appointed the remuneration committee which consists of 4 directors and 3 of which are independent directors. The committee is responsible for determining and setting up remuneration for the Companyûs directors by comparing with industries of the same type. C. Scope of authorities of the remuneration committee : 1. To determine criteria for setting up remuneration for directors and managing director. 2. To establish procedures and principles for setting up fair and reasonable remuneration for directors and managing director and propose to the shareholders meeting for approval. Responsibilities : The secretary is responsible for arranging a Board of Directors and shareholders meeting, filing the meeting minutes and directorsû profile, and supporting the Board of Directorsû performance pertinent to legal regulations. Secretary of the company In order to comply with good corporate governance of the listed companies under the Board of Directorsû responsibilities category, the Company has appointed Assoc. Prof. Noppavan Chongvatana to be the secretary of the Company.

Annual Report 2007

24

As of 31 December 2007


Patkol Public Company Limited

Remuneration for Directors and Executives

1.

2.

The directorsû remuneration for the year 2007 is as follows : Remuneration Remuneration rate The Companyûs directors - Monthly remuneration (pension) * Chairman 52,500 Baht * Director 23,100 Baht/person - Meetin attendance payment * All directors 10,000 /meeting Sub-committees - Audit Committee * Monthly remuneration 23,100 / person - Nominating Committee * None - Remuneration Committee * None

Remark : The shareholders meeting No. 42 approved the payment for the extra pension from the performance in 2006 (paid in 2007) by which the Managing Director determined the following allocation : - Chairman Baht 83,000 (for the portion of 8 months in his presidency) - Chairman of the Audit Committee and Chairman of the Management Committee Baht 125,000 / person - The other 9 directors Baht 75,000 / person Total Baht 1,008,000 Remarks : This amount did not include the remuneration paid to Management Committee who were not on the Board. The total remuneration paid to the Management Committee for the year 2007 was fl 27,858,3573.- being salaries, bonuses, provident fund and others. Remarks : The paid remuneration were paid to :1. Companyûs directors who were the Management Committee. 2. Management who were the Management Committee.

The total remuneration of employees The total remuneration for the 1,237 employees as of December 31, 2007 was 361,254,931 baht as detailed below : Remuneration Type

Total Amount (Baht)

Wages/salary Bonus Incentive Provident fund Social security fund

304,951,292.00 19,244,321.00 21,380,838.00 6,817,904.00 8,860,576.00

Annual Report 2007

25

As of 31 December 2007

Baht Baht Baht Baht Baht


Patkol Public Company Limited

Records of the Directorûs meeting Name

Audit Committee

1. Asso.Prof.Dr.Somchob Chaiyavej 2. Miss Ratchanee Chongvatana 3. Dr. Piya Chongvatana 4. Mrs. Vipa Chulajata 5. Mr.Sangchai Chotechuangchutchaval 6. Asso.Prof. Noppavan Chongvatana 7. Mr. Paradorn Chulajata * 10/10 8. Mr. Suchat Suksumitr 10/10 9. Mr. Veerachai Srikajorn 10/10 10. Mr. Preecha Jantrarangkul 10/10 11. Mrs. Anongsiri Chaiyakul 12. Miss. Nongrak Sakdakrai * Mr. Paradorn Chulajata is the advisor to the audit committee A = Ordinary Meeting , B = Extraordinary Meeting

Nominating Committee

Remuneration Committee

1/1 1/1

1/1 1/1 1/1 1/1

1/1

Board of Director A B Total 5/5 0/6 5/11 5/5 1/6 6/11 5/5 6/6 11/11 5/5 6/6 11/11 5/5 6/6 11/11 3/5 6/6 9/11 5/5 6/6 11/11 5/5 6/6 11/11 4/5 2/6 6/11 4/5 6/6 10/11 5/5 5/6 10/11 5/5 4/6 9/11

Corporate Governance The Companyûs operations are set up in compliance with the Articles of Association, Securities and Stock Exchange Act and in conformity with the Code of Best Practice under the regulations of SET by based on 5 categories which are rights of shareholders, Equality of shareholders, Stakeholdersû roles, Information disclosure and its transparency, and the Board of Directorsí responsibilities as follows: 1. Policy on corporate governance. The Company management team realized the importance of good corporate governance which had made the Companyûs trust worthy firm and gained trust from shareholders, customers, employees as well as society. The main practices of the company are :1. Treated all the shareholders fairly and in accordance with global standard business operation. 2. Established the good workforce in order to yield the highest value to the Companyûs products in order to gain trust from customers. 3. Set up the operation target with clear strategy for the steady growth of business. 4. Set up the employeeûs etiquette, however, while preparing this etiquette the employees should keep strictly the Companyûs motto which is sincere and intent. 5. Arranged to have suitable internal control and constantly analyzing the management risks to make sure that the Company has certain risk in accordance to the situation. 6. The company will disclose the correct information to the shareholders and manage the transparency business.

Annual Report 2007

26

As of 31 December 2007


Patkol Public Company Limited 2.

Shareholders rights In 2006, the company held one ordinary shareholders meeting. The meetings was held at the Companyûs premises for the convenience of the shareholders. Also, the company had sent the notice of the meeting and relevant documents to all the shareholders not less than 7 days before the meeting date. The company also provided the proxy form in case the shareholders were not able to participate. 3.

Right of various groups of stakeholders The Company are well aware that its operation involved various groups of stakeholders and had ensured that their rights are protected and treated with care such as :1. The management and all the staff are trust worthy and would use their ability at the fullest. All the decisions are transparency and will yield the benefits to shareholders, customers, debtors and the public. 2. The management and staff will not disclose the companyûs inside information to the public for their own benefits. 3. The management and staff will not do anything that would cause conflict of interest, without the Companyûs permission. 4. The Company has disclosed sufficient financial information basing on the accounting standard, security codes and Security Exchange Committee. 5. The Company has disclosed the Companyûs operation and be fair to all the shareholders and customers. 6. It is the Companyûs policy to carry out a fair share to all the companyûs competitors. 7. The company will not wrongly obtain inside information or secret of the competitors. 8. The Company is strictly responsible to all the agreements made with suppliers and debtors. 9. The Company gives suitable salary to all their staff basing on each individual knowledge, capability and responsibility. 10. The Company has continuously supported the personnel development to ensure the sound standing of its staff. 11. The Company has followed all the rules and regulations of the labour laws and workman compensation. 12. The Company supported the public and community activities. 13. The Company will refrain from wrong doing that may damage the country reputation, natural resources and environments. 14. The Company will not support any individual who may commit the outlaw business, doing harm to the public or the countryûs stability. The stakeholdersû rights are also prescribed in the Companyûs ethics as follows: ë Customers The Company responds to customersû needs with quality products and equitable services, loyalty, and protection of their interests as well as their confidential information. ë Shareholders The Company equally respects all shareholdersû rights and performs its businesses by efficiency, loyalty, transparency, and non-disclosure of information for its owns benefits, and disclosure of accurate and adequate financial information to shareholders.

Annual Report 2007

27

As of 31 December 2007


Patkol Public Company Limited ë

ë

ë

Employees The Company recruits and maintains qualified employees to carry out the performances as well as continuously improves their capabilities. For instance, the Company has provided an English class for employees who are in need for the language, thus promoting their career part and security. Furthermore, all remuneration and benefits are appropriately in line with their skills and capabilities such as Provident fund and special work allowance. These include safe and hygienic work place that facilitates effective working environment. Alliances and partners The Company collaborates with the partners in exchanging information for mutual benefits and upholds loyalty and fairness by encompassing all opinions, suggestions, and explanations. Society and environment The Company has consistently continued to support social and environmental activities such as making donations to needy schools, charities, flooding victims, etc.

4.

Shareholders Meeting According to the 1992 Public Companyûs Law, the Company would held General Shareholdersû meeting at least once a year to consider various matters as stipulated by law. During the meeting, the Company gave the right to shareholders to view their opinions and answer their queries. In each meeting, the Companyûs directors, auditor and legal advisor were participated in order to give answers to the shareholders. In each meeting the Companyûs Managing Director, as Chairman of the meeting had given sufficient time for each meeting agenda for shareholders queries. 5.

Leadership and Vision The Companyûs directors perform their role in determining the Companyûs policies, goals and budgets and follow up to ensure that all are efficiently practiced in order to yield the fullest benefits for shareholders. Vision & Mission Vision Our goal is to be the world number one Ice Making Machines Producer and the leader of ASEAN in Food Machine Engineering and Refrigeration Technology. Mission 1. We will hold commitment to our customers and will always concern to the optimum benefits of our customers. 2. We will develop our human resources both in professional and management skills to be efficient and competitive. 3. We will be innovative and devoted to develop our machines and our technology to maintain the leading edges in all our businesses. 4. We will develop to be an IT organization with simplify work process and real time information for quick and correct decision. 5. We will contribute to the society and the environmental preservation. The directors had set up internal audit committee for internal checking and set up efficient risk management with proper follow up during the directors meeting. Annual Report 2007

28

As of 31 December 2007


Patkol Public Company Limited 6.

Conflict of Interest The Company has an adequate plan to avoid the conflict of interest (see detail on Part 2 of the Management of Internal Information and Connected Transaction) for the benefits of the Company, the shareholders and the public. However, the connected transactions are completely disclosed in the yearly report. 7.

Business Ethic The Company has a written code of ethics in the compliance manual, item 4, the code of Corporate ethics, which was given to all its staff so that they could conduct the business accordingly. 8.

Balance of power in the Board of Directors Out of the 12 directors, 4 of them are Management directors and 4 are the independent directors, 3 of them, who hold the position of audit committee as well. Therefore, there are only 4 independent directors or 33.3% of the board. 9.

Aggregation or segregation of positions The Companyûs Chairman of the Board is independent and does not hold the position of managing director. The authority of the boardûs chairman and head of management team are clearly separated. 10. Directors and Management Remuneration The nominated directors for considering remuneration submitted their policy and scheme on remuneration to be paid to the companyûs directors and management and had been adopted by the shareholdersû meeting. The remuneration paid for the year 2007 is shown in page 25 remuneration for directors and management. 11. Board of Directorsû Meetings The Board of Directors meetings were set well in advance each year. The meetings were held every 3 months, the Company will send the meeting agenda 7 days before each meeting date. The Audit Committeeûs meeting was held once a month and the date was set well in advance, the relevant documents were sent 7 days prior the meeting date. 12. Special Committees The Companyûs management set up special committee for particular matters such as audit committee, subcommittee for selecting auditors, sub-committee for remuneration. These special committees should report their work to the companyûs management. 13. System Control and Internal Auditing The Company has set up regulations to control the working procedures as well as having internal audit committee to recheck the work to ensure the work efficiency and constant internal check up in all process. The audit committee was allowed to work independently and in accordance to the global standard and reported directly to the Managing Director.

Annual Report 2007

29

As of 31 December 2007


Patkol Public Company Limited 14. Management on Use of Internal Information In 2007, the Company reviewed the regulations and use of internal information to prevent crucial information and know-how from loss and/or to protect insiders/outsiders from using such information for their personal purposes. In case an employee or an executive discloses the said information or makes use for his/her personal purpose or carries out any action that may cause the conflict of interest, such the person will be penalized. 15. Directorsû Report The Companyûs directors are responsible for the consolidated financial statements of the Company and its affiliated firms as well as yearly reports. The Audit Committee together with the independent auditors, are responsible for the balance sheets of the Company and its affiliated firms to make sure that those balance sheets are according to the acceptable accounting standard as stipulated by the Security Exchange Committee and Security Exchange Board. 16. Independency a definition of independent directors The independent director, under the definition stipulated in the Companyûs corporate governance policies, means an independent director who is qualified for his/her independency under the qualification of SET regulations and shall be able to equally take care of shareholdersû benefits and to prevent them from the conflict of interests. In addition, the directors will be able to attend the Board of Director meeting and provide their opinion independently, which can be detailed as follows : 1) Hold shares not exceeding 0.5% of the paid-in capital in the Company, affiliated companies, joint companies, or other related companies. Whereas, the share holding will include a number of shares held by related parties. 2) Do not involve in the management of the Company, affiliated companies, joint companies, other related companies, or the major shareholders and are not a worker, an employee, or a consultant who receive monthly salary from the Company, affiliated companies, joint companies, other related companies, or the major shareholders. 3) Do not have any benefits or interests either directly or indirectly in finance and management of the Company, affiliated companies, joint companies, or the major shareholders and did not have such the said benefits or interests one year prior to the appointment unless the Board of Directors has carefully considered and agreed that such the benefits or interests involvment will not affect the performance and their independent suggestion. 4) Are not related or close relatives to the Executives or the Companyûs major shareholders. 5) Are not assigned as proxy to maintain interests for the Companyûs directors, the major shareholders, or shareholders who are related to the major shareholder. 6) Can perform, recommend, or report the results of performances as assigned by the Board of Directors without any control of management or major shareholders, including related persons or close relatives of the said parties.

Annual Report 2007

30

As of 31 December 2007


Patkol Public Company Limited 17. Director nomination and appointment procedure The Company has appointed and assigned the nomination sub-committee to establish principles and policies in selecting a qualified person to assume the directorship in accordance with the Articles of Association and other relevant laws. The sub-committee also performs the selection of a qualified person and proposes for the directorship to fill the vacancy by which the committee will determine the education background and experience as well as his/her professionals as for facilitating the decision making of the Board of Directors and the shareholders. Additionally, in every annual ordinary shareholder meeting, one-third of the directors will have to resign. If the number of directors cannot be divided into 3 parts, the resignation will be made to a number close to the one-third. The resignation from the directorship in the first and second year after the registration in SET will be made by a draw. For the later years, the directors who are in the post for the longest period will make the resignation. The resigned directors, however, may be selected to resume the post. In case of vacancy due to other causes rather than retirement by rotation, the committee will select a qualified person who is not in prohibited quality under Section 68 of Public Company Limited Act 1992 A.D. to assume the directorship. Unless the term of the said director is less than 2 months, the person who assumes the directorship will be in his/her post only for the rest of the term of the former director. Whereas, the Company provides the shareholders meeting to appoint a director in accordance with the principles and procedures prescribed in the Articles of Association as follows: (1) One shareholder has a number of votes equal to the number of share(s) held. (2) Each shareholder can exercise all votes under Clause (1) to appoint one or more persons. In case of appointing many persons to be the directors, the unequal number of votes cannot be specifically given to a particular person. (3) The person of the same number of vacant posts who receive the highest votes will be appointed as directors. In case of a tie, causing the exceeding number of the vacancy, a draw will be made to obtain the required number. The Company has not determined the maximum number of occasions a director can be re-elected, or his/her age, but will take into consideration his/her time, capabilities and knowledge devoted to the Company in performing duties. 18. Investors Relation The Company has an investor relation unit which carries out the promotion and communication with shareholders investors as well as other interested persons in the Company没s performance. Any interested person can contact directly at Business Strategic Planning Division, Tel. 02-328-1035-49 Ext. 251 or visit the website www.patkol.com

Annual Report 2007

31

As of 31 December 2007


Patkol Public Company Limited

Human Resource As of December 31, 2007, The Company employs the total of 1,237 persons to work for each department as follows : Department Engineers Workers Others Total Management (E1-E3) Refrigeration (RF) Ice Making Machine (IM) Food and Daily (FD) Food Processing Engineering (FPE) Turnkey (TK) Services (SV) Accounting and Finance (AF+CR) Procurement/Administration/Personnel (BU) Research & Development (R&D) Factory Personnel Electrical Automation (EA) Total

27 26 37 15 55 1 53 42 26 282

146 134 55 13 19 23 157 12 559

20 21 19 14 10 25 1 37 179 3 65 2 396

20 194 179 106 38 99 25 37 179 56 264 40 1,237

Policy on Personal Department 1. 2. 3. 4. 5.

Develop, improve and modernize the Organization没 human resources management and its work could be efficiently appraised and measured. Select knowledgeable staff, suitable for each position. Keep the selected ones by giving them fair, motivated and competitive remuneration. Build good relation between employers and between the company and employers. Improve working environment, provide safety precaution, reducing accident as well as granting suitable fringe benefits. Develop on workers skill through in-house and outside training.

Annual Report 2007

32

As of 31 December 2007


Patkol Public Company Limited

Organization Chart Board of Directors Audit Committee President Division of Internal Audit Executive Director Business Unit

Executive Director Administrator

Executive Director T&D

Executive Director Production

Director of Ice Machine

Director of Accounting and Finance

Director of Machine Development

Director of Production

Director of Strategy Office

Director of Refrigeration

Division Manager of Credit Control

Director of Quality Assurance

Manager of Unit Machine

Division of Office President

Director of Switchboard / Automation

Division Manager of Finance

Division of Research and Development

Manager of Commercial Unit

Division Manager of System Development

Director of Food and Dairy

Division Manager of Accounting

Division of Commercial Unit Production

Manager of Unit Fabrication

Chief Section of Marketing

Director of Food Processing Engineering

Division Manager of Costing

Manager of Petrochemical

Legal Office

Director of Service Compressor Director of Turnkey

Director of Supply Chain

Division of Petrochemical

Division Manager of Warehouse & Delivery Division Manager of Local Purchasing Division Manager of Foreign Purchasing Director of Human Resource Division Manager of Human Resource Management Division Manager of Human Resource Development Division Manager of Information Technology Annual Report 2007

33

As of 31 December 2007


Patkol Public Company Limited

Internal Control The audit committee meeting No. 1/2551 on January 25, 2008 carried out the evaluation on the Company没s internal control system and came to the conclusion on the internal control system sufficiency in 5 parts as follows: Part 1. Organization and Environment The goals of the Company没s businesses are set up as clear, possible and measurable. The Company set up the organization structure that facilitates management to carry out efficient performance and achieve their goals and benefits of the Company. The Company also established policies and procedures for financial transactions, procurement, and other administrative operations based on fairness to partners and the Company没s interests. Part 2. Risk Management The Company manages all risks by consistently evaluating both internal and external factors that can be attributed to the cause of such risks and provides risk management measures, including monitoring its planned performance. Part 3. Operation Control of the Management The management没s operations are clearly and independently separated by responsibilities such as approval, accounting and information technology, and assets management. The approval on transactions of the Company with major shareholders, directors, executives, or other related parties to the said will be based on maximum interests of the Company as though of any person in general. Part 4. Information Technology and Communication The Company always provides adequate crucial information as for facilitating decision making of the Board of Directors. The directors will be notified for a meeting appointment or provided necessary and adequate information for consideration 7 days prior to the meeting. Accounting record and other relevant documents will be categorized and filed in accordance with accounting policy under Generally Accepted Accounting Principles and business characteristics appropriateness. Part 5. Monitoring System The Company monitors general operations by comparing to the business purposes. The internal auditor will examine the compliance with the internal control system and directly report to the audit committee and examined parties. Any subject defects will be reported to the audit committee in due course as well as the progress on defect improvement to the management.

Annual Report 2007

34

As of 31 December 2007


Patkol Public Company Limited

Audit Committee Corporate Governance Report To

Shareholders of Patkol Public Co., Ltd. The audit committee is pleased to submit the annual audit committee report for the year end December 31, 2007 as follows : Patkol Public Co., Ltd.รปs Board of Directors appointed the Companyรปs audit committee, comprising of 3 directors who are not in the management committee and have no interests in shareholding, namely Mr. Suchart Suksumitr, chairman of the audit committee, Mr. Virachai Srikajon and Mr. Preecha Chantharangkul. In 2007, the audit committee has held 10 meetings for which the subject matters can be concluded as follows: 1. Corporate Governance The Company has complied with the good corporate governance under business transparency and ethics to establish confidence towards the shareholders, investors, and other parties. The Company has provided the good corporate governance in writing since 2003 onwards as shown in 56-1. 2. Supervision and Financial Review The audit committee, together with the management and the auditor, has performed the review of both fiscal and annual financial statements for the year 2007 to assure that the Companyรปs financial reports as well as the consolidated financial statements had been accurately prepared in accordance with the generally accepted accounting standard. The disclosure of information was adequate, accurate, credible and on time. Furthermore, such the reviews of the transaction disclosure between the Company and its affiliated firms had also been made to assure that it has complied with the business conditions and SETรปs regulations. 3. Supervision and Risk Management The audit committee supervised the risk management on outstanding debtors, cash flow, loan structure by evaluating monthly risk management in according to risk factors or potentials, assessing the impact from such risks, and suggesting the measure for managing the said risks. The audit committee has not yet found any risk that may affect the business operations. 4. Internal Control System Evaluation The results of the internal control system evaluation was in line with those of the auditor who provided fiscal and annual report in that there was no subject matter or defects. 5. Internal Audit Supervision The audit committee has reviewed the operation of the internal audit unit to assure its efficiency and independency. 6. The Selection of the auditor The audit committee has collaborated with the Companyรปs Board of Directors to consider and appointed the auditing firm, DIA, to be the auditor for the year 2008 for another term and set up the appropriate remuneration. February 28, 2008 On behalf of the audit committee

(Suchart Sooksumitr) Chairman of the Audit Committee

Annual Report 2007

35

As of 31 December 2007


Patkol Public Company Limited

Major Shareholders List of names and ratio of shares owned of the first 12 major shareholders (information from the report on shares distribution as at January 7, 2008) No

Name of person / Private Co.,

No. of shares

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

Mr. Piya Chongvatana Mrs. Vipa Chulajata Miss Ratchanee Chongvatana Mr. Sangchai Chotchuangchutchaval Miss Nongluck Sakdakrai Thai NDVR Co., Ltd. Mrs. Noppavan Chongvatana Mrs.Pornpana Sakdakrai Mrs. Chantipa Chotchuangchutchaval Swee Cheng Investment Pte. Ltd. Mr.Panet Chongvatana Mr. Paradon Chulajata √«¡

31,316,844 31,116,475 28,879,942 25,773,303 22,504,917 18,899,050 12,624,151 6,850,000 4,000,000 3,810,539 3,548,742 2,649,500 191,973,463

Annual Report 2007

36

As of 31 December 2007

Percentage of shares 13.13 13.05 12.11 10.81 9.44 7.92 5.29 2.87 1.68 1.60 1.49 1.11 80.50


Patkol Public Company Limited

Transaction with Related Parties Related transactions among the companies in Patkol Group were normal business to business trades. The pricing will be based on comparison of the prices and the market or a similar type of business by adding on profits as follows : Pricing Policies Sales of products and services Procurement of products and services Rental and service fees for the buildings Related Interest

Costs plus profit of 1% or more Finished products - Costs plus profit of 5% or more Costs plus profit of 5% or more In accordance with the contracts 1,000 - 148,000 baht/month The interest rate of 6.875 - 7.75% per annum for lending and loan

In approving related transactions, the Company has prescribed a clear authorization, based on the consideration of the balance between flexibility in normal business operations and proper internal control system. Such the subjects were consistently reviewed by the audit committee. For the related transactions, the Company has considered maximum benefits to the group by receiving and compensating in respect with a business type and in fair market price.

Annual Report 2007

37

As of 31 December 2007


Patkol Public Company Limited

Result from Business Operation Results from Business Operations In 2007, the Companyรปs revenues from sales and services were lower than those of the previous year by 2.8%. The main revenues were from Turnkey, ice making machine and refrigeration, and food and daily and food processing machine and system business, respectively. The higher rate of domestic sales, compared to the previous year, was due to the ethanol plant construction. The Company, therefore, recognized this year revenues at 34% of the total value. On the other hand, the decline in international sales was attributed to the weakness of the U.S. dollars, thus resulting in a high price competition among competitors.

Business Operation โœฝ

Overall pictures of the past operation The Companyรปs overall operation for 2006-2007 was as follows :-

Consolidated / Year Sale and services income Cost of sales and service Gross profit Selling and administration expenses Other income Income before interest expenses and income tax Interest expenses Income before tax Income tax Net income of minority interest Net profit

Year 2007 Total %

Year 2006 Total %

Unit : million Baht Variance Total %

3,673 3,568 105 294 29 (161) 116 (277) 2 1 (280)

3,779 3,377 402 229 32 205 77 128 26 (1) 100

(107) 191 (297) 66 (3) (366) 39 (404) (23) 3 (381)

100.0% 97.1% 2.9% 8.0% 0.8% (4.4%) 3.2% (7.5%) 0.1% 0.0% (7.6%)

100.0% 89.4% 10.6% 6.0% 0.8% 5.4% 2.0% 3.4% 0.7% 0.0% 2.7%

(2.8%) 5.6% (73.9%) 28.8% (8.4%) (78.5%) 50.2% (316.7%) (90.8%) (176.1%) (379.0%)

From the information above, the Companyรปs losses was attributed to the costs of sales and services which rose to 97.1% of the total sales, while the costs of sales and services in 2006 was 89.4%. This primarily caused by the dramatic change in prices of the main raw materials such as steel, stainless, and copper. Although the Company had purchased and stocked the raw materials, it was unable to do it completely due to the shortage in some certain periods, leading to higher costs than previously expected. The other part was a result from the costs underestimation of the ethanol plant construction projects. The analysis of each business type is as follows :

Annual Report 2007

38

As of 31 December 2007


Patkol Public Company Limited The Operation of each Business Unit 1. Income from sales and services

Total Income Million Baht

2007 Sale and services income - income Sale and services income - Abroad Total Cost of sales Gross profit % of profit per total sales % sales per total sales 2006 Sale and services income - income Sale and services income - Abroad Total Cost of sales Gross profit % of profit per total sales % sales per total sales % Product growth

Ice Making Machine and Industrial Refrigeration

Machineries for Liquid and food processing

Turnkey

Services and Other

Center

Total

958.29

587.06

1,514.10

76.71

1.23

3,137.39

293.10 1,251.39 (1,207.02) 44.37 4.% 34%

99.51 686.57 (623.55) 63.02 9.% 19%

71.21 1,585.31 (1,607.05) (21.74) (1%) 43%

71.57 148.28 (130.40) 17.88 12% 4%

0.00 1.23 0.00 1.23 100% 0%

535.39 3,672.78 (3,568.02) 104.76 3% 100%

1,187.38

618.35

1,102.92

70.02

6.80

2,985.47

415.05 1,602.43 (1,405.96) 196.47 12% 42% (22%)

195.98 814.33 (676.07) 138.26 17% 22% (16%)

108.72 1,211.64 (1,198.72) 12.92 1% 32% 31%

74.21 144.23 (96.73) 47.50 33% 4% 3%

0.00 6.80 0.00 6.80 100% 0% (82%)

793.96 3,779.43 (3,377.48) 401.95 11% 100% (3%)

The Company没s main revenue was from the turnkey business, accounting for 43% of the total revenues. This business grew at a rate of 31% when compared with the previous year. The gain was recognized from the revenue of ethanol plant construction projects. The outstanding was expected to be recognized next year. The ice making machine and refrigeration were the other businesses for which the Company gained the revenues, accounting for 34% of the total. The food and daily and food processing machine and system also accounted for 19%.

Annual Report 2007

39

As of 31 December 2007


Patkol Public Company Limited For the lower gross profits of ice making machine and refrigeration, and food and daily and food processing machine and system businesses were due to the increase in main raw material prices and their seasonal shortage. The strengthened baht against the U.S. dollar was also attributable to fierce pricing competition with international competitors. The turnkey business incurred losses due to the ethanol plant construction in which it was quite new to the Company, hence leading to the costs underestimation. The new technology (Katzen) required considerably higher specifications than what the Company had used before. The raw materials for ethanol production using this technology were also highly corrosive, thus requiring high quality machinery and more thickness of steel and stainless. Another part was from the construction projects (Pure Civil) from government agencies at quite low prices due to the last year economic slowdown. Since the Companyûs products were capital goods, it, therefore, had to undertake the projects. 2. Other revenues consisted of interest income from clients, compensation from duties and tax privileges (Blue Corner) for export and dividends from the affiliated companies. 3. Costs and expenses of sales and services - The Companyûs higher costs of sales were resulted from the increase in raw material prices, ethanol project underestimation, and low price constructions. Services from the subcontractors also caused the cost over turn as the Company had to responsibly solve their quality problems. - The Company had a policy to invest in its subsidiaries to prepare for further projects. This resulted in more employment and machinery and equipment investment. - The Company had a policy on allowance for doubtful debts in regard with the outstanding receivables. The policy was for a close control and monitoring debtors. In 2007, The Company set more allowance for doubtful debts due to more debtors as sales has increased in line with the proportion of total sales. Nevertheless, the Company will hasten to follow up debt payments and be more careful to grant credits. - The Company set more allowance for outstanding inventory due to the expanded sales in spare pats and equipment. The Company reserved these products for sales and maintenance for clients because it was in this particular market and increased them in respect with the service quantity projection. - The Company incurred higher interest expense than last year due to the loan for investment in Patkol Manufacturing Co., Ltd. as to expand equipment parts factory for Patkol Plc.ís projects and to stock the main raw materials for the likely seasonal shortage. ✽

Investment Policy The Company allocated the investment budgets to further purchase assets for annual replacement and maintenance of machinery and to invest in companies that support its core businesses or increase production capacities of the Company as in Patkol Manufacturing Co., Ltd. Whereas, Patkol Manufacturing Co., Ltd. receives benefits from duties and other privileges from investment BOI. ✽

Control of affiliated and joint companies The Company controls its affiliated and joint companies by establishing policies and operations in line with and supportive to its main policies and business plans. The Company invested in and gave the importance to businesses it specializes in and in similar business areas of the Company. To manage efficiently, the management committee carried out the control by assigning a management team to closely participate in policies, budgets, marketing and production plans setting as for mutually sharing information and available resources among the Company group to optimize benefits and support the overall businesses.

Annual Report 2007

40

As of 31 December 2007


Patkol Public Company Limited

Financial Position and Results of Operation FINANCIAL POSITION AND RESULTS OF OPERATION PATKOL PUBLIC COMPANY LIMITED 2007

Balance Sheet ASSETS CURRENT ASSETS Cash and cash equivalents Current investment Accounts receivable - net Accounts receivable - related companies - net Installments receivables - net Unbilled revenues from sales and services - net Short term loans to related companies Inventories - net Other current assets Total Current Assets NON-CURRENT ASSETS Installments receivables Deposits at bank with commitment Investments for using the equity method Property, plant and equipment - net Intangible assets - net Unused land in operations - net Other non-current assets Total non-current assets TOTAL ASSETS

2006

(Baht没000) 2004

2005

59,884 0 494,330

2% 0% 16%

32,957 20,000 830,696

1% 1% 27%

97,649 0 564,267

4% 0% 23%

125,145 0 579,240

5% 0% 24%

2,346 131,354

0% 4%

80,957 162,979

3% 5%

162,721 156,658

7% 6%

15,007 203,962

1% 8%

1,173,380

39%

796,288

26%

441,324

18%

482,305

20%

5,850 181,821 285,864 2,334,829

0% 6% 9% 77%

30,178 247,070 165,182 2,366,307

1% 8% 5% 77%

17,882 251,183 82,603 1,774,287

1% 10% 3% 71%

3,505 223,627 53,830 1,686,621

0% 9% 2% 70%

17,277 1,260

1% 0%

27,137 8,900

1% 0%

19,393 9,964

1% 0%

22,240 1,055

1% 0%

113,248 512,345 22,918 19,248 910 687,206 3,022,035

4% 17% 1% 1% 0% 23% 100%

113,248 524,459 26,742 19,248 1,115 720,849 3,087,156

4% 17% 1% 1% 0% 23% 100%

144,333 517,906 6,747 19,248 7,739 725,330 2,499,617

6% 21% 0% 1% 0% 29% 100%

195,543 491,219 27,164 18,139 7,988 738,948 2,425,569

8% 20% 0% 1% 0% 30% 100%

Annual Report 2007

41

As of 31 December 2007


Patkol Public Company Limited 2007

Balance Sheet LIABILITIES AND SHAREHOLDERSรป EQUITY CURRENT LIABILITIES Bank overdrafts and short - term loans from financial institution Accounts payable-trade and others Account payable - related companies Current portion of long term liabilities and debenture Short-term loans from related companies Collections in excess of earned revenues Other current liablilities Total current liablities NON-CURRENT LIABLITIES Long term loan and liabilities - net Defereed interest discounted from debt restruction agreement Financial liabilities - convertible preferred shares Total non-current liablities Total liablities SHAREHOLDERSรป EQUITY Convertible preferred shares Share capital - common shares authorized, issued and fully paid-up Premium on common shares Revaluation increment in land Retained earnings - Appropriated for reserve fund Unappropriated retained earnings Total Shareholdersรป Equity - net TOTAL LIABILITIES AND SHAREHOLDERSรป EQUITY

2006

(Bahtรป000) 2004

2005

1,538,335 444,186 32,325

51% 15% 1%

912,929 674,604 137,714

30% 22% 4%

761,154 308,539 90,106

30% 12% 4%

679,759 369,210 45,090

28% 15% 2%

52,942

2%

60,761

2%

158,651

6%

150,546

6%

20,267

1%

0

0%

32

0%

51

0%

187,323 130,459 2,405,837

6% 4% 80%

316,742 107,768 2,210,518

10% 3% 72%

152,330 80,265 1,551,077

6% 3% 62%

101,335 64,066 1,410,057

4% 3% 58%

67,127

2%

109,670

4%

150,352

6%

291,682

12%

5,884

0%

17,131

1%

25,756

1%

18,724

1%

117,846 190,858 2,596,695

4% 6% 86%

0 126,802 2,337,319

0% 4% 76%

0 176,108 1,727,185

0% 7% 69%

0 310,406 1,720,463

0% 13% 71%

643

0%

0

0%

0

0%

0

0%

238,486 0 260,241

8% 0% 9%

238,486 0 260,241

8% 0% 8%

238,486 0 260,241

10% 0% 10%

238,486 0 260,241

10% 0% 11%

32,000 (106,029) 425,341

1% (4%) 14%

32,000 219,110 749,837

1% 7% 24%

32,000 241,705 772,432

1% 10% 31%

23,849 182,530 705,106

1% 8% 29%

3,022,035

100%

3,087,156

100%

2,499,617

100%

2,425,569

100%

Annual Report 2007

42

As of 31 December 2007


Patkol Public Company Limited Statement of Income

2007

Sales and services income 3,548,564 Costs of sales and services 3,517,997 GROSS MARGIN 30,567 Selling and administrative expenses 261,377 NET INCOME FROM SALES AND SERVICE (230,811) Other income 42,901 NET INCOME FROM OPERATION (187,910) Share of profits (losses) from investments for using the equity method 0 NET INCOME BEFORE INTEREST AND INCOME TAX (187,910 Interest expense 101,457 INCOME BEFORE INCOME TAX (289,366) Income tax 0 INCOME FROM ORDINARY ACTIVITY (289,366) Extraordinary item - net 0 Gain on debt restructuring 0 NET INCOME (289,366) Basic Earnings per Share: Income before extraordinary item (1.21) Extraordinary item NET INCOME (1.21)

2006

(Baht没000) 2004

2005

100% 3,620,564 99.1% 3,319,604 0.9% 300,960 7.4% 195,771

100% 2,754,330 91.7% 2,504,118 8.3% 250,212 5.4% 146,003

100% 2,246,097 90.9% 2,050,728 9.1% 195,369 5.3% 130,241

100% 91.3% 8.7% 5.8%

(6.5%) 1.2% (5.3%)

105,189 43,585 148,774

2.9% 1.2% 4.1%

104,209 33,390 137,599

3.8% 1.2% 5.0%

65,128 36,468 101,596

2.9% 1.6% 4.5%

0.0%

0

0.0%

(1,299)

0.0%

(107)

0.0%

(5.3%) 2.9% (8.2%) 0.0%

148,774 65,599 83,175 22,043

4.1% 1.8% 2.3% 0.6%

136,300 47,673 88,627 21,300

4.9% 1.7% 3.2% 0.8%

101,489 38,094 63,395 10,707

4.5% 1.7% 2.8% 0.5%

(8.2%) 0.0% 0.0% (8.2%)

61,133 0 0 61,133

1.7% 0.0% 0.0% 1.7%

67,327 0 67,327

2.4% 0.0% 0.0% 2.4%

52,688 0 52,688

2.3% 0.0% 0.0% 2.3%

Annual Report 2007

0.26 0.26

43

0.28 0.28

As of 31 December 2007

0.22 0.22


Patkol Public Company Limited 2007

Cash Flows CASH FLOWS FROM OPERATING ACTIVITIES : Net profit (loss) Adjustments of net profit (loss) to cash receipt (disbursement) from operations Net (profit) loss of minority interest Equity (gain) loss from investments Depreciation Amortized intangible assets Bad debt and doubtful accounts Allowance for devaluation of inventories (reversal) (Gain) Loss on sales of investment (Gain) loss on sales of fixed assets Fixed assets written off and transferred to expenses Loss on sales of intangible assets Unrealized loss on exchange rate † (Increase) Decrease in changes in parts of operating assets Trade accounts receivable Accounts receivable - related parties † Installments receivables Unbilled receivable Inventories Other current assets † Other non-current assets †Increase (Decrease) in changes in parts of operating liabilities Trade accounts payable † Accounts payable - related parties † Accured Income tax Collection in excess of earned revenues Other current liabilities †Net cash provided by (used in) operating activities

Annual Report 2007

2006

2005

(Bahtû000) 2004

(289,366)

61,133

67,327

52,688

0 49,844 6,842 45,608 2,262 0 (1,753) 986 0 (1,811)

0 45,289 3,902 13,579 2,725 582 (1,899) 1,092 0 (3,435)

1,299 39,549 1,320 (5,552) 302 (1,716) 15,064 (16) (255)

107 31,031 1,136 (4,876) 184 (18,528) (2,446) 5,647 0 1,472

297,791 78,611 33,333 (377,092) 62,986 (120,721) 204

(271,417) 81,764 (19,756) (354,963) 1,389 (81,584) 6,625

26,056 (147,714) 39,761 45,063 (27,930) (28,774) (464)

(238,921) (14,103) (67,335) (92,079) (64,458) (15,600) (6,025)

(230,236) (105,389) (129,419) 22,730 (650,970)

366,030 47,608 164,412 27,361 90,435

(60,668) 45,016 50,996 16,200 74,864

115,684 (44,241) (7,873) 68,173 3,237 (297,127)

44

As of 31 December 2007


Patkol Public Company Limited 2007

Cash Flows Cash flows from investing activities (Increase) Decrease in short-term loans to related parties (Increase) Decrease in current investment Dividend received Cash received from sales of fixed assets Cash paid for purchase of fixed assets Increase in restricted investments † Cash paid for purchase of intangible assets Cash received from recovery of capital Cash paid for purchase of investments from minority interest Cash received (paid) from sales of investment Cash received (paid) from sales of intangible assets Decrease in other assets Net cash provided by (used in) investing activities loans from financial institutions Cash flows from financing activities Received (paid) for overdrafts and short - term Short-term loans from related persons and parties Cash received from long-term loans Repaid for long-term loans Cash paid for redemption of debentures Paid for liabilities under financial lease agreement † Dividend paid Cash received from convertible preferred shares issuance Cash received from increase in share capital Net cash provided by (used in) financing activities Effect of change in exchange rate on cash Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period †Additional disclosure of cash flows information Cash paid during the year for Interest expenses Income tax

Annual Report 2007

2006

2005

(Bahtû000) 2004

24,328 20,000 1,933 (38,896) 7,640 (3,017) -

(13,149) (20,000) 2,224 (50,838) 1,064 (23,897) -

(14,378) 0 48,411 3,465 (70,863) (8,910) (16) 1,500

(3,505) 0 7,999 27,219 (42,565) 2,863 (461) 33,000

0 0 0 0

(30,000) 622 0 0

0 0 112 (270)

(2,445) 105 0 537

11,988

(133,973)

(40,949)

22,748

624,581 20,267 (50,791) 0 0 (10,817) (35,773)

152,041 (32) (38,821) 0 (100,000) (10,795) (23,849)

81,893 (19) 7,069 (45,000) (100,000) (4,946) 0

507,909 (87,288) 3,230 (59,500) 0 (4,590) (27,822)

118,489 0 665,956 (47) 26,927 32,957 59,884

0 0 (21,456) 303 (64,691) 97,649 32,957

0 0 (61,003) (408) (27,496) 125,145 97,649

0 26,500 358,440 (322) 83,739 41,406 125,145

96,889 23,916

66,774 19,879

44,113 21,764

46,836 24,605

45

As of 31 December 2007


Patkol Public Company Limited 2007

DATA PER SHARES (Baht) Book Value per shares Earnings per shares Cash Dividend per share Stock Dividend per share

1.78 (1.21) 0.15 2007

GROWTH RATE (%) Total Assets Total Liabilities Sales and Services Income Cost and Expenses †Net Income

(2.1%) 11.1% (2.0%) 7.5% (573.3%)

2005

2004

3.14 0.26 0.10 -

3.24 0.28 0.00 -

2.96 0.22 0.12 0.45

2006

2005

2004

23.5% 35.3% 31.4% 32.6% (9.2%)

3.1% 0.4% 22.6% 21.5% 27.8%

38.6% 43.6% 6.9% 9.5% (62.1%)

2007

2006

2005

2004

1.0 0.3 (0.3) 4.5 80.9 22.9 15.7 5.5 65.9 30.6

1.1 0.5 0.0 3.4 105.8 18.5 19.4 5.5 65.7 59.6

1.1 0.6 0.1 3.0 120.3 13.3 27.1 6.2 58.4 88.9

1.2 0.7 (0.4) 3.1 115.8 13.5 26.8 5.4 66.9 75.7

0.9% (5.3%) 1.2% 346.4% (8.1%) (49.2%)

8.3% 4.1% 1.2% 60.8% 1.7% 8.0%

9.1% 5.0% 1.2% 54.4% 2.4% 9.1%

8.7% 4.5% 1.6% (292.5%) 2.3% 8.5%

(9.47%) (46.2%) 1.2

2.19% 20.4% 1.3

2.73% 21.2% 1.1

4.34% 18.3% 1.1

6.1 (5.5) (27.2) (12.4%)

3.1 2.7 0.3 39.0%

2.2 3.2 0.3 0.0%

2.4 (4.8) (1.3) 52.8%

FINANCIAL RATIO LIQUIDITY RATIO : Liquidity Ratio (Time) Quick Ratio (Time) Liquidity Ratio - Cash (Time) Account Receivable-Turnover (Time) Average no.of day for collection (days) Inventory Turnover (Time) Average no.of day for sales (days) Account Payable-Turnover (Time) † Average no.of day for payment (days) Cash Cycle (days) †PROFITABILITY RATIO : Gross margin (%) Operation profit margin (%) Other Profit Margin (%) Cash to profitability ratio (%) Net profit margin (%) Return on equity (%) EFFICIENCY RATIO : Return on Assets (%) Return on Fixed Assets (%) Assets Turnover (Times) †FINANCIAL POLICY RATIO : Debt to Equity Ratio (Time) Time Interest Earned (Time) Cash debt coverage(Cash basis) (Time) Dividend payout ratio(%)

2006

Annual Report 2007

46

As of 31 December 2007


Patkol Public Company Limited FINANCIAL POSITION AND RESULTS OF OPERATION PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Balance Sheet

2007

ASSETS CURRENT ASSETS Cash and cash equivalents 72,143 Current investment 11 Accounts receivable - net 518,128 Accounts receivable - related companies - net 346 Installments receivables - net 131,354 Unbilled revenues from sales and services - net 1,182,447 Short term loans to related companies 0 Inventories - net 573,106 Other current assets 263,294 Total Current Assets 2,740,827 NON-CURRENT ASSETS Installments receivables 17,277 Deposits at bank with commitment 2,503 Investments for using the equity method 0 Property , plant and equipment -net 842,749 Intangible assets - net 24,588 Unused land in operations - net 38,691 Other non-current assets 1,060 Total non-current assets 926,868 TOTAL ASSETS 3,667,695

2006

(Baht没000) 2004

2005

2% 0% 14%

54,631 20,010 880,578

2% 1% 25%

106,487 10 594,411

4% 0% 22%

176,336 10 605,155

7% 0% 25%

0% 4%

342 162,979

0% 5%

811 156,658

0% 6%

1,094 203,963

0% 8%

32% 0% 16% 7% 75%

808,567 0 490,720 177,767 2,595,595

23% 0% 14% 5% 73%

462,099 0 428,019 104,932 1,853,428

17% 0% 16% 4% 69%

493,978 0 269,656 60,186 1,810,377

20% 0% 11% 2% 73%

0% 0%

27,137 10,104

1% 0%

19,393 11,295

1% 0%

22,240 2,378

1% 0%

0% 23% 1% 1% 0% 25% 100%

0 857,716 29,118 38,691 1,361 964,127 3,559,722

0% 0 28% 597,128 0% 2,769 2% 18,139 0% 14,740 31% 657,393 100% 2,467,770

0% 24% 0% 1% 1% 27% 100%

Annual Report 2007

47

0% 0 24% 746,421 1% 7,506 1% 42,460 0% 9,345 27% 836,420 100% 2,689,847

As of 31 December 2007


Patkol Public Company Limited 2007

Balance Sheet LIABILITIES AND SHAREHOLDERSû EQUITY CURRENT LIABILITIES Bank overdrafts and short-term loans from financial institution Accounts payable-trade and others Account payable - related companies Current portion of long term liabilities and debenture Short-term loans from related companies Collections in excess of earned revenues Other current liablilities Total current liablities NON-CURRENT LIABLITIES Long term loan and liabilities - net Defereed interest discounted from debt restruction agreement Financial liabilities - convertible preferred shares Total non-current liablities Total liablities SHAREHOLDERSû EQUITY Convertible preferred shares Share capital - common shares authorized, issued and fully paid-up Premium on common shares Revaluation increment in land Retained earnings - Appropriated for reserve fund Unappropriated retained earnings Total Shareholdersû Equity - net Minority Interest Total Shareholdersû Equity & Minority Interest TOTAL LIABILITIES AND SHAREHOLDERSû EQUITY

2006

(Bahtû000) 2004

2005

1,693,010 665,623 293

46% 18% 0%

959,555 918,382 355

27% 26% 0%

804,240 395,964 390

30% 15% 0%

689,598 421,727 224

28% 17% 0%

75,557

2%

68,837

2%

160,095

6%

151,125

6%

0

0%

0

0%

0

0%

0

0%

189,078 142,362 2,765,923

5% 4% 75%

322,777 124,724 2,394,629

9% 4% 67%

153,246 91,761 1,605,696

6% 3% 60%

96,272 82,427 1,441,374

4% 3% 58%

231,127

6%

284,400

8%

270,351

10%

291,682

12%

7,452

0%

20,043

1%

30,206

1%

19,334

1%

117,846 356,426 3,122,348

3% 10% 85%

0 304,443 2,699,072

0% 9% 76%

0 300,557 1,906,253

0% 11% 71%

0 311,016 1,752,390

0% 13% 71%

643

0%

0

0%

0

0%

0

0%

238,486 0 260,241

7% 0% 7%

238,486 0 260,241

7% 0% 7%

238,486 0 260,241

9% 0% 10%

238,486 0 260,241

10% 0% 11%

32,000 2,248 533,618 11,729

1% 0% 15% 0%

32,000 318,304 849,031 11,620

1% 9% 24% 0%

32,000 241,706 772,432 11,162

1% 9% 29% 0%

23,849 182,530 705,106 10,274

1% 7% 29% 0%

545,347

15%

860,650

24%

783,595

29%

715,380

29%

3,667,695

100%

3,559,722

100%

2,689,847

100%

2,467,770

100%

Annual Report 2007

48

As of 31 December 2007


Patkol Public Company Limited Statement of Income

2007

Sales and services income 3,672,781 Costs of sales and services 3,568,029 GROSS MARGIN 104,752 Selling and administrative expenses 294,401 NET INCOME FROM SALES AND SERVICE (189,649) Other income 28,852 NET INCOME FROM OPERATION (160,797) Share of profits (losses) from investments for using the equity method 0 NET INCOME BEFORE INTEREST AND INCOME TAX (160,797) Interest expense 115,994 INCOME BEFORE INCOME TAX (276,791) Income tax 2,381 INCOME BEFORE MINORITY INTEREST (279,172) Net income of minority interest 1,111 INCOME FROM ORDINARY ACTIVITY (280,283) Extraordinary item - net 0 Gain on debt restructuring 0 NET INCOME (280,283) †Basic Earnings per Share: Income before extraordinary item (1.18)† † Extraordinary item NET INCOME (1.18)

2006

(Bahtû000) 2004

2005

100% 3,779,433 97.1% 3,377,482 2.9% 401,951 8.0% 228,541

100% 2,725,504 89.4% 2,442,795 10.6% 282,709 6.0% 174,110

100% 2,392,501 89.6% 2,168,634 10.4% 223,867 6.4% 164,635

100% 90.6% 9.4% 6.9%

(5.2%) 0.8% (4.4%)

173,410 31,510 204,920

4.6% 0.8% 5.4%

108,599 35,571 144,170

4.0% 1.3% 5.3%

59,232 50,004 109,236

2.5% 2.1% 4.6%

0.0%

0

0.0%

0

0.0%

0

0.0%

(4.4%) 3.2% (7.5%) 0.1%

204,920 77,214 127,706 25,801

5.4% 2.0% 3.4% 0.7%

144,170 50,491 93,678 24,812

5.3% 1.9% 3.4% 0.9%

109,236 38,074 71,162 16,386

4.6% 1.6% 3.0% 0.7%

(7.6%) 0.0% (7.6%) 0.0% 0.0% (7.6%)

101,905 (1,458) 100,447 0 0 100,447

2.7% 0.0% 2.7% 0.0% 0.0% 2.7%

68,866 (1,539) 67,327 0 0 67,327

2.5% (0.1%) 2.5% 0.0%† 0.0% 2.5%

54,776 (2,089) 52,688 0 0 52,688

2.3% (0.1%) 2.2% 0.0% 0.0% 2.2%

Annual Report 2007

0.42 0.42

49

0.28 0.28

As of 31 December 2007

0.22 0.22


Patkol Public Company Limited 2007

Cash Flows CASH FLOWS FROM OPERATING ACTIVITIES : † Net profit (loss) Adjustments of net profit (loss) to cash receipt (disbursement) from operations Net (profit) loss of minority interest Equity (gain) loss from investments Depreciation Amortized intangible assets Bad debt and doubtful accounts Allowance for devaluation of inventories (reversal) (Gain) Loss on sales of investment (Gain) loss on sales of fixed assets Fixed assets written off and transferred to expenses Loss on sales of intangible assets Loss on impairment of assets Unrealized loss on exchange rate °Increase) Decrease in changes in parts of operating assets Trade accounts receivable Accounts receivable - related parties Installments receivables Unbilled receivable Inventories Other current assets Other non-current assets †Increase (Decrease) in changes in parts of operating liabilities Trade accounts payable Accounts payable - related parties Accured Income tax Collection in excess of earned revenues Other current liabilities Net cash provided by (used in) operating activities

Annual Report 2007

2006

2005

(Bahtû000) 2004

(280,283)

100,447

67,327

52,688

109 0 77,174 7,705 45,608 2,883 0 (1,759) 1,382 0 2,382 1,539

1,459 0 64,351 4,275 13,577 2,864 209 (1,895) 1,107 0 3,769 (3,055)

1,539 0 47,843 1,513 (5,579) 297 0 (383) 14,245 (16) 0 (275

2,089 0 38,011 1,265 (4,515) (1,149) (105) (1,521) 5,662 0 0 )1,725

323,851 (4) 33,333 (373,819) (85,269) (85,527) 301

(291,609) 470 (19,756) (346,469) (65,565) (72,862) 7,983

21,854 283 39,761 35,961 (158,732) (44,747) 95

(235,706) (726) (67,011) (96,026) (75,215) (12,840) (6,192)

(252,551) (62) (133,700) 13,765 (703,002)

522,724 (35) 169,531 33,253 124,774

(25,759) 166 (1,678) 56,974 (34,237) 16,452

86,941 (45) (7,369) 61,561 7,999 (250,479)

50

As of 31 December 2007


Patkol Public Company Limited 2007

Cash Flows Cash flows from investing activities : (Increase) Decrease in short-term loans to related parties (Increase) Decrease in current investment Dividend received Cash received from sales of fixed assets Cash paid for purchase of fixed assets Increase in restricted investments Cash paid for purchase of intangible assets Cash received from recovery of capital Cash paid for purchase of investments from minority interest Cash received (paid) from sales of investment Cash received (paid) from sales of intangible assets Decrease in other assets Net cash provided by (used in) investing activities loans from financial institutions Cash flows from financing activities : Received (paid) for overdrafts and short - term Short-term loans from related persons and parties Cash received from long-term loans Repaid for long-term loans Cash paid for redemption of debentures Paid for liabilities under financial lease agreement Cash paid for recovery of capital to minority interest Dividend paid Cash received from convertible preferred shares issuance Cash received from increase in share capital Net cash provided by (used in) financing activities Effect of change in exchange rate on cash Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period Additional disclosure of cash flows information Cash paid during the year for Interest expenses Income tax

Annual Report 2007

2006

2005

(Baht没000) 2004

0 20,000 0 1,938 (62,276) 7,601 0 0

0 (20,000) 0 8,317 (180,380) 1,192 (472) 0

0 0 0 4,669 (171,406) (8,918) (455) 0

0 0 0 5,611 (89,845) 2,857 (465) 0

0 0 0 (3,175)

0 0 0 (25,887)

0 0 112 (270)

(809) 105 0 (2,330)

(35,912)

(217,230)

(176,268)

(84,876)

732,899 0 0 (47,021) 0 (12,122) 0 (35,773)

155,315 0 0 22,409 (100,000) (12,577) 0 (24,850)

115,169 0 127,069 (45,000) (100,000) (6,202) 0 (651)

505,713 0 3,230 (59,500) 0 (5,525) 0 (28,861)

118,489 0 756,473 (47) 17,511 54,631 72,143

0 0 40,297 303 (51,856) 106,487 54,631

0 0 90,384 (417) (69,849) 176,336 106,487

0 26,500 441,557 (322) 105,880 70,456 176,336

116,477 27,766

78,678 22,652

48,406 28,859

46,660 30,044

51

As of 31 December 2007


Patkol Public Company Limited 2007

DATA PER SHARES (Baht) Book Value per shares Earnings per shares Cash Dividend per share †Stock Dividend per share

2.24 (1.18) 0.15 2007

GROWTH RATE (%) Total Assets Total Liabilities Sales and Services Income Cost and Expenses †Net Income

(3.0%) 15.7% (2.8%) 7.1% (379.0%)

2005

2004

3.56 0.42 0.10 -

3.24 0.28 0.00 -

2.96 0.22 0.12 0.45

2006

2005

2004

32.3% 41.6% 38.7% 37.8% (49.2%)

9.0% 8.8% 13.9% 12.2% 27.8%

38.6% 43.6% 6.9% 9.5% (62.1%)

2007

2006

2005

2004

1.0 0.3 (0.3) 4.7 76.4 23.3 15.5 4.5 79.9 11.9

1.1 0.5 0.1 3.8 93.7 18.8 19.1 5.1 70.1 42.7

1.2 0.5 0.0 3.2 113.6 13.0 27.8 6.0 60.3 81.1

1.3 0.7 (0.2) 3.1 115.8 14.2 26.8 5.4 66.9 75.7

2.9% (4.4%) 0.8% 437.2% (7.6%) (40.5%)

10.6% 5.4% 0.8% 60.9% 2.6% 12.4%

10.4% 5.3% 1.3% 11.4% 2.4% 9.1%

9.4% 4.6% 2.0% (229.3%) 2.2% 8.5%

(7.8%) (23.9%) 1.0

3.2% 20.5% 1.2

2.6% 17.1% 1.1

4.3% 18.3% 1.1

5.9 (4.8) (5.1) (12.8%)

3.2 2.9 0.4 24.7%

2.5 1.9 0.1 1.0%

2.5 (3.7) (1.4) 54.8%

FINANCIAL RATIO LIQUIDITY RATIO : Liquidity Ratio (Time) Quick Ratio (Time) Liquidity Ratio - Cash (Time) Account Receivable-Turnover (Time) Average no.of day for collection (days) Inventory Turnover (Time) Average no.of day for sales (days) Account Payable-Turnover (Time) † Average no.of day for payment (days) Cash Cycle (days) †PROFITABILITY RATIO : Gross margin (%) Operation profit margin (%) Other Profit Margin (%) Cash to profitability ratio (%) Net profit margin (%) Return on equity (%) EFFICIENCY RATIO : Return on Assets (%) Return on Fixed Assets (%) Assets Turnover (Times) †FINANCIAL POLICY RATIO : Debt to Equity Ratio (Time) Time Interest Earned (Time) Cash debt coverage(Cash basis) (Time) Dividend payout ratio(%)

2006

Annual Report 2007

52

As of 31 December 2007


Audit没s Report and Financial Statement PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES AS AT DECEMBER 31, 2007 AND 2006


Patkol Public Company Limited

Auditorûs Report To

The Shareholders of PATKOL PUBLIC COMPANY LIMITED

I have audited the consolidated balance sheets of PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES and the separate balance sheets of PATKOL PUBLIC COMPANY LIMITED as at December 31, 2007 and 2006, and the related consolidated statements of income and separate statements of income, consolidated statements of changes in shareholdersû equity and separate statements of changes in shareholdersû equity, and consolidated statements of cash flows and separate statements of cash flows for the years then ended. These financial statements are the responsibility of the Companyûs management as to their correctness and completeness of the presentation. Except for the matters stated in the following paragraph, I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audit provides a reasonable basis for my opinion. I did not observe the taking of the physical count the Company and subsidiariesû inventories which had the amount of Baht 482.02 million (Baht 251.18 million in Companyûs financial statements) and work in process which were recorded as unbilled revenue from sales and services and had the amount in the balance sheets as at December 31, 2005 of Baht 462.10 million (Baht 441.32 million in the Companyûs financial statements), since that date I had not been appointed as auditor for the Company and subsidiaries, and I was unable to apply the other auditing procedures for satisfactory as to the inventories quantities and unbilled revenue from sales and services. Such transaction value brought forward to the beginning balance of year 2006 which affected to the revenues and costs of sales for the year ended December 31, 2006. In my opinion, except for the effects of adjustments on the 2006 financial statements from the scope limitation by circumstances, if any, as might have been determined to be necessary had I been audited to satisfy in inventories and unbilled revenues from sales and services as stated in the preceding paragraph, the consolidated financial statements and the separate financial statements referred to above present fairly, in all material respects, the consolidated financial position of PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES and the separate financial position of PATKOL PUBLIC COMPANY LIMITED as at December 31, 2007 and 2006, the results of their and its operations and cash flows for the years then ended in conformity with generally accepted accounting principles.

Annual Report 2007

54

As of 31 December 2007


Patkol Public Company Limited

Without qualifications for the financial statements, I draw your attention to notes 23 to financial statements, since January 1, 2007 the Company changed its accounting policy for investment in subsidiaries from equity method to cost method in the separate financial statements to be in compliance with the Notification of the Federation of Accounting Professions and retroactively restated the separate statements of income, separate statements of changes in shareholders没 equity and separate statements of cash flows for the year ended December 31, 2006 and the separate balance sheets as at December 31, 2006 for the changes in such accounting policy. I also audited the adjustments that were applied to restate the separate financial statements for the year ended December 31, 2006. In my opinion, such adjustments are appropriate and have been properly applied.

Office of D I A International Auditing

(Mrs. Suvimol Krittayakiern) C.P.A. (Thailand) Registration No. 2982 February 29, 2008

Annual Report 2007

55

As of 31 December 2007


Patkol Public Company Limited

Balance Sheets PATKOL PUBLIC COMPANY LIMITED As at December 31, 2007 and 2006 Baht Assets

Note

Current assets Cash and cash equivalents Current investments Trade accounts receivable - net Accounts receivable - related parties Installments receivable due within one year Unbilled receivable Short - term loans to related parties Inventories - net Other current assets Retentions Advance payment Receivable - Revenue Department Withholding income tax Advance receivable Others Total current assets Non-current assets Installments receivable - net Deposits at bank with commitment Long-term investments in subsidiaries Property, plant and equipment - net Non-performed land - net Intangible assets - net Other non-current assets Total non-current assets Total assets

6.1 7 24

Consolidated 2007 2006

72,142,666 10,812 518,127,592 345,831

8

131,354,379 1,182,446,584 24 0 9 573,105,501

54,631,430 20,010,400 880,577,844 341,765

Separated 2007 2006 (Restated) 59,883,968 0 494,329,545 2,346,145

32,957,361 20,000,000 830,696,216 80,957,121

162,979,274 131,354,379 808,567,184 1,173,379,738 0 5,850,000 490,719,644 181,821,468

162,979,274 796,287,563 30,178,094 247,069,686

30,283,034 67,154,076 30,283,034 67,154,076 24 89,249,084 43,448,987 141,551,945 50,542,312 70,218,826 43,329,091 46,258,387 29,859,154 21,760,293 0 21,760,293 0 21,839,206 0 21,839,206 0 24 29,943,455 23,835,184 24,171,109 17,626,206 2,740,827,263 2,595,594,879 2,334,829,217 2,366,307,063 8 10 11 12 13 14

17,276,954 27,137,281 17,276,954 27,137,281 2,502,670 10,103,523 1,260,000 8,900,000 0 0 113,248,325 113,248,325 842,749,370 857,716,355 512,345,034 524,458,929 38,691,250 38,691,250 19,247,500 19,247,500 24,587,837 29,117,705 22,917,884 26,742,156 1,060,043 1,361,130 910,387 1,114,617 926,868,124 964,127,244 687,206,084 720,848,808 3,667,695,387 3,559,722,123 3,022,035,301 3,087,155,871

Notes to financial statements are parts of these financial statements. Annual Report 2007

56

As of 31 December 2007


Patkol Public Company Limited

Balance Sheets (Cont.) PATKOL PUBLIC COMPANY LIMITED As at December 31, 2007 and 2006 Baht Liabilities and shareholder没s equity

Note

Current liabilities Overdrafts and short-term loans from financial institutions 15 Trade accounts payable Trade accounts payable - related parties 24 Current portion of long-term debts 16, 17 Short-term loans from related person and parties 24 Other current liabilities Collections in excess of earned revenues Accrued expenses Retentions Others Total current liabilities Non-current liabilities Long - term loans - net Liabilities under financial lease agreement - net Financial liabilities - convertible preferred shares Total non-current liabilities Total liabilities

Consolidated 2007 2006

1,693,009,846 665,623,432 292,557 75,557,104 0

Separated 2007 2006 (Restated)

959,554,590 1,538,335,209 918,381,969 444,185,797 354,879 32,324,850 68,836,581 52,942,333 0

20,267,067

912,928,930 674,604,174 137,713,913 60,760,517 0

189,077,672 322,777,371 187,322,857 316,742,291 59,018,197 49,355,484 50,813,361 41,804,386 39,841,422 22,962,847 39,841,422 22,962,847 43,502,506 52,405,367 39,804,180 43,000,465 2,765,922,736 2,394,629,088 2,405,837,076 2,210,517,523

16

231,127,302

284,400,217

67,127,302

109,670,217

17

7,452,366

20,042,634

5,884,462

17,131,367

18

117,845,894 0 117,845,894 0 356,425,562 304,442,851 190,857,658 126,801,584 3,122,348,298 2,699,071,939 2,596,694,734 2,337,319,107

Notes to financial statements are parts of these financial statements. Annual Report 2007

57

As of 31 December 2007


Patkol Public Company Limited

Balance Sheets (Cont.) PATKOL PUBLIC COMPANY LIMITED As at December 31, 2007 and 2006 Baht Liabilities and shareholderรปs equity (Cont.) Note Shareholdersรป equity Share capital Authorized share capital 33,744,100 preferred shares of Baht 1 each 91,486,000 common shares of Baht 1 each 20,000,000 common shares of Baht 1 each Issued and paid-up share capital Convertible preferred shares 38,486,001 common shares of Baht 1 each 38,486,000 common shares of Baht 1 each Premium on common shares Revaluation surplus on land Retained earnings Appropriated - legal reserve Unappropriated Total shareholdersรป equity Minority interest Total shareholdersรป equity and minority interest Total liabilities and shareholdersรป equity

Consolidated 2007 2006

Separated 2007 2006 (Restated)

33,744,100

33,744,100

291,486,000

291,486,000

18

320,000,000

19 20

320,000,000

643,139

0

643,139

0

238,486,001

0

238,486,001

0

0 4 260,240,615

238,486,000 0 260,240,615

0 4 260,240,615

238,486,000 0 260,240,615

32,000,000 2,248,317 533,618,076 11,729,013

32,000,000 32,000,000 32,000,000 318,304,051 (106,029,192) 219,110,149 849,030,666 425,340,567 749,836,764 11,619,5180 0 0

545,347,089 860,650,184 425,340,567 749,836,764 3,667,695,387 3,559,722,123 3,022,035,301 3,087,155,871

Notes to financial statements are parts of these financial statements. Annual Report 2007

58

As of 31 December 2007


Patkol Public Company Limited

Statements of Income PATKOL PUBLIC COMPANY LIMITED For the years ended December 31, 2007 and 2006 Baht Note

Consolidated 2007 2006

Separated 2007 2006 (Restated)

Revenues Sales and services income Dividend received Other income Total revenues

24 3,672,780,909 3,779,433,265 3,548,563,880 3,620,563,859 0 0 9,098,980 11,998,800 24 28,852,100 31,510,219 33,802,172 31,586,193 3,701,633,009 3,810,943,484 3,591,465,032 3,664,148,852

Expenses Cost of sales and services Selling and administrative expenses Bad debt and doubtful accounts Total expenses

24 3,568,028,692 3,377,481,832 3,517,997,161 3,319,603,757 24 248,793,529 214,961,920 215,769,562 182,191,574 45,607,868 13,579,440 45,607,868 13,579,440 3,862,430,089 3,606,023,192 3,779,374,591 3,515,374,771

Profit (Loss) before interest expenses and income tax Interest expenses Income tax Profit (Loss) after interest expenses and income tax Net (profit) loss of minority interest Net profit (loss) Basic earnings per share Net profit (loss)

24 21

(160,797,080) 204,920,292 (187,909,559) 148,774,081 (115,994,405) (77,214,447) (101,456,881) (65,598,685) (2,380,834) (25,800,513) 0 (22,042,806) (279,172,319) 101,905,332 (289,366,440) (1,110,515) (1,458,427) 0 (280,282,834) 100,446,905 (289,366,440)

22

(1.18)

0.42

Notes to financial statements are parts of these financial statements. Annual Report 2007

59

As of 31 December 2007

(1.21)

61,132,590 0 61,132,590 0.26


Annual Report 2007

60

As of 31 December 2007

18 18 20

20

0 238,486,000 0 0 0 0 0 238,486,000 643,139 0 0 1 0 0 0 0 643,139 238,486,001

Notes to financial statements are parts of these financial statements.

Balance as at December 31, 2005 Dividend paid Net profit for the year Balance as at December 31, 2006 Convertible preferred shares issuance Increase in common shares Dividend paid Net loss for the year Balance as at December 31, 2007

Issued and paid - up Note Convertible‘ Common Preferred shares shares

PATKOL PUBLIC COMPANY LIMITED For the years ended December 31, 2007 and 2006

Premium on common shares 0 260,240,615 0 0 0 0 0 260,240,615 0 0 4 0 0 0 0 0 4 260,240,615

32,000,000 0 0 32,000,000 0 0 0 0 32,000,000

241,705,746 11,162,291 783,594,652 (23,848,600) (1,001,200) (24,849,800) 100,446,905 1,458,427 101,905,332 318,304,051 11,619,518 860,650,184 0 0 643,139 0 0 5 (35,772,900) (1,001,020) (36,773,920) (280,282,834) 1,110,515 (279,172,319) 2,248,317 11,729,013 545,347,089

Consolidated (Unit : Baht) Revaluation Retained earnings (Dificit) Minority Total Surplus interest on land Appropriated Unappropriated

Statements of Changes in ShareholdersĂť Equity

Patkol Public Company Limited


Annual Report 2007

61

As of 31 December 2007

0 0 0 0 0 643,139 0 0 0 643,139

0

Convertible preferred shares

0 238,486,000 0 0 238,486,000 0 1 0 0 238,486,001

238,486,000

Common shares

Issued and paid - up

Notes to financial statements are parts of these financial statements.

Balance as at December 31, 2005 as previously reported Cumulative effects of change in accounting policy for equity recognition in subsidiaries Balance as at December 31, 2005 Dividend paid 20 Net profit for the year Balance as at December 31, 2006 Convertible preferred shares issuance 18 Increase in common shares 18 Dividend paid 20 Net loss for the year Balance as at December 31, 2007

Note

PATKOL PUBLIC COMPANY LIMITED For the years ended December 31, 2007 and 2006

0 0 0 0 0 0 4 0 0 4

0

Premium on common shares

0 260,240,615 0 0 260,240,615 0 0 0 0 260,240,615

260,240,615

Separated Revaluation surplus on land

0 32,000,000 0 0 32,000,000 0 0 0 0 32,000,000

32,000,000

Legal reserve

(Dificit)

(59,879,587) (59,879,587) 181,826,159 712,552,774 (23,848,600) (23,848,600) 61,132,590 61,132,590 219,110,149 749,836,764 0 643,139 0 5 (35,772,901) (35,772,901) (289,366,440) (289,366,440) (106,029,192) 425,340,567

772,432,361

(Unit : Baht) Retained earnings Total

241,705,746

Statements of Changes in Shareholders没 Equity

Patkol Public Company Limited


Patkol Public Company Limited

Statements of Cash Flows PATKOL PUBLIC COMPANY LIMITED For the years ended December 31, 2007 and 2006 Baht Consolidated 2007 2006 Cash flows from operating activities Net profit (loss) Minority interest Adjustments of net profit (loss) to cash receipt (disbursement) from operations Depreciation Bad debt and doubtful accounts Unbilled receivable Allowance for devaluation of inventories Loss on sales of investment Gain on sales of fixed assets Fixed assets written off and transferred to expenses Loss on impairment of assets Unrealized loss on exchange rate Amortized intangible assets (Increase) Decrease in changes in parts of operating assets Trade accounts receivable Accounts receivable - related parties Installments receivables Inventories Other current assets Other non-current assets Increase (Decrease) in changes in parts of operating liabilities Trade accounts payable Accounts payable - related parties Collection in excess of earned revenues Other current liabilities Net cash provided by (used in) operating activities

Separated 2007 2006 (Restated)

(280,282,834) 100,446,905 (289,366,440) 109,495 1,458,796 0

77,174,240 64,351,328 49,843,886 45,288,693 45,607,868 13,576,872 45,607,868 13,579,439 (373,879,400) (346,468,591) (377,092,175) (354,963,348) 2,883,190 2,864,281 2,261,945 2,724,562 0 208,975 0 582,383 (1,759,208) (1,895,008) (1,752,978) (1,899,490) 1,381,517 2,381,643 1,539,143 7,705,192

1,106,818 3,768,575 (3,054,905) 4,275,439

986,243 0 1,810,607 6,841,596

1,091,809 0 (3,435,336) 3,902,343

323,851,212 (291,608,521) 297,791,053 (271,417,044) (4,066) 469,730 78,610,976 81,763,611 33,332,796 (19,756,084) 33,332,796 (19,756,084) (85,269,047) (65,564,642) 62,986,274 1,389,080 (85,526,558) (72,862,317) (120,720,570) (81,583,718) 301,087 7,983,440 204,230 6,624,651

(252,550,637) 522,724,098 (230,235,926) 366,029,882 (62,321) (35,303) (105,389,063) 47,607,700 (133,699,699) 169,531,246 (129,419,434) 164,411,850 13,764,812 33,252,894 22,729,607 27,361,013 (703,001,575) 124,774,026 (650,969,505) 90,434,586

Notes to financial statements are parts of these financial statements. Annual Report 2007

61,132,590 0

62

As of 31 December 2007


Patkol Public Company Limited

Statements of Cash Flows (Cont.) PATKOL PUBLIC COMPANY LIMITED For the years ended December 31, 2007 and 2006 Baht

Cash flows from investing activities (Increase) Decrease in current investment (Increase) Decrease in short-term loans to related parties Deposits at bank with commitment Increase in investment of subsidiaries Cash received (paid) from sales of investment Cash received from sales of fixed assets Cash paid for purchase of fixed assets Cash paid for purchase of intangible assets Net cash provided by (used in) investing activities Cash flows from financing activities loans from financial institutions Increase (Decrease) in short-term loans from related persons and parties Increase (Decrease) in long-term loans Paid for redemption of debentures Paid for liabilities under financial lease agreement Dividend paid Cash received from convertible preferred shares issuance Cash received from increase in share capital Net cash provided by (used in) financing activities Effect of change in exchange rate on cash Net increase (decrease) in cash and cash equivalents Cash and cash equivalents as at January 1 Cash and cash equivalents as at December 31

Consolidated 2007 2006

Separated 2007 2006 (Restated)

19,999,588

20,000,000

(20,000,226)

0 0 7,600,853 1,191,906 0 0 0 (471,879) 1,938,336 8,317,187 (62,275,929) (180,379,546) (3,175,324) (25,887,348) (35,912,476) (217,229,906)

24,328,095 (13,148,853) 7,640,000 1,064,465 0 (30,000,000) 0 622,296 1,933,124 2,223,616 (38,896,380) (50,837,631) (3,017,324) (23,897,162) 11,987,515 (133,973,269)

732,899,162

624,580,749

155,314,741

0 0 (47,020,707) 22,409,000 0 (100,000,000) (12,121,954) (12,576,816) (35,772,900) (24,849,800)

118,489,033 0 118,489,033 5 0 5 756,472,639 40,297,125 665,955,949 (47,352) 302,958 (47,352) 17,511,236 (51,855,797) 26,926,607 54,631,430 106,487,227 32,957,361 72,142,666 54,631,430 59,883,968

63

152,040,867

20,267,067 (31,716) (50,790,707) (38,821,000) 0 (100,000,000) (10,817,298) (10,795,232) (35,772,900) (23,848,600)

Notes to financial statements are parts of these financial statements. Annual Report 2007

(20,000,000)

As of 31 December 2007

0 0 (21,455,681) 302,958 (64,691,406) 97,648,767 32,957,361


Patkol Public Company Limited

Note to Financial Statements PATKOL PUBLIC COMPANY LIMITED As at December 31, 2007 and 2006

1.

GENERAL INFORMATION 1.1 Patkol Public Company Limited was incorporated as a company limited on November 28, 1965 with registration no. 372/2508 and changed to a public company limited on June 28, 1993 with registration no. 0107536000587. 1.2 The Company没s office is located at 348 Chalermprakiat Rama 9 Road, Pravate, Bangkok 10250. 1.3 The Company is engaged in the trading and services of engineering products which include turnkey sales of services in design, manufacturing and installation of various types of industrial refrigeration for the ice making industry and supermarket, dairy and ice-cream processing, as well as food related processing plant and supplies made to order. 1.4 As at December 31, 2007 and 2006, the Company and subsidiary have 1,618 staff and 1,699 staff in the consolidated financial statements, and 1,238 staff and 1,318 staff in the separate financial statements, respectively and also have staff expenses for the year 2007 and 2006 amount of Baht 506.76 million and Baht 431.71million in the consolidated financial statements, Baht 419.74 million and Baht 360.61 million in the separate financial statements, respectively.

2.

PREPARATION OF FINANCIAL STATEMENTS BASIS

These financial statements have been presented in accordance with the notification of the Department of Business Development dated September 14, 2001 regarding the abbreviate items which must be shown in the financial statements for the company limited and prepared in conformity with the generally accepted accounting principles as prescribed by the Accounting Professions Act B.E. 2547. The financial statements have been prepared under the historical cost convention, except as transaction disclosed in significant accounting policies.

3.

BASIS OF CONSOLIDATED FINANCIAL STATEMENTS

These financial statements for the year ended December 31, 2007 and 2006 have been consolidated the financial statements of Patkol Public Company Limited and its subsidiary companies as follows : Subsidiaries没 name

Percentage of shareholding 2007 2006

Shareholding by the Company Patkol Manufacturing Co., Ltd.

99.99

99.99

Patkol (1984) Co., Ltd.

99.98

99.98

Shareholding by the Company Patkol R & D Co., Ltd.

99.98

99.98

PKB Enterprise Co., Ltd.

80.00

80.00

Annual Report 2007

64

Type of business

Manufacture and sale of food related processing equipment and cooling equipment Manufacture and sale the electric system equipment Research and development in applied technology and related fields Manufacture and import foam plate and equipment for cold room business

As of 31 December 2007


Patkol Public Company Limited Subsidiariesû name Shareholding by subsidiary companies Siam Patkol Co., Ltd. (60% of share capital held by Patkol (1984) Co., Ltd.) Kaset Phet Co., Ltd. (98.80% of share capital held by Siam Patkol Co., Ltd.)

Percentage of shareholding 2007 2006 39.99

39.99

0.00

0.00

Type of business

Manufacture and sale the cooling system equipment Consultant and brokerage

The consolidated financial statements have been prepared in conformity with the same accounting policy for the accounts and accounting events of the Company and subsidiaries. The balance of accounts and transaction between the Company and its subsidiaries, inter - company unrealized gain between the Company and net assets of subsidiaries have been eliminated from the consolidated financial statements.

4.

NEW ACCOUNTING STANDARDS ISSUANCE

In accordance with the notification No. 9/2550, No.38/2550 and No.62/2550 issued by the Federation of Accounting Professions, pertaining to the Accounting Standards announced in the Government Gazette, intention to follow the revised 2007 Accounting Standards in stead of the old Accounting Standards which were cancelled as following : 4.1 The revised Accounting Standards became effective in the current year No. 44 çConsolidated Financial Statements and Separate Financial Statementsé No. 45 çInvestments in Associatesé No. 46 çInterests in Joint Ventureé Those three Accounting Standards are required to adopt for the financial statements beginning on or after January 1, 2007 onwards. And on January 1, 2007 the Company had changed the accounting policy for investment in subsidiaries and associates in the separate financial statements in order to conform to the revised Accounting Standards No. 44 and No. 45 as stated in notes to financial statements no.23. 4.2 The revised Accounting Standards are not operative yet in the current year No. 25 çCash Flows Statementsé No. 29 çLeasesé No. 31 çInventoriesé No. 33 çBorrowing Costsé No. 35 çPresentation of Financial Statementsé No. 39 çAccounting Policies, Changes in Accounting Estimates and Fundamental Errorsé No. 41 çInterim Financial Reportingé No. 43 çBusiness Combinationsé No. 49 çConstruction Contractsé No. 51 çIntangible assetsé Those ten Accounting Standards are required to adopt for the financial statements beginning on or after January 1, 2008 onwards. The Companyûs management deems that the adoption of those Accounting Standards are not materially affected to the financial statements in the current year. Annual Report 2007

65

As of 31 December 2007


Patkol Public Company Limited

5.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

5.1 Revenues and Expenses recognition 5.1.1 Revenues and expenditures are recognized on an accrual basis. 5.1.2 Revenue from sales is recognized on the value of delivered goods and the significant risks and rewards of ownership have been transferred to the buyer. 5.1.3 Revenue from services is recognized by the percentage of completion which is based on the proportion of actual costs to the total estimated costs by considering the effects to the most recent estimates of total costs, coupled with the consideration of the physical completion estimated by the engineer. 5.2 Cash and cash equivalents Cash and cash equivalents are cash on hand and all type of deposits at banks excluding deposit which held to maturity and short-term highly liquid investments that are subject to insignificant risk of change in value. 5.3 Allowance for doubtful accounts The Company and subsidiaries provided allowance for doubtful accounts equal to the estimated uncollectible receivable. The estimated loss are based on historical collection experience coupled with a review of the current status of existing receivables. 5.4 Inventories Inventories are valued at the lower of cost or net realizable value. The cost calculation are detailed as follows : 5.4.1 Finished goods and work in process recorded on a specific method. 5.4.2 Raw material, spare and supplies recorded on a moving average method. 5.5 Investment Investment in subsidiaries are stated at cost less provision for impairment (if any). 5.6 Property, plant and equipment The Company没s land is stated at the revaluation value which revalued by the independent appraiser. Revaluation surplus of land is presented under shareholders没 equity in balance sheets. The appraisal of such land should be reviewed periodically such that the carrying amount does not differ materially from fair value as at the balance sheets date. Subsidiaries没 land is stated at cost less provision for impairment of assets (if any). Building and equipment are stated at cost less accumulated depreciation and provision for impairment of assets. Building and equipment are depreciated by the straight - line method over the estimated useful lives of the assets as follows: Nomber of years Building factory and improvement 10 and 20 Machinery, tools and equipment 5 Leasehold machinery 8 Furniture and office equipment 3 and 5 Vehicles 5 Land and assets in progress are not depreciated. Interest from long-term borrowings for acquisition of fixed assets is capitalized as part of fixed assets and stopped to recognize as cost of fixed assets when the assets are ready for use.

Annual Report 2007

66

As of 31 December 2007


Patkol Public Company Limited 5.7 Intangible assets Intangible assets are stated at cost less accumulated amortization. Such amortization are calculated at cost of assets on a straight-line basis over the estimated useful lives of the assets for 5 years. Intangible assets consist of computer software. 5.8 Non-performed land Non-performed land is stated at cost less provision for impairment of assets (if any). 5.9 Impairment of assets The Company and subsidiaries have considered the impairment of assets whenever events or changes indicated that the carrying amount of an assets exceeds its recoverable value (net selling price of the assets under current operation or its utilization value whichever is higher). The Company will consider the impairment for each asset item or each asset unit generating cash flows, whenever is practical. In case of the carrying amount of an asset exceeds its recoverable value, the Company will recognize an impairment in the statements of income. The Company will reverse the impairment loss whenever there is an indication that there is no longer impairment or reduction in impairment. 5.10 Transaction in foreign currencies The Company records its transactions in foreign currencies converted into Thai Baht by using the exchange rates ruling on the transaction dates. The balance of assets and liabilities in foreign currencies as at the balance sheets date are converted into Thai Baht on the average commercial bank buying and selling rate except forward contracts which are based on contractual rate. Gain or Loss on exchange rate are included in the results of its operation. 5.11 Financial instruments Financial instruments are presented in balance sheets, consist of cash and cash equivalents, accounts receivable, short-term loans, deposit at bank with commitment, other receivables, bank overdrafts and short-term loans from financial institutions, accounts payable, short-term loans, long-term loans, long - term liabilities under financial lease agreement and other payables. The basis of recognition and measurement of each item are separately disclosed in the related transactions. 5.12 Long - term lease agreement The Company, subsidiaries and joint venture recorded vehicles and equipments under financial lease agreement / hire purchase agreement as assets and liabilities in an amount equal to the fair value at the leased assets or the present value of minimum payments under agreement. Interest expenses are recorded on over the term of agreement. 5.13 Operating lease - where the Company and subsidiaries are the lessee Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under an operating lease are recognized as an expense on straight-line basis, over the lease term. 5.14 Operating lease - where the Company and subsidiaries are the lessor The Company and subsidiaries present assets for lease under operating lease contract in the balance sheets according to the nature of assets. Income from operating lease is recognized as income over the lease term. 5.15 Corporate income tax The Company and subsidiaries recorded corporate income tax by calculating from taxable net profit based on the condition described in the Revenue Code.

Annual Report 2007

67

As of 31 December 2007


Patkol Public Company Limited 5.16 Use of accounting estimates Preparation of financial statements in conformity with generally accepted accounting principles required the management to make several estimation and assumption which affect the reported amounts in the financial statements and notes related thereto. Consequent actual results may differ from these estimates. 5.17 Provision for liabilities The Company and subsidiaries recognize a provision for liabilities when an entity has a present legal or constructive obligation as a result of a past event. It is probable that an outflow of economic benefits resources will be required to settle the obligation and reliable estimate can be made of the amount of the obligation. If some or all the expenditure is required to settle a provision, is expected to be reimbursed when it is virtually certain that reimbursement will be received if the Company and subsidiaries settles the obligation. The amount recognized should not excee the amount of the provision. 5.18 Basic earnings per share Basic earnings (loss) per share are calculated by dividing the net profit (loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. Diluted earnings (loss) per share is calculated by using profit (loss) by the weighted average number of ordinary shares outstanding during the year plus the effects of potential ordinary shares from exercise right of warrants and convertible preferred shares.

6.

ADDITIONAL DISCLOSURE OF CASH FLOWS INFORMATION 6.1 Cash and cash equivalents consist of Baht

Cash on hand Current account Savings deposits Fixed deposit Total

Consolidated 2007 2006

Parent company 2007 2006

216,878 41,609,325 30,139,613 176,850 72,142,666

110,000 39,564,376 20,078,270 131,322 59,883,968

487,784 6,404,518 47,316,027 423,101 54,631,430

357,336 4,108,791 28,112,443 378,791 32,957,361

6.2 Cash paid during the year Baht Consolidated 2007 2006 Interest expenses Income tax

116,477,179 27,766,447

Annual Report 2007

68

78,677,673 22,651,501

Parent company 2007 2006 96,889,045 23,915,839

As of 31 December 2007

66,773,944 19,879,127


Patkol Public Company Limited

7. TRADE ACCOUNTS RECEIVABLE - NET Baht Consolidated 2007 2006 Accounts receivable are separated on aging : Undue - normal Undue - debt acceptance Overdue : - Less than 3 months - Over 3 months to 6 months - Over 6 months to 12 months - Over 12 months Under legal action Total Less Allowance for doubtful accounts Net

Separated 2007 2006

158,640,965 448,682,066 146,906,378 430,507,631 101,774,837 159,026,238 101,774,837 159,026,238 184,097,347 39,544,956 36,460,900 18,076,615 54,221,034 592,816,654 (74,689,062) 518,127,592

153,408,151 79,927,086 32,878,189 27,419,445 16,441,078 917,782,253 (37,204,409) 880,577,844

173,104,898 39,181,450 35,967,395 17,402,312 52,873,295 567,210,565 (72,881,020) 494,329,545

124,668,022 77,486,703 32,469,174 26,870,686 15,093,339 866,121,793 (35,425,577) 830,696,216

8. INSTALLMENTS RECEIVABLE - NET Baht Consolidated and Separated 2007 2006 Installments receivable Under legal action Total Less Allowance for doubtful accounts Net Installments receivable due within 1 year Net

151,319,246 38,888,335 190,207,581 (41,576,248) 148,631,333 (131,354,379) 17,276,954

195,830,014 27,710,364 223,540,378 (33,423,823) 190,116,555 (162,979,274) 27,137,281

9. INVENTORIES - NET Baht Consolidated 2007 2006 Finished goods, raw materials, equipment, spare parts and supplies Work in process Equipment and materials in transit Total Less Allowance for declining in value of inventories Net

382,306,818 201,722,675 4,090,432 588,119,925 (15,014,424) 573,105,501

319,132,445 150,450,554 33,267,879 502,850,878 (12,131,234) 490,719,644

Parent company 2007 2006 145,577,918 46,326,506 4,090,432 195,994,856 (14,173,388) 181,821,468

161,250,743 64,462,508 33,267,879 258,981,130 (11,911,444) 247,069,686

10. DEPOSITS AT BANK WITH COMMITMENT The Company and subsidiaries 첫 fixed deposit were used as collaterals for credit line with bank (note 15). Annual Report 2007

69

As of 31 December 2007


Annual Report 2007

Manufacture and sale of machinery and equipment related food and beverage industry Manufacture and sale the cooling system equipment Manufacture and sale of electricity appliance

Type of Business

70

1.25 10.00

10.00

3.00

3.00 1.25

2.50

100.00

2.50

100.00

80.00

99.98

99.98

39.99

99.99

80.00

99.98

99.98

39.99

999,850.00

0.00

0.00

0.00

113,248,325.00 113,248,325.00 9,098,980.00 11,998,800.00

8,000,000.00 8,000,000.00 4,000,000.00 4,000,000.00

1,249,775.00 1,249,775.00

0.00 0.00 7,998,800.00

2,999,400.00 2,999,400.00 5,098,980.00

999,850.00

0.00

Parent company (Baht) Cost Method Dividend 2007 2006 2007 2006

99.99 99,999,300.00 99,999,300.00

Paid-up capital % of (Million Baht) shareholding 2007 2006 2007 2006

The financial statements of the aforementioned subsidiaries which were brought into the preparation of consolidated financial statements for the year ended December 31, 2007 and 2006 were taken from their audited financial statements. According to the minutes of shareholders没 annual general meeting no. 1/2007 held on March 22, 2007 of Patkol (1984) Co., Ltd., passed the resolution to pay dividend from retained earnings at Baht 170 per share, amounting to Baht 5.10 million which was paid on May 21, 2007. According to the minutes of shareholders没 general meeting no. 12/2007 held on April 30, 2007 of PKB Enterprise Co., Ltd., passed the resolution to pay dividend from retained earnings at Baht 50.00 per share, amounting to Baht 5.00 million which was paid on June 27, 2007.

Research and development in applied technology and related fields - PKB Enterprise Co., Ltd. Manufacture and import foam plate and equipment for cold room business Total investment in subsidiaries

- Siam Patkol Co., Ltd. and subsidiaries - Patkol (1984) Co., Ltd. and subsidiaries - Pakol R & D Co., Ltd.

Subsidiaries :- Patkol Manufacturing Co., Ltd.

Company

11. LONG - TERM INVESTMENT IN SUBSIDIARIES

Patkol Public Company Limited

As of 31 December 2007


Assets - cost As at December 31, 2006 Purchase Disposal Transference As at December 31, 2007 Accumulated depreciation As at December 31, 2006 Depreciation for the year Disposed assets - depreciation As at December 31, 2007 Impairment of assets As at December 31, 2006 Increase As at December 31, 2007 Net book value of assets As at December 31, 2006 As at December 31, 2007

Annual Report 2007

0 0 0 0 0 0 0 260,240,615 260,240,615

0 0 0

81,888,970 81,888,970

260,240,615 0 0 0 260,240,615

0 0 0 0

81,888,970 0 0 0 81,888,970

71

As of 31 December 2007

217,085,181 216,733,173

0 0 0

141,281,690 19,536,006 0 160,817,696

358,366,871 0 0 19,183,998 377,550,869

156,047,708 163,739,497

0 2,381,642 2,381,642

144,499,183 30,144,310 (3,261,605) 171,381,888

300,546,891 21,503,593 (3,517,207) 18,969,750 337,503,027

9,927,946 6,429,529

0 0 0

12,642,098 3,498,417 0 16,140,515

22,570,044 0 0 0 22,570,044

26,669,241 24,912,016

0 0 0

85,568,288 12,652,101 (1,601,310) 96,619,079

112,237,529 6,506,149 (1,611,619) 4,399,036 121,531,095

Consolidated (Baht) Land Building Machinery Machinery Office Cost Increment and and for equipment inprovement equipment lease

12. PROPERTY, PLANT AND EQUIPMENT - NET

34,272,790 25,057,148

0 0 0

32,684,731 11,343,406 (2,444,261) 41,583,876

66,957,521 2,243,018 (2,559,515) 0 66,641,024

Vehicles

Total

71,583,904 63,748,422

0 0 0

0 0 0 0

857,716,355 842,749,370

0 2,381,642 2,381,642

416,675,990 77,174,240 (7,307,176) 486,543,054

71,583,904 1,274,392,345 35,509,980 65,762,740 (792,678) (8,481,019) (42,552,784) 0 63,748,422 1,331,674,066

Assets in progress

Patkol Public Company Limited


Annual Report 2007

72 0 0 0 0 260,240,615 260,240,615

41,828,785 41,828,785

260,240,615 0 0 0 260,240,615

0 0 0 0

41,828,785 0 0 0 41,828,785

51,799,062 63,316,451

129,038,103 10,406,277 0 139,444,380

180,837,165 0 0 21,923,666 202,760,831

39,458,018 31,687,901

115,745,051 12,490,509 (3,257,046) 124,978,514

155,203,069 3,502,030 (3,504,207) 1,465,523 156,666,415

21,927,948 15,533,644

21,642,097 6,394,304 0 28,036,401

43,570,045 0 0 0 43,570,045

21,144,336 19,498,971

85,390,499 10,771,659 (44,355) 96,117,803

106,534,835 4,923,023 (55,657) 4,214,573 115,616,774

29,111,463 21,037,995

27,793,264 9,781,137 (2,351,183) 35,223,218

56,904,727 1,822,917 (2,466,431) 0 56,261,213

Vehicles

Total

58,948,702 59,200,672

0 0 0 0

524,458,929 512,345,034

379,609,014 49,843,886 (5,652,584) 423,800,316

58,948,702 904,067,943 28,648,410 38,896,380 (792,678) (6,818,973) (27,603,762) 0 59,200,672 936,145,350

Assets in progress

Depreciation for the year 2007 and 2006 were Baht 78.17 million and Baht 65.23 million in the consolidated financial statements, Baht 49.84 million and Baht 45.29 million in the separate financial statements, respectively. As at December 31, 2007 and 2006, building and equipment at cost of Baht 233.39 million and Baht 243.16 million in the consolidated financial statements, Baht 220.32 million and Baht 230.60 million in the separate financial statements, respectively were fully depreciated. As at December 31, 2007 and 2006, land with its construction and machinery at cost of Baht 1,068.80 million and Baht 827.58 million in the consolidated financial statements, Baht 705.07 million and Baht 463.85 million in the separate financial statements, respectively were used as guarantee for overdrafts and short-term loans from financial institution (note 15), long-term loans (note 26) and contingent liabilities (note 27.3).

Assets - cost As at December 31, 2006 Purchase Disposal Transference As at December 31, 2007 Accumulated depreciation As at December 31, 2006 Depreciation for the year Disposed assets - depreciation As at December 31, 2007 Net book value of assets As at December 31, 2006 As at December 31, 2007

Separated (Baht) Land Building Machinery Machinery Office Cost Increment and and for equipment inprovement equipment lease

12. PROPERTY, PLANT AND EQUIPMENT - NET (Cont.)

Patkol Public Company Limited

As of 31 December 2007


Patkol Public Company Limited

13. NON-PERFORMED LAND - NET Baht

Land Less Provision for impairment of assets Net

Consolidated 2007 2006

Separated 2007 2006

44,055,806 (5,364,556) 38,691,250

20,843,481 (1,595,981) 19,247,500

44,055,806 (5,364,556) 38,691,250

20,843,481 (1,595,981) 19,247,500

In 2006, the Company hired the appraisal company to appraise non- performed land of a subsidiary by using Maket Approach method. According to the appraisal report dated January 12, 2007 presented fair value of land of Baht 19.44 million which is lower than carrying value of Baht 3.77 million. Such subsidiary, therefore, recognized such different as impairment loss of assets in whole amount. All of the Company and subsidiaries没 lands are used as guarantee for overdrafts and short-term loans from financial institution (note 15), long-term loans (note 16) and contingent liabilities (note 27.3).

14. INTANGIBLE ASSETS - NET Baht Consolidated 2007 2006 Computer software Intellectual property Total Less Accumulated amortization Net Amortization for the year

Separated 2007 2006

61,023,265 58,106,498 57,616,733 54,857,967 6,653,729 6,395,171 6,653,729 6,395,171 67,676,994 64,501,669 64,270,462 61,253,138 (43,089,157) (35,383,964) (41,352,578) (34,510,982) 24,587,837 29,117,705 22,917,884 26,742,156 7,705,195 4,275,439 6,841,597 3,902,343

15. OVERDRAFTS AND SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS Baht Consolidated 2007 2006 Bank overdrafts Discounted promissory notes Discounted post dated cheque Trust receipts Packing credit Net

Annual Report 2007

Separated 2007 2006

83,972,182 56,718,187 35,062,867 24,353,391 1,399,453,000 675,232,204 1,299,453,000 675,232,204 40,103,976 34,892,126 40,103,976 34,892,126 66,574,688 26,780,073 63,699,366 12,519,209 102,906,000 165,932,000 100,016,000 165,932,000 1,693,009,846 959,554,590 1,538,335,209 912,928,930

73

As of 31 December 2007


Patkol Public Company Limited As at December 31, 2007 and 2006, the Company has credit facilities from serveral banks in total amount of Baht 2,596.63 million and USD 1.63 million, collateralized by deposit at banks (note 10), the mortgages of land and its construction (note 12), leasehold land and by the subsidiary没s guarantee. The subsidiary has credit facilities from several banks in total amount of Baht 282.90 million and USD 1.38 million, guaranteed by deposit at banks (note 10), mortgaging land with its construction and machinery (note 12) and the Company没s guarantee.

16. LONG-TERM LOANS - NET Baht Consolidated 2007 2006 Long-term loans Less Current portion of long-term debt Net

Separated 2007 2006

294,139,590 341,160,296 109,139,590 159,930,296 (63,012,288) (56,760,079) (42,012,288) (50,260,079) 231,127,302 284,400,217 67,127,302 109,670,217

The Company has obtained long - term loans from two domestic banks as follows : The 1st credit line in the amount of Baht 312 million at the interest rate of MLR - 2.0% per annum for the 1 st - 2nd year, MLR - 0.5% per annum for the 3rd - 4th year and MLR thereafter. The principal is repayable in the quarterly amount of Baht 30 million (February 2003 to January 2009) and Baht 54 million (February 2009 - January 2010). The 2nd credit line in the amount of Baht 26 million at the interest rate of MLR - 2.0% per annum for the 1st - 2nd year and MLR - 0.5% per annum thereafter. The principal is repayable in the quarterly amount of Baht 1.25 million to Baht 3.15 million (January 2005 to January 2007). Such loans are guaranteed by mortgaging land with its construction (note 12). The 3rd credit line in the amount of Baht 10 million at the interest rate of MLR - 1.0% per annum. The principal and interest is repayable in the quarterly amount of Baht 0.62 million (2007 - 2012). Such loans are guaranteed by leasehold and benefits received from insurance. Subsidiary has obtained long - term loans from a domestic bank as follows : The 1st credit line in the amount of Baht 120 million at the interest rate of MLR - 0.25 - 2.25% per annum. The principal is repayable in the quarterly amount of Baht 2.50 million to Baht 10 million (2005 - 2012) which was graced for the principal repayment in the first two years. The 2nd credit line in the amount of Baht 70 million at the interest rate of MLR - 1.0% per annum for the 1 st year and MLR thereafter. The principal is repayable in the quarterly amount of Baht 1.50 million to Baht 6 million (2006 - 2012). Such loans are guaranteed by mortgaging land with its construction and machinery (note 12) and the Company没s guarantee.

Annual Report 2007

74

As of 31 December 2007


Patkol Public Company Limited

17. LIABILITIES UNDER FINANCIAL LEASE AGREEMENTS - NET Baht Consolidated 2007 2006 Liabilities under financial lease agreements Less Deferred interest expense Total Less Current portion of liabilities Net

Separated 2007 2006

21,472,522 35,174,282 18,079,377 30,240,863 (1,475,340) (3,055,146) (1,264,870) (2,609,058) 19,997,182 32,119,136 16,814,507 27,631,805 (12,544,816) (12,076,502) (10,930,045) (10,500,438) 7,452,366 20,042,634 5,884,462 17,131,367

As at December 31, 2007 and 2006, the Company and subsidiaries entered into hire purchase agreement of vehicles and office equipment with several finance companies. These are repayable in 36 - 48 monthly installments. The agreement will terminate in 2010.

18. SHARE CAPITAL 18.1 In the shareholders没 extraordinary meeting no. 1/2007 held on March 27, 2007, the shareholders passed the resolution as follows : 18.1.1 Approved to decrease the Company没s share capital from Baht 320 million to Baht 291.49 million divided into 291,486,000 shares of Baht 1.00 each by cancelling the unallocated 28,514,000 shares. The Company has registered the decrease share capital with the Ministry of Commerce on March 28, 2007. 18.1.2 Approved to increase share capital from Baht 291.49 million to Baht 325.23 million to serve the issuance and offering new convertible preferred shares, divided into 291,486,000 ordinary shares of Baht 1.00 each total amount of Baht 291.49 million and 33,744,100 preferred shares of Baht 1.00 each, total amount of Baht 33,74 million allocated to the specific investors at the offering price of Baht 3.62 each. The Company has received the payment from issuance of convertible preferred shares amount of Baht 118.49 million (after deduction with share issuance expenses of Baht 3.66 million) on March 30, 2007 and the Company has registered the increase share capital with the Ministry of Commerce on March 28, 2007. 18.2 Right of convertible preferred shares are as follows : Name of preferred shares : Patkol Public Company Limited preferred shares Number of share : 33,744,100 shares of Baht 1.00 each total amount of Baht 33.74 million at the offering price of Baht 3.62 each. Issuance date : March 28, 2007 Expiry date : March 28, 2009 Conditions of preferred shares : 1) The preferred shares are entitled to cumulative dividend with the right to receive dividend at least once a year at the annual rate of 7% and will have the first right to the capital refund over the shareholders of the ordinary shares. 2. The shareholders of preferred share will have no right to receive dividend declared in the annual shareholders没 general meeting for the year 2007. Annual Report 2007

75

As of 31 December 2007


Patkol Public Company Limited 3. The period of preferred shares is 2 years from the issuing date and as at the expiry date if the market price of preferred shares is lower than the issued price, the Company agrees to compensate the difference to the investors within 14 business days from the expiry date of the preferred shares, whether the preferred shares are converted to ordinary shares at the expiry date or not. The compensation will not be enforced if the preferred shares are converted to ordinary shares before the expiry date. 4. The shareholders of the preferred shares can convert all or part of the shares to ordinary shares at the ratio of 1 preferred share : 1 ordinary share. The conversion can be done quarterly since the issuing and the offering date. 5. The rights of preferred shares and right on receive incompleted payment of dividend shall not be enforced when the conversion of preferred shares is completed, the rights shall be enforced as the same as ordinary shares. 6. One preferred share has one voting right. 7. The preferred shares will not be listed on the SET. From such issuance of convertible preferred shares which held as mixed financial instruments including by financial liabilities, therefore, such financial instruments after deduction with share issuance expenses consist of ; Amount of Baht Composition of financial liabilities 117,845,894 Composition of capital 643,139 Total benefits derived from convertible preferred shares 118,489,033 The Company calculated the composition of financial liabilities from issuance of convertible preferred shares by fair value at the discount rate of 7.5% per annum. The Company has interest expenses from such financial instrument for the year ended December 31, 2007 amount of Baht 3.92 million. 18.3 Warrants On September 22, 2001, the Company issued 53 million units of warrants in the form of specified the name of the holders are negotiable with 3 years maturity from the issuance date to the existing shareholders. One unit of warrant has a right to purchase one ordinary share at Baht 5.00 each with the exercise period on every 25 of February, May, August and November. The first exercise date is on November 25, 2004 until August 25, 2007 and the last exercise date will be on September 21, 2007. On September 7, 2007, there is exercise right of warrants for 1 unit.

19. LEGAL RESERVE According to the Public Company Limited Act. B.E. 2535, the Company has to set aside its reserve as a legal reserve not less than 5% of the annual net profit deducted by the total accumulated deficit brought forward (if any) unit the reserve reaches an amount not less than 10% of the authorized share capital. Such legal reserve is not available for dividends distribution. Annual Report 2007

76

As of 31 December 2007


Patkol Public Company Limited

20. RETAINED EARNINGS APPROPRIATION 20.1 According to the minutes of the shareholders没 annual general meeting no. 42 held on April 26, 2007, the Company passed the resolution to pay dividend to the shareholders for the results of its operation as at December 31, 2006 for 238.49 million shares at Baht 0.15 each, amounting to Baht 35.77 million which was paid on May 25, 2007. 20.2 According to the minutes of the shareholders没 annual general meeting no. 1/2006 held on April 27, 2006, the Company passed the resolution to pay dividend to the shareholders for the results of its operation for 2005 for 238.48 million shares at Baht 0.10 each, amounting to Baht 23.85 million which was paid on May 26, 2006.

21. CORPORATE INCOME TAX The Company and subsidiaries calculated corporate income tax at the rate of 25 - 30% of profit (loss) before deducting with tax expenses added by the reserve and other expenses which shall not be allowed as expenses in tax calculation and deducted with taxable deficit brought forward from the previous year except a subsidiary (Patkol Manufacturing Co., Ltd.) calculated corporate income tax at the rate of 30% of profit (loss) before deducting with tax expenses added by the reserve and other expenses which shall not be allowed as expenses in tax calculation and deducted with taxable deficit brought forward from the previous year not exceed 5 years and exempted taxable profit derived from promoted business by using the right and privileges as specified in the promotion certificate (note 28).

22. EARNINGS PER SHARE Consolidated (Baht) For the year ended December 31 Net Profit (loss) Number of shares Baht / share 2550 2549 2550 2549 2550 2549 Basic earnings per share Net profit (loss) of common shareholders (280,282,834) 100,446,905 238,486,001 238,486,000 Effects of potential common share (exercise rights) 5,854,738 33,744,100 Diluted earnings per share Profit of common shareholders assumed as conversion to common share (274,428,096) 272,230,101

Annual Report 2007

77

As of 31 December 2007

(1.18)

(1.01)

0.42


Patkol Public Company Limited Separated (Baht) For the year ended December 31 Net Profit (loss) Number of shares Baht / share 2550 2549 2550 2549 2550 2549 Basic earnings per share Net profit of common shareholders (289,366,440) 61,132,590 238,486,001 238,486,000 Effects of potential common share (exercise rights) 5,854,738 33,744,100 Diluted earnings per share Profit of common shareholders assumed as conversion to common share (283,511,702) 272,230,101

(1.21)

0.26

(1.04)

23. CHANGE IN ACCOUNTING POLICY FOR INVESTMENT IN SUBSIDIARIES As stated in notes 4 to financial statements, the Company has changed the accounting of investment in subsidiaries in the separate financial statements from equity method to cost method. The Company has adjusted the beginning retained earnings of the year 2007 and retroactively restated the 2006 separate financial statements by using cumulative effect of change in accounting policy. From this change, resulting to the decrease in beginning retained earnings and investment in subsidiaries in the separate financial statements for the year ended December 31, 2007 by the same amount of Baht 99.19 million and the 2006 separate financial statements had changed as follows : Separated balance sheet (Baht) as at December 31,2006 Previous Restated Variance (decrease) Investment in subsidiaries Unappropriated retained earnings Total

212,442,227 113,248,325 (318,304,051) (219,110,149) (105,861,824) (105,861,824)

99,193,902 (99,193,902) 0

Separated statement of income (Baht) For the year ended December 31,2006 Previous Restated Variance (decrease) Gain on net operation of subsidiaries Dividend received Total Net profit Basic earnings per share Net profit

Annual Report 2007

78

51,313,115 0 51,313,115 100,446,905

0 11,998,800 11,998,800 61,132,590

51,313,115 (11,998,800) 39,314,315 39,314,315

0.42

0.26

0.16

As of 31 December 2007


Patkol Public Company Limited

24. TRANSACTIONS WITH RELATED PERSON AND PARTIES Assets, liabilities, revenues and expenses arose from transaction with related person and companies. These related transactions are determined on the conditions in the normal course of business and based on the company concerned as follows : 24.1 Relationship Type of business Relationship Person Mr. Piya Chongwattana Company没s director Subsidiaries Patkol Manufacturing Co., Ltd. Manufacture and sale of machinery Subsidiary and directorship and equipment related food and beverage industry Patkol (1984) Co., Ltd. Manufacture and sale of electricity Subsidiary and directorship appliance Patkol R&D Co., Ltd. Reserch and development in applied Subsidiary and directorship technology and related fields PKB Enterprise Co., Ltd. Manufacture and import foam plate Subsidiary and directorship and equipment for cold room business Siam Patkol Co., Ltd. Manufacture and sale the cooling Subsidiary of Patkol (1984) Co., Ltd. system equipment Kaset Phet Co., Ltd. Consultant and brokerage Subsidiary of Siam Patkol Co., Ltd. Related Company Prepack (Thailand) Co., Ltd. Produce and distribute garbage bag Directorship 24.2 Pricing policy Revenues from sale and services Purchase of goods and services Building rental and services Inter-company interest

Pricing policy Cost plus profit 1% and cost plus profit 5% for finished goods Cost plus profit 5% At Baht 1,000 - 148,000 per month At the interest rate of 6.875 - 7.75% per annum

Annual Report 2007

79

As of 31 December 2007


Patkol Public Company Limited 24.3 Assets and liabilities with related persons and parties are as follows : Trade accounts receivable Baht Consolidated Separated 2007 2006 2007 2006 Patkol Manufacturing Co., Ltd. Patkol (1984) Co., Ltd. PKB Enterprise Co., Ltd. Prepack (Thailand) Co., Ltd. Total

0 0 0 345,831 345,831

0 0 0 341,765 341,765

1,645,198 150,975 204,141 345,831 2,346,145

77,532,569 2,862,220 220,567 341,765 80,957,121

Short-term loans to related parties and accrued interest income Baht Consolidated 2007 2006 Patkol Manufacturing Co., Ltd. Patkol (1984) Co., Ltd. Total

0 0 0

Separated 2007 2006 0 0 0

6,229,133 0 6,229,133

17,745,265 13,427,089 31,172,354

Increase and decrease of loans to related parties for the year ended December 31, 2007 and 2006. Baht Separated 2007 2006 Beginning balance Increase during the period Decrease during the period Ending balance Such loans have no agreement entering and collaterals.

30,178,094 17,793,065 448,284,361 164,872,530 (472,612,455) (152,487,501) 5,850,000 30,178,094

Advance payment Baht Consolidated 2007 2006 Patkol Manufacturing Co., Ltd. PKB Enterprise Co., Ltd. Total

Annual Report 2007

0 0 0

80

Separated 2007 2006 0 0 0

50,149,946 480,000 50,629,946

As of 31 December 2007

49,861,678 149,000 50,010,678


Patkol Public Company Limited Trade accounts payable Baht Consolidated 2007 2006 Patkol Manufacturing Co., Ltd. Patkol (1984) Co., Ltd. PKB Enterprise Co., Ltd. Prepack (Thailand) Co., Ltd. Total

0 0 0 292,557 292,557

Separated 2007 2006

0 0 0 354,879 354,879

1,937,434 82,685,662 9,010,440 39,396,756 21,084,419 15,321,086 292,557 310,409 32,324,850 137,713,913

Short-term loans from related persons and parties Baht Consolidated 2007 2006 Patkol (1984) Co., Ltd. Total

0 0

Separated 2007 2006 0 0

20,267,067 20,267,067

0 0

Increase and decrease of loans are as follows : Baht Consolidated 2007 2006 Beginning balance 0 Increase during the period 20,000,000 Decrease during the period (20,000,000) Ending balance 0 Such loans have no agreement entering and collaterals.

Separated 2007 2006 0 0 0 0

0 0 48,810,839 32,162,885 (28,543,772) (32,162,885) 20,267,067 0

24.4 Revenues and expenses transaction with related persons and parties Baht Consolidated Separated 2007 2006 2007 2006 Sales of goods and services Patkol Manufacturing Co., Ltd. Patkol (1984) Co., Ltd. PKB Enterprise Co., Ltd. Siam Patkol Co., Ltd. Prepack (Thailand) Co., Ltd. Total

Annual Report 2007

0 0 0 0 118,584 118,584

81

0 0 0 0 15,540 15,540

41,148,480 677,686 2,118,600 0 63,884 44,008,650

As of 31 December 2007

40,513,338 0 1,701,097 123,842 7,540 42,345,817


2007

Patkol Public Company Limited Baht Consolidated 2007 2006

Separated 2007 2006

Rental and other fees Patkol Manufacturing Co., Ltd. Patkol (1984) Co., Ltd. PKB Enterprise Co., Ltd. Patkol R&D Co., Ltd. Siam Patkol Co., Ltd. Kaset Phet Co., Ltd. Prepack (Thailand) Co., Ltd. Total

0 0 0 0 0 0 1,954,752 1,954,752

0 0 0 0 0 0 1,955,952 1,955,952

136,724 1,776,000 987,844 24,000 12,000 4,800 1,954,752 4,896,120

12,000 2,804,000 960,000 24,000 12,000 4,800 1,954,752 5,771,552

Interest income Patkol Manufacturing Co., Ltd. Patkol (1984) Co., Ltd. Total

0 0 0

0 0 0

4,628,436 162,248 4,790,684

1,500,691 510,050 2,010,741

Purchase goods and services Patkol Manufacturing Co., Ltd. Patkol (1984) Co., Ltd. PKB Enterprise Co., Ltd. Siam Patkol Co., Ltd. Prepack (Thailand) Co., Ltd. Total

0 0 0 0 869,754 869,754

Interest expenses Patkol Manufacturing Co., Ltd. Patkol (1984) Co., Ltd. Total

0 0 0

0 594,908,128 338,418,275 0 40,482,292 58,360,897 0 38,035,074 68,586,246 0 5,256 12,546,494 761,779 747,117 659,819 761,779 674,177,867 478,571,731

0 0 0

106 284,838 284,944

0 228,865 228,865

25. FINANCIAL INFORMATION BY SEGMENT The Company and the subsidiary companies没 operations involved in the trading and services of engineering products which include turnkey sales of services in design, manufacturing and installation of various types of industrial refrigeration for the ice making industry and supermarket, dairy and ice-cream processing, as well as food related processing plant and supplies made to order and operated the business in geographical segment both in domestic and overseas. Business unit segment information of the Company and its subsidiary companies are as follows :

Annual Report 2007

82

As of 31 December 2007


Annual Report 2007

83

2006 Statement of income Sales and services - domestic 1,187.38 Sales and services - overseas 415.05 Cost of sales (1,405.96) Operating profit (loss) 196.47 Selling and administrative expenses (5.57) Profit after selling and administrative expenses 190.90 Balance sheet Property, plant and equipment - net 359.63

2007 Statement of income Sales and services - domestic 958.29 Sales and services - overseas 293.10 Cost of sales (1,207.02) Operating profit (loss) 44.37 Selling and administrative expenses (4.95) Profit after selling and administrative expenses 39.42 Balance sheet Property, plant and equipment - net 10.88 32.26

As of 31 December 2007

9.26

6.06

618.35 1,102.92 195.98 108.72 (676.07) (1,198.72) 138.26 12.92 (0.14) (1.09) 138.12 11.83

7.28

587.06 1,514.10 99.51 71.21 (623.55) (1,607.05) 63.02 (21.74) (0.98) (1.48) 62.04 (23.22)

106.69

70.02 74.21 (96.73) 47.50 (1.60) 45.90

97.67

76.71 71.57 (130.40) 17.88 (1.02) 16.86

Total

842.75

10.02

376.08

857.72

13.04

6.80 2,985.47 961.26 0.00 793.96 415.05 0.00 (3,377.48) (1,278.32) 6.80 401.95 97.99 (206.56) (214.96) (5.57) (199.76) 186.99 92.42

694.66

4.05

9.15

5.39

618.35 1,169.66 195.98 108.72 (680.80) (1,278.62) 133.53 (0.24) (0.14) (1.09) 133.39 (1.33)

7.28

578.33 1,491.89 99.52 71.21 (620.99) (1,601.54) 56.86 (38.44) (0.98) (1.48) 55.88 (39.92)

107.42

142.40 2.33 (81.87) 62.86 (1.60) 61.26

97.67

152.78 2.35 (150.16) 4.97 (1.02) 3.95

Total

512.34

389.46

524.46

6.81 2,898.48 0.00 722.08 0.00 (3,319.61) 6.81 300.95 (173.79) (182.19) (166.98) 118.76

393.32

1.23 3,082.54 0.00 466.02 0.00 (3,518.00) 1.23 30.56 (207.34) (215.77) (206.11) (185.21)

Separated Ice machine Machineries Turnkey Service Central and for project and management Industrial Liquid others refrigeration and food machine processing

1.23 3,137.39 858.31 0.00 535.39 292.94 0.00 (3,568.02) (1,145.31) 1.23 104.76 5.94 (240.36) (248.79) (4.95) (239.13) (144.03) 0.99

Consolidated Ice machine Machineries Turnkey Service Central and for project and management Industrial Liquid others refrigeration and food machine processing

(Unit : million)

Patkol Public Company Limited


Patkol Public Company Limited

26. DISCLOSURE OF FINANCIAL INSTRUMENTS 26.1 The significant accounting policies and method adopted including the basis of recognition and measurement relating to each class of financial assets and liabilities have been disclosed in note 5.11. 26.2 Credit risk Credit risk derives from failure by counterparties to discharge their obligations resulting in financial loss to the Company and subsidiaries. Financial assets shown in balance sheets at the book value deducted by allowance for doubtful accounts is maximum value of credit risk. 26.3 Exchange rate Risk The Company and subsidiaries have the exchange rate risk for trade accounts receivable and payable denominated to foreign currency. The Company has reduced the uncertainty of future cash flow by using natura hudge. Besides, the Company has managed the risk by entering into forward contract. As at December 31, 2007 and 2006, the Company and subsidiaries have foreign currencies transaction as follows :

Transaction

Currency

Cash at banks Trade accounts receivable

USD USD EURO SGD USD EURO USD EURO DKK SGD Yen (100) USD

Trust receipt payable Trade accounts payable

Forward contract

Consolidated 2007 2006 639,669 2,528,319 36,842 7,140 1,035,924 576,319 126,651 107,712 38,303 0 0 0

722,243 270,425 0 0 237,500 81,942 1,101,687 406,970 325,459 2,141,172 1,670,753 581,617

26.4 Interest rate risk Interest rate risk from changes in market interest rate will affect the results of the Company and subsidiaries没 operations and cash flows. The Company and subsidiaries exposed the interest rate risk due to its deposits at financial institutions, deposits at bank with commitment, short - term loans from financial institutions, long - term loans and long-term liabilities under financial lease agreement. The Company and its subsidiaries do not use derivative financial instruments to hedge such risk. 26.5 Convertible preferred shares risk The Company may have a risk from issuance of convertible preferred shares (note 18.2) since the convertible preferred shares required the Company to make cumulative dividend payment to the convertible preferred shareholders at the rate of 7% per annum of offering price of convertible preferred shares and is liable to pay the variance of merket price of ordinary shares which is lower than the offering price of convertible preferred shares (Baht 3.62 per share) at the convertible of ordinary share date. As at December 31, 2007, the market price of the Company没s ordinary shares equal to Baht 1.64 per share). Annual Report 2007

84

As of 31 December 2007


Patkol Public Company Limited 26.6 Fair value of financial instruments Financial assets shown in balance sheets consist of cash and cash equivalents, trade accounts receivable, short-term loans and other receivables. Financial liabilities shown in balance sheet consist of bank overdrafts and short-term loans from financial institutions, trade accounts payable, short-term loans, long-term loans and other payables. The carrying value of financial assets and liabilities are close to their fair value.

27. COMMITMENT AND CONTINGENT LIABILITIES 27.1 As at December 31, 2007, the Company and subsidiaries have commitment under the hiring contractor agreement in the amount of Baht 168.69 million and commitment on the conditions in the purchase of goods agreement amount of Baht 779.16 million. 27.2 As at December 31, 2007, the Company and subsidiaries have non-performed letter of credit in the amount of Baht 25.61 million (USD 750,699.95 and EURO 3,499.19). 27.3 As at December 31, 2007 and 2006, the Company and subsidiaries have contingent liabilities on bank没s issuance letter of guarantee for the Company没s and subsidiaries retentions and the work offer competing bids to the customers as follows : 2007 2006 Domestic currency (million Baht) Overseas currency EURO US Dollar

744.30

833.90

20,809 601,893

5,310 2,174,486

28. PROMOTIONAL PRIVIEGES A subsidiary (Patkol Manafucturing Co., Ltd.) is granted certain right and privileges as a promoted industry under the Promotion of Investment Act B.E. 2520 for the manufacturing business of industrial machineries and spare parts or machineries equipment. The Significant privileges are as follows : 1) To exempt the corporate income tax from net profit for the period of 8 years from the date of income earnings, provided that such a project with capital investment not exceed 100 per cent of total investment excluding cost of land and working capital. 2) To exempt the customs duty for imported raw materials and essential materials used in manufacturing for re-export for the period of 5 years from the imported date. 3) To excemp the import duty on machinery which have to import within June 18, 2006. Such company was granted the extension period of importing of machinery until June 18, 2008 in compliance with the approval letter no. Or Kor. 0905/003394 dated May 11, 2007. Subsidiary must to comply with the certain conditions and terms as stipulated in promotion certificate from being a promoted industry company.

Annual Report 2007

85

As of 31 December 2007


Patkol Public Company Limited Subsidiaryûs revenues are separated as follows : (Unit : Baht) For the year ended December 31, 2007 Promoted Non-promoted Total business business Revenues from sales and services Other income Total

649,378,061.01 15,733,538.72 665,111,599.73 5,459,400.73 142,871.09 5,602,271.82 654,837,461.74 15,876,409.81 670,713,871.55 (Unit : Baht) For the year ended December 31, 2006 Promoted Non-promoted Total business business

Revenues from sales and services Other income Total

485,886,296.40 1,103,305.13 486,989,601.53

7,651,850.99 493,538,147.39 8,582.54 1,111,887.67 7,660,433.53 494,650,035.06

29. PROVIDENT FUND On March 1, 2004, the Company has joined to be a member of provident fund named çSin Sathaporn Registered Provident fundé which registered in accordance with the Provident Fund Act B.E. 2530 and the amendment by appointing the fund management to be fund manager. The fund is contributed to both by the employees and the Company at the same rate of 3% of employees wage. The accumulation and benefits will be paid to the members upon their retirement, death or resignation. The Company contributed to the fund for the year 2007 and 2006 amount of Baht 7.44 million and Baht 6.47 million, respectively.

30. DIRECTORSû REMUNERATION Directorsû remuneration is all benefits paid to the Companyûs directors excluding salaries and related expenses which paid to executive director. The directorsû remuneration for the year ended December 31, 2007 and 2006 was Baht 5.35 million and Baht 5.96 million, respectively.

31. FINANCIAL STATEMENTS APPROVAL These financial statements have been approved to be issued by the Companyûs Board of directors on February 29, 2008.

Annual Report 2007

86

As of 31 December 2007


Patkl 07  

PATKL_2007 PATKOL PCL Annual Report 2007

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