Global Connections Plublic Company Limited ANNUAL REPORT … · 2020. 2. 28. · GC ANNUAL REPORT 2007 06 4. BUSINESS CHARACTER The Global Connections Public Company Limited (çthe

ANNUAL REPORT2007

Global Connections Plublic Company Limited

EthicsIntergrityProfessional | Focus

PartnershipStrive For Better

best partner“ Your best partner for solution and service in Industrial raw material supply”

1. GENERAL INFORMATION

2. FINANCIAL SUMMARY

3. MESSAGE FROM THE CHAIRMAN

4. BUSINESS CHARACTERS

5. REVENUE STRUCTURE

6. COMPANY BACKGROUND

7. INDUSTRY OVERVIEWS

8. RISK FACTORS

9. SHAREHOLDER STRUCTURE

10. MANAGEMENT STRUCTURE AND DIRECTORS

11. THE PRINCIPLES OF CORPORATE GOVERNANCE

12. CORPORATE SOCIAL RESPONSIBILITIES

13. RELATED TRANSACTIONS

14. DISCUSSION AND ANALYSIS OF OPERATING

RESULTS AND FINANCIAL POSITION

15. AUDIT COMMITTEEûS REPORT YEAR 2007

16. STATEMENT OF BOARD OF DIRECTORS

RESPONSIBILITIES FOR THE FINANCIAL STEMENTS

17. FINANCIAL STATEMENT YEAR 2007

INDEX

GC ANNUAL REPORT 2007

Global Connections PLC

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GC ANNUAL REPORT 2007 02

1. GENERAL INFORMATION 31 December 2007

Company NameSymbol Business

Head office

Home PageTelephoneFacsimile Investor RelationsRegistration NumberEstablishment dateDate of registration Public Company Stock Listed DateRegistered and Up CapitalNumber of Ordinary Shares

Global Connections Public Company Limited (çThe companyé or çGCé)GCDistributing agent of plastic, petrochemical and additive, which are used in petrochemical and plastic transformation process.13/1 Moo 2 Kingkaew Rd., Rachateva, Bangplee, Samuthprakarn 10540 , Thailandhttp://www.gc.co.th+66 (0)2763-7921, +66 (0)2763-7999, +66 (0)2763-7923-42+66 (0)2763-7949, +66(0)2312-4880-1+66 (0)2763-7999 Ext. 201-204010757480015327 th September 199417 th March 2005 6 th December 2005200,000,000 Baht200,000,000 Shares

Registrars

Auditor

Thailand Securities Depository Co.,LTD.Capital Market Academy Building, 2nd FL2/7 Moo 4, (North Park Project) Vibhavadi-Rangsit Rd.,Tung Song Hong, Laksi, Bangkok, 10210, ThailandTel. + 66 (0) 2596-9000 Fax. +66 (0) 2832-4994

Ernst & Young Office Limited193/136-137 Rajadapisek Road, Klongtoey,Bangkok 10110, ThailandTel. +66(0)2264-0777 Fax. +66(0)2661-9192


2005 2006 2007

FINANCIAL POSITION (MILLION BAHT)

Current Asset 644 691 784

Total Asset 893 851 946

Current Liabilities 505 473 570

Total Liabilities 596 535 579

Shareholderûs Equity 297 316 366

OPERATING RESULT (MILLION BAHT)

Sale Revenue 3,258 3,378 3,456

Gross Profit 164 203 240

Operating Profit 76 112 159

Net Profit 37 67 108

FINANCIAL RATIOS

Return on Asset (%) 4.18 7.64 12.07

Return on Equity (%) 15.99 21.74 31.81

Net Profit Margin (%) 1.12 1.97 3.14

Current Ratio (Times) 1.28 1.46 1.37

Debt to Equity Ratio (Times) 2.00 1.70 1.58

Book Value per Share (Baht) 1.49 1.58 1.83

Net Profit Per share (Baht) 0.23 0.33 0.54

2.FINANCIAL SUMMARY



3. MESSAGE FROM THE CHAIRMANFor the year 2007 although the growth of company revenue was merely 2-3% comparing with the target of 7-8%. It was due to the global economic slow down and unstable political situation in Thailand. However it was the record year of the Company which succeeded in generating net profit of baht 108 million, an increase of 62.8% from the year 2006. The rise of net profit of the Company was resulted from the expansion of specialty products marketing policy focusing on specialty & engineering polymer products (BU2) and Specialty chemical products (BU3). Moreover, the appropriate risk management policy containing exchange rate, account receivable and inventory control also supported the Company achievement year.

The excellent performance of the Company in 2007 reflected the efficiency of the proper marketing strategy, together with risk management policy, and learning from the past which drove the gross profit and reduced the expenses of the Company. According to the aforesaid supporting factors, the Company is capable to pay dividends to the shareholders consistency and continuously as committed in the Company policy of at least 40% of net profit. The Company management policy is based on selective quality growth principle which provides not only a sustainable growth, but also benefits to both the Company and the investors as well. Additionally, the year of 2007 was the 10th anniversary of the alliance between the Company and DuPont Company, which played the significant role in development of the premium grade specialty polymer products for automotive, electronics and electrical appliance industries. The anniversary party had been held on 13th September 2007 at Sukhothai hotel. The party illustrated the closed relationship and commercial partnership between the two Companies.

Plastic and petrochemical industries growth is predicted to expand from the past year as a result of the increasing of petrochemical products prices and export market. However, the domestic economy will strongly affect to the demand of the petrochemical products which is likely to create high competition in the market in 2008.

The Company will continue to concentrate on policy to expand its business to the specialty products market in 2008. The products are the raw materials of the continuous increasing evolution industries, for example, automotive, electronics and electrical appliance industries. The Company has a long term plan to adjust the proportion of the commodity polymer product (BU1) sale down to 50% from 60% at present. Moreover, the target is to increase the sale of the engineering plastic product (BU2) and specialty product (BU3) to 40-50% from 30-40% at present.


Lastly, it is my honor to be part of the success of the Company. On behalf of the Board of Directors, I would like to express my sincere thanks to our customers, shareholders, suppliers, financial institutions, and the directors for their wonderful supports. Furthermore, I would like to thank all of our staff members and managements for their intentional contributions. Under the good corporate governance concept and strong supports from our partners, it will be the strong foundation for the Company to be the leader of plastic and petrochemical related distributor in Thailand in the very near future.

Yours sincerely,

( Dr. Pisit Leeahtham )Chairman of the Board



4. BUSINESS CHARACTERThe Global Connections Public Company Limited (çthe Companyé or çGCé) is the distributing agent of plastic, petrochemical and additive, which are used in petrochemical and plastic transfor-mation process. The company is the distributing agent for 23 companies, which are both domestic and foreign companies leading in petrochemical and plastic in terms of production capacity and technology such as SCG Plastics Co., ltd. (former CCC Chemical Commerce Co., ltd., a subsidiary owned 100 percent by Siam Cement Plc), Thai Plastic and Chemical Plc, Exxon Mobile Chemical, DuPont Engineering Polymers, Siam Polystyrene Co., ltd, Ciba Special Chemical, ChiMei Corpora-tion, and etc. By this reason, the Company is considered to be the Thai distributor who provides the most variety petrochemical and plastic related products for Thailand.

The Company was established on September 27, 1994 by five experienced founders who each has been working in petrochemical industry for more than 20 years with the company initial registered capital of baht 2 million and began fully commercial on April 1, 1995. The knowledge and experience of founders coincided with the rapid emerging petrochemical industry in Thailand created the rapid growth for the Company. The Companyûs sale growth rate was 10.5 percent annually from the year 2004 to the year 2007, although sale volume in the year 2007 slightly decrease from the year 2006 from 59,079 metric tons to 58,955 metric tons or 0.2% decrease, The Companyûs net profit in the year 2007 increase 63% higher than that of the year 2006 because The Company focusing on specialty product group which contribute better margin. On December 31, 2007 the registered capital of the company was raised to baht 200 million.

The objective of the Company is to be the best total solutions provider for petrochemical and plastic industry not only for supplying the variety products but also for advising production technology and knowledge to customers/end users in order to form long term strategic partner-ship with the customers as well as the suppliers.


Companyûs revenue growth from 1995-2007

Million THB

Year

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007



In general, large producers such as Exxon Mobil, Ciba, and Chi Mei and others in Petrochemical industry do not distribute their products by themselves because of the scatter location of end-users, high cost of each trade transaction. Furthermore, end-users of plastic mostly use the assortment of plastic raw material in the production process. As end-users perspective, it is too complicated to buy raw materials at a time from many producers. The picture below well illustrates transaction without role of distributing agent.

Trade transaction without distributing agent

The essential of distributing agents for petrochemical industry is to connect the entire product ranges from the number of large producers to serve the various needs of end-users/ customers, and to lower logistic cost of each transaction. The company can delivers value added to both suppliers and customers by satisfy economy of scope to the number of customers/ end-users and satisfy economy of scale to large producers simultaneously.

Role of Distributing Agent

n

n


The above picture demonstrates role and benefit of distributing agent in petrochemical industry similar to role of distribution channel for consumer products which regularly generate trade transaction at the supermarket or hyperstore such as TescoLotus, Makro, and BigC. In addition, the barrier for new entry in petrochemical distributing agent is that the petrochemical producers usually appoint only one or two distributing agents for each country as general practice.

Role and benefit of distributing agent

n

n



The Companyûs main business can be categorized into three business-units.1. Business Unit 1: Commodity Polymer Business Unit2. Business Unit 2: Specialty and Engineering Polymer Business Unit3. Business Unit 3: Specialty Chemical Business Unit

5. REVENUE STRUCTURE

-SCG-Sabic-Borouge-The Polyolefin-Asia Polymer (Indent)-Nova Chemical-DOW (NUC)-Others

-Thai PET resin-TPC-IRPC-RIKEN-Others

-DuPont-Chisso-SABIC Innovation-Exxon Mobil (EPDM/Butyl Rubber)-Reinforcement Compound-Others

-Exxon Mobil (Santoprene product)-Eastman-Exxon Mobil (PE & PP Metalouene)-TPE Compound-Cabot Plastics-Others

-Chevron Philips-Owens Corning-Rio Tinto Mineral-Nanocor-Others

3. Styrenic Plastic

-Siam Polystyrene-Chi mei Corp.-Denka-Nova Chemical-Others

-Ciba Specialty-Exxon Mobil (Adhesive)-Others

1. Additive & Adhesive

2. Petrochem. & Intermediate

2. Thermo Rubber & Transparency

1. Engineering & Synthetic Rubber

2. PET & PVC

1. Polyolefin

GC

BU3 : Specialty ChemicalBU1: Commodity Polymer BU2 : Specialty & Engineering Polymer


The Companyûs product selections ranging from commodity polymer to special additive chemical which contribute high profit margin, Global Connections PLC is one of the only two Thai distributors offering product selections from common commodity grade polymers to special grade polymers. The Companyûs revenue baht 3,472 million in 2007 derived from Commodity Polymer (B.U.1) 63.6% (or baht 2,208 million), Specialty & Engineering Polymer (B.U.2) 30.6% (or baht 1,062 million), Specialty Chemical (B.U.3) 5.3% (or baht 186 million) and from other income 0.5% (or baht 17 million) During the past couple years, the Company business strategy was to expand market in Specialty Product Units which contributed better profit margin and depended largely on technical support, obviously the growth was significant from baht 391 million in the year 2002 to baht 1,248 million in the year 2007.

COMPANY REVENUES STRUCTURE 2004 - 2007: BREAK DOWN BY BUSINESS UNITS

Remark: 1 Other income included commission income from oversea suppliers and interest income.

Amount%(mil THB)

Amount%(mil THB)

Amount%(mil THB)

REVENUE STRUCTURE 2005 2006 2007

Commodity polymer

Specialty and

engineering polymer

Specialty chemicalTotal Sale Revenue

24.36% 3.60% 2.45%

2,424.0

666.2

167.4

3,257.6

14.2

3,271.8

74.1

20.4

5.1

99.6

0.4

100.0

2,406.2

822.5

149.3

3,378.0

11.5

3,389.5

71.0

24.3

4.4

99.7

0.3

100.0

2,207.9

1,061.6

186.1

3,455.7

17.1

3,472.8

63.6

30.6

5.3

99.6

0.5

100.0Total RevenueOther income1

Growth rate



THE COMPANY REVENUE BREAKS DOWN : YEAR 2003 - 2007

4,000

2,631

3,272 3,389 3,473

1,873

Million THB

3,000

2,000

1,000

2003 2004 2005 2006 2007 Year

0

Specialty and engineering polymer Commodity polymer

Other Income Specialty Chemical


GC was established with initial registered capital of Baht 2 million on September 27, 1994. GC was appointed to be HDPE distributing agent of Bangkok Polyethylene Plc. and increased its registered and paid-up capital to Baht 5 million.

GC was appointed to be distributing agent of SCG Plastics Co., ltd. (former CCC Chemical Com-merce Co., ltd., a subsidiary owned 100 percent by Siam Cement Plc.) by beginning as a 17th company sale ranking. Moreover GC was appointed to be distributing agent of Eastman Chemical, which was the start of specialty product trading. GC increased its registered and paid-up capital to Baht 10 million.

GC increased its paid-up capital to Baht 20 million to support the company expansion. GC was appointed to be distributing agent of DuPont Engineering Polymers which is the worldûs largest producer of Polyamide66 or Nylon 66. As well as appointed to be distributing agent for Chi Mei Corporation which is the worldûs largest manufacturer of the ABS.

GC was appointed to be distributing agent of Ciba (Singapore) Pte Ltd. (at before name: Ciba Specialty Chemical), the worldûs class producer of additives chemical for plastic industry, and was appointed to be agent of Owen Corning Australia PTY, producer of glass fiber. GC also increased its paid-up capital to Baht 30 million.

GC was appointed to be distributing agent of Siam Polystyrene (Thailand) Co., ltd. (Dow Chemical Thailand), and was appointed to be distributing agent for Cabot Plastic Hong Kong Ltd., which is the worldûs largest manufacturer of master batch and Carbon Black. GC increased its paid up capital to Baht 50 million and sale revenue over Million 500 Baht

GC was appointed to be distributing agent of Advance Elastomer Systems (AES), presently acquainted by Exxon Mobil, which is the worldûs largest manufacturer of rubber mixed PP. GC was expand financial resource from 3 to 6 commercial banks which be able to increase large amount of customers with the total sale from million 542 Baht in year 1999 to million 849 Baht in year 2000 or increased by 57%

6. COMPANY BACKGROUND1994

1995

1996

1997

1998

1999

2000



GC increased its paid-up capital to Baht 80 million to support the company expansion with the total sale revenue million 1,116 Baht.

GC increased its paid up capital to Baht 100 million and moved its warehouse to Kingkaew road. GC was appointed to be distributing agent of Thai Plastic and Chemical Plc.

GC was appointed to be distributing agent of Exxon Mobil and Rio Tinto Mineral Asia Pte., Ltd., the company moved the headquarters to Kingkaew road to facilitate the operation. The company paid dividends Baht 78 million and increased its paid-up capital to Baht 155 million.

In March, GC transformed into public company limited, increased its paid-up capital to Baht 200 million and changed its par value to Baht 1 per share with the intention to implement an IPO of 45 million shares. (1.1 million shares for ESOP at baht 1.03 per share and the remain 43.9 million shares for IPO) çGCé common stock was IPO and listed in The Stock Exchange of Thai-land since 6 December 2005

GC was appointed to be distributing agent of Nanocor Inc. which is a producer of addictive chemical and was appointed to be distributing agent of BAFS Catalysts LLC, (former named Engelhard corporation), a producer of catalyst product.

GC signed a contract which is a financial support for dealer contract with Kasikorn Thai Bank in K › Dealer Financing Project on June 6, 2007. As well as financing supported will be given to GCûs supplier for current credit line which help increase efficiency for financial management

GC celebrated 10th Anniversary Strategic Partnership with DuPont on September 13,2007 at Sukhothai Hotel.

2001

2004

2005

2006

2007


According to Global Connections Plcûs business characteristic as a distributing agent of plastics and petrochemical products, the companyûs performance is directly related to plastic product and petrochemical industry. The Office of Industrial Economics reports situations of both industries as the followings.

Industry OverviewThe Plastic products industry is an important industry that contributes billions of Baht to thedomestic economy each year. The industry involves many producers, most of which are small-and-medium enterprises (SMEs). Moreover, this industry acts as a bridge between the petrochemical industries that feed raw materials for production of plastic pellets for further processing by other industries, such as automotives and parts, electrical appliances, electronic components, apparel, shoes, construction materials, furniture, office equipment, stationery, toys, sports ware, packaging, processed food, etc. all of which require plastic as a raw material for the production of final products and components. During 2007, plastic manufacturers faced various problems such as rising global oil prices that increased the costs of most industries and which pushed plastic pellet prices to historical highs as a result that Cost of Production of all manufacturer got chain affect especially plastic pelted price make their Production Cost increase as well, the increasing of more-over the appreciation of Thai Baht although, the government had manipulated some monetary policy to reduce those in pacts.

Plastic Products IndustryPlastic ProductThe main important plastic products being produced in Thailand included plastic bag and sack, film sheet, foil, and etc. The plastic industry have amount 5,000 factory in Thailand. Major manufactures are small size companies just only ten percent is large size manufacturers. Many types of industries utilize plastic as raw material such as packaging, textile, shoes, construction material, electrical appliances, electronics parts, and automotive parts industry. Costs structure of these industries consist of plastic cost at seventy percent, labor cost from ten to fifteen percent, energy at eight percent and other administration cost about seven to twelve percent.

7. INDUSTRY OVERVIEWS



MarketingExportIn 2007, plastic products export value was approximately US$ 2,293.6 million increased by 15.52% over the previous year. The major export markets were Japan, U.S., United Kingdom, ASEAN countries and Australia. Top three major products with the highest export value were film sheets and foil, plastic strips and sacks, and tableware with contributions of 30.04%, 22.99%, and 4.73 %, respectively. When comparing the totals of products exported in this category, the export of film foil and strip, Plastic floor and wallpapers and Plastic-made box, should show the biggest growth of 23.33%, 30.45% and 57.31%, respectively.

The export of plastic product to markets, example The export of plastic product to major market such as USA which may impacted from Sup prime or low quality loan crisis, on the other had the alternative market such as Australia is become more bettor especially in the year 2008 due to the tariff would be reduce to 0%

Source: Trade Economics Information Center, Ministry of Commerce Thailand.*Remark: Estimated number for 2007

2006compare to

2005 %

2007compare to

2006 %

2005 2006

(Jan-Oct)

2007

(Jan-Oct)

2006 2007

Plastic bag and sackFilm, foil and stripClothes makeup and accessoriesPlastic-made boxPlastic-made office suppliesPlastic tube and pipePlastic floor and wallpapersPlastic tablewareOther plastic productsTotal

518.8536.722.630.922.641.550.684.0

551.11,858.8

530.4558.717.930.020.246.059.198.9

624.21,985.4

527.4689.120.347.221.145.677.1

108.4759.1

2,293.6

440.4455.815.123.816.638.648.183.0

504.91,626.4

450.9581.917.639.117.939.365.093.4

637.31,942.4

2.244.10

-20.80-2.91

-10.6210.8416.8017.7413.266.81

-0.5723.3313.1657.314.54-0.8930.459.62

21.6115.52

Plastic Product Export Value (Million US dollar) Change


ImportIn 2007, Plastic products import value was approximately US$ 2,271.6 million, increased of 2.20 % over the previous year. Import of plastic film sheet, foil and plastic strip rose 6.22% from the previous year while plastic straws and tubes grew 4.95% over the same period. The major sources of import were Japan, China, U.S., Malaysia and South Korea. The major import products were plastic film sheet, foil, and strips, which contributed 35.89% of total plastic import.

TrendRising in oil price in year 2007 has driven up costs for most industries and prompting producers to focus on reducing production costs and manage raw materials inventories; particularly those with high volatility.

Plastic Industry still undergo with many risk factors such as shrinking in domestic demand from the economic factor the uncertainty of political after the election , and the diminution of International Demand which causes from subprime crisis.

Recent Baht appreciation also affected Thai cost competitiveness compared to other Asian competi-tors and Therefore, impact the more degree of competitive and difficulty for both domestic & inter-national market. Moreover, oil prices, and freight rates continued to affect the industry.

Therefore, it is important that the government set clear policies and implement other strategies to reduce short-term pains ; such as encouraging the use of domestic raw materials and developing new channels of shipping to reduce the distance, time, and transportation costs. There must be production to substitute imports and encourage more export activities by developing higher-value products that are in high demand. Including, Co-operative among industries chain from upstream

Plastic Product2006

compare to2005 %

2007compare to

2006 %

2005 2006

(Jan-Oct)

2007

(Jan-Oct)

2006

Import Value (Million US dollar) Change

2007

Source: Trade Economics Information Center, Ministry of Commerce Thailand.*Remark: Estimated number for 2007

Plastic bag and sackFilm, foil and stripOther plastic productsTotal

79.7742.4

1,224.02,046.1

88.2767.5

1,366.92,222.6

92.6815.2

1,363.52,271.6

75.4648.2

1,141.91,865.5

80.8705.6

1,170.71,957.1

9.643.27

10.457.94

4.956.22-0.252.20



to down stream producers for increase competitiveness ,reduce cost of production, and reduce risk factor from raising in raw material price In the past, Improvement of production efficiency by utilizes new technologies and focus to serve consumersû need such as çGreen Plasticé or environmental friendly. The tendency of environmental concern and global warming urge the usage of recycling, bio plastic as a demand value for Thai export.

Petrochemical IndustryIn 2007, The petrochemical industry was very volatile. Petrochemical price has been increased parallel with crude-oil. which caused from political factors among oil producer nations for example, the nuclear project in Iran and Nigeria's political turmoil cooperate as well as weather factor. Many countries in the region have expanded their capacity by investing more new ethylene crackers such as Thailand, India, China, Oman, Philippines, and many countries had co-operate and joint venture for reducing dependency in import raw material such as Kuwait ›China, Taiwan-China.

MarketingImport value of upstream, intermediate, and downstream petrochemical product in the year 2007 expected to be Baht 23,959.07, 27,938.72, and 73,204.70 million, respectively. Import value of upstream and downstream product increased by 26.79% and 12.88%, respectively. While interme-diate product decreased by 26.58% as compared to the previous year. Export values of upstream, intermediate, and downstream petrochemical product in 2007 were Baht 17,397.42, 52,607.11 and 163,400.15 million, correspondingly. Export value of upstream decreased by 38.11 %, while intermediate product increased by 4.31% and downstream product increased by 6.00%, respec-tively, over the same period.

The figure of 3Qs in the year 2007, the value of export for upstream decrease significantly due to the postpone of re-operate after close from yearly maintenance the export value of intermediate had growth continuously from starting production line of Ethylene Glycol market in China still ploy an import role due to Olympic 2008 took place.


2008 TrendPetrochemical Industry in year 2008. Many new investment projects and expansions effect the degree of competition and impact domestic petrochemical industry face the recession. Estimate the import value of upstream intermediate petrochemical would be stable while down stream trend to be increase from demand from linkage industries especially in specialty grade of plastic

The export of petrochemical export to increase slightly due to many plant had restart the opera-tion after close for yearly maintenance moreover expansion in capacity make product for export especially to China which consider as important market that had investment in new economic zone. However, petrochemical producer would face the oil price fluctuation & instability of thai bath value, which impact drectly to cost of production and to the degree of competitiveness.

Taxation on Petrochemical industryThe agreement of ASEAN Free Trade Area (AFTA) is to relieve Import duty and Tariff among member nations to be 0-5 percent within 10 years since the beginning of the formation of the group. In the year 2003 Import duty for all phase of petrochemical products would be lower to 5 percent. Consequently, degree of competition in this region would be higher, trade value among member nations would be raised while non-member would be less impacted due to WTO frame of duty and import the duty of MFN (Most Favorite Nation) rates are applied. Currently, duty rates of MFN are higher than that of AFTA, however MFN rate, will be reduce to 0-5 percent by starting from the year 2007, hence the trend of import in Petrochemical product of Thailand potentially increases. The Company can gain benefit from the lower tariff rate as the cost of

Source: Thai Customs Department.*Remarks: Estimated Number

Q1 / 2006

Q2 / 2006

Q3 / 2006

Q4 / 2006

2006

Q1 / 2007

Q2 / 2007

Q3 / 2007

Q4 / 2007*

2007*

2007*/2006 (%)

3,318.16

5,787.10

5,787.75

4,003.58

18,896.59

6,006.82

6,407.74

6,170.11

5,374.39

23,959.07

26.79

6,951.57

8,025.93

6,591.33

6,541.03

28,109.87

3,993.55

4,317.68

4,539.69

4,546.51

17,397.42

-38.11

10,118.48

10,610.97

8,770.68

8,552.54

38,052.68

8,225.73

7,188.23

7,351.40

5,173.37

27,938.72

-26.58

7,502.13

11,860.82

14,522.12

16,549.96

50,435.04

12,565.38

13,448.54

15,188.93

11,404.24

52,607.11

4.31

16,518.92

16,163.24

16,436.03

15,735.06

64,853.26

17,879.95

18,580.15

18,533.77

18,190.83

73,204.70

12.88

37,416.98

38,451.84

40,042.42

38,236.51

154,147.75

36,675.75

40,445.01

43,452.14

42,827.25

163,400.15

6.00

Quarter Upstream Petrochemical (Million Baht)

Import Export Import Export Import Export

Intermediate Petrochemical(Million Baht)

Downstream Petrochemical (Million Baht)



imported goods will be lower and enable the company to expand the market due to the price difference between domestic and import narrower, while the properties of import products generally superior. Therefore, the companyûs sale would be increase easier as a result of change in Import duty.

8. RISK FACTORS1. Risk associated with the reliability on major suppliers or manufacturers.The highest supplier proportion is SCG Plastics Co., ltd. (former CCC Chemical Commerce, a subsidiary of Siam Cement Plc.), which is 55.86 percent of total purchase in 2007. SCG Plastics Co., ltd. Is a supplier of polyolefin in Thailand and ASEAN. If SCG Plastics Co., ltd. Revoke agent agreement, the Companyûs sale revenue and profit would decrease as a result from lack of product for sale.

However, this purchasing proportion declines continuously. In 2004, this proportion was 63 percent of total purchase; in 2005 › 2008 it was declined to 55 percent of total purchase, even though the Companyûs purchase amount from SCG Plastics Co., ltd. Increase from Baht 1,583 Million in year 2004 to 1,665 in year 2005. In 2007 the proportion purchase amount from SCG Plastics Co., ltd. was reduce as compared to the total purchase amount due to the Company aim to increase the market and sale of the special grade products from more than 20 suppliers which mostly the Company was appointed as the exclusive distributor and those products contribute more gross profit margin while lower risk from price fluctuated and bad debt. The Company target to increase proportion of these products, Specialty and engineering polymer, and Specialty chemical business unit, within the next three years to increase from the 30-40% in this year, alive 40-50%. This will decrease the proportion of purchasing from CCC Chemical Commerce and will reduce the risk associated with the reliability on major suppliers.

2. Risk associated with the reliability on the officers.Because GC sells the goods by sell officers mostly. Hence, GC has the risk associated with the reliability on the officers. If the selling officers leave GC, the clients may move their selling. More-over, selling specialty products needs special knowledge of selling officers. If these selling officers leave GC, GC may face the officer replacement problem.

However, few officers quitted and the management has sold the product to the clients for a long time. Thus, it reduces this risk. Moreover, the management has the knowledge of every product


and GC has the policy to train the officer continuously. Hence, GC should replace the officer shortly. Moreover, for specialty products, when the buyers of clients assure the quality of the products, the clients will not change the products without really necessary reasons.

3. Risk associated with the Accounts Receivable.Now GC sells the goods in credit term mostly. Thus, if account receivable turns to be bad debt significantly, GC may encounter a delinquency risk and affect the companyûs profitability. However, GC had the policy to verify the clientsû credit before provide credit to customers and closely follow › up financial behavior as well as payment capacity of GCûs customers. Now GC sets the team to consider the credit of the clients, both new and old one and also set the credit approval system, which separate from sale department to control the unsafe sale. Moreover, GC has insurance, which covers the damage from account receivable. It insures against the bad debt of customers, which the outstanding is more than Baht 3 hundred thousand and covers 90 percent of total bad debt value. The minimum insurance premium is Baht 1.525 million and the maximum protection is 30 time of paid insurance premium. The insurance company set insurance coverage of each client. GC sets the doubtful debt allowance according to the risk of accounts receivable, the past experience and the present status of the clients. Then GC compares with the allowance for doubtful debt and insurance to verify if GC needs to reserve more doubtful debt allowance.

4. Risk associated with exchange rate. Nearly all of the goods bought from foreign suppliers are in US Dollar term. In 2007, GC imports the goods in foreign currency accounts for 18.80 percent of total purchase. From the foreign currency accounts, 99% are in US Dollar account. If the exchange rate of Thai Baht against US Dollar fluctuates, it may affect the GCûs profitability. However, to protect the exchange rate risk, GC follows the movement of the exchange rate of Thai Baht against US Dollar closely by asking the advice of the bank to determine whether GC should buy the forward contacts. GC has the policy that there is not speculate. GC must not buy the forward contacts without the trading obligations. Moreover, GC uses the cost plus policy to set the price for imported goods and GC will not sell the goods in advance without agree the exchange rate with the clients or buy the forward contacts. By these reason, The Company can prevent a certain level of risk from foreign exchange rate.

5. Risk associate with working capitalBecause GC has to reserve the inventory for deliver to the clients in a short time and credit term



of clients is about 55 days, which is longer than the credit term of suppliers, which is about 24 days. This causes GC have to maintain the working capital for operation. Cash cycle is about 54 days. If sale of the company increases significantly, GC may need to find more capital source, which is more costly than the financial cost in the present.

GC currently can purchase goods from vendors such as SCG Plastics Co., ltd and Thai Plastic and Chemical for the credit period of 60 days, however The Company has lower financial cost from many financial institutions which offer lower interest rate. The Company purchase goods by financ-ing from financial institutions instead of venderûs credit and take trade discount from vender, as a result The Company has better gross profit margin. By the way, The Company still can utilize trade credit from vendors when needed to increase working capital.Currently, as at December 31, 2007, GC has the credit facilities from many financial institutions and still have available amount for more than 74% of the total credit amount. This makes GC has the stronger working capital status and improves the debt to equity ratio to be 1.58 times as at December 31, 2007. Moreover, GC is likely to get the better conditions from bank due to GCûs good performance.

6. Risk associated with the fluctuations in the price of goods in the world marketAlthough GC sells the goods to the domestic customers mostly, product price fluctuates with the world market because the petrochemical goods is commodity produce, which depends on uncer-tain demand and supply in the world market. GCûs profitability changes according to the world market price as the cycle. There is the risk in the case that GC buys the goods in the high price and the price declines. This may lead GC to sell inventory to the clients cheaper or lower than buying price, which cause GCûs profitabilityûs lower or loss in some cases.However, GC tries lower this risk by keeping inventory in the low level especially the goods, which has high fluctuation price, and follows the changing price from the global supplier data all the time. Moreover, for the customers, who order the big amount in advance, GC is supported about the quantity and price directly from manufacturers and/or suppliers. This can lower the risk. Furthermore, specialty products are affected by this risk only little because GC sets the price according to cost plus policy.

7. Risk associated with low profit marginProfit margin of GC is relatively low, which is according to the nature of business. Thus, factors


i.e. the fluctuation of interest rate, foreign exchange, quality of account receivable and inventory management could affect net profit margin. However, the continually improvement of the Companyûs performance make better the working capital and D/E ratio consequently allow the Company to have better offer and condition from commercial banks. Furthermore, GC follows the exchange rate policy, customer credit policy and inventory management policy closely, which should lower the risk of low profit margin. Moreover, GC has the comparative advantage in terms of product selections and accepted quality from the first to the third ranking of the world manufacturers in capacity and technology, hence GC can expand market of the specialty products with the high growth rate in every year. This leads profit margin of GC better and higher than common competitors, who focus on commodity products, lower profit margin. The Company improve gross profit margin from 6.00% in 2006 to 6.94% in 2007 increasingly.

8. Risk associated with terminates the distributing agent contact.The period of distributing agent contacts are either yearly basis or 2 years basis which is normal practice in the petrochemical industry. Thus, GC will face the risk from contact termination from the manufacturers if GC could not perform status as the conditions require in the contact i.e. can not achieve the sale target or can not maintain the required infrastructure.

However, GC has good performance continuously and also has many repeat clients, which impress the manufacturers. Moreover, GC contacts with the manufacturers closely to explain the domestic sale progression. Thus, the manufacturers remain renew the contacts even GC cannot achieve the sale target because they understand the reasons. In the past GC has never been termi-nated the contact by any manufacturers.



9. SHAREHOLDER STRUCTURE

No. of shares % of paid-up capital1. Mr. Somchai Kulimakin *2. Mr. Aikachai Sirijantanan3. Mr. Sumruay Tichachol 4. Mr. Bhiya Jriyasetapong 5. Mr. Siri Thirawattanawong6. Mr. Somkiat Terdtultaveedey7. Thai NVDR Co., Ltd.8. Miss Tharnpetch Jinwattanaporn9. Mr. Supornchai Kongpatanakul 10. Mr. Issara Kulimakin 11. OthersTotal

46, 499,90028,420,73027,125,00027,125,00021,426,0007,600,6003,780,5003,660,0001,850,0001,580,480

30,931,790200,000,000

23.2514.2113.5613.5610.713.801.891.830.930.79

15.47100.00

Name As of December 31, 2007

Remark: included related person, * Mrs. Boonsri Kulimakin which hold 100 shares. ** Mrs. Nisaporn Sirijantanan which hold 1,295,730 shares.

Foreign Shareholders as of December 31, 2007

The number of foreign shareholder was 6 shareholders which held 750,000 shares or 0.38% of paid-up capital

Note : The company has a limitation on the percentage of equity shares held by foreign share-holders stated in the article of association no. 7 that The company equity shares are fully transfer-able unless those transferring will cause share of the company held by the foreign shareholders exceed the 49% of the company total shares, the company have the rights to reject those transac-tions.

Dividend PolicyCompanyûs dividend policy is to distribute to shareholders all funds surplus to the investment and operation requirements of the company as determined by the board and approved by share-holder meeting, Our target dividend payout ration is respect of each financial year is 40% of the companyûs net profit remained after taxation, and the appropriation of all kinds of reserve fund stipulated by the company.


Prof. Pisit Leeahtam Chairman of The boardPercent of Share holding (%) 0.08

Age 57

10. MANAGEMENT STRUCTURE AND DIRECTORS

2004 › Present2001 › PresentPresent

20072001 › 2003

ChairmanVice Chairman and Chairman of Audit CommitteeVice Chairman and Chairman of Audit CommitteeChairmanDirector and Chairman of Audit CommitteeDirector and Chairman of Audit Committee DirectorBoard ConsultingCountry Chairman, ThailandPresidentMemberPresident & CEO

Global Connections PCLKGI Securities (Thailand) PCL TPT Petrochemical PCL.Prueksa Real Estate PCL.Tira Thai PCLQuality Minerals PCL.The Oriental Hotel (Thailand) PCL.Dimet (Siam) PCL.Jardines Matheson (Thailand) Ltd.Provident Fund AssociationConstitution Drafting Assembly BE 2550TT&T PCL.

Ph.D, Economics, Erasmus University, NetherlandsM.S., Economics, Erasmus University, NetherlandsB.S., Economics, Erasmus University, Netherlands

Directors Certification Program (DCP) class 18/2002 Thai Institute of Directors (Thai-IOD)

Mr. Virah Mavichak Chairman of Audit Committee Percent of Share holding (%)0.05

Age 64

2004 › Present2005 › PresentPresent2001 › 20031999 › 20001997 - 1998

Chairman of Audit CommitteeDirector and Environmental AdvisorDirector and Audit CommitteeDirector generalDeputy undersecretaryGeneral inspector

Global Connections PCLRefine Tech Co.,Ltd.TPT Petrochemical PCL.Department of Industrial worksThe permanent secretary Office of Ministry of IndustryThe permanent secretary Office of Ministry of Industry

M.S. Chemical Engineering, University of Texas, USAB.S. Engineering, Chulalongkorn University

Directors Certification Program (DCP) class 26/2003 Thai Institute of Directors (Thai-IOD)Role of the Chairman Program (RCP) class 17/2007 Thai Institute of Directors (Thai-IOD)



Assoc.Prof. Chawalee Pongpatirochna Audit CommitteePercent of Share holding (%) 0.05Age 72

2004 › Present1999 › Present1997 › Present1995 › 2007

1996 › 2003

Audit CommitteeChairman of Audit CommitteeDirectorExecutive Director

Managing Director

Global Connections PCLPhatra Leasing PCLPhatra Leasing PCLChula Unisearch, Chulalongkorn UniversityIntellectual Property Institute , Chulalongkorn University

Equivalence to Master degree, Business Administration, The School of Economics and Business Administration in Gothenburg , SwedenBachelor Degree in Accounting, Chulalongkorn University

Director Accreditation Program (DAP) class32/2005 Thai Institute of Directors (Thai-IOD)

Mr.Suchart Suphayak Audit CommitteePercent of Share holding (%) 0.00Age 50

2006 › PresentPresent2004 › 20062004 › 20062003 - 20041998 › 2003

Audit CommitteeFinancial AdvisorAudit CommitteeAudit CommitteeCFOVice President

Global Connections PCLRerm Udom Sugar Factory Co., ltdADDA (Thailand) PCLRepax Construction Co., ltd.Sammitr Motor Group ltd.Kad Suan Kaew Co., ltd

Master Degree in Business Administration, Chulalongkorn UniversityBachelor Degree in Accounting , Assumption University

Directors Certification Program (DCP) Class 72/2006 Thai Institute of Directors (Thai-IOD)Audit Committees Program (ACP) Class 14/2004 Thai Institute of Directors (Thai-IOD)Directors Diploma Examination √ÿàπ 20/2006 Thai Institute of Directors (Thai-IOD)

Mr. Somchai Kulimakin President Percent of Share holding (%)23.25Age 50

1995 - Present 1988 › 19951985 › 19881979 - 1985

Vice Chairman and President Executive Vice PresidentAssistant ManagerSale Dept. Manager

Global Connections PCLLiack Seng Trading Co., Ltd.Central Pacific (EX-IM) GmbH, GermanyMetro Co., Ltd.

Bachelor Degree in Business Administration, Assumption University

Directors Certification Program (DCP) Class 62/2005 Thai Institute of Directors (Thai-IOD)Finance for Non-Finance Director (FND) Class 2/2003 Thai Institute of Directors (Thai-IOD)Leadership and CEO Succession Planning 4/2006 Thai Institute of Directors (Thai-IOD)


Mr. Sumruay Tichachol Senior Executive Vice President : Department of Marketing 1Percent of Share holding (%)13.56

Age 50

1996 › Present

1994 › 19961989 › 19941986 › 19881981 › 19861980 - 1981

Senior Executive Vice President : Department of Marketing 1Sale Dept. ManagerDirect Sale Manager Sale Representative Sale Dept. Manager Technical officer

Global Connections PCL

Siam brother Import-Export Co.,Ltd., Thai Polyethylene Co., ltd.Siam Cement Trading Co.,Ltd.Metro Co., Ltd.Bangkok Steel Industry PCL

Bachelor Degree in Economics, Thammasat University

Directors Certification Program (DCP) Class 72/2006 Thai Institute of Directors (Thai-IOD)

Mr. Aikachai Sirijuntanan Senior Executive Vice President :Department of Marketing 2Percent of Share holding (%)14.21

Age 43

1995 › Present

1986 › 19951986 - 1988

Senior Executive Vice President Department of Marketing 2Sale Dept. ManagerInstructor of Polymer Engineering Faculty


Liack Seng Trading Co., Ltd.Rajamangala Institute of Technology

Master Degree in Business Administration, Chulalongkorn UniversityBachelor of Science in Industrial Chemistry, King Mongkutûs Institute of Technology North Bangkok. Bachelor Degree in Polymer Engineering, Rajamangala Institute of Technology Certificate Chemical Engineering, Rajamangala Institute of Technology

Directors Certification Program (DCP) Class 69/2006 Thai Institute of Directors (Thai-IOD)Finance for Non-Finance Director (FND) Class 15/2005 Thai Institute of Directors (Thai-IOD)

Mr. Siri Thirawattanawong Senior Executive Vice President: Department of AdministrationPercent of Share holding (%)10.71

Age 44

1995 › Present

1992 › 19941990 › 19921987 › 1990

Senior Executive Vice President Department of AdministrationSale Dept. ManagerSale Dept. ManagerSale Representative


Liack Seng Trading Co., Ltd.Talomsin Plastic Co.,Ltd.MC Plastic Co.,Ltd





Mr. Bhija JriyasetapongAge 47



Mrs. Pravishya Hansakui Õ“¬ÿ (ªï) 44


Graduate Diploma in Auditing, Thammasat UniversityDirectors Certification Program (DCP) Class 87/2007 Thai Institute of Directors (Thai-IOD)

2002 › Present2001 › 20011998 › 20011991 › 19971998 › 1990

1995 -- Present

1989 -- 19951983 -- 1989

Executive V.P. Finance and Accounting Finance Planning & Accounting ManagerAccounting & Financial ControllerFinance & Accounting ManagerSenior Auditor

Senior Executive Vice President Department of OperationSale Dept. ManagerSale Dept. Manager

Senior Executive Vice President Department of OperationPercent of Share holding (%)13.56

Executive Vice President ›Finance and AccountingPercent of Share holding (%) 0.05


Liack Seng Trading Co., Ltd.Metro Co., Ltd.

Global Connections PLC GlaxoSmithKline (Thailand) LimitedBlock Drug Company (Thailand) LimitedC. Melchers & Co., (Thailand) Ltd.PricewaterhouseCoopers ABAS Ltd.


MANAGEMENT STRUCTURE Management structure comprises with three committees which are the Board of Directors, the Executive Committee, and the Audit Committee detail as the followings;

The Board of DirectorsMembers of the Board of Directors as of 31 December 2007

1. Prof. Pisit Leeahtam Chairman of the Board2. Mr. Somchai Kulimakin Vice Chairman and Director3. Mr. Siri Thirawattanawong Director4. Mr. Bhija Jriyasetapong Director5. Mr. Sumruay Tichachol Director6. Mr. Aikachai Sirijuntanan Director7. Mr. Virah Mavichak Director and Chairman of Audit Committee8. Assoc. Prof. Chawalee Pongpatirochna Director and Member of Audit Committee9. Mr. Suchart Suphayak* Director and Member of Audit CommitteeSecretary to the Board is Ms.Pornpimol Torpaiboon

Remark: The Board of Directorsû resolution held on February 22, 2006 had appointed Mr. Suchart Suphayak to be a member of the Audit Committee to replace Mr. Chanitr Charnchainarong who had resigned on February 14, 2006.

Board of Directors

Executive Committee

Pressident

The President office

MarketingDepartment 1

Finance & Account

MarketingDepartment 2

Administration Operation

Audit Committee

Internal Audit



Scope, Authorities and Duties of the Board of Directors

The Board of Directors has authority in management and operation of the Company's business in accordance with the laws, objectives, the Articles of Association, and the resolution of share-holdersû meetings, has authority to formulate the policies and directions, the financial manage-ment, the risk management, to supervise and control the Management to compliance with the assigned policies efficiency and effectively, to be responsible to the shareholders, has to preserve the shareholders' interest, and disclose the information accurately and completely with the standard and the transparency. In addition, the Board of Directors is authorized to appoint the directors, and/or the executives to act under the scope of authority and duties of the Board of Directors, unless the acts of the following matters which shall be approved in advance by the shareholdersû meeting:-(a) Any issues stipulated by law that resolutions of shareholders must be sought.(b) Any transaction in which the directors have the interest and there is a law or provision of the Stock Exchange of Thailand prescribes that there must be the approval of the shareholders' meet-ing for such transaction.In this connection, the director who has the interest or has the conflict of interest in any matter is not entitled to cast the vote for such matter.


The Executive Committee

Members of the Executive Committee as of December 31, 20071. Mr. Somchai Kulimakin Chairman of the Executive Committee2. Mr. Siri Thirawattanawong Executive Committee3. Mr. Bhija Jriyasetapong Executive Committee4. Mr. Sumruay Tichachol Executive Committee5. Mr. Aikachai Sirijuntanan Executive Committee

Scope, Authorities and Duties of the Executive Committee

1. To plan and formulate the Companyûs policies, directions, strategies, work plans, organization structure, management structure, and business discipline to proper with the circumstances of the economy and the marketûs competition for proposing to the Board of Directorsû approval.

2. To plan and formulate the Companyûs business plan, annual budget, line of authority for proposing to the Board of Directorsû approval.

3. To audit and follow the implementation of the Companyûs assigned policies and management directions efficiently and support the Companyûs business performance.

4. To take consideration for approval of auctions or hire of works with company or person with the budget scope not exceed 150 million Baht.

5. To recruit or dismiss the Companyûs staff in management level excluding Managing Director and the Companyûs directors positions.

6. To supervise and checks the outcome of the Companyûs daily operation in accordance with the Companyûs business plan approved by the Board of Directors.

7. To sign on any documents which related to withdrawal document from the Companyûs bank account under the conditions and limitations which approved by the Board of Directors.

8. To permit the Companyûs expenditures on the approved annual budget without any limitation.



9. To sign on contract which binding the Company for the period from 1-3 years and not exceed 150 million Baht.

10. To invest or invest in capital expenditure (not exceed 150 million Baht) or the transaction fixed on the annual budget approved by the Board of Directors.

11. To finds out the financing for investment or invest in capital expenditure which was approved by the Board of Directors, or refinance the outstanding liabilities under the better terms and condi-tions.

12. To approve extra compensation for staff (Bonus) in accordance with the approved budget by the Board of Directors.

13. To approve the rising of staffûs compensation in accordance with the approved budget by the Board of Directors.

14. To act as appropriates for any duties which shall be assigned from the Board of Directors.

However, the Executive Committee shall delegate its powers to the Management of the Company as appropriates for approving of one or more financial issues under the authorized scope of power.

Nevertheless, the above delegation of authority shall be in accordance with Thailand legislations and the Companyûs the articles of association. Moreover, where the conflicts of interest of the Executive Director(s) occurred of the prohibited person under the provision of SEC, the Executive Committee shall present that issue to the Board of Directors for taking the consideration, and the Executive Director(s) who has the conflict of interest is not entitled to cast the vote for such matter.

Nonetheless, any transactions which were in relation or related with the receiving or selling the Company or affiliate Companyûs assets under provision of SET, shall be approved by the shareholderûs meeting and/or acted as stated in that provision.


The Management CommitteeMembers of the Management Committee as of December 31, 2007

1. Mr. Somchai Kulimakin President 2. Mr. Sumruay Tichachol Senior Executive Vice President Department of Marketing 1 3. Mr. Aikachai Sirijuntanan Senior Executive Vice President Department of Marketing 2 4. Mr. Siri Thirawattanawong Senior Executive Vice President Department of Administration 5. Mr. Bhija Jriyasetapong Senior Executive Vice President Department of Operation 6. Mrs. Pravishya Hansakul Executive Vice President Department of Accounting and Finance

Scope, Authorities and Duties of the Managing Director1. To manages and operates Companyûs normal business in accordance with business policies, plans and strategies approved by the board of Directors.

2. To permits any normal transaction of the Company including offering, contracting, purchasing, and hiring within the amount of Baht 30 Million or in accordance with the authority assigned by the Board of Directors.

3. To assigns any responsibilities of the Companyûs management and operation to the Management or to the staff according to organization structure approved by the Board of Directors in line with the Laws and the Companyûs articles of association.

4. To recruits, appoints, transfers, dismiss, lay-off, assigns wages of all Companyûs staffs below the management level including appointing employerûs representative for the Companyûs provident fund committee.

5. To issues any orders, practices, declarations, and memorandums involving operation in accordance with the policies and for preserve interest of the Company and for keeping the Companyûs discipline.

6. To acts as appropriates for any duties which shall be assigned by the Board of Directors.



The Managing Director shall be under direct supervising of the Board of Directors and shall directly report to the Board of Directors. Thus, the Management Director shall perform in the directions and policies assigned by the Board of Directors.

Nevertheless, the above delegation of power shall be in accordance with Thailand legislations and the Companyûs articles of association. Moreover, where the conflicts of interests of the Managing Director occurred or the prohibited person under the SECûs provision appeared, the Managing Director do not have power for approval that matter and shall present that issue to the Board of Directors for taking the consideration.

Nonetheless, any transactions, which were in relation or related with the receiving or selling the Company of affiliated Companyûs assets under the SET provision, shall be approved by the shareholderûs meeting and/or acts as stated in that provision.


The Audit CommitteeMembers of the Audit Committee as of 31 December 2007

1. Mr. Virah Mavichak Chairman of Audit Committee2. Assoc. Prof. Chawalee Pongpatirochna Audit Committee3. Mr. Suchart Suphayak* Audit Committee

Secretary to the Audit Committee is Ms. Pornpimol Torpaiboon Remark*: The Board of Directorsû resolution held on February 22, 2006 had appointed Mr. Suchart Suphayak to be a member of the Audit Committee.

Scope, Authorities and Duties of the Audit Committee

1. To review the sufficiency, credibility and objectivity of the financial reporting by coordinating with the external auditors and management responsible for preparing the quarterly and yearly financial reports. The audit committee may suggest issues or matters to be included for review or audit by the external auditors during its audit of the company.

2. To review the adequacy and effectiveness of the internal control systems and internal audit functions by coordinating with the external auditors and internal auditors.

3. To review compliance with the Securities and Exchange Acts, Regulations of the SET, and any other relevant laws.

4. To consider and advise the appointment of the external auditors including the audit fee by considering the creditability, the adequacy of its resources, the firm's audit engagements, and the experience of its supervisory and professional staff.

5. To consider compliance with all connected transaction disclosures or the conflict-of-interests disclosures.

6. To take care of any other matters assigned to it by the board of directors, such as reviewing the company's financial and risk management policies, reviewing compliance with the Code of Corporate Conduct of the management, and reviewing with the company's management, all important reports which must be disclosed to the public according to the law (e.g. Management Discussion and Analysis (MD&A), etc.).



7. To report the activities of the audit committee in the company's annual report, which must be signed by the chairman of the audit committee. The following information should be included in the report.

7.1 Comments on the company's financial reporting process and the disclosure of its financial information, which must be correct, sufficient, and credible.

7.2 Comments on the adequacy of the company's internal control systems.

7.3 Statements on whether the company's auditor is suitable for re-appointment.

7.4 Comments on compliance with the Securities and Exchange Acts, Regulations of the SET, and any other relevant laws.

7.5 Other statements that shareholders and general investors deem to be considered under the scope of the functions and responsibilities assigned to them by the board.


The finding for the Board of DirectorsAccording to the Companyûs regulations, the Company does not have a pre-finding committee.The Board of Directors consists of at least 5 Directors who appointed by the Shareholder Meeting with Majority decision in respect to the rules and measures as follows:

1. Individual election by the Shareholders 2. Under 1., there is an one vote per one share 3. The sequence of persons who being appointed started from the highest votes shall be appointed respectively as the Director(s) as equal as the total number of the Directors which will be appointed or elected in that period. However, when there are two or more persons getting the same amount of votes which caused to exceed the sum of appointing or electing of the Directors in that period, the decision of the Chairman of election shall prevail.

There is a number of one-third of the Board of Directors shall retire in each annual Meeting. Where the number of the Board of Directors cannot exactly divide by three, the total number of retiring Director(s) shall be the closet number of one-third. The retiring Director(s) in the first and second years after Companyûs transforming shall be selected by the lucky draw. Otherwise, the longer Directors shall be retired. However, the retiring Director(s) under this clause may be re-elected.

Except for the number of the Board of Directors is not enough for the completion of its meeting, Where there is the unoccupied Director(s) caused by any reasons other than from the duration expired, the Board of Directors shall appoint the person(s), who qualified, and not prohibited by laws, to be the replaced Director(s) in the next Board of Directorsû meeting. In case of the duration of the replaced Director(s) is less than 2 months left, the replacing Director(s) shall be on that position as long as the left duration of the replaced Director(s).

Where the number of the Board of Directors is not enough of the completion of its meeting, the rests of the Board of Directors shall manage, on behalf of the Board of Directors, merely for setting up the Shareholderûs meeting for election of the entire unoccupied Director(s).



The rules of designating the independent Directors

The proceeding of finding the independent Directors

Firstly, the Board of Directors shall consider the persons who have the qualifications as defined by the regulation of SEC, and intently support the Companyûs businesses with their appropriate potentials. Then, the Shareholderûs Meeting shall consider for approval on the final step.

1. Holding shares not more than 5 percent of voting rights shares of the Company, affiliated company, related company, or person who may has conflict with the companyûs interest.

2. Being a director who is not an employee, staff member or does not take part in the man-agement of any company, affiliated company, associated company or related company which may has conflict of interest with the Company.

3. Being a director who is not a related person or close relative of any person whom may has conflict.

4. Being a director who has no business relate with any company, affiliated company, asso-ciated company or related company which may has conflict or not being person who has conflict with the companyûs interest that may obstruct his/her independent consideration for the Com-pany.


Remark: * Mr.Chanitr Charnchainarong had resigned on 14th February 2006, The Board of Directorsû resolution held on February 22, 2006 had appointed Mr. Suchart Suphayak to be a member of the Audit Committee. Because the first Audit committee meeting was held on 20 February, Mr. Suchart Suphayak, therefore, has the total meeting attendance for 5 times in the year 2006.

Monetary Remuneration(1) Remuneration for the Board of DirectorsFrom Fiscal year end December 31, 2006 and December 31, 2007, the number of meeting and the amount of annual gratuity for the Board of Directors as the followings

Meeting

Remuneration

Remuneration

PositionAttendance/Number ofMeeting for Board of Direct

Attendance/Number of Meeting for Audit Committee

1

2

3

4

5

6

7

8

9

Prof. Pisit Leeahtam

Mr. Virah Mavichak

Assoc. Prof. Chawalee

Pongpatirochna

Mr. Suchart Suphayak*

Mr. Somchai Kulimakin

Mr. Siri Thirawattanawong

Mr. Bhija Jriyasetapong

Mr. Sumruay Tichachol

Mr. Aikachai Sirijuntanan

Chairman of the Board

Chairman of Audit Committee

Audit Committee

Audit Committee

Vice Chairman and Director

Director

Director

Director

Director

Name

2006

4/4

4/4

3/4

4/4

4/4

4/4

2/4

4/4

4/4

2007

3/4

4/4

4/4

4/4

4/4

4/4

4/4

4/4

4/4

2006

6/6

6/6

5/6

2007

6/6

6/6

6/6

PositionName

2006200,000

200,000

135,000

135,000

80,000

60,000

30,000

60,000

60,000

960,000

2007150,000

200,000

150,000

150,000

80,000

60,000

60,000

60,000

60,000

970,000

Meeting fee (Baht)

1

2

3

4

5

6

7

8

9

Prof. Pisit Leeahtam

Mr. Virah Mavichak

Assoc. Prof. Chawalee

Pongpatirochna

Mr. Suchart Suphayak*

Mr. Somchai Kulimakin

Mr. Siri Thirawattanawong

Mr. Bhija Jriyasetapong

Mr. Sumruay Tichachol

Mr. Aikachai Sirijuntanan

Total

Chairman of the Board

Chairman of Audit Committee

Audit Committee

Audit Committee

Vice Chairman and Director

Director

Director

Director

Director



Remark : * DirectorBesides the meeting allowances per each meeting as showed in the table above, the company had grant monthly compensation to four independent directors as a total of 1,140,000 THB in 2007. The Board of Directors had allotted the bonus for 9 directors for the total of Baht 1,040,000 and Baht 1,890,000 for the year 2006 and 2007, respectively. The above remuneration are within the amount approved by Annual General Meeting 2006 and 2007 which has resolution to assign remuneration amount for not over Baht 2,000,000 and Baht 4,000,000 per year for the year 2006 and 2007, respectively.

(2) Remuneration for executive directors and management committeeFor the Fiscal year ended 31 December 2007, remuneration for executive directors and manage-ment committee total of six was Baht 27.44 million in form of salary and bonus.

Other forms of remunerationThe company has established provident fund since 2000, the companyûs contribution to the provi-dent fund for the management executives (The Management committee) totaled Baht 2.89 million in 2006 and Baht 2.90 million in 2007. The Company also provided automobile for the 6 man-agement committee members.


The Company emphasize the importance of Corporate Governance (CG) Which it is a prac-tice to structure the leadership in line with transparency, responsibility, and generate business competitiveness for sustaining the capital investment of shareholders and enhance the share value back to the long term shareholders in accordance with the ethic, and responsible to both stakeholders and society as a whole.

In order to build the business growth continuously and to create the trust to stakeholders, The company had regulated The companyûs vision, mission, objective of Corporate Gover-nance, code of conduct, business strategic direction, business and budget plan by appointing management team to propose all issues to the board of directors for consideration to express and debate prior to mutual agreement and approval.

The Board of directors has the policy to comply with Corporate Governance inline with the regulations and guideline and direction related to The Stock Exchange of Thailand (SET) as the following,

Section 1 Rights and Equitable Treatment of Shareholders Recognizing the importance of shareholdersû equitable rights

Shareholder rights to shall obtain relevant material of company information on a timely, sufficient, and appropriate for decision making. The company has policy to send the invitation letter together with the relevant documents and information on each agenda item to the shareholders not less than 14 days prior to the meeting and will record the minutes of the meeting correctly. In order for shareholders to inspect, the company will add details of issues for consideration, reasons, impacts of each agenda.

Participate and vote in shareholdersû meetingsAll shareholders possess equal rights to for express their opinion and/or concern to acquire explanations and ask additional question in association with the nature of business.

11. THE PRINCIPLES OF CORPORATE GOVERNANCE



Right of equitable Treatment Besides above-mentioned , All shareholders possess equal basic rights such as rights to receive share certificates and rights to transfer shares, rights to elect and remove directors, rights to approve the appointment of auditors and rights to share in profit of the company

Shareholders MeetingShareholders should receive letters of invitation to meetings and information relating to the location, time and agenda. Shareholders may request to directors add additional agenda of meetings and may pose questions In advance prior to meet date. Besides, The Chairman, Executive Directors, Audit Committee, Auditor and legal adviser should participate in the shareholdersû meetings to answer questions. The minutes of Share-holders Meetings will be presented in Shareholders Meetings next time.

After the minute being approved by the meeting, The Company shall keep it for verification by concerned party.


Section 2 Rights of Stakeholders The company believes in good relationship and well cooperation between the Company and the stakeholders so the can bring sustainable growth. Hence the board of directors assigns the code of conduct that emphasizes the importance of stakeholders rights. The board of directors announces the code of conduct to the board of directors and all employees as guideline for regular practice.

Principles and core ValuesThese thirteen principles have been approved by the Board of Directors. It is expected that all directors and each employee follow these principles in all their activities for the company. 1. Honesty 2. Promise-keeping and Trust Worthiness 3. Keep Confidential Business Information4. Professionalism 5. Integrity6. Leadership7. Compliance to law & Regulations 8. Loyalty 9. Fairness 10. Empathy11. Respect for others 12 Commitment to Excellence13. Reputation and Honor

Treatment of stakeholders 1. Policies and practices toward shareholders2. Policies and practices toward staff3. Policies and practices toward customers4. Policies and practices toward trading partners and/or creditors5. Policies and practices toward competitors6. Responsibility to the community and Society7. Environment, Occupational Health and Safety



Conflict of interest On the subject of conflict of interest, all staffs have to comply with the policy to avoid any activity, investment or any form of benefit, that result in losses for integrity or reputation of the company and also of staffs.

Companyûs right of ownership of InformationAll of us strictly comply with policy, rules and regulations including any guidance set by the company to save its information.

The gathering of information relevant to the competitors, including productive and technical information We comply the policies which concern about finding the information of competitors, includ-ing productive and technical information. We will not perform any procedure that is prohib-ited by law (Thief, Graft) or not authorized by code of conduct in order to obtain the competitorûs information

Political Activity and Participation The basic policy of the company specify that the company will not contribute money or any resource of the company for encouraging political action to political parties,candidates except if it is allowed by the law and supports democracy.The company comply with related laws and regulation to ensure that the right of stakeholders are well taken care of.

Section 3 Information Disclosure and TransparencyThe Board of directors values the importance of disclosure of accurate, adequate, regular and timely information of the company. Therefore the company has the policies to organize financial statements which display the companyûs financial status and performance, shareholders structure and the Corporate Governance Policy that is transparent, auditable. Furthermore, the company has established an Investor Relation Division to disseminate information to shareholders and securities analysts to understand the company on equal basis. The Board of directors is responsible for financial reports of the company and the financial information in its Annual Report. The financial report is prepared in accordance with Generally-Accepted Accounting Principles (GAAP in Thailand by choosing an appropriate


policy and practice on regular basis). In addition, all relevant information will be adequately disclosed in the remarks to financial statements. The company has appointed the audit committee to verify financial report and internal audit system to insure efficiency & transparency of the operation, including following the company policies and related laws, considering nomination and remuneration of auditor.

Section 4 Responsibilities of the BoardBoard of Directors composition The Board of directors shall consist 9 directors, a chairman, a vice chairman and directors, that 4 in 9 of the entire the board of directors are independent directors as 44% of the Board of directors which comply by law and regulation and no less than one-third of directors shall be Independent directors who have no business relationship or any other relationship with the company which may affect the directorûs independent exercise of discretion

Time of ServicesThe Board of Directors have set a term of service in accordance with the Articles of Association of the Company in every AGM. one-third of the board of directors, or if their number is not a multiple of three, then the number nearest to one-third will have to retire from the post. The Companyûs directors, who must be retired in the first year and in the second year after the Company registration, shall be selected by means of drawing a lots; meanwhile, in the subsequent years, the director who has been in the position for the position for the longest period will be retired. The retiring director may be reelected.

Separation of positions The chairman of the board of directors is independent director who does not has a manage-ment position under the principle of segregation of roles in policy formulation and oversight from those in operations management. Beside, the company has the audit committee that consist 3 independent directors. The function of the audit committee balances and reviews operations management.

Sub-committees The audit committee consists of 3 independent directors for Corporate Governance. The authority of this audit committee is described under the management structure section. The audit committee holds meetings regularly once in every 3 months. And report directly to the Board of directors



Board of Directorsû meeting The Companyûs policy is to arrange a board of director meeting at least 4 times per year and Executive committee meeting at least once every month for considering short term and long term strategy. There shall be directors attending the meeting not less than half of the total number of directors to complete the quorum. The secretary to the Board will inform and send the notice of the meeting to the Board of Directors. The secretary to the Board will inform and send the notice of the meeting to the Board of Directors 7 days prior to the meeting for an appropriate consideration. The member of the Board able to raise more agenda and present idea openly and directly. The Companyûs secretary will record and take minute of the meeting

The Board of Directors appoints a Secretary to the Board to support the functioning of the Board of Directors. The secretaryûs duty is preparing agenda, making Invitation for meeting and arranging meeting, including advising about law, rule and the regulation for the meeting.

The remuneration of directors and the management a) Directorsû remuneration: The Company has specified directorsû and managementûs remu-neration clearly and with transparency. The remuneration of directors will be comparable with similar industry and will be appealing enough to attract and retain quality directors. Moreover the director who takes more responsibility will obtain more appropriate remuneration.

b) The managementsû remuneration: The managementsû remuneration is based on the policy that set by The Companyûs Board of Directors in conjunction with the performance of The Com-pany and each individual director. At the present time, The Company does not set The compensation committee however there is an appropriate process to carefully considered and approved the Boardûs remuneration in compari-son with similar industry and take into account the profit of The Company as well.

Succession policyThe Board of Directors shall ensure that a succession plan for the position of CEO and other senior executives is in place to ensure that the company is managed at all the time by executives with appropriate competence and skills. Managing Director has been trained on leadership and CEO Success Planning Course to inherit the position in the future.


Orientation for New Directors and Enhancement of Business KnowledgeThe Board of Directors assign the secretary of the Board to prepare information for all new directors so as to inform them of the business of the company, a directorûs roles, duties and responsibilities and compliance with the companyûs corporate governance Policy and practices.

Assessment of Performance of the Board of DirectorsTo ensure that operation is in line with set goals, the Board of directors requires that the management reports the results of actual operation in comparison with set targets on a regular basis. In the event that operation fails to perform as planned, the Board of Directors shall request the management to propose plans to resolve the situation and shall provide corrective strategic directions.

The Board of Directors shall assess the annual performance themselves. The criteria for such evaluation will be related to the annual business plan in short and long term.

Section 5 Conflict of interest In the event of the transactions with conflict of interest may possibly occur, the Board of Directors will carefully take into consideration in the interest of the company. Moreover a Policy and Procedure on the approval of related transactions such as purchasing or selling between juristic company and persons involved will be conducted under the rules and condi-tions which were conducted with the same standard as that of an external vendor. In case of the connected transactions occurred are not normal case, the related department of the Company will gather these information to propose the Audit Committee for consideration and giving opinion that they have been conducted according to the Companyûs normal prac-tice under which the market price before they will be perused by the Board of Directors once again. In addition, the Company shall be obliged to comply strictly with securities trading law and related rules and regulations governing the Securities and Exchange. In any transac-tion in which concerned persons are persons whose personal interest may conflict with the Companyûs interest, such persons will not be eligible to vote approval of such transactions.

Section 6 Internal Control and Internal Audit systems Internal Control and Internal Audit systems: The Board of Directors and The Audit Committees have reviewed the internal control systems of the Company with executives regularly and gave its opinion that the Company has an adequate appropriate internal control systems and



sufficient to protect its assets from serious misconduct or other irregularities in management of the Company such as setting authorization and writing operational regulations as well as recognition of the importance of internal control systems. An independent Internal Audit Office is established to ensure that all operation units of the company are in compliance with set operating procedures and to coordinate with external auditor. The Internal Audit Office reports directly to the Audit Committee.

Furthermore, the Company has kept important document system for verification of the auditor and legislative authority.

Utilization of Inside Information: The Company has a policy and methods of governing utilization of the Companyûs inside information by directors and executives for personal gain, disclosure it to other persons including selling or buying securities. As well as all directors and executives must comply strictly with securities trading law of the Office of Securities and Exchange Commission regarding disclosure their trading of securities of the Company as follows

The Companyûs policy is to uphold ethics and conduct its business with integrity to customers, suppliers and the shareholders of the Company, within its regulations and Code of Conduct. In case of inside information of the Company is utilized by the executives for personal gain or revelation confidential information to outsiders including making transactions that may pose potential conflict of interest, these actions are serious misconduct and disciplinary punishment may be taken.

a) The company will notify the board of directors and executives who perceive inside infor-mation that may affect the price of securities. to refrain from trading their shares of the com-pany one week before and 24 hours after financial statement has been revealed to the public and prohibit disclosure of inside information to others.

b) The company has instructed its directors and executives to report any change in their holding of securities of company in accordance with section 59 and provisions on penalties stipulated of Securities and Exchange Act B.E 2535 and the regulations of the SET including to their spouses and children less than 21 years. The directors and Executives must summit one copy of the securities disclosure report to the Company and the Securities and Exchange Commission on the same day.


Section 7 Risk ManagementThe company gives importance to risk management system by assessing and setting the companyûs risk constantly relating to business operation risk and financial risk of the com-pany. The company has initiated management meeting consist of management team and all support functions in every month to settle strategies and policies to reduce the companyûs risk and assign to related functions for monitoring risk and reporting to management team.



12. CORPORATE SOCIAL RESPONSIBILITIESGC recognizes that its businesses have direct and indirect impact on the communities in which we operate. GC undertakes a wide variety of social contribution activities, to help address the needs of communities in regions where GC conducts business. Several programs in fiscal 2007 are presented below;

Donated Baht 17,000 to a university and two local schools to support educational development.

Donated one LCD monitor to a local school in remote areas of Thailand.

Cooperated with several associations and philanthropic foundations in the donation of 106,000 Baht.

Donation to several temples for the encouragement Buddhism in the amount of 12,000 Baht.

Donation to Uthai Hospital for purchasing physician equipments in the amount of 100,000 Baht.

Moreover the GC employees joined and contributed to these communities through various donations together with the Company.

Integrity Plastics Co.,Ltd Mr. Chanchai Ruckthananon (brother of Mr.Aikachai Sirichantanunt, the major shareholder and director of the GC company) was the major shareholder and director of the Integrity Plastics Company.

Trade the instant petrochemical products, on the date of 31st December 2005 and 2006 has the sum of the debts at 0.53 and 2.06 million Baht respectively.

7.36

0.00

3.89 There were normal businesses and transactions of the GC Company with its customers. Therefore, the Auditor Committee found that they were normal businesses and transactions of GC company and they were in relation with the related market prices.

There were normal businesses and transactions of the GC Company with its customers. Therefore, the Auditor Committee found that they were normal businesses and transactions of that company and they were in relation with the related market prices.

Her customers were introduced by the Vector Solution company. Therefore, the Audit Committee considered and found that those transactions were in relation with the normal business contracts and with reasonable.

Due to sometimes the GC Companyûs customer would like to purchase not just only computer monitor, therefore the GC company necessary to purchase those products. The Auditor Committee found that they were normal businesses and transactions.

There were purchase of computers and parts for the GC Companyûs business operations. The Auditor Committee found that they were normal businesses and transactions of GC company and they were in relation with the market related prices.

Vector Solution Co.,Ltd Ms.Patchamon Thirawattanawong, elder sister of Mr. Siri Thirawattana-wong (major shareholder and director of GC Company), is the major shareholder and director of Vector Solution Company

Trade the instant computer products, on the date of 31st December 2005 and 2006 has the sum of the debts at 0.13 and 0.00 million Baht respectively.

Pay the commission of the selling of monitors to the Vector Solution Company

Purchase the instant Computer products

Purchase the office supply products

0.220.30

0.02

0.000.05

0.340.38

Related Company/person

13. Related TransactionsUnit : Million Baht

Description of Transactions Size of 2004 transactions

Size of 2005 transactions

Necessaries and reasons of transactionsDescription of Relations

51

New Modern Superpack Co.,Ltd. Mr. Wichan Nanthananonchai, The major share holder of New modern is an elder brother of Ms. Boonsri Kuleemakin (shareholder of 100 shares) who is a wife of Mr.Somchai Kuleemakinûs (major shareholder and director of the GC Company) and also be Ms. Boonsri shareholder of New Modern Company

Trade the instant petrochemical products, on the date of 31st December 2005 and 2006 has the sum of the debts at (0.17) and 0.00 million Baht respectively

16.2225.64 There were normal businesses and transactions of the GC Company with its customers. Therefore, the Auditor Committee found that they were normal businesses and transactions of GC company and they were in relation with the market related prices.

Due to 21 Construction Co., Ltd was the constructor of the GC companyûs warehouse and office. Later, the land surface around warehouse got the problem therefore the GC company was hire the mentioned company to fix the problem. Therefore, the Audit Committee considered and found that they were normal businesses and those transactions were in relation with the contracts and reasonable.

21 Construction Co.,Ltd Mr. Hook Tichachol, the elder brother of Mr. Sumruay Tichachol which is the major shareholder and director of the GC Company, is the major and director of 21 Construc-tion Company.

Payment for the building and warehouseûs construction 0.480.25

The GC Company advertised its computer products on the Brandage magazine which the readers are GC companyûs target groups. Therefore, the Auditor Committee found that they were in relation with the market related prices.

Brandage Co,.Ltd Mr.Pichai Sirichantanunt, elder brother of Mr.Aikachai Sirichanta-nunt which is the major and director of the GC Company, is a major shareholder and director of the Brandage Company.

Advertisement fee 0.000.01

There were normal businesses and transactions of the GC Company with its customers. Therefore, the Auditor Committee found that they were normal businesses and transactions of GC company and they were in relation with the market related prices.

Taicoon-Brandage Holding Mr.Pichai Sirichantanunt, elder brother of Mr.Aikachai Sirichanta-nunt which is the major and director of the GC Company, is a major shareholder and director of the Taicoon-Brandage Holding Company

Trade the instant computer products. 0.000.10

Related Company/person Description of Transactions Size of 2004 transactions



52

The GC Company advertised its computer products on the Brandage magazine which the readers are GC companyûs target groups. Therefore, the Auditor Committee found that they were in relation with the market related prices.

Advertisement fee 0.000.11

Practically, the Companyûs director which requested for the loans must guaranteed those loans for the debtors in respect to the Banks and financial institutesû regulation. After the GC Company has been listed in the Stock Exchange of Thailand, those guarantors were release from any Banks and financial institutes since March 31, 2006

GC companyûs directors which are:

Mr. Somchai KuleemakinMr. Sumruay TichacholMr.Aikachai Sirichantanunt Mr.Siri ThirawattanawongMr. Bhiya Jariyasethapong

Companyûs directors On the date of 31st December 2005 all 5 directors were together being the guarantors of the loans from the Banks and financial institutes which were 1,341. The Guaranteed loans were such as an O/D account, promissory notes, and long term loan. On the date of 31st December 2006 all 5 directors were not being the guarantors for the loans from any Banks and financial institutes.

0.000.00

Related Company/person Description of Transactions Size of 2004 transactions



53



Analysis of Overall Performance The distribution business of the plastic resins, plastic, and petrochemical related products need relatively high working capital. The key success factors of this business depend on the inventory management, the logistic systems that meet the clientsû needs in time, cost of capital, receivables management and sales revenue. Due to this business has low gross profit margin, to build up more sales revenue will result in good net profit.

Sales revenue The Company had total sales revenue of Baht 3,456 million in 2007, increased Baht 78 million from last year or equivalent to 2.30%. The main reason of this rise was the growth of the relevant industries such as packaging and automotive sectors, etc.

Another reason was due to the marketing strategy of focusing on the specialty products, which have high growth, better gross profit margin and less price sensitivity compared to the commodity products.

Financial Operating Results In 2007, total cost of sales and operating expenses were Baht 3,314 million, or 1.11% increased from last year which was in line with the growth of sales revenue. Costs of goods sold slightly decreased from 94.00% to 93.06% was mainly due to the increasing sales proportion of specialty products .

GC incurred Baht 98 million in selling and administrative expenses, a decrease of 4.15% from last year. Key factors contributing to this saving was the better control of both bad debts and doubtful debts as well as obsolete inventories, and as a result the Allowance for doubtful accounts was maintained in 2007 whereas there was a reversal of Allowance for diminution in value of inventory amounting to Baht 1.7 million as the slow moving inventories had been reduced. How-ever, in 2007 there was an increase in personnel expenses due to both annual salary adjustments and the additional number of staff as per business expansion.

14. DISCUSSION AND ANALYSIS OF OPERATING RESULTS AND FINANCIAL POSITION


Interest expenses were Baht 15 million, or 24.76% lower than last yearûs. This was due to the downward trend of interest rate in 2007 coupled with the prepayment of principal of long-term loan amounting to Baht 40 million during 2007 result in a reduction of interest burden for the year 2007.

As a result of the discussed factors, our net income rose to Baht 108 million in 2007 versus Baht 67 million in 2006 or equivalent to 62.80% increased.

Comparison of Financial Position (FY2007/2006) Assets: As of 31 December 2007, GC recorded total assets of Baht 946 million, representing an increase of Baht 94 million from last year. This was due to the rise in both trade accounts receivable and inventories.

As of 31 December 2007 trade accounts receivable showed Baht 554 million, an increase of Baht 72 million or 15.01% increased from last year. This was mainly due to the expansion of market into specialty products and extended credit term to customers especially in commodity group who switched from general retail products to industrial products whereby longer credit term is required. However, we have also added higher margin for this segment.

While inventories showed Baht 212 million as of 31 December 2007, an increase of Baht 28 million or 15.05% increased from last year. Due to the cut down of import duty from 8.75% to 5.00% in 2007, the inventory for imported goods was maintained at low level during the last quarter of 2006. In addition, some commodity products were short of supply in 2007, causing the company to maintain high level of inventory for this product group for our main customers.

Liabilities : As of 31 December 2007, GC recorded total liabilities of Baht 579 million, an increase of Baht 44 million from the previous year. This was due to the increase of short-term loan resulting from the rise in both trade accounts receivable and inventories as mentioned above as well as the prepayment of long-term loan. During 2007, GC made prepayment of principal of long-term loan amounting to Baht 40 million to cut down interest burden. Therefore, the ending 2007 balance of long-term loan was Baht 20 million versus 77 million as of 2006 or equivalent to 74.13% decreased.. This was also caused the Debts to Equity Ratio reduced to 1.58 times compared to 1.70 times of 2006.



Sources fo Funds : The structure of GCûs funds in 2007 was not much different from those of 2006 as they were in term of short-term liabilities. The major liabilities were from short-term loans from financial institutions, bank overdrafts, trade accounts payable, and long-term loan.

Shareholdersû Equity: As of 31 December 2007, the portion of shareholdersû equity amounted to Baht 366 million, an increase of Baht 50 million, or 15.98%, due to a rise in net profit from operations in fiscal year 2007.

Liquidity: In 2007 GC had better liquidity. Since after listed, GC had good fund from the IPO proceeds at the end of 2005 and the working capital from deposits redemption at the beginning of 2006. This caused a better working capital management to reduce the cost of fund and generated more profit.

In 2007 GC had a current ratio at 1.37 times compared to 1.46 times in 2006 which had been increasing since 2002 at 0.86 time. The key factor was the increase in both trade accounts receivable and inventories reflected from sales growth.


To: The Shareholders

The Audit Committee of Global Connections Public Company, which was appointed by the resolution of the Board of Directorsû meeting, consists of three independent Directors as follows:

1. Mr. Virah Mavichak Chairman of Audit Committee2. Assoc. Prof. Chawalee Pongpatirochna Audit Committee3. Mr. Suchart Suphayak Audit Committee

For the year of 2007, the Audit Committee had independently accomplished their assigned tasks with no limitations in gathering the Companyûs information in any aspects. The Audit Committee had organized totally 6 meetings with concerned management; these included 4 meetings with the external auditors. The Main important issues can be summarized as follows:-

The Audit Committee had considered the reviewed quarterly financial statement and the audited financial statement for the year 2007 to confirm that The Companyûs financial report was made in accordance with Generally Accepted Accounting Principles and the disclosure of information was sufficient, complete and reliable. Moreover, the Committee had intensively considered and discussed the audited report with the external auditor and internal auditors and provided The Company with valuable notices and suggestions.

The Audit Committee had considered internal audit plan for the year 2008 which prepared by the internal audit section of the Company. The Committee agreed that the plan could cover all activities of the Company.

The Audit Committee had considered the internal audit report which was planned. Moreover, the Committee also provided its suggestions and had followed up the correction of notable issues as reported in the internal audit report for the appropriate internal control and reducing the risks which may occur.

The Audit Committee had considered expanding the scope of internal audit in addition to the internal audit plan for the year 2007 especially the areas that need by the management.

15.AUDIT COMMITTEEûS REPORT YEAR 2007



The Audit Committee had provided some suggestions over the internal control system of the Com-pany. The Committee assessed the Company risks which may occur during the Company operation processes such as checking the inventory, evaluation of the stocked products, as well as the risk management incurred by the currency exchange rate.

The Audit Committee had considered the GCûs budget for the year 2008 and recommended the Company to set up annual work plan that consist with the planned budget.

The Audit Committee had suggested the Company to observe rules and regulations including any policies which the Company has issued or revised in 2007 and keep in well order of those documents.

The Audit Committee had overseen to ensure that all rules and regulations are strictly enforced, and no significant abuse was founded.

The Audit Committee had reviewed The Companyûs compliance to all legal aspects and regula-tions to SET, as well as other business laws in order to ensure the shareholders and all concerned parties of Companyûs good corporate governance and transparency. The Committee are in the view that The Company had conducted its business consistently with all related laws and find no significant mistake. The Audit Committee also commented on the disclosure of related transactions between the Company and other related companies that those transactions were executed as normal business practice with reasonable market prices. These all are in the line with regulation set up by SET.

The Committee has selected the authorized Auditors with fixed remunerations and proposed to the Board of Directors for further requesting the Shareholdersû approval for appointing Ernst & Young Office Limited, also recognized either of Khun Siraporn Ouaanunkun, C.P.A. registration number 3844, and/or Khun Suppachai Panyawattano, C.P.A. registration number 393, and/or Khun Tippawan Nananuwat, , C.P.A registration number 3459, to be the Companyûs Auditor for another period of the fiscal year end on 31 December 2008

(Mr.Vira Mavichak)Chairman of Audit Committee

Global Connections Public Company


The Board of Directors realizes the significance of its duties and responsibilities to ensure good management and give importance to the financial statements of the Company, as well as all the financial information appeared in the annual report, containing accurate and full accounting records that reflect its actual financial status and operational results. In this regard, the company has arranged for the reporting and disclosing of key information adequately on continuous basis for the benefit of the shareholders and general investors.

The Board of Directors has initiated and gives importance to management structure and internal control which provides reasonable assurance that the Companyûs financial reports are reliable and the Companyûs system is good and sufficient to protect its assets and also prevent serious misconduct or other irregularities in the operation of the Company.

The Board of Directors has established the Audit Committee comprising independent directors fully qualified in accordance with the requirements of the Stock Exchange of Thailand to take care and review quality of the financial report and the internal control systems including complete disclosure of connected transactions. The Audit Committeeûs view regarding such matters is disclosed in this Annual Report and form 56-1 under the Audit Committeeûs Report.

The Board of Directors is of the opinion that the Company has an adequate and appropriate internal control systems, and is confident that the Companyûs financial statements for the year ended 31 December 2007 can be considered reliable and audited by generally accepted audit-ing standard of the Companyûs auditor, reflect accurate financial status and operational results as appropriate in material aspects in accordance with generally accepted accounting standards.

(Dr. Pisit Leeahtam) (Somchai Kulimakin) Chairman of the Board President

16. STATEMENT OF BOARD OF DIRECTORSRESPONSIBILITES FOR THE FINANCIAL STATEMENTS


Global Connections PLC 61


Global Connections PCL 63










Global Connections 73





√“¬ß“πª√–®”ªï 2550 78


EthicsIntergrityProfessional | Focus

PartnershipStrive For Better

Documents

Global Connections Plublic Company Limited ANNUAL REPORT … · 2020. 2. 28. · GC ANNUAL REPORT 2007 06 4. BUSINESS CHARACTER The Global Connections Public Company Limited (çthe