TRU : Annual Report 2007 by sarunya dareephat

( )

WORLD CLASS THAI CRAFT

Financial Highlights Board of Directors and Audit Committee Social Activities 2007 Message from the Chairman General Information Nature of Business Risk Factors Shareholders and Management Corporate Governance Related Party Transactions Audit Committeeâ&#x20AC;&#x2122;s Report Remuneration Committeeâ&#x20AC;&#x2122;s Report Board of Directorâ&#x20AC;&#x2122;s Responsibility for Financial Reports Managementâ&#x20AC;&#x2122;s Discussion and Analysis Report of Independent Auditor Financial Statements

4 6 10 12 13 16 19 21 32 41 44 45 46 47 51 52

( ) Thai Rung Union Car Public Company Limited,

( ) ! " # $ % " % % &% '* + # 2510 , - . # " % " / #/ ( ) 3 ' + , # & + # 2537 % % #/ % 40 # ( ) " " " + 8 + % " # $ 9 + # & " # : ; + + " < 9 ;= # # & % ! % < !9 , % < " % $ # > 8 > % 9 + ( ) + % + " " , - < 9 ;= ;9 , ,> # Thai Rung Union Car Plc. has long been established in the business of motor vehicle assembly Originally founded as a limited partnership under the name Thai Rung Engineering in 1967. its business success eventually led to its become a listed company on the Stock Exchange of Thailand in 1994 under the current name, Thai Rung Union Car Public Company Limited. For the last forty years, until the Present, Thai Rung Union Car Plc. has always been dedicated to developing creative and innovative products for the Thai automotive assembly industry, has also had success with imaginative exports to several countries in different parts of the world. lts products have been popular with consumers, and it has received the Prime MinisterDs Award for Best Exporter and the Car of the Year Award, to name just two of many awards. All this is a source of great pride to us at Thai Rung Union Car Plc. and it also strengthens our determination to continue ceaselessly creating and developing quality products for thai people and the thai nation.

/ Financial Highlights ( : / Unit : Million Baht) 31

Consolidated, as at 31st December Operating Performance Sales and Service Income Total Revenues Total Expenses ( ) ! Earnings (loss) before interest expense and income tax ( )" # Net Earnings (loss) Financial Situation " $ % Current Assets " $ % Total Assets " Total Liabilities " &' *+ Shareholders- Equity ( : ) Per Share Data (Unit: Baht) ( )" # ; Earnings (loss) per Share (EPS) < & ; Dividend per Share ' ; > ; Book Value per Share ( : %) Financial Ratios (Unit : %) ; " # ; Net Earnings margin ; & ; ; " &' *+ Return on Equity (ROE) ; & ; " $ % Return on Asset (ROA)

2550

2550 2007

2549 2006

2548 2005

2,215.10

2,302.99

2,965.63

2,372.63

2,413.90

3,049.78

2,384.08

2,423.91

2,888.70

(11.45)

(10.00)

161.08

(11.60)

(26.16)

119.78

1,620.20

1,568.35

2,224.87

2,851.85

2,803.88

3,488.88

384.68

315.34

914.05

2,467.17

2,488.54

2,574.83

(0.02)

(0.05)

0.24

0.10

4.92

4.96

5.13

(0.49)

(1.08)

3.93

(0.47)

(1.03)

4.50

(0.41)

(0.83)

3.45

Mrs. Pranee Phaoenchoke Chairman of the Board of Directors & President

Mr. Sompong Phaoenchoke

Ms. Kaewjai Phaoenchoke

Director & Managing Director

Director

( &

&"% ")

Mr. Wuttichai Phaoenchoke

Mr. Somkiat Nimrawee

Director

!" ""# $

Mr. Pricha Attavipach

Mr. Anthony Farquhar McDonald

Independent Director & Chairman, Audit Committee

Director

& ' " "

Mr. Kavee Vasuvat 2550Independent Director & Member, Audit Committee

Mr. Suvait Theeravachirakul Independent Director & Member, Audit Committee

Board of Directors and Audit Committee

Mrs. Pranee Phaoenchoke

: !" #$ % # &" '!" &( ) * & ) & +, # : - & # * & & # .% /, 0"# / # - * & & # . ) " !" ! .% .( . ! !" ) #/ .% ,/ 0 *!# % .% .( . !!$ 1"2! .% ! " . .( . !!$ 1"!3#" ! %( . # ( 3!("(! 1 . "4 ( . ! 220 ) " !" ! . " 1 - ! .% !!$ 1 "( ( .% !!$ 1 ! 1 *! "2 1 . $ -% " 1# . ! 220 !" ! . " 2 !!$ 1 2 1 . ! 0 2 ,/ . (" !!$ 1 - . " 1 % ,/ +# # 1# /56! ( 31 . . 2551) : 245,387,500 1# (48.92%)

Academic qualifications: Honorary doctorate in Business Administration, American Coastline University, U.S.A. Honorary MasterQs Degree in Commerce and Accountancy Thammasart University Work Experience: - Chairman of the Board of Directors & President of Thai Rung Union Car Plc. - Director & President of Chaicharoenkij Motors Co. Ltd. Thai V.P. Corporation Co. Ltd. Thai Rung Tools and Dies Co. Ltd. Thai V.P. Auto Service Co. Ltd. Thai Ultimate Car Co. Ltd. V.P. Auto Enterprise Co. Ltd. Sinthoranee Property Co. Ltd. First Part Co. Ltd. Isuzu Chaicharoenkij Motors Co. Ltd. Delta-TR Co. Ltd. Thai Auto Pressparts Co. Ltd. Thai Auto Body Assembly Co. Ltd. Europe Thai Car Rent Co. Ltd. Isuzu V. Motor Co. Ltd. Lexus Auto City Co. Ltd. TRU Leasing Co. Ltd. V.P.K. Auto Co., Ltd. - Director of Delta Thairung Co.,Ltd. Shareholding as of January 31, 2008 : 245,387,500 shares (48.92%)

Mr. Sompong Phaoenchoke

: $ ! " $! &" / #/ & +, # : - * & E0 1 .% ,/ 0"# / # - & # " / , .% ,/ 0"# / # - * & !, & # .% .( . ! !" ) #/ .% ! " . .( . !!$ 1"!3#" ! %( . "4 ( . ! 220 ) " !" ! . $ -% " 1# . ! 220 !" ! . " 2 !!$ 1 2 1 . " 1 % ,/ - * & E0 1 .% ,/ 0 *!# % .% .( . !!$ 1"2! . " 1 - ! .% !!$ 1 "( ( . ! 0 2 ,/ - . ) " !" ! . # ( 3!("(! 1 .% !!$ 1 ! 1 *! "2 1 . % !!$ 1 !#" !) #/ 0 Director Certification Program 26/2003 : IOD +# # 1# /56! ( 31 . . 2551) : 46,150,100 1# (9.20%)

Academic qualifications: MasterQs degree in Industrial Engineering, Keio University, Japan Work Experience: - Director & Managing Director of Thai Rung Union Car Plc. - Chairman of Risk Management Committee of Thai Rung Union Car Plc. - Director & Vice President of Thai V.P. Corporation Co. Ltd. Thai Ultimate Car Co. Ltd. V.P. Auto Enterprise Co. Ltd. First Part Co. Ltd. Isuzu Chaicharoenkij Motors Co. Ltd. Europe Thai Car Rent Co. Ltd. Isuzu V. Motor Co. Ltd. Lexus Auto City Co. Ltd. Delta Thairung Co.,Ltd. - Director & Managing Director of Thai Rung Tools and Dies Co. Ltd. Thai V.P. Auto Service Co. Ltd. Delta-TR Co. Ltd. Thai Auto Pressparts Co. Ltd. TRU Leasing Co. Ltd. - Director of Chaicharoenkij Motors Co. Ltd. Sinthoranee Property Co. Ltd. Thai Auto Body Assembly Co. Ltd. Thai Auto Conversion Co. Ltd. Director Certification Program 26/2003: IOD Shareholding as of January 31, 2008: 46,150,100 shares (9.20%)

( )

Ms. Kaewjai Phaoenchoke

: Bachelor Degree in Financial Administration University of New England Australia & +, # : - * & .% ,/ 0"# / # - * & & #" 1 #1 / .% ! " .% .( . ! !" ) #/ . "4 ( . ! 220 ) " !" ! . .( . !!$ 1"!3#" ! %( . $ -% " 1# . ! 220 !" ! . " 2 !!$ 1 2 1 . (" !!$ 1 - .) " !" ! .% .( . !!$ 1"2! .% ,/ 0 *!# % . # ( _!("(! 1 .% !!$ 1 "( ( .% !!$ 1 ! 1 *! "2 1 . ! 0 2 ,/ 0 Director Certification Program 29/2003 : IOD +# # 1# /56! ( 31 . . 2551) : 34,991,250 1# (6.98%)

Academic qualifications: Bachelor Degree in Financial Administration University of New England Australia Work Experience: - Director & Executive Board of Thai Rung Union Car Plc. - Director & Chief Executive Officer of Thai Ultimate Car Co. Ltd. Thai V.P. Corporation Co. Ltd. First Part Co. Ltd. Isuzu Chaicharoenkij Motors Co. Ltd. V.P. Auto Enterprise Co. Ltd. Europe Thai Car Rent Co. Ltd. Isuzu V. Motor Co. Ltd. Lexus Auto City Co. Ltd. V.P.K. Auto Co., Ltd. - Director of Chaicharoenkij Motors Co. Ltd. Thai V.P. Auto Service Co. Ltd. Thai Rung Tools and Dies Co. Ltd. Sinthoranee Property Co. Ltd. Thai Auto Pressparts Co. Ltd. Thai Auto Body Assembly Co. Ltd. TRU Leasing Co. Ltd. Director Certification Program 29/2003: IOD Shareholding as of January 31, 2008: 34,991,250 shares (6.98%)

Mr. Wuttichai Phaoenchoke

: $ # # $ " # &" ! , `

& +, # : - , * & " / , . % /, 0"# / # - * & E0 1 . ! 220 ) " !" ! . # ( _!("(! 1 . ) " !" ! . ! 220 !" ! .% .( .!!$ 1"2! - .% ! " .% !!$ 1 "( ( .% !!$ 1 ! 1 *! "2 1 .% .( . ! !" ) #/ .% ,/ 0 *!# % . .( . !!$ 1"!3#" ! %( . " 1 - ! . ! 0 2 ,/ . $ -% " 1# +# # 1# /56! ( 31 . . 2551) : 22,500,000 1# (4.49%)

Academic qualifications: MasterQs degree in Automotive Engineering, Coventry University, U.K. Work Experience: - Director, Executive Board and Member of Risk Management Committee of Thai Rung Union Car Plc. - Director & Managing Director of Isuzu Chaicharoenkij Motors Co. Ltd. Sinthoranee Property Co. Ltd. Chaicharoenkij Motors Co. Ltd. Isuzu V. Motor Co. Ltd. Thai V.P. Auto Service Co. Ltd. - Director of Thai Ultimate Car Co. Ltd. Thai Auto Pressparts Co. Ltd. Thai Auto Body Assembly Co. Ltd. Thai V.P. Corporation Co. Ltd. Thai Rung Tools and Dies Co. Ltd. V.P. Auto Enterprise Co. Ltd. Delta-TR Co. Ltd. TRU Leasing Co. Ltd. Europe Thai Car Rent Co. Ltd. Shareholding as of January 31, 2008: 22,500,000 shares (4.49%)

Mr. Somkiat Nimrawee

: &( ) * & ) & +, # : - , , + # / ! * # * & " / , .% ,/ 0"# / # - E0 1 . * #-% ! " 1# 0 Director Accreditation Program 10/2004 : IOD +# # 1# /56! ( 31 . . 2551) : 80,000 1# (0.02%)

Academic qualifications: BachelorQs degree in Finance & Accounting, Thammasart University Work Experience: - Director, Executive Board, Member of Remuneration Committee and Risk Management Committee of Thai Rung Union Car Plc. - Managing Director of Dan-Thai Equipment Co. Ltd. Director Accreditation Program 10/2004: IOD Shareholding as of January 31, 2008: 80,000 shares (0.02%)

! !"

Mr.Anthony Farquhar McDonald

: $ Bachelor Degree in Financial Administration University of New England Australia & +, # : - .% ,/ 0"# / # - E0 1 . Astudo Holdings 0 Director Certification Program 83/2007 : IOD +# # 1# /56! ( 31 . . 2551) : % /

Academic qualifications: MasterQs degree in Marketing Thammasart University Bachelor Degree in Financial Administration University of New England Australia Work Experience: - Director of Thai Rung Union Car Plc. - Managing Director of Astudo Holdings Co. Ltd. Director Certification Program 83/2007: IOD Shareholding as of January 31, 2008: None

2550

# $ % "

Mr. Pricha Attavipach

: ! { , $ MS (Industrial Engineering & Management) Oklahoma State University &" '!" 1!, # )! ( !. #/ 32) & +, # : - ! &, & # ! * & & # + # / ! * # . % ,/ 0"# / # - * & ! . 0#2 " # % - & # . ,/ | " ! . / !/ , !, , # 1 . *(#" " ! (1192) . ) # # ,( ( * # . ( .( . ! #" ! "#) /#*# . "! '( # ."!3#% !#" 3# ( ( *!# " " ! - E0)1 +# ( "

& } - ( / , & ,* ,, #* & , - ) & 6!! ) !# * & ! } 5 #* /, &" % - & , & ,! - & # & %441 ~/ E * /, &" % $ " * /, &" % . $ " * /,) - / . $ " * /,) 0 Director Certification Program 39/2004 : IOD 0 Finance for Non-Finance Directors 8/2004 : IOD +# # 1# /56! ( 31 . . 2551) : 280,000 1# (0.06%)

Academic qualifications: BachelorQs Degree in industrial engineering Chulalongkorn University MasterQs Degree (MS) in engineering (Industrial Engineering & Management) Oklahoma State University, U.S.A. National Defence College of Thailand, Class of 1989 Work Experience: - Independent Director & Chairman, Audit Committee and Remuneration Committee of Thai Rung Union Car Plc. - Director and Member of the Audit Committee, Siam Cement Plc. - Chairman of Tongkah Harbour Plc. Ruamkijaungthong Warehouse Co.,Ltd. Pan-Paper 1992 Co.,Ltd. Chaiyananbangplee Parkland Co.,Ltd. SIAM P.P. International Co.,Ltd. Ekaratpattana Co.,Ltd Environment Pulp and Paper Co.,Ltd. - Specialist Senior Engineering (Industrial Engineer), Council of Engineers - Law Councilor of Ministry of Labour - Academic Director of the Safety and Health Vocational Management System, The Engineering Institute of Thailand Under H.M. The KingQs Patronage (E.I.T.) - Deputy Permanent Secretary to the Ministry of Industry - Chairman of Electricity Generating Authority of Thailand Petroleum Authority of Thailand National Petrochemical Plc. - Honorary Advisor, National Petrochemical Plc. Director Certification Program 39/2004: IOD Finance for Non-Finance Directors 8/2004: IOD Shareholding as of January 31, 2008 : 280,000 shares (0.06%)

Mr. Kavee Vasuvat

: Electrical Engineering Royal Melbourne Institute of Technology, Australia & +, # : - ! &, ! * & + # / ! * # .% ,/ 0"# / # - & # ! , ! & * & + # / ! * # . % " " - & # . .! . . "!) #/ 0 Director Forum Program 1/2000 : IOD 0 Director Accreditation Program 23/2004 : IOD 0 Director Certification Program 58/2005 : IOD 0 Finance for Non-Finance Directors 18/2005 : IOD 0 Audit Committee Program 10/2005 : IOD +# # 1# /56! ( 31 . . 2551) : % /

Academic qualifications: BachelorQs degree in Electrical Engineering Royal Melbourne Institute of Technology, Australia Work Experience: - Independent Director & Member, Audit Committee and Remuneration Committee of Thai Rung Union Car Plc. - Independent Director & Chairman Audit Committee and Member Remuneration Committee of Thai Steel Cable Plc. - Chairman of Q.E.D. Creation Co. Ltd. Director Forum Program 1/2000 : IOD Director Accreditation Program 23/2004 : IOD Director Certification Program 58/2005 : IOD Finance for Non-Finance Directors 18/2005 : IOD Audit Committee Program 10/2005 : IOD Shareholding as of January 31, 2008 : None

" &

Mr. Suvait Theeravachirakul

: & ) +* , $ Wagner College NY New York U.S.A. & +, # : - ! &, ! * & " / , .% /, 0"# / # - / E0!1 +# . "!3 " - . $ ,* ! !! ( &" % ) . % 2 *!# * # . ( # 0 Director Certification Program 9/2001 : IOD 0 Audit Committee Program 15/2006 : IOD +# # 1# /56! ( 31 . . 2551) : 15,012 1# (0.003%)

Academic qualifications: BachelorQs degree in Business Administration, Accounting, Ramkhamhaeng University MasterQs degree in MBA, Wagner College, New York NY, U.S.A. Work Experience: - Independent Director & Member, Audit Committee and Risk Management Committee of Thai Rung Union Car Plc. - Director & President of MBK Plc. - Director of Royal Orchid Hotel (Thailand) Plc. Patum Rice Mill and Granary Plc. Siam Piwat Co. Ltd. Director Certification Program 9/2001: IOD Audit Committee Program 15/2006: IOD Shareholding as of January 31, 2008: 15,012 shares (0.003%)

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2550 : Social Activities 2007

?" $ !% & >@ &' !

' % 1 ( ) F * ;% < 2550G " ;

TR ADVENTURE SPORT < ; ?% H ; ;" ; % ; %@ % 28 JK <Q 6 < J K <Q + ; & ; ?W%

X <Q ;

; +

Khun Sompong Phaoenchoke, Managing Director of Thai Rung Union Car Plc, was presented with the FCar of the YearG award in the Outstanding Thai Innovation category for the TR Adventure Sport by Deputy Minister of Industry Mr. Piyabutr Cholvijarn at the 28th Bangkok International Motor Show, this being the sixth successive year that Thai Rung has received the award, which provides real assurance that Thai Rung-s products have continuously sustained their excellence in Thai innovation.

? & >@ &' < !

' % 2 ( ) *; ?% TR ADVENTURE 2 " " ' # @ ; X$?X H ; $ " #% % <Q < # $+ < @ ? % ; ; < < * K (ARRIVE ALIVE) " $ - < <; ? $' + 14 # 2550 ? ;K " ; ; H

On December 14th 2007 Khun Kaewkao Phaoenchoke, General Manager of Thai Rung Union Car Plc, presented two TR Adventure patrol vehicles in support of the charitable foundation FIf you drink, don-t driveG. In a ceremony held at the Santimaitree Building, Government House, the Prime Minister, General Surayut Chulanont, accepted the vehicles on behalf of the charity, for use in the FArrive aliveG New Year traffic accident reduction campaign on the Bangkok-Poipet route.

2550

?" $ !% & >@ &' <Q ; 3 F"* < " $ #% " " < < 2550G " " " " " ? ;K " ; ; H + 10 2550 JK < <Q < 3 ; ; ! X

On September 10th 2007, at the Santimaitree Building, Government House, Managing Director Khun Sompong Phaoenchoke represented the Company in receiving the Outstanding Workplace 2007 award in the category Labour Relations and Welfare, from the Department of Labour Protection and Welfare of the Ministry of Labour and Social Welfare. This is the third successive year that Thai Rung has won this award.

?" $ !% & >@ &' !

.$ . 4 @; J % " JK <Q !

X * < ; * ;%@ " !

Zhengzhou Yutong Group ; + FYUTONGG ? @ $ < %

Khun Sompong Phaoenchoke, Managing Director of Thai V.P. Auto Service Co. Ltd., a Thai Rung group company, held a news conference at the Chao Phraya Park Hotel to announce the company-s appointment as distributor for a leading Chinese brand of passenger vehicles in partnership with the Zhengzhou Yutong Group, under the brand name Yutong.

? " $ !% & > @ &' ? 5 " $ _ !H% &' &' !

' % ( ) ; . "; ` % "% < # < ' ; { ; ! ; %" (< _

) @ " & ; TR ALLROADER * < " % 7 JK $ | < $ @ @ @ + <Q $ # ; # ? !

' % ( )

Khun Sompong Phaoenchoke and Khun Noppadol Suplaset, Managing Director and Assistant Managing Director respectively of Thai Rung Union Car Plc, welcomed Mr. Steve Carlisle, President of GM Southeast Asia Operations, General Motors Thailand, to Thai Rung for a visit to the production line of the TR Allroader, a multi-purpose seven-seater developed from the Colorado pick-up, confirming the business partnership.

' % ( ) " 6 * < " % 7 TR ALLROADER &' &' * ;% $ Chevrolet < _ $ & ; " ? !

' % ( ) @ .< ? & >@ < # ;

Thai Rung Union Car Plc held a training and advisory seminar on the multi-purpose seven-seater TR Allroader for Chevrolet dealer principals and sales personnel nationwide including a visit to the modern production line at Thai Rung-s factory. Delegates were welcomed by Mrs. Pranee Phaoenchoke, President of the Company.

' % ( ) & ; ?W% 7 * < " % 7 TR ADVENTURE II $ * ;% ISUZU < _ $ & ; " ? !

' % ( ) @ &' !

X ;

Thai Rung Union Car Plc held a product training session on the multi-purpose seven-seater TR Adventure II for Isuzu sales staff nationwide including a visit to the modern production line at Thai Rung-s factory. Delegates were welcomed by senior executives of Thai Rung.

?" $ !% & >@ &' !

' % 8 ( ) $ < _

< 2550 FThailand Top 100 HR 2007G ." # ; ; " # _ "; % ? < _ ' $

Khun Sompong Phaoenchoke, Managing Director of Thai Rung Union Car Plc received the Thailand Top 100 HR 2007 award on behalf of the Company from Dr. Sumet Tantivejkul, President of Thammasat University Council, at a ceremony held in the university-s Sriburapha Auditorium.

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WORLD CLASS THAI CRAFT

Message from the Chairman In 2007 the Thai automotive industry grew by 8% on the previous year, with total domestic vehicle production reaching 1,287,346 units, while domestic vehicle sales fell by 7% to 631,251 and CBU exports increased to 690,100 units, up 28% on the prior year. The fall in domestic sales was caused by consumers putting off purchasing decisions due to their lack of confidence in the political and economic situation and the rapid increase in oil prices, which then steadied at a high level. Despite all this, vehicle exports continued their sustained positive trend. In line with its policy of pushing to make Thailand the ~Detroit of Asia-, the government supported investment and reduced import duties on raw materials and auto parts, which encouraged more major automakers to boost their production capacity or move production to Thailand with a view to using Thailand as their production and worldwide export base. We believe that the Thai automotive and parts industries will expand and improve, both in terms of domestic sales, which should start to recover following the installation of a new government with a policy of stimulating economic growth to help restore confidence in the private sector, and also in terms of exports, which will continue to grow, albeit perhaps not at quite the same rate in view of the world economic slowdown and the relative strength of the Thai currency, but which on the other hand will tend to be sustained by the AFTA free trade agreement and bilateral trade agreements with various countries. Turning to 2008, Thai Rung will face a continuing struggle against fierce competition in the vehicle market, which, together with other negative factors including rising oil prices and the political and economic situation, have led to sales of the Company-s multi-purpose vehicles falling behind target. To counter this, the Company is constantly trying to find new channels for business expansion. In 2007 we were successful with several projects, such as the launch and start of sales of the new model TR Allroader multi-purpose vehicle, developed in partnership with Chevrolet, success in winning an order from China for a turnkey jig project, the opening of a distributorship for Yutong buses from China, and the setting up of Delta Thai Rung Co Ltd, a joint venture with Delta Kogyo of Japan, to make auto seats, parts and other automotive equipment to cater to future growth in the parts industry, and apart from that we are also in discussion with a number of other potential business partners. As regards the business outlook for 2008, the Company remains determined to develop its multi-purpose vehicles and special purpose vehicles to meet customer requirements and offer a wider variety of products, and we are optimistic that the Company-s two new multi-purpose vehicle models will be well received by customers. Apart from this, the Company continues to stress its policy of expanding the business by actively seeking foreign partners to invest together in expanding production capacity for both metal and plastic parts and for opportunities for contract assembly of various makes of vehicles for sale both at home and abroad. We will also continue to push our dies and jigs business so as to take advantage of the overall sustained growth of the high value automotive and auto parts industries, focusing at the same time on ensuring that product quality is up to international standards, that our prices are right, and that we can remain competitive into the future. The Company has always attached great importance to shareholders- rights and the equitable treatment of shareholders. In 2007 the Company was assessed as ~good- in the joint SEC-BOI ~AGM check-list-. The Company will continue to strive to improve the standard of corporate governance in order to assure the Company-s ongoing progress, growth and stability under efficient and transparent management and to bolster the confidence of all stakeholders, for the greatest benefit of the Company and its shareholders. On behalf of the Company-s Board of Directors I should like to thank our customers, our shareholders, the various organisations and departments both governmental and private, and all our employees and stakeholders who are a driving force in their constant support. All the Directors and I will continue to work together with all of you to further develop the Company-s growth and future success.

Pranee Phaoenchoke Chairman

Annual Report 2007

General Information Listed Company

Thai Rung Union Car Public Co., Ltd. Companies Register Number 0107536001435

Registered share capital

Bt.524,996,497 divided into 524,996,497 ordinary shares of Bt.1 each.

Paid-up share capital

Bt.501,589,497 (as at 31st January 2008)

Business Activities

Address

28/6 Moo 1, Phetkasem Road Soi 81, Nongkhangphloo, Nong Khaem, Bangkok 10160 Tel: 0-2431-0071-2, 0-2431-0065, 0-2420-0076 Fax: 0-2812-0844, 0-2814-5030, 0-2420-3664

Website

http://www.thairung.co.th

Securities Registration

Thailand Securities Depository Co., Ltd. 62, Stock Exchange of Thailand Building, Rachadaphisek Road, Klong Toey, Bangkok 10110

Auditors

Mr. Sophon Permsirivallop, CPA no. 3182, and/or Miss Vissuta Jariyathanakorn, CPA no. 3853, and/or Mrs. Nonglak Pumnoi CPA no. 4172 Ernst & Young Office Ltd., 193/136-137 33rd Floor, Lake Rachada Building, Rachadaphisek Road, Klong Toey, Bangkok 10110 Tel: 0-2264-0777, 0-2661-9190 Fax: 0-2264-0789-90, 0-2661-9192

Product design, research and development Manufacture of dies and jigs Manufacture of automotive parts Vehicle assembly and modification

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT Group Structure of Thai Rung Union Car Public Co., Ltd. and subsidiaries as at 31st December 2007 Thai Rung Union Car Plc. (TRU)

Thai Rung Tools and Dies Co.,Ltd 94%

Delta-TR Co.,Ltd. 46%

Thai Auto Pressparts Co.,Ltd 91%

Thai Auto Conversion Co.,Ltd. 30%

Thai Auto Body Assembly Co.,Ltd 91%

Delta Thairung Co.,Ltd. 30%

Thai V.P. Auto Service 94% Thai Ultimate Car Co.,Ltd 99.53%

TRU Leasing Co.,Ltd 90%

General Information on Subsidiaries and Joint Venture Companies Subsidiary Companies

Thai Rung Tools and Dies Co., Ltd. Registered share capital Bt.27,000,000 issued and fully paid up, divided into 270,000 ordinary shares of Bt.100 each Address 28/22 Moo 1, Phetkasem Rd. Soi 81, Nongkhangphloo, Nong Khaem, Bangkok 10160 Tel: 0-2431-0071-2, 0-2431-0065, 0-2420-0076 Fax: 0-2814-5030, 0-2420-3664 Business Activities Manufacture of dies and jigs.

Thai V.P. Auto Service Co., Ltd. Registered share capital Bt.25,000,000 issued and fully paid up, divided into 250,000 ordinary shares of Bt.100 each Address 17/22 Moo 2, Phetkasem Rd. Soi 81, Nongkhangphloo, Nong Khaem, Bangkok 10160 Tel: 0-2420-6708, 0-2420-4823, 0-2812-1445-6 Fax: 0-2420-1601 Business Activities Sale of spare parts and accessories, after-sales service centre

Thai Auto Pressparts Co., Ltd. Registered share capital Bt.400,000,000 issued and fully paid up, divided into 4,000,000 ordinary shares of Bt.100 each Factory Address Amata City Industrial Estate 7/122 Moo 4, National Highway 331, Tambol Marpyarngphorn, Amphoe Pluak Daeng, Rayong Tel: (038) 956-156, 956-239-42 Fax: (038) 956-169 Business Activities Manufacture of automotive body parts Annual Report 2007

Thai Auto Body Assembly Co., Ltd. (not yet active) Registered share capital Bt.12,000,000 of which 25% issued and paid up, divided into 120,000 ordinary shares of Bt.100 each Address 68 Moo 1 Chonburi-Ban Bung Rd., Tambol Nongsamsark, Amphoe Ban Bung, Chonburi Business Activities Assembly of various kinds of auto bodies for commercial use.

Thai Ultimate Car Co., Ltd. Registered share capital Bt.25,000,000 issued and fully paid up, divided into 25,000 ordinary shares of Bt.1,000 each Address 371 Vibhavadee Rangsit Road, Khwaeng Samsennai, Khet Phayathai, Bangkok 10400 Tel: 0-2616-1040-59 Fax: 0-2616-1063 Business Activities Vehicle dealership, after-sales service, sale of spare parts.

TRU Leasing Co., Ltd. (not yet active) Registered share capital Bt.15,000,000 issued and fully paid up, divided into 150,000 ordinary shares of Bt.100 each. (On 28th December 2007 the company registered a decrease in capital from Bt.60m to Bt.15m.) Address 28/6 Moo 1, Phetkasem Rd. Soi 81, Nongkhangphloo, Nong Khaem, Bangkok 10160 Tel: 0-2812-2930, 0-2812-2940 Fax: 0-2812-2909 Business Activities Purchase, sale, rental, leasing and hire-purchase finance of motor vehicles

Joint Venture Companies

Delta-TR Co., Ltd. Registered share capital Address Tel: Fax: Business Activities

Bt.20,000,000 issued and fully paid up, divided into 200,000 ordinary shares of Bt.100 each 28/23 Moo 1, Phetkasem Rd. Soi 81, Nongkhangphloo, Nong Khaem, Bangkok 10160 0-2431-0071-2, 0-2431-0065, 0-2420-0076 0-2812-4302 Manufacture of automotive seats and related components.

Thai Auto Conversion Co., Ltd. Registered share capital Bt.74,500,000 issued and fully paid up, divided into 74,500 ordinary shares of Bt.1,000 each Address 700/182 Moo 1, Tambol Ban Kao, Amphoe Phan Thong, Chonburi 20160 Tel: (038) 457106-110 Fax: (038) 457112 Business Activities Product development and fitting of special accessories for special purpose vehicles.

Delta Thairung Co., Ltd. Registered share capital Bt.20,000,000 issued, 50% paid up, divided into 2,000,000 ordinary shares of Bt.100 each Factory Address Amata City Industrial Estate 7/150 Moo 4, Tambol Marpyarngphorn, Amphoe Pluak Daeng, Rayong Tel: (038) 650-398-400 Business Activities Manufacture of auto seats and parts and other equipment for vehicles

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT

Nature of Business

General Business Overview of the Company, its Subsidiaries and Joint Ventures Thai Rung Union Car Public Co., Ltd. is in the motor vehicle industry. Its main business activities are product design, research and development, manufacture of tools, dies and jigs, manufacture of metal and plastic parts, and contract assembly and modification of vehicles, including station wagons, seven-seater multi-purpose vehicles, taxis and special purpose vehicles such as rapid response rescue vehicles, ambulances, refrigerated trucks and minibuses. It is also a dealer and after-sales service provider for Land Rover vehicles and Yutong buses from China. The Company has nine subsidiary and joint venture companies, which are engaged in related or supporting businesses and which enable the group to provide a full range of services as well as spreading the business risks. Details are as follows. Thai Rung Tools and Dies Co., Ltd., a subsidiary, makes dies and jigs. It has received BOI promotional privileges for investments. Thai Auto Pressparts Co., Ltd., a subsidiary, started business in June 2002 at its factory at Amata City Industrial Estate, Amphoe Pluak Daeng, Rayong Province, thus considerably expanding the groupDs parts production capacity. Thai Auto Pressparts, which has been granted BOI promotional privileges for its investments, supplies automotive parts to the customer group formed by auto and motorcycle manufacturers in the Eastern Seaboard and surrounding areas, and also caters to the export market. In 2005 it broadened its activities to include the manufacture and sale of plastic parts. Thai V.P. Auto Service Co., Ltd., another subsidiary, provides after-sales service for the Thai RungDs multi-purpose vehicles. In 2005 it expanded its activities to include plastic accessories under the name ]Parto^, and in 2007 it further expanded its business by becoming the Thai importer and distributor for Yutong buses from China. Thai V.P. Auto Service Co., Ltd. has two subsidiaries. - Thai Ultimate Car Co., Ltd., which it acquired in 2001 in order to expand into vehicle distribution, is a dealer and provider of after-sales service for Land Rover vehicles. It also sells equipment and accessories for multi-purpose vehicles, and spare parts. - TRU Leasing Co., Ltd. was established in 2005 to carry on finance business, initially concentrating on supporting the groupDs business by providing hire purchase finance for the parent CompanyDs TR Bangkok Limousine. However in 2007 since the company had still not started doing business, its share capital was reduced by 75% to Bt.15m.

Annual Report 2007

Thai Auto Body Assembly Co., Ltd., a subsidiary, is located at Ban Bung, Chonburi Province. Its purpose is the modification of bodies for various kinds of commercial and special purpose vehicles such as rapid response rescue vehicles, buses, vans, refrigerated trucks, trailers, and ambulances. The company is not yet active. Delta-TR Co., Ltd. is a joint venture with Delta Kogyo Co., Ltd. of Japan, for the manufacture of auto seats and related components. Thai Auto Conversion Co., Ltd. is a joint venture with the Toyota Motor Group for product development and fitting of accessories for special purpose vehicles. Delta Thairung Co., Ltd. is a joint venture with Delta Kogyo of Japan, newly established in 2007 to manufacture auto seats and parts and other equipment for vehicles. Its factory is at Amata City Industrial Estate, Amphoe Pluak Daeng, Rayong Province. The CompanyDs group policy is for each subsidiary to strive to operate profitably in its own right and to be self-sufficient in its particular activities within the overall policy of the parent.

Breakdown of Total Revenues, Thai Rung Union Car Plc and Subsidiaries, 2005-2007 Unit: baht 000s Product/Service Contract vehicle assembly including cost of equipment and accessories fitted Sale of vehicles (includes a portion of income from assembly and cost of equipment and accessories fitted) Sale of parts, income from sub-assembly of parts Sales of dies and jigs Sale of spare parts and accessories and other service income Share of profit from investments accounted for under equity method Other Income Total Revenues

Performed % of shares 2005 by held Revenue %

2006 Revenue %

2007 Revenue %

TRU, TUC

99.53*

681,707

22.35

169,428

7.03

152,533

6.43

TRU, TVS, TUC

94, 99.53*

840,689

27.57

559,830

23.19

515,412

21.72

TRU, TAP

943,156

30.93

1,191,116

49.34 1,219,529

51.40

TRT TRU, TVS, TUC

94 94, 99.53*

142,467 357,614

4.67 11.72

115,245 267,372

4.77 11.08

100,501 227,103

4.24 9.57

10,909

0.45

21,947

0.93

84,148 2.76 100,002 4.14 135,582 5.71 3,049,781 100.00 2,413,903 100.00 2,372,627 100.00

*TRU holds 94% of the shares in TVS, which in turn holds 99.53% of the shares in TUC.

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT Industry trends and future competitive situation In 2007 the Thai automotive industry grew by 8% on the previous year, with total domestic vehicle production reaching 1,287,346 units, while domestic vehicle sales fell by 7% to 631,251 and CBU exports increased to 690,100 units, up 28% on the prior year. The fall in domestic sales was caused by consumers putting off purchasing decisions due to their lack of confidence in the political and economic situation and the rapid increase in oil prices, which then steadied at a high level. Despite all this, vehicle exports continued their sustained positive trend. In line with its policy of pushing to make Thailand the {Detroit of AsiaD, the government supported investment and reduced import duties on raw materials and auto parts, which encouraged more major automakers to boost their production capacity or move production to Thailand with a view to using Thailand as their production and worldwide export base. We believe that the Thai automotive and parts industries will expand and improve, both in terms of domestic sales, which should start to recover following the installation of a new government with a policy of stimulating economic growth to help restore confidence in the private sector, and also in terms of exports, which will continue to grow, albeit perhaps not at quite the same rate in view of the world economic slowdown and the relative strength of the Thai currency, but which on the other hand will tend to be sustained by the AFTA free trade agreement and bilateral trade agreements with various countries. At the same time economically priced low-cost vehicles from China and India are starting to invade Thai and global markets, further increasing competitive pressures. This means that Thai producers will have to accelerate their efforts to improve efficiency in managing production costs, and to seek business opportunities and strategic partners in order to boost their competitive potential. The next step for the automotive industry must be to develop its ability to compete, in terms of design engineering, research and development, and reaching and maintaining global standard levels. Players in the Thai automotive industry need to improve continuously and rapidly, in terms of quality, costs and technology, in order to reach and maintain global standard levels and thus meet the ever growing competition as auto assemblers and parts makers from America, Europe and Japan continue to move their production bases to Thailand, and to cope with changing global terms of trade under WTO, AFTA and bilateral free trade agreements.

Annual Report 2007

Risk Factors 1 Business Risks, by Business Type Multi-purpose vehicles - Risks arising from the fact that the distribution channel for Isuzu pick-ups modified by the Company is limited to dealers of Tri Petch Isuzu Sales Co., Ltd. Income from this business accounted for roughly 20% of total consolidated revenues in 2007. - Brand owners who already produce multi-purpose vehicles, and new entrants attracted into the market by the high value of the station wagon type segment. Auto Parts and Contract Assembly - Bargaining power affected by weight of major customers Aapico Amata Co., Ltd. and Isuzu Motors (Thailand) Co., Ltd., who together accounted for about 20% of total consolidated income in 2007. - The growth of the automotive and parts industries for supply to both domestic and export markets, as seen from the fact that several major auto makers have expanded their production capacity and others have moved their production bases from overseas to Thailand, leads to ever more competitors in the auto parts industry, both big and small, old and new. Dies & Jigs - Increasing competition both from existing manufacturers expanding production capacity so as to be able to take on more orders, and from new entrants from overseas coming to take a share of the work available, could have an effect on the volume of work in the future .In 2007 income from dies and jigs accounted for approximately 4% of total consolidated revenues. - Shortage of skilled die-making technicians, leading to poaching of capable personnel.

Risk Management In order to spread risk and lessen the possible impact of the various risk factors, the Company has laid down policy guidelines for each business unit, as follows. Multi-purpose Vehicles - The Company places emphasis on research and development of multi-purpose vehicles, focusing on up-to-date styling and on quality to match requirements of target customer groups. At the same time studies are under way aimed at developing a line of business in special purpose vehicles of various kinds such as taxis and rapid response rescue vehicles, so as to expand the market and target customer groups by taking advantage of the CompanyDs flexibility in adapting its production processes. - The Company has joined hands with a new business partner to develop a new multi-purpose vehicle based on the Chevrolet Colorado pickup truck, sales of which started in March 2007, opening up an additional group of customers and additional sales outlets for multi-purpose vehicles, as well as seeking alliances with producers of chassis and sales outlets for other brands which do not yet produce multi-purpose vehicles or {PPVsD (pickup-passenger vehicles.)

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT -

The Company has further developed its {TR CenterD product presentation outlets, in order to maximize customer and end-user awareness. In 2007 there were two branches, at Phetkasem Rd. and Rama IV, while in 2008 two further braches have been opened, at Bang Na and Sutthisarn. Parts making - The Company continues to foster its relationships with its long-standing major customers, whilst at the same time seeking new customers from other sectors such as motorcycles, industrial machinery, electrical appliances and agricultural machinery, so as to spread risk. The Company set up an all year round program of marketing activities aimed at fostering good customer relations, and also established new target customer groups for plastic parts and window regulators. The Company expanded its business into the production and sale of blow-mould and vacuum-formed plastic parts, including plastic accessory parts under the name Parto. Expansion of customer base to overseas markets such as India, Iran and U.S.A. The Company is constantly on the look-out for possible new alliances with foreign partners to invest together in expanding production capacity for both metal and plastic parts so as to cater to the growing volume of work resulting from the sustained growth of the automotive industry, its policy being to focus on high value-added work. Development of new variants of the CompanyDs existing {flat deckD to cater to the pick-up industry at home and abroad in the future. Dies & Jigs The Company has carried out investments to improve the efficiency of the production process so as to meet the many and varied customer requirements and at the same time to improve chances of winning high value orders. The Company has a project to increase automation of the production process so as to lessen the impact of shortages of skilled labour, and has also arranged training courses aimed at enhancing personnel capability. Expansion of customer base to overseas markets such as China, India and U.S.A. Nevertheless in order to spread the risks in all three business units, the Company also strives to diversify its business, both to reduce the risk of business concentration and to broaden the revenue base. Examples are: - Thai Ultimate Car Co., Ltd. is a dealer and after-sales service provider for the Land Rover brand of vehicles. - Thai V.P. Auto Service Co., Ltd. is sole importer and distributor for Thailand of ]Yutong^ brand buses. Financial Risks Please refer to details in Note 29 to the Financial Statements for the year ended 31st December 2007.

Annual Report 2007

Shareholders and Management Shareholders Major Shareholders as at 31st January 2008, last date on which the share register was closed, when paid up capital was Bt.501,589,497 No.

Name

1 2 3 4 5 6 7 8 9 10

Mrs. Pranee Phaoenchoke Mr. Sompong Phaoenchoke 1,2 Ms. Kaewjai Phaoenchoke 2 Citibank Nominees Singapore Pte Ltd.-S.A. PBG Clients SG Mr. Wuttichai Phaoenchoke Coutts Bank Von Ernst Ltd, Singapore Branch Tisco Bank Plc Gerlach & Co-Dimensional Emerging Markets Value Fund, Inc Thai N.V.D.R. Co. Ltd. Mr. Wisan Jitprasertsuk Total

Number of shares

Percentage of shares held

245,387,500 46,150,100 34,991,250 24,691,925

48.92% 9.20% 6.98% 4.92%

22,500,000 20,066,875 15,025,000 5,386,250 3,859,600 2,457,900 409,166,925

4.49% 4.00% 3.00% 1.07% 0.77% 0.49% 83.84%

1. Mr. Sompong Phaoenchoke holds 43,900,100 shares and his wife Mrs. Kaewkao Phaoenchoke holds 2,250,000 shares. 2. As at the date of closing of the share registry January 31st 2008, the name FThailand Securities Depository Co. Ltd., for DepositorG appeared as the holder of 27.8 million shares. This was due to an error in classifying shares as ~foreign- when they were in fact held by Thai citizens. Of the shares referred to above, 20 million belong to Mr. Sompong Phaoenchoke and the remaining 7.8 million to Ms. Kaewjai Phaoenchoke, both of whom have taken the necessary steps, on February 20th 2008, to have the register corrected to show the shares as ~local-, and the corrected position is as shown in the above table which includes these shares in the holdings of Mr. Sompong Phaoenchoke and Ms. Kaewjai Phaoenchoke.

Investors wishing to see information on current shareholders can do so by visiting the Company s website before the Annual General Shareholders Meeting.

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT Management Management Structure The Company has the following five boards and committees: Board of Directors, Audit Committee, Executive Board, Risk Management Committee and Remuneration Committee, details as follows: 1. Board of Directors As at 31st December 2007 nine of the ten positions on the Board of Directors were occupied as follows. Name Position Mrs. Pranee Phaoenchoke Chairman of the Board Mr. Sompong Phaoenchoke Director Ms. Kaewjai Phaoenchoke Director Mr. Wuttichai Phaoenchoke Director Mr. Somkiat Nimrawee Director Mr. Anthony Farquhar McDonald Director Mr. Pricha Attavipach Independent Director Mr. Kavee Vasuvat Independent Director Mr. Suvait Theeravachirakul Independent Director Secretary to the Board of Directors: Mr. Sakchai Komgris As regards the vacant position on the Board, a proposal will be placed before the Meeting of Shareholders to cancel this position. Characteristics and definition of independent director of Thai Rung Union Car Plc The definition of an Independent Director of the Company is as stipulated by the relevant provisions of the SEC, as follows. An independent Director 1. Does not hold more than 5% of the paid-up shares of the Company, or of any of its subsidiaries, joint venture companies or related companies, shares held by related persons to be included in the calculation in accordance with directive 258 of the Securities Act. 2. Does not take part in administering the work, is not a contractor or an employee or consultant in receipt of a regular salary or providing professional services such as those of an auditor, and in short is not in a position to exert influence or control on the Company, its subsidiaries, its joint venture or related companies or on the CompanyDs major shareholders. 3. Does not stand to gain from and has no vested interest in, whether direct or indirect, financial or administrative, nor any significant business relationship with the Company, its subsidiaries, joint ventures, related companies or major shareholders such as that of customer or supplier, trade creditor or debtor, financial creditor or debtor by way of lending or borrowing.

Annual Report 2007

In this regard an Independent Director must not have been a Director as per Articles 2 and 3 at any time within the period of one year preceding his appointment as Independent Director, except if the CompanyDs Board of Directors after careful consideration is of the opinion that his having stood to gain from or having been an interested party will have no effect on his carrying out his duties or expressing his opinion as an Independent Director. 4. Is not a related person or a close relative of an Administrator or major shareholder of the Company, its subsidiaries, joint venture or related companies. 5. Has not been appointed to represent or look after the interests of any Director or major shareholder. 6. Is able freely and independently to perform his duties, express his opinions and report on results of his work in accordance with the duties and responsibilities entrusted to him by the CompanyDs Board of Directors, without being subject to control by any Administrator or major shareholder of the Company or of any related persons or close relatives of such. Powers and Duties of the Board of Directors 1. To carry out its duties in accordance with the CompanyDsD laws, objectives and regulations, including resolutions of shareholdersD meetings, in accordance with the law, with integrity, ethically, prudently and with due regard to the CompanyDs best interests. 2. To arrange for a shareholdersD meeting to be held at least once a year, to report to shareholders on the CompanyDs performance and to seek shareholdersD approval for matters which exceed the authority or duties of the board of directors. 3. To hold a meeting of the Board of Directors at least once every three months. 4. To take all necessary steps to ensure that financial and other information provided to shareholders is at all times correct, complete and transparent. 5. To ensure that the Company has efficient internal control and audit systems in place. 6. To consider and make decisions on important matters such as policies, business plans, administrative powers, large investment projects, related party transactions, acquisitions or disposals of assets of the listed company as covered by the regulations of the Stock Exchange of Thailand, and any other matters stipulated by law. 7. To ensure that the CompanyDs business dealings are carried out in an ethical manner. 8. The Board of Directors may delegate its powers and duties to one of more Directors or to other individual(s) as it sees fit, authorizing such person or persons to act on its behalf with whatever powers and duties it may chose to assign. 9. The Board of Directors has the power to appoint and to change authorized signatories empowered legally to bind the Company on its behalf. 10. To consider the payment of interim dividends to shareholders. 11. To establish the CompanyDs policies and working guidelines and to monitor administrative departmentsD efficient and effective implementation of such policies with a view to maximizing growth and economic value for shareholders. 12. To give advice to the Managing Director on administration and on decisions likely to have important consequences for the Company. 13. To avoid conflicts of interest amongst Company stakeholders. Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT The scope of the powers and duties mentioned shall not extend to: 1. Matters subject by law to a resolution of a shareholdersD meeting, such as capital decrease or increase or amendments to the CompanyDs Memorandum or Articles of Association. 2. The authorization of any related party transaction or acquisition or disposal of listed CompanyDs assets, which require approval by a meeting of shareholders in accordance with the regulations of the Stock Exchange of Thailand. 3. The authorization of any transaction in which a Director is an interested party or has a conflict of interest, which requires approval by a meeting of shareholders. 2. Audit Committee As at 31st December 2007 the CompanyDs Audit Committee was composed of three members: Name Mr. Pricha Attavipach Mr. Kavee Vasuvat Mr. Suvait Theeravachirakul Secretary to the Audit Committee:

Position Chairman of the Audit Committee Member of the Audit Committee Member of the Audit Committee Mr. Phakkawat Suwanmajo

Members of the Audit Committee serve for a term of two years. A quorum for a meeting of the Audit Committee is constituted by not less than half the total number of Committee Members. Resolutions are carried by the affirmative votes of not less than half the total number of Members present. Powers and duties of the Audit Committee 1. To review the CompanyDs financial statements and ensure that they are correct and complete and present a true picture of the CompanyDs financial position. 2. To review the CompanyDs internal control procedures and ensure that they are appropriate and efficient. 3. To select, review and recommend appointment of CompanyDs external auditors and establishment of their remuneration. 4. To monitor the CompanyDs compliance with all relevant laws and regulations. 5. To consider and review any transactions likely to give rise to a conflict of interest. 6. To deliver a report on the Audit CommitteeDs activities for publication in the CompanyDs Annual Report, such report to be signed by the Chairman of the Audit Committee. 7. To carry out such other duties as may from time to time be assigned the CompanyDs Board of Directors.

Annual Report 2007

3. Executive Board As at 31st December 2007 the CompanyDs Executive Board consisted of five Directors, as follows: Name Mrs. Pranee Phaoenchoke Mr. Sompong Phaoenchoke Ms. Kaewjai Phaoenchoke Mr. Wuttichai Phaoenchoke Mr. Somkiat Nimrawee Secretary to the Executive Board:

Position Chairman of the Executive Board Managing Director Director Director Director Mr. Sakchai Komgris

Directors on the Executive Board serve terms of three years. A quorum for a meeting of the Executive Board is constituted by not less than half the total number of Directors. Resolutions are carried by the affirmative votes of not less than half the total number of Directors present. Powers and Duties of the Executive Board 1. To control and take care of the general conduct of the CompanyDs business and perform duties assigned to it by the CompanyDs Board of Directors in order to achieve the CompanyDs objectives. 2. To direct and monitor the successful implementation of policies and working plans assigned by the CompanyDs Board of Directors to the various administrative departments. 3. To examine, consider and authorize important and urgent business within the scope of its powers and duties and monetary limitation determined by the CompanyDs Board of Directors but in any case not exceeding Bt.400m. 4. To establish financial policies and supervise and monitor the administration of all financial work, including all business conducted with financial institutions, with a view to optimising efficiency. 5. To consider and authorize transactions within the CompanyDs scope of business. 6. To perform such other duties as may be assigned by the CompanyDs Board of Directors. The scope of the powers and duties mentioned shall not extend to the authorization of any transaction in which the executive board or an individual is an interested party or involving a conflict of interest on the part of the executive board or an individual, nor any related party transaction nor the acquisition or disposal of listed CompanyDs assets, in accordance with the regulations of the Stock Exchange of Thailand.

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT 4. Risk Management Committee As at 28th February 2008 the CompanyDs Risk Management Committee was composed of six members, as follows: Name Mr. Sompong Phaoenchoke Mr. Somkiat Nimrawee Mr. Wuttichai Phaoenchoke Mrs. Kaewkao Phaoenchoke Mr. Suvait Theeravachirakul Mr. Noppadol Suplaset Mr. Phakkawat Suwanmajo*

Position Chairman of the Risk Management Committee Member of the Risk Management Committee Member of the Risk Management Committee Member of the Risk Management Committee Member of the Risk Management Committee Member of the Risk Management Committee Member of and Secretary to the Risk Management Committee

Note: * Mr. Phakkawat Suwanmajo was appointed Member of and Secretary to the Risk Management Committee effective 28th February 2008.

Members of the Risk Management Committee serve terms of two years. A quorum for a meeting of the Risk Management Committee is constituted by not less than half the total number of Members. Resolutions are carried by the affirmative votes of not less than half the total number of Members present. The scope of duties and responsibilities of the Risk Management Committee is as follows: 1. To establish a policy and framework for managing the CompanyDs overall risk situation, covering the various risks that might affect the CompanyDs results and reputation. 2. To establish strategies which are in accordance with the CompanyDs overall risk management policy and which enable risks to be gauged, monitored, taken care of and kept at appropriate levels, including the setting up of advance warning systems. 3. To review the adequacy and effectiveness of risk management policies and systems and monitor adherence to those policies on an ongoing basis so as to enhance the prudence, security and efficiency of the CompanyDs overall risk management. 4. The Risk Management Committee has the power to establish and define the roles of sub-committees and working committees for managing the various kinds of risk as it sees fit, and all such committees shall report directly to the Risk Management Committee. 5. The Committee is empowered to call for documents and information and to require individuals to provide facts for consideration so as to be able to achieve its objectives. 6. To communicate with the Audit Committee in order to ensure that risk management systems are in line with internal controls and in accordance with policies and strategies that have been established. 7. To report to the Board on risks and risk management.

Annual Report 2007

5. Remuneration Committee As at 31st December 2007 the CompanyDs Remuneration Committee was composed of three members, as follows: Name Position Mr. Pricha Attavipach Chairman of the Remuneration Committee Mr. Kavee Vasuvat Member of the Remuneration Committee Mr. Somkiat Nimrawee Member of the Remuneration Committee Secretary to the Remuneration Committee: Mr. Sakchai Komgris** Note: ** Mr. Sakchai Komgris was appointed Secretary to the Remuneration Committee effective 28th February 2008.

Members of the Remuneration Management Committee serve terms of two years. A quorum for a meeting of the Remuneration Management Committee is constituted by not less than half the total number of Members. Resolutions are carried by the affirmative votes of not less than half the total number of Members present. The scope of duties and responsibilities of the Remuneration Committee is as follows: 1. To set policies, methodology and criteria for establishing DirectorsD remuneration fairly and in consonance with the CompanyDs results and with each individualDs performance. 2. To consider, review and present proposals for establishing DirectorsD remuneration. 3. To present reports and proposals of the Remuneration Committee to meetings of the CompanyDs Board of Directors for their consideration. Directors signing powers DirectorsD signatory powers to bind the Company must be granted by a general meeting of shareholders and recorded in the CompanyDs registry. At present such powers are as follows: Any one of the following Directors, acting alone, may bind the Company with his or her signature and the Company seal: Mrs. Pranee Phaoenchoke Mr. Sompong Phaoenchoke Ms. Kaewjai Phaoenchoke The following two Directors, acting together, may jointly bind the Company with their signatures and the Company seal: Mr. Wuttichai Phaoenchoke Mr. Somkiat Nimrawee Note: The Company is preparing a proposal to place before the 2008 Annual General Meeting of Shareholders for an amendment to Article 25 of the Company-s Articles of Association regarding the Directors- signing powers.

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT Company Administrators As at 31st December 2007 Company Administrators were as follows: Mrs. Pranee Phaoenchoke President Mr. Sompong Phaoenchoke Managing Director Mr. Prakarn Cheunchokesan Deputy Managing Director Mr. Viruch Kulsri Senior Assistant Managing Director Mr. Noppadol Suplaset Assistant Managing Director Managing Director s Powers and Duties 1. To control and oversee the pursuance of the CompanyDs business in general and to perform duties assigned by the CompanyDs Board of Directors or Executive Board, ensuring that objectives are met. 2. To follow up and monitor the implementation of policies and working plans, ensuring that the administrative departments concerned duly perform the various tasks assigned them by the CompanyDs Board of Directors or Executive Board, with the desired results. 3. To consider and, if appropriate, approve important and urgent transactions within the scope of his powers and duties and such monetary limits as the CompanyDs Board of Directors may establish, up to a maximum of Bt.200 million. 4. To control and oversee financial administration, including dealings with financial institutions, ensuring that it is in accordance with financial policies, as efficient as possible in accordance with assignments from the CompanyDs Board of Directors or Executive Board. 5. To consider and, if appropriate, approve business transactions within the CompanyDs authorized areas of business. 6. To perform such other duties as may be assigned by the CompanyDs Board of Directors or Executive Board. The scope of the powers and duties mentioned shall not extend to the authorization of any transaction in which the Managing Director or an individual with a possible conflict of interest is an interested party or where there is a conflict of interest regarding the benefits of a related party transaction, or the acquisition or disposal of the listed CompanyDs assets, in accordance with the regulations of the Stock Exchange of Thailand. Nomination of Directors and Administrators The Company does not have a nominating committee, but the process for selecting individuals to be appointed as Directors includes consideration of a number of characteristics including skills, experience and capability, especially in areas that are of the greatest benefit to the Company, and integrity. In fairness to shareholders, each individual should be able to dedicate the necessary time to attending board meetings on a regular basis, and thus no individual should hold directorships of several listed companies at same time. Finally the individual must not possess any of the qualities or characteristics prohibited by the Listed Companies Act. The Board of Directors undertakes an initial assessment of possible candidates for the position of Company Director, and then selects the most suitable candidate(s) to place before a meeting of shareholders for their consideration.

Annual Report 2007

Approval is by simple majority of votes of those shareholders present or duly represented at the meeting and in possession of voting rights, as follows: 1. Each share confers the right to one vote. 2. Each shareholder who votes must use all his votes as per (1) above for a single individual or for a number of individuals together, but may not allocate votes individually. 3. The individuals receiving the highest number of votes will be selected in descending order for appointment as Directors of the Company depending on the number of Directors to be appointed on each occasion. In the event that two candidates receive the same number of votes and that appointing them both would lead to exceeding the required number of Directors, the Chairman of the meeting shall exercise a casting vote.

Directors and Administrators Remuneration A. Monetary remuneration - Directors and Audit Committee Total remuneration received by all nine Directors from the Company in their capacity as Directors by way of DirectorsD stipends and meeting fees in 2007 was Bt. 2,760,000 .- Details are as follows: DirectorDs Name Mrs. Pranee Phaoenchoke Mr. Sompong Phaoenchoke Ms. Kaewjai Phaoenchoke Mr. Wuttichai Phaoenchoke Mr. Pricha Attavipach Mr. Somkiat Nimrawee Mr. Anthony Farquhar McDonald Mr. Kavee Vasuvat Mr. Suvait Theeravachirakul Mr. Pong Sarasin Total

2007 (Baht) 240,000 240,000 240,000 240,000 840,000 240,000 240,000 240,000 240,000 - Leave 2,760,000

2006 (Baht) 330,000 310,000 260,000 240,000 850,000 250,000 190,000 250,000 250,000 120,000 3,050,000

- Administrators (excluding Directors)

Salaries Bonus Living Allowances Total

Number of persons 4 4 2

2007 Remuneration (baht) 8,938,372 619,615 281,260 9,839,247

2006 Number of Remuneration persons (baht) 4 9,827,999 4 619,615 2 283,884 10,731,498

Note: The monthly and yearly remuneration of the President of the Executive Board and of the Managing Director have been duly considered by the Remuneration Committee and approved by the Company-s Board of Directors.

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT B. Non-monetary remuneration - Directors Stock options conferring the right to buy ordinary shares of the Company under the ESOP 2003 program which runs for five years, the total number of stock options being 24,999,000 and the exercise price Bt.5.00* per unit. The numbers of units allocated to each Director are as follows. Name Mrs. Pranee Phaoenchoke Mr. Sompong Phaoenchoke Ms. Kaewjai Phaoenchoke Mr. Wuttichai Phaoenchoke Mr. Pricha Attavipach Mr. Anthony Farquhar McDonald Mr. Somkiat Nimrawee Mr. Kavee Vasuvat Mr. Suvait Theeravachirakul

Position President Managing Director Director Director Director Director Director Director Director

Number of stock options allocated 7,900,000 5,300,000 4,700,000 4,300,000 300,000 200,000 200,000 150,000 150,000

As % of total project 31.6 21.2 18.8 17.2 1.2 0.8 0.8 0.6 0.6

Note* On 24th April 2006 a meeting of the Company-s shareholders resolved to authorize a change in the exercise price of the common stock options from Bt.8.00 per unit to Bt.5.00 per unit with effect from June 2006.

- Administrators Company car

Control of internal information The Company is acutely aware of the importance of safeguarding the confidentiality of internal information and therefore has strict policies guarding against the use by Directors and employees of internal information for their personal benefit. Important internal information is revealed only to individuals directly concerned, such as auditors or legal counsel. The Company releases information to shareholders only as and when appropriate. The Board of Directors has resolved that Directors and Administrators of the Company and the Manager of Accounting & Finance Department, together with their spouses, parents, children and siblings, must refrain from buying or selling securities from at least five working days before the Company discloses its financial statements to the stock exchange. The Company has also informed them of their obligation to report their shareholdings in the Company and those of their spouses and of any children who are still minors, including the reporting of any changes in their shareholdings to the SEC and the SET in accordance with article 59, subject to penalties for non-compliance as per article 275 of the Securities and Stock Exchange Act 1992, and has assigned the Share Register and Investor Relations Department to inform them in advance of the periods during which they should refrain form trading in securities each quarter. The Company has set out the basic principles of control of internal information in the form of an article in the CompanyDs code of business ethics, to ensure that all employees adhere to them.

Annual Report 2007

The Board of Directors has resolved that Directors and Administrators who are obliged by law to report their shareholdings must submit these reports to the CompanyDs Board of Directors each time. The Board of Directors has further determined that shareholdings of Directors and Administrators be reported every quarter to the Board.

Dividend Policy of Company and Subsidiaries (a)

(b)

Payment of dividends by the Company to Shareholders TRUDs divident policy is to pay a divident each year of approximately 40% of its consolidated net earning of the previous year, subject to TRU and its affiliatesD cash flow and investment plans, and other future considerations as to necessity and appropriateness. Payment of dividends by Subsidiaries to the Company Subsidiary companies Thai Rung Tools and Dies Co., Ltd., Thai V.P. Auto Service Co., Ltd., Thai Auto Pressparts Co,. Ltd., Thai Auto Body Assembly Co., Ltd. and Thai Ultimate Car Co., Ltd. and TRU Leasing Co., Ltd. consider their policy year by year in light of their investment requirements and other circumstances as appropriate.

Auditors Remuneration a) Audit fees During the year the Company and its subsidiaries paid a total of Bt. 2,070,000 to the CompanyDs Auditors, Ernst & Young Office Ltd. as per the following details.

Thai Rung Union Car Plc Thai V.P. Auto Service Co., Ltd. Thai Rung Tools and Dies Co., Ltd. Thai Auto Pressparts Co., Ltd Thai Ultimate Car Co., Ltd. Thai Auto Body Assembly Co., Ltd. TRU Leasing Co., Ltd.

Baht 700,000 280,000 260,000 300,000 450,000 30,000 50,000 2,070,000

b) Non-audit fees In the course of the year 2007 the Company and its subsidiaries paid Ernst & Young Office Ltd. a total of Bt. 95,308 by way of other representation and service charges such as hotel and travel expenses, postal charges, photocopying expenses and certification costs. In the course of the year 2007 Thai Auto Pressparts Co., Ltd. paid Bt.70,000 to Ernst & Young Office Ltd. by way of special service fees in accordance with BOI instructions.

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT

Corporate Governance Principles of corporate governance are guidelines for doing business and administering organizations, which are becoming more and more widely known and accepted. In accordance with these principles the Board of Directors has a very important role to play in running the organization, by focusing on responsibilities towards all parties with which it has dealings, both inside and outside the organization, and by emphasizing the importance of ethical dealings, transparency, efficiency, adequate disclosure of information that can be examined, the protection of shareholdersD rights and attention to their remuneration, and responsibilities towards society and the nation. The Company is very well aware of the importance of these guidelines and adheres to them strictly, so as to inspire confidence in shareholders and everyone with whom it has dealings and to form a solid base for the growth of the business. The Company is committed to applying the principles of corporate governance on an ongoing basis to the running of the CompanyDs business. Thanks to this commitment the Company was assessed as {goodD by theD {Corporate Governance Report of Thai Listed Companies 2007D and was also assessed as {goodD in the joint SEC-BOI {AGM check-listD. (The Thai Institute of Directors (IOD) did not carry out their assessment of corporate governance in 2007, due to a change in criteria.) The CompanyDs policy is to continue improving the standard of corporate governance. 1. Shareholders Rights The policy laid down by the CompanyDs Board of Directors is to look after shareholdersD basic rights. The Board considers the equitable safeguarding of the interests of all groups of shareholders to be an important duty and responsibility, in order to ensure that shareholders are treated fairly and that they have confidence in how business is conducted by the Company and its Directors. 1. The CompanyDs Board of Directors has established a corporate governance policy in writing, which must be strictly adhered to, as per Company Announcement No. 37/2004 as follows. 1. Rights and equitable treatment of Shareholders and other Stakeholders â&#x20AC;˘ The Company deals fairly and impartially with shareholders and other stakeholders such as employees and contractors, trading partners, the public, competitors, and creditors. â&#x20AC;˘ The Company endeavours to arrange shareholdersD meetings at the most convenient times possible for shareholders and to give shareholders equal opportunities to voice their opinions and ask questions. 2. Board of Directors - structure, role, duties and responsibilities, independence â&#x20AC;˘ The Board of Directors should play a leading role, have vision, and be independent in its decision making, for the overall maximum benefit of the Company and its shareholders. â&#x20AC;˘ The Board of Directors, management and shareholders should consider prudently how best to solve problems arising through any conflict of interest, with sincerity and integrity, rationally and independently within the framework of best ethical practice. â&#x20AC;˘ At least one third of the total number of Directors, but in any case not less than three, shall be Independent Directors.

Annual Report 2007

•

The Board of Directors and the management team have agreed a system for the clear sharing of function, duties and responsibilities, and the Board has established a number of committees to help it study and scrutinize work in light of policies and to provide clear monitoring and follow-up. Committees currently include the Executive Board, the Audit Committee, the Risk Management Committee and the Remuneration Committee. The Board may consider setting up further committees as and when appropriate. • Directors are expected to attend all Board meetings. Each year the Company fixes such meeting in advance, at least one every three months, with additional, special meetings being called as and when necessary. The Company discloses the number of meetings attended by each Director in its Annual Report. 3. Disclosure and Transparency • The Board shall perform its duties with transparency, such that its actions can be examined, and shall disclose of correct and complete information, in a timely manner, to all interested parties. The Company has appointed the persons to be responsible for communicating with shareholders, institutional investors, stock analysts, and relevant government departments. • The Company has established a Remuneration Committee whose duty is to establish DirectorsD remuneration fairly and reasonably. The establishment of DirectorsD remuneration is subject to approval by a general meeting of shareholders, and is published in the CompanyDs Annual Report. 4. Control and Management of Risk • The Company attaches importance to the implementation of internal controls and audits, and has accordingly established an internal audit department to ensure that basic working practices and important financial transactions are conducted in accordance with established guidelines and in an efficient manner, reporting direct to the Audit Committee. 5. Business Ethics • The Company has issued to all Directors, administrators, managers and employees a written code of ethics to which they must adhere in performing their duties. 2. The CompanyDs Board of Directors has determined that an Annual General Meeting of Shareholders be held each year within four months of the close of business of the previous accounting year, and that the Company inform time, place and agenda of the meeting and provide relevant information and give DirectorsD opinion as regards each agenda item in the letter of invitation to the shareholdersD meeting, which shall be in both Thai and English, and attach a form of proxy together with explanations as to registration for the meeting and granting of proxy are sent to shareholders at least fourteen days in advance and posted on the CompanyDs website beforehand, so as to give shareholders sufficient opportunity to study the information in advance of the meeting. In addition to this, in the letter of invitation to the shareholdersD meeting, the Company gives shareholders the opportunity of querying information relating to agenda items or of submitting questions to the Company in advance of the meeting by e-mail or fax, to promote shareholdersD opportunities to express their opinions to the Company.

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT 3. The CompanyDs Board of Directors treats all its shareholders impartially, endeavours to arrange shareholdersD meetings at convenient and appropriate venues and opens for registration well before the meeting starts, while shareholders who are unable to attend in person can appoint another person as proxy and can also choose to appoint one of the CompanyDs independent directors to act as proxy. Before the meeting starts, all rules and procedures governing the meeting are announced and clearly explained, including the method used to count shareholdersD votes on each agenda item. The Company hands out voting registration cards for each agenda item, while for any proposed appointment of Directors there is a card for each individual candidate, allowing shareholders to vote on each individual separately if they so wish. Throughout the meeting shareholders are welcome to express their opinions and to ask questions, all of which are answered. Complete and accurate minutes are taken of each meeting and are made available for shareholdersD inspection. 4. The CompanyDs Board of Directors attaches great importance to shareholdersD meetings, and all Directors endeavour to attend every such meeting, particularly the President of the Board of Directors and the Chairmen of the various committees, so as to facilitate questions and answers on matters relating to each one. 2. Equitable Treatment of Shareholders The policy of the CompanyDs Board of Directors is to treat all shareholders equally and fairly so as to safeguard their basic rights. 1. The CompanyDs Board of Directors accommodates shareholders who are unable to attend meetings in person, enabling them to vote by proxy. The Company also makes available the name of at least one independent Director whom shareholders have the option of appointing as their proxy, and provides as part of the letter of invitation to the meeting, information on each one, comprising name, age, address, positions held, academic record, work experience, shareholding in the Company and whether the Director is an interested party with regard to any particular agenda items. The Company makes available a form of proxy which enables shareholders to give instructions on how votes are to be cast on each item; however shareholders are free to use any form that complies with the criteria published by the Department of Business Development of the Ministry of Commerce. 2. The CompanyDs Board of Directors arranges for voting registration cards to be handed out for each agenda item, while for any proposed appointment of Directors there is a card for each individual candidate, allowing shareholders to vote on each individual separately if they so wish, and facilitating transparency and ease of examination in the event of any subsequent dispute. Information on individuals to be proposed for appointment as Directors is disclosed in the letter of invitation to the shareholdersD meeting, the information comprising name, photograph, age, academic record and DirectorsD training courses, work experience and shareholding in the Company, for shareholders to study before reaching a decision. 3. In meetings of the Board of Directors or of shareholders, any Director, Administrator or shareholder who is an interested party in any agenda item must disclose to the meeting information on his or her own interest and those of related parties, and will not be entitled to vote on that particular agenda item, so that the meeting can consider transactions that might involve conflicts of interest and reach decisions in the overall best interests of the Company.

Annual Report 2007

4. A shareholder who is also an Administrator may not raise any additional agenda item at a meeting of shareholders unless such item has been communicated in advance, even if the item is not so important as to require shareholders to spend time studying it before reaching a decision. 5. The CompanyDs Board of Directors attaches great importance to the safekeeping and protection of confidential internal information and has therefore established written guidelines for guarding against the use of internal information for personal benefit. For details please refer to Control of Internal Information. 6. The Board of Directors has resolved that Directors and Administrators who are obliged by law to report their shareholdings must submit these reports to the CompanyDs Board of Directors each time. The Board of Directors has further determined that shareholdings of Directors and Administrators be reported every quarter to the Board. 7. The Company has so far not put in place arrangements to facilitate minority shareholdersD proposing additional agenda items or putting forward candidatesD names for appointment as Directors in advance of shareholdersD meetings, but the Board of Directors will take these matters under consideration in due course. 3. Stakeholders The Company attaches importance to dealing with all its stakeholders, including shareholders, customers, trading partners and creditors, competitors, employees, the environment, the community and society with sincerity, honesty and impartiality. 1. The CompanyDs Board of Directors has produced and issued to all Directors, Administrators and employees a written Code of Ethics or Statement of Business Conduct to which they must adhere in performing their duties in accordance with the CompanyDs mission, as follows. • Shareholders The Company attaches great importance to its shareholders and other stakeholders, and carries on its business with sincerity, integrity and fairness, treating all parties concerned equitably, for the greater benefit of all concerned. • Employees The Company is confident that its employees constitute the organizationDs most valuable resource, and is therefore determined to recruit and look after good people with know-how, capability and integrity, and also focuses on developing individualsD potential to help employees advance, while providing them with appropriate and fair remuneration and various welfare benefits aimed at promoting a cooperative work atmosphere in which initiative and creativity can thrive to the benefit of the organization. • Customers The Company is devoted to and responsible to its customers, supplying them with quality standard goods, and respecting their confidentiality. • Trading Partners The Company can demonstrate that its procurement practices are in accordance with commercial conditions and that its financial borrowings, repayments and guarantee transactions are all in accordance with terms and conditions agreed with creditors. • Competitors The Company operates within a framework of fair competition, adhering to best practice principles and avoiding any unethical practices aimed at harming competitors. Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT â&#x20AC;˘

Community and Society The Company cares about the environment, and takes steps to reduce and avoid creating pollution in its production processes that could affect the environment or the community, promotes community relations activities, helps society consistently to the best of its ability, and is always ready to listen to warnings or suggestions from the community so as to be more environmentally friendly, to improve the state of the environment and make it more liveable. 2 The Company attaches importance to playing a useful role as regards the community, society and religion, for example through financial or material donations in support of various charitable organizations, granting scholarships every year to children of the CompanyDs employees and pupils of schools located near the Company, supporting the Buddhist religious clubs in the Company, arranging important religious activities in the Company on an ongoing basis throughout the year, arranging a competition for automotive design (TAS Contest) for five consecutive years to give young people and interested parties in general the opportunity to enter their work in the contest, judging and presentation of awards for which takes place every year at the Bangkok Motor Show. 3 The Company pays close attention to the health and safety of all its employees, and has issued a Circular, No. 6/2008, concerning its policies on safety and health at work and the work environment, for all employees to cooperate in strict observance. 4 The Company attaches great importance to its employees, who constitute one of its most important resources. It has a policy of looking after its employees consistently, and has arranged to provide various appropriate welfare benefits such as buses to transport workers to and from the factory, a canteen, uniforms, employeesD birthday parties, accident insurance, annual health checks, a clinic and a library. The Company has made arrangements for channels of communication to enable it to receive opinions and suggestions from all stakeholder groups, with a view to improving and developing its products, services and organisation, making it stable, able to compete successfully in the on term. One example is the employee suggestion scheme, in which each employee has a target of six suggestions per year, and suggestions go straight from the suggestion box to the Managing Director. Another is the facility for customers, shareholders, or the general public to submit suggestions and recommendations through the CompanyDs website. 4. Disclosure and Transparency The CompanyDs policy as established by the Board of Directors is one of transparency and of complete and timely disclosure to all interested parties of correct, readily accessible, consistent, reliable and checkable information, whether financial or non-financial. 1. The Company has set up a {Share Register and Investor Relations DepartmentD within the Office of the Managing Director, whose duty it is to disclose correct, complete, transparent information, whether financial or of a general nature, as well as being responsible for communicating with outside parties such as shareholders, institutional and other investors, analysts and relevant government departments in a fair and equitable manner. Investors can request further information about the Company by contacting:

Annual Report 2007

Share Register & Investor Relations Department, Office of the Managing Director Tel: 0-2420-0076 ext. 321 or 359, Fax: 0-2812-0844 e-mail: naiyana@thairung.co.th or omd_ir@thairung.co.th or by visiting the CompanyDs website: http://www.thairung.co.th 2. The Company has disclosed information in accordance with the criteria established using the Stock Exchange of ThailandDs SET Community Portal (SCP) system by way of Form 56-1 for the disclosure of annual information, as well as submitting its Annual Report and disclosing important information in both Thai and English on the CompanyDs website. 3. The Board of Directors has prepared a report on the BoardDs responsibility for financial statements, which is shown together with the AuditorDs Report in Form 56-1 for annual information and in the CompanyDs Annual Report. 4. The Board of Directors has disclosed the roles and duties of the Board and of the various Committees in Form 56-1 for annual information and in the CompanyDs Annual Report. (For details please refer to Management Structure.) Details concerning the number of times each board and committee met during 2007 and individual attendance records are as follows. Meetings attended / Meetings held Name Mrs. Pranee Phaoenchoke Mr. Sompong Phaoenchoke Ms. Kaewjai Phaoenchoke Mr. Wuttichai Phaoenchoke Mr. Anthony Farquhar McDonald Mr. Somkiat Nimrawee Mr. Pricha Attavipach Mr. Kavee Vasuvat Mr. Suvait Theeravachirakul Mrs. Kaewkao Phaoenchoke Mr. Noppadol Suplaset **

Company Board of Directors 4/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 -

Executive Board 1/1 1/1 1/1 1/1 0/1 -

Audit Remuneration Risk Attendance at Committee Committee Management Shareholders! Committee Meetings 1/1 0/0 1/1 1/1 0/0 1/1 1/1 1/2 0/0 1/1 4/4 2/2 1/1 4/4 2/2 1/1 4/4 0/0 0/1 0/0 0/0 -

5. Responsibilities of the Board of Directors The CompanyDs Board of Directors is well aware of the important role it plays in controlling and monitoring business for the greatest possible good of the Company, and of its answerability to shareholders for the consequences of its actions in carrying out its duties. It operates independently from management. Details are as follows. 1. Board Structure 1 The Board of Directors of the Company consists of nine persons, at least one third of whom must be independent directors. At present the Company has four independent non-executive directors. The Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT characteristics of independent directors are as defined by the Company. (For details please see Management Structure.) 2 The President is not the same person as the Managing Director, and the Board of Directors of the Company has clearly defined the Managing DirectorDs powers and duties so that no single person has unlimited power. (For details please see Management Structure.) This arrangement makes for better checks and balances and control. 3 The Board of Directors of the Company has not so far appointed a Company Secretary, but in practice the Office of the Managing Director performs the duties of issuing and filing letters of invitation to and minutes of the meetings of the CompanyDs Board of Directors. In due course the Board will consider appointing a person to occupy the position of Company Secretary and will duly notify the SEC and the SET. 4 The Board of Directors of the Company has not so far established on how many company boards each director can sit, nor has it established clear policies or guidelines on the question of seats on boards of other companies being occupied by the Managing Director and senior Administrators of the Company, since these matters are in the process of being studied prior to proceeding. The CompanyDs Board of Directors will consider these matters in due course. 2. Other Boards and Committees 1. The Board of Directors has established four other boards and committees: the Audit Committee, the Executive Board, the Risk Management Committee and the Remuneration Committee in order to help study details and scrutinize work as necessary according to the situation, to lighten the workload of the Board of Directors, to provide clear arrangements for the consideration of each particular type of subject, and to accord with good corporate governance practices. (For names of members, powers and duties and other information on each board and committee please refer to Management Structure.) The Company does not have a nomination committee but it does have a process for the selection of directors and administrators in accordance with established methods and criteria. (For details please see Nomination of Directors and Administrators.) 2. The President of the Board of Directors of the Company cannot be a chairman or member of any other board or committee. The majority of members of other boards and committees are independent directors, including the chairmen of the Audit Committee and of the Remuneration Committee, so as to ensure transparency and independence in carrying out their duties. 3. Role, Duties and Responsibilities of the Board of Directors 1. The Board of Directors plays a part in establishing the CompanyDs vision, mission and business strategies and also in ensuring independently that administrative departments proceed in accordance with work plans efficiently and effectively for the overall benefit of the Company and its shareholders. In addition the Board establishes internal control systems and an effective internal audit, and constantly monitors them though meetings of the Audit Committee. 2. The Board of Directors has established written corporate governance policies and a Code of Ethics or Statement of Business Conduct (see details as per the section headed Corporate Governance, paragraph 1, shareholdersD rights), and it reviews these policies and monitors compliance with them consistently.

Annual Report 2007

3. The CompanyDs Board of Directors has established guidelines for the careful consideration of transactions involving possible conflicts of interest for the Company and its shareholders, whereby anyone having an interest in any agenda item must disclose such interest to the meeting, and foregoes the right to take part in taking a decision on that item. The CompanyDs Board of Directors has established guidelines for the consideration of related party transactions and of acquisitions and disposals of Company assets as follows. â&#x20AC;˘ In the event that, the size of the transaction having been calculated in accordance with Stock Exchange of Thailand criteria it transpires that the transaction requires approval by the CompanyDs Board of Directors, then the transaction must be submitted to the Board of Directors for their consideration. In the event that the Audit Committee disagrees, the proposal can nevertheless be placed before the Board and an appropriate record made in the minutes. â&#x20AC;˘ In the event that, the size of the transaction having been calculated in accordance with Stock Exchange of Thailand criteria, it transpires that the transaction requires approval by a meeting of shareholders, then the transaction must first be submitted to the Audit Committee for consideration and, if approved, onward submission to the Board of Directors who in turn will, if approved, propose it to a meeting of shareholders. 4. The CompanyDs Board of Directors attaches considerable importance to risk control and management systems, and has accordingly established a Risk Management Committee to establish duties and policies and a framework for managing the CompanyDs overall risk situation, covering the various risks that might affect the CompanyDs results and reputation, as well as establishing an internal audit department to ensure that basic working practices and important financial transactions are conducted in accordance with established guidelines and in an efficient manner. In order to make sure that the internal audit department can perform properly and independently, the Board has instructed it to report direct to the Audit Committee. (For details please refer to Internal Controls.) 4. Board Meetings 1. The CompanyDs Board of Directors establishes a schedule of Board meetings in advance for each year. Meetings take place at least once a quarter, with additional special meetings being held as and when necessary. The Company informs all Directors in advance of the schedule of meetings referred to above so as to enable them to plan their time and make themselves available for the meetings. Directors attach great importance to Board meetings and endeavour always to attend. Letters of invitation are sent at least seven days in advance clearly setting out the agenda. Each Director is free to suggest topics for the agenda, and to request additional information from the Managing Director or the Secretary to the Board of Directors. 2. At meetings of the CompanyDs Board of Directors, the President of the Board ensures that sufficient time is made available for Directors to discuss important problems thoroughly together, and the Managing Director always invites senior Administrators to attend Board meetings in order to provide additional detailed information to the extent that it is directly relevant to problems. One of the items on the agenda at all regular quarterly meetings of the Board is the following up of outstanding issues. Directors can express their opinions openly and freely. A written record is made of each meeting and, once the minutes have been approved by the Board, they are kept available for Directors and other concerned parties to examine.

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT 5. Assessment of Board s Performance The CompanyDs Board of Directors has not so far set up a system for assessing the BoardDs overall performance nor its performance in specific areas, nor for regular self-assessment by the Board. The Board will give consideration to these matters in due course. 6. Remuneration The Company has established a Remuneration Committee, which is chaired by an independent director and is charged with setting policies, methodology and criteria for establishing the remuneration of Directors, the President and the Managing Director fairly, transparently, in consonance with the CompanyDs results and each individualDs performance, in line with industry norms, and sufficient to reward directors having the desired characteristics. DirectorsD remuneration is subject to approval by a meeting of shareholders of the Company and to disclosure in the CompanyDs Annual Report and in Form 56-1 as required by the SEC. (For details please refer to AdministratorsD Remuneration.) 7. Development of Directors and Administrators 1 The CompanyDs Board of Directors facilitates and supports training and study for Directors and members of the Audit Committee by way of regular attendance of various courses run by the Institute of Directors (IOD). At present 78% of Directors have attended these courses. Details are as follows. Name Course 1. Mr. Sompong Phaoenchoke Director Certification Programme 26/2003 2. Ms. Kaewjai Phaoenchoke Director Certification Programme 29/2003 3. Mr. Anthony Farquhar McDonald Director Certification Programme 83/2007 4. Mr. Somkiat Nimrawee Director Accreditation Programme 10/2004 5. Mr. Pricha Attavipach Director Certification Programme 39/2004 Finance for Non-Finance Directors 8/2004 6. Mr. Kavee Vasuvat Director Forum Programme 1/2000 Director Accreditation Programme 23/2004 Director Certification Programme 58/2005 Finance for Non-Finance Directors 18/2005 Audit Committee Programme 10/2005 7. Mr. Suvait Theeravachirakul Director Certification Programme 9/2001 Audit Committee Programme 15/2006 2 As for recommending types of business and guidelines for doing business to new Directors, and establishing development and transition plans for the jobs of the Managing Director and senior Administrators, so far no action has been taken; however the Board of Directors will consider these matters in due course. 3 With regard to the preparation of a plan for developing and testing the work of the Managing Director and top level Administrators, no action has s yet been taken, however the CompanyDs Board of Directors will consider this matter on due course.

Annual Report 2007

Related Party Transactions (1) Transactions with Related Parties having a Possible Conflict of Interest Related company

Main type of Business

Thai Rung Group Counterparty Isuzu Chaicharoenkij Motor Isuzu dealer TRU, TUC Co., Ltd. Sale of spare parts TRU, TVS after-sales service TVS TRU, TUC TUC TRU TRU Isuzu V. Motor Co., Ltd. Isuzu dealer TRU, TUC Sale of spare parts TVS After sales service TRU Firstpart Co., Ltd. Sale of spare parts & accessories TUC, TVS Vehicle repair service TRU, TUC, TVS TUC TUC TUC V.P. Auto Enterprise Co., Ltd. Ford dealer TRU, TVS Sale of spare parts TUC, TVS After sales service TUC TUC VPK Auto Co., Ltd. Ford dealer TUC Sale of spare parts TUC After sales service Thai V.P. Corporation Co.,Ltd. Vehicle rental TRU, TAP, TUC, TVS, TRT TUC TVS, TUC TUC Phothiphoom Co., Ltd. Real estate TRU, TUC TRU Sinthoranee Land and Real estate TUC, TVS Construction Co., Ltd. Chaicharoenkij Motor Co., Ltd. Isuzu dealer TUC Europe Thai Car Rent Co., Ltd. Car rental TUC Lexus Auto City Co., Ltd. Lexus dealer TUC

Related Party Transactions 2007 (Baht millions) Income from assembly, fitting accessories 245.03 Purchase of spares, vehicle repairs 2.09 Sale of spare parts 1.07 Sales promotion expenses 10.44 Commissions paid 5.00 Purchase of vehicles 7.91 Loans granted 28.00 Income from assembly, fitting accessories 16.43 Purchase of spares and payment for repairs 0.06 Rental paid for showroom space 0.10 Sale of spares 25.79 Purchase of spares and payment for repairs 4.01 Income from consultancy fees 0.95 Income from rental of space and utilities 6.19 Sale of vehicles and office equipment 0.72 Purchase of spares and payment for repairs 0.30 Sale of spares and charges for repairs 0.69 Income from consultancy fees 0.95 Income from rental of space and utilities 0.77 Purchase of spares 0.02 Sale of spares 2.16

Outstanding (Baht millions) Trade debtors 84.74 Other debtors 0.14 Trade creditors 1.22 Other creditors 4.85 Short term loans 28.08

Trade debtors Other debtors Trade creditors Trade debtors Other debtors Trade creditors Other creditors

1.24 0.01 0.01 8.92 5.34 0.40 0.04

Trade debtors Other debtors Trade creditors

0.66 0.22 0.04

Vehicle rental

Trade debtors Other debtors Trade creditors 3.85 Trade debtors

0.21 0.37 0.04 0.36

Administration & management fees Sale of spares and charges for repairs Income from rental of space and utilities Cost of leasing land Cost of renting showroom Land lease cost & amort. of leasehold rights

1.15 0.98 0.37 29.12 0.13 6.57

Other debtors Trade creditors Other creditors Other creditors

0.12 0.03 1.06 1.90

Other debtors Other creditors 0.96 Other creditors 1.23 Other debtors 1.80 Other debtors

0.99 1.20 0.16 0.91 0.15

Cost of leasing land Income from rental of space and utilities Income from lease of land

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT Nature of relationships 1. TRT, TVS, TAP and TAB are subsidiaries of TRU, in which the Phaoenchoke group hold directorships and are the major shareholders. 2. TUC is a subsidiary of TVS, which holds 99.53% of the shares, the Phaoenchoke group holding the remaining 0.47%. 3. TRL is a subsidiary of TVS, which holds 90% of the shares, the Phaoenchoke group holding the remaining 10%. 4. The above listed companies having possible conflicts of interest are related companies in which members of the Phaoenchoke group are both directors and major shareholders. Key to Abbreviations Thai Rung Tools and Dies Co., Ltd. TRT Thai V.P. Auto Service Co., Ltd. TVS Thai Auto Pressparts Co., Ltd. TAP Thai Auto Body Assembly Co., Ltd. TAB Thai Ultimate Car Co., Ltd. TUC TRU Leasing Co., Ltd. TRL (2) Necessity and Propriety of Related Party Transactions â&#x20AC;˘ Carrying out contract assembly of vehicles, fitting accessories, buying and selling spare parts and providing and receiving vehicle repair services are all normal business transactions of the Company, performed at cost plus a profit margin. â&#x20AC;˘ Sales promotion expenses and commissions paid to related companies are in line with normal sales promotion policies in the business and with those applied to outside parties. â&#x20AC;˘ The leasing of land and office and showroom space together with utilities is at prices stipulated in mutual contracts, which are in line with actual or estimated market prices. â&#x20AC;˘ Consultancy, management and administration fees are in support of the CompanyDs normal business and constitute pooling of resources for the greatest benefit, at prices as per contracts and similar to those applied to unrelated parties. â&#x20AC;˘ Vehicles rented from a related company are for use in the business. Rates and terms are similar to those applied to unrelated parties. â&#x20AC;˘ The purchase of vehicles from related companies is for purposes of development research and for use as demonstration vehicles. Transactions are at book value plus a profit margin. â&#x20AC;˘ The sale of Company assets that are no longer used is at book value plus a profit margin. â&#x20AC;˘ Loans to related companies are for use in sales support for the GroupDs vehicles. Interest is charged at the average of the five major commercial banksD one-year fixed deposit rates plus 1%. The above Related Party Transactions were considered with regard to their necessity, appropriateness and overall benefit to the Company and its shareholders. Most of them were normal business transactions or were in support of such normal business transactions, and they were conducted on normal commercial terms, without giving rise to any

Annual Report 2007

profit diversion, and were conducted at arms-length prices and on similar terms to those applied to non-related parties. The non-executive DirectorsD opinion does not differ in any respect from the relevant resolutions of the Board of Directors. (3) Authorization Procedure for Related Party Transactions Information on Related Party Transactions is submitted by the Manager of Accounting & Finance Department to the Managing Director, who in turn asks the Board of Directors or a meeting of shareholders to consider authorizing the proposed transaction(s), in accordance with the criteria set out by the Stock Exchange of Thailand in the article relating to disclosure of information on related party transactions and material acquisitions or disposals of assets of the company or its subsidiaries. The Board of Directors has established the following guidelines for considering related party transactions. â&#x20AC;˘ In the event that, the size of the transaction having been calculated in accordance with Stock Exchange of Thailand criteria it transpires that the transaction requires approval by the CompanyDs Board of Directors, then the transaction must be submitted to the Board of Directors for their consideration. In the event that the Audit Committee disagrees, the proposal can nevertheless be placed before the Board and an appropriate record made in the minutes. â&#x20AC;˘ In the event that, the size of the transaction having been calculated in accordance with Stock Exchange of Thailand criteria, it transpires that the transaction requires approval by a meeting of shareholders, then the transaction must first be submitted to the Audit Committee for consideration and, if approved, onward submission to the Board of Directors who in turn will, if approved, propose it to a meeting of shareholders. Any person who is an interested party must declare such interest to the meeting and will not take part in the decision making process for that particular agenda item, leaving it to Directors who have no such interest to give their opinions as to the need for and the appropriateness and propriety of the transaction in the overall best interests of the Company and its shareholders. Related Party Transactions are disclosed in a Note to the audited annual financial statements and in Form 56-1 for annual reporting of information, as well as in the Annual Report. (4) Policy and approach with regard to future Related Party Transactions As regards any future Related Party Transactions the Company will act in accordance with all relevant laws, and with all relevant orders, proclamations and regulations of the Stock Exchange of Thailand, including regulations regarding the disclosure of information on Related Party Transactions and on the acquisition or disposal of significant assets by the Company or its subsidiaries. For details please refer to the above: Authorization Procedure for Related Party Transactions.

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT

Audit Committeeâ&#x20AC;&#x2122;s Report The Audit Committee, composed of three non-executive independent Directors, examined the appropriateness and efficiency of the CompanyDs internal control systems, collating information from the internal audit department, the external auditorsD report and the administration department, and made various recommendations to administrative departments with a view to improving working efficiency and effectiveness. It also monitored compliance with principles of good corporate governance and risk management, so as to enhance the value of the organization to its shareholders and other stakeholders. In 2007 the Audit Committee met four times and considered and dealt with the following matters. 1. Examination of the CompanyDs quarterly and annual financial statements to ensure that they were prepared in accordance with generally accepted accounting principles and that they disclosed adequate information in a timely manner. 2. Evaluation of the CompanyDs internal control and audit systems, validation of the annual audit plan and monitoring of its implementation, including making recommendations aimed at improving working efficiency. 3. Monitoring compliance with securities legislation, stock exchange regulations and other legislation relevant to the CompanyDs business, and of adherence to principles of good corporate governance. 4. Ensuring the accuracy and completeness of Company information disclosed in cases of related party transactions or transactions involving a possible conflict of interest. 5. Selection, review and recommendation for appointment of CompanyDs external auditors and establishment of their remuneration. 6. Other miscellaneous duties as assigned by the CompanyDs Board of Directors The Audit Committee met and exchanged opinions with the Board of Directors and with the internal audit department in order to evaluate the adequacy of the CompanyDs internal control systems. The Audit Committee and the Board of Directors are of the opinion that the CompanyDs internal control systems are on the whole adequate, without any significant defects.

Pricha Attavipach Chairman of the Audit Committee

Annual Report 2007

Remuneration Committeeâ&#x20AC;&#x2122;s Report The Remuneration Committee, composed of three non-executive independent Directors, is charged with setting policies, methodology and criteria for establishing, and for considering and reviewing the establishment of remuneration of Directors, the President and the Managing Director fairly, transparently and in consonance with the CompanyDs results and each individualDs performance. It reports independently to the Board of Directors so as to ensure that remuneration is established in a way that is appropriate and fair to all interested parties whilst safeguarding shareholdersD interests, in accordance with the CompanyDs principles of good corporate governance. In 2007 the Remuneration Committee met to consider the following matters. 1. Remuneration for the year 2007 and monthly remuneration for 2008 of the President of the Executive Board and the Managing Director. 2. Individual stipends for 2007 for Company Directors and Members of the Audit Committee, taking into account the performance of the Company and the duties, responsibilities and performance of each person. 3. Possible changes in the structure of DirectorsD remuneration to make it more appropriate, and to establish DirectorsD remuneration for 2008 at a level that is appropriate and close to the average of the industry, for submission to the Board of Directors for their onward proposal to a meeting of shareholders for their approval.

Pricha Attavipach Chairman of the Remuneration Committee

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT

Board of Directorsâ&#x20AC;&#x2122; Responsibility for Financial Reports The CompanyDs Board of Directors is responsible for the consolidated financial statements of Thai Rung Union Car Public Co., Ltd. and its subsidiaries and for the financial information which appears in the Annual Report. The financial statements were prepared in accordance with generally accepted accounting standards, applying appropriate and consistent accounting policies and with careful, prudent consideration and best possible estimates, making adequate disclosure of information by way of notes to the financial statements. The Board of Directors has put in place and maintains effective internal control systems which provide reasonable assurance that the recording of transactions in the CompanyDs books is correct and complete, as well as adequately protecting the CompanyDs assets and ensuring that any weak points can be detected and any misconduct or significant abnormal occurrence thus prevented. The CompanyDs Board of Directors has appointed an Audit Committee consisting of non-executive directors, which is responsible for monitoring the quality of financial reports and internal control systems. The Audit CommitteeDs opinion on these matters appears in the Report of the Audit Committee. The Board considers that the CompanyDs internal control systems are at an appropriate level and provide sufficient assurance in terms of the reliability of the financial statements of the Company and its subsidiaries as at 31st December 2007.

Pranee Phaoenchoke President

Annual Report 2007

Sompong Phaoenchoke Managing Director

Managementâ&#x20AC;&#x2122;s Discussion and Analysis (Based on Consolidated Financial Statements as at 31st December 2007) In 2007 ThailandDs total vehicle production amounted to 1,287,346 units, representing an increase of 8% on the previous year. Total domestic vehicle sales reached 631,251 units (7% down on previous year), whilst 690,100 units were exported, representing an increase of 28% on the previous year. As for the Thai Rung group of companies, total consolidated revenues in 2007 amounted to Bt.2,372.62m, down 1.7% on the previous year, basically due to sales of both the CompanyDs multi-purpose vehicles and Land Rover vehicles still being below target because of intense competition in the vehicle market and the negative impact of higher oil prices and the economic and political situation, which also had some effect on sales of parts, which were down slightly reflecting lower vehicle sales. In addition to this, in 2007 the Company did not have any income from contract painting of pick-up cargo boxes, since the contact expired in 2006 (revenue in 2006 was Bt.81m.). Nevertheless in 2007 the Company was able to boost revenues from contract assembly work, both by way of increased volumes for the {flat deckD and from a special project involving painting of police cars and assembly of patrol wagons worth Bt.60m. The consolidated ratio of Cost of Sales and Service to Sales and Service Revenue fell by 0.48%, meaning that the gross profit ratio increased by 0.48%, however Selling and Administration Expenses rose by 10.89% compared with the previous year, leading to a net consolidated loss of Bt.11.6m, which is 55.7% less than the year before. Details of CompanyDs performance and financial situation are as follows. Results Consolidated Revenues Total consolidated revenues for 2007 were Bt. 2,372.62 m., representing a decrease of Bt. 41.28 m. or 1.71% compared with 2006, details as follows. Type of Revenue Revenue from vehicle assembly and fitting of accessories Revenue from sale of vehicles (includes an element of cost of fitting accessories) Revenue from sale and assembly of parts Revenue from die and jig production Other sales and service revenue Total Revenue from Sales and Service Other Revenue Share of profit (loss0 in investments accounted for under the equity method Total Consolidated Revenue

2007 Bt millions

2006 Bt millions

152.55 515.41

6% 22%

169.43 559.83

7% 23%

(16.88) (44.42)

-10% -8%

1,219.53 100.50 227.10 2,215.09 135.58 21.95

51% 4% 10% 93% 6% 1%

1,191.11 115.25 267.37 2,302.99 100.00 10.91

49% 5% 11% 95% 4% 0%

28.42 (14.75) (40.27) (87.90) 35.58 11.04

2% -13% -15% -4% 36% 101%

2,372.62

100%

2,413.90

100%

(41.28)

-2%

Change Bt millions %

Total Sales & Service Income was Bt.2,215.09m, down Bt.87.90m or 3.82% on the prior year, breakdown being as follows: Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT â&#x20AC;˘

Income from vehicle modification and assembly including equipment and accessories amounted to Bt.152.55m, down 9.96% on the prior year due to lower volumes of vehicles assembled as a result of a model change in the second quarter of 2007. â&#x20AC;˘ Income from vehicle sales (which includes an element of assembly charges and cost of equipment and accessories) totalled Bt 515.41m, down 7.93% on the previous year, reflecting lower sales of both the CompanyDs multi-purpose vehicles and of Land Rover vehicles, in turn due to intense competition in the market and the effect of rising oil prices. â&#x20AC;˘ Income from sales and sub-assembly of parts totalled Bt.1,219.53m, representing an increase of 2.39% on the previous year, thanks to increased assembly volumes of the {flat deckD for Isuzu and increased parts assembly for Bangkok Komatsu. â&#x20AC;˘ Income from sale of dies and jigs totalled Bt.100.5m, down 12.8% on the year before, reflecting the completion of jobs for Toyota and Triumph in 2006. - Other sales and service income was Bt.227.1m, down by 15.06% on the prior year, due to: - expiry in 2006 of a contract for painting pick-up truck cargo boxes (Bt.81m.) - decrease of Bt.24.18m in income from service centres. - orders worth Bt.57.67m for contract painting work for patrol wagons and other vehicles for a police project and increased income of Bt.7.22m from other contract work. â&#x20AC;˘ Other Income stood at Bt.135.58m, representing an increase of Bt.35.58m on the previous year, significant items being: - Income from sales of scrap and consumables increased by Bt.26.12m. - Income from disposal of assets (machinery and vehicles) rose by Bt.9.78m. â&#x20AC;˘ Share of profit (loss) on investments accounted for under the equity method was Bt.21.95m, representing an increase of Bt.11.04m on the previous year, due to an increase of Bt.5.29m in the CompanyDs share of profits from its investment in Delta-TR Co. Ltd., an increase of Bt.5.86m in its share of profits from its investment in Thai Auto Conversion Co. Ltd. and a Bt.0.11m share in losses on its investment in Delta Thai Rung Co. Ltd. Cost of Sales, Expenses Total Cost of Sales and Expenses for the Company and its subsidiaries, including Interest Paid and Corporation Tax, for the year 2007 amounted to Bt.2,385m, which was Bt.45.96m or 1.89% less than in 2006, main items being as follows: â&#x20AC;˘ Cost of Sales & Service, at Bt.1,905.59m, represented 86.03% of total Sales & Service Revenue, 0.48% less than in the previous year, reflecting lower sales. â&#x20AC;˘ Selling and Administrative Expenses amounted to Bt.478.49m, representing an increase of Bt.46.99m or 10.89% on the previous year, significant items being: â&#x20AC;˘ Provision for price adjustments on sale of parts was up by Bt.21.63m, reflecting lower raw material prices. â&#x20AC;˘ Sales promotion expenses up by Bt.27.37m due to a sales drive. 48

Annual Report 2007

•

Interest Paid was down by Bt.4.47m on the previous year, reflecting the absence of external borrowing. • Corporation Tax, at Bt.0.89m, was down by Bt.1.66m or 65.08% on the previous year. Net Profit (Loss) The Company recorded a net loss for the year of Bt. 11.6m for the year, 55.7% less than in the previous year. Net EPS for the years 2007 and 2006 were (Bt.0.02) and (Bt.0.05) respectively. Financial Situation Assets Total consolidated assets as at 31st December 2007 amounted to Bt.2,851.85m, up Bt.47.96m or 1.71% on 31.12.06, major changes being as follows: -

Cash and cash equivalents fell by Bt.170.66m , Bt.28.74m being generated by operating activities, Bt.190.40m being used in investment activities and Bt.9m used in financing activities. Current investments increased by Bt.98.52m due to investment in bonds and promissory notes. Net trade debtors increased by Bt.35.24m due to sale of parts to customers Related party trade debtors and short-term loans increased by Bt.67.75m. Bt.59.16m of the increase came from vehicle sales (including vehicle assembly charges and cost of fitting accessories), sale of spare parts and service charges, and Bt.8.59m from increased short-term loans. Net inventories increased by Bt.9.63m due to purchases of raw materials for producing vehicles. Other current assets increased by Bt.11.37m, mainly due to increases of Bt.9.86m in accrued income and Bt.2.83m in input tax refundable. Investments accounted for under the equity method increased by Bt.35.41m due to a Bt.8.68m share of profits and a Bt.0.34m dividend recorded on the CompanyDs investment in Delta-TR Co., Ltd., a Bt.13.37m share of profits and a Bt.1.2m dividend on its investment in Thai Auto Conversion Co., Ltd., a new investment of Bt.15m in Delta Thairung Co. Ltd. and a Bt.0.10m share in its losses. Net property, plant and equipment was down by Bt.28.83m, reflecting acquisitions of Bt.100.66m and disposals of (Bt.4.33m) during the year, with depreciation of (Bt.125.16m) for the year. Net leasehold rights reduced by Bt.1.55m and other non-current assets decreased by Bt.8.92m.

Liabilities Total liabilities, at Bt.384.68m, were up by Bt.69.33m or 21.99% compared with 31st December 2006, the main changes being: • Non-related trade creditors increased by Bt.22.01m, reflecting the purchase of raw materials for use in producing vehicles • Related Party trade creditors decreased by Bt.15.90m reflecting payment by group companies of sales support costs and cost of spare parts. • Creditors for investment increased by Bt.15m, reflecting the CompanyDs investment in Delta Thairung Co., Ltd., which will be paid in 2008.

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT â&#x20AC;˘

Other current liabilities increased by Bt.48.22m, due mainly to an increase of Bt.12.79m in accrued sales promotion expenses and an increase of Bt.32.49m in increased unearned income and the liability arising from lower provisions for price adjustments on parts sales. Shareholders equity ShareholdersD equity fell by Bt.21.38m, of which Bt.11.6m reflects results for the year 2007 and Bt.9.78m a reduction in minority interests. Cash Flow Statement Cash and cash equivalents held by the Company and its subsidiaries as at 31st December 2007 were Bt.170.66m or 32.75% less than at 31st December 2006, as per the following analysis. â&#x20AC;˘ Net cash from operating activities was Bt.28.74m, with Bt.92.05m being generated by operating activities before taking into account changes in working capital, with current assets reducing by Bt.117.64m and liabilities increasing by 54.33m. â&#x20AC;˘ Net cash from investment activities was (Bt.190.4m), salient items being as follows. - Cash paid for short-term investments (Bt.98.52m) - Short-term loans to related companies (Bt.8.59m) - Dividends received from joint venture companies Bt.1.54m â&#x20AC;˘ Acquisitions (Bt.100.66m) and disposals Â&#x201A; Bt. 15.84m Â&#x201A; of assets â&#x20AC;˘ Net cash used in financing activities (Bt.9m) relates to dividends paid by subsidiaries to minority shareholders (Bt.4.5m), and repayment of share capital in subsidiaries to minority shareholders (Bt 4.5m).

Annual Report 2007

Report of Independent Auditor To the Shareholders of Thai Rung Union Car Public Company Limited I have audited the accompanying consolidated balance sheet of Thai Rung Union Car Public Company Limited and its subsidiaries as at 31 December 2007, the related consolidated statements of income, changes in shareholdersD equity and cash flows for the year then ended, and the separate financial statements of Thai Rung Union Car Public Company Limited for the same period. These financial statements are the responsibility of the management of the Company and its subsidiaries as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audit. The consolidated financial statements of Thai Rung Union Car Public Company Limited and its subsidiaries, and the separate financial statements of Thai Rung Union Car Public Company Limited for the year ended 31 December 2006, as presented herein for comparative purposes, were audited by another auditor of our firm who expressed an unqualified opinion on those statements, under her report dated 28 February 2007. Except as discussed in the next paragraph, I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. The CompanyDs consolidated financial statements as at 31 December 2007, and for the year then ended, include investments in three associated companies accounted for under the equity method amounting to Baht 98 million and shares of income from these companies amounting to Baht 22 million (as discussed in Note 12 to the financial statements). These were recorded based on financial statements prepared by the management of such associated companies, which were not audited by their auditors. In my opinion, except for the effect of any adjustments may result from the scope limitation imposed by circumstance described in the preceding paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of Thai Rung Union Car Public Company Limited and its subsidiaries and of Thai Rung Union Car Public Company Limited as at 31 December 2007, and the results of their operations and cash flows for the year then ended, in accordance with generally accepted accounting principles. Without changing my opinion on the above financial statements, I draw attention to the matter as discussed in Note 4 to the financial statements whereby, effective 1 January 2007, the Company changed its accounting policy for recording investments in subsidiaries and associates in the separate financial statements from the equity method to the cost method. The Company has thus restated the separate financial statements as at 31 December 2006 and for the year then ended to reflect this accounting change. I believe that the adjustments made to prepare the separate financial statements are appropriate and were properly applied.

Vissuta Jariyathanakorn Certified Public Accountant (Thailand) No. 3853 Ernst & Young Office Limited Bangkok: 28 February 2008 Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT

Balance Sheets Thai Rung Union Car Public Company Limited and Subsidiaries As at 31 December 2007 and 2006 (Unit: Baht)

Note ASSETS Current assets Cash and cash equivalents Current investments Trade accounts receivable - others,net Trade accounts receivable - related parties, net Amounts due from related parties Short-term loans to related parties Inventories - net Other current assets Total current assets Non-current assets Investments in subsidiaries Investments in associated companies Other long - term investments, net Property, plant and equipment - net Land and building leasehold rights - net Other non-current assets Total non-current assets TOTAL ASSETS

6 7 7,8 8 8 9 10

11 12 13 14 15

Consolidated financial statements 2007 2006

350,434,439 521,091,366 147,327,046 334,100,890 235,577,905 254,313,843 326,708,270 291,470,757 144,373,659 122,138,038 70,441,315 197,922,354 9,544,827 2,082,352 10,596,310 28,086,710 19,500,000 51,086,710 390,648,838 381,016,912 251,776,820 58,542,646 47,174,886 9,967,130 1,620,204,658 1,568,355,493 1,067,363,872

Annual Report 2007

255,394,744 212,796,112 113,680,867 100,660,502 11,497,030 62,500,000 200,744,518 11,437,054 968,710,827

- 415,610,000 415,610,000 98,134,535 62,727,108 46,550,000 31,550,000 1,080,642,510 1,109,468,827 372,877,810 388,674,737 6,811,980 8,360,278 25,000 46,053,274 54,976,845 33,954,524 51,698,888 1,231,642,299 1,235,533,058 868,992,334 887,558,625 2,851,846,957 2,803,888,551 1,936,356,206 1,856,269,452

The accompanying notes are an integral part of the financial statements.

Separate financial statements 2007 2006 (Restated)

Balance Sheets (Continued) Thai Rung Union Car Public Company Limited and Subsidiaries As at 31 December 2007 and 2006 (Unit: Baht)

Note LIABILITIES AND SHAREHOLDERS! EQUITY Current liabilities Trade accounts payable - others Trade accounts payable - related parties Amounts due to related parties Account payable - purchase of investment in associated company Other current liabilities Total current liabilities Shareholders! equity Share capital Registered 524,996,497 ordinary shares of Baht 1 each Issued and paid up 501,589,497 ordinary shares of Baht 1 each Additional paid-in capital Premium on ordinary shares Retained earnings Appropriated Statutory reserve - the Company - subsidiaries Unappropriated Total equity attributable to Company-s shareholders Minority interest - equity attributable to minority shareholders of subsidiaries Total shareholders! equity TOTAL LIABILITIES AND SHAREHOLDERS! EQUITY

8 8 12 17

Consolidated financial statements 2007 2006

Separate financial statements 2007 2006 (Restated)

247,397,127 6,418,421 9,510,415

225,384,666 15,078,720 16,745,875

106,300,770 11,372,089 4,176,909

80,509,784 3,920,602 6,716,334

15,000,000 106,351,827 384,677,790

58,134,098 315,343,359

15,000,000 24,869,142 161,718,910

24,909,541 116,056,261

524,996,497

501,589,497

727,144,000

19 52,499,649 52,499,649 52,499,649 52,499,649 13,271,939 11,414,029 1,093,503,815 1,106,958,486 493,404,150 458,980,045 2,388,008,900 2,399,605,661 1,774,637,296 1,740,213,191 79,160,267 88,939,531 2,467,169,167 2,488,545,192 1,774,637,296 1,740,213,191 2,851,846,957 2,803,888,551 1,936,356,206 1,856,269,452

The accompanying notes are an integral part of the financial statements.

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT

Income Statements Thai Rung Union Car Public Company Limited and Subsidiaries For the Years Ended 31 December 2007 and 2006 (Unit: Baht)

Revenues Sales Service income Other income Dividend income Share of income from investments in associated companies Total revenues Expenses Cost of sales and services Selling and administrative expenses Total expenses Income (loss) before interest expense and corporate income tax Interest expense Corporate income tax Income (loss) after corporate income tax Net loss (income) attributable to minority interest Net income (loss) for the year

Note

Consolidated financial statements 2007 2006

20 11, 12

1,836,891,862 1,935,855,921 378,205,640 367,135,616 135,582,537 100,002,398 -

754,492,088 295,045,994 81,599,151 47,039,426

675,486,909 275,478,402 58,990,591 232,321,800

21,946,853 10,908,907 2,372,626,892 2,413,902,842 1,178,176,659 1,242,277,702 1,905,589,679 1,992,409,906 911,096,334 910,036,454 478,490,379 431,495,611 232,653,790 245,284,319 2,384,080,058 2,423,905,517 1,143,750,124 1,155,320,773 (11,453,166) (27,227) (895,632) (12,376,025) 779,264 (11,596,761)

(10,002,675) (4,501,849) (2,564,511) (17,069,035) (9,091,139) (26,160,174)

34,426,535 (2,430) 34,424,105 34,424,105

86,956,929 (5,210,982) 81,745,947 81,745,947

Earnings per share 24 Net income (loss) Weighted average number of ordinary shares (shares)

(0.02) 501,589,497

(0.05) 501,589,497

0.07 501,589,497

0.16 501,589,497

Diluted earnings per share 24 Net income (loss) Weighted average number of ordinary shares (shares)

(0.02) 501,589,497

(0.05) 501,589,497

0.07 501,589,497

0.16 501,589,497

The accompanying notes are an integral part of the financial statements.

Separate financial statements 2007 2006 (Restated)

Annual Report 2007

Thai Rung Union Car Public Company Limited

727,144,000 727,144,000

501,589,497

727,144,000 -

501,589,497 -

The accompanying notes are an integral part of the financial statements.

Balance as at 31 December 2005 Appropriated to statutory reserve Dividend paid by the Company Dividend paid by subsidiaries Surplus on changes in value of investments Net loss for the year Net income attributable to minority interest of subsidiaries Balance as at 31 December 2006 Appropriated to statutory reserve Dividend paid by subsidiaries Surplus on changes in value of investments Net loss for the year Net loss attributable to minority interest of subsidiaries Balance as at 31 December 2007

Note

Issued and paid-up share capital

Consolidated financial statements

1,250,335 (1,250,335) -

52,499,649

52,499,649 -

50,158,949 2,340,700 -

13,271,939

11,414,029 1,857,910 -

5,251,012 6,163,017 -

1,093,503,815

1,106,958,486 (1,857,910) (11,596,761)

1,191,781,127 (8,503,717) (50,158,750) (26,160,174)

(779,264) 79,160,267

9,091,139 88,939,531 (4,500,000) (4,500,000) -

97,654,835 (17,799,600) (6,843) -

Total

(Unit: Baht)

(779,264) 2,467,169,167

9,091,139 2,488,545,192 (4,500,000) (4,500,000) (11,596,761)

2,574,829,755 (50,158,750) (17,799,600) (1,257,178) (26,160,174)

Minority interest Premium Surplus on Retained earnings - equity attributable to on ordinary changes in value Appropriated - statutory reserve minority shareholders shares of investments The Company Subsidiaries Unappropriated of subsidiaries

Thai Rung Union Car Public Company Limited and Subsidiaries For the Years Ended 31 December 2007 and 2006

Statements of Changes in Shareholdersâ&#x20AC;&#x2122; Equity

Annual Report 2007 4

The accompanying notes are an integral part of the financial statements.

Balance as at 31 December 2006, as previously reported Cumulative effect of the change in accounting policy for investments in subsidiaries and associates Balance as at 31 December 2006, as restated Net income for the year Balance as at 31 December 2007

Balance as at 31 December 2005, as previously reported Cumulative effect of the change in accounting policy for investments in subsidiaries and associates Balance as at 31 December 2005, as restated Appropriated to statutory reserve Dividend paid Surplus on changes in value of investments Net income for the year (restated) Balance as at 31 December 2006, as restated

Note

501,589,497 501,589,497

501,589,497

501,589,497 501,589,497

501,589,497

Issued and paid-up share capital

Thai Rung Union Car Public Company Limited and Subsidiaries For the Years Ended 31 December 2007 and 2006

727,144,000 727,144,000

727,144,000

727,144,000 727,144,000

727,144,000

Premium on ordinary shares

1,250,335 (1,250,335) -

1,250,335

52,499,649 52,499,649

52,499,649

50,158,949 2,340,700 52,499,649

50,158,949

(659,392,470) 458,980,045 34,424,105 493,404,150

1,118,372,515

(767,298,591) 429,733,548 (2,340,700) (50,158,750) 81,745,947 458,980,045

1,197,032,139

Surplus on Retained earnings changes in value Appropriated of investments statutory reserve Unappropriated

Separate financial statements

Statements of Changes in Shareholdersâ&#x20AC;&#x2122; Equity (Continued)

(659,392,470) 1,740,213,191 34,424,105 1,774,637,296

2,399,605,661

(767,298,591) 1,709,876,329 (50,158,750) (1,250,335) 81,745,947 1,740,213,191

2,477,174,920

Total

(Unit: Baht)

WORLD CLASS THAI CRAFT

Cash Flow Statements Thai Rung Union Car Public Company Limited and Subsidiaries For the Years Ended 31 December 2007 and 2006 (Unit: Baht) Consolidated financial statements 2007 2006 Cash flows from operating activities Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by (paid from) operating activities: Net income (loss) attributable to minority interest Share of income from investments in associates Allowance for (reversal of) doubtful accounts Allowance for diminution in value of inventories Depreciation Allowance for impairment loss of assets Written off equipment and other assets Amortisation of land and building leasehold rights Gain on sales of equipment Gain on sales of current investments Income from operating activities before changes in operating assets and liabilities Operating assets (increase) decrease Trade accounts receivable - others and related parties Amounts due from related parties Inventories Other current assets Other non-current assets Operating liabilities increase (decrease) Trade accounts payable - others and related parties Amounts due to related parties Other current liabilities Net cash from (used in) operating activities

Separate financial statements 2007 2006 (Restated)

(11,596,761)

(26,160,174)

34,424,105

81,745,947

(779,264) (21,946,853) (305,998) 11,482,382 125,157,907 1,959,915 1,548,298 (13,465,836) -

9,091,139 (10,908,907) 564,350 9,348,420 155,471,686 8,047,031 6,295,962 1,648,301 (3,682,864) (3,828,339)

83,683,186 25,000 (10,156,399) -

624,495 7,157,638 115,965,772 8,047,031 6,295,962 125,000 (565,074) (2,266,362)

92,053,790

145,886,605

107,975,892

217,130,409

(86,628,238) (7,462,475) (21,114,308) (11,367,760) 8,923,571

182,227,258 (1,057,239) 385,623,613 15,835,899 (21,612,677)

(127,954,644) 900,720 (51,032,302) 1,469,924 17,744,364

295,292,975 (10,510,227) 241,293,382 1,024,604 (18,636,310)

13,352,162 (109,933,627) (7,235,460) 11,294,260 48,217,729 (80,069,500) 28,739,011 528,194,592

33,242,473 (2,539,425) (40,399) (20,233,397)

(97,047,057) 3,037,946 (40,976,008) 590,609,714

The accompanying notes are an integral part of the financial statements.

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT

Cash Flow Statements (Continued) Thai Rung Union Car Public Company Limited and Subsidiaries For the Years Ended 31 December 2007 and 2006 (Unit: Baht)

Note Cash flows from investing activities Decrease (increase) in current investments Decrease (increase) in short-term loans to related parties Dividend received from associated companies Proceeds from sales of equipment Acquisition of building and equipment Acquisition of building leasehold right Net cash from (used in) investing activities Cash flows from financing activities Decrease in short-term loans from financial institutions Decrease in short-term loans from related parties Dividend paid by the Company Repayment of share capital of a subsidiary to minority interest Dividend paid by subsidiaries to minority interest Net cash used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental cash flows information: Cash paid during the year for Interest expense Corporate income tax

Consolidated financial statements 2007 2006

(98,522,985) 216,803,551 (8,586,710) 500,000 1,539,426 961,400 15,836,481 7,081,614 (100,662,150) (114,669,991) (150,000) (190,395,938) 110,526,574

(41,517,731) 11,413,290 11,752,790 (69,482,650) (87,834,301)

189,996,243 (8,500,000) 681,544 (98,736,819) (150,000) 83,290,968

(420,000,000) (50,158,750)

(360,000,000) (105,000,000) (50,158,750)

(4,500,000) (4,500,000) (17,799,600) (9,000,000) (487,958,350) (170,656,927) 150,762,816 521,091,366 370,328,550 350,434,439 521,091,366

(108,067,698) 255,394,744 147,327,046

(515,158,750) 158,741,932 96,652,812 255,394,744

2,430 9,297,667

10,414,390 14,918,699

27,227 12,911,914

The accompanying notes are an integral part of the financial statements.

Annual Report 2007

Separate financial statements 2007 2006 (Restated)

9,809,590 21,126,131

Notes to Consolidated Financial Statements Thai Rung Union Car Public Company Limited and its Subsidiaries For the Years Ended 31 December 2007 and 2006

GENERAL INFORMATION Thai Rung Union Car Public Company Limited (]The Company^) is a public company incorporated and domiciled in Thailand. The Company is principally engaged in the car assembly and modification, and the manufacture and distribution of parts and mold and its registered address is located at 28/6 Moo 1, Petchkasem Road, Khwaeng Nongkangploo, Khet Nongkaem, Bangkok.

BASIS OF PREPARATION 2.1

The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Profession Act B.E. 2547. The presentation of the financial statements has been made in compliance with the stipulations of the Notification of the Department of Business Development dated 14 September 2001, issued under the Accounting Act B.E. 2543. The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies.

2.2

Basis of consolidation a)

The consolidated financial statements include the financial statements of the Company and the following subsidiary companies:

Nature of business

Country of incorporation

Percentage of shareholding

2007

2006

Percent Percent Subsidiaries directly held by the Company Thai V.P. Auto Service Co., Ltd. Thai Rung Tools and Dies Co., Ltd. Thai Auto Pressparts Co., Ltd. Thai Auto Body Assembly Co., Ltd.

Sales of cars, spare parts and car service centers Mold making service Manufacture of vehicle s body parts Manufacture of parts and assembly of special car (not yet operated)

Assets as a percentage Revenues as a percentage to the consolidated to the consolidated total total assets as at revenues for the years 31 December ended 31 December

2007

2006

2007

2006

Percent Percent Percent Percent

Thailand

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT

Nature of business

Country of incorporation

Percentage of shareholding

2007

2006

Percent Percent Subsidiaries held by Thai V.P. Auto Service Co., Ltd. Thai Ultimate Car Co., Ltd. Sales of cars, spare parts and accessories and car service centers TRU Leasing Co., Ltd. Hire purchase of cars

Thailand

99.53

Thailand

Assets as a percentage Revenues as a percentage to the consolidated to the consolidated total total assets as at revenues for the years 31 December ended 31 December

2007

2006

2007

2006

Percent Percent Percent Percent

(not yet operated)

On 3 March 2006, Thai Rung General Motor Co., Ltd. registered the change of its name to Thai Rung Tools and Dies Co., Ltd. with the Ministry of Commerce.

2.3

Material balances and transactions between the Company and its subsidiary companies have been eliminated from the consolidated financial statements.

Investments in the subsidiary companies as recorded in the CompanyDs books of account are eliminated against the equity of the subsidiary companies.

The separate financial statements, which present investments in subsidiaries and associates presented under the cost method, have been prepared solely for the benefit of the public.

ADOPTION OF NEW ACCOUNTING STANDARDS The Federation of Accounting Professions (FAP) has issued Notifications No. 9/2550, 38/2550 and 62/2550 regarding Accounting Standards. The notifications mandate the use of the following new Accounting Standards. a)

Thai Accounting Standards which are effective for the current year TAS 44 (revised 2007) TAS 45 (revised 2007) TAS 46 (revised 2007)

Consolidated Financial Statements and Separate Financial Statements Investments in Associates Interests in Joint Ventures

These accounting standards become effective for the financial statements for fiscal years beginning on or after 1 January 2007. During the first quarter of the current year, the Company changed its accounting policy for recording investments in subsidiaries and associates in the separate financial statements in order to comply with the revised Thai Accounting Standards No. 44 and 45 as discussed in Note 4. However, the revised Thai Accounting Standard No. 46 has no impact on the financial statements since the Company does not have investments in jointly controlled entities.

Annual Report 2007

Thai Accounting Standards which are not effective for the current year TAS 25 (revised 2007) TAS 29 (revised 2007) TAS 31 (revised 2007) TAS 33 (revised 2007) TAS 35 (revised 2007) TAS 39 (revised 2007) TAS 41 (revised 2007) TAS 43 (revised 2007) TAS 49 (revised 2007) TAS 51

Cash Flow Statements Leases Inventories Borrowing Costs Presentation of Financial Statements Accounting Policies, Changes in Accounting Estimates and Errors Interim Financial Reporting Business Combinations Construction Contracts Intangible Assets

These accounting standards will become effective for the financial statements for fiscal years beginning on or after 1 January 2008. The management has assessed the effect of these revised accounting standards and believes that they will not have any significant impact on the financial statements for the year in which they are initially applied.

CHANGE IN ACCOUNTING POLICY FOR RECORDING INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES IN THE SEPARATE FINANCIAL STATEMENTS During the first quarter of the current year, the Company changed its accounting policy for recording investments in subsidiaries and associates in the separate financial statements from the equity method to the cost method, in compliance with Accounting Standard No. 44 (Revised 2007) regarding ]Consolidated Financial Statements and Separate Financial Statements^, under which investments in subsidiaries and associates are to be presented in the separate financial statements under the cost method. In this regard, the Company has restated the previous yearDs separate financial statements as though the investments in the subsidiaries and associates had originally been recorded using the cost method. The change has the effect of increasing net income in the separate income statements for the years ended 31 December 2007 and 2006 by Baht 46 million (Baht 0.09 per share) and Baht 108 million (Baht 0.21 per share), respectively. The cumulative effect of the change in accounting policy has been presented under the heading of ]Cumulative effect of the change in accounting policy for investments in subsidiaries and associates^ in the separate statements of changes in shareholdersD equity. Such change in accounting policy affects only the accounts related to investments in subsidiaries and associates in the CompanyDs separate financial statements, with no effect to the consolidated financial statements.

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT 5.

SIGNIFICANT ACCOUNTING POLICIES 5.1

Revenue recognition a)

Sales of goods Sales of goods are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are the invoiced value, excluding value added tax, of goods supplied after deducting discounts and allowances.

Rendering of services Service revenue is recognised when services have been rendered taking into account the stage of completion.

Interest income Interest income is recognised as interest accrues based on the effective rate method.

Dividends Dividends are recognised when the right to receive the dividends is established.

5.2

Cash and cash equivalents Cash and cash equivalents consist of cash in hand, cash at banks, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions.

5.3

Trade accounts receivable and allowance for doubtful accounts Trade accounts receivable are stated at the net realisable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection experiences and analysis of debtor aging.

5.4

Inventories and allowance for diminution in value of inventories a)

Finished goods and work in process are valued at the lower of standard cost (which approximates actual cost) and net realisable value. Standard cost includes all production costs and attributable factory overheads.

Raw materials and parts are valued at the lower of standard cost (which approximates actual cost) and net realisable value and are charged to production costs and cost of services whenever consumed.

Spare parts of car service centers are valued at the lower of cost (moving average method) and net realisable value.

Annual Report 2007

Cars purchased for sales are valued at the lower of cost (specific identification method) and net realisable value. Allowance for diminution in value of inventories is recorded by considering old, slow-moving and obsolete inventories.

5.5

Investments a)

Investments in associates are accounted for in the consolidated financial statements using the equity method.

Investments in subsidiaries and associates are accounted for in the separate financial statements using the cost method.

Investments in debt securities, both due within one year and expected to be held to maturity, are recorded at amortised cost. The premium/discount on debt securities is amortised by the effective rate method with the amortised amount presented as an adjustment to the interest income.

Investments in non-marketable equity securities, which the Company classifies as other investments, are stated at cost net of allowance for loss on diminution in value (if any). The weighted average method is used for computation of the cost of investments.

5.6

Property, plant and equipment/Depreciation Land is stated at cost. Buildings and equipment are stated at cost less accumulated depreciation and allowance for loss on impairment of assets (if any). Depreciation of plant and equipment is calculated by reference to their costs as follows: -

Land improvement Buildings and building improvement Machinery, factory equipment and tools Machinery, factory equipment and tools acquired from since 1999 onwards Office equipment Motor vehicles

Depreciation method

Estimated useful lives

Straight-line method Straight-line method Straight-line method Double declining method

20 years 20 years 10, 15 years 5 years

Double declining method Double declining method

5 years 5 years

Depreciation is included in determining income. No depreciation is provided on land and work in progress.

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT 5.7

Land and building leasehold rights/Amortisation Land and building leasehold rights are stated at cost less accumulated amortisation. Amortisation of land and building leasehold rights is calculated by reference to their costs on a straight-line basis over the periods of lease agreements. Amortisation is included in determining income.

5.8

Related party transactions Related parties comprise enterprises and individuals that control, or are controlled by, the Company, whether directly or indirectly, or which are under common control with the Company. They also include associated companies and individuals which directly or indirectly own a voting interest in the Company that gives them significant influence over the Company, key management personnel, directors and officers with authority in the planning and direction of the CompanyDs operations.

5.9

Foreign currencies Foreign currency transactions are translated into Baht at the exchange rates ruling on the transaction dates. Assets and liabilities denominated in foreign currencies outstanding at the balance sheet date are translated into Baht at the exchange rates ruling on the balance sheet date. Gains and losses on exchange are included in determining income.

5.10 Impairment of assets The Company and its subsidiaries assess at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, the Company and its subsidiaries make an estimate of the assetDs recoverable amount. Where the carrying amount of the asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses are recognised in the income statement. An assetDs recoverable amount is the higher of fair value less costs to sell and value in use. 5.11 Employee benefits Salaries, wages, bonuses and contributions to the social security fund and provident fund are recognised as expenses when incurred. 5.12 Provisions Provisions are recognised when the Company and its subsidiaries have a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. 64

Annual Report 2007

5.13 Income tax Income tax is provided for in the accounts based on the taxable profits determined in accordance with tax legislation. 5.14 Derivatives Forward exchange contracts Receivables and payables arising from forward exchange contracts are translated into Baht at the rates of exchange ruling on the balance sheet. Gains and losses from the translation are included in determining income. Premiums or discounts on forward exchange contracts are amortized on a straightline basis over the contract periods. 5.15 Use of accounting estimates Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions in certain circumstances, affecting amounts reported in these financial statements and related notes. Actual results could differ from these estimates.

CURRENT INVESTMENTS (Unit: Baht) Consolidated financial statements

Investments in debt securities to be held to maturity Bonds-Bank of Thailand

Separate financial statements

2007

2006

2007

2006

334,100,890

235,577,905

254,313,843

212,796,112

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT 7.

TRADE ACCOUNTS RECEIVABLE The outstanding balances of trade accounts receivable as at 31 December 2007 and 2006 are aged, based on due date, as follows: (Unit: Baht) Consolidated financial statements Separate financial statements 2007 2006 2007 2006 Age of receivables Trade accounts receivable - others Not yet due 280,534,048 236,687,675 Past due Up to 3 months 41,710,262 46,210,968 3 - 6 months 4,519,821 7,463,405 6 - 12 months 2,030,054 Over 12 months 826,986 Total 327,591,117 292,392,102 Less: Allowance for doubtful accounts (882,847) (921,345) Trade accounts receivable - others, net 326,708,270 291,470,757 Trade accounts receivable - subsidiaries Not yet due Past due Up to 3 months 3 - 6 months 6 - 12 months Over 12 months Total trade account receivable - subsidiaries Trade accounts receivable - associated companies Not yet due 24,246,491 6,673,732 Past due Up to 3 months 1,746,324 958,712 Total trade account receivable - associated 25,992,815 7,632,444 companies

Annual Report 2007

126,502,984

103,170,330

14,673,257 3,174,264 23,154 144,373,659 144,373,659

10,487,383 23,154 113,680,867 113,680,867

38,705,192

13,104,083

13,575,918 11,237,927 27,927,350 21,147,247 112,593,634

3,143,715 19,460,886 10,123,831 12,372,124 58,204,639

23,885,856

6,063,012

1,746,324 25,632,180

958,711 7,021,723

(Unit: Baht) Consolidated financial statements Separate financial statements 2007 2006 2007 2006 Trade accounts receivable - related companies Not yet due Past due Up to 3 months 3 - 6 months 6 - 12 months Over 12 months Total trade account receivable - related companies Total trade account receivable - related parties Less: Allowance for doubtful accounts Trade accounts receivable - related parties, net

59,730,059

44,966,253

47,920,071

25,870,520

26,857,149 3,433,917 2,803,523 3,320,575 96,145,223 122,138,038 122,138,038

7,978,966 2,685,505 5,801,807 1,643,840 63,076,371 70,708,815 (267,500) 70,441,315

7,009,162 1,474,347 1,312,240 1,980,720 59,696,540 197,922,354 197,922,354

4,924,200 1,392,100 2,138,480 1,108,840 35,434,140 100,660,502 100,660,502

RELATED PARTY TRANSACTIONS During the years, the Company and its subsidiaries had significant business transactions with related parties, which have been concluded on commercial terms and bases agreed upon in the ordinary course of business between the Company and those companies. Below is a summary of those transactions. (Unit: Million Baht) Consolidated Separate financial statements financial statements 2007 2006 2007 2006 Transactions with subsidiaries (eliminated from consolidated financial statements) Purchases of goods and services Purchases of fixed assets Electricity expense

25 4 13

35 39 14

Interest expense Sales of goods Sales of fixed assets Service income Technical service income

108 1 2 41

1 30 1 9 39

Transfer Pricing policy

Cost plus margin Carrying value plus margin Cost plus gross profit margin not more than 5 percent 1.50 - 5.45 percent per annum Cost plus margin Carrying value plus margin Cost plus margin In accordance with the contract price at the following rates: 1) Technical service fee fixed rate per unit 2) Management service fee fixed rate per month 3) Commission not more than 4 percent of sales revenue

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT (Unit: Million Baht) Consolidated Separate financial statements financial statements 2007 2006 2007 2006 Building and factory rental income Land rental income Management service income Utilities, transportation income and sales of supplies Interest income

1 2 8 7

1 2 10 9

Dividend income Transactions with associated companies Purchases of goods and services 28 Sales of goods 42 Consulting service income 5 Utilities, transportation income 18 and sales of supplies Dividend income 2 Transactions with related companies Purchases of goods and services 18 Land rental expense and 37 amortisation of leasehold rights Car rental expense 4 Showroom rental expense Commission fee 5 Purchases of fixed assets 8 Service income 22 Sales of goods 271 Sales of fixed assets 1 Consulting service income 2 Utilities, transportation income 4 and sales of supplies Land and showroom rental income 7 Interest income -

231

9 30 5 6

17 39 5 16

9 29 5 4

24 40

2 24

1 24

4 1 1 32 275 5 -

1 8 21 156 -

2 1 27 172 -

6 1

1 -

Transfer Pricing policy Contract price Contract price Contract price Cost plus margin 2.50% - 5.00% p.a. (2006: 4.73% - 6.00% p.a.) As declared Cost plus margin Cost plus margin Contract price Cost plus margin As declared Cost plus margin Contract price Contract price Contract price Fixed rate per unit Carrying value plus margin Cost plus margin Cost plus margin Carrying value plus margin Contract price Cost plus margin Contract price 3.50% - 5.00% p.a. (2006: 1.50% - 5.45% p.a.)

The balances of the accounts as at 31 December 2007 and 2006 between the Company and those related companies are as follows:

Annual Report 2007

(Unit: Baht) Separate financial statements 2007 2006

Consolidated financial statements 2007 2006 Trade accounts receivable - related parties Subsidiaries Thai Rung Tools and Dies Co., Ltd. Thai V.P. Auto Service Co., Ltd. Thai Ultimate Car Co., Ltd. Thai Auto Pressparts Co., Ltd. Associated companies Delta-TR Co., Ltd. Thai Auto Conversion Co., Ltd. Related companies Isuzu Chaicharoenkij Motor Co., Ltd. Isuzu V Motor Co., Ltd. Thai V.P. Corporation Co., Ltd. V.P. Auto Enterprise Co., Ltd. Firstpart Co., Ltd. V.P.K. Auto Co., Ltd. Less: Allowance for doubtful accounts Trade accounts receivable - related parties, net Amounts due from related parties Subsidiaries Thai Rung Tools and Dies Co., Ltd. Thai Auto Pressparts Co., Ltd. TRU Leasing Co., Ltd. Thai V.P. Auto Service Co., Ltd.

450,320 43,608,797 68,147,017 387,500 112,593,634

1,421,567 20,209,354 36,514,558 59,160 58,204,639

25,567,861 424,954 25,992,815

7,525,266 107,178 7,632,444

25,567,861 64,319 25,632,180

6,999,248 22,475 7,021,723

48,819,793 59,165,253 1,676,338 531,287 2,531,314 70,287 9,978,639 63,076,371 59,695,540 (267,500) 62,808,871 59,695,440 70,441,315 197,922,354

34,753,660 680,480 35,434,140 35,434,140 100,660,502

84,740,860 1,244,775 358,731 662,767 8,924,571 213,519 96,145,223 96,145,223 122,138,038

563,340 8,076,200 1,797,600 38,274 10,475,414

357,000 9,437,400 1,498,000 41,233 11,333,633

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT (Unit: Baht) Separate financial statements 2007 2006

Consolidated financial statements 2007 2006 Associated company Delta - TR Co., Ltd. Related companies Isuzu Chaicharoenkij Motor Co., Ltd. Bhoti Phum Co., Ltd. V.P. Auto Enterprise Co., Ltd. Lexus Auto City Co., Ltd. Firstpart Co., Ltd. Thai V.P. Corporation Co., Ltd. Isuzu V Motor Co., Ltd. Sinthoranee Property Co., Ltd. Europe Car Rent Co., Ltd. V.P.K. Auto Co., Ltd. Amounts due from related parties Short-term loans to related parties Subsidiary Thai V.P. Auto Service Co., Ltd. Related company Isuzu Chaicharoenkij Motor Co., Ltd. Short-term loans to related parties Trade accounts payable - related parties Subsidiaries Thai Rung Tools and Dies Co., Ltd. Thai V.P. Auto Service Co., Ltd. Thai Ultimate Car Co., Ltd.

Annual Report 2007

1,292,448

138,417 219,536 150,000 5,339,068 120,000 17,521 990,000 907,220 370,617 8,252,379 9,544,827

37,397 126,000 333,071 300,000 882,814 390,266 12,804 2,082,352 2,082,352

120,896 120,896 10,596,310

37,397 126,000 163,397 11,497,030

23,000,000

43,000,000

28,086,710 28,086,710

19,500,000 19,500,000

28,086,710 51,086,710

19,500,000 62,500,000

832,291 5,998,362 8,810 6,839,463

800,555 2,836,009 3,636,564

(Unit: Baht) Separate financial statements 2007 2006

Consolidated financial statements 2007 2006 Associated company Delta-TR Co., Ltd. Related companies Isuzu Chaicharoenkij Motor Co., Ltd. Thai V.P. Corporation Co., Ltd. V.P. Auto Enterprise Co., Ltd. Isuzu V Motor Co., Ltd. V.P.K. Auto Co., Ltd. Firstpart Co., Ltd. Trade accounts payable - related parties Amounts due to related parties Subsidiaries Thai Rung Tools and Dies Co., Ltd. Thai V.P. Auto Service Co., Ltd. Associated company Delta-TR Co., Ltd. Related companies Isuzu Chaicharoenkij Motor Co., Ltd. Isuzu V Motor Co., Ltd. Thai V.P. Corporation Co., Ltd. Sinthoranee Land and Construction Co., Ltd. Chaicharoenkij Motor Co., Ltd. V.P. Auto Enterprise Co., Ltd. Lexus Auto City Co., Ltd. Bhoti Phum Co., Ltd. Firstpart Co., Ltd. Amounts due to related parties

4,678,512

891,859

3,372,936

284,038

1,222,826 29,960 36,560 8,163 38,758 403,642 1,739,909 6,418,421

10,157,185 64,130 3,965,546 14,186,861 15,078,720

1,159,690 1,159,690 11,372,089

3,920,602

1,576,163 1,576,163

294,000 4,860,000 5,154,000

300,000

4,854,073 1,055,098 1,200,000 160,000 1,900,000 41,244 9,210,415 9,510,415

9,571,594 20,653 3,205,002 1,200,000 960,000 201,000 7,088 1,280,538 16,445,875 16,745,875

353,696 305,806 1,900,000 41,244 2,600,746 4,176,909

37,539 20,653 1,085,868 201,000 7,088 210,186 1,562,334 6,716,334

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT During 2007, movement of loans to related parties were as follows: (Unit: Million Baht) 1 January 2007

During the year 31 December Increase Decrease 2007

Interest rate

Consolidated financial statements Short-term loan to related company Isuzu Chaicharoenkij Motor Co., Ltd.

(19)

3.325 - 5 percent per annum, due in 2 months

Separate financial statements Short-term loan to subsidiaries Thai V.P. Auto Service Co., Ltd.

(35)

(15)

2.50 - 5 percent per annum, due in 2 months -

(19)

Thai Rung Tool and Dies Co., Ltd. Short-term loan to related company Isuzu Chaicharoenkij Motor Co., Ltd.

3.325 - 5 percent per annum, due in 2 months

As at 31 December 2007, the Company and subsidiaries had significant balances of trade accounts receivable with related parties. The Company and subsidiaries had not set an allowance for doubtful accounts for such debts, since the management of the Company and subsidiaries believe that such debts will be repaid in full. Directors and management s remuneration In 2007, the Company and its subsidiaries paid salaries, meeting allowances and gratuities to their directors and management totaling Baht 37 million (Separate financial statements: Baht 12 million) (2006: Baht 29 million, Separate financial statements: Baht 14 million). Guarantee obligations with related parties As at 31 December 2007 and 2006, the Company has outstanding guarantee obligations with subsidiaries as follows. a)

The Company has obligations under the guarantee it provided to a local bank in respect of credit facilities of Thai Ultimate Car Co., Ltd. (a subsidiary) amounting to USD 1.5 million.

The Company has obligations of Baht 30 million in respect of its guarantee of credit facilities provided by a local bank to Thai V.P. Auto Service Co., Ltd. (a subsidiary).

The Company has obligations of Baht 220 million in respect of its guarantee of credit facilities provided by a local bank to Thai Rung Tool and Dies Co., Ltd. (a subsidiary).

The Company has not charged a guarantee fee to its subsidiaries.

Annual Report 2007

INVENTORIES (Unit: Baht)

Finished goods Work in process Raw materials and supplies Total Less: Allowance for diminution in value of inventories Inventories - net

Consolidated financial statements

Separate financial statements

2007

2006

147,285,972 190,758,763 67,464,425 91,681,351 62,517,770 67,816,031 46,961,479 28,850,771 231,385,108 161,499,748 150,702,784 93,564,264 441,188,850 420,074,542 265,128,688 214,096,386 (50,540,100) (39,057,630) (13,351,868) (13,351,868) 390,698,838 381,016,912 251,776,820 200,744,518

10. OTHER CURRENT ASSETS (Unit: Baht)

Accrued income Input tax refundable Input tax suspense Prepayment Other current assets Total

Consolidated financial statements

Separate financial statements

2007

2006

2007

39,160,778 2,832,338 5,500,851 8,286,454 2,762,225 58,542,646

29,303,918 4,403,852 8,849,756 4,617,360 47,174,886

2,643,411 302,157 5,269,488 1,752,074 9,967,130

2006 244,290 7,325,596 3,867,168 11,437,054

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT 11. INVESTMENTS IN SUBSIDIARIES (Unit: Baht) Separate financial statements Company s name

Nature of business

Shareholding percentage

2007

2006

2007

2006

Million Baht

27 400

Thai V.P. Auto Service Co., Ltd. and its subsidiaries Thai Rung Tools and Dies Co., Ltd. Thai Auto Pressparts Co., Ltd. Thai Auto Body Assembly Co., Ltd. Total investments in subsidiaries

Dividend received for the years ended 31 December

Cost method 2007

2006

2007

2006

23,500,000

3,290,000

94 91

25,380,000 364,000,000

45,500,000

141,620,400 86,450,000

2,730,000 415,610,000

45,500,000

231,360,400

12. INVESTMENTS IN ASSOCIATED COMPANIES 12.1 Details of associates: (Unit: Baht)

Company s name

Delta-TR Co., Ltd. Thai Auto Conversion Co., Ltd. Delta Thairung Co., Ltd.

Nature of business

Country of incorporation

Manufacture of Thailand vehicle parts Manufacture of Thailand vehicle parts Not yet operated Thailand

Separate financial statements

Consolidated financial statements

Cost method

Carrying amounts based on equity method

Shareholding percentage 2007

2006

9,200,000

22,350,000

Total investments in associated companies

2007

2006

2007

2006

9,200,000

45,354,933

37,010,204

22,350,000

37,887,941

25,716,904

15,000,000

14,891,661

46,550,000

31,550,000

98,134,535

62,727,108

(Unit: Baht)

Company-s name

Delta-TR Co., Ltd. Thai Auto Conversion Co., Ltd. Delta Thairung Co., Ltd. Total

Annual Report 2007

Consolidated financial statements Share of income (loss) from invest ments in associates during the years

Separate financial statements Dividend received during the years

2007

2006

2007

8,684,209 13,370,983 (108,339) 21,946,853

3,393,412 7,515,495 10,908,907

339,480 1,199,946 1,539,426

2006 961,400 961,400

12.2 Summarised financial information of associates (Unit: Million Baht) Paid-up capital as at 31 December

Company s name

Total assets as at 31 December

Total liabilities as at 31 December

Total revenues for the Net income (loss) years ended for the years ended 31 December 31 December

2007

2006

2007

2006

2007

2006

2007

2006

2007

2006

Delta-TR Co., Ltd. Thai Auto Conversion Co., Ltd.

20 75

186 196

112 230

87 69

31 144

375 291

280 216

19 44

7 25

Delta Thairung Co., Ltd.

(0.4)

In December 2007, the Company entered into the Equity Joint Venture Agreement with a foreign company to establish Delta ThaiRung Co., Ltd. (]associated company^). As at 31 December 2007, this associated company has called up 25 percent of share capital, and the Company paid in such capital in January 2008. Shares of income from investments in the associated companies, included in the consolidated income statements for the years ended 31 December 2007 and 2006, amounting to Baht 22 million and Baht 11 million, respectively, were calculated based on financial statements prepared by the management of those companies and not audited by their auditors.

13. PROPERTY, PLANT AND EQUIPMENT (Unit: Baht)

Land and land improvement

Buildings and building improvement

Consolidated financial statements Machinery, factory equipment Office Motor and tools equipment vehicles

Cost 31 December 2006 353,593,504 668,810,665 1,536,401,845 185,940,963 93,399,210 Acquisitions 262,500 2,203,850 22,828,289 8,507,615 7,416,973 Transfer in (out) 9,251,232 44,300,012 484,737 2,150,727 Disposals (460,287) (14,400,340) (2,473,270) (12,762,013) 31 December 2007 353,856,004 679,805,460 1,589,129,806 192,460,045 90,204,897 Accumulated depreciation 31 December 2006 8,833,051 323,125,227 1,256,559,483 164,769,371 70,965,625 Depreciation for the year 481,444 32,264,831 72,593,286 11,942,916 7,875,430 Depreciation on disposals (460,287) (11,703,383) (2,405,070) (11,196,610) 31 December 2007 9,314,495 354,929,771 1,317,449,386 174,307,217 67,644,445 Allowance for impairment loss 31 December 2006 (7,623,031) 31 December 2007 (7,623,031) Net book value 31 December 2006 344,760,453 345,685,438 272,219,331 21,171,592 22,433,585 31 December 2007 344,541,509 324,875,689 264,057,389 18,152,828 22,560,452 Depreciation for the years 2006 (Baht 114 million included in manufacturing cost, and the balance in selling and administrative expenses) 2007 (Baht 89 million included in manufacturing cost, and the balance in selling and administrative expenses)

Work in progress

Total

103,198,428 2,941,344,615 59,442,923 100,662,150 (56,186,708) (30,095,910) 106,454,643 3,011,910,855 - 1,824,252,757 125,157,907 (25,765,350) - 1,923,645,314 -

(7,623,031) (7,623,031)

103,198,428 1,109,468,827 106,454,643 1,080,642,510 155,471,686 125,157,907

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT (Unit: Baht)

Land and land improvement

Buildings and building improvement

Separate financial statements Machinery, factory equipment Office Motor and tools equipment vehicles

Cost 31 December 2006 60,805,477 314,518,114 1,355,389,811 93,974,011 71,544,710 Acquisitions 262,500 1,341,000 15,484,784 7,084,243 5,568,558 Transfer in (out) 8,656,055 30,061,464 34,097 2,150,727 Disposals (460,287) (12,164,509) (2,263,908) (3,987,586) 31 December 2007 61,067,977 324,054,882 1,388,771,550 98,828,443 75,276,409 Accumulated depreciation 31 December 2006 8,833,051 154,521,655 1,221,205,178 82,393,226 54,726,793 Depreciation for the year 481,444 12,699,573 57,588,674 7,391,618 5,521,877 Depreciation on disposals (460,287) (11,446,354) (2,218,744) (3,154,514) 31 December 2007 9,314,495 166,760,941 1,267,347,498 87,566,100 57,094,156 Allowance for impairment loss 31 December 2006 (7,623,031) 31 December 2007 (7,623,031) Net book value 31 December 2006 51,972,426 159,996,459 126,561,602 11,580,785 16,817,917 31 December 2007 51,753,482 157,293,941 113,801,021 11,262,343 18,182,253 Depreciation for the years 2006 (Baht 103 million included in manufacturing cost, and the balance in selling and administrative expenses) 2007 (Baht 67 million included in manufacturing cost, and the balance in selling and administrative expenses)

Work in progress

Total

21,745,548 1,917,977,671 39,741,565 69,482,650 (40,902,343) (18,876,290) 20,584,770 1,968,584,031 - 1,521,679,903 83,683,186 (17,279,899) - 1,588,083,190 -

(7,623,031) (7,623,031)

21,745,548 20,584,770

388,674,737 372,877,810 115,965,772 83,683,186

As at 31 December 2007, certain plant and equipment items have been fully depreciated but are still in use. The original cost of those assets amounted to approximately Baht 1,141 million (2006: Baht 1,084 million) (Separate financial statements: Baht 1,010 million, (2006: Baht 975 million)). As at 31 December 2007, a subsidiaryDs (Thai Ultimate Car Co., Ltd.) land and building constructed thereon at net book value of Baht 60 million (2006: Baht 72 million) have been mortgaged with a bank to secure the subsidiaryDs credit facilities of Baht 80 million as granted by the bank.

Annual Report 2007

14. LAND AND BUILDING LEASEHOLD RIGHTS (Unit: Baht)

Cost of land and building leasehold rights Less: Accumulated amortisation Net Amortisation expenses included in the income statements for the years

Consolidated financial statements

Separate financial statements

2007

2006

150,000 (150,000) -

150,000 (125,000) 25,000

25,000

125,000

2006

61,612,872 61,612,872 (54,800,892) (53,252,594) 6,811,980 8,360,278

1,548,298

1,648,301

15. OTHER NON-CURRENT ASSETS (Unit: Baht)

Withholding tax deducted at source Other non-current assets Total

Consolidated financial statements

Separate financial statements

2007

2006

2007

2006

28,981,313 17,071,961 46,053,274

40,810,101 14,166,744 54,976,845

23,956,414 9,998,110 33,954,524

38,697,070 13,001,818 51,698,888

16. BANK OVERDRAFTS FACILITIES As at 31 December 2007, the Company and subsidiaries have bank overdrafts facilities amounting to Baht 83 million (Separate financial statements: Baht 28 million) which are guaranteed by the Company and its Directors, and secured by the mortgage land with structures thereon of the subsidiary.

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT 17. OTHER CURRENT LIABILITIES (Unit: Baht)

Corporate income tax payable Output tax suspense Accrued expenses Other current liabilities Total

Consolidated financial statements

Separate financial statements

2007

2006

2007

2006

390,126 8,854,621 32,802,848 64,304,232 106,351,827

205,830 6,106,843 20,009,818 31,811,607 58,134,098

8,218,468 4,377,348 12,273,326 24,869,142

5,298,796 4,473,709 15,137,036 24,909,541

18. WARRANTS On 16 July 2004, the Company issued 24,999,000 warrants to subscribe to the CompanyDs ordinary shares (ESOP 2003), to be allotted to directors, advisors and/or employees of the Company and its subsidiaries at Baht 0 per unit. These 5-year warrants, expiring on 15 July 2009 have an exercise ratio of 1 warrant to 1 new ordinary share and the exercise price is Baht 8 per share. The exercise periods are as follows: -

In the first year, no more than 40% of the total warrants any individual received from the Company.

In the second year, no more than an additional 30% of the total warrants any individual received from the Company.

After the second year, all remain warrants can be exercised.

The ESOP 2003 warrants are not listed on the Stock Exchange of Thailand. On 18 December 2003, an Extraordinary General Meeting of the CompanyDs shareholders approved the allocation of 24,999,000 of its new ordinary shares to be reserved for the exercise of the warrants. On 24 April 2006, the Annual General Meeting of the shareholders of the Company approved the amendment of the exercise price of the warrants to subscribe to the CompanyDs ordinary shares from Baht 8 per share to Baht 5 per share. The Company already implemented the procedures stipulated under Notification Gor. Jor. 36/2544 of the Office of the Securities and Exchange Commission and the Company adjusted the exercise price with effect from June 2006. As at 31 December 2007 and 2006, the outstanding warrants are 23,407,000 units.

Annual Report 2007

19. STATUTORY RESERVE Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a statutory reserve at least 5 percent of its net income after deducting accumulated deficit brought forward (if any), until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution. As at 31 December 2007 and 2006, the statutory reserve reaches 10 percent of the CompanyDs registered capital.

20. OTHER INCOME (Unit: Baht)

Scrap sales Interest income Campaign support income Utilities, transportation service and sales of supplies Consulting fee Export subsidies Gains on sales of fixed assets Others Total

Consolidated financial statements

Separate financial statements

2007

2006

2007

2006

36,115,090 23,050,752 7,807,000

28,762,334 21,744,321 10,028,348

19,005,749 -

18,677,043 -

33,207,174 14,444,697 4,980,000 4,980,000 183,281 13,465,836 3,862,864 16,956,685 16,176,553 135,582,537 100,002,398

38,385,089 4,980,000 10,156,399 9,071,914 81,599,151

27,654,294 5,890,000 183,281 565,074 6,020,899 58,990,591

21. NUMBER OF EMPLOYEES AND RELATED COSTS (Unit: Baht)

Number of employees at end of year (persons) Employee costs for the year (Thousand Baht)

Consolidated financial statements

Separate financial statements

2007

2006

2007

2006

1,477 312,446

1,464 320,843

883 175,593

853 185,345

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT 22. CORPORATE INCOME TAX The Company is not liable to corporate income tax for the years 2007 and 2006 because the Company has dividend income, which is tax-exempted income, and tax loss brought forward. Corporate income tax of the subsidiaries, in the consolidated financial statements for the years 2007 and 2006 has been calculated at rate of 30 percent on the net pre-tax income from non-promoted activities for the years, after adding back certain provisions and expenses which are disallowable for tax computation purposes. Three subsidiaries have been granted the promotional privileges discussed in Note 23, including exemption from corporate income tax on net income from promoted activities.

23. PROMOTIONAL PRIVILEGES The three subsidiaries were granted investment promotional privileges by the Board of Investment (BOI). Important tax privileges granted to the companies are summarised below.

Thai Rung Tools and Dies Co., Ltd. Manufacture and maintenance of molds and jigs Thai Auto Pressparts Co., Ltd. Manufacture of metal vehicle body parts, plastic and fiber glass vehicle parts, and the manufacture and maintenance of molds and jigs Thai Auto Body Assembly Co., Ltd. Manufacture of metal vehicle and truck body parts, and plastic and fiber glass vehicle parts

Annual Report 2007

Exemption from corporate income tax for 3 years commencing from

Exemption from corporate income tax for 8 years commencing from

Exemption from 50% reduction of corporate income tax rate for 5 years commencing from

15 September 2000

3 June 2002

3 June 2010

The date the promoted operations commenced generating revenues (the subsidiary had no revenue from its promoted operations)

24. EARNINGS PER SHARE Basic earnings per share is calculated by dividing the net income (loss) for the year by the weighted average number of ordinary shares in issue during the year. Diluted earnings per share is calculated by dividing net income (loss) for the year by the weighted average number of ordinary shares in issue during the year plus the weighted average number of ordinary shares which would need to be issued to convert all dilutive potential ordinary shares into ordinary shares. The calculation assumes that the conversion took place either at the beginning of the year or on the date the potential ordinary shares were issued. Reconciliation between basic earnings per share and diluted earnings per share is presented below. Consolidated financial statements For the years ended 31 December Net loss

Weighted average number of shares

Loss per share

2007

2006

2007

2006

2007

2006

Baht

(0.02)

(0.05)

(0.02)

(0.05)

Basic earnings per share Net loss (11,596,761) Effect of dilutive potential ordinary shares Warrants to subscribe to the Company s ordinary shares, to be allotted to directors, advisors and/or employees of the Company and its subsidiaries (ESOP 2003 - 23,407,000 warrants*) Diluted earnings per share Net loss of ordinary shareholders assuming the conversion of dilutive potential ordinary shares (11,596,761)

(26,160,174) 501,589,497 501,589,497

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT Separate financial statements For the years ended 31 December Weighted average number of shares

Net loss

Loss per share

2007

2006

2007

2006

2007

2006

Baht

Baht (Restated)

Baht

Baht (Restated)

34,424,105

81,745,947

501,589,497

0.07

0.16

34,424,105

81,745,947

501,589,497

0.07

0.16

Basic earnings per share Net income Effect of dilutive potential ordinary shares Warrants to subscribe to the Company s ordinary shares, to be allotted to directors, advisors and/or employees of the Company and its subsidiaries (ESOP 2003 - 23,407,000 warrants*) Diluted earnings per share Net income of ordinary shareholders assuming the conversion of dilutive potential ordinary shares

* No calculation of diluted earnings (loss) per share is required for the years 2007 and 2006 since the exercise price of the warrants is in excess of average fair value of the CompanyDs ordinary shares.

25. SEGMENT INFORMATION The CompanyDs and its subsidiariesD business operations involve three principal segments: (1) car assembly and other related car services (2) manufacture of equipment for production of car accessories (comprising the manufacture of molds and jigs and manufacture and sales of car accessories and spare parts) and (3) sales of cars and car service centre business. These operations are mainly carried on in Thailand. Below is the consolidated financial information for the years ended 31 December 2007 and 2006 of the Company and its subsidiaries by segment.

Annual Report 2007

(Unit : Million Baht) Consolidated financial statements for the years ended 31 December 2007 and 2006 Car assembly and Manufacture of Sales of cars other related equipment for production and car service car services of car accessories centre

Elimination of inter-segment revenues

Total

2007

2006

2007

2006

2007

2006

2007

2006

2007

2006

Revenue from external customers Intersegment revenues Total revenues Segment income (loss) Unallocated income and expenses: Interest income Other income Selling and administrative expenses Share of income of associated companies Interest expense Corporate income tax Minority interest Net loss

774 168 942 166

765 85 850 122

924 43 967 141

969 34 1,003 133

517 17 534 39

569 27 596 58

(228) (228) (37)

(146) (146) (3)

2,215 2,215 309

2,303 2,303 310

23 112 (478)

22 78 (431)

22 (1) 1 (12)

11 (4) (3) (9) (26)

Property, plant and equipment Unallocated assets

299

1,080 1,772

1,109 1,695

2,852

2,804

260

470

548

344

355

(33)

(54)

Total assets

Transfer prices between business segments are as set out in Note 8.

26. PROVIDENT FUND The Company, its subsidiaries and their employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. The funds are monthly contributed to by employees at the rates of 3-5 percent of their salaries, and by the Company and its subsidiaries at the rates of 0-100 percent of the employeesD contribution. The fund is managed by BankThai Plc., except that of a subsidiary (Thai Ultimate Car Co., Ltd.) is managed by Kasikorn Asset Management Co., Ltd. The funds will be paid to the employees upon termination in accordance with the rules of the funds. During the year 2007, the Company and its subsidiaries contributed Baht 7 million (2006: Baht 7 million) to the funds.

27. DIVIDENDS Dividends of the Company which was declared in 2006 consist of the following: (Unit: Baht) Approved by Final dividends on 2005 income Total for 2006

Annual General Meeting of the shareholders on 24 April 2006

Total dividends 50,158,750

Dividend per share 0.10

50,158,750 Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT 28. COMMITMENTS AND CONTINGENT LIABILITIES 28.1 Operating lease commitments The Company and its subsidiaries have entered into several lease agreements in respect of the lease of land, office building space, factory building and machinery and equipment. Future minimum rentals payable under these leases as at 31 December 2007 are as follows: Payable within 1 year 2 to 5 years

Million Baht 23 33

28.2 Bank guarantees As at 31 December 2007, the Company and its subsidiaries have outstanding bank guarantees of approximately Baht 120 million (separate financial statements: Baht 23 million) issued by banks on behalf of the Company in respect of certain performance bonds as required in the normal course of business. These included letters of guarantee amounting to Baht 20 million to guarantee purchase of goods, Baht 30 million and USD 0.9 million to guarantee contractual performance, and Baht 40 million (separate financial statements: Baht 23 million) to guarantee electricity use, among others. 28.3 Investment commitment As at 31 December 2007, the Company has commitment amounting to Baht 53 million regarding to the uncalled share capital of subsidiary and associated companies.

29. FINANCIAL INSTRUMENTS 29.1 Financial risk management The CompanyDs and its subsidiariesD financial instruments, as defined under Thai Accounting Standard No. 48 ]Financial Instruments: Disclosure and Presentations^, principally comprise cash and cash equivalents, trade accounts receivable, other receivables, loans, investments, trade accounts payable and other payables. The financial risks associated with these financial instruments and how they are managed is described below. Credit risk The Company and subsidiaries are exposed to credit risk primarily with respect to trade accounts receivable, loans, and other receivables. The Company and subsidiaries manage the risk by adopting

Annual Report 2007

appropriate credit control policies and procedures and therefore does not expect to incur material financial losses. In addition, the Company and its subsidiaries do not have high concentration of credit risk since they have a large customer base. The maximum exposure to credit risk is limited to the carrying amounts of receivables, loans, and other receivables as stated in the balance sheet. Interest rate risk The CompanyD and subsidiariesD exposures to interest rate risk relate primarily to their cash at banks, current investments and short-term loans. However, since most of the CompanyDs and subsidiariesD financial assets and liabilities have been repaid within one year, the interest rate risk is expected to be minimal. Significant financial assets and liabilities as at 31 December 2007 classified by type of interest rates are summarised in the table below, with those financial assets and liabilities that carry fixed interest rates further classified based on the maturity date, or the repricing date if this occurs before the maturity date. Fixed interest rates Non-interest within 1 year bearing (Million Baht) Financial assets Cash and cash equivalents Trade accounts receivable and other receivables Current investments Short-term loans to related parties Financial liabilities Trade accounts payable and other payables

Total

Interest rates (Percent per annum)

350 334 28 712

458 458

350 458 334 28 1,170

1.0 - 1.5 2.95-3.22 3.325-5

263 263

Foreign currency risk A subsidiaryDs exposures to foreign currency risk arise mainly from trading transactions that are denominated in foreign currencies. The subsidiary seeks to reduce this risk by entering into forward exchange contracts when it considers appropriate. Generally, the forward contracts mature within one year.

Thai Rung Union Car Public Company Limited

WORLD CLASS THAI CRAFT The balances of financial assets and liabilities denominated in foreign currencies as at 31 December 2007 are summarised below.

Foreign currency

Financial assets

Financial liabilities

USD

731,825

750,000

Average exchange rate as at 31 December 2007 (Baht per 1 foreign currency unit) 33.77

Foreign exchange contracts outstanding at 31 December 2007 are summarised below. Foreign currency US dollar

Sold amount (Million dollar) 4.4

Contractual exchange rate Sold (Baht per 1 foreign currency unit) 33.57

29.2 Fair values of financial instruments Since the majority of the CompanyDs and subsidiariesD financial instruments are short-term in nature, and current investments and loans bear interest at rates close to market rate, their fair value is not expected to be materially different from the amounts presented in the balance sheets. A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an armDs length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument.

30. RECLASSIFICATION In addition to the change in accounting policy as mentioned in Note 4, which affects the net income and shareholderDs equity as previously reported, certain other amounts in the financial statements for the year ended 31 December 2006 have been reclassified to conform to the current yearDs classification but with no effect to previously reported net income (loss) or shareholdersD equity other than from the change in accounting policy.

31. APPROVAL OF FINANCIAL STATEMENTS These financial statements were authorised for issue by the CompanyDs Board of Directors on 28 February 2008.

Annual Report 2007

( ) Thai Rung Union Car Public Company Limited,

/Vision

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â&#x20AC;&#x153;To be at the pinnacle of the Thai auto industry with our own brand; to build optimum customer satisfaction through world-class quality and serviceâ&#x20AC;?