Cpl 12

Contents

Message from Chairman ...................................................................1

Audit committee’s Report ................................................................2

The Board of Directors’ Report on the Accountability

of the Company’s Financial Reports .............................................3

General Information ...........................................................................4

Summary of Financial Information ...............................................6

Business Review ...................................................................................7

Factors of Risk .................................................................................... 10

Structures of Shareholder and Management ........................ 11

Transactions between Company and Affiliates ..................... 25

Management Discussion and Analysis ..................................... 26

Independent Auditor’s Report ..................................................... 28

Financial Statement ......................................................................... 29

Note to Financial Statements ....................................................... 35

The Remuneration in 2012 for Auditor .................................... 60

1Annual Report 2012 C.P.L. Group Public Company Limited

In thepast year, there hadbeen continuous inflation from theprevious year,which theprice of

consumergoodsincreasedoneafteranother,andthefluctuationintheeconomy,finance,social,andpolitics

aroundtheworldthroughoutthewholeyearcausedthepriceofrawhidestosoartomorethanUSD100

perhides,whichwasunprecedented.Thiswasduetolowerbeefconsumptioncausingcowhide’spricetobe

veryexpensivebecauseoflowersupply.

Normally,shoesmanufacturingindustrymainlylikestousefullgraincowhidetomakeshows,butdue

tothehighpriceofrawhide,themarket’sbehaviorhaschanged.Shoesmanufacturingcompanyturnedto

splitcowhide,whichisacheapershoesproduct,asrawmaterialinmakingleathershoesinsteadoffullgrain

cowhide,whichhasbetterqualitybuthashigherprice.And,tosurvive,thecompanyhasexperiencedthe

mostdifficultbarrierinbusinessoperationinthismatterbecauseofhighcowhidescostbutonlythesales

forsplitcowhideshasincreased,whilefullgraincowhidessaleshasdecreasedcausingrevenuetodecline.

However,in2013,byclosingmonitoringtheeconomy,itisexpectedthatglobaleconomywillstillbe

fluctuatingandinflationwillstillcontinuetobehigh,andthedirectionofoilpriceandvariousproductswillstill

likelytobecontinuouslyhigh,aswellasminimumwagehasbeenincreasedtoTHB300perday,whichwill

beeffectivenationwidethisyearaccordingtothegovernment’spolicy.Thiscausesmanycompaniestobeeven

moreefficientinthemanagementforsurvival.Thisyear,thecompanyhasapolicytomakethisyearayear

ofdesigningnewproductstoaddvaluetotheproductitself,genuinelycontrollingproductquality,production

cost,andexpensestobecompetitiveandforsurvival,whichthecompanymustinevitablyoperateaccording

tothisguideline.Thecompanyhaspreparedanannualplaninadvance,whichmustbestrictlyandespecially

followedthisyear.

Thisyear,Iwouldliketoencourageallexecutivesandstaffstomaintaingoodphysicalandmental

health inorder toworkaccording to theguideline,and Iamconfident that thecompanywillbeable to

overcometheobstaclelikeeveryyearinthepast.

TheChairman

Mr.ManochWongcharoensin

Massage from Chairman


TheauditcommitteeofCPLGroupPublicCompanyLimitedcomprisingofChairmanof theAuditCommittee,Mr.KamhtornVathanalaohaandauditcommitteememberMr.SukhoVoddhtijotiandMr.MongkolLaoworapongheld5meetingsduringthelastaccountingyearendingDecember31,2012.Companyexecutives,externalauditorandotherconcernedofficershadattendedallsuchmeetingtoclarifyissuesontheagendaoftheirconcernsuchasauditingresultsonfinancialstatements,internalauditingresultsaswellasthecompany’srisksmanagement.Allresolutionofthemeetingsaresummarizedasfollows:

1. Annual Financial Statements

Financialstatementsof theCompanyhavebeenprepared inaccordancewith theAccountingActB.E.2543andaccountingstandardsasrecommendedbytheFederationofAccountingProfessionUndertheRoyalPatronageofHisMajestytheKing,andcertifiedbyauthoritiesconcerned.Relevantinformationhasbeensufficientlydisclosedinthefinancialstatements.Anysuggestionrecommendedbytheexternalauditorwouldbereflectedinaccountingrecordscorrectlyandappropriately.

2. Internal Control System

TheCompanyhassufficientinternalcontrolsystem.InternalauditorsofthecompanyconductedinternalauditingaccordingtotheplansetupannuallybytheAuditCommittee.InternalcontrolwasevaluatedbyusingmeasuresfromsuggestedbytheStockExchangeofThailandcoveringorganizationandenvironment,managementoperatingcontrol,informationsystem,communicationandmonitoringcontrol.Theevaluationresultswerefairlygood.

3. Risk Management

TheAuditCommitteehasjoinwithmanagementteamtoknowonfinancialrisk,operationalrisk,businessriskandexternalfactorsthatareuncontrollable,Soasthemitigateriskstoacceptablelevelortoinitiateremedialmeasures.Themanagementteamwasassignedtomonitoroperationresultsascomparedtoprice,andrawmaterialpricewhichhavedirectorimpactonproductioncostofourproduct.

3. Appointed the company auditor and remuneration

TheAuditCommitteerecommendedtheBoardofDirectortoproposetotheAnnualGeneralMeetingofShareholdertoappointtheCompany’sAuditorsfromS.K.AccountantServicesCo.,Ltd,asMs.WanrayaPuttasatienCPANo. 4387,Ms.ChantraWongsriudompornCPANo. 4996 for the accounting year endingDecember31,2013withtheremunerationamountof515,000baht.

Mr.KamthonVathanalaoha ChairmanoftheAuditCommittee

Audit Committee’s Report


รายงานความรับผิดชอบของคณะกรรมการบริษัทฯต่อรายงานทางการเงิน

TheBoardofDirectorisaccountableforcorrectnessoffinancialstatementsofCPLGroup

LimitedCompanyincludingfinancialinformationpresentedintheAnnualReportandform56-1.

TheCompanyhasadoptedappropriateaccountingpoliciesconsistentlyappliedandconformed

togenerallyacceptedaccountingstandards.Also,significantinformationwassufficientlydisclosed

innotestofinancialstatementforproperbenefitstoshareholders,investorsandstakeholders.

FinancialStatementof theCompanyhavebeenauditedbyS.K.AccountantServices

Co.,,Ltd,auditoroftheCompany.TheBoardofDirectorshassupportedtheauditorwillallnecessary

informationanddocumentssothatexternalauditorcouldaudittheandexpresshisopinionin

accordancewithaccountingstandards.TheexternalauditorhasexpressedhisopinioninAuditor’s

Report.

TheBoard ofDirector has appointed anAuditCommittee to be responsible for the

reviewingaccountingpolicies,qualityoffinancialreports,internalcontrolsystem,riskmanagement

system.TheAuditCommitteehasexpressedtheiropinionintheAuditCommittee’sReportas

showninthisAnnualReport.

TheBoardofDirectoropinesthatmanagerialstructureandinternalcontrolsystemofthe

Companywassatisfactory.TheCompany’sauditordidnotqualifyorraisedanyspecificobservation

theCompany’sfinancialstatement.SowecouldassuredthatfinancialstatementofCPLGroup

PublicCompanyLimitedasatDecember31,2012presentfairly inallmaterialrespectsthe

financialposition,performance,andcashflowinaccordancewithgenerallyacceptedaccounting

principlesandotherrelevantlawsandregulations.

Mr.LaiChiHsiang

ManagingDirector

The Board of Directors’ Report on the Accountability of the Company’s Financial Reports


CPL Group Public Company Limited

CPLwasfoundedin1989byateamofinternationalmanagerswithmorethan40yearsofexperience

]in the tanning industry. The founders comprised of leaders in modern tannery management, skilled

techniciansandstrongmarketingteams.CPLGroupPublicCoLtd.locatedat700moo6,SukhumvitRoad,

TambolBangpoomai,AmpourMuang,Samutprakarn10280,Thailand,isregisteredwithacapitalissuedand

paidupof20millionbahtonJune28,1989toproducebovineleathersuppliestoThailocalandoverseas

shoesandleathergoodsmanufacturers.

Becauseof its successfulperformance,CPLbecameaPublicCompanyandamemberofStock

ExchangeofThailand(SET)onJanuary27,1994,andknowasCPLGroupPublicCompanyLimitedwitha

capitalissuedandpaidupof240millionbahtdividedinto24millionordinaryshareswithpersharevalueof

10baht.Subsequently,theAnnualExtraordinaryShareholdersMeetingfor2005hadunanimouslyresolvedto

increaseditsregisteredcapitalfrom24m.sharesto26.4millionshareeachof10baht,totalvalue264million

bahttosupporttheissuanceofdividendsharespursuanttotheresolutionofOrdinaryShareholdersMeeting

for2005ofwhichthecompanyhadsubsequentlyissuedthosedividendsharesandregisteredtoincreaseits

capitalwithMinistryofCommerceon1June2005.

Associated Company

Duringtheyear2001and2002,thecompanyhadinvestedanewjointventurecompanyinHong

KongnamedCPLInternationalCo.,Ltd.andhadbeenbuiltupatanneryinGuangzhou,China.CPLinternational

Co.,Ltd.issuedandpaidupsharecapitalUSD7millionordinaryshare@USD1,andhadincreasedcapital

fromUSD7milliontoUSD8millionordinarysharein2004.CPLhadinvested15%fromtotalsharecapital

ofCPLInternationalCo.,Ltd.

General Information


Other References

1. Stock Registration ThailandSecuritiesDepositoryCo.,Ltd.

62RatchadapisekRoad,Klongtoey,

Bangkok10110,Tel.02359120001

Fax.02-359-1259

2. Certified Public Accountant S.KAccountantServicesCo.,Ltd.

Ms.WanrayaPuttasatienCPANo.4387

Ms.ChantraWongsriudompornCPANo.4996

14thfl.PayataiPlazaBuildingNo.128/150-153

Tel.02-214-6464,Fax.02-215-4772,02-214-6065

3. Lawyer Consultant PayabKamartLawyerOffice

45/15Moo1BangrateakSampran

Nakornpatom73210

Tel.081-814-0793


(Unit:ThousandBaht)

Financial Statement Data 2012 2011 2010

TotalAsset 1,126,771 1,159,305 1,123,263

TotalLiabilities 170,239 192,678 173,463

TotalShareholder’sEquity 956,531 966,627 949,799

SalesRevenue 1,736,968 1,759,933 1,986.492

TotalRevenue 1,768,850 1,777,774 2,004,599

NetProfit 42,704 81,824 66,018

NetProfitpershares 1.62 3.10 2.50

BookValuePershares 36.30 36.61 35.97

Financial Ratio 31 Dec. 31 Dec. 31 Dec.2012 2011 2010

CurrentRatio 5.85 4.62 4.72

Returnonrevenue (%) 2.41 4.60 3.29

ReturnonShareholder’sequity (%) 4.46 8.47 6.95

ReturnonAsset (%) 3.79 7.06 8.43

Debt/EquityRatio 0.18 0.17 0.18

DividendPerShare (Baht) 1.75 2.00 1.75

Summary of Financial Information


Business Review

Revenue Structure

Revenue Structure of CPL Public Company Limited

Revenue2012 2011 2010

MillionBaht % MillionBaht % MillionBaht %

SalesRevenue 1,736.97 98.20 1,759.32 99.00 1,986.49 99.09

OtherIncome

IncomefromTaxRefund 13.90 0.79 4.09 0.23 6.93 0.35

GainonExchangeRate 15.33 0.87 10.58 0.60 7.52 0.38

InterestIncome 2.41 0.13 2.44 0.14 2.70 0.13

Other 0.24 0.01 0.70 0.03 0.96 0.05

TotalRevenue 1,768.85 100.00 1,777.74 100.00 2,004.60 100.00

Business Operation

Thecompanyoperatecompleteleathertanningfactory,whichthemainproductisfullgrainleather,

suedesplitleather,andwetblue,whicharethestartingproductsforleathershoes,leatherbags,leatherfurniture,

leathercarseats,andalltypesofleatherproductsthatusegenuineleather,whichdomesticandinternational

salesratioisbetween50:50to75:25,whichisuncertaindependingonthechangeineachyear.

MostcustomersareshoesmanufacturesinChina,Indonesia,Vietnam,andotherAsiancountrieswho

manufactureshoesforpopularshoesbrandssuchasAdidas,Timberland,Lactose,Mark&Spencer,andRockport,

etc.,whicharestandardproductacceptedbypopularbrandsaroundtheworld.Thecompanyoperatesunder

ISO9001in2008,andISO:TS16949in2009.Furthermore,thecompanyhasbecomeamemberofSatraTechnol-

ogyCenterinEngland,whichisaninstitutionfordevelopingworldclassleather,andwonagoldmedalfrom

LWGenvironmentalStewardshipAudit.Currently,thecompanyisapplyingforISO14001.

Change in Year 2012

Lastyearthesituationforlowerbeefconsumptionbecomerawhidesincreasecontinuouslywithout

anysignofceasing.AttheendoflastyearrawhidespriceuptoUSD100perhidesThisisinfluencethe

customerstochangebehaviorfromordercowfullgraintocowsplitwhichislowpriceandquantitylessthan

cowfullgrainstartfromtheyear2010continueto2012


TheChanginginyear2012stillcontinuesfromlastyear,thecompanyhasextendedcustomerbase

inCambodiaandBangladeshandstillincreases.Inordertosurvivetorunthebusinesstheshoesfactory

hadchangebehaviortobuysplitleatherfortheirproductbecauseofrawhidespriceincreasetheCompany

needstocreatenewproductstooffertocustomerbydirectsales,canpresentournewproductandmoving

toladyshoes.Fortheoffice,CPLstarttorunthecomputersystemonyear2013

ForEnvironments,CPLhadstartnewmachinetosplitwastefromwaterintanneryprocess,inthe

partofwatertreatmentbeforeflowtopublic

Marketing and Product Distribution

In2012,marketingforleathershoeshaschangedtousingmorecowsplitthanotheryearsinthepast

becauseitischeaperthanfullgrain,whichisrawmaterialthathasbecomemoreexpensivesincethemiddle

oflastyearandstillcontinuetorisetomorethanUSD100rightnow.Therefore,leathershoesmanufacturers

turnedcowsplitmorebecauseitischeaperthanfullgrain,whichisconsideredasreducingthecostofshoes

manufacturingbecauseitisimpossibletobearthecostoffullgrainthathasbecomeveryexpensive.Last

year,therewasaninitiativeandefforttoenternewmarketsinCambodiaandBangladesh,whichcontinues

toincreaseatthemoment.MostorderstillcomefromshoesmanufacturersinChina,Vietnam,andIndonesia

likeinthepastmanyyears.

However,thecompanymuststillmaintainproductqualitystandardandreliabilityintermsofontime

deliverybecauseintanningbusiness,besidesquality,punctualityinthedeliveryisthemostimportanttomaintain

customerbaseaswellasgettingnewcustomerstoexpandcustomerbaselikewhatwehavebeentryingto

doatthemoment.

Intermsofmarketingandsales,originally,thecompanyusedthestrategyoforganizingboothshowcasing

productsoverseas,whichisamethodforapproachingcustomersbutthereislimitationintermsofmarketing;

lownumberofcustomers,becausemustseeandhavegenuineinterestintheproductonly.However,thisyear,

thecompanyistryingtofocusonthestrategyofmeetingmorecustomersdirectlytocreateopportunityto

explaincharacteristicsandproperties,andrecommendmorenewproductstocustomers,notjustsellingold

products,whichiscreatingmoreincome.Atthesametime,itisalsoexpandingproducttypestohavemore

varietiesintermsofquantity,price,andcustomerstolowersalesrisk.Todothis,R&Ddepartmentmustmake

newproductstoincreasevarietyofproductstofeedtocustomersworldwide,orfocusonnewinnovationas

analternativeforcustomersincreasevalueoftheproductandmaintaingoodperformancecontinuouslyinthe

situationwherethecostishighsuchasnow.Furthermore,Thecompanymuststrictlymaintainproductquality

thatmatchestheorder,bepunctualintermsofproductdeliveryaswellbecauseshoescompanytreatthese

twomattersseriously.Regardingtheabovestrategyofaddingnewinnovation,thecompanyisfamousforand

expertofinthepast,andlastyear,thecompanydevelopedanddesignedalmost100typesofnewproducts,

whichismorethananyyearinthepast.


Production and Market Competition Trend

Forlastyear,tanningfactoryisinadifficultsituationtomakeaprofit,i.e.costofrawmaterialisstill

likelytocontinuetoincreasewhilethisburdencannotbepushedawaybyincreasingsalepricetocompensate

foralloftherisingcost.Therefore,itislikelythatsmalltanningfactoriesmustshutdown,leftonlyfewbig

factoriesinthenearfuturebecauseoftheburdenofhighcostofrawmaterial.Furthermore,thereisstilllabor

costandexpensesthatriseaccordingtotheinflation,whichmakesitdifficultforsmallcompaniestosurvive.

Intermsofcompetition,itisnotmuchaworrybecause,currently,thecompanyisconsideredoneof

thefewbigmanufactures.Therestsaresmallcompaniesthatarelikelytostruggletosurvivefortheabove

reason.Thecompanymustlookfornewwaystosurvivelikesmallcompaniesaswellsuchasconsidering

tanningforotherproductssuchasleatherbagsorcarseats,whichhasincreasedalotinthepast2-3years,

becausethecompanydoesnothavetoinvestalotasitisstillinsimilarbusinessesandmostfactorsfor

productionarealreadythere.Furthermore,thecompanymuststillfindasolutionforcowsplitshortage,i.e.

market behavior has turned to cow split more and uses full grain less causing cow split shortage and

overstockedfullgrain.Therefore,thecompanymustfindwaytoreleasesomeofthefullgrainbylookingfor

carseatbusinesstosupporttheremainingfullgrain.Atthesametime,itisalsotomaintainprofitatsimilar

level is maintaining stable performance in the difficult situation mentioned above. In terms of marketing,

competitionwillbemoreintenseintermsofprice,quality,ontimedelivery,andlaunchingnewproductsto

matchcustomer’sneed,andthereshouldnotbemanycompetitors.

Atthemoment,thecompanyhasconsideredsellingwetblueandcrusttonewclientsinorderto

allowcontinuousproductionintoothertypesofproductotherthanshoes,which2-3Japanesecompanieshave

madenewinvestment.

Fortheoverseasmarket,thecompanylaunchedanewmarketinBangladeshandCambodialastyear,

whichthecompanytriestomaintainandincrease.Atthesametime,thecompanyalsowentintoIndiatoopen

amarketthereaswell.Thecompanyalsotriestomaintainitsmainmarket.Tomaintainoverseasmarkets,the

companymustmaintainamajormarketcompetitionfactor,i.e.productqualitymustmatchcustomer’sspec,

andproductdeliverymustonschedule.Thesetwothingsarehighlyimportancetocustomers,whichrequires

efficientmanagement,whichthecompanyhasdoneverywellinthepast.


Factor of Risk

Risk from Operation

Lastyear,thecompanyhasaproportionofdomesticsalesof20%,andinternationalsalesof80%due

tothecompanyhasexpandedinternationalmarketsbysellingtomorecustomersinBangladeshandIndia,which

thesalesweremadewith15dayscredittermofthegoodsdeliverydate.Therefore,itisaslightincrease

ofariskcomparetonoriskatallbefore.Forotherinternationalclients,salesweredonebyopeningL/C,or

clientswereaskedtomakeadvancepaymentforthegoods.Fordomesticsales,wesoldtocompanieswith

financialstabilityandgooddebtpaymentabilitybecausethecompanyhasbeentradingwiththeseclientsfor

alongtime,sowebelievethatthecompanyhasnosignificantriskfromthedebtornotmakingdebtpayment.

However,thecompanyhassetsufficientallowancefordoubtfuldebtfordebtor.

Risk from Credit Terms

TheCompanyisselling20%ofitsproductdomesticallyandtheother80%totheOversealmarket.

FromnewmarketinBangladeshandIndiawhichhadcreditterm15days.Forotherexportsaleshavebeen

operatedincash,prepaid,orbyL/Cterms,whichisloan-riskfree.Fordomesticsales,alltransactionsare

withmajorcustomerswithgoodcreditsothattheloanriskislow.However,wefindfoundlatelythatsome

customersfailtopay,ordelaypayment,butonlyinsmallproportioncomparedtothetotalsales.TheCompany

monitorsandevaluatescloselythesecustomerstoallowasufficientbaddebtreserve.

Risk of Exchange Rate Fluctuation

Themainrawmaterialofthecompanyinmanufacturingfullgrainleatheriswetsaltedcowhide,allof

whichareimportedfromoverseas.In2012,USD29.9millionofrawmaterialwaspurchased,whichisequivalent

toTHB933.56million.ChemicalsimportedfromoverseascostUSD3.46millionorTHB108.17million,whichwas

purchaseddirectlyfromoverseasdistributer.Therefore,thecompanyhasariskofexchangeratefluctuation.At

thesametime,80%ofthecompany’ssalesweremadetooverseas.Paymentwasmadeinthesameforeign

currency,i.e.USD.Therefore,thecompanyusedthemoneyfromsalestopayforrawmaterial(matching).

ThecompanyhasincomefromoverseassalesofUSD45.58millionorTHB1.405.85billion.Therefore,trading

inoverseasmarketisconsideredtohavelowriskintermsofexchangeratefluctuationbecauseincomeand

expenseinforeigncurrencyissimilarinproportion.However,thecompanyhasenteredintoaforwardforeign

currencyexchangetradingagreementfromtimetotimeincasetheexchangeratehashighfluctuation.


Structure of Shareholder and Management

Shareholder

Thereareregisteredcapital26.4Millionshare,10bahtpershareandallissuedandpaid-up.

ThenameofshareholdersasatMarch14,2013asclosingdate.Thereare939persons,Thaisholder920personsandforeignholder19persons

GroupofTopTenShareholders

NameofGroup Share/million %

1. ChareonsinHoldingCo.,Ltd. 10.03 38.00

2. Mr.ChenJuYing 2.83 10.74

3. ThaiNVDRCo.,Ltd. 2.58 9.77

4. Ms.NuchnapaWongcharoensin 1.00 3.80

5. Mr.ChenRuiTeng 0.93 3.19

6. Mr.LaiChiHsiang 0.67 2.53

7. Ms.WalairatSilchevakijja 0.46 1.75

8. Mr.KuoShihLun 0.46 1.75

9. Mr.ManitWongcharoensin 0.45 1.71

10. Mr.VichernSrimuninnimit 0.45 1.71

GroupofMajorShareholders

1. CharoensinGroup 13.16 49.85

2. ChenGroup 3.76 14.30

Dividend Policy

Thecompanyhavedividendpolicytoshareholderaround60%ofnetprofitfromeachyear.


Management Structure

Mr. Manoch WongchaorensinChairman

Mr. Lai Chi HsiangManagingDirector

Mr. Kuo Shih LunDirector/DeputyManagingDirector

Mr. Suwatchai WongcharoensinDirector/DeputyManagingDirector/

CompanySecretary


Mr. Kitichai WongcharoensinDirector/SalesCenterManager

Mr. Puvasith WongcharoensinDirector

Mr. Kamthon Vathanalaoha Director/IndependentDirector

ChairmanofAuditcommittee

Mr. Sukho VoddhijotiDirector/IndependentDirector/

Auditcommittee

Mr. Mongkon Laoworapong Director/IndependentDirector/

Auditcommittee


Board of Directors’ Structure

BoardofDirectorsconsistsofpersonswithknowledgeandexperience,whichhave important rolein policy making and organization’s overview, including important role in regulating, inspecting, evaluatingperformanceofthecompanytoensurethatitisaccordingtotheplan,aswellasoperatethecompany’sbusinessaccordingtothelaw,regulation,andshareholdersmeeting’sresolution,includingregulatingmanagement’sadministrationtobeaccordingtothetargetandguidelinedetermined,andleadtobestinterestofthecompanyandshareholders.

BoardofDirectors’structureconsistsofindependentdirectorsofmorethan1in3ofdirectorsinthewholeboard,whichwouldmaintainthevotingbalanceintheconsiderationofvariousmatters,andthereisanAudiCommittee,whichconsistsof3independentdirectors.

Currently,BoardofDirectorshas9directors,whichconsistsof6directorswhoaremajorshareholders’representatives,and3independentdirectorswhoarealsodirectorsintheAuditCommittee.Numberofthecompany’sindependentdirectorsisaccordingtotheruleofSEC,whichdeterminesthatonethirdoftotalnumberofdirectorsmustbeindependentdirectors.

Accordingtothecompany’sregulation, ineveryAnnualGeneralMeeting,at leastonethirdofthedirectorsmustretire.Ifnumberofdirectorscannotbedividedintothreeparts,numberofclosesttoonethirdshallapply.Directorthatmustresigninthefirstyearandthesecondyearafterthecompany’sregistration,adrawmustbemadetoselectwhowillberesigning.Forthesubsequentyears,directorsinthepositionthelongestshallretire.However,retireddirectormaybereelectedasdirector.

Furthermore,BoardofDirectorshasappointedsubcommittees,whichconsistsofExecutiveCommitteeandAuditCommitteetohavespecificfunctionandmakeproposaltoBoardofDirectorsforconsiderationoracknowledgement,whichsuchsubcommitteeshavetherightasdeterminedintheauthorityofeachsubcommittee.

The Board of Director

CompanyCommitteecanbedividedinto3setsasfollows:

BoardofDirectorsasatMarch1,2013have9personsasfollow

Name Position

1.Mr.ManochWongcharoensin Chairman

2.Mr.SuwatchaiWongcharoensin Director

3.Mr.LaiChiHsiang ManagingDirector

4.Mr.KuoShihLun Director

5.Mr.KitichaiWongcharoensin Director

6.Mr.PuvasithWongcharoensin* Director

7.Mr.KamthonVathanalaoha Director/ChairmanofAuditcommittee

8.Mr.SukhoVoddhijoti Director/Auditcommittee

9.Mr.MongkonLaoworapong Director/Auditcommittee

*NewdirectorappointonBoardofDirectorNo.1/201327February,2013


IneveryAnnualGeneralMeeting,atleastonethirdofthedirectorsmustretire.Ifnumberofdirectorscannotbedividedintothreeparts,numberofclosesttoonethirdshallapply.Directorthatmustresigninthefirstyearandthesecondyearafterthecompany’sregistration,adrawmustbemadetoselectwhowillberesigning.Forthesubsequentyears,directorsinthepositionthelongestshallretire.However,retireddirectormaybereelectedasdirector.

ScopeofDutyandResponsibilityofBoardofDirectors;

1. Mustperformdutyincompliancewiththelaw,objective,regulationofthecompany,aswellas

shareholdersmeeting’sresolution,exceptforthematterthatrequiresapprovalfromshareholders

meetingbeforeoperationsuchasthematterthatthelawrequiresshareholdersmeeting’sresolution,

connectedtransaction,andbuyingorsellingsignificantassetaccordingtotheruleofSET,oras

determinedbyotherstateagencies,etc.

2. Determineorchangethenameofauthorizeddirector.

3. Determinepolicy,strategy,anddirectionofthecompany’sbusinessoperation,andregulatemanagement’s

operationtoensurethatitisaccordingtothedeterminedpolicy,strategy,anddirectionefficiently

andeffectivelytoaddmaximumeconomicvalueforshareholdersandsustainablegrowth.

4. Considermakingdecisiononsignificantmatterssuchasbusinessplan,budget,largeinvestment

project,managementpower,andotheritemsasdeterminedbythelaw.

5. Evaluateperformanceanddetermineconsiderationforthemanagement.

6. Responsibleforperformanceandoperationofmanagementwithdeterminationandcare inthe

operation.

7. Providereliableaccountingsystem,financial reportandaccountingaudit,aswellasprovidea

process forassessingsuitabilityof internalcontrol,and internalaudit toensureefficiencyand

effectiveness,riskmanagement,financialreport,andresultmonitoring.

8. Preventconflictinginterestbetweenstakeholdersandthecompany.

9. Regulatebusinesstoensureethicaloperation.

10.Determineinternalregulationorruleofthecompanyinvariousmatters.

11.ReportresponsibilityoftheBoardofDirectorsinpreparingfinancialreportbypresentingittogether

withtheauditor’sreportintheannualreport,andcoverimportantmattersaccordingtothepolicy

ofgoodpracticefordirectorsoflistedcompanyinSET.

The Audit Committee

ThenameoftheBoardasMarch1,2013

1.Mr.KamthonVathanalaoha Chairrman

2.Mr.SukhoVoddhijoti Committee

3.Mr.MongkonLaoworapong Committee

4.MissArjareeSuphasinwongchai Secretary


1.Reviewandcontrolthecompanytomanagecorrectandreasonablefinancialreport

2.Reviewandcontrolthecompanytoarrangethesuitableandefficientinternalcontrolandaudit

3.Reviewandcontrolthecompanytocomplywiththelawconcerningsecurityandsecurityexchange,

stipulationofSETorotherlawsrelatedtothecompany’sbusiness.

4.Consider,recruit,propose,appointandproposetheremunerationoftheauditor.

5.Consider,disclosetheinformationofthecompanyincaseofthereisanyrelateditemoranyitem

whichmayobjectagainstbenefittobecorrectandcomplete.

6. Prepare report of Audit Committee expressly recorded in annual report duly signed by the

ChairmanoftheAuditCommittee.

7.ConductotherbusinessbeingassignedbytheBoardofDirectorsundertheapprovaloftheAudit

Committee.

Executive director

whoisauthorizedcommitteeofthecompanyatMarch1,2013have5personsasfollow.

1.Mr.ManochWongcharoensin

2.Mr.SuwatchaiWongcharoensin

3.Mr.LaiChiHsiang

4.Mr.KuoShihLun

5.Mr.KitichaiWongcharoensin ScopeofdutyofExecutiveCommittee

1. Determinepolicy,direction,strategy,andstructureofmainworkmanagementinthecompany’s

businessoperationthatisdeterminedtobeconsistentandsupportiveofeconomicconditionand

competitiondeterminedandstatedtoshareholderstoproposeforBoardofDirectors’approval.

2. Determinebusinessplan,budget,andmanagementpowersofthecompanytoproposetoBoard

ofDirectorsforapproval.

3. Determineorganizationalstructureanddeterminemanpowerpolicy,whichshallcovertheoverview

inselecting,training,hiring,creatingreplacementexecutive,aswellasresultevaluationandrule

fordeterminingconsiderationofemployeeatalllevel.

4. Verify andmonitor policy and guideline for management in various aspects of the company

determinedtobeefficientandfacilitativetobusinessoperationcondition.

5. Verify and monitor the company’s performance determined to be in according to approved

businessplan.

6. Preparefinancialtransactionwithfinancialinstitutioninopeningaccount,loan,pledge,mortgage,

guaranteeandotheractionsincludingtradingandregisteringanylandownershipaccordingtothe

objectivefortheinterestofthecompanybusinessoperationunderdeterminedamount.

7. MonitorresultofmanagementsystemdevelopmentandotheroperationsasassignedbytheBoard

ofDirectorsfromtimetotime.


BoardofDirectorshasappointedthecompany’ssecretarytoperformdutyandresponsibilityaccordingtoSecuritiesandExchangeAct.

NameofManagementTeamatMarch1,2013

1.Mr.ManochWongcharoensin Chairman

2.Mr.SuwatchaiWongcharoensin Director/Companysecretary

3.Mr.LaiChiHsiang ManagingDirector

4.Mr.KuoShihLun Director

5.Mr.KitichaiWongcharoensin Director

6.Mr.SinghaWongrujipairoj ChiefFinancialOfficer

7.Mr.SomphongWongrujipairoj DomesticMarketingManger

8.Ms.ChutimaKititarakul OverseasMarketingManager

9.Ms.TanyatornApichatvicheanchot AccountingManager

10.Ms.ArjareeSuphasinwongchai FinanceManager/secretary

DirectorandExecutiveRecruitment

For recruitingperson tobe thecompany’sdirector, thecompanyallowsshareholders tonominatequalifiedpersonwhohasexperienceandsuitablepotentialtobethecompany’sdirectorintheannualgeneralmeetingofshareholders.Eachshareholdermaycastavailablevotetoselectonepersonormanypersonstobedirectors.However,votesmaynotbedividedunequally,whichthosewithskillandexperiencenecessaryforthecompany’sbusinessoperationwillbeprioritized,whichthefollowingqualities;

1. Having quality according to Limited Public Company Act, Security and Exchange Act, Rule of SEC,

rule of SET, and the company’s good corporate governance.

2. Havingvarietyofknowledge,ability,andexperienceinvariousfieldsofoccupationthatwillbeuseful

and add value for the company.

3. Having attributes the supports and encourages business regulation to create value to the company,

perform duty with Accountability, Care and Loyalty, and fully dedicated.

Independent Director

TheCompanydetermines components forBoard ofDirectors tobe consisting of at least 1/3 ofindependentoftotalnumberofthecompany’sdirectors.

BoardofDirectorsdeterminesqualitiesofindependentdirectorasfollows;

1. Holdsharesnomorethan1.0%oftotalnumberofsharewithvotingrightofthecompany,headoffice,

subsidiary, joint company, major shareholder, or person with power to control the company, which

shall also include shareholding of related person of that independent director.

2. Not being or never been a director involved in management, employee, consultant who receives

regularsalary,orpersonwithcontrollingpowerofthecompany,headoffice,subsidiary,jointcompany,

subsidiary at the same level, major shareholder, or of person with controlling power of the company,

except being freed from such characteristic for at least 2 years before being appoint as independent

director.


3. No blood relationship or by registration according to the law in the manner of father, mother, spouse,

sibling, and child, including spouse of the child, of executive, major shareholder, person with controlling

power, or person to be nominated as executive or person with controlling power of the company or

subsidiary.

4. Nothavingorneverhavebusinessrelationshipwiththecompany,headoffice,subsidiary,jointcompany,

major shareholder, or person with controlling power of the company in the manner that is preventing

one’s independent judgment, including not being or never been implied shareholder or person with

controlling power of the company, except being freed from such characteristic for at least 2 years

before being appoint as independent director.

5. Notbeingorneverbeenanauditorof thecompany,headoffice, subsidiary, jointcompany,major

shareholder, or person with controlling power of the company, and not being implied shareholder,

personwithcontrollingpower,orpartnerofaudit firmthathasauditorofthecompany,headoffice,

subsidiary, joint company, major shareholder, or person with controlling power of the company, except

being freed from such characteristic for at least 2 years before being appoint as independent director.

6. Not being or never been service provider in any profession, including providing service of legal advisor

orfinancialadvisorwhoreceiveservicefeeofmorethanTHB2millionperyearfromthecompany,head

office,subsidiary,jointcompany,majorshareholder,orpersonwithcontrollingpowerofthecompany,

and not being implied shareholder, person with controlling power, or shareholder of service provider in

that profession, except being freed from such characteristic for at least 2 years before being appoint

as independent director.

7. Not being a director that was appointed as director’s representative of the company, major shareholder,

or shareholder who is related to major shareholder.

8. Not operating a business that has the same condition, and is an implied competition with business of

the company or subsidiary, or not being an implied partner in a partnership, or is a director involved

in management, employee, employee, consultant who receives regular monthly salary, or hold share

more than 1.0% of total shares with voting right of other company, which operate a business that has

the same condition, and is an implied competition with business of the company or subsidiary.

9. Not having any other characteristic that cannot provide independent comment regarding the company’s

operation.

Audit Committee Board of Directorsappointsatleast3auditcommitteememberstobethecompany’sauditcommitteemembers.EachauditcommitteemembermustbeanindependentdirectorandmustnotbeadirectorassignedbyBoardofDirectorstomakedecisioninbusinessoperationofthecompany,headoffice,subsidiary,jointcompany,subsidiaryatthesamelevel,majorshareholder,orpersonwithcontrollingpowerofthecompany,andnotbeingadirectorofthecompany,headoffice,subsidiary,jointcompany,subsidiaryatthesamelevel,especiallylistedcompany,whichtheauditcommitteemembermustbequalifiedaccordingtotheSecuritiesandExchangeAct,aswellasnotification,regulation,and/orruleofSET,whichdeterminequalificationandscopeofoperationofAuditCommittee.


TheremunerationforDirectorsandManagement

1.Theremuneration

Name Amount Type remuneration

1.Mr.ManochWongcharoensin 300,000 Director’sfee,Meetingfee

2.Mr.SuwatchaiWongcharoensin 380,000 Director’sfee,Meetingfee

3.Mr.LaiChiHsiang 385000 Director’sfee,Meetingfee

4.MrChenRuiTeng 200,000 Director’sfee,Meetingfee

5.Mr.KuoShihLun 380,000 Director’sfee,Meetingfee

6.Mr.KitichaiWongcharoensin 180,000 Director’sfee,Meetingfee

7.Mr.KamthonVathanalaoha 225,000 Director’sfee,Meetingfee

8.Mr.SukhoVoddhijoti 225,000 Director’sfee,Meetingfee

9.Mr.MongkonLaoworapong 225,000 Director’sfee,Meetingfee

Total 2,500,000

2.TheremunerationforDirectorsandManagement

Type remunerationDirectors and Management

Number BahtSalary 12 19,072,520Bonus 6,811,860Otherremuneration 1,310,150Total 12 27,194,530

Corporate Governance

Thecompanyrealizesandfocusesonefficient,transparent,andtraceablemanagementsystem,whichleadstoconfidenceinallrelevantdivisions,andresultsinsustainablebusinessgrowthunderethicalconductandcompliancewithrelevantlaw.Therefore,thecompanyhasdeterminedagoodcorporategovernancepolicytoraiseexistinglevelofoperationtobeaclearstandard,andspreadthepracticetothecompany’sstaffsinalllevel,whichcreatesgenuinecorporategovernanceculture.Thecompanyhasadopted2006GoodCorporateGovernanceforlistedcompanyasdeterminedbySET,whichcovers5sectionsasfollows;

Section 1 : The Rights of Shareholders

Thecompany realizesan focusesonbasic rightsofshareholdersas investors instockexchangeandasthecompany’sownerssuchastherighttobuy,sell,andtransfersecuritiesheldbyoneself,therightto receiveprofitsharing fromthecompany, the right to receivesufficientcompany’s information, rights inshareholdersmeeting,therighttocomment,therighttomakedecisioninthecompany’simportantmatterssuchasdividendallocation,appointmentorremovalofdirectors,appointmentofauditor,approvalofmajortransactionthataffectsdirectionofcompany’sbusinessoperation,amendmentofmemorandumofassociation,company’sregulation,etc.


Apart frombasicrightsabove, thecompanyhasapolicytooperate inthefollowingmattersthatpromotesandfacilitatestherightsofshareholders;

1. The company supports Board of Directors, executives, and relevant units, including auditors to

participate in shareholders meeting.

2. The company shall send meeting invitation together with meeting information according to various

agendas to shareholders at least 7 days prior to the meeting, or as determined by SEC and SET, which

shall be advertised in a newspaper at least 3 consecutive days prior to the meeting. Each agenda will

have comments from the board, and such information will be published on the company’s website to

allow time for shareholders to study such information prior to the meeting.

3. In case shareholders cannot personally attend the meeting, the company gives opportunity for

shareholders to authorize independent director or any person to attend the meeting on one’s behalf

using any type of proxy sent by the company with the meeting invitation.

4. Prior to the meeting, allow shareholders to comment, recommend, and question in advance prior to

the meeting.

5. In the meeting, allow shareholders to have equal right in making a comment, recommendation, or raising

question in various agenda independently before making a resolution in any agenda. In shareholders

meeting, there will be relevant director and executive attending the meeting to answer question in the

meeting, as well as important question and comment will be recorded in the minutes of meeting for

shareholders to verify.

6. In the meeting to appoint director, shareholders may vote for an appointment of one director at a time,

which shareholders may select representative who deemed suitable to become a director to look after

their interest, which would lead to variation and be genuine representative of shareholders.

7. After the meeting, the company will prepare minutes of meeting, which must present accurate and

complete information for shareholders to verify, and the minutes of meeting will be published in the

company’s website.

Section 2 : The Equitable Treatment of Shareholders

TheCompanyhasapolicyofcreatingequitabletreatmentofeveryshareholderinallgroups,especiallyminorityshareholdersbyallowingopportunityforminorityshareholderstoproposemeetingagendafortheannualgeneralmeetingofshareholders,andqualifiedcandidatesfordirectornominationbeforeshareholdersmeetingdate,aswellasaccompanyingdocumentforconsiderationand/orqualificationandconsentofthenominee,whichthecompanywillscreenforusefulagendaandselectqualifiedpersonthroughAuditCommitteebeforeproposingittotheboardofdirectorsforconsiderationanddeterminingmeetingagendafurther.

Ineachmeeting,thecompanywillallowallshareholderstohaveequalopportunity,whichbeforethemeetingstarts,theChairmanwillexplainvotingrightandvotingcountrequiredineachagenda,andalsoallowallshareholderstocomment,makeproposal,andquestionineachagendawithadequatetimegiven,whichtheChairmanwillproceedwiththemeetingaccordingtotheorderoftheagendas,aswellasthereisapolicynottoaddanyagendawithoutnotifyingshareholdersinadvancetogiveshareholdersanopportunitytostudyinformationaccompanyingtheagendabeforemakingdecision.

Thecompanyhasstrict regulationon inside informationutilizationtopreventexploitationof insideinformationforoneselforothersinillegalmanner(Abusiveself-dealing)toensurefairnesstoallstakeholders,


whichthecompanyhasdeterminedaguidelineforthecompany’sinsideinformationstorage,andaguidelineforpreventinginsideinformationexploitationforpersonalinterestaswrittendirectives,aswellasdeterminingthatdirectors,executives,andemployeesmustnotpurchasethecompany’ssecuritiesusingsecretand/orinsideinformationand/orenterintoanyotherlegaltransactionusingsecretand/orthecompany’sinsideinformationthat causes damage to the company either directly or indirectly. Furthermore, directors, executives, andemployeesareintheunitthatreceivesthecompany’sinsideinformationmustnotusesuchinformationbeforepublicdisclosure,andpersonrelatedtotheinsideinformationisprohibitedfrompersonallytradingthecompanysecurities,orbyhis/herspouseorminorchild,whetheritisadirectorindirecttrade(suchasnomineethroughpersonalfund)within1monthbeforedisclosingquarterlyandannualfinancialstatements,andatleast3daysafterthedisclosureofsuchinformation.

Thecompanygaveinformationtodirectorandexecutiverelatingtodutythatmustreportownershipofthecompany’ssecurities,anddeterminedpenaltyaccordingtotheSecuritiesandExchangeAct,B.E.2535,andaccordingtoSET’srequirement,andincasedirectororexecutivetradesthecompany’ssecurities,own,spouse,orminorchildownershipofthecompany’ssecuritiesmustbereportedaccordingtosection59oftheSecuritiesandExchangeAct,B.E.2535within3workingdaysfortheSECtomakepublicannouncementfurther. Section 3 : The Role of Stakeholders

Thecompanyfocusesontherightofstakeholdersineverygroup,whethertheyareinternalstakeholderssuchasshareholders,executives,andcompany’semployees,orexternalstakeholderssuchascreditors,customers,competitors,statesectors,society,andcommunity,etc.Thecompanyrealizesthatsupportandcommentfromstakeholdersinallgroupsareusefulfortheoperationandbusinessdevelopmentofthecompany.Therefore,thecompanywillcomplywiththelawandrelevantrequirementtoensurethatsuchrightsofstakeholdersarewellregulated.Therefore,thecompany’sbusinessoperationtakesintoaccounttherightsofallstakeholdersaccordingtothefollowingguideline;

shareholder : Treatshareholdersequally,maintaininterestofshareholders,andnotperformanyactionthatisinviolationordeprivationofshareholders’rights,aswellasfocusonmaximumsatisfactionforshareholdersbytakingintoaccountthecompany’ssustainablegrowthtoaddvalueandgiveappropriatereturncontinuously,includingadheretogoodcorporategovernance.

Employee : Treatemployeesequallyandfairlyintermsofopportunity,consideration,welfare,andcapacitydevelopment,whichallemployeesareregardedasvaluableresourceandimportantfactorindrivingsuccessfulorganization,andconcentrateoncreatingcultureandworkingatmosphere,promoteteamwork,promotedevelopmentofstaff’sknowledgeandabilityforprogressandsecuredoccupation,aswellasgiveconfidenceinqualityoflifeandworksafety,includingmaintainworkingenvironment.

Customer : Concentrateoncreatingsatisfactionandconfidenceforcustomers,careandberesponsibletowards customers, which customers must receive good and quality product/service atreasonableprice,andaccordingtothedeterminedstandard,aswellasstrictlycomplywithconditionandtermswithcustomers,seriouslyandregularkymaintaingoodandsustainablerelationshipwithcustomers,includingnotexploitingcustomer’sinformationfortheinterestofthecompanyandrelatedperson.


PartnerandCreditor

: Considerequalityandfairness,nottakingadvantage,andbehonestinbusinessoperation,maintainthe interestofpartnerandcreditorbystrictlycomplyingwiththe lawandruledetermined together,andbeethical inbusinessoperation,notdemanding,accepting,orgivinganydishonestinteresttopartner,aswellasstrictlycomplyingwithvariousconditions,andtreatcreditor fairly, includingrepayingdebtaccordingtoschedule, report topartnerandcreditorinadvanceifnotbeingabletocomplywithobligationandfindingsolutiontosuchproblemtogether.

Competitor : Treattradecompetitoraccordingtointernationalprincipleunderlegalframeworkrelatingtotradecompetitionpractice,andadheretogoodcompetitionruleequally.Notpreventingothersfromcompetinginthebusiness,notdestroyingreputationoftradecompetitorbyaccusing,mudslinging,andattackingcompetitorwithoutfactualground,orperformanyactionthatisunfairtocompetition.

Society,community,and environment

: Haveabusinessoperationpolicythatisresponsibletocommunity,society,andenvironmentintermsofsafety,qualityoflife,andnaturalresourcepreservation,promoteefficientenergyconsumption, realize quality of life of the community and society, aswell as take intoaccountbusinessoperationthataffectenvironment,operationanddecisionmaking,anyactionofthecompanymustbeensuredthatallproductandthecompany’sbusinessoperationareproperandconsistentwithvariousrulesandstandards,aswellaspromoteemployeetobeconsciousandresponsibletowardscommunity,society,andenvironment,includingcooperateinvariousactivateswiththecommunitythatthecompanyisoperatinginasappropriate.

Section 4 : Disclosure and Transparency

Thecompany’sboardofdirectorsfocusesoncorrect,complete,intime,andtransparentdisclosureofinformation,intermsoffinancialinformationandgeneralinformationaccordingtotheruleofSECandSET,aswellasotherimportantinformationthataffectsthepriceofthecompany’ssecurities,whichaffectdecisionmakingofinvestorsandthecompany’sstakeholders.Thecompanyhaspolicyofdisclosingthecompany’sinformationtoshareholders,investors,andpublicvariouschannelandinformationdistributionmediaofSETandonthecompany’swebsite.Thecompany’sboardofdirectorsisresponsibleforthecompany’financialstatementandfinancial informationappearingintheannualreport.Suchfinancialstatement ispreparedaccordingtogenerallyacceptedaccountingstandardinThailandbychoosingsuitableaccountingpolicy,whichisalwaysadheredto,aswellasthereiscompleteandsufficientdisclosureofinformationinthefinancialstatement,whichinthisregards,theAuditCommitteewillreviewqualityoffinancialreportandinternalcontrol,includingdisclosureofimportantinformationsufficientlyinthenotetothefinancialstatement,andreporttothecompanyboardofdirectors.

Investor Relations

ChiefFinancialOfficerisresponsibleforinvestorcommunications.TheCompanyhasbeendisclosingaccurate,complete,transparent,on-time,andfairinformationtothepublicasitiswellawareoftheimportanceofsuchinformationforinvestors’analysisanddecisionmakingbyaccommodatinginvestorsandanalysts,e.g.,CompanyvisitandmeetingwiththeManagementforinformationexchangesandvariousactivities.Forfurtherinformationonthedisclosureofcorporateinformation,[email protected]@cpl.co.thortelephonenumber66270956338Fax6627096033


Section 5 : Responsibilities of the Board of Directors

1.BoardofDirectors’Structure

BoardofDirectorsconsistsofpersonswithknowledgeandexperience,whichhave important rolein policy making and organization’s overview, including important role in regulating, inspecting, evaluatingperformanceofthecompanytoensurethatitisaccordingtotheplan,aswellasoperatethecompany’sbusinessaccordingtothelaw,regulation,andshareholdersmeeting’sresolution,includingregulatingmanagement’sadministrationtobeaccordingtothetargetandguidelinedetermined,andleadtobestinterestofthecompanyandshareholders.

BoardofDirectors’structureconsistsofindependentdirectorsofmorethan1in3ofdirectorsinthewholeboard,whichwouldmaintainthevotingbalanceintheconsiderationofvariousmatters,andthereisanAudiCommittee,whichconsistsof3independentdirectors.

Currently,BoardofDirectorshas9directors,whichconsistsof6directorswhoaremajorshareholders’representatives,and3independentdirectorswhoarealsodirectorsintheAuditCommittee.Numberofthecompany’sindependentdirectorsisaccordingtotheruleofSEC,whichdeterminesthatonethirdoftotalnumberofdirectorsmustbeindependentdirectors.

Accordingtothecompany’sregulation, ineveryAnnualGeneralMeeting,at leastonethirdofthedirectorsmustretire.Ifnumberofdirectorscannotbedividedintothreeparts,numberofclosesttoonethirdshallapply.Directorthatmustresigninthefirstyearandthesecondyearafterthecompany’sregistration,adrawmustbemadetoselectwhowillberesigning.Forthesubsequentyears,directorsinthepositionthelongestshallretire.However,retireddirectormaybereelectedasdirector.

Furthermore,BoardofDirectorshasappointedsubcommittees,whichconsistsofExecutiveCommitteeandAuditCommitteetohavespecificfunctionandmakeproposaltoBoardofDirectorsforconsiderationoracknowledgement,whichsuchsubcommitteeshavetherightasdeterminedintheauthorityofeachsubcom-mittee.

BoardofDirectorshasappointedthecompany’ssecretarytoperformdutyandresponsibilityaccordingtoSecuritiesandExchangeAct.

ScopeofDutyandResponsibilityofBoardofDirectors;SeemoreinBoard of Director Structures

Intheyear2012DirectorattendedtheMeetingasfollow:

Name Board of Director Audit Commitee1.Mr.ManochWongcharoensin 5/5

2.Mr.SuwatchaiWongcharoensin 4/5

3.Mr.LaiChiHsiang 5/5

4.Mr.ChenRuiTeng* 1/5

5.Mr.KuoShihLun 5/5

6.Mr.KitichaiWongcharoensin 5/5

7.Mr.KamthonVathanalaoha 5/5 5/58.Mr.SukhoVoddhijoti 5/5 5/59.Mr.MongkonLaowarapong 5/5 5/5

*ResignonNovember9,2012


Inside Information Regulation

Thecompanyhasaruleandregulationthatdirectorandexecutive,employeeandstaffmustmaintainconfidentialityand/orinsideinformationofthecompany,notdisclosingorexploitingsecretand/orthecompany’sinsideinformationforowninterestorforothers’interestwhetherdirectlyorindirectly,andwhetherreceivinganythinginreturnornot,aswellasmustnottrade,transferoracceptthetransferofthecompany’ssecurityusingsecretand/orinsideinformationand/orenteringintoanytransactionusingsecretand/orinsideinformationofthecompany,whichcausesdamagetothecompanywhetherdirectlyorindirectly.Furthermore,directorandexecutive,employeeandstaffintheunitthatreceivesthecompany’sinsideinformationmustnotutilizesuchinformationpriortopublicdisclosure,andrelatedpersonisprohibitedfromtradingthecompany’ssecuritieswithin1monthpriortothedisclosureofquarterlyandannualfinancialstatement.Suchregulationshallincludespouseandminorchildofdirectorandexecutive,employeeandstaffaswell.

Furthermore,thecompanyinformeddirectorandexecutivetounderstandtheirdutyinreportingsecuritiesownershipofthemselves,spouse,andminorchild,aswellasthechangeinownershipofsuchsecuritiestoSECaccordingtosection59,andpenaltyaccordingtosection275oftheSecuritiesandExchangeAct,B.E.2535.

Thecompanydetermineddisciplinaryactionforthosewhoexploitsordisclosesthecompany’sinsideinformationcausingdamageto thecompanybyconsiderpunishmentasappropriate to thecasesuchasverbalwarning,writtenwarning,probation,aswellasterminationofemploymentduetodismissal,discharge,orretirementasthecasemaybe,etc.

Internal Control

TheBoardofDirectorssatisfiestheinternalcontrolsystemthatcreatedreasonablecredibilityofthefinancialstatementofthecompanyat31December2012

TheboardofdirectorandAuditCommitteehasevaluatedtheinternalcontrolsystemoftheCompany’asfollow:

1.TheOrganizationControlandenvironmentMeasure

2.RiskManagementMeasure

3.ManagementControlActivities

4.Informationandcommunicationsystems

5.Themonitoringsystem

Theboardofdirectorsalsodeemedthattheinternalcontrolsystemsaresufficient.


Transactions between Company and Affiliates

TransactionsbetweenCompanyandAffiliates

Therewastheopenreportoftheinter-transactionitem24notestofinancialstatementsalready.

IndependentDirectorCommended

Therelationtransactionbetweencompanyandaffiliateswereunderregularizationtradeinmarketprice

comparedwiththeothersandhavethesignatureapproveforsellingandpurchasingwhichregularizationto

conduct.


Management Discussion and Analysis

CPLGroupPublicCo.,Ltd.isafullyintegratedtannery,fromthepurchaseofrawhidestopickling,

wetblues,crustinguntilfinalfinishingascowfinishedleatherreadytobecutintoshoes&leatherproducts.

Thebeamhouseandtannerywascompletedin1989dulyoperatedandmanagedbyfoundingpersonnelwith

experienceofmorethan40years.CPLhascontinuouslyexpandedsincethen.In1994CPLwasregistered

inSETwithregisteredcapitalof240millionbaht.Subsequently,theAnnualExtraordinaryShareholdersMeeting

for2005hadunanimouslyresolvedtoincreaseditsregisteredcapitalfrom24m.sharesto26.4millionshares,

eachof10baht,andtotalvaluingto264millionbaht.CPLhasregisteredthisincreaseincapitalwithMinistry

ofCommerceon1June2005.

ThecompanyhadjointlyinvestedwithitsalliestoestablishanewcompanynamedCPLInternational

Co.,Ltd.inHongKongandinvestedintheconstructionofatanneryinGuangZhou.SubsequentlyCPL

InternationalCo.,Ltd.hasincreaseditsregisteredcapitalfrom7millionUSDto8millionUSDoftotalregistered

capital.Nowduringrestructurethecompany.

Analysis from Operation

Last year, there was an important factor, i.e. beef price became very high causing lower beef

consumption,hencelowercattleslaughtering,whichinturncausingcowhide,thecompany’srawmaterial,to

beexpensive.Forsuchreason,shoesmanufacturersturnedtocheaperrawmaterial,i.e.cowsplitinsteadof

fullgrain,whichhasbetterqualityandmoreexpensive,tolowerproductcostforsurvival,whichaffectsthe

companydirectlybycausingtotalaverageincomeofthecompanytobelowerduetohighersalesproportion

ofcowsplit,whichischeaper.

For2012,thecompanyhasanetprofitofTHB42.7million,whichisTHB39millionlessthanthe

previousyear,or48%reductionfromlastyearduetoariseincostofcowhide,whichisanimportantraw

material,by4%comparedtothepreviousyear,aswellaschemicalcost,laborcost,andproductionexpense

becamehigher,whichaffectsgrossprofittobe3%less.Thisimportant information, i.e.thecompanyhas

incomefromsalestotalofTHB1.737billion,whichisclosetothepreviousyear,buttotalsalescostisTHB

1.582billion,whichisTHB43millionmorethanthepreviousyear,or3.7%higherthanthepreviousyearleading

togrossprofitofTHB155million,orTHB66millionlessthanthepreviousyear.Salesandmanagement

expensesdecreasedslightlyduetolesscommission,butalsoclosetothepreviousyear.Otherincomesare

taxrefundforMor.19ofaboutTHB10million,reversetransferanddoubtfuldebtofTHB12.5million.Furthermore,

therewaslossduetodevaluationoflongterminvestmentofTHB7million.In2012,grossprofitpershare

wasTHB1.62pershare,whichwasTHB1.48persharelessthanthepreviousyear(itwasTHB3.10per

shareinthepreviousyear)


Analysisofthecompanyfinancialstatus

ThecompanyhasTHB70millionmorecashandcashequivalent,whichmostlycomesfromdistributing

inventory,whichwasalargequantityattheendofthepreviousyearcausingthecompanytohaveamuch

betterliquidity,whichhavingcurrentratioof6.58times,whichis1.46timesbetterthanthepreviousyear.In

termsofaccountreceivable,outstandingbalanceincreasedslightly,andaccountreceivableturnoverwasslightly

lowerfrom18daysto23days,butstillsimilartothepreviousyear.Thecompanyorganizesmeetingtoanalyze

debtorperiodonamonthlybasis.Thereforeoutstandingbalancewasabletobecontrolled.Fortheinventory

andratematerialsthatarerawcowhide,chemicals,goodsinproduction,finishedgoods,andconsumables

wereTHB136millionlessthanthepreviousyear.Asthecompanydeemsthatrawcowhidebecamemore

expensive,thisyear,inventoryisreservedmoreandreleasedthisyeartobearlowercost,otherwisethecompany

wouldhaveevenworseperformance.

Liabilities and Investing Activities

Shareholders’equity,thecompanyincreasedauthorizedcapitalfrom24millionsharesatTHB10per

shareto26.4millionsharesatTHB10pershare,whichistotaledtoTHB264million.Capitalincreasewas

registeredwithMinistryofCommerceonJune1,2005,andfor2012,thecompanyhadaperformancewith

netprofitofTHB42.7million,andearningspershareofTHB1.62,retainedearningsforshareholders’equity

ofTHB956.53million.Lastyear,thecompanypaiddividendfor2011inQ2of2012atTHB2.00pershare,

whichistotaledtoTHB52.80million.BoardofDirectors’meetingnumber1/2013hadaunanimousresolution

topaydividendfor2012atTHB1.75pershare,whichshallbepaidonMay20,2013.


Independent Auditor’s Report

TotheShareholdersandBoardofDirectorsofC.P.L.GROUPPUBLICCOMPANYLIMITED

IhaveauditedtheaccompanyingfinancialstatementsofC.P.L.GROUPPUBLICCOMPANYLIMITED,whichcomprisethestatementoffinancialpositionasofDecember31,2012,andthestatementofcomprehensiveincome,thestatementofchangesinequityandthestatementofcashflowsfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements inaccordancewithFinancialReportingStandards,andforsuchinternalcontrolasmanagementdeterminesisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Auditor’s Responsibility

Myresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonmyaudit.IconductedmyauditinaccordancewithStandardsonAuditing.ThosestandardsrequirethatIcomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationandfairpresentationofthefinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.

IbelievethattheauditevidenceIhaveobtainedissufficientandappropriatetoprovideabasisformyauditopinion.

Opinion

Inmyopinion,thefinancialstatementspresentfairly,inallmaterialrespects,thefinancialpositionofC.P.L.GROUPPUBLICCOMPANYLIMITEDasofDecember31,2012,andtheirfinancialperformanceandcashflowsfortheyearthenendedinaccordancewithFinancialReportingStandards.

Other Matter

ThefinancialstatementsofC.P.L.GROUPPUBLICCOMPANYLIMITEDfortheyearendedDecember31,2011,wereauditedbyanotherauditorwhoexpressedanunmodifiedopiniononthosestatementsonFebruary20,2012.

S.K.ACCOUNTANTSERVICESCOMPANYLIMITED.

(WanrayaPuttasatiean) AuthorizedAuditorNo.4387

Bangkok,February22,2013


C.P.L.GROUPPUBLICCOMPANYLIMITED

Asof

December31,2012

Asof

December31,2011

Asof

January1,2011Notes

Baht Baht Baht

ASSETS

CURRENTASSETS

CashandCashEquivalents 6 106,973,259.18 36,523,762.58 58,240,574.52

TemporaryInvestments 9 30,000,000.00 16,000,000.00 -

TradeandOtherReceivables-Net 7 110,781,364.40 89,303,759.96 175,837,897.35

Inventories-Net 8 610,441,829.12 746,876,185.71 584,889,601.57

OtherCurrentAssets 149,258.62 125,245.40 176,095.40

TOTAL CURRENT ASSETS 858,345,711.32 888,828,953.65 819,144,168.84

NON-CURRENTASSETS

Long-TermInvestments-Net 9 79,319,829.23 65,865,509.61 82,781,260.81

InvestmentProperty-Net 10 39,450,000.00 39,450,000.00 39,450,000.00

Property,PlantandEquipment-Net 11 141,398,767.07 155,609,382.18 173,797,664.88

OtherIntangibleAssets-Net 12 8,244,319.91 9,536,875.18 -

OtherNon-CurrentAssets 12,322.74 14,822.74 8,089,616.33

TOTAL NON - CURRENT ASSETS 268,425,238.95 270,476,589.71 304,118,542.02

TOTAL ASSETS 1,126,770,950.27 1,159,305,543.36 1,123,262,710.86

Notestothefinancialstatementsareanintegralpartoftheabovefinancialstatements.

Statements of Financial Position


Asof

December31,2012

Asof

December31,2011

Asof

January1,2011Notes

Baht Baht Baht

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENTLIABILITIES

Short-TermBorrowingsfromFinancial

Institutions 14 - 28,135,866.25 47,600,880.03

TradeandOtherPayables 15 139,627,142.32 129,946,672.53 125,862,391.85

CurrentIncomeTaxPayable 6,900,799.23 13,447,936.91 -

TOTAL CURRENT LIABILITIES 146,527,941.55 171,530,475.69 173,463,271.88

NONCURRENTLIABILITIES

EmployeeBenefitObligation 16 23,711,542.00 21,147,958.00 -

TOTAL NON CURRENT LIABILITIES 23,711,542.00 21,147,958.00 -

TOTAL LIABILITIES 170,239,483.55 192,678,433.69 173,463,271.88

SHAREHOLDERS’EQUITY

ShareCapital 17

AuthorizedShareCapital

26,399,[email protected] 263,999,950.00 263,999,950.00 263,999,950.00

IssuedandPaidShareCapital

26,399,[email protected] 263,999,950.00 263,999,950.00 263,999,950.00

SharePremiumAccount-OrdinaryShares 198,000,000.00 198,000,000.00 198,000,000.00

RetainedEarnings

Appropriated

LegalReserve 28,940,744.21 28,940,744.21 28,940,744.21

Unappropriated 475,686,415.46 458,858,744.77

TOTAL SHAREHOLDERS’ EQUITY 956,531,466.72 966,627,109.67 949,799,438.98

TOTAL LIABILITIES AND

SHAREHOLDERS’ EQUITY 1,126,770,950.27 1,159,305,543.36 1,123,262,710.86


C.P.L.GROUPPUBLICCOMPANYLIMITED

Statements of Financial Position


Notes 2012 2011

Baht Baht

RevenuefromSales 1,736,968,771.77 1,759,932,702.26

CostofSales (1,581,652,002.45) (1,539,243,531.73)

Gross Profit 155,316,769.32 220,689,170.53

GainfromExchangeRate 15,328,115.62 10,584,459.84

OtherIncome 16,553,352.16 7,257,060.01

SellingExpense (42,674,380.35) (44,428,472.60)

AdministrativeExpense (70,628,127.68) (61,199,344.56)

DoubtfulDebt (14,658,751.65) (7,046,865.22)

ReversalforDoubtfulDebt 12,575,810.72 -

LossfromImpairmentofLong-TermInvestment (7,164,180.38) (915,751.20)

FinancialCosts (3,924,892.39) (3,885,999.33)

Profit Before Income Tax Expense 60,723,715.37 121,054,257.47

TaxExpense 20 (18,019,368.32) (39,230,258.53)

PROFIT FOR THE YEAR 42,704,347.05 81,823,998.94

OTHER COMPREHENSIVE INCOME (EXPENSE) FOR THE YEAR - -

TOTAL COMPREHENSIVE INCOME (EXPENSE) FOR THE YEAR 42,704,347.05 81,823,998.94

BASICEARNINGSPERSHARE 1.62 3.10


C.P.L.GROUPPUBLICCOMPANYLIMITEDFortheyearsendedDecember31,2012and2011

Statements of Comprehensive Income


Issued andPaid-up

ShareCapital

SharePremiumAccount

OrdinaryShares

RetainedEarnings

TotalAppropriatedLegalReserve Unappropriated

Baht Baht Baht Baht Baht

Balance as of December 31, 2010 263,999,950.00 198,000,000.00 28,940,744.21 458,858,744.77 949,799,438.98

AdjustforEmployeeBenefitObligation - - - (18,796,337.00) (18,796,337.00)

PaidDividends 18 - - - (46,199,991.25) (46,199,991.25)

TotalComprehensiveIncome(Expense)

fortheYear - - - 81,823,998.94 81,823,998.94


PaidDividends 18 - - - (52,799,990.00) (52,799,990.00)

TotalComprehensiveIncome(Expense)

fortheYear - - - 42,704,347.05 42,704,347.05




Statements of Changes in Shareholders’ Equity


Notes 2012 2011

Baht BahtCASHFLOWFROMOPERATINGACTIVITIES

ProfitbeforeIncomeTax 60,723,715.37 121,054,257.47

AdjustmentstoProfitbeforeIncomeTaxforCashReceipt(Paid)fromOperation

Depreciation 21,574,048.26 25,562,211.03

AmortizationofOtherIntangibleAsset 1,472,555.27 7,740.82

PrepaidExpenseAmortization 3,489,728.28 1,038,040.20

DoubtfulDebt 14,658,751.65 7,046,865.22

ReversalforDoubtfulDebt (12,575,810.72) -

EstimationofDebtReductionfromReturnedGoodsandDis-countPayment(Reversal)

(2,839,549.20) 1,102,355.19

EstimationCostfromReturnedGoods 2,405,256.01 (85,537.69)

LossfromDeclininginValueofInventories(Reversal) 4,805,517.61 (5,231,807.11)

(Gain)LossfromUnrealizedExchangeRate (168,576.83) 201,476.54

LossfromSaleofProperty,PlantandEquipment (126,165.23) (370,771.32)

LossfromWriteOffofProperty,PlantandEquipment 35,375.34 -

LossfromImpairmentofLong-TermInvestment 7,164,180.38 915,751.20

EmployeeBenefitObligation 2,563,584.00 2,351,621.00

InterestIncome (2,409,234.11) (2,466,468.87)

InterestExpenses 1,220,438.76 1,254,265.82

ProfitfromOperatingbeforeChangeinOperatingAssetsandLiabilites

101,993,814.84 152,379,999.50

(Increase)DecreaseinOperatingAssets

TradeandOtherReceivables (32,044,941.12) 64,549,902.74

Inventories 129,223,582.97 (156,669,239.34)

OtherCurrentAssets (24,013.22) 50,850.00

OtherNon-CurrentAssets 2,500.00 (10,822.41)

Increase(Decrease)inOperatingLiabilities

TradeandOtherPayables 10,479,540.71 15,788,867.98

CashReceived(Paid)fromOperatingActivities 209,630,484.18 76,089,558.47

CashReceivedfromInterestIncome 205,250.59 268,928.04

CashReceivedRefundablefromTaxExpense 7,407,394.65 -

CashPaidTaxExpense (24,566,506.00) (25,782,321.62)

Net Cash Provided from (Used in) Operating Activities 192,676,623.42 50,576,164.89

Statements of Cash Flows



Notes 2012 2011

Baht BahtCASH FLOW FROM INVESTING ACTIVITIES

CashPaidforTemporaryInvestments (30,000,000.00) -

CashPaidforInvestmentinDebtInstrumentHeldtoMaturity (16,000,000.00) -

CashReceivedfromSaleofInvestmentinDebtInstrumentHeldtoMaturity

16,000,000.00 -

CashPaidforInvestmentinGeneralInvestment (4,618,500.00) -

CashPaidforPurchasesofProperty,PlantandEquipment (6,549,999.21) (6,344,815.89)

CashReceivedfromSaleofProperty,PlantandEquipment 126,168.23 469,158.88

CashReceivedinInterestIncomefromInvestmentinDebtInstrumentHeldtoMaturity

2,066,120.52 2,197,540.83

CashPaidforPurchasesofOtherIntangibleAsset (180,000.00) (1,459,000.00)

Net Cash Provided from (Used in) Investing Activities (39,156,210.46) (5,137,116.18)

CASH FLOW FROM FINANCING ACTIVITIES

CashPaidforAssetsPayables (1,127,500.00) -

CashReceivedfromShort-TermBorrowingsfromFinancialInstitutions

641,069,196.30 804,334,906.64

CashPaidinShort-TermBorrowingsfromFinancialInstitutions (669,205,062.55) (824,321,173.67)

PaidDividends (52,799,990.00) (46,199,991.25)

CashPaidinInterestExpense (1,241,579.66) (1,286,912.28)

Net Cash Provided from (Used in) Financing Activities (83,304,935.91) (67,473,170.56)

EffectfromChangesinExchangeRateofCashandCashEquivalents 234,019.55 317,309.91

NET CASH AND CASH EQUIVALENTS INCREASE (DECREASE) 70,449,496.60 (21,716,811.94)

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 6 36,523,762.58 58,240,574.52

CASH AND CASH EQUIVALENTS AT ENDING OF THE PERIOD 6 106,973,259.18 36,523,762.58


Statements of Cash Flows



Notes to Financial Statements C.P.L.GROUPPUBLICCOMPANYLIMITED

December31,2012and2011

1. General Information

TheCompanywasregisteredonJanuary27,1994,haveregistrationnumber0107537000289with

itsregisteredofficesituatedat700Moo6,SukhumvitRd,BangPooMai,MuangSamutprakran,Thailand.

Itsmainbusinessactivityisproducingandsellingtannedleather.

2. Basis of Preparation

2.1 The financial statementshavebeenprepared inaccordancewithFinancialReportingStandardsof

ThailandincludingrelatedinterpretationsandguidelinespromulgatedbytheFederationofAccounting

Professions, applicable rules and regulations of the Securities and Exchange Commission and The

Stock Exchange of Thailand.

2.2 ThefinancialstatementswerepresentedincompliancewiththenotificationofDepartmentofBusiness

Developmentregarding“BriefparticularsmustbecontainedinfinancialstatementsB.E.2554”dated

onSeptember28,2011,notifiedaccordingtoAccountingActB.E.2543.

2.3 Inordertopreparethefinancialstatementstocomplywithfinancialreportingstandards,theCompany’s

management had to make some estimates and suppositions which may have an effect on the amount

shown for revenues, expenses, assets and liabilities and also on the disclosures concerning assets

and contingent liabilities, therefore the actual result may differ from the estimated amount.

2.4 Fortheconvenienceoftheuser,anEnglishtranslationofthefinancialstatementshasbeenprepared

fromthestatutoryfinancialstatementsthatareissuedinThailanguage.

3. New Financial Reporting Standard

NewaccountingstandardwhichiseffectiveforaccountingperiodbeginningonorafterJanuary

1,2012,isasfollow:

TAS20 AccountingforGovernmentGrantsandDisclosureof

GovernmentAssistance

Theaboveaccountingstandardhasnoimpactonthesefinancialstatements.

4. New Financial Reporting Standards Not Yet Effective

New accounting standards, financial reporting standards, interpretations accounting standards,

interpretationsfinancialreportingstandardsandaccountingguidance,whichareeffectiveforaccounting

periodsbeginningonorafterJanuary1,2013and2014,thattheCompanyhasnotadopted,areas

follow:


EffectiveonorafterJanuary1,2013

AccountingGuidance TransferofFinancialAsset

TAS12 IncomeTaxes

TAS20(revised2009) AccountingforGovernmentGrantsandDisclosureofGovernmentAssistance

TAS21(revised2009) TheEffectsofChangesinForeignExchangeRates

TFRS8 OperatingSegments

TSIC10 GovernmentAssistance-NoSpecificRelationtoOperationActivities

TSIC21 IncomeTaxes-RecoveryofRevaluedNon-DepreciableAssets

TSIC25 IncomeTaxes-ChangesinTaxStatusofanEnterpriseoritsShareholder

EffectiveonorafterJanuary1,2014

TFRIC4 DeterminingWhetheranArrangementsContainsaLease

TFRIC12 ServiceConcessionArrangement

TFRIC13 CustomerLoyaltyPrograms

TSIC29 Disclousure-ServiceConcessionArrangement

ThemanagementoftheCompanybelievesthatabovefinancialreportingstandardswillnothave

anyimpactonthefinancialstatementswhentheyareapplied.Except,TAS12“IncomeTaxes”requires

theCompanytospecifythetemporarydifferenceoccurringfromthedifferenceinthevalueofassets

andliabilitiesbetweentheaccountingcriteriaandtaxfortheacknowledgementonthetaximpactwhich

isthedeferredtaxassetsorliabilitiesfollowingthespecifiedcriteria.Currently,themanagementofthe

Companyisassessingtheimpactsonthefinancialstatementsfortheperiodwhentheaccountingstandard

isapplied.

5. SignificantAccountingPolicy

5.1 MeasurementsbasesusedinthePreparationofFinancialStatements

Measurementbasesusedinthepreparationoffinancialstatementsarehistoricalcostmeasurement

basis and combination of variety measurement bases used. Some assets and liabilities that use other

measurement bases have been disclosed the measurement bases used in the particular accounting

policies.

5.2 ForeignCurrencies

ItemsdenominatedinforeigncurrenciesarerecordedinBahtattheprevailingexchangerate

when the transactions occur, and their balances of assets and liabilities at the ended of period are

convertedintoBahtbyclosingrateasatendedperiod.Profitorlossarisingfromsuchconversionis

shown as revenues or expense in the statement of comprehensive income for that period.

5.3 FinancialInstruments

Financialassetswereshowninthestatementsoffinancialpositioncomposedofcashandcash

equivalents,investments,tradeandotherreceivables.Financialliabilitieswereshowninthestatement

of financialpositioncomposedofshort-termborrowingsfrom financial institutions,tradeandother

payables. The particular accounting policy of each items are disclosed in each individual section. The

Companyhasmadetheforwardforeigncurrenciescontractsoastohedgeagainstriskfromfluctuation

of exchange rates. The forward foreign currencies contract will determine exchange rates in the future

that foreign currencies asset and liability will receive or has to be repayable. The forward foreign currencies


contractasofperiodendwillbecomputedbyfairvalueanddisclosedinthenotetothe financial

statements. In addition, realized gain (loss) incurred from the forward foreign exchange contract will

be recorded in the statements of comprehensive income.

5.4 Cash and Cash Equivalents

Cash and cash equivalents include bank deposit in type of current accounts, saving accounts

and3-monthsfixedaccountswithoutguaranteeobligation.

5.5 Trade and Other Receivables

Trade and other receivables are stated at the net realizable value.

5.6 Inventories

Inventories are valued at cost price or net realizable value, whichever is lower which the cost

price calculates as follows:

- RawmaterialsarevaluedatcostpriceunderFIFOmethod.

- Work-in-processisvaluedatactualcost.

- Finishedgoodsarerecordedincostpriceinaccordancewithspecificmethod.

- SparepartsarevaluedatcostpriceunderFIFOmethod.

5.7 TemporaryandLong-TermInvestments

- Investmentsinnon-marketablesecuritieswhichareheldasageneralinvestmentareshown

at cost price and also adjusted the allowance for impairment. The Company recognized

the change of the value of general investments in the statements of comprehensive income

when there is a disposal of the investment or the impairment of investment.

- InvestmentinunittrustinthemarketablesecuritywhichtheCompanyholdsasavailablefor

salesecurityisreflectedbyfairvalue.Thefairvalueofunittrustisannouncementpricefrom

openfundasofthedateinthestatementoffinancialposition.TheCompanyrecognizedthe

change of the value as separate transaction in the shareholders equity in the statement of

financialpositionandwouldberecordedinthestatementofcomprehensiveincomewhen

there is a disposal of the investment or impairment of investment.

- Heldtomaturitydebtinstrumentstatedatamortizedcost.

5.8 Investment Property

TheCompanyinvestmentpropertyistheirownedlandwithoutspecificpurposeofuseinthe

future and/or exploiting for rental income or appreciation of the asset. The Company measures the

investment property by the cost value, deducted the accumulated depreciation and the allowance for

impairment, (if any).

5.9 Property, Plant and Equipment

Land are recorded at cost on the transaction date. Plant and equipment are recorded at cost

onthetransactiondatelessaccumulateddepreciation.Depreciationiscalculatedonastraight-line

basis over the approximate useful life as follows:


-BuildingsandConstructions 20 years

-BuildingsImprovement 5 years

-MachinesandEquipments 10 years

-FixturesandofficeEquipments 5,10 years

-Vehicles 5 years

-WasteWaterStorage 10 years

5.10 Intangible Asset and Amortization

Computer software

Acquired computer software license are capitalized on the basis of the costs incurred to acquire

andbringtousethespecificsoftware.Thesecostsareamortizedovertheirestimatedusefullives5

years.

5.11 Impairment

The carrying amounts of assets are assessed at the end of each reporting period to determine

whether there is any indication of impairment. If any such indication exists, the assets’ recoverable

amountsareestimatedof assetor its cash-generatingunit towhich theasset is included in the

recognition of an impairment loss when the recoverable amount less than the carrying amount of the

asset or its cash generating unit.

Impairmentlossisrecognizedasexpensesinprofitorlossimmediately.

Calculation of Recoverable Amount

- Therecoverableamountisthehigheroftheasset’sfairvaluelesscosttosellofassetorthe

cash-generatingunitoritsvalueinuse.

- Inassessingvalueinuseofanassetbyestimatingthepresentvalueoffuturecashflowsgenerated

bytheasset,discountedusingapre-taxdiscountratewhichreflectscurrentmarketassessments

ofthetimevalueofmoneyandtherisksspecifictotheasset.

- Theassetthatdoesnotgeneratecashinflowslargelyindependentofthosefromotherassets,

therecoverableamountisdeterminedforthecash-generatingunittowhichtheassetbelongs.

Reversals of Impairment Loss

- Thelossonimpairmentofassetsrecognizedinthepriorperiodwillbereversediftheestimation

for indicated net realizable value changes since the last impairment loss was recognized. The

carrying amount of the asset not exceed just to be the carrying amount that would have been

(net of depreciation or amortization), if no impairment loss had been recognized.

- Reversalsofimpairmentlosswillberecognizedasincomeinprofitorlossimmediately.

5.12 Trade and Other Payables

Trade and other payables were shown in cost value.

5.13 EmployeesBenefit

Short-TermEmployeeBenefits

The Company is recognized salary, wage, bonus, social security fund and provident fund are

expenses on date when the transactions occur.


Long-TermEmployeeBenefits

TheCompanyprovidesforpostemploymentbenefitstoorretirementindemnityemployeesunder

the labor laws applicable in Thailand. The Company has recorded the liabilities in respect of employee

benefitswhicharethepresentvalueofthedefinedbenefitobligationscalculatedbyanindependentactuary

inaccordancewiththeactuarialtechnique,anddiscountedbenefitbytheprojectedunitcreditmethod.

Theestimatedfuturecashflowsshallreflectemployeesalaries,turnoverrate,mortalityrate,lengthof

serviceandother.TheCompanyrecordedprovisionforemployeebenefitisnon-currentliabilities.The

costsassociatedwithprovidingthesebenefitsarechargedtothestatementsofcomprehensiveincome

soastospreadthecostovertheemploymentperiodduringwhichtheentitlementtobenefitsisearned.

5.14 Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a

resultofpastevents,itisprobablethatanoutflowofresourceswillberequiredtosettletheobligation,

andareliableestimateoftheamountcanbemade.WheretheCompanyexpectsaprovisiontobe

reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement

is virtually certain.

5.15 Recognition of Revenues

- Revenuefromsalesisrecognizedwhengoodsaredeliveredtocustomer.

- Revenueofrentalisrecognizedinaccordancewiththeperiodofrentthroughtheperiodterm

of the contract of rent.

- Revenueofinterestincomeisrecognizedinaccordancewiththeperiodthatinvestmentorloan.

- Revenuefromtaxreturnisrecordedtootherincomewhentaxreturnsarereceived.

- Dividendrevenueisrecognizedwhentherighttoreceivedividendarises.

5.16 Recognition of Expenses

- Expensesarerecognizedonaccrualbasis.

5.17 Income Tax

Incometaxexpensesarerecognizedasexpensesinprofitorlossasincometaxtobepaid,

using tax rates enacted at the end of each reporting period

5.18 Earnings per Share

Calculationofearningspershare,calculatedbydividingnetprofitwiththeweightedaverage

numberofissuedandpaid-upshares.TheCompanydidnotcalculatethefully-dilutedearningsper

share since it has no equivalent ordinary shares equivalents.

5.19 SignificantAccountingJudgmentsandEstimates

In order toprepare the financial statements to complywith financial reporting standards, the

Company’s management had to make some judgment and estimates which may have an effect on

theamountshowninfinancialstatementsandnotestofinancialstatements,thereforetheactualresult

maydifferfromtheestimatedamount.Significantestimatesandprovisionsareasfollows:

Lease


Indeterminingwhethera lease is tobeclassifiedasanoperating leaseor finance lease, the

management isrequiredtouse judgmentregardingwhethersignificantriskandrewardsofownership

of the leased asset have been transferred, taking into consideration terms and conditions of the

arrangement.

AllowanceforDoubtfulAccounts–TradeandOtherReceivables

Indetermininganallowancefordoubtfulaccounts-tradeandotherreceivables,themanagement

needs to make judgment and estimates based upon, among other things, past collection history, aging

profileofoutstandingdebtsandtheprevailingeconomiccondition.

AllowanceofDebtReductionfromReturnGoodsandDiscountPayment

In determining an allowance of debt reduction from return goods and discount payment, the

management makes judgment in estimation an allowance of debt reduction from return goods and

discount payment from the Company merchandise is not complied with the attribute the customers

definedwherebytheCompanycomputedfromthedebtreductionrateandmerchandisereturnedreceipt

over sales by average multiplication with merchandise sales incurred every three months.

ReductionofInventoriestobecomeNetRealizableValue

In estimating the reduction of inventories to become net realizable value, the management uses

the discretion in estimating the net realizable value of inventories. The sum of money expected to

receive from inventories is considered from the change in sale price or cost directly related to the

events occurring after of report period.

EstimationofReturnedGoods

In determining an estimation of returned goods, the management makes judgment in estimation

of returned goods from the Company merchandise is not complied with the attribute the customers

definedwhereby theCompany is estimation fromaverage cost of goods sold ratemultipliedwith

estimation of debt reduction allowance incurred from merchandise returned.

AllowanceofImpairmentofEquityInvestment

The Company treats investment in debt instrument held to maturity and other investments

asimpairedwhentherehasbeenasignificantorprolongeddeclineinthefairvaluebelowtheircost

orwhereotherobjectiveevidenceofimpairmentexists.Thedeterminationofwhatis“significant”or

“prolonged”requiresjudgmentofthemanagement.

Property,PlantandEquipmentandDepreciation

In determining depreciation of plant and equipment, the management is required to make

estimates of the useful lives and residual values of the Company’s plant and equipment and to review

estimate useful lives and residual values when there are any changes. In addition, the management

is required to review property, plant and equipment for impairment on a periodical basis and record

impairment losses in the period when it is determined that their recoverable amount is lower than the

carrying amount. This requires judgments regarding forecast of future revenues and expenses relating

to the assets subject to the review.


IntangibleAssetsandAmortization

Intangible assets are systematically amortized over their estimated useful lives, and are subject

to impairment if there is an indication they may be impaired.

Post-EmploymentBenefits

Theobligationunderdefinedbenefitplanisdeterminedbasedonactuarialvaluations.Inherent

within these calculations are assumptions as to discount rates, future salary increases, mortality rates

and other demographic factors. In determining the appropriate discount rate, an independent actuary

selectsaninterestratethatreflectsthecurrenteconomicsituation.Themortalityrateisbasedonpublicly

availablemortalitytablesforthecountry.However,actualpost-retirementcostsmayultimatelydiffer

from these estimates.

6. CashandCashEquivalents

Consistof:

Asof Asof

December31,2012 December31,2011

Baht Baht

Cash 274,035.37 734,425.76

BankDeposit-CurrentDeposit 15,083,367.72 17,182,707.96

BankDeposit-SavingDeposit 91,615,856.09 18,606,628.86

Total 106,973,259.18 36,523,762.58

7. TradeandOtherReceivables-Net

Consistof:

Asof Asof


Baht Baht

TradeReceivables-Domestic 29,038,171.06 60,663,171.04

TradeReceivables-Oversea 73,304,338.92 46,762,022.62

NotesReceivables 25,274,364.36 7,251,030.53

LessAllowanceforDoubtfulDebt (21,978,403.34) (29,904,335.59)

Less Estimation of Debt Reduction from Returned

GoodsandDiscountPayment (3,079,049.82) (5,918,599.02)

TradeandNotesReceivables-Net 102,559,421.18 78,853,289.58

OtherReceivable 8,221,943.22 10,450,470.38

Total 110,781,364.40 89,303,759.96


Agingoftradeandnotesreceivablesareasfollows:

Asof Asof


Baht Baht

Withincreditterm 68,704,435.41 51,461,602.75

Overdue1to30days 31,988,952.53 14,091,882.60

Overdue31to60days 3,047,726.73 2,367,352.00

Overdue61to90days 1,423,232.38 29,061.16

Overdue91to180days 417,465.30 1,809,896.37

Overdue181to365days 56,658.65 22,407,556.13

Overdueover366days 21,978,403.34 22,508,873.18

Total 127,616,874.34 114,676,224.19


LessEstimationofDebtReductionfrom

ReturnedGoodsandDiscountPayment (3,079,049.82) (5,918,599.02)

Net 102,559,421.18 78,853,289.58

OtherreceivablesasofDecember31,2012and2011consistof:

Asof Asof


Baht Baht

PrepaidExpense 1,259,592.15 1,233,191.54

AccruedRevenue 2,470,596.90 370,969.86

RevenueDepartmentReceivable 3,897,071.37 889,014.92

PrepaidIncomeTax - 7,407,394.65

OtherReceivables 594,682.80 549,899.41

Total 8,221,943.22 10,450,470.38

FortheyearsendedDecember31,2012and2011,theCompanyhasmovementofallowance

fordoubtfuldebtasfollows:

For the years ended


Baht Baht

BeginningBalance (29,904,335.59) (22,928,354.40)

IncreasewithinPeriod (14,658,751.65) (7,475,981.19)

ReversewithinPeriod 12,575,810.72 500,000.00

WrittenoffasBadDebt 10,008,873.18 -

EndingBalance (21,978,403.34) (29,904,335.59)


FortheyearsendedDecember31,2012and2011,theCompanyhasmovementofestimationof

debtreductionfromreturnedgoodsanddiscountpaymentasfollows:

For the years ended


Baht Baht



DecreasewithinPeriod 13,941,757.52 20,827,761.27

EndingBalance (3,079,049.82) (5,918,599.02)

AsofDecember31,2012and2011,tradereceivablesoversea-relatedcompanythatisoverdue

over366daysand181daysrespectively,hadmadewrittenrequestforgraduallysettlementtotheCompany

bythemachineswhichhadtheapproximatevalueinamountofUSD0.23millionwithinthequarter

2/2012,theremainingwillbecompletelysettledwithinthequarter4/2012andtheCompanyexpected

thatitwillbecollectible.Laterinthequarter2/2012,suchtradereceivablesoversea-relatedcompany

isunabletocomplythatsettlementplan.However,theCompanyhasrecognizedthewholeamountof

allowancefordoubtfuldebt,whichthemanagementoftheCompanywillfollow-upthecollectionfrom

suchtradereceivablescloselytominimizethedamageincurredtotheCompany.

8. Inventories - Net

Consistof:

Asof Asof


Baht Baht

FinishedGoods 10,249,426.10 29,926,582.50

RawMaterials 16,345,928.20 36,826,587.68

Work-in-Process 475,604,366.42 573,417,867.80

Chemical 38,010,306.71 56,181,127.82

SparePart 2,137,947.70 2,890,804.03

Goods-in-Transit 74,341,309.18 46,669,897.45

LessAllowancefromDeclininginValueofInventories (6,871,251.40) (2,065,733.79)

PlusEstimationCostofAllowanceforReturnedGoods 623,796.21 3,029,052.22

Net 610,441,829.12 746,876,185.71


FortheyearsendedDecember31,2012and2011,theCompanyhasmovementofallowancefrom

declininginvalueofinventoriesasfollows:

Asof Asof


Baht Baht



ReversewithinPeriod 3,399,663.08 8,745,405.93

EndingBalance (6,871,251.40) (2,065,733.79)

FortheyearsendedDecember31,2012and2011,theCompanyhasmovementofestimationcost

ofallowanceforreturnedgoodsasfollows:

For the years ended


Baht Baht

BeginningBalance 3,029,052.22 2,943,514.53

IncreasewithinPeriod 2,944,299.63 12,880,068.19

DecreasewithinPeriod (5,349,555.64) (12,794,530.50)

EndingBalance 623,796.21 3,029,052.22

AsofDecember31,2012and2011,theCompanyhasinsuredrawmaterials,workinprocess,

finishedgoodsandsuppliesinvalueofBaht614million,equallyfortwoyearswhichthebeneficiary

frominsuranceisgrantertoonemerchantbankinnote13.


9. TemporaryInvestments/Long-TermInvestments-Net

Consistof:

Activities

Placeof

incorporation

incorporation

ShareCapital

%of

Shareholding

OriginalCost

ofInvestment

Investment

Asof

Dividends

For the year ended

December31,

2012

December31,

2011

December31,

2012

December31,

2011

U.S.Dollar % U.S.Dollar Baht Baht Baht Baht

9.1GeneralInvestment:

C.P.L.INTERNATIONAL Businessof BritishVirgin

COMPANYLIMITED Tannery Islands 8,000,000.00 15 1,200,000.00 51,483,750.00 51,483,750.00 - -

PlusAdvancePaymentfor

CapitalIncrease 1,000,000.00 15 150,000.00 4,618,500.00 - - -

LessAllowanceforImpairment (21,232,420.77) (14,068,240.39) - -

Net 34,869,829.23 37,415,509.61 - -

SIRINRATCOMPANY Building Thai Baht Baht

LIMITED For rent 15,000,000.00 3 450,000.00 450,000.00 450,000.00 - -

TotalGeneralInvestment 35,319,829.23 37,865,509.61 - -

9.2InvestmentinDebtInstrumentheldtoMaturity:

DebtInstrumentMaturityin2-5years 10,000,000.00 10,000,000.00

DebtInstrumentMaturityin6-10years 34,000,000.00 18,000,000.00

TotalInvestmentinDebtInstrumentheldtoMaturity 44,000,000.00 28,000,000.00

TotalLong-TermInvestments 79,319,829.23 65,865,509.61

9.3TemporaryInvestments:

InvestmentsinFixedDeposit4months 30,000,000.00 -

DebtInstrumentMaturityin1years - 16,000,000.00

TotalTemporaryInvestments 30,000,000.00 16,000,000.00

FortheyearsendedDecember31,2012and2011,theCompanyhasmovementofallowancefor

impairmentofgeneralinvestmentasfollows:

For the years ended


Baht Baht


IncreasewithinPeriod (7,164,180.38) (915,751.20)

DecreasewithinPeriod - -

EndingBalance (21,232,420.77) (14,068,240.39)

GeneralInvestment

Inaccordancewithminuteoftheboardofdirectorsmeetingno.2/2012onMarch19,2012,ithas

passedaunanimousresolutiontoapprovethecapitalincreaseinC.P.L.INTERNATIONALCO.,LTD.in

theproportionof15%oftheauthorizedsharecapitalincreaseinamountofUSD1.0million,totalingin

amountofBaht4.62million.BecausethesuchCompanyhasfacedthefinancialdifficultiesinworking

capital,cashflowandthebusinessoperations.Theobjectiveofcapitalincreaseistosettletheseverance

payforemployees.Presently,suchcapitalincreaseisnotsuccess,theCompanyhasmadefullyallowance

forimpairmentinadvancepaymentforcapitalincrease.


InvestmentinDebtInstrumentHeldtoMaturity

AsofDecember31,2012,amountofBaht16.00millionwasinvestmentinunsubordinatedsecured

andholdernamedefinabledebentures.Thematurityofdebenturesfor6years9months19daysfrom

issueddateforperiodsinceJanuary27,2012toNovember15,2018withinterestrateyears1-4is

4.00%perannum,interestyears5-6is4.40%perannumandsinceinterestyearsover6tomaturityis

5.50%perannum.

AsofDecember31,2012and2011,amountofBaht10.00millionwasinvestmentinunsubordinated

securedandholdernamedefinableadebentures.Thematuritydebenturesfor4yearsfromissuedate

forperiodsinceOctober1,2010toOctober1,2014withinterestrateof3.85%perannum.

AsofDecember31,2012and2011,amountofBaht18.00millionwasdebentures intypeof

non-guaranteed,non-convertible.Thematurityofdebenturesfor10yearsfromissueddateforperiod

sinceOctober22,2009toOctober22,2019withinterestrateyears1-5is4.80%perannumandinterest

years6-10is6.00%perannum.

AsofDecember31,2011,amountofBaht16.00millionwasinvestmentinunsubordinatedsecured

andholdernamedefinabledebentures.Thematurityofdebenturesfor8yearsfromissueddatefor

periodsinceMay20,2004toMay20,2012withinterestrateyears1-4is4.25%perannumandinterest

years5-8is5.75%perannum.

InvestmentsinFixedDeposit

AsofDecember31,2012,amountofBaht30.00millionwasinvestmentinfixeddeposit4months,

sinceDecember17,2012toApril17,2013withinterestrateat3.05%perannum.

10. InvestmentProperty-Net

AsofDecember31,2012and2011,TheCompanyinvestmentpropertyistheirownedlandwithout

specificpurposeofuseinfutureandexploitingforrentalincome,whichitsinvestmentpropertyhadthe

bookvalueamountofBaht39.45millionandfairvalueamountofBaht42.08million.


11.

Prop

erty,P

lantand

Equ

ipmen

t-Net

Con

sistof:

Land

and

Land

Improvem

ent

Buildingsand

Buildings

Improvem

ent

Mac

hine

s an

d

Equipm

ents

Vehicles

Fixturesand

Office

Equipm

ents

WasteW

ater

Storage

Assetsin

Prog

ress

Total

Baht

Baht

Baht

Baht

Baht

Baht

Baht

Baht

As o

f Dec

embe

r 31

, 20

10

Cost

50,654,770.00

153,167,503.04

232,641,303.65

29,538,986.08

8,578,634.42

6,250,000.00

-480,831,197.19

LessAc

cumulated

De

preciation

-(122,478,148.98)

(150,022,118.44)

(22,120,924.30)

(6,162,342.70)

(6,249,997.89)

-(307,033,532.31)

Book

value

50,654

,770

.00

30,689

,354

.06

82,619

,185

.21

7,41

8,06

1.78

2,41

6,29

1.72

2.11

-17

3,79

7,66

4.88

Tran

sactions

during the ye

ar

ende

d Dec

embe

r 31

, 20

11

Purchase

60,000.00

-1,702,500.00

1,012,663.56

916,204.39

-3,780,947.94

7,472,315.89

Disposal

--

(2,160,038.00)

(885,746.82)

--

-(3,045,784.82)

Depreciationfortheyear

-(4,041,652.52)

(16,727,116.59)

(3,877,017.07)

(916,424.85)

--

(25,562,211.03)

DepreciationforDisposal

--

2,061,653.44

885,743.82

--

-2,947,397.26

Ending

boo

k va

lue

50

,714

,770

.00

26,647

,701

.54

67,496

,184

.06

4,55

3,70

5.27

2,41

6,07

1.26

2.11

3,78

0,94

7.94

155,60

9,38

2.18

As o

f Dec

embe

r 31

, 20

11

Cost

50,714,770.00

153,167,503.04

232,183,765.65

29,665,902.82

9,494,838.81

6,250,000.00

3,780,947.94

485,257,728.26

LessAc

cumulated

De

preciation

-(126,519,801.50)

(164,687,581.59)

(25,112,197.55)

(7,078,767.55)

(6,249,997.89)

-(329,648,346.08)

Book

value

50,714

,770

.00

26,647

,701

.54

67,496

,184

.06

4,55

3,70

5.27

2,41

6,07

1.26

2.11

3,78

0,94

7.94

155,60

9,38

2.18


Land

and

Land

Improvem

ent

Buildingsand

Buildings

Improvem

ent

Mac

hine

s an

d

Equipm

ents

Vehicles

Fixturesand

Office

Equipm

ents

WasteW

ater

Storage

Assetsin

Prog

ress

Total

Baht

Baht

Baht

Baht

Baht

Baht

Baht

Baht

As o

f Dec

embe

r 31

, 20

11

Cost

50,714,770.00

153,167,503.04

232,183,765.65

29,665,902.82

9,494,838.81

6,250,000.00

3,780,947.94

485,257,728.26

LessAc

cumulated

De

preciation

-(126,519,801.50)

(164,687,581.59)

(25,112,197.55)

(7,078,767.55)

(6,249,997.89)

-(329,648,346.08)

Book

value

50,714,770.00

26,647,701.54

67,496,184.06

4,553,705.27

2,416,071.26

2.11

3,780,947.94

155,609,382.18

Tran

sactions

during the ye

ar

en

ded

Dec

embe

r 31

, 20

12

Purchase

--

5,483,997.42

1,345,728.97

569,085.10

--

7,398,811.49

Transferin/(Transferou

t)-

-3,780,947.94

--

-(3,780,947.94)

-

Disposal

--

(329,160.00)

(1,479,000.00)

--

-(1,808,160.00)

Written-offAs

sets

--

-(3,271.03)

(2,976,264.09)

--

(2,979,535.12)

Depreciationfortheyear

-(3,214,212.01)

(15,531,143.29)

(1,845,972.83)

(982,720.13)

--

(21,574,048.26)

DepreciationforDisposal/

Written-offAs

sets

--

329,159.00

1,482,268.03

2,940,889.75

--

4,752,316.78

Ending

boo

k va

lue

50

,714

,770

.00

23,433

,489

.53

61,229

,985

.13

4,05

3,45

8.41

1,96

7,06

1.89

2.11

-14

1,39

8,76

7.07

As o

f Dec

embe

r 31

, 20

12

Cost

50,714,770.00

153,167,503.04

241,119,551.01

29,529,360.76

7,087,659.82

6,250,000.00

-487,868,844.63

LessAc

cumulated

De

preciation

-(129,734,013.51)

(179,889,565.88)

(25,475,902.35)

(5,120,597.93)

(6,249,997.89)

-(346,470,077.56)

Book

value

50,714

,770

.00

23,433

,489

.53

61,229

,985

.13

4,05

3,45

8.41

1,96

7,06

1.89

2.11

-14

1,39

8,76

7.07


AsofDecember31,2012and2011,theCompanyhadassetswiththedepreciationfullycalculated

butstilloperatewhichhadacostvalueofBaht219.13millionandBaht193.60millionrespectively.The

netbookvalueofwhichwasnowBaht692.00andBaht587.00respectively.

AsofDecember31,2012and2011,theCompanypledgedandmortgagedlandplusproperty,

machinery and some equipmentwhich the net book value ofBaht 123.98million andBaht 133.50

millionrespectively,ascollateralagainstalltypeofliabilityatthemerchantbankandbeneficiaryfrom

theinsuranceintheamountaccordingtotheinsurancecontractinBaht216.00million,equallyfortwo

years.ItisgiventomerchantbankaccordingtonoteNo.13.

12. OtherIntangibleAssets-Net

Consistof:

ComputerSoftwareBaht

As of December 31, 2010Cost 264,999.59LessAllowanceforImpairmentofAssets (264,999.59)Book Value -TransactionsduringtheyearendedDecember31,2011Purchase 9,544,616.00AmortizationExpenses (7,740.82)Ending book value 9,536,875.18As of December 31, 2011Cost 9,809,615.59LessAllowanceforImpairmentofAssets (264,999.59)AccumulatedAmortization (7,740.82)Book Value 9,536,875.18

ComputerSoftwareBaht

As of December 31, 2011Cost 9,809,615.59LessAllowanceforImpairmentofAssets (264,999.59)AccumulatedAmortization (7,740.82)Book Value 9,536,875.18TransactionsduringtheyearendedDecember31,2012Purchase 180,000.00Written-offAssets (264,999.59)Amortizationfortheyear (1,472,555.27)AllowanceforImpairmentofAssetsforWritten-off 264,999.59Ending book value 8,244,319.91As of December 31, 2012Cost 9,724,616.00LessAccumulatedAmortization (1,480,296.09)Book value 8,244,319.91


13. CreditFacilitiesandGuarantee

TheCompanyhascreditlinefromcommercialbankandfinancialinstitutionsinformbankoverdraft,

trustreceipts,short-termloan,letterofguarantee,creditlineforforwardcontract,andforeignexchange.

AsofDecember31,2012and2011hasgrantedthetotalcreditlineinamountofBath1,165.00million

andBath1,260.00millionrespectively,andamountofUSdollar3.00million,equallyfortwoyears.It

ispledgedbymortgageregisteroflandplusproperty,machineryandequipment,andbeneficiaryfrom

insuranceininventory,suchlandplusproperty,machineryandequipmentaccordingtonoteNo8and11.

14. Short-TermBorrowingsfromFinancialInstitutions

AsofDecember31,2011,thewholeamountisborrowingfrommerchantbankinformoftrust

receiptpayablewithcarriedtheinterestrateof7.25–8.37%perannum.Undertermoftrustreceipt

contract,theCompanyreceivesmerchandiseorderedbyusingcreditofthefinancialinstitution.Hence,

theCompanyconstitutesobligationcommitmenttothefinancialinstitutionforsuchmerchandisefeeboth

thatkeptordisposed.

SuchaboveborrowingconstitutescollateralaccordingtonoteNo13.

15. TradeandOtherPayables

Consistof:

Asof Asof


Baht Baht

TradePayables-Domestic 62,456,813.21 60,072,460.00

TradePayables-Oversea 56,989,899.61 49,575,368.73

NotesPayables - 3,691.50

TradeandNotesPayables 119,446,712.82 109,651,520.23

OtherPayables 20,180,429.50 20,295,152.30

Total 139,627,142.32 129,946,672.53

OtherpayablesasofDecember31,2012and2011consistof;

Asof Asof


Baht Baht

AssetsPayables 848,812.28 1,127,500.00

AccruedExpenses 14,087,786.68 14,096,152.71

AdvanceReceiptforGoods 2,231,029.87 2,731,438.74

OtherPayables 3,012,800.67 2,340,060.85

Total 20,180,429.50 20,295,152.30


16. EmployeesBenefitObligation

EmployeeBenefitsObligationareasfollows:

For the year ended

December31,

2012 2011

Baht Baht

PresentvalueforobligationasofJanuary1, 21,147,958.00 18,796,337.00

Currentservicecost 1,772,084.00 1,641,909.00

Interestexpenses 791,500.00 709,712.00

PresentvalueforobligationasofDecember31, 23,711,542.00 21,147,958.00

Theprincipalassumptionsusedforthepurposesoftheactuarialvaluationwereasfollows:

Discountrate 3.77%

AverageSalaryincreaserate 4.66%

Mortalityrate mortalityfromtableofmortalityyear2008

Disabilityrate 5%ofmortality

Employeeturnoverrate 2%–49%

Retirementage 60years

17. ShareCapitalFor the year ended

December31,2012

For the year ended

December31,2011

Par

Value

Numberof

Share

Amount Numberof

Share

Amount

Baht Shares Baht Shares Baht

AuthorizedShareCapital

BeginningOrdinaryShares 10.00 26,399,995 263,999,950.00 26,399,995 263,999,950.00

EndingOrdinaryShares 10.00 26,399,995 263,999,950.00 26,399,995 263,999,950.00

IssuedandPaid-upShareCapital

BeginningOrdinaryShares 10.00 26,399,995 263,999,950.00 26,399,995 263,999,950.00

EndingOrdinaryShares 10.00 26,399,995 263,999,950.00 26,399,995 263,999,950.00

18. Paid Dividends

InaccordancewiththeminuteoftheAnnualGeneralShareholders’Meetingfortheyear2012

which held on April 25, 2012, it is unanimously resolved that the Company appropriates retained

earningsfor2011asdividendtoshareholdersinnumberof26.39millionsharesintherateofBaht2.00

pershareaggregatingtoamountofBaht52.79million.DividendisrepayableonMay15,2012,whereby

theCompanyhasalreadypaiddividends.

InaccordancewiththeminuteoftheAnnualGeneralShareholders’Meetingfortheyear2011

which held on April 29, 2011, it is unanimously resolved that the Company appropriates retained

earningsfor2010asdividendtoshareholdersinnumberof26.39millionsharesintherateofBaht1.75


pershareaggregatingtoamountofBaht46.19million.DividendisrepayableonMay25,2011,whereby

theCompanyhasalreadypaiddividends.

19. Capital Management

Theprimaryobjectivesof theCompany’scapitalmanagementare tomaintain theirabilities to

continueasagoingconcernandtomaintainanappropriatecapitalstructure.

AsofDecember31,2012and2011,debtstoequityratiointhefinancialstatementsis0.18:1

and0.20:1respectively.

20. TaxExpense

FortheyearendedDecember31,2012and2011,theCompanycalculatedcorporateincometaxat

23%and30%respectivelyofaccountingnetprofitafteraddingadjustedtransactioninaccordancewith

theRevenueCodewhichismainlyreversalofallowancefordoubtfuldebt,estimationofdebtreductionfrom

returngoodsanddiscountpayment,estimationcostofallowanceforreturngoods,lossfromimpairment

ofgeneralinvestmentandlossfromdeclininginvalueofinventories,etc.

21. ExpensesbyNature

Consistof:

For the year ended

December31,

2012 2011

Baht Baht

ChangingwithinWorkinProcessandFinishGoods 117,490,657.78 (149,325,466.32)

RawMaterialandChemicalUsed 1,297,030,959.10 1,537,271,563.95

LossfromDeclininginValueofInventories(Reversal) 4,805,517.61 (5,231,807.11)

EmployeeExpenses 134,465,291.25 131,209,793.89

Managements’Remuneration 25,492,104.00 16,830,968.00

Depreciation 21,574,048.26 25,562,211.03

BadDebtandDoubtfulDebt(Reversal) 2,082,940.93 7,046,865.22

LossfromImpairmentofLong-TermInvestment 7,164,180.38 915,751.20

TransportationExpense 11,656,858.98 8,956,110.90

OtherProductionExpenses 68,948,758.78 67,916,432.85

OtherExpenses 13,490,314.72 11,681,541.70

Total 1,704,201,631.79 1,652,833,965.31

22. FinancialDataSegregatedbyBusinessSector

TheCompanyoperates inonlyonebusinesssector, namelymanufacturinganddistributionof

leatherproductsandoperateinonegeographicalarea,whichisThailand.Thusallincome,profitand

entireassetsshowninthefinancialstatementsarerelatedtothesaidbusinesssectorandgeographical

area.


FortheyearsendedDecember31,2012and2011,theCompanyhasnetdomesticsalesand

foreignsalesasfollows:

Domestic Foreign Total

2012 2011 2012 2011 2012 2011

’000Baht ’000Baht ’000Baht ’000Baht ’000Baht ’000Baht

RevenuefromSales 331,111 426,918 1,405,858 1,333,014 1,736,969 1,759,932

GrossProfit 21,191 34,423 134,126 186,266 155,317 220,689

GainfromExchangeRate 15,328 10,584

OtherIncome 16,553 7,257

SellingExpense (42,674) (44,428)

AdministrativeExpense (70,629) (61,199)

DoubtfulDebt (14,659) (7,047)

ReversalforDoubtfulDebt 12,576 -

LossfromImpairmentof

Long-TermInvestment (7,164) (916)

FinancialCosts (3,925) (3,886)

ProfitBeforeIncomeTaxExpense 60,723 121,054

TaxExpense (18,019) (39,230)

ProfitfortheYear 42,704 81,824

23. FinancialInstruments

23.1 PolicyofFinancialRiskManagement

The Company constitutes risk in relation to change of interest rates and exchange rates by

whichtheCompanyconsiderstoutilizeanappropriatefinancialinstrumenttohedgeagainstsuchrisk.

However,theCompanyhasnopolicytoholdorissuefinancialinstrumentforspeculatingorfortrading.

23.2 Risk from Interest Rates

Interestrateriskarisesfromthefluctuationofinterestratesinthefuturewhichwillaffectoperations

andcashflowoftheCompany,whichtheCompanyhadassetsandliabilitiesinstrumentsagainstthis

risk as follow:

Amount

AsofDecember31,

Interest rate per annum

AsofDecember31,

2012 2011 2012 2011

MillionBaht MillionBaht % %

BankDeposit–SavingAccount 91.62 18.61 0.05–0.75 0.05–0.75

BankDeposit–FixedAccount 30.00 - 3.05 -

InvestmentinDebtInstrument

heldtoMaturity 44.00 44.00 3.85–5.75 3.85–5.75

TrustReceiptsPayable - 28.14 - 7.25–8.37


23.3 Risk on Exchange Rates

Risk on exchange rates is regarded to purchase raw material, machines and sales denominated

inforeigncurrencies.TheCompanyhasfinancialassetsandfinancialliabilitiesinforeigncurrenciesas

follows:

Currencies FinancialAssets FinancialLiabilities

Asof

December31,2012

Asof

December31,2011

Asof

December31,2012

Asof

December31,2011

EUR - 400.00 - -

GBP 182.00 - - -

CNY - 10,405.00 - -

INR 2,850.00 2,850.00 - -

USDollars 2,558,051.04 1,660,738.14 1,914,836.03 2,489,704.07

AsofDecember31,2012and2011,theCompanyhedgetheriskfromforeigncurrencyexchange

rate incurred from sale good as foreign currency by performing the forward foreign currency contract

as follows:

Asof

December31,2012

Asof

December31,2011

CreditLimitforForwardContract 120.00MillionBaht 120.00MillionBaht

ValueofForwardContract–Sale 0.18MillionUSDollars 0.62MillionUSDollars

ValueofForwardContract-Sale 5.67MillionBaht 19.16MillionBaht

FairValue 5.66MillionBaht 19.77MillionBaht

Fairvalueoftheforwardcontract–saleiscomputedbyusingratesdeterminedbythosecounter

partybankasofthedateinstatementsoffinancialposition.

23.4 Credit Risk

TheCompanyhasnotsignificantriskfromcreditriskinconnectiontotradereceivablessince

the Company provides sales overseas by L/C application or alternatively clients make goods payment

inadvance.Moreover,domesticsalesaretypicallyperformedtofinanciallysecuredcompanieswhose

capability is good at debt repayment. The Company has dealt with these clients for a long time:

therefore,itisanticipatedofnonsignificantriskderivedfromunpaymentofthoseaccountsreceivable.

However,theCompanysufficientlyconsideredtheallowanceofdoubtfuldebt.

23.5 FairValue

Duetothefinancialassetsandliabilitiesaremainlyshorttermtype,investmentindebtinstrument

and loans has interest rates be similar to market rates, the management believes that book values of

suchfinancialassetsandliabilitiesreflectvalueswhichdonotmateriallydifferfromtheirfairvalues.

24. TransactionswithRelatedParties

TheCompanyhadsignificantbusinesstransactionswiththerelatedcompanies.Suchtransactions,

whichhavebeenconcludedoncommercialtermsandbases,agreeduponbetweentheCompanywith

thesecompaniesareinordinarycourseofbusinessaresummarizedbelow:


24.1 Inter-RevenuesandExpensesFor the year ended

December31,

2012 2011

PricingPolicy Baht Baht

Inter-Transaction with Related Companies

SalesMaterial Costplusmargin

approximate20% 169,200.00 353,940.00

SalesGoods Normalbusinesspriceswhichcan

becomparedwithtransactions

incurred by outside parties

16,374,596.91 11,648,952.55

PurchasesMaterial Priceiscompliedwiththeprices

whicharemutuallyagreedupon

91,075,412.00 82,828,348.00

Inter-Transaction with Related Companies

PurchasesGoods Priceiscompliedwiththeprices


- 15,245,548.75

PurchasesofAsset Priceiscompliedwiththeprices


154,092.79 -

OtherExpenses Priceiscompliedwiththeprices


332,532.33 -

ProfessionalService Pricesinaccordancewiththe

contract

- 60,000.00

24.2 Inter-AssetsandLiabilities

Asof Asof

December31,

2012

December31,

2011

Baht Baht

Trade and Notes Receivables

TheRelatedCompanies

-C.P.L.MARKETINGCO.,LTD. 21,978,403.34 22,376,985.24

-EAGLECHEMICALINDUSTRIALCO.,LTD - 27,606.00

-MIMIINDUSTRAILCO.,LTD. 40,885.51 45,340.72

-MITNIYUM(MANWOOD)CO.,LTD 3,909,868.97 491,691.43

Total 25,929,157.82 22,941,623.39


Net 3,950,754.48 15,546,160.98

Trade Payables

TheRelatedCompany

-EAGLECHEMICALINDUSTRIALCO.,LTD 32,951,347.64 27,959,768.75

Total 32,951,347.64 27,959,768.75


Asof Asof

December31,

2012

December31,

2011

Baht Baht

Accrued Expenses

TheRelatedCompany

-APPLYD.B.INDUSTRIALCO.,LTD. - 358,582.68

Total - 358,582.68

24.3 ManagementBenefitExpenses

For the year ended

December31,

2012 2011

Baht Baht

Short-TermEmployeeBenefits 25,161,600.00 16,524,000.00

Post-EmploymentBenefits 330,504.00 306,968.00

Total 25,492,104.00 16,830,968.00

Thismanagementremunerationisbenefitthatrepayabletomanagementanddirectorsofthe

Company.Itiscomposedofremunerationthatismonetary,i.e.salary,relatedbenefitandremuneration

ofdirectorsincludingremunerationbenefitinotherform.TheCompany’smanagementisthepersons

whoaredefinedundertheSecuritiesandExchangeAct.

24.4 The Relationship with the Company

Consist of:

Name RelationshipC.P.L.MARKETINGCO.,LTD. RelatedCompanybyindirectshareholdingviaC.P.L.INTERNATIONAL

CO.,LTD.EAGLECHEMICALINDUSTRIALCO.,LTD. RelatedCompanybyCommonGroupShareholdersandExecutivesAPPLYD.B.INDUSTRIALCO.,LTD. RelatedCompanybyCommonGroupShareholdersandExecutivesMIMIINDUSTRAILCO.,LTD. RelatedCompanybyCommonGroupShareholdersandExecutivesMITNIYUM(MANWOOD)CO.,LTD. RelatedCompanybyCommonGroupShareholdersandExecutivesCHAROENSINASSETCO.,LTD. RelatedCompanybyCommonGroupShareholdersandExecutives


25. Non-CashFlowsTransactionsFor the year ended

December31,2012 2011Baht Baht

Property,PlantandEquipmentIncreasedfrom

AssetsPayables 848,812.28 1,127,500.00BeginningRetainedEarningsdecreasedfrom

EmployeeBenefitObligation - 18,796,337.00Off-SetbetweenTradeReceivablesandTrade

Payables-RelatedCompanies 486,625.12 13,447,092.10

26. ObligationandContingentLiabilities

ApartfromliabilitiesshownonthestatementoffinancialpositionasofDecember31,2012and

2011, theCompanystill remainsotherobligationandcontingent liabilitieswithcommercialbanksas

follows:Asof Asof


MillionBaht MillionBaht

-LettersofCredit

CreditLineforBaht730.0Million,Unused 685.11 638.38

CreditLinefor3.0MillionUSDollar,Unused 46.46 47.94

-LettersofGuaranteethatissuedbyBankfor

ElectricityConsumption 3.91 3.91


27. ReclassificationofAccounts

TheCompanyreclassifiedsomeitemsincomparativefinancialstatementsinordertocomplywith

thepresentfinancialstatements,whichdoesnothaveanyaffectsonnetprofit(loss)orshareholders’

equityalreadypresented.Thedetailsofreclassificationareasfollows:

AsPreviouslyReported

Reclassified AsCurrentlyReported

Baht Baht Baht

Statement of Financial Position as of January 1, 2011

TradeandNotesReceivables-OtherCompanies-Net 117,709,077.72 (117,709,077.72) -

TradeandNotesReceivables-RelatedCompanies-Net 48,430,804.73 (48,430,804.73) -

TradeandOtherReceivables-Net - 175,837,897.35 175,837,897.35

OtherCurrentAssets 9,874,110.30 (9,698,014.90) 176,095.40

InvestmentProperty-Net - 39,450,000.00 39,450,000.00

Property,PlantandEquipment-Net 213,247,664.88 (39,450,000.00) 173,797,664.88

TradeandNotesPayables 67,053,542.50 (67,053,542.50) -

TradePayables-RelatedCompanies 35,126,826.70 (35,126,826.70) -

TradeandOtherPayables - 125,862,391.85 125,862,391.85

AccruedExpenses 19,615,833.60 (19,615,833.60) -

AdvanceReceiptforGoods 1,125,281.31 (1,125,281.31) -

OtherCurrentLiabilities 2,940,907.74 (2,940,907.74) -

Statement of Financial Position as of December 31, 2011

CashandCashEquivalents 34,404,834.42 2,118,928.16 36,523,762.58

TradeandNotesReceivables-OtherCompanies-Net 65,426,056.76 (65,426,056.76) -

TradeandNotesReceivables-RelatedCompanies-Net 15,546,160.98 (15,546,160.98) -

TradeandOtherReceivables-Net - 89,303,759.96 89,303,759.96

OtherCurrentAssets 10,575,715.78 (10,450,470.38) 125,245.40

InvestmentProperty-Net - 39,450,000.00 39,450,000.00

Property,PlantandEquipment-Net 195,059,382.18 (39,450,000.00) 155,609,382.18

OtherIntangibleAssets-Net - 9,536,875.18 9,536,875.18

OtherNon-CurrentAssets 9,551,697.92 (9,536,875.18) 14,822.74

TradeandNotesPayables 81,691,751.48 (81,691,751.48) -

TradePayables-RelatedCompanies 27,959,768.75 (27,959,768.75) -

TradeandOtherPayables - 129,946,672.53 129,946,672.53

AccruedExpenses 14,096,152.71 (14,096,152.71) -


AsPreviouslyReported

Reclassified AsCurrentlyReported

Baht Baht Baht

Statement of Financial Position as of January 1, 2011

AdvanceReceiptforGoods 2,731,438.74 (2,731,438.74) -

OtherCurrentLiabilities 3,467,560.85 (3,467,560.85) -

Statement of Comprehensive Income for the year ended December 31, 2011

CostofSales (1,538,897,867.73) (345,664.00) (1,539,243,531.73)

AdministrativeExpense (51,051,193.78) (10,148,150.78) (61,199,344.56)

DoubtfulDebt - (7,046,865.22) (7,046,865.22)

Managements’Remuneration (16,830,968.00) 16,830,968.00 -

FinancialCosts (4,595,711.33) 709,712.00 (3,885,999.33)

28. ApprovaloftheFinancialStatements

ThefinancialstatementshavebeenapprovedbyauthorizeddirectorsoftheCompanyonFebruary

22,2013


The Remuneration in 2012 for Auditor

Companyname S.K.AccountantandServicesCo.,Ltd.

AuditorName Ms.WanrayaPuttasatienCPANo.4387

Fee 493,000Baht

Thecompanyhavenoconstitutesbusinesstransactionorpersonalityrelationshipwiththeauditoror

theauditor’sofficeneitherdirectnorindirect,thentherehavenootherremuneratetopaytoauditor’.

C.P.L. Group Public Company Limited

บริษัท ซี.พี.แอล.กรุ๊พ จำ�กัด (มห�ชน)

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