Opinion of the Independent Financial Advisor Regarding the

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Opinion of the Independent Financial Advisor Regarding the Disposition of Assets of Yarnapand Public Company Limited

18 July 2011 Subject: Opinion of the Independent Financial Advisor Regarding the Disposition of Assets of

Yarnapund Public Company Limited To: Audit Committee and Shareholders of Yarnapund Public Company Limited Re: 1) Resolution of the Board of Directors’ meeting of Yarnapund Plc. No. 5/2011 held on

29 June 2011 2) Information Memorandum regarding the disposition of assets of Yarnapund Plc.

dated 30 June 2011 3) Form 56-1 of Yarnapund Plc. ended 31 December 2009 4) Audited financial statements of Yarnapund Plc. and Walker Exhaust (Thailand) Co.,

Ltd. for 12 months period ended 31 December 2007 – 2010 and the management accounts of Walker Exhaust (Thailand) Co., Ltd. for 5 months period ending 31 May 2011. However, the auditor is unable to express opinion on the financial statement of Yarnapund Plc. for 12 months period ended 31 December 2010.

5) Certificate of Registration, Memorandum of Association, and other documents including interviewing with the managements of Yarnapund Plc. and Walker Exhaust (Thailand) Co., Ltd. and related parties

Disclaimers: 1) The study results of Silom Advisory Company Limited (“Silom Advisory” or

“independent financial advisor” or “IFA”) in this report were based on information and assumptions provided by the management of Yarnapund Plc. (“YNP” or “the Company”), Walker Exhaust (Thailand) Co., Ltd. (“WETCO”) and subsidiaries and the information of the Company disclosed to the public on the websites of the Securities and Exchange Commission (www.sec.or.th) and the Stock Exchange of Thailand (www.set.or.th).

2) Silom Advisory shall not be responsible for the profits or the losses, and any impacts resulting from this transaction.

3) Silom Advisory conducted the study with knowledge, skills, and cautiousness on the basis of the professional ethics.

4) Silom Advisory considers and provides opinion based on the situation and information at the present time. If such situation and information have been changed significantly, the study results in this report may be affected.

5) The certified auditor is unable to express opinion on the financial statement of Yarnapund Plc. for 12 months period ended 31 December 2010 for the reasons stated in the financial statement, with major points as summarized below:

1. The auditor could not perform any other audit procedure to satisfy as to

the quantities and the movements of inventories. 2. The Company recorded rewards compensation to employees in

December 2010 totaling amount of Baht 78.42 million, as assets instead of expenses according to the generally accepted accounting standard. Therefore, if the awards compensation is recorded as expenses, the Company will incur an additional loss of Baht 78.42 million (Baht 0.03 per share) and assets as well as equity may decrease by Baht 78.42 million.

3. In 2010 the Company had reversed the allowance for impairment of investment in a subsidiary company, the Company opined that such subsidiary will have better results of operations as compared to prior year and shall generate its cash inflow in the future, for the whole amount with reference to the appraised value of such subsidiary company’s shares appraised by an independent financial l advisor based on the present value of cash flows from the cash flows that the subsidiary company expected to receive from its future operations. However, such subsidiary company had contingent liabilities as a guarantor of the Company’s debts at amount of Baht 3,025 million and the effects to the financial statements could not presently be determined.

Opinion of the Independent Financial Advisor Yarnapund Public Company Limited

Silom Advisory Company Limited Page 2/36

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4. The Company has not been able to determine the adequacy of the allowance for doubtful accounts receivable and loans to a subsidiary company to comply with the generally accepted accounting standard. The effects of this to the financial statements could not presently be determined.

5. The Company recorded the value of land based on the market value amount appraised by independent appraiser as the appraised value was lower than cost. However, the financial institution currently providing credit facilities for the Company is in the process of appraisal of such land and building. Not assured of the accuracy of the appraisal, the Company considers to consult the Professional Association of Appraisal Assets to determine the appropriateness of the valuation method whether it appraised the market value of land or not. Therefore the appropriateness of the market value of land could not been determined yet.

6. The auditor could not perform any other audit procedure to satisfy as to the quantities and the movements of inventories of a subsidiary company. This is due to inadequate inventory internal control. In addition, the subsidiary company has obligation as a guarantor of the loan from a financial institution that has filed prosecution against the Company and at present the case has not been concluded. Therefore, the effect to the financial statements could not presently be determined.

7. Financial institutions have sued the Company and its subsidiary against the shareholders for not passing a resolution to increase share capital on 16 August 2010. Therefore, the future operating result of the Company depends on a) the result of negotiation with the financial institution for new credit facilities, and b) the future profitability and adequacy of cash inflows from operating activities. Both of these factors indicate significant uncertainties in the business operation of the Company and the subsidiaries. The Company’s securities may face conditions called for delisting from the Exchange if the equity is below zero.

However, since the aforementioned financial statement is the most updated of the Company, the independent financial advisor uses this financial statement as the reference to determine the transaction size in consideration to purpose to the shareholders’ meeting for an approval. However, if the auditor considers changing any information in the financial statement, the information in this report is also subjected to revise accordingly. In accordance to the Board of Directors (“BODs”) Meeting No. 5/2011 of Yarnapund Public Company Limited (“Company” or “YNP”), held on 29 June 2011 resolved to propose to the meeting of shareholders to approve the disposition of investment in ordinary shares of Walker Exhaust (Thailand) Company Limited (“WETCO”) of 200,000 shares, accounting for 25.00% of total paid-up capital of WETCO with the par value of Baht 100.00 per share at the selling price of Baht 575.00 per share, totaling of Baht 115.00 million to Tenneco Automotive (Thailand) Limited (“Tenneco”), the 75.00% shareholder of WETCO. 100% of Tenneco’s shares are held by Tenneco Automotive Company Inc. (USA), a designer of exhaust systems for GM / ISUZU and Tenneco Inc group, listed in the New York Stock Exchange Entering into this transaction is considered as the disposition of assets as per Notification of the Capital Market Supervisory Board No. TorJor 20/2551 Re: Rules on Entering into Material Transactions Deemed as Acquisition or Disposition of Assets and the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets B.E. 2547 (“the Notification of the Acquisition or Disposition of Assets”), with the Consideration of 1.08% of total assets, calculating as per the consolidated financial statement of the Company for 12 months period ended 31 December 2010 audited by an auditor approved by the Securities and Exchange Commission (“SEC”). Thus the Company is not required to disclose such information to the Stock Exchange of Thailand (“SET”) or propose to the shareholders’ meeting for the approval. However, when calculating as per the consolidated financial statement of the Company for 9 months period ended 30 September 2010 Reviewed by an auditor approved by the SEC, the Consideration is 68.13% of net tangible assets (“NTA”) of the Company, which is higher than 50%. The transaction is considered as a class 1st transaction under the Notice of the Acquisition or Disposition of Assets.



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Thus the Company is required to propose such transaction to be approved by the shareholders’ meeting with not less than with the vote not less than ¾ of attended and eligible to vote excluding the shareholders who have conflict of interest and disclose the information of the transaction to the SET. Considering the Consideration is significant comparing with the NTA of the Company, which has decreased from positive value as of 30 September 2010 to negative value as of 31 December 2010, the BODs’ meeting of the Company No. 5/2011 held on 29 June 2011 passed a resolution to propose the Extraordinary General Meeting (“EGM”) of shareholders of the Company No. 1/2011, which will be held on 9 August 2011 to consider and approve this disposition of assets with not less than with the vote not less than ¾ of attended and eligible to vote excluding the shareholders who have conflict of interest and disclose the information of the transaction for the consideration. In this regards, YNP appointed Silom Advisory Co., Ltd. (“Silom Advisory” or “the Independent Financial Advisor” or “IFA”) as its independent financial advisor in order to provide the opinion to the shareholders on the reasonableness and fairness of the price and conditions of the disposition of assets. Silom Advisory provides the opinion based mainly on the truth and completeness of the information and documents received from the Company as well as the interview with the management of the Company. We have considered such information thoroughly and reasonably according to the professional standards. After studying all information and documents of the Company together with all other relevant information, Silom Advisory would like to summarize our opinion on the disposition of assets as follows:



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Contents

Conclusion of IFA’s opinions 5 1. General Characteristics of the Transaction 6

1.1 Objective and Reason of Entering the Transaction 6 1.2 Types and Values of Transactions 6 1.3 Parties and Relationships 7 1.4 Transaction Date 9 1.5 Conditions of entering the Transaction 9 1.6 Details of Assets to be Disposed 10

2. General Information of Yarnapund Public company Limited 13 2.1 Background 13 2.2 Nature of business 15 2.3 Revenue structure 15 2.4 List of Shareholders 15 2.5 List of company board of directors 16 2.6 Summary of important transactions in balance sheets and analysis of financial status and performance of the Company 16 2.7 Industry outlook 21

3. Rationale, Advantage, and Disadvantage and Benefits of the Transactions 22 3.1 Rationale of the Transaction 22 3.2 Advantage of the Transaction 22 3.3 Disadvantage of the Transaction 22 3.4 Risk of the Transaction 22 3.5 The appropriateness of the conditions of the transaction 23

4. Opinion of the Independent Financial Advisor on the Appropriateness of the Value of the Disposition of Assets 23 4.1 Appropriateness of Value of WETCO shares 24

4.1.1 Book Value Approach 24 4.1.2 Adjusted Book Value Approach 24 4.1.3 Market Value Approach 24 4.1.4 Price to Book Value Ratio Approach: P/BV Ratio 25 4.1.5 Price to Earnings Ratio Approach: P/E Ratio 26 4.1.6 Discounted Cash Flow Approach 26

4.2 Summary of IFA opinions regarding price appropriation for WETCO’s share price 33 Conclusion of IFA’s opinion 35



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Conclusion of IFA’s opinions

IFA has the opinion that the disposition of investment in ordinary shares of WETCO, its associated company, of 200,000 shares, accounting for 25.00% of total paid-up capital of WETCO with the par value of Baht 100.00 per share at the selling price of Baht 575.00 per share, totaling of Baht 115.00 million is appropriate in both rationale and necessity. This is because YNP is experiencing financial distress from the ongoing losses in the last 4 years, which is continuously pushing the shareholder’s equity to zero, at the same time as incurring liquidity problems from large amount of liabilities and debts from financial institutions as well as from other entities. Thus, the disposition of investment in WETCO will infuse Baht 115.00 million of cash flows into YNP for use as working capital. Moreover, the Company has liabilities under the sentence of court of Baht 225.42 million, which is currently in the process of court and negotiation with the related financial institutions for debt haircut. If the case is resolved and negotiation is successful, the Company may consider using the cash received from the disposition partially to repay such debts. Additionally, the net profit (as at 31 December 2011) of Baht 33.61million will be realized from the transaction (calculated from the income from the disposition of assets of Baht 115.00 million, with the Company’s investment in the equity method as at 31 December 2011 of Baht 81.39 million.) In addition, as WETCO is one of the Company’s customers, with the Company’s income from WETCO in 2009 and 2010 being Baht 113.94 million and Baht 186.80 million, accounting for 1.66% and 1.95% of sales and services income, respectively. After this transaction the Company will no longer be a shareholder and has no part in the management of WETCO. In addition, the Company must agree to terminate the joint venture, purchase agreements and all other related agreements between the Company and WETCO. Consequently, there is a risk that WETCO may consider hiring manufacturers other than the Company that offer lower prices or superior quality, which would deprive the Company of such earnings from WETCO. However, the joint venture agreement and other related agreements consider matters related to joint business operation with an emphasis that the Company, as a manufacturer, shall be capable of production for WETCO’s purchase orders, of which estimated quantity will be notified in advance to the Company. WETCO makes no guarantee as to the minimum quantities to be purchased and does not assure the Company of achieving any particular level of profits from the sale of parts to WETCO. In addition WETCO has the right to notify the Company to adjust the price down. Therefore, despite the termination of the agreement, the status of the Company will not change substantially and it does not mean that WETCO will discontinue its purchase with the Company, but only that the Company will change from the status of Tenneco’s joint venture to WETCO’s supplier. At present, WETCO still purchase from the Company and the income at risk accounts for only 2% of the Company’s sales income, which can be considered insignificant. IFA has an additional opinion that, to avoid the risk of reduced income from WETCO, the Company may negotiate with Tenneco, the purchaser, and the 100% shareholder of WETCO (after the transaction) to enter into a long-term contract with WETCO in order to maintain WETCO’s purchase with the Company. The price of WETCO’s ordinary shares which is Baht 575.00 per share and the conditions of payment are considered appropriate because the price is in an appropriate range evaluated by the IFA using discounted cash flow approach, which is currently between Baht 517.96 - 662.32 per share. The purchaser shall pay 10% of the Consideration or Baht 11.50 million to the Escrow Agent on the Signing Date, 9 August 2011, after the Extraordinary General Meeting no. 1/2011 approves the transaction, and a payment of whole amount will be made on the Completion Date, within 31 August 2011.

For to the aforementioned reasons, Silom Advisory as an IFA has the opinion that the shareholders of YNP should approve this transaction for the Company to sell its investment in ordinary shares of WESTCO, which is considered a disposition of assets. However, the final decision shall be at own discretionary of the shareholders. The shareholders should consider the information in the invitation to the Extraordinary General Meeting No.1/2011 and its attachments before making the decision.



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1. General Characteristics of the Transaction 1.1 Objective and Reason of Entering the Transaction In accordance to the Board of Directors (“BODs”) Meeting No. 5/2011 of Yarnapund Public Company Limited (“Company” or “YNP”), held on 29 June 2011 resolved to propose to the meeting of shareholders to approve the disposition of investment in ordinary shares of Walker Exhaust (Thailand) Company Limited (“WETCO”) of 200,000 shares, accounting for 25.00% of total paid-up capital of WETCO with the par value of Baht 100.00 per share at the selling price of Baht 575.00 per share, totaling of Baht 115.00 million to Tenneco Automotive (Thailand) Limited (“Tenneco”), the 75.00% shareholder of WETCO. The cash inflows from this transaction will be used as working capital. Moreover, the Company has liabilities under the sentence of court of Baht 225.42 million, which is currently in the process of court and negotiation with the related financial institutions for debt haircut. If the case is resolved and negotiation is successful, the Company may consider using the cash received from the disposition partially to repay such debts. Entering into this transaction is considered as the disposition of assets as per the Notification of the Acquisition or Disposition of Assets, with the Consideration of 1.08% of total assets, calculating as per the consolidated financial statement of the Company for 12 months period ended 31 December 2010 audited by an auditor approved by the SEC. Thus the Company is not required to disclose such information to the SET or propose to the shareholders’ meeting for the approval. However, when calculating as per the consolidated financial statement of the Company for 9 months period ended 30 September 2010 Reviewed by an auditor approved by the SEC, the Consideration is 68.13% of net tangible assets (“NTA”) of the Company, which is higher than 50%. The transaction is considered as a class 1st transaction under the Notice of the Acquisition or Disposition of Assets. Thus the Company is required to propose such transaction to be approved by the shareholders’ meeting with not less than with the vote not less than ¾ of attended and eligible to vote excluding the shareholders who have conflict of interest and disclose the information of the transaction to the SET. Considering the Consideration is significant comparing with the NTA of the Company, which has decreased from positive value as of 30 September 2010 to negative value as of 31 December 2010, the BODs’ meeting of the Company No. 5/2011 held on 29 June 2011 passed a resolution to propose the Extraordinary General Meeting (“EGM”) of shareholders of the Company No. 1/2011, which will be held on 9 August 2011 to consider and approve this disposition of assets with not less than with the vote not less than ¾ of attended and eligible to vote excluding the shareholders who have conflict of interest and disclose the information of the transaction for the consideration. 1.2 Types and Values of Transactions This transaction of the Company is the disposition of investment in ordinary shares of WETCO of 200,000 shares, accounting for 25.00% of total paid-up capital of WETCO with the par value of Baht 100.00 per share at the selling price of Baht 575.00 per share, totaling of Baht 115.00 million to Tenneco, the 75.00% shareholder of WETCO. Entering into this transaction is considered as the disposition of assets as per the Notification of the Acquisition or Disposition of Assets, with the Consideration of 1.08% of total assets, calculating as per the consolidated financial statement of the Company for 12 months period ended 31 December 2010 audited by an auditor approved by the SEC. However, since the Company had negative NTA and net loss for the 4 latest consecutive quarters, the NTA Criteria and Net Profit Criteria are not applicable. The Value of Consideration Criteria is the only criteria to be applied with the Consideration of 1.08% of total assets of the Company. Thus the Company is not required to disclose such information to the SET or propose to the shareholders’ meeting for the approval. However, when calculating as per the consolidated financial statement of the Company for 9 months period ended 30 September 2010 Reviewed by an auditor approved by the SEC, the Consideration is 68.13% of net tangible assets (“NTA”) of the Company, which is higher than 50%. The transaction is considered as a class 1st transaction under the Notice of the Acquisition or Disposition of Assets. Thus the Company is required to propose such transaction to be approved by the shareholders’ meeting with not less than with the vote not less than ¾ of attended and eligible to vote excluding the shareholders who have conflict of interest and disclose the information of the transaction to the SET.



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The details of the calculation are as follows:

Financial information YNP and WETCO

(Unit: Baht million) YNP 30 Sep 2010

YNP 31 Dec 2010

WETCO 31 Dec 2010

Total Assets 10,576.66 10,638.51 515.06

Intangible Asset 38.55 37.33 6.59

Total Liabilities 10,421.75 10,637.07 191.37

Minority Shareholders - - -

Net Tangible Asset (NTA) 116.37 (35.89) 317.10

NTA of WETCO for 25% shareholding by YNP 79.28

Net Profit for Equity holders of the Parent Company (4 latest consecutive quarters)

(1,439.40) (1,345.39) 122.87

Calculation of the Consideration

Calculation formula Value (%)

YNP 30 Sep 2010

YNP 31 Dec 2010

1. NTA Criteria NTA of WETCO for the disposition portion /

NTA of YNP

68.13% Cannot calculate since YNP has negative NTA

2. Net Profit Criteria

4-latest quarter net profit of WETCO / 4-latest quarter net

profit of YNP

Cannot calculate since YNP had

net loss *

Cannot calculate since YNP had net

loss**

3. Value of Consideration Criteria

Received Amount / Total Assets of YNP

1.09% 1.08%

4. Newly Issued Share Criteria

Newly Issued Shares for payment / Number of Paid-up

Shares of YNP

Not applicable since this

transaction is the disposition of

assets

Not applicable since this

transaction is the disposition

of assets Note: * Referred to the consolidated financial statement of the Company for Q4/2009 – Q3/2010 ** Referred to the consolidated financial statement of the Company for Q1/2010 – Q4/2010

Hence, the BODs’ meeting of the Company No. 5/2011 held on 29 June 2011 passed a resolution to propose the Extraordinary General Meeting (“EGM”) of shareholders of the Company No. 1/2011, which will be held on 9 August 2011 to consider and approve this disposition of assets with not less than with the vote not less than ¾ of attended and eligible to vote excluding the shareholders who have conflict of interest and disclose the information of the transaction for the consideration. 1.3 Parties and Relationships Seller : Yarnapund Plc.

Purchaser : Tenneco Automotive (Thailand) Limited (“Tenneco”), who has no relationships and/or connection with directors, managements, shareholders or authorized persons of the Company. However, Tenneco is the joint partner with YNP in WETCO by having 75.00% shareholding in WETCO.

Relating agreements can be summarized as follows Share Sale and Purchase Agreement between YNP and Tenneco Signing date Completion date

: :

After the EGM of shareholders of the Company No. 1/2011, which will be held on 9 August 2011 to consider and approve this Transaction Within 31 August 2011

Assets for sale and purchase

: Ordinary shares of WETCO totaling of 200,000 shares, accounting for 25.00% total paid-up shares of WETCO

Selling price : Baht 575.00 per share, with total value of Baht 115.00 million Deposit : Purchaser and Selling shall appoint Tilleke & Gibbins International Ltd. as

the Escrow Agent to hold the Deposit and all interest and other income earned thereon in escrow, and to release the Deposit and the Income only in accordance with the provisions of this Escrow Agreement. Promptly following the execution of this Agreement, the Purchaser shall pay 10% of the Consideration or Baht 11.50 million to the Escrow Account. Expenses



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for the services of the Escrow Agent shall be borne equally by the Seller and the Purchaser*.

Payment : Cash Completion Date : On the Completion Date, the Purchaser shall pay the Consideration of

Baht 115.00 million, less the Deposit of Baht 11.50 million to the Seller. The Seller shall instruct the Escrow Agent, by written notice signed by

both the Seller and the Purchaser to release the Deposit to the Seller, pursuant to the terms of the escrow agreement*.

Sale and Purchase of the sale shares

: The Seller shall arrange the BOD’s meeting and shareholders’ meeting to approve the transfer of the Sale Shares as contemplated in this Agreement.

Before or on the Completion Date, both parties agree to terminate the Joint Venture Agreement entered into on 5 February 2001, between YNP and Tenneco and all related agreements.

The Seller represents and warrants to the Purchaser that the performance by it of its obligations under this Agreement, and the consummation of the transactions contemplated in this Agreement will not violate or conflict with any provisions of law, the Company’s Memorandum and Articles of Association, or any agreement to which Seller is a party.

Within 2 years after the Completion Date, in the event the Seller breaches any provisions of this Agreement and/or any of the representations and warranties provided by the Seller in this Agreement are not true, are incorrect, or are falsified, the Purchaser shall have the right to require the Seller to purchase all or any portion of the Sale Shares from Purchaser at the Consideration price or the book value at the time Purchaser exercises the right (as determined by the Company’s auditor), whichever is higher. And the Seller shall make or cause payment to be made to the Purchaser within 30 days after such notice is dispatched.

If (i) the Seller breaches the Share Sale and Purchase Agreement, (ii) Completion has not occurred by August 9, 2011 through no fault of the Purchaser, or (iii) the Seller’s Board of Directors and/or its shareholders (as applicable) fail to approve the transactions contemplated by the Share Sale and Purchase Agreement, the Purchaser shall instruct the Escrow Agent, by written notice signed by both Seller and Purchaser, to initiate the telegraphic transfer of the Deposit to the Purchaser. *

If the Purchaser breaches the Share Sale and Purchase Agreement or unable to conduct the purchase, , the Seller shall instruct the Escrow Agent, by written notice signed by both Seller and Purchaser, to initiate the telegraphic transfer of the Deposit to the Seller. *

The Seller shall be responsible for and shall pay any and all applicable national/federal, state/provincial, and local withholding taxes, stamp duty, and other taxes, levies, imposts, duties, charges, fees, and deductions, hereafter imposed, levied, collected, required to be withheld, and/or assessed by any foreign or domestic governmental authority, arising under or in connection with this Agreement and the actions contemplated herein.

Each Party shall bear its own legal and other costs and expenses incurred in connection with the preparation of this Agreement.

Note: * Content in the Escrow Agreement

Joint Venture Agreement between YNP and Tenneco Parties : YNP and Tenneco Signing Date : 5 February 2001 Objective : To engage in the assembly of exhaust systems for sale to Isuzu through

establishment of Walker Exhaust (Thailand) Company Limited (“WETCO”) Proportion of shareholding

: Tenneco 75% and YNP 25% of total paid-up shares of WETCO

Directors : 6 directors of WETCO are to be appointed, 4 of which by Tenneco 4 and 2by YNP

Termination Termination of contract occurs: 1. if the parties agree in written notice to terminate the Joint Venture



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Agreement 2. if one of the parties: Does not achieve the commitments set forth in this agreement for the

period of 90 days due to unexpected events. Is in the event of bankruptcy Breaches a material provision of this agreement or such parts

supplement and such breach remains uncured for 90 days after notice of such breach.

Supply Agreement (Pursuant to the Joint Venture Agreement) Parties : YNP and WETCO Signing Date : 31 July 2001 Objective : To agree that the Purchaser will purchase from the Seller and the Seller will

sell to the Purchaser certain parts and components at quantities and prices specified in the Agreement.

Purchase : The Company shall be capable for production for WETCO’s purchase orders. All cost savings will be shared equally by the Company and WETCO.

WETCO does not make any guarantee as to the minimum quantities to be purchased and profits from the sale of parts to WETCO

Selling prices shall be as mutually agreed by both parties. Termination : WETCO may terminate this agreement:

If YNP breaches a material provision of this agreement of such parts supplements and such breach remained uncured for 10 days after notice of such breach.

If YNP is in the event of bankruptcy If YNP does not achieve the cost savings commitments set forth in this

Agreement or such Parts Supplements If YNP performance is delayed for the period in excess of 1 month If the joint venture agreement is terminated

1.4 Transaction Date Contract signing will occur after the EGM of shareholders of the Company No. 1/2011, which will be held on 9 August 2011 to consider and approve the disposition of investment in ordinary shares of WETCO to Tenneco, and the transaction will be completed within 31 August 2011.

1.5 Conditions of entering the Transaction After shareholders’ meeting has approved the transaction with not less than ¾ of attended and eligible to vote excluding the shareholders who have conflict of interest and disclose the information of the transaction. The Company will hold the EGM of shareholders of the Company No. 1/2011 on 9 August 2011 to consider and approve such Transaction. In this regards, Mr. Buco Seng Hiang Lorence, a shareholder of the Company, who is also the director and shareholder of Tenneco, is not eligible to vote due to the conflict of interest.



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1.6 Details of Assets to be Disposed

1) Walker Exhaust (Thailand) Company Limited (WETCO)

Type of business Manufacturer of exhaust systems for cars and trucks, which owned by the Company and Tenneco of 25% and 75% of its total paid-up capital, respectively, since 2001. Its major customers are GM, Isuzu and Honda, etc.

Head office 700/701-702,700/757, Moo 1, Panthong Sub-district, Panthong District, Chonburi

Registered and paid-up Baht 80.00 million Capital Par value Baht 100.00 per share

2) Shareholder of WETCO as of 20 June 2011

Name No. of share (shares)

%

1. Tenneco Automotive (Thailand) Limited * 600,000 75.00%

2. Yarnapund Public Company Limited 200,000 25.00%

Total 800,000 100.00% Notes: 100% of shares are held by Tenneco Automotive Company Inc, USA, which is a member of Tenneco Inc (TEN)

group, listed in the New York Stock Exchange, is not a connected person and does not have a conflict of interest with the Company

3) Board of Directors of WETCO as of 20 June 2011

Name Position

1. Mr. Buko Seng Hiang Laurent Director

2. Mr. Hari Nerayan Nair Director

3. Mr. Odor Weh Bonnor Director

4. Mr. Samphan Phanpanit Director

5. Mr. Prits Phanpanit Director

4) Summary of operating and financial highlights of WETCO

2008 2009 2010

Balance Sheets Assets Cash and deposits at financial institutions 131.20 22.26 76.35

Trade accounts receivables 123.42 114.17 208.45

Inventories 55.60 50.78 64.79

Total Current Assets 324.36 217.50 359.21

Plant and equipment 74.76 103.84 142.72

Total Non-Current Assets 79.60 114.35 155.85

Total Assets 403.96 331.76 515.06

Liabilities Trade accounts payables 80.86 57.78 101.21

Trade accounts payables – related parties 57.32 54.10 63.01

Total Liabilities 169.63 130.94 191.37

Equity Registered and paid-up share capital 80.00 80.00 80.00

Statutory reserve 10.00 10.00 10.00

Unappropriated retained earnings 144.32 110.81 233.69

Total Equity 234.32 200.81 323.69

Statements of income Sales income 813.66 442.44 993.53

Other income 5.53 12.21 16.50

Total Revenues 819.19 456.50 1,010.03

Cost of sales 636.12 365.76 776.67

Selling and administrative expenses 50.58 70.90 102.87

Total Expenses 692.47 458.01 882.62

Income before income tax 126.72 (1.51) 127.41

Net Income 88.87 (1.51) 122.87



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2008 2009 2010

Statements of cash flows Cash flows from operating activities 82.43 (37.23) 119.35

Cash flows from investing activities (18.91) (39.71) (65.35)

Cash flows from financing activities (80.00) (32.00) 0.00

Cash and equivalents (decrease) (16.48) (108.94) 54.00

Financial ratios

Gross profit margin (%) 21.82% 15.87% 21.82%

Net profit margin (%) 10.85% -0.33% 12.16%

Debt to equity (%) 72.39% 65.20% 59.12%

Return on asset (%) 21.19% -0.41% 29.01%

Return on equity (%) 38.66% -0.69% 46.84%

Analysis of financial status and performance of WETCO Sales income

The majority of WETCO’s sales income is from the production and sales of automotive parts and exhaust systems. In 2009, the Company’s sales income was Baht 442.44 million, Baht 371.22 or 45.62% decrease from the same income in 2008, which was Baht 813.66 million. This is because of the global economic crisis that affected automotive industry globally, causing the number of purchase orders to decline substantially.

In 2010 the Company’s sales income were Baht 993.53 million, Baht 551.09 or 124.56% increase from 2009 due to the recovery of economy and global automotive industry, resulting in customers start purchasing again to make up for the pause in 2009

Cost of sales

In 2009, the Company’s cost of sales was Baht 365.76 million, Baht 270.36 million or 42.50% decrease from the cost in 2008, which was Baht 636.12 million, because of the drop in production due to less purchase orders during the economic crisis. In 2009, cost of sales was 82.67% of sales income, higher than 2008 where the cost was 78.18% of sales income, as a result of dropped production which caused fixed costs to increase in proportion.

In 2010, the Company’s cost of sales was Baht 776.67 million, Baht 410.91 million or 112.34% rise from 2009 because of the increased sales that led to increased production. The ratio of cost of sales to sales income was 78.18%, less than in 2009, corresponded to the increased income.

Selling and administrative expenses

In 2009, the Company’s selling and administrative expenses were Baht 70.90 million, Baht 20.32 million or 40.17% increase from 2008, where the expenses were Baht 50.58 million. The increase mainly resulted from the increase in administrative expenses of Baht 13.29 million or 30.30% from 2008 due to employee expenses that grew with the number of employees and increase in employee salaries and benefits of approximately 5-6% per year.

In 2010, the Company’s selling and administrative expenses were Baht 102.87 million, Baht 38.44 million or 59.67% increase from 2009 due to the increase in selling expenses of Baht 18.94 million or 261.60% as sales rose and the increase in administrative expenses of Baht 19.51 million or 34.11% from 2009 due to employee expenses that grew with the number of employees and increase in employee salaries and benefits of approximately 5 - 6% per year.

Net profit (loss)

In 2009 the Company experienced a loss of Baht 1.51 million, Baht 90.37 million or 101.70% decrease from 2008 of which net profit was Baht 88.87 million due to the effect of economic crisis which resulted in less purchase orders, as mentioned.



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In 2010 the Company had a net profit of Baht 122.874 million, Baht 128.92 million or 8,548.87% increase from that of 2009 due to the recovery of automotive industry. Assets At the end of 2009 the Company’s total assets were Baht 331.76 million, Baht 72.20 million or 17.87% decrease from at the end of 2008. This is attributed to the cash outflow of Baht 108.94 million for the payments of dividends and acquisitions of permanent assets as well as a decrease in trade accounts receivable as sales dropped.

At the end of 2010 the Company’s total assets were Baht 515.06 million, Baht 183.30 million or 55.25% increase from the end of 2009. This is attributed to the cash inflow and trade accounts receivable of Baht 54.09 million and Baht 94.28 million, respectively, resulting from improved sales and an increase in permanent assets of Baht 38.87 million to accommodate the Company’s increased production.

Liabilities

At the end of 2009 the Company’s total liabilities were Baht 130.94 million, Baht 38.69 million or 22.81% decrease from the end of 2008. This is attributed to a decrease in other payables and trade accounts payable – related parties of Baht 23.08 million and Baht 3.22 million, respectively, as a result of reduced production during economic crisis.

At the end of 2010 the Company’s total liabilities were Baht 191.37 million, Baht 60.43 million or 46.51% increase from the end of 2009. This is attributed to an increase in other payables and trade account payables – related parties of Baht 43.43 million and Baht 8.91 million, respectively, due to increased production resulting from the recovering economy.

Shareholder’s Equity

At the end of 2009 the Company’s equity was Baht 200.81 million, Baht 33.51 million or 14.30% decrease from the end of 2008 where equity was Baht 234.32 million, due to some minor losses and dividend payments of Baht 32 million.

At the end of 2010 the Company’s equity was Baht 323.69 million, Baht 122.88 million or 61.19% increase from the end of 2009 due to the Company’s net profit, as mentioned.

Liquidity

In 2009 the Company’s total cash flows decreased by Baht 108.94 million, resulting from the cash flows used in operating activities of Baht 37.23 million, cash flows used in investing activities of Baht 39.71 million for acquisitions of assets, and cash flows used in financing activities of Baht 32 million for dividend payments.

In 2010 the Company’s total cash flows increased by Baht 54.00 million, resulting from the cash flows from operating activities of Baht 119.35 million, aligning with the improved performance, with Baht 65.35 million of cash flows used investing activities for acquisitions of permanent assets.

5) Industry Outlook

Performance summary of automotive and spare parts industry in 2010

Following the recovery of financial crisis in the US, Thai automotive industry started to see some improvements after the ASEAN free trade agreement was made, which resulted in no trade tariffs between the original six member countries from the beginning of 2010 onwards. Consequently, a number of automotive manufactures moved their production bases to Thailand as well as expanded their production capacity in the country, with anticipation for Thailand to become the largest automotive production base in ASEAN, supplying both domestically and internationally.

With the aforementioned direction of automotive industry, Thailand’s domestic production for 2010 was highest in history, at 1.6 million units, which was rapidly expanding at 64.6% from the



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previous year for which the figure was 1.0 million units. This has pushed up the domestic demand for automobile parts. In addition, the global automotive industry has also recovered in 2010, enabling Thai exports of automotive parts to increase to approximately Baht 179,350.24 million, expanding at 40% from Baht 128,143.63 million of the previous year. At the same time, several automotive manufacturers have invested to expand their production bases in Thailand, which will also increase the country’s strength in automotive industry for the future.

Forecast of automotive and spare parts industry for 2011 Originally the forecast suggested improvements in automotive and spare parts industry, but for the effect of recent Tsunami in Japan - the world’s important automotive manufacturer - the industry is slowed down. Initially it is estimated that in 2011 income for automotive parts manufacturers will decrease by approximately Baht 105,000 million or 70% of target production for this year. The figures are estimated from the total production in Q1/2011 where production is expected to increase by approximately 6%. In Q2/2011 the production is expected to be approximately minus 40% as a result of the Tsunami, which will also affect Q3/2011 where the production is expected to be approximately minus 25%. Anticipation is for the production to come back to approximately positive 6% in Q4/2011 after Japan comes back on top of its situations in automotive industry.

In the case that everything turns out to be as anticipated, it is estimated that in 2011 automotive industry’s growth rate will be minus 13% or 1.5 million units produced per year. With the initial target of 1.8 units per year, the estimated production will be 300,000 units below target as opposed to 2010, where 1.6 million cars were produced (source: Automotive Industry Club, the Federation of Thai Industries)

2. General Information of Yarnapund Public company Limited

2.1 Background

Yarnapund Public company Limited (“YNP” or “the Company”) was founded on 21 April 1952 with initial registered capital of Baht 2.5 million by the Phanpanit family, initially to manufacture and sell press parts. The Company had a factory located in Soi Sukhumvit 81, Bangkok where it produced spare parts for large pick-up trucks. Once successful and widely accepted, the Company expanded its production lines to supply other parts domestically.

In 2001, the Company formed a joint venture with Tenneco Inc (USA), which designs exhaust systems for GM / ISUZU group, to establish Walker Exhaust (Thailand) Co., Ltd. – WETCO in Bangplee, Samutrprakarn to engage in the assembly of exhaust systems for GM / ISUZU 1-ton pick-up trucks. At present, YNP holds 25% of the registered capital. Subsequently, the Company expanded its customer base to other automobile manufacturers, which results in increased purchase orders and production.

In the same year, the Company’s major shareholders founded YNP Engineering Company Limited. (YNPE), which was initially the Company’s sub-business unit, and set up a factory located in Bangplee, Samutrprakarn for the design and production of tooling such as die, jig, checking fixture and equipment, in order for the group to be able to operate a more comprehensive manufacturing business.

In 2002, the Company’s major shareholders founded Yarnapund International Company Limited (YNPI), which was initially the Company’s sub-business unit that operated REM: Replacement Equipment Manufacturing business. YNPI later on expanded its production lines to other related businesses such as motorcycles and electrical appliances.

The Company had increased its capital for several times in order to expand its business and to invest in the subsidiaries. In 2005, the Company was registered in the Stock Exchange of Thailand (SET). Currently the Company’s registered capital is Baht 16,000 million; consisting of 16,000 million ordinary shares, with Par value Baht 1 per share.



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YNP’s corporate structure

Notes: YNP = Yarnapund Public Company Limited

YNPE = YNP Engineering Company Limited YNPI = Yarnapund International Company Limited

WETCO= Walker Exhaust (Thailand) Company Limited YNPD = Yarnapund Daiso (Thailand) Company Limited YSP = YS Pund Company Limited RMR = Rachamongkol Rice Company Limited

Yarnapund International Company Limited (“YNPI”) YNPI is YNP’s subsidiary which was once the Company’s sub-business. Currently YNPI’s registered capital is Baht 240 Million. YNPI supplies replacement equipment to more than 40 automotive parts retailers across the country. Additionally, YNPI also operates manufactures REM: Replacement Equipment Manufacturing business to support demand of automotive manufacturers for the next 10 years after the OEM period ends in 4-7 years, in accordance with agreements between the parent company YNP and the automotive manufacturers. Main products of YNPI are:

Exhaust system components Other components such as door hinges, cross member frames, bracket engine, various

types of press parts, etc.

YS Pund Company Limited (“YSP”) YSP is a joint venture of YNP and Sango Co., Ltd, the Japanese designer, developer and owner of the patented drawings of exhaust system parts for TOYOTA. YSP supplies large automobile parts, exhaust systems and metal pipes. YNP purchases exhaust system components and medium to small press parts from YNP to assemble with the pieces manufactured by YSP. The finished products are then supplied to TOYOTA. Currently YSP’s registered capital is Baht 1,414 million. In 2009 the Company sold the majority of its investment in YSP, resulting in YNP holding only 9.55% of the shares, while Sango Co., Ltd holds 84.94% and Sumitomo Corporation Company Limited holds 5.03% and Sumi-Thai International Company Limited holds 0.48%. Exhaust (Thailand) Company Limited (“WETCO”) WETCO is a joint venture of YNP and Tenneco, purchasing exhaust parts from YNP to assemble and sole for ISUZU / GM. Currently WETCO’s total paid-up capital is Baht 80 million. The Company holds 25% of the shares, while Tenneco, a designer, developer and owner of the patented drawings of exhaust system parts for ISUZU / GM holds 75% of the shares.

YNP

WETCO

YNPI YNPE

YNPD

99.99%

99.99%

25.00% 30.00%

9.54%

YSP RMR

2.00%



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2.2 Nature of business The Company and subsidiaries operate a business of manufacturing and supplying press parts for automobiles and die for automobile manufacturing. At present, YNP group provides comprehensive services with the following business outline:

1. Press parts for automotive and other industries The Company’s products are wide-ranging, with an emphasis on automotive industry.

Products are categorized into 3 groups: (1) Complete exhaust system sets / components for passenger cars and 1-ton pickup trucks

sole for every TOYOTA model, and complete exhaust system sets / components for 10-wheel pickup trucks sole for HINO and Nissan

(2) Accelerator ,Brake ,Clutch Pedal: ABC for passenger cars and 1-ton pickup trucks (3) Press Parts for automobiles, electrical appliances, agricultural machineries and more

than 1,700 of other types of press parts

2. Tooling The Company’s subsidiary YNPE, with Baht 300 million paid-up capital, was the Company’s sub-business unit that operates the business of designing and manufacturing of tooling such as die, jig, checking fixture and equipment for press parts manufacturing. YNPE produces tooling primarily for YNP and secondarily for other manufacturers if there is enough surplus manufacturing capacity.

3. Electron Deposit Painting

Yarnapund Daiso (Thailand) Company Limited (“YNPD”) is a joint venture of the Company and Daiso Industries (Japan) Company Limited for operation of EDP: Electron Deposit Painting business, with registered paid-up capital of Baht 20 million. The Company holds 30% of the shares while Daiso Industries (Japan) Company Limited, an EDP specialist and a manufacturer of die and press parts sole for Honda, holds 70% of the shares.

2.3 Revenue structure Revenue categorized according to product types are as follows

Product 2008 2009 2010

% % %

1) Press parts for automotive and other industries 95.28 96.96 98.06

2) Tooling 0.64 0.89 0.56

3) Others 4.08 2.15 1.38

Total 100.00 100.00 100.00

Source: The Company

2.4 List of Shareholders as at May 30, 2011

Name Number of shares Percentage

1. Mrs. Jamlong Phanpanit 313,183,860 19.57%

Mr. Samphan Phanpanit 49,934,780 3.12%

Mr. Palits Phanpanit 49,300,270 3.08%

Mrs. Ornzalochaya Bunnag 27,283,995 1.71%

Ms.Pilaiphan Lattanan 16,476,060 1.03%

Mrs. Amornrat Angkhasekvilai 11,822,125 0.74%

Mr. Kittipatr Phanpanit 11,385,000 0.71%

Ms. Acharaporn Phanpanit 8,591,000 0.54%

Mrs. Pornchit Phanpanit 8,577,195 0.54%

Mrs. Amporn Nilpirom 6,752,695 0.42%

Ms. Wanthana Phanpanit 400,000 0.03%

Ms. Keawkarn Phanpanit 385,000 0.02%

Total 504,091,980 31.51%

2. Mr. Charn Lertprasertkarn 239,074,760 14.94%

3. Mr. Amnuay Pichitpongchai 79,917,600 4.99%

Ms. Thanwarat Pichitpongchai 5,420,000 0.34%

Mrs. LinChong Pichitpongchai 1,500,000 0.09%

Ms. Nisanart Pichitpongchai 1,000,000 0.06%

Mr Ratchapol Pichitpongchai 500,000 0.03%



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Name Number of shares Percentage

Total 88,337,600 5.52%

4. Mr. Kampol Koslanant 43,959,010 2.75%

5. Mr. Prinn Chirathivat 19,934,600 1.25%

Ms. Suvimol Chirathivat 2,000,000 0.13%

Ms. Jirarath Chirathivat 650,000 0.04%

Ms. Netanong Chirathivat 500,000 0.03%

Mrs. Vanida Chirathivat 500,000 0.03%

Mr. Pichai Chirathivat 400,200 0.03%

M.L. Saralee Kitiyakorn Chirathivat 37,500 0.00%

Total 24,022,300 1.50%

6. Mr. Thawatchai Karnananthavong 20,651,700 1.29%

7. Mr. Charn Watthanakul 16,000,000 1.00%

Mr. Watthanai Watthanakul 2,500,000 0.16%

Mrs. Pranee Watthanakul 365,000 0.02%

Total 18,865,000 1.18%

8. Mrs. Kamolrath Sangchaipoom 15,714,700 0.98%

9. Thai NVDR Company Limited 13,892,400 0.87%

10. Mr. Bunchuay Tangwatthanasirikul 12,850,000 0.80%

Total for the first 10 major shareholders 981,459,450 61.34%

2.5 List of company board of directors as at June 9, 2011

Name Position

1. Mr. Samphan Phanpanit Chairman and President of Board Director

2. Mr. Palits Phanpanit Managing Director

3. Mrs. Ornzalochaya Bunnag Director

4. Mrs. Amporn Nilpirom Director

5. Mrs. Amornrat Angkhasekvilai Director

6. Mrs. Pornchit Phanpanit Director

7. Mr Kiang Bunperm Director

8. Lt. Gen. Trirat Pinmanee Independent Director and President of Audit Committee

9. Po.l Maj. Gen. Wanchai Witsuttinan Independent Director and Audit Committee

10. Ms Kanya Busyarasamee Independent Director and Audit Committee

11. Mr. Piyaporn Limchaaroen Audit Committee

2.6 Summary of important transactions in balance sheets and analysis of financial status and performance of the Company

The Company’s balance sheets for the 12 months ended 31 December 2010 were the balance sheets on which the certified auditor is not able to express opinions, as indicated in the auditor’s report.

Balance sheet

Unit: Baht million As at Dec 31, 08 As at Dec 31, 09 As at Dec 31, 10

(Audited) (Audited) (Audited)

Assets

Cash and equivalents 245.69 309.98 134.92

Trade accounts receivable, net 2,238.14 1,620.63 1,809.73

Inventories, net 1,478.93 883.01 609.00

Other current assets 239.22 195.92 312.83

Total Current Assets 4,201.99 3,009.54 2,866.48

Investments in subsidiary companies, net 928.91 78.30 121.51

Investment in general companies - 386.30 386.30

Property, plant and equipment, net 8,387.88 7,255.97 6,680.51

Land not used for operation, net 50.94 551.31 495.08

Intangible assets 41.11 43.57 37.33

Other non-current assets 24.09 31.43 41.39



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Unit: Baht million As at Dec 31, 08 As at Dec 31, 09 As at Dec 31, 10


Total Non-current Assets 9,445.08 8,358.22 7,772.03

TOTAL ASSETS 13,647.07 11,367.76 10,638.51

Liabilities and equity

Liability that due for repayment 53.04 4,168.57

Liability under the sentence of the Court

- - 225.42

Bank overdrafts and short-term loans from

2,973.12 2,532.29 531.85

Trade accounts payable 2,793.99 3,125.59 3,322.52

Other payables 50.77 36.44 81.74

Current portion of long-term loans 454.45 657.16 200.71

Loan from director - - 57.90

Accrued expenses 29.06 18.68 35.14

Other current liabilities 26.72 42.02 79.81

Total Current Liabilities 6,328.10 6,465.22 8,703.66

Long-term loans from financial institutions, net

4,116.66 3,693.42 1,933.12

Total Non-Current Liabilities 4,116.94

3,693.71

1,933.41

TOTAL LIABILITIES 10,445.05 10,158.94 10,637.07

Issued and paid-up share capital 1,600.00 1,600.00 1,600.00

Surplus from ordinary share value and capital surplus

1,591.00 1,606.00 1,744.01

Retained earnings

Legal reserve 39.82 39.82 39.82

Unappropriated (28.80) (2,037.00) (3,382.40)

Total Shareholders' Equity 3,202.02 1,208.82 1.44

Total Liabilities and Shareholders' Equity

13,647.07 11,367.76 10.638.51



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Income Statements

Unit: Baht million 2008 2009 2010


Sales of goods and services 9,407.32 6,848.52 9,555.81 Gain from disposal of investment in associated company - 218.14 - Gain on reversal of allowance for doubtful account - - 158.24 Gain on discount sale contract for account receivable - - 26.85 Gain on reversal of allowance for impairment of investment - - - Dividend income - - 11.29 Other income 40.82 21.74 9.49

Profit (loss) before expenses 9,448.14 7,088.40 9,761.67

Cost of sales and services 9,124.57 8,014.18 (10,144.05)

Gross profit 282.74 (1,165.67) (588.25)

Selling and administrative expenses 319.40 269.93 350.63 Doubtful debt 33.46 341.06 - Loss from land revaluation 34.94 43.82 91.80

Profit before share of net profit in investment from disposition of investment (64.24) (1,580.59) (824.81)

Profit from disposition of investment 0.00 218.14 0.00 Share of net profit in investment 259.26 19.29 43.20 Finance costs (430.15) (459.60) (563.79) Income tax (5.88) 0.00 0.00

Net profit (loss) (241.00) (2,020.91) (1,345.40)

Cash Flows Statements

Unit: Baht million 2008 2009 2010


CASH FLOWS FROM OPERATING ACTIVITIES

945.81 741.48 404.61

CASH FLOWS FROM INVESTING ACTIVITIES

(899.39) 386.54 (258.85)

CASH FLOWS FROM FINANCING ACTIVITIES

(152.46) (1,063.72) (320.82)

NET INCREASE (DECREASE) (106.03) 64.30 (175.06)

Financial ratios

Unit: Percentage 2008 2009 2010

Gross profit margin (%) 3.01% -17.02% -6.16%

Net profit margin (%) -2.55% -28.51% -13.78%

Debt to equity (%) N/A* N/A* N/A*

Return on asset (%) -1.89% -16.16% -12.23%

Return on equity (%) N/A* N/A* N/A*

Notes: * unable to calculate because Equity is less than zero

Analysis of financial status and performance of the Company (YNP and Subsidiaries)

Income Most of the Company’s income is from producing and supplying of automobile parts and die for automobile manufacturing. In 2009 The Company’s total income was Baht 7,088.40 million, Baht 2,359.74 million or 24.98% decrease from 2008, where the same income was Baht 9,448.14 million, consisting of income from sales and services of Baht 6,848.52 million, Baht 2,558.80 million or 27.20% decrease from 2008, where the income from sales and services was Baht 9,407.32 million. This is because of the reduced production due to the economy that was slowed down, during which the Company ceased production of some products to accommodate customers’ purchase orders. In addition, in 2009 the Company profited Baht 218.14 million from the disposition of investments in YS Pund Company Limited (YSP), The Company’s joint venture, resulting in the Company’s shareholding in YSP decreasing from 20.24% to 9.54%

In 2010, The Company’s total income was Baht 9,761.67 million, Baht 2,673.27 million or 37.71% increase from 2009. The income consisted of income from sales and services of Baht 9,555.81, Baht 2,707.29 million or 39.53% increase from 2009 due to the recovery in



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economy and global automotive industry, which increased the number of purchase orders in 2010. In addition, the Company gained Baht 158.24 million from reversal of allowance for doubtful accounts, which did not occur in 2009 because accrued receivables had been repaid.

Cost of sales

In 2009 the Company’s cost of sales and services was Baht 8,014.18 million, Baht 1,110.39 million or 12.17% decrease from 2008, where the cost was Baht 9,124.57 million, due to decrease in number of purchase orders as a result of the economic crisis. In 2009, cost of sales were 117.20% of income from sales and services, which was an increase from 2008, where the proportion was 96.99% of income from sales and services, due to the drop in production which caused fixed costs to increase in proportion.

In 2010 The Company’s cost of sales was Baht 10,144.05 million, Baht 2,129.87 million or 26.58% increase from 2009 because of the increased sales which resulted in increased production. The cost of sales was 106.16% of sales income, which was a decrease from 2009, corresponded to the increased sales.


In 2009 the Company’s selling and administrative expenses were Baht 269.93 million, Baht 49.47 million or 15.49% decrease from 2008, where the expenses were Baht 319.40 million. This was due to a decrease of Baht 21.56 million in selling expenses, Baht 28.78 million in administrative expenses, and Baht 0.87 million in management benefit expenses. The value of doubtful accounts in 2009 was Baht 341.06 million, Baht 307.60 million or 919.31% increase from 2008, for which the value was Baht 33.5 million, due to a number of debtors failing to repay.

In 2010 the Company’s selling and administrative expenses were Baht 350.63 million, Baht 80.70 million or 29.90% increase from 2009, due to an increase of Baht 8.39 million in selling expenses, Baht 68.63 million in administrative expenses and Baht 3.67 million in management benefit expenses as a result of improved income aligning with the overall economy.

Net profit (loss)

In 2009 the Company’s net loss was Baht 2,020.90 million. The loss increased by Baht 1,779.91 million or 738.55 % from 2009, of which net loss was Baht 241.00 million. This was due to the economic crisis and reduced purchase orders, as mentioned.

In 2010, the Company’s net loss was Baht 1,345.40 million. The loss decreased by Baht 675.51 million or 33.43% from 2009, due to the recovering economy and the automotive industry. In the case that shareholders approve the disposition of investment in ordinary shares of WETCO, the Company’s share of profit according to the equity method will decrease. During 2006 -2010, the Company’s share of profit according to the equity method was approximately Baht 18-30 million (not including the years that WETCO incurred net losses).

Assets At the end of 2009, the Company’s total assets were Baht 11,367.76 million, Baht 2,279.31 million or 16.70% decrease from at the end of 2008, of which value was 13,647.07, mainly due to a decrease in land, buildings and equipment of Baht 1,131.91 million resulting from sales of machinery and factory equipment, a decrease in trade accounts receivable of Baht 617.51 million, and a decrease in inventories of Baht 595.92 million, due to declined sales and reduced investment in a subsidiary (YSP) of Baht 850.61 million.

At the end of 2010, the Company’s total assets were baht 10,638.51 million, Baht 729.25 million or 6.42 decrease from 2009, mainly because of a decrease in land, buildings and equipment of Baht 575.46 million from depreciation and a decrease in inventories of Baht 274.01 million and a decrease in cash of Baht 175.06 million.

Liabilities

At the end of 2009, the Company’s total liabilities were Baht 10,158.94, Baht 286.11 million or 2.74% decrease from 2008, where total liabilities were Baht 10,445.05 million, the



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decrease consisted of a decrease in bank overdrafts and short-term loans from financial institutions of Baht 440.83 million and Baht 423.24 million, respectively, due to the Company’s repayments of these liabilities.

At the end of 2010, the Company’s total liabilities were Baht 10,637.07 million, Baht 478.13 million or 4.71% increase from at the end of 2009, consisting of an increase in liabilities due for repayment of Baht 4,115.53 million, which is a categorization in short-term loan and long-term loan accounts, resulting in bank overdraft and short-term loans from financial institutions, current part of long-term loans and long-term loans decreased in value by Baht 2,000.44 million, Baht 448.15 million, and Baht 1,760.30 million, respectively. In addition, the Company’s trade accounts payable increased by Baht 196.93 million and liabilities under the sentence of court from a number of lawsuits increased by Baht 225.42 million

Shareholder’s Equity

At the end of 2009, the Company’s total equity was Baht 1,208.82 million, Baht 1,993.20 million or 62.25% decrease from at the end of 2008, where the equity was Baht 3,202.02 million, due to the Company incurred net loss in 2009

At the end of 2010 the Company’s total equity was Baht 1.44 million, Baht 1,207.38 million or 99.98% from at the end of 2009, due to the Company continuously incurring losses in 2010. As the equity continues to decline substantially, it is projected that in 2011, the Company may have net loss which will results in equity falling below zero, and may face the conditions called for delisting from the SET.

Liquidity

In 2009, the Company’s net cash increased by Baht 64.30 million, attributed to Baht 741.48 million of cash inflows from operating activities, mainly from an increase in trade accounts payables, Baht 386.54 million of cash inflows from investing activities from the disposition of investment in a subsidiary (YSP), and Baht 1,063.72 million of cash outflows used in financing activities of for repayments of loans and interests.

In 2010, the Company’s net cash decreased by Baht 175.06 million, attributed to Baht 258.85 million of cash outflows used in investing activities for acquisition of assets and Baht 320.82 million of cash outflows used in financing activities for repayments of loans and interests. However, the Company received Baht 404.61 million of cash inflows from operating activities from a decrease in trade accounts receivables as some customers settled their accounts. The company is experiencing liquidity problems from the ongoing losses in the past and liabilities due for payments of Baht 4,168.57 million, for which the Company is in the process of negotiation for extension of payment period with a number of banks and financial institutions. In addition, the Company has liabilities under the sentence of court of Baht 225.42 million, for which the Company has appealed for extension in trial and now in the process of court of appeals. Moreover, the certified auditor is unable to express opinion on the financial statement of Yarnapund Plc. for 12 months period ended 31 December 2010 as the reasons stated in the financial statement, with major points as summarized below:

1. The auditor could not perform any other audit procedure to satisfy as to the quantities

and the movements of inventories.

2. The Company recorded rewards compensation to employees in December 2010 totaling amount of Baht 78.42 million as assets instead of expenses according to the generally accepted accounting standard. Therefore, the awards compensation is recorded as expenses, it will incur an additional loss of Baht 78.42 million (Baht 0.03 per share) and assets as well as equity may decrease by Baht 78.42 million.

3. In 2010 the Company had reversed the allowance for impairment of investment in a subsidiary company, the Company opined that such subsidiary will have better results of operations as compared to prior year and shall generate its cash inflow in the future, for the whole amount with reference to the appraised value of such subsidiary company’s



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shares appraised by an independent financial l advisor based on the present value of cash flows from the cash flows that the subsidiary company expected to receive from its future operations. However, such subsidiary company had contingent liabilities as a guarantor of the Company’s debts at amount of Baht 3,025 million and the effects to the financial statements could not presently be determined.

4. The Company has not been able to determine the adequacy of the allowance for doubtful

accounts receivable and loans to a subsidiary company to comply with the generally accepted accounting standard. The effects of this to the financial statements could not presently be determined.

5. The Company recorded the value of land based on the market value amount appraised

by independent appraiser as the appraised value was lower than cost. However, the Company’s creditor financial institution is in the process of appraisal of such land and building. Not assured of the accuracy of the appraisal, the Company considers to consult the Professional Association of Appraisal Assets to determine the appropriateness of the valuation method whether it appraised the market value of land or not. Therefore the appropriateness of the market value of land could not been determined yet.

6. The auditor could not perform any other audit procedure to satisfy as to the quantities

and the movements of inventories of a subsidiary company. This is due to the subsidiary company had the physical inventory checking plan agreed by the auditor but he cannot conclude the results of the physical inventory checking against inventory records as there were a lot of inventories, accordingly, the plan of inventory taking and timing were not adequate. In addition, the subsidiary company has obligation from guarantee of the loan from a financial institution of the Company at amount of Baht 3,025 million. On 23 May 2011, the Company defaulted to repay debt to such financial institution. Therefore, the financial institution has filed prosecution against the Company and the subsidiary companies as the guarantors. Therefore, the effect to the financial statements could not presently be determined.

7. Financial institutions have sued the Company and its subsidiary and the shareholders did

not pass a resolution to increase share capital on 16 August 2010. Therefore the future performance of the Company depends on a) the result of negotiation with the financial institution for new credit facilities, and b) the future profitability and adequacy of cash inflows from operating activities. Both of these factors indicate significant uncertainties in the business operation of the Company and the subsidiaries. The Company’s securities may face conditions call for delisting from the SET if the equity is below zero.

Thus, if the auditor considers changing any information in the financial statement, the information in this report is also subjected to revise accordingly.

2.7 Industry outlook - Same as industry outlook for WETCO



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3. Rationale, Advantage, and Disadvantage and Benefits of the Transactions 3.1 Rationale of the Transaction

Because YNP is experiencing financial distress from the ongoing losses in the last 4 years, which is continuously pushing the shareholder’s equity to zero (according to the Company’s consolidated financial statement as of 31 December 2010, the equity is Baht 1.44 million), at the same time as incurring liquidity problems from large amount of liabilities and debts from financial institutions as well as from other entities. Thus, the disposition of investment in WETCO will infuse cash flows into YNP for use as working capital. Moreover, the Company may consider using the cash received from the disposition partially to repay such debts. Additionally, the net profit will be realized from the transaction 3.2 Advantage of the Transaction YNP will receive cash flows of Baht 115.00 million from the sales of assets (with no tax burden on

the sales of shares as the Company has accumulated losses) for use as working capital. In addition, the Company has liabilities under the sentence of court of Baht 225.42 million which is currently in the process of court and negotiation for a debt haircut. If the case is concluded and the negotiation is successful the Company may consider using the cash received from the disposition of assets partially to repay such debts.

YNP will realize the profit from disposition of investment in ordinary shares of WETCO of Baht

33.61 million, according to the Company’s financial statement as of 31 December 2011 (calculated from income from the sale of investment of Baht 115.00 million, with the Company’s share of investment in the equity method of Baht 81.39 million) However, if the Company has disclosure in the 2011 quarterly financial statement, the realization of profit will change with the value of investment according to the equity method.

3.3 Disadvantage of the Transaction After the sales of WETCO’s ordinary shares, the Company will not gain the share of profit from

investment sccording to the equity method in WETCO and will not be obtaining dividend income from WETCO, which for the past 5 years can be summarized as follows

Unit: Baht million 2006 2007 2008 2009 2010

Share of net profit in investment 18.48 19.61 22.55 (1.10) 30.73

Dividend income 25.00 25.00 20.00 8.00 -

However, due to severe competitive nature of automotive businesses as apparent in decreasing income for the Company’s major customers such as Isuzu and GM, and risks from external factors such as the Tsunami/earthquake in Japan, the future performance of WETCO may not be as profitable as in the past

3.4 Risk of the Transaction Risk of the transaction is the risk that YNP may not receive cash from the disposition of investment

in ordinary shares of WETCO from Tennecco, the purchaser. However, after investigating financial status of Tenneco, according to its 2010 financial statements, as reviewed by PricewaterhouseCoopers ABAS Ltd, an auditor approved by the SEC, it is found that at the end of 2010, Tenneco’s value of cash and equivalents was Baht 132.92 million, while total liabilities were only Baht 20.23 million, which can be considered sufficient for the payment of WETCO’s shares of Baht 115 million. Additionally, in the case that Tenneco does not have enough cash, Tenneco may borrow from financial institutions or from Tenneco Inc. (USA), the parent company that is listed in the New York Stock Exchange and is financially stable.

According to the Company’s consolidated balance sheets for the 12 months ended 31 December

2009 – 2010, the Company’s income from sales and services from WETCO were Baht 113.94 million and Baht 186.80 million or 1.66% and 1.95% of total income from sales and services, respectively. Therefore, after the sales of all investment in WETCO, the Company will no longer be a shareholder and has no part in the management of WETCO, eliminating the Company’s access of information to WETCO’s decision. In addition, the Company must agree to terminate the joint



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venture, purchase agreements and all other related agreements between WETCO, Tenneco and the Company.

However, the joint venture agreement and other related agreements consider matters related to joint business operation with an emphasis that the Company, as a manufacturer, shall be capable of production for WETCO’s purchase orders. Of which estimated quantity will be notified in advance to the Company. WETCO makes no guarantee as to the minimum quantities to be purchased and WETCO does not assure the Company of achieving any particular level of profits from the sale of parts to WETCO. In addition WETCO has the right to notify the Company to adjust the price if a minimum of two other suppliers offer to sell the same items for less than the price offered by the Company. Therefore, despite the termination of the agreements, the status of the Company does not change substantially and it does not mean that WETCO will discontinue its purchase with the Company, but only that the Company will change from the status of Tenneco’s joint venture to WETCO’s customer. At present, WETCO still purchase from the Company and the income at risk accounts for only 2% of the Company’s sales income, which can be considered insignificant. The IFA has an additional opinion that, to avoid the risk of reduced income from WETCO, the Company may negotiate with Tenneco, the purchaser and 100% shareholder of WETCO, to extend its purchase contracts or to revise the terms of contract that would enable WETCO to continue its purchase with the Company (at present WETCO stills purchase from the Company). Moreover, long cooperation with WETCO gives the Company a competitive edge over other suppliers as the Company knows of WETCO’s production requirements. Thus, the directors of the Company expect that WETCO will continue its purchase with YNP.

3.5 The appropriateness of the conditions of the transaction

The Purchaser of the disposition of investment in ordinary shares of WETCO is Tenneco, who shall pay 10% of the Consideration or Baht 11.50 million to the Escrow Account on the Signing Date after the Extraordinary General Meeting no. 1/2011 approves the transaction. The remaining payment of Baht 103.50 million will be made on the Completion Date, within 31 August 2011. Escrow Agent is to transfer the deposit to the Company on the same day. If between the signing date and the Completion date, one party breaches the Agreement or is unable to conduct the sale or purchase, the other party is entitled to such deposit. Considering the details in Sale and Purchase Agreement between the Company and Tenneco (as stated in Section 1.3: Parties and Relationships), the IFA has an opinion that the conditions of the transaction are appropriate

4. Opinion of the Independent Financial Advisor on the Appropriateness of the Value of the Disposition of Assets

Silom Advisory, a SEC certified financial advisor, was appointed by YNP as an independent financial advisor to provide independent fairness opinion to minority shareholders on the disposition of assets. Silom Advisory evaluated the fair value of WETCO shares using information obtained from YNP and WETCO, interviews with the managements, and other publicly-disclosed information, such as Form 56-1, audited financial statements, financial information from various websites, and information from the SEC’s websites (www.sec.or.th) and SET’s websites (www.set.or.th). However, the IFA renders its opinion based mainly on the truth and completeness of those information and documents at present. Therefore, any change of such information may significantly affect WETCO and its subsidiaries and WETCO’s business operation, the financial projection as well as the shareholders’ decision. CapAd applied 6 approaches in evaluating the fair value of AQUA and WETCO newly issued shares, namely:

1. Book Value Approach (BV) 2. Adjusted Book Value Approach (ABV) 3. Market Value Approach 4. Price to Book Value Ratio Approach: P/BV Ratio



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5. Price to Earnings Ratio Approach: P/E Ratio, and 6. Discounted Cash Flow Approach (DCF)

After studying information and documents, as well as other relevant information from YNP and WETCO, Silom Advisory’s opinion on the appropriateness of the selling price of WETCO’s shares can be summarized as follows;

4.1 Appropriateness of Value of WETCO shares 4.1.1 Book Value Approach This approach determines the company’s share value at a certain period. In this case, the calculation is based on WETCO’s latest financial statement as of 31 December 2010, reviewed by a certified auditor approved by the SEC. The summary of share value is as follows;

(Unit: Baht million)

Paid-up capital 80.00

Appropriated – Legal reserve 10.00

Unappropriated retained earnings 233.69

Total shareholders’ equity 323.69

No. of paid up shares (million shares) 0.80

Book value per share (Baht) 404.61

Remark: * par value is Baht 100 per share The share value of WETCO based on this approach is equal to Baht 404.61 per share 4.1.2 Adjusted Book Value Approach

By this approach, the share value is derived from total assets, deducted by total liabilities including commitments and contingent liabilities as shown in the financial statement of WETCO, dated 31 December 2010, and adjusted by items occurred after the end of accounting period or the items that may reflect the actual value of assets and liabilities. The adjustment items may include unrealized gain or loss from assets revaluation, assets impairment, write-off for doubtful accounts receivable or lending, exercise of warrants, losses carried forward that could be used as tax credit. Consequently, the adjusted book value is divided by total number of WETCO’s paid- up shares. In deriving the value of WETCO shares, the IFA used the book value as shown in the latest financial statement as of 31 December 2010, which was reviewed by an auditor approved by the SEC, and made the adjustments until 29 June 2011. After review financial information, WETCO does not have its asset appraisal by the independent asset appraiser, no losses carried forward, no contingent liabilities, which are not booked in WETCO latest financial statement. However, WETCO has management accounts for 5 months period ended 31 May 2011, which should reflect the most update information as well as value of WETCO. Therefore, the adjusted valuation can be summarized as follows


Paid-up capital 80.00

Appropriated – Legal reserve 10.00

Unappropriated retained earnings 245.60

Total shareholders’ equity 335.60


Book value per share (Baht) 419.51

Remark: * par value is Baht 100 per share The share value of WETCO based on this approach is equal to Baht 419.51 per share

4.1.3 Market Value Approach This approach valued WETCO shares by using weighted average historical closing prices on the SET at a different point in time. The IFA used the SEC’s definition of market prices, defined by weighted average closing price at least 7 consecutive trading days but no more than 15 consecutive trading days prior to the price determination date. However, since WETCO is not listed in SET, there is no market value



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4.1.4 Price to Book Value Ratio Approach: P/BV Ratio The Price to Book Value Ratio Approach is derived by using the book value per share as shown in WETCO financial statement as of 31 December 2011 as reviewed by an auditor approved by the SEC of Baht 404.61 per share multiplied by the Median of P/BV ratio of selected listed companies in the automotive industry, which operate similar business to WETCO. There are 6 comparable companies as follow:

Company Business

1. Aapico Hitech Public Company Limited (AH)

Designs and produce Jig, die and automobile components. Retails cars and provides after sales services

2. Somboon Advance Technology Public Company Limited (SAT)

Produce components for automobile manufacturers domestically and internationally. Main products are axle shafts, as well as invest in other companies that manufacture automobile components to widen product range.

3. T.Krungthai Industries Public Company Limited (TKT)

Produces plastic parts and provides design, manufacture, and repair services for plastic parts die for leading automobile, electrical appliances as well as prototype manufacturers.

4. Thai rung Union Car Public Company Limited (TRU)

Produces metal and plastic parts as well as provides assembly services for automobile and motorcycles manufacturers. Produces components for construction tools, industrial tooling, and other businesses that do not involve automobiles as well as provides assembly and modification of motor vehicles into station wagons, seven-seater multi-purpose vehicles or special purpose vehicles.

5. Thai Steel Cable Public Company limited (TSC)

Manufactures automobile and motorcycle control cable and window regulator, supplying to leading automobile and motorcycle manufacturers domestically and internationally as well as to companies in Nippon Cable System Inc group.

6. Yarnapund Public Company Limited (YNP)*

Supply press parts to assembly factories and domestic automotive parts retailers. Main products are exhaust systems for passenger cars and trucks, Accelerate Brake Clutch Pedal; ABC for passenger cars and 1 ton pickup trucks and press parts, etc.

Note: * Because YNP was marked SP since 15 November 2010, P/BV ratio and P/E ratio cannot be calculated The IFA has chosen to use the median rather than the mean for reference because it reduces the effect of variation in data, whereas using the mean will involve exclusion of outliers, which will reduce the number of samples being considered.

Information to 29 June 2011 is summarized as follows:

Historical P/BV Ratio

7

days 15

days 30

days 60

days 90

days 120 days

180 days

360 days

AH 0.75 0.76 0.77 0.79 0.80 0.83 0.88 0.77

SAT 1.83 1.82 1.83 1.81 1.83 1.92 2.16 2.00

TKT 0.92 0.91 0.92 0.93 0.94 0.96 0.97 0.95

TRU 1.10 1.11 1.14 1.17 1.22 1.24 1.21 1.00

TSC 1.70 1.71 1.72 1.72 1.76 1.80 1.85 1.62

YNP* N/A N/A N/A N/A N/A N/A N/A N/A

Median 1.10 1.11 1.14 1.17 1.22 1.24 1.21 1.00

Price per share (Baht) 446.23 447.50 460.45 473.19 493.62 503.03 488.52 404.88

Source: SETSMART Note: * Because YNP was marked SP since 15 November 2010, P/BV ratio and P/E ratio cannot be calculated The value of WETCO shares based on this approach is between Baht 404.88 – 503.03 per share



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4.1.5 Price to Earnings Ratio Approach: P/E Ratio The Price to Earnings Ratio Approach derived by using earning per share as shown in WETCO financial statement as of the most recent 4 quarters ending 31 December 2011 reviewed by an auditor approved by the SEC of Baht 153.59 per share multiplied by the Median of P/E ratio of 6 listed companies which operate similar business to WETCO, as selected in section 3.1.4, Using information to 29 June 2011, this approach is summarized as follows:

Historical P/E Ratio

7

days 15

days 30

days 60

days 90

days 120 days

180 days

360 days

AH 8.80 8.81 9.09 9.60 10.73 12.13 15.42 60.42

SAT 10.01 9.99 10.03 9.85 9.85 10.19 11.17 12.66

TKT 11.71 11.59 11.63 11.01 11.57 12.49 12.79 13.76

TRU 10.46 10.48 10.85 12.11 14.26 16.31 22.72 25.74

TSC 8.79 8.83 8.91 9.04 9.24 9.43 9.85 11.49

YNP* N/A N/A N/A N/A N/A N/A N/A N/A

Median 10.01 9.99 10.03 9.85 10.73 12.13 12.79 13.76

Price per share (Baht)

1,536.78

1,533.65

1,541.02

1,513.50 1,648.46

1,863.62 1,964.67 2,113.37

Source: SETSMART Note: * Because YNP was marked SP since 15 November 2010, P/BV ratio and P/E ratio cannot be calculated The value of WETCO shares based on this approach is between Baht 1,513.50 – 2,113.37 per share 4.1.6 Discounted Cash Flow Approach This valuation approach takes into account WETCO’s future operating performance by deriving present value of future cash flow stream using an appropriate discount rate. The IFA calculated the Weighted Average Cost of Capital (WACC) to be used as the discount rate and constructed a 10-year forecast of AQUA’s cash flow (2011 – 2020), based on an assumption that WETCO’s operation is on a going concern basis without any significant changes under the current economic conditions and circumstances. IFA has chosen to conduct a 10-year forecast because WETCO has been granted corporate tax exemption for a 7-year period from the Board of Investment of Thailand. Therefore, from 2016, WETCO will be taxed at 30% of net profit before tax which will affect the Company’s cash flows.

WETCO’s financial forecast is based on information and assumptions obtained from YNP and WETCO and from interviews with directors and relevant persons to determine a fair price of the company’s shares to be used in payment of WETCO’s shares for this transaction only. In the case that economic conditions and other external factors affect the company’s performance or internal affairs causing significant changes to the stated assumptions, the estimated fair price will also change. In addition, the IFA has considered WETCO’s internal financial statements for the 5 months of 2011 and income statements for the 7 months of 2011, which WETCO has prepared with reference to its customers’ purchase orders, for use as basis for the projection of income and expenses for 2011. Accordingly, the IFA has prepared WETCO’s financial projection with major assumptions as summarized below:

Sales income WETCO operates a business of manufacturing parts and exhaust systems for pickup trucks, trucks and passenger cars. The income comes from contracts to manufacture parts for each model of cars or pickup trucks. Assumptions for WETCO’s income can be summarized as follows:

Isuzu - Isuzu is the largest manufacturers of pickup trucks in Thailand. In the past, most of WETCO’s

income was from Isuzu. In 2008, 2009, and 2010 income from Isuzu were approximately 86.69%, 80.49% and 60.56% of the company’s sales income, respectively. A continuous drop in purchase orders from Isuzu is a result of Isuzu initially hiring only WETCO for manufacturing of automobile parts up until 2010, where Isuzu has hired two more manufacturers (3 in total, resulting in decreased net purchase from Isuzu) for its new models’ parts. Projected income from Isuzu for



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2011 will be based on the company’s projection of sales for the 7 months of 2011, where actual sales of some products were reduced because the customer has cancelled the orders in June 2011, causing the sales for Isuzu to decrease from the 5-month period, according to the internal financial statements of the company. Additionally, in 2011 contracts to manufacture some of the parts for Isuzu will be expired (Isuzu has discontinued the models), resulting in WETCO’s projected sales for ISUZU decreasing to approximately Baht 220.01 million and remain constant over the projection period (income from Isuzu for 2011 to 2012 is estimated based on the purchase orders made 6-12 months in advance by Isuzu, for the manufacturer to plan and prepare the production to meet the requirements).

- The IFA did not make upward adjustments to the projected sales for Isuzu after 2012 because

there is little to no possibility that WETCO will receive new purchase orders from Isuzu nor be able increase prices. Now that there are two competitors and there is a chance that Isuzu may hire other manufacturers in the future in order to manage costs, Isuzu may not hire WETCO anymore if WETCO increases prices.

GM - GM is the customer that has purchased from the company since the company was first

established. However, the sales for GM have a declining trend as a result of GM’s drop in sales. In 2011 it is expected that the sales for GM will be Baht 6.79 million, based on the company’s projection of sales for the 7 months of 2011, from actual sales, and there will be no sales for GM thereafter as GM has announced to cease all productions after 2011.

Nissan - Nissan group has placed a significant number of purchase orders since 2010. In 2011, it is

expected that the sales for Nissan will be Baht 306.12 million or 41.43% of sales income, based on the Company’s projection of sales for the 7 months of 2010, from the actual sales for Nissan, and the sales are projected to grow at 3% p.a. from 2012 throughout the projection period, aligning with the requested price increase due to expected rise in raw material price from inflation (according to the forecasted inflation rate for 2011 by the Bank of Thailand) as production remain constant, under the assumption that Nissan will not discontinue purchase orders in the future.

Ford - During 2008-2010, WETCO’s sales for Ford were approximately Baht 2 - 6 million but in 2011 Ford

has cancelled its purchased orders, hence the company expects the sales for Ford to be approximately Baht 0.5 million for 2011. However, the company anticipates Baht 112.31 million in purchase orders from Ford for its new products in 2012 (based on the purchase orders made 6-12 months in advance by Ford, for the manufacturer to plan and prepare the production to meet the requirements) and the sales are projected to grow at 3% p.a. from 2013 throughout the projection period, aligning with the price increase due to expected rise in raw material price from inflation, as production remains constant.

Toyota - WETCO’s sales for Toyota during 2008-2010 were approximately Baht 22- 24 million, but for the

effect of Tsunami, Toyota has cancelled all purchase orders in 2011. However, WETCO expects that Toyota is likely to start purchasing from WETCO again in 2012, with purchase orders of approximately Baht 27.35 million in value and this value is projected to grow at 3% p.a. from 2013 throughout the projection period, aligning with the price increase due to expected rise in raw material price from inflation, as production remains constant.

Volvo - WETCO’s sales for Volvo are modest because the sales of Volvo are not as great as those of

other Japanese manufacturers. In 2011, the sales for Volvo are projected to be approximately Baht 20.43 million, based on the Company’s projection of sales for the 7 months of 2011 from the actual sales for Volvo, and the sales are projected to grow at 3% p.a. from 2012 throughout the projection period, aligning with the price increase due to expected rise in raw material price from inflation, as production remains constant.

Other customers: BMW and Mercedes Benz - BMW and Mercedes Benz are European manufacturers whom WETCO have recently come to

contact with, with expectation to create sales that will compensate for the declining sales for Isuzu. However, sales of these European automobiles are modest; hence the number of total purchase orders from these manufacturers is not as high as those from the Japanese manufacturers such as



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Isuzu and Nissan. Therefore, the company expects sales for the other customers to be relatively constant, with expected sales for 2011 for BMW and Mercedes Benz to be Baht 20.57 million and Baht 46.08 million, respectively, based on the Company’s projection of sales for the 7 months of 2011 from the company’s actual sales, and the sales are projected to grow at 3% p.a. from 2012 throughout the projection period, aligning with the price increase due to expected rise in raw material price from inflation, as production remains constant.


2551A 2552A 2553A 7 months/ 2554E*

2554F 2555F 2556F

Sales income

Isuzu 705.36

356.11

601.69

197.40

338.41

220.01 220.01

Nissan 0.25

1.26

161.53

178.57

306.12

315.30

324.76

Ford 4.10

4.06

5.72

0.28

0.48

112.81

116.19

Volvo 8.85

1.09

13.60

11.92

20.43

21.05

21.68

MBW -

12.90

39.46

12.00

20.57

21.19

21.83

Benz -

4.53

46.17

26.88

46.08

47.46

48.89

GM 69.32

39.42

66.05

3.96

6.79 - -

Toyota 24.62

22.65

22.69 - -

27.35

28.17

Others 1.17

0.42

36.62 - - - -

Total sales income

813.66

442.44

993.53

431.01

738.88

765.16

781.52

(Unit :Baht million)

2557F 2558F 2559F 2560F 2561F 2562F 2563F

Sales income

Isuzu 220.01 220.01 220.01 220.01 220.01 220.01 220.01

Nissan 334.50 344.54 354.88 365.52 376.49 387.78 399.42

Ford 119.68 123.27 126.97 130.77 134.70 138.74 142.90

Volvo 22.33 23.00 23.69 24.40 25.13 25.88 26.66

MBW 22.48 23.15 23.85 24.56 25.30 26.06 26.84

Benz 50.35 51.86 53.42 55.02 56.67 58.37 60.12

GM - - - - - - -

Toyota 29.02 29.89 30.78 31.71 32.66 33.64 34.65

Others - - - - - - -

Total sales income 798.36 815.72 833.59 851.99 870.95 890.48 910.60

Notes: * company’s actual sales for the 7 months of 2010 from WETCO’s projection based on total purchase orders as well as advance cancellations of purchase orders that WETCO received from customers which varied from the internal financial statements for the 5 months of 2011, hence should better reflect WETCO’s income that is current and appropriate for projection of sales for 2011, In 2005, 2006 and 2007, WETCO’s sales income was Baht 1,003.46 million, Baht 950.00 million and Baht 819.21 million respectively. The income has a declining trend due to severe competition in business and a large number of competitors.

However, the majority of WETCO’s manufacturing contracts are long-term, with average duration of 3 to 5 years. Thus, if WETCO needs to raise its prices (as raw material price rises), it must arrange a special negotiation, which depend on whether the customers will accept the new prices. Also considering the fact that the business is highly competitive because the manufacturing of exhaust systems are not complex and does not require high-end technology, hence, other manufacturers in the industry are equipped to compete in price, the chance that WETCO will be able to raise its prices by 3% p.a. is slim; consequently growth of sales may be below 3% p.a. This is under the assumption that there will be no significant cancellations of WETCO’s customers’ purchase orders like in the case



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of Isuzu and GM, which the IFA adjusted the sales growth to be between 1% -3% p.a. in the end of this approach.

Other income

- Other income includes income from sales of equipment, tools as well as rubbish and is set as 1.05% of sales income, and equal to the average for the period of 2008 through to the 5 months of 2011

(Unit: Baht million) 2551A 2552A 2553A 5 months/ 2554A

2554F 2555F 2556F

Other income 5.53 7.65 16.50 0.49 7.76 8.03 8.21

% of total sale income 0.68% 1.73% 1.66% 0.13% 1.05% 1.05% 1.05%

(Unit: Baht million) 2557F 2558F 2559F 2560F 2561F 2562F 2563F

Other income 8.38 8.57 8.75 8.95 9.15 9.35 9.56

% of total sale income 1.05% 1.05% 1.05% 1.05% 1.05% 1.05% 1.05%

Cost of sales

WETCO’s cost of sales includes raw material, labor and manufacturing overhead costs, which in total is approximately 78%-83% of sales income. However, for the 5 months of 2011, WETCO’s cost of sales increased to 87.40% of sales income because, in the beginning of the year, WETCO had expenses for the design and development of new models of approximately Baht 20 million. If not including these expenses, the cost of sales will be 82.20% of the sales income. Therefore, the proportion of cost of sales to sales income in 2011 is set to equal that of the 5 month period, plus the aforementioned design and development cost. For 2012 onwards WETCO expects the cost of sales to be close to the cost of sales in 2011 and may have an inclining trend (gross profit decreases) because the price of stainless steel, which is the main raw material, has a rising trend aligning with the price of consumer goods. Additionally, the rise in competition of the business results in competitive prices and quality which hinders manufacturers such as WETCO from raising prices in order to maintain gross profit. The IFA, therefore, assumes WETCO’s cost of sales for 2012 to be the same as the cost of sales in 2011 and remain constant over the projection period under the assumption that WETCO will not incur significant design and development costs for new products (as in 2011)

The global stainless steel price for 2009 – 2011 is summarized below:

Source: www.worldsteelprices.com

(Unit: Baht million) 2551A 2552A 2553A 5 months 2554A

2554F 2555F 2556F

Cost of sales * 636.12 365.76 776.70 335.64 627.36 628.97 642.41

% of sale income 78.18% 82.67% 78.18% 87.40%** 82.20% 82.20% 82.20%



- Translation -


Cost of sales * 656.26 670.52 685.21 700.34 715.92 731.98 748.51

% of sale income 82.20% 82.20% 82.20% 82.20% 82.20% 82.20% 82.20% Notes: * In 2008 -2010, WETCO does not have expenses for design and development of new products - WETCO’s cost of sales for 2005-2007 was 84.37%, 84.28 and 81.46% of sales income, respectively ** if not including expenses for design and development of new models, cost of sales will be 82.20% of sales income

Selling and administrative expenses - Selling expenses such as royalty fee (approximately 2-3% of sales of some products) promoting

and marketing expenses etc. are set to be 2% of sales income, which is equal to the average for the period of 2008 through to the 5 months of 2011

- 80% - 90% of administrative expenses are employee salaries bonuses and benefits. In accordance with the company’s policy and historical information for 2008-2010, WETCO has increased salaries and benefits on average of 4% - %5 p.a. Other 10% -20% of administrative expenses are rents and utility costs. WETCO’s administrative expenses increased continuously during 2008 -2010 due to the increased number of employees. Therefore, it is assumed that the administrative expenses for WETCO are growing at 3% p.a. and remain constant throughout the projection period, aligning with the forecasted inflation rate for 2011 by the Bank of Thailand, which is equal to 3% p.a., under the assumption that the company will not increase or reduce the current number of employees.

(Unit: Baht million) 2551A 2552A 2553A 5 month/ 2554A

2554F 2555F 2556F


50.58

70.90

102.87

36.81 93.77* 96.66 99.43

% of sales income 6.22% 16.03% 10.35% 9.59% 12.69% 12.63% 12.72%

Growth rate 13.50% 40.17% 45.08% N/A (8.85)% 3.09% 2.86%



102.28

105.22

108.24

111.36

114.57

117.87

121.28

% of sales income 12.81% 12.90% 12.99% 13.07% 13.15% 13.24% 13.32%

Growth rate 2.87% 2.87% 2.87% 2.88% 2.88% 2.88% 2.89%

Notes: In 2011 selling and administrative expenses decreased due to a drop in selling expenses which accounts for approximately 2% of sales income, which is projected to decrease from 2010.

Corporate income tax WETCO has been granted a tax exemption for a 7-year period (2009 -2016) from the Board of Investment of Thailand. However WETCO has reversal of expenditures, where it will be taxed at 2.57% of earnings before tax, which is equal to the average of 2010 and the 5 months of 2011. From 2015 onwards the Company will be taxed at 30% p.a. of earnings before tax.

Capital Expenditure WETCO will invest in machines and equipment for the manufacturing of new models, and expects to spend approximately Baht 60 million and Baht 40 million, in 2011 and 2012, respectively, based on the purchase orders made 6-12 months in advance, because a machine or a die for use with a certain model may not be fit for use with another model. Thereafter, capital expenditure is set to be Baht 20 million per year for repairs and replacements of assets such as machines, equipment office stationary etc. under the assumption that WETCO has no plan to significantly expand its production capacity.

Collection and payment period

According to company policy and historical record for 2008 – the 5 months of 2011: - Collection period Approximately 75 days - Inventory period Approximately 45 days - Payment period Approximately 80 days

Dividend payout policy

The IFA assumed that WETCO has the dividend payout ratio of 90%of net profit, which is equal to the average of the ratio for 2008 -2010, under the assumption that there will be no significant business expansion.



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WETCO’s projected financials during 2011 - 2015 can be summarized as follow:

(Unit: Baht million) 2008A 2009A 2010A 5 months/ 2554A

2011F 2012F 2013F

Total assets 403.95 331.76 515.06 525.70 410.24 432.08 435.34

Total liabilities 169.63 130.94 191.37 190.09 159.97 160.33 163.27

Total shareholders’ Equity 234.32 200.81 323.69 335.60 250.28 271.77 272.07

Total income 819.19 456.50 1,010.03 384.51 746.64 773.20 789.73

Total expenses 692.47 458.01 882.62 372.41 721.13 725.63 741.84

Incomes tax 37.85 0.00 4.57 0.19 0.65 1.22 1.23

Net profit 88.87 (1.51) 122.84 11.92 24.86 46.35 46.66


Total assets 438.69 442.14 432.28 435.85 439.52 443.30 447.20

Total liabilities 166.31 169.43 172.65 175.97 179.39 182.90 186.53

Total shareholders’ Equity 272.39 272.72 259.64 259.89 260.14 260.41 260.68

Total income 806.75 824.28 842.34 860.94 880.10 899.83 920.16

Total expenses 758.54 775.74 793.45 811.70 830.49 849.85 869.79

Incomes tax 1.24 1.25 14.67 14.77 14.88 14.99 15.11

Net profit 46.97 47.30 34.22 34.47 34.72 34.99 35.26

Terminal Value After the projection period, the IFA assumed that WETCO will have 0% terminal growth order to be conservative. This is under the assumption that WETCO will not have any significant business expansion plans and under expectation of the industry’s competitive nature.

Discount Rate The discount rate applied to the calculation of the present value of free cash flow is the Weighted Average Cost of Capital (WACC) capital based on WETCO’s capital structure, which derived from the weighted average of Cost of Debt (Kd) and Cost of Equity (Ke) based on the following formula; WACC = Ke*E/(D+E) + Kd*(1-T)*D/(D+E)

Ke = Cost of equity or shareholders’ required rate of return (Re) Kd = Cost of debt or loan interest rate T = Corporate income tax rate E = Total shareholders’ equity D = Interest-bearing debt

However, as WETCO does not have loans from external sources, WACC is the cost of equity (Ke) or shareholders’ required rate of return (Re), which is derived from Capital Asset Pricing Model (CAPM):

Ke (or Re ) = Rf + β (Rm - Rf) Whereby Risk Free Rate (Rf) = 4.81% p.a. based on 50-year government bond yield (information as of 29

June 2011) which is currently the longest government bond that is regularly issued or offered by the Government, hence, aligned with the assumption that WETCO operation is on an on-going basis.

Beta (β) = Based on the Beta of 4 listed companies: AH, SAT, TKT, and TSC (company information provided in section 3.1.4 The Price to Book Value Approach) against the SET (the IFA did not include TRU and YNP for calculation of Beta because TRU has negative Beta and YNP was marked SP since 15 November 2010) against the SET. The Beta is calculated from historical figures beginning 29 June 2011, which is the period that shares of these companies are best to reflect the required rate of return in the current economic condition, which is equal to 0.56

Market Risk (Rm) = 19.19%which is the 26-year average rate of return from the investment in market portfolio of the Stock Exchange of Thailand (1985 – 2010). However, IFA did not take into account the market returns during 1975 – 1984 because they were returns during the establishment of the SET when few companies



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were listed and trading volume was still limited. Therefore, they may not reflect the actual market return.

Using the above formula, WACC which is equal to the annual return of equity (Re) or cost of equity (Ke), is 12.81% p.a The IFA did not use unleveraged beta of the 4 comparable companies because unleveraged beta was 0.28, which, when calculated in consideration of WETCO’s debt to equity ratio, the beta of WETCO was 0.44, resulting in WETCO’s Re of 11.14%, 1.73% p.a. less than the average Re of the comparable companies, while having higher risks in aspects such as disclosure, access to information, transparency, and not as good internal control, because WETCO is not listed in the SET Under the aforementioned assumptions, WETCO’s cash flows are calculated as follow: .

(Unit: Baht million) 2554F 2555F 2556F 2557F 2558F

Free Cash Flow to the Firm 19.78 43.51 70.50 74.25 74.48

Present Value of Free Cash Flow to the Firm (2011 – 2020) 18.62 36.32 52.15 48.69 43.29

(Unit: Baht million) 2559F 2560F 2561F 2562F 2563F

Free Cash Flow to the Firm 47.73 46.41 37.23 28.07 24.77

Present Value of Free Cash Flow to the Firm (2011 – 2020) 24.59 21.19 15.07 10.07 7.88


PV of Terminal Value 54.50

Total PV of WETCO 332.38

Add: Cash and short-term investment as of 31 May 2011* 153.31

Minus: Bank loan as of 31 May 2011* -

Net PV of WETCO 485.69


Net PV of WETCO (Baht per share) , dated 30 June 2011 607.11

Notes: *According the WETCO’s internal financial statements as of 31 May 2011. Considering the financial statements reviewed by an auditor approved by the SEC as of 31 December 2010, cash was baht 76.35 million and no loans. If based on the cash information as of 31 December 2010, the share WETCO will be valued at Baht 510.91 million In addition, IFA has conduct Sensitivity Analysis of WETCO’s share value by adjusting the Discount Rate (WACC) either up or down for 2% per year from base case Moreover, the majority of WETCO’s manufacturing contracts are long-term, with average duration of 3 to 5 years. Thus, if WETCO needs to raise its prices (as raw material price rises), it must arrange a special negotiation, which depend on whether the customers will accept the new prices. Also considering the fact that the business is highly competitive because the manufacturing of exhaust systems are not complex and does not require high-end technology, hence, other manufacturers in the industry are equipped to compete in prices, the chance that WETCO will be able to raise its prices by 3% p.a. is slim; consequently growth of sales may be below 3% p.a. Therefore, the IFA has conducted a sensitivity analysis in the case that sales growth is between 1% -3% p.a., as summarized below:

Share value of WETCO

(Baht per share)

Discount Rate: Ke

-2.00% -1.00% 0.00% +1.00% +2.00%

10.81% 11.81% 12.81% 13.81% 14.81%

Sales growth

1% 587.58 566.99 548.82 532.59 517.96

2% 623.94 598.99 577.21 557.97 540.78

3% 662.32 632.72 607.11 584.66 564.77

According to the Sensitivity Analysis done by adjusting WACC, the share value of WETCO is in the range of Baht 517.96 – 662.32 per share

However, the share valuation is conducted based on the assumption received from WETCO under current economic situation and under the assumption that WETCO’s customers purchase orders will not be cancelled Therefore, if there are customers cancelling their purchase orders or there is any significant change in WETCO’s business plan or policy, that may results in significant changes in WETCO’s projection and in changes in WETCO’s evaluated share value.



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4.2 Summary of IFA opinions regarding price appropriateness for WETCO’s share price Comparison of WETCO’s share value using several evaluation approaches can be summarized in the following table:

(Unit: Baht per share)

Valuation approach Share value of WETCO

1. Book Value Approach 404.61 2. Adjusted Book Value Approach 419.51 3. Market Value Approach Cannot appraise 4. Price to Book Value Ratio Approach: P/BV Ratio 404.88 – 503.03 5. Price to Earnings Ratio Approach: P/E Ratio 1,513.50 – 2,113.37 6. Discounted Cash Flow Approach: DCF 517.96 – 662.32

From the table above, WETCO’s valuation using all appraisal methods is between Baht 404.61 – 2,113.37 per share. The Book Value Approach is the method that reflects the operating result and status of WETCO at any given period of time, but without taking into account its real asset value and future profitability, as well as the overall economic and industry outlook. Therefore, valuation of WETCO share using this approach might not be appropriate. The Adjusted Book Value Approach is the method that better reflects WETCO market value than Book Value Approach. However, it does not reflect the future growth potential of the business, overall economic, and industry outlook. However, valuation of WETCO share using this approach can reflects WETCO’s basic value The Price to Book Value Ratio and Price to Earnings Ratio Approaches estimate the value of the share by using past financial figures of WETCO in 2010 to compare with the past selected industrial average of the comparable listed companies, which operate similar business to WETCO, which is spare parts manufacturing. The IFA has found 5 comparable companies: AH, SAT, TKT, TRU and TSC (excluding YNP as the company is marked SP since November 2010) However the size of the listed companies may affect different expectations of investors which will be reflected in the share price. Therefore, if considering the book value of the 5 comparable companies, averaging at Baht 2,100 million, which is more than 8 times higher than the book value of WETCO, the share value of WETCO estimated using this approach might not be appropriate. The Price to Earnings Ratio Approach derived by using earning per share as shown in WETCO financial statements as of the most recent 4 quarters ended 31 December 2010 reviewed by an auditor approved by the SEC to compare with the same ratio for the 5 comparable companies as mentioned. However, similarly to The Price to Book Value Ratio approach mentioned above, considering the book value of the 5 comparable companies, which is more than 8 times higher than the book value of WETCO, the share value of WETCO estimated using this approach might not be appropriate. Moreover, in 2010, WETCO has exceptionally high income and net profit; namely, Baht 993.53 million of sales income, and Baht 122.84 of net profit, because there was especially high number of purchase orders to make up for the pause in 2009. In 2009, WETCO’s sales income was Baht 442.44 million and incurred a net loss of Baht 1.51 million, while considering the profitability in 2011 for the 5 month period ended 31 May 2011 according to the internal financial statements of WETCO, it is found that net profit decreased to Baht 11.92 million. Additionally WETCO’s performance from 2011 onwards will differ from the past performance because the major customers from which total income accounts for more than 80% of total income in the past, which are Isuzu and GM, will discontinue the production of some models (GM discontinues all its purchase) from 2012, causing the proportion of major customers to decline continuously until there are only new customers. While the Company’s cost of sales has a rising trend from the highly competitive nature of the business, it is expected that WETCO performance may decrease to only Baht 25- 50 million per year in 2011 and thereafter (according to the financial projection). Therefore, using the Company’s past performance which is different from the current performance may cause the share value of WETCO derived from this approach to be inappropriate.



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The IFA has the opinion that this approach is suitable for companies whose past performance does not significantly differ from current and projected future performance and financial projection should be conducted in normal circumstances of operation. Otherwise, the value of share derived for each period of time will be volatile (with the volatility of performance for each different period) and not reflect the true value of the company, such as in this case. If based on the projection for 2011, in which WETCO’s net profit is likely to decrease to Baht 20-30 million, the share value of WETCO derived from this approach will be between Baht 246.35 – 515.99 per share, which differ considerably from the range of Baht 1,513.50 - 2,113.50 per share, etc. Moreover, the share price of WETCO derived from the Price to Earnings Ratio Approach, with reference to the performance result in 2010, is as high as Baht 1,513.50-2,1134.37 million (4-5 times higher than the book value). If considering the Company’s financial distress from liabilities and lack of liquidity, resulting in the Company failing to repay debts and currently being sued by financial institutions, setting the share price at such a high level may cause the sale to be unsuccessful. The Discounted Cash Flow Approach is the method that considers the historical operating results as well as the future growth prospects. However, WETCO’s share price calculated by this approach is based on financial projection based on assumptions received from YNP and WETCO and on current situation. Any future changes that will significantly impact the above assumptions might result in WETCO’s business operation not to be as forecasted, or changes in appraisal factors. Therefore, the valuation from this approach will be changed accordingly. According to the above information, IFA has an opinion that the Discounted Cash Flow Approach is the most appropriate for the current situation of the Company and should best benefit shareholders of the Company because it reflects the demand and supply of WETCO shares in the market, taking into account all publicly available information and expected operating performance in the future of investors. Therefore, the appropriate value of WETCO share is between Baht 517.96 – 662.32 per share



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Conclusion of IFA’s opinion

IFA has the opinion that the disposition of investment in ordinary shares of WETCO, a joint venture, of 200,000 shares, accounting for 25.00% of total paid-up capital of WETCO with the par value of Baht 100.00 per share at the selling price of Baht 575.00 per share, totaling of Baht 115.00 million is appropriate in both rationale and necessity. This is because YNP is experiencing financial distress from the ongoing losses in the last 4 years, which is continuously pushing the shareholder’s equity to zero, at the same time as incurring liquidity problems from large amount of liabilities and debts from financial institutions as well as from other entities. Thus, the disposition of investment in WETCO will infuse Baht 115 million of cash flows into YNP for use as working capital. Moreover, the Company has liabilities under the sentence of court of Baht 225.42 million, which is currently in the process of court and negotiation with the related financial institutions for debt haircut. If the case is resolved and negotiation is successful, the Company may consider using the cash received from the disposition partially to repay such debts. Additionally, the net profit (as at 31 December 2011) of Baht 33.61million will be realized from the transaction (calculated from the income from the disposition of assets of Baht 115.00 million, with the Company’s investment in the equity method as at 31 December 2011 of Baht 81.39 million. In addition, as WETCO is one of the Company’s customers, with the Company’s income from WETCO in 2009 and 2010 being Baht 113.94 million and Baht 186.80 million, accounting for 1.66% and 1.95% of sales and services income, respectively. After this transaction the Company will no longer be a shareholder and has no part in the management of WETCO. In addition, the Company must agree to terminate the joint venture, purchase agreements and all other related agreements between the Company and WETCO. Consequently, there is a risk that WETCO may consider hiring manufacturers other than the Company that offer lower prices or superior quality, which would deprive the Company of such earnings from WETCO. However, the joint venture agreement and other related agreements consider matters related to joint business operation with an emphasis that the Company, as a manufacturer, shall be capable of production for WETCO’s purchase orders, of which estimated quantity will be notified in advance to the Company. WETCO makes no guarantee as to the minimum quantities to be purchased and does not assure the Company of achieving any particular level of profits from the sale of parts to WETCO. In addition WETCO has the right to notify the Company to adjust the price if a minimum of two other suppliers offer to sell the same items for less than the price offered by the Company. Therefore, despite the termination of the agreement, the status of the Company will not change substantially and it does not mean that WETCO will discontinue its purchase with the Company, but only that the Company will change from the status of Tenneco’s joint venture to WETCO’s customer. At present, WETCO still purchase from the Company and the income at risk accounts for only 2% of the Company’s sales income, which can be considered insignificant. IFA has an additional opinion that, to avoid the risk of reduced income from WETCO, the Company may negotiate with Tenneco, the purchaser, and the 100% shareholder of WETCO (after the transaction) to enter into a long-term contract with WETCO in order to maintain WETCO’s purchase with the Company.

The price of WETCO’s ordinary shares which is Baht 575.00 per share and the conditions of payment are considered appropriate because the price is in an appropriate range evaluated by the IFA using discounted cash flow approach, which is currently between Baht 517.96 and Baht 662.32 per share. The purchaser shall pay 10% of the Consideration or Baht 11.50 million to the Escrow Agent on the Signing Date, 9 August 2011, after the Extraordinary General Meeting no. 1/2011 approves the transaction, and a payment of whole amount will be made on the Completion Date, within 31 August 2011.

For to the aforementioned reasons, Silom Advisory as an IFA has the opinion that the shareholders of YNP should approve this transaction for the Company to sell its investment in ordinary shares of WESTCO, which is considered a disposition of assets. However, the final decision shall be at own discretionary of the shareholders. The shareholders should consider the information in the invitation to the Extraordinary General Meeting No.1/2011 and its attachments before making the decision.



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Silom Advisory as the independent financial advisor hereby certifies that the opinions have prudently been provided in compliance with the professional standards and principles, with due regard to the shareholders’ benefits. Yours sincerely, Silom Advisory Company Limited (Mr. Pitak Kittiakrasatien) Managing Director

Documents

Opinion of the Independent Financial Advisor Regarding the