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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

Patkl 07  

PATKL_2007 PATKOL PCL Annual Report 2007

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