Annual Report, 2013 - 56-1.com · 1982 DIMET was founded in 1982 by Australian ACMIL Group, which was the sole shareholder. Initially, DIMET produced and sold high performance protective

Annual Report, 2013

Content Page

Message from the Chairman 1

Report of the Audit Committee 2

Financial Summary 3

General Information 4

Business Characteristics 7

Shareholders’s Structure 9

Corporate’s Structure 10

Corporate Governance 23

Risk Factors 28

Connected Transaction 32

Management Discussion and Analysis 38

Report of Independent Auditor 40

Balance Sheets 42

Notes to Financial Statements 50

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Annual Report, 2013

Message from the Chairman For this special occasion, I am honored to inform the company’s shareholders regarding the Company’s performance in the fiscal year 2012/2013 (July 1, 2012 - June 30, 2013). With the efforts and the devotion of all executives and staff, the Company has gradually gained market share in distribution of protective coating and architectural coating. However, Timber coatings and industrial coatings were disappointed under perform due to some circumstances. In fiscal year 2012/2013 (July 1, 2012 – June 30, 2013), our gross profit increased by 12.4% compared to last fiscal year, i.e., 95.20 million Baht vs 84.71 million Baht, but can not cover our increased expenditure of expanding Architectural coating, decreased sales of heat resistance paint, and incurred cost of finance instrument. Therefore, our net loss in 2012/2013 was 14.41 million Baht, compared to 8.53 million Baht last financial year. In next fiscal year 2013/2014 (July 1, 2013 - June 30, 2014), management team has aimed the target growth for sale revenue from all business units, especially from Architectural Coating Department with more aggressive activities and is confident that the expected target will be achieved, consequently, the Company would come into profitable status again. All executives have realized the competitive challenge of this business, so we are alert and intend to drive the Company to meet with the business plan, which would yield profit in the return to shareholders.

___________________________ (Mr.Suraphol Rujikarnchana) Chairman

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Annual Report, 2013 Report of the Audit Committee Dear Shareholders

The Audit Committee of Dimet (Siam) Public Company Limited comprises 3 independent directors: 1. Prof. Dr. Lieutenant Achara Chandrachai Chairman of the Audit Committee 2. Mr. Tumnong Dasri Audit Committee 3. Mr. Krairit Boonyakiat Audit Committee

In the accounting year 2013 (1 July 2012 to 30 June 2013), the Audit Committee convened 4 meetings in which all committee members attended. The committee also invited the Company’s top management and the accounting auditor to participate in the meeting on relevant agenda. The Audit committee invited public accountant without management team once. The committee reported the findings to the Board every time. Major undertakings can be summarized as followed:

1. Review annual and quarterly financial statements to ensure that the Company’s financial statements provide accurate information, adequate disclosure and are prepared according to the GAAP, prior to the presentation to the Board.

2. Review the connected transactions between the Company and subsidiaries, related companies and connected persons to ensure that the transactions conform to normal business practice and the information disclosure is accurate and complete in accordance with SET’s regulations, before forwarding the transactions for the Board’s approval.

3. Review the adequacy of the internal control system through the review of reports from the internal audit office and discussion with the accounting auditor. Comments and recommendations are given to improve the internal control system.

4. Review to ensure that the Company complies with the good corporate governance practices for the listed company according to the Securities and Securities Exchange Law, the SET regulations, and other relevant laws or regulations.

5. Review risk management system, plan and determine the scope of internal audit to ensure greatest efficiency. The committee reports the audit results and suggestions to the Board and follows-up the progress of corrective actions to ensure effectiveness.

6. Appraise independency of the auditor, consider and propose the nomination of the auditor and his remuneration.

7. Review to ensure that the Company‘s operations conform to good corporate governance to gain confidence from all stakeholders. For the fiscal year 2014, for the certified accountant selection and its subsidiaries (from July 1, 2013 to June 30, 2014), the committee satisfies with the independency of the current auditor, and proposes to the Board of Directors to obtain approval from the Shareholders’ meeting to appoint Mr Somkid Tiatragoon, certified public accountant no. 2785 or Mrs. Sumalee Chokdeeanant, certified public accountant no. 3322 or Mr. Theerasak Chuasrisakul, certified public accountant no. 6624 of Grant Thornton Co., Ltd. ,either one of the two, as the Company accounting auditor for the accounting year 2013 (1 July 2012 to 30 June 2013).

(Prof. Dr. Achara Chandrachai) Chairman of the Audit Committee

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Annual Report, 2013 Financial summary and overall performance.

2011 (ended 30 June 2011)

2012 (ended 30 June 2012)

2013 (ended 30 June 2012)

MB % MB % MB % Total assets 259.90 100% 239.36 100% 231.48 100% Total liabilities 130.24 50.11% 126.90 53.01% 132.73 57.34% Registered capital 90.00 34.63% 90.00 37.60% 135.00 58.32% Issued and paid up capital 90.00 34.63% 90.00 37.60% 90.00 38.88% Shareholders’ equity 129.66 49.89% 112.47 46.99% 98.87 42.71% Book value per share 0.72 0.62 0.55

2011 (ended 30 June 2011)

2012 (ended 30 June 2012)

2013 (ended 30 June 2013)

MB % MB % MB % Revenues from sales and services 359.89 100.00% 388.10 100.00% 376.23 100.00% Costs of sales and services 276.55 76.84% 303.39% 78.17% 281.03 74.70% Profits (losses) margins 83.34 23.16% 84.71 21.83% 95.20 25.30% Other incomes 2.20 0.61% 2.84 0.73% 2.33 0.62% Profits (losses) before interest and tax (12.55) -3.49% (8.53) -2.20% (14.66) -3.90% Net profits (losses) (12.55) -3.49% (8.53) -2.20% (14.66) -3.90% Allocation of comprehensive Profits

(losses) for the year.

Portion of the main shareholders (12.55) -3.49% (8.53) -2.20% (14.41) -3.83% Portion of non-controlling interest 0.00 0.00% 0.00 0.00% (0.25) 0.07%

Profits (losses) equity per shares *(Baht/share)

(0.07) (0.05) (0.08)

Remark: - * Calculated using weighted average common shares

Financial ratio 2011

(ended 30 June 2011) 2012

(ended 30 June 2012) 2013

(ended 30 June 2013) Gross profit margin (%) 23.16 21.83 25.30 Net profit margin (%) -3.49 -2.20 -3.83 Return on equity (%) -9.16 -7.04 -13.63 Return on assets (%) -4.93 -3.42 -6.12 Debt to equity ratio (Times) 1.00 1.13 1.34

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Annual Report, 2013 General Information

Company’s name Dimet (Siam) Public Company Limited Company’s registrar number 0105525004339 Business characteristics Produce and sell high performance protective coating, which is used in

petrochemical plant, oil refinery, power plant, off-shore platform in the Gulf of Thailand to prevent corrosion, architectural coating, timber finishes for furniture factories, industrial coating such as household gas cylinder.

Office and plant location 602 Moo2, Bangpu Industrial Estates, Soi1, Sukhumvit Road, Tambol Bangpu Mai, Muang District, Samutprakarn Province

Office and plant phone no. 0-2323-2800-6 Office and plant fax no. 0-2323-2807 Website www.dimetsiam.com Registered capital : Baht 135,000,000 Issued and paid up capital Baht 90,000,000 Type of securities Common stocks Stock ticker DIMET Investor relation Please contact Mr. Suraphol Rujikarnchana,

Tel: 0-2323-2800-6 e-mail : [email protected]

Reference person Stock registrar Thailand Securities Depository Company Limited

The Stock Exchange of Thailand Building 62 Ratchadapisek Road, Klongtoey Bangkok 10110, Thailand Tel: 0-2229-2800 Fax: 0-2359-1259

Certified public accountant Mrs. Sumalee Chokdeeanant, certified public accountant no. 3322 of

Grant Thornton Co., Ltd. 18th Floor Capital Tower, All Seasons Place 87/1 Wireless Road, Bangkok 10330 Thailand Tel: 0-2205-8222 Fax: 0-2654-3339

Financial advisor Asset Pro Management Company Limited

999/9 The Offices at CentralWorld, 10th Floor, Room 1011-1012, Rama I Road, Patumwan Sub-District, Patumwan District Bangkok 10330 Tel: 0-2264-5678 Fax: 0-2264-5679

http://www.dimetsiam.com/

mailto:[email protected]

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Annual Report, 2013 Dimet (Siam) Public Company Limited was founded on 9 February 1982 to produce and sell high performance protective coating for industrial and steel structure for various construction projects, such as petrochemical plant, refinery, power plant, oil and gas platform in the Gulf of Thailand, as well as timber finishes, industrial coating and architectural coating. The Chronicle: 1982 DIMET was founded in 1982 by Australian ACMIL Group, which was the sole shareho lder. Initially,

DIMET produced and sold high performance protective coating for industrial and steel structure for various construction projects, such as petrochemical plant, refinery, power plant, oil and gas. DIMET has 3 affiliate companies in South East Asia, Singapore, Malaysia and Indonesia.

1985 ACI - Australian Consolidated Industries one of the biggest construction material and glas s manufacturer in Australia bought all Dimet business in Asia, therefore, Dimet (Siam) Co.,Ltd became one of the Thai Glass Industry Co., Ltd affiliates

1988 Wattyl Australia Pty.,Ltd, an Australian stock exchange registered company, bought Dimet group in South East Asia from ACI and expanded its market and new products to strengthen the company such as timber coatings, and architectural coatings.

1990 Dimet (Siam) Co., Ltd changed company name to Wattyl Dimet (Siam) Co., Ltd and succeeded in expand its market to furniture industry.

1993 Wattyl Dimet moved its office and factory to Bangpoo industrial estate in Samutprakarn Province for its production expansion and continuous sell improvement

2002 Wattyl Australia Pty., Ltd.decided to sell all its South East Asia affiliates. The existing Thai Management group decided to buy the business and achieved to obtain technical supports from both Ameron and Wattlyl.

2005 DIMET increased its capital from Baht 6,500,000 to Baht 20,000,000 by issuing common shares for existing shareholders in the board meeting of 2/2005 on 17 June 2005

DIMET invested 10% in Suncoat (Thailand) company limited with registered capital of 3,000,000 Baht . The company is in the business of trading heat resistance paints for automobile and parts for electrical appliance industry, with support manufacturing by Dimet.

2006 DIMET invested in Asian Corrosion Control Trading Limited (ACCT), by buying 99.96% of registered capital

PPG Inc, USA the second largest paint manufacturer in the world , acquired Ameron High Performance Coatings.

DIMET increased full paid registered capital from Baht 20,000,000 to Baht 60,000,000 by issuing common share and selling to existing shareholders.

DIMET increased full paid registered capital from Baht 60,000,000 to Baht 70,000,000 by issuing common share and selling to ‚ONE FUND‛ to improve financial facilities.

2007 DIMET transformed from private company limited to public company limited. DIMET increased registered capital from 70 Million Baht to 90 Million Baht and changed par value from

100 Baht per share to 0.5 Baht per share. Hence, DIMET has total of 180 Million shares wih 90 Million Baht registered capital. Dimet offered 40 Million shares to public at 1 Baht per share.

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Annual Report, 2013 DIMET signed ‚Special Manufacturing Agreement‛ and ‚Distribution Agreement‛ with PPG (Thailand) Co.,

Ltd., a subsidiary of PPG Industries, Inc USA to manufacture and distribute Protective Coatings in Thailand for 3 years (24 Nov. 2007 to 23 Nov. 2010).

2008 DIMET’s shares were registered in Market of Alternative Investment (MAI) stock market and began trading officially.

Signed an addendum to Special Manufacturing Agreement with PPG (Thailand) Co., Ltd to provide better service to local customers.

Signed ‚Distribution Agreement for BILUX Auto Refinishes‛ with PPG (Thailand) Co., Ltd, for 3 years, effective from 1 APR 2008 to 31 MAR 2011.

2009 Expanded laboratory on the third floor of existing main building and built raw material warehouse to improve safety and efficiency.

Built 4 Solvent storage tanks of 15,000 L. each to improve safety and efficiency. 2010 Developed and modified production area and warehouse to serve increment of production capacity

for Architectural Coatings and Industrial Coatings in the near future. Increased registered capital in ACCT from 2 Million Baht to 4 Million Baht, which DIMET has 99.98%

in ACCT. DIMET and ACCT were appointed to be an exclusive agent from Wilson Taylor Asia Pacific Pt e Ltd

of Singapore to expand Cathodic Protection business in Oil and Gas Industries in Thailand. 2011 Dimet appointed more dealers in provinces such as Chiangmai, Chiangrai, Samui - Suratthani,

Phuket, Hua Hin – Prachubkirikhan, Khonkaeng, Chumporn, etc. Expanded Cathodic Protection business in ACCT. Developed and modified production area. Opened Paint Showroom in Dimet factory for serving factories in Bangpoo Industrial Estates. 2012

Expanded warehouse area to support increased sell. Increased distribution in Modern Trade such as HomePro Increased private dealers to distribute Dimet paint.

The 2012/2013 Annual General Meeting of Shareholders held on October 22, 2012 resolved to increase the registered capital of 90.00 million to 135.00 million, issuing Dimet W -1 warrant to support expansion in future.

Wattyl Australia Pty Ltd was acquired by Valspar Inc., USA. Valspar is the fifth large st paint manufacturer in the World.

2013

February 2013 Dimet sold 23.75% of total shares in ACCT to Hong Kong based company, MUI International Ltd., to obtain Cathodic Protection technology. Dimet expaned Modern Trade Outlets and dealers nationwide in Architecutral Paints market. Expansion the production area and increase warehouse space.

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Annual Report, 2013 DIMET holds 10% or more in following companies as at 30 June, 2011

1. Asian Corrosion Control Technology Ltd. (ACCT) Registered on March 28, 1988 located at 602 Moo 2 Sukhumvit Road, Bangpoomai, Muang Samutprakarn, Samutprakarn, as a trading arm for DIMET, to subcontract painting work for some clients, and to do Cathodic Protection business for immersed and submerged steel structure. Initially, Dimet had 29,982 common shares and 510 preferrence shares held by individuals for registered capital of 4 Million Baht at 100 Baht per share. At present, Dimet holds 76.23% of total shares. Note: Asian Corrosion Control Technology Ltd was formerly known as Asian Corrosion Control

Trading Ltd has changed the name to Asian Corrosion Control Technology Ltd on October 3, 2012. On February 1, 2013 , the Company sold 23.75% in ACCT to MUI International Ltd., who are not related,

2. Suncoat (Thailand) Co.,ltd, (Suncoat) Registered on October 10, 2005 as a trading firm to expand business of heat resistance paint for automotive , motorcycle, parts, electrical appliances to Japanese Companies. DIMET has 10% of SUNCOAT’s registered capital of 3 Million Baht by issuing 30,000 common shares at 100 Baht per share.

3. Solid Construction Co., Ltd. (Solid) Registered on August 23, 1989 as a construction company. Solid has full paid registered capital of

6,000,000 Baht by issuing 600 common shares at 10,000 Baht per shares . Mrs.Achara Momin, who is a director, the executive director, and the authorized director of the Company, has 57% stake in SOLID.

Business Characteristics The company products are divided into two main groups, Industrial Coatings and Architectural Coatings as follows. (1) Industrial Coatings Group

1.1. Protective Coating Protective coating is used for steel structure to prevent corrosion from internal and external environments such as UV, sea atmosphere, industrial environment, and chemical environment. Moreover, the coating could maintain its appearance in industrial usage for long-lasting usage life. According to industrial classification, protective coatings are comprised of primer, intermediate coat and topcoat . Each layer has different property as follow:

Primer : Prevent rust and increase adhesion to steel surface such as Inorganic Zinc Primer Intermediate : Enhance strength of coating, such as Epoxy Coating Top coat : Prevent steel surface exposure from external environments (such as UV, sea

environment, or chemical environment, such as Polyurethane Coating

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Annual Report, 2013

1.2. Timber Coating Coating used to coat timber to enhance appearance and make it more durable in actual usage. The coating is usually applied multiple layers to obtain desired characteristics, such as smoothness, glossy, resistance to washing detergent, catering foods, sauce, etc.

1.3. Industrial Coating Coating is applied to various industrial products and parts. Each type of industrial coating shall have different characteristics due to specific needs for each industry.

(2) Architectural Coating

Paints used for building, home, hotel, or office building to offer beauty and durability from various environment factors. Architectural Coatings usually consist of primer and top coat. Some coatings are flexible, cover hairline cracks, anti-fungus both indoor and outdoor and easily cleaned. Moreover, some building coating can reflect heat to conserve energy, and others are odorless for interior painting to prevent irritation to the residents. Due to strong competition, Dimet have registered some own trade names for future marketing expansion.

Revenue breakdown of the Company and subsidiaries

Income type Ended 30 June 2011 Ended 30 June 2012 Ended 30 June 2013 Baht m. % Baht m. % Baht m. %

1. Domestic sales 1.1. Industrial Coatings Group/1 259.37 71.63 261.27 66.83 259.78 68.63 1.2. Architectural Coatings Group 17.91 4.95 34.07 8.71 39.65 10.47

1.3. Others (other paints, OEM products, and service revenue)

80.57 22.25 86.83 22.21 76.24 20.14

Total domestic sales 357.85 98.83 382.17 97.75 375.67 99.24 2.Export sales 2.04 0.56 5.93 1.52 0.56 0.15

Total export sales 2.04 0.56 5.93 1.52 0.56 0.15 Total sales revenue 359.89 99.39 388.10 99.27 376.23 99.38 Other incomes/2 2.20 0.61 2.84 0.73 2.32 0.61

Total revenue 362.09 100.00 390.94 100.00 378.55 100.00 Remark: - /1 = Industrial Coatings Group – Protective Coatings, Industrial Coatings and Timber Coatings.

- /2 = Other incomes include sales commission, rental incomes and interest receive.

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Annual Report, 2013 Shareholders’ Structure Shareholders: As of 30 June 2013, the Company has following shareholders as follow:

Name Number of Shares % Shares 1. Group of Mr. Suraphol Rujikarnchana 38,642,759 21.47

1.1. Mr. Suraphol Rujikarnchana 23,048,759 12.80 1.2. Mrs. Chanida Rujikarnchana 350,000 0.19 1.3. Miss. Vissuta Rujikarnchana 7,702,200 4.28 1.4. Mr. Tansith Rujikarnchana 7,541,800 4.19

2. Mrs. Saovaluck Chokearpornchai 21,255,114 11.81 3. Mrs. Achara Momin 16,987,927 9.44 4. Miss Chomporn Kamalasuddhi 9,801,200 5.45 5. OCBC Securities Private Limited. 8,950,000 4.97 6. UOB Hian (Hong Kong) Limited. 8,805,800 4.89 7. Mr. Warin Suriyachaisawad 5,090,000 2.83 8. MAYBANK Kim Eng Securities Pte Ltd. 4,984,800 2.77 9. Miss Sayomporn Buapoom 4,759,800 2.64 10. Other 60,722,600 33.57

Total 180,000,000 100.00

Annual Report 2013

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Corporates’ Structure

Board of Directors Board Advisors

Executive Board

Managing Director

Audit Committee

Marketing Director Timber Finishes

& Industril Coatings

Corporate Planning Director

Technical Director &

QMR

Marketing Director Protective Costings

Finance Director

Risk Management Committee

Marketing Director Decorative Paints

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Annual Report, 2013 Board of Directors: As of 30 June 2013, the Board of Directors comprised of 10 Directors by having Dr.Pisit Leeahtam as Advisor to the Board of Directors. LIST OF THE BOARD OF DIRECTORS. No Name Position 1. Mr. Suraphol Rujikarnchana President 2. Mrs. Saovaluck Chokearpornchai Vice Presidenrt & Risk Management Committee 3. Mrs. Achara Momin Director & Risk Management Committee 4. Mr. Chokchai Niamratana Director 5. Mr. Chatchaval Asavakanoksilp Director 6. Miss Sayomporn Buapoom Director & Risk Management Committee 7. Dr. Vudichai Neeranartvong Independent Director & Chairman of Risk Management Committee 8 Prof.Dr. Lieutenant Achara

Chandrachai Independent Director & Chairman of Audit Committee

9. Mr. Tumnong Dasri Independent Director & Director of Audit Committee 10. Mr. Krairit Boonyakiat Independent Director & Director of Audit Committee Remark - The Audit Committee with accounting and finance specialization is Prof. Dr. Lieutenant

Achara Chandrachai - Mr. Jarintorn Udompipat acted as Board Secretary and Company Secretary

Authorized directors Mr.Suraphol Rujikarnchana, Mrs.Saovaluck Chokearpornchai, Mrs.Achara Momin, and Ms.Sayomporn Buapoom, with 2 of the above four directors co-sign with the Company’s official stamp. Scope of responsibilities of the Board of Directors 1. The Board of Directors must act according to the law, objectives, and resolution of the shareholders with

integrity and prudence to maintain the Company’s benefit. 2. The Board of Directors has duties to approve the Company’s goals, guidelines, policies, plan and budget

and to oversee the management or anyone who has been delegated with the works to ensure that they act according to the policy determined by the Board of Directors.

3. The Board of Directors has authority to appoint some directors to be Executive Board, sub-committee and/or other board advisor as appropriate to do certain or many tasks.

4. The Board of Directors has authority to appoint Executive Board, determine the authority and responsibilities of the Executive Board as deem appropriate according to the law or if this regulations determine that it is authority of the shareholders.

5. The Board of Directors must manage to the best interest of the shareholders, ensure that there is information disclosure, and prepare according to the required conditions and standards.

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Annual Report, 2013 6. The Board of Directors has a duty to ensure that the Company has internal audit system and efficient

internal audit system by having the internal audit oversee the audit system and work with the Audit Committee.

7. The Board of Directors has a duty to prepare financial statements and provide accounting auditors to audit and/or review the financial statement before presenting to the shareholders.

8. Any of the following proceedings by the Board of Directors, the Board must receive shareholders’ resolution with the vote of no less than three-quarter (3/4) of the participated shareholders who are eligible to vote.

A. Sell or transfer all or crucial parts of business to other party. B. Acquire or receive other company or public company to be part of the Company. C. Create, amend, or cancel contracts about renting all or crucial parts of business, assigning

other person to manage the Company, or to form joint venture to share profit or loss with other person.

D. Add or amend the Company memorandum of association or regulations. E. Increase or decrease the Company’s registered capital. F. Terminate the Company. G. Issue the Company’s bond. H. Merge with other company.

In all, any director who has conflict of interests with the Company or subsidiary does not have the right to vote on that particularly issue. Moreover, the Board has obligation to oversee and ensure that the Company or subsidiary operate according to the regulations and announcement of the Stock Exchange of Thailand and law concerning Securities and Stock Exchange on connected transaction or items concerning acquisition or sales of the Company or subsidiary’s assets. Audit Committee: As of 30 June 2013, Audit Committee comprised of LIST OF AUDIT COMMITTEE.

No Name Position 1. Prof. Dr. Lieutenant Achara Chandrachai Chairman of Audit Committee

2. Mr. Tumnong Dasri Director of Audit Committee 3. Mr. Krairit Boonyakiat Director of Audit Committee

Mr. Jarintorn Udompipat is the Secretary to the Audit Committee Scope of responsibilities of the Audit Committee The Audit Committee has duties and responsibilities according to the regulations and criteria determined by the Securities Exchange Commission (SEC) and the Stock Exchange of Thailand (SET) and report directly to the Board of Directors.

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Annual Report, 2013 1. Ensure adequate and reliable financial disclosure according to the accounting standard. 2. Ensure appropriate and effective internal control and audit system. 3. Review the Company’s action to be consistent with the law concerning Securities and Stock Exchange, the

regulation of the SET and relevant laws. 4. Select and appoint the Company’s accounting auditor and the remuneration. 5. Accurately and adequately disclose information in case of connected transaction or any transaction that

may potentially cause conflict of interest. 6. Other action as assigned by the Board and agreed by the Audit Committee. 7. Disclose the activities of Audit Committee in the Company’s annual report, signed by the Chairman of the

Audit Committee. Risk Management Committee As of 30 June 2013, the appointed Risk Management Committee as following: No Name Position 1. Dr. Vudichai Neeranartvong Chairman of Risk Management Committee 2. Mrs. Saovaluck Chokearpornchai Risk Management Committee 3. Mrs. Achara Momin Risk Management Committee 4. Miss. Sayomporn Buapoom /1 Risk Management Committee Scope of responsibilities of the Risk Management Committee The Risk Management Committee has duties and responsibilities according to the regulations as follows:

1. Define policy and framework for company risk management . This policy will cover all types of risks; strategy, finance, operation, environment, marketing, legal and any risks which may effect company's reputation.

2. Set strategy of risk management system to comply with risk management policy and able to evaluate, monitor, and control risk at acceptable level.

3. Encourage to create cooperation in company risk management, review adequacy of the policy and risk management system including effectiveness and policy enforcement

4. Monitor and control to follow Risk Management policy and review information with relevants functions before releasing to Public.

5. Report periodically to Board of Directors for any improvement to comply with policy and defined strategies.

6. Conduct other assignment from Board of Directors. The risk management committee is able to hire external consultant according to Board of Directors approval.

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Annual Report, 2013 Executive Board: As of 30 June 2013, Executive Board comprised of LIST OF EXECUTIVE BOARD

No Name Position 1. Mr. Suraphol Rujikarnchana President 2. Mrs. Saovaluck Chokearpornchai Vice President 3. Mrs. Achara Momin Director 4. Mr. Chokchai Nimaratana Director 5. Mr. Chatchaval Asavakanoksilp Director 6. Miss Sayomporn Buapoom Director

Scope of responsibilities of the Executive Board 1. Determine the business policies and strategies 2. Plan and control operations according to the Company’s policies. 3. Approve purchase, cancellation, or sales of assets, investments, and other expenses necessary to

business’s operation (details as shown in approval chart). 4. Determine employee’s benefit according to the prevailing environment.

In all, the delegation of duties and responsibilities of the Executive Board as mentioned above will not include authorities and/or transfer of authority that he or the delegated person or related person (as defined by the Office of the SEC) has conflict of interest with the Company or subsidiary. Such items must be approved by the Board of Directors and/or the shareholders’ meeting (depending on the case) to approve those transaction according to the Company or subsidiary’s regulations or relevant laws. Authorization Limited.

Position Purchase & Sell assets Purchase products and/or raw material

Obtaining credit from financial institution

(Baht) (Baht) (Baht) Board of Director 30,000,000 Baht 30,000,000 Baht 30,000,000 Baht Executive Board 30,000,000 Baht 30,000,000 Baht 30,000,000 Baht Managing Director 10,000,000 Baht 10,000,000 Baht 10,000,000 Baht Company has budget preparation annually for investment including sell and administration expenses. Using of this budget plan to run business by all items has to obtain company board approval. This budget preparation is conducted during April to June every year.

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Annual Report, 2013 Management: As of 30 June 2013, management comprised of LIST OF COMPANY MANAGEMENT.

No Name Position 1. Mr. Suraphol Rujikarnchana Managing Director

Acting Sales & Marketing Director Decorative Paints

2. Mrs. Saovaluck Chokearpornchai Technical Director & QMR 3. Mrs. Achara Momin Corporate Planning Director 4. Mr. Chokchai Niamratana Sales & Marketing Director

Timber Finishes & Industrial Coatings Timber Finishes & Industrial Coatings

5. Mr. Chatchaval Asavakanoksilp Sales & Marketing Director Protective Coatings

6. Miss Sayomporn Buapoom Finance Director Scope of responsibilities of the Managing Director 1. Proposes management guideline to the Board of Directors for consideration. 2. Plans and controls operation according to the policies stipulated by the Board of Directors and Executive Board. 3. Determines authorities and responsibilities of the top management. 4. Summarizes operational result and proposes to the Board of Directors and Executive Board. 5. Has authority to approve purchase, cancellation, or sales of assets, investments, and other expenses

necessary to business’s operation (details as shown in approval chart). 6. Has authority to hire, appoint, terminate, determine salary, reward, salary, remuneration, and bonus for

employees at all level according to remuneration policy. In all, the delegation of duties and responsibilities of the Managing Director as mentioned above will not include authorities and/or transfer of authority that he or the delegated person or related person (as defined by the Office of the SEC) has conflict of interest with the Company or subsidiary. Such items must be approved by the Board of Directors and/or the shareholders’ meeting (depending on the case) to approve those transactions according to the Company or subsidiary’s regulations or relevant laws. The Company does not have selection committee. The person who is appointed to the Managing Director and management must fulfill the section 68 of the Public Company Limited Act B.E. 2535 and according to the SEC’s announcement no. 12/2543. None of the Company’s directors and management has criminal record in the last 10 years, is judged bankruptcy, found to be cheating or violating laws concerning Securities and Securities Exchange, and free of any charge or lawsuit during trial. The 4 independent directors must be experienced personnel and outsiders, and must not hold more than 5% of total outstanding shares of the Company to be deemed independent enough to protect minority shareholders’ interest.

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Annual Report, 2013 Criteria and selection of directors 1. The Company’s Board of Directors shall comprise of at least five (5) directors with no less than half of

directors must reside in the kingdom. The Company’s directors must have characteristics according to the law. Director may be the Company’s shareholder.

2. The shareholders’ meeting will appoint directors with following criteria and procedures.

2.1 Each shareholder shall have a vote (1) per share (1). 2.2 Each shareholder shall exercise all the voting right according to the item 2.1 to select one or many

candidates as directors. In case of selecting many directors, the shareholders cannot split vote unevenly among the candidates.

2.3 The person who receives highest numbers of vote shall be elected as the Company directors in order down to the vacant positions in such selection. In case there are candidates who have equal votes exceed the number of vacant positions, the Chairman of the meeting shall have the final vote.

3. During the general ordinary shareholders’ meeting, a-third (1/3) of the Board will retire by rotation. If the

numbers of the Board cannot be divided by three, use the numbers closest to a-third. The directors retired this way may be re-elected back to the post. The directors with longest serving duration shall be retired from the positions.

4. The director may resign from the position by submitting resignation letter. The resignation will be in effect

from the date the resignation letter reaches the Company. 5. The shareholders meeting may vote any director out of the position prior to the retirement by rotation by

using at least three-quarter (3/4)of the participated shareholders who are eligible to vote, and all the shares must be more than half of the participated shareholders who are eligible to vote.

6. In case the directorship position become vacant by reason than retire by rotation, the remaining Board of

Directors shall appoint person with characteristics and without any prohibited characteristics stipulated by the law concerning public company limited or securities and securities exchange to fill the vacant director position with at least three-quarter (3/4) vote of the remaining directors unless the term of the previous director is less than two (2) months. The new director selected by this method will remain director according to the remaining term of the previous directors.

7. The Board of Directors shall select one of the directors to be the Chairman of the Board. When appropriate,

the Board may choose one or many directors as vice-chairman. Vice chairman has duties according to the regulation as assigned by the Chairman.

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Annual Report, 2013 Criteria and selection of the Audit Committee The Company’s Audit Committee must be the Company’s directors who are appointed by the Board and has characteristics as determined by the Securities and Stock Exchange Act and announcement, regulation and/or rules of the SET. The Audit Committee shall comprise of at least 3 directors with at least one of them must have accounting and finance knowledge. The Audit Committee must have following characteristics concerning their independency:

1. Hold less than 1% of the outstanding, votable shares in the Company, subsidiary, joint venture and related companies or juristic person that may have conflict of interest.

2. Is not the employee, consultant, or authorize person of the Company, subsidiary, joint venture and related companies or juristic person that may have conflict of interest.

3. Is not personally related via family tie or marriage with person that may have conflict of interest. 4. Does not have business relation with the Company, subsidiary, joint venture and related

companies or juristic person that may have conflict of interest in the way that it may prevent independent judgment.

5. Does not have any other characteristics that may prohibit independent judgment concerning the Company’s operation.

6. Is not personally related or has been an auditor of the company, its subsidiaries, associated companies, major shareholders or controlling person of the company who is a significant shareholder, authority control or a partner of audit firm.

7. Is or has been a provider of any professional who includes serving as legal counsel, or a financial advisor who receive the consultancy service charges over two million per year or controlling person of the Compaeceiveny who is a significant shareholder, and or controlling person or partner of such professional service providers.

8. No other characteristics which make it impossible for the independent manage of the company. 9. Not operate the similar business characteristic and in competition with the company and its

subsidiaries, or more than 1 % stakeholder in the business as well, or directors who participating employee management , consultant who receives a regular salary and person who control of such entity.

10. Can participate in the decision in the tribunal.

Criteria and selection of the Risk Management Committee 1. Risk management committed should comprise of at least board of directors and at least of one of the

committee has to be independent directors. 2. Risk management committee selects independent director to be the chairman of the committee. 3. Committee sets up a meeting twice a year.

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Annual Report, 2013 4. Committee will consider as complete at least two of the committee attend the meeting. One of the

meeting would act as chairman. 5. Meeting agenda with supported documents would be provided to committee prior to meeting by

secretary of board of directors. 6. Committee could invite related company management as see appropriate. 7. When required consensus, each committee has one vote, in case of draw, chairman could decide and

his decision is final. Criteria and selection of the Executive Board The Board of Directors proposes the Executive Board by choosing from directors and/or managements as appropriate. The Board shall determine a member of the Executive Board to be Managing Director. Directors and management’s remuneration 1) Monetary remuneration

(a) Directors’ remuneration Name of Directocr and Management Meeting Allowance (Baht/Time)

Directors Meeting Allowance President 7,000 Vice President 6,000 Director 5,000 Independent Director 10,000 Advisor to the Board of Directors 10,000

Director of Audit Committee Allowance Chairman of Audit Committee 5,000 Director of Audit Committee 3,000

Director of Risk Management Committee Allowance Chairman of Risk Management Committee 5,000 Director of Risk Management Committee 3,000

Director’s Annual Remuneration. Chairman of Audit Committee and Independent Director 66,000 Director of Audit Committee and Independent Director 55,000 Independent Director 55,000 Advisor to the Board of Directors 55,000

Directors’ remuneration 2011 accounting year

(1 July 10 - 30 June 11) 2012 accounting year

(1 July 11 - 30 June 12) 2013 accounting year

(1 July 12 - 30 June 13) Number Of Persons

Amount (Baht) Number Of Persons


Amount (Baht)

Meeting allowance/1 12 418,000 11 540,000 11 485,000 Remuneration/1 5 286,000 5 286,000 5 286,000 Remark : /1 = included meeting allowance and remuneration of Board of Directors Consultant.

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Annual Report, 2013 (b) Executive and management’s remuneration

Executive and management’s remuneration

2011 accounting year (1 July 10 - 30 June 11)



Number Of Persons



Amount (Baht)

Salary , Bonus and 7 17,952,885 7 16,742,655 6 14,983,576 Providence fund Total 17,952,885 16,742,655 14,983,576

Director and Management’s Profile

No. Name/position Age Education Relationship

with management

Share-holding (%)

Work experience in the last 5 years Period Position and company

1. Mr. Suraphol Rujikarnchana (Previous name Suraphol Kaewkitichai) Chairman of the Board Authorized director Board of Director Managing director

61 Bachelor degree Engineering, Chemical Engineering, Chulalongkorn University Diploma Director Certification Program No. 77/2006 Thai Institute of Directors

- 12.80 1986 - Present 2002 – Present 2007 - Present

-Managing Director Dimet (Siam) Pcl. -Member of Thai-Australia Chamber of Commerce -Chairman of the Board Dimet (Siam) Pcl.

2. Mrs. Saovaluck Chokearpornchai (Previous name Saovaluck Jiaranaidilok) Vice Chairman Authorized director Executive board Director in Technique and Efficiency Management

54 Bachelor degree Science, Chemical Major Chiangmai University Diploma Director Certification Program No. 82/2007 Thai Institute of Directors

- 11.81 1989 - Present 2000 – Present 2007 - Present 2011 – Present

-Technical Director Dimet (Siam) Public Company

Limited -Director, Thai Paint Association -Vice President Dimet (Siam) Public Company

Limited -Director of Risk Management Committee, Dimet (Siam) Pcl.

3. Mrs. .Achara Momin (Previous name Achara Panichanon) Director Authorized director Executive board Director in Planning

49 Bachelor degree Economic, Economic Thammasat University Master degree MBA, Asian Institution of Technology (AIT) Diploma Director Certification Program No. 77/2006 Thai Institute of Directors

- 9.44 1991 – Present 2007 – Present 2011-Present

-Corporate Planning Director Dimet (Siam) Pcl. -Executive Board Dimet (Siam) Pcl. -Director of Risk Management Committee, Dimet (Siam) Pcl.

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Annual Report, 2013


with management

Share-holding (%)


4. Miss Sayomporn Buapoom Director Executive board Authorized director Director in Accounting and Finance

46 Bachelor degree Commerce and Accountancy Thammasat University Master degree Commerce and Accountancy Chulalongkorn University Diploma Accounting certificate

Thammasat University Chief Financial Officer

Certification Program No. 7/2007 Accounting Profession Institute

Director Certification Program

No. 88/2007 Thai Institute of Directors

- 2.64 1995 – Present 2007 – Present 2011 - Present

-Finance Director Dimet (Siam) Pcl. -Executive Board Dimet (siam) Pcl. -Director of Risk Management Committee, Dimet (Siam) Pcl.

5. Mr. Chokchai Niamratana Director Executive board Director in Marketing, Timber Coating and Industrial Paint

49 Bachelor degree Engineering, Industrial Chiangmai University Diploma Director Certification Program No. 82/2007 Thai Institute of Directors

- 2.25 1993 - Present 2007 - Present

-Sales & Marketing Director Timber Coating and Industrial Paint Dimet (Siam) Pcl. -Executive Board Dimet (Siam) Pcl.

6. Mr. Chatchaval Asavakanoksilp Director Executive board Director in Marketing, Protective Coating, and Marine Coating

53 Bachelor degree Engineering, Steel Engineering, Chulalongkorn University Master degree Commerce and Accountancy, MBA, Thammasat University Diploma Director Certification Program No. 88/2007 Thai Institute of Directors

- 1.78 2002 – Present 2007 - Present

-Sales & Marketing Director Protective Coating, Dimet (Siam) Pcl. -Executive Board Dimet (Siam) Pcl.

7. Dr. Vudichai Neeranartvong Independent director

62 Bachelor degree Mechanical Engineering Chulalongkorn University Doctorate degree Chemical Engineering Institut du Genie Chimique, France

- - 2007 - Present 2011 - Present Present 2007 - 2011

-Independent Director Dimet (Siam) Pcl. -Chairman of Risk Management Committee Dimet (Siam) Pcl. -Chairman of Lemon Farm Co-op - Consultant, M&E Co., Ltd. - Chairman of Audit Committee,

Pan Asia Footware Pcl.

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Annual Report, 2013


with management

Share-holding (%)


8. Professor Dr. Lieutenant Achara Chandrachai (Previous name Achara Tri-Ukot) Independent director Chairman of the Audit Committee

65 Bachelor degree Commerce and Accountancy Chulalongkorn University Master degree Master of Business Administration (2nd honor roll) National Institute of Development Administration Doctorate degree Ph.D. (Quantitative Business Analysis) Diploma Director Certification Program No. 45/2004 Thai Institute of Directors

- - 2007 - Present Present

- Independent director and Chairman of the Audit Committee Dimet (Siam) Pcl.

- Professor for Technopreneur and Innovation Management Course, Chulalongkorn University

- Independent director and Chairman of the Audit committee, Internet Thailand Pcl.

- Independent director and Chairman of audit committee, Krungthai Securities Pcl.

- Independent director and Audit committee, Pan Rajthewee Group Pcl.

- Manager, I-Mate Foundation Project Thailand Co., Ltd.

- Independent director and Chairman of the Audit committee , Union Textile PCL.

9. Mr. Tumnong Dasri Independent director Audit Committee

67 Bachelor degree Economic (honor roll)

(English) Thammasat University BBA (General management)

Sukhothai University Master degree Master in Economic (English)

Thammasat University Diploma The Intensive Management

Program Graduate School of Business Administration Harvard University (An Executive Program designed for the Bank of Thailand)

Accredited LEADR Mediator (Thailand), National Dispute Centre, Australia)

Director Certification Program No. 25/2002 Thai Institute of Directors

Tour Guide Diploma, Chulalongkorn University and Tourism Authority of Thailand


- Independent director and Audit committee, Dimet (Siam) Pcl. -Executive Board of Foundation Center for Integrated Human Development -Executive Board of Foundation for International Human Development Center integration. -Director of Association of Provident Fund - Sub-Commission. Monetary and fiscal policy and fiscal Commission budget in the Senate Banking and Financial Institutions. - Honorary Advisory Committee on Finance of the Senate Banking and Financial Institutions.

- Advisory Subcommittee Buddhism in business. Commission on Ethics, Religion and Culture of the Senate.

-Special lecture, Management Sciences Faculty, Khonkaen University

- Special lecture, Management Science, Ubonratchathani University.

- Advisory Board of Thai Community Development Volunteer Leader Association, Khonkaen Province

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Annual Report, 2013


with management

Share-holding (%)


10. Mr. Krairit Boonyakiat Independent director Audit Committee

68 Bachelor degree Bachelor of Science (honor roll) Chulalongkorn University Master degree MBA Massachusetts Institute of Technology : USA Diploma

- Post Graduate Diploma in International Trade, Management Institute of United Nation, Italy

- Director Certification Program No. 0/2000 Thai Institute of

Directors


- Audit committee, Dimet (Siam) Pcl. - Audit committee, Pan Rajthewee

Group Pcl. - Chairman of Audit committee,

Pack Food CL. - Independent director

Asian Phytoceuticals Pcl. - Consultant, Marketing Association of Thailand - Honorary committee, Silpakorn

University Institute - Professor Emeritus, Commerce

and Accountanc, Chulalongkorn University

Details of directors of subsidiary

Name Company Company Subsidiary (ACCT) 1. Mr. Suraphol Rujikarnchana X, //, ///, @ X, @

2. Mrs. Saovaluck Chokearpornchai /, //, ///, @ /, @ 3. Mrs. Achara Momin /, //, ///, @ /, @ 4. Miss Sayomporn Buapoom /, //, ///, @ /, @ 5. Mr. Chokchai Niamratana /, //, /// / 6. Mr. Chatchaval Asavakanoksilp /, //, /// - 7. Dr. Vudichai Neeranartvong / - 8. Professor Dr. Lieutenant Achara Chandrachai / - 9. Mr. Tumnong Dasri / - 10. Mr. Krairit Boonyakiat / -

Remark: ACCT is Asian Corrosion Control Trading Company Limited X means Chairman / means Director // means Executive director /// means Management @ means Authorized director

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Annual Report, 2013 Corporate Governance In the past, the Company has practiced according to the good corporate governance guideline as follow Part 1 : Rights of Shareholders The Company is well-aware of the basic rights of the shareholders, both in term of the owner of the Company and the investors in the securities. Those rights include, the right to buy, sell, or transfer the securities, right to receive adequate information disclosure, right to receive profit shares from the Company’s operation, right to participate in the shareholders’ meeting, right to give opinion, right to co-make important decision of the Company, such as dividend allocation, appoint or terminate directors, appoint accounting auditor, and other transaction that is crucial to business operation, etc. Other than the rights mentioned above, the Company also does the following to facilitate the shareholders to exercise their right.

1. The Company will arrange general ordinary shareholders' meeting every year within 4 months after the last date of each accounting year. The Company will send meeting invitation and relevant information concerning every agenda to shareholders at least 7 days prior to the meeting. The Company will also publish the invitation in the newspaper for 3 consecutive days prior to the meeting. Each agenda will be commented by the Board of Directors.

2. In case that the shareholder cannot participate in the meeting by self, the Company allow the shareholders to appoint independent directors or other person as a proxy to attend the meeting by using any of the attached proxy form that was sent with the invitation letter. The Company will choose the venue with convenient transportation at appropriate date and time.

3. In the meeting, the Company will allow the shareholders to independently and equally raise question, make suggestion or present any comment on different agenda. The Company's directors and relevant managements will be there to answer questions raised in the meeting.

4. After the shareholders' meeting is over, the Company will notify the resolutions to the Stock Exchange of Thailand (SET) before the stock exchange could open in the next session. The Company will record meeting minutes with accurate and complete meeting information, details of the participating directors, vote counts of every agenda, important and interest question or comment raised in the meeting. The minute will be sent to the SET within 14 days after the shareholders' meeting.

Part 2: Equitable Treatment of Shareholders Other than the shareholders’ meeting as mentioned above, the Company also has a policy to treat every shareholder on equitable basis. During every shareholders’ meeting, the Company will give every shareholders equal opportunity to vote according to the numbers of shares the shareholders own, which is one share equal to one vote. In case that the shareholder cannot participate in the meeting by self, the Company allow the shareholders to appoint independent directors or other person as a proxy to attend the meeting by using any of the attached proxy form that was sent with the invitation letter.

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Annual Report, 2013 Moreover, the Company has a policy to strictly deal with internal insider’s information, which shall only be known by the relevant persons. Every director and management is well aware of duties and responsibilities for the insider’s information and will not use it for personal gain or personal trading. The Company has determined measure in case of any violation. The Company determined that management report any changes in shareholdings to the Office of the SEC and the SET according to the section 59 of the Securities and Securities Exchange act B.E. 2535. Part 3: Roles of Stakeholders The Company respects the rights of all stakeholders, whether the internal stakeholders, such as employees and management, or external stakeholders, such as competitors, trade partners and customers. The Company value support and suggestion from every stakeholder and believe that it will be invaluable to develop and improve the Company operations. The Company will comply with the relevant law and regulation to preserve the right of every stakeholder. The Company respect right of every stakeholder by doing the following:

Employee : Treat employee on equitable basis and remunerate them accordingly. Customers : Care and responsible for customers, in term of high quality product, during

and after sales service and keep customers’ secrets. Share Holders : The Annual General Meeting for 2012 which was held on October 22, 2012,

had total shareholders 110 persons. There was not any additional topics, requested by shareholders in advance, either by website of the company or website of MAI. All share holdrs, presented in meeting, had voted all topics without any dispute. All questions from individual share holders were answered by the Management of the company.

Competitors : Behave according to the fair competition practices; avoid dishonest means to sabotage competitors.

Supplier : Buy goods and services from supplier according to fair trade condition and keep promise with them.

Community and Society: Responsible to community and society with environmental friendly concept and policy to protect environment. There is no issue regarding to environmental claim from any party in the past up to present.

Fiancial Institute : Treat all Financial Institutes with fair deals, good relationship, trust, and honour to every signed contractors.

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Annual Report, 2013 Part 4: Disclosure and Transparency The Company aware of the importance of accurate, complete, and transparent information disclosure, both in financial and general information according to the requirement of the Office of the SEC and the SET, as well as the crucial information that may affect share prices, which could affect decision making of the investors and stakeholder of the Company. The Company discloses information to the shareholders, investors and public through various channels of the Office of the SEC, the SET, and the Company’s website www.dimetsiam.com. The Company has not form the investor relation unit, but the Board has appointed Mr. Suraphol Rujikarnchana to communicate with the investors, shareholders, analysts and relevant persons. The interested person can contact the Company at 02-323-2800-6. The Board of Directors is responsible for the Company’s financial statements and financial information appears in the annual report. The financial reports are made according to the Thai generally accepted accounting standard (Thai GAAP). The Company selects an appropriate accounting policy that has been adopted consistently. The Company discloses adequate amount information in the financial statement. The Audit Committee will review the quality of the financial statements and internal audit system, and ensure adequate information disclosure in the notes to financial statements. Part 5: Board Responsibilities The Board of Directors comprised of persons with diverse sets of knowledge, skills and expertise with good leadership. The Board will take part in determining the Company’s vision, mission, strategy and policy to operate business. The Board will ensure the Company’s operation is consistent with legal requirement, objective, regulations and shareholders’ resolution. To achieve good corporate governance standard, the Company has complied with principles and guidelines provided by the SET as follow:

1. The Principles of Good Corporate Governance The Board understand the importance of the principles of good corporate governance by determine making it a key operating policy to ensure business transparency that can be verified. To increase investor’s confidence, the Company will regularly disclose the Company’s information to the public. The Company also stress on internal audit system. The Company tries to control cost very closely. The Company also considered business ethics to ensure that every stakeholder is treated fairly.

2. Leadership and vision The Board has responsibilities to ensure good corporate governance in the following issues

Determine vision, mission, objective, business plan and budget of the Company. Regularly oversee and follow up the operation of the management to ensure that the goals are

achieved.

http://www.dimetsiam.com/

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Annual Report, 2013 Ensure adequate internal audit system. The Company’s accounting auditor, AST Master Company

Limited, also evaluated and reviewed the Company’s internal audit during the annual audit and did not found significant weakness and flaws in the system.

Ensure that there is adequate risk management measure and followed up regularly for the Company’s best interest.

3. Conflict of interest To prevent conflict of interest, the Board will carefully evaluate any transaction that may cause conflict of interest. The Board will determine policies and measures to prevent management and relevant persons to use the Company’s insider’s information for personal gain. In order to proceed with the transaction that may risk conflict of interest, the Board’s approval must be obtained with consent from the Audit Committee. In all the connect transaction must consider the Company’s best interest, must be done with fairness and rationale with transaction occurred at market price. Moreover, the related person who may have conflict of interest in such transaction shall not take part in the approval of such transaction to ensure fairness and greatest benefit of the Company. If the connected transaction that relates to the SET’s regulation, announcement, order and rule, the Company shall comply with the regulations of the SET. Moreover, the Company will determine the guideline to prevent the usage of insider’s information by limiting the disclosure of the insider’s information to only those who responsible. Every director and management is well aware of the duties and responsibilities toward insider’s information and will not use it for personal gain or personal trading. The Company also stipulates punishment measure for violation.

4. Business ethics The Company is preparing code of ethics of the Board, management and employees to ensure that the related persons shall take the ethic code as a guideline to perform his own duties and responsibilities with loyalty, integrity, just and responsibility towards stakeholder, shareholders and related parties. The code of ethics shall also indicate punish in an event of violation.

5. Balancing of power of non-executive directors The Company has 3 independent directors who are audit committees and another independent directors, making 4 independent directors altogether from a total of 11 directors in the Board, which is more than a-third (1/3) of the total numbers of Board members and should help balancing power of executive directors.

6. Directors and management’s remuneration The Company determine remuneration for directors to benchmark the similar companies in the same industry and suitable for assigned duties and responsibilities to be able to retain desired directors. The directors’ remuneration is in accordance with the guideline and policy determined by the Board, which linked to the Company and individual’s performance.

7. Board meeting The Company determined that there must be at least a Board meeting every 3 month and

meet more as necessary. The meeting agendas will be clearly indicated prior to the meeting with a regular

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Annual Report, 2013 agenda to follow-up on the progress of the Company. The meeting invitation and relevant documents will be sent to directors at least 7 days prior to the meeting so the Board can have enough time to study relevant information prior to the meeting. The meeting statistics are as followed:

No Name of Director Number of Meetings Attended / Number of Meetings Held



1. Mr. Suraphol Rujikarnchana 5/5 Meeting 5/5 Meeting 2. Mrs. Saovaluck Chokearpornchai 5/5 Meeting 5/5 Meeting 3. Mrs. Achara Momin 5/5 Meeting 5/5 Meeting 4. Mr. Chokchai Niamratana 5/5 Meeting 5/5 Meeting 5. Mr. Chatchaval Asavakanoksilp 5/5 Meeting 5/5 Meeting 6. Miss Sayomporn Buapoom 5/5 Meeting 5/5 Meeting 7. Dr. Vudichai Neeranartvong 5/5 Meeting 5/5 Meeting 8. Professor Dr. Lieutenant Achara Chandrachai 5/5 Meeting 5/5 Meeting 9. Mr. Tumnong Dasri 5/5 Meeting 5/5 Meeting

10. Mr. Krairit Boonyakiat 5/5 Meeting 5/5 Meeting 8. Sub committees

The extraordinary shareholders’ meeting no. 2/2550 resolved to appoint 3 audit committees and an independent director on 17 October 2007. They have serving tenure of 2 years to oversee the Company’s business. As of February 11, 2011, 3 risk management committee members were appointed and stay in member for 2 year per term. These two committees will manage as per company description for audit and risk management policy and guidelines in clause 1.8 structure for management. Audit committee will meet once every quarter and will conduct special meeting as required, for risk management committee will meet twice annually.

9. Internal audit system

The Company gives importance to the Company’s internal audit system in all levels from management to operational to enhance efficiency. So the Company indicate clearly in written as the Company’s policy to control the Company’s assets, and divided responsibilities among operators, follow-up person, controller and evaluator to ensure appropriate level of check and balance. Moreover, the Company’s financial system is controlled by forming financial reporting system to each responsible head of respective department. Moreover, AST Master Company Limited, who is accounting auditor, also evaluate and review internal audit system during the annual accounting audit, yet did not find any significant weakness or flaw in the internal audit system.

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Annual Report, 2013 10. The Board reports

The Board will be responsible for the major business transaction and corporate governance, financial statement of the Company and subsidiary, and public information disclosure in the annual information disclosure form and annual report. The financial statement shall be prepared according to Thailand generally accepted accounting principles. The Board shall select appropriate accounting policies and practice them on continual basis. The Company will prudently exercise judgment and forecast estimates. The Board will ensure adequate information disclosure in the note attached to financial statement. The Board of Directors shall maintain appropriate level of internal audit system to ensure that the accounting record are accurate, complete and adequate enough to maintain the Company’s assets and point out weakness to prevent any significant fraud or abnormality. In regard to this issue, the Board has appointed the Audit Committees, who are non-executive, independent directors. They will be responsible for the quality of financial report and internal audit system. The Audit Committee deems that the Company’s internal audit system is satisfactory and thus should contribute to the degree of confidence in the Company’s financial statements. Risk Factors 1. Production risks

1.1. Risk on reliance on overseas production technology The Company relied on production technology from 2 world-class paint manufacturers which

are well-recognised by the paint industry, VALSPAR/1 and PPG. (1) Valspar Paint (Australia) Pty Ltd. (‚VALSPAR) VALSPAR acquisition of Wattyl and continues to provide

liceense to DIMET for manufacturing and distribution Timber coatings and Decorative Paints for 3 years to renew the contract. DIMET to renew this contract for a term of three years with effect from 1 July 2013 is linked to the June 30, 2016

(2) PPG : PPG made 2 agreements with Dimet to make PPG's products and distribute in Thailand. The latest agreements will expire on 30, December 2013.

More or less there are risks with these 2 principles if there were some changes in Wattyl or PPG's agreement, or both.

Note: /1 = Valspar Paint (Australia) Pty Ltd. (‚VALSPAR‛) is a Paint manufacturing and distribution. Headquartered in the United States an acquisition of Wattyl Australia Pty Ltd. ("Wattyl") since 2011.

However, the Company has continued to research and develop protective coating and has come up with protective coatings with chemical qualities suitable for weather in Thailand. Other than paint quality, color selection and delivery capability, after-sales service also play a vital role in paint distribution business, such as to have service team to attend actual customer’s site to provide accurate advice about paint choice, which enable the Company to provide prompt services for clients and make opportunity for the Company to expand market. The long track record of paint distribution in domestic market makes the Company familiar with the domestic market and creates marketing competitiveness. Due to extensive

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Annual Report, 2013 exposure in domestic paint market, Wattyl and PPG still need the Company’s marketing arm to distribute their products in domestic markets. Moreover, the Company has established strong relationship with both companies for over 25 years. Until today, the Company continues to receive license to produce paint. The Company is ready and very experienced in producing and distributing paints under technology of the two companies. As a result, the company also builds good relationship and received trust and confidence from the paint buyers of the two global brands. Moreover, the DIMET has continuously enhanced paint quality using production technology from the two major players to come up with paint that is suitable with weather and environment in Thailand. Moreover, the Company has research and development (R&D) teams that develop new formula of paint, which the Company is registering for its own brand name, such as timber coating under the Company’s own brand. These developments are mainly to reduce degree of technology dependency of the two aforementioned companies and create public acceptance and confidence in the Company’s own brand. Presently, the Company’s owned researched products account for 31.76 % of the Company’s total sales.

1.2. Risk in raw material acquisition The raw materials used in paint production are from both domestic and imports via local suppliers.

Main raw materials are resin, pigment, solvent and additive. The Company does not make any purchasing contract with any particularly supplier. Therefore, the Company may face risk of unable to acquire raw material if any suppliers cease to sell raw materials to the Company. However, the Company has minimized the risk of raw material acquisition by ordering raw materials from many suppliers. And the Company has bought raw materials from many suppliers for over the last decade and has established good relationship with those suppliers. Therefore, the Company believes that the risk of raw material acquisition is low as there has never been any problem in the past. DIMET is confident that the raw materials acquisition used in production will not be a problem.

1.3. Risk from fluctuation in raw material prices and exchange rate

Company could have risk from fluctuation of oversea raw materials price . .As they are related to crude oil price, global demand and supply as well as variation of foreign currency exchange rate. Company orders these raw materials through local vendors in ratio of 90% and import 10%. According to the oversea purchasing from manufacturers, company does not make forward exchange rate with banks as raw material purchasing value is not much. Therefore company do not have much imact from this foreign exchange rate. However, company has emphasized in supply chain management especially material planning, material purchasing, inventory control management including delivery management to control and manage cost and expenses to run the company business. Together with company business is mainly made to order allow us to

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Annual Report, 2013 plan production effectively as per selling plan, at the same time made company is able to define the price as per raw material cost change in each period and able to maintain basic profits.

1.4. Risk from customers changing production technology As most of the Company’s clients are industrial clients with different production lines, if industrial customers change production technology to respond to changing requirements, DIMET will also be affected. For example, many industrial users now tend to switch from solvent base paint, which contain large portion of solvent and little paint, to water base paint, which contains small portion of solvent and more paint and could reduce environment al impacts, which require the Company to change production process to respond to customer’s changing needs. Therefore, the Company may face some risks from those changes. However, the Company’s after-sales service team focuses on giving advice about paint usage in the customers’ production line, which enables the Company to plan any necessary production and technology changes to suit customers’ preference. Thus the Company could lessen risk from those changes. 2. Business Risks

2.1. Risks from new entrants and free trade agreement The company may face the risk of new entrants, both in term of subsidiaries of overseas paint producers, Thai

paint producers, and Thai paint producers who receive technological support from overseas paint producers. Moreover, the free trade agreement may post risk that cheap,. The threats from new entrants and free trade agreement may cause price competition, which may affect sales and profits of the Company in the future. However, the Company has operated in the paint industry for over 25 years and has offered both industrial and household paints in wide range of shades with good after-sales service, all of which contribute to the Company’s strength. Moreover, the Company has produced paints that are widely-accepted in term of premium quality, and the Company’s production standard and technology have been transferred from the world-class paint manufacturers. While the threat of new entrants may affect the Company, the Company was never impacted by such risk.

2.2. Risk from reliance from skilled employees Paint manufacturing needs highly specialized chemical production techniques, which require understanding, experiences and expertise of employees in order to continually research and development (R&D) to achieve high quality paint that could respond to market demand. Therefore, the employees who understand the products and have intuition to innovate high quality product are very important assets of paint production and distribution business. Thus, losing those R&D staffs may affect the Company’s competitiveness. However, most of the Company’s R&D staffs have been working with the Company for over 10 years, with very low turnover rate in the department. Moreover, crucial R&D staffs are the Company’s shareholders, directors and managements. Therefore, the Company is confident that the risk of losing key R&D staffs is minimized. The Company also provides training for employees in that department to share knowledge to other team members to reduce reliance on any particular employee.

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Annual Report, 2013 2.3. Risk from production halt as a result of fire

As paint production require highly flammable chemicals such as resin, pigment, solvent and additive. Therefore if those chemicals leak or a spark occurs in the factory, the Company may risk production halt due to fire. However, the Company is well-aware of the risk and has prevented those risk by provide training for employees in the Company to understand about the manufacturing procedures, guidelines and cautions. The Company also educates employees about causes of fire, such as chemical reaction, temperature that the chemical may ignite, avoiding chemical, hazardous chemical resulted from decomposition, etc. Moreover, the Company also provides training on fire prevention and suppression by inviting official from Public Disaster Prevention Center, Preaksa District, Muang District, Samut Prakarn Province to regularly educate employees. The Company also invested in explosion proof electricity system that could prevent electrical spark, which may cause faire. Thus the risk of fire is minimized, and the Company never has any fire occur in the Company. 2.4 Risk from expanding the investment

According to company financial year 2011/12, the company has invested her business more on architecture coatings. This is to expand sales revenue and market share into majority market of paints; but high competition. The company must invest to launching brand awareness via public relation and media etc. to be known. In addition, company tried to increase various kinds of distribution channels e.g. more sales team, direct customers, resident or building owners, dealers, contractors and architects. The effectiveness of investment depends on many factors such as domestic economic situation and the competition. Company expenses are 95.46 Million Bath, which is lower than last financial year 97.90 Million Bath. The huge increment on expenses make company performance lost 8.53 Million Bath in this year. However, DIMET paints are high performance, which can apply the paint for more areas against other brands at least 20-30% in the same paid price. So most of customers have more confident on DIMET paints when they have experience on it. 3. Management Risks

3.1. Risk from reliance on key managements As the Company sells over 95% of its products to industrial customers that trust the Company’s

product and service quality and has good relationship with the key managements of the Company. Most of the key managements have been working for the Company for over 10 years. Moreover, it require a great deal of experience, knowledge, understanding to manage the Company, particularly in the R&D department as paint requires high chemical expertise to be able to respond to customer demand, both in terms of paint characteristics and qualities. Therefore, the Company may face the risk from reliance on key managements to operate, and the changes in management may affect the Company’s operations.

However, the Company has established the management system as a guideline for the managements and employees to operate. The Company also provides training for employees at all level to understand the works evenly and encourage and delegate employees to work up organization level as a succession plan, which could minimize risk from reliance on key managements.

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Annual Report, 2013 Connected transaction 1. Connected transaction with subsidiaries

Subsidiary Relationship Transaction details Account receivable (Baht)

Reasons and rationales As at 30 June 2012

As at 30 June 2013

ACCT – The Company’s Subsidiary – Shares directors of the Company:

Mr. Suraphol Rujikarnchana, Mrs. Saovaluck Chokearpornchai, Mrs. .Achara Momin,Ms. Sayomporn Buapoom and Mr. Chokchai Niamratana and the and the ortherized directors are Mr.Suraphol Rujikarnchan, Mrs. Saovaluck Chokearpornchai and Mrs. Achara Momin

1. The Company sold products to ACCT

- 59,450

ACCT operate painting contractor, bidding supply, apply projects and supply Cathodic Protection System for controlling corrosion of steel immersed in sea-water or buried underground.

- 33 -

Annual Report, 2013 1. Connected transactions (continued)

Remark: -The Company has entered office and warehouse leasing contract and service contract for office no. 602 Moo 2, Bangpu Industrial Estates, Soi 1, Sukhumvit Road, Tambol Bangpoo Mai, Muang District, Samutprakarn Province with ACCT with contract duration of 2 year from 1 August 2008 to 31 July 2010 . The rental fee for office and warehouse is Baht 1,000 per month, office service fee of Baht 5,000 per month and insurance fee of Baht 100 per month.

-The Audit Committee and independent directors have considered connected transaction between the Company and ACCT as mentioned above on Audit Committee meeting no. 3/2013 on 23 August 2013 and deemed that the connected transaction is deemed a normal business transaction and should not have any issue that may affect the Company’s operation.

Subsidiary Relationship Transaction details Account receivable (Baht)


As of 30 June 2013

ACCT 2. The Company received rental income from ACCT 12,000 12,000 To be used as storage warehouse 3. The Company received management fee income from ACCT 61,200 61,200 To make transaction clear and

management transparency 4. ACCT received transporatation service and telephone charge

incomes. 42,139 27,733 To finance the Company’s working

capital and management transparency 5. Dimet bought goods from ACCT 9,375 - Purchased THW wire for electronic

maintenance with reasonable price. 6. Dimet paid service fee for ACCT 28,049 - 2011: Dimet hired ACCT to improved the

customer's working area. 2012: Courier Charge, air ticket and hotel.

7. Dimet provided short term loan for ACCT 100,825 625,703 Dimet provides support to its subsidiaries. 8. Dimet has interest income from ACCT. 7,360 25,703

9. DIMET's other receivables due from renting storage space, management fees and other services fee of ACCT.

40,580 17,155 This is in accordance with normal business transactions of the company.

10. DIMET's trade accounts payable arising from the purchase of ACCT.

10,031 -

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Annual Report, 2013 2. Connected transaction with related company

Remark: - SUNCOAT sells heat-resistant paint for automotive and electrical appliance industry. 60% of SUNCOAT’s shares are owned by Thai shareholders and the remaining 40% of registered capital are held by Japanese shareholders who are experienced in heat-resistant production.

The Audit Committee and independent directors have considered connected transaction between the Company and SUNCOAT as mentioned above on Audit Committee meeting no. 3/2013 on 23 August 2013 and deemed that the connected transaction is deemed a normal business transaction and should not have any issue that may affect the Company’s operation.

Company Relationship Transaction details Account receivable (Baht)


As of 30 June 2013

SUNCOAT – The related company – The Company holds

10% stakes of total outstanding shares of SUNCOAT

1. The Company sold heat-resistant paints to SUNCOAT

81,679,964 68,002,999 The Japanese shareholder of SUNCOAT is knowledgeable in heat-resistant paint production. The Company could learn such knowledge to expand the Company’s heat-resistant product line.

2. Dimet had a receivable due from the sale of heat-resistant paint to SUNCOAT.

15,861,306 21,476,278

3. The Company bought products from SUNCOAT

19,487,445 17,725,086 Raw materials used to produce SUNCOAT products, which are imported from Japan. They are 94% raw materials and 6% packaging.

4. The company's trade creditors arising from purchases of SUNCOAT.

5,103,868 5,217,667

- 35 -

Annual Report, 2013 2. Connected transaction with related company (continued)

Remark: -SOLID operates contractor business with registered and paid up capital of Baht 6,000,000. SOLID’s director, executive director and authorized director is related to Mrs. Achara Momin and holds 57% controlling stake in SOLID. -The Audit Committee and independent directors have considered connected transaction between the Company and SOLID as mentioned above on Audit Committee meeting no. 3/2013 on 23 August 2013 and deemed that the connected transaction is deemed a normal business transaction and should not have any issue that may affect the Company’s operation.

Company Relationship Transaction details Account receivable (Baht)


As at 30 June 2013

SOLID – SOLID is related to the Company as it has director, authorized director as the person related to Mrs. Achara Momin, who is director, executive director, authorized director and management of the Company.

1. The Company sold products to SOLID 559,904 576,913 Business Relationship since 1990.

2. The Company had a receivable due from the sale of products to SOLID.

46,558 78,062

3. The Company hired SOLID to construct fixed assets

225,409 1,697,463 The Company hired SOLID to construct buildings for future expansion to accommodate the expansion of sales in the future.

4. DIMET paid services fee to SOLID

30,000 28,500 DIMET employed Solid to paint the house.

- 36 -

Annual Report, 2013 2. Connected transaction with related person

Remark : /1 = Mr.Amnat Su-Uthai resigned from Production Director on 1st March 2012 and resigned from employee on 1st July 2012

Related person Relationship Transaction details

Value (Baht) Reasons and rationales Ended

30 June 2012 Ended

30 June 2013 Mr. Suraphol Rujikarnchana Shareholder Director Authorized director Executive board Finance Director

The Company sold a vehicle 747,663 - The Company has a policy to sell vehicle by giving the first right to the person entitled to the vehicles at the price discounted from market prices 50,000 Baht from out sources (internet, 2nd-hand car dealer, and service center) as a good morale for Company’s management. Mr.Chokchai Niamratana Shareholder Director Authorized director Executive board Sales & Marketing Director – Industrial & Timber Coatings

The Company sold a vehicle 392,523 - The Company has a policy to sell vehicle by giving the first right to the person entitled to the vehicles at the price discounted from market prices 50,000 Baht from out sources (internet, 2nd-hand car dealer, and service center) as a good morale for Company’s management.

Mrs. Vissuta Rujikarnchana Shareholder Related to Director The Company sold mobile phone 4,206 - The company has a policy to sell company assets at the price discounted from market price as a good morale for Company’s employee.

Mr. Amnat Su-thai/1 Shareholder Production Director 1.Bought Paints from the company 2.The Company sold a vehicle

704,334 - 1. The company has a policy to sell paints by giving special discount for employee. 2. The Company has a policy to sell vehicle by giving the first right to the person entitled to the vehicles at the price discounted from market prices 50,000 Baht from out sources (internet, 2nd-hand car dealer, and service center) as a good morale for Company’s management.

- 37 -

Annual Report, 2013 4. Comment of the Audit Committee The Audit Committee has considered connected transaction between the Company, subsidiaries and related person in the Audit Committee meeting no. 3/2012 on 22 August 2012 and deemed that the connected transaction are normal business transactions or providing assistance to subsidiaries. The connected transactions are reasonable in term of pricing and other conditions that are similar to what the market would pay for the non-related person or company. There is no transferring of benefit between the Company, subsidiaries and the related person. 5. Measures and procedures to approve the connected transaction In case of any connected transaction between the Company, subsidiaries and the related person that may cause conflict of interest in the future, the Company will have the Audit Committee comment on the necessity and appropriateness of the transaction. In case the committee does not have expertise in the area, the Company will allow independent expert or accounting auditor to give comment on the connected transaction for the Board of Directors or shareholders to consider, depending on the case. In all, the Company will disclose the connected transaction in the audited financial statements and information disclosure form 56-1 of the Company. 6. Policy or tendency to do connected transaction in the future. In the future, the Company may engage in the connected transaction as appropriate for the best interest of the Company. The connected transaction must be based on the normal term of trade or financial assistance, which can be referred to the normal trade practice, and the Company would have done to the outsiders. The Company will comply with the law concerning securities and securities exchange and regulation, announcement, order or rules of the Stock Exchange of Thailand and will strictly comply with the disclosure requirement for the connected transactions and acquisition and disposal of the major assets of the Company and subsidiaries according to the standard specified by the Accounting Association

- 38 -

Annual Report, 2013 Management Discussion and Analysis

Revenue During accounting year 2013, the Company reported product sales and services of 376.23 Million Baht, decreased from 2012 accounting year 11.87 Million Baht which was decreased 3.06% due to decreased sales of heat resistant paint. The company has other incomes for 2013 accounting year 2.33 Million Baht from management fees, rents and interest income.

Cost of Sales and Selling and Administration Expenses Cost of goods sold and services in 2013 is 74.70% of total revenues decreases from previous fiscal year 2012 7.37%, this differences caused by effective cost management. In 2013 fiscal year, the company has products sales and management expenses 110.57 million Baht which increased from fiscal year 2012 15.11 million Baht or 15.83% , caused from management fee 5.83% 2. Financial Analysis

Total Assets. Total assets as of the end of accounting year 2013 (June 2013) was 231.48 MB which decreased from 2012 accounting year by 7.89 MB or 3.29%. The changes in total assets were due to the following factors:

Cash and equivalent as of the end of accounting 2013 was 2.24 MB. which decreased from 2012 accounting 5.82 MB. or 72.22% due to business expansion in Architectural Coatings section.

Account receivable as of the end of accounting year 2013 was 76.98 MB which increased from previous accounting year 1.16 MB or 1.53% resulted from accrual of debtors total 47.52 MB which increased from previous accounting year 4.94 MB or 11.59%

Account receivable of related company business as of 2013 was to 21.55 MB which increased from 2012 by 5.65 MB or 35.49% due to increased sell of heat resistant paints. Company management evaluated accrual of debtor using verification of debtor balance and decided a reserve of 0.5% of total sell. Management will review the adequacy of this reserve in accondance with overdue payment, or payment not in full, using payment record of debtors, number of debtors, relation between debtor and bad debts as well as economic condition.

Inventory as of 2013 is 72.98 MB decreased from 2012 by 9.68 MB or 11.71 % as resulted from lower raw materials and lower work-in-process by 17.03% and 8.78 respectively.

Land, building and equipment value as of 2013 equal to 53.25 MB decreased from 2012 by 0.22 MB or 0.42 %.

- 39 -

Annual Report, 2013 Liquidity At the end of the accounting period, total current assets of the company was 176.42 MB and current liability of of 125.73 MB, or current ratio of 1.40 The cash flow rate was of 0.80 times which shown that the company has quick ratio due to gross profit marging and effectively stock system.

Liabilities. At the end of the accounting period, the company reported total liabilities of 132.73 MB, which

increased from 2012 by 5.84 MB or 4.60% as resulted from increasing in bank overdrafts and short-term loans from financial institutions 19.36 MB.

Shareholders’ Equity The company’s shareholders’ equity as of 30 June 2013 was 98.87 MB which decreased from 2012 accounting year by 13.60 MB due to the overall loss of 2013 and the legal provision for employment termination benefits of 1.20 MB. The company had debt to equity ratio for 2013 of 1.34 which increased from 2012 fiscal year 1.13 which indicated that the capital structure of the business was still strong. Finance status summary and business performance of ACCT Business performance ACCT is an affiliate of the company is currently selling paints, subcontract for painting at the project level and design, supply and install Cathodic Protection System. In the account year of 2013, its income from sale and service was 1.50 MB which decreased from 2012 by 1.48 MB or 49.59%. ACCT had net profit 0.87 MB which was insignificant to the overall company performance.

Financial status ACCT total asset in account year from 2013 was 0.59 MB which decreased from 2012 by 0.21 MB or 26.62% . ACCT debts was 1.10 MB increased from 2012 by 0.65 MB or 144.92 %, and shareholders equity was (0.51) MB.

- 40 -

Annual Report, 2013 REPORT OF INDEPENDENT AUDITOR

To the Shareholders of Dimet (Siam) Public Company Limited I have audited the accompanying consolidated financial statements of Dimet (Siam) Public Company Limited and its subsidiaries, comprising the consolidated statement of financial position as at 30 June 2013, and the related consolidated statements of comprehensive income and changes in shareholders’ equity and cash flows for the year then ended, including notes disclosure summarizing significant accounting policies and other explanatory information. I have also audited the separate financial statements of Dimet (Siam) Public Company Limited, comprising the separate statement of financial position as at 30 June 2013, and the related separate statements of comprehensive income and changes in shareholders’ equity and cash flows for the year then ended, including notes disclosure summarizing significant accounting policies and other explanatory information. Management’s responsibility for the financial statements The Company’s management is responsible for the preparation and the fair presentation of these financial statements in accordance with Thai Financial Reporting Standards and for such internal controls as management determines to be necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Thai Standards on Auditing. Those standards require that I perform the audit under ethical requirements, including planning and performing the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidences about the amounts and disclosures in the financial statements. The selected audit procedures depend on the auditor’s judgment, including the assessment of risks of material misstatement on the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of financial statements.

- 41 -

Annual Report, 2013

I believe that the audit evidences I have obtained are sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position as at 30 June 2013 and the consolidated results of operations and cash flows for the year then ended of Dimet (Siam) Public Company Limited and its subsidiaries, and the separate financial position as at 30 June 2013 and the results of operations and cash flows for the year then ended of Dimet (Siam) Public Company Limited, in accordance with Thai Financial Reporting Standards. Mrs. Sumalee Chokdeeanant Certified Public Accountant Registration No. 3322 Bangkok, Thailand 23 August 2013

- 42 -

Annual Report, 2013 DIMET (SIAM) PUBLIC COMPANY LIMITED AND SUBSIDIARY

STATEMENTS OF FINANCIAL POSITION (Unit : Baht) CONSOLIDATED F/S SEPARATE F/S Notes 30 June 2013 30 June 2012 30 June 2013 30 June 2012 ASSETS CURRENT ASSETS Cash and cash equivalents 6 2,238,068 8,055,937 2,169,081 8,027,048 Trade accounts receivable - general customers -net 7 76,984,765 75,826,127 76,612,940 75,551,232 Trade accounts receivable - related companies 7,8 21,554,340 15,907,864 21,554,340 15,907,864 Short - term loan to subsidiary company 8 - - 625,703 100,825 Inventories - net 9 72,980,494 82,657,499 72,944,097 82,603,440 Other current assets 2,664,469 1,557,163 2,677,932 1,563,109 Total Current Assets 176,422,136 184,004,590 176,584,093 183,753,518 NON - CURRENT ASSETS Investment in subsidiary company - net 10 - - 381,250 500,000 Investment in related company 300,000 300,000 300,000 300,000 Other long-term investments 11 - - - - Property, plant and equipment - net 12 53,253,826 53,477,106 53,222,687 53,438,710 Intangible assets - net 13 860,238 776,947 860,238 776,947 Witholding tax 38,911 340,210 21,230 187,052 Other non - current assets 603,463 464,800 544,964 257,300 Total Non - Current Assets 55,056,438 55,359,063 55,330,369 55,460,009 TOTAL ASSETS 231,478,574 239,363,653 231,914,462 239,213,527 The accompanying notes form an integral part of these financial statements.

- 43 -


STATEMENTS OF FINANCIAL POSITION

(Unit : Baht) CONSOLIDATED F/S SEPARATE F/S Notes 30 June 2013 30 June 2012 30 June 2013 30 June 2012

LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Overdrafts and short - term loan from financial institutions 14 25,000,000 5,637,325 25,000,000 5,637,325 Trade accounts

payable - general suppliers 80,740,932 93,884,289 80,402,669 93,679,041

Trade accounts payable

- related company 8 5,217,667 5,103,868 5,217,667 5,113,899

Current portion of liabilities under finance lease agreeements 15 1,183,817 1,369,370 1,183,817 1,369,370 Accrued expenses 6,473,083 6,668,269 6,374,325 6,571,846 Other current liabilities 16 7,114,029 4,013,882 7,091,280 4,006,766

Total Current Liabilities 125,729,528 116,677,003 125,269,758 116,378,247

NON - CURRENT LIABILITIES Liabilities under finance lease agreements -

net 15 456,532 1,640,349 456,532 1,640,349

Employee retirement benefits obligation 17 6,548,066 8,578,493 6,548,066 8,578,493 Total Non - Current Liabilities 7,004,598 10,218,842 7,004,598 10,218,842

TOTAL LIABILITIES 132,734,126 126,895,845 132,274,356 126,597,089 The accompanying notes form an integral part of these financial statements.

- 44 -


STATEMENTS OF FINANCIAL POSITION

The accompanying notes form an integral part of these financial statements.

(Unit : Baht) CONSOLIDATED F/S SEPARATE F/S Notes 30 June 2013 30 June 2012 30 June 2013 30 June 2012

LIABILITIES AND SHAREHOLDERS' EQUITY (Continued)

SHAREHOLDERS' EQUITY Share capital – common share at Baht 0.50 par

value 18

- Authorized 270,000,000 shares 135,000,000 - 135,000,000 - - Authorized 180,000,000 shares - 90,000,000 - 90,000,000 - Issued and fully paid-up 180,000,000 shares 90,000,000 90,000,000 90,000,000 90,000,000 Premium on share capital 20,385,912 20,385,912 20,385,912 20,385,912 Surplus from change in proportion of investment in subsidiary company 10 818,260 - - - Retained earnings (deficit) Appropriated for legal reserve 3,030,000 3,030,000 3,030,000 3,030,000 Unappropriated (15,367,552) (948,104) (13,775,806) (799,474)

Portion of the Company's shareholders 98,866,620 112,467,808 99,640,106 112,616,438 Non - controlling interests (122,172) - - - TOTAL SHAREHOLDERS' EQUITY 98,744,448 112,467,808 99,640,106 112,616,438

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 231,478,574 239,363,653 231,914,462 239,213,527

- 45 -


STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED 30 JUNE 2013

(Unit : Baht) CONSOLIDATED F/S SEPARATE F/S Notes 2013 2012 2013 2012 Revenues from sales and services 8 376,228,457 388,098,098 374,784,987 385,144,680 Costs of sales and services 8, 20 (281,025,995) (303,391,732) (280,081,497) (301,078,681) Gross income 95,202,462 84,706,366 94,703,490 84,065,999 Gain on sale of investment in subsidiary company

10 - - 831,250 -

Other income 8 2,325,357 2,842,922 1,610,620 2,737,666 Selling expenses 8, 20 (82,516,775) (72,236,641) (81,224,425) (71,494,878) Administrative expenses 8, 20 (28,053,538) (23,220,994) (27,279,391) (23,000,090) Financial costs (1,617,876) (617,714) (1,617,876) (617,714) Loss before income tax (14,660,370) (8,526,061) (12,976,332) (8,309,017) Income tax 22 - - - - Total loss for the year (14,660,370) (8,526,061) (12,976,332) (8,309,017) Other comprehensive income for the year - - - - Total comprehensive loss for the year (14,660,370) (8,526,061) (12,976,332) (8,309,017) ALLOCATION OF LOSS Portion of the Company (14,406,458) (8,526,061) (12,976,332) (8,309,017) Portion of non-controlling interests (253,912) - - - (14,660,370) (8,526,061) (12,976,332) (8,309,017)

ALLOCATION OF COMPREHENSIVE LOSS Portion of the Company (14,406,458) (8,526,061) (12,976,332) (8,309,017) Portion of non-controlling interests (253,912) - - - (14,660,370) (8,526,061) (12,976,332) (8,309,017)

Basic Earnings per Share Loss (Baht per share) (0.08) (0.05) (0.07) (0.05) Weight average number of common shares (Share) 180,000,000 180,000,000 180,000,000 180,000,000

DILUTED INCOME (LOSS) PER SHARE Income (loss) (Baht per share) (0.06) (0.05) (0.06) (0.05) Weighted average number of ordinary shares (share) 224,136,943 180,000,000 224,136,943 180,000,000


- 46 -

Annual Report, 2013DIMET (SIAM) PUBLIC COMPANY LIMITED AND SUBSIDIARY STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE YEARS ENDED 30 JUNE 2013 (Unit : Baht) Shareholders' equity of the Company

Surplus from change

Retained earnings (deficit) Non Paid-up Premium on in proportion of

investment Appropriated controlling

Notes share capital share capital in subsidiary company

for legal reserve

Unappropriated Total interests Total CONSOLIDATED F/S Balance as at 1 July 2011 90,000,000 20,385,912 - 3,030,000 7,577,957 120,993,869 - 120,993,869 Total comprehensive loss for the year - - - - (8,526,061) (8,526,061) - (8,526,061) Balance as at 30 June 2012 90,000,000 20,385,912 - 3,030,000 (948,104) 112,467,808 - 112,467,808 Balance as at 1 July 2012 90,000,000 20,385,912 - 3,030,000 (948,104) 112,467,808 - 112,467,808 Surplus from change in proportion of investment in subsidiary company 10 - - 818,260 - - 818,260 - 818,260 Non controlling interests in was sold 10 - - - - (12,990) (12,990) 131,740 118,750 Total comprehensive loss for the year - - - - (14,406,458) (14,406,458) (253,912) (14,660,370) Balance as at 30 June 2013 90,000,000 20,385,912 818,260 3,030,000 (15,367,552) 98,866,620 (122,172) 98,744,448


- 47 -

Annual Report, 2013DIMET (SIAM) PUBLIC COMPANY LIMITED AND SUBSIDIARY STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE YEARS ENDED 30 JUNE 2013 (Unit : Baht)

Retained earnings (deficit)

Paid-up Premium on Appropriated share capital share capital for legal reserve Unappropriated Total

SEPARATE F/S

Balance as at 1 July 2011 90,000,000 20,385,912 3,030,000 7,509,543 120,925,455 Comprehensive loss for the year - - - (8,309,017) (8,309,017) Balance as at 30 June 2012 90,000,000 20,385,912 3,030,000 (799,474) 112,616,438

Balance as at 1 July 2012 90,000,000 20,385,912 3,030,000 (799,474) 112,616,438 Comprehensive loss for the year - - - (12,976,332) (12,976,332) Balance as at 30 June 2013 90,000,000 20,385,912 3,030,000 (13,775,806) 99,640,106


- 48 -


STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 30 JUNE 2013

(Unit : Baht) CONSOLIDATED F/S SEPARATE F/S 2013 2012 2013 2012

Cash flows from operating activities Loss before income tax (14,660,370) (8,526,061) (12,976,332) (8,309,017) Adjustments to reconcile loss to net cash provided from (used in) operating activities

Depreciation and amortization 8,771,549 8,783,048 8,764,293 8,776,637 Bad debts (1,059,714) - (613,647) - Allowance (Reversal of allowance) for doubtful accounts 2,429,248 (221,449) 2,429,248 (221,449) Loss from defective inventories 1,890,131 603,088 1,891,113 581,156 Gain on sale of investment in subsidiary company - - (831,250) - Unrealised loss (gain) on exchange rate 256,362 62,930 256,362 61,544 (Gain) loss on disposal of equipment 3,045 (1,142,780) 3,045 (1,142,780) Withhold tax written off 121,896 52,579 - 52,579 Loss from customer's debt restructuring 440,468 - - - Current service cost for employee retirement benefits 1,185,953 1,198,936 1,185,953 1,198,936 Interest income (28,933) (232,026) (28,648) (232,026) Financial costs 1,221,603 218,227 1,221,603 218,227 Income from operations before changes in operating assets and liabilities 571,238 796,492 1,301,740 983,807 Decrease (increase) in operating assets

Trade accounts receivable - general customers (2,968,640) (11,776,535) (2,877,309) (13,250,919) Trade accounts receivable - related companies (5,646,476) 11,809,428 (5,646,476) 12,635,542 Inventories 7,786,874 6,735,574 7,768,230 6,730,301 Other current assets (1,107,305) (131,932) (1,114,823) (154,144) Prepaid income tax 206,408 145,144 175,146 145,144 Other non - current assets (138,662) 500,083 (287,663) 256,757

Increase (decrease) in operating liabilities Trade accounts payable –general suppliers (13,399,719) (15,475,638) (13,532,734) (15,275,863)

Trade accounts payable - related companies 113,798 (2,709,326) 103,768 (2,699,295) Accrued expenses (195,186) 1,302,312 (197,521) 1,328,081 Other current liabilities 1,054,326 (420,123) 1,038,692 164,967 Employee retirement benefits obligation (3,216,380) (1,287,500) (3,216,380) (1,287,500)

Cash used in operating activities (16,939,724) (10,512,021) (16,485,330) (10,423,122) Interest paid (1,215,069) (218,227) (1,215,069) (218,227) Income tax paid (27,005) (43,168) (9,324) (11,906)

Net cash used in operating activities (18,181,798) (10,773,416) (17,709,723) (10,653,255) The accompanying notes form an integral part of these financial statements.

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STATEMENTS OF CASH FLOWS (CONTINUED) FOR THE YEARS ENDED 30 JUNE 2013

(Unit : Baht) CONSOLIDATED F/S SEPARATE F/S 2013 2012 2013 2012

Cash flows from investing activities Cash received from interest 28,933 232,026 28,648 232,026 Decrease in restricted deposits with bank - 1,500,000 - 1,500,000 Decrease (Increase) in short - term loan to subsidiary - - (524,878) 451,576 Proceed from sale on investment in subsidiary 937,010 - 950,000 - Proceed from disposal of assets 30,748 2,921,810 30,748 2,921,810 Paid for acquisition of plant and equipment (6,275,193) (10,658,224) (6,275,193) (10,642,479) Paid for acquisition of intangible assets (350,874) (170,544) (350,874) (170,544)

Cash used in investing activities - net (5,629,376) (6,174,932) (6,141,549) (5,707,611)

Cash flows from financing activities Proceed from overdraft and short - term loan from financial

institutions 19,362,675 5,637,325 19,362,675 5,637,325

Repayment for finance lease liabilities (1,369,370) (1,605,667) (1,369,370) (1,605,667) Cash provided from financing activities - net 17,993,305 4,031,658 17,993,305 4,031,658

DECREASE IN CASH AND CASH EQUIVALENTS - NET (5,817,869) (12,916,690) (5,857,967) (12,329,208) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 8,055,937 20,972,627 8,027,048 20,356,256 CASH AND CASH EQUIVALENTS AT END OF YEAR 2,238,068 8,055,937 2,169,081 8,027,048

Supplemental cash flows information: 1 Purchase a vehicle under finance lease agreements - 2,010,032 - 2,010,032

2 Recognition of provision for employee retirement benefits by adjusting the past service cost with retained earnings as at 1 July 2011. - 8,667,057 - 8,667,057


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Annual Report, 2013 DIMET (SIAM) PUBLIC COMPANY LIMITED AND SUBSIDIARY NOTES TO FINANCIAL STATEMENTS AS AT 30 JUNE 2013 1. GENERAL INFORMATION

Dimet (Siam) Public Company Limited was listed on the Stock Exchange of Thailand in 2008 and the Company’s stocks have been traded on the MAI (Market for Alternative Investment). The Company is principally engaged in the manufacturing and sales of coating products (paint). The Company office is located at 602 Moo 2 Sukhumvit Road, Bangpoo Mai, Muang Samutprakarn, Samutprakarn.

2. BASIS FOR FINANCIAL STATEMENTS PREPARATION

These financial statements have been officially prepared in Thai language in accordance with Thai generally accepted accounting principles issued under the Accounting Act B.E. 2543 and the Federation of Accounting Professions Act B.E. 2547 and the regulations promulgated by the Securities Exchange Commission concerning the preparation and disclosure of financial information under the Securities Exchange Act B.E. 2535. The translation of these financial statements to other language should be based on the Thai version. The financial statements have been prepared on a historical cost basis except as, otherwise, disclosed specifically. During the year 2011, the Federation of Accounting Professions had announced the accounting standards, financial reporting standards and interpretation of accounting standards that will affect the Company’s operations but are not effective for the year 2013 as follows;

Accounting Standards No. Topic Effective date

Effect to the financial statements

12 Income Taxes 1 Jan 2013 Being assessed 21

(Revised 2009 ) The Effects of Changes in Foreign Exchange Rates 1 Jan 2013 Being assessed

Moreover, during the year 2012, the Federation of Accounting Professions issued the financial reporting standard TFRS 8: Operating Segments, which is effective for fiscal years beginning on or after 1 January 2013. The Company’s management believes that this financial reporting standard will not have any significant impact on the financial statements when it is initially applied.

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Annual Report, 2013 3. BASIS OF CONSOLIDATED FINANCIAL STATEMENTS PREPARATION

3.1 The consolidated financial statements include the financial statements of Dimet (Siam) Public Company Limited and Asian Corrosion Control Technology Limited, (Formerly Asian Corrosion Control Trading Limited), a 76.25% (2012 : 100%) subsidiary which is engaged in distribution of coating products (paint) and painting service.

The percentage of subsidiary’s assets and revenues as included in the consolidated financial statements as at 30 June 2013 and 2012 and total revenues for the year ended 30 June 2013 and 2012, are summarized below :

Percentage of subsidiary’s total

assets to consolidated total assets 2013 2012 Subsidiary company Asian Corrosion Control Technology Limited (Formerly Asian Corrosion Control Trading Limited)

0.25

0.33

Percentage of subsidiary’s total assets to consolidated total revenues

2013 2012 Subsidiary company Asian Corrosion Control Technology Limited (Formerly Asian Corrosion Control Trading Limited)

0.40 0.79

3.2 Significant intercompany balances and intercompany transactions with subsidiary included in the consolidated financial statements have been eliminated.

3.3 The consolidated financial statements have been prepared with the same accounting policies as for

the separate financial statements for the same accounting transactions or accounting events.

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Annual Report, 2013 4. SIGNIFICANT ACCOUNTING POLICIES

4.1 Cash and cash equivalents Cash and cash equivalents include cash on hand and highly liquid cash in banks (which do not have restriction of usage) that are readily convertible to cash on maturity date with insignificant risk of change in value.

4.2 Trade accounts receivable and allowance for doubtful accounts Trade accounts receivable are carried at anticipated realizable value. An estimate is made for doubtful receivables based on a review of all outstanding amounts at the end of year. Bad debts are written off during the year in which they are identified. The Company and subsidiary estimate the adequacy of allowances for doubtful accounts based on the reviews of individual pass due accounts at end of year which collection is uncertain. The estimate encompasses consideration of past collection experiences and other factors, such as changes in the composition and volume of the receivable, the relationship of the allowance for doubtful accounts to the receivable and the local economic conditions.

4.3 Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. The cost of purchase comprises both the purchase price and costs directly attributable to the acquisition of the inventory, such as duties and transportation charges, less all attributable discounts, allowances or rebates. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs and related production overheads, which are allocated on the basis of normal operating activities. Net realizable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses. The Company’s and subsidiary’s policy of setting the allowance for obsolete, slow-moving and defective inventories are as follow:

Raw Material

The Company and subsidiary estimate the allowances for obsolete raw materials at 5.55 % of raw material balances at end of year together with the consideration of individual physical condition, aging and standard shelf life for determination of the adequacy and the appropriateness of allowance.

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Annual Report, 2013 Finished goods

The Company and subsidiary estimate the allowances for obsolete finished goods at end of years as follows:

At the end of year, the Company and subsidiary consider the physical condition of finished goods in the estimation of the adequacy of allowances for obsolete finished goods.

4.4 Investments

Investment in subsidiary is presented by using the cost method of accounting in the separate financial statements.

Subsidiary included in the consolidation, is the entity in which the Company has power to govern the financial and operating policies.

Subsidiary is consolidated from the date on which control is transferred to the Company and is no longer consolidated from the date that control ceases.

Investments in non-marketable equity securities, which the Company holds as general investments, are valued at cost.

A test for impairment is carried out when there is an indication that an investment might be impaired. If the carrying amount of the investment is higher than its recoverable amount, impairment loss is charged to the statement of comprehensive income.

4.5 Related parties

Related parties comprise enterprises and individuals that control, or are controlled by the Company, whether directly or indirectly, or which are under common control with the Company. They also include associated companies and individuals which directly or indirectly own a voting interest in the Company that gives them significant influence over the Company, key management personnel, directors and officers with authority in the planning and directing the Company’s operations.

Aging of finished goods The percentage of allowance for obsolete finished goods

Less than 6 months - 6 months to 1 year 25 % of finished goods 1 year to 8 years 50 % of finished goods

Over 8 years 100 % of finished goods

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Annual Report, 2013 4.6 Property, plant and equipment

Property, plant and equipment are initially recorded at cost. All assets, except land, are stated at historical cost less accumulated depreciation.

The construction in progress is stated at historical cost. The depreciation of underlying asset is not recognized until the construction is completed and the asset is ready for its intended use.

Depreciation of plant and equipment is calculated on the straight line method over their estimated useful lives are as follows:

Buildings 20 years Machinery and equipment 6.6 years Fixtures and office equipment 6.6 years Motor vehicles 5 years

Gain or loss from disposal of property, plant and equipment is computed from discrepancy between net cash received and book value and recognized as other revenue or other expense in the statement of income. Subsequent costs shall be recognized as an asset when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. Major overhaul costs are depreciated over the remaining useful lives of related asset. Repair and maintenance costs are recognized as an expense when incurred. 4.7 Intangible assets and amortization

Intangible asset represents computer software which is stated at historical cost and amortized by the straight line method over its useful live of 6.6 years.

4.8 Impairment of assets

The Company and subsidiary review the impairment of assets whenever events or changes in circumstances indicate that the recoverable amount of assets is lower than the carrying amount (the higher of an assets selling price or value in use). The review is made for individual assets or the cash generating unit. In case where the carrying value of an asset exceeds its recoverable amount, The Company and subsidiary recognise the impairment losses in the statements of comprehensive income. The reversal of impairment losses recognised in prior years is recorded as other income when there is an indication that the impairment losses recognised for the assets no longer exist or had decreased.

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Annual Report, 2013 4.9 Leases - where a company is the lessee

Leases of equipment where the Company assumes substantially all the benefits and risks of ownership are classified as finance leases. Finance leases are capitalized at the fair value of leases of assets or estimated present value of the underlying lease payments whichever is lower. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the outstanding lease payments. Lease payments net of financial charges, is recognized as liabilities under financial lease agreements. The interest expense is charged to statement of income over the lease period. Assets acquired under finance lease agreements are depreciated over the useful lives of the assets. Leases of assets, under which all the risks and benefits of ownership are effectively retained by the lessor, are classified as operating leases. Payments made under operating leases are charged to statements of income on a straight – line basis over the lease period. When an operating lease is terminated before expiry date of the lease period, any payment required to be made to the lessor by way of penalty is recognized as an expense in the period in which termination takes place.

4.10 Revenue The Company and subsidiary recognize sales as income when delivery has taken place and transfer of risks and rewards has been completed The Company and subsidiary recognize service income when services have been rendered. Interest income is recognized on a time proportion basis that reflects the effective yield on the asset.

4.11 Income tax The Company and subsidiary recorded income tax based on the actual amount currently payable according to the Revenue Code.

4.12 Foreign currency transactions Transactions in foreign currencies are translated into Baht at the exchange rates applying at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Baht at the exchange rates applying at the end of reporting period. Gains and losses on exchange are included in determining income.

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Annual Report, 2013 4.13 Basic earnings (loss) per share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of paid-up common shares during the year.

4.14 Financial instruments Financial assets carried on the statement of financial position include cash and cash equivalents, trade accounts receivable, short - term loan to subsidiary and deposits pledged as collateral. Financial liabilities carried on the statement of financial position include, trade accounts payable, financial lease liabilities and other current liabilities. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.

4.15 Accounting estimate The preparation of financial statements in conformity with generally accepted accounting principles requires management of the Company and subsidiary to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses, and disclosures for contingent assets and liabilities. Actual results may differ from those estimates.

4.16 Provisions for liabilities and charges and contingency assets The Company and subsidiary account for estimated liabilities and accrued expenses in the books of accounts when legal or constructive obligations occurred as the results of past events with probable outflows of resources to settle the obligations, and where a reliable estimate of the amount can be made. The contingent asset will be recognized as a separate asset only when the realization is virtually certain.

5. CRITICAL ACCOUNTING ESTIMATES, ASSUMPTION AND JUDGMENT AND CAPITAL RISK MANAGEMENT

5.1 Critical accounting estimates, assumption and judgments a. Impairment of receivables The Company and subsidiary provide allowances for doubtful accounts to reflect impairment of trade accounts receivable relating to estimated losses resulting from the inability of customers to make required payments. The allowances are based on consideration of historical collection experience couple with a review of the ages of outstanding receivables at the statement of financial position date.

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Annual Report, 2013 b. Allowances for slow-moving and defective inventories The Company and subsidiary provide allowances for slow-moving and defective inventories to reflect impairment of inventories. The allowances are based on consideration of inventory turnovers and deterioration of each category. c. Building and equipment and intangible asset Management determines the estimated useful lives and residual values for the Company’s and subsidiary’s building and equipment and intangible asset, and revise the depreciation charges where useful lives and residual values previously estimated have changed or subject to be written down for their technical obsolescence or if they are no longer in use. d. Leases In determining whether a lease is to be classified as an operating lease or finance lease, management is required to use judgment regarding whether significant risk and reward of ownership of the leased asset has been transferred, taking into consideration terms and conditions of the arrangement. e. Impairment of assets The Company and subsidiary treat asset as impaired when there has been a significant or prolonged decline in the fair value below their cost or where other objective evidence of impairment exists. The determination of what is ‚significant‛ or ‚prolonged‛ requires management judgment. f. Post-employment benefits under defined benefit plans The obligation under defined benefit plan is determined based on actuarial valuations. Inherent within these calculations are assumptions as to discount rates, future salary increases, mortality rates and other demographic factors. In determining the appropriate discount rate, management selects an interest rate that reflects the current economic situation. The mortality rate is based on publicly available mortality tables for the country. Actual post-retirement costs may ultimately differ from these estimates

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Annual Report, 2013 5.2 Capital risk management The Company’s and subsidiary’s objectives in the management of capital are to safeguard their ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends payment for shareholders, return capital to shareholders, issue of new shares, or sell assets to reduce debts.

6. CASH AND CASH EQUIVALENTS (Unit : Baht) CONSOLIDATED F/S SEPARATE F/S

2013 2012 2013 2012 Cash on hand 158,369 85,314 143,369 70,314 Deposits with Banks 2,079,699 7,970,623 2,025,712 7,956,734

Total 2,238,068 8,055,937 2,169,081 8,027,048

7. TRADE ACCOUNTS RECEIVABLE - NET

Aging analysis of trade accounts receivable are as follows : (Unit : Baht) CONSOLIDATED F/S SEPARATE F/S

2013 2012 2013 2012 Trade accounts receivable – general customers

Not yet due 47,516,046 42,580,945 47,144,222 42,356,319 Past due :

Less than 3 months 25,976,356 26,047,724 25,976,356 25,997,455 4 – 6 months 2,818,986 5,378,593 2,818,986 5,378,593 7 – 9 months 450,138 1,223,499 450,138 1,223,499 10 - 12 months 541,750 545,366 541,750 545,366

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Annual Report, 2013 Over 12 months 18,000,029 20,086,906 17,279,744 18,261,903

Total 95,303,305 95,863,033 94,211,196 93,763,135 Less Allowance for doubtful accounts (18,318,540)

(20,036,906)

(17,598,256)

(18,211,903)

Net 76,984,765 75,826,127 76,612,940 75,551,232 (Unit : Baht) CONSOLIDATED F/S SEPARATE F/S

2013 2012 2013 2012 Trade accounts receivable -

related companies

Not yet due 7,244,957 7,358,480 7,244,957 7,358,480 Past due :

Less than 3 months 14,309,383 8,549,384 1433093383 8,549,384 4 - 6 months - - - - 7 - 9 months - - - - 10 - 12 months - - - - Over 12 months - - - -

Total 21,554,340 15,907,864 21,554,340 15,907,864 8. RELATED PARTY TRANSACTIONS

The related parties include the following :

Company Type of Business Relationship Subsidiary Asian Corrosion Control Technology Limited (Formerly Asian Corrosion Control Trading Limited)

Distribution of coating products (paint) and painting service Shares held by the Company with common directorship

a mRt d taleRnies Suncoat (Thailand) Co., Ltd. Distribution of coating product and thinner Shares held by the Company Solid construction Co., Ltd. Construction Shares held by close relative of directors a mRt d e rsans Miss Vissuta Rujikarnchana Common shareholder and close relative of directors

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Annual Report, 2013 The pricing policies for particular types of transactions are explained further below:

Type of Transaction Pricing Policies Sales of goods At normal business prices, same as other entities Revenue from management fee At agreed contract price Rental income At agreed contract price Other income At agreed contract price Purchase of goods At normal business prices, same as other entities Service At normal business prices, same as other entities Guarantee No fee charged Sales of vehicle The Company has a policy to sell the old car which due to be replaced to its user, which has position in director and manager, at market price reduced by Baht 50,000 Acquisition of fixed assets At normal business prices, same as other entities Loan Interest rate at 7.0 % P.A Significant transactions with related parties for the years ended 30 June 2013 and 2012 are as follows :

(Unit : Baht) CONSOLIDATED F/S SEPARATE F/S For the years ended 30 June 2013 2012 2013 2012 Revenue from sales Asian Corrosion Control Technology Limited (Formerly Asian Corrosion Control Trading Limited) - -

59,450 - Suncoat (Thailand) Co., Ltd. 68,002,999 81,697,964 68,002,999 81,697,964 Solid construction Co., Ltd. 576,913 559,904 576,913 559,904 Total 68,579,912 82,257,868 68,639,362 82,257,868 Revenues from services and other income

Asian Corrosion Control Technology Limited (Formerly Asian Corrosion Control Trading Limited) -

-

100,933

115,339 Interest income

Asian Corrosion Control Technology Limited (Formerly Asian Corrosion Control Trading Limited) -

-

25,703

7,360 Sales of fixed assets Related person - 1,848,726 - 1,848,726 Purchase of goods

Asian Corrosion Control Technology Limited (Formerly Asian Corrosion Control Trading Limited -

- -

9,375 Suncoat (Thailand) Co., Ltd. 17,725,086 19,487,445 17,725,086 19,487,445 Total 17,725,086 19,487,445 17,725,086 19,496,820 Services fees

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Annual Report, 2013 (Unit : Baht) CONSOLIDATED F/S SEPARATE F/S For the years ended 30 June 2013 2012 2013 2012 Asian Corrosion Control Technology Limited (Formerly Asian Corrosion Control Trading Limited) - - - 28,049 Solid construction Co., Ltd. 28,500 30,000 28,500 30,000 Total 28,500 30,000 28,500 58,049 Acquisition of fixed assets Solid construction Co., Ltd. 1,697,463 225,409 1,697,463 225,409 Key management personnel compensation Short-term benefits 11,036,632 11,153,427 11,036,632 11,153,427 Retirement benefits 392,219 426,988 392,219 426,988 Total 11,428,851 11,580,415 11,428,851 11,580,415

Office and warehouse rental agreement and office service agreement The Company has office and warehouse rental agreement and office service agreement with a subsidiary for the period of 2 years commencing 1 August 2012 to 31 July 2014. The monthly rental income is Baht 1,000 for the office and warehouse, Baht 5,000 for the office services, and Baht 100 for insurance service. Significant balances with related parties as at 30 June 2013 and 2012 are as follow :

(Unit : Baht) CONSOLIDATED F/S SEPARATE F/S 2013 2012 2013 2012 Trade accounts receivable - related companies Suncoat (Thailand) Co., Ltd. 21,476,278 15,861,306 21,476,278 1538613306 Solid Construction Co., Ltd. 78,062 46,558 78,062 463558 Total 21,554,340 1539073864 21,554,340 1539073864 Short - term loan to subsidiary company Asian Corrosion Control Technology Limited (Formerly Asian Corrosion Control Trading Limited) -

- 625,703

100,825

Other current asset - amount due from related company Asian Corrosion Control Technology Limited (Formerly Asian Corrosion Control Trading Limited) -

-

17,155

40,580 Trade accounts payable – related companies Asian Corrosion Control Technology Limited (Formerly Asian Corrosion Control Trading Limited) -

-

-

10,031 Suncoat (Thailand) Co., Ltd. 5,217,667 5,103,868 5,217,667 5,103,868 Total 5,217,667 5,103,868 5,217,667 5,113,899

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Annual Report, 2013 9. INVENTORIES – NET

(Unit : Baht) CONSOLIDATED F/S SEPARATE F/S

2013 2012 2013 2012 Finished goods 40,868,409 4134373371 40,517,814 4130683132 Work in process 7,044,033 737223158 7,044,033 737223158 Raw materials 34,992,893 4231773247 34,992,893 4231773247 Container and packaging material 3,477,361 238323794 3,477,361 2,832,794

Total 86,382,696 9431693570 86,032,101 9338003331 Less Allowance for defective inventories (13,402,202) (1135123071) (13,088,004) (1131963891) Net 72,980,494 8236573499 72,944,097 8236033440

During the year, the movements in allowance for defective inventories are as follows :

(Unit : Baht) CONSOLIDATED F/S SEPARATE F/S Balance as at 1 July 2012 1135123071 1131963891 Add Additional provision for defective inventories 2,578,910 2,579,892 Less Defective inventories written-off (688,779) (688,779) Balance as at 30 June 2013 13,402,202 13,088,004

10. INVESTMENTS IN SUBSIDIARY COMPANY - NET

SEPARATE F/S Paid up capital (Baht) Percentage of investment Cost method (Baht) 2013 2012 2013 2012 2013 2012 Asian Corrosion Control Technology Limited (Formerly Asian Corrosion Control Trading Limited) (distributor and service provider for coating products) 4,000,000 4,000,000

76.25

100.00 3,202,500 4,199,890 Less Allowance for declining in value of investment (2,821,250) (3,699,890)Total investments in subsidiary company - net 381,250 500,000

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Annual Report, 2013

At the Board of Directors’ Meeting No. 1/2013 held on 11 February 2013, the Board of Directors approved to entered into share sale and purchase agreement dated 1 February 2013 with MUI International Ltd., incorporated in Hong Kong, for the sale of 9,500 ordinary shares of subsidiary company’s shares (23.75 % of shares capital) at Baht 100 each totally Baht 0.95 million. Movements in investment in subsidiary company for the year ended 30 June 2013 are as follows :

(Unit : Baht) SEPARATE F/S Net book value as at 1 July 2012 500,000 Proceed from sale of investment in subsidiary company (950,000) Gain on sale of investment in subsidiary company 818,260 Non controlling interests in sale portion 12,990 Net book value as at 30 June 2013 381,250

Gain on sale of investment in subsidiary company amount of Baht 0.82 million was presented in consolidated statements of financial position and changes in shareholders’ equity under ‚Surplus from change in proportion of investment in subsidiary company‛.

11. LONG - TERM INVESTMENT

(Unit : Baht) CONSOLIDATED F/S

Company Nature Location 2013 2012 K-Tech Construction PCL. Construction Thailand 658,652 - Less Allowance for declining in value of investment (658,652) - Net - -

During the year 2013, the subsidiary received ordinary share amount 0.66 million shares at Baht 1 par value and the subsidiary recorded loss from restructuring in the consolidated statements of comprehensive income.

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Annual Report, 2013 12. PROPERTY, PLANT AND EQUIPMENT - NET

(Unit : Baht)

CONSOLIDATED F/S Transfer in 2012 Increase Decrease (Out) 2013 Cost Land 16,470,500 - - - 16,470,500 Buildings 40,684,154 1,697,462 - 812,793 43,194,409 Machinery and equipment 45,921,711 1,384,700 - 31,322 47,337,733 Fixture and office equipment 27,239,394 4,940,939 (43,738) - 32,136,595 Vehicles 14,059,272 - - - 14,059,272 Work in progress 605,093 291,378 - (844,115) 52,356

Total 144,980,124 8,314,479 (43,738) - 153,250,865 L ss AttulumRt d D er tiRtian Buildings 28,831,482 1,752,678 - - 30,584,160 Machinery and equipment 38,429,004 1,946,917 - - 40,375,921 Fixture and office equipment 18,139,200 2,334,309 (9,945) - 20,463,564 Vehicles 6,103,332 2,470,062 - - 8,573,394

Total 91,503,018 8,503,966 (9,945) - 99,997,039

Net 53,477,106 53,253,826 Allocation : Cost of good sold 3,652,060 2,907,825 Selling and administrative expenses

4,855,546 5,596,141

Depreciation for the year 8,507,606 8,503,966

(Unit : Baht) SEPARATED F/S Transfer in 2012 Increase Decrease (Out) 2013 Cost Land 16,470,500 - - - 16,470,500 Buildings 40,684,154 1,697,463 - 812,793 43,194,410 Machinery and equipment 45,217,310 1,384,700 - 31,322 46,633,332 Fixture and office equipment 27,123,789 4,940,939 (43,738) - 32,020,990 Vehicles 14,059,272 - - - 14,059,272 Work in progress 605,093 291,378 - (844,115) 52,356 Total 144,160,118 8,314,480 (43,738) - 152,430,860

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Annual Report, 2013 (Unit : Baht) SEPARATED F/S Transfer in 2012 Increase Decrease (Out) 2013

L ss AttulumRt d D er tiRtian Buildings 28,831,482 1,752,678 - - 30,584,160 Machinery and equipment 37,724,607 1,946,917 - - 39,671,524 Fixture and office equipment 18,061,987 2,327,053 (9,945) - 20,379,095 Vehicles 6,103,332 2,470,062 - - 8,573,394 Total 90,721,408 8,496,710 (9,945) - 99,208,173

Net 53,438,710 53,222,687 Allocation : Cost of good sold 3,652,060 2,907,826 Selling and administrative expenses 4,849,135 5,588,884 Depreciation for the year 8,501,195 8,496,710 As at 30 June 2013 and 2012, land with structures thereon and machinery with total net book value of Baht 30.29 million and Baht 28.32 million, respectively, have been mortgaged as collaterals for overdrafts and short-term loans from financial institutions as discussed in Note 14. As at 30 June 2013 and 2012, the Company and subsidiary had fully depreciated assets, but are still in active use with the costs amounting to approximately Baht 76.37 million and Baht 42.09 million, respectively. The Company also had vehicle acquired under finance lease agreements, with net book value amounting to approximately Baht 5.15 million and Baht 7.00 million, respectively.

13. INTANGIBLE ASSETS – NET (Unit : Baht) CONSOLIDATED F/S / SEPARATE F/S 2012 Increase Decrease 2013 Cost 2,022,022 350,874 - 2,372,896 Less Accumulated amortization (132453075) (267,583) - (1,512,658) Net book value 776,947 860,238 Depreciation for the year 275,442 267,583

14. OVERDRAFTS AND SHORT - TERM LOAN FROM FINANCIAL INSTITUTIONS

(Unit : Baht) Interest rate CONSOLIDATED F/S SEPARATE F/S per annum 2013 2012 2013 2012 Bank overdrafts MOR - 1 - 5,637,325 - 5,637,325 Promissory note (3 - month) MLR - 1 25,000,000 - 25,000,000 - 25,000,000 5,637,325 25,000,000 5,637,325

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Annual Report, 2013 As at 30 June 2013, the Company has credit facilities for bank overdrafts and short - term loans totaling Baht 100 million with interest rates ranging MOR - 1% and MLR - 1% per annum, respectively. The overdrafts and short - term loans are guaranteed by the mortgage of land with structures thereon and certain machinery as discussed in Note 12.

15. FINANCE LEASE LIABILITIES – NET

(Unit : Baht) CONSOLIDATED / SEPARATE F/S 2013 2012 Finance lease liabilities 1,720,451 3,243,657 Less Deferred Interest (80,102) (233,938) Less Current portion of finance lease liabilities (net of deferred interest amount Baht 89,422 and Baht 153,836 respectively) (1,183,817) (1,369,370) Net 456,532 1,640,349

16. OTHER CURRENT LIABILITIES

(Unit : Baht) CONSOLIDATED F/S SEPARATE F/S

2013 2012 2013 2012 Payable from acquisition of assets 2,138,146 98,860 2,138,146 98,860 Other payables 3,273,303 2,199,624 3,273,304 2,199,624 Withholding tax payable 364,796 389,331 363,722 387,175 VAT payable 790,952 1,054,607 769,276 1,049,647 Advance receipts for the sales of goods 546,832 271,460 546,832 271,460

Total 7,114,029 4,013,882 7,091,280 4,006,766 17. EMPLOYEE RETIREMENT BENEFITS OBLIGATION Movement in employee retirement benefits obligation for the year ended 30 June 2013 are as follows :

(Unit : Baht) CONSOLIDATED F/S SEPARATE F/S Balance as at 1 July 2012 8,578,493 8,578,493 Employee retirement benefit expenses Service cost 789,680 789,680 Finance cost 396,273 396,273 Benefits paid (3,216,380) (3,216,380) Balance as at 30 June 2013 6,548,066 6,548,066

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Annual Report, 2013 Principal actuarial assumptions as at reporting date are as follows :

Discount rate 4.22 percent per annum Average future salary increment rate 5.74 percent per annum Normal retirement age 60 years Number of employees 146 persons

18. SHARE CAPITAL

18.1 At the meeting of the Annual General Shareholders meeting of the company on 22 October 2012, there was resolution to increase share capital, allocation of the warrants to purchase ordinary shares to the existing shareholders of the Company as follow :

18.1.1 Increase in the registered share capital from Baht 90 million (180,000,000 shares at par 0.50

Baht) to Baht 135 million (270,000,000 shares at par 0.50 Baht) for the potential exercise of right under the warrants allocation without charge to the Company’s existing shareholders. Those rights will be offered at the rate of 2 existing shares to 1 warrant. The exercise price of the warrant is Baht 0.50 per share. The first Exercise Date will be on 30 December 2014 and the final Exercise Date will be on 1 November 2017.

18.1.2 Issue the share capital warrant No 1 of 90,000,000 shares.

18.2 At the meeting of the Annual General Shareholders meeting of the subsidiary company on 1

October 2012, the shareholders approved to change its name to Asian Corrosion Control Technology Ltd. The subsidiary company has already registered the change of its name with the Ministry of Commerce on 3 October 2012.

19. SHARE PREMIUM

Under the Section 51 of the Public Limited Companies Act B.E. 2535, if the Company sold its shares at price in excess of the par value, the excess amount has to be recorded as a reserve account (‚share premium‛). Share premium is not available for dividend distribution.

20. LEGAL RESERVE

Under the provision of the Public Company Limited Act B.E. 2535, the Company is required to appropriate at least 5% of its annual net income after deduction of the deficit brought forward (if any) as legal reserve until the reserve reaches not less than 10% of the authorized capital.

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Annual Report, 2013 21. EXPENSES BY NATURE (Unit : Baht) CONSOLIDATED F/S SEPARATE F/S For the years ended 30 June 2013 2012 2013 2012 Changes in finished goods and work in process

(1,2473088)

(1,226,037)

(132283443)

(1,231,309)

Purchases of finish goods 15,039,467 14,922,157 14,182,631 12,882,736 Raw materials and consumable supplies used 233,521,326 258,893,291 233,521,327 258,893,291 Salaries, wages and employee compensation 64,811,751 60,604,928 63,747,189 60,133,851 Depreciation and amortization 8,771,550 837833048 8,764,294 837763637 Bad debts and doubtful debts (Reversal) 1,803,933 (116,703) 2,250,000 (116,703) 22. EMPLOYEES’ PROVIDENT FUND

The Company had established a contributory registered provident fund in accordance with the provident fund Act, B.E.2530. The provident fund plan was registered on 27 June 1990. Under the plan, the employees contribute monthly the amounts equivalent to 2% - 5% of their basic salaries and the Company makes contribution for the same amounts. The Company appointed a fund manager to manage the fund in accordance with the terms and conditions prescribed in the Ministerial Regulation No.2 B.E. 2532 issued under the Provident fund Act. B.E. 2530. The Company’s contributions charged to expenses for the years 2013 and 2012 amounted to Baht 2.19 million and Baht 2.37 million, respectively.

23. INCOME TAX (Unit : Baht) CONSOLIDATED F/S SEPARATE F/S For the years ended 30 June 2013 2012 2013 2012 Net loss (14,660,370) (8,526,061) (12,976,332) (8,309,017) Income tax - - - - Net loss before income tax (14,660,370) (8,526,061) (12,976,332) (8,309,017)

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Annual Report, 2013 Add Items not yet allowed as expenses

and tax-exempt income under the Revenue Code

4,797,574

4,639,102

3,859,430

4,596,417 Less Expenses entitled to additional

deduction

(132,194)

(145,782)

(132,194)

(145,782) Net taxable loss (9,994,990) (4,032,741) (9,249,096) (3,858,382) Income tax - - - -

24. SEGMENT FINANCIAL INFORMATION

The Company and its subsidiary are engaged in the manufacturing and distribution of coating products (paint), rendering services and painting services, and operate in one geographical area in Thailand. The revenues from rendering services and painting services are insignificant; therefore, these financial statements do not present the financial information by segment.

25. COMMITMENTS

As at 30 June 2013, the Company has commitments from bank guarantees issued by banks on behalf of the Company for the payment of electricity charge and performance bonds totalling Baht 0.30 million and Baht 0.53 million, respectively. These bank guarantees are collateralized by the mortgage of land with structures thereon and certain machinery as discussed in Note 12.

26. KNOW - HOW AND TECHNICAL ASSISTANCE AGREEMENTS The Company and the subsidiary company have agreements regarding intellectual property for the

manufacturing and distribution, and technical assistance with 2 foreign companies as follows:

26.1 Agreement between the Company with PPG, incorporated in USA, through its subsidiary in Thailand, PPG Coating (Thailand) Co., Ltd. for special production of protective coating and distribution with agreed contract price. This will be effective until 31 December 2013.

26.2 Agreement between the Company with Wattyl, incorporated in Australia, for the production and

distribution of timber coating and decorative paints which will last until 30 June 2013. The Company agrees to pay fees at a percentage of net sale prices.

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Annual Report, 2013 27. FINANCIAL INSTRUMENT

27.1 Financial risk management policies The Company and subsidiary did not intend to engage in trading derivative instruments for speculative purposes.

27.2 Interest rate risk

The Company and subsidiary have exposure to interest risks because they held deposits with loans from financial institutions. However, the Company and subsidiary believed that the future fluctuation on market interest rates would not significantly affect their operations and cash flows; therefore, no financial derivative hedging was executed to manage such risks.

27.3 Credit risk

The Company and subsidiary have exposure to credit risk. However, due to the large number and diversity of the entities comprising the Company and subsidiary’s customer base, the Company and subsidiary do not anticipate material losses from their debt collection. The Company and subsidiary estimate the allowance for doubtful accounts from the ending balance of accounts receivable. The estimates were made under generally accepted principles.

27.4 Foreign currency risk

The Company and subsidiary’s exposure to foreign currency risk relates to its trade accounts payable amounted to U.S. dollars 0.14 million and the Company and subsidiary have not entered into forward exchange contracts at the reporting date to mitigate such risks.

27.5 Fair value

Certain financial assets and liabilities are short-term in nature. The Company’s management believes that the financial assets and liabilities comprise cash and cash equivalents, trade accounts receivable, trade accounts payable and financial lease liabilities, the fair value of these financial assets and liabilities are not expected to be materially different from the amounts presented in the statement of financial position.

28. APPROVAL OF FINANCIAL STATEMENTS These financial statements have been approved by the Company’s Board of Directors on 23 August 2013.

Documents

Annual Report, 2013 - 56-1.com · 1982 DIMET was founded in 1982 by Australian ACMIL Group, which was the sole shareholder. Initially, DIMET produced and sold high performance protective