Patkl 05

ANNUAL REPORT 2005

PATKOL Plc.

Annual Report 2005 As at 31 December 2005 PATKOL Public Company Limited

Comparative Data

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Comparative Data

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Message from Chairman

The year 2005 was the year that Patkol have had a great loss due to the decease of Dr. Vira Susangokorakarn, our Company’s Chairman who had lead the company through the economy crisis years. He was Thailand role model of government civil servant who, even after over 15 years of retirement from government post, still dedicated his entire life in doing good work for the country. Dr. Vira Susangkorakarn was the one who had introduced Patkol to the alternative energy business, by entering the contract to fabricate some of machineries for ethanol plant for Thai Agro Energy Co., Ltd., the company he set up so that Thailand would have its own formula for alternative energy. He was the investor who owned the minimum shares in Thai Agro Energy Co., Ltd. but was the major force to push for the project to start, in which Patkol received the full benefits as, nowadays, the company is in the Ethanol Turnkey Project business. In the year 2005, Patkol had made some profits for the shareholders. However, Patkol’s management is still trying their best to increase the Company’s profit so as to give full dividend to the shareholders for the year 2006. For the year 2005 Patkol was not in the position to grant full dividend to its shareholders as Patkol is under the expansion of its second factory in Petchaburi in order to obtain the tax exemption. However, upon finishing the factory expansion at the end of 2006, Patkol would save on income tax of around 15% of the total group income. I wish to thank the shareholders for their trust in the management and confirm that all the company’s directors will try to increase the company’s income in order to give a full dividend to our shareholders. Also, I wish to thank all Patkol’s staff for their hard work dedication. Rachanee Chongvatana Termporary Chairman

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Message from the President and Chairman of Management Committee

Dear The Shareholders, At the moment, Patkol is well accepted in the industrial and engineering circles as the engineering firm and not just a firm who manufacture only refrigeration or food processing machineries. This, as Patkol Turnkey Projects are well known to all the investors that it could reduce the stress of the investors’ management from working with several sub-contractors and, at the same time, could have good control of construction schedule. Nowadays, Patkol’s expansion work on Turnkey Projects is growing steadily. Together with the government free policy on the set up of Ethanol Plant, Patkol expects to be able to make a sale for 2 projects in the year 2006, at the cost of Baht 500 million each. I am sure that for the year 2006, we will have a high growth and should be able to make a good profit as we are well aware of the fluctuation of raw materials prices thus having better cost control. In 2006, Patkol will push for the increase of export as it makes good profit. At the moment, all of the company’s business units had set up its special sales force for international sales in order to reach the set goal. On the development section, Patkol had put its efforts to strengthen the Research and Development Department which had yielded new products for each business units over the set goal of one product per unit, enable the company to expand the market further. I wish to assure our shareholders that, for the year 2006, Patkol would expand its export market as targeted which would result in good business operation.

Mr. Piya Chongvatana President and Chairman of Management Committee

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Board of Directors 1 Name Mr. Vira Susangkarakarn

Position Chairman Highest Education Record Master’s Degree in Engineering (Civil), University of

Illinois Working Record Former : 2 Times as the Deputy Minister of Ministry of

Industry Present : 1. Chairman, Saving and Energy Increase

Efficiency the Engineering Institute of Thailand.

2. Chairman of the Executive Board of T.S.B. Trading Co.,Ltd. 3. Chairman of Board of Director, Thai Agro Energy Co.,Ltd. 4. Chairman of Board of Director, Hydro Energy Co.,Ltd. 5. Director, Prachin Traffic Products Co.,Ltd. 6. Director of Siam Strip Mill Plc. 7. Director of Poenix Pulps & Paper Plc. 8. President, Jet Sports Boating Association of Thailand

Engineering License Civil Senior Professional Engineer 2 Name Miss Ratchanee Chongvatana

Position Vice Chairman Highest Education Record Bachelor’s Degree in Electrical Engineering,

Chulalongkorn University Working Record Present : Chairman, Board of Directors, Prepac

Thailand Co.,Ltd. Engineering License Electrical Senior Professional Engineer (Power)

3 Name Mr.Piya Chongvatana Position Director Highest Education Record - Associated Degree in Applied Science in Air Conditioning Engineering Technology, Milwaukee School of Engineering, Milwaukee, Wisconsin, USA. - Bachelor’s Degree in Mechanical Engineering,

Chulalongkorn University Working Record Present : 1. President, Patkol Plc. 2. Director, Prepac Thailand Co.,Ltd. 3. Chairman, Siam Patkol Co.,Ltd.

Engineering License Mechanical Senior Professional Engineer

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4 Name Mrs. Vipa Chulajata Position Director Highest Education Record Bachelor’s Degree M.A. (Honours) in Modern

Languages, Edinburgh University Working Record Former : 1. Government official in Ministry of

Education 2. Lecturer, Faculty of Liberal Arts, Thammasart University

Present : 1. Director, Prepac Thailand Co.,Ltd. 2. Director, Patkol Plc. 3. Director, Siam Patkol Co.,Ltd. 5 Name Mr. Sangchai Chotechuangchutchaval

Position Director Highest Education Record -Bachelor’s Degree in Electrical Engineering,

King Mongkut’s Institute of Technology North Bangkok

-Master Degree of Public Administration -Defense College Working Record Present : 1. Director, Patkol Plc. 2. Vice President, Sales and Marketing, Patkol Plc. Engineering License Electrical Professional Engineer (Power)

6 Name Asso.Prof. Noppavan Chongvatana Position Director Highest Education Record - University of Hawaii (By Ford Foundation Scholarship) Master’s Degree, Library Studies and

Demography - Master’s Degree in Demography, Chulalongkorn University

7 Name Mr. Paradon Chulajata Position Director Highest Education Record Master’s Degree in Business Administration, Faculty of

Finance, Eastern Michigan University, USA. Working Record Former : 1. Investment Banking Officer, Phatra

Thanakij Plc. 2. Vice President Financial, Patkol Plc.

Present : 1. Audit Committee’s Consultant, Patkol Plc.

2. Managing Director, Prepac Thailand Co.,Ltd.

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8 Name Mr. Suchart Sooksumitr Position Director Highest Education Record - Bachelor’s Degree of Law, Thammasart University - Barrister at Law Working Record Former : Judge, Ministry of Justice (26 years) last

position, Judge of the Supreme Court of Thailand

Present : 1. Director and Chairman of Audit Committee, Patkol Plc. 2. Legal Advisor 9 Name Mr. Virachai Srikajon

Position Director Highest Education Record Master’s Degree in Business Administration, South

Eastern University, Washington DC, USA. Working Record Present :1. Director and Audit Committee, Patkol Plc.

2. Managing Director, Chiangmai Medical Services Plc.

3. Managing Director, Thai Storage Battery Plc.

Engineering License Mechanical Professional Engineer

10 Name Mr. Preecha Chantarangkul Position Director Highest Education Record Bachelor’s Degree in Business Administration, Faculty

of Management, Thammasart University Working Record Present : Director and Audit Committee, Patkol Plc. 11 Name Miss Nongluck Sakdakrai

Position Director Highest Education Record Master’s Degree in Perfect Management, Georage

Washington University Working Record Present : Vice President, Thai Ice Club Limited

12 Name Mrs. Anongsiri Chaiyakul Position 1. Member of Management Committee

2. Assistant President, Patkol Plc. Highest Education Record Bachelor’s Degree in Accounting, Thammasart

University

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Management Committee

1 Name Mr.Piya Chongvatana

Position 1. Chairman of Management Committee 2. President, Patkol Plc. Highest Education Record - Associated Degree in Applied Science in Air Conditioning Engineering Technology, Milwaukee School of Engineering, Milwaukee, Wisconsin,

USA. - Bachelor’s Degree in Mechanical Engineering,

Chulalongkorn University Engineering License Mechanical Senior Professional Engineer

2 Name Mr. Sangchai Chotechuangchutchaval Position 1. Vice Chairman of Management Committee 2. Vice President Sales and Marketing, Patkol Plc. Highest Education Record - Bachelor’s Degree in Electrical Engineering,

King Mongkut’s Institute of Technology North Bangkok - Master Degree of Public Administration

- Defense College Engineering License Electrical Professional Engineer (Power)

3 Name Asso.Prof. Noppavan Chongvatana Position 1. Member of Management Committee 2. Vice President Human Resource and General Management Highest Education Record - University of Hawaii (By Ford Foundation Scholarship) Master’s Degree, Library Studies and

Demography - Master’s Degree in Demography, Chulalongkorn

University

4 Name Mr. Sumet Jeambutr Position 1. Member of Management Committee

2. Vice President Technical and Development, Patkol Plc.

Highest Education Record Bachelor’s Degree in Mechanical Engineering, King Mongkut’s Institute of Technology North Bangkok

Engineering License Mechanical Senior Professional Engineer

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5 Name Mrs. Anongsiri Chaiyakul Position 1. Member of Management Committee

2. Assistant President, Patkol Plc. Highest Education Record Bachelor’s Degree in Accounting, Thammasart

University 6 Name Mr. Sombatt Srichainont

Position 1. Member of Management Committee 2. Vice President Manufacturing, Patkol Plc.


Engineering License Mechanical Associate Engineer 7 Name Mrs. Somnuk Taepanit

Position 1. Member of Management Committee 2. Vice President Financial and Accounting, Patkol Plc.

Highest Education Record Master’s Degree in Accounting, Thammasart University

8 Name Mr. Neramit Ponyuttapoom

Position 1. Member of Management Committee 2. Assistant Vice President Sales and Marketing, Patkol Plc.


Engineering License Mechanical Associate Engineer 9 Name Mr. Amarin Thepsiriamnuay

Position 1. Member of Management Committee 2. Vice President Supply Chain Patkol Plc.

Highest Education Record Bachelor’s Degree in Pharmacy, Chiang Mai University

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Major events and developments Major events in the past 6 years

- In 2000 signed debt restructuring contracts with banks and financial institutions due to the result of the economy crisis as well as expanding business into turnkey projects, obtaining a contract to design and construct tuna processing plant for Princes Food in Mauritius. Launched new product, Tube Ice Maker, capacity 1.5 tons/day.

- In 2001 received Prime Minister’s Export Award on Thai Owned Brand in which

in 1999 the company received Prime Minister’ Export Award for own design category.

- In 2002 set up a new business unit to support the work on system automation

control. Received permission from shareholders to issue debenture bond to exit from all debt restructuring contracts.

- In 2003 Signed a long term contract for the amount of ฿312 million and exited

from all the debt restructuring contracts with creditors before due date. Launched new products in ice maker line, the nugget ice for consumption, capacity 60 and 200 Kgs./day and scale ice for sea food processing , capacity 2,500 Kgs./day. Set up new business unit “Special Project Unit” to support the government enterprises business.

- In 2004.

Set up new factory at Petchburi Province under the name of “Patkol Manufacturing Co., Ltd.” with registered capital of ฿70 million and the company own 99.99% of shares. This new company is under BOI. privileges with 8 years income tax exemption. The budget for land, buildings and machineries of new factory is set at ฿200 million and expected to be in operation by June 2005. In April 2004, set up a new company Patkol R&D Co., Ltd, with registered capital of ฿5 million, and Patkol Plc. own 99.99% of shares. This company will concentrate on the technical and development of new products.

On October 19, 2004. Mr. Piya Chongvatana the company’s President received the 2004 Outstanding Technologist Awards from HRH Princess Maha Chakri Sirindhorn.

- In 2005.

Patkol Manufacturing Co., Ltd started the production as per privileges received from B.O.I.

Paid back long terms loan of 100 million baht on schedule, part of the payment came from the business operation, the rest was from loan from various financial institutions.

Patkol R&D Co., Ltd, an affiliated firms, was listed at No. 98 of the Notice from the Ministry of Finance regarding the income tax (No. 44) as the firm to carry out the research and development, effective as from February 4, 2005.

Siam Patkol Co., Ltd terminated the rental of factory premises and moved to Patkol Public Company Limited factory at King Kaew Road, thus saving the rental fee ฿ 6 Million a year.

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General Information

Registered No. : Bor Mor Jor 132 Company set up : 28 November 1965 by the Chongvatana families. Types of Business : 1) Manufacturer of tube ice maker, Block Ice

Plant and small ice maker. 2) Machineries and system for refrigeration industry.

3) Machineries and processor for liquid food (milk and beverage) 4) Machineries and equipment for food processing industry. 5) Turnkey Project.

6) Industrial automation. Head office : 348 Chalerm Prakiat Rama 9 Rd., Nongbon, Pravate,

Bangkok 10250, Thailand. Telephone : 662 3281032-49 Fax : 662 328-1058 , 662 328-1245 Homepage : www.patkol.com E-mail : [email protected] Registered Capital : ฿320 million with paid up capital of

฿238.5 million, divided into 238.5 million shares. Past Record 12 February 1992 - Changed its name from Patanakolkarn Co., Ltd. To Patkol Co., Ltd.

3 March 1992 - Registered for public company with the Security Exchange of Thailand.

28 June 1992 - Registered as Public Company and changed its name to Patkol Public Co., Ltd.

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http://www.patkol.com/

mailto:[email protected]


Other References Auditors

1. Mrs. Yongyoo Krasaesindhuwanond CAP No. 2517 Bunchikij Co.,Ltd. 9th Floor, 87 Modern Town Building, Ekamai Soi 3, Sukhumvit 63 Rd., Wattana District, Bangkok 10110. Tel : 02 382 0414 Fax : 02 381 5849, 02 382 0417

2. Mrs. Suwanee Kittipanya-Ngam CAP No. 2899 Bunchikij Co.,Ltd. 9th Floor, 87 Modern Town Building, Ekamai Soi 3, Sukhumvit 63 Rd., Wattana District, Bangkok 10110. Tel : 02 382 0414 Fax : 02 381 5849, 02 382 0417

Registrar Thailand Securities Depository Company Limited

62 The Stock Exchange of Thailand Building, 4, 6-7 Floor, Ratchadapisek Rd., Kongteaw, Bangkok 10110.

Tel : 02-359-1200-49 Fax : 02-359-1259

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Business Operation Patkol Public Company Limited

1) Ice Making Machine: there is tube ice making machines 1.5-80 tons, nugget ice machine 60-450 kgs. and block ice plant 50-3,000 cans. The ice machine business was still growing well in 2005 for domestic and abroad. We exported our machines to over 27 countries, majority in the Middle East. Our machines are manufactured order the ASME (American Society of Mechanical Engineering) standard.

2) Machines and systems for Industrial Refrigeration: which are divided into cold

rooms for large and small industries, IQF freezer Air Blast Freezer including spare parts. There are also the heat exchanger units, in which Patkol was the first firm in the world who manufactured stainless steel evaporative condenser since 1990. Patkol is also supplying “Bonnet” refrigeration Show-cases with well-known standard all over the world.

3) Liquid Food Machine: divided into machine and system for machine for dairy and beverage industries. Patkol could design, manufacture and install the whole system as well as providing spare parts for milk Plant, beverage industries in both alcohol and non-alcohol including stainless steel tank with CIP system. Patkol could also design, manufacture and install systems and machine for liquid chemicals, or providing only stainless steel tank and piping works; most of the major parts are manufactured at the Company’s factory under ASME standard.

4) Machines and systems for Food Processing: divided into frozen food industry for

meat, seafood, vegetable and fruit and canning industry for tuna, vegetable and fruit. Pakol could design conveyor units, install the system and providing spare parts to suit customers’ enquiry, with efficient productivity and friendly to environment. Most of the machine parts are manufactured at the Company’s factory with hygienic design and safety standards.

5) Turnkey Project, Patkol had a lot of experience in the construction of food

processing plant as turnkey project for both local market an aboard. With a team of 160 engineers in every branches, the Company could design, carry out construction work, manufacture machines and supported work in 3 different fields; civil construction, machineries for production and support and project management The Company had constructed an alcohol plant project with the cooperation from Katzen International on technology side.

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6) Electrical System and Automation: the company could provide the design and installation of electrical system and automation . The electrical system is divided into 2 types of work; manufacture the Switch Board or Main Distribution Board (MDB) and providing electrical system for machineries of other business units as well as for the turnkey projects. For the automation, the company could design, install, set up program and testing the automatic control of machines as well as acting as consultant for modernizing the old system to meet the international standard.

7) Services & Maintenance, Patkol found that the maintenance and service could be

greatly expanded as most customers begin to realize the importance of system maintenance and the small service provider could not give good program. The work of our Service Department has expended and it also gave us an opportunity to increase our sale as well.

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Income structure Income structure of business groups (local and abroad)

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Risk Factors Business Risk 1) Depending on customers or large distributors.

As Company has a large quantity of customers in several types of business, therefore, there was no risk on depending on customers or distributors. The company did not have any customer who would buy more than 15% of annual sales. Company’s big customers are in the investment project and this has been changed each year in several business sectors 2) Risk on Production

The company calculated cost of raw materials on the offered date, therefore, there was no risk on the price variation. In 2005, even though prices of raw material varied a great deal but the company had good planning and better cost control so able to earn more profit than the previous year. The company has no risk on machineries as most of them are standard machines. 3) Management Risk

We have risks on the department manager level which requires special skill in their work. We reduced the risk by using the Technical & Development Department manpower. We assigned one of the engineers in T&D to back up the technology in the business unit and the man will be our support if we should loss a department manager. For high level executive, all has long services with the company and our top and second from top executive are our board of directors and major shareholders of our company. 4) Financial Risk 4.1 Risk on exchange rate

The company has export sales at the value closed to the payment for the imported goods. Also the company has protected the risk on exchange rate by booking forward cover for imported materials. 4.2 Risk on investment on warrants.

Risk on time valve of warrant. The company adjusted the exercise price and exercise ratio along the exercise period

of warrant according to the right adjustment clause. The first date to exercise right was 25 November 2004 and the last date is 21 December 2007. and there was no one who want to exercise his right on the first date of 2004.

However, such adjustment take into account only exercise price and exercise ratio on the adjustment date without considering the time value of the warrants. As the time value of warrant is to be declined as the exercise period is shorten, in case the company offers new warrants or convertible securities in the future, the warrant holders may receive less benefit after the right adjustment.

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Risk on the adjustment price that is lower than the par value of ordinary share. In case the adjustment of the exercise price and exercise ratio according to the right

adjustment clause, caused the exercise price to be lower than the par value of ordinary share, such adjusted price is to be applied unless prohibited by law. In case the law prohibited the issue of new shares at lower price than the par value, the new exercise price will be at the par value, thus the warrant holders will receive less benefit.

5) Risk on the ratio of shares owned by shareholders. The company did not have any restriction on the payment of dividend. In obtaining

loan, the company could pay for interest and installments per agreement contract. The dividend would be paid according to the company policy with restriction of not over 70% of the net profit after tax. The company will consider paying suitable dividend (Please see more details on item 2.8, section 5 policy on dividend payment.

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Management

1) Management Structure

2) List of Company Management as at 31 December 2005. The Company’s Board of Directors :-

1. Mr. Vira Susangkarakarn Chairman 2. Miss Ratchanee Chongvatana Vice Chairman 3. Mr.Piya Chongvatana Director 4. Mrs. Vipa Chulajata Director 5. Mr. Sangchai Chotechuangchutchaval Director 6. Mr. Paradon Chulajata Director 7. Mr. Suchart Sooksumitr Director 8. Mr. Virachai Srikajon Director 9. Mr. Preecha Chantarangkul Director 10. Miss Nongluck Sakdakrai Director 11. Asso.Prof. Noppavan Chongvatana Director 12. Mrs. Anongsiri Chaiyakul Director

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Management Directors as at 31 December 2005 :- 1. Mr.Piya Chongvatana

- Chairman of Management Committee - President, Patkol Plc.

2. Mr. Sangchai Chotechuangchutchaval - Vice Chairman of Management Committee - Vice President Sales and Marketing, Patkol Plc.

3. Asso.Prof. Noppavan Chongvatana - Member of Management Committee - Vice President Human Resource and General Management

4. Mr. Sumet Jeambutr - Member of Management Committee - Vice President Technical and Development, Patkol Plc.

5. Mrs. Anongsiri Chaiyakul - Member of Management Committee - Assistant President, Patkol Plc.

6. Mr. Sombatt Srichainont - Member of Management Committee - Vice President Manufacturing, Patkol Plc.

7. Mrs. Somnuk Taepanit - Member of Management Committee - Vice President Financial and Accounting, Patkol Plc.

8. Mr. Neramit Ponyuttapoom - Member of Management Committee - Assistant Vice President Sales and Marketing, Patkol Plc.

9. Mr. Amarin Thepsiriamnuay - Member of Management Committee - Vice President Supply Chain, Patkol Plc.

Audit Committee as at 31 December 2005. 1. Mr. Suchart Sooksumitr Chairman 2. Mr. Virachai Srikajon Director 3. Mr. Preecha Chantarangkul Director Election Committee as at 31 December 2005. 1. Mr. Virachai Srikajon Chairman 2. Mr. Sangchai Chotechuangchutchaval Director 3. Asso.Prof. Noppavan Chongvatana Director Remuneration Committee as at 31 December 2005. 1. Mr. Vira Susangkarakarn Chairman 2. Mr. Virachai Srikajon Director 3. Mr. Preecha Chantarangkul Director 4. Miss Nongluck Sakdakrai Director

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Auditors Selecting Committee as at 31 December 2005 1. Mr. Suchart Sooksumitr Chairman 2. Mr. Virachai Srikajon Director Auditors Selecting Committee 3. Mr. Preecha Chantarangkul Director Auditors Selecting Committee 4. Mrs. Somnuk Taepanit Director Auditors Selecting Committee Scope of work of the Company’s Board of Directors. At present there are 12 directors, comprising of independent directors, representative of major shareholders and directors from the internal management. In order that the directors would work efficiently, it was set that at least in one year there shall be 5 directors’ meeting. The agenda of each meeting shall be set up in advance and shall be sent to all the directors prior to each meeting. All the meeting consideration would be for the benefit of the shareholders with fairness and just to all involved. Each director would be allowed to give his opinion freely and between each agenda there would be sufficient time allowed for freely discussion. The Chairman would look after the meeting to make sure of the appropriate time. The Board of Directors’ duty are :- 1) Set up the vision, missions and strategy on business operation for the company’s

prosperity and stability as well as continuously increase the value for shareholders. 2) Dedicate himself and his time for the Company, shall not seek self benefits and

commit any conflict of interest. 3) Shall consider the operation plan and develop the company ability to be compatible

internationally. 4) Check and follow up on the operation of business group and the company. There

should be the regular reports as well as giving policy to develop and adjust the business operation and company personnel.

5) Look after the risk management including the good governance policy to make sure that they meet the international standard.

6) Act according to the law, company’s objectives and regulations and resolution of the shareholders with honest for the benefits of shareholders at present and in the long run.

7) Act according to the good governance and good practice for the director of the listed company as stipulated by the Stock Exchange of Thailand and Securities and Exchange Commission.

8) Evaluate the company’s operation and work performance of the high level management staff. 9) Support the ethic and moral of employees in all levels and realize the important of

the internal control system which would help reducing the risk on fraud, the over exercising of power as well as illegal practices.

10) Protecting the benefits of shareholders large and small according to their right and just. The shareholders should be able to exercise their right in protecting their benefits as well as receiving correct, complete, transparency and disclose information that could be checked.

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11) The Board of Directors authorized the directors, Management Committee, sub-committees and any person or jurisdiction individually or jointly carry out any

function according to the Company’s objective at remuneration set by the Board of Directors. The Board of Directors has the right to change or revoke the authority given as well as to replace with more suitable person. The newly appointed person should carry out his study according to the order, regulation as well as the policy set by the Board of Directors.

Scope of work of Management Committee. The Management Committee is responsible for all general duty; from planning as well as follow up and analysis. However, the major decisions such as increase or reducing of investment, the investment, the investment in other companies, etc. the Management Committee has to ask the Board of Directors for their decision. Scope of work of the Managing Director. The Managing Director has to manage the Company’ s general business which covers :-

Looking after the overall operation of the Company to meet the Company’s objectives.

Consider and screening all types of investment before presenting them to the Board of Directors.

Consider, prepare and provide the annual budget to be presented to the Board of Directors.

Authorized the payment to projects that meet the approval of the Board of Directors.

Authorized the appointment of various consultants deemed necessary for the business operation as well as carry out other duties as authorized by Board of Director or directors, case by case. “However, the Managing Director is not allowed to approve any business that he, himself or conflict person may gain or loss, or causing the conflict of interest to the company on its affiliated firms. Unless it was approved by the Company’s Board of Directors who had thoroughly considered the matter.”

Management Personnel. The Managing Director is the Company’s highest management personnel and shall act as Chairman of the Management Committee, comprising of 8 persons (including the Managing Director). This 8 Management Committee will manage, look after and be responsible on the company’s business operation as well as set up budget, controlling the expenses as well as put up policy on personnel under the agreement of the Company’s Directors.

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Remuneration for Directors and Management.

1) Remuneration for Company’s Board of Directors for the year 2005 was ฿3,800,000.- being salaries, bonuses and meeting perdiem.

Remarks : This amount did not include the remuneration paid to Management

Committee who were not on the Board. 2) The total remuneration paid to the Management Committee for the year 2005 was ฿28,890,888.27.- being salaries, bonuses, provident fund and others.

Remarks : The paid remuneration were paid to :- - Company’s directors who were the Management Committee. - Management who were the Management Committee.

Records of the Director’s meeting

Name Audit Committee

Meeting / Participants

Ordinary Meeting

Extraordinary Meeting

Total

1. Mr. Vira Susangkarakan - 3/6 0/16 3/16 2. Miss Ratchanee Chongvatana - 6/6 6/10 12/16 3. Mr. Piya Chongvatana - 6/6 9/10 15/16 4. Mrs. Vipa Chulajata - 6/6 9/10 15/16 5. Mr.Sangchai Chotechuangchutchaval - 6/6 10/10 16/16 6. Mrs. Noppavan Chongvatana - 6/6 10/10 16/16 7. Mr. Paradorn Chulajata - 5/6 10/10 15/16 8. Mr. Suchat Suksumitr 10/10 5/6 10/10 16/16 9. Mr. Veerachai Srikajorn 10/10 5/6 10/10 16/16 10. Mr. Preecha Jantrarangkul 9/10 5/6 7/10 12/16 11. Miss. Nongrak Sakdakrai - 6/6 10/10 16/16 12. Mrs. Anongsiri Chaiyakul - 6/6 10/10 16/16 Management Operation The Company’s management team had acted according to the 15 Codes of Best Practices of Security Exchange of Thailand as per following details :-

1) Policy on corporate governance. The Company management team realized the importance of good corporate

governance which had made the Company’s trust worthy firm and gained trust from shareholders, customers, employees as well as society. The main practices of the company are :-

Treated all the shareholders fairly and in accordance with global standard business operation.

Established the good workforce in order to yield the highest value to the Company’s products in order to gain trust from customers.

Set up the operation target with clear strategy for the steady growth of business.

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Set up the employee’s etiquette, however, while preparing this etiquette the employees should keep strictly the Company’ s motto which is sincere and intent

Arranged to have suitable internal control and constantly analyzing the management risks to make sure that the Company has certain risk in accordance to the situation.

The company will disclose the correct information to the shareholders and manage the transparency business.

2) Shareholders rights. In 2005, the company held one ordinary shareholders meeting. The meetings was held at the Company’s premises for the convenience of the shareholders. Also, the company had sent the notice of the meeting and relevant documents to all the shareholders not less than 7 days before the meeting date. The company also provided the proxy form in case the shareholders were not able to participate. 3) Right of various groups of stakeholders. The Company are well aware that its operation involved various groups of stakeholders and had ensured that their rights are protected and treated with care such as :-

1) The management and all the staff are trust worthy and would use their ability at the fullest. All the decisions are transparency and will yield the benefits to shareholders, customers, debtors and the public.

2) The management and staff will not disclose the company’s inside

information to the public for their own benefits.

3) The management and staff will not do anything that would cause conflict of interest, without the Company’s permission.

4) The Company has disclosed sufficient financial information basing on

the accounting standard, security codes and Security Exchange Committee.

5) The Company has disclosed the Company’s operation and be fair to all

the shareholders and customers.

6) It is the Company’s policy to carry out a fair share to all the company’s competitors.

7) The company will not wrongly obtain inside information or secret of the

competitors. 8) The Company is strictly responsible to all the agreements made with

suppliers and debtors.

9) The Company gives suitable salary to all their staff basing on each individual knowledge, capability and responsibility.

10) The Company has continuously supported the personnel development to

ensure the sound standing of its staff.

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11) The Company has followed all the rules and regulations of the labour laws and workman compensation.

12) The Company supported the public and community activities.

13) The Company will refrain from wrong doing that may damage the

country reputation, natural resources and environments.

14) The Company will not support any individual who may commit the outlaw business, doing harm to the public or the country’s stability.

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

5) Leadership and Vision. The Company’s directors perform their role in determining the Company’s

policies, goals and budgets and follow up to ensure that all are efficiently practiced in order to yield the fullest benefits for shareholders.

The directors had set up internal audit committee for internal checking and set up efficient risk management with proper follow up during the directors meeting.

6) Conflict of Interest The Company has an adequate plan to avoid the conflict of interest (see detail

on Part 2 of the Management of Internal Information and Connected Transaction) for the benefits of the Company, the shareholders and the public. However, the connected transactions are completely disclosed in the yearly report.

7) Business Ethic The Company has a written code of ethics in the compliance manual, item 4,

the code of Corporate ethics, which was given to all its staff so that they could conduct the business accordingly.

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8) Balance of power in the Board of Directors

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

9) Aggregation or segregation of positions The Company’s Chairman of the Board is independent and does not hold the position of managing director. The authority of the board’s chairman and head of management team are clearly separated.

10) Directors and Management Remuneration The nominated directors for considering remuneration submitted their policy and scheme on remuneration to be paid to the company’s directors and management and had been adopted by the shareholders’ meeting.

The remuneration paid for the year 2005 is shown in part 2 remuneration for directors and management.

11) Board of Directors’ Meetings The Board of Directors meetings were set well in advance each year. The meetings were held every 3 months, the Company will send the meeting agenda 7 days before each meeting date.

The Audit Committee’s meeting was held once a month and the date was set well in advance, the relevant documents were sent 7 days prior the meeting date. 12) Special Committees. The Company’s management set up special committee for particular matters such as audit committee, sub-committee for selecting auditors, sub-committee for remuneration. These special committees should report their work to the company’s management. System Control and Internal Auditing. The Company has set up regulations to control the working procedures as well as having internal audit committee to recheck the work to ensure the work efficiency and constant internal check up in all process. The audit committee was allowed to work independently and in accordance to the global standard and reported directly to the Managing Director.

PAGE 25


Directors’ Report The Company’s directors are responsible for the consolidated financial statements of the Company and its affiliated firms as well as yearly reports. The Audit Committee together with the independent auditors, are responsible for the balance sheets of the Company and its affiliated firms to make sure that those balance sheets are according to the acceptable accounting standard as stipulated by the Security Exchange Committee and Security Exchange Board. Investors Relation The Managing Director’ office acted as center of public relation and communication to and from shareholders and investors as well as the interested public. Personnel

As at December 31, 2005, there were 1,080 employees, divided according to the main business lines as follows :-

Department

Engineers

Workers

Others

Total

Management (E1-E3)

- - 18 18

Refrigeration (RF)

23 137 15 175

Ice Machine (IM)

12 137 18 167

Liquid processing (FD)

22 49 13 84

Food processing (FPE)

10 11 14 35

Turnkey (TK+SPJ)

17 9 18 44

Services (SV)

- 19 - 19

Finance & Accounting (AF+AC)

- - 28 28

Purchasing / Admin. / Personnel

- - 113 113

Technical & Development

33 - 3 36

Factory Personnel

31 212 62 305

Electrical Automation

5 1 1 7

Total

153 575 352 1,080

PAGE 26


Policy on Personnel Department.

1. Develop, improve and modernize the Organization’ human resources management and its work could be efficiently appraised and measured.

2. Select knowledgeable staff, suitable for each position. 3. Keep the selected ones by giving them fair, motivated and competitive

remuneration. 4. Build good relation between employers and between the company and

employers. Improve working environment, provide safety precaution, reducing accident as well as granting suitable fringe benefits.

5. Develop on workers skill through in-house and outside training.

PAGE 27


Internal Control

The Company’s Board of Directors had appointed the Audit Committee from the independent directors who had no benefits on the Company’s shares; being Mr. Suchart Sooksumitr as Chairman of the Audit Committee, Mr. Virachai Srikajon and Mr. Preecha Chantarangkul as the audit committee.

The Audit Committee had worked independently from the Company’s directors and

management and, upon request, there were no limitation on information given, on the use of resources as well as on staff cooperation.

For the year 2005, the Audit Committee agreed that the Company had carried out its business according to the accounting standard of the Federation of Accounting Professions as well as the Stock Exchange of Thailand. Also, in checking its quarterly financial statements and Balance Sheet for 2005, had found no significance performance not according to the good governance regulations, The company had internal Control system suitable to its business and found no significance weak point (Details as shown in the report of Audit Committee Section 2, Page 29)

PAGE 28


Report of the Audit Committee for the year 2005.

Throughout the year, the Audit Committee had an average meeting once a month, had performed its duty in compliance with the suggestion of the Stock Exchange of Thailand on good corporate governance and reported to the Board of Directors. Hereunder are details of its performance.

1) Reviewed the Company’ conducts in business under good governance. Upon checking with the 15 regulations of good governance of the Stock Exchange of Thailand, found that the Company carried out its business accordingly. In 2005 the Company had a written good governance policy as shown in 56-1.

2) Reviewed the quarterly and annual financial statements and Balance Sheet for the

year 2005 to make sure that the financial statement were done in accordance with the Stock Exchange of Thailand and Civil and Commercial Laws. Also reviewed the extent of disclosure of the Company data that it was sufficient and in time and the financial statements were ready for each quarterly and annual check up prior to the time set by the Stock Exchange of Thailand. The auditors had checked the Company Balance Sheet and there was no significance correction.

3) Reviewed management risk on debts, cash flow and loan, through the monthly

adjustment on each risk factors, chances and the affection from those risk as well as suggestions on how to manage them. However, the Audit Committee had not found any significance risk.

4) Analyzed the internal control and found that their works were in accordance to the

Auditors’ expectations for each quarterly and annually and had no significance omission.

5) Review the work of internal auditors Had constantly checked their work in order to

make sure that they work efficiently.

6) Appointment of Auditors, the Audit Committee and the Board of Directors had appointed DIA Co., Ltd. as the Company’s auditor for the year 2006 and had specified the suitable remuneration.

Mr. Suchart Sooksumitr (Chairman of the Audit Committee)

PAGE 29


Major Shareholders List of names and ratio of shares owned of the first 10 major shareholders (information from the report on shares distribution as at December 31, 2005) No. Name of person / Private Co., No. of

shares Percentage of

shares 1 Thailand Securities Depository Company 84,811,671 35.56 2 Mr. Piya Chongvatana 31,316,844, 13.13 3 Mrs. Vipa Chulajata 29,116,475 12.21 4 Miss Ratchanee Chongvatana 28,879,942 12.11 5 Mr. Sangchai Chotchuangchutchaval 25,773,303 10.81 6 Mrs. Noppavan Chongvatana 11,374,151 4.77 7 Mrs. Chanthipha Chotchuangchutchaval 4,000,000 1.68 8 Thailand Securities Depository Company … 3,725,000 1.56 9 Swee Cheng Investment Pte. Ltd. 3,3,650,339 1.53 10 Mrs. Panet Chongvatana 3,285,608 1.38 11 Miss Thitikarn Chongvatana 2,037,505 0.85

Total 227,970,838 95.59

PAGE 30


Transactions with Related Parties

It is normal to carry out the transactions with related parties as general business and the receivable and payable were done on the like business and at fair prices by adding 5-10% profit. Majority of related transactions were the buying / selling of goods, services and loans as shown in Parts 4 and 7 of the balance sheet.

The permitting of connected transaction were done under the Company’s clear authorization considering the balance of the general business and sufficient internal control, constantly checked by the Company’s audit committee. Also the connected transactions were done as general business considering the highest business yield to the group and the Company had received the fair prices.

PAGE 31


Result of Business Operation

In 2005 the Company had the growth on sales and services 13% more than the year 2004 which was closed to the target. This was due to the spreading of products into all groups of business. The company emphasized on the sale of its main products such as industrial cold rooms, ice making machines, food and dairy industry equipment and food processing machineries. The company has set a target for the turnkey business as well.

Business Operation. Overall pictures of the past operation.

Total sale of the year 2005 was ฿2,761 million, 13% higher than the previous year which was reported at ฿2,442 million. The total sale was closed to the target set while the net profit shown was ฿67 million, higher than the previous year which was reported at ฿53 million, please see following details :-

PAGE 32


Major factors that affected the company’s operation were :- Outside Factors.

- World price of oil had increased constantly. - General interest rates were up - The growth of China demanded the import of various products particularly steel

and stainless steel causing the shortage of the said raw materials. Domestic Factors.

The return of the avian flu and the terrorist problems in the 3 provinces in the south had halt the sales to those parts.

New Products and Services. The company has a plan to expand the turnkey project on ethanol plant as Thailand

needed to find a substitute fuel. In 2004, the Company had built some parts of ethanol plant, being the fermented tanks, distilled towers and electrical wiring for Thai Agri Energy Co., Ltd. a plant with capacity of 185,000 liter/day, situated at Dan Chang, Supanburi Provice. The company is convinced that with its experience together with the cooperation on technological side from an expert firm in the United States, the Company could increase its income greatly.

Result from each products line or business unit 1) Income from sales or services

Total Income Million Baht

Ice Making Machine and

Industrial Refrigeration

Machineries forLiquid and

food processing

Turnkey Services and

Other

Total

2548 Income 1,280 618 696 131 2,725Profit (Loss) from operation 140 93 38 35 306% of profit per total sales 11% 15% 5% 27% 11%% sales per total sales 47% 23% 26% 5% 100%

2547 Income 1,489 476 317 111 2,393Profit (Loss) from operation 175 49 6 34 264% of profit per total sales 12% 10% 2% 31% 11%

% sales per total sales 62% 20% 13% 5% 100% % …………… -14% 30% 120% 18% 14%

PAGE 33


The company income from major products such as ice making machines and refrigeration industry as well as liquid and food processing machineries was ฿1,898 million, 70% of the total income. Profit from the business operation of the above products was ฿233 million, 12% of total sales of these products and 76% of total profit. The turnkey projects had a growth of 120% with an income of ฿ 696 million, 26% of total income. However, as turnkey projects had high cost and fierce competition, therefore, could make profit of around 5% of project income. Total profit for turnkey project was ฿38 million, 12% of total profit, which was much higher than previous year and could be considered as company’s success. 2) Other Income– comprising interest gain from customers and income from the rental of premises, export tax return and from rate of exchange. 3) Cost and expenses on sales and services. Costs of each product were lower as we had better cost control. The Company has specific policy for making allowance on bad debt and doubtful

accounts in order to control the debtors closely. In 2005 the Company had received payments from several debtors, therefore, there were adjustments on bad debts and reduction of doubtful accounts. The Company had paid higher amount of interest due to higher stock of raw materials

and more customers on installed payments. Investment Policy For normal capital expenditure, the Company will invest in the same ratio set for the

increase of sale in order to support the future expansion. Majority of them were for replacement of machineries and equipment as well as development of new products. For affiliated firms, the Company will invest in the expertise business in both up stream

and down stream as well as in supporting business that would yield benefits to the group. The Company will contribute in the major decision making in order to operate business in relevant to the Company’s main business. The control of affiliated firms.

The Company would invest in business in which it has expertise and quite close to the Company’s business. The Company’s management would send a management team to exercise the close control on policy, budget, marketing plan and production. The sharing of useful information would also support the overall operation of the group.

PAGE 34


FINANCIAL POSITION AND RESULTS OF OPERATION

FINANCIAL POSITION AND RESULTS OF OPERATION PATKOL PUBLIC COMPANY LIMITED

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FINANCIAL POSITION AND RESULTS OF OPERATION PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES

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PAGE 42

Financial Statements

PATKOL Public Company Limited

PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND AUDITOR’S REPORT

1 JANUARY 2005 TO 31 DECEMBER 2005

Report of the Certified Public Accountant

To the Shareholders of PATKOL PUBLIC COMPANY LIMITED

I have audited the consolidated balance sheets of PATKOL PUBLIC COMPANY LIMITED AND

SUBSIDIARIES and the balance sheets of PATKOL PUBLIC COMPANY LIMITED as at 31 December 2005 and 2004, and the related consolidated and the Company statements of income, changes in shareholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management as to their correctness and completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits.

I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimated made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES, and of PATKOL PUBLIC

COMPANY LIMITED, as at 31 December 2005 and 2004, and the results of their operations and cash flows for the years then ended in conformity with generally accepted accounting principles.

(Yongyoo Krasaesindhuwanond) Certified Public Accountant No. 2517 Bunchikij Co., Ltd. Bangkok 22 February 2006

- 1 -

PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIESBALANCE SHEETS

As at 31 December 2005 and 2004Unit : Baht

ASSETSConsolidated The Company

Note 2005 2004 2005 2004CURRENT ASSETS

Cash and cash equivalents 3.1 106,487,227 176,335,909 97,648,767 125,145,080Current investments 10,173 10,123 0 0Trade accounts receivable - net 5 594,410,848 605,154,773 564,266,559 579,240,344Accounts receivable - related parties 4 811,495 1,094,004 162,720,732 15,006,520Installments receivables - net 6 156,657,530 203,962,590 156,657,530 203,962,590Unbilled revenues from sales and services - net 462,098,593 493,977,695 441,324,215 482,305,171Short-term loans to related parties 7 0 0 17,882,150 3,504,603Inventories - net 8, 15 428,019,283 269,655,814 251,183,328 223,626,958Other current assets

Retentions 54,152,802 16,277,761 53,781,001 16,277,761Advance for purchases of inventories and to subcontractors 8,490,898 22,056,898 7,873,638 19,327,749Revenue Department receivable - VAT 22,578,179 1,969,732 5,139,949 0Others 19,710,579 19,881,521 15,809,184 18,224,463

Total current assets 1,853,427,607 1,810,376,820 1,774,287,053 1,686,621,239NON-CURRENT ASSETS

Installments receivables 6 19,392,713 22,239,728 19,392,713 22,239,728 Investments for using the equity method 9 0 0 144,332,592 195,542,524

Restricted investments 10 11,295,429 2,377,767 9,964,465 1,054,682 Property, plant and equipment - net 11, 15, 18 746,421,446 597,127,735 517,905,938 491,219,555

Intangible assets - net 12 7,505,796 2,768,584 6,747,338 2,764,329 Other non-current assets

Land not used in operations - net 13 19,247,500 18,138,500 19,247,500 18,138,500Land for sale 14 23,212,325 0 0 0Others 9,344,570 14,740,419 7,739,268 7,988,106

Total non-current assets 836,419,779 657,392,733 725,329,814 738,947,424Total assets 2,689,847,386 2,467,769,553 2,499,616,867 2,425,568,663

Notes to financial statements are an integral part of these statements.

- 2 -

PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIESBALANCE SHEETS (Continued)As at 31 December 2005 and 2004

Unit : BahtLIABILITIES AND SHAREHOLDERS' EQUITY

Consolidated The CompanyNote 2005 2004 2005 2004

CURRENT LIABILITIES

Bank overdrafts and short-term loans from financial institutions 11, 15 804,239,850 689,597,569 761,153,555 679,759,253

Trade accounts payable 395,964,243 421,727,478 308,538,896 369,210,197Accounts payable - related parties 4 390,182 224,368 90,106,213 45,089,767Short-term loans from related parties 7 0 0 31,716 50,662Current portion of liabilities under

hire purchase agreements 16 1,478,483 405,625 1,274,731 0Current portion of liabilities under

financial lease agreements 17 10,216,039 5,719,505 8,976,379 5,546,593Current portion of long-term loans 11, 18 48,400,000 45,000,000 48,400,000 45,000,000Current portion of debentures 19 100,000,000 100,000,000 100,000,000 100,000,000Income tax payable 1,310,171 2,987,746 0 0Collections in excess of earned revenues 153,246,125 96,272,015 152,330,441 101,334,639Other current liabilities

Accrued expenses 31,851,843 44,173,883 25,918,212 31,646,006Retention 18,678,746 5,085,569 18,523,746 5,085,569Others 39,920,016 30,179,991 35,823,383 27,334,081

Total current liabilities 1,605,695,698 1,441,373,749 1,551,077,272 1,410,056,767NON-CURRENT LIABILITIES

Liabilities under hire purchase agreements - net 16 1,519,448 0 1,164,422 0 Liabilities under financial lease agreements - net 17 28,686,293 19,333,602 24,591,516 18,723,928 Long-term loans - net 11, 18 270,351,296 191,682,456 150,351,296 191,682,456

Debentures 19 0 100,000,000 0 100,000,000Total non-current liabilities 300,557,037 311,016,058 176,107,234 310,406,384Total liabilities 1,906,252,735 1,752,389,807 1,727,184,506 1,720,463,151


- 3 -

PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIESBALANCE SHEETS (Continued)As at 31 December 2005 and 2004

Unit : BahtLIABILITIES AND SHAREHOLDERS' EQUITY (Continued)


SHAREHOLDERS' EQUITY

Share capital 20Authorized share capital

320,000,000 Ordinary shares of Baht 1 each 320,000,000 320,000,000 320,000,000 320,000,000

Issued and paid-up share capital238,486,000 Ordinary shares of Baht 1 each 238,486,000 238,486,000 238,486,000 238,486,000

Additional paid - in capitalRevaluation surplus on land 11 260,240,615 260,240,615 260,240,615 260,240,615

Retained earningsAppropriated

Legal reserve 22 32,000,000 23,848,600 32,000,000 23,848,600Unappropriated 241,705,746 182,530,297 241,705,746 182,530,297

Total company shareholders' equity 772,432,361 705,105,512 772,432,361 705,105,512Minority interest 11,162,290 10,274,234 0 0

Total shareholders' equity 783,594,651 715,379,746 772,432,361 705,105,512Total liabilities and shareholders' equity 2,689,847,386 2,467,769,553 2,499,616,867 2,425,568,663


- 4 -

PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIESSTATEMENTS OF INCOME

For the years ended 31 December 2005 and 2004Unit : Baht


REVENUES 4Sales and services income 2,725,503,559 2,392,501,244 2,754,330,078 2,246,096,520Other income 23,459,910 40,865,256 23,228,662 31,047,106Reversal of doubtful accounts 12,110,993 9,138,322 10,161,272 5,420,530Share of profits from investments for using

the equity method 0 0 10,472,080 9,770,078Total revenues 2,761,074,462 2,442,504,822 2,798,192,092 2,292,334,234

EXPENSES 4Cost of sales and services 2,442,794,785 2,168,634,308 2,504,118,461 2,050,728,230Selling and administrative expenses 162,441,858 155,171,175 136,258,228 124,856,601Director's remuneration 5,136,000 4,840,000 5,136,000 4,840,000Bad debt and doubtful accounts 6,532,290 4,623,439 4,608,937 544,359Share of losses from investments for using

the equity method 0 0 11,771,227 9,876,681Total expenses 2,616,904,933 2,333,268,922 2,661,892,853 2,190,845,871

INCOME BEFORE INTEREST EXPENSES

AND INCOME TAX 144,169,529 109,235,900 136,299,239 101,488,363INTEREST EXPENSES 50,491,338 38,073,834 47,672,522 38,094,138INCOME TAX 24,812,071 16,385,670 21,299,868 10,706,466INCOME AFTER INCOME TAX 68,866,120 54,776,396 67,326,849 52,687,759NET INCOME OF MINORITY INTEREST 1,539,271 2,088,637 0 0NET INCOME 67,326,849 52,687,759 67,326,849 52,687,759

BASIC EARNINGS PER SHARE 3.18 0.28 0.23 0.28 0.23

Weighted average number of ordinary shares (Shares) 3.18 238,486,000 234,069,333 238,486,000 234,069,333


- 5 -

PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIESSTATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the years ended 31 December 2005 and 2004Consolidated

Unit : BahtRetained earnings

Issued and paid-up Revaluation Appropriated Unappropriated Minority interest TotalNote share capital surplus on land Legal reserve

Balance as at 1 January 2004 106,000,000 140,000,000 10,600,000 276,899,138 10,041,238 543,540,376Net income 52,687,759 52,687,759Issuance of common stock 20 132,486,000 132,486,000Revaluation surplus of land 11 120,240,615 120,240,615Legal reserve 22 13,248,600 (13,248,600) 0Cash dividends 23 (27,822,000) (27,822,000)Stock dividends 23 (105,986,000) (105,986,000)Dividend paid to minority interest (1,039,000) (1,039,000)Issuance of ordinary shares of subsidiary 225 225Decrease in capital of subsidiary company (450) (450)Purchase of investment in subsidiary from minority interest (809,346) (809,346)Sale of investment in subsidiary company (7,070) (7,070)Net income of minority interest 2,088,637 2,088,637Balance as at 31 December 2004 238,486,000 260,240,615 23,848,600 182,530,297 10,274,234 715,379,746Net income 67,326,849 67,326,849Legal reserve 22 8,151,400 (8,151,400) 0Dividend paid to minority interest (650,765) (650,765)Decrease in capital of subsidiary company (450) (450)Net income of minority interest 1,539,271 1,539,271Balance as at 31 December 2005 238,486,000 260,240,615 32,000,000 241,705,746 11,162,290 783,594,651


- 6 -

PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIESSTATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Continued)

For the years ended 31 December 2005 and 2004

The CompanyUnit : Baht

Retained earningsIssued and paid-up Revaluation Appropriated Unappropriated Total

Note share capital surplus on land Legal reserveBalance as at 1 January 2004 106,000,000 140,000,000 10,600,000 276,899,138 533,499,138Net income 52,687,759 52,687,759Issuance of common stock 20 132,486,000 132,486,000Revaluation surplus of land 11 120,240,615 120,240,615Legal reserve 22 13,248,600 (13,248,600) 0Cash dividends 23 (27,822,000) (27,822,000)Stock dividends 23 (105,986,000) (105,986,000)Balance as at 31 December 2004 238,486,000 260,240,615 23,848,600 182,530,297 705,105,512Net income 67,326,849 67,326,849Legal reserve 22 8,151,400 (8,151,400) 0Balance as at 31 December 2005 238,486,000 260,240,615 32,000,000 241,705,746 772,432,361


- 7 -

PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIESSTATEMENTS OF CASH FLOWS



Cash flows from operating activitiesNet income 67,326,849 52,687,759 67,326,849 52,687,759Adjustment to reconcile net income to net cash from

operating activities:Depreciation 47,842,892 38,011,208 39,549,010 31,031,156Amortization 1,512,681 1,264,890 1,319,773 1,135,656Bad debt and doubtful accounts (reversal) (5,578,703) (4,514,883) (5,552,335) (4,876,171)Allowance for decline in value of inventories (reversal) 297,288 (1,148,626) 301,951 183,893(Gain) loss on sale of investments 0 (105,366) 0 (18,528,294)(Gain) loss on sale of fixed assets (383,042) (1,521,432) (1,716,409) (2,445,508)Fixed assets written off and transferred to expenses 14,244,587 5,662,277 15,064,166 5,647,348(Gain) loss on sale of intangible assets (16,078) 0 (16,078) 0Unrealized (gain) loss from exchange rate (275,327) 1,724,747 (254,555) 1,472,127Share of (profits) losses from investments

for using the equity method 0 0 1,299,147 106,603Net income of minority interest 1,539,271 2,088,637 0 0

Net income from operating activities before changes in operating assets and liabilities 126,510,418 94,149,211 117,321,519 66,414,569

(Increase) decrease in operating assets Trade accounts receivable 21,853,595 (235,706,039) 26,056,253 (238,921,159)

Accounts receivable - related parties 282,509 (725,644) (147,714,212) (14,102,970)Installments receivables 39,761,114 (67,010,931) 39,761,114 (67,334,699)

Unbilled revenues from sales and services 35,961,142 (96,025,667) 45,062,996 (92,078,734)Inventories (158,732,189) (75,214,948) (27,929,752) (64,458,208)Other current assets (44,746,546) (12,839,903) (28,773,799) (15,599,587)Other non-current assets - others 95,354 (6,192,134) (464,388) (6,025,374)

Increase (decrease) in operating liabilitiesTrade accounts payable (25,758,620) 86,941,372 (60,667,552) 115,683,552Accounts payable - related parties 165,814 (44,942) 45,016,446 (44,241,183)Income tax payable (1,677,575) (7,369,138) 0 (7,873,203)Collection in excess of earned revenues 56,974,110 61,560,797 50,995,802 68,172,861Other current liabilities (34,236,790) 7,999,144 16,199,685 3,236,952

Net cash from operating activities 16,452,336 (250,478,822) 74,864,112 (297,127,183)


- 8 -

PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIESSTATEMENTS OF CASH FLOWS (CONTINUED)



Cash flows from investing activities(Increase) decrease in current investments (50) (50) 0 0(Increase) decrease in short-term loans to related parties 0 0 (14,377,547) (3,504,603)Dividend received 0 0 48,411,235 7,999,400Proceed from sales of investments 0 105,366 0 105,366Proceed from sales of fixed assets 4,668,865 5,611,293 3,465,359 27,219,133Purchase of fixed assets (171,405,528) (89,845,408) (70,863,150) (42,564,640)(Increase) decrease in restricted investments (8,917,662) 2,857,088 (8,909,783) 2,863,220Purchase of land not used in operations 13 (170,000) 0 (170,000) 0Proceed from return of capital 0 0 1,499,550 32,999,550Purchase of investment in subsidiary company from minority interest 0 (809,346) 0 (2,444,775)Proceed from sales of intangible assets 111,500 0 111,500 0Purchase of intangible assets (455,300) (465,288) (16,000) (460,988)(Increase) decrease in other non-current assets (100,000) (2,330,034) (100,000) 536,550

Net cash from investing activities (176,268,175) (84,876,379) (40,948,836) 22,748,213Cash flows from financing activities

Increase (decrease) in bank overdrafts and short - term loans from financial institutions 115,168,904 505,712,817 81,893,113 507,909,048

Received (repayment) of short - term loans from related parties 0 0 (18,946) (87,287,593)Redemption of debentures 19 (100,000,000) 0 (100,000,000) 0Proceed from long-term loans 127,068,840 3,230,456 7,068,840 3,230,456Repayment of long-term loans (45,000,000) (59,500,000) (45,000,000) (59,500,000)Increase (decrease) in liabilities under hire purchase agreements 1,756,671 (1,845,700) 2,318,645 (956,347)Repayment of liabilities under financial lease agreements (7,959,087) (3,678,859) (7,265,025) (3,633,277)Proceed from issuance of share capital 20 0 26,500,000 0 26,500,000Proceed from issuance of share capital from minority interest 0 225 0 0Cash payment for capital reduction to minority interest (450) (450) 0 0Cash dividends payment (650,765) (28,861,000) 0 (27,822,000)

Net cash from financing activities 90,384,113 441,557,489 (61,003,373) 358,440,287Effect of change in exchange rate on cash (416,956) (321,914) (408,216) (321,914)Net increase (decrease) in cash and cash equivalents (69,848,682) 105,880,374 (27,496,313) 83,739,403Cash and cash equivalents at beginning of the year 176,335,909 70,455,535 125,145,080 41,405,677Cash and cash equivalents at end of the year 3.1 106,487,227 176,335,909 97,648,767 125,145,080


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PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIESSTATEMENTS OF CASH FLOWS (CONTINUED)



Supplemental disclosures of cash flows information :Cash paid during the year for Interest expenses 48,405,582 46,660,377 44,113,241 46,835,562

Income tax (including income tax deducted at sources) 28,858,949 30,044,188 21,764,256 24,605,043Non-cash transactions

Purchases fixed assets by credit 45,247,952 0 0 0Purchases fixed assets under hire purchase agreements 835,635 0 120,508 0Purchases fixed assets under financial lease agreements 21,808,312 28,731,966 16,562,399 27,903,798Obtain land from the settlement of debt 939,000 0 939,000 0Transferred land from operation to land for sale 14 23,212,325 0 0 0Stock dividend payment 0 105,986,000 0 105,986,000Re-appraisal of land 0 120,240,615 0 120,240,615


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PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements

As at 31 December 2005 and 2004

1. General information Patkol Public Company Limited is a public company limited under Thai laws and is a listed company in the

Stock Exchange of Thailand. The Company is engaged in the trading and services of engineering products which include turnkey sales of services in design, manufacturing and installation of various types of industrial refrigeration for the ice making industry and supermarket, dairy and ice-cream processing, as well as food related processing plant and supplies made to order. The Company’s office is located at 348 Chalermprakiat Rama 9 Road, Pravate, Bangkok 10250.

2. Basis for preparation and presentation of financial statements

2.1 The financial statements have been prepared in conformity with accounting standards and practices generally accepted in Thailand.

Except those which are disclosed in the respective accounting policies, the financial statements have been prepared under the historical cost convention.

2.2 Basis of consolidation The consolidated financial statements include the financial statements of Patkol Public Company Limited

and the following subsidiaries : Percentage of Shareholdings 2005 2004 Patkol Manufacturing Co., Ltd. 99.99 99.99 Siam Patkol Co., Ltd. 99.98 99.98 PK Business Solution Co., Ltd. 99.98 99.99 Patkol (1984) Co., Ltd. 99.98 99.98 Patkol R&D Co., Ltd. 99.98 99.98 Kaset Phet Co., Ltd. 98.78 99.70 PKB Enterprise Co., Ltd. 80.00 80.00 Riple Plate (Thailand) Co., Ltd. 99.94 99.94

Balances and significant transactions between the Company and its subsidiaries, cost of investments in subsidiaries, and the shareholder’s equity of the subsidiaries have been eliminated from the consolidated financial statements.

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PATKOL PUBLIC COMPANY LIMITED AND SUBSIDIARIES Notes to Financial Statements (Continued)

2. Basis for preparation and presentation of financial statements (Continued)

2.2 Basis of consolidation (Continued) The financial statements of a subsidiary company, PK Business Solution Co., Ltd., which were included in

the consolidated financial statements were audited by other auditor who expressed an unqualified audit opinion. Those statements reflected the total assets as at 31 December 2005 of Baht 0.36 million, and total revenues for the year then ended of Baht 0.004 million and net loss of Baht 0.01 million. (31 December 2004 : reflected the total assets of Baht 2.18 million, and total revenues for the year then ended of Baht 0.75 million and net profit of Baht 0.61 million)

3. Significant accounting policies

3.1 Cash and cash equivalents Cash and cash equivalents include cash on hand, deposit at financial institutions and short-term, highly

liquid investments that are readily convertible to known amounts of cash with an original maturity of three months or less and free from commitments and that are subject to an insignificant risk of change in value.

3.2 Trade accounts receivable / Allowance for doubtful accounts Trade accounts receivable are stated at the net realizable value. Allowance for doubtful accounts is

provided for the estimated collection losses that may be incurred in the collection of all receivables. The estimated losses are based on collection experience together with a review of current financial position of the existing receivables.

3.3 Inventories Inventories are stated at cost or net realizable value, which ever is the lower. The value of cost is calculated by the method of followings:

Finished goods and work in process - standard cost which approximates actual costs Spareparts and supplies - moving average method Own manufactured parts - the actual cost

3.4 Investments Investment in subsidiaries and associates are stated under the equity method. Long-term investment which are held as other investments are valued at cost.

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3. Significant accounting policies (Continued)

3.5 Property, plant and equipment / Depreciation Land is initially recorded at cost and subsequently is revalued by an independent appraiser to its fair value.

Revaluations are to be made with sufficient regularity to ensure that the carrying amount does not differ materially from the fair value at the balance sheet date. The revaluation surplus on land is shown under “Shareholders’ Equity” in the balance sheet.

Plant and equipment are stated at cost less accumulated depreciation. When assets are sold or retired, their cost and accumulated depreciation are eliminated from the accounts and any gain or loss resulting from their disposal is included in the statement of income.

Depreciation of plant and equipment is calculated by the straight-line method over the estimated useful lives of the assets as follows :

Building and building improvements 5 - 20 Years Machinery, tool and equipment 5 - 10 Years Machinery for lease 8 Years Furniture, fixtures and office equipment 3 - 5 Years Vehicles 5 Years

No depreciation is provided for land and assets in progress.

3.6 Capitalization of borrowing costs Borrowing costs are capitalized to the extent that the Company and subsidiaries have incurred borrowing

costs on assets that require a period of time to get them ready for their intended use.

3.7 Intangible assets / Amortization Intangible assets are amortized by the straight-line method over the period of 5 years.

3.8 Land not used in operation Land not used in operation is valued at cost and make the adjustment to devalue this assets when there is an

impairment.

3.9 Impairment of assets The Company and subsidiaries review the impairment of assets whenever event indicate that the carrying value

of an asset exceeds its recoverable amount. The review is made for individual assets or for the cash-generating unit. In case that the carrying value of an asset exceeds its recoverable amount, the Company and subsidiaries

recognize the impairment losses by reducing the carrying value of the asset to be at its recoverable amount and recording the devaluation in the statement of income, or reduce the revaluation surplus in case that those assets were previously revalued. The reversal of impairment losses recognized in prior years is recorded as part of other income or as a revaluation surplus when there is an indication that the impairment losses recognized for the assets no longer exist or are decreased.

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3.10 Financial lease – where the Company and subsidiaries are the lessee Leases of assets where the Company and subsidiaries have substantially all the risks and rewards of

ownership are classified as finance leases. Finance leases are capitalized at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other long-term payable. The interest element of the finance cost is charged to the income statement over the lease period. The asset acquired under finance lease is depreciated over the useful life of the asset.

3.11 Operating lease – where the Company and subsidiaries are the lessee Leases of asset under which all the risks and rewards of ownership are effectively retained by the lessor are

classified as operating lease. Lease payments under an operating lease are recognized as an expense on straight-line basis, over the lease term.

3.12 Operating lease – where the Company and subsidiaries are the lessor The Company and subsidiaries present assets for lease under operating lease contract in the balance sheets according to the nature of assets. Income from operating lease is recognized as income over the lease term.

3.13 Foreign currency transactions Transactions in foreign currencies are translated into Baht at rates prevailing at the date of transactions.

Assets and liabilities denominated in foreign currencies at the balance sheet dates are translated into Baht at the prevailing bank rates at those dates. Gains or losses from the translation are credited or charged to operations.

3.14 Income and cost recognitions The Company and subsidiaries recognize income from sales based on value of delivered goods and from the

service contracts by the percentage of completion method. Earned revenues are based on the percentage that incurred costs to date bear to total estimated costs after giving effect to the most recent estimates of total costs, coupled with the consideration of the physical completion estimated by the engineer.

Other income are recognized on the accrual basis. Costs of sales and services are recognized on the accrual basis.

3.15 Income tax The provision for income tax of the Company and subsidiaries are based on the amount currently payable

according to the Revenue Code.

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3.16 Financial instruments The Company and subsidiaries do not speculate in or engage in the trading of any derivative financial

instruments. The accounting policies on recognition and measurement of financial assets and liabilities are disclosed in the respective accounting policies.

3.17 Use of accounting estimates Preparation of financial statements in conformity with generally accepted accounting principles in certain

circumstances requires management to make estimates and assumptions that affect amounts reported in the financial statements and notes thereto. Actual results may differ from these estimates.

3.18 Earnings (loss) per share Basic earnings (loss) per share are computed by dividing the net income (loss) for the year by the weighted

average number of ordinary shares outstanding during the year, after adjusting the number of ordinary shares in proportion to the change in the number of shares as a result of the change in par value as discussed in Note 20.

Diluted earnings (loss) per share are computed by dividing the net income (loss) for the year by the total sum of the weighted average number of ordinary shares in issue during the year and the weighted average number of ordinary shares to be issued for conversion of all dilutive potential ordinary shares into ordinary shares.

No effect of dilutive potential ordinary shares as the exercise price of warrant was greater than the average fair value of the ordinary share.

4. Transactions with related parties A portion of the Company’s and subsidiaries’ assets, liabilities, income, costs and expenses arose from

transactions with related parties. These parties are related through common shareholdings and/or directorship. The effects of these transactions are reflected in the financial statements on the normal and ordinary course of business as follows :

Sales/Purchases of goods and services : Cost plus 5% - 20% Commission expense : 1% - 5% of contract price Rental income : Contract price

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4. Transactions with related parties (Continued) Significant transactions with related parties for the years ended 31 December, are as follows :

Unit : Baht Consolidated The Company

2005 2004 2005 2004 Sales of goods and services 1,042,567 1,226,371 195,569,946 29,267,507 Purchases of goods and services 1,275,595 1,249,104 140,597,666 92,802,445 Consultant and commission fee 0 0 0 1,102,641 Rental income and others 1,954,752 1,942,752 3,126,552 3,110,552 Interest income 0 0 315,901 111,452 Interest expenses 0 0 586,124 834,576

The outstanding balances with related parties are as follows : Unit : Baht Consolidated The Company 2005 2004 2005 2004

Accounts receivable Patkol Manufacturing Co., Ltd. 0 0 158,440,554 13,910,000 Siam Patkol Co., Ltd. 0 0 114,006 172,013 Patkol (1984) Co., Ltd. 0 0 3,712,538 10,560 PKB Enterprise Co., Ltd. 0 0 57,085 196,294 Riple Plate (Thailand) Co., Ltd. 0 0 0 543,560 Prepack Thailand Co., Ltd. 811,495 1,094,004 396,549 174,093

Total 811,495 1,094,004 162,720,732 15,006,520

Accounts payable Patkol Manufacturing Co., Ltd. 0 0 48,062,465 0 Siam Patkol Co., Ltd. 0 0 215,370 246,105 Patkol (1984) Co., Ltd. 0 0 14,892,722 901,684 Kaset Phet Co., Ltd. 0 0 0 17,841,730 PKB Enterprise Co., Ltd. 0 0 26,588,915 25,335,554 Riple Plate (Thailand) Co., Ltd. 0 0 0 599,200 Prepack Thailand Co., Ltd. 390,182 224,368 346,741 165,494

Total 390,182 224,368 90,106,213 45,089,767

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5. Trade accounts receivable - net The Company and subsidiaries have outstanding balance of trade accounts receivable which are classified by aging

as follows: Unit : Baht Consolidated The Company 2005 2004 2005 2004

Not yet due 315,369,100 405,066,012 300,859,493 390,612,475 Overdue :

Up to 3 months 201,116,622 146,150,846 195,434,528 137,766,791 Over 3 months to 6 months 27,528,269 42,625,650 21,265,533 39,796,906 Over 6 months to 12 months 46,313,222 14,590,553 42,563,329 14,494,188 Over 12 months 16,230,605 8,014,162 15,901,209 7,466,330

Under legal action 17,170,339 36,594,541 15,778,376 32,581,817 Total 623,728,157 653,041,764 591,802,468 622,718,507 Less Allowance for doubtful accounts 29,317,309 47,886,991 27,535,909 43,478,163

Net 594,410,848 605,154,773 564,266,559 579,240,344

6. Installments receivables - net Unit : Baht Consolidated The Company 2005 2004 2005 2004

Due within one year 162,239,740 204,116,195 162,239,740 204,116,195 Under legal action 22,151,842 17,717,424 22,151,842 17,717,424 Total 184,391,582 221,833,619 184,391,582 221,833,619 Less Allowance for doubtful accounts 27,734,052 17,871,029 27,734,052 17,871,029

Net 156,657,530 203,962,590 156,657,530 203,962,590 Due more than one year 19,392,713 22,239,728 19,392,713 22,239,728 Total installments receivables - net 176,050,243 226,202,318 176,050,243 226,202,318

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7. Short-term loans to / loans from related parties Consolidated Unit : Baht

As at Movement during the year As at 2005

1 Jan. 2005 Addition Settlement 31 Dec. 2005 Interest policies

Loans from director 0 35,000,000 35,000,000 0 No interest charged

Total 0 35,000,000 35,000,000 0

The Company Unit : Baht As at Movement during the year As at

2005 1 Jan. 2005 Addition Settlement 31 Dec. 2005 Interest policies

Loans and Interest Receivable

Patkol Manufacturing Co., Ltd. 3,504,603 22,031,040 19,198,068 6,337,575 6% - 6.5 % p.a. Patkol (1984) Co., Ltd. 0 60,771,598 49,227,023 11,544,575 6% - 6.5 % p.a.

Total 3,504,603 82,802,638 68,425,091 17,882,150

Loans and Interest Payable

Patkol Manufacturing Co., Ltd. 0 14,352,299 14,352,299 0 6% - 6.5 % p.a. Patkol (1984) Co., Ltd. 50,662 161,262,055 161,281,001 31,716 6% - 6.5 % p.a.

Total 50,662 175,614,354 175,633,300 31,716

Consolidated Unit : Baht As at Movement during the year As at


Loans from director 0 7,000,000 7,000,000 0 No interest charged

Total 0 7,000,000 7,000,000 0

The Company Unit : Baht As at Movement during the year As at


Loans and Interest Receivable

Patkol Manufacturing Co., Ltd. 0 27,806,955 24,302,352 3,504,603 3.25% - 6% p.a. Siam Patkol Co., Ltd. 0 1,030,000 1,030,000 0 6% p.a. Patkol R&D Co., Ltd. 0 21,000 21,000 0 No interest charged

Total 0 28,857,955 25,353,352 3,504,603

Loans and Interest Payable

Patkol Manufacturing Co., Ltd. 70,002,227 69,768,179 139,770,406 0 3.25% p.a. Siam Patkol Co., Ltd. 11,500,000 39,699 11,539,699 0 6% p.a. Patkol (1984) Co., Ltd. 5,836,028 218,830,334 224,615,700 50,662 6% p.a.

Total 87,338,255 288,638,212 375,925,805 50,662

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8. Inventories - net Unit : Baht

Consolidated The Company Consist of

2005 2004 2005 2004 Finished goods, manufactured parts, parts and equipment 326,054,779 220,310,570 197,441,823 179,649,419 Work in process 88,306,791 34,130,573 40,644,419 30,286,038 Equipment and supplies in transit 22,924,666 24,184,336 22,283,967 22,576,431 Total 437,286,236 278,625,479 260,370,209 232,511,888 Less Allowances for decline in value of inventories 9,266,953 8,969,665 9,186,881 8,884,930 Net 428,019,283 269,655,814 251,183,328 223,626,958

9. Investments for using the equity method This account consists of the direct and indirect investments in ordinary shares of subsidiary companies as follows:

Paid up capital (Million Baht) Percentage of shareholding Company Type of Business

2005 2004 2005 2004

Patkol Manufacturing Co., Ltd. Manufacture and sale of food related 70.00 70.00 99.99 99.99 processing equipment and cooling equipment Siam Patkol Co., Ltd. Manufacture and sale the cooling 2.50 2.50 99.98 99.98 system equipment PK Business Solution Co., Ltd. Sale computer hardware and software 0.25 1.00 99.98 99.99 and computer system service Patkol (1984) Co., Ltd. Manufacture and sale the electric 3.00 3.00 99.98 99.98 system equipment Patkol R&D Co., Ltd. Research and development in applied 1.25 1.25 99.98 99.98 technology and related fields Kaset Phet Co., Ltd. Consultant and brokerage 0.50 2.00 98.78 99.70 PKB Enterprise Co., Ltd. Manufacture and import foam plate 10.00 10.00 80.00 80.00 and equipment for cold room business Riple Plate (Thailand) Co., Ltd. Manufacture and sale, riple plate 0.25 1.00 99.94 99.94

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9. Investments for using the equity method (Continued) The balance of investments are as follows:

Unit : Baht Consolidated The Company 2005 2004 2005 2004

Patkol Manufacturing Co., Ltd. 0 0 64,184,491 66,555,912 Siam Patkol Co., Ltd. 0 0 16,911,943 47,288,048 PK Business Solution Co., Ltd. 0 0 364,264 2,156,403 Patkol (1984) Co., Ltd. 0 0 6,224,240 14,436,246 Patkol R&D Co., Ltd. 0 0 1,142,800 1,184,197 Kaset Phet Co., Ltd. 0 0 9,616,797 20,105,588 PKB Enterprise Co., Ltd. 0 0 45,421,049 41,715,847 Riple Plate (Thailand) Co., Ltd. 0 0 467,008 2,100,283 Total 0 0 144,332,592 195,542,524

On 9 December 2005, Riple Plate (Thailand) Co., Ltd., the subsidiary company, decreased its authorized share capital from Baht 1 million to Baht 250,000.

On 14 December 2005, PK Business Solution Co., Ltd., the subsidiary company, decreased its authorized share capital from Baht 1 million to Baht 250,000.

On 25 August 2004, Kaset Phet Co., Ltd., the subsidiary company of Siam Patkol Co., Ltd., which was the Company’s wholly owned subsidiary company decreased its authorized share capital from Baht 8 million to Baht 2 million and on 14 December 2005, decreased its authorized share capital from Baht 2 million to Baht 500,000.

On 25 August 2004 and 23 December 2004, Siam Patkol Co., Ltd., the subsidiary company of Patkol (1984) Co., Ltd., which was the Company’s wholly owned subsidiary company decreased its authorized share capital from Baht 40 million to Baht 10 million and Baht 10 million to Baht 2.5 million, respectively.

10. Restricted investments Restricted investments are deposits at bank and financial institutions which have been pledged as collateral for credit facilities extended by local banks, bearing interest at the rate 0.50% - 2.50% per annum (The Company : 2.50% per annum).

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11. Property, plant and equipment - net Consolidated Unit : Thousand Baht

Factory Machinery, Furniture, buildings and tools and fixtures and Vehicles Total 2005 Land Improvement equipment

Machinery for lease

office equipment

Assets in progress

Cost At 1 January 2005 Cost 105,101 186,820 200,888 16,346 90,592 51,623 66,472 717,842 Revaluation surplus (in 2001) 140,000 0 0 0 0 0 0 140,000 Revaluation surplus (in 2004) 120,241 0 0 0 0 0 0 120,241 Total 365,342 186,820 200,888 16,346 90,592 51,623 66,472 978,083 Purchases 0 310 24,236 0 8,714 23,207 187,584 244,051 Disposals 0 0 (24,797) 0 (6,652) (3,111) 0 (34,560) Transfers in (out) (23,212) 90,037 76,043 6,224 (177) 1,964 (179,570) (28,691) Written off and transfer to expenses 0 0 (446) 0 (1,001) 0 (14,174) (15,621) At 31 December 2005 342,130 277,167 275,924 22,570 91,476 73,683 60,312 1,143,262 Accumulated depreciation

At 1 January 2005 0 120,083 152,736 6,222 78,456 23,458 0 380,955 Depreciation 0 10,125 17,699 3,599 6,614 9,805 0 47,842 Disposals 0 0 (21,740) 0 (6,464) (2,070) 0 (30,274) Transfers in (out) 0 0 0 0 (306) 0 0 (306) Written off and transfer to expenses 0 0 (377) 0 (999) 0 0 (1,376) At 31 December 2005 0 130,208 148,318 9,821 77,301 31,193 0 396,841 Net book value

At 31 December 2005 342,130 146,959 127,606 12,749 14,175 42,490 60,312 746,421 Consolidated Unit : Thousand Baht


Machinery for lease

office equipment

Assets in progress

Cost At 1 January 2004 Cost 80,634 186,002 195,304 10,819 85,115 29,912 34,281 622,067 Revaluation surplus (in 2001) 140,000 0 0 0 0 0 0 140,000 Total 220,634 186,002 195,304 10,819 85,115 29,912 34,281 762,067 Revaluation surplus (in 2004) 120,241 0 0 0 0 0 0 120,241 Purchases 24,467 79 11,653 0 6,195 26,228 49,956 118,578 Disposals 0 0 (8,561) 0 (427) (4,517) 0 (13,505) Transfers in (out) 0 739 3,049 5,527 0 0 (12,214) (2,899) Written off and transfer to expenses 0 0 (557) 0 (291) 0 (5,551) (6,399) At 31 December 2004 365,342 186,820 200,888 16,346 90,592 51,623 66,472 978,083 Accumulated depreciation

At 1 January 2004 0 111,172 143,570 4,178 72,914 21,261 0 353,095 Depreciation 0 8,911 14,339 2,044 6,178 6,539 0 38,011 Disposals 0 0 (4,677) 0 (396) (4,342) 0 (9,415) Written off and transfer to expenses 0 0 (496) 0 (240) 0 0 (736) At 31 December 2004 0 120,083 152,736 6,222 78,456 23,458 0 380,955 Net book value

At 31 December 2004 365,342 66,737 48,152 10,124 12,136 28,165 66,472 597,128

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11. Property, plant and equipment - net (Continued) The Company Unit : Thousand Baht


Machinery for lease

office equipment

Assets in progress

Cost At 1 January 2005 Cost 41,828 167,755 127,788 31,346 82,216 42,598 50,314 543,845 Revaluation surplus (in 2001) 140,000 0 0 0 0 0 0 140,000 Revaluation surplus (in 2004) 120,241 0 0 0 0 0 0 120,241 Total 302,069 167,755 127,788 31,346 82,216 42,598 50,314 804,086 Purchases 0 260 12,138 0 5,804 17,697 51,647 87,546 Disposals 0 0 (2,666) 0 (422) (1,941) 0 (5,029) Transfers in (out) 0 1,618 8,520 12,224 0 244 (27,103) (4,497) Written off and transfer to expenses 0 0 (446) 0 (1,001) 0 (14,993) (16,440) At 31 December 2005 302,069 169,633 145,334 43,570 86,597 58,598 59,865 865,666

Accumulated depreciation At 1 January 2005 0 112,910 101,227 9,222 71,144 18,364 0 312,867 Depreciation 0 8,250 10,302 6,974 5,998 8,025 0 39,549 Disposals 0 0 (1,308) 0 (287) (1,685) 0 (3,280) Written off and transfer to expenses 0 0 (377) 0 (999) 0 0 (1,376) At 31 December 2005 0 121,160 109,844 16,196 75,856 24,704 0 347,760

Net book value At 31 December 2005 302,069 48,473 35,490 27,374 10,741 33,894 59,865 517,906

The Company Unit : Thousand Baht Factory Machinery, Furniture,

buildings and tools and fixtures and Vehicles Total 2004 Land Improvement equipment

Machinery for lease

office equipment

Assets in progress

Cost At 1 January 2004 Cost 65,214 166,937 115,093 19,819 76,573 18,097 46,281 508,014 Revaluation surplus (in 2001) 140,000 0 0 0 0 0 0 140,000 Total 205,214 166,937 115,093 19,819 76,573 18,097 46,281 648,014 Revaluation surplus (in 2004) 120,241 0 0 0 0 0 0 120,241 Purchases 0 79 11,564 0 6,086 24,941 27,798 70,468 Disposals (23,386) 0 (1,361) 0 (374) (440) 0 (25,561) Transfers in (out) 0 739 3,049 11,527 0 0 (18,214) (2,899) Written off and transfer to expenses 0 0 (557) 0 (69) 0 (5,551) (6,177) At 31 December 2004 302,069 167,755 127,788 31,346 82,216 42,598 50,314 804,086

Accumulated depreciation At 1 January 2004 0 104,820 93,543 5,303 66,037 13,449 0 283,152 Depreciation 0 8,090 8,260 3,919 5,483 5,279 0 31,031 Disposals 0 0 (80) 0 (343) (364) 0 (787) Written off and transfer to expenses 0 0 (496) 0 (33) 0 0 (529) At 31 December 2004 0 112,910 101,227 9,222 71,144 18,364 0 312,867

Net book value At 31 December 2004 302,069 54,845 26,561 22,124 11,072 24,234 50,314 491,219

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11. Property, plant and equipment - net (Continued)

Capitalization of borrowing costs As at 31 December 2005, a subsidiary company capitalized cost of borrowing on loans for the factory

construction and machinery and equipment Baht 1.4 million as part of cost of assets in progress. As at 31 December 2005, the Company and the said subsidiary company have a commitment to pay cost of

construction and machinery as prescribed in the agreement approximately Baht 2.3 million.

Depreciation Depreciation expenses for the years ended 31 December 2005 and 2004 amounted to Baht 47.84 million and

Baht 38.01 million, respectively (The Company : Baht 39.55 million and Baht 31.03 million, respectively).

Restriction on property, plant and equipment Land and certain construction including machinery of the Company and subsidiaries with net book value

(appraisal value) of approximately Baht 555 million have been mortgaged as collateral for credit facilities and long-term loans granted by banks.

Appraisal of property In 2001, the Company engaged an independent appraiser, Tobtavee Appraisal and Services Co., Ltd., to

appraise the Company’s land which its appraised value is higher than the value appraised by one of the lender banks. For conservative purpose, the Company applies the lower amount of appraisal value to revalue the land. The revaluation surplus on land amounted to approximately Baht 140 million is presented as “Revaluation surplus on land” under “Shareholders’ Equity” in the balance sheets. The revaluation surplus is not available for dividend distributions.

In 2004, The Company engaged an independent appraiser, Tobtavee Appraisal and Services Co., Ltd., to re-appraise all of land for operation in order to state the fair value of these land. Based on the appraisal reports dated 13 and 14 November 2004, the market approach method was applied to the revaluation, reflecting the fair market value of the Company’s land for operation in the amount of Baht 260.24 million which higher than the 2001’s appraisal value by approximately Baht 120.24 million. The Company recorded the difference between the historical cost and new appraisal value in the “Revaluation surplus on land” under “Shareholders’ Equity” in the balance sheets.

12. Intangible assets - net Unit : Baht Consolidated The Company 2005 2004 2005 2004

Computer software 33,303,599 32,209,323 32,045,204 32,205,023 Intellectual property 5,310,772 0 5,310,772 0

38,614,371 32,209,323 37,355,976 32,205,023

Less Accumulated amortization 31,108,575 29,440,739 30,608,638 29,440,694

Net 7,505,796 2,768,584 6,747,338 2,764,329

Amortization for the year 1,512,681 1,264,890 1,319,773 1,135,656

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13. Land not used in operations - net Land not used in operation of the Company amounting to Baht 18,138,500 is stated at cost net of impairment

loss of Baht 1.6 million, according to the appraisal report dated 31 March 2005 prepared by Year Appraisal Co., Ltd. The market approach method was applied to determine the appraised values for those assets.

During the year 2005, the Company obtained land of an account receivable from the auction in the amount of Baht 170,000 (the transfer of land title deed is in the process). In addition the Company obtained land from the settlement of debt of an account receivable in the amount of Baht 939,000 (appraisal value Baht 2,025,900).

The said land have been mortgaged to secure loans of the Company from banks.

14. Land for sale On 16 December 2005, a subsidiary company entered into a contractual agreement to buy and to sell a plot of

land at Chachoengsao province to a third party at the price of Baht 25.5 million (at cost of Baht 23,212,325). The payment of land in the amount of Baht 25.4 million (net of deposit Baht 100,000) will be paid upon the buyer get the approval of credit facilities from the commercial banks. The land title deed will be transferred on the date that the subsidiary company received all the money.

The said land has been mortgaged to secure loans of the Company from banks. As at 31 December 2005, the subsidiary company classified the said land from land for operation to land for sale.

15. Bank overdrafts and short-term loans from financial institutions Unit : Baht Consolidated The Company 2005 2004 2005 2004

Bank overdrafts 35,165,595 7,409,861 3,855,527 0 Discounted promissory notes 599,228,763 211,328,900 592,018,193 211,328,900 Bill of exchange 0 380,000,000 0 380,000,000 Trust receipts 52,646,136 37,729,972 48,080,479 35,301,518 Packing credit 51,375,000 13,873,000 51,375,000 13,873,000 Liabilities under discounted post dated cheques 65,824,356 39,255,836 65,824,356 39,255,835 Total 804,239,850 689,597,569 761,153,555 679,759,253

The Company and subsidiaries have credit facilities from banks of Baht 1,904 million and USD 3 million (The company : Baht 1,593 million and USD 1.5 million) which are collateralized by the mortgages of land and certain construction including machinery.

Under the term of the trust receipts agreements with the banks, certain imported inventories have been released to the Company and subsidiaries in trust for the banks. The Company and subsidiaries are accountable to the banks for the trusteed inventories or their sales proceeds.

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16. Liabilities under hire purchase agreements - net Unit : Baht Consolidated The Company 2005 2004 2005 2004

Liabilities under hire purchase agreements 2,997,931 405,625 2,439,153 0 Less Portion due within one year 1,478,483 405,625 1,274,731 0

Net 1,519,448 0 1,164,422 0

The current portion due within one year is presented under current liabilities in the balance sheets.

17. Liabilities under financial lease agreements - net Unit : Baht Consolidated The Company 2005 2004 2005 2004

Liabilities under financial lease agreements 43,643,498 28,138,451 37,562,326 27,260,913 Less Deferred interest expense 4,741,166 3,085,344 3,994,431 2,990,392

38,902,332 25,053,107 33,567,895 24,270,521

Less Portion due within one year (net of deferred interest expense) 10,216,039 5,719,505 8,976,379 5,546,593

Net 28,686,293 19,333,602 24,591,516 18,723,928

The Company entered into several financial lease agreements to purchase equipments, with interest at the rates ranging from 3.35% – 8.92% per annum. These are repayable in 36 – 48 equal monthly installments. The repayment terms of the liabilities under financial lease agreements are as follows:

Unit : Baht Consolidated The Company

Principal Deferred

Interest Expense Total Principal

Deferred Interest Expense

Total

2006 10,216,039 2,044,976 12,261,015 8,976,379 1,721,132 10,697,511 2007 10,625,206 1,412,215 12,037,421 9,294,813 1,179,104 10,473,917 2008 11,759,275 1,098,025 12,857,300 10,484,779 955,862 11,440,641 2009 6,301,812 185,950 6,487,762 4,811,924 138,333 4,950,257

Total 38,902,332 4,741,166 43,643,498 33,567,895 3,994,431 37,562,326

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18. Long-term loans - net

Unit : Baht Consolidated The Company 2005 2004 2005 2004

Long-term loans 318,751,296 236,682,456 198,751,296 236,682,456 Less Portion due within one year 48,400,000 45,000,000 48,400,000 45,000,000

Net 270,351,296 191,682,456 150,351,296 191,682,456

On 21 April 2005, a subsidiary company was granted long-term loan amounting to approximately Baht 120 million by a local commercial bank for purchase of fixed assets. The loan is repayable by quarterly installments within seven years in various amounts commencing from July 2007, with interest at the rate of MLR minus 0.25% to 2.25% per annum. The said loan is collaterized by the mortgage of the subsidiary company’s land and certain construction including machinery of the subsidiary company, and also guarantee by the Company (See Note 11). On 16 January 2003, the Company was granted long-term loan amounting to approximately Baht 312 million by a local commercial bank for the purpose of refinancing its outstanding balance of restructured debt under the debt restructuring agreement made on 6 July 2000. This loan is repayable in quarterly installments within seven years in various amounts commencing from April 2003, with interest at the rate of MLR minus 0% to 2% per annum. The said loan is collaterized by the mortgage of land and certain construction of the Company (See Note 11). On 18 September 2003, the Company was granted long-term loan amounting to approximately Baht 26 million by a local commercial bank for the purpose of system information improvement. The loan is repayable by quarterly installments within four years in various amounts commencing from January 2005, with interest at the rate of MLR minus 0.5% to 2% per annum. The said loan is collaterized by the mortgage of the Company’s land and certain construction (See Note 11).

19. Debentures

On 20 October 2003, the Company issued the unsubordinated and unsecured debentures without trustee in the amount of Baht 200 million to an investment institution which are as follows : 1. Debentures No. 1/2003 Due 2005 of Patkol Public Company Limited in an amount of Baht 100 million, 100,000 units, with a maturity of 2 years and interest at the fixed rate of 3.3% per annum, payable semi-annually. These debentures were redeemed in October 2005. 2. Debentures No. 2/2003 Due 2006 of Patkol Public Company Limited in an amount of Baht 100 million, 100,000 units, with a maturity of 3 years and interest at the float rate (1 year fixed deposit rate quoted by SCB plus 2% per annum), payable semi-annually.

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20. Share capital On 19 January 2004, the extraordinary general meeting of the Company’s shareholders number 1/2004 approved the follow resolutions: 1. To change the par value of the registered share from 10.6 million ordinary shares of Baht 10 par value to 106 million ordinary shares at Baht 1 par value. (The Company registered the change of the par value with the Ministry of Commerce on 22 January 2004). 2. Increased the registered share capital of the Company from Baht 106 million to Baht 320 million by issuing 214 million new ordinary shares of Baht 1 par value each, totaling Baht 214 million. (The Company registered the change of registered capital with the Ministry of Commerce on 23 January 2004). 3. To allot the new ordinary shares of 26.5 million shares of Baht 1 par value each, totaling Baht 26.5 million to the existing shareholders whose names appear in the share register book on 28 January 2004 at the subscription ratio of 4 existing shares to 1 new ordinary share at the offering price of Baht 1 each. (On 16 February 2004, the said increase share capital have been issued to the existing shareholders at the price of Baht 1 each. Such shares were fully paid. The Company registered the change of the paid-up share capital of Baht 238,486,000 with the Ministry of Commerce on 4 March 2004). 4. To issue and offer of 53 million warrants to the existing shareholders who purchase new ordinary shares of the Company under item 3 in a ratio of 1 new share per 2 units of warrant. No value is to be charged for the warrants upon issue. The warrants have an exercise price of Baht 5 per share and are exercisable at the ratio of 1 warrant per 1 ordinary share, for a period of 3 years from the issuance date as stated on the warrants. 5. To allot the increased share capital of 214 million shares at Baht 1 par value each as follows:

5.1 To allot the new ordinary shares of 106 million shares at the par value of Baht 1 each for dividend payment to the existing shareholders under Note 23.

5.2 To allot the new ordinary shares of 26.5 million shares at the par value of Baht 1 each to offer by way of the rights issue to the existing shareholders under item No.3.

5.3 To allot the new ordinary shares of 28.5 million shares at the par value of Baht 1 each to offer by way of private placement in accordance with the Office of the Securities and Exchange Commission No. Kor Jor 12/2543.

5.4 To allot the new ordinary shares of 53 million shares at the par value of Baht 1 each for exercise of warrants issued to the existing shareholders under item No.4.

The terms, conditions and offering details of the above increase shares and warrants including reasons for which new shares must be reserved for the adjustment to the exercise price or the exercise ratio of the warrants or both will be determined at the discretion of the Board of Directors.

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21. Warrants On 31 August 2004, the Company received approval from the Office of the Securities and Exchange Commission to issue and offer 53 million units of warrant to its existing shareholders with no value to be charged. Subsequently, the Stock Exchange of Thailand has set the warrants to be traded on the Stock Exchange of Thailand commencing from 5 October 2004. The warrants specified the name of the holders and are negotiable with 3 years maturity from the issuance date. One warrant represents the right to buy one ordinary share and are exercisable on every 25 of February, May, August and November. The first exercise date is on 25 November 2004 until 25 August 2007 and the final exercise date will be on 21 September 2007. The exercise price of the warrants are Baht 5 per share. Up to now, no warrant has been exercised.

22. Legal reserve Under the provision of the Limited Public Company Act B.E. 2535, the Company is required to appropriate

at lease 5% of its net income for the year after deduction of the deficit brought forward (if any) as reserve fund until the reserve fund reaches 10% of the authorized share capital. The reserve fund is not available for dividend distribution.

In 2005, the company made additional appropriation for the legal reserve in the amount of Baht 8,151,400. Presently, the reserve fund is at 10% of the authorized share capital.

23. Appropriation On 27 April 2004, the ordinary shareholders’ meeting approved the dividends payment at Baht 0.05 per share in respect of year 2003 earnings in the total amount of Baht 11.92 million. The payment of dividends were made on 27 May 2004. On 19 January 2004, the extraordinary general meeting of the Company’s shareholders number 1/2004 approved the interim dividend payment in respect of the Company’s retained earnings as of 30 September 2003, as the following:

1. Stock dividend payment (increased share capital) in proportion 1 ordinary share to 1 share of stock dividend totaling the stock dividend 106 million shares at the par value of Baht 1 each, in the total amount of Baht 106 million or at the rate of Baht 1 per share.

2. Cash dividend payment at the rate of Baht 0.15 per share totaling Baht 15.9 million. The payment of the said dividend were made on 12 February 2004.

24. Registered provident fund The Company and subsidiaries have a contributory registered provident fund in accordance with the

Provident Fund Act B.E. 2530. Under the plan, the employee contributes an amount equivalent to 3% of their basic salary. The Company and subsidiaries contribute monthly to the fund at an amount equivalent to 3% of its employees’ basic salaries.

During the year ended 31 December 2005 and 2004, the Company and subsidiaries contributed to the fund and recorded expenses of Baht 5.06 million and Baht 4.70 million, respectively. (The Company : Baht 4.70 million and Baht 4.60 million, respectively)

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25. Employees and related costs Consolidated The Company 2005 2004 2005 2004

Number of employees at end of year (include temporary employees) Persons 1,362 1,236 1,080 1,129

Employee costs for the year Thousand Baht 363,183 310,063 320,919 281,775

26. Financial information by segment The Company and the subsidiary companies’ operations involved in the trading and services of

engineering products which include turnkey sales of services in design, manufacturing and installation of various types of industrial refrigeration for the ice making industry and supermarket, dairy and ice-cream processing, as well as food related processing plant and supplies made to order. Business unit segment information of the Company and its subsidiary companies for the years ended 31 December 2005 and 2004 are as follows :

Unit : Million Baht

Ice machine and Machineries for Industrial Liquid and

Consolidated refrigeration machine food processing

Turnkey project

Service and others

Central management

Total

2005 Sales and services 1,280 618 696 131 0 2,725 Operating profit (loss) 140 93 38 17 18 306 Property, plant and equipment-net 254 5 18 108 361 746 2004 Sales and services 1,489 476 317 109 2 2,393 Operating profit (loss) 175 49 6 10 24 264 Property, plant and equipment-net 132 4 5 106 350 597

Unit : Million Baht

Ice machine and Machineries for Industrial Liquid and

The Company refrigeration machine food processing

Turnkey project

Service and others

Central management

Total

2005 Sales and services 1,120 618 766 247 3 2,754 Operating profit (loss) 112 93 33 17 18 273 Property, plant and equipment-net 15 5 18 107 373 518 2004 Sales and services 1,319 476 342 107 2 2,246 Operating profit (loss) 140 49 7 12 18 226 Property, plant and equipment-net 12 4 5 105 365 491

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27. Disclosures of financial instruments 27.1 Interest rate risk

As at 31 December 2005, the Company and subsidiaries had financial assets and financial liabilities exposed to interest rate risk as follows:

Unit : Baht Average

Fixed interest rate maturing in : interest rate

Floating Fixed Consolidated

Floating Interest

rate 1 year or less Over 1 to 5 years

Total

% %

Financial assets Cash and cash equivalents 106,369,263 117,964 106,487,227 0.57 2.23 Current investments 10,173 10,173 2.25 Restricted investments 161,799 11,133,630 11,295,429 0.50 2.42

Financial liabilities Bank overdrafts and short-term loans - from financial institutions 35,165,595 769,074,255 804,239,850 6.59 5.46 Liabilities under hire purchase agreements 1,478,483 1,519,448 2,997,931 6.32 Liabilities under financial lease agreements 10,216,039 28,686,293 38,902,332 6.18 Long-term loans 318,751,296 318,751,296 5.05 Debentures 100,000,000 100,000,000 3.00

Unit : Baht Average

Fixed interest rate maturing in : interest rate

Floating Fixed The Company

Floating Interest

rate 1 year or less Over 1 to 5 years

Total

% %

Financial assets Cash and cash equivalents 97,573,925 74,842 97,648,767 0.50 2.50 Short-term loans to related parties 17,882,150 17,882,150 6.50 Restricted investments 9,964,465 9,964,465 2.50

Financial liabilities Bank overdrafts and short-term loans - from financial institutions 3,855,527 757,298,028 761,153,555 6.75 5.45 Short-term loans from related parties 31,716 31,716 6.50 Liabilities under hire purchase agreements 1,274,731 1,164,422 2,439,153 6.96 Liabilities under financial lease agreements 8,976,379 24,591,516 33,567,895 6.13 Long-term loans 198,751,296 198,751,296 5.54 Debentures 100,000,000 100,000,000 3.00

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27. Disclosures of financial instruments (Continued) 27.2 Credit risk Credit risk is the risk that a counterparty is unable or unwilling to meet a commitment that they entered into

with the Company and subsidiaries. This risk is controlled by the application of credit approvals, limits and monitoring procedures. Whenever the Company and subsidiaries consider any deal is in risk, the Company will obtain collateral in the form of a customer’s promissory note, which is guaranteed by a bank in approving credit sales. The maximum credit risk exposure is the book value of assets after deduction of allowance for doubtful accounts as presented in the balance sheet.

27.3 Foreign currency risk The Company and subsidiaries have certain foreign currency transactions, giving rise to significant exposure to market risk from changes in foreign exchange rates. However, the management believes that the foreign exchange rate risk is minimum. Hence, the Company and subsidiaries do not use derivative financial instruments to mitigate this risk, except for the forward contract to sales and purchases foreign currency.

27.4 Fair value of financial instruments The Company and subsidiaries use the following methods and assumptions in estimating the fair value of financial instruments. Cash, deposit with financial institutions and loan receivable, bank overdrafts and loan payable The fair value is the amount stated in the balance sheet, since amounts are predominantly subject to market interest rates. Trade accounts receivable and payable The carrying amount approximates fair value because of the short period to maturity of those instruments. Liabilities under hire purchase agreements, Liabilities under financial lease agreements, Long-term loans and debentures The fair value is estimated using a discounted cash flows method based on the average interest - market rate and the remaining period to maturity.

28. Contingent liabilities and commitments As at 31 December 2005, the Company and subsidiaries: a) Have sales and service contracts with the customers for which goods or services have not been delivered

or rendered totalling approximately Baht 2,043 million. The Company and subsidiaries do not expect material loss from these contracts.

b) Are contingently liable for letters of guarantee issued by banks to customers for its performance

guarantees and bidding guarantees totalling approximately Baht 355 million, Euro 36,000 and USD 2,144,487.

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Check List PAGE

1. Comparative Data 1 - 2 2. Message from the Chairman of the Board 3 3. Message from the President and Chairman of Management Committee (MC) 4 4. Board of Directors 5 - 7 5. Management Committee (MC) 8 - 9 6. Major events and developments 10 7. General Information 11 8. Other References 12 9. Type of Business 13 - 14 10. Income Structure of business Group 15 11. Risk Factors 16 - 17 12. Management 18 - 27 13. Internal Control 28 - 29 14. Major Shareholders 30 15. Transactions with Related Parties 31 16. Result from Business Operation 32-34 17. Financial Position 35-42 18. Financial Statements 19. Check List

Documents

Patkl 05