OOVBM 3FQPSU £ ² ¢ ² £ ° Í ² u :FBS PG (SPXUI...2012/11/06 · 9% market share of world consumption 2011 952,000 tons sales volume in 2011 21 processing factories in Thailand

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Corporate Fact Sheet 1Message from Chairman 2Financial Highlights 4Board of Directors 6Executive Management 12Organisation Structure 16Nature of Business 18Risk Factors 30Capital Structure 36Dividend Policy 40Management Structure 42Corporate Governance 56Corporate Social Responsibility 72Related Party Transactions and Interested Party Transactions 77Management Discussion and Analysis 97The Audit Committee Report 112Utilisation of IPO Proceed 113Consolidated and Company Financial Statements 2011 114General Corporate Information 201Defined Terms and Abbreviations 209

ContentContentContentContentContent

9% market share of

world consumption 2011 952,000 tons

sales volume in 2011

21 processing factories

in Thailand and Indonesia

18% of Thailandûs

production volume in 2011

Fully Integrated Natural Rubber Supply Chain

ë 2,800 hectares of rubber plantation ë Located in northern part of Thailand

ë 1,100,000 tons capacity per annum ë 21 factories in Thailand and Indonesia ë Cover full range of products from RSS, TSR and Concentrated Latex

ë Investment in one of world leading glove manufacturing company ë 12.5 billion pieces per annum capacity of gloves ë Produce both latex and nitrile examination gloves

Upstream

Midstream

Downstream

World Leading Natural Rubber Processor

Buengkarn

Mukdaharn

Buriram

Chumporn

Surathani Nakornsrithammarat

SongKhla Trang

Pichit Pisanulok

Sukhothai

Lampang

Others shareholders 60%

Sri Trang Holdings Co., Ltd. 19%

Dr. Viyavood Sincharoenkul 13%

Mr. Aram Sirisuwat 4%

CITIBANK NOMS

SPOREPTE LTD 4%

50,017 60,134

45,910

83,845

133,704

2007 2008 2009 2010 2011

Shareholding Structure (5 March 2012) Sales of Goods and Services (THB million)

1 A n n u a l R e p o r t 2 0 1 1

Cou

ntrie

s of O

pera

tions

2 A n n u a l R e p o r t 2 0 1 1 2

Message from Chairman

Financia l Year 2011 was another memorable year for us. It was our çYear of Growthé in many milestone aspects. We delivered an industry record sales volume of 952,000 tons. Our capacity expansion has been far beyond the old territory. Highly potential locations have become our footprints in 2011 and more in future.

A n n u a l R e p o r t 2 0 1 1

33

Dear Shareholders

Year 2011 was our çYear of Growthé in various aspects including sales volume, capacity expansion and access to international capital market despite being one of challenging periods amidst global economy uncertainties. Tonnage of sale volume in 2011 increased to a record 952,000 tons, 13% growth from the year earlier. Our revenue increased 60% to THB 133,704 million due to the increase in sale volume and increase in price of natural rubber. Our net profit was recorded at THB 1,329 million, decrease 65% from the previous year. This was due mainly to volatile natural rubber price which created a very challenging environment for our business. Our balance sheet remains healthy with the net cash of THB 2,273 million, total equity of THB 18,031 million with a lower debt gearing at 1.24 times.

We have expanded our business throughout our value chain from the upstream rubber plantation to the midstream of natural rubber processing and downstream of our glove manufacturing. In 2011, we achieved a world record of natural rubber capacity of 1.1 million tons per annum for the midstream which enabled us to be the world leader of natural rubber processor. Our target of 1.5 million ton capacity is expected to come on stream in 2013.

We realize that our industry is very fragmented in nature. Therefore, higher market share through investment in capacity expansion will subsequently enable our profits to stray from fluctuation in commodity price. The synergy creation with the upstream business would be more and more prominent. Our rubber plantation are located in the new phase areas of rubber plantation in Thailand. Significant economy of scale in procurement and production activities will be realised when it is ready to provide yield starting from year 2016. Our downstream business through the joint venture entities are also in expansion mode. Resilient demand growth and best support of raw materials from us have strengthened our leading position in glove industry.

Under the competitive environment of the industry, we believe that our excellent sales and procurement platforms together with our strongholds in high-demand destination markets will be the headways to growth for the next years to persist.

We are not just strived to become larger in size, but we have ambition to be top-of-mind midstream processor amongst suppliers and customers. Driven by our gratitude, we place great emphasis in manufacturing quality products for our customers and at the same time giving back to our community and conserving our planetûs resources. We value sustainable business practices and grow contingently with the community and the environment.

On behalf of board of directors, I would like to convey appreciation to our dedicated staffs around the globe, the most prized asset of our group, for every initiative, devotion and passion-to-excellence spirit in developing our business up to this milestone. I would also like to thank our valued investors, banks and other stakeholders for your continued support and confidence in our company. We are steadfast in our commitment to continue our fine tradition of quality and growth in pursuit of our ultimate goal: to maintain our worldclass standard as the second-to-none natural rubber processor in the world.

Sincerely yours, Dr. Viyavood Sincharoenkul Chairman Sri Trang Agro-Industry Public Company Limited March 2012

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RSS 19%

TSR 72%

LTX 7% Others 2%

RSS 18%

TSR 70%

LTX 10% Others 2%

RSS 19%

TSR 67%

LTX 11% Others 3%

2011 2010 2009

Financial Highlights

(UNIT : THB million) FY 2011 FY2010 FY2009 FY2008 FY2007

STATEMENT OF COMPREHENSIVE INCOME Revenue from sale 133,704 83,845 45,910 60,134 50,017 EBITDA 3,311 4,877 2,972 1,598 975 Profit before tax 1,959 4,113 2,298 652 144 Net profit 1,329 3,841 2,182 603 102

STATEMENT OF FINANCIAL POSITION Total assets 40,412 37,656 23,105 15,181 18,015 Total liabilities 22,381 27,264 15,736 9,773 14,010 Shareholdersû equity 18,031 10,392 7,369 5,408 4,005

FINANCIAL RATIOS Gross profit margin (%) 4.3 6.2 7.7 4.9 4.3 Net profit margin (%) 1.0 4.6 4.7 1.0 0.2 Current ratio (times) 1.5 1.2 1.1 1.0 1.0 Net debt to equity ratio (times) 1.1 2.5 2.0 1.6 3.3

Note : Financial statement for FY2007 - FY2009 have been prepared in accordance with Thai generally accepted

accounting principles under the Accounting Act B.E. 2543 while Financial statement for FY2010 and FY2011 have

been prepared based on the early adoption of some accounting standards.

Revenues Breakdown by Products

RSS - Ribbed Smoked Sheet TSR - Technically Specified Sheet LTX - Concentrated Latex

S r i T r a n g A g r o - I n d u s t r y P u b l i c C omp a n y L im i t e d 5

Financial Highlights (Contûd)

Sale volume (LHS) Revenues (RHS)

Net debt to equity (Times)

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0 2007 2008 2009 2010 2011

Fixed asset turnover (Times)

45 40 35 30 25 20 15 10 5 0

2007 2008 2009 2010 2011

Current ratio (Times)

2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0

2007 2008 2009 2010 2011

ROE (%)

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

2007 2008 2009 2010 2011

Earning per share (THB)

4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0

2007 2008 2009 2010 2011

14%

12%

10%

8%

6%

4%

2%

0% 2007 2008 2009 2010 2011

ROA (%)

Net profit (LHS) Net profit margin (RHS)

1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000

-

(Tons)

2007 2008 2009 2010 2011

Revenue from sale

(THB million) 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 -

Net Profit

4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 -

(THB million)

2007 2008 2009 2010 2011

(%) 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%

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Board of Directors

1. Mr. Viyavood Sincharoenkul Chairman/ Managing Director Age: 56 years

Academic Background ë Ph.D. in Chemistry, Queen Elizabethûs College, University of London ë Bachelorûs Degree in Chemistry (First Class), Queen Elizabethûs College, University of London

Training Program -

Work Experience present ë Chairman, STA ë Chairman, Sri Trang International ë Managing Director, STA ë Director, Rubberland Products ë Director, Nam Hua Rubber ë Director, Sadao P.S. Rubber ë Director, Thai Tech Rubber ë Director, SSC ë Director, Semperflex Asia ë Director, Semperform Pacific ë Director, Anvar Parawood ë Director, Premier System Engineering ë Director, Startex Rubber ë Director, Starlight Express Transport ë Director, Sri Trang Rubber & Plantation ë Director, PT Sri Trang Lingga ë Director, Shanghai Sempermed ë Director, Semperflex Shanghai ë Director, Shi Dong Investments ë Director, Shi Dong Shanghai ë Director, Sri Trang USA, Inc. ë Director, Sempermed Singapore ë Director, Sempermed USA, Inc. ë Director, Pattana Agro Futures ë Director, Shanghai Semperit ë Director, PT Star Rubber 1987 - 1993 ë Managing Director, Sri Trang Agro-Industry Co., Ltd. 1985 - 1987 ë General Manager, Paktai Rubber

2. Mr. Prasit Panidkul Vice Chairman/ Executive Director Age: 64 years Academic background ë Executive Micro MBA, Thammasat University Training Program ë DAP 75/2008 by Thai Institute of Directors Association Work Experience present ë Vice-chairman, STA ë Director, Nam Hua Rubber ë Director, Sadao P.S. Rubber ë Director, Premier System Engineering ë Director, Starlight Express Transport ë Director, Sri Trang Rubber & Plantation ë Director, PT Sri Trang Lingga 1987 - 1993 ë Vice-chairman, Sri Trang Agro-Industry Co., Ltd. 1986 - 1991 ë Member of Trang Provincial Council, Trang Province 1975 - 1997 ë Managing Partner, Trang Sahakarn Khonsong Ltd.

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3. Mr. Chaiyos Sincharoenkul Director/ Executive Director Age: 60 years Academic background ë Executive Micro MBA, Thammasat University Training Program ë DAP 66/2007 by Thai Institute of Directors Association Work Experience Present ë Director, STA ë Director, Rubberland Products ë Director, Nam Hua Rubber ë Director, Sadao P.S. Rubber ë Director, Anvar Parawood ë Director, Premier System Engineering ë Director, Startex Rubber ë Director, Starlight Express Transport ë Director, Sri Trang Rubber & Plantation ë Director, PT Sri Trang Lingga ë Director, Shanghai Sempermed ë Director, Semperflex Shanghai ë Director, Sempermed Singapore ë Director, Shanghai Semperit ë Director, Sri Dong Shanghai 1987 - 1993 ë Director, Sri Trang Agro-Industry Co., Ltd. 1990 - 1992 ë Member of Chamber of Commerce, Trang Province 1970 - 1986 ë Assistant Manager, TTR Production Division, Yang Thai Pak Tai Co., Ltd.

4. Mr. Anan Pruksanusak Director/ Executive Director Age: 57 years Academic background ë Executive Micro MBA, Thammasat University Training Program ë DAP 66/2007 by Thai Institute of Directors Association Work Experience Present ë Director, STA ë Director, Rubberland Products ë Director, Nam Hua Rubber ë Director, Sadao P.S. Rubber ë Director, Anvar Parawood ë Director, Premier System Engineering ë Director, Startex Rubber ë Director, Starlight Express Transport ë Director, Semperflex Shanghai ë Director, Sempermed Singapore

a n g A g r o - I n d u s t r y P u b l i c C omp a n y L im i t e d a n g A g r o - I n d u s t r y P u b l i c C omp a n y L im i t e dS r i T r a

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5. Mr. Kitichai Sincharoenkul Director/ Executive Director/ Nomination Committee Member Age: 52 years Academic background ë Master of Business Administration, Indiana State University, United States ë Bachelor in Economics, Thammasat University Training Program ë DAP 67/2007 by Thai Institute of Directors Association ë SGX Listed Companies Development Programme: Understanding the Regulatory Environment in Singapore: What Every Director Ought to Know Work Experience Present ë Executive Director, STA Bangkok branch ë Director, STA ë Manager of legal and administration, STA ë Director, Sadao P.S. Rubber ë Director, Siam Sempermed ë Director, Semperflex Asia ë Director, Semperform Pacific ë Director, Sri Trang Rubber & Pantation ë Director, Shanghai Sempermed ë Director, Semperflex Shanghai ë Director, Sri Trang International ë Director, Shi Dong Investments ë Director, Sri Trang USA, Inc. ë Director, Sempermed Singapore ë Director, Sempermed USA, Inc. ë Director, Pattana Agro Futures 1988 - 2006 ë Branch Manager, STA 1984 - 1987 ë Credit Department of Citibank

6. Mr. Veerasith Sinchareonkul Director Age: 27 years Academic background ë Bachelor of Computer Science and Cybernetics, University of Reading, United Kingdom Training Program ë DAP 85/2010 by Thai Institute of Directors Association Work Experience Present ë Director, STA ë Director, Siam Sempermed ë Director, Semperflex Asia ë Director, Semperform Pacific 2008 - 2011 ë Corporate Credit Analyst, KASIKORNBANK PLC

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7. Mr. Paul Sumade Lee Director/ Executive Director Age: 57 years Academic background ë Master of Business Administration, International Institute for Management Development, Lausanne, Switzerland ë Bachelor of Commerce University of New South Wales, (Sydney) Australia Training Program ë SGX Listed Companies Development Programme: Understanding the Regulatory Environment in Singapore: What Every Director Ought to Know Work Experience Present ë Marketing Manager, STA ë Director, PT Star Rubber ë Director, Thai Tech Rubber ë Director, Shi Dong Investments ë Director, Sri Dong Shanghai ë Director, PT Sri Trang Lingga ë Director, Sri Trang USA, Inc. ë Director, and Vice Chairman, Sri Trang International

8. Mr. Prakob Visitkitjakan Independent Director/ Chairman of Audit Committee/ Chairman of Remuneration Committee Age: 71 years Academic background ë Master of Business Administration, Indiana University, USA ë Bachelor of Science in Business (Honors), Indiana University, USA Training Program ë Audit Committee Program (ACP) 27/2009 by Thai Institute of Directors Association ë Monitoring the Quality of Financial Reporting (MFR) 8/2009 by Thai Institute of Directors Association ë Monitoring Fraud Risk Management (MFM) 1/2009 by Thai Institute of Directors Association ë Chartered Director Class (CDC) 3/2008 by Thai Institute of Directors Association ë Director Certification Program (DCP) 33/2003 by Thai Institute of Directors Association ë Role of the Chairman Program (RCP) 5/2001 by Thai Institute of Directors Association ë SGX Listed Companies Development Programme: Understanding the Regulatory Environment in Singapore: What Every Director Ought to Know Work Experience Present ë Chairman of Audit Committee, STA ë Independent Director and Chairman of the Audit Committee, ARIP PLC. ë Director, Lease It Co., Ltd. ë Independent Director, STA 1999 - 2011 ë Independent director and Chairman of the Audit Committee, Siam City Cement PLC. 1999 - 2008 ë Audit Committee, STA 2006 - 2008 ë Independent Director/ Audit Committee, Bank of Ayudhya Public Company Limited 1999 - 2002 ë Executive Vice Prisident, Bank of Auydhya Public Company Limited

a n g A g r o - I n d u s t r y P u b l i c C omp a n y L im i t e d S r i T r a

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9. Mr. Kriang Yanyongdilok Independent Director/ Audit Committee member/ Chairman of the Nomination Committee/ Remuneration Committee member Age: 73 years Academic background ë Bachelor of Science in Business Administration (Major in Accounting), Thammasat University Training Program ë DAP 11/2004 by Thai Institute of Directors Association Work Experience Present ë Independent Director and Audit Committee, STA ë Certified Public Accountant (Thailand) No. 4250 2002 - 2005 ë Audit Committee, Oishi Group PLC. 1985 - 1998 ë Provincial Revenue, Area Revenue Office, Regional Revenue Office 3, Revenue Office 1968 ë Ombudsman, third class, Revenue Office, Phuket 1965 ë Class-three government official, Office of the Auditor-General of Thailand

10. Mr. Samacha Potavorn Independent Director/ Audit Committee member/ Nomination Committee member/ Remuneration Committee member Age: 68 years Academic background ë Master Degree in Governmental Administration, Thammasat University ë Thai barrister-at-law Training Program ë DAP 75/2008 by Thai Institute of Directors Association ë SGX Listed Companies Development Programme: Understanding the Regulatory Environment in Singapore: What Every Director Ought to Know Work Experience Present ë Independent Director and Audit Committee, STA 2006 - 2008 ë Assistant Secretary of Ministry of Interior 2003 - 2004 ë Governor, Phang-nga province 2002 - 2003 ë Legal counsel, Ministry of Interior 2000 - 2002 ë Assistant Permanent Secretary, Vice-Director of Southern Border Provinces Administration Center, Ministry of Interior 1997 - 2000 ë Vice-Governor, Pattalung Province, Trang Province 1996 - 1997 ë Permanent Secretary 1984 - 1996 ë Sheriff 1969 - 1983 ë Assistant District Officer

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11. Mr. Neo Ah Chap Independent Director Age: 67 years Academic background ë Diploma in Accountancy, Perth Technical College ë Certified Public Accountant (Australia) ë Certified Public Accountant (Singapore) Training Program ë SGX Listed Companies Development Programme: Understanding the Regulatory Environment in Singapore: What Every Director Ought to Know Work Experience Present ë Independent Director, STA ë Sole - prorietor of NAC Consultancy Services 1971 - 2009 ë Marketing Director of Tan Chong & Sons Motor Company (Singapore) Private Limited

a n g A g r o - I n d u s t r y P u b l i c C omp a n y L im i t e d a n g A g r o - I n d u s t r y P u b l i c C omp a n y L im i t e dS r i T r a u s t r y P u b l i c C omp a n y L im i t e d 11

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Executive Management

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Executive Management

1. Mrs. Prapai Srisuttiphong Procurement Manager Age: 58 years Academic background Vocational Certificate in Accountancy from the Polytechnic Bangkok College Training Program - Work Experience 2005 - 2010 ë Procurement Manager, STA 1997 - 2004 ë Head of Accounting, Raw Materials Verification Division, STA 1993 - 1996 ë Accountant, STA

3. Mr. Arsom Aksornnam Production Manager Age: 44 years Academic background Bachelor of Science (General Science), Prince of Songkhla University Training Program - Work Experience 2009 - Present ë Factory Manager, Siam Sempermed 2004 - 2008 ë Factory Manager, Shanghai Sempermed 1998 - 2003 ë Factory Manager, Siam Sempermed 1995 - 2007 ë Production Manager, Siam Sempermed 1989 - 1994 ë Line Chemist, Siam Sempermed

2. Mr. Chalermpop Khanjan Production Manager Age: 40 years Academic background Diploma in General Management from Industrial and Community Education College Training Program - Work Experience 2006 - 2010 ë Production Manager, Rubberland Products 1998 - 2005 ë Factory Manager, Rubberland Products 1994 - 1997 ë Assistant to TTR Factory Manager, STA


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4. Mr. Chaidet Pruksanusak Quality Assurance Manager Age: 43 years Academic background Diploma in Finance and Banking, Bangkok Commercial College Training Program - Work Experience Present ë Director, Prueksa Rubber 2009 - 2010 ë Quality Assurance Manager, STA 2007 - 2008 ë Coordinated Officer, STA 1999 - 2006 ë Factory Manager, STA

5. Mr. Patrawut Panitkul Chief Financial Officer (CFO) Age: 43 years Academic background Bachelor of Accounting, Prince of Songkhla University Training Program - Work Experience 2010 ë Accounting and Financing Manager, STA 2001 - 2009 ë Accounting Manager, STA 1989 - 2000 ë Accounting Manager, Siam Sempermed

6. Miss Lim Li Ping Controller Age: 39 years Academic background ë Certified Public Accountant (Australia) ë Diploma in Accountancy, Ngee Ann Polytechnic, Singapore ë Bachelor of Business (Accountancy), Royal Melbourne Institute of Technology Training Program SGX Listed Companies Development Programme: Understanding the Regulatory Environment in Singapore: What Every Director Ought to Know Work Experience 2002 - Present ë Accounting Manager and General Manager, Sri Trang International 2001 ë Assistant Accounting Manager, Clarent Singapore Pte Ltd. 1993 - 2000 ë Senior Accountant, Glenayre Electronics (S) Pte Ltd.

14 A n n u a l R e p o r t 2 0 1 1

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10. Miss Nuchanart Chaiyarat Human Resources Manager Age: 44 years Academic background Bachelor of Marketing Science, Prince of Songkhla University Training Program - Work Experience 2008 - Present ë Human Resources Manager, STA 2000 - 2007 ë Purchasing Manager, Siam Sempermed

7. Mr. Rattapong Laparojkit Engineering Manager Age: 38 years Academic background Bachelor of Civil Engineering Technology, University of Southern Colorado at Pueblo, United States Training Program - Work Experience 2009 - 2010 ë Engineering Manager, Premier System Engineering 2003 - 2009 ë System Engineering Manager, Premier System Engineering 2001 - 2003 ë Factory Manager, Premier System Engineering 2000 - 2001 ë Assistant to Factory Manager, Premier System Engineering

8. Mr. Phanlert Wangsuphadilok Engineering Manager Age: 39 years Academic background Bachelor of Engineering, Kasem Bundit University Master of Engineering, King Mongkutûs University of Technology Thonburi Training Program - Work Experience 2009 - 2010 ë System Engineering Manager, Premier System Engineering 2006 - 2009 ë Factory Manager, Semperflex Asia 1998 - 2006 ë Production Manager, Semperflex Asia

9. Mr. Udom Pruksanusak Human Resources Manager Age: 50 years Academic background ë Bachelor of Agriculture, Prince of Songkhla University ë Master of Agriculture, Kasetsart Unitversity Training Program - Work Experience Present ë Director, Prueksa Rubber 2000 - Present ë Human Resources Manager, Siam Sempermed 1998 - 1999 ë Factory Manager, Semperflex Asia 1998 - 1997 ë Production Manager, Siam Sempermed


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Organisation Structure

17S r i T r a n g A g r o - I n d u s t r y P u b l i c C omp a n y L im i t e d S r i T r a n g A g r o - I n d u s t r y P u b l i c C omp a n y L im i t e d 17

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18 A n n u a l R e p o r t 2 0 1 1

Nature of Business Background STA was established by our founders, Mr. Somwang Sincharoenkul and Dr. Viyavood Sincharoenkul in Thailand in 23 April 1987, as a private limited company with an initial registered capital of Baht 31 million to produce RSS in Hat Yai, Thailand. STA is a producer and exporter of Natural Rubber, which is one of the most important agricultural products in the southern part of Thailand. STA has continuously expanded its business to support the growth of the domestic and international rubber industries.

In 1991, we undertook an initial public offering exercise in Thailand and were listed on the SET on 22 August 1991. STA was converted as a public limited company in 27 December 1993. In January 2011, STA made an offering of its newly issued shares to the public (Public Offering) including institutional investors in Singapore and listed its shares on the SGX-ST. At present, STA shares are listed securities on both the SET and SGX-ST (Dual Listing).

Since our inception as a Natural Rubber processor in Thailand, we have expanded our product mix, our production capacity and our geographical operations to become a dominant Natural Rubber supply chain operator with integrated end-to-end capabilities on a multi-national platform. Significant Changes and Developments Our significant changes and developments are as follows: October 1987 Established Anvar Parawood for the production of rubber wood for the furniture

industry. March 1988 Established Rubberland Products for the production of Concentrated Latex, our

Groupûs first processing facility producing Concentrated Latex. January 1989 Jointly established SSC to produce latex examination gloves. March 1990 Thai Tech Rubber was jointly established with Southland Rubber Co., Ltd and Itochu

Corporation Limited increasing our product mix to include TSR. January 1994 Starlight Express Transport was established to provide logistical support to our

Groupûs business. March 1994 Premier System Engineering was established to support our Groupûs research and

development and provide engineering services. May 1995 Jointly established Shanghai Semperit to produce escalator handrails. September 1995 Established Startex Rubber to diversify upstream into the ownership of rubber

plantations in the southern region of Thailand. April 1998 Our Company started TSR production at our Thungsong facility. April 2002 Sri Trang International was established in Singapore, a purchasing hub for key users

of Natural Rubber, for the distribution of the Natural Rubber Products that we sell globally.

March 2004 Established Sri Trang USA to focus on the distribution of the Natural Rubber Products that we sell in the United States.

July 2004 We expanded substantially in the PRC by establishing our sales teams in Qingdao and Shanghai to conduct direct sales of the Natural Rubber Products that we sell and to provide after sales services to our customers within the PRC.


January 2005 We established PT Sri Trang Lingga, our first Natural Rubber procurement and processing capability outside of Thailand.

December 2007 Sri Trang Rubber & Plantation was established to manage the ownership of rubber plantations in northern Thailand.

May 2008 Established Sempermed Singapore with Semperit Technische for the acquisition of Sempermed Brasil, our examination glove distributor in Brazil.

August 2009 We established PT Star Rubber to acquire our second Indonesian TSR processing facility.

August 2010 We established our first PRC subsidiary, Shi Dong Shanghai, in Shanghai, to expand our presence in the PRC.

January 2011 STA made an offering of its newly issued shares to the public (Public Offering) in Singapore, including institutional investors and listed its shares on the SGX-ST.

Other significant events in the operational history of our Group are as follows: April 1987 Commenced operations producing ribbed smoked sheets in Hat Yai, Thailand with an

initial registered capital of Baht 31.0 million. December 1994 Our subsidiary, Nam Hua Rubber, commenced production of Concentrated Latex. March 1996 Jointly founded Semperflex Asia which commenced the production of high-pressure

hydraulic hoses. March 1996 Jointly established Semperform Pacific which produces rubber and plastic parts. April 1998 Sempermed USA was jointly established to manage the sales and marketing of

examination gloves which are used for medical and industrial purposes and other finished products in the United States.

July 2005 Semperflex Shanghai was jointly established to commence production of high-pressure hydraulic hoses in the PRC.

February 2007 Our subsidiary, Sri Trang International, was awarded the first prize in the top trading volume award by the Singapore Commodity Exchange Limited.

December 2007 Our subsidiary, Sri Trang International, received the Supplier Partnership and Appreciation Day award from Goodyear Orient (Private) Company Limited.

February 2008 Our subsidiary, Sri Trang International, was awarded the second prize in the top trading volume award by the Singapore Commodity Exchange Limited.

October 2008 Jointly acquired Sempermed Brasil, which distributes examination gloves which are used for medical and industrial purposes in Brazil.

November 2009 Semperform Pacific was dormant. Currently, asset disposal process is completed and liquidation is expected to be performed within 2012.

December 2009 Our Company received the Prime Ministerûs Export Award 2009 (Best Exporter) for being the top Thai exporter into the PRC market by export volume under the Natural Rubber category.

September 2011 SSC received Quality Award form Food and Drug Administration for three consecutive years.

November 2011 Shanghai Sempemed was dormant. Currently, it is in the process of asset disposal. December 2011 STA successfully issued two tranches of debentures to the institutional and high net-

worth investors totaling Baht 2,150,000.

20 A n n u a l R e p o r t 2 0 1 1

Type of Products and Services 1. Natural Rubber Products

We produce three main types of Natural Rubber Products; RSS, TSR, and Concentrated Latex. ë Ribbbed Smoked Sheet : RSS

RSSs are unsmoked rubber sheets which have undergone processing and can be classified into five categories, namely, RSS1, RSS2, RSS3, RSS4 and RSS5. The classification is based on the quality of each sheet, which takes into account factors like purity, elasticity and colour. RSS is used as a raw material in the production of products such as tyres, pipes, shoes and automobile parts. As it is a form of processed Natural Rubber, RSS is of a higher quality and can be subjected to dyeing treatments.

ë Technically Specified Rubber : TSR

TSR or block rubber is produced from raw materials such as cup lump and unsmoked rubber sheets. Cup lump is produced when field latex is allowed or made to coagulate in the cup in which it is collected. Unlike RSS, the quality of TSR is determined through chemical testing to ascertain its technical specifications. We produce two main types of TSRs - the Standard Thai Rubber (STR) and the Standard Indonesian Rubber (SIR). TSR is a raw material used mainly in the production of tyres for automobiles and airplanes. ë Concentrated Latex

Concentrated Latex is derived from field latex and is liquid latex with a dry rubber content of approximately 60%. It is one of the cleanest forms of rubber and is used primarily in the production of various products such as, latex examination gloves, surgical gloves, condoms, elastic threads and adhesives.

Raw materials procurement and management The raw materials which our rubber processing facilities utilise to produce Natural Rubber Products include unsmoked rubber sheets, cup lumps and field latex.

We have established a network of 57 raw material procurement centres comprising 46 procurement centres in Thailand, mainly in the southern region of Thailand, and 11 procurement centres in Indonesia. Our procurement centres consist of our 36 collection centres and our 21 Natural Rubber production facilities, which are located strategically, close to sources of raw materials supply. While we purchase raw materials primarily from dealers, raw materials are also sourced either directly from farmers or from farmer unions and cooperatives and rubber centre markets at which farmers sell the raw materials. As we obtain our raw materials through our procurement network from diverse sources of raw materials, we do not have any supplier of raw materials or Natural Rubber Products who accounts for 5% or more of our purchases for the three most recent completed financial years ended 31 December 2011.


Production facilities and rates of utilisation As at 31 December 2011, we have a total of 19 processing facilities located in Thailand and 2 processing facilities located in Indonesia with a total optimal production capacity of approximately 1.1 million tonnes of Natural Rubber Products per year. Our production capacity is limited by available space, production lines, number of machines and manpower. For the year ended December 2011, utilisation rate was approximately 72.4% of our production capacity. Sales, marketing and customers Our global sales and distribution function is located in and managed out of Singapore, a global purchasing hub for Natural Rubber Products. We have established three trading and distribution networks based in Singapore, the United States and the PRC for the Natural Rubber Products that we sell, through our subsidiaries Sri Trang International, Sri Trang USA, and Shi Dong Shanghai, respectively. Together with the various sales teams established in Thailand and in our major geographical markets, such as the PRC, we are able to ensure that the Natural Rubber Products that we sell to customers in various countries and territories in Asia such as the PRC, India, Singapore, Japan, Vietnam, Malaysia, and Korea as well as to the United States and Europe are efficiently distributed. Shipping, logistics and maintenance In local Thailand market, services for shipping and logistics activities in relation to the sale of Natural Rubber Products are provided by our subsidiary, Starlight Express Transport. Such services include the arrangement of product shipping and the preparation of the related import and export documentation. In addition, Starlight Express Transport also undertakes the business of forklift rental and repair services to companies within our Group.

For international market, we typically engage third party transportation and freight forwarding companies to provide services in relation to shipping and logistics activities relating to the export of the Natural Rubber Products that we sell.

Premier System Engineering, our subsidiary, provides maintenance services for some of our groupûs machinery and equipment. Our maintenance team comprises qualified engineers and technicians who have been appropriately trained. 2. Finished Products

In addition and complementary to our Natural Rubber Products business, we have diversified our income stream through our interest in SSC, our associate, in which we have an aggregate interest (direct and indirect) of approximately 40.2%. We are closely involved in the day-to-day operations of SSC which primarily produces Natural Rubber examination gloves and nitrile examination gloves. These examination gloves are used for medical and industrial purposes.

22 A n n u a l R e p o r t 2 0 1 1

Production facilities and capacity SSC has a total of four production facilities with a total production capacity as at 31 December 2011 of approximately 12.5 billion glove pieces annually. We believe that SSC is one of the largest examination gloves producers in Thailand and one of the leading producers of Natural Rubber and nitrile examination gloves globally. Raw materials procurement and management The base raw material that our associate, SSC, requires for its production of its latex examination gloves is Concentrated Latex. Under the terms of the SSC JVA, our Group supplies all of the Concentrated Latex which SSC requires for its production of latex examination gloves. Sales and marketing SSC in cooperation with Semperit Technische, Sempermed USA and Sempermed Brasil regularly markets its products and sources for customers by participating in regional Asia-Pacific and international fairs and exhibitions. Through its participation in such trade fairs and exhibitions, SSC is able to promote its products, obtain up-to-date information on industry developments and market trends, meet potential customers and secure new customers.

We have, together with our business partner Semperit Technische, also established two companies, Sempermed USA and Sempermed Brasil, which focus on the sales and distribution of the examination gloves produced by SSC in North America and Brazil respectively. Our business partner, Semperit Technische, distributes and sells the examination gloves produced by SSC in Europe. 3. Other Businesses

Rubber wood processing

We have expanded our business operation to manufacture and distribute finished products through investments in our associates that we have jointly established with Semperit Technische, namely Semperflex Asia, Semperflex Shanghai, and Shanghai Semperit. We have participated in the production and sale of high-pressure hydraulic hoses for industrial, mining, and other specific applications through Semperflex Asia and Semperflex Shanghai and participated in the production and sale of escalator handrails through Shanghai Semperit.

Through our subsidiary, Anvar Parawood, we are also involved in the production and distribution of rubber wood for the furniture industry in both local and global market.

High-pressure hydraulic hoses Escalator hanrails


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24 A n n u a l R e p o r t 2 0 1 1

Capitalise on emerging expertise

Increase scale and processing capacity

In addition, through our associate, Pattana Agro Futures, we are also a commodity futures broker in the Agricultural Futures Exchange of Thailand. Revenue Structure The revenue from sales and services according to the consolidated financial statements ended 31 December 2009, 2010 and 2011 are shown below:

Year ended 31 December Revenue breakdown 2009 2010 2011

by product segment Baht million % Baht million % Baht million %

TSR 30,584.8 66.6 58,909.1 70.3 96,138.6 71.9 RSS 8,677.0 18.9 15,046.4 17.9 24,942.8 18.7 Concentrated Latex 5,314.0 11.6 8,168.8 9.7 10,236.6 7.6 Others 1 1,334.0 2.9 1,721.0 2.1 2,385.8 1.8 Total revenue from sales and services 45,909.8 100.0 83,845.3 100.0 133,703.8 100.0

Note : 1 Comprises (i) the sale of dried rubber wood and wood packing products and (ii) the provision of certain services (such as

logistics, research and development and information technology services) to our associates and a joint venture entity as

well as other external third parties.

Our Business Strategy Our vision is to be a global leader in the Natural Rubber industry. To achieve this vision, we have established our business model as an integrated Natural Rubber supply chain operator and our principal strategy is to make long-term investments in establishing and expanding our capabilities and capacity at each stage of the Natural Rubber supply chain, namely planting, procurement, processing, and sales and distribution. Vertical integration of business model Our business model of operating an integrated Natural Rubber supply chain is instrumental in enabling us to strengthen our market position as a dominant Natural Rubber supply chain operator with integrated end-to-end capabilities on a multi-national platform since we are able to maximise our cost

Further vertical integration of business model


efficiency, competitive edge and ultimately, our profit potential. In establishing our business model, we have developed all-round capabilities throughout the Natural Rubber supply chain. Over the years, we have integrated and synergised the operations, domain knowledge and management expertise of the inter-linked processes of the entire Natural Rubber supply chain, as well as reduced the need to transact with third-party intermediaries. As a result, we are able to achieve greater operational efficiency and capture value across the entire Natural Rubber supply chain. Through operating an integrated Natural Rubber supply chain, we are also able to gain direct access to supply and customer demand information, which in turn enables us to respond to changes in market conditions and adjust our procurement, production and inventory levels accordingly. We identify potential investment and expansion opportunities (such as plantations, establishment of processing plants and establishment of capabilities in new geographical markets) on the basis of their potential long-term benefits to our business model. We have been developing our upstream business since we believed that it can create a better cost control as well as harmonize the entire supply chain, for instance, strategy of raw material procurement in the new plantation area such as Northern Thailand. To implement our principal strategy, our Company plans to acquire additional land to achieve 50,000 rai (or 8,000 hectares) in the next three year for rubber plantation. Apart from our midstream business, our core business, to process Natural Rubber Products and upstream business to expand rubber plantation, our Company has also been focusing on our downstream examination gloves business. Siam Sempermed, our associated company, has also been continually expanding its capacity to support the demand growth of latex examination glove. Increase scale and processing capacity In line with our principal strategy of making long-term investments in establishing and expanding our capabilities and capacity at each stage of the Natural Rubber supply chain, we constantly invest in both organic and inorganic growth initiatives, as we believe such growth momentum is critical in creating a scalable integrated Natural Rubber supply chain. We will expand our production capacity to strengthen our largest Natural Rubber processor in the market. To implement our principal strategy, we will acquire and/or build new processing plants as well as increase procurement units in order to expand our production capacity to achieve 1,500,000 tonnes per year by the end of 2013. Capitalise on emerging expertise With vision of our management, we believe that we can identify business opportunity in emerging market even in the light of economic crisis. As an example, during the economic downturns such as the 1997 financial crisis, the burst of the dotcom bubble in 2000 and the recent credit crisis in 2008, we undertook the following strategic investments and corporate developments:

ë Starting from 2000, we enhanced our competitiveness by consolidating our position as a key Natural Rubber supply chain operator through the expansion of our network of raw material procurement centres and the increase of our production capacities in Thailand. We have also made investments in Indonesia, worldûs second largest Natural Rubber producer after Thailand, to strengthen our groupûs market position.

26 A n n u a l R e p o r t 2 0 1 1

Industry and Competition ë Natural Rubber industry

According to International Rubber Study Group (IRSG) Rubber Statistical Bulletin Vol. 66, No.7-9, world demand of Natural Rubber in 2011 was 10,924,000 tonnes whereas world production of natural rubber was 10,974,000 tonnes. China is a worldûs major natural rubber consumer accounting for 33.0% of total global consumption followed by European Union and USA who consumed about 11.1% and 9.4% of total global consumption, respectively. Thailand, worldûs topmost natural rubber producing country, produced 3,393,800 tonnes or 30.9% of worldûs natural rubber production followed by Indonesia whose production contributed 27.2% of worldûs natural rubber production.

ë In 2004, we made a strategic decision to substantially expand into the PRC market, as we believed that the PRC would become the largest consuming country of Natural Rubber. In 2009, the PRC was the largest consumer of Natural Rubber globally at approximately one-third of world demand.

ë In 2007, we started expanding our operations upstream by investing in large-scale rubber plantations in Thailand.

Leveraging on our dominant market position, in-depth industry knowledge and proven track record of successfully implementing our strategy, we believe that we will be able to continue to realise future growth opportunities for our business. Through our multi-national platform, we have acquired on-the-ground knowledge and insights that will enable us to undertake our investments in the geographical locations and business environments that we identify as being most strategically favourable and beneficial to our business. Our Future Plan Going forward, in line with our strategy, we intend to pursue the following initiative to grow our business and further strengthen our dominant market position;

Acquire land to achieve 50,000 rai (approx. 8,000 hectares) within 2014.

Upstream Business Midstream Business Downstream Business

Build/ acquire/ expand rubber processing facilities to increase our production capacity to 1.5 mil l ion tonnes per year within 2013.

Expand product ion capaci ty of la tex examination gioves to reach 14 billion pieces within 2012.


Unit : Million Tonnes

Unit : Tonnes

Globalûs Natural Rubber consumption in 2012 is expected to be 11,494,000 tonnes (Source: IRSG - The World Rubber Industry Outlook, Review and Prospect to 2020, December 2011). The increase in demand coincides with growth of tyre industry which accounted for more than 70% of global Natural Rubber demand. Most growing demand comes primarily from emerging countries such as China, Brazil, Africa, and the Middle East whose relatively high GDP growth would benefit automotive industry which is directly related to tyre industry, as part of component. Meanwhile, IRSG forecasted that total global Natural Rubber production will be increased to 11,417,000 tonnes. Such increase is mainly contributed by Thailand and Indonesia, worldûs major Natural Rubber producing countries. Even though growth rate of demand in Natural Rubber forecasted to surpass that of supply, it is anticipated that a supply deficit of 77,000 tonnes still continues in 2012.

Diagram exhibits Supply Surplus (Deficit) of Natural Rubber during 2002-2012

Diagram exhibits Demand and Supply of Natural Rubber during 2002-2012

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (f)

7.6 7.3 7.9 8.0 8.7 8.7 9.2 8.9

9.7 9.8 10.2 9.9 10.2 10.1 9.3 9.7

10.8 10.4 10.9 11.0 11.5 11.4 12

10

8

6

4

2

-

Demand Supply

400,000 300,000 200,000 100,000

- (100,000) (200,000) (300,000) (400,000) (500,000)

(246,000) (298,000) (288,000)

(47,000)

(377,000)

(77,000)

69,000 28,000

137,000

361,000

50,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (f)

28 A n n u a l R e p o r t 2 0 1 1

Unit : Thousand Tonnes

Thailand Indonesia Malasia Others

Diagram Exhibits Worldûs Major Natural Rubber Producing Countries during 2002-2011

Unit : Thousand Tonnes

Diagram Exhibits Worldûs Major Natural Rubber Consuming Countries during 2002-2011

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

12,000

10.000

8,000

6,000

4,000

2,000

-

12,000

10.000

8,000

6,000

4,000

2,000

-

1 Based on our sales volume of Nutural Rubber Products of approximately 951,935 tonnes for the financial year ended 31 December 2011 and the total global demand for Natural Rubber Products of approximately 10,924,000 tonnes in 2011.

2 Based on our production volume in Thailand of 625,673 tonnes for the financial year ended 31 December 2011 and production volume of Thailand of approximately 3,393,800 tonnes in 2011.

3 Based on our sale volume to the PRC of 317,513 tonnes for the financial year ended 31 December 2011 and gross import of Natural Rubber of the PRC of approximately 2,665,400 tonnes in 2011.

Price of Natural Rubber throughout 2011 shown in below diagram was relatively volatile due to various factors such as Tsunami in Japan, curb of high inflation in China, sovereign debt in Europe, and weak economic recovery in the United States.

Being one of the worldûs largest Natural Rubber processing company, in 2011 our sales volume accounted for 8.7%1 of worldûs Natural Rubber consumption while our production volume in Thailand accounted for 18.4%2 of Thailand production volume. Our sales volume in 2011 to the PRC accounted for 11.9%3 of the PRCûs total Natural Rubber import in 2011.

China EU Countries USA India Japan Others


ë Competition

The main Natural Rubber producing and exporting countries are Thailand, Indonesia and Malaysia. The majority of rubber processors and exporters in such countries are relatively small in scale and do not possess the same scale of operations, technical and product development capabilities as us. We are a dominant Natural Rubber supply chain operator carrying out our business operations on a multinational platform. With our high international standard quality of products, we are a certified supplier to all of top 20 global tyre manufacturers. We believe that there are currently no companies that are directly comparable to us in terms of business model and scale of business operations. To the best of our knowledge, we believe that our main competitors are primarily larger Natural Rubber processors and exporters such as Von Bundit Company Limited, Southland Group and Thai Hua Rubber Public Company Limited based in Thailand, The Tat Lee Group and The Kirana Group based in Indonesia, and Lee Rubber Group based in Malaysia and Indonesia.

Majority of our products are globally sold to conventional tyre manufacturers. Diagram below exhibits the proportion of geographic sale during the past three years.

USD : Ton

Diagram Exhibits Price of STR20 in 2011

High inflation in China

25%

8% 6%

1%

15%

29%

10%

45%

7%

0.4%

17%

37%

27%

11%

8%

2%

18%

34%

We believe that the major competitive factors in the Natural Rubber processing industry include product quality, production capability and capacity, economies of scale, customer service, product pricing, geographical presence and management capability.

6,000

5,500

5,000

4,500

4,000

3,500

3,000

03/0

1/11

03/0

2/11

03/0

3/11

03/0

4/11

03/0

5/11

03/0

6/11

03/0

7/11

03/0

8/11

03/0

9/11

03/1

0/11

03/1

1/11

03/1

2/11

2009 2010 2011

China Other Asia Thailand America Europe Others

Sovereign debt in Europe

Tsunami in Japan

30 A n n u a l R e p o r t 2 0 1 1

Risk Factors


Risk Factors Our Company is exposed to a number of risks that may affect its business and the value of its shares. The following sets out some of the significant risks that may affect the Company. However, there are some risks that may be unknown to the Company and other risks that the Company currently considers to be immaterial. These risks could have an impact upon the operation of the Company in the future. 1. Risks Relating to Our Industry and Our Business Prices of commodities in general, including natural rubber, are susceptible to price fluctuations.

Prices of commodities in general, including natural rubber, have been volatile and we, like other participants in the natural rubber industry, have limited influence over the timing and extent of the price changes for natural rubber. The price of natural rubber and the Natural Rubber Products that we sell, like most commodities, are affected by a number of factors including but not limited to the following:

ë Supply and demand for natural rubber - An increase in the supply of natural rubber or a decrease in world consumption levels of natural rubber could result in an oversupply which could in turn result in a decrease in average selling prices of the Natural Rubber Products that we sell;

ë Prices of crude oil, energy and oil-based chemicals - Crude oil prices may affect the prices of natural rubber and other input materials such as oil-based chemicals used in rubber processing. In addition, the prices of synthetic rubber usually move along with crude oil prices, and the price fluctuations of synthetic rubber affects the pricing and demand for natural rubber;

ë Currency movements - As natural rubber is traded mainly in US Dollars, any fluctuations in the natural rubber exporting currencies against US Dollars may result in corresponding fluctuations in natural rubber prices in the relevant exporting countries;

ë Speculation - As natural rubber and certain of the Natural Rubber Products that we sell are traded at various commodity future exchanges, they are susceptible to price speculation in addition to local and global economic factors; and

ë Government intervention - The governments of natural rubber producing countries such as Thailand, Indonesia and Malaysia may from time to time introduce policies to support the natural rubber industry in their respective countries. For example, the Indonesian government had imposed export quotas in relation to natural rubber in 2009, in response to the drop in the price of natural rubber, which restricted our ability to operate our factories in Indonesia at full capacity. In addition, in January 2012, the Thai government has announced a price intervention scheme to provide loans to the state-run Rubber Estate Organization and cooperatives through the Bank for Agriculture and Agricultural Cooperatives to buy rubber from farmers at prices above market prices.

Other unpredictable factors which affect the price of natural rubber and the Natural Rubber Products that we sell include economic growth rates, foreign and domestic interest rates and trade policies.

32 A n n u a l R e p o r t 2 0 1 1

If we are unable to pass on any increase in raw material costs to our customers and/or suppliers, our profitability may be adversely affected. If the market prices of the Natural Rubber Products that we sell are volatile, our business, financial condition and results of operations could be materially and adversely affected. A significant portion of the sales of the Natural Rubber Products that we sell are for use in the tyre manufacturing industry which exposes us to downturns in this industry.

The Natural Rubber Products that we sell include RSS, TSR and Concentrated Latex. Global demand for such products, in particular TSR, is dependent significantly upon the tyre manufacturing industry. Our customers include tyre manufacturers in the emerging markets such as the PRC and India and leading global tyre manufacturers. The majority of our sales of Natural Rubber Products are made to tyre manufacturers. If the level of activity in the tyre manufacturing industry declines, the demand for the Natural Rubber Products that we sell may decrease and our business, financial condition and results of operations may be adversely affected. Our business, financial condition and results of operations may be adversely affected by fluctuations in exchange rates and foreign exchange controls.

While our financial reporting currency is Baht and our raw material purchases for the Natural Rubber Products that we produce are transacted in Baht and Indonesian Rupiah, approximately 83.0% of our total revenues is denominated in US Dollars. In addition, the Companyûs shares will also be quoted in Singapore dollars on the SGX-ST while dividends, if any, will be paid in Baht. Fluctuations in the exchange rates between the Baht, Indonesian Rupiah, US Dollars, Singapore dollar or other currencies, could adversely affect our business, financial condition and operating results as well as the foreign currency value of any dividend distributions. Any fluctuations in the exchange rates between the Baht, Indonesian Rupiah and Malaysian Ringgit could adversely affect our price competitiveness in relation to other natural rubber processors from Indonesia and Malaysia.

We attempt to mitigate foreign exchange risks using forward foreign exchange contracts and foreign exchange options to hedge our foreign exchange exposures arising from purchase and sale of products in currencies other than Baht. Should we be unable to successfully hedge our foreign exchange exposures, we may have a greater exposure to foreign exchange fluctuations and our financial condition and results of operations may be adversely affected. Our Group is dependent upon the services of key management staff.

One of the key reasons for the growth of our Group has been our ability to attract and retain a team of experienced professional managers. Our continued success will depend on our ability to retain key management staff, such as Dr. Viyavood Sincharoenkul, Mr. Kitichai Sincharoenkul, and Mr. Paul Sumade Lee, and to attract and train new managers. If members of our senior management team are unable or unwilling to continue in their present positions, we may not be able to hire satisfactory replacements and our business may be adversely affected. In addition, the process of hiring new managers with the required combination of skills and attributes may be time-consuming and competitive. We may not be able to attract additional qualified persons to complement our expansion plans. As a result, our business and results of operations may be adversely affected.


We are a capital intensive business and our operations could be adversely affected if we fail to maintain sufficient levels of working capital.

We expend a significant amount of cash in our operations, principally on the purchase of raw materials such as unsmoked rubber sheets, cup lumps and field latex, the Natural Rubber Products which we purchase from third party producers and our joint venture entity, Thai Tech Rubber, from time to time, to meet demand from customers, and the storage of the Natural Rubber Products to facilitate our sales in overseas markets. The working capital cycle for the Natural Rubber Products that we produce, from the purchase of raw materials to the receipt of payment from our customers, is approximately two to four months. We may also require substantial capital expenditures to maintain, upgrade and expand our processing and storage facilities, logistics services and other facilities to keep pace with competitive developments, technological advances and changing safety and environmental standards in our industry. We fund our operations principally through cash flow from our operations and short and long-term bank loans.

As at 31 December 2011, we had cash and cash equivalents of approximately Baht 2,273.0 million and the majority of our total borrowings comprised short-term borrowings. We can provide no assurance that we will not experience negative cash and cash equivalents in the future. In the event that we are unable to obtain or secure sufficient borrowings or generate sufficient revenue from our operations, or if we fail to maintain sufficient cash, we may not have sufficient cash flow to fund our operations and our business and operating results will be adversely affected. Difficult conditions in the global credit markets could adversely impact the cost or other terms of our existing financing.

As at 31 December 2011, we have an aggregate of Baht 18,010.5 million in short and long term bank loans, accounting for approximately 85.6% and 14.4% of the aggregate amount of bank loans respectively, with interest rates ranging from 1.1% to 7.7% per annum depending on the currency on which the loans are denominated. Difficult conditions in the global credit markets could adversely impact the cost or other terms of our existing financing as well as our ability to obtain new credit facilities or access the capital markets on favourable terms. A significant increase in our borrowing costs could impair our ability to compete effectively in our business relative to competitors with lower amounts of indebtedness. We may be affected by adverse weather conditions and/or diseases which could lead to price fluctuations and an increase in our operating costs.

Unsmoked rubber sheets, cup lumps and field latex are the primary raw materials for Natural Rubber Products. The availability of these raw materials from suppliers, as well as our ability to harvest field latex from our own rubber plantations in the future, may be adversely affected by unfavourable weather conditions such as drought, floods, prolonged periods of rainfall, storms etc. and/or diseases which has infected the rubber plantations from which suppliers purchase the raw materials or our own rubber plantations in the future. Such events, especially if continued for a prolonged period, could affect the overall yield of such raw materials and consequently lead to price fluctuations. Any substantial decrease in the supply of, and increase in the cost of, raw materials could increase our operating costs, affect

34 A n n u a l R e p o r t 2 0 1 1

our production capacity and consequently have a material adverse effect on our business, financial condition and results of operations. There may be disruptions at our processing facilities as well as the processing facilities of our associates and joint venture entity which would have an adverse effect on our operations and those of our associates and joint venture entity.

Our production processes and those of our associates and joint venture entity require significant use of resources such as water and electricity to power our processing facilities and those of our associates and joint venture entity. Natural disasters, acts of God, a shortage of labour, major or sustained disruptions in the supply of utilities such as water or electricity and other calamities or events beyond our control. For example, the torrential floods occurred in southern Thailand in November 2010 and January 2012 may lead to significant disruption or a cessation in processing at our processing facilities and those of our associates and joint venture entity. Such disruptions would have an adverse effect on our operations and those of our associates and joint venture entity and would result in longer lead-time for processing and delayed delivery to customers. Our Company depends on distributions from our principal operating subsidiaries, associates and joint venture entity which may in turn affect our Companyûs cashflow

Our Company is dependent on distributions from our principal operating subsidiaries, associates and joint venture entity to meet our financial obligations, including the payment of principal and interest of our indebtedness.

Our Company will receive distributions made by our subsidiaries, associates and joint venture entity based on our ownership interest. However, should revenues or operating performance of our principal operating subsidiaries, associates and joint venture entity be decreased, the amount of distributions in terms of both rate and value made by such principal operating subsidiaries, associates and joint venture entity will decline. Accordingly, our Companyûs cashflow might be adversely affected. Our Group may be adversely affected by the imposition and enforcement of more stringent environmental regulations.

Our Group is subject to a variety of laws and regulations that promote environmentally and socially sound operating practices. Our Groupûs principal environmental concerns relate primarily to the discharge of effluent resulting from the processing of natural rubber. Any environmental claims or the failure to comply with any present or future regulations could result in the assessment of damages or the imposition of fines, the suspension or a cessation of our Groupûs operations.

Environmental regulations and social practices in the countries in which our Group operates tend to be less stringent than those in developed countries. It is possible that these regulations and/or social practices could become more stringent in the future and consequently have an adverse effect on our operations and financial condition. Any failure to comply with the laws and regulations could subject our Group to liabilities which may affect our business, financial condition, results of operations and prospects.


The demand for Natural Rubber Products could be affected by the emergence of synthetic rubber substitutes.

Our sales of Natural Rubber Products, which are produced from natural rubber, accounted for 98.2% of our Groupûs revenue for the financial year ended 31 December 2011. There are a variety of synthetic rubber substitutes available in the market which can be used as substitutes for natural rubber in the manufacture of rubber products. Factors such as increased global demand for rubber, volatile pricing of natural rubber, increased natural rubber price compared to synthetic rubber, long transport distances, risks of supply disruption driven by political events, regional constraints and seasonal supply patterns may lead to an increase in demand for such synthetic rubber substitutes. Any resulting decrease in demand for Natural Rubber Products may have a material adverse effect on our business, financial condition and results of operations. Expiry of concessionary tax rates and/or exempt tax status for certain of our subsidiaries and associates will have an adverse impact on our profitability.

Our subsidiary, Sri Trang International, enjoys certain tax benefits under the Global Trader Programme launched by International Enterprise Singapore, pursuant to which Sri Trang International is only taxed on 10.0% of its qualifying income (i.e. income which is derived from offshore sales or sales to companies under the Global Trader Programme).

In addition, our Company and certain of our subsidiaries and associates which are incorporated in Thailand have been granted certain privileges, including exemption from certain taxes, at various times by the Board of Investment of Thailand, in relation to our respective operations

In the event of any expiry of such tax benefits, Sri Trang International, our Company and our relevant subsidiaries and associates which are incorporated in Thailand will be liable to the applicable taxes at the prevailing rates and accordingly, there will be an adverse impact on our profitability. 2. Risks Relating to the Countries in Which We Operate Economic, political, legal and regulatory conditions in the countries in which we operate may materially and adversely affect our business, financial condition, results of operations, prospects and the market price of our Shares.

We have operations in and investments in countries such as Thailand, Singapore, USA, Indonesia, and the PRC, each of which contributed 61.2%, 28.4%, 6.1%, 3.4%, and 0.9% of total revenues, respectively. Accordingly, we are subject to the risks associated with our business activities in these countries. Our business, financial condition, results of operations and prospects may be materially and adversely affected by a variety of conditions and developments in these countries including: ë inflation, interest rates and general economic conditions; ë civil unrest, military conflict, terrorism, change in political climate and general security concerns; ë changes in legal and regulatory conditions; ë changes in duties payable and taxation rates; ë natural disasters; ë imposition of restrictions on foreign currency conversion or the transfer of funds; or ë expropriation or nationalisation of private enterprise or confiscation of private property or assets.

Should any of the aforesaid risks materialise and we are unable to adapt our business strategies or operations accordingly, our business, financial condition, results of operations and prospects may be materially and adversely affected.

36 A n n u a l R e p o r t 2 0 1 1

Capital Structure


Capital Structure Information on Share Capital and Shareholding of STA As of 5 March 2012

Share Capital Authorised Share Capital : Baht 1,280,000,000 Issued and fully paid-up Share Capital : Baht 1,280,000,000 (representing 1,280,000,000 ordinary shares with a par value of Baht 1 each) Class of Shares : Ordinary shares with a par value of Baht 1 each Voting Rights : One vote per share Distribution of Shareholdings As of 5 March 2012

Size of shareholdings Number of shareholders % Number of shares % 1 - 999 1,858 10.34 765,315 0.06 1,000 - 10,000 11,618 64.67 48,890,620 3.82 10,001 - 1,000,000 4,390 24.43 269,812,467 21.08 1,000,0001 and above 100 0.56 960,531,598 75.04 Total 17,966 100.00 1,280,000,000 100.00

Note : Includes shareholders holding through CDP

Public Float Based on information available to the Company, approximately 58.14% of the Companyûs shares are held in the hands of the public as of 5 March 2012. Accordingly, the Company has complied with Rule 723 of the Listing Manual. Substantial Shareholders (Holding 5% and above) (As of 5 March 2012)

Direct interest Deemed interest Number of shares % Number of shares %

STH(1) 246,852,060 19.29 - - Dr. Viyavood Sincharoenkul(2) 168,523,970 13.17 255,302,060 19.95

Notes : (1) The largest group of shareholders in STH is the Sincharoenkul family which holds 4,924,140 shares, representing 55.96% of

the total issued and paid up shares in STH. Dr. Viyavood Sincharoenkul is interested in approximately 31.7% of the total

issued and paid up shares in STH. Certain directors of STH are also directors of our Company (2) Dr. Viyavood Sincharoenkul is deemed interested in the 8,450,000 shares held by his wife and the 246,852,060 shares held

by STH.

38 A n n u a l R e p o r t 2 0 1 1

Top Twenty Largest Shareholders of STA Based on information available to STA, the top twenty largest shareholders of STA as of 5 March 2012 are as follows:

Name No. of Shares %

1. STH 246,852,060 19.29 2. Dr. Viyavood Sincharoenkul 168,523,970 13.17 3. Mr. Aram Sirisuwat 54,787,505 4.28 4. CITIBANK NOMS SûPORE PTE LTD 44,980,000 3.51 5. Thai NVDR Co., Ltd 42,926,231 3.35 6. CITIBANK NOMINEES SINGAPORE PTE LTD-MANTARAY INVESTMENTS (MAURITIUS) PTE LTD 22,950,000 1.79 7. Mr. Veerasith Sinchareonkul 22,441,000 1.75 8. Mr. Somwang Sincharoenkul 18,913,305 1.48 9. Mr. Kitichai Sincharoenkul 14,250,000 1.11 10. Mr. Tsai Wu-Ying 13,153,420 1.03 11. Ms. Suwanna Kowitsopol 12,300,000 0.96 12. Southland Rubber Co., Ltd. 11,605,920 0.91 13. UOB Kay Hian Private Limited 10,000,000 0.78 14. RAFFLES NOMINEES (PTE) LTD 9,851,000 0.77 15. DBS NOMINEES PTE LTD 9,312,000 0.73 16. Mr. PAUL SUMADE LEE 8,906,955 0.70 17. Mrs. Promsuk Sinchareonkul 8,450,000 0.66 18. Mrs. Sungai Cherdkiatgamchai 8,357,875 0.65 19. STATE STREET BANK AND TRUST COMPANY FOR AUSTRALIA 8,224,600 0.64 20. CITIBANK INTERNATIONAL PLC (LUXEMBOURG BRANCH)-UBS LUXEMBOURG S.A. 7,706,000 0.60 Total 744,491,841 58.16

Note : Information obtained from TSD and CDP

Directorsû Interests The Directors holding office as of 31 December 2011 had the following interests in the ordinary shares of the Company as of 31 December 2011 below:

As of 31 December 2011 Name Direct interest Deemed interest

Dr. Viyavood Sincharoenkul (1), (2) 168,523,970 255,302,060 Mr. Prasit Panidkul 9,181,475 - Mr. Chaiyos Sincharoenkul(3) 7,410,825 4,300,000 Mr. Anan Pruksanusak 100,000 - Mr. Kitichai Sincharoenkul(4) 14,250,000 3,246,500 Mr. Paul Sumade Lee(5) 8,906,955 18,615,075 Mr. Veerasith Sinchareonkul 22,441,000 - Mr. Prakob Visitkitjakarn(6) 450,060 17,940 Mr. Kriang Yanyongdilok - - Mr. Samacha Potavorn - - Mr. Neo Ah Chap(7) - 1,100,000


Notes: (1) The largest group of shareholders in STH is the Sincharoenkul family which holds 4,924,140 shares, representing 55.96% of

the total issued and paid-up shares in STH. Dr. Viyavood Sincharoenkul is interested in approximately 31.7% of the total

issued and paid-up shares in STH. Certain directors of STH are also directors of our Company. (2) Dr. Viyavood Sincharoenkul is deemed interested in the 8,450,000 shares held by his wife and the 246,852,060 shares held

by STH. (3) Mr. Chaiyos Sincharoenkul is deemed to be interested in the 4,300,000 shares held by his wife. (4) Mr. Kitichai Sincharoenkul is deemed to be interested in the 3,246,500 shares held by his wife. (5) Mr. Paul Sumade Lee is deemed to be interested in the 18,615,075 shares held by his wife. (6) Mr. Prakob Visitkitjakarn is deemed to be interested in the 17,940 shares held by his wife. (7) Mr. Neo Ah Chap is deemed interested in 1,100,000 shares held through Thai NVDR Co., Ltd.

List of Direct Interests of Each Director as of 31 December 2011

Increase (decrease) during the Name Direct Interests Number of Shares accounting period

Dr. Viyavood Sincharoenkul STA 168,523,970 - Nam Hua Rubber 1 - Sadao P.S Rubber 1 - Thai Tech Rubber 1 - Anvar Parawood 1 - Premier System Engineering 1 - Sri Trang Rubber & Plantation 1 - Mr. Prasit Panidkul STA 9,181,475 - Sri Trang Rubber & Plantation 1 - Mr. Chaiyos Sincharoenkul STA 7,410,825 - Thai Tech Rubber 1 - Mr. Anan Pruksanusak STA 100,000 - Sri Trang Rubber & Plantation 1 - Mr. Kitichai Sincharoenkul STA 14,250,000 - Sadao P.S Rubber 1 - Premier System Engineering 1 - Sri Trang Rubber & Plantation 1 - Mr. Paul Sumade Lee STA 8,906,955 - Mr. Veerasith Sinchareonkul STA 22,441,000 - Mr. Prakob Visitkitjakarn STA 450,060 - Mr. Kriang Yanyongdilok STA - - Mr. Samacha Potavorn STA - - Mr. Neo Ah Chap STA 1,100,000 -

Note : This is to comply with the requirement of the PLCA that a director holding shares or debentures of the Company

or an affiliate company held directly by a board member under his name, and shall indicate the total number of

shares increasing or decreasing during a fiscal year (if any).

40 A n n u a l R e p o r t 2 0 1 1

Dividend Policy


Dividend Policy of STA Our policy is to pay a dividend of approximately 30% of our net profit as reported in our Companyûs stand-alone financial statements for each financial year, but not in excess of our retained earnings. In considering the level of dividend payments, we intend to take into account various factors, including: STAûs financial position, results of operations and cash flow; the ability of our subsidiaries, associates and joint venture entities to make dividend payment to STA; STAûs expected working capital requirements to support STAûs future growth; and general economic conditions and such other external factors that STA believes will have an impact on the business operations of STA. Dividend Policy of Our Subsidiaries The dividend payment of our subsidiaries shall be approved by the Board of Directors of each subsidiary and shall be presented to the shareholdersû meeting for approval. The Company does not fix the percentage of dividend payment. The dividend payment made by our subsidiaries will depend on the business profits, financial position and the future investment plans of each subsidiary and shall be according to its Articles of Association and the relevant laws.

42 A n n u a l R e p o r t 2 0 1 1

Management Structure Committees of STA As of 31 December 2011, the corporate structure of STA consists of five committees which are the Board of Directors of STA, the Audit Committee, the Executive Committee, the Nominating Committee and the Remuneration Committee. The Board of Directors of STA As of 31 December 2011, our Board of Directors consists of 11 directors as follows:

Name Position Remarks

1. Mr. Viyavood Sincharoenkul Chairman /Managing Director/ Executive Director Executive Committee 2. Mr. Prasit Panidkul Vice-chairman/ Executive Director Executive Committee 3. Mr. Chaiyos Sincharoenkul Director/ Executive Committee Executive Director 4. Mr. Anan Pruksanusak Director/ Executive Committee Executive Director 5. Mr. Kitichai Sincharoenkul Director/ Executive Committee/ Executive Director Nominating Committee member 6. Mr. Paul Sumade Lee Director/ Executive Committee Executive Director 7. Mr. Veerasith Sinchareonkul Director Non-Executive Director 8. Mr. Prakob Visitkitjakarn Lead Independent Director/ Chairman of the Non-Executive Director Audit Committee/ Chairman of the Remuneration Committee 9. Mr. Kriang Yanyongdilok Independent Director/ Non-Executive Director Audit Committee member/ Chairman of the Nominating Committee/ Remuneration Committee member 10. Mr. Samacha Potavorn Independent Director/ Non-Executive Director Audit Committee member/ Nominating Committee member/ Remuneration Committee member 11. Mr. Neo Ah Chap Independent Director Non-Executive Director Mrs. Pacharin Anuwongwattanachai is a secretary to the Board of Directors of the Company.

Authorized Directors of STA

Mr. Viyavood Sincharoenkul, Mr. Chaiyos Sincharoenkul, Mr. Prasit Panidkul, Mr. Anan Pruksanusak, Mr. Kitichai Sincharoenkul, Mr. Veerasith Sinchareonkul, and Mr. Lee Paul Sumade, any two of these seven directors jointly sign with STAûs seal affixed.


Engagement of Mr. Somwang Sincharoenkul as Honorary Adviser

The Board of Directors Meeting of STA No. 4/2010 held on 6 May 2010 resolved to approve the engagement of Mr. Somwang Sincharoenkul as the Honorary Adviser of STA. Such advisory services are as follows:

1. Advise on the formulation of the Companyûs goals and vision. 2. Advise on the Companyûs investment and business plans and the business operation policy

of the Company, both domestically and internationally. 3. Advise on strategies in relation to the use of raw materials, procurement, price and quantity

in each period pursuant to the local conditions. 4. Advise on dealings with communities, local authorities and government agencies in the

southern part of Thailand.

Mr. Somwang Sincharoenkul does not have any participation in the Companyûs operation. His remuneration during 2 years starting from 6th May 2010 to 6th May 2012 is Baht 400,000 per month or Baht 4,800,000 per year. This transaction is considered as a connected transaction which continues to be carried out in the future.

As the Honorary Advisor period of Mr. Somwang Sincharoenkul will be ended on 6th May 2012, the Board of Directors meeting no.2/2012 held on 9th March 2012 have approved the extension period of his services for two years which will be ended on 6th May 2014. The remuneration rate remains the same at Baht 400,000 per month or Baht 4,800,000 per year. Scope of Duties and Responsibilities of the Board of Directors of STA

STA has determined the scope of duties and responsibilities of the Board of Directors as follows:

1. Duties of the Board of Directors

The Board of Directors of STA shall perform its duties with knowledge, ability, and experience to benefit the business operation of the Company. The Board of Directors shall also perform its duties in accordance with STAûs objectives, and its Articles of Association and shareholderûs resolutions with due care in order to protect the interests of STA and be responsible to STA shareholders. According to the Articles of Association of STA, a meeting of the Board of Directors shall be held at least once every three months.

2. Review and Approve the Appropriate Policies

The Board of Directors of STA is responsible for reviewing and approving STAûs policies and business direction as proposed by the Board of Directors.

3. Supervision of the Executive Committee

The Board of Directors of STA shall supervise the Executive Committee to follow the policies setting out efficiently and to notify the Board of Directors to propose material matters in relation to the significant business operations of STA and connected transactions to be in accordance with the regulations of the SEC, the SET, and the SGX-ST.

If necessary, the Board of Directors of STA may appoint advisor(s) to advise or provide professional opinions to support the significant business decisions of STA.

44 A n n u a l R e p o r t 2 0 1 1

4. Arrange the Efficient Internal Control and Internal Audit Systems

The Board of Directors of STA shall arrange efficient internal control and internal audit systems, in particular in respect of transactions in which the director(s) have an interest and are required to be approved by the shareholdersû meeting pursuant to the law and the SET regulations.

In any case, the assignment of the duties and responsibilities of the Board of Directors of STA shall not constitute an authorization or sub-authorization which may cause the Board of Directors of STA or its assignee to be able to approve any transaction in which such person or other related party (as defined in the Notification of the SEC or the notification of the Capital Market Supervisory Board) may have a conflict of interest or may benefit in any manner, or any other conflict of interest with STA or its subsidiaries, except when the approvals of such transactions are consistent with the policy and criteria approved by the shareholders meeting or the Board of Directors meeting of STA. Composition and Appointment of the Board of Directors of STA

The following is a summary of the composition, appointment, removal or retirement from the Board of Directors of STA set forth in the Articles of Association: 1. The number of members of the Board of Directors of STA shall be determined by a shareholders

meeting but shall be not less than five persons and not less than one-half of the total number of Directors must reside in the Kingdom of Thailand.

2. Directors shall be elected at a shareholders meeting in accordance with the following criteria and procedures:

(1) Each shareholder shall have one vote for one share. (2) A shareholder must use all of his/her votes in (1) to elect one or several persons as

Director or Directors, however, he or she may not split his/her votes unequally between any person in any number.

(3) The persons who receive the most votes shall be elected as Directors, in the number of Directors required or to be elected on the relevant occasion. In the event that votes of two or more nominees, are equal in number, causing the number of Directors required or to be elected on such relevant occasion to be exceeded, the chairman of the meeting shall have a casting vote.

3. At every annual general meeting, one-third of the Directors, or, if the number of Directors is not a multiple of three, then the number nearest to one-third, shall retire from office.

The Directors who are to retire from office in the first and the second years after registration of the Company shall be drawn by lots. In subsequent years, the Directors who have been holding office for the longest time shall retire.

4. Any Director wishing to resign from office shall submit his or her resignation letter to STA. The resignation shall be effective from the date on which STA receives the resignation letter.

5. The shareholders meeting may pass a resolution to remove any Director from office prior to rotation, by a vote of not less than three-fourths of the number of the shareholders attending the meeting and having the right to vote, and whose shares represent a total of not less than one half of the number of shares held by the shareholders attending the meeting and having the right to vote.


The Board currently comprises eleven Directors, four of whom are Independent Directors. The Company has six Executive Directors and five Non-executive Directors. The composition of the Board takes into consideration the nature and scope of the Groupûs operations to allow constructive discussion, a diversity and balance of judgment for effective decision making. The Directors have invaluable experience in accounting, finance, business management, strategic planning, marketing, law and the rubber industry.

Selection of Independent Director

Qualifications of Independent Director

1. Holding shares not exceeding one percent of the total number of shares with voting rights of STA, its parent company, subsidiary company, associate company, major shareholder or controlling person of STA, including shares held by related persons of such independent director.

2. Neither being nor having been an executive director, employee, staff, advisor who receives salary, or a controlling person of STA, its parent company, subsidiary company, associate company, same-level subsidiary company, major shareholder or controlling person of STA, unless the foregoing status ended not less than two years prior to the date of filing an application with the Office of the SEC. Such prohibited characteristic shall not include the case where the independent director used to be a government official or advisor of a government unit which is a major shareholder or controlling person of STA.

3. Not being a person related by blood or legal registration as father, mother, spouse, sibling, and child, including spouse of child, director, executive, major shareholder, controlling person, or person to be nominated as director, executive or controlling person of STA or its subsidiary company.

4. Not have an immediate family member including spouse, child, adopted child, stepchild, brother, sister, and parent who is, or has been in any of the past three financial years, employed by the Company or any of its related companies as a senior executive officer whose remuneration is determined by the remuneration committee.

5. Not being a director or having an immediate family member including spouse, child, adopted child, stepchild, brother, sister, and parent accepting any compensation from STA or any of its subsidiaries other than compensation for board service for the current or immediate past financial year.

6. Neither having nor having had a business relationship with STA, its parent company, subsidiary company, associate company, major shareholder or controlling person, in the manner which may interfere with his independent judgement, and neither being nor having been a significant shareholder or controlling person of any person having a business relationship with STA, its parent company, subsidiary company, associate company, major shareholder or controlling person, unless the foregoing relationship ended not less than two years prior to the date of filing an application with the Office of the SEC.

(The term çbusiness relationshipé and the calculation of the value of the business relationship shall have the same meaning as defined in the Notification of the Capital Market Supervisory Board Re: Application for and Approval of Offer for Sale of Newly Issued Shares).

46 A n n u a l R e p o r t 2 0 1 1

7. Neither being nor having been an auditor of STA, its parent company, subsidiary company, associate company, major shareholder or controlling person of STA, and not being a significant shareholder, controlling person, or partner of an audit firm which employs auditors of STA, its parent company, subsidiary company, associate company, major shareholder or controlling person of STA, unless the foregoing relationship ended not less than two years prior to the date of filing an application with the Office of the SEC.

8. Neither being nor having been a provider of any professional services including those as legal advisor or financial advisor who receives service fees exceeding two million baht per year from STA, its parent company, subsidiary company, associate company, major shareholder or controlling person of STA, and not being a significant shareholder, controlling person or partner of the provider of professional services, unless the foregoing relationship ended not less than two years prior to the date of filing an application with the Office of the SEC.

9. Not being a director appointed as representative of directors of STA, major shareholder or shareholder who is related to a major shareholder.

10. Not undertaking any business in the same nature and in competition to the business of STA or its subsidiary company or not being a significant partner in a partnership or being an executive director, employee, staff, advisor who receives salary or holds shares exceeding one percent of the total number of shares with voting rights of other company which undertakes business in the same nature and in competition to the business of STA or its subsidiary company.

11. Not having any other characteristics which would cause the inability to express independent opinions with regard to STAûs business operations.

The qualifications of the Independent Director shall be in accordance with the definitions as specified in the notification of the Capital Market Supervisory Board.

The Nominating Committee is also guided by the Code of Corporate Governance in determining independence. Executive Committee As of 31 December 2011, the Executive Committee consisted of 6 Directors as shown below.

Name Position

1. Mr. Viyavood Sincharoenkul Chairman of Executive Director 2. Mr. Prasit Panidkul Executive Director 3. Mr. Chaiyos Sincharoenkul Executive Director 4. Mr. Anan Pruksanusak Executive Director 5. Mr. Kitichai Sincharoenkul Executive Director 6. Mr. Paul Sumade Lee Executive Director


Scope of Duties and Responsibilities of the Executive Committee

1. To order, plan, and operate the business of STA to be in accordance with the policies set out by the Board of Directors of STA.

2. To appoint STAûs management to efficiently and transparently manage STAûs businesses. 3. Any two of the Executive Committee members jointly signing and affixing the company seal are

eligible to grant proxies to any person to perform on behalf of STA in respect of any business that will benefit STA.

4. To determine the appropriate employeesû benefits and welfare in compliance with corporate culture and applicable laws.

5. To approve the credit limits of the normal business transactions or other transactions that bind STA.

In any case, the assignment of duties and responsibilities of the Executive Committee shall not constitute an authorization or sub-authorization which may cause the Executive Committee or its assignee to be able to approve any transaction in which such person or other related party (as defined in the Notification of the SEC or the Capital Market Supervisory Board) may have a conflict of interest or may benefit in any manner or any other conflict of interest with STA or its subsidiaries. Such approval must be proposed to the meeting of the Board of Directors and/or the meeting of shareholders, as the case may be, for approval, as stipulated in the Articles of Association of STA or subsidiaries, or any applicable laws. Audit Committee The Audit Committee consists of 3 independent directors and all have the qualifications required by the Capital Market Supervisory Board and the SET. As of 31 December 2011, the Audit Committee consists of the following directors:

Name Position

1. Mr. Prakob Visitkitjakarn Chairman of the Audit Committee 2. Mr. Kriang Yanyongdilok Audit Committee Member 3. Mr. Samacha Potavorn Audit Committee Member Mr. Prakob Visitkitjakarn and Mr. Kriang Yanyongdilok are the Audit Committee members who have sufficient knowledge and experience to review the reliability of financial statements of STA.

Mr. Wittawas Grungtanmuang is a secretary to the Audit Committee. Scope of Duties and Responsibilities of the Audit Committee

1. To assist the Board of Directors in the discharge of its responsibilities on financial and accounting matters (including reviewing STAûs financial reporting process and our Companyûs consolidated financial statements to ensure accuracy and adequacy).

2. To review our Companyûs internal control system and internal audit system to ensure that they are suitable and efficient, to determine an internal audit unitûs independence, as well as to approve the appointment, transfer and dismissal of the chief of an internal audit unit or any other unit in charge of an internal audit.

48 A n n u a l R e p o r t 2 0 1 1

3. To review our Companyûs compliance with the law on securities and exchange, the regulations of the SET and the laws relating to business of STA.

4. To consider, select and nominate an independent person to be STAûs auditor, and to propose such personûs remuneration, as well as to attend a non-management meeting with an auditor at least once a year.

5. To review the connected transactions, interested person transactions or the transactions that may lead to conflicts of interest, to ensure that they are in compliance with the laws and the regulations of the SGX-ST and the SET, and are reasonable and in the best interests of STA.

6. To prepare, and to disclose in our Companyûs annual report, an Audit Committeeûs report which must be signed by the Chairman of the Audit Committee and consist of at least the following information: (1) an opinion on the accuracy, completeness and credibility of the companyûs financial report; (2) an opinion on the adequacy of the companyûs internal control system; (3) an opinion on the compliance with the law on securities and exchange, the regulations of

the SET or the laws relating to the STAûs business; (4) an opinion on the suitability of an auditor; (5) an opinion on the transactions that may lead to conflicts of interests; (6) the number of the Audit Committee meetings, and the attendance at such meetings by

each committee member; (7) an opinion or overview of comments received by the Audit Committee from its performance

of duties in accordance with the charter; and (8) other transactions which, according to the Audit Committeeûs opinion, should be known to

the shareholders and general investors, within the scope of duties and responsibilities assigned by the companyûs board of directors.

7. To commission and review the findings of significant internal investigations and/or consult with the auditor in relation to such findings and report the findings to the Board of Directors of STA in the event that there is any suspected fraud or irregularity or infringement of any law or regulations of Singapore or SGX-ST which has or is likely to have a material impact on our results of operations and/or financial position of STA.

8. To review the audit plans, scope of work and results of our audits compiled by our internal and external auditors.

9. To review the co-operation given by our officers to the external auditors. 10. To review our risk management structure (including all hedging policies) and any oversight of our

risk management processes and activities to mitigate and manage risk at acceptable levels determined by our Directors.

11. To perform any other act as delegated by the Board of Directors and approved by the Audit Committee.

Apart from the duties listed above, the Audit Committee is required to commission and review the findings of internal investigations into matters where there is any suspected fraud or irregularity, or failure of internal controls or infringement of any law, rule or regulation which has or is likely to have a material impact on the results of operations and/or financial position of STA.


Nominating Committee As of 31 December 2011, the Nominating Committee of STA consists of 3 Directors as follows:

Name Position

1. Mr. Kriang Yanyongdilok Chairman of the Nominating Committee 2. Mr. Samacha Potavorn Nominating Committee Member 3. Mr. Kitichai Sincharoenkul Nominating Committee Member Scope of Duties and Responsibilities of the Nominating Committee

1. Reviewing and assessing candidates for directorships (including executive directorships) before making recommendations to our Board for the appointment of Directors.

2. Reviewing and recommending nominations for appointment, re-appointment or re-election or renewal of appointment of our Directors having regard to the Directorûs contribution and performance.

3. Determining annually whether or not a Director is independent. 4. Deciding whether or not a Director is able to and has been adequately carrying out his duties as

a director. Certain factors considered by the Nominating Committee in order to carry out their responsibilities above include: ë independence of mind; ë capability of the individual and how it meets the needs of the Company and simultaneously

complements the skill set of the other Board members; ë experience and track record as directors in other companies; and ë ability to commit time and effort toward discharging his responsibilities as a Director.

Nomination of Directors The Nominating Committee will nominate candidates who have appropriate qualifications to be a director. At the end of the office term of any director or when it is necessary to appoint more directors, the Nominating Committee will jointly discuss and consider determining the person(s) with appropriate experience, knowledge and ability to benefit STA to be a director of STA. The nomination of the aforementioned person(s) will be proposed to the meeting of the Board of Directors of STA and the meeting of shareholder respectively for further approval.

The resolution of the meeting of shareholders for an approval of directors will be the majority of votes of the shareholders attending the meeting and having the right to vote.

50 A n n u a l R e p o r t 2 0 1 1

Remuneration Committee As of 31 December 2011, the Remuneration Committee consists of 3 Directors as follows:

Name Position

1. Mr. Prakob Visitkitjakarn Chairman of the Remuneration Committee 2. Mr. Kriang Yanyongdilok Remuneration Committee Member 3. Mr. Samacha Potavorn Remuneration Committee Member Scope of Duties and Responsibilities of the Remuneration Committee

Our Remuneration Committee is responsible, among other things, for recommending to our Board of Directors a framework and criteria of remuneration for the Directors and executive officers, and for recommending specific remuneration packages for each Director and the Managing Director and to perform any other act as delegated by the Board of Directors. Details of Attendance for the Meetings of the Board of Directors and Board Committees Details of the meeting attendance for the meetings of the Board of Directors, Executive Committee and Audit Committee in 2010 and 2011 are as follows: No. of Attendances No. of Attendances No. of Attendances No. of Attendances No. of Attendances

Board of Directors Executive Audit Nominating Remuneration

Name of STA Committee Committee Committee3 Committee3

2010 2011 2010 2011 2010 2011 2010 2011 2010 2011

1. Mr. Viyavood Sincharoenkul 8/9 7/7 3/3 8/8 - - - - - -

2. Mr. Prasit Panidkul 8/9 7/7 3/3 8/8 - - - - - -

3. Mr. Chaiyos Sincharoenkul 9/9 7/7 3/3 8/8 - - - - - -

4. Mr. Anan Pruksanusak 9/9 6/7 3/3 8/8 - - - - - -

5. Mr. Kitichai Sincharoenkul 9/9 7/7 3/3 8/8 - - - 1/1 - -

6. Mr. Paul Sumade Lee (1) 3/4 7/7 3/3 8/8 - - - - - -

7. Mr. Veerasith Sinchareonkul(2) 6/6 7/7 - - - - - - - -

8. Mr. Prakob Visitkitjakarn 9/9 7/7 - - 8/8 7/7 - - - 1/1

9. Mr. Kriang Yanyongdilok 9/9 7/7 - - 8/8 7/7 - 1/1 - 1/1

10. Mr. Samacha Potavorn 9/9 7/7 - - 8/8 7/7 - 1/1 - 1/1

11. Mr. Neo Ah Chap (1) 4/4 6/7 - - - - - - - -

Notes : (1) Appointed as a new director of STA at the Extraordinary General Meeting of Shareholders No. 1/2010 held on 28 June

2010. (2) Appointed as a new director of STA at the 2010 Annual General Meeting of Shareholders held on 28 April 2010. (3) The Nominating Committee and the Remuneration Committee were recently established in July 2010; therefore, there were

no meetings of both Committees during 2010.


Executives (pursuant to the definition of çExecutiveé in the SECûs notification no. GorJor. 17/2551 re: Determination of Definitions under Notifications relating to Issuance and Offering of Securities) As of 31 December 2011, the list of Executives of STA is as follows:

Name Position

1. Mr. Viyavood Sincharoenkul Chairman and Managing Director 2. Mr. Prasit Panidkul Vice Chairman 3. Mr. Chaiyos Sincharoenkul Director 4. Mr. Anan Pruksanusak Director 5. Mr. Kitichai Sincharoenkul Director and Manager of Legal and Administration 6. Mr. Paul Sumade Lee Director and Manager of Sales and Marketing 7. Mr. Veerasith Sinchareonkul Director 8. Mr. Prakob Visitkitjakarn Independent Director and Chairman of the Audit Committee 9. Mr. Kriang Yanyongdilok Independent Director and Member of the Audit Committee 10. Mr. Samacha Potavorn Independent Director and Member of the Audit Committee 11. Mr. Neo Ah Chap Independent Director 12. Mrs. Prapai Srisuttiphong Group Procurement Manager 13. Mr. Chalermpop Khanjan Co-Group Production Manager 14. Mr. Arsom Aksornnam Co-Group Production Manager 15. Mr. Chaidet Pruksanusak Group Quality Assurance Manager 16. Mr. Rattapong Laparojkit Co-Group Engineering Manager 17. Mr. Phanlert Wangsuphadilok Co-Group Engineering Manager 18. Mr. Udom Pruksanusak Co-Group Human Resource Manager 19. Ms. Nuchanart Chaiyarat Co-Group Human Resource Manager 20. Ms. Lim Li Ping Controller 21. Mr. Patrawut Panitkul Chief Financial Officer Note : çExecutiveé means a director, manager or the next four executives succeeding the manager, a person holding an

equivalent position to the fourth executive, including a person holding the position of manager or equivalent in the

accounting or finance departments

Scope of Authorities and Responsibilities of the Managing Director 1. Approve any juristic act binding the company for the normal business operation of STA in an

amount not exceeding Baht 200,000,000. 2. Issue and amend the rules, orders, and work rules of STA, for example, the acceptance,

appointment, removal and disciplining of staff and employees, and the determination of salary and other monies, including compensation and other welfare.

3. Determine the salary rate and other remuneration, including expenses rate and facilities of the manager or equivalent for proposing to the Executive Committee for further approval.

4. Administer STA pursuant to the resolutions and policies of the Board of Directors of STA.

52 A n n u a l R e p o r t 2 0 1 1

5. Propose significant matters to the Board of Directors of STA or the meeting of shareholders for further approval or other appropriate action.

6. Study the feasibility of new projects and consider and approve the projects as delegated by the Board of Directors of STA and the Executive Committee.

7. Perform other matters as delegated by the Board of Directors of STA and/or the Executive Committee from time to time.

However, the abovementioned approvals shall not be given in a way that may cause the Managing Director or his authorized representative to be able to approve any transaction in which he himself or any related person has or may have a conflict of interest with STA or its subsidiaries as defined in the Notification of the SEC or the Capital Market Supervisory Board. Company Secretary The Board of Directors of STA resolved to approve the appointment of Mrs. Pacharin Anuwongwattanachai as the Company Secretary (the çCompany Secretaryé) having the duties and responsibilities as provided in the Securities and Exchange Act, including providing advice on and ensuring compliance with relevant laws and regulations which the Board is required to know and follow. The Company Secretary attends and documents all Board meetings and ensures Board procedures are followed. The appointment and removal of the Company Secretary is subject to the approval of the Board. Remuneration of Directors and Executive Officers Financial Remuneration (1) Directorsû Fees For the fiscal year ended 31 December 2011, STA paid the directorsû fees to the Directors in the amount of Baht 5,472,000 for services rendered by them in forms of monetary remuneration. The details are as follows:

Name Amount of Directorsû Fees (Baht)

Fiscal year ended 31 December 2011

1. Mr. Viyavood Sincharoenkul 576,000 2. Mr. Prasit Panidkul 432,000 3. Mr. Chaiyos Sincharoenkul 432,000 4. Mr. Anan Pruksanusak 432,000 5. Mr. Kitichai Sincharoenkul 432,000 6. Mr. Paul Sumade Lee 432,000 7. Mr. Veerasith Sinchareonkul 432,000 8. Mr. Prakob Visitkitjakarn 720,000 9. Mr. Kriang Yanyongdilok 576,000 10. Mr. Samacha Potavorn 576,000 11. Mr. Neo Ah Chap 432,000


(2) Remuneration of the Directors and Executive Officers For the fiscal year ended 31 December 2011, STA paid remuneration to the Executive Directors and Executive Officers, totaling 19 persons, in the amount of Baht 192,184,217. Such remuneration was in the form of salary, bonus and other compensation. Note : çExecutiveé means manager(s), first four executives immediately followed the manager and all the fourth

executives.

Fees and compensation paid by our Company to each of our Directors and each of the top five Executive Officers of STA (for services rendered by them in all capacities to STA and our subsidiaries), in remuneration bands(1) for year ended 31 December 2011, are as follows:

Amount of Directorûs Salary

Performance Total

Name Remuneration Fees based Paid by STA (%)

(%) bonuses (%)

(%)

1. Mr. Viyavood Sincharoenkul Band N 0.75 25.54 73.72 100 2. Mr. Prasit Panidkul Band B 4.52 53.28 42.20 100 3. Mr. Chaiyos Sincharoenkul Band B 5.53 52.72 41.75 100 4. Mr. Anan Pruksanusak Band A 23.22 42.85 33.94 100 5. Mr. Kitichai Sincharoenkul Band B 4.15 60.40 35.45 100 6. Mr. Paul Sumade Lee Band I 0.83 15.55 83.62 100 7. Mr. Veerasith Sinchareonkul Band A 100 - - 100 8. Mr. Prakob Visitkitjakarn Band A 100 - - 100 9. Mr. Kriang Yanyongdilok Band A 100 - - 100 10. Mr. Samacha Potavorn Band A 100 - - 100 11. Mr. Neo Ah Chap Band A 100 - - 100 Top five Executive Officers 1. Ms. Lim Li Ping Band B - 51.69 48.31 100 2. Mrs. Prapai Srisuttiphong Band A - 61.01 38.99 100 3. Mr. Chalermpop Khanjan Band A - 61.01 38.99 100 4. Mr. Rattapong Laparojkit Band A - 61.01 38.99 100 5. Mr. Chaidet Pruksanusak Band A - 61.01 38.99 100

Notes : (1) Remuneration bands: Band A means between SGD 1 and SGD 250,000. Band B means between SGD 250,001 and SGD 500,000. Band C means between SGD 500,001 and SGD 750,000. Band D means between SGD 750,001 and SGD 1,000,000. Band E means between SGD 1,000,001 and SGD 1,250,000. Band F means between SGD 1,250,001 and SGD 1,500,000. Band G means between SGD 1,500,001 and SGD 1,750,000. Band H means between SGD 1,750,001 and SGD 2,000,000. Band I means between SGD 2,000,001 and SGD 2,250,000. Band J means between SGD 2,250,001 and SGD 2,500,000. Band K means between SGD 2,500,001 and SGD 2,750,000. Band L means between SGD 2,750,001 and SGD 3,000,000. Band M means between SGD 3,000,001 and SGD 3,250,000. Band N means between SGD 3,250,001 and SGD 3,500,000.

54 A n n u a l R e p o r t 2 0 1 1

Remuneration bands are based on the average (Baht: SGD) foreign exchange rates for the stipulated year, being SGD 1 to Baht 24.2591. Compensation includes benefit-in-kinds and compensation that has already been paid includes any deferred compensation accrued for the financial year in question and payable at a later date. The estimated amount of compensation payable in the current financial year includes bonus or profit-sharing plan or any other profit-linked agreement or arrangement.

Sri Trang International Pte. Ltd. have entered into employment agreements with each of our Directors, Dr. Viyavood Sincharoenkul and Mr. Paul Sumade Lee. Each of these employment agreements does not have a fixed term of employment.

Pursuant to their respective employment agreements, each of Dr. Viyavood Sincharoenkul and Mr. Paul Sumade Lee will be entitled to the following:

ë a monthly salary and a variable bonus, as determined by the Profit Incentive Scheme (as defined below); and

ë coverage of all reasonable business expenses incurred or paid for during the term of employment, in connection with the discharge of their duties to Group.

Profit Incentive Scheme

Each of our Directors, Dr. Viyavood Sincharoenkul and Mr. Paul Sumade Lee are entitled to participate in a profit incentive scheme (the çProfit Incentive Schemeé) in respect of each financial year of our subsidiary, Sri Trang International.

Under the Profit Incentive Scheme, in respect of each financial year, if the board of directors of Sri Trang International determines that there is a surplus (çSurplusé) after deducting (i) 10% of Sri Trang Internationalûs issued and paid-up capital of US$ 8 million, or such other amount as may be determined by the board of directors of Sri Trang International, at their sole discretion, from time to time, (ii) 5% of any retained profits as at the beginning of the relevant financial year and (iii) accumulated losses as at the beginning of the relevant financial year from Sri Trang Internationalûs profit after tax (as reflected in its audited accounts), 20% of such Surplus will be payable under the Profit Incentive Scheme (çProfit Incentiveé). Retirement and Re-election of Directors

A retiring Director shall be eligible for re-election. The Directors to retire in every year shall be those, subject to retirement by rotation, who have been longest in office since their last re-election or appointment. The details of the retirement and re-election of the Directors are set out as follows:


Date of first Date of last Name of Director Position appointment re-election to the Board as Director

1. Mr. Viyavood Sincharoenkul Chairman and Managing Director 27 December 1993 28 April 2010 2. Mr. Prasit Panidkul Vice-chairman 27 December 1993 28 April 2011 3. Mr. Chaiyos Sincharoenkul Director 27 December 1993 28 April 2011 4. Mr. Anan Pruksanusak Director 5 November 1993 28 April 2011 5. Mr. Kitichai Sincharoenkul Director and Manager of Legal 10 April 1995 29 April 2009 and Administration 6. Mr. Paul Sumade Lee Director and Manager of Sales 28 June 2010 - and Marketing 7. Mr. Veerasith Sinchareonkul Director 28 April 2010 - 8. Mr. Prakob Visitkitjakarn Independent Director and Chairman 27 December 1993 28 April 2010 of the Audit Committee 9. Mr. Kriang Yanyongdilok Independent Director and Member 25 January 2000 28 April 2011 of the Audit Committee 10. Mr. Samacha Potavorn Independent Director and Member 1 February 2008 29 April 2009 of the Audit Committee 11. Mr. Neo Ah Chap Independent Director 28 June 2010 -

56 A n n u a l R e p o r t 2 0 1 1

Corporate Governance


CORPORATE GOVERNANCE The Board of Directors of STA has conducted the business operation appropriately and effectively in accordance with its objectives by utilizing expertise, diligence, and due care to protect the interests of the Company and to comply with the laws, objectives, and the Articles of Association. The Board of Directors of STA has also followed the Principles of Good Corporate Governance for Directors of Listed Companies and the Principles of Good Corporate Governance for Listed Companies of 2006 as well as the Code of Corporate Governance. The roles and responsibilities of the Board of Directors of STA are all managed with due care, in particular in the process of decision making. Careful consideration is given using reasonable judgment based on honesty, transparency, ethics, and the concern of stakeholders as well as all aspects of the best interests of shareholders. Principles of Good Corporate Governance under the Principles of Good Corporate Governance for Listed Companies of 2006 STA has established principles for good corporate governance in accordance with the Principle of Good Corporate Governance for Listed Companies of 2006 as prescribed by the SET. The details of 5 principles of good corporate governance areas are as follows: 1. Rights of Shareholders

STA always realizes that the main factors for building shareholdersû trust and confidence for investing in the businesses of STA are the application of policies and operations that protect the fundamental rights of the shareholders as well as the equality of all shareholders as prescribed by the laws, and encouraging the shareholders to exercise their fundamental rights. For example:

(1) Right to Receive Profit Sharing in the Form of Dividend: STA has a policy on dividend payment which is based on careful consideration of the financial position, results of operation and cash flow of STA, the ability of our subsidiaries, associates and joint venture entity to make dividend payment, STAûs expected working capital requirements to support the future growth of STA, the economic situation, and other external factors that STA expects will have an impact on its operations. In order to manage the business operation efficiently, the dividend payment policy is at approximately 30 percent of the net profit.

(2) Right to Attend the Shareholdersû meeting: STA pays great attention to the sufficiency of information so that the shareholders are able to make a well-informed decision in the shareholdersû meeting, including casting their votes and expressing their opinions on significant changes and the election of the Board of Directors of STA, based on information which is accurate, complete, transparent, and equally shared.

Where the STAûs shares are held through CDP, CDP will be the only holder on record of such shares. Accordingly, as a matter of Thai law, CDP will be the only person or entity recognised as a shareholder and legally entitled to vote on any matter to be submitted to the vote of the Companyûs shareholders at a general meeting of shareholders.

58 A n n u a l R e p o r t 2 0 1 1

CDP has appointed a Thai custodian to safekeep all the shares held by CDP. Such Thai custodian will act as CDPûs proxy during a general meeting of shareholders and CDP will instruct such Thai custodian to split its votes in accordance with the instructions that CDP receives from investors holding shares through CDP. However, shareholders who desire to attend shareholdersû meetings and exercise their voting rights under their names with regard to the shares beneficially owned by them will be required to transfer their shares out of the CDP system and have the share transfer registered in the share register book. In addition, a shareholder who transfers the Companyûs shares out of the CDP system will not be able to trade such shares on the SGX-ST unless he first transfers such shares back into the CDP system.

In order to provide the equivalent of the annual general meeting to shareholders in Singapore holding shares through the CDP, STA will hold an annual investor forum in Singapore at around the same time as the annual general meeting is held in Thailand, to enable as even a level of access to information as possible at the time of such forum. Shareholders will be given the opportunity to air their views and ask Directors any questions they may have. The representation of the Board at the forum will include at the minimum, the Managing Director, two other Executive Directors and two Independent Directors, one of whom will be the Lead Independent Director.

(3) Right to Vote on Agenda Items in the Shareholdersû meeting: The completed invitation to shareholdersû meeting and attachments will be forwarded to shareholders in advance. The invitation to shareholdersû meeting includes details on agenda items, attachments to agenda items, opinions of the Board of Directors of STA, proxy forms as prescribed by the Ministry of Commerce, a name list of all independent directors to whom the shareholders are able to give their proxy, and a map of the meeting venue. The invitation to the shareholdersû meeting also includes the information regarding the required documents that shareholders have to present to the meeting in order to protect their right to attend the meeting, the Articles of Association of STA pertaining to the shareholdersû meeting, and voting instructions. Furthermore, so that the investors can obtain information thoroughly, the shareholders can access all information with respect to the agenda of the shareholdersû meeting at www.sritranggroup.com and the website of the SGX-ST at www.sgx.com (çSGXNETé).

(4) Equitable Right to Express Opinions and Make Inquiries in the Shareholdersû meeting: With respect to agenda items and proposed agenda items, the Chairman of the shareholdersû meeting should allocate sufficient time and encourage the shareholders to express their opinions and make inquiries in the meeting. STAûs Lead Independent Director, Mr Prakob Visitkitjakarn, also the Chairman of the Audit Committee and Remuneration Committee, will be present at the annual general meeting to address questions that shareholdersû may have. External auditors will also be present to address queries in relation to the audit of the Group and the auditorsû report.


2. Fair Treatment for Shareholders

(1) The shareholdersû meeting shall be held in accordance with the agenda mentioned in the invitation to shareholdersû meeting. The policy is that no additional agenda item is included in the meeting without prior notice to the shareholders. STA sends a complete invitation to shareholdersû meeting, including attachments, with all sufficient information relevant to the meeting to the shareholders. Moreover, STA posts all information which is relevant to the meeting at its website (www.sritranggroup.com) and on SGXNET so that the shareholders will have sufficient time to carefully study this information. In addition, the invitation to shareholdersû meeting shall be advertised no less than three days prior to the shareholdersû meeting in a daily newspaper for at least three consecutive days in order to allow shareholders to have sufficient time to prepare for attending the shareholdersû meeting. Before the commencement of each meeting, the Chairman will give instructions on the voting and the counting methods as clearly prescribed. During the meeting, the Chairman allows the shareholders, equitably, to make inquiries and express their opinions as well as to make recommendations. The Chairman also answers questions and provides complete information as requested by the shareholders. After the meeting, STA will send the minutes of the shareholdersû meeting to the SET within the prescribed period.

(2) STA has encouraged the shareholders to use ballots for voting on each agenda item. The ballots shall be kept in the meeting room for vote counting prior to the announcement of the resolutions. For the purpose of transparency, STA will keep all ballots having signatures of the shareholders or their proxy for future reference.

(3) Minutes of the shareholdersû meeting must be accurately and completely recorded and submitted to the SET within 14 days after the shareholdersû meeting. The resolutions of the shareholdersû meeting will be posted on the website of STA at www.sritranggroup.com and on SGXNET.

(4) The policy regarding the monitoring of the use of insider information has been established for strict compliance by personnel at all levels.

(5) A full and clear disclosure of shareholding structure in the subsidiaries and associates is made to assure shareholders that the operational structure of STA is transparent and accountable.

(6) STA places importance on the accurate, full, timely, and transparent disclosure of information on various issues to shareholders. As such, significant information is disclosed on a regular basis.

(7) STA has established a channel of communication for minority shareholders to directly access information on various issues e.g. the activities of the Board of Directors, supervision and monitoring of the operation, and auditing through the email address of the independent directors. Furthermore, minority shareholders may directly seek information from the Company Secretary of STA or the Investor Relations Office.

60 A n n u a l R e p o r t 2 0 1 1

3. Role of Stakeholders

STA fully realizes that the growth and development of STA has resulted from the full support given by all interested parties. STA places importance on the rights of all stakeholders, both internal stakeholders such as personnel, staff members, and the executives of STA and the subsidiaries and external stakeholders such as commercial partners ranging from the suppliers of raw materials to various groups of customers of finished products, financial institutions, government agencies that provide close co-operation, and finally, the shareholders of STA. In this regard, STA realizes its responsibilities towards the above-mentioned stakeholders. The details of such responsibilities are as follows:

Shareholders:

STA is committed to be the representative of its shareholders in conducting its business operation in a transparent manner, and having a reliable accounting and finance system that brings the highest satisfaction to shareholders by continuous considering the long-term, sustainable growth of STA and an adequate return.

Employees:

STA treats its employees equally and fairly by providing a good and safe working environment and adequate remuneration. Moreover, STA supports its employees in terms of providing the opportunity to develop knowledge, skills and experiences for career improvement. STA has established a Health and Working Environment Committee. A training program is specially designed for relevant personnel responsible for overseeing, providing advice, and giving accurate information on safety, occupational heath, and the working environment, and the prevention of accidents resulting from work as well as providing other interesting health information to the employees. Considering the employeeûs welfare with respect to the safe and maximum working efficiency, STA has introduced various activities that promote the quality of life of employees, such as establishing a library and creating entertainment programs as well as various activities which are designed to promote employeesû good physical and mental health. Moreover, a handbook for employees has been published and is publicized through STA Intranet.

Customers:

STA is committed to create customer satisfaction by producing quality products and delivering the products on a timely basis and maintaining a good sustainable relationship. A guideline for customer relations practice is included in the Employeesû Handbook.

Business Partners:

STA purchases goods and services from its business partners pursuant to commercial conditions and always complies with the agreements entered into with its business partners and strictly follows the laws and regulations and possesses good business ethics in regard to business competition.

Government Agencies and Related Organizations:

STA strictly complies with various laws and regulations e.g. laws pertaining to the environment, safety, labour, tax management and accounting, as well as the government notifications relating to


the business operations of STA.

Society and Environment:

STA is aware of and concerned about the safety, environment, and the quality of life of the people, and the importance of natural resources conservation, the promotion of energy sufficiency, the alternative use of natural resources to minimize the impact on society, the environment and peopleûs quality of life to the greatest possible extent. As such, STA supports activities in the neighborhood community of the factories by providing the most efficient management of safety and environment.

In addition, STA has supervised and monitored its management system to ensure full compliance with laws and regulations of regulatory agencies and the fair and strict equitable treatment of all stakeholders.

4. Information Disclosure and Transparency

(1) The Board of Directors of STA is responsible for the accurate, complete, timely, and transparent disclosure of both significant financial and non-financial information of STA through easy-to-access channels, which reflects fairness and reliability so that the stakeholders are all equally able to receive information in compliance with the requirements of various regulators.

(2) STA has set up a public relations department in order to communicate with investors and related third parties. The Investor Relations Office is the center for communication between shareholders, stakeholders, investors, and analysts.

(3) The Board of Directors of STA supports the preparation of information in an accurate, reliable, timely, and regular manner in both Thai and English through communication channels at SET and the website of STA.

(4) The Board of Directors of STA has a duty to report its corporate governance policy through the Annual Report and website of STA.

(5) The Board of Directors of STA has a duty to disclose meeting attendance of Directors and the Audit Committee members.

(6) The Board of Directors of STA is responsible for the preparation of the balance sheet, profit and loss statement, auditorûs report, annual report, and other relevant reports for shareholders approval.

(7) The Board of Directors of STA has a duty to report risk factors, types of risk, and the cause and impact of risk upon the business operation of STA through the Annual Report.

The Board of Directors of STA ensures that the disclosure of significant information is conducted in an accurate, precise, reliable, and timely manner in accordance with the regulations of the SEC and SET, and that such information is disclosed in the Annual Registration Statement (Form 56-1) and the Annual Report (Form 56-2) so that the shareholders are equally informed. Furthermore, the Investor Relations Office has been established to act as a contact person for communication with investors, shareholders, securities analysts, and other related agencies.

62 A n n u a l R e p o r t 2 0 1 1

The STA website is updated regularly. Information which should be disclosed is posted on the STA website. The Investor Relations Office at Bangkok Branch can be contacted at Tel: 0-2259-2964-71 or at www.sritranggroup.com

5. Responsibility of the Board of Directors

(1) The Structure of the Board of Directors

The Board of Directors of STA, consisting of directors who have knowledge, competence and experience in business, has the duty to determine policies, visions, strategies, goals, missions, business plans and budgets of STA, as well as to monitor the management team to effectively and efficiently manage the business of STA in accordance with the policies under the legal framework, objectives, the Articles of Association and the resolutions of the shareholders meeting and the Board of Directors Meeting. Such duties must be performed with responsibility, due care and loyalty under the principles of good corporate governance in order to increase the best economic value for the business and the highest stability for the shareholders.

The Board of Directors of STA consists of 11 directors, including four independent directors who are fully qualified under the notifications of the Capital Market Supervisory Board and the SET.

No director of STA shall hold the office of director in more than five listed companies. In the case that any director holds the office of director in more than five listed companies, the Board of Directors will review the efficiency of such directorûs performance.

According to the Articles of Association of STA, at every annual general meeting, one-third of the Directors, or, if the number of Directors is not a multiple of three, then the number nearest to one-third, shall retire from office. The Directors who are to retire from office in the first and the second years after registration of the company shall be drawn by lots. In the subsequent years, the Directors who have been holding office for the longest time shall retire

STA has appointed a Company Secretary to provide advice on compliance with relevant laws and regulations which the Board of Directors is required to know. The Company Secretary shall also supervise the activities of the Board of Directors and ensure that the resolutions of the Board of Directors meeting have been complied with.

(2) Sub-Committees

The Board of Directors has a duty to carefully and effectively consider and give approval on significant operational matters; therefore, sub-committees are formed to assist the Board of Directors in various aspects. An Audit Committee is appointed consisting of at least three independent directors and at least one of them must have knowledge of accounting and finance and must have a qualification on independence as prescribed by the notifications of the Capital Market Supervisory Board and by the definition of an independent director. The Audit Committee was established for the purpose of monitoring the internal control system,


financial report system, corporate governance, risk management, as well as the selection and the appointment of the auditor. Moreover, STA has formed other sub-committees such as the Remuneration Committee and the Nominating Committee in order to manage the businesses of STA. The majority of members of the sub-committees are independent committee members in order to ensure a transparent and independent business operation.

(3) Roles, Duties, and Responsibilities of the Board of Directors

The Board of Directors of STA oversees the business operation and the mission of STA to be in accordance with the approval given by shareholders, applicable laws, objectives, the Articles of Association, and resolutions of the Board of Directors meeting and the shareholders meeting. The Board of Directors of STA must exercise good business judgment in making business decisions and perform its duty with responsibility, due care, and loyalty in the best interests of STA.

Conflict of Interests

The Board of Directors of STA has established a policy for preventing conflicts of interests on the basis that any decision-making on business transactions must be made only for the best interest of STA, and that any act which may cause a conflict of interest should be avoided. It is required that a person involved in or having a conflict of interest in any agenda item to be discussed in a meeting shall report the relationship or conflict of interest in such agenda item to STA, as well as abstain from voting and shall have no authority to grant approval for such transaction.

(4) The Board of Directors Meeting

According to the Articles of Association of STA, the Board of Directors shall hold a meeting at least once every three months and any additional meetings as necessary. A meeting notice will be delivered to directors at least seven days prior to the date of the meeting, except in the case where it is necessary or urgent to preserve the rights and benefits of STA. At each meeting, the agenda items of the meeting must be clearly specified and supported by complete and sufficient documents, and must be delivered to the directors in advance so that the directors will have sufficient time to study such information prior to the meeting. At the meeting, each director is allowed to openly discuss and express his/her opinion. In addition, at the meeting of the Board of Directors, the senior executives will be invited to participate in order to present additional details of information on such matters in which they are directly involved.

STA is committed to providing the Board of Directors with adequate, complete, continuous information in a timely manner prior to a Board of Directors meeting. The Directors can directly and independently contact the Company Secretary. The Company Secretary is responsible for advising the Board of Directors on compliance with legal and regulatory requirements.

64 A n n u a l R e p o r t 2 0 1 1

(5) Remuneration

The remuneration for directors must be made on a practical industry level based on working experience, role, responsibilities, and must be in line with the average market practice of the same industry.

(6) Training for Directors and Executives

The Board of Directors has a policy to enhance and accommodate the provision of training on good corporate governance. Regular and continuous training programs are provided to directors so that they can improve their knowledge.

Dealings in Securities

STA has a policy and procedure to monitor its executives in relation to their use of inside information of STA and its subsidiaries for personal interest as follows:

1. Educate the Directors and executives of each department regarding their duties to prepare and disclose the report of securities holding and the report of changes in securities holding of STA to the Office of the SEC, the SET and SGX-ST, as the case may be, including the applicable penalty in the case of breach according to the SEC Act, the regulations of the SET and the SGX-ST Listing Manual.

2. Arrange for the Directors and executives of STA and their spouses and minor-children to prepare and disclose the report of securities holding and the report of changes in securities holding of STA to the Office of the SEC pursuant to Section 59 of the SEC Act and deliver copies of such documents to STA on the same day, and to report to SGX-ST as stipulated in the Listing Manual of SGX-ST.

3. The Directors and executives of STA and its subsidiaries who know material inside information affecting changes in securities price, must be cautious in the trading of securities of STA within one month prior to the time when the financial statement or such inside information is disclosed to the public. Moreover, within 24 hours after such inside information has been disclosed to the public, no person involved with such inside information shall disclose any inside information to any person before such inside information has been notified to the SET and/or SGX-ST. Regarding penalty measures in the case of a violation of the above-mentioned regulations, STA deems such violation as warranting a disciplinary penalty according the working rules of STA.

4. The directors, executives, staff members and employees of STA shall not, whether directly or indirectly, purchase or sell, offer to purchase or sell or invite any other person to purchase, sell or offer to purchase or sell shares or other securities (if any) of STA by using inside information which has or may have an impact on the change of the price of STA securities and has not been disclosed to the public, in a manner that may directly or indirectly cause damage to STA and whether or not such act is done for their own or another personûs benefit, or to disclose such information so that they will receive consideration from the person who engages in the aforementioned acts.

Directors and employees are also expected to observe applicable insider trading laws at all times even when dealing in securities within permitted trading periods. In addition, the Directors and employees are expected not to deal in the Companyûs securities for short-term considerations.


Principles of Good Corporate Governance under the Code of Corporate Governance THE BOARDûS CONDUCT OF AFFAIRS

Principle 1: Effective Board to lead and control the Company

The Boardûs principal roles are set out under çScope of Duties and Responsibilities of the Board of Directors of STAé. The membership and attendance of the members of the Board and Board Committees at Board and Board Committee meetings held in FY 2010 and FY 2011, are disclosed in the table set out under çDetails of Attendance for the Meetings of the Board of Directors, Executive Committee and Audit Committeeé. BOARD COMPOSITION AND GUIDANCE

Principle 2: Strong and independent element on the Board

The Board composition of the Company is set out under çScope of Duties and Responsibilities of the Board of Directors of STA - Composition and Appointment of the Board of Directors of STAé. In determining independence, the Nominating Committee is guided by the factors set out under çSelection of Independent Directoré. The Nominating Committee reviews nominations for re-appointment as set out under çScope of Duties and Responsibilities of the Nominating Committeeé.

Brief profiles of the Companyûs Directors are provided under the section çBoard of Directorsé. CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Principle 3: Chairman and Chief Executive Officer to be separate persons to ensure appropriate balance of power; increased accountability and greater capacity of the Board for independent decision making

Dr. Viyavood Sincharoenkul is the Chairman and Managing Director (the equivalent of the Chief Executive Officer) (çMDé) of the Company.

The Board believes that Dr. Sincharoenkul should continue to lead the Group as Chairman and MD. Dr. Sincharoenkul manages the day-to-day operations of the Group as its MD and is responsible for the strategic direction and growth of the Group. As Chairman, he ensures that Board meetings are held when necessary and sets agendas in consultation with other Directors. He ensures that Board members are provided with complete, accurate and timely information on a regular basis.

There is accountability and independent decision making by the Board by virtue of the following factors:

ë The Board is of the view that there are sufficient safeguards and checks in place to ensure that management is accountable to the Board as a whole. The Nominating Committee, Remuneration Committee and Audit Committee are all chaired by Independent Directors.

ë Active participation by Independent Directors during Board meetings, who challenge the assumptions and proposals of the management on all issues affecting the affairs and businesses of the Group.

ë The appointment of Mr. Prakob Visitkitjakarn as Lead Independent Director, to address shareholder concerns which could not have been resolved through the normal channels of the Chairman or MD, or for which such contact is inappropriate. The Lead Independent Director also acts as the principal liaison between the Independent Directors and the Chairman on sensitive issues.

66 A n n u a l R e p o r t 2 0 1 1

BOARD MEMBERSHIP

Principle 4: Formal and transparent process for the appointment of new directors to the Board

The Nominating Committee comprises a majority of Independent Directors, including the Chairman. The members of the Nominating Committee are Mr. Kriang Yanyongdilok, Mr. Samacha Potavorn and Mr. Kitichai Sincharoenkul. The Chairman of the Nominating Committee is Mr. Yanyongdilok. The duties and responsibilities of the Nominating Committee are set out in the section titled çNominating Committee - Scope of Duties and Responsibilities of the Nominating Committeeé.

The selection, nomination, appointment and re-election processes of the Companyûs Directors according to the articles of association are set out under the section titled çComposition and Appointment of the Board of Directors of STAé and çNomination of Directorsé. For details of the factors taken into consideration for the selection of independent Directors, please refer to the section çSelection of Independent Director - Qualifications of Independent Directoré. The Independent Directors shall not be under anyoneûs influence and controlled by any situation.

A retiring Director shall be eligible for re-election. The Directors to retire in every year shall be those, subject to retirement by rotation, who have been longest in office since their last re-election or appointment. The details of the retirement and re-election of the Directors are set out under the section titled çRetirement and re-election of Directorsé.

The directorships or chairmanships both present and those held over the preceding three years in other listed companies and other major appointments by the Directors are set out below: Name of Director Present Three preceding years Name of Company Position Name of Company Position

1. Mr. Prakob Visitkitjakarn ARIP PLC Independent ARIP PLC Independent Director Director and Chairman and Chairman of the of the Audit Audit Committee Committee Siam City Director and Cement PLC Chairman of the Audit Committee 2. Mr. Neo Ah Chap NAC Consultancy Sole-Proprietor Tan Chong Executive Director Services International Limited*

Note : * Tan Chong International Limited is listed in Hong Kong Stock Exchange.

BOARD PERFORMANCE

Principle 5: Formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board

Details of the assessment carried out by the Nominating Committee in relation to the effectiveness of the Directors are set out under çScope of Duties and Responsibilities of the Nominating Committeeé and çNomination of Directorsé.


ACCESS TO INFORMATION

Principle 6: Board members should be provided with complete, adequate and timely information

The Board has separate and independent access to senior management and the Company Secretary at all times. The management provides information requested by the Board promptly and keeps the Board informed of all material events and transactions as they occur. Meeting agendas and board materials are provided to all Directors with sufficient time prior to meetings, so that there is sufficient time to seek clarification if required. The management consults Board members as necessary and appropriate.

The role of the Company Secretary is set out under çCompany Secretaryé.

The Directors may, in fulfilling their duties, as a group or individually, when necessary, direct the Company to appoint external professionals to render advice. REMUNERATION MATTERS Principle 7: Formal and transparent procedure for developing policy on executive remuneration

Principle 8: Remuneration of directors should be adequate but not excessive

Principle 9: Disclosure on remuneration policy, level and mix of remuneration, and procedure for setting remuneration

The Remuneration Committee comprises entirely of Non-executive and Independent Directors. The Remuneration Committee comprises Mr. Prakob Visitkitjakarn, Mr. Kriang Yanyongdilok, and Mr. Samacha Potavorn. The Chairman of the Remuneration Committee is Mr. Visitkitjakarn.

The roles and functions of the Remuneration Committee is set out in the section çScope of Duties and Responsibilities of the Remuneration Committeeé. The recommendations of the Remuneration Committee are submitted for endorsement by the entire Board. All aspects of remuneration, including but not limited to directorsû fees, salaries, allowances, bonuses, options and benefits-in-kind shall be covered by the Remuneration Committee.

Please refer to the section titled çRemuneration of Executive Officersé for information on the remuneration of the Companyûs Directors, Executive Officers and employees who are immediate family members of any Director. ACCOUNTABILITY AND AUDIT

Principle 10: The Board should present a balanced and understandable assessment of the Companyûs performance, position and prospects

The Board has adopted a policy of openness and transparency in the conduct of the Companyûs affairs while preserving the commercial interests of the Company. The Company reports its financial results quarterly and presents such financial results in a balanced and understandable manner.

Financial results and other price sensitive information are disseminated to shareholders via SGXNET and on the website of the SET, to the SGX-ST and SET as required, press releases, the Companyûs website and through media and analyst briefings. Any information disseminated on the website of one stock exchange is simultaneously released on the other as well, in order to preserve parity of information between shareholders on both exchanges.

68 A n n u a l R e p o r t 2 0 1 1

The Company will also hold annual investor forums in Singapore where CDP depositors can meet the Directors. At least three of the Companyûs Executive Directors and two of its Independent Directors will be present at the investor forum. Shareholders will have the opportunity to be briefed on the Companyûs performance and may raise any queries directly with the Directors present.

Principle 11: Establishment of Audit Committee with written terms of reference

The Audit Committee comprises entirely of Non-executive Directors, namely, Mr. Prakob Visitkitjakarn, Mr. Kriang Yanyongdilok and Mr. Samacha Potavorn. The Chairman of the Audit Committee is Mr. Visitkitjakarn.

The Audit Committee meets periodically and has the duties and responsibilities as set out under çScope of Duties and Responsibilities of the Audit Committeeé.

The Companyûs auditors have not provided any non-audit services and as such, the Company has not paid non-audit fees to the auditors. INTERNAL CONTROLS AND INTERNAL AUDIT

Principle 12: Sound system of internal controls

Principle 13: Independent internal audit function

The Company recognises the importance of an internal control system, risk management system, and operational control, to ensure that all employees and the Executive Board share their duties and responsibilities so that all share the same goals.

Independent internal audit function

The Companyûs Internal Audit Department is an independent unit, which reports directly to the Audit Committee. Under the Companyûs yearly internal audit plan, the Internal Control Department will perform an audit of the internal control system, implement the risk management system, and provide general advice under the çStandard for the Professional Practice of Internal Auditingé. This standard is an operating guideline and framework of internal audit that focuses on independent, just, and international standard operations with high quality auditing work. Guidelines for the development and training of internal audit staff are also included in the standard.

The Internal Audit Department has full, free and unrestricted access to all data of the Company that it requires to carry out its function. The Internal Audit Department is responsible for the internal auditing of all business unit operations of the Group under its annual internal auditing plan and provides advice to improve the internal audit system. The main considerations are primarily business and operational risks.

The Audit Committee continuously reviews the performance and the adequacy of the internal audit function. In addition, the Audit Committee may recommend improvements to the internal audit and internal control systems to the Board of Directors.


Risk Management

Risks

As a result of the Companyûs multi-national platform, it is exposed to various types of financial risks, such as foreign exchange risk, interest rate risk, credit and counterparty risks and liquidity risk. The Company uses forward and simple option contracts and interest rate swaps to hedge certain risk exposures.

The Company actively monitors and manages these risks associated with its business activities through an experienced risk management group which is responsible for identifying, evaluating, managing and controlling such risks.

Foreign exchange risks

The Company is exposed to foreign exchange risks arising from its exposure to currencies such as Indonesian Rupiah and US Dollars. These foreign exchange risks arise primarily from the difference of currencies dominated in the Companyûs sales and costs. As the Company presents its income statement in Baht, it generally benefits in the event the US Dollar appreciates against the Baht. The Company generally manages its foreign exchange risk through the use of forward and simple option contracts.

The Company is also exposed to foreign currency translation risks in respect of its investments in foreign operations. The Company does not hedge its exposure to such risks as the management believes that the exposure to such risks is not significant due to the long-term nature of the Companyûs investments in foreign operations.

Price risks

Prices of commodities in general, including natural rubber, have been volatile and the Company, like other participants in the natural rubber industry, is exposed to the risk of fluctuations in the price of natural rubber. To mitigate such risks, the Company monitors the demand and supply of natural rubber as well as prices of Natural Rubber Products. Through its long-established relationships, diversified customer base and negotiation power with buyers, the Company is able to transact sales of Natural Rubber Products either on a spot basis or long-term contracts, depending on various factors, including the price of natural rubber. In the event the Company is unable to transact its sales of Natural Rubber Products, it may enter into hedging arrangements through the use of rubber futures contracts.

Interest rate risks

The Company has fixed and floating interest rate borrowings. Interest rate risks refer to the Companyûs exposure to interest rate fluctuations on the Groupûs borrowings. The Company manages its exposure to interest rate risks by ensuring that the majority of the borrowings have a suitable repayment term as necessary for the use in such period and considering the trend of the interest rate in such period.

Credit and counterparty risks

A large portion of the Companyûs sales are to customers in various countries and territories in Asia such as, the PRC, India, Singapore, Japan and Korea and to the United States and Europe, for which the Company will require letters of credit from customers or cash against the presentation of documents of title. As such, the Company is exposed to credit and counterparty risks arising from normal business activities if its customers or counterparties fail to meet their contractual obligations. To mitigate such

70 A n n u a l R e p o r t 2 0 1 1

risks, the Company only transacts with counterparties after taking steps to assess their creditworthiness while also taking into account past transactional experience with such counterparties and their financial position. The Company also regularly monitors its counterpartiesû use of the credit limits which have been granted, with a specific focus on the counterparties identified as being of higher risk of default. Additionally, for sales into the PRC, the Company generally requires payment of cash on delivery and may grant substantial customers credit terms from the date of issuance of the invoice.

The Company is also exposed to credit risks with respect to the cash deposits which it places with and derivative financial instruments which it enters into with banks and financial institutions. The Company assess the creditworthiness of the banks and financial institutions with whom it transacts and mitigates its exposure by increasing the number of banks and financial institutions with which such cash deposits are placed.

Liquidity risks

The working capital cycle for the Natural Rubber Products produced, from the purchase of raw materials to the receipt of payment from customers, is approximately two to four months. As such, the Company regularly monitors its liquidity requirements to ensure it has sufficient cash to meet its operational needs while also maintaining sufficient headroom on unutilised committed borrowing facilities at all times so that the borrowing limits or covenants on its credit facilities are not breached. Additionally, the Company believes that due to the global demand for Natural Rubber Products, there is a ready market for its inventory and should be able to sell them quickly in the event that the Company is in need of funds.

Internal control systems

The following sets out a summary of the Companyûs internal control system and functions implemented to handle the risks related to the business:

ë Management Activity Control System - The Board of Directors sets the operating goals of the Company by determining the clear mission, detailed operating plan of each department, and Key Performance Indicators (KPIs) in financial outcome, operating output, and customer satisfaction. Such control is closely monitored every month.

ë Risk Assessment - Changing environments may cause business at risk and negative impacts, therefore continuous risk assessment and monitoring are required. Each department shall assess its risk and prepare the solution plan. In addition, there is a management meeting every month to evaluate the current situation and select strategy to cope with the possible risks.

ë Control System - The Company clearly determines measures and implementation plans by issuing orders, rules, approval authority, and working procedures for the management and all employees.

ë Information and Communication - STA has moved towards çIT governanceé to manage and control IT system efficiently with IT risk management system based on international standard level. Goal and plan of IT system are set based on our nature of business and conformed with related laws and regulations. To prevent the changes, errors, or misleading information, users can only access IT system through the channel provided by STA. In addition, STA provides backup and IT continuity plan in preparation for an emergency event. Nowadays,


the Company has various communication networks, via both the Internet and its Intranet. The Internet is a communications channel between the Company and stakeholders such as shareholders, investors, and other external parties. For internal communication within the Group, the Intranet is the key method for correspondence. This ensures efficiency and accuracy of information, and that information is delivered in time to all related parties.

ë Monitoring and Evaluation Systems - To monitor operating performance of all business units. Each business unit reports its operating performance to the management every month. The internal audit team also frequently audits all operating units and reports to the Audit Committee quarterly.

ë Risk Reporting - Daily reports setting out the aggregate amount and cost of raw materials purchased are generated by the managers of each of the Companyûs rubber processing facilities. In addition, the Companyûs sales and marketing department also generates a daily sales and inventory report. The senior management team utilises these reports to determine the net position of the Companyûs sales and cost of goods sold, and hence, the exposure to the various risks.

ë Reviews - The managers of the Companyûs rubber processing facilities meet with the procurement and sales and marketing teams on a monthly basis, to prepare the budget (including the targeted monthly production capacities for each of the Companyûs rubber processing facilities as well as the sales targets for the month). These targets are set after taking into account several factors such as the estimated effective production capacity at each of the rubber processing facilities, the supply of raw materials that the Company is able to acquire, the demand of Natural Rubber Products, the price of natural rubber in the commodities markets and other general economic conditions. Such budgets are then reviewed by the senior management team before they are implemented. Through these monthly budget meetings and the setting of targets, the Company has established procedures which it believes allows it to achieve maximum return on investments within the appropriate risk parameters that are set by the senior management team from time to time.

COMMUNICATION WITH SHAREHOLDERS

Principle 14: Regular, effective and fair communication with shareholders

Principle 15: Greater shareholder participation at annual general meetings

The Company aims to provide timely information to shareholders, and such information should be substantial and clear in relation to the matters at hand. The Company ensures that all shareholders should be equally informed of all major developments impacting the Group, and is accessible and responsive to the public at all times.

For more information on communication with shareholders, please refer to the section titled çCorporate Governance - Principles of Good Corporate Governance under the Principles of Good Corporate Governance for Listed Companies of 2006 - Rights of Shareholdersé and çCorporate Governance - Principles of Good Corporate Governance under the Principles of Good Corporate Governance for Listed Companies of 2006 - Fair Treatment for Shareholdersé.

72 A n n u a l R e p o r t 2 0 1 1

Corporate Social Responsibility


Corporate Social Responsibility (CSR) Grow Together with Community Besides being committed to continue realising future growth opportunities for our business, we sincerely value better society and community as one of our mission. Driven by our gratitude, we place great emphasis in manufacturing quality products for our customers and at the same time giving back to our community and conserving our planetûs resources. Natural rubber has become the most important agricultural product for the country. As part of it, we strive to maintain our concept of çgrowing togetheré with the people who live around the area. It is our mission to improve the quality of life of the local people and community surrounded to our factories. In the context of long-term sustainable growth, it is not just the expansion of our capacity and sales volume, but the better living conditions of the people, improvement of infrastructure, the happiness of community and greener environment are our definition of growth as well. The activities employed in 2011 can be summarized as follow:

ë To clean, dredge up and free marine creatures into the Trang canal, a main water resource for agricultural activities in community in Sikao subdistrict, Trang province.

ë Educational tools donation to Wat Chaeng School, close to our Trang factory.

ë Building a playground and sponsored sport equipment to Baan Nong Jade School, Trang province.

ë Provide blood donation to Red Cross. This programme has been carried out every year across our factories nationwide.

74 A n n u a l R e p o r t 2 0 1 1

ë Sponsorship for çbetter job, better lifeé, an intensive labor training programme deve loped wi th Department Sk i l l Deve lopment, Labor Min is t ry for villagers in Mukdaharn province.

ë Develop çJob Creation Projecté, a labor training programme developed with Office of the Rubber Replanting Aid Fund for villagers in Lampang province.

ë Green growth project to plant and grow trees in var ious locat ions including our offices, factories and encroached forest.

ë Donate survival bags for flood victims in various areas including Songkha, Surat Thani, Trang, Nakorn Ratchsima and Buriram.

74 √ “ ¬ ß “ π ª √ – ®Ì “ ªï 2 5 5 4


Our charitable activities also stretch far beyond business territory. Donations to the victims of various natural disasters have been regularly carried out. In addition, we aim to have our products associated with not only being of quality, but being environmentally friendly and natural resources saving as well. In our normal operational and strategic policies, we also have focused on the following initiatives.

Plantation We will only develop plantations on land which has been approved by the government for the cultivation of rubber trees. We have documented and will continue to strive to document our agreements with individuals for the purchase of the land for planting, thus demonstrating clear evidence of ownership of our land. We adhere strictly to environment-friendly and community-friendly policies.

76 A n n u a l R e p o r t 2 0 1 1

Processing Efficiency We continually seek to improve the efficiency of our processing methods through the modification of our production machinery. This will help us to minimise the production costs of Natural Rubber Products through material savings and optimise existing production processes through the development of innovative processing methods and systems. For example, we have developed various processes and systems which reduce the loss of raw materials through in-process recycling of raw materials.

Energy Savings and Waste Management We have implemented energy and cost saving measures and other measures related to waste management in our processing facilities. We have also instituted waste water treatment measures, such as conducting periodic measurements of the effluent discharged from the processing of natural rubber. We also regularly assess the quality of air emissions from our productions facilities.

Behavioral Change We also regularly promote behavioral change of our staffs towards environmental friendly habits. For example, we have instituted campaigns to reduce global warming by encouraging the use of cloth bags in place of plastic bags and the use of bicycle instead of fuel-consuming vehicles at our production facilities.


Related

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Th

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STA

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78 A n n u a l R e p o r t 2 0 1 1

Value

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of th

e pe

riod.

Outstand

ing b

alanc

e ac

cord

ing

to th

e pa

ymen

t terms

unde

r no

rmal

trade

con

ditio

ns a

nd

the

acco

unts re

ceiva

ble

were

norm

al.

1.3

Rubb

erland

Pr

oduc

ts

ë Re

venu

e fro

m th

e sa

le of C

once

ntrated

Latex

888.02

1,19

2.49

Ru

bberlan

d Pr

oduc

ts s

old

Conc

entra

ted

Latex

to S

SC a

t the

marke

t pric

e. Th

e Gr

oup

was

resp

onsib

le for p

rocu

ring

Conc

entra

ted

Latex

to S

SC p

ursu

ant t

o the

Joint

Ven

ture

Agreem

ent.

The

price

of t

he C

once

ntrated

Latex

sold b

y Ru

bberlan

d Pr

oduc

ts to

SSC

was

bas

ed

on th

e marke

t pric

e that w

as

quoted

by

SICO

M (Sing

apore

Commod

ity E

xcha

nge).

ë Re

venu

e fro

m th

e sa

le of g

roun

d wa

ter

41.01

44.14

Rubb

erlan

d Pr

oduc

ts s

old

grou

nd w

ater to

SS

C as

its

factories

were

loca

ted

in the

same

area

. Th

e sa

le pr

ice w

as a

t Bah

t 16

per c

ubic

meter, w

hich

was

compa

rable

to th

e pr

ice o

f tap

water s

old

by th

e Pr

ovinc

ial W

aterwo

rks

Authority

.

SSC

factory

was

loca

ted

near

the

factory

of R

ubbe

rland

Pr

oduc

ts a

nd S

SC d

id n

ot

poss

ess

its o

wn g

roun

d wa

ter

well.

The

price

of g

roun

d wa

ter

sold to

SSC

was

com

parable

to th

e pr

ice o

f tap

water s

old

by th

e Pr

ovinc

ial W

aterwo

rks

Authority

to th

e bu

sines

s se

ctor.

80 A n n u a l R e p o r t 2 0 1 1

Value

of T

rans

actio

n (T

HB M

illion

) Ne

cess

ity /

Rea

sona

blen

ess

of

Opinion

(s) of

the

Relate

d Pa

rties

Re

latio

nship

Type

of Tr

ansa

ction

Cons

olidat

ed

Cons

olidat

ed

FY 2

010

FY 2

011

the

Tran

sact

ion

Audit Co

mmitt

ee

ë Re

venu

e fro

m th

e pr

ovisi

on o

f fiel

d lat

ex ta

nk

5.00

15

.99

Rubb

erlan

d Pr

oduc

ts e

ntered

into th

e lea

sing

of fi

eld la

tex

tank

agree

men

t with

SSC

as

SSC

did

not h

ave

its o

wn ta

nk to

store th

e fie

ld

latex

. Th

e se

rvice

fee

for 1

00 to

n wa

s Ba

ht

40,000

per m

onth p

er ta

nk, f

or 2

50 to

n wa

s Ba

ht 1

00,000

per m

onth p

er ta

nk w

hich

refle

cted

the

relev

ant c

ost a

nd a

n ad

equa

te

profit

of R

ubbe

rland

Produ

cts.

The

service

fee

for t

he

prov

ision

of f

ield

lalex

tank

did

not h

ave

a co

mpa

rable

marke

t pr

ice. H

owev

er, t

he s

ervic

e fee

charge

d by

Rub

berla

nd

Prod

ucts c

overed

and

refle

cted

the

relev

ant c

ost a

nd a

n ad

equa

te p

rofit m

argin.

1.4

Star

light

Exp

ress

Tr

ansp

ort

ë Re

venu

e fro

m

impo

rt-ex

port

freight fo

rwarding

fees

7.22

6.83

St

arlig

ht E

xpress

Trans

port

prov

ided

exp

ort

and

impo

rt se

rvice

s to S

SC a

s St

arlig

ht

Expr

ess

Tran

sport h

as e

xpertis

e an

d pe

rson

nel

suita

ble

for t

he p

rovis

ion

of s

ervic

es.

The

fees

for t

he p

repa

ratio

n of th

e relat

ed

expo

rt an

d im

port

docu

men

tatio

n for t

he y

ear

2010

and

201

1 we

re B

aht 2

80 p

er c

ontaine

r an

d Ba

ht 5

00 p

er s

et re

spec

tively

and

the

fee

for t

he tr

ailer s

ervic

e wa

s US

D 60

per

contain

er.

Th

ese

rates

were c

ompa

rable

to th

e marke

t pr

ice o

f other s

ervic

e pr

oviders

in the

same

indus

try.

Starlig

ht E

xpress

Trans

port

has

expe

rtise

in th

e logistics

se

rvice

s an

d the

docu

men

tatio

n wo

rk c

once

rning

logistics

. Th

e rate o

f servic

e fee

refle

cted

the

reas

onab

le co

st o

f its b

usine

ss

operation

and

was

compa

rable

to o

ther s

ervic

e pr

oviders

in the

same

indus

try.


Value

of T

rans

actio

n (T

HB M

illion

) Ne

cess

ity /

Rea

sona

blen

ess

of

Opinion

(s) of

the

Relate

d Pa

rties

Re

latio

nship

Type

of Tr

ansa

ction

Cons

olidat

ed

Cons

olidat

ed

FY 2

010

FY 2

011

the

Tran

sact

ion

Audit Co

mmitt

ee

ë Re

venu

e fro

m

logistic

service

s 39

.99

46.97

St

arlig

ht E

xpress

Trans

port

prov

ided

logistics

se

rvice

s to S

SC a

s St

arlig

ht E

xpress

Trans

port

cond

ucted

logistics

servic

es a

nd h

as

equip

men

t and

perso

nnel

read

y to s

uppo

rt su

ch s

ervic

e. T

he s

ervic

e fee

was

at th

e marke

t pric

e ac

cord

ing to

the

trans

porta

tion

route

and

was

adjus

ted

acco

rding

to th

e ch

ange

of t

he o

il pr

ice in

eac

h pe

riod.

Starlig

ht E

xpress

Trans

port

has

expe

rtise

in th

e logistics

se

rvice

s an

d the

docu

men

tatio

n wo

rk

conc

ernin

g logistics

. Th

e rate

of s

ervic

e fee

refle

cted

the

reas

onab

le co

st o

f its b

usine

ss

operation

and

was

compa

rable

to o

ther s

ervic

e pr

oviders

in the

same

indus

try.

1.5

Prem

ier Sy

stem

En

gine

ering

ë Re

venu

e fro

m th

e man

ufac

turin

g of

mac

hinery

and

equip

men

t

378.76

41

1.96

Pr

emier

Sys

tem E

ngine

ering

produ

ced

and

sold

mac

hinery

and

equip

men

t to

SSC

as th

e mac

hinery

used

in th

e man

ufac

turin

g pr

oces

s of S

SC re

quire

d sp

ecial

spe

cifica

tion

and

SSC

need

ed to

kee

p its

produ

ction

tech

nology

and

eq

uipmen

t as

its b

usine

ss s

ecret.

Prem

ier

System

Eng

ineering

has

equ

ipmen

t and

pe

rson

nel s

uitab

le for t

he m

anufac

turin

g of

mac

hinery

and

equip

men

t. Th

e pr

ice o

f the

mac

hinery

and

equip

men

t sold

by P

remier

Sy

stem

Eng

ineering

were

compa

rable

to th

e marke

t pric

e wh

ich re

ason

ably

refle

cted

the

cost o

f produ

ction, o

peratio

n, a

nd a

n ad

equa

te

profit

margin.

Prem

ier S

ystem E

ngine

ering

ha

s ex

pertise

in th

e de

velopm

ent,

prod

uctio

n, a

nd

main

tena

nce

of m

achin

ery

and

equip

men

t in

relat

ion

to th

e pr

oduc

tion

of n

atural

rubb

er

and

finish

ed p

rodu

cts

from

natural r

ubbe

r.

The

price

of t

he m

achin

ery

and

equip

men

t sold

to S

SC

refle

cted

the

reas

onab

le co

st

of it

s pr

oduc

tion

and

an

adeq

uate p

rofit m

argin

of

Prem

ier S

ystem E

ngine

ering

an

d wa

s co

mpa

rable

to th

e marke

t pric

e.

82 A n n u a l R e p o r t 2 0 1 1

Value

of T

rans

actio

n (T

HB M

illion

) Ne

cess

ity /

Rea

sona

blen

ess

of

Opinion

(s) of

the

Relate

d Pa

rties

Re

latio

nship

Type

of Tr

ansa

ction

Cons

olidat

ed

Cons

olidat

ed

FY 2

010

FY 2

011

the

Tran

sact

ion

Audit Co

mmitt

ee

ë Re

venu

e fro

m

clean

ing s

ervic

e 51

.76

48.86

Prem

ier S

ystem E

ngine

ering

provid

ed c

leanin

g se

rvice

for t

he m

achin

ery

and

equip

men

t to

SSC

as P

remier

Sys

tem E

ngine

ering

has

ex

pertise

in m

achin

ery

and

equip

men

t and

was

the

selle

r of m

achin

ery

and

equip

men

t to

SSC.

Th

e rate o

f servic

e fee

was

compa

rable

to th

e marke

t pric

e an

d refle

cted

an

adeq

uate p

rofit

margin

of P

remier

Sys

tem E

ngine

ering

.

Prem

ier S

ystem E

ngine

ering

ha

s ex

pertise

in th

e de

velopm

ent,

prod

uctio

n, a

nd

main

tena

nce

of m

achin

ery

and

equip

men

t in

relat

ion

to th

e pr

oduc

tion

of n

atural

rubb

er

and

finish

ed p

rodu

cts

from

natural r

ubbe

r.

The

rate o

f servic

e fee

for

clean

ing th

e mac

hinery

and

equip

men

t of P

remier

Sys

tem

Engine

ering

refle

cted

the

reas

onab

le co

st o

f its b

usine

ss

operation

and

an a

dequ

ate

profit

margin

of P

remier

Sys

tem

Engine

ering

and

was

co

mpa

rable

to o

ther s

ervic

e pr

oviders

in the

same

indus

try.

ë Re

venu

e fro

m

information

tech

nology

servic

es

9.90

14

.71

Prem

ier S

ystem E

ngine

ering

sup

porte

d Time

Charge

-IT

to S

SC in

ord

er to

sele

ct S

AP

system

adv

isor.

The

service

fee

was

compa

rable

to th

e marke

t pr

ice.

ë Re

venu

e fro

m

purcha

sing-

main

tena

nce

the

mac

hines

- 27

.06

Prem

ier S

ystem E

ngine

ering

provid

ed

main

tena

nce

service

s of m

achin

ery

to S

SC.

The

service

fee

was

base

d on

actua

l works

wh

ich w

as c

ompa

rable

with m

arke

t rates

.

Service

fee

was

compa

rable

with m

arke

t rates

.


Value

of T

rans

actio

n (T

HB M

illion

) Ne

cess

ity /

Rea

sona

blen

ess

of

Opinion

(s) of

the

Relate

d Pa

rties

Re

latio

nship

Type

of Tr

ansa

ction

Cons

olidat

ed

Cons

olidat

ed

FY 2

010

FY 2

011

the

Tran

sact

ion

Audit Co

mmitt

ee

ë Re

venu

es fr

om

sales

of e

quipmen

t an

d mac

hinery

spare

part

- 13

9.98

Pr

emier

Sys

tem E

ngine

ering

provid

ed s

tock

man

agem

ent s

ervic

es a

nd p

rocu

red

equip

men

t an

d mac

hinery

spare

part

to S

SC s

ince

it ha

s ex

pertise

and

spe

cializ

es in

mac

hinery

and

equip

men

t.

The

service

fee

was

compa

rable

to th

e marke

t pr

ice.

ë Ac

coun

ts re

ceiva

ble

54.49

37.08

Outstand

ing b

alanc

e ac

cord

ing

to th

e pa

ymen

t terms

unde

r no

rmal

trade

con

ditio

ns a

nd

the

acco

unts re

ceiva

ble

were

norm

al.

Outstand

ing a

ccou

nts

rece

ivable

from th

e aforem

entio

ned

service

s.

ë Ex

pens

e fro

m

purcha

sing

supp

lies

4.62

5.43

Pr

emier

Sys

tem E

ngine

ering

purch

ased

sup

plies

fro

m S

SC in

ord

er to

sav

e pu

rcha

sing

cost a

nd

effic

iently

man

age

supp

lies

of th

e Gr

oup. T

he

purcha

sing

price

of s

upplies

was

weig

hted

av

erag

e co

st o

f SSC

exc

luding

any

other

relat

ed p

roce

ssing

exp

ense

s.

Large

purcha

sing

quan

tity

of

supp

lies

enab

les th

e Gr

oup

to

rece

ive d

iscou

nts

and

increas

e ba

rgain

ing p

ower. T

he

purcha

sing

price

of s

upplies

that P

remier

Sys

tem

Engine

ering

pu

rcha

sed

from

SSC

was

compa

rable

to

marke

t pric

e wi

thou

t any

other

relat

ed p

roce

ssing

exp

ense

s.

1.6

Anva

r Pa

rawoo

d ë

Reve

nue

from th

e sa

le of fi

rewo

od

579.73

83

3.04

An

var P

araw

ood

sold fi

rewo

od to

SSC

as

Anva

r Paraw

ood

operates

the

busin

ess

of th

e sa

le of ru

bber w

ood

and

has

person

nel

suita

ble

to p

rovid

e su

ch s

ervic

e. Th

e pr

ice o

f the

firew

ood

was

the

price

on

the

date th

e tra

nsac

tion

was

entered

into

plus

the

operation

cost a

nd a

n ad

equa

te p

rofit m

argin

which

was

co

mpa

rable

to th

e marke

t pric

e.

The

sellin

g pr

ice o

f the

firew

ood

was

compa

rable

to

the

price

offe

red

by o

ther

selle

rs.

84 A n n u a l R e p o r t 2 0 1 1

Value

of T

rans

actio

n (T

HB M

illion

) Ne

cess

ity /

Rea

sona

blen

ess

of

Opinion

(s) of

the

Relate

d Pa

rties

Re

latio

nship

Type

of Tr

ansa

ction

Cons

olidat

ed

Cons

olidat

ed

FY 2

010

FY 2

011

the

Tran

sact

ion

Audit Co

mmitt

ee

2. S

empe

rflex

Asia

ë An

ass

ociat

e co

mpa

ny.

ë A

compa

ny in

whic

h ST

H,

the

majo

rity

shareh

olde

r of

STA,

holds

5.0%

of t

he

shares

. ë

A co

mpa

ny in

whic

h Mr.

Viya

vood

Sinc

haroen

kul,

the

majo

rity

shareh

olde

r and

the

Chair

man

of S

TA, h

olds

directly

and

indire

ctly,

in a

n ag

greg

ate

of 1

2.38

% o

f the

sh

ares

. ë

Three

directors

of S

TA, w

ho

are

Mr.

Viya

vood

Sinc

haroen

kul,

Mr.

Kitic

hai

Sinc

haroen

kul a

nd M

r. Ve

eras

ith S

incha

reon

kul,

are

the

directors

of S

empe

rflex

As

ia.

37.50

STA

rece

ived

divid

ends

from

Sem

perflex

Asia

pa

id fr

om th

e op

eration

resu

lts o

f Sem

perflex

As

ia.

The

paym

ent o

f divi

dend

was

mad

e in

acco

rdan

ce w

ith th

e reso

lution

of th

e sh

areh

olde

rsû

mee

ting

of S

empe

rflex

Asia

. ST

A rece

ived

divid

end

in pr

oportio

n to it

s sh

areh

olding

in

Sempe

rflex

Asia

.

2.1

STA

ë Re

venu

e fro

m

divid

ends

75

.00

2.2

Rubb

erland

Pr

oduc

ts

ë Re

venu

e fro

m

divid

ends

10

.00

5.00

Ru

bberlan

d Pr

oduc

ts re

ceive

d divid

ends

paid

fro

m S

empe

rflex

Asia

bas

ed o

n its

ope

ratin

g resu

lts.

The

paym

ent o

f divi

dend

was

mad

e in

acco

rdan

ce w

ith th

e reso

lution

of th

e sh

areh

olde

rsû

mee

ting

of S

empe

rflex

Asia

. Ru

bberlan

d Pr

oduc

ts re

ceive

d divid

end

in pr

oportio

n to it

s sh

areh

olding

in S

empe

rflex

As

ia.


Value

of T

rans

actio

n (T

HB M

illion

) Ne

cess

ity /

Rea

sona

blen

ess

of

Opinion

(s) of

the

Relate

d Pa

rties

Re

latio

nship

Type

of Tr

ansa

ction

Cons

olidat

ed

Cons

olidat

ed

FY 2

010

FY 2

011

the

Tran

sact

ion

Audit Co

mmitt

ee

2.3

Star

light

Exp

ress

Tr

ansp

ort

ë Re

venu

e fro

m

trans

porta

tion

5.17

7.02

St

arlig

ht E

xpress

Trans

port

prov

ided

logistics

se

rvice

s to S

empe

rflex

Asia

as

Starlig

ht E

xpress

Tran

sport c

ondu

cted

logistics

servic

es a

nd h

as

equip

men

t and

perso

nnel

read

y for t

he

prov

ision

of s

uch

service

. The

servic

e fee

was

compa

rable

to th

e marke

t and

cha

nged

ac

cord

ing to

the

oil p

rice

level.

Starlig

ht E

xpress

Trans

port

has

expe

rtise

in lo

gistics

servic

es

and

docu

men

tatio

n wo

rk

conc

ernin

g logistics

. Th

e rate

of s

ervic

e fee

refle

cted

the

reas

onab

le co

st o

f its b

usine

ss

operation

and

was

compa

rable

to o

ther s

ervic

e pr

oviders

in the

same

indus

try.

2.4

Prem

ier Sy

stem

En

gine

ering

ë Re

venu

e fro

m th

e man

ufac

turin

g of

mac

hinery

and

equip

men

t

14.71

15.17

Prem

ier S

ystem E

ngine

ering

sold

mac

hinery

and

equip

men

t to

Sempe

rflex

Asia

as

the

mac

hinery

used

in th

e man

ufac

turin

g pr

oces

s of S

empe

rflex

Asia

requ

ired

spec

ial

spec

ification

and

Sempe

rflex

Asia

nee

ded

to

keep

its

prod

uctio

n tech

nology

and

equ

ipmen

t as

its

busin

ess

secret. P

remier

Sys

tem

Engine

ering

has

equ

ipmen

t and

perso

nnel

suita

ble

for t

he m

anufac

turin

g of m

achin

ery

and

equip

men

t. Th

e pr

ice o

f the

mac

hinery

and

equip

men

t sold

by P

remier

Sys

tem

Engine

ering

were

compa

rable

to th

e marke

t pr

ice.

Prem

ier S

ystem E

ngine

ering

ha

s ex

pertise

in th

e de

velopm

ent,

prod

uctio

n, a

nd

main

tena

nce

of m

achin

ery

and

equip

men

t in

relat

ion

to th

e pr

oduc

tion

of n

atural

rubb

er

and

finish

ed p

rodu

cts

from

natural r

ubbe

r.

The

price

of t

he m

achin

ery

and

equip

men

t sold

to S

empe

rflex

As

ia refle

cted

the

reas

onab

le co

st o

f its p

rodu

ction

and

an

adeq

uate p

rofit m

argin

of

Prem

ier S

ystem E

ngine

ering

an

d wa

s co

mpa

rable

to th

e marke

t pric

e.

86 A n n u a l R e p o r t 2 0 1 1

Value

of T

rans

actio

n (T

HB M

illion

) Ne

cess

ity /

Rea

sona

blen

ess

of

Opinion

(s) of

the

Relate

d Pa

rties

Re

latio

nship

Type

of Tr

ansa

ction

Cons

olidat

ed

Cons

olidat

ed

FY 2

010

FY 2

011

the

Tran

sact

ion

Audit Co

mmitt

ee

ë Re

venu

e fro

m

clean

ing s

ervic

e 1.41

6.22

Pr

emier

Sys

tem E

ngine

ering

, who

is a

sp

ecial

ist in

mac

hinery

and

equip

men

t and

a

selle

r of m

achin

ery

and

equip

men

t to

Sempe

rflex

Asia

, provid

ed c

leanin

g se

rvice

s to

Sempe

rflex

Asia

with

servic

e fee

compa

rable

to m

arke

t rate.

Prem

ier S

ystem E

ngine

ering

ha

s ex

pertise

in th

e de

velopm

ent,

prod

uctio

n, a

nd

main

tena

nce

of m

achin

ery

and

equip

men

t in

relat

ion

to th

e pr

oduc

tion

of n

atural

rubb

er

and

finish

ed p

rodu

cts

from

natural r

ubbe

r.

The

service

fee

for c

leanin

g of

mac

hinery

refle

cted

the

reas

onab

le co

st o

f its

prod

uctio

n an

d an

ade

quate

profit

margin

of P

remier

Sys

tem

Engin

eerin

g an

d wa

s co

mpa

rable

to th

e marke

t pric

e.

ë Re

venu

e fro

m

sellin

g an

d main

tena

nce

mac

hine

- 11

.93

Prem

ier S

ystem E

ngine

ering

provid

ed

main

tena

nce

service

s of m

achin

ery

to S

SC.

The

service

fee

was

base

d on

actua

l works

wh

ich w

as c

ompa

rable

with m

arke

t rates

.

Service

fee

was

compa

rable

with m

arke

t rates

.

ë Re

venu

es fr

om

sales

of e

quipmen

t an

d mac

hinery

spare

part

- 40

.08

Prem

ier S

ystem E

ngine

ering

provid

ed s

tock

man

agem

ent s

ervic

es a

nd p

rocu

red

equip

men

t an

d mac

hinery

spare

part

to S

empe

rflex

Asia

sin

ce it

has

exp

ertis

e an

d sp

ecial

izes

in mac

hinery

and

equip

men

t.

The

service

fee

was

compa

rable

to th

e marke

t pr

ice.


Value

of T

rans

actio

n (T

HB M

illion

) Ne

cess

ity /

Rea

sona

blen

ess

of

Opinion

(s) of

the

Relate

d Pa

rties

Re

latio

nship

Type

of Tr

ansa

ction

Cons

olidat

ed

Cons

olidat

ed

FY 2

010

FY 2

011

the

Tran

sact

ion

Audit Co

mmitt

ee

ë Ac

coun

ts re

ceiva

ble

2.88

14

.57

Acco

unt r

eceiv

able

from th

e ab

ove

service

s.

Outstand

ing b

alanc

e ac

cord

ing

to th

e pa

ymen

t terms

unde

r no

rmal

trade

con

ditio

ns a

nd

the

acco

unts re

ceiva

ble

were

norm

al.

2.5

Anva

r Pa

rawoo

d ë

Reve

nue

from th

e sa

le of p

allets

6.36

8.99

An

var P

araw

ood

sold p

allets

to S

empe

rflex

As

ia as

Anv

ar P

araw

ood

cond

ucted

the

busin

ess

of s

elling

rubb

er w

ood

and

has

person

nel s

uitab

le for p

rovid

ing s

uch

service

. Th

e pr

ice o

f pall

ets

sold to

Sem

perflex

Asia

wa

s co

mpa

rable

to th

e marke

t pric

e.

The

price

of t

he p

allets

was

compa

rable

to th

e pr

ice o

f othe

r sell

ers.

3.1

STA

ë Re

venu

e fro

m

divid

ends

- 30

.15

STA

rece

ived

divid

ends

from

Tha

i Tec

h Ru

bber p

aid fr

om th

e op

eration

resu

lts o

f Tha

i Te

ch R

ubbe

r.

The

paym

ent o

f divi

dend

was

mad

e in

acco

rdan

ce w

ith th

e reso

lution

of th

e sh

areh

olde

rsû

mee

ting

of T

hai T

ech

Rubb

er.

STA

rece

ived

divid

end

in pr

oportio

n to it

s sh

areh

olding

in

Thai

Tech

Rub

ber.

ë An

ass

ociat

e co

mpa

ny.

ë Tw

o directors

of S

TA, w

ho

are

Mr.

Viya

vood

Sinc

haroen

kul a

nd M

r. Pa

ul Su

mad

e Le

e, a

re th

e directors

of T

hai T

ech

Rubb

er.

3. T

hai T

ech

Rub

ber

88 A n n u a l R e p o r t 2 0 1 1

Value

of T

rans

actio

n (T

HB M

illion

) Ne

cess

ity /

Rea

sona

blen

ess

of

Opinion

(s) of

the

Relate

d Pa

rties

Re

latio

nship

Type

of Tr

ansa

ction

Cons

olidat

ed

Cons

olidat

ed

FY 2

010

FY 2

011

the

Tran

sact

ion

Audit Co

mmitt

ee

3.2

Sri T

rang

Inte

rnat

iona

l ë

Cost o

f the

pu

rcha

se o

f TSR

6,26

9.56

6,04

5.30

Sr

i Trang

Internationa

l purch

ased

TSR

from

Th

ai Te

ch R

ubbe

r for s

elling

to in

ternationa

l marke

t. Th

e pu

rcha

se p

rice

was

base

d on

SICO

M

The

natural r

ubbe

r tha

t the

Gr

oup

prod

uced

to in

ternationa

l cu

stom

ers

was

distrib

uted

by

Sri T

rang

Internationa

l as

Thai

Tech

Rub

ber d

id n

ot d

o marke

ting

or s

ale o

f natural

rubb

er to

internationa

l cu

stom

ers.

The

natural r

ubbe

r pric

e that

Thai

Tech

sold

to S

ri Tran

g Internationa

l was

com

parable

to

the

marke

t pric

e that th

ird

party

sold

to S

ri Tran

g int

erna

tiona

l.

ë Ac

coun

ts p

ayab

le 77

1.60

15

5.99

Ac

coun

ts p

ayab

le fro

m th

e pr

ovisi

on o

f the

aforem

entio

ned

service

s.

Outstand

ing b

alanc

e ac

cord

ing

to th

e pa

ymen

t terms

unde

r no

rmal

trade

con

ditio

ns a

nd

the

acco

unts p

ayab

le we

re

norm

al.


Value

of T

rans

actio

n (T

HB M

illion

) Ne

cess

ity /

Rea

sona

blen

ess

of

Opinion

(s) of

the

Relate

d Pa

rties

Re

latio

nship

Type

of Tr

ansa

ction

Cons

olidat

ed

Cons

olidat

ed

FY 2

010

FY 2

011

the

Tran

sact

ion

Audit Co

mmitt

ee

4.1

STA

ë Ac

coun

ts

rece

ivable

(pay

able)

for t

he

future tr

ading

of

natural r

ubbe

r

81.27

71

.42

Acco

unts re

ceiva

ble

from th

e tra

ding

of n

atural

rubb

er fu

ture c

ontra

cts

No

rmal

busin

ess

trans

actio

n for

future tr

ading

ë An

ass

ociat

e co

mpa

ny.

ë Tw

o directors

of S

TA, w

ho

are

Mr.

Viya

vood

Sinc

haroen

kul a

nd M

r. Kitic

hai S

incha

roen

kul,

are

the

directors

of P

attana

Ag

ro F

utures

.

4. P

atta

na A

gro

Fut

ures

ë Am

ount d

ue fr

om

futures

brok

ers

2.77

44

.06

Norm

al bu

sines

s tra

nsac

tion

for

future tr

ading

De

posit

mad

e for t

rading

in fu

tures

marke

t in

acco

rdan

ce w

ith A

FET

crite

ria.

5. P

ruks

a Ru

bber

Co., L

td.

ë Th

e Ex

ecutive

s Of

ficer o

f ST

A, M

r. Ud

om

Pruk

sanu

sak

and

siblin

gs,

hold m

ore

than

50%

of t

he

shares

in P

ruks

a Ru

bber

Co.,

Ltd. M

r. Ud

om

Pruk

sanu

sak

is the

authorize

d sig

natory o

f Pr

uksa

Rub

ber C

o., L

td.

5.1

STA

ë Re

venu

e fro

m th

e sa

le of fi

eld la

tex

5.32

7.95

ST

A so

ld fi

eld la

tex

to P

ruks

a Ru

bber C

o.,

Ltd. T

he s

ale w

as m

ade

at th

e ST

A rubb

er

plan

tatio

n be

caus

e ST

A did

not h

ave

any

depa

rtmen

t to

hand

le the

trans

porta

tion

of fi

eld

latex

on

its o

wn a

nd in

ord

er to

sav

e co

st o

n the

man

agem

ent,

sales

, and

relat

ed p

erso

nnel.

Th

e pr

ice a

t whic

h fie

ld la

tex

was

sold to

Pr

uksa

Rub

ber C

o., L

td. w

as a

t the

pric

e de

term

ined

daily

by

the

proc

urem

ent

depa

rtmen

t of S

TA.

Due

to th

e fact th

at S

TA o

nly

had

a few

rubb

er p

lantatio

n area

s read

y for t

apping

. In

orde

r to

save

cos

t, ST

A de

cided

to m

inimize

its

oblig

ations

on

trans

porta

tion

and

man

agem

ent b

y se

lling

field la

tex

to P

ruks

a Ru

bber

Co.,

Ltd. a

t the

pric

e de

term

ined

by th

e pr

ocurem

ent

depa

rtmen

t of t

he G

roup

.

90 A n n u a l R e p o r t 2 0 1 1

Value

of T

rans

actio

n (T

HB M

illion

) Ne

cess

ity /

Rea

sona

blen

ess

of

Opinion

(s) of

the

Relate

d Pa

rties

Re

latio

nship

Type

of Tr

ansa

ction

Cons

olidat

ed

Cons

olidat

ed

FY 2

010

FY 2

011

the

Tran

sact

ion

Audit Co

mmitt

ee

5.2

Nam H

ua R

ubbe

r ë

The

purcha

se o

f fie

ld la

tex

120.09

19

1.59

Na

m H

ua R

ubbe

r purch

ased

field

latex

from

Pruk

sa R

ubbe

r Co., L

td. b

ecau

se th

e rubb

er

plan

tatio

ns o

f Pruks

a Ru

bber C

o., L

td. w

ere

located

clos

e to th

e factory

and

the

purcha

sing

center fo

r purch

asing

field

latex

of N

am H

ua

Rubb

er.

Moreo

ver,

Pruk

sa R

ubbe

r Co., L

td.

was

capa

ble

of s

upplyin

g rubb

er o

f the

qua

lity

and

quan

tity

as re

quire

d by

Nam

Hua

Rub

ber.

The

purcha

sing

price

of t

he fi

eld la

tex

was

at

the

price

that th

e Gr

oup

mad

e an

ann

ounc

emen

t to g

eneral

custom

ers

in fro

nt o

f its fa

ctory.

Nam H

ua R

ubbe

r req

uired

field

lat

ex a

s a

raw

material

for t

he

prod

uctio

n of C

once

ntrated

Latex. T

he p

urch

ase

price

was

at th

e marke

t pric

e de

term

ined

daily

by

the

proc

urem

ent

depa

rtmen

t of t

he G

roup

for

the

purp

ose

of p

urch

asing

raw

material

s fro

m g

eneral

supp

liers.

5.3

Sada

o P.

S.

Ru

bber

ë

Cost o

f the

pu

rcha

se o

f un

smok

ed s

heet

rubb

er

12.26

16.38

Sada

o P.

S. R

ubbe

r purch

ased

uns

mok

ed s

heet

rubb

er fr

om P

ruks

a Ru

bber C

o., L

td.,

a d

ealer

wh

o bu

ys u

nsmok

ed s

heet ru

bber fro

m th

e farm

ers

and

sells

it to

factories

loca

ted

in the

Sada

o Di

stric

t whe

re is

close

to th

e Sa

dao

P.S.

factory. M

oreo

ver,

Pruk

sa R

ubbe

r was

ca

pable

to s

upply

unsm

oked

she

et ru

bber a

t the

quali

ty a

nd q

uantity

as

requ

ired

by S

adao

P.

S. R

ubbe

r. T

he p

urch

ase

price

of u

nsmok

ed

shee

t rub

ber w

as th

e pr

ice th

at th

e Gr

oup

mad

e an

ann

ounc

emen

t to

gene

ral c

ustomers

in fro

nt o

f its fa

ctory.

Sada

o P.

S. R

ubbe

r req

uired

un

smok

ed s

heet ru

bber a

s the

raw

material

for t

he p

rodu

ction

of R

SS. T

he p

urch

ase

price

wa

s at th

e marke

t pric

e de

term

ined

daily

by

the

proc

urem

ent d

epartm

ent o

f the

Gr

oup

for t

he p

urpo

se o

f pu

rcha

sing

raw

material

s fro

m

gene

ral s

upplier

s.


Value

of T

rans

actio

n (T

HB M

illion

) Ne

cess

ity /

Rea

sona

blen

ess

of

Opinion

(s) of

the

Relate

d Pa

rties

Re

latio

nship

Type

of Tr

ansa

ction

Cons

olidat

ed

Cons

olidat

ed

FY 2

010

FY 2

011

the

Tran

sact

ion

Audit Co

mmitt

ee

6.1

STA

ë Tran

sportatio

n ex

pens

e 5.38

4.42

W

orldwi

de S

hipping

Log

istic

Service

Pte.,

prov

ided

freig

ht fo

rwarding

servic

e for

trans

porta

tion

of g

oods

from

STA

factories

to

overse

as c

ustomers. T

he s

ervic

e fee

paid b

y ST

A to W

orldwi

de S

hipping

Log

istic

Service

Pt

e., w

as c

ompa

rable

with th

e se

rvice

fee

of

othe

r servic

e pr

oviders

havin

g no

con

nection

with th

e Gr

oup. ST

A wi

ll co

nduc

t a p

rice

compa

rison

eac

h tim

e it

enters in

to a

n ag

reem

ent f

or re

ceivi

ng s

uch

service

s.

The

fee

was

reas

onab

le an

d co

mpa

rable

to th

e marke

t pr

ice.

ë A

compa

ny w

ith 1

00%

of i

ts

shares

own

ed b

y a

spou

se

of a

chil

d of a

Dire

ctor o

f ST

A -

Mr.

Pras

it Pa

nidku

l

6. W

orldwide

Shipp

ing

Log

istic

Ser

vice

P

te.

6.2

Sri

Tran

g

In

tern

ationa

l

ë Tran

sportatio

n Co

st

15.73

15

.00

Worldwi

de S

hipping

Log

istic

Service

Pte.,

prov

ided

freig

ht fo

rwarding

servic

e for

trans

porta

tion

of g

oods

to o

versea

s

custom

ers. T

he s

ervic

e fee

paid b

y Sr

i Trang

Internationa

l to

Worldwi

de S

hipping

Log

istic

Service

Pte.,

was

compa

rable

with th

e se

rvice

fee

of o

ther s

ervic

e pr

oviders

who

are

not

relat

ed p

arty o

f the

Group

. Sr

i Trang

Internationa

l will

cond

uct a

pric

e co

mpa

rison

ea

ch ti

me

it en

ters in

to a

n ag

reem

ent f

or

rece

iving

suc

h se

rvice

s.

The

fee

was

reas

onab

le an

d co

mpa

rable

to th

e marke

t pr

ice.

92 A n n u a l R e p o r t 2 0 1 1

Value

of T

rans

actio

n (T

HB M

illion

) Ne

cess

ity /

Rea

sona

blen

ess

of

Opinion

(s) of

the

Relate

d Pa

rties

Re

latio

nship

Type

of Tr

ansa

ction

Cons

olidat

ed

Cons

olidat

ed

FY 2

010

FY 2

011

the

Tran

sact

ion

Audit Co

mmitt

ee

6.3

P.T. S

tar Ru

bber

ë

Docu

men

t fee

(Bill

of L

odging

) -

13.19

Worldwi

de S

hipping

Log

istic

Service

Pte wa

s hir

ed b

y P.

T. S

tar

Rubb

er to p

rovid

e ex

port

docu

men

t at t

he ra

te o

f RPH

2,400

,000

per s

et

of B

ill of L

odging

. The

fee

was

compa

rable

to

othe

r ind

epen

dent c

ompa

nies.

The

fee

was

reas

onab

le an

d co

mpa

rable

to th

e marke

t pric

e.

7. T

ham P

hann

ara

Rub

ber Fu

nd

C

oope

rativ

e

Wife

(Mrs. J

irapo

rn

Akso

rnna

m) of C

o-Gr

oup

Prod

uctio

n Man

ager (Mr.

Arso

m Ak

sornna

m) is

an

authorize

d pe

rson

on

beha

lf of th

e co

operative

. ë

Purcha

sing

field

latex

-

89.68

STA

purcha

sed

filed

latex

from

Thu

m P

hann

ara

Rubb

er F

und

Coop

erative

as

it sit

uates

nearby

ST

Aûs

proc

urem

ent u

nit. M

oreo

ver,

it wa

s ca

pable

of s

upplyin

g rubb

er o

f the

qua

lity a

nd

quan

tity

as re

quire

d by

STA

. Th

e pu

rcha

sing

price

of t

he fi

eld la

tex

was

at th

e pr

ice th

at th

e Gr

oup

mad

e an

ann

ounc

emen

t to

gene

ral

custom

ers

in fro

nt o

f its fa

ctory.

STA

requ

ired

field la

tex

as a

raw

material

for t

he p

rodu

ction

of C

once

ntrated

Latex. T

he

purcha

se p

rice

was

at th

e marke

t pric

e de

term

ined

daily

by

the

proc

urem

ent d

epartm

ent

of th

e Gr

oup

for t

he p

urpo

se

of p

urch

asing

raw

material

s fro

m g

eneral

supp

liers.

8. M

r. So

mwan

g

S

inch

aroe

nkul

Father o

f ë

Mr.

Viya

vood

Sinc

haroen

kul,

Majo

r sha

reho

lder, C

hairm

an

and

Man

aging

Dire

ctor o

f the

Compa

ny

ë Mr.

Kitic

hai S

incha

roen

kul,

director o

f the

Com

pany

an

d Su

bsidiar

ies

ë Mr.

Lee

Paul

Sumad

e,

director o

f the

Com

pany

Gr

andfathe

r of

ë Mr.

Veeras

ith S

incha

reon

kul

ë Fe

e of a

dviso

r se

rvice

3.20

4.80

Th

e Bo

ard

of D

irectors

appr

oved

the

enga

gemen

t of M

r. So

mwa

ng S

incha

roen

kul a

s the

Hono

rary A

dvise

r of S

TA fo

r period

of tw

o ye

ars

in orde

r to

adv

ise o

n the

form

ulatio

n of

the

Compa

nyûs g

oals

and

vision, in

vestmen

t an

d bu

sines

s plan

, procu

remen

t stra

tegies

, as

well as

stra

tegies

to d

eal w

ith c

ommun

ities

and

loca

l autho

rities

. His

remun

eration

is Ba

ht

400,00

0 pe

r mon

th.

There

is no

ava

ilable

compa

rable

fee

for s

uch

advis

e se

rvice

. How

ever, w

ith h

is kn

owled

ge, e

xperien

ce,

compe

tenc

y, a

nd ti

me

devo

tion, th

e Co

mpa

ny

cons

iders

the

com

pens

ation

of M

r. So

mwa

ng S

incha

roen

kul

reas

onab

le.


Value

of T

rans

actio

n (T

HB M

illion

) Ne

cess

ity /

Rea

sona

blen

ess

of

Opinion

(s) of

the

Relate

d Pa

rties

Re

latio

nship

Type

of Tr

ansa

ction

Cons

olidat

ed

Cons

olidat

ed

FY 2

010

FY 2

011

the

Tran

sact

ion

Audit Co

mmitt

ee

9. T

he B

oard

of

Dire

ctor

of S

TA

and

subs

idiarie

s co

nsists o

f: ë

Mr.

Somwa

ng

Sinc

haroen

kul

ë Mr.

Viya

vood

Sinc

haroen

kul

ë Mr.

Kitic

hai

Sinc

haroen

kul

ë Mr.

Pras

it Pa

nidku

l ë

Mr.

Chaiy

os

Sinc

haroen

kul

ë Mrs. P

romso

ok

Sinc

haroen

kul

ë Mr.

Anan

Pr

uksa

nusa

k

Directors

of S

TA a

nd th

e su

bsidiar

ies

Person

al gu

aran

tees

ha

ve b

een

prov

ided

on

the

loan

s that

have

bee

n ex

tend

ed

to S

TA a

nd

subs

idiar

ies b

y fin

ancia

l ins

titutions

3,89

0.00

1,23

5.00

Di

rectors

of S

TA a

nd th

e su

bsidiar

ies p

rovid

ed

person

al gu

aran

tees

on

the

loan

s that h

ave

been

exten

ded

to S

TA a

nd s

ubsid

iaries

by

finan

cial ins

titutions

as

a requ

iremen

t of

borro

wing

spe

cified

by

certa

in fin

ancia

l ins

titutions

.

Such

sup

port

complied

with

the

requ

iremen

ts o

f spo

nsor

supp

ort a

gree

men

t and

was

mad

e for t

he b

enefit

of S

TA

and

the

subs

idiar

ies.

The

directors

actin

g as

gua

rantors

did

not c

harge

any

fee

for

prov

iding

the

person

al.

94 A n n u a l R e p o r t 2 0 1 1

Aggr

egat

ed v

alue

of a

ll Inte

rested

Per

son

Ag

greg

ate

value

of a

ll

Tr

ansa

ctions

for th

e ye

ar e

nded

201

1 un

der re

view

Inte

rested

Per

son

Tran

sact

ions

Name

of In

tere

sted

Per

son

(exc

luding

tra

nsac

tions

less

tha

n

cond

ucte

d un

der sh

areh

olde

rsû

SGD

100,00

0 an

d tra

nsac

tions

man

date

(ex

clud

ing

trans

actio

ns

cond

ucte

d un

der sh

areh

olde

rsû m

anda

te)

less

tha

n SG

D 10

0,00

0)

Pruk

sa R

ubbe

r Co., L

td

- ST

A so

ld fi

eld la

tex

to P

ruks

a Ru

bber C

o., L

td

8.0

- Pr

uksa

Rub

ber C

o., L

td

- Na

m H

ua R

ubbe

r purch

ased

field

latex

and

Sada

o P.

S.

208.0

- Ru

bber p

urch

ased

uns

mok

ed s

heet ru

bber fr

om P

ruks

a Ru

bber C

o., L

td

W

orldwi

de S

hipping

Log

istic

Service

Pte -

STA

and

Sri

Tran

g Internationa

l mad

e

19.4

- pa

ymen

t for lo

gistic

service

s to W

orldwi

de S

hipping

Log

istic

Service

Pte

Mr S

omwa

ng S

incha

roen

kul -

remun

eration

for e

ngag

emen

t as

hono

rary a

dvise

r for S

TA

4.8

- Gu

aran

tees

and

sec

urity

provid

ed b

y the

Board

of d

irectors

of S

TA a

nd th

eir

1,23

5.0

- as

socia

tes, n

amely

; ë

Mr.

Somwa

ng S

incha

roen

kul

ë Mr.

Viya

vood

Sinc

haroen

kul

ë Mr.

Kitic

hai S

incha

roen

kul

ë Mr.

Pras

it Pa

nidku

l ë

Mr.

Chaiy

os S

incha

roen

kul

ë Mrs. P

romsu

k Sinc

haroen

kul

ë Mr.

Anan

Pruks

anus

ak

ë Mr.

Sombo

on P

ruks

anus

ak

Save

as

disc

lose

d in ç

Related

Party

Trans

actio

nsé, the

re w

ere

no o

ther m

aterial c

ontra

cts

entered

into b

y the

Compa

ny o

r an

y of it

s su

bsidiarie

s invo

lving

the

interests

of a

ny d

irector o

r co

ntrollin

g sh

areh

olde

r which

are e

ither s

till su

bsist

ing

at the

end

of the

finan

cial y

ear or e

ntered

into

since

the

end

of the

prev

ious

finan

cial y

ear.

Intereste

d Pe

rson

Tra

nsac

tions

Interested

Perso

n tra

nsac

tions

as

defin

ed in

the

SGX

listin

g man

ual R

ule: 9

20 for the

finan

cial y

ear en

ded

31 D

ecem

ber 20

11 a

re a

s follo

ws:

Unit

: THB

million


Audit Committeeûs Opinion on Related Party Transactions The Audit Committee of STA evaluated and expressed its opinion on the above related party transactions that such transactions were carried out reasonably and were necessary to the business operation of STA. Measures or Procedures for Approving the Related Party Transactions In the event that STA or its subsidiaries carries out its business with a party who may have a conflict of interest, whether at present or in the future, or have an interest with STA, the Audit Committee will express its opinion regarding the necessity and the reasonableness of the price of such transaction. The Audit Committee will ensure that the terms and conditions of these transactions are consistent with market practice and the prices charged for these transactions compared with third party or market prices. If the Audit Committee is unable to evaluate related party transactions due to lack of expertise in certain areas, STA will arrange an independent expert or the auditor of STA to give an opinion on such transactions. The Board of Directors or Audit Committee or the STA shareholders, as the case may be, will use this opinion from the independent expert as a supplement to form their own conclusion. Those directors who may have an interest in the transaction are prohibited from voting on such transactions. In addition, related party transactions will be disclosed in the notes to the STAûs audited or reviewed financial statements.

At present, STA has a pricing policy for it subsidiaries, associates, joint venture entities and related companies as follows:

Pricing Policy

Sales of products and raw materials At armûs length as if it was transacted with a third party Revenues from services - logistic services At armûs length as if it was transacted with a third party Revenues from services - management At fixed rate pursuant to the contract which is comparable services to the market price Interest income from trade credit At armûs length as if it was transacted with a third party Rental income At a contract price which had been agreed upon and is comparable to the market price Product purchase At armûs length as if it was transacted with a third party Rental and Service Expenses At armûs length as if it was transacted with a third party Guarantee No fee charged Fixed assets acquisition At armûs length as if it was transacted with a third party Furthermore, the Board of Directors Meeting resolved to approve in principle business transactions with general trading conditions or supporting normal business transactions with general trading conditions between STA or its subsidiaries and the Directors, Executive Officers or any related parties.

STA and its subsidiaries may purchase raw materials, sell products, provide transportation services or enter into any other transactions between the Directors, Executive Officers or related parties, whether at present or in the future. In this regard, STA authorizes the management to approve such transactions if the purchase price, selling price, transportation fees or other related transactions is not different from

96 A n n u a l R e p o r t 2 0 1 1

the price offered to other customers (market price) and the conditions and commercial terms are the same as those an ordinary person would agree with any party under similar circumstances. The transportation fee shall be the same as the rate of transportation used by the general public. In respect of the transportation fee, the fee will be according to the normal market rate, but shall not be more than 10% compared with the fee paid by other trade partners. In addition, STA shall prepare a report on the summary of the transactions every quarter to present to the Board of Directors Meeting or upon the request of the Board of Directors. Policy on Future Related Party Transactions In the event that STA engages in related party transactions in the future, STA will ensure that such transactions are carried out in compliance with the SEC Act, the Securities Law of Singapore, regulations, notifications, orders or rules of the SET and SGX-ST. In addition, STA must also comply with the Thai GAAP on disclosure rules related to related party transactions and other requirements as specified by the Institute of Certified Accountants of Thailand and the Companyûs policy or other relevant laws.

In addition, when STA enters into related party transactions, STA will seek the Audit Committeeûs opinion on the reasonableness of such transactions. In the event that the Audit Committee is unable to evaluate related party transactions due to lack of expertise in certain areas, the Committee may for arrange an independent expert, such as auditor or independent appraiser, to give opinion on the transactions. The opinion of the Audit Committee or the independent expert will be used by the Companyûs Board of Directors or shareholders, as the case may be, for making a decision to ensure that these related party transactions are carried out without any conflict of interest and for the best interest of all shareholders.


Managementûs Discussion and Analysis of Financial Condition and Results of Operations

1. Financial Statements Accounting Policy Changes

Commencing on 1 July 2011, the Group has adopted TAS 12 çIncome Taxesé before the standard comes into effect as published in the Government Gazette. This accounting standard comes into effect for periods beginning on or after 1 January 2013. In addition, the Group has adopted the accounting for derivative financial instruments, of which comprise rubber forward contracts made with traders, rubber futures contracts, interest rate swaps and forward foreign exchange contracts, that are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at fair value, and the resultant gains and losses are recognised in the statements of comprehensive income. The Group also applies the presentation and disclosures of financial instruments under TAS 107 (formerly TAS 48) çFinancial Instruments: Presentation and Disclosuresé. Statements of Financial Position as at 31 December 2011 have been presented in comparison with as at 31 December 2010 and Statements of Comprehensive Income have been presented in comparison with the year ended 31 December 2010 which are retrospectively restated for comparative purposes.

Financial statement for FY2009 presented below; however, has been prepared in accordance with Thai generally accepted accounting principles under the Accounting Act B.E. 2543.

1.1 Statements of Financial Position

(Unit : THB million)

Statements of Financial Position 2011 2010 2009

Assets Current assets Cash and cash equivalents 2,273.0 1,774.0 980.6 Derivative financial instruments 329.3 459.6 - Trade accounts receivable and other receivables, net 7,787.4 6,239.8 4,131.7 Amounts due from futures brokers 406.4 135.1 52.5 Inventories - net 17,336.6 20,282.4 10,173.2 Other current assets 198.9 60.2 581.9 Total current assets 28,331.7 28,951.0 15,920.0 Non-current assets Long-term loan to an associate 62.9 - - Fixed deposits pledged as collateral 143.5 125.4 83.5 Investments in associates 3,122.6 2,615.4 2,371.6 Investment in a joint venture 456.5 325.3 255.0 Available-for-sale financial assets 43.7 46.3 36.7 Property, plant and equipment, net 7,475.6 5,213.4 4,245.3 Intangible assets, net 24.2 21.7 14.3

98 A n n u a l R e p o r t 2 0 1 1


Statements of Financial Position 2011 2010 2009

Investment properties 102.3 48.0 22.9 Witholding tax deducted at source 76.6 143.3 121.2 Deferred income tax assets 537.7 130.3 - Other non-current assets 35.0 35.6 35.0 Total non-current assets 12,080.5 8,704.7 7,185.4 Total assets 40,412.2 37,655.8 23,105.4 Liabilities and shareholdersû equity Current liabilities Short-term loans from financial institutions 15,425.6 20,452.6 11,988.8 Trade accounts payable and other payables 2,543.7 3,042.1 1,695.2 Current portion of long-term loans from financial institutions 120.0 597.6 206.2 Current portion of finance lease liabilities 11.5 17.2 12.2 Derivative financial instruments 1,112.2 493.5 - Current income tax liabilities 192.4 119.7 76.5 Other current liabilities 65.2 64.9 87.0 Total current liabilities 19,470.6 24,787.6 14,066.0 Non-current liabilities Long-term loans from financial institutions 314.9 2,226.1 1,578.1 Debentures 2,150.0 - - Finance lease liabilities 12.3 22.9 15.3 Deferred income tax liabilities 328.8 138.4 - Provision for post employment benefit obligations 104.8 89.3 77.2 Total non-current liabilities 2,910.7 2,476.7 1,670.6 Total liabilities 22,381.4 27,264.3 15,736.6 Shareholdersû equity Issued and paid-up share capital 1,280.0 1,000.0 1,000.0 Premium on share capital 8,551.0 1,123.8 1,123.8 Deduction arising from acquisition of additional interest in subsidiaries from non-controlling interests (173.1) (173.1) (173.1) Revaluation surplus, net of accumulated depreciation 833.2 850.0 1,010.7 Unrealised gain on available-for-sale financial assets 0.6 3.0 (6.2) Cumulative translation adjustments (120.5) (283.8) (46.0) Retained earnings Appropriated - legal reserve 128.0 100.0 100.0 Unappropriated 7,437.3 7,729.4 4,323.4 Total parentûs shareholdersû equity 17,936.4 10,349.3 7,332.5 Non-controlling interests 94.4 42.2 36.3 Total shareholdersû equity 18,030.9 10,391.5 7,368.8 Total liabilities and shareholdersû equity 40,412.2 37,655.8 23,105.4


1.2 Statements of Comprehensive Income


Statements of Comprehensive Income 2011 2010 2009

Sales of goods and services 133,703.8 83,845.3 145,909.8 Cost of sales and services (127,941.3) (78,678.5) (42,375.3) Gross profit 5,762.5 5,166.8 3,534.5 Other income 165.2 77.2 105.9 Selling expenses (3,199.9) (1,780.7) (1,437.0) Administrative expenses (1,032.4) (576.5) (539.5) Gains (losses) on exchange rates (22.7) 925.5 538.0 Other gains (losses) - net 505.7 (10.4) (324.7) Operating profit 2,178.4 3,801.8 1,877.1 Share of profit of investments in associates and a joint venture 648.9 702.8 744.5 Profit before net financial costs and income tax 2,827.3 4,504.7 2,621.7 Finance income 16.2 6.2 6.0 Finance costs (885.0) (397.7) (329.9) Finance costs - net (868.8) (391.5) (323.8) Profit before income tax 1,958.5 4,113.2 2,297.8 Income tax expenses (629.2) (272.7) (115.4) Profit for the year 1,329.3 3,840.5 2,182.5 Owners of the parent 1,306.2 3,819.6 2,142.0 Non-controlling interests 23.0 20.9 40.5

1.3 Statements of cash flows


Statements of cash flows 2011 2010 2009

Cash flows from operating activities Profit before income tax 1,958.5 4,113.2 2,297.8 Adjustments for: Unrealised (gain) loss on foreign currency translations 139.8 (462.7) (257.3) Unrealised (Gain) loss from revaluation of derivative financial instuments 749.0 79.7 - Unrealised gain from revaluation of futures - - (56.4) Allowance for (reversal of) impairment of trade accounts receivable 31.2 (36.4) 31.6 Allowance for (reversal of) inventory cost in net realisable value 869.6 (1.0) (683.6) Allowance for impairment of other receivables - non-controlling interests 18.4 - - Provision for post-employment benefit obligations 15.7 15.8 7.8 Depreciation 476.1 366.0 341.9 Amortisation 7.1 6.0 8.0 Loss on asset revaluation 5.2 - - Finance costs 885.0 397.7 329.9 Dividend income (1.2) (17.6) (0.6) Loss in liquidation in other company - - 0.1 Share of profit of investments in associates and a joint venture (648.9) (702.8) (744.5) Gain from revaluation of investment properties (15.4) - -

100 A n n u a l R e p o r t 2 0 1 1


Statements of cash flows 2011 2010 2009

(Gain) loss on disposal and write-off of property, plant and equipment and intangible assets (8.0) 6.7 3.2 Changes in operating assets and liabilities: (Increase)/decrease in operating assets Trade accounts receivable and other receivables (1,565.8) (1,946.3) (1,448.0) Amounts due from futures brokers (271.4) 177.5 118.4 Inventories 2,076.2 (10,108.2) (5,057.1) Other current assets (138.7) (18.2) 93.0 Other non-current assets 0.7 (25.8) (22.8) Increase/(decrease) in operating liabilities Trade accounts payable and other payables (490.4) 1,068.0 1,042.1 Other current liabilities 0.1 234.8 56.5 Cash (used in)/provided by operating activities 4,093.1 (6,853.9) (3,940.0) Interest paid (878.2) (390.2) (328.0) Income tax paid (628.2) (284.9) (110.0) Net cash (used in)/provided by operating activities 2,586.7 (7,528.9) (4,378.0) Cash flows from investing activities Increase in long-term loan to an associate (62.9) - - (Increase) Decrease in fixed deposits at financial institutions - 0.3 (0.0) Increase in fixed deposits pledged as collateral (18.0) (42.0) (27.0) Increase in available-for-sale financial assets (0.1) (0.0) - Dividends received 75.8 749.0 270.3 Cash paid for investments in subsidiaries and associates (30.3) - - Proceeds from disposal of property, plant and equiment and intangible assets 162.5 37.5 16.5 Purchases of property, plant and equipment (2,844.1) (1,383.8) (788.9) Purchases of intangible assets (9.4) (13.5) (6.8) Purchases of investment property (6.8) - - Proceed form liquidation in other company - - 1.5 Proceeds from a decrease in share capital of an associate - 19.1 - Net cash (used in)/provided by investing activities (2,733.4) (633.4) (534.4) Cash flows from financing activities Increase/(decrease) in short-term loans from financial institutions (4,854.1) 8,163.5 5,016.1 Proceeds from long-term loans from financial institutions 62.3 1,609.6 - Repayments of long-term loans from financial institutions (2,695.9) (192.4) - Proceeds from issuance of debentures 2,150.0 - - Payments on finance lease liabilities (21.9) (16.8) (13.2) Dividends paid to minority interests - (8.0) - Dividend payment (1,600.0) (600.0) (200.0) Proceeds from capital increase from non-controlling Interest 7.2 - 2.7 Proceeds from issuance of new shares 8,034.9 - - Costs directly attributable to the issue of new shares (436.7) - - Net cash (used in)/provided by financing activities 645.7 8,955.9 4,805.6 Net increase in cash and cash equivalents 499.1 793.6 (106.7) Cash and cash equivalents at beginning of the year 1,774.0 980.4 1,087.1 Cash and cash equivalents at end of the year 2,273.0 1,774.0 980.4


1.4 Financial Ratios

Financial Ratios 2011 2010 2009

Liquidity Ratios Current ratio Times 1.46 1.17 1.13 Quick ratio Times 0.52 0.32 0.36 Cash flow liquidity ratio Times 0.12 (0.39) (0.37) Account receivable turnover1 Times 20.38 17.05 13.36 Average collection period Days 17.67 21.11 26.94 Inventory turnover2 Times 6.80 5.17 5.80 Inventory period Days 52.93 69.68 62.04 Account payable turnover3 Times 55.75 38.54 40.17 Average payment period Days 6.46 9.34 8.96 Cash Cycle Days 64.14 81.45 80.02 Profitability Ratios Gross profit margin (%) 4.31 6.16 7.70 Operating profit margin (%) 1.63 4.53 4.09 Operating cashflow to operating profit ratio (%) 1.19 (1.98) (2.33) Net profit margin (%) 0.98 4.56 4.67 Return on equity (ROE)4 (%) 9.19 43.01 33.53 Efficiency Ratios Return on assets (ROA)5 (%) 3.35 12.57 11.19 Return on fixed assets6 (%) 28.09 88.50 62.03 Fixed assets turnover ratio7 Times 21.07 17.73 11.47 Total assets turnover ratio8 Times 3.43 2.76 2.40 Financial Leverage Ratios Net debt to equity ratio Times 1.12 2.45 2.00 Debt to equity ratio Times 1.24 2.62 2.14 Interest coverage ratio Times 4.63 (17.25) (11.92) Debt service coverage ratio Times 0.21 (3.43) (4.34) Dividend payout ratio (%) n.a. 41.66 27.49

Notes : 1 Computed by dividing sales of goods and services by average trade accounts receivable 2 Computed by dividing cost of sales and services by average inventories 3 Computed by dividing cost of sales and services by trade accounts payable 4 Computed by dividing net profit for the year (attributable to owners of the parent) by average shareholdersû equity 5 Computed by dividing net profit for the year (attributable to owners of the parent) by average total assets 6 Computed by dividing summation of net profit for the year (attributable to owners of the parent) and depreciation by

average fixed assets 7 Computed by dividing sales of goods and services by average fixed assets 8 Computed by dividing total revenues by average total assets

102 A n n u a l R e p o r t 2 0 1 1

2. Managementûs Discussion and Analysis of Financial Condition and Results of Operations

Financial Result Overview

Year 2011 has been further year of growth in which the Groupûs revenues and sale volume satisfactorily grew. Nonetheless, the Group has been facing various challenging factors that have affected overall demand of Natural Rubber such as uncertainty of global economic conditions stemmed from sovereign debt in Europe, the slow recovery of US economy, the credit tightening policy to control inflation in the PRC who is the world largest consuming country of Natural Rubber with one-third of global demand, and natural disaster in many countries around the world. All aforementioned factors have created a large volatility in Natural Rubber price throughout the year and posted some difficulties to strategically manage business operation particularly second half of the year. The decline of net profit margin of the Group compared with the previous year was primarily attributable to 1) the volatility of Natural Rubber price during the year and the downward price movement during the last nine months of 2011 2) the inventory allowance resulted from continual decline in price of Natural Rubber in the fourth quarter of 2011 due to a concern of deepened and prolonged sovereign debt in Europe. This happened during the period that the the Group usually stocks up raw materials and Natural Rubber Products in preparation for the wintering period in Thailand starting from February to May, 3) an increase in cess rate from Baht 1.40 to Baht 5.00 per kilogram since 1 October 2010, and 4) an increase income tax expenses as a result of full utilisation of loss carried forward and the expiration of tax benefits from some BOI certificates. Income Statement Overview

In 2011, total sales of goods and services was Baht 133,703.8 million, increased by 59.5% YoY due mainly to the increase in average selling price of 41.2% and the increase in sale volume of 13.3%. Such increase in average selling price and sale volume were as a result of a continual increase in demand of Natural Rubber Products, particularly from the tyre manufacturing industry which is heavily influenced by growth of automotive sector.

In terms of sale volume, the Group sold 951,935 tons of Natural Rubber in 2011, increased by 13.3% YoY which was the highest record since inception amidst the uncertainty of world economic conditions. Domestic market, EU countries, and the US contributed a significant growth rate of 17.0%, 40.1%, and 27.0%, respectively. Sale volume to the PRC was 317,513 tons, up 3.2% YoY. Such marginal increase in the PRC market was due to the slowdown of industrial sector resulted from credit tightening policy to prevent overheating economy in the PRC started from Q2 2011 as well as the slowdown of demand in Natural Rubber due to high level of stock during last quarter of the year.

Gross profit in 2011 was recorded at Baht 5,762.5 million, up 11.5%. The Groupûs gross profit margin of 2011 was 4.3%, fell from 6.2 % compared with last year. Part of the decline in gross profit margin was as a result of the decline in Natural Rubber price during the last 9 months, particularly during the last quarter of 2011. Consequently, the Group had to recognise inventory allowance of Baht 869.6 million. Assuming the inventory allowance was not made in 2011, gross profit of the Group would have been Baht 6,632.1 million and gross profit margin would have been at 5.0%. The decline in gross profit margin compared to the previous year was mainly attributable to global economic turbulence from EU, the US, and the PRC which adversely affected the price movement and market sentiment during the year. TSR, core product of the Group, was largely affected by this phenomenon and recorded gross profit margin at 3.6% whereas gross profit margin of RSS and Concentrated Latex were maintained at 5.9% and 4.7%, respectively.


Operating profit in 2011 amounted to Baht 2,178.4 million, down from operating profit of Baht 3,801.8 million in 2010, or 42.7% YoY. Operating profit margin was 1.6%, declined from 4.5% in 2010. The lower operating profit was due principally to a decline in gross profit, an increase in cess expenses of Baht 1,392.4 million due to the adjustment of cess rate from Baht 1.40 to Baht 5.00 per kilogram which has been in effect since 1 October 2010, and an increase of Baht 211.6 million in administrative expenses of which mainly comprised personal expenses to support the capacity expansion even though partially offset by increases in other income and other gains.

Net profit in 2011 was Baht 1,329.3 million declined by 65.4% YoY. Net profit margin was 1.0%, declined from 4.6% in 2010 due mainly to lower operating profit, an increase in finance cost as a result of expanded amount of loans in support of the increase in sale volume and average selling price of Natural Rubber as well as higher interest rates, and an increase in income tax expenses due to full utilisation of tax loss carried forward and the expiration of tax benefits from some BOI certificates. Key Factors Affecting the Groupûs Operation

1. Price and Volatility of Natural Rubber

Daily Price Movement of TSR20 and RSS3 at SICOM

Price of Natural Rubber has been highly volatile throughout 2011 due principally to the earthquake in Japan, the inflationary pressure in the PRC and the Europeanûs debt crisis that put pressure the Natural Rubber price in Q4 2011. Given that the closing price of TSR as at 31 December 2011 of USD 3,270 per ton which was lower than annual average price of USD 4,504 by 37.8%, the Group had to record inventory allowance for Baht 869.6 million in 2011.

Price Movement of TSR20 and RSS3 at Singapore Commodity Exchange Limited (SICOM) during 2011

(Unit : US dollar per ton)

RSS3 TSR20 2010 2011 %Change 2010 2011 %Change

Q1 Average 3,195 5,688 78% 3,103 5,216 68% Q2 Average 3,731 5,290 42% 3,023 4,668 54% Q3 Average 3,374 4,652 38% 3,141 4,564 45% Q4 Average 4,328 3,598 -17% 4,259 3,579 -16% Year Average 3,665 4,802 31% 3,390 4,504 33% Closing price as at 31 December 5,000 3,275 5,000 3,270

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104 A n n u a l R e p o r t 2 0 1 1

2. Foreign Exchange rate

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MLR 2010

Historical Exchange Rate of Thai Baht against US dollar

Overall, Thai Baht against US Dollar has strengthened from yearly average of 31.46 Baht/US dollar in 2010 to 30.25 Baht/US dollar in 2011, representing an increase of 3.9%. However, the depreciation of Thai Baht against US Dollar at the end of 2011 has required the Group to record an unrealised loss on foreign currency exchange in accordance with the early adoption of some accounting policies. The Group, thus, posted total loss on foreign exchange of Baht 22.7 million in 2011 compared with gain in foreign exchange gain of Baht 925.5 million in 2010. However, if unrealised loss on foreign exchange of Baht 618.1 million was not included, the Group would have recorded gain on foreign exchange of Baht 595.4 million. 3. Finance costs

The Group has been further approved for credit facilities both short and long-term loans from several commercial banks to support capacities expansion and working capital financing of the Group. During 2011, the average selling price of TSR increased by 40.4% from 2010. Moreover, the policy rate of the BOT had been increasing by 125 basis point to the peak of 3.5% in October 2011. The Groupûs finance costs, therefore, increased by Baht 477.3 million or 121.9% from Baht 391.5 million in 2010 to Baht 868.8 million.

Being a leader in rubber industry allows the Group to better access and manage source of funding. Graph below exhibited that the Groupûs average interest rate during 2010-2011 when compared to the average Minimum Loan Rate (MLR) of three large commercial banks; Bangkok Bank, Kasikorn Bank, and Siam Commercial Bank were much lower and closed to policy rate.

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4. Shares of Profit from Investment in Affiliates

In 2011, the Group received share of profit from 10 investments in affiliates and joint venture companies in total of Baht 648.9 million of which 56.8% contributed by SSC, 24.9% by Thaitech Rubber, and 15.3% by Semperflex Asia. Share of profit from investment in affiliates decreased by 7.7% compared to the previous year due mainly to the decrease in net profit of examination gloves business of the Group. The switching from NR gloves to NBR gloves of some certain customers due to the increase in price of fresh latex compared to Butadiene Nitrile has generally affected operating results of SSC as it mainly produces and distributes NR gloves. However, TSR business operated by Thaitech Rubber and high pressure hydraulic hose business operated by Semperflex Asia performed better in 2011 with the growth in profits of 129.5% and 37.9%, respectively. Business Segmentation Analysis

Revenue breakdown by product segment (Baht million)

2011 2010 % YoY

RSS 24,942.8 15,046.4 65.8% % 18.7% 17.9% TSR 96,138.6 58,909.1 63.2% % 71.9% 70.3% Concentrated Latex 10,236.6 8,168.8 25.3% % 7.7% 9.7% Others(1) 2,385.8 1,721.0 38.6% % 1.8% 2.1% Total revenue 133,703.8 83,845.3 59.5%

Note : (1) Comprises revenue from (i) the sale of dried rubber wood and wood packing products and (ii) the provision of certain

services (such as logistics, research and development and information technology services) to associates of the Group and

a joint venture entity as well as other external third parties.

Tonnage breakdown by product segment (tons)

2011 2010 % YoY

RSS 165,154 140,206 17.8% % 17.3% 16.7% TSR 675,648 581,212 16.2% % 71.0% 69.2% Concentrated Latex 111,132 119,044 -6.6% % 11.7% 14.2% Total sale volume 951,934 840,462 13.3%

106 A n n u a l R e p o r t 2 0 1 1

Business segment breakdown: 2011 (Baht million)

% to % to % to % to % to RSS sales TSR sales Con. Latex sales Others1 sales Total sales

Revenue 24,942.8 100.0 96,138.6 100.0 10,236.6 100.0 2,385.8 100.0 133,703.8 100.0 Cost of sales 23,462.7 94.1 92,643.7 96.4 9,755.9 95.3 2,079.1 87.1 127,941.3 95.7 Gross profit 1,480.1 5.9 3,495.0 3.6 480.7 4.7 306.7 12.9 5,762.5 4.3

Business segment breakdown: 2010 (Baht million)

% to % to % to % to % to RSS sales TSR sales Con. Latex sales Others1 sales Total sales

Revenue 15,046.4 100.0 58,909.1 100.0 8,168.8 100.0 1,721.0 100.0 83,845.3 100.0 Cost of sales 14,131.5 93.9 55,183.2 93.7 7,877.5 96.4 1,486.3 86.4 78,678.5 93.8 Gross profit 914.9 6.1 3,725.9 6.3 291.3 3.6 234.7 13.6 5,166.8 6.2

Note : (1) Comprises revenue from (i) the sale of dried rubber wood and wood packing products and (ii) the provision of certain

services (such as logistics, research and development and information technology services) to associates of the Group and

a joint venture entity as well as other external third parties.

Total sales and services income was Baht 133,703.8 million of which 98.2% or Baht 131,318.1 million contributed by Natural Rubber Products. Total sales and services income comprised TSR of Baht 96,138.6 million or 71.9%, RSS of Baht 24,942.8 million or 18.7%, concentrated latex of Baht 10,236.6 million or 7.7%, and other products and services including parawood, transportation, and engineering service of Baht 2,385.8 million or 1.8%. Ribbed Smoked Sheet (RSS)

Revenue from the sale of RSS was up 65.8% YoY. Such increase was largely attributed to 40.7% increase in average selling price and increase in sale volume by 17.8% in line with the expansion of tyre industry

Cost of sales of RSS increased 66.0% YoY. The increase in cost of sales was in line with a rise in sale volume and higher price of raw materials owing to higher market price of Natural Rubber. Also, there was an inventory allowance for RSS amounted Baht 61.5 million in 2011.

In 2011, the Groupûs gross profit from the sale of RSS amounted to Baht 1,480.1 million, 61.8% increase YoY. Gross profit margin of 2011 was 5.9% decreased from 6.1% in 2010. The decrease in gross profit margin comparing to last year was owe to a faster rate of increase in the price of raw materials in comparison with the rate of increase in the average selling price for the same period. Assuming the inventory allowance was not made, the gross profit margin of RSS would have been at 6.2%, slightly better than 2010.


Technically Specified Rubber (TSR)

Revenue from the sale of TSR recorded a growth of 63.2% YoY due mainly to an increase in average selling price of 40.4% and the increase in sale volume of 16.2% YoY. The expansions of tyre industry as well as the switch from the use of RSS to TSR by many tyre makers due to its standardised quality were key drivers of the continuous rising in demand of TSR.

Cost of sales of TSR increased 67.9% YoY. The increase was attributable to a rise in price of raw materials according to higher price of Natural Rubber. However, sovereign debt in Europe has brought concerns to industrial sector including tyre manufacturing business. Therefore, price of Natural Rubber continually declined during the past 9 months of 2011 particularly in the fourth quarter of 2011. Such decrease in price in the fourth quarter occurred during the period that the Group needs to stock up raw materials and Natural Rubber Products in preparation for the wintering period in Thailand which normally starting from February to May. As a result of this, the Group needed to recorded inventory allowance of Baht 732.3 million in 2011.

Due to the aforesaid difficulty as well as a faster rate of increase in the price of raw materials in comparison with the rate of increase in the average selling price for the same period, gross profit from the sale of TSR decreased to Baht 3,495.0 million, decreased 6.2% YoY. Gross profit margin of 2011 was 3.6% down from 6.3% in 2010. Assuming the inventory allowance was not made, the gross profit margin of TSR would have been at 4.4%. Concentrated Latex

Revenue from the sale of Concentrated Latex was up 25.3% YoY. The increase was mainly attributable to the increase in average selling price of 34.2% despite a decrease in sale volume by 6.6% due to the increase in price of fresh latex compared to Butadiene Nitrile during 2011. Latex examination glovemakers, therefore, switched from using Natural Rubber to NBR (synthetic rubber) to feed their production.

Cost of sales of Concentrated Latex increased 23.8% YoY. The increase in cost of sales was attributable to the higher price of raw materials along the line with the increasing Natural Rubber price as well as the inventory allowances of Baht 75.9 million.

The Groupûs gross profit from the sale of Concentrated Latex amounted to Baht 480.7 million, increase 65.0% YoY. The Groupûs gross profit margin in 2011 was 4.7% increased from 3.6% in 2010. This increase in gross profit margin was primarily driven by improvement of production efficiency in reducing production loss and waste, particularly from the new machine equipped in the plants that recently expanded. Assuming the inventory allowance was not made, the gross profit margin of Concentrated Latex would have been at 5.4%. Consolidated Statement of Financial Position

Current assets

Current assets decreased by Baht 619.3 million, or 2.1%, from Baht 28,951.0 million for the year end 2010 to Baht 28,331.7 million for the year end 2011 which due primarily to a decrease in inventories of Baht 2,945.8 million from a decrease in Natural Rubber price at the end of 2011, which was partially

108 A n n u a l R e p o r t 2 0 1 1

offset by an increase in trade accounts receivables and other receivables of Baht 1,547.7 million due mainly to growth volume and increase in average selling price, an increase in cash and cash equivalent for Baht 499.1 million partly from capital increase through the equity offering in Singapore, and an increase in amounts due from futures brokers of Baht 271.4 million which is deposit money to support Natural Rubber hedging activities during volatile period.

Non-current assets Non-current assets increased by Baht 3,375.8 million, or 38.8%, from Baht 8,704.7 million for the year end 2010 to Baht 12,080.5 million for the year end 2011 which primarily consists of an increase in property, plants and equipments for Baht 2,262.2 million (net of depreciation and write-off) for the construction of the Groupûs new factories in Chonburi, Mukdaharn, Udorn Thani, Ubonratcha Thani, for the expansion of existing factories in Songkhla, Nong Khai, Pontianak and Palembang (Indonesia) as well as for acquisition of landbank for rubber plantation, an increase in investment in associates and joint venture of Baht 638.4 million from their operating results, and an increase in deferred income tax assets of Baht 407.4 million

Net book value of the Groupûs land and buildings as at 31 December 2011 (THB million):

Freehold land including land improvements 2,539.2 Leasehold land 76.0 Buildings and structures 2,036.6 Total 4,651.8 Current liabilities

Current liabilities decreased by Baht 5,316.9 million, or 21.5%, from Baht 24,787.6 million for the year end 2010 to Baht 19,470.6 million for the year end 2011 which was mainly on account of a decrease in short-term loans of Baht 5,027.0 million as the Group required less working capital during a downward movement of Natural Rubber price, a decrease in trade accounts payable and other payables of Baht 498.4 million, and a decrease in a current portion of long-term loan of Baht 477.6 million, which was partially offset by an increase in derivative financial instruments of Baht 618.8 million. Non-current liabilities

Non-current liabilities increased by Baht 434.1 million, or 17.5%, from Baht 2,476.7 million for the year end 2010 to Baht 2,910.7 million for the year end 2011. The increase was primarily due to an increase in deferred income tax liabilities of THB 190.4 million and an issuance of debentures amounted Baht 2,150.0 million to refinance long-term loan. As a result, long-term loan (net of current portion) was decreased by Baht 1,911.2 million. Shareholdersû equity

Equity increased by Baht 7,639.4 million, or 73.5%, from Baht 10,391.5 million for the year end 2010 to Baht 18,030.9 million for the year end 2011 due mainly to a capital increase through the equity offering in Singapore of Baht 7,707.2 million (net of fund raising expense) and net profit during the year.


Consolidated Cash Flow

As at 31 December 2011, the Group had cash and cash equivalents of Baht 2,273.0 million, an increase of Baht 499.1 million, or 28.1% increase from the balance of Baht 1,774.0 million as at 31 December 2010.

The Group generated cash flows from operations before net change in operating assets and liabilities of Baht 4,482.3 million. The Group utilised Baht 389.2 million arising from an increase in operating assets which was due primarily to an increase in trade accounts receivable and other receivables of Baht 1,565.8 million as well as an increase in amounts due from futures brokers of Baht 271.4 million and a decrease in operating liabilities which mainly contributed by a decrease in trade accounts payable and other payables of Baht 490.4 million, which partially offset by a decrease in inventories of Baht 2,076.2 million from a decrease of Natural Rubber price during the fourth quarter of 2011. The increase in trade accounts receivable and other receivables was due mainly to an increase in the average selling prices and sales volumes of Natural Rubber Products of the Group. The increase in amounts due from futures brokers was made to support rubber hedging activities. Meanwhile, the decrease in trade accounts payable and other payable was solely contributed by a decrease in the payable to the Groupûs associate company due to lower purchase of Natural Rubber Products from them.

The Group paid interest and income tax of Baht 1,506.4 million. Overall, the Group had net cash flows of Baht 2,586.7 million provided by operating activities.

Investing activities utilised net cash flows of Baht 2,733.4 million, principally from investment in property, plants and equipments of Baht 2,844.1 million for the construction of the Groupûs new factories in Chonburi, Mukdaharn, Udorn Thani, Ubonratcha Thani, for the expansion of existing factories in Songkhla, Nong Khai, Pontianak and Palembang (Indonesia) as well as for acquisition of landbank for rubber plantation. This was partially offset by dividend received of Baht 75.8 million from associate and joint venture companies and cash received from disposal of intangible assets and fixed assets of Baht 162.5 million.

Net cash inflow from financing activities amounted to Baht 645.7 million. This consisted mainly of a capital fund raising through the equity offering in Singapore of Baht 7,598.1 million (net of fund raising expense and relevant taxes), debenture of Baht 2,150.0 million to refinance long-term loan, which was partially offset by a repayment of long-term loans from financial institutions of Baht 2,695.9 million (majority from refinance scheme), a repayment of short-term loans from financial institutions of Baht 4,854.1 million, and dividend payment of Baht 1,600.0 million. Financial Ratios

Current ratios Current ratio is calculated by dividing total current assets by total current liabilities. As at 31 December 2011 and 31 December 2010 the Groupûs current ratios were 1.46 and 1.17 times, respectively. The increase in current ratio was due primarily to an increase in cash and cash equivalents, and trade accounts receivable in line with the increasing sale volume and price of Natural Rubber Products.

110 A n n u a l R e p o r t 2 0 1 1

Fixed asset turnover ratio

Fixed asset turnover ratio is calculated by dividing sales of goods and services by average property, plant and equipment (net). As at 31 December 2011 and 31 December 2010, the Groupûs fixed asset turnovers were 21.07 and 17.73 times, respectively. An increase in fixed asset was due mainly to an increase in sale volume and price of Natural Rubber Products. Return on assets (çROAé)

ROA is calculated by dividing net profit (parent company) for the year by average total assets. As at 31 December 2011 and 31 December 2010, the Groupûs ROA were 3.35% and 12.57%, respectively. The decrease in ROA was due to a decrease in net profit for the year ended 2011 as well as an increase in total assets which mainly contributed by a rise in capacity expansion, trade accounts receivable, cash and cash equivalents, and investment in associates and joint venture. Return on equity (çROEé)

ROE is calculated by dividing net profit (parent company) for the year by average total equity. As at 31 December 2011 and 31 December 2010, the Groupûs ROE were 9.19% and 43.01%, respectively. The decrease in ROE was due mainly to decrease in net profit and the increase in shareholdersû equity through the equity offering in Singapore. Debt to equity ratio (çD/Eé)

D/E is calculated by dividing total debt by total equity. As at 31 December 2011 and 31 December 2010, the Groupûs D/E were 1.24 and 2.62 times, respectively. The decrease in D/E was due mainly to the increase in shareholdersû equity through equity offering in Singapore and the decrease in short-term loans from financial institutions as the Group required less working capital during a downward movement of Natural Rubber price during 2011. 3. Audit Fee

Audit Fee

STA paid audit fee to the auditors of STA for the preparation of the 2011 consolidated financial statements and stand-alone financial statements in amount of Baht 4,370,000 and SGD 143,000. STA paid audit fee for its subsidiaries in amount of Baht 1,410,000 and USD 37,600.

Non-Audit Fee

-None- 4. Business Outlook

Industry in general

Global economy development, main indicator for tyre consumption, remains the key driver for Natural Rubber consumption as 70% of Natural Rubber demand is driven by tyre industry. The slowdown of global economic growth mainly results from the adverse spillovers from the EU area via trade and financial channels. However, it is expected that macroeconomic policy easing would offset such


deterioration. As of January 2012, International Monetary Fund (IMF) has revised down its forecast that global economy for 2012 and 2013 are expected to grow at 3.3% and 3.9% respectively, whereas emerging markets are expected to grow at 5.4% and 5.9% respectively, and the PRC, which is the major Natural Rubber consumption country, is forecasted to grow at 8.2% and 8.8%, respectively. The existing of high sovereign debt level of major advanced countries without clear fiscal and monetary remedies may continue to be a concern for global consumption and commodity price. However, it is expected to see improvement of market sentiment as the commodity prices have seemingly already absorbed all global economic concerns during 2011. Pessimistic global outlook has also eliminated those speculative investors and thus should create more price stability. In short term conservative outlook, given that there are no other significant negative factors, Natural Rubber price in 2012 should better reflect the balance of demand and supply and should move in a sideway consolidation.

The Group still expects revenue growth to be higher than the overall growth of Natural Rubber demand due to its continuance of capacity expansion in upstream, midstream, and downstream products both in Thailand and Indonesia. Progress of the Groupûs businesses in value chain

As at 31 December 2011, the Groupûs optimum annual capacity was registered at industry record at 1.1 million tons per annum, the highest capacity in the industry. At the end of 2012, production capacity of the Group should be arrived at 1.27 million tons per annum with additional capacity from new TSR plants in the in Udon Thani, Thailand and the expansion capacity of Palembang, Indonesia. The Group also plans to achieve capacity of 1.5 million tons per annum in 2013. Thailand remains to be primary production base of the Group with additional 3 plants to be completed in different timeline. The Group will also build new plants and expand the existing plant in Indonesia within 2-year time horizon. Upstream integration through rubber plantation that the Group has earmarked for future entry remains on track. As at 31 December 2011, the Group has acquired land approximately 17,400 rai (2,784 hectares), most of them are in the North of Thailand. Approximately 250 rai (40 hectares) are under tapping, 6,900 rai (1,104 hectars) have been planted and will be mature to start tapping in 2016. The vacant land of 10,250 rai (1,640 hectars) will be planted during raining season in 2012. The Groupûs achievement of plan to have 50,000 rai of rubber plantation in 2014 will depend on the reasonability of land price and advantages of location as well as sufficiency of saplings. Although the Group has yet to achieve mature plantation at the necessary scale, the Group believes that the upstream integration shall further enhance Natural Rubber supply chain that the Group has capitalized on with sustained profitability. Financial management

On financial front, the Group has successfully raised capital of approximately Baht 7,700 million through the listing in Singapore Stock Exchange since 31 January 2011 and have successfully issued the debentures in two tranches to the institutional and high net-worth investors totaling Baht 2,150 million for the refinancing of long-term loan in order to achieve lower cost of financing and extension of the loan tenure. All in all, the Group has maintained gearing at a more conservative level compared with the previous financial years and competitors.

112 A n n u a l R e p o r t 2 0 1 1

The Audit Committee Report The Audit Committee, appointed by the Board of Directors of Sri Trang Agro-Industry Public Company Limited (the çCompanyé), consists of 3 independent directors, two-thirds of whom have finance and accounting knowledge, as follows:

1. Mr. Prakob Visitkitjakarn Chairman of Audit Committee 2. Mr. Kriang Yanyongdilok Audit Committee 3. Mr. Samacha Potavorn Audit Committee

The Audit Committee performs its duties and responsibilities as assigned by the Board of Directors of the Company. In year 2011, the Audit Committee members attended a total of 7 meetings. All the members of the Audit Committee attended all the meetings, and, where the agendas were related, meetings were also attended by the senior management, manager of the internal audit department and auditor. The responsibilities of the Audit Committee can be summarized as follows: ë The Audit Committee reviewed quarterly and year end financial statements of 2011 together with

the auditor and the management to ensure that they are accurate and comply with generally accepted accounting principles. Through the meetings there were discussions, opinion exchanges, and assessment on the reporting before granting the approval of such financial statements.

ë Considered internal audit plan and reviewed the results of the audit conducted by the internal audit department, as well as the sufficiency and appropriateness of the internal control system, to ensure that they are suitable and efficient.

ë Reviewed the Companyûs compliance with the regulations, relevant laws and the principles of good corporate governance and ensured that the Company has complied with its Articles of Association, regulations of the Securities and Exchange Commission and the Stock Exchange of Thailand, relevant laws and the principles of good corporate governance and has disclosed information sufficiently and transparently.

ë Reviewed the entering into and disclosure of connected transactions and interested person transactions which may lead to conflicts of interest between the interested party and the Company. The review concluded that such transactions have complied with the laws and the regulations of the Stock Exchange of Thailand and Singapore Exchange Securities Trading Limited.

ë Reviewed the risk management policy and any oversight of risk management processes and activities to mitigate and manage risk at acceptable levels determined by the Board of Directors.

ë Selected and nominated auditors of the Company and auditing fees for 2012 to be proposed to the Board of Directors to obtain an approval from the 2012 Annual General Meeting of Shareholders. The Audit Committee has considered the performance, the independence, and the appropriate of the remuneration of the auditors.

In conclusion, it is the opinion of the Audit Committee that the Companyûs operations in the past year have sufficient and appropriate internal control system, financial statements were prepared under the generally accepted accounting principles, and complied with relevant laws of the Securities and Exchange, the regulations of the Stock Exchange of Thailand and the law relating to the business of the Company. In the performance of its duties the Audit Committee has had full discretion to give all relevant matters its independent consideration, and there has been no limitation on its access to information. Yours sincerely,

(Mr. Prakob Visitkitjakarn) Chairman of Audit Committee 23 February 2012


Utilisation of IPO Proceed The Company refers to the gross proceeds amounting to SGD 336 million raised from the initial public offering of its shares on the Singapore Exchange Securities Trading Limited January 2011.

As at 31 December 2011, the status on the use of proceeds raised from the initial public offering of the Company is as follows: Approximate Approximate Allocation accumulated amount yet Objectives actual utilisation to be utilised (SGD million) (1)

(SGD million) (1)

(approximately) (SGD million) (1)

Acquisition and/or construction of new and 204.75 73.16 131.59 expansion of existing rubber processing facilities Acquisition of land for rubber plantation 63.00 34.04 28.96 General working capital purposes 47.25 47.25 - Listing expenses 21.00 19.50 1.50 Total 336.00 173.95 162.05

Notes : (1) Based on a foreign exchange rate SGD 1 to Baht 24.1566

The utilisation is in accordance with the intended use of proceeds of the initial public offering and in accordance with the percentage allocated, as stated in the prospectus, which was registered by the Monetary Authority of Singapore on 20 January 2011.

114 A n n u a l R e p o r t 2 0 1 1

SRI TRANG AGRO-INDUSTRY PUBLIC COMPANY LIMITED

31 DECEMBER 2011

Consolidated and Company Financial Statements 2011


Auditorûs Report To the Shareholders of Sri Trang Agro-Industry Public Company Limited I have audited the accompanying consolidated and company statements of financial position as of 31 December 2011 and 2010, and the related consolidated and company statements of comprehensive income, changes in shareholdersû equity and cash flows for the years then ended of Sri Trang Agro-Industry Public Company Limited and its subsidiaries (çthe Groupé), and of Sri Trang Agro-Industry Public Company Limited, respectively. The Companyûs management is responsible for the correctness and completeness of information in these financial statements. My responsibility is to express an opinion on these financial statements based on my audits.

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

In my opinion, the consolidated and company financial statements referred to above present fairly, in all material respects, the consolidated and company financial position as at 31 December 2011 and 2010, and the consolidated and company results of operations and cash flows for the year then ended of Sri Trang Agro-Industry Public Company Limited and its subsidiaries, and of Sri Trang Agro-Industry Public Company Limited, respectively, in accordance with generally accepted accounting principles.

Without qualifying my opinion, I draw attention to Notes 2, 3 and 6 to the consolidated and company financial statements, beginning 1 January 2011 the Group has adopted the new and revised financial reporting standards as announced by the Federation of Accounting Professions. Beginning 1 July 2011, the Group has early adopted the Thai Accounting Standard No. 12 çIncome Taxesé and has applied accounting for derivative financial instruments. The consolidated and company statements of financial position as at 31 December 2010 and the related consolidated and company statements of comprehensive income, changes in shareholdersû equity and cash flows for the year then ended, which are presented for comparative purposes, which I have audited and on which I have issued a report, have been restated retrospectively and presented in the new format to conform with the current year financial statements. I have audited the adjustments as stated above. I have not performed any other auditing procedures subsequent to the date of that report, except for the adjustments as stated above. Unakorn Phruithithada Certified Public Accountant (Thailand) No. 3257 PricewaterhouseCoopers ABAS Ltd. Bangkok 24 February 2012

116 A n n u a l R e p o r t 2 0 1 1

Consolidated Company

(Restated) (Restated)

31 December 31 December 31 December 31 December

2011 2010 2011 2010

Notes Baht Baht Baht Baht

Assets Current assets Cash and cash equivalents 8 2,273,020,951 1,773,962,249 766,433,932 686,844,087

Derivative financial instruments 9 329,304,538 459,558,936 44,430,250 98,248,193

Trade accounts receivable and other receivables, net 10, 37.3 7,787,446,884 6,239,766,690 6,125,343,153 3,947,756,981

Amounts due from futures brokers 37.3 406,419,876 135,054,146 115,479,473 84,046,854

Inventories - net 11 17,336,596,468 20,282,433,067 6,570,252,082 10,505,003,800

Other current assets 12 198,898,231 60,247,004 36,283,658 30,136,709 Total current assets 28,331,686,948 28,951,022,092 13,658,222,548 15,352,036,624 Non-current assets Long-term loan to an associate 37.3 62,905,000 - 62,905,000 -

Fixed deposits pledged as collateral 13 143,483,323 125,444,193 12,594,670 12,550,742

Investments in subsidiaries 14 - - 5,130,765,514 2,553,696,099

Investments in associates 14 3,122,562,093 2,615,422,132 709,802,500 679,507,500

Investment in a joint venture 14 456,500,685 325,283,320 20,099,800 20,099,800

Available-for-sale financial assets 15 43,652,348 46,267,525 42,778,669 45,105,924

Property, plant and equipment, net 16 7,475,597,194 5,213,369,663 2,690,400,416 2,130,526,410

Intangible assets, net 17 24,204,164 21,700,028 10,651,107 10,566,822

Investment properties 18 102,327,410 48,031,578 22,850,000 22,850,000

Witholding tax deducted at source 76,624,253 143,304,822 38,724,575 120,310,910

Deferred income tax assets 19 537,688,934 130,263,643 124,956,144 12,853,715

Other non-current assets 20 34,982,831 35,643,792 8,115,155 10,561,720 Total non-current assets 12,080,528,235 8,704,730,696 8,874,643,550 5,618,629,642 Total assets 40,412,215,183 37,655,752,788 22,532,866,098 20,970,666,266

Statements of Financial Position Sri Trang Agro-Industry Public Company Limited and its subsidiaries

As at 31 December 2011 and 2010

The notes to the consolidated and Company financial statements on pages 127 to 200 form an integral part of the financial statements.





2011 2010 2011 2010


Liabilities and shareholdersû equity

Current liabilities

Short-term loans from financial institutions 22 15,425,613,869 20,452,626,308 4,551,591,000 10,641,378,000

Trade accounts payable and other payables 21, 37.3 2,543,715,563 3,042,117,125 1,537,325,200 1,207,522,195

Current portion of long-term loans from

financial institutions 22 120,000,000 597,610,000 - 575,000,000

Current portion of finance lease liabilities 22 11,451,377 17,165,140 6,361,631 10,505,841

Derivative financial instruments 9 1,112,238,950 493,487,531 541,893,664 65,410,102

Current income tax liabilities 19 192,381,061 119,671,329 154,380,736 -

Other current liabilities 23 65,235,361 64,908,153 41,273,833 43,824,820

Total current liabilities 19,470,636,181 24,787,585,586 6,832,826,064 12,543,640,958

Non-current liabilities

Long-term loans from financial institutions 22 314,860,000 2,226,050,000 - 2,031,250,000

Debentures 22 2,150,000,000 - 2,150,000,000 -

Finance lease liabilities 22 12,309,850 22,927,273 8,000,715 13,531,353

Deferred income tax liabilities 19 328,763,683 138,402,245 106,875,360 71,649,954

Provision for post employment benefit obligations 24 104,787,664 89,285,660 41,923,427 37,865,261

Total non-current liabilities 2,910,721,197 2,476,665,178 2,306,799,502 2,154,296,568

Total liabilities 22,381,357,378 27,264,250,764 9,139,625,566 14,697,937,526

Statements of Financial Position (Contûd) Sri Trang Agro-Industry Public Company Limited and its subsidiaries



118 A n n u a l R e p o r t 2 0 1 1




2011 2010 2011 2010


Liabilities and shareholdersû equity (Contûd) Shareholdersû equity Share capital 25

Authorised share capital

Ordinary shares, 1,280,000,000 shares

of par Baht 1 each

(2010: 1,280,000,000 shares of par Baht 1 each) 1,280,000,000 1,280,000,000 1,280,000,000 1,280,000,000 Issued and paid-up share capital

Ordinary shares, 1,280,000,000 shares

of par Baht 1 each

(2010: 1,000,000,000 shares of par Baht 1 each) 1,280,000,000 1,000,000,000 1,280,000,000 1,000,000,000

Premium on share capital 25 8,550,989,821 1,123,800,000 8,550,989,821 1,123,800,000

Deduction arising from acquisition of

additional interest in subsidiaries

from non-controlling interests (173,134,488) (173,134,488) - -

Revaluation surplus, net of accumulated depreciation 27 833,185,039 850,018,523 541,438,028 610,628,497

Unrealised gain on available-for-sale financial assets 27 600,390 3,022,987 159,618 2,299,988

Cumulative translation adjustments 27 (120,534,770) (283,842,793) - -

Retained earnings

Appropriated - legal reserve 26 128,000,000 100,000,000 128,000,000 100,000,000

Unappropriated 7,437,342,052 7,729,396,328 2,892,653,065 3,436,000,255 Total parentûs shareholdersû equity 17,936,448,044 10,349,260,557 13,393,240,532 6,272,728,740

Non-controlling interests 94,409,761 42,241,467 - - Total shareholdersû equity 18,030,857,805 10,391,502,024 13,393,240,532 6,272,728,740

Total liabilities and shareholdersû equity 40,412,215,183 37,655,752,788 22,532,866,098 20,970,666,266

Statements of Financial Position (Contûd) Sri Trang Agro-Industry Public Company Limited and its subsidiaries







2011 2010 2011 2010

Notes Baht Baht Baht Baht Sales of goods and services 30 133,703,841,648 83,845,328,841 76,862,112,971 44,040,706,709 Cost of sales and services (127,941,331,065) (78,678,531,873) (71,835,474,372) (41,121,586,298) Gross profit 5,762,510,583 5,166,796,968 5,026,638,599 2,919,120,411 Other income 31 165,216,010 77,162,994 154,464,019 394,750,751 Selling expenses (3,199,881,826) (1,780,698,903) (2,810,039,869) (1,316,673,395) Administrative expenses (1,032,413,541) (576,498,371) (387,173,776) (220,138,655) Gains (losses) on exchange rates (22,692,004) 925,460,794 (42,330,407) 808,609,694 Other gains (losses) - net 33 505,657,843 (10,390,619) 73,879,860 103,543,834 Operating profit 2,178,397,065 3,801,832,863 2,015,438,426 2,689,212,640 Share of profit of investments in associates and a joint venture 14 648,938,352 702,833,127 - - Profit before net financial costs and income tax 2,827,335,417 4,504,665,990 2,015,438,426 2,689,212,640 Finance income 16,173,685 6,160,470 4,634,173 2,756,402 Finance costs (884,996,710) (397,660,146) (418,916,472) (239,203,958) Finance costs - net 32 (868,823,025) (391,499,676) (414,282,299) (236,447,556) Profit before income tax 1,958,512,392 4,113,166,314 1,601,156,127 2,452,765,084 Income tax expenses 34 (629,241,543) (272,661,891) (534,576,925) (86,033,514) Profit for the year 1,329,270,849 3,840,504,423 1,066,579,202 2,366,731,570 Other comprehensive income (loss): Revaluation surplus, net of tax 35,556,592 - - - Change in tax rate used in deferred tax recognition (16,591,686) - (45,073,286) - Disposal of assets, net of tax (6,215,786) - (6,215,786) - Change in fair value of available-for-sale financial assets, net of tax (2,308,390) 8,395,782 (1,968,159) 7,855,168 Currency translation differences 166,821,447 (234,636,825) - - Other comprehensive income (loss) for the year 177,262,177 (226,241,043) (53,257,231) 7,855,168 Total comprehensive income for the year 1,506,533,026 3,614,263,380 1,013,321,971 2,374,586,738

Statements of Comprehensive Income Sri Trang Agro-Industry Public Company Limited and its subsidiaries

For the years ended 31 December 2011 and 2010


120 A n n u a l R e p o r t 2 0 1 1




2011 2010 2011 2010

Notes Baht Baht Baht Baht Profit attributable to:

Owners of the parent 1,306,248,913 3,819,626,625 1,066,579,202 2,366,731,570

Non-controlling interests 23,021,936 20,877,798 - -

Profit for the year 1,329,270,849 3,840,504,423 1,066,579,202 2,366,731,570

Total comprehensive income

attributable to:

Owners of the parent 1,479,997,666 3,600,329,184 1,013,321,971 2,374,586,738

Non-controlling interests 26,535,360 13,934,196 - -

Total comprehensive income

for the year 1,506,533,026 3,614,263,380 1,013,321,971 2,374,586,738

Earnings per share

Basic earnings per share 35 1.04 3.82 0.85 2.37

Statements of Comprehensive Income (Contûd) Sri Trang Agro-Industry Public Company Limited and its subsidiaries




Co

nsoli

dated

De

ducti

on a

rising

(Res

tated

)

fro

m ac

quisi

tion

(Res

tated

) Un

reali

sed

of a

dditio

nal

Reva

luatio

n ga

in (lo

ss) o

n

int

eres

t in

surp

lus,

avail

able-

(R

estat

ed)

(Res

tated

)

Iss

ued

and

su

bsidi

aries

from

ne

t of

for-

sale

Cumu

lative

Re

taine

d ea

rning

s No

n-

paid-

up

Prem

ium o

n no

n-co

ntro

lling

accu

mulat

ed

finan

cial

trans

lation

Ap

prop

riated

(R

estat

ed)

cont

rollin

g

sh

are

capit

al sh

are

capit

al int

eres

ts de

prec

iation

as

sets

differ

ence

s -

legal

rese

rve U

napp

ropr

iated

int

eres

ts To

tal

No

tes

Baht

Ba

ht

Baht

Ba

ht

Baht

Ba

ht

Baht

Ba

ht

Baht

Ba

ht

Open

ing b

alanc

e as

at 1

Jan

uary

2011

- a

s pr

eviou

sly re

porte

d

1,000

,000,0

00

1,123

,800,0

00

(173

,134,4

88)

974,0

58,91

5 3,3

38,24

5 (2

68,29

9,700

) 10

0,000

,000

7,612

,689,7

52

42,21

0,859

10,4

14,66

3,583

Re

trosp

ectiv

e ad

justm

ents

from

chan

ges

in ac

coun

ting

polic

y 6

- -

- (12

4,040

,392)

(315,2

58)

(15,54

3,093

) -

116,7

06,57

6 30

,608

(23,16

1,559

) Op

ening

bala

nce

as a

t 1 J

anua

ry 20

11 -

as

resta

ted

1,0

00,00

0,000

1,1

23,80

0,000

(1

73,13

4,488

) 85

0,018

,523

3,022

,987

(283

,842,7

93)

100,0

00,00

0 7,7

29,39

6,328

42

,241,4

67 1

0,391

,502,0

24

Prof

it fo

r the

yea

r

- -

- -

- -

- 1,3

06,24

8,913

23

,021,9

36

1,329

,270,8

49

Othe

r com

preh

ensiv

e inc

ome

Re

valua

tion

surpl

us, n

et of

tax

-

- -

35,55

6,592

-

- -

- -

35,55

6,592

Chan

ge in

tax

rate

used

in d

eferre

d tax

reco

gnitio

n

- -

- (16

,477,4

79)

(114,2

07)

- -

- -

(16,59

1,686

)

Depre

ciatio

n tra

nsfer

on

asse

ts rev

aluati

on, n

et of

tax

-

- -

(29,69

6,811

) -

- -

29,69

6,811

-

-

Dispo

sal o

f ass

ets, n

et of

tax

-

- -

(6,21

5,786

) -

- -

- -

(6,21

5,786

)

Chan

ge in

fair

value

of a

vaila

ble-fo

r-sale

fina

ncial

ass

ets, n

et of

tax

-

- -

- (2,

308,3

90)

- -

- -

(2,30

8,390

)

Curre

ncy

trans

lation

diffe

rence

s

- -

- -

- 16

3,308

,023

- -

3,513

,424

166,8

21,44

7

Total

othe

r com

prehe

nsive

inco

me

-

- -

(16,83

3,484

) (2,

422,5

97)

163,3

08,02

3 -

29,69

6,811

3,5

13,42

4 17

7,262

,177

To

tal c

ompr

ehen

sive

incom

e

- -

- (1

6,833

,484)

(2

,422,5

97)

163,3

08,02

3 -

1,335

,945,7

24

26,53

5,360

1,5

06,53

3,026

Tr

ansa

ction

s wi

th s

hare

holde

rsû e

quity

Increa

se in

sha

re ca

pital

net o

f cos

ts dir

ectly

attrib

utable

to th

e iss

ue o

f new

sha

res -

net

of tax

25

28

0,000

,000

7,427

,189,8

21

- -

- -

- -

- 7,7

07,18

9,821

Appro

priati

on o

f leg

al res

erve

26

- -

- -

- -

28,00

0,000

(28

,000,0

00)

- -

Div

idend

pay

ment

36

- -

- -

- -

- (1,

600,0

00,00

0) -

(1,60

0,000

,000)

Sh

ares

issue

d to

non-

contr

olling

inter

ests

share

holde

rs of

a su

bsidi

ary

-

- -

- -

- -

- 7,2

04,00

8 7,2

04,00

8

Adjus

tmen

t of n

on-c

ontro

lling

intere

sts

-

- -

- -

- -

- 18

,428,9

26

18,42

8,926

Total

tran

sacti

ons

with

sha

reho

ldersû

equ

ity

28

0,000

,000

7,427

,189,8

21

- -

- -

28,00

0,000

(1,62

8,000

,000)

25

,632,9

34

6,132

,822,7

55

Clos

ing b

alanc

e as

at 3

1 De

cemb

er 2

011

1,2

80,00

0,000

8,5

50,98

9,821

(1

73,13

4,488

) 83

3,185

,039

600,3

90

(120

,534,7

70)

128,0

00,00

0 7,4

37,34

2,052

94

,409,7

61 1

8,030

,857,8

05

Statem

ents

of C

hang

es in

Sha

reho

ldersû

Equity

Sri T

rang

Agro-

Indus

try P

ublic

Com

pany

Lim

ited

and

its s

ubsid

iaries

For t

he y

ears

ende

d 31

Dec

embe

r 201

1 an

d 20

10

The

notes

to th

e co

nsoli

dated

and

Compa

ny fi

nanc

ial s

tatemen

ts on

pag

es 1

27 to

200

form

an

integ

ral p

art o

f the

fina

ncial

statemen

ts.

122 A n n u a l R e p o r t 2 0 1 1

Co

nsoli

dated

De

ducti

on a

rising

fro

m ac

quisi

tion

(R

estat

ed)

(Res

tated

)

of

add

itiona

l Re

valua

tion

Unre

alise

d

int

eres

t in

surp

lus,

gain

(loss

) on

(Res

tated

)

(R

estat

ed)

Issue

d an

d

subs

idiar

ies fr

om

net o

f av

ailab

le-

Cumu

lative

Re

taine

d ea

rning

s No

n-

paid-

up

Prem

ium o

n no

n-co

ntro

lling

accu

mulat

ed

for-

sale

trans

lation

Ap

prop

riated

(R

estat

ed)

cont

rollin

g

sh

are

capit

al sh

are

capit

al int

eres

ts de

prec

iation

fin

ancia

l ass

ets

differ

ence

s -

legal

rese

rve U

napp

ropr

iated

int

eres

ts To

tal

No

tes

Baht

Ba

ht

Baht

Ba

ht

Baht

Ba

ht

Baht

Ba

ht

Baht

Ba

ht

Open

ing b

alanc

e as

at 1

Jan

uary

2010

- a

s pr

eviou

sly re

porte

d

1,000

,000,0

00

1,123

,800,0

00

(173

,134,4

88)

1,010

,671,1

37

(6,20

0,239

) (4

5,996

,843)

10

0,000

,000

4,323

,361,1

32

36,27

0,162

7,3

68,77

0,861

Re

trosp

ectiv

e ad

justm

ents

from

chan

ges

in ac

coun

ting

polic

y 6

- -

- (16

5,112

,862)

827,4

44

(10,15

2,868

) -

190,8

68,81

9 -

16,43

0,533

Op

ening

bala

nce

as a

t 1 J

anua

ry 20

10 -

as

resta

ted

1,0

00,00

0,000

1,1

23,80

0,000

(1

73,13

4,488

) 84

5,558

,275

(5,37

2,795

) (5

6,149

,711)

10

0,000

,000

4,514

,229,9

51

36,27

0,162

7,3

85,20

1,394

Pr

ofit

for t

he y

ear

3,819

,626,6

25

20,87

7,798

3,8

40,50

4,423

Ot

her c

ompr

ehen

sive

incom

e

Depre

ciatio

n tra

nsfer

on

asse

ts rev

aluati

on, n

et of

tax

-

- -

4,460

,248

- -

- (4,

460,2

48)

- -

Ch

ange

in fa

ir va

lue o

f ava

ilable

-for-s

ale fi

nanc

ial a

ssets

, net

of tax

- -

- -

8,395

,782

- -

- -

8,395

,782

Cu

rrenc

y tra

nslat

ion d

ifferen

ces

-

- -

- -

(227,6

93,08

2) -

- (6,

943,7

43)

(234,6

36,82

5)

Total

othe

r com

prehe

nsive

inco

me

-

- -

4,460

,248

8,395

,782

(227,6

93,08

2) -

(4,46

0,248

) (6,

943,7

43)

(226,2

41,04

3)

Total

com

preh

ensiv

e inc

ome

-

- -

4,460

,248

8,395

,782

(227

,693,0

82)

- 3,8

15,16

6,377

13

,934,0

55

3,614

,263,3

80

Tran

sacti

ons

with

sha

reho

ldersû

equ

ity

Div

idend

pay

ment

36

- -

- -

- -

- (60

0,000

,000)

(7,96

2,750

) (60

7,962

,750)

To

tal tr

ansa

ction

s wi

th s

hare

holde

rsû e

quity

- -

- -

- -

- (6

00,00

0,000

) (7

,962,7

50)

(607

,962,7

50)

Clos

ing b

alanc

e as

at 3

1 De

cemb

er 2

010

- as

resta

ted

1,0

00,00

0,000

1,1

23,80

0,000

(1

73,13

4,488

) 85

0,018

,523

3,022

,987

(283

,842,7

93)

100,0

00,00

0 7,7

29,39

6,328

42

,241,4

67 1

0,391

,502,0

24

Statem

ents

of C

hang

es in

Sha

reho

ldersû

Equity (Co

ntûd)

Sri T

rang

Agro-

Indus

try P

ublic

Com

pany

Lim

ited

and

its s

ubsid

iaries

For t

he y

ears

ende

d 31

Dec

embe

r 201

1 an

d 20

10

The

notes

to th

e co

nsoli

dated

and

Compa

ny fi

nanc

ial s

tatemen

ts on

pag

es 1

27 to

200

form

an

integ

ral p

art o

f the

fina

ncial

statemen

ts.


Co

mpan

y

(R

estat

ed)

(R

estat

ed)

Unre

alise

d

Reva

luatio

n ga

in (lo

ss)

Retai

ned

earn

ings

Iss

ued

and

su

rplus

, net

of

on a

vaila

ble

Appr

opria

ted

pa

id-up

Pr

emium

on

accu

mulat

ed

-for-

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- leg

al (R

estat

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sh

are

capit

al sh

are

capit

al de

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iation

fin

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l ass

ets

rese

rve

Unap

prop

riated

To

tal

Notes

Ba

ht

Baht

Ba

ht

Baht

Ba

ht

Baht

Ba

ht

Open

ing b

alanc

e as

at 1

Jan

uary

2011

- a

s pr

eviou

sly re

porte

d

1,0

00,00

0,000

1,1

23,80

0,000

67

9,263

,975

2,515

,995

100,0

00,00

0 3,3

93,10

6,918

6,2

98,68

6,888

Re

trosp

ectiv

e ad

justm

ents

from

chan

ges

in ac

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ting

polic

y

6 -

- (68

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- 42

,893,3

37

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) Op

ening

bala

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t 1 J

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ry 20

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as

resta

ted

1,000

,000,0

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1,123

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610,6

28,49

7 2,2

99,98

8 10

0,000

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3,436

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55

6,272

,728,7

40

Prof

it fo

r the

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r

-

- -

- -

1,066

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1,066

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Ch

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18,07

3,608

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of tax

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- -

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in fa

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f ava

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ale fi

nanc

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of tax

-

- -

(1,96

8,159

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- (1,

968,1

59)

To

tal o

ther c

ompre

hens

ive in

come

-

- (69

,190,4

69)

(2,14

0,370

) -

18,07

3,608

(53

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31)

To

tal c

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sive

incom

e

-

- (6

9,190

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70)

- 1,0

84,65

2,810

1,0

13,32

1,971

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ansa

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th s

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f cos

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0 7,4

27,18

9,821

-

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- 7,7

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9,821

Appro

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f leg

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erve

26

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- -

- 28

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(28,00

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Div

idend

pay

ment

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-

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(1,60

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(1,60

0,000

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To

tal tr

ansa

ction

s wi

th s

hare

holde

rsû e

quity

28

0,000

,000

7,427

,189,8

21

- -

28,00

0,000

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28,00

0,000

) 6,1

07,18

9,821

Cl

osing

bala

nce

as a

t 31

Dece

mber

201

1

1,2

80,00

0,000

8,5

50,98

9,821

54

1,438

,028

159,6

18

128,0

00,00

0 2,8

92,65

3,065

13,3

93,24

0,532

Statem

ents

of C

hang

es in

Sha

reho

ldersû

Equity (Co

ntûd)

Sri T

rang

Agro-

Indus

try P

ublic

Com

pany

Lim

ited

and

its s

ubsid

iaries

For t

he y

ears

ende

d 31

Dec

embe

r 201

1 an

d 20

10

The

notes

to th

e co

nsoli

dated

and

Compa

ny fi

nanc

ial s

tatemen

ts on

pag

es 1

27 to

200

form

an

integ

ral p

art o

f the

fina

ncial

statemen

ts.

124 A n n u a l R e p o r t 2 0 1 1

Co

mpan

y

(R

estat

ed)

(R

estat

ed)

Unre

alise

d

Reva

luatio

n ga

in (lo

ss)

Retai

ned

earn

ings

Iss

ued

and

su

rplus

, net

of

on a

vaila

ble

Appr

opria

ted

pa

id-up

Pr

emium

on

accu

mulat

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-for-

sale

- leg

al (R

estat

ed)

sh

are

capit

al sh

are

capit

al de

prec

iation

fin

ancia

l ass

ets

rese

rve

Unap

prop

riated

To

tal

Notes

Ba

ht

Baht

Ba

ht

Baht

Ba

ht

Baht

Ba

ht

Open

ing b

alanc

e as

at 1

Jan

uary

2010

- a

s pr

eviou

sly re

porte

d

1,0

00,00

0,000

1,1

23,80

0,000

70

6,108

,043

(6,36

9,462

) 10

0,000

,000

1,583

,638,2

01

4,507

,176,7

82

Retro

spec

tive

adjus

tmen

ts fro

m ch

ange

s in

acco

untin

g po

licy

6

- -

(100,5

88,22

4) 81

4,282

-

90,73

9,162

(9,

034,7

80)

Open

ing b

alanc

e as

at 1

Jan

uary

2010

- a

s re

stated

1,0

00,00

0,000

1,1

23,80

0,000

60

5,519

,819

(5,55

5,180

) 10

0,000

,000

1,674

,377,3

63

4,498

,142,0

02

Prof

it fo

r the

yea

r

-

- -

- -

2,366

,731,5

70

2,366

,731,5

70

Othe

r com

preh

ensiv

e inc

ome

De

precia

tion

trans

fer o

n as

sets

revalu

ation

, net

of tax

-

- 5,1

08,67

8 -

- (5,

108,6

78)

-

Chan

ge in

fair

value

of a

vaila

ble-fo

r-sale

fina

ncial

ass

ets, n

et of

tax

- -

- 7,8

55,16

8 -

- 7,8

55,16

8

Total

othe

r com

prehe

nsive

inco

me

- -

5,108

,678

7,855

,168

- (5,

108,6

78)

7,855

,168

To

tal c

ompr

ehen

sive

incom

e

-

- 5,1

08,67

8 7,8

55,16

8 -

2,361

,622,8

92

2,374,

586,7

38

Tran

sacti

ons

with

sha

reho

ldersû

equ

ity

Div

idend

pay

ment

36

-

- -

- -

(600,0

00,00

0) (60

0,000

,000)

Clos

ing b

alanc

e as

at 3

1 De

cemb

er 2

010

- as

resta

ted

1,000

,000,0

00

1,123

,800,0

00

610,6

28,49

7 2,2

99,98

8 10

0,000

,000

3,436

,000,2

55

6,272

,728,7

40

Statem

ents

of C

hang

es in

Sha

reho

ldersû

Equity (Co

ntûd)

Sri T

rang

Agro-

Indus

try P

ublic

Com

pany

Lim

ited

and

its s

ubsid

iaries

For t

he y

ears

ende

d 31

Dec

embe

r 201

1 an

d 20

10

The

notes

to th

e co

nsoli

dated

and

Compa

ny fi

nanc

ial s

tatemen

ts on

pag

es 1

27 to

200

form

an

integ

ral p

art o

f the

fina

ncial

statemen

ts.





2011 2010 2011 2010

Notes Baht Baht Baht Baht Cash flows from operating activities Profit before income tax 1,958,512,392 4,113,166,314 1,601,156,127 2,452,765,084 Adjustments for: Unrealised (gain) loss on foreign currency translations 139,816,666 (462,736,541) - 23,223,129 Unrealised (Gain) loss from revaluation of derivative financial instuments 749,005,815 79,717,272 530,301,505 (39,414,130) Allowance for (reversal of) impairment of trade accounts receivable 31,216,341 (36,441,260) 31,400,605 (389,027) Allowance for (reversal of) inventory cost in excess of net realisable value 869,632,841 (953,235) 111,752,672 - Allowance for impairment of other receivables - non-controlling interests 18,428,927 - - - Provision for post-employment benefit obligations 24 15,733,004 15,750,990 4,289,165 4,281,939 Depreciation 16 476,131,295 365,979,363 176,309,029 176,275,533 Amortisation 17 7,126,804 5,988,056 3,170,907 2,662,813 Loss on asset revaluation 5,248,890 - - - Finance costs 32 884,996,709 397,660,146 418,916,472 239,203,958 Dividend income 31 (1,176,655) (17,597,956) (70,808,511) (355,580,872) Share of profit of investments in associates and a joint venture 14 (648,938,352) (702,833,127) - - Gain from revaluation of investment properties 18 (15,436,844) - - - (Gain) loss on disposal and write-off of property, plant and equipment and intangible assets 31 (7,983,952) 6,720,587 (16,895,220) 1,918,684 Changes in operating assets and liabilities: (Increase)/decrease in operating assets - Trade accounts receivable and other receivables (1,565,760,111) (1,946,286,181) (2,208,986,779) (1,070,607,051) - Amounts due from futures brokers (271,365,729) 177,527,206 (31,432,619) (103,738,721) - Inventories 2,076,203,759 (10,108,240,868) 3,822,999,047 (3,819,340,772) - Other current assets (138,651,228) (18,183,997) (6,146,949) (9,933,487) - Other non-current assets 660,961 (25,827,563) 2,446,565 (2,756,120) Increase/(decrease) in operating liabilities - Trade accounts payable and other payables (490,361,103) 1,067,971,964 325,081,784 373,521,948 - Other current liabilities 96,208 234,763,562 (2,781,989) 5,838,841

Cash (used in)/provided by operating activities 4,093,136,638 (6,853,855,268) 4,690,771,811 (2,122,068,251) Interest paid (878,201,511) (390,182,248) (410,550,758) (235,644,557) Income tax paid (628,224,496) (284,864,571) (310,011,366) (69,450,881)

Net cash (used in)/provided by operating activities 2,586,710,631 (7,528,902,087) 3,970,209,687 (2,427,163,689)

Statements of cash flows Sri Trang Agro-Industry Public Company Limited and its subsidiaries



126 A n n u a l R e p o r t 2 0 1 1




2011 2010 2011 2010

Baht Baht Baht Baht Cash flows from investing activities Increase in long-term loan to an associate (62,905,000) - (62,905,000) - Decrease in fixed deposits at financial institutions - 261,023 - 261,023 Increase in fixed deposits pledged as collateral (18,039,129) (41,956,721) (43,929) (82,168) Increase in available-for-sale financial assets 15 (60,000) (30,000) - - Dividends received 75,826,355 748,955,456 70,808,511 670,580,872 Cash paid for investments in subsidiaries and associates 14 (30,295,000) - (2,607,364,415) (454,650,140) Proceeds from disposal of property, plant and equiment and intangible assets 162,479,985 37,512,163 36,870,407 32,532,876 Purchases of property, plant and equipment (2,844,121,981) (1,383,763,899) (761,596,824) (179,898,179) Purchases of intangible assets (9,422,235) (13,486,945) (3,255,191) (8,203,468) Purchases of investment property 18 (6,823,591) - - - Proceeds from a decrease in share capital of an associate 14.2 - 19,125,000 - 16,875,000

Net cash (used in)/provided by investing activities (2,733,360,596) (633,383,923) (3,327,486,441) 77,415,816

Cash flows from financing activities Increase/(decrease) in short-term loans from financial institutions (4,854,142,602) 8,163,500,477 (6,089,787,000) 2,052,995,000 Proceeds from long-term loans from financial institutions 62,260,000 1,609,600,000 - 1,200,000,000 Repayments of long-term loans from financial institutions (2,695,860,000) (192,415,267) (2,606,250,000) (93,750,000) Proceeds from issuance of debentures 2,150,000,000 - 2,150,000,000 - Payments on finance lease liabilities (21,886,946) (16,840,277) (15,230,608) (6,637,345) Dividends paid to minority interests - (7,962,750) - - Dividend payment 36 (1,600,000,000) (600,000,000) (1,600,000,000) (600,000,000) Proceeds from capital increase from non-controlling Interest 7,204,008 - - - Proceeds from issuance of new shares 8,034,868,800 - 8,034,868,800 - Costs directly attributable to the issue of new shares (436,734,593) - (436,734,593) -

Net cash (used in)/provided by financing activities 645,708,667 8,955,882,183 (563,133,401) 2,552,607,655

Net increase in cash and cash equivalents 499,058,702 793,596,173 79,589,845 202,859,782 Cash and cash equivalents at beginning of the year 1,773,962,249 980,366,076 686,844,087 483,984,305

Cash and cash equivalents at end of the year 8 2,273,020,951 1,773,962,249 766,433,932 686,844,087

Supplementary information for cash flows

Cash paid for acquisition of property, plant and equipment and intangible assets: Property, plant and equipment and intangible assets acquired (2,843,497,000) (1,441,627,428) (766,763,284) (217,346,812) Increase in liabilities under finance lease contracts 5,555,760 29,374,610 5,555,760 20,064,200 Increase in payable from acquisition of assets (15,602,976) 15,001,974 (3,644,491) 9,180,965

Cash paid for acquisition of property, plant and equipment and intangible assets (2,853,544,216) (1,397,250,844) (764,852,015) (188,101,647)

Statements of cash flows (Contûd) Sri Trang Agro-Industry Public Company Limited and its subsidiaries




1 General information Sri Trang Agro-Industry Public Company Limited (çthe Companyé) is a public limited company, incorporated and resident in Thailand. The Company was listed on the Stock Exchange of Thailand on 22 August 1991. The address of its registered office is as follows:

10 Soi 10, Phetkasem Road, Hadyai, Songkhla, Thailand.

In addition, the Company placed new ordinary shares on the Singapore Exchange Securities Trading Limited (çSGX-STé) on 31 January 2011.

The Company and its subsidiaries (çthe Groupé) manufacture and distribute natural rubber products such as ribbed smoked sheets, concentrated latex, STR block rubber, gloves and other products. In addition, the Group provides engineering and logistics services.

These consolidated and Company financial statements were authorised for issue by the Board of Directors on 24 February 2012.

2 Basis of preparation

The consolidated and company financial statements have been prepared in accordance with Thai generally accepted accounting principles under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the Accounting Profession Act B.E. 2547, and the financial reporting requirements of the Securities and Exchange Commission under the Securities and Exchange Act.

The consolidated and company financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below.

The preparation of financial statements in conformity with Thai generally accepted accounting principles requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Groupûs accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.

On 31 January 2011, the Company successfully listed new ordinary shares on the Singapore Exchange Securities Trading Limited (çSGX-STé). The interim consolidated and company financial statements for the period ended 31 March 2011 and 30 June 2011 prepared in accordance with Singapore Financial Reporting Standards are available on the SGX-STûs website (çwww.sgx.comé). On 10 August 2011, the Board of Directors of the Group passed a resolution to approve the adoption of some Thai Accounting Standards (çTASé) before the standards come into effect as described in Note 3.2 and the application of accounting for derivative financial instruments as described in Note 3.13 in the Thai generally accepted accounting principles (çThai GAAPé) financial statements. Therefore, from the third quarter of 2011 onward, the Group will prepare only Thai GAAP financial statements and submit these to both the Stock Exchange of Thailand and SGX-ST.

Commencing on 1 July 2011, the Group has early adopted TAS 12 çIncome Taxesé before the standard comes into effect as published in the Government Gazette which are mandatory for accounting periods beginning on or after 1 January 2013. In addition, the Group has adopted the accounting for derivative financial instruments as disclosed in Note 3.13.4. The Group is also applying the presentation and disclosures of financial instruments under TAS 107 çFinancial

Notes to the consolidated and Company financial Statement For the years ended 31 December 2011 ·and 2010

128 A n n u a l R e p o r t 2 0 1 1

Instruments: Presentation and Disclosuresé (formerly TAS 48) as described in Note 3.13.

Where necessary, comparative figures have been reclassified to conform with changes in presentation in the current year. To comply with the announcement of Department of Business Development Regulation dated 7 November 2011 in relation to the format of Financial Statements B.E. 2554, the Group has reclassified some balances as at 31 December 2010 which were previously reported as other current assets to çtrade accounts receivable and other receivablesé and çamount due from futures brokersé, and which were previously reported as accrued expenses and other currents liabilities to çtrade accounts payable and other payablesé. The reclassification can be summarised as follows:

Consolidated Company 31 December 31 December 2010 2010 Bahtû000 Bahtû000 Trade accounts receivable and other receivables, net As previously reported: Trade accounts receivable, net - other companies, net 5,611,477 2,956,296 - related companies 91,211 658,406 Included in çOther currents assetsé - Advances for inventories 184,466 107,117 - Prepaid expenses 323,028 225,831 - Accrued income 29,585 107 Reclassified to: Trade accounts receivable and other receivables, net 6,239,767 3,947,757 Amounts due from futures brokers As previously reported: Amounts due from futures brokers - other companies 31,223 - - an associate 81,275 81,275 Included in çOther currents assetsé - Advance payments to futures brokers 22,556 2,772 Reclassified to: Amounts due from futures brokers 135,054 84,047 Trade accounts payable and other payables As previously reported: Trade accounts payable - other companies 1,689,078 842,170 - related companies 849,450 243,723 Accrued expenses 247,160 119,976 Included in çOther currents liabilitiesé - Deferred income 97,267 19 - Deposits and retentions received from customers 159,162 1,634 Reclassified to:

Trade accounts payable and other payables 3,042,117 1,207,522


An English version of the consolidated and company financial statements have been prepared from the statutory financial statements that are in the Thai language. In the event of a conflict or a difference in interpretation between the two languages, the Thai language statutory financial statements shall prevail.

3 Accounting policies

The principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out below: 3.1 New accounting standards, new financial reporting standards, amendments to

accounting standards and new financial reporting interpretations which are effective for the period beginning on or after 1 January 2011

New accounting standards, new financial reporting standards, new interpretation and amendments to accounting standards effective for the periods beginning on or after 1 January 2011 and adopted by the Group: TAS 1 (Revised 2009) Presentation of Financial Statements TAS 2 (Revised 2009) Inventories TAS 7 (Revised 2009) Statement of Cash Flows TAS 8 (Revised 2009) Accounting Policies, Changes in Accounting Estimates and Errors TAS 10 (Revised 2009) Events after the Reporting Period TAS 11 (Revised 2009) Construction Contracts TAS 16 (Revised 2009) Property, Plant and Equipment TAS 17 (Revised 2009) Leases TAS 18 (Revised 2009) Revenue TAS 19 Employee Benefits TAS 23 (Revised 2009) Borrowing Costs TAS 24 (Revised 2009) Related-Party Disclosures TAS 26 Accounting and Reporting by Retirement Benefit Plans TAS 27 (Revised 2009) Consolidated and Separate Financial Statements TAS 28 (Revised 2009) Investments in Associates TAS 29 Financial Reporting in Hyperinflationary Economies TAS 31 (Revised 2009) Interests in Joint Ventures TAS 33 (Revised 2009) Earnings per Share TAS 34 (Revised 2009) Interim Financial Reporting TAS 36 (Revised 2009) Impairment of Assets TAS 37 (Revised 2009) Provisions, Contingent Liabilities and Contingent Assets TAS 38 (Revised 2009) Intangible Assets TAS 40 (Revised 2009) Investment Property TFRS 2 Share-based Payment TFRS 3 (Revised 2009) Business Combinations TFRS 5 (Revised 2009) Non-current Assets Held-for-sale and Discontinued Operations TFRS 6 Exploration for and Evaluation of Mineral Resources TFRIC 15 Agreements for the Construction of Real Estate

130 A n n u a l R e p o r t 2 0 1 1

The following are the new accounting standards/new financial reporting standards/amendments to accounting standards/interpretations that are mandatory for the first time for the financial year beginning 1 January 2011, and that impact the financial statements for the year ending 31 December 2011:

ë TAS 1 (Revised 2009) çPresentation of Financial Statementsé: the revised standard will prohibit the presentation of items of income and expenses in the statement of changes in equity. Entities can choose to present the statement of comprehensive income as one statement or two statements (the income statement and statement of comprehensive income). Where entities restate or reclassify comparative information, they are required to present a restated statement of financial position as at the beginning comparative period in addition to the current requirement to present the statement of financial position at the end of the current period and comparative period. However, for the financial statements for the period beginning on or after 1 January 2011 which is the first period to apply this standard, an entity can choose to present statement of financial position as only two statements without the statement of financial position as at the beginning comparative period.

The Groupûs management has chosen to present the statement of comprehensive income as one statement and has chosen to present the statement of financial position as only two statements without the statement of financial position as at the beginning comparative period.

TAS 1 (Revised 2009) affects the presentation of the financial statements as follows:

- The statement of income has been re-presented and is now called the statement of comprehensive income. The increase or decrease in non-shareholder equity that used to be presented in the statement of changes in shareholdersû equity is now included in the statement of comprehensive income as other comprehensive income. The comparative information of the statement of comprehensive income and the statement of changes in equity for the year ended 31 December 2010 has also been re-presented so that it is in conformity with the revised standard.

- The balance sheet is now called the çstatement of financial positioné.

The change in TAS 1 (Revised 2009) only impacts the presentation of the financial information, and thus there is no impact on earnings per share.

ë TAS 16 (Revised 2009) çProperty, Plant and Equipmenté: the revised standard requires that entities include in the cost of property plant and equipment, an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, when the entity has an obligation to do so. It also requires that any component of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately. In addition, the revised standard also requires that entities review the useful life, residual value and depreciation method at least at each financial year-end.


The Groupûs management has determined that the adoption of TAS 16 (revised 2009) will impact the financial statements when the Group acquires significant property, plant and equipment during the year.

ë TAS 40 (Revised 2009) çInvestment Propertiesé: the standard has specific presentation and measurement requirements for investment property. An entity has to present investment property separately in the statement of financial position. The entity can choose to measure it using either the cost model or fair value model. Under the fair value model, any changes in fair value are recognised in profit or loss for the period in the statement of comprehensive income. The Group has adopted this accounting standard from 1 January 2011 and has chosen the fair value model for measurement. The investment properties of the Group comprise the land not used in operations and properties that used to be presented as part of other non-current assets.

The effects of the adoption of TAS 40 (revised 2009) on the previously reported statement of financial position are presented in Note 6.1.

3.2 The new accounting standards, amendments to accounting standards and new

interpretations which are mandatory for accounting periods beginning on or after 1 January 2013.

The Group has applied the following accounting standards and interpretations before the standards come into effect: TAS 12 Income Taxes TSIC 21 Income Taxes - Recovery of Revalued Non-Depreciable Assets TSIC 25 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders

The impact of the adoption of these income tax related accounting standards on the previously reported statement of financial position is presented in Note 6.2.

The Group has not applied the following accounting standards and interpretations before the standards come into effect:

TAS 20 (revised 2009) Accounting for Government Grants and Disclosure of Government Assistance TAS 21 (revised 2009) The Effects of Changes in Foreign Exchange Rates TSIC 10 Government Assistance - No Specific Relation to Operating Activities

The Groupûs management has determined that the new accounting standards, new financial reporting standards, new interpretation and amendments to accounting standards, which are mandatory for accounting periods beginning on or after 1 January 2013 and the Group has not applied, will not significantly impact the financial statements being presented.

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3.3 Group accounting - investments in subsidiaries and associates and an interest in a joint venture (1) Subsidiaries

Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible including potential voting rights held by another entity, are considered when assessing whether the Group controls another entities. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases.

The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interestûs proportionate share of the acquireeûs net assets.

The Company applies the predecessor value method for business combination acquired under common control. The excess of consideration paid compared to book values of the business acquired is recorded as a separate item and presented in equity.

In the Companyûs separate financial statements, investment in subsidiaries is accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes direct attributable costs of investment.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Groupûs share of the identifiable net asset acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss.

Inter-company transactions, balances and unrealised gains on transactions between group of companies are eliminated; unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

A list of the Groupûs subsidiaries is set out in Note 14.1.

(2) Transactions and non-controlling interests The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gain or losses on disposals to non-controlling interests are also recorded in equity.


When the Group ceases to have control or significant influence, any retained interest in the entity is re-measured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of the entity are accounted for as if the Group had directly disposed of the related assets or liabilities.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.

(3) Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. In the consolidated financial statement, the Groupûs investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss (if any).

The Groupûs share of its associatesû post-acquisition profits or losses is recognised in the profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Groupûs share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Groupûs interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group. Dilution gains and losses arising in investments in associates are recognised in the profit or loss.

In the Companyûs separate financial statements, investment in associates is accounted for using the cost method of accounting. A list of the Groupûs associates is set out in Note 14.2.

(4) Joint venture

The Groupûs joint venture is entity over which the Group has contractual arrangements to jointly share the control over the economic activity of the entity with one or more parties. In the Companyûs separate financial statements, the interest in a jointly controlled entity is accounted for using the cost method. The Groupûs interest in joint venture is accounted for in the consolidated financial statements using the equity method of accounting.

134 A n n u a l R e p o r t 2 0 1 1

The Groupûs share of its joint ventureûs post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Groupûs share of losses in a joint venture equals or exceeds its interest in the joint venture, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint venture.

Unrealised gains on transactions between the Group and its joint venture are eliminated to the extent of the Groupûs interest in the joint venture. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Accounting policies of the joint venture have been changed where necessary to ensure consistency with the policies adopted by the Group at the consolidated financial statements.

The Groupûs joint venture is set out in Note 14.3.

3.4 Foreign currency translation Items included in the financial statements of each entity in the Group are measured using Thai Baht. The consolidated financial statements are presented in Thai Baht. Foreign currency transactions are translated into Thai Baht using the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated to Thai Baht at the exchange rate prevailing at the date of statements of financial position. Gains and losses resulting from the settlement of foreign currency transactions and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognised in the profit or loss. Translation differences on investments in debt securities and other monetary financial assets measured at fair value are included in foreign exchange gains and losses. Translation differences on non-monetary items such as investments in equity securities held for trading are reported as part of the fair value gain or loss. Translation differences on available-for-sale investments in equity securities are included in the revaluation reserve in equity. The statements of comprehensive income and cash flows of foreign entities are translated into the Groupûs reporting currency at the weighted average exchange rates for the year and statements of financial position are translated at the exchange rates ruling on the date of statements of financial position. Currency translation differences arising from the retranslation of the net investment in foreign entities are taken to shareholdersû equity. On disposal of a foreign entity, accumulated currency translation differences are recognised in the statement of comprehensive income as part of the gain or loss on disposal.

3.5 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits held at call with banks (but do not include deposits with banks which are held to maturity), and other short-term highly liquid investments with maturities of three months or less from the date of acquisition and bank overdrafts. Bank overdrafts are included in current liabilities on the statements of financial position.

Deposits at financial institutions that are restricted in use are presented as çFixed deposits pledged as collateralé under non-current assets in the statements of financial position.


3.6 Trade accounts receivable Trade accounts receivable are carried at the original invoice amount and subsequently measured at the remaining amount less any allowance for impairment of receivables based on a review of all outstanding amounts at the year end. The amount of the allowance is the difference between the carrying amount of the receivable and the amount expected to be collectible. Bad debts are written off during the year in which they are identified and recognised in the statement of comprehensive income within administrative expenses.

3.7 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined by the weighted average method. The cost of purchase comprises both the purchase price and costs directly attributable to the acquisition of the inventory, such as import duties and transportation charges, less all attributable discounts. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity), but excludes borrowing costs. Net realisable value is the estimate of the selling price in the ordinary course of business, less the costs of completion and selling expenses. Allowance is made, where necessary, for obsolete, slow moving and defective inventories.

3.8 Investments

Investments other than the investments in subsidiaries, associates and an interest in a joint venture are classified into the following four categories: 1. Trading investments, 2. Held-to-maturity investments, 3. Available-for-sale investments, and 4. General investments. The classification is dependent on the purpose for which the investments were acquired. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. 1. Investments that are acquired principally for the purpose of generating a profit from

short-term fluctuations less than three months from the date of acquisition in price are classified as trading investments and included in current assets.

2. Investments with fixed maturity that the management has the intent and ability to hold to maturity are classified as held-to-maturity and are included in non-current assets, except for maturities within 12 months from the statement of financial position date which are classified as current assets.

3. Investments intended to be held for an indefinite period of time, which may be sold in response to liquidity needs or changes in market prices or interest rates, are classified as available-for-sale; and are included in non-current assets unless management has expressed the intention of holding the investment for less than 12 months from the statement of financial position date or unless they will need to be sold to raise operating capital, in which case they are included in current assets.

4. Investments in non-marketable equity securities are classified as general investments.

All categories of investment are initially recognised at cost, which is equal to the fair value of consideration paid plus transaction cost. Trading investments and available-for-sale investments are subsequently measured at fair value. The fair value of investments is based on quoted bid price at the close of business on the statement of financial position date by reference to the Stock Exchange of Thailand. Held-to-maturity investments are carried at amortised cost using the effective yield method less impairment loss.

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General investments are carried at cost less impairment. A test for impairment is carried out when there is a factor indicating that an investment might be impaired. If the carrying value of the investment is higher than its recoverable amount, impairment loss is charged to the statement of comprehensive income.

On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the statement of comprehensive income. When disposing of part of the Groupûs holding of a particular investment in equity security, the carrying amount of the disposed part is determined by the weighted average carrying amount of the total holding of the investment.

3.9 Property, plant and equipment

Land and buildings are initially recognised at cost. Land is subsequently carried at the revalued amount less accumulated impairment losses, if any. Land improvements, buildings and structures are subsequently carried at the revalued amounts less accumulated depreciation and accumulated impairment losses.

Land, land improvements, buildings and structures are revalued by independent professional valuers every 5 years or whenever there is an indication that their carrying amounts are likely differ materially from their revalued amounts. When an asset is revalued, any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset. The net amount is then restated to the revalued amount of the asset.

Increases in the carrying amount arising on revaluation of land and building are credited to statement of comprehensive income and shown as çrevaluation surplusé in shareholdersû equity. Decreases that offset previous increases of the same asset are charged in other comprehensive income and debited against çrevaluation surplusé directly in equity; all other decreases are charged to profit or loss. Each year, the difference between depreciation based on the revalued carrying amount of the asset charged to profit or loss and depreciation based on the assetûs original cost is transferred from çrevaluation surplusé to retained earnings.

All other items of property, plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses.

The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is calculated on the straight line basis to write off the cost (or the revalued amount) of each asset, except for land which is considered to have an indefinite life, to its residual value over the estimated useful life as follows:

Land improvements 5 - 30 years Buildings and structures 20 - 40 years Machinery and equipment 5 - 10 years Vehicles 5 years Fixtures and office equipment 3 - 5 years

The assetsû residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.


The assetûs carrying amount is written-down immediately to its recoverable amount if the assetûs carrying amount is greater than its estimated recoverable amount. Repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset. Gains and losses on disposals are determined by comparing proceeds with the carrying amounts and are included in operating profit. On disposals of revalued assets, the fair value reserve is transferred to retained earnings. Interest costs on borrowings to finance the construction of property, plant and equipment are capitalised as part of cost of the asset, during the period of time required to complete and prepare the property for its intended use. All other borrowing costs are expensed.

3.10 Intangible assets Computer software Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of 3 - 5 years. Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Costs that are directly associated with identifiable and unique software products controlled by the Group and will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs include staff costs of the software development team and an appropriate portion of relevant overheads.

3.11 Investment properties Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the companies in the consolidated Group, is classified as investment property. Investment property also includes property that is being constructed or developed for future use as investment property. Investment property is measured initially at its cost including related transaction costs. After initial recognition, investment property is carried at fair value, as determined by an independent professional valuer. Changes in fair values are recognised in profit or loss. Subsequent expenditure is capitalised to the assetûs carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Group and the cost of the item can be measured reliably. All other repair and maintenance costs are expensed when incurred.

3.12 Impairment of assets Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount which is the higher of an assetûs fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there is separately identifiable cash flows. Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

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3.13 Financial instruments 3.13.1 Financial assets

(a) Classification The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, held-to-maturity and available-for-sale. The classification depends on the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition. The designation of financial assets at fair value through profit or loss is irrevocable. (i) Financial assets at fair value through profit or loss This category has two sub-categories: financial assets held for trading

and those designated at fair value through profit or loss at inception. A financial asset is classified as held for trading if it is acquired principally for the purpose of selling in the short term. Financial assets designated at fair value through profit or loss at inception are those that are managed and their performances evaluated on a fair value basis, in accordance with a documented Group investment strategy. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are presented as current assets if they are either held for trading or are expected to be realised within 12 months after the date of the statement of financial position.

(ii) Loans and receivables Loans and receivables are non-derivative financial assets with

determinable payments that are not quoted in an active market. They are presented as current assets, except for those maturing later than 12 months after the date of the statement of financial position, which are presented as non-current assets. Loans and receivables are presented as çtrade and other receivablesé and çcash and cash equivalentsé in the statement of financial position.

(iii) Financial assets held-to-maturity Financial assets held-to-maturity are non-derivative financial assets with

fixed or determinable payments and fixed maturities that the Groupûs management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-sale. They are presented as non-current assets, except for those maturing within 12 months after the date of the statement of financial position, which are presented as current assets.

(iv) Financial assets available-for-sale Financial assets available-for-sale are non-derivatives that are either

designated in this category or not classified in any of the other categories. They are presented as non-current assets unless management intends to dispose of the assets within 12 months after the date of the statement of financial position.


(b) Recognition and derecognition Regular way purchases and sales of financial assets are recognised on the

trade-date - the date on which the Group commits to purchase or sell the asset.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all of the risks and rewards of ownership. On disposal of a financial asset, the difference between the carrying amount and the sales proceeds is recognised in the statement of comprehensive income. Any amount in the fair value reserve relating to that asset is transferred to the statement of comprehensive income.

Trade receivables that are factored out to banks and other financial institutions with recourse to the Group are not derecognised until the recourse period has expired and the risks and rewards of the receivables have been fully transferred. The corresponding cash received from the financial institutions is recorded as bills payable under short-term loans from financial institutions.

(c) Initial measurement Financial assets are initially recognised at fair value plus transaction costs

except for financial assets at fair value through profit or loss, which are recognised at fair value. Transaction costs for financial assets at fair value through profit and loss are recognised immediately in the statement of comprehensive income.

(d) Subsequent measurement Financial assets, both available-for-sale and at fair value through profit or loss,

are subsequently carried at fair value. Loans and receivables and financial assets held-to-maturity are subsequently carried at amortised cost using the effective interest method.

Changes in the fair values of financial assets at fair value through profit or loss, including the effects of currency translation, interest and dividend, are recognised in the statement of comprehensive income when the changes arise.

Interest and dividend income on financial assets available-for-sale are recognised separately in the statement of comprehensive income. Changes in the fair values of available-for-sale debt securities (i.e. monetary items) denominated in foreign currencies are analysed into currency translation differences on the amortised cost of the securities and other changes; the currency translation differences are recognised in the statement of comprehensive income and the other changes are recognised in the fair value reserve. Changes in fair values of available-for-sale equity securities (i.e. non-monetary items) are recognised in the fair value reserve, together with the related currency translation differences in equity.

(e) Impairment The Group assesses at the date of each statement of financial position whether

there is objective evidence that a financial asset or a group of financial assets is impaired, and recognises an allowance for impairment when such evidence exists.

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(i) Loans and receivables / financial assets - held to maturity

Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy, and default or significant delay in payments are classed as objective evidence that these financial assets are impaired.

The carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated as the difference between the carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. When the asset becomes uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised against the same line item in the statement of comprehensive income.

The allowance for impairment loss account is reduced through the statement of comprehensive income in a subsequent period when the amount of impairment loss decreases and the related decrease can be objectively measured. The carrying amount of the asset previously impaired is increased to the extent that the new carrying amount does not exceed the amortised cost had no impairment been recognised in prior periods.

(ii) Financial assets, available-for-sale Significant or prolonged declines in the fair value of the security below

its cost and the disappearance of an active trading market for the security are classed as objective evidence that the security is impaired.

The cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from shareholdersû equity and recognised in profit or loss. Impairment losses recognised in the consolidated statement of comprehensive income on equity instruments are not reversed through the consolidated statement of comprehensive income. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the consolidated statement of comprehensive income.

3.13.2 Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement

of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

3.13.3 Fair value estimation of financial assets and liabilities The fair values of financial instruments traded in active markets (such as exchange traded and over-the-counter securities and derivatives) are based on quoted market prices at the date of the statement of financial position. The quoted market prices used for financial assets are the current bid prices; the appropriate quoted market prices for financial liabilities are the current asking prices.


The fair values of financial instruments that are not traded in an active market are determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on the market conditions existing at each statement of financial position date. Where appropriate, quoted market prices or dealer quotes for similar instruments are used. Valuation techniques, such as discounted cash flow analysis, are also used to determine the fair values of the financial instruments. The fair values of current financial assets and liabilities carried at amortised cost approximate their carrying amounts.

3.13.4 Derivative financial instruments Derivative financial instruments comprise rubber forward contracts made with traders, rubber futures contracts, interest rate swaps and forward foreign exchange contracts. Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at fair value, and the resultant gains and losses are recognised in the statement of comprehensive income. Fair value is determined based on quoted market prices at the date of the statement of financial position.

Derivative financial instruments are reported in the financial statements on a net basis where legal right of setoff exists. Derivative financial instruments are carried as assets when their fair value is positive and as liabilities when their fair value is negative.

3.14 Borrowings

Borrowings are recognised initially at the fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective yield method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent that there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of reporting date.

3.15 Leases - where a Group company is the lessee

Leases of property, plant or equipment which substantially transfer all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated to the principal and to the finance charges so as to achieve a constant rate on the finance balance outstanding. The outstanding rental obligations, net of finance charges, are included in other long-term payables with current portion of the finance lease liabilities presented as current liabilities. The interest element of the finance cost is charged to the statement of comprehensive income over the lease period so as to achieve a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant or equipment acquired

142 A n n u a l R e p o r t 2 0 1 1

under finance leases is depreciated over the shorter period of the useful life of the asset or the lease term.

Leases not transferring a significant portion of the risks and rewards of ownership to the lessee are classified as operating leases. Payments made under the operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the periods of the leases. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which the termination takes place.

3.16 Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the date of statements of financial position in the countries where the companyûs subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the statement of financial position. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the date of statements of financial position and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates, and joint ventures, except where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

3.17 Employee benefits

(a) Defined contribution plans Defined contribution plans are post-employment benefit plans under which some entities in the Group pay fixed contributions into separate entities on a mandatory, contractual or voluntary basis. Some entities in the Group have no further payment obligations once the contributions have been paid.


The contributions from those entities to the post-employment benefit plans are charged to the statement of comprehensive income in the year to which they relate.

(b) Post employment benefit obligations The Group provides for post-employment benefits, payable to employees under the Thai Labour Law. The amounts payable in the future depend on the salary and years of service of the respective employees. The defined benefit obligations are measured, using the Projected Unit Credit method calculated with sufficient regularity that the amounts recognised in the financial statements do not differ materially from the amounts that would be determined at the end of the reporting period, by an independent actuary, in accordance with actuarial technique as the present value of the estimated future cash outflows, based on employee salaries, turnover rate, retirement ages, mortality rate, length of service and others, and using interest rates of government bonds, which have terms to maturity approximating to the terms of the related obligations.

Prior to 2011, actuarial gains or losses arising from changes in the actuarial assumptions of the present value of defined benefit obligations are recognized through statement of income using a straight-line basis over the expected average remaining working lives of the employees. Commencing 2011, actuarial gains or losses arising from changes in the actuarial assumptions of the present value of defined benefit obligations are charged or credited to equity in other comprehensive income in the period which they arise. However, there is no significant impact to the financial statements as a result of such change.

3.18 Provisions

Provisions, excluding the provisions for employee benefits, are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

3.19 Share capital

Ordinary shares are classified as equity.

Incremental external costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

3.20 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and service net of output tax, rebates and discounts, and after eliminating sales within the Group for the consolidated financial statements.

The Group recognises revenue when the amount of revenue and related costs can be reliably measured; it is probable that future economic benefits will flow to the entity and when the specific criteria for each of the Groupûs activities are met as follows:

144 A n n u a l R e p o r t 2 0 1 1

(a) Sales of goods

The Group manufactures and sells a range of natural rubber products. Sales of goods are recognised when significant risks and rewards of ownership of the products are transferred to the buyer and the collectability of the related receivable is reasonably assured.

(b) Rendering of services

Revenue from services is recognised when the services are rendered.

(c) Interest income

Interest income is recognised on an accrual basis unless collectibility is in doubt using the effective interest method.

(d) Dividend income

Dividend income is recognised when the right to receive payment is established.

(e) Rental income

Rental income is recognised on an accrual basis in accordance with the relevant rental agreements.

3.21 Dividend distribution

Dividends are recorded in the consolidated and Companyûs financial statements in the period in which the dividends are approved by the Companyûs shareholders.

3.22 Segment reporting

Business segments provide products or services that are subject to risks and returns that are different from those of other business segments. Geographical segments provide products or services within a particular economic environment that are subject to risks and returns that are different from those of components operating in other economic environments.

4 Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 4.1 Impairment of non-financial assets

Assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts exceed their recoverable amounts. The assessment of the carrying amounts often requires the use of estimates and assumptions such as discount rates, exchange rates, commodity prices, future capital requirements and future operating performance. The key line item affected will be çProperty, plant and equipmenté as disclosed in Note 16.

4.2 Income taxes and deferred income taxes

The Group are subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. In addition, deferred tax assets and liabilities are recognised for temporary difference arising


between tax bases of assets and liabilities and their carrying amount for accounting purposes as at the date of statement of financial position. Significant management judgment is used in considering whether it is highly probable that the Group will generate sufficient taxable profits from its future operations to minimise these deferred tax assets. The Groupûs assumptions regarding the future taxable profits and the anticipated timing of minimise of deductible temporary differences and significant changes in these assumptions from period to period may have a material impact on financial position and results of operations.

4.3 Employee benefits

The present value of post employment benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations.

The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability. The key line items affected will be çPost employment benefit obligationsé and çEmployee costsé as disclosed in Note 24 and 29, respectively.

5 Financial risk management

5.1 Financial risk factors The Groupûs activities expose it to a variety of financial risks: market risk (including currency risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Groupûs overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Groupûs financial performance. The Group uses derivative financial instruments to hedge certain risk exposures. Risk management is carried out under supervision by the management, who identifies, evaluates and hedges financial risks but does not apply hedge accounting. (a) Market risk

(i) Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar. Foreign exchange risk arises from commercial transactions, net investment in foreign operations and borrowings. Management has set up policies to manage their foreign exchange risk against their functional currency. To manage the foreign exchange risk arising from future commercial transactions and borrowings, entities in the Group use forward contracts. Foreign exchange risk arises when future commercial transactions are denominated in a currency that is not the Companyûs functional currency.

146 A n n u a l R e p o r t 2 0 1 1

The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk.

If Thai Baht had changed by 3% against the US dollar with all other variables held constant, post-tax profit for the year, and shareholdersû equity would have been impacted as follows:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Impact to profit after tax in the statement of

comprehensive income

THB against USD

- Weakened (47,926) 57,854 (150,588) (104,854)

- Strengthened 47,926 (57,854) 150,588 104,854

Impact to shareholdersû equity in the statement

of financial position

THB against USD

- Weakened (57,273) (47,326) - -

- Strengthened 57,273 47,326 - -

(ii) Price risk The Group is exposed to commodity price risk from the natural rubber industry. The

Group has managed the risks arising from price fluctuations by managing raw material sourcing. If the price of natural rubber increase/decrease by 10% with all other variables held constant, post-tax profit for the year will increase/decrease as follows:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Profit and loss 680,885 414,472 73,632 10,086

The Group is also exposed to equity securities price risk because of investments held by the Group and classified on the consolidated statement of financial position as available-for-sale. Some of the Groupûs investments in equity securities are publicly traded in the Stock Exchange of Thailand. To manage its price risk arising from investments in equity, the Group diversifies its portfolio.

The table below summarises the impact of increases/decreases of the equity securities on the Groupûs and Companyûs equity. The analysis is based on the assumption that the price per share of the invested securities had increased/decreased by 5% (2010: 21%) with all other variables held constant and all the Groupûs and Companyûs available-for-sale equity instruments moved according to the historical correlation with the index:



2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Equity - unrealised gain/loss on

available-for-sale financial assets 1,786 7,519 1,953 7,448

(iii) Cash flow and fair value interest rate risk The Groupûs and Companyûs interest rate risk arises from borrowings. Borrowings

which are issued at floating rates expose the Group and Company to cash flow interest rate risk. The Group and Company manages its cash flow interest rate risk by entering into interest rate swap contracts. If the interest rate increase/decreases by 0.5%, the post-tax profit for the year will increase/decrease as follows:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Profit and loss 17,906 30,572 - 12,500

Borrowings which are issued at fixed rates expose the Group and Company to fair value interest rate risk. However, changes in market interest rates will not have an impact on the statement of comprehensive income as borrowings are accounted for on an amortised cost basis.

(b) Credit risk Credit risk arises from cash and cash equivalents, derivative financial instruments,

deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions. The Group and Company also assesses credit quality of banks, financial institutions, and customer, taking into account its financial position, past experience and other factors. The utilisation of credit limits is regularly monitored.

(c) Liquidity risk The Group and Company monitor its liquidity requirements to ensure it has sufficient

cash to meet operational needs while maintaining sufficient headroom on undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants on any of the borrowing facilities.

The table below analyses the Groupûs and Companyûs maturity grouping based on the remaining period at the date of statements of financial position to the contractual maturity date. The negative figures represent cash inflows and positive figures represent cash outflows. The amounts disclosed below are the contractual undiscounted cash flows.

148 A n n u a l R e p o r t 2 0 1 1

Consolidated

Less than Between Between Over

1 year 1 and 2 years 2 and 5 years 5 years

Bahtû000 Bahtû000 Bahtû000 Bahtû000

31 December 2011

Short-term loans from financial institutions 15,505,145 - - -

Trade accounts payable 2,051,590 - - -

Accrued expenses 339,086 - - -

Long-term loans from financial institutions 142,629 128,067 215,663 -

Debentures - - 1,811,393 679,392

Finance lease liabilities 12,540 9,523 3,261 -

Gross and net settled derivative financial

instruments

- Foreign exchange options (29,700) - - -

- Rubber futures (Buy) 137,831 - - -

- Rubber futures (Sell) (2,742,222) - - -

- Forward - (Baht against USD)

payments 14,460,613 - - -

- Forward - (Baht against USD) receipts (14,861,738) - - -

- Physical forward (Buy) 2,808,091 - - -

- Physical forward (Sell) (1,120,707) - - -

31 December 2010


Trade accounts payables 2,538,527 - - -


Long-term loans from financial institutions 751,942 2,311,696 2,682,259 -



instruments

- Rubber futures (Buy) 612,506 - - -

- Rubber futures (Sell) (661,774) - - -


payments 12,648,605 - - -


- Forward - (IDR against USD) payments 284,969 - - -

- Forward - (IDR against USD) receipts (300,063) - - -

- Physical forward (Buy) 1,756,404 - - -

- Physical forward (Sell) (1,114,042) - - -


Company

Less than Between Between Over

1 year 1 and 2 years 2 and 5 years 5 years

Bahtû000 Bahtû000 Bahtû000 Bahtû000 31 December 2011


Trade accounts payable 1,390,506 - - -


Debentures - - 1,811,393 679,392


Gross and net settled derivative

financial instruments

- Foreign exchange options (29,700) - - -



payments 13,430,465 - - -


31 December 2010


Trade accounts payables 1,085,893 - - -


Long-term loans from financial institutions 589,748 - 2,323,795 -



instruments



payments 12,099,050 - - -


5.2 Capital risk management

The Groupûs and Companyûs objectives when managing capital are to safeguard the Groupûs and Companyûs ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group and Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Management regards total equity as its capital. The Group and Company monitor capital on the basis of the net debt to total equity ratio. This ratio is calculated as net debt divided by total equity. Net debt is calculated as total liabilities as shown in the consolidated statement of financial position less cash and cash equivalents. Total equity is as shown in the statement of financial position.

150 A n n u a l R e p o r t 2 0 1 1

The net debt to total equity ratios at 31 December 2011 and 2010 were as follows: Consolidated Company


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Total liabilities 22,381,357 27,264,251 9,139,626 14,697,938

Less cash and cash equivalents (2,273,021) (1,773,962) (766,434) (686,844)

Net debt 20,108,336 25,490,289 8,373,192 14,011,094

Total equity 18,030,858 10,391,502 13,393,241 6,272,729

Net debt to total equity ratio 1.12 2.45 0.63 2.23

5.3 Fair value measurements Assets and liabilities measured at fair value are classified by level of the following fair value measurement hierarchy: Level 1 : quoted prices in active markets for financial assets Level 2 : inputs other than quoted prices included within level 1 that are observable for

the assets or liabilities, either directly (that is, as prices) or indirectly Level 3 : inputs for the assets or liabilities that are not based on observable market data

The following table presents the Groupûs and Companyûs assets and liabilities that are measured at fair value.

Consolidated

Level 1 Level 2 Level 3 Total

Bahtû000 Bahtû000 Bahtû000 Bahtû000 31 December 2011 Available-for-sale financial assets - Equity securities 33,225 - 10,427 43,652 Financial assets at fair value through profit or loss - Trading derivatives - 329,305 - 329,305 Financial liabilities at fair value through profit or loss - Trading derivatives - 1,112,239 - 1,112,239

31 December 2010 Available-for-sale financial assets - Equity securities 35,841 - 10,427 46,268 Financial assets at fair value through profit or loss - Trading derivatives - 459,559 - 459,559 Financial liabilities at fair value through profit or loss - Trading derivatives - 493,488 - 493,488


Company

Level 1 Level 2 Level 3 Total


31 December 2011

Available-for-sale financial assets

- Equity securities 32,352 - 10,427 42,779

Financial assets at fair value through

profit or loss

- Trading derivatives - 44,430 - 44,430

Financial liabilities at fair value

through profit or loss


31 December 2010

Available-for-sale financial assets

- Equity securities 34,679 - 10,427 45,106

Financial assets at fair value through

profit or loss


Financial liabilities at fair value

through profit or loss


The fair value of financial instruments traded in active markets is based on quoted market prices at the date of statement of financial position. A market is regarded as active if quoted prices are readily and regularly available. These instruments are included in Level 1. Instruments included in Level 1 comprise primarily equity securities classified as available-for-sale.

The fair value of financial instruments that are not traded in active markets (interest rate swap, forward, option) is determined by using fair value obtained from financial institutions and using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable and fair value is readily available from financial institutions, the instrument is included in Level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. During the current financial year, there was no movement in those instruments included in Level 3 (2010: no movement). Specific valuation techniques used to value financial instruments include: ë Quoted market prices ë Financial institution quotes for derivatives

152 A n n u a l R e p o r t 2 0 1 1

ë Fair value of forward foreign exchange contracts is determined using forward exchange rate at the date of the statement of financial position, with the resulting value discounted back to present value.

ë Fair value of physical forward contracts is determined based on quoted market prices at the date of the statement of financial position.

6 Effect of the adoption of new accounting policies

The impact on the statement of financial position as at 31 December 2010 and the statements of comprehensive income for the year ended 31 December 2010 from the adoption of the new accounting policies can be summarised as follows: 6.1 Accounting policy relating to çInvestment propertiesé as described in Note 3.11 6.2 Accounting policy relating to çIncome taxesé as described in Note 3.16 6.3 Accounting policy relating to derivative financial instruments as described in Note 3.13

Consolidated

(Before

Adjustment) (Restated)

31 December Retrospective Adjustments 31 December

2010 6.1 6.2 6.3 2010

Notes Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Statements of financial position

Current assets

Derivative financial instruments - assets 9 - - - 459,559 459,559

Non-current assets

Investments in associates 2,596,516 - 17,698 1,208 2,615,422

Deferred income tax assets 19 - - 129,024 1,240 130,264

Investment properties - 48,032 - - 48,032

Land not used in operations 22,850 (22,850) - - -

Other non-current assets 25,182 (25,182) - - -

Current liabilities

Derivative financial instruments - liabilities 9 - - - 493,488 493,488

Non-current liabilities

Deferred income tax liabilities 19 - - 138,402 - 138,402

Shareholdersû equity

Revaluation surplus, net of accumulated depreciation 974,059 (10,318) (113,722) - 850,019

Unrealised gain on

available-for-sale financial assets 3,338 - (315) - 3,023

Cumulative translation adjustments (268,300) - (5,746) (9,797) (283,843)

Retained earnings 7,612,690 10,318 128,103 (21,715) 7,729,396

Non-controlling interests 42,211 - - 30 42,241


Consolidated

(Before Adjustment) (Restated) 1 January Retrospective Adjustments 1 January 2010 6.1 6.2 6.3 2010 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Statements of financial position Shareholdersû equity Revaluation surplus, net of accumulated depreciation 1,010,671 (10,318) (154,795) - 845,558 Unrealised gain on available-for-sale financial assets (6,200) - 827 - (5,373) Cumulative translation adjustments (45,997) - (498) (9,655) (56,150) Retained earnings 4,323,361 10,318 131,373 49,178 4,514,230 Statements of comprehensive income For the year ended Share of profit of investments in associates and a joint venture 695,860 - 3,528 3,445 702,833 Gains on exchange rates 878,783 - - 46,678 925,461 Other gains (losses) - net 96,464 - - (106,855) (10,391) Income tax expenses (292,806) - 18,905 1,239 (272,662) Profit for the year 3,873,564 - 22,433 (55,493) 3,840,504 Earnings per share (Baht) 3.85 - 0.02 (0.05) 3.82

Company

(Before Adjustment) (Restated) 31 December Retrospective Adjustments 31 December 2010 6.1 6.2 6.3 2010 Notes Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Statements of financial position Current assets Derivative financial instruments - assets 9 - - - 98,248 98,248 Non-current assets Deferred income tax assets 19 - - 11,615 1,239 12,854 Investment properties - 22,850 - - 22,850 Land not used in operations 22,850 (22,850) - - - Current liabilities Derivative financial instruments - liabilities 9 - - - 65,410 65,410 Non-current liabilities Deferred income tax liabilities 19 - - 71,650 - 71,650 Shareholdersû equity Revaluation surplus, net of accumulated depreciation 679,264 (10,318) (58,317) - 610,629 Unrealised gain on available-for-sale financial assets 2,516 - (216) - 2,300

Retained earnings 3,393,107 10,318 (1,502) 34,077 3,436,000

154 A n n u a l R e p o r t 2 0 1 1

Company (Before Adjustment) (Restated) 1 January Retrospective Adjustments 1 January 2010 6.1 6.2 6.3 2010 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Statements of financial position Shareholdersû equity Revaluation surplus, net of accumulated depreciation 706,108 (10,318) (90,270) - 605,520 Unrealised gain on available-for-sale financial assets (6,369) - 814 - (5,555) Retained earnings 1,583,638 10,318 86,997 (6,576) 1,674,377

Company (Before Adjustment) (Restated) 31 December Retrospective Adjustments 31 December 2010 6.1 6.2 6.3 2010 Notes Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Statements of comprehensive income For the year ended Gains (losses) on exchange rates 754,760 - - 53,850 808,610 Other gains (losses) - net 117,980 - - (14,436) 103,544 Income tax expenses (30,726) - (56,546) 1,239 (86,033) Profit for the year 2,382,625 - (56,546) 40,653 2,366,732 Earnings per share (Baht) 2.38 - (0.05) 0.04 2.37

7 Segment information

The chief operating decision maker has been identified as the Managing Director (çMDé). The MD reviews the Groupûs internal reporting regularly in order to assess the performance and allocate resources. The MD measures the business based on a measure of segment profit, which is derived on a basis consistent with the measurement of profit for the year in the consolidated statement of comprehensive income.

Operating segments are defined as components of the Group for which separate financial information is available by a Company basis that is evaluated regularly by the MD. There are two reportable segments: (1) Natural Rubber Products: This segment is engaged in manufacturing, selling and trading in

ribbed smoked sheets, concentrated latex and block rubber. This segment also includes manufacturing and selling of powdered and powder-free latex examination gloves, handrails escalator, injection-moulded rubber and high-pressure hydraulic hose.

(2) Other business: This segment comprises logistic services, research and development in machinery/production process and IT services. The majority of the services provided under this segment are provided internally within the Group with a small amount provided to third parties. The Group operates two business segments in five main geographical areas (2010 : five main geographical areas). The basis of allocating revenue to each geographical area is based on the origin of sales.


Breakdown of reportable segments by geography on the consolidated financial statements for the year ended 31 December 2011:

Other Intersegmental

Products natural rubber business balances

Thailand Indonesia Singapore USA China Thailand Total

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000

Segment revenues 102,101,730 16,191,252 40,588,541 8,100,811 1,240,027 2,532,336 - 170,754,697

Inter-segment revenues (21,951,874) (11,579,225) (2,658,345) - - (861,411) - (37,050,855)

Revenues from

external customers 80,149,856 4,612,027 37,930,196 8,100,811 1,240,027 1,670,925 - 133,703,842

Depreciation and amortisation

(Notes 16 and 17) (330,918) (117,968) (5,331) (1,254) (1,197) (26,590) - (483,258)

Finance income 6,170 5,503 2,689 36 758 1,018 - 16,174

Finance costs (601,471) (188,042) (50,959) (43,329) - (1,196) - (884,997)

Share of profits from

associates and a joint venture 648,938 - - - - - - 648,938

Income tax expenses (544,157) (77,210) (53,349) 113,019 (2,786) (64,759) - (629,242)

Profit (loss) for the year 1,281,567 160,487 161,605 (12,185) 5,254 115,962 (383,419) 1,329,271

Total assets 31,413,586 3,259,233 6,733,723 3,646,540 249,322 2,961,284 (7,851,473) 40,412,215

Breakdown of reportable segments by geography on the consolidated financial statements for the year ended 31 December 2010:

Other Intersegmental

Products natural rubber business balances

Thailand Indonesia Singapore USA China Thailand Total

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000

Segment revenues 55,132,328 9,018,961 29,226,344 5,632,972 11,153 1,661,708 - 100,683,466

Inter-segment revenues (6,471,833) (5,960,182) (3,891,174) (22,411) (6,215) (486,322) - (16,838,137)

Revenues from

external customers 48,660,495 3,058,779 25,335,170 5,610,561 4,938 1,175,386 - 83,845,329

Depreciation and amortisation

(Notes 16 and 17) (259,924) (83,204) (4,642) (632) (47) (23,518) - (371,967)

Finance income 3,241 896 1,511 49 37 426 - 6,160

Finance costs (284,539) (64,835) (30,265) (17,562) - (459) - (397,660)

Share of profits from

associates and a joint venture 702,833 - - - - - - 702,833

Income tax expenses (154,867) (73,080) 18,566 (19,316) (144) (43,821) - (272,662)

Profit (loss) for the year 3,558,553 211,108 333,909 29,972 2,366 95,088 (390,492) 3,840,504

Total assets 26,962,475 3,287,824 6,192,143 1,961,186 174,906 1,552,543 (2,475,324) 37,655,753

156 A n n u a l R e p o r t 2 0 1 1

The non-current assets, excluding financial instruments, deferred tax assets and withholding tax deducted at source, can be presented by geography as follows:


2011 2010 2011 2010


Thailand 6,178,424 4,380,154 2,727,889 2,167,091

Indonesia 1,329,547 856,208 - -

Singapore 102,313 57,224 - -

USA 3,761 1,763 - -

China 12,356 6,107 - -

Total 7,626,401 5,301,456 2,727,889 2,167,091

8 Cash and cash equivalents Consolidated Company

2011 2010 2011 2010


Cash on hand 49,488 81,397 39,040 28,107

Deposits held at call with banks 2,223,533 1,692,565 727,394 658,737

Total cash and cash equivalents 2,273,021 1,773,962 766,434 686,844

The effective interest rates on short-term bank deposits were between 0.1% and 3.1% per annum (2010 : 0.1% and 3.5% per annum).

The carrying amounts of the Groupûs cash and cash equivalents are denominated in the following currencies:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 USD 1,139,524 631,459 368,610 11,019

IDR 192,188 57,619 - -

JPY 50,865 76,657 - -

SGD 43,148 11,711 2,456 -

RMB 85,760 8,310 - -

THB 761,536 988,206 395,368 675,825

Total cash and cash equivalents 2,273,021 1,773,962 766,434 686,844


9 Derivative financial instruments Consolidated

(Restated)

2011 2010

Assets Liabilities Assets Liabilities

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Foreign exchange options - (29,700) - -

Forward foreign exchange contracts - (544,460) 100,455 (56,512)

Rubber futures 171,365 (40,201) 98,181 (150,697)

Physical forward contracts 157,940 (497,878) 260,923 (286,279)

Total derivative financial instruments (Note 6) 329,305 (1,112,239) 459,559 (493,488)

Company

(Restated)

2011 2010

Assets Liabilities Assets Liabilities

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Foreign exchange options - (29,700) - -

Forward foreign exchange contracts - (502,328) 98,248 (50,974)

Rubber futures 44,430 (9,865) - (14,436)

Total derivative financial instruments (Note 6) 44,430 (541,893) 98,248 (65,410)


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Notional amount

Foreign exchange options 935,232 - 935,232 -

Forward foreign exchange contracts 14,460,613 12,933,574 13,430,465 12,099,050

Rubber futures 2,880,053 1,274,279 736,317 100,864

Physical forward contracts 3,928,798 2,870,445 - -

158 A n n u a l R e p o r t 2 0 1 1

10 Trade accounts receivable and other receivables, net Consolidated Company

2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Trade accounts receivable - other companies 7,381,482 5,643,108 4,120,582 2,964,143

Less Allowance for impairment of trade receivables (63,307) (31,632) (39,248) (7,847)

Total trade accounts receivable - other companies, net 7,318,175 5,611,476 4,081,334 2,956,296

Trade accounts receivable - related companies (Note 37.3) 103,140 91,212 1,922,252 658,406

Trade accounts receivable, net 7,421,315 5,702,688 6,003,586 3,614,702

Add Advances for inventories 88,540 184,466 13,484 107,117

Add Prepaid expenses 251,091 323,028 107,143 225,831

Add Accrued income 26,501 29,585 1,130 107

Trade accounts receivable and other receivables, net 7,787,447 6,239,767 6,125,343 3,947,757

Outstanding trade accounts receivable as at 31 December can be analysed as follows:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Within credit terms 6,559,515 5,277,954 5,476,819 3,132,733

Overdue 1 - 30 days 828,872 404,114 492,060 369,469

Overdue 31 - 60 days 43,160 23,534 43,131 68,015

Overdue 61 - 90 days 16,522 829 16,092 14,953

Overdue 91 - 120 days 4,163 714 12 29,526

Overdue 121 - 365 days 7,247 289 6,797 6

More than 365 days 25,143 26,886 7,923 7,847

7,484,622 5,734,320 6,042,834 3,622,549

Less allowance for impairment of trade receivables (63,307) (31,632) (39,248) (7,847)

Trade accounts receivable, net 7,421,315 5,702,688 6,003,586 3,614,702

As at 31 December 2011 and 2010, trade accounts receivable - other companies as presented in the following table were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The aging analysis of these trade receivables - other companies is as follows:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Overdue 1 - 90 days 751,435 389,298 526,090 280,921

Overdue 91 - 365 days 5,818 51 1,642 51

More than 365 days - 1,620 - -

Total 757,253 390,969 527,732 280,972


As at 31 December 2011 and 2010, trade receivables - other companies as presented in the following table were impaired and provision for impairment have been made. It was assessed that a portion of the receivables is expected to be recovered. The aging of these receivables before provision of impairment is as follows:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Current 47,515 - 27,907 -

Overdue 1 - 90 days 136,586 39,025 25,088 -

Overdue 91 - 365 days 5,593 953 5,167 -

More than 365 days 25,143 25,265 7,923 7,847

Total 214,837 65,243 66,085 7,847

Movements on the Groupûs allowance for impairment of trade receivables are as follows:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Opening net book amount 31,632 68,074 7,847 8,236

Allowance for impairment of trade accounts receivable 40,493 2,237 31,401 186

Reversal of allowance for impairment of trade

accounts receivable (8,796) (4,377) - -

Written off during the year (22) (34,302) - (575)

Ending net book amount 63,307 31,632 39,248 7,847

The creation and release of allowance for impairment of trade receivables have been included in the statement of comprehensive income. Amounts charged to the allowance account are generally written off, when there is no expectation of recovering any cash. The carrying amounts of the Groupûs and Companyûs trade receivables are denominated in the following currencies:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 USD 6,007,317 4,759,360 2,782,907 2,137,446

RMB 21,732 - - -

THB 1,352,433 883,748 1,337,675 826,697

Total trade accounts receivable - other companies 7,381,482 5,643,108 4,120,582 2,964,143

160 A n n u a l R e p o r t 2 0 1 1

11 Inventories, net Consolidated

Allowance for inventory cost in

At cost excess of net realisable value Inventories, net

2011 2010 2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Finished goods 10,998,589 10,715,743 (869,398) - 10,129,191 10,715,743

Work-in-progress 3,636,838 2,749,258 (2,302) - 3,634,536 2,749,258

Raw materials, vessels

and chemicals 3,483,282 6,758,137 (4,440) (4,484) 3,478,842 6,753,653

Spare parts and supplies 94,027 63,779 - - 94,027 63,779

Total 18,212,736 20,286,917 (876,140) (4,484) 17,336,596 20,282,433

Company

Allowance for inventory cost in

At cost excess of net realisable value Inventories, net

2011 2010 2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Finished goods 3,493,928 4,904,516 (111,753) - 3,382,175 4,904,516

Work-in-progress 1,259,676 1,087,570 - - 1,259,676 1,087,570

Raw materials, vessels and chemicals 1,899,051 4,488,554 - - 1,899,051 4,488,554

Spare parts and supplies 29,350 24,364 - - 29,350 24,364

Total 6,682,005 10,505,004 (111,753) - 6,570,252 10,505,004

The cost of inventories recognised as expense and included in ùcosts of sales and servicesû amounting to Baht 124.21 million (2010: Baht 76.66 million).

Inventories are carried at lower of cost and net realisable value. As at 31 December 2011, the Group reserved an allowance for inventory cost in excess of net realisable value amounting to Baht 876.14 million (Company: Baht 111.75 million) as a result of a decline in market prices.

12 Other current assets Consolidated Company

2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Value added tax refundable 86,703 36,888 15,459 10,199

Others 112,195 23,359 20,825 19,938

Total other current assets 198,898 60,247 36,284 30,137


13 Fixed deposits pledged as collateral Fixed deposits amounting to Baht 143.48 million (2010: Baht 125.44 million) are pledged as collateral for short-term loan facilities with several financial institutions and for bank guarantees. The fixed deposits earn average interest rate of 0.1% to 3.1% per annum (2010: 0.1% to 3.5%).

The carrying amounts of the fixed deposits pledge as collateral are denominated in the following currencies:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 USD 106,802 88,853 - -

THB 36,681 36,591 12,595 12,551

Total fixed deposits pledged as collateral 143,483 125,444 12,595 12,551

14 Investments in subsidiaries, associates and an interest in a joint venture Consolidated Company

(Restated)

2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Net book amount at 1 January 2,940,705 2,638,483 3,253,303 2,815,528

Share of profits after tax 648,938 702,834 - -

Acquisitions 30,295 - 2,607,365 454,650

Disposals - (19,125) - (16,875)

Dividends received (Note 37.1) (74,650) (329,058) - -

Gain on disposal of land to an associate (3,469) - - -

Currency translation differences 37,243 (52,429) - -

Net book amount at 31 December 3,579,062 2,940,705 5,860,668 3,253,303

162 A n n u a l R e p o r t 2 0 1 1

14.1 Subsidiaries The principal subsidiaries are:

% Ownership Country of interest Name Business incorporation 2011 2010 Sri Trang International Pte Ltd. Distribution of rubber products Singapore 100.00 100.00

Sri Trang USA, Inc. Distribution of rubber products USA 100.00 100.00

PT Sri Trang Lingga Indonesia Manufacture of STR block rubber Indonesia 90.00 90.00

Anvar Parawood Co., Ltd. Manufacture of parawood Thailand 99.94 99.94

Rubberland Products Co., Ltd. Manufacture of latex Thailand 99.99 99.99

Nam Hua Rubber Co., Ltd. Manufacture of rubber products Thailand 99.99 99.99

Sadao P.S. Rubber Co., Ltd. Manufacture of rubber products Thailand 99.99 99.99

Startex Rubber Co., Ltd. Rubber plantation Thailand 99.99 99.99

Premier System Engineering Co., Ltd. Provision of engineering services Thailand 99.99 99.99

Starlight Express Transport Co., Ltd. Provision of logistics services Thailand 99.99 99.99

Sri Trang Rubber Rubber plantation Thailand 99.99 99.99

& Plantation Co., Ltd.

Shi Dong Shanghai Rubber Co., Ltd. Distribution of rubber products China 100.00 100.00

Indirect subsidiaries

Shi Dong Investments Pte Ltd. Investment holding Singapore 100.00 100.00

(held by Sri Trang

International Pte Ltd.)

P.T. Star Rubber (held by Shi Dong Manufacture of STR block rubber Indonesia 99.0 99.00

Investments Pte Ltd.)

In January 2011, the Company invested in the increased share capital of Sri Trang Rubber & Plantation Co., Ltd., a subsidiary, by paying cash amounting to Baht 40 million.

In February 2011, the Company invested in the increased share capital of Sri Trang International Pte Ltd., a subsidiary, by paying cash amounting to USD 24 million (approximately Baht 727 million).

In March 2011, the Company invested in the increased share capital of Nam Hua Rubber Co., Ltd., a subsidiary, by paying cash amounting to Baht 325 million.

In March 2011, the Company invested in the increased share capital of Rubberland Products Co., Ltd., a subsidiary, by paying cash amounting to Baht 512.5 million.

In May and June 2011, the Company invested in the increased share capital of Sri Trang Rubber & Plantation Co., Ltd., a subsidiary, by paying cash amounting to Baht 40 million and 300 million, respectively.

In July 2011, the Company invested in the increased share capital of Rubberland Products Co., Ltd., a subsidiary, by paying cash amounting to Baht 512.5 million.

In August and September 2011, the Company invested in the increased share capital of Sri Trang Rubber & Plantation Co., Ltd., a subsidiary, by paying cash amounting to Baht 84 million and Baht 36 million, respectively.


In February 2010, the Company invested in the increased shares of Sri Trang Rubber & Plantation Co., Ltd., a subsidiary, by paying cash amounted to Baht 60 million.

In April 2010, the Company invested in the increased shares of Sri Trang Rubber & Planatation Co., Ltd. by paying cash of Baht 40 million.

In August 2010, the Company invested in the increased shares of Sri Trang Bubber & Plantation Co., Ltd. by paying cash amounted to Baht 80 million.

In September 2010, the Company invested in the increased shares of Sri Trang Rubber & Plantation Co., Ltd. by paying cash amounting to Baht 80 million. In addition, the Company invested in the shares of Shi Dong Shanghai Rubber Co., Ltd., a subsidiary which was incorporated in August 2010, by paying cash of USD 5 million (approximately Baht 154.6 million).

In December 2010, the Company invested in the increased shares of Sri Trang Rubber & Plantation Co., Ltd. by paying cash amounted to Baht 40 million.

14.2 Associates

The Groupûs share of the results of its associates, all of which are unlisted, and its share of the assets including goodwill and liabilities are as follows:

Bahtû000 %

Country of Profits ownership

Name Business incorporation Assets Liabilities Revenues (losses) interest 2011

Siam Sempermed Manufacture of medical Thailand 3,079,237 837,488 4,637,184 368,317 40.23

Corporation Ltd. gloves

Semperflex Asia Manufacture of Thailand 545,271 140,770 647,334 98,980 42.50

Corporation Ltd. hydraulic hose

Semperform Pacific Manufacture of Thailand 6,791 25 160 77 42.50

Corporation Ltd. moulded parts

Sempermed USA, Inc. Sales of medical gloves USA 660,504 494,924 1,982,373 34,786 45.12

Pattana Agro Futures Co., Ltd. Futures broker Thailand 142,136 98,166 11,336 4,788 40.00

Semperflex Shanghai Co., Ltd. Manufacture of China 418,401 122,791 192,921 15,536 50.00

hydraulic hose

Sempermed Singapore Pte Ltd. Investment holding Singapore 151,522 8,176 9,579 6,038 50.00

Indirect associates

Sempermed Brazil Comercio Sales of medical gloves Brazil 252,697 134,886 474,621 4,569 50.00

Exterior LTDA. (held by

Sempermed Singapore Pte Ltd.)

Shanghai Foremost Plastic Manufacture of China 57,819 14,307 106,026 (45,582) 40.23

Industrial Co., Ltd. medical gloves

(held by Siam Sempermed

Co., Ltd.)

164 A n n u a l R e p o r t 2 0 1 1

Bahtû000 %


Name Business incorporation Assets Liabilities Revenues (losses) interest 2010

Siam Sempermed Manufacture of Thailand 2,406,552 554,325 3,987,505 520,784 40.23

Corporation Ltd. medical gloves

Semperflex Asia Manufacture of Thailand 429,706 81,177 460,043 74,772 42.50

Corporation Ltd. hydraulic hose

Semperform Pacific Manufacture of Thailand 6,879 190 634 102 42.50

Corporation Ltd. moulded parts

Sempermed USA, Inc. Sales of medical gloves USA 421,600 301,449 1,797,830 22,007 45.12

Pattana Agro Futures Co., Ltd. Futures broker Thailand 99,828 58,395 10,449 2,648 40.00

Semperflex Shanghai Co., Ltd. Manufacture of China 318,783 67,065 168,864 21,253 50.00

hydraulic hose

Sempermed Singapore Pte Ltd. Investment holding Singapore 108,800 8,691 - (2,044) 50.00

Indirect associates

Sempermed Brazil Comercio Sales of medical gloves Brazil 168,109 28,620 283,119 (8,018) 50.00

Exterior LTDA. (held by

Sempermed Singapore Pte Ltd.)

Shanghai Foremost Plastic Manufacture of China 89,624 8,411 159,541 (5,958) 40.23

Industrial Co., Ltd. medical gloves

(held by Siam Sempermed Co., Ltd.)

In June 2011, the Company invested in the increased share capital of Sempermed Singapore Pte. Ltd., an associate, by paying cash amounting to USD 1 million (approximately Baht 30 million).

In November 2010, the Company and Rubberland Products Co., Ltd. received proceeds from a decrease in share capital of Semperform Pacific Corporation Ltd., an associate, amounted to Baht 16.9 million and Baht 2.3 million, respectively, as a result of the change in the par value of the associateûs ordinary shares from Baht 100 per share to Baht 25 per share.

14.3 An interest in a joint venture

The jointly controlled entity is: Bahtû000 %


Name Business incorporation Assets Liabilities Revenues (losses) interest 2011 Thaitech Rubber Manufacture of Corporation Ltd. STR block rubber Thailand 1,474,668 1,011,399 7,442,183 161,367 33.50 2010 Thaitech Rubber Manufacture of Corporation Ltd. STR block rubber Thailand 1,684,081 1,327,711 4,922,555 70,314 33.50


15 Available-for-sale financial assets The movement in the available-for-sale financial assets for the years is as follows:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Opening net book amount 46,267 36,699 45,106 36,220

Additions 60 30 - -

Disposals (126) - - -

Changes in fair values of available-for-sale investments (2,549) 9,538 (2,327) 8,886

Ending net book amount 43,652 46,267 42,779 45,106

Available-for-sale financial assets are analysed as follows: Consolidated Company

2011 2010 2011 2010


As at 31 December

Listed equity securities 33,225 35,840 32,352 34,679

Unlisted equity securities 10,427 10,427 10,427 10,427

Total available-for-sale financial assets 43,652 46,267 42,779 45,106

Listed equity securities


2011 2010 2011 2010


Listed equity securities at cost 32,562 32,502 32,163 32,163

Cumulative changes in fair value 663 3,338 189 2,516

Listed equity securities at fair value 33,225 35,840 32,352 34,679

The table below shows deferred income tax impact on unrealised gains (losses) on available-for-sale financial assets.


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Cumulative net gains from change

in fair value 663 3,338 189 2,516

Effect on deferred income tax (63) (315) (29) (216)

Cumulative net gains from change

in fair value, net of tax (Note 27) 600 3,023 160 2,300

166 A n n u a l R e p o r t 2 0 1 1

Non-listed equity securities Consolidated Company

2011 2010 2011 2010


Non-listed equity securities at cost 10,427 10,427 10,427 10,427

The management of the Group is of the opinion that the cost of the non-listed equity securities remains the best estimate of the fair value unless the investment is impaired.

16 Property, plant and equipment, net Bahtû000

Consolidated Revaluation/cost basis Cost basis Assets under Land and Buildings Machinery Fixtures and construction land and and office and improvements structures equipment Vehicles equipment installation Total

At 1 January 2010

Cost 1,032,506 1,269,661 2,093,164 443,392 187,378 307,631 5,333,732

Add surplus on asset revaluation 554,341 503,648 - - - - 1,057,989

Less cumulative losses

from asset revaluation (98,963) (22,384) - - - - (121,347)

Less accumulated depreciation (111,880) (193,646) (1,201,437) (358,635) (151,900) - (2,017,498)

Less provision for impairment - - (7,541) - - - (7,541)

Net book amount 1,376,004 1,557,279 884,186 84,757 35,478 307,631 4,245,335

For the year ended 31

December 2010

Opening net book amount 1,376,004 1,557,279 884,186 84,757 35,478 307,631 4,245,335

Additions 328,713 12,774 39,613 39,085 12,398 995,557 1,428,140

Transfers in (out) 88,661 282,214 399,722 20,413 4,582 (795,592) -

Disposals and write-offs (1,494) (320) (7,479) (109) (78) (34,747) (44,227)

Depreciation charge (Note 28) (31,423) (90,819) (198,426) (28,225) (17,086) - (365,979)

Currency translation differences (2,826) (18,232) (21,408) (3,160) 3,097 (7,370) (49,899)

Closing net book amount 1,757,635 1,742,896 1,096,208 112,761 38,391 465,479 5,213,370

At 31 December 2010

Cost 1,443,683 1,542,634 2,399,349 491,319 200,241 465,479 6,542,705






Net book amount 1,757,635 1,742,896 1,096,208 112,761 38,391 465,479 5,213,370


Bahtû000 Consolidated

Revaluation/cost basis Cost basis Assets under Land and Buildings Machinery Fixtures and construction land and and office and improvements structures equipment Vehicles equipment installation Total

For the year ended

31 December 2011

Opening net book amount 1,757,635 1,742,896 1,096,208 112,761 38,391 465,479 5,213,370

Additions 838,417 28,639 60,637 35,393 28,253 1,842,553 2,833,892

Transfers in (out) 132,238 368,871 629,475 35,565 22,254 (1,188,403) -

Reclassification to investment

property (Note 18) - - - - - (29,544) (29,544)

Disposals and write-offs (120,405) (3,545) (13,223) (956) (1,329) (18,812) (158,270)

Revaluation surplus 39,197 - - - - - 39,197


Currency translation differences 3,249 16,355 20,299 2,977 618 9,585 53,083

Closing net book amount 2,615,176 2,036,618 1,526,129 148,945 67,871 1,080,858 7,475,597 At 31 December 2011

Cost 2,303,477 1,956,228 3,043,959 555,914 239,752 1,080,858 9,180,188






Net book amount 2,615,176 2,036,618 1,526,129 148,945 67,871 1,080,858 7,475,597

Bahtû000

Company


At 1 January 2010

Cost 574,462 598,325 1,161,132 131,635 129,663 34,380 2,629,597

Add surplus on asset revaluation 396,843 342,742 - - - - 739,585



Less accumulated depreciation (76,634) (104,016) (739,245) (115,058) (105,177) - (1,140,130)


Net book amount 821,035 821,286 414,346 16,577 24,486 34,380 2,132,110

168 A n n u a l R e p o r t 2 0 1 1

Bahtû000 Company


For the year ended

31 December 2010

Opening net book amount 821,035 821,286 414,346 16,577 24,486 34,380 2,132,110

Additions 44,160 773 13,808 12,118 2,581 135,703 209,143

Transfers in (out) 2,180 29,224 23,632 - 1,079 (56,115) -



Closing net book amount 844,594 803,713 355,756 20,836 18,601 87,026 2,130,526 At 31 December 2010

Cost 617,704 628,055 1,105,619 138,658 125,462 87,026 2,702,524






Net book amount 844,594 803,713 355,756 20,836 18,601 87,026 2,130,526 For the year ended

31 December 2011

Opening net book amount 844,594 803,713 355,756 20,836 18,601 87,026 2,130,526

Additions 232,964 3,808 27,489 8,571 12,015 478,661 763,508

Transfers in (out) 3,337 56,823 129,435 3,874 10,927 (204,396) -



Closing net book amount 1,044,207 814,639 417,889 23,541 31,558 358,566 2,690,400 At 31 December 2011

Cost 840,089 688,685 1,248,053 145,047 141,490 358,566 3,421,930






Net book amount 1,044,207 814,639 417,889 23,541 31,558 358,566 2,690,400

The Groupûs land, land improvements, buildings and structures thereon were revalued by independent valuers in the third quarter of 2008 using the market approach, the depreciated replacement cost approach and the income approach. The revaluation surplus was credited to fair value reserves in shareholdersû equity.


The table below shows deferred income tax impact on revaluation surplus. Consolidated Company

2011 2010 2011 2010


Revaluation surplus 1,095,085 1,057,989 732,235 739,585

Less accumulated depreciation on revaluation surplus (128,754) (94,248) (92,010) (57,735)

Less deferred income tax (133,146) (113,722) (98,787) (71,222) Revaluation surplus, net of accumulated depreciation and deferred income taxes 833,185 850,019 541,438 610,628

If the land, land improvements, buildings and structures were stated on the historical cost basis, the total carrying amount of the property, plant and equipment would be as follows:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Cost 9,248,557 6,542,705 3,421,930 2,702,524

Less accumulated depreciation (3,242,318) (2,836,522) (1,756,761) (1,611,598)

Less provision for impairment (7,541) (7,541) (7,541) (7,541)

Net book amount 5,998,698 3,698,642 1,657,628 1,083,385

Consolidated financial statements The Groupûs depreciation expense of Baht 427 million (2010: Baht 330 million) has been charged in çcosts of sales and servicesé and of Baht 49 million (2010: Baht 36 million) in çadministrative expensesé.

As at 31 December 2011, certain land, land improvements, buildings and structures thereon, and machinery and equipment of some subsidiaries with the total net book values amounted to Baht 1,445.3 million (2010 : Baht 1,940.3 million) are mortgaged as collateral for credit facilities and short-term and long-term loans from banks as explained in Note 22.

As at 31 December 2011 and 2010, the Group had gross carrying amounts of land improvements, buildings, structures, machinery and equipment, vehicles, fixtures and office equipment that are fully depreciated but they are still in active use totaling Baht 1,338 million and Baht 1,217 million, respectively. Company financial statements The Companyûs depreciation expense of Baht 155 million (2010: Baht 158 million) has been charged in çcosts of sales and servicesé and of Baht 21 million (2010: Baht 18 million) in çadministrative expensesé.

As at 31 December 2011 and 2010, the Company had gross carrying amounts of land improvements, buildings, structures, machinery and equipment, vehicles, fixtures and office equipment that are fully depreciated but they are still in active use totaling Baht 783.2 million and Baht 671.9 million, respectively.

170 A n n u a l R e p o r t 2 0 1 1

Leased assets included above, where the Group and the Company are lessees under finance leases, comprise vehicles, fixtures and office equipment:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Cost of assets acquired under finance leases 141,951 144,497 31,702 39,298

Less accumulated depreciation (107,253) (89,748) (19,316) (25,211)

Net book amount 34,698 54,749 12,386 14,087

The Group leases various vehicles and fixtures and office equipment under non-cancellable finance lease agreements. The lease terms are between 3 to 5 years, and ownership of the assets lies within the Group.

17 Intangible assets, net

Bahtû000 Computer software

Consolidated Company At 1 January 2010 Cost 49,146 29,366 Less accumulated amortisation (34,850) (24,340) Net book amount 14,296 5,026 For the year ended 31 December 2010 Opening net book amount 14,296 5,026 Additions 13,487 8,204 Write-offs (6) - Amortisation charge (Note 28) (5,988) (2,663) Currency translation differences (89) - Net book amount 21,700 10,567 At 31 December 2010 Cost 61,721 37,096 Less accumulated amortisation (40,021) (26,529) Net book amount 21,700 10,567 For the year ended 31 December 2011 Opening net book amount 21,700 10,567 Additions 9,605 3,255 Write-offs - - Amortisation charge (Note 28) (7,127) (3,171) Currency translation differences 26 - Net book amount 24,204 10,651 At 31 December 2011 Cost 71,437 40,351 Less accumulated amortisation (47,233) (29,700) Net book amount 24,204 10,651


18 Investment properties Consolidated Company

2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Opening net book amount 48,032 39,843 22,850 22,850 Additions Acquisitions 6,824 9,852 - - Reclassification from assets under Construction (Note 16) 29,544 - - - Net fair value gain recognised in profit or loss 15,437 - - - Gain(loss) from translation differences 2,490 (1,663) - - Ending net book amount 102,327 48,032 22,850 22,850

The investment property of the Group is property held for a currently undetermined future use and land not in use. The Group has not determined whether it will be held as owner-occupied property or for short-term capital appreciation.

The land not used in operations was revalued by an independent valuer in the third quarter of 2008 using the market approach.

Investment property of a subsidiary is carried at fair value at the date of statement of financial position as determined by the most recent transacted market value of a property in the location and of the same category as the one held by the subsidiary. Valuation is made annually based on the propertyûs highest-and-best-use using the Direct Market Comparison Method.

19 Deferred income tax

Deferred income taxes are calculated in full on temporary differences, using the liability method and using a principal tax rate of 1.70% - 38.75% (2010: 8.59% - 38.75%). The deferred income taxes are temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

Deferred income tax assets are recognised for all deferred income tax assets to the extent that the realisation of the related tax benefit through future taxable profits is probable.

172 A n n u a l R e p o r t 2 0 1 1

The analysis of deferred income tax assets and deferred income tax liabilities is as follows: Consolidated Company

2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Deferred income tax assets: Deferred income tax assets to be recovered after more than 12 months 487,573 66,647 103,456 12,854 Deferred income tax assets to be recovered within 12 months 50,116 63,617 21,500 - 537,689 130,264 124,956 12,854 Deferred income tax liabilities: Deferred income tax liabilities to be settled after more than 12 months 188,702 22,447 5,333 13,333 Deferred income tax liabilities to be settled within 12 months 140,062 115,956 101,542 58,317 328,764 138,403 106,875 71,650 Deferred income tax - net 208,925 (8,139) 18,081 (58,796)

The movement of deferred income tax for the years is as follows:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 As at 1 January (8,139) (21,892) (58,796) (2,459) (Charged)/credited to profit or loss 233,091 20,144 120,457 (55,307) (Charged)/credited to other comprehensive income (23,980) (1,143) (43,580) (1,030) Cumulative translation differences 7,953 (5,248) - - As at 31 December 208,925 (8,139) 18,081 (58,796)


Consolidated Recorded Recorded (Restated) to other (Restated) to other 1 January Recorded to comprehensive 31 December Recorded to comprehensive 31 December 2010 profit or loss income 2010 profit or loss income 2011 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Deferred income tax assets Tax losses carried forward 80,124 (71,621) (79) 8,424 5,725 60 14,209 Unrealised gain/(loss) on derivative financial instruments 30,653 34,240 (4,789) 60,104 361,932 5,439 427,475 Allowance for inventory cost in excess of net realisable value 1,311 - - 1,311 45,181 - 46,492 Cumulative loss from revaluation 21,163 (7,225) - 13,938 4,074 - 18,012 Provision for post employment benefit obligations 15,778 733 (94) 16,417 441 963 17,821 Others 21,386 13,557 (4,873) 30,070 (17,875) 1,485 13,680 170,415 (30,316) (9,835) 130,264 399,478 7,947 537,689 Deferred income tax liabilities Revaluation surplus 154,795 (41,958) - 112,837 (690) 24,232 136,379 Fair value estimation of investment properties - 885 - 885 706 - 1,591 Unrealised gain/(loss) on derivative financial instruments 37,333 (20,656) (3,551) 13,126 (8,255) 463 5,334 Allowance for inventory cost in excess of net realisable value - - - - 162,900 (768) 162,132 Others 179 11,269 107 11,555 11,726 47 23,328 192,307 (50,460) (3,444) 138,403 166,387 23,974 328,764 Deferred income tax assets (liabilities), net (21,892) 20,144 (6,391) (8,139) 233,091 (16,027) 208,925

Company Recorded Recorded (Restated) to other (Restated) to other 1 January Recorded to comprehensive 31 December Recorded to comprehensive 31 December 2010 profit or loss income 2010 profit or loss income 2011 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Deferred income tax assets Tax losses carried forward 66,943 (66,943) - - - - - Unrealised gain/(loss) on derivative financial instruments 2,595 (1,356) - 1,239 80,853 - 82,092 Allowance for inventory cost in excess of net realisable value - - - - 21,364 - 21,364 Cumulative loss from revaluation 12,393 (4,070) - 8,323 6,635 - 14,958 Provision for post employment benefit obligations 4,293 (1,042) - 3,251 3,218 - 6,469 Others 3,341 (2,270) (1,030) 41 32 - 73 89,565 (75,681) (1,030) 12,854 112,102 - 124,956

174 A n n u a l R e p o r t 2 0 1 1

Company Recorded Recorded (Restated) to other (Restated) to other 1 January Recorded to comprehensive 31 December Recorded to comprehensive 31 December 2010 profit or loss income 2010 profit or loss income 2011 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Deferred income tax liabilities Revaluation surplus 90,270 (32,839) - 57,431 (1,277) 43,767 99,921 Fair value estimation of investment properties - 886 - 886 706 - 1,592 Unrealised gain/(loss) on derivative financial instruments 1,755 2,304 - 4,059 1,274 - 5,333 Others - 9,274 - 9,274 (9,058) (187) 29 92,025 (20,375) - 71,650 (8,355) 43,580 106,875 Deferred income tax assets (liabilities), net (2,460) (55,306) (1,030) (58,796) 120,457 (43,580) 18,081

20 Other non-current assets Consolidated Company

2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Refundable deposits 10,711 17,288 4,127 7,413

Prepayments 1,027 188 1,027 188

Others 23,245 18,168 2,961 2,961

Total other non-current assets 34,983 35,644 8,115 10,562

21 Trade accounts payable and other payable Consolidated Company

2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Trade accounts payable - other companies 1,791,933 1,689,078 970,656 842,170

Trade accounts payable - related companies (Note 37.3) 259,657 849,450 419,849 243,723

Accrued expenses 339,086 247,160 140,550 119,976

Deferred income 90,859 97,267 1,312 19

Deposits and retentions received from customers 62,181 159,162 4,958 1,634

Total trade accounts payable and other payable 2,543,716 3,042,117 1,537,325 1,207,522


The carrying amounts of the Groupûs trade accounts payable - other companies are denominated in the following currencies:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 USD 520,571 626,508 28,031 10,302 IDR 17,727 13,589 - - SGD 3,508 62 - - RMB 3,439 31 - - THB 1,246,688 1,048,888 942,625 831,868 Total trade accounts payable - other companies 1,791,933 1,689,078 970,656 842,170

22 Borrowings Consolidated Company

2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Current Loans for packing credit 1,647,104 3,023,338 1,562,091 3,001,338 Short-term loans from financial institutions 11,777,387 15,058,080 2,989,500 7,640,040 Bills payable 2,001,123 2,371,208 - - Total short-term borrowings from financial institutions 15,425,614 20,452,626 4,551,591 10,641,378 Current portion of long-term borrowings Bank borrowings 120,000 597,610 - 575,000 Finance lease liabilities 11,451 17,165 6,361 10,506 Total current borrowings 15,557,065 21,067,401 4,557,952 11,226,884 Non-current Bank borrowings 314,860 2,226,050 - 2,031,250 Debentures 2,150,000 - 2,150,000 - Finance lease liabilities 12,310 22,927 8,001 13,531 Total non-current borrowings 2,477,170 2,248,977 2,158,001 2,044,781 Total borrowings 18,034,235 23,316,378 6,715,953 13,271,665

22.1 Short-term loans from financial institutions

(a) Consolidated financial statements The Group has facilities of overdrafts, loans for packing credit and short-term loans with several financial institutions totalling Baht 29,545.9 million, USD 457.8 million and Rp 85 billion (2010 : Baht 22,521 million, USD 259.1 million and Rp 75 billion). The overdrafts bear interest at the rate of 7.55% per annum (2010: 6.25% per annum). The loans for packing credit and short-term loans bear interest at the rates ranging from 1.05% to 7.66% per annum (2010: 1.09% to 11.5% per annum). In addition, the balance of short-term loans for the Group as at 31 December 2011 amounting to Baht 15,425.6 million (2010: Baht 20,452.6 million) included loans from banks of two subsidiaries as follows:

176 A n n u a l R e p o r t 2 0 1 1

- As at 31 December 2011, Rubberland Products Co., Ltd., a subsidiary of the Company, has a long-term loan from financial institutions balance of Baht 244.8 million, which was reclassified as short-term loan from financial institutions since the subsidiary was not in full compliance with the terms of the underlying loan agreement. During the year 2011, the counterparty bank has changed the terms of the underlying loan agreement and has waived the non-compliance with the terms of the underlying loan agreement and consequently the balance of the loan was reclassified back to long-term loan in the first quarter of 2011. As at 31 December 2011, the ending balance under the underlying loan agreement was Baht 192.8 million, the loan bears interest at the rate of MLR minus a fixed percentage per annum and the interest is payable on a monthly basis.

- A short-term loan of PT Sri Trang Lingga Indonesia amounting to USD 5 million (approximately Baht 158.5 million) (2010: USD 9.95 million or equivalent to Baht 297.9 million) bears interest at SIBOR plus a fixed percentage per annum (2010: SIBOR plus a fixed percentage per annum) and the interest is payable on a monthly basis. As at 31 December 2010, the subsidiary was not in full compliance with the terms of the underlying loan agreement and the counterparty bank has waived the non-compliance with the terms of the underlying loan agreement. During the year 2011, the counterparty bank has changed the terms of the underlying loan agreement and the subsidiary was in full compliance.

- A long-term loan of PT Sri Trang Lingga Indonesia amounting to USD 2.2 million (approximately Baht 69.7 million) (2010: USD 4.2 million or equivalent to Baht 125.8 million), which was classified as a short-term term because under the terms of the underlying loan agreement, the counterparty bank reserves the right to request repayment of this loan on demand although the loan is repayable in 20 quarterly installments starting from April 2008 and the last installment is in January 2013. The loan bears interest at the rate of OBR minus a fixed percentage per annum and the interest is payable on a monthly basis.

As at 31 December 2011, the Groupûs facilities of overdrafts, loans for packing credit and short-term loans are guaranteed by land, land improvements, buildings and structures thereon, and machinery and equipment of some subsidiaries as described in Note 16, fixed deposits of a subsidiary balance of Baht 22.4 million (2010: Baht 22.4 million) and certain of the Companyûs directors (no fee charged) (2010: guaranteed by certain of the Companyûs directors). According to a condition of the loan agreements, the Company and its two subsidiaries are not allowed to create any encumbrance on their assets, except for encumbrances created with the prior consent of the banks and permitted liens. In addition, the Company and the subsidiaries must comply with other conditions and restrictions stated in the loan agreements.


(b) Company financial statements The Company has facilities of overdrafts, loans for packing credit and short-term loans with several financial institutions totalling Baht 21,024 million (2010: Baht 16,490 million). The loans for packing credit and short-term loans amounted to Baht 4,552 million (2010: Baht 10,641 million) bear interest at the rates ranging from 1.5% to 3.7% per annum (2010: 1.28% to 2.4% per annum). As at 31 December 2011, under a condition specified in the loan agreements, the Company is not allowed to create any encumbrance on its assets, except for encumbrances created with the prior consent of the banks and permitted liens. In addition, the Company must comply with other conditions and restrictions stated in the loan agreements

22.1 Long-term loans from financial institution (a) Consolidated financial statements - Nam Hua Rubber Co., Ltd.

The first loan, As at 31 December 2010, balance of Baht 10.9 million payable in quarterly installments in principal starting from July 2005 and the last installment in April 2011, interest payable on a monthly basis, which bears interest at the rate of MLR per annum.

The second loan, As at 31 December 2010, balance of Baht 3.8 million payable in quarterly installments in principal starting from October 2007 and the last installment in July 2011, interest payable on a monthly basis, which bears interest at the rate of MLR per annum.

The third loan, As at 31 December 2011, balance of Baht 10 million (2010 : Baht 18 million), payable in quarterly installments in principal starting from April 2008 and the last installment in January 2013, interest payable on a monthly basis, which bears interest at the rate of MLR per annum.

As at 31 December 2011, this subsidiary has no balance of long-term loans from financial institutions from the first and second loans because this subsidiary has made fully repayments without any fee from early repayments. - Rubberland Products Co., Ltd.

The first loan, As at 31 December 2011, balance of Baht 192.8 million (2010 : Baht 244.8 million and classified as short-term loan), payable in quarterly installments in principal starting from November 2010 and the last installment in August 2015, interest payable on a monthly basis, which bears interest at the rate of MLR minus a fixed percentage per annum.

The second loan, As at 31 December 2011, balance of Baht 232.1 million (2010 : Baht 184.8 million), granted by a bank in 2010, payable in quarterly installments in principal starting from December 2011 and the last installment in September 2016, interest payable on a monthly basis, which bears interest at the rate of MLR minus a fixed percentage per annum.

178 A n n u a l R e p o r t 2 0 1 1

(b) Company financial statements The first loan, As at 31 December 2010, balance of Baht 200 million, payable in

December 2011, interest payable on a monthly basis, which bears interest at the rate of 3.87% per annum.

The second loan, As at 31 December 2010, balance of Baht 2,406.3 million, which is a syndicated loan granted by three banks, payable in quarterly installments in principal starting from November 2010 and the last installment in August 2014, interest payable on a monthly basis, which bears interest at the rates of Thai Baht fixed deposit with maturity of three months plus a fixed percentage per annum and MLR minus a fixed percentage per annum.

Under a condition specified in the loan agreements, the Company is not allowed to create any encumbrance on its assets, except for encumbrances created with the prior consent of the banks and permitted liens. In addition, the Company must comply with other conditions and restrictions stated in the loan agreements As at 31 December 2011, the Company has no balance of long-term loans from financial institutions from both loans because the Company has made fully repayments without any fee from early repayments.

22.3 Debentures

On 1 December 2011, the Company issued and offered the unsecured, unsubordinate, with name registered, and with debenture holdersû representative debentures, amounting to 2,150,000 units. The debentures are divided into 2 tranches as follows: - Debentures of Sri Trang Agro-Industry Public Company Limited No. 1/2011 Tranche 1

due 2014 - Debentures of Sri Trang Agro-Industry Public Company Limited No. 1/2011 Tranche 2

due 2016

The movement of the balance of the debentures can be presented as follows: Consolidated and Company 2011 2010 Bahtû000 Bahtû000

Opening balance - - Issuing during the year 2,150,000 - Ending balance 2,150,000 -

The details of the debentures in the consolidated and company financial statements can be presented as follows:

Interest 31 December Issuing during 31 December rate Par value 2010 the year 2011 Term of interest Due for (%) (Baht) (shares) (shares) (shares) payment redemption

STA14DA 4.40 p.a. 1,000 - 1,600,000 1,600,000 1 June and 1 December 2014 1 December every year STA16DA 4.70 p.a. 1,000 - 550,000 550,000 1 June and 1 December 2016 1 December every year - 2,150,000 2,150,000


22.4 Additional information for the borrowings from financial institutions and debentures The interest rate exposure on the borrowings from financial institutions and debentures (excluding finance lease liabilities) of the Group and the Company is as follows:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Short-term borrowings - at fixed rates - - - - - floating rates 15,425,614 20,452,626 4,551,591 10,641,378 15,425,614 20,452,626 4,551,591 10,641,378 Long-term borrowings - at fixed rates - 200,000 - 200,000 - floating rates 434,860 2,623,660 - 2,406,250 434,860 2,823,660 - 2,606,250 Debentures - at fixed rates 2,150,000 - 2,150,000 - - floating rates - - - - 2,150,000 - 2,150,000 - Total borrowings - at fixed rates 2,150,000 200,000 2,150,000 200,000 - floating rates 15,860,474 23,076,286 4,551,591 13,047,628 18,010,474 23,276,286 6,701,591 13,247,628

Fair values of the long-term borrowings and debentures are based on discounted cash flows using discount rates based upon the borrowing rates which the management expects would be available to the Group and the Company at the date of statements of financial position. The carrying amounts of short-term borrowings and lease obligations approximate their fair values. Maturity of long-term borrowings and debentures (excluding finance lease liabilities) is as follows:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Not later than 1 year 15,545,614 21,050,236 4,551,591 11,216,378 Later than 1 year but not later than 3 years 1,914,860 1,238,750 1,600,000 1,093,750 Later than 3 year but not later than 5 years 550,000 987,300 550,000 937,500 18,010,474 23,276,286 6,701,591 13,247,628

The carrying amounts of the Groupûs borrowings from financial institutions and debentures are denominated in the following currencies:

Consolidated Company 2011 2010 2011 2010 Bahtû000 Bahtû000 Bahtû000 Bahtû000

USD 4,979,750 5,527,877 - - IDR 468,060 569,771 - - THB 12,562,664 17,178,638 6,701,591 13,247,628 Total borrowings from financial institutions and debentures 18,010,474 23,276,286 6,701,591 13,247,628

180 A n n u a l R e p o r t 2 0 1 1

22.5 Finance lease liabilities The minimum lease payments recognised as liabilities from the finance leases are summarised as follows:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Not later than 1 year 12,540 18,840 7,056 11,540 Later than 1 year but not later than 5 years 12,784 24,103 8,352 14,171 25,324 42,943 15,408 25,711 Less future finance charges on finance leases (1,563) (2,851) (1,046) (1,674) Present values of finance lease liabilities 23,761 40,092 14,362 24,037

Finance lease liabilities - Current 11,451 17,165 6,361 10,506 - Non-current 12,310 22,927 8,001 13,531 23,761 40,092 14,362 24,037

The present value of finance lease liabilities is as follows:


2011 2010 2011 2010


Not later than 1 year 11,451 17,165 6,361 10,506

Later than 1 year but not later than 5 years 12,310 22,927 8,001 13,531

23,761 40,092 14,362 24,037

22.6 Borrowing facilities The Group and the Company have the following undrawn committed borrowing facilities:

Consolidated

2011 2010

Million Million

Bahtû000 USDû000 Rupiah Bahtû000 USDû000 Rupiah Floating rate

- Expiring within one year 19,893,246 300,868 85,000 9,063,000 75,146 55,000

Company

2011 2010

Bahtû000 Bahtû000 Floating rate

- Expiring within one year 16,472,319 5,848,622

The facilities expiring within one year are annual facilities subject to reviews at various dates during year. The other facilities have been arranged to help finance the proposed expansion of activities for the Group and the Company.


23 Other current liabilities Consolidated Company

2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Social security and other taxes 40,949 42,740 17,698 25,305 Others 24,287 22,168 23,576 18,520 Total other current liabilities 65,236 64,908 41,274 43,825

24 Provision for post employment benefit obligations The amounts recognised in the statement of financial position are determined as follows: Consolidated Company

2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Present value of unfunded obligation 104,788 89,286 41,923 37,865

The movements in the defined benefit obligations over the year are as follows:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 At 1 January 89,286 73,535 37,865 33,583 Current service costs 14,205 13,732 3,062 2,961 Interest costs 3,256 2,972 1,227 1,321 Benefits paid (1,959) (953) (231) - At 31 December 104,788 89,286 41,923 37,865

The amounts recognised in the statement of income are as follows:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Current service costs 14,205 13,732 3,062 2,961 Interest costs 3,256 2,972 1,227 1,321 Total 17,461 16,704 4,289 4,282

The principal actuarial assumptions used were as follows:

Percentage


2011 2010 2011 2010 Discount rate 4.7 4.7 4.7 4.7 Inflation rate 3.0 3.0 3.0 3.0 Future salary increases (monthly staff) 6.5 6.5 6.5 6.5 Future salary increases (daily staff) 3.0 3.0 3.0 3.0

182 A n n u a l R e p o r t 2 0 1 1

25 Share capital and premium on share capital Consolidated and Company

Number of Issued and

registered paid-up Ordinary Share

Par value shares shares shares premium Total

(Baht) (Shares) (Shares) (Bahtû000) (Bahtû000) (Bahtû000) At 1 January 2009 5 200,000,000 200,000,000 1,000,000 1,123,800 2,123,800

Issue of shares - - - - - -

At 31 December 2009, pre-split share 5 200,000,000 200,000,000 1,000,000 1,123,800 2,123,800

At 28 June 2010, post-split share

(split share 1 : 5) 1 1,000,000,000 1,000,000,000 1,000,000 1,123,800 2,123,800

Issue of shares 1 280,000,000 - - - -

At 31 December 2010 1 1,280,000,000 1,000,000,000 1,000,000 1,123,800 2,123,800 At 1 January 2011 1 1,280,000,000 1,000,000,000 1,000,000 1,123,800 2,123,800

Issue of shares 1 - 280,000,000 280,000 7,427,190 7,707,190 At 31 December 2011 1 1,280,000,000 1,280,000,000 1,280,000 8,550,990 9,830,990

At the Extraordinary General Shareholdersû Meeting 1/2010 held on 28 June 2010, the shareholders approved a resolution to change the par value of the Companyûs shares from Baht 5 to Baht 1 (split share 1:5) and increase the authorised share capital by Baht 280,000,000 from Baht 1,000,000,000 to Baht 1,280,000,000 by registering an additional 280,000,000 ordinary shares of Baht 1 each. The Company registered the increased share capital with the Ministry of Commerce on 29 June 2010.

As at 31 December 2011, the total authorised number of ordinary shares was 1,280,000,000 shares (31 December 2010: 1,280,000,000 shares) with a par value of Baht 1 per share (31 December 2010: Baht 1 per share). 1,280,000,000 shares were issued and fully paid-up (31 December 2010: 1,000,000,000 shares).

On 31 January 2011, the Company completed a placement of its ordinary share offering of 280 million shares on the Singapore Exchange Securities Trading Limited (çSGX-STé) at the offering price of SGD 1.20 per share, totalling SGD 336 million (approximately Baht 8,035 million). In addition, the SGX-ST set the new ordinary shares of the Company to be traded on its main board on that date. Incremental costs directly attributable to the issuance of the new ordinary shares amounting to Baht 437 million, net of tax of Baht 109 million, have been recognised in equity as a deduction of the premium on share capital.


26 Legal reserve Consolidated

and Company

2011 2010

Bahtû000 Bahtû000 At 1 January 100,000 100,000

Appropriation during the year 28,000 -

At 31 December 128,000 100,000

In accordance with the Public Limited Company Act., B.E. 2535, the Company is required to set aside a legal reserve based on 5% of its net profit until the reserve is not less than 10% of the registered capital. On 28 April 2011 the Annual General Meeting of Shareholders resolved to set aside Baht 28 million of net profit to the legal reserve.

27 Other component of equity

Other component of equity can be analysed as follows: Consolidated

Deduction arising

from acquisition (Restated) of additional (Restated) Unrealised interest in Revaluation gain (loss) on (Restated) subsidiaries from surplus, net of available- Cumulative non-controlling accumulated for-sale translation interests depreciation financial assets differences Total Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 For the year ended 31 December 2011

Opening balance as at

1 January 2011 - as restated (173,134) 850,018 3,023 (283,843) 396,064

Revaluation surplus, gross - 44,446 - - 44,446

Revaluation surplus, tax - (8,889) - - (8,889)

Depreciation transfer on assets revaluation, gross - (34,506) - - (34,506)

Depreciation transfer on assets revaluation, tax - 4,809 - - 4,809

Disposal of assets, gross - (7,350) - - (7,350)

Disposal of assets, tax - 1,134 - - 1,134

Change in fair value of available-

for-sale financial assets, gross - - (2,675) - (2,675)


for-sale financial assets, tax - - 367 - 367

Change in tax rate used in deferred tax recognition - (16,477) (115) - (16,592)

Currency translation differences - - - 163,308 163,308

Closing balance as at 31 December 2011 (173,134) 833,185 600 (120,535) 540,116

184 A n n u a l R e p o r t 2 0 1 1

Consolidated

Deduction arising

from acquisition (Restated) of additional (Restated) Unrealised interest in Revaluation gain (loss) on (Restated) subsidiaries from surplus, net of available- Cumulative non-controlling accumulated for-sale translation interests depreciation financial assets differences Total Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 For the year ended 31 December 2010

Opening balance as at

1 January 2010 - as restated (173,134) 845,558 (5,373) (56,150) 610,901

Depreciation transfer on assets revaluation, gross - (24,290) - - (24,290)

Depreciation transfer on assets revaluation, tax - 3,684 - - 3,684


for-sale financial assets, gross - - 9,539 - 9,539


for-sale financial assets, tax - - (855) - (855)

Change in tax rate used in deferred tax recognition - 25,066 (288) - 24,778

Currency translation differences - - - (227,693) (227,693)

Closing balance as at

31 December 2010 - as restated (173,134) 850,018 3,023 (283,843) 396,064

Company


Revaluation Unrealised gain

surplus, net of (loss) on

accumulated available-for-sale

depreciation financial assets Total

Bahtû000 Bahtû000 Bahtû000 For the year ended 31 December 2011

Opening balance as at 1 January 2011 - as restated 610,628 2,300 612,928

Depreciation transfer on assets revaluation, gross (21,371) - (21,371)

Depreciation transfer on assets revaluation, tax 3,298 - 3,298

Disposal of assets, gross (7,350) - (7,350)

Disposal of assets, tax 1,134 - 1,134

Change in fair value of available-for-sale financial assets, gross - (2,327) (2,327)

Change in fair value of available-for-sale financial assets, tax - 359 359

Change in tax rate used in deferred tax recognition (44,901) (172) (45,073)

Closing balance as at 31 December 2011 541,438 160 541,598


Company


Revaluation Unrealised gain

surplus, net of (loss) on

accumulated available-for-sale

depreciation financial assets Total

Bahtû000 Bahtû000 Bahtû000 For the year ended 31 December 2010

Opening balance as at 1 January 2011 - as restated 605,520 (5,555) 599,965

Depreciation transfer on assets revaluation, gross (26,844) - (26,844)

Depreciation transfer on assets revaluation, tax 2,305 - 2,305

Change in fair value of available-for-sale financial assets, gross - 8,885 8,885

Change in fair value of available-for-sale financial assets, tax - (763) (763)

Change in tax rate used in deferred tax recognition 29,648 (267) 29,381

Closing balance as at 31 December 2011 - as restated 610,629 2,300 612,929

28 Expense by nature The following significant items have been charged to the operating profit for the year.


2011 2010 2011 2010

For the years ended 31 December Notes Bahtû000 Bahtû000 Bahtû000 Bahtû000

Raw materials and consumables used 90,445,985 55,464,757 47,891,806 34,327,986

Allowance for

inventory cost in excess of net realisable value 11 869,633 - 111,753 -

Employee costs and key

management benefits 29 1,254,180 822,057 449,867 362,317

Depreciation 16 476,131 365,979 176,309 176,276

Amortisation 17 7,127 5,988 3,171 2,663

Transportation and distribution expense 795,075 818,241 671,459 522,074

Energy expense 627,914 480,679 265,417 246,424

Cess expense 2,192,649 800,286 1,946,217 684,056

Additional information The cess expense is a fee charged to exporters of natural rubber products to be deposited into the rubber replanting aid fund managed by the office of the Rubber Replanting Aid Fund (ORRAF) in Thailand for the purpose of replanting support.

186 A n n u a l R e p o r t 2 0 1 1

29 Employee costs and key management benefits Consolidated Company

2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Wages and salaries 1,136,664 743,557 420,965 338,565

Social security costs 32,600 16,729 10,271 9,275

Post-employment benefit expenses 17,461 16,704 4,289 4,282

Other employment benefits 67,455 45,067 14,342 10,195

Total employee costs and key management benefits 1,254,180 822,057 449,867 362,317

30 Sales of goods and services Consolidated Company

2011 2010 2011 2010


Revenues from sales of goods 133,549,712 83,683,992 76,838,862 44,033,004

Service revenues 154,130 161,337 23,251 7,703

Total sales of goods and services 133,703,842 83,845,329 76,862,113 44,040,707

31 Other income Consolidated Company

2011 2010 2011 2010


Dividend income 1,177 17,598 70,809 355,580

Rental income 10,981 10,346 1,439 1,359

Income from sales of scraps 20,177 16,434 13,318 7,131

Gains (losses) on disposals of and

write-offs of property, plant and

equipment, and intangible assets 7,984 (6,721) 16,895 (1,919)

Others 124,897 39,506 52,003 32,600

Total other income 165,216 77,163 154,464 394,751

32 Finance costs - net Consolidated Company

2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Finance income

Interest income from bank deposits 12,377 2,890 3,277 874

Interest income from customers and brokers 2,847 3,270 407 1,882

Interest income from related parties 950 - 950 -

Total finance income 16,174 6,160 4,634 2,756



2011 2010 2011 2010


Finance costs

Interest expenses on bank borrowings 899,759 445,854 418,289 238,463

Interest expenses on finance leases 1,304 1,665 627 741

Net foreign exchange gains on financing activities (16,066) (49,859) - -

Total finance costs 884,997 397,660 418,916 239,204

Finance costs - net 868,823 391,500 414,282 236,448

33 Other gains (losses) - net Consolidated Company

2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Gains (losses) from derivative financial instruments 505,658 (10,391) 73,880 103,544

Other gain (losses) - net 505,658 (10,391) 73,880 103,544

34 Income tax expenses The estimated average annual tax rate for the consolidated financial statements for the year ended 31 December 2011 was 32.13% (the tax rate for the year ended 31 December 2010 was 6.63%), and for the company financial statements, it was 33.39% (the tax rate for the year ended 31 December 2010 was 3.51%).

For the year ended 31 December 2010, the Company had tax losses carried forward which could be used to offset the income tax expenses, and the promotional privileges under some promotional certificates were fully utilised during the year 2010.

On 11 October 2011, the Thai Cabinet has passed a resolution to reduce the corporate income tax rate from 30% to 23% for 2012 and to 20% for 2013 onward. The Royal Decree No. 530, B.E. 2554 dated 21 December 2011 promulgated that the tax rate for 2012 will be 23% and 2013 - 2014 will be 20%. In January 2012, the Thai Federation of Accounting Professions (çFAPé) has issued a clarification about the change in corporate income tax rate. FAP believed that it is highly probable that the Thai government will amend the tax rate for 2015 onward to the rate not more than 20%. According to this clarification from FAP, the deferred income taxes that expected to be reversed in 2012 and 2013 onward are re-measured using the tax rate of 23% and 20%, respectively. The reduction of this tax rate resulted in the decrease in deferred income tax assets and deferred income tax liabilities of the Group. The impacts were recognised as income tax expenses for the year ended 2011 except for the deferred income tax which recognised through the shareholdersû equity, the impact from the change in tax rate is recognised in the other comprehensive income.

188 A n n u a l R e p o r t 2 0 1 1


2011 2010 2011 2010


Current income tax:

Current income tax on profit of the year 862,333 292,806 655,034 30,727

Deferred income tax:

Origination and reversal of temporary differences (233,091) (20,144) (120,457) 55,307

Income tax expenses 629,242 272,662 534,577 86,034

The taxes on the Groupûs profits before income tax differ from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Profit before income tax 1,958,512 4,113,166 1,601,156 2,452,765

Tax calculated at domestic tax rates

applicable to profits in the respective countries 767,123 514,986 534,635 179,785

Share of tax on profits of associates and a joint venture (216,684) (59,742) - -

Tax effect of:

- Income not subject to tax (25,620) (34,786) (23,643) (22,959)

- Expenses not deductible for tax purpose 31,078 5,252 23,025 554

- Double deductable expenses (1,733) (9,827) (403) -

- Change in tax rate 16,118 (25,722) 7,844 (29,648)

- Tax losses of the current year for which no

deferred income tax asset was recognised 334 2,269 - -

- Tax at concessionary rate of 10%

see note (a) 30,122 (38,230) - -

- Utilisation of previously unrecognised tax

losses - (29,553) - (27,788)

- Recognition of temporary differences which were

not recognised in previous periods - (59,954) - -

- Under estimation of income tax liability in the prior year (2,460) - - -

- Others 30,964 7,969 (6,881) (13,910)

Total income tax expenses 629,242 272,662 534,577 86,034

Additional information (a) On 11 May 2007, the Ministry of Trade and Industry of Singapore awarded the Global Trader

Programme status to one of the subsidiaries for the period from 11 May 2007 to 31 December 2009. Under this programme, incomes derived from qualifying trading transactions of approved products are taxed at the concessionary rate of 10%. On 21 January 2010, this status was extended from 1 January 2010 to 31 December 2014.


(b) The Company and certain subsidiaries in Thailand were granted tax incentives relating to the manufacturing of certain natural rubber products. The tax incentives include the following: ë Exemption from payment of import duty on imported machinery and equipment. ë Exemption from payment of income tax for the period of eight years starting from the

commencement date of the promoted business, and 50 percent reduced from the normal tax rate for the next five years after the period of eight years are expired.

Consolidated

2011 2010

Tax (charge) Tax (charge)

Before tax credit After tax Before tax credit After tax

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Revaluation surplus 44,446 (8,889) 35,557 - - - Change in tax rate used in deferred tax recognition - (16,592) (16,592) - - - Disposal of assets (7,350) 1,134 (6,216) - - - Change in fair value of available- for-sale financial assets (2,675) 367 (2,308) 9,538 (1,142) 8,396 Cumulative translation adjustments 158,868 7,953 166,821 (229,388) (5,249) (234,637) Total income tax charges to other comprehensive income 193,289 (16,027) 177,262 (219,850) (6,391) (226,241)

Company

2011 2010

Tax (charge) Tax (charge)

Before tax credit After tax Before tax credit After tax

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Change in tax rate used in deferred tax recognition - (45,073) (45,073) - - - Disposal of assets (7,350) 1,134 (6,216) - - - Change in fair value of available- for-sale financial assets (2,327) 359 (1,968) 8,885 (1,030) 7,855 Total income tax charges to other comprehensive income (9,677) (43,580) (53,257) 8,885 (1,030) 7,855

190 A n n u a l R e p o r t 2 0 1 1

35 Earnings per share Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares in issue during the year, excluding treasury shares.



2011 2010 2011 2010 Net profit attributable to ordinary shareholders (Bahtû000) 1,306,249 3,819,627 1,066,579 2,366,732

Weighted average number

of ordinary shares in issue (shares) 1,256,666,667 1,000,000,000 1,256,666,667 1,000,000,000

Basic earnings per share (Baht) 1.04 3.82 0.85 2.37

There are no potential dilutive ordinary shares in issue during the years ended 31 December 2011 and 2010

36 Dividends

A dividend in respect of the year ended 31 December 2010 of Baht 1.25 per share (amounting to a total of Baht 1,600 million) was paid on 27 May 2011 to all shares outstanding (the year ended 31 December 2009 : Baht 3 per share amounting to a total of Baht 600 million).

37 Related party transactions

Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Company and close members of the family of these individuals and companies associated with these individuals also constitute related parties.

In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form.

The following transactions were carried out with related companies:


37.1 Sales of goods and services Consolidated Company

2011 2010 2011 2010

For the years ended 31 December Bahtû000 Bahtû000 Bahtû000 Bahtû000 Sales of goods to:

Subsidiaries - - 6,019,552 2,276,290

Associates 6,287,304 5,002,056 2,684,485 2,344,059

6,287,304 5,002,056 8,704,037 4,620,349

Sales of services to:

Subsidiaries - - 41,367 22,370

Associates 166,090 136,679 6,219 6,370

166,090 136,679 47,586 28,740

Dividend income received from:

Subsidiaries - - - 71,665

Associates 44,500 329,058 39,500 266,362

A joint venture 30,150 - 30,150 -

74,650 329,058 69,650 338,027

Rental income from:

A subsidiary - - 227 -

An associate 5,412 5,538 768 894

5,412 5,538 995 894

Revenue interest from:

Associates 951 - 951 -

951 - 951 -

37.2 Purchases of goods and services


2011 2010 2011 2010

For the years ended 31 December Bahtû000 Bahtû000 Bahtû000 Bahtû000 Purchases of goods from:

Subsidiaries - - 15,937,775 4,191,735

Associates 565,817 401,339 559,189 396,509

A joint venture 6,045,302 6,269,563 - -

6,611,119 6,670,902 16,496,964 4,588,244

Purchases of services from:

Subsidiaries - - 429,773 311,553

Associates 1,156 2,019 1,141 1,551

1,156 2,019 430,914 313,104

192 A n n u a l R e p o r t 2 0 1 1

37.3 Outstanding balances arising from sales/purchases of goods and services and other income as at 31 December


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Trade accounts receivable (Note 10) Subsidiaries - - 1,913,722 635,777 Associates 103,140 91,212 8,530 22,629 103,140 91,212 1,922,252 658,406 Amounts due from futures broker An associate 71,415 81,275 71,415 81,275 Other receivable An associate 44,064 2,772 44,064 2,772 Accrued interest Associates 948 - 948 - Long-term loan to Associates 62,905 - 62,905 - Trade accounts payable (Note 21) Subsidiaries - - 316,734 166,731 Associates 103,671 77,852 103,115 76,992 A joint venture 155,986 771,598 - - 259,657 849,450 419,849 243,723

The carrying amounts of the Groupûs outstanding balances with related parties are denominated in the following currencies:


2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Trade accounts receivable (Note 10) USD 201 - 1,911,576 558,240 THB 102,939 91,212 10,676 100,166 103,140 91,212 1,922,252 658,406 Amounts due from futures broker THB 71,415 81,275 71,415 81,275 Other receivable THB 44,064 2,772 44,064 2,772 Accrued interest USD 948 - 948 - Long-term loan to USD 62,905 - 62,905 - Trade accounts payable (Note 21) USD 155,986 771,598 15,447 5,614 THB 103,671 77,852 404,402 238,109 259,657 849,450 419,849 243,723


The trade receivables from related parties arose mainly from sales transactions and are due approximately one month after the date of sales. The receivables are unsecured in nature and bear no interest. There is no allowance for impairment against receivables from related parties (2010: Nil).

The long-term loan to an associate is the loan to Semperflex Shanghai Ltd. denominated in USD amounting to USD 2 million (approximately Baht 62.91 million). The loan bears interest at 5.5 percent per annum and is to be repaid in a single lump sum three years from the lending date. The loan is unsecured.

The accounts payable to related parties arose mainly from purchase transactions and are due approximately one month after the date of purchase. The payables bear no interest.

37.4 Key management compensation

Key management includes all directors and non-directors. The compensation paid or payable to key management for their services is shown below:


For the years ended 31 December 2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Salaries and other employee benefits 232,591 88,559 33,121 24,199

38 Financial instruments by category Consolidated

31 December 2011

Assets at fair

Loans and value through Available

receivables the profit and loss -for-sale Total


Assets as per statement of financial position

Long-term loan to an associate 62,905 - - 62,905

Available-for-sale financial assets - - 43,652 43,652

Derivative financial instruments - 329,305 - 329,305

Trade accounts receivable 7,421,315 - - 7,421,315

Fixed deposits pledged as collateral 143,483 - - 143,483

Cash and cash equivalents 2,273,021 - - 2,273,021

Total 9,900,724 329,305 43,652 10,273,681

194 A n n u a l R e p o r t 2 0 1 1

Consolidated 31 December 2011

Liabilities at fair Other financial value through the liabilities at profit and loss amortised cost Total Bahtû000 Bahtû000 Bahtû000

Liabilities as per statement of financial position Short-term loans from financial institutions - 15,425,614 15,425,614 Current portion of long-term loans - 120,000 120,000 Current portion of finance lease liabilities - 11,451 11,451 Long-term loans from financial institutions - 314,860 314,860 Debentures - 2,150,000 2,150,000 Finance lease liabilities - 12,310 12,310 Derivative financial instruments 1,112,239 - 1,112,239 Trade accounts payable - 2,051,590 2,051,590 Total 1,112,239 20,085,825 21,198,064


Assets at fair Loans and value through the Available receivables profit and loss -for-sale Total Bahtû000 Bahtû000 Bahtû000 Bahtû000

Assets as per statement of financial position Available-for-sale financial assets - - 46,267 46,267 Derivative financial instruments - 459,559 - 459,559 Trade accounts receivable 5,702,688 - - 5,702,688 Fixed deposits pledged as collateral 125,444 - - 125,444 Cash and cash equivalents 1,773,962 - - 1,773,962 Total 7,602,094 459,559 46,267 8,107,920


Liabilities at fair Other financial value through the liabilities at profit and loss amortised cost Total Bahtû000 Bahtû000 Bahtû000

Liabilities as per statement of financial position Short-term loans from financial institutions - 20,452,626 20,452,626 Current portion of long-term loans from financial institutions - 597,610 597,610 Current portion of finance lease liabilities - 17,165 17,165 Long-term loans from financial institutions - 2,226,050 2,226,050 Finance lease liabilities - 22,927 22,927 Derivative financial instruments 493,488 - 493,488 Trade accounts payable - 2,538,528 2,538,528 Total 493,488 25,854,906 26,348,394


Company 31 December 2010

Assets at fair Loans and value through the Available receivables profit and loss -for-sale Total


Assets as per statement of financial

position

Long-term loan to an associate 62,905 - - 62,905





Cash and cash equivalents 766,434 - - 766,434

Total 6,845,520 44,430 42,779 6,932,729

Consolidated

31 December 2010

Liabilities at fair Other financial

value through the liabilities at

profit and loss amortised cost Total

Bahtû000 Bahtû000 Bahtû000

Liabilities as per statement of financial

position

Short-term loans from financial institutions - 4,551,591 4,551,591


financial institutions - - -

Current portion of finance lease liabilities - 6,362 6,362

Long-term loans from financial institutions - - -

Debentures - 2,150,000 2,150,000

Finance lease liabilities - 8,001 8,001

Derivative financial instruments 541,893 - 541,893

Trade accounts payable - 1,390,506 1,390,506

Total 541,893 8,106,460 8,648,353

196 A n n u a l R e p o r t 2 0 1 1

Company 31 December 2010

Assets at fair Loans and value through the Available receivables profit and loss -for-sale Total


Assets as per statement

of financial position





Cash and cash equivalents 686,844 - - 686,844

Total 4,314,097 98,248 45,106 4,457,451

Liabilities at fair Other financial

value through the liabilities at

profit and loss amortised cost Total

Bahtû000 Bahtû000 Bahtû000

Liabilities as per statement of financial position

Short-term loans from financial institutions - 10,641,378 10,641,378


financial institutions - 575,000 575,000

Current portion of finance lease liabilities - 10,506 10,506

Long-term loans from financial institutions - 2,031,250 2,031,250

Finance lease liabilities - 13,531 13,531

Derivative financial instruments 65,410 - 65,410

Trade accounts payable - 1,085,893 1,085,893

Total 65,410 14,357,558 14,422,968

39 Credit quality of financial assets

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates:



2011 2010 2011 2010


Deposits held at call with banks AAA+ - 10,620 - - Aaa 63,993 - - - Aa1 229,686 286,338 - - Aa2 217 217 217 217 Aa3 18,367 285,547 1,782 - A1 506,303 147,784 394,443 135 A3 194,517 21,543 159,247 11,019 Baa1 342,739 563,495 104,339 466,321 Baa2 158,645 315,489 33,813 149,061 Baa3 32,842 32,808 32,648 30,105 Ba1 - 1,926 - - Ba2 667,542 - - - B2 - 322 - - C1 - 14,387 - - No rating 8,682 12,089 905 1,879 Total deposits held at call with banks 2,223,533 1,692,565 727,394 658,737 Trade accounts receivable

Counterparties without external credit rating

Group 1 333,718 370,522 - 3,699

Group 2 5,947,694 5,329,912 6,003,586 3,611,003

Group 3 1,139,903 2,254 - -

Total unimpaired trade accounts receivable 7,421,315 5,702,688 6,003,586 3,614,702 Derivative financial instruments

Counterparties with external credit rating

A2 - 56,876 - 56,223

Baa1 - 536 - 515

Baa2 - 35,451 - 33,918

Baa3 - 243 - 243

Ba1 - 7,349 - 7,349

Counterparties without external credit rating

Group 2 329,305 359,104 - -

Total derivative financial instruments 329,305 459,559 - 98,248 Fixed deposit pledged as collateral Aaa 14,147 - - - Aa1 76,809 36,414 - - Aa3 - 24,263 - - A1 15,846 - - - A2 - 28,176 - - Baa1 22,798 400 - - Baa2 13,883 36,191 12,595 12,551 Total 143,483 125,444 12,595 12,551

198 A n n u a l R e p o r t 2 0 1 1

Group 1 new customers/ related parties (less than 6 months) Group 2 existing customers/ related parties (more than 6 months) with no defaults in the past. Group 3 existing customers/ related parties (more than 6 months) with some defaults in the past. All defaults were fully recovered. Maintenance margins are held with high quality counterparties with no history of default. None of the financial assets that are fully performing has been renegotiated during the financial year.

40 Promotional privileges

By virtue of the provisions of Industrial Investment Promotion Act. B.E. 2520, the Group and the Company were granted certain privileges on their manufactures of concentrated latex, STR block rubber and Skim Crepe, which included among others, as follows:

(a) Exemption from payment of import duty on imported machinery and equipment. (b) Exemption from payment of income tax for the period of eight years starting from the

commencement date of the promoted business, and 50 percent reduced from the normal income tax rate for the next five years after the period of eight years is expired.

As a promoted industry, the Group and the Company must comply with certain conditions and restrictions provided for in the promotional certificates.

Sales classified as promoted and non-promoted business for the years ended 31 December 2011 and 2010 of the Company are summarised as follows:

2011 2010

Non- Non-

Promoted promoted Promoted Promoted

business business Total business business Total

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Export sales and service income - net 28,055,004 30,198,378 58,253,382 12,866,806 20,305,490 33,172,296 Domestic sales and service income - net 7,797,095 10,811,636 18,608,731 3,015,633 7,852,778 10,868,411 Total 35,852,099 41,010,014 76,862,113 15,882,439 28,158,268 44,040,707


41 Contingencies and commitments 41.1 Sales and purchase commitments

The Group and the Company are committed to certain sales and purchases for which the contractual prices are fixed and will be settled at future dates and for which the contractual prices are uncertain. The values of these commitments presented at the fixed contractual prices or the market prices at the end of period in case of the uncertain contractual price are as follows:


2011 2010 2011 2010


Purchases

From associates 578,079 1,177,510 - -

From third parties 8,576,177 19,073,929 - -

9,154,256 20,251,439 - -

Sales

To associates 2,024,819 1,317,675 114,885 261,843

To third parties 28,817,425 22,350,071 13,201,954 8,408,782

30,842,244 23,667,746 13,316,839 8,670,625

41.2 Capital commitments

The Group and the Company have capital commitments as the following: Consolidated Company

2011 2010 2011 2010

Bahtû000 Bahtû000 Bahtû000 Bahtû000 Capital commitments 535,211 442,410 301,324 134,151

41.3 Commitments to guarantee loans of subsidiaries, a joint venture and associates

41.3.1 The Company has a commitment to guarantee loans of Sri Trang USA, Inc., a subsidiary, amounted to USD 68.25 million (approximately Baht 2,162.9 million) (2010 : USD 45 million or equivalent to Baht 1,354.6 million) (no fee charged).

41.3.2 The Company has a commitment to guarantee loans of PT Sri Trang Lingga Indonesia, a subsidiary, amounted to USD 15.8 million and Rp 123.0 billion (approximately Baht 936.7 million) (2010 : USD 45.6 million and Rp.126.1 billion or equivalent to Baht 1,783.9 million) (no fee charged).

41.3.3 The Company has a commitment to guarantee loans of P.T. Star Rubber, a subsidiary, amounted to USD 13.0 million and Rp 10 billion (approximately Baht 450.1 million) (2010 : USD 14.6 million and Rp 50 billion or equivalent to Baht 587.9 million) (no fee charged).

41.3.4 The Company has a commitment to guarantee loans of Sadao P.S. Rubber Co., Ltd., a subsidiary, amounted to Baht 46.8 million (2010 : Baht 107.5 million) (no fee charged).

200 A n n u a l R e p o r t 2 0 1 1

41.3.5 The Company has a commitment to guarantee loans and credit facilities of Thaitech Rubber Corporation Ltd., a joint venture, limited to its percentage of holding amounting to USD 1 million (approximately Baht 30.5 million) and Baht 36.9 million (2010 : USD 1 million (approximately Baht 30.5 million) and Baht 36.9 million) (no fee charged).

41.3.6 The Company has a commitment to guarantee loans of Sempermed USA, Inc., an associated company, limited to its percentage of holding amounting to USD 2 million (approximately Baht 63.4 million) (2010 : USD 2 million or equivalent to Baht 60.2 million) (no fee charged).

41.3.7 The Group has contingently liabilities for bank guarantees issued in favor of government agency totalling Baht 44.4 million (2010: Baht 33.6 million) and has pledged its fixed deposits of Baht 13.0 million (2010: Baht 14.2 million) as collateral for these bank guarantees.

41.4 Operating lease commitments - where the Group/Company is the lessee

The future aggregate minimum lease payments under non-cancellable operating leases of the Group and the Company are as follows:

Bahtû000


2011 2010 2011 2010

Not later than 1 year 71,107 43,759 22,643 16,666

Later than 1 year but not later than 5 years 120,156 67,897 31,451 13,989

Later than 5 years 2,894 3,060 - -

Total 194,157 114,716 54,094 30,655

42 Contingent assets On 30 June 2011, Office of the Rubber Replanting Aid Fund (çORPAFé) has issued a letter to notify about the consideration results that allow the payment of cess at the former rate which is lower than the rate that the Company has paid to ORPAF. The content of this letter mentioned that in order to follow the announcement of The Ministry of Agriculture dated 20 June 2011 about the guidance for consideration to allow the payment of cess at the former rate, the rubber inventories, which ORPAF has examined during 20 - 30 September 2010 which is the period before the new cess rate come into effect, will be allowed to pay cess at the former rate and order the Company to submit the supporting documents as specified in this letter to ORPAF in order to request for the payment of cess at former rate.

As at 31 December 2011, the Company has not yet received the result of examination to approve the refund of cess. If the ORPAF approves and refunds the cess according to the Companyûs request in full amount, the Group will receive the cess refund about Baht 252 million (Company: Baht 175 million). The Group did not recognise these contingent assets in the statement of financial position as at 31 December 2011 because there is an uncertainty from the process of document examination.


General Corporate Information

Information of the Company

Name of the Company (Thai) : ∫√‘…—∑ »√’μ√—ß·Õ‚°√Õ‘π¥— ∑√’ ®”°—¥ (¡À“™π) Name of the Company (English) : Sri Trang Agro-Industry Public Company Limited Head Office : 10 Soi 10, Phetkasem Road, Hatyai, Songkhla 90110, Thailand Telephone +66-7434-4663 (Automatic 14 Lines) Fax +66-7434-4676, +66-7434-4677, +66-7423-7423 Type of Business : Production and export of RSS, TSR and Concentrated Latex Registration No. : 0107536001656 Company Secretary : Mrs. Pacharin Anuwongwattanachai Website : http://www.sritranggroup.com Type of Shares : Ordinary shares Registered Capital : Baht 1,280,000,000 Paid-up Capital : Baht 1,280,000,000 Issued Shares : Baht 1,280,000,000 with a par value of Baht 1 each

Information of juristic persons in which the Company holds more than 10% of the issued shares of such juristic persons

1. Nam Hua Rubber Head Office : 10 Soi 10 Phetkasem Road, Hatyai Subdistrict Hatyai District, Songkhla, 90110 Thailand Branch Office : 1. 99 Moo 3 Samnuk Kham Subdistrict, Sadao District, Songkhla Province, 90120 2. 41 Moo 3 Samnuk Kham Subdistrict, Sadao District, Songkhla Province, 90120 Type of Business : Production and export of RSS, TSR and Concentrated Latex Telephone : 66-7441-2268, 66-7441-1982-5 Fax : 66-7441-2255 Type of Shares : Ordinary shares Total number of shares directly held by STA: 1,749,994 shares or 99.99% 2. Anvar Parawood Head Office : 101 Moo 3, Padangbezar Road, Samnuk Kham Subdistrict Sadao District, Songkhla Province, 90120 Thailand Type of Business : Lumber production and manufacture of wooden furniture Telephone : 66-7441-2756-7 Fax : 66-7441-2853 Type of shares : Ordinary shares Total number of shares directly held by STA : 9,994 shares or 99.94%

202 A n n u a l R e p o r t 2 0 1 1

3. Premier System Engineering Head Office : 123 Moo 8, Karnchanawanich Road, Banpru Subdistrict Hatyai District, Songkhla, 90250, Thailand Branch Office : 133 Rakpru Road, Banpru Subdistrict, Hatyai District, Songkhla Province, 90250 Type of Business : Engineering services, design, installation and maintenance machinery Telephone : 66-7447-1480-3, 66-7447-1368 Fax : 66-7447-1290, 66-7447-1430 Type of Shares : Ordinary shares Total number of shares directly held by STA : 409,996 shares or 81.99% 4. Rubberland Products Head Office : 109 Karnchanawanich Road, Pahtong Subdistrict Hatyai District, Songkhla Province, 90230, Thailand Branch Office : 1. 10 Soi 10 Phetkasem Road, Hatyai Subdistrict Hatyai District, Songkhla, 90110 2. 36/82 P.S.Tower 23rd Floor, Soi Sukhumvit 21, Asoke Road, Klongtory Nua Subdistrict, Wattana District Bangkok 10110 3. 338 Moo 2 Nonsomboon Subdistrict, Mueang Bungkarn District, Bungkarn, 38000 4. 338 Moo 1 Kokma Subdistrict, Prakonchai District, Burirum, 31140 5. 188 Moo 10 Bangsaiyai Subdistrict, Mueang Mukdahan Subdistrict, Mukdahan, 49000 Type of Business : Production of Concentrated Latex/ Block rubber Telephone : 66-7429-1223-4, 66-7429-1755, 66-7429-1476 Fax : 66-7429-1477 Type of Shares : Ordinary shares Total number of shares directly held by STA : 749,994 shares or 99.99% 5. SSC Head Office : 110 Karnchanawanich Road, Pahtong Subdistrict Hatyai District, Songkhla, 90230, Thailand Branch Office : 1. 10 Soi 10 Phetkasem Road, Hatyai Subdistrict Hatyai District, Songkhla Province, 90110 2. 36/82 P.S.Tower 23rd Floor, Soi Sukhumvit 21, Asoke Road, Klongtoey Nua Subdistrict, Wattana District, Bangkok 10110 3. 109/2 Karnchanawanich Road, Pahtong Subdistrict Hatyai District, Songkhla Province, 90230 4. 352 Karnchanawanich Road, Pahtong Subdistrict Hatyai District, Songkhla Province, 90230 5. 189 Moo 7 Plaiwat Subdistrict, Karnchanadit district, Surat Thani Province, 84160 6. 39/1 Moo 9 Tungkai Subdistrict, Yantakao District, Trang Province, 92140


Type of Business : Production of examination gloves Telephone : 66-7447-1471, 66-7429-1648-9, 66-7429-1471-5 Fax : 66-7429-1650 Type of Shares : Ordinary shares Total number of shares directly held by STA: 6,300 shares or 31.50% Auditor : BDO Limited 6. Semperflex Asia Head Office : 110/1 Karnchanawanich Road, Pahtong Subdistrict Hatyai District, Songkhla Province, 90230, Thailand Branch Office : 10 Soi 10 Phetkasem Road, Hatyai Subdistrict Hatyai District, Songkhla, Province 90110 Type of Business : Production of high-pressure Hydraulic hoses Telephone : 66-7447-1231-5 Fax : 66-7447-1230 Type of Shares : Ordinary shares Total number of shares directly held by STA : 1,425,000 shares or 37.50% Auditor : BDO Limited 7. Semperform Pacific1 Head Office : 110/2 Karnchanawanich Road, Pahtong Subdistrict Hatyai District, Songkhla Province, 90230, Thailand Branch Office : 10 Soi 10 Phetkasem Road, Hatyai Subdistrict Hatyai District, Songkhla, Province 90110 Type of Business : Production of injection moulded-rubber and plastic parts Telephone : 66-7447-1231-5 Fax : 66-7447-1230 Type of Shares : Ordinary shares Total number of shares directly held by STA : 56,250 shares or 37.50% Auditor : BDO Limited 8. Sadao P.S. Rubber Head Office : 207/1 Padang Besar Road, Sadao Subdistrict Sadao District, Songkhla Province, 90120, Thailand Type of Business : Production of RSS Telephone : 66-7441-1838, 66-7446-0483, 66-7446-0485 Fax : 66-7446-0484 Type of Shares : Ordinary shares Total number of shares held by STA : 399,994 shares or 99.99%

1 Semperform Pacific ceased its business operations. Currently, asset disposal process was completed. Liquidation is

expected to be performed within 2012.

204 A n n u a l R e p o r t 2 0 1 1

9. Starlight Express Transport Head Office : 13/1 Jingjit Road, Thupthiang Subdistrict Muang District, Trang Province, 92000, Thailand Type of Business : Provision of logistics services Telephone : 66-7521-0900-2 Fax : 66-7521-0903 Type of Shares : Ordinary shares Total number of shares directly held by STA : 114,998 shares or 76.66% 10. Startex Rubber Head Office : 10 Soi 10 Phetkasem Road, Hatyai Subdistrict Hatyai District, Songkhla Province, 90110, Thailand Type of Business : Ownership and management of rubber and oil palm plantations Telephone : 66-7521-0900-2 Fax : 66-7521-0903 Type of Shares : Ordinary shares Total number of shares directly held by STA : 419,995 shares or 83.99% 11. Thai Tech Rubber Head Office : 2 Juti Utit 3 Road, Hatyai Subdistrict Hatyai District, Songkhla Province, 90110, Thailand Type of Business : Production of TSR Telephone : 66-7423-0768, 66-7423-0406-7, 66-7423-9063-4 Fax : 66-7423-8650 Type of Shares : Ordinary shares Total number of shares directly held by STA : 200,998 shares or 33.50% Auditor : AST Master Co., Ltd. 12. Pattana Agro Futures Head Office : Wallstreet Tower, G Floor, 33/19 Surawongse Road Surawongse Subdistrict, Bangrak District, Bangkok, 10500, Thailand Type of Business : Brokerage activities Telephone : 66-2632-8826 Fax : 66-2632-8825 Type of Shares : Ordinary shares Total number of shares directly held by STA : 3,200,000 shares or 40.00% Auditor : Ernst & Young Office Limited 13. Sri Trang Rubber & Plantation Head Office : 13/1 Jingjit Road, Thupthiang Subdistrict Muang District, Trang Province, 92000, Thailand Type of Business : Ownership and management of rubber plantation Telephone : 66-7521-0900-2 Fax : 66-7521-0903 Type of Shares : Ordinary shares Total number of shares directly held by STA : 16,999,993 shares or 99.99%


14. Sri Trang International Head Office : 1 Raffles Place No. 38-02, One Raffles Place, Singapore 048616 Type of Business : Natural rubber wholesaler in Singapore Telephone : 65-6532-5210, 65-6532-5321 Fax : 65-6532-7501 Type of Shares : Ordinary shares Total number of shares directly held by STA : 42,000,000 shares or 100.00% 15. Sri Trang USA, Inc. Head Office : 300 Preston Ave., Suite 400 Charlottesville Virginia 22902 United States Type of Business : Natural rubber wholesaler in the United States Telephone : 1-434-296-0080, 1-434-244-0089 Fax : 1-434-296-0098 Type of Shares : Common stock Total number of shares directly held by STA : 2,000 shares or 100.00% Auditor : Cherry, Bakaert & Holland LLP.2

16. Sempermed USA, Inc. Head Office : 13900, 49th Street North, Clearwater, Florida 33762 United States Type of Business : Distribution of examination gloves in the United States Telephone : 1-800-366-9545 Fax : 1-800-763-5491 Type of Shares : Ordinary shares Total number of shares directly held by STA : 1,000 shares or 25.00% Auditor : Pender Newkirk & Company LLP, USA 17. Shanghai Sempermed3 Head Office : No.8, Xinja Road, Che Dun Town Songjiang District, Shanghai 201611 P.R.C Type of Business : Production of examination gloves Telephone : 86-21-5760-9389 Fax : 86-21-5760-9296 Type of capital : Registered capital Total amount of capital directly held by SSC : USD 3,000,000 or 100.00% Auditor : Deloitte Touche Tohmatsu CPA Ltd. 18. Shanghai Semperit Head Office : Bei SongSt2, Minhang, Shanghai 20111 P.R.C. North of Bridge No.2 Type of Business : Manufacture of handrails and related parts for escalators and travelators Telephone : 86-21-6409 0850, 86-21-6409 0300 Fax : 86-21-6409 0850 Type of Interest : Equity Total interest directly held by STA : 10.00% 2 The Companyûs board and audit committee are satisfied with the standard and effectiveness of the audit of the Company. 3 Shanghai Sempemed is currently dormant and in the process of asset disposal.

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19. PT Sri Trang Lingga Head Office : Jalan TPA2, RT.26 & 29 Keramasan, Palembang, South Sumatera, Indonesia 30259 PO BOX 1230 Palembang Type of Business : Production of block rubber Telephone : 62-711-445 666 Fax : 62-711-445 222 Type of Shares : Ordinary shares Total number of shares directly held by STA : 18,000 shares or 90.00% 20. Semperflex Shanghai Head Office : Shanghai Chemical Industry Park, Fengxian Subzone Canggong Road 1255, 201424, Shanghai, P.R.C. Type of Business : Production of high-pressure Hydraulic hoses Telephone : 86-21-5744-8386 Fax : 86-21-5744-8386 Type of Interest : Equity Total interest held by STA : USD 7,500 shares or 50.00% Auditor : Grant Thornton, Shanghai, China 21. Sempermed Singapore Head Office : 10 Anson Road, #09-24, International Plaza, Singapore 079903 Type of Business : Investment holding in Sempermed Brasil Telephone : N/A Fax : N/A Type of Shares : Ordinary shares Total number of shares directly held by STA : 3,000,000 shares or 50.00% Auditor : Audit Alliance Public Accountants and Certified Public Accountants 22. Sempermed Brasil Head Office : Rua João Franco de Oliveira 750 - Unileste, Piracicaba - São Paulo Brazil Zip Code : 13.422-160 Type of Business : Distribution and marketing of natural rubber gloves and synthetic rubber in Brazil Telephone : N/A Fax : N/A Type of capital : Quotas Total number of quotas held by Sempermed Singapore: 12,546,637 shares or approximately 100.00% Auditor: Röedl & Partner Auditores Independentes, Brazil 23. Shi Dong Investments Head Office : 1 Raffles Place No.38-02, One Raffles Place, Singapore 048616 Type of Business : Investment holding in PT Star Rubber Telephone : 65-6532-5210, 65-6532-5321 Fax : 65-6532-7501 Type of Shares : Ordinary shares Total number of shares directly held by Sri Trang International : 100.00%


24. PT Star Rubber Head Office : Jalan Trans Kalimantan KM. 16, Desa Jawa Tengah Kec. Sungai Ambawang, Kab Kubu Raya-Kalbar, Pontianak, Kalimantan Barat, Indonesia. PO Box 7864 Type of Business : Production of block rubber Telephone : 62-561-724888 Fax : 62-561-724593 Type of Shares : Ordinary shares Total number of shares directly held by Shi Dong Investment Pte Ltd. 99.00% 25. Shi Dong Shanghai Head Office : Unit 2701, Wheelock square, No.1717 West Nanjing Road, Jingû an District, Shanghai 200040 Type of Business : Distribution of Natural Rubber Products in PRC Telephone : 86 21-64137860 Fax : 86 21-64137315 Type of Interest : Equity Total interest held by STA : USD 5,000,000 or 100.00%

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References

1. Share Registrar Thailand Securities Depository Co., Ltd. 62 The Stock Exchange of Thailand Building, Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand Telephone : 66-2229 2800 Fax : 66-2654 5427 TSD Call Center : 66-2229 2888 2. Singapore Transfer Agent Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623 Telephone : 65-6536 5355 Fax : 65-6536 1360 3. Auditor (Appointed on 28 June 2010) Mrs. Unakorn Phruithithada, Certified Public Accountant (Thailand) No. 3257; or Mrs. Nattaporn Phan-Udom, Certified Public Accountant (Thailand) No. 3430; or Mr. Boonlert Kamolchanokkul, Certified Public Accountant (Thailand) No. 5339 PricewaterhouseCoopers ABAS Limited 15th Floor, Bangkok City Tower 179/74-80 South Sathorn Road Bangkok, 10120 Thailand Telephone : 66-2344-1000, 66-2286-9999 Fax : 66-2286-5050 4. Debenture Registrar Siam Commercial Public Company Limited 9 Ratchadapisek Rd., Chatuchak, Bangkok, 10900 Thailand Telephone : 66-2544-1000 Fax : 66-2544-2658 5. Debenture Holderûs Representative Kasikornbank Public Company Limited 1 Soi Ratburana 27/1 Ratburana Rd., Ratburana, Ratburana, Bangkok 10140 Thailand Telephone : 66-2222-0000 Fax : 66-2470-1144-5


Defined Terms and Abbreviations

In this document, unless the context otherwise requires, references to çour Companyé, çthe Companyé or çSTAé refer to Sri Trang Agro-Industry Public Company Limited; references to çweé, çusé, çouré, çourselvesé, and çGroupé refer to the Company and its consolidated subsidiaries taken as a whole. Our Group Companies and other Entities Anvar Parawood : Anvar Parawood Company Limited Company or STA : Sri Trang Agro-Industry Public Company Limited Nam Hua Rubber : Nam Hua Rubber Company Limited Paktai Rubber : Paktai Rubber Industries Limited Partnership Pattana Agro Futures : Pattana Agro Futures Company Limited Premier System Engineering : Premier System Engineering Company Limited PT Sri Trang Lingga : PT Sri Trang Lingga Indonesia Rubberland Products : Rubberland Products Company Limited Sadao P.S. Rubber : Sadao P.S. Rubber Company Limited Semperflex Asia : Semperflex Asia Corporation Limited Semperflex Shanghai : Semperflex Shanghai Ltd. Semperform Pacific : Semperform Pacific Corporation Limited Semperit Technische : Semperit Technische Produkte Gesellschaft m.b.H., a subsidiary of Semperit AG Holding Sempermed Brasil : Sempermed Brasil Comë rcio Exterior Ltda. Sempermed Singapore : Sempermed Singapore Pte. Ltd. Sempermed USA : Sempermed USA, Inc. Shanghai Semperit : Shanghai Semperit Rubber & Plastic Products Co., Ltd. Shanghai Sempermed : Shanghai Sempermed Gloves Co., Ltd. Shi Dong Investments : Shi Dong Investments Pte. Ltd. Shi Dong Shanghai : Shi Dong Shanghai Rubber Co., Ltd. Sri Trang International : Sri Trang International Pte. Ltd. Sri Trang Rubber & Plantation : Sri Trang Rubber & Plantation Company Limited Sri Trang USA : Sri Trang USA, Inc. SSC : Our associate, Siam Sempermed Corporation Limited Starlight Express Transport : Starlight Express Transport Company Limited Startex Rubber : Startex Rubber Corporation Limited STH : Sri Trang Holdings Company Limited Thai Tech Rubber : Thaitech Rubber Corporation Limited General CDP : The Central Depository (Pte) Limited Code of Corporate Governance : Singapore Code of Corporate Governance 2005 Concentrated Latex : Liquid latex with a dry rubber content of approximately 60.0% Listing Manual : The listing manual of the SGX-ST Natural Rubber Products : RSS, TSR and Concentrated Latex

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Office of the SEC : The office of the SEC OTC : Over the counter Other Finished Products : Finished products, including high-pressure hydraulic hoses, escalator handrails and various rubber and plastic parts which are mainly used in electrical appliances PLCA : The Public Limited Companies Act B.E. 2535 (1992) of Thailand, as amended from time to time RSS : Ribbed smoked sheet SEC : The Securities and Exchange Commission of Thailand SEC Act : The Securities and Exchange Act. B.E. 2535 (1992) of Thailand, as amended from time to time SET : The Stock Exchange of Thailand SFRS : Singapore Financial Reporting Standards SGX-ST : Singapore Exchange Securities Trading Limited SICOM : Singapore Commodity Exchange Limited STR : Standard Thai rubber Thai GAAP : Generally accepted accounting principles in Thailand TSD : The Thailand Securities Depository Co., Ltd. TSR : Technically specified rubber, which includes STR and SIR Currencies and Measurements Baht : The lawful currency of Thailand IDR or Indonesian Rupiah : The lawful currency of Indonesia MYR or Malaysian Ringgit : The lawful currency of Malaysia R$ : The lawful currency of the Federative Republic of Brazil SGD or Singapore dollar : The lawful currency of the Republic of Singapore US$ or US Dollar : The lawful currency of the U.S.

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