TUF: Annual Report 2011

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ANNUAL REPORT 2011 thai union frozen products public company limited

The World Seafood Expert

COMPANY PROFILE THAI UNION FROZEN PRODUCTS PCL. Registration No. 0107537000891 (previously Bor.Mor.Jor. 336)

TYPE OF BUSINESS Processor and exporter of frozen and canned seafood HEAD OFFICE 72/1 Moo 7, Sethakit 1 Road, Tambon Tarsrai, Amphoe Mueang Samutsakhon, Samutsakhon 74000 Tel: 66 (0) 3481-6500 (Automatic 7 Lines) Fax: 66 (0) 3481-6886 BANGKOK OFFICE 979/12 M Floor, S.M. Tower, Phaholyothin Road, Samsennai, Phayathai, Bangkok 10400 Tel: 66 (0) 2298-0024, 2298-0537 - 41 Fax: 66 (0) 2298-0548, 2298-0550 Website: www.thaiuniongroup.com Listed on the Stock Exchange of Thailand since November 22, 1994 AS OF DECEMBER 31, 2011 Registered capital of Bt1,000,000,000 (At Bt1 par value) Paid-up capital of Bt956,329,407 (956,329,407 shares)

CONTENTS Contents Message from Chairman Message from President Organization Chart Board of Directors Audit Committee and Sub-Committees Management Team 5-Year Comparative Financial Statistics 2011 Sales Breakdown and Distribution Corporate History and Development MW Brands Holdings SAS Nature of Business Investments in Subsidiaries and Associated Companies Sales Structure of TUF and Subsidiaries Nature of Main Business Related Business Groups TUF Strengths Financial Highlights

2 4 6 8 9 18 19 20 21 22 24 26 28 34 35 40 46 47

Sustainable Development Industry Outlook and Competition Risk Factors and Other Related Factors for Investment Considerations Report on the Practice of Good Corporate Governance Appointment of Directors Authority of Board of Directors and Audit Committee Shareholding Structure And Management Remuneration for Directors and Management Connected Transactions of Listed Company Report of Audit Committees Financial Ratios Explanation of Financial Ratios References Management Discussion and Analysis Statement of the Board of Director’s Responsibilities for the Financial Statements Report of Independent Auditor Consolidated and the Company Only Financial Statements Note to Consolidated Financial Statements

48 50 56 60 64 74 75 77 79 80 90 92 93 94 95 104 105 106 115

MESSAGE FROM CHAIRMAN

Mr. Kraisorn Chansiri Chairman

! " that wreaked extensive havoc on many parts of # $ areas and with no exception to industrial zones in Ayudhya and Pathum Thani provinces. The damages to these major economic areas led to a host of adverse impacts on the manufacturing sector where a slowdown becomes inevitable as a consequence of raw material shortage. As far as the frozen and canned seafood industry was concerned, the majority of processing plants and canneries are fortunately not located within " % $$ $ # & & from any direct impact of the crisis and was capable of running their operations without

interruptions. Thai Union Frozen Products (TUF)’s processing plants in Samutsakhon province lie in ' $ " River. Our plant facilities and those of our nearby subsidiary were all unaffected thanks to relentless & $$ $ & $ # with great cooperation from the private sector & " major canals and rivers. These concerted efforts helped save the city area of Samutsakhon & $ * + & " cause impacts on the daily life of some of our employees. We therefore launched some ad-hoc relief measures during and after the crisis to help them get back to a normal life. Besides, TUF formed teams of volunteers and assigned them to

THAI UNION FROZEN PRODUCTS PCL.

assist those affected employees and the general public who were in need of a helping hand. # and other food supplies to governmental and non-governmental agencies for disaster relief purposes in affected areas throughout the entire " * The overall Thai seafood export value for the year registered 11% year-on-year growth to Bt245,116 million. Among all export items under the seafood category, canned and processed seafood products were ranked the best performer with a robust year-on-year growth rate of 17% in value term to reach Bt152,050 million. Based on the annual ! # $ $ # ! & $ " crisis and indeed delivered a satisfactory annual growth rate. With regards to the annual operating performance, <= & >>? which easily surpassed its target set earlier for the * @ & K & sales growth in both US dollar and Thai baht term by 43% and 38% respectively. This was considered an exceptional achievement, setting a new corporate earning milestone since our last record-breaking $ @ Q QVV X* Z K # <=[ # K the USD1,000 million mark in 2004, followed by consecutive annual growth in the next 4 years, and eventually topped USD2,000 million in 2008. However, it took even less time (3 years) to add another USD 1,000 million of sales to attain USD3,232 million in 2011. According to our plan, we previously targeted to achieve annual sales of USD3,000 million within 2012. But our 2011 performance was considered a big leap, allowing us to attain the target one year ahead of our plan. At present, we have raised our 2013 target to USD4,000 million. We believe that TUF is well positioned to achieve this new sales target given our advantage as a truly global seafood player with an ability to source, produce and market our products across the globe, particularly thanks to the strength of our global tuna brands. Throughout our entire corporate history, we have K $ # # growth with persistent and satisfactory returns to our shareholders. As one of our normal practices, # !

through issuing Thai baht-denominated debentures to local institutional investors. The debentures, collectively worth Bt6,750 million, are of 3-year, 5-year and 10-year maturity with corresponding coupon rates of 4.51%, 4.70% and 5.02%. The funds raised were used for prepaying some of our existing loans, which in turn helped reduce our total funding costs. Continuous sales growth, on the back of a # that TUF should be able to bring its Debt-to-Equity (D/E) ratio down to 1:1 within 2013 while our current D/E ratio is standing at 1.47 times as a direct consequence of the acquisition of Europe-based MW Brands in 2010. In line with our core corporate strategy with a strong emphasis on continual growth, we have been expanding through new promising investments, greater presence in new markets and a larger product range to meet dynamic needs of customers and consumers across the globe. In addition to corporate growth, we have also been very keen on giving back to the society. During the past year, many of our ongoing CSR activities did contribute to the well-being of the society and the environment. Among these projects were “Restoring the balance of the Coastal Eco-system through Planting 1 million Mangrove Saplings Project�, “Hometown Community Development Program�, “Biogas Generation from Scraps and Wastes� and co-founding the International Seafood Sustainability Foundation (ISSF). As the Chairman, I would like to take this opportunity to recognize the efforts, commitments, integrity and continual improvements made by our management team and all employees in our organization who produced satisfactory operating results. Their deep devotion, despite & # # has enabled us to achieve the sales target of USD3,000 million well before the original schedule for 2012. My thanks are also extended to our valued & # who have given us their unwavering support all along. We are committed to attaining an even higher level of management excellence in the future in order to achieve our ambitious goals.

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MESSAGE FROM PRESIDENT

Mr. Thiraphong Chansiri President

Global economies for the year 2011 was characterized by a host of persistent challenges carried forward from the year 2010 that exerted increasing economic pressure to many countries. Therefore, Thai packers also needed to monitor closely how these impacts affected their own customers in those markets during the year. To K [ # "# # the US and the European Union, have to date been encumbered by an unresolved issue of public debt burdens. In the meantime, Japan, another world’s major economy, also suffered from a catastrophic tsunami. Thailand, with seemingly ! ! & " which was the worst in decades. Being a critical manufacturing base for certain industries such

as automobile and electronics, the historic Thai " & K # & industrial sectors even in several other countries, in addition to Thai domestic industrial activities. The $ " $ # was essentially the supply of raw materials, as demonstrably evident in the case of rice where damages were made to harvested crops and crop-producing areas. Apart from these main factors shaping the national economic landscape during the year, fuel price, currency exchange rates and labor supply were other key hurdles that deserved Thai packers’ continual close attention and actions whenever necessary. Therefore, with these ongoing challenges,

THAI UNION FROZEN PRODUCTS PCL.

we are putting even more efforts in our managing business in areas of strategy, organizational management, production and marketing in order to hold off these increasing outside adversities. Given the severity of these challenges that could likely last for a few years, we have put ourselves on a high alert for any potential negative development. We believe that these proactive measures should # K # K competitiveness in the global marketplace. In regard to our 2011 overall operating performance, $# % $ MW Brands books into Thai Union Group. During the course of the year, MW Brands managed to deliver satisfactory results and achieved set goals in all quarters. Meanwhile, Tri-Union Frozen Products, Inc. (established through the merger of Empress International Ltd. and Tri-Union Frozen Foods, LLC.) also reported a strong annual performance. With the operating results of our US and European subsidiaries well on track, we managed to increase our total annual sales in US dollar term to USD3,232 million or Bt98,670 million in Thai baht term, which represented 43% and 38% year-on-year growth rates respectively. This achievement was one full year ahead of our original sales target of USD3,000 million set for 2012. More importantly, annual net K @ \ >\ representing 77% year-on-year growth. This new # K $ we have developed a robust business model supported by effective operational policies and $ ! # K * ! # fruit of our employees’ dedication, diligence and commitment to their work. Our sales target for 2013 has now been raised to USD4,000 million while our longer term goal is USD8,000 million for 2020. These apparently ambitious goals demonstrate the long-term commitment from all our staff under Thai Union Group that they would make united efforts to achieve them. In order to attain the annual sales target of USD8,000 million within the planned time frame, we have & $ % ] development strategies, which should serve as a guidance for our future growth. These internallydeveloped strategies consist of the following 7 main pillars:

^ _ & ^ `# { | $ _ $ }# $ $ development ^ @ _ & $ # best practices ^ & _ & & # & ^ ~ ! _ & ^ $ _ # $ to support growth development ^ |# K _ & $ # K business Sharing the same view with many world-leading corporations, we place great emphasis on organizational development that should get ourselves ready for a dynamic business environment where cross-border competition becomes increasingly complicated. This is also the key rationale for our need to develop al corporate vision and a set of future goals that are clear and understood by our staff. This should enable us to remain competitive and strong amidst challenging business conditions in the world marketplace. To achieve these goals, our management team needs to act swiftly according to our prescribed strategies. Looking back, the milestones that we have accomplished over decades of operations are a # " $ demonstrated by our management team and all $$ * # K # $ are the driving force behind our continuously outstanding performance at TUF. As the president of TUF, I would like personally recognize the contributions of our employees, whom I have always believed as one of powerful drivers behind our growth. Nevertheless, our sustainable growth also cannot be made possible without unwavering support from shareholders, business partners,

# & € continue to uphold our management standards and move forward to achieve continual and sustainable growth for TUF in the future.

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ORGANIZATION CHART Total Workforce as of December 31, 2011: Salaried Employee: Daily Employee:

12,074 Staffs 1,344 Staffs 10,730 Staffs

BOARD OF DIRECTORS

Nomination Committee

Audit Committee

Remuneration Committee

Audit Unit

Risk Management Committee

Company Secretary

PRESIDENT / CEO

FISH PRODUCT LINES

SHRIMP PRODUCT LINES

Managing Director

Managing Director

General Manager

General Manager

Deputy General Manager

Deputy General Manager Finance

Corporate Account Manager

Deputy General Manager

General Manager Audit Unit

BOARD OF DIRECTORS

Mr. Kraisorn Chansiri Chairman Age 77 Education ^ + „ „ $ in Business Adminstration, Mae Fah Luang University ^ $ ] K the Thai Institute of Directors Association (RCP 15/2007) ^ … Z Program 12 (March – July 2011)

Social Positions ^ $ $ & @ Thai-Chinese Merchant Club ^ $ $ Thailand ^ ‚ % = Association ^ + Z & ‚ ‚ K $

Other Positions ^ < … #$ # * Z * ^ | = * Z * ^ … | # Z* ^ ! # & „ | Z* ^ ! # & „ < ‡ * Z * ^ „ %< | $ ZZ * ^ „ %< = ] # * ^ „ < | $ * Z * ^ „ < = * Z *

No. of Shares Held: 122,282,016 shares* *

Shareholders of TUF that included spouse and children as of 31 December 2011

Mr. Cheng Niruttinanon

Mr. Chuan Tangchansiri

Executive Director Age 70

Executive Director Age 67

Education ^ … | $ | # People’s Republic of China

Education ^ „ ] K the Thai Institute of Directors Association (DAP 86/2010)

Other Positions ^ % * Z * ^ Z# < = * Z * ^ ! # & „ … „ Thai Union Manufacturing Co., Ltd. ^ „ < = * Z * ^ „ %< | $ ZZ * ^ „ ˆ# $ = * Z * ^ „ ‰# = * Z * ^ „ <*|* Š# ZZ * ^ „ …€ @ + | |

Other Positions ^ ! # & „ < … #$ # Co., Ltd. ^ „ | Z* ^ „ % * Z * ^ „ < | $ * Z * ^ „ < = * Z * ^ „ < ‡ * Z * ^ „ < & + (Investment in MW Brands Holdings SAS)

No. of Shares Held: 60,716,605 shares*

No. of Shares Held: 9,400,000 shares*

*

*

10

Shareholders of TUF that included spouse and children as of 31 December 2011

ANNUAL REPORT 2011

Shareholders of TUF that included spouse and children as of 31 December 2011

Mr. Thiraphong Chansiri President Age 47 Education ^ @ [ „ ‹… Œ Assumption University ^ … $ @# (Management), University of San Francisco, USA ^ „ ] K the Thai Institute of Directors Association (DCP 10/2001)

Social Positions ^ „ Z ^ & … $ & Investment (MAI) ^ & | # ^ # … (TMA) ^ @ $ # $ | No. of Shares Held: 82,422,782 shares*

Other Positions ^ < | $ * Z * ^ …€ @ + | | ^ < * ^ < ‡ * Z * ^ %+ * Z * ^ ! # & „ Thai Union Manufacturing Co., Ltd. ^ ! # & „ | Z* ^ „ % * Z * ^ „ < = * Z * ^ „ < + * Z * ^ „ @ ] „ * Z * ^ „ %< | $ ZZ * ^ „ %< = ] # * ^ „ Lucky Union Foods Co., Ltd. ^ „ ˆ# $ = * Z * ^ Director, Yueh Chyang Canned Food Co., Ltd. ^ „ Š = * Z * ^ „ … | # Z* ^ „ <*|* Š# ZZ * ^ „ < & + (Investment in MW Brands Holding SAS)

*

Shareholders of TUF that included spouse and children as of 31 December 2011

ANNUAL REPORT 2011

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Mr. Rittirong Boonmechote

Mr. Yasuo Goto

Managing Director (Shrimp Product Lines) Age 50

Director Age 63

Education ^ @ [ „ @ < & ^ „ ] K the Thai Institute of Director Association (DCP 84/2010) ^ Z ! # & „ & (EDP 2/2009) by Thai Listed Companies Association

Education ^ @ [ „ � < & ˆ

Other Positions ^ < = * Z * ^ `# | * Z * ^ < + * Z * ^ < | $ * Z * ^ „ %< = ] # * Social Position ^ ‚ = ] = ^ ‚ @ < & # Association No. of Shares Held: 13,100,000 shares* *

12

Shareholders of TUF that included spouse and children as of 31 December 2011

ANNUAL REPORT 2011

Experience ^ { $ ! # & ~$ Hagoromo Foods Corporation ^ + = ^ „ … „ Hogoromo Foods Corporation No. of Shares Held: - *

Mr. Kakiuchi Takehiko

Mr. Chan Tin King

Director Age 57

Age 44

Education ^ @ [ „ � < & ˆ

Education ^ @ [ „ $ | < & USA ^ „ ] K the Thai Institute of Directors Association (DCP 47/2004)

Experience ^ | ‚ ‹= „ Œ $ Mitsubishi Corporation No. of Shares Held: - *

Other Positions ^ ! # & „ … „ Biz Dimension Co., Ltd. ^ ! # & „ < … #$ # Co., Ltd. ^ ! # & „ | Z* ^ „ %+ * Z * ^ „ %< | $ ZZ * ^ „ %< = ] # * ^ „ < + * Z * ^ „ ˆ# $ = * Z * ^ „ ‰# = * Z * ^ „ < & + (Investment in MW Brands Holdings SAS) ^ „ …€ @ + | | No. of Shares Held: 18,553,327 shares* *

Shareholders of TUF that included spouse and children as of 31 December 2011

ANNUAL REPORT 2011

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Mr. Chan Shue Chung

Mr. Ravinder Singh Grewal Sarbjit S

Executive Director Age 37

Director Age 43

Education ^ @ [ „ ~ | < & USA ^ … $ @# @ University ^ „ ] K the Thai Institute of Directors Association (DCP 10/2002) ^ Z ! # & „ & (EDP 1/2009) by Thai Listed Companies Association

Education ^ @ [ „ ‹ Œ University of New South Wales, Australia ^ #K # # |

Other Positions ^ „ < = * Z * ^ „ < + * Z * No. of Shares Held: 2,878,182 shares* *

14

Shareholders of TUF that included spouse and children as of 31 December 2011

ANNUAL REPORT 2011

Other Positions ^ „ € + ‹ # Œ ^ „ | %Z + ‹… Œ ^ „ | # Z * ^ „ ~ … Z * ^ „ …€ @ + | | ^ „ | ~ $ Z ‹@ # Œ No. of Shares Held: - *

Mr. Sakdi Kiewkarnkha

Pol.Maj.Gen. Pracha Anucrokdilok

Independent Director Age 77

Independent Director Age 75

Education ^ @ [ „ ‹ # and Law), Thammasat University ^ „ ] K the Thai Institute of Directors Association (DCP 13/2001) ^ $ ] K the Thai Institute of Directors Association (RCP 4/2001) ^ $ organized by the Thai Institute of Directors Association (RCC 9/2009) ^ ! # & | $ < & { University of Singapore ^ | ! # & | ‡ # Institute of Business Administration of Chulalongkorn University

Education ^ @ [ „ ‹Z Œ University ^ $ #K $ ^ „ ] K the Thai Institute of Directors Association (DAP 33/2005) Experience ^ `# „ & ^ „ # @# # ^ „ # ‡ No. of Shares Held: 6,310 shares* *

Shareholders of TUF that included spouse and children as of 31 December 2011

Experience ^ ! # & ‚ | Commercial Bank PCL. ^ ! # & „ @ … Z $ Insurance Co., Ltd. ^ „ { # Member, Dusit Thani PCL. ^ & ! # & @ @ Metropolitan Bank PCL. ^ $ # @ #K Finance PCL. ^ ‚ … [ … ‚ # = # No. of Shares Held: - *

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Mr. Kiti Pilunthanadiloke

Mr. Kirati Assakul

Independent Director Age 73

Independent Director Age 54

Education ^ @ [ „ ‹Z Œ University ^ @ Z ^ „ ] K the Thai Institute of Directors Association (DAP 36/2005)

Education ^ @ [ „ ‹ ~ Œ `# [ < & ^ … [ „ ‹ Œ University of Southern California ^ „ ] K the Thai Institute of Directors Association (DCP 27/2003) ^ $ organized by the Thai Institute of Directors Association (RCC 5/2007)

Experience ^ Z Â? Z # ^ | #K # ~$ $ Attorney General No. of Shares Held: - *

Other Positions ^ $ @ ~ ‡ Z* ^ ~ Z $ # * Z * No. of Shares Held: 21,000 shares* *

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ANNUAL REPORT 2011

Shareholders of TUF that included spouse and children as of 31 December 2011

Dr. Thamnoon Ananthothai Independent Director Age 55 Education ^ @ [ „ ‹ # { Management), Eckerd College USA ^ … [ „ ‹…*@* … Œ The University of Sarasota Florida USA ^ *„* … Walden University USA ^ * * Council for Accountancy USA ^ # ] K the Thai Institute of Directors Association (ACP 10/2005) ^ „ ] K the Thai Institute of Directors Association (DAP 48/2005) ^ „ ] K the Thai Institute of Directors Association (DCP 70/2006) ^ $ ] K the Thai Institute of Directors Association (RCP 14/2006) ^ < =# $ = Statement organized by the Thai Institute of Directors Association (UFS 7/2007)

Other Positions ^ ‚ Z* ^ ‚ $ # Committee, Better World Green PCL. ^ ‚ $ # Committee, IFS Capital (Thailand) PCL. ^ ! # & „ … Securities PCL. ^ „ $ # Eastern Printing PCL. ^ „ „ # Committee, Chairman of the NominatingCommittee and Remuneration Committee Member, Property Prefect PCL. ^ „ # @ University No. of Shares Held: - *

ANNUAL REPORT 2011

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THAI UNION FROZEN PRODUCTS PCL.

Thai Union Frozen Products PCL.

AUDIT COMMITTEE AND SUB-COMMITTEES AUDIT COMMITTEE

Mr. Sakdi Kiewkarnkha

Pol.Maj.Gen. Pracha Anucrokdilok

Mr. Kiti Pilunthanadiloke

Chairman of Audit Committee

Audit Committee

Audit Committee

SUB-COMMITTEES; The Nomination Committee Dr. Thamnoon Ananthothai

Chairman of the Nomination Committee

Â… * | Â?

Member of the Nomination Committee

Â… * Â?

Member of the Nomination Committee

The Remuneration Committee Â… * Â? #

Chairman of the Remuneration Committee

Â… * Â? #

Member of the Remuneration Committee

Â… * Â?

Member of the Remuneration Committee

The Risk Management Committee Dr. Thamnoon Ananthotha

Chairman of the Risk Management Committee

Â… * | Â?

Member of the Risk Management Committee

Pol.Maj.Gen. Pracha Anucrokdilok

Member of the Risk Management Committee

Mr. Thiraphong Chansiri

Member of the Risk Management Committee

Â… * Â?

Member of the Risk Management Committee

THAI UNION FROZEN PRODUCTS PCL.

Thai Union Frozen Products PCL.

MANAGEMENT TEAM Mr. Suthidej Amornkasemwong General Manager – Fish Product Lines Experience ^ … … ‹= # Z Œ Thai Union Frozen Products PCL.

Mr. Preerasak Boonmechote General Manager – Shrimp Product Lines Experience ^ ‡ … ‹| # Z Œ Thai Union Frozen Products PCL.

Ms. Sureenard Sukhawanchai General Manager Audit Unit Experience ^ … $ # „ � # # * Z * ^ … $ = „ � # # * Z *

Mr. Yongyut Setthawiwat Deputy General Manager Finance Experience ^ # � Z* ^ # … +# € …# Z *

Mr. Niti Trakpiboon Corporate Accounting Manager Experience ^ ‚ $ … „ � | # * Z *

THAI UNION FROZEN PRODUCTS PCL.

5-Year Comparative

FINANCIAL STATISTICS

TOTAL REVENUES (MILLION BAHT)

TOTAL ASSETS (MILLION BAHT)

NET PROFIT (MILLION BAHT)

BOOK VALUE PER SHARE (BAHT)

TOTAL LIABILITIES TO EQUITY (TIMES)

RETURN ON AVERAGE EQUITY (%)

THAI UNION FROZEN PRODUCTS PCL.

2011

| Z | @ ~ AND DISTRIBUTION

TUNA PRODUCTS

FROZEN SHRIMP

DOMESTIC PRODUCTS

CANNED PETFOOD

CANNED SEAFOOD

SHRIMP FEED

SALMON

CANNED FROZEN SARDINE AND CEPHALOPOD MACKEREL

2011 SALES BREAKDOWN

USA

EUROPE

JAPAN

DOMESTIC SALES

AFRICA

OCEANIA ASIA MIDDLE (NON-JAPAN) EAST

2011 SALES DISTRIBUTION

CANADA

SOUTH AMERICA

THAI UNION FROZEN PRODUCTS PCL.

CORPORATE HISTORY AND „ ‚ Z~ … Š

TUF’s long history of frozen seafood processing and export started in 1988 with Bt25-million initial capital. Later in 1992, we embarked on a joint venture with Mitsubishi Corporation and Hagoromo Foods Corporation, both of which are our Japanese business alliances that have concurrently taken dual roles as our authorized product distributors as well as our valued customers. Their efforts have played critical roles in the development of our products, enabling us to reach high industry standards and compete in the international marketplace. In 1994, we became a publicly traded company on the Stock Exchange of Thailand and ever since we have continually increased our share capital. Today, our registered capital amounts to Bt1,000,000,000 at Bt1 par value, with paid-up capital of Bt956,329,407 or 956,329,407 shares. Through the years since our inception, we have operated our business under prudential & $ operations possible. This has been further strengthened by our expertise acquired through decades of hands-on industry experience and visionary executive members. These factors in combination have yielded our business success, # # *

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ANNUAL REPORT 2011

Vision We strive to be the “Chef of the World� creating and providing high quality and innovative cuisine $# # # # stakeholders’ ever evolving demands.

Mission ^ $ ’ & in people and creating opportunities for " # ’ & our people with a better quality of life. ^ # & $ %}# $ delicious and convenient food products and simultaneously as a fair and responsible partner for all of our stakeholders with a commitment to building long-term mutually successful relationships. ^ ‡ K K advocate for the seafood industry both in Thailand and among the world business communities. ^ & corporate citizen with long-term commitment to protect the environment and our Earth’s resources.

Development within 2011 1. The Company issued debentures worth Bt6,750 million to prepay part of its existing loans and to reduce funding cost. The issued debentures are of 3-year, 5-year and 10-year maturity with respective coupon rates of 4.51%, 4.70% and 5.02%. The series of bonds, assigned A+ rating from TRIS Rating, were successfully placed to a group of institutional and high net worth investors. 2. The Company sought to acquire more shares of PT Juifa International Foods Co., Ltd., one of its subsidiaries and a leading Indonesiabased canned tuna processor and exporter, from 76.50% to 88.78%. The Company’s Board of Directors has already given its approval to the plan since November 7, 2011 and implementation is currently in process. 3. The Company’s Board of Directors’ Meeting, held on December 21, 2011, approved a resolution for the Company to make a voluntary tender offer for all shares of Pakfood Public Company Limited (PPC or Pakfood). The Share Sale and Purchase Agreement

(SPA) was signed by the Company and PPC’s major shareholders on the same day. The acquisition will be executed when all conditions precedent stated in the SPA are $# * $$ equal to the net book value per share of #

[ statements for the year 2011 ended December 31, 2011. PPC operates as a leading Thai processor, exporter and distributor of seafood products, ready meal % $ # K frozen. PPC has issued and paid-up share capital of Bt300,000,000 comprising 30,000,000 issued and paid-up ordinary shares at par value of Bt10 per share (as of September 30, 2011). The business alliance forged by both companies & # # # K including, among others, raw material sourcing and inventory management, manufacturing capability management and market coverage. The new alliance will therefore offer great potential to increase their respective revenues in the domestic and international markets on continued basis.

ANNUAL REPORT 2011

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THAI UNION FROZEN PRODUCTS PCL.

MW BRANDS HOLDINGS SAS

JOHN WEST

PETIT NAVIRE

€ ”•” ˆ € currently the dominant market player in canned seafood sector in three major European markets; the < � Š market share of 29%, 70% and 34%, respectively. Underpinned by the brand’s long commercial history, John West today has strong product offerings, ranging diversely from tuna, salmon, sardine to mackerel, other seafood choices and to fully-processed value-added meal and snack products. In its most recent business milestone, John West’s logo has been changed as part of its rebranding process.

Launched in 1932, Petit Navire is currently the market-leading canned seafood brand in France with tuna, sardine, mackerel and value-added varieties as its core products.

In addition, MW Brands owns the following four manufacturing facilities in strategic locations with convenient access to sources of raw materials, thus providing it with superior cost control advantages, namely:

Business Strengths

1. The processing plant of Ets Paul Paulet in France; for value-added seafood products, such as fully-processed ready meals and seafood spread products 2. The processing plant of European Seafood Investment Portugal, Lda. in Portugal; for sardine and mackerel products 3. The processing plant of Pioneer Food Company in Ghana; for canned tuna and tuna loin varieties 4. The processing plant of Indian Ocean Tuna Ltd. in Seychelles; for canned tuna products 24

ANNUAL REPORT 2011

In 2011, the total market value of canned seafood sector in France amounted to EUR825 million (as of December 2011). Petit Navire and Hyacinthe Parmentier collectively carved as much as 28%

Following an integration of competitive advantages between TUF and MW Brands, the synergistic K <= $# $ processor and distributor with the capability of global raw material procurement, manufacturing and competitiveness, as summarized below: ^ … $$ & # % " and raw material procurement on the back of strategically located manufacturing bases in Ghana and Seychelles, one of the world’s largest # * ^ @ }# X # % & # % K performance as well as facilitate greater access to real-time in-depth information on the trend of raw material prices and availability.

THAI UNION FROZEN PRODUCTS PCL.

MW Brands is a major fully integrated processor and distributor of canned seafood products with a strong market presence in Europe. The extensive product range of MW Brands consists of tuna, salmon, sardine, mackerel, value-added tuna and other seafood-based products, which are marketed under the following trademarks:

HYACINTHE PARMENTIER

MAREBLU

Unveiled in 1883, the core product under Hyacinthe Parmentier trademark is sardine. The brand currently enjoys a dominant market position in the French market.

Unveiled in 1960 in Italy, the core product range under Mareblu trademark covers tuna, sardine and mackerel. Mareblu is currently the third largest player in the Italian canned seafood sector with a 6% share out of the total canned seafood market value of EUR982 million (as of December 2011).

market share, thereby making them category leader in the French market.

^ ˆ $$ & # $ an objective to achieve maximum productivity and become a leaner manufacturing chain. ^ ˆ {„ $$ & & # % products, such as tuna oil and pet food. ^ $$ ! & _ …€ @ [ manufacturing bases in African, Caribbean ‹ Œ # ! of import tariffs on canned seafood products bound for the European Union, compared with the normal import duty of as high as 24% being imposed on Thai imports. Market Strengths ^ …€ @ [ in the seafood sector in Europe (the world’s largest canned seafood consuming region) will <= K $ #

presence and expanding its existing European market base. ^ <= K K & K sales distribution between its main markets, namely the U.S., Europe and Asia. Brand Strengths ^ <=[ K lifted to 52% whilst private label sales are accordingly lowered to 48%. ^ # …€ @ established and highly recognized by European consumers. These market-dominant trademarks are John West, Petit Navire, Hyacinthe Parmentier and Mareblu.

ANNUAL REPORT 2011

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THAI UNION FROZEN PRODUCTS PCL.

Thai Union Frozen Products PCL.

NATURE OF BUSINESS GROUP 1 Production and Export of Frozen and Canned Food Products Thai Union Manufacturing Co., Ltd.

90.08%

Songkla Canning PCL.

90.44%

Thai Union Seafood Co., Ltd.

51.00%

GROUP 2 Production and Distribution of Packaging Products

90.50%*

Thai Union Graphic Co., Ltd.

74.00%

GROUP 3 Production and Distribution of Animal Feeds and Agriculture Products Thai Union Feedmill Co., Ltd.

51.00%

Thai Quality Shrimp Co., Ltd.

95.00%***

Thai Union Hatchery Co., Ltd.

99.99%***

GROUP 4 Food Business in Domestic Market T-Holding Co., Ltd. 26

90.00%

THAI UNION FROZEN PRODUCTS PCL.

GROUP 5 Overseas Investments Thai Union International, Inc.

100.00%

Tri-Union Seafoods, LLC. (Chicken of the Sea International)

100.00%

Tri-Union Frozen Products, Inc.

82.00%

(Empress International Ltd. and Tri-Union Frozen Foods, LLC were merged) U.S. Pet Nutrition, LLC

99.00%

- Canadian Pet Nutrition, ULC

100.00%

Thai Union Investment Holding

100.00%

MW Brands Holdings SAS

100.00%

PT Juifa International Foods Co., Ltd.

76.50%

Yueh Chyang Canned Food Co., Ltd.

51.00%*

Associated Companies Lucky Union Foods Co., Ltd.

25.00%

Biz Dimension Co., Ltd.

20.00%

Avanti Feeds Limited

14.99%

TN Fine Chemicals Co., Ltd.

48.97%**

Avanti Thai Aqua Feeds Private Ltd.

50.00%

Moresby International Holdings, Inc.

33.33%**

* Invested by Songkla Canning PCL. ** Invested by Thai Union Manufacturing Co., Ltd. *** Invested by Thai Union Feedmill Co., Ltd. 27

Investments in Subsidiaries and

ASSOCIATED COMPANIES

TQS

TUI

CAPN

TUIH

YCC ATA

MIH

THAI UNION FROZEN PRODUCTS PCL.

THAI UNION MANUFACTURING CO., LTD. (TUM) ! Tel: Fax: Factory:

Tel: Fax: Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

979/13-16 M Floor, S.M. Tower, Phaholyothin Road, Samsennai, Phayathai, Bangkok 10400 66 (0) 2298-0025, 298-0421 - 32 66 (0) 2298-0027 - 28 30/2 Moo 8, Sethakit 1 Road, Tambon Tarsrai, Amphoe Mueang Samutsakhon, Samutsakhon 74000 66 (0) 3441-2210, 3481-6441 - 4 66 (0) 3442-5459 Processor and exporter of canned tuna and petfood @ Q @ ‚ # March 1994 (Additional investment in June 1999) Common share 90.08% or 27,025,360 shares

|~Š‡�Z ŠŠ Š‡ Z* ‹| Œ ! Tel: Fax: Factory: Tel: Fax: Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

979/9-10 12th Floor, S.M. Tower, Phaholyothin Road, Samsennai, Phayathai, Bangkok 10400 66 (0) 2298-0029 66 (0) 2298-0442 - 3 QQQ � ' & ' K & Amphoe Mueang Songkhla, Songkhla 90100 66 (0) 7433-4005 - 8 66 (0) 7433-4009 Processor and exporter of canned seafood @ Q• @ ‚ # October 1995 (Additional investment in March 1999) Common share 90.44% or 32,556,819 shares

THAI UNION SEAFOOD CO., LTD. (TUS) ! Tel: Fax: Factory:

Tel: Fax: Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

30

979/8 12th Floor, S.M. Tower, Phaholyothin Road, Samsennai, Phayathai, Bangkok 10400 66 (0) 2298-0024 66 (0) 2298-0550 77 Moo 5, Songkhla-Ranot Road, Tambon Watkanun, Amphoe Singhanakhon, Songkhla 90330 66 (0) 7448-3482 - 7 66 (0) 7448-3480 Processor and exporter of frozen shrimp @ V @ ‚ # December 1996 (Additional investment in March 2005 and October 2008) Common share 51.00% or 20,400,000 shares

ANNUAL REPORT 2011

ASIAN-PACIFIC CAN CO., LTD. (APC) !

Tel: Fax: Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

38/70 Moo 8, Sethakit 1 Road, Tambon Tarsrai, Amphoe Mueang Samutsakhon, Samutsakhon 74000 66 (0) 3442-3401 - 6 66 (0) 3442-1493 Manufacturer and distributor of steel and aluminum food packaging products @ ” @ V ‚ # December 1993 Common share 90.50% or 181 shares (Invested by Songkla Canning PCL.)

THAI UNION GRAPHIC CO., LTD. (TUG) ! Tel: Fax: Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares: Website:

255 Smaedam Road, Smaedam, Bangkhunthian, Bangkok 10150 66 (0) 2415-5808 - 9, 2895-5865 - 6 66 (0) 2415-4371 One-stop-service offset printing house specialized in standard high-quality printouts @ V @ ‚ # July 1995 (Additional investment in May 2001) Common share 74.00% or 2,960,000 shares http://www.thaiuniongraphic.com

THAI UNION FEEDMILL CO., LTD. (TFM) !

Tel: Fax: Factory: Tel: Fax: Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares: Website:

”X– … K � Amphoe Mueang Samutsakhon, Samutsakhon 74000 66 (0) 3441-7222 66 (0) 3441-7255, 3488-5125 103/1 Moo 2, Songkhla-Ranot Road, Tambon Pak-Trae, Amphoe Ranot, Songkhla 90140 66 (0) 7439-6933 - 7 66 (0) 7439-6938 Processor and exporter of animal feeds @ \ @ ‚ # June 2000 (Additional investment in May 2001, October 2006 and August 2010) Common share 51.00% or 25,500,000 shares http://www.thaiunionfeedmill.com

THAI UNION FROZEN PRODUCTS PCL.

TQS

+ `< Z ‰ |+ … ~* Z „* ‹ `|Œ !

Tel: Fax: Type of Business:

Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

”X– … K � Amphoe Mueang Samutsakhon, Samutsakhon 74000 66 (0) 3441-7222 66 (0) 3441-7255 Producer and distributor of nauplii and postlarvae shrimps. Research and development of new shrimp breeds. @ V @ ‚ # July 2004 (The capital decrease in December 2007) Common share 95.00% or 379,995 shares (Invested by Thai Union Feedmill Co., Ltd.)

THAI UNION HATCHERY CO., LTD. (TUH) ! Tel: Fax: Factory: Tel: Fax: Type of Business:

Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

”X– … K � Amphoe Mueang Samutsakorn, Samutsakhon 74000 66 (0) 3441-7222 66 (0) 3441-7255 V … V K � Amphoe Takua Pa, Phangnga 82140 66 (0) 7658-4000 – 27 66 (0) 7658-4028 – 9 `# % K & produce and distribute high-quality nauplii and postlarvae to farmers @ V @ ‚ # April 2006 (Additional investment in November 2007 and April 2011) Common share 99.99% or 29,999,974 shares (Invested by Thai Union Feedmill Co., Ltd.)

T-HOLDING CO., LTD. (THD) ! Tel: Fax: Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares: Website:

� ' @ K @ K Bangkok 10150 66 (0) 2898-8200 66 (0) 2895-3001 Distributor of “Fisho�,“Sealect� and “Bellotta� product lines @ > @ ‚ # November 1996 Common share 90.00% or 6,300,000 shares _–– * *

TUI

THAI UNION INTERNATIONAL, INC. (TUI) !

Tel: Fax: Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

Sorrento South Corporate Center 9330 Scranton Road, Suite 500, San Diego, California 92121, USA (858) 558-9662 (858) 597-4566 A holding company for investment in USA <|„ <|„ ‚ # April 1996 Common share 100.00% or 10,000,000 shares

TRI-UNION SEAFOODS, LLC. (TRI-U) !

Tel: Fax: Type of Business: Equity: Date of Investment: Type/% Holding/ No. of Shares: Website:

Sorrento South Corporate Center 9330 Scranton Road, Suite 500, San Diego, California 92121, USA (858) 558-9662 (858) 597-4566 Processor and distributor of canned seafood under “Chicken of the Sea� brand USD62,390,422 July 1997 (Additional investment in January 2001) 100.00% (Invested by Thai Union International, Inc.) (No share issued) http://www.chickenofthesea.com

TRI-UNION FROZEN PRODUCTS, INC. (TUFP)** " ! Tel: Fax: ! Tel: Fax: Type of Business: Registered Capital:

Type/% Holding/ No. of Shares:

222 N. Sepulveda Blvd, Suite 1550, El Segundo CA 90245 USA (866) 572-0996 (310) 469-7037 5 Dakota Drive, Suite 303, Lake Success, NY 11042 USA (516) 740-4100 (516) 621-0199 Importer and distributor of frozen seafood products Common share 5,800 shares at USD0.001

‚ # $ | V <|„ * ‚ # Common share 68.97% or 4,000 shares Preferred share100.00 or 4,200 shares (Invested by Thai Union International, Inc.)

**Empress International Ltd. and Tri-Union Frozen Foods, LLC were merged

ANNUAL REPORT 2011

31

THAI UNION FROZEN PRODUCTS PCL.

U.S. PET NUTRITION LLC. (USPN) ! Tel: Fax: Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

CAPN

Tel: Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

\ � Z ‚ @ ‚ •‚ (250) 762-5434 Processor and distributor of pet food <|„ * ‚ # July 2011 Common share 100.00% (Invested by U.S. Pet Nutrition LLC.)

+ <Š ~Š Š‚ | … Š +~Z„ Š‡ ‹ < +Œ !

Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

32

! Tel: Fax: Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

CANADIAN PET NUTRITION, ULC (CAPN) !

TUIH

9330 Scranton Road, Suite 500, San Diego CA 92121 USA (858) 558-9662 (858) 597-4566 Processor and distributor of wet and dry pet food USD1 October 2010 Common share 99.00% (Invested by Thai Union International, Inc.)

MW BRANDS HOLDINGS SAS (MW BRANDS)

8th Floor, Medine Mews, La Chaussee Street, Port Louis, Mauritius A holding company for investment in Europe < ‚ # June 2010 Common share 100.00% or 22,000,001 shares

ANNUAL REPORT 2011

V & # # — � >\ • Paris, France (33) 1-53-77-53-53 (33) 1-53-77-17-13 Processor and exporter of canned seafood in Europe Q Q•> < ‚ # October 2010 Common share 100.00% or 31,367,000 shares (Invested by Thai Union Investment Holding)

PT JUIFA INTERNATIONAL FOODS CO., LTD. (JIF) !

Tel: Fax: Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

YCC

JL. Lingkar Timur No.53 Tegalkamulyan Cilacap 53211 Jawa Tengah, Indonesia (62-282) 521-002 - 5 (62-282) 521-007 Processor and exporter of canned tuna products <|„ > <|„ ‚ # May 2006 Common share 76.50% or 20,655 shares

YUEH CHYANG CANNED FOOD CO., LTD. (YCC) !

Tel: Fax: Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

Š # ‚ @ Z# „ Long An Provice, People’s Republic $ ‚ (84) 072-387-2377 (84) 072-387-2388 Processor and exporter of canned seafood USD1,919,936 December 2007 51.00% (Invested by Songkla Canning PCL.)

THAI UNION FROZEN PRODUCTS PCL.

Z< �‰ <Š ~Š =~~„| ~* Z „* ‹Z<=Œ # Factory: Tel: Fax: Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

Tel: Fax: Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

Tel: Fax: Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

Tel: Fax: Type of Business:

Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

ATA

Tel: Fax: Type of Business: Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

MIH

G2, Concorde Apartments, 6-3-658, Somaji Guda, Hyderabad 500 082, Andhra Pradesh, India 91-40-2331-0260, 2331-0261 91-40-2331-1604 Processor and exporter of shrimp feed and frozen shrimp Š ” Š ‚ # October 2008 Common shares 14.99% or 1,199,000 shares

Remark: Phuket Fishing Co.,Ltd., Samui Fishing Co.,Ltd., Phang-nga Fishing Co.,Ltd., | = * Z * | = * Z * # & K# group have terminated their operations and completed registeration procedures for business dissolution and liquidation in 2011

30/2 Moo 8, Sethakit 1 Road, Tambon Tarsrai, Amphoe Mueang Samutsakhon, Samutsakhon 74000 66 (0) 3442-3686 66 (0) 3442-3688 Processor and exporter of seafood by-products, i.e. high grade oil extracts from # # & $ shell. @ X @ ‚ # March 2009 Common share 48.97% or 4,407 shares (Invested by Thai Union Manufacturing Co., Ltd.)

‚ Š + `< = „| ‚ Z „* ‹ Œ !

979/79-80 26th Floor, S.M. Tower, Phaholyothin Road, Samsennai, Phayathai, Bangkok 10400 66 (0) 2298-0345 66 (0) 2298-0331 - 3 E-Procurement Service Provider @ \ @ \ ‚ # September 2003 Common share 20.00% or 1,000,000 shares

‚ Š = „| Z … „ ‹ =ZŒ !

!

1/74-75 Samutsakhon Industrial Estate, Tambon Tarsrai, Amphoe Mueang Samutsakhon, Samutsakhon 74000 66 (0) 3449-0330, 3449-0009 66 (0) 3449-0008 Processor and exporter of imitation crab stick @ \ @ ‚ # June 1990 (Additional investment in March 2004) Common share 25.00% or 375,000 shares

BIZ DIMENSION CO., LTD. (BZD) !

TN FINE CHEMICALS CO., LTD. (TNFC)

G2, Concorde Apartments, 6-3-658, Somaji Guda, Hyderabad 500 082, Andhra Pradesh, India 91-40-2331-0260, 2331-0261 91-40-2331-1604 Processor and exporter of shrimp feed and frozen shrimp Bt55,440,000 September 2009 Common share 50.00%

MORESBY INTERNATIONAL HOLDINGS, INC. (MIH) !

Type of Business:

Registered Capital: Date of Investment: Type/% Holding/ No. of Shares:

Unit 4, 2nd Floor ADF Haus, Musgrave St. Port Moresby, Papua New Guinea A holding company set up for investment in Majestic Seafood Corporation Ltd. in Papua New Guinea which operates tuna processing / # # [ K maritime areas USD1,500,000 October 2009 Common share 33.33% (Invested by Thai Union Manufacturing Co., Ltd.)

ANNUAL REPORT 2011

33

THAI UNION FROZEN PRODUCTS PCL.

Sales Structure of

TUF AND SUBSIDIARIES Unit: Million Baht Product Business Group Group 1

Company

% by TUF

Sale

%

Sale

%

Sale

%

-

13,276.77

13.5

11,961.94

16.7

13,116.93

19.0

2011

2010

2009

Thai Union Frozen Products PCL.

TUF

Thai Union Manufacturing Co., Ltd.

TUM

90.08

15,175.86

15.4

12,624.51

17.7

12,416.72

18.0

Songkla Canning PCL.

SC

90.44

6,557.31

6.6

5,374.85

7.5

5,535.89

8.0

Thai Union Seafood Co., Ltd.

TUS

51.00

1,531.51

1.6

1,487.42

2.1

1,199.42

1.7

Group 2

™ * Z *

APC

90.50*

799.06

0.8

496.92

0.7

418.47

0.6

Production and Distribution of Packaging Products

Thai Union Graphic Co., Ltd.

TUG

74.00

187.00

0.2

241.32

0.3

240.16

0.3

Group 3

Thai Union Feedmill Co., Ltd.

TFM

51.00

4,978.25

5.0

4,758.23

6.7

3,964.69

5.8

`# | * Z *

TQS

95.00*

23.41

0.0

27.81

0.1

27.44

0.0

Thai Union Hatchery Co., Ltd.

TUH

99.99*

88.48

0.1

78.03

0.0

130.93

0.2

T-Holding Co., Ltd.

THD

90.00

1,813.86

1.8

1,514.02

2.1

1,282.66

1.9

Group 5

Thai Union International, Inc.

TUI

100.00

N/A

N/A

N/A

N/A

N/A

N/A

Overseas Investments

Tri-Union Seafoods, LLC.

Tri-U

100.00* 13,080.19

13.3

12,860.20

18.0

15,489.63

22.5

Tri-Union Frozen Products, Inc.

TUFP

82.00* 18,594.08

18.8 11,713.50

16.4

10,136.60

14.7

4,396.97

6.2

4,048.47

5.9

Production and Export of Frozen and Canned Food Products

Production and Distribution of Animal Feeds and Agricultural Products

Group 4 Food Business in Domestic Market

(Empress International Ltd. and Tri-Union Frozen Foods, LLC. were merged)

Group 6 = ‚ (All Companies have terminated their operations and completed registeration procedures for business dissolution and liquidation in 2011)

Thai Union Investment Holding

TUIH

100.00

N/A

N/A

N/A

N/A

N/A

N/A

MW Brands Holdings SAS

MWB

100.00* 21,867.85

22.2

2,820.32

3.9

N/A

N/A

U.S. Pet Nutrition LLC.

USPN

99.00*

N/A

N/A

N/A

N/A

N/A

N/A

Canadian Pet Nutrition, ULC.

CAPN 100.00*

N/A

N/A

N/A

N/A

N/A

N/A

PT Juifa International Foods Co., Ltd.

JIF

76.50

437.26

0.4

503.86

0.7

401.71

0.6

Yueh Chyang Canned Food Co., Ltd.

YCC

51.00*

259.49

0.3

647.50

0.9

584.77

0.8

Phuket Fishing Co., Ltd., Samui Fishing Co., Ltd., Phang-nga Fishing Co.,Ltd., Songkla Fishing Co., Ltd., Siam Fishing Pte. Ltd. 98,670.38 100.0 71,507.40 100.0 68,994.49 100.0

Remark: The above data refers to sales structure after exclusion of connected transactions. The total sales of tuna vessel business group are derived from sales made to member companies in Thai Union Group and therefore regarded wholly as connected transactions. ˜ ‰ K | – `| <+ K =… – %< <= <| Š K < – …€@ K < + – CAPN holding owned by USPN

THAI UNION FROZEN PRODUCTS PCL.

NATURE OF MAIN BUSINESS MAJOR EXPORT PRODUCTS

Canned/Pouched/Seal-contained Tuna Frozen tuna is selected, defrosted, steamed,

K $ K – pouched/seal-contained as per customer requirements. In order to enrich nutritional value # $ # * * K # " soybean oil, olive oil or different seasoning sauces. After sealing, the products undergo sanitary ] }# *

Frozen Shrimp White shrimp is processed or boiled under standardized manufacturing process before proceeding to freezer, being packaged and ready for shipment to consumers worldwide. Frozen shrimp products are available in a wide variety, ranging from whole, headless, tail-on, headless and shelled, boiled and to value-added products, e.g. sushi and breaded. In addition, pouched products are also available for more convenient preparation.

Canned/Pouched/Seal-contained Seafood Selected raw materials, like shrimp, crab, squid and baby clam, are shelled, boiled and brined before being canned/pouched/seal-contained, respectively. Sealed products are sterilized and & }# *

Canned/Pouched Sardine and Mackerel Standard-quality fresh and frozen sardine and mackerel, locally procured or imported, are selected, cleaned, canned or pouched as per customer requirements and cooked, respectively. After cooking, the products receive appropriate measure of certain ingredients, e.g. tomato sauce, K # " K & nutritional value and taste. Sealed products are ] & }# *

Frozen Tuna Loin Frozen tuna is selected, defrosted, steamed # standards, then vacuum-packed and re-frozen, respectively, to preserve natural nutritional value before export and domestic sales. Tuna raw $ % areas and of various species, e.g. Skipjack, ‰ K *

Frozen Cephalopod Imported fresh and frozen cephalopod in conformity with required standards undergoes $ #$ # K with processing expertise and technique under quality-oriented environment to preserve natural freshness. The raw materials are processed to become standard value-added products as per customer requirements, e.g. sashimi and breaded.

Frozen Salmon Imported fresh salmon under Norwegian and Chilean selection and quality standards, rich in Protein and Omega-3, is processed and valueadded. Through expert and skillful manufacturing techniques, fresh salmon is made into processed varieties where natural freshness and original taste are perfectly preserved.

Ready-to-Eat Frozen Food Frozen fully processed food is developed, innovated and prepared by using meticulously selected raw materials in combination with authentic premium ingredients directly imported from original sources for international dishes, or with nutrient-rich local herbs for original Thai dishes. Together, the raw materials and # $ processing environment designed to best preserve natural taste as if freshly cooked right from kitchen.

Bakery Creative research and development efforts proudly lead to delectable bakery delights under modern manufacturing environment to serve domestic and international quality-conscious consumers.

Canned/Pouched/Seal-contained Pet Food Fresh tuna loin is mixed with other raw materials or ingredients to enrich nutrition and taste as per customer requirements before being canned/ % ] & }# respectively.

MAJOR DOMESTIC PRODUCTS Sealect Family: Canned Fish Premium quality raw materials are processed in conformity with internationally recognized standards. “Sealect� family includes the following varieties: 1. Classic Canned Tuna comprises the following varieties: # | ‚ K ~ # Steak in Brine, Tuna Steak in Spring Water, Tuna | |# " ~ Z # | ‚ K ~ # | @ Tuna Sandwich in Spring Water 2. Thai-style Flavored Canned Tuna comprises the following varieties: Stir-fried Tuna with Chili and Basil (Tuna Paad Prig Baikaprao), Stir-fried Tuna with Red Chili (Tuna Paad Prig), Tuna ‡ # ‹� � € # Œ # Mussaman Curry (Mussaman Tuna), Stir-fried Tuna Curry (Panaeng Tuna), Tuna Chili Curry Soup (Nam Prig Tuna), Tuna Curry Soup (Naam Ya Tuna), Stir-fried Tuna with Black Pepper (Tuna Paad Prig Thai Dum) and Stir-fried Tuna with Roasted Chili Paste (Pad Prig Pao Tuna) 3. Tuna Salad in Mayonnaise comprises the following varieties:

^ # | | Â? & | Spread and Shrimp Spread. $ & ' & + ; $ < ! Salad Cream with Tuna, Salad Cream with Seafood, Thousand Island Salad Cream with # # | | { Isolated Soy Protein 5. Seasoned Tuna; available in 3 recipes: Stir-fried Tuna in Chili Paste (Tuna Prung Rod Naam Prig Paad), Stir-fried Tuna in Pickled Fish (Tuna Prung Rod Pla Raa) and Stir-fried Tuna in Spicy Salad (Tuna Prung Rod Larb) 6. Mackerel in Tomato Sauce 7. Sardine in Tomato Sauce and Sardine in Spicy Dressing 8. Sanma in Tomato Sauce

^ # | | Â’ & K " & % | ^ # | Z %$ Â…

9. Grilled Saba in Kabayaki Sauce and Saba in Teriyaki Sauce

Fisho Family: Fish-based/Squid-based Snack # %K š= › $ # $ K $ # }# %" & # }# * š= › $ # # & K $ K K # & * ” ? # š= › ] $ # * K $ … $ #K + |~ 14001accreditation body guarantees that “Fisho� is hygienically produced and has attained standard environmental performance. Through continued product development efforts, “Fisho� has been & & $ # K $ Q # _

1. Seasoned and Shredded Fish Snack ^ Fisho Original; & K V " & % @ K # Tasty, Squid and Soy Sauce in various pack sizes from 7 to 52 grams ^ Fisho iDee: | # ’ & K " & ™ @ # @ K # { | K

= $ & | = K = $ & # K K & ^ Fisho Dino Master Character; available in 3 " & ™ @ K #

2. Seasoned Fish Slice; broken into the following varieties: 2.1 Seasoned Fish Slice in Dipping Sauce ^ | = | „ | # ’ & K V " & ™ ~ „ @ Pepper Crab and Shrimp Paste ^ | = | | ’ & K " & ™ @ K # |# | 2.2 Seasoned and Baked Fish Slice; available in " & ™ ~ |}# | |}# 3. Crispy Seasoned and Baked Fish Slice; & K Q " & ™ + { | Dipping and Tasty Squid

Bellotta Family: Pet Food Bellotta is broken into 5 groups:

1. Packaged Dog and Cat Food (Premium Grade) ^ @ ‡ # „ = ’ & K • " & % @ $ Z $ Z & Beef Loaf Balanced Nutrition, Chicken in Jelly with Oligofructose, Chicken in Jelly Topping Tuna with Omega 3, Chicken in Jelly Topping # Z … ~ Q Z K { Chicken Loaf ^ @ ‡ # = ’ & K > " & % # Z … ‡ & ‚ K # Z … ‡ & Imitation Crab Meat, Tuna Light Meat in Jelly Topping Shrimp, Tuna Light Meat in Jelly Hair Ball Control, Tuna Light Meat Mixed Beef in Jelly, Tuna Light Meat Mixed Cheese in Jelly … # @ $ � = #

^ @ ‡ = ’ & K 5 flavors - Tuna in Jelly Topping Chicken (3 Layers), Tuna Chunk Mixed Tuna Flake in Gravy (Lutein Added), Tuna in Jelly Topping Shrimp, Tuna in Jelly Topping Chicken and Tuna Topping Shirasu 4. SLU-pouched Dog and Cat Food ^ @ „ = ’ & K \ " & % Z K # { ‚ K ‡ & Z K # ‡ & # { ‚ K ‡ & @ $ # { ‚ K in Gravy and Beef Chunk in Gravy ^ @ ‡ = ’ & K \ " & % Tuna Mixed Chicken Chunk in Jelly, Tuna Mixed Sardine in Jelly, Tuna Mixed Beef in Jelly, Tuna in Jelly and Seafood Platter

2. Cup-packaged Cat Food (Premium Grade) 5. Cup-packaged Dog and Cat Food ^ @ ‡ # = ‹Š = # # Œ’ & K V " & ™ „ � ‡ & Salmon with Anchovy in Gravy, Tuna with Scallop in Gravy and Tuna with Crab in Gravy 3. Canned Dog and Cat Food ^ @ „ = ’ & K \ " & % @ $ # … ! ‚ K ˆ ‹‚ Œ Chicken Loaf Mixed Rice (With L-carnitine), @ $ # { Z & ‡ & Z K # Gravy and Beef Chunk Topping Chicken Ham in Gravy

^ @ ‡ & „ = ’ & K Q " & % | $ ‡ & | $ Salmon Gravy with Real Salmon and Liver Gravy with Real Liver ^ @ ‡ & = ’ & K Q " & % ‡ & # { ‡ & # { and Shrimp Gravy with Real Shrimp

THAI UNION FROZEN PRODUCTS PCL.

RELATED BUSINESS GROUPS > )

Thai Union Graphic Co., Ltd. (TUG)

* Z * ‹ Œ #$ # and distributor of steel and aluminum food packaging products (conventional lid and 2-piece easy-open lid).

Thai Union Graphic Co., Ltd. (TUG) offers high-quality offset printing services through fully-integrated one-stop-service, enhanced technological capabilities and guaranteed after-sales services. Throughout its presence in printing industry, TUG ] $ $ printing service is critical to the attainment of its business objectives. Therefore, continued improvements in modern technological capabilities have been constantly areas of strong focus at TUG in order to best meet customer demand and ensure highest satisfaction among customers from each industry. In addition, TUG believes in the importance of human capital in its business and the vital contribution it makes to business success. This belief has led TUG to constantly improve its breadth of people to become printing specialists who are readily equipped with skills and knowledge to effectively provide consulting service and meet virtually every printing need of customers.

During 2011, APC continued to see good growth with 12.8% increase in annual sales. The sales growth for the year was mainly contributed by stronger market demand by up to 30% year-on-year for empty can with easy-open lid (EOE) category. In addition, sales performance was also pleasing and improving, with up to 60% annual growth, among target customer groups outside Thai Union Group as a result of customer base expansion efforts made during the year. In respect to overall market environment for aluminum food package products in Thailand, the industry saw a 8% year-on-year decline in market growth rate during the year thanks primarily " # # materials, when compared to imported counterparts with more competitive prices. However, downward movement in material prices was later observed during mid-year to year-end to USD400 per metric ton on average, with tendency towards further decline until early 2012. Purchase plan for additional machinery from Songkla Canning PCL., its parent company, has been included in APC’s strategy for 2012. APC anticipates that the additional machinery should be ready for production in the second quarter of 2012 and should increase monthly production capacity for 307-mm can size to 5 million sets.

40

ANNUAL REPORT 2011

The printing industry has been characterized K & past several years, with tendency towards more competitive pressure each year. In order to stay competitive amidst such an industry landscape, TUG differentiates itself from its printing sector peer group by extending its range of service offerings to drive customer value. Packaging design service features computer-aided design with over 2,000 available formats and styles for customer to choose from. Sample cutting service is made possible through its sample cutter, which is capable of providing customer with realistic overview of

THAI UNION FROZEN PRODUCTS PCL.

printing output before actual printing. Besides, TUG also attempts to shorten production lead time K K # }# through the entire printing process in order to achieve greater customer satisfaction. TUG’s 2012 business plan includes provision and installation of a rolled sticker printer in response to stronger market demand. The machine has printing capacity in excess of 20 million stickers per month. T-Holding Co., Ltd. (THD) T-HOLDING CO., LTD. (THD) is a marketing communications strategy consultant and a distributor of branded products under “Sealect�, “Fisho� and “Bellotta� trademarks for domestic market in Thailand. “Sealect� Family 2011 saw an overall 6% growth rate in Thai canned

š| › second most dominant brand with 12% annual growth rate. Nevertheless, Sealect branded products continued to maintain its leadership in domestic Thai canned tuna market with robust growth rate of up to 27% during the year. Throughout the entire year, Sealect constantly deployed marketing communications strategy through all available media. In parallel with the implementation of marketing communications strategy, continual {„ $$ & K of its product offerings essentially to best meet consumer needs. Current tuna consumption among Thai consumers amounts only to 40 grams/person/year. Comparatively, annual domestic sardine/mackerel consumption per person stands at 850 grams, or 21 times higher than that of tuna. Based on the research data, Sealect managed to launch proactive marketing efforts to promote increased tuna consumption among Thai consumers. New products were launched under “seasoned tuna category�; Stir-fried Tuna in Chili Paste (Tuna Prung Rod Naam Prig Paad) and Stir-fried Tuna in Pickled Fish (Tuna Prung Rod Pla Raa). The two new Sealect innovative products feature brilliant combination of wholesome tuna texture and Thai traditional spices and

condiments to create tasty recipes that are much favored among Thai consumers. Both new products reported strong consumer feedback on the back of their two obvious advantages; affordable retail price that offers excellent value for money for consumers; and their favorably distinctive taste. Consumers can enjoy the products right out of the can, along with freshly cooked rice, with no additional preparation required. Alternatively, consumers can also use the products as main ingredient in variety of delicious dishes such as fried rice, sandwich, sautÊed vegetable, to name but a handful, simply for the sake of enhanced & % $ ! among consumers. In regard to business strategy in 2012, Sealect & $ ! # K % market-leading canned tuna producer in domestic * $ | # to adhere to its marketing concept with strong focus on promoting higher tuna consumption among Thai consumers as alternative substitute for conventional meat such as pork and chicken. Canned tuna products have an array of advantages that suit well with hectic lifestyle led by % # % $ * Among those advantages include storage and # & K derived from naturally digestible tuna texture with low fat yet high DHA composition. In consideration of these intrinsic value and advantages of its canned tuna products, Sealect plans to deploy 360-degree marketing communications strategy with main feature involving suggested product application in a number of simple, appetizing and time-saving Thai dishes beyond imagination of most consumers. Sealect anticipates that the campaign should boost sales growth and broaden customer base for canned tuna products in Thailand by over 20% against an average of mere 6% perennial market growth per annum in the past. As for sardine/mackerel products, Sealect aims to capture new generation consumers through building their perceptions of Sealect as a decided brand of choice with attractiveness, modernity and accessibility and being commonly favored among the new generations. In order to implement the brand awareness campaign, major Sealect’s

ANNUAL REPORT 2011

41

THAI UNION FROZEN PRODUCTS PCL.

strong points will be emphasized to attract target consumers. Among those strong points include meticulously selected quality tuna chunks and %}# # # K „ � Royal Project. The procurement of tomato sauce $ „ � | & reliable quality ingredient while also providing additional earning channel to those local growers participating in the royal project. “Fisho� Family " # $ # }# $ had negative impacts on Fisho’s annual sales performance. Both target consumers and retail stores opted to purchase only necessary living & # " * Besides, scheduled promotional campaigns in conjunction with participating retail stores and general grocery outlets during the ending quarter of the year were all unable to implement. As fourth }# # # K# # sales of Fisho [and other products in the snack industry], the impossibility to carry out planned promotional campaigns during the period resulted in sales below target. Despite a host of unfavorable trading factors during the year, Fisho still managed to deliver a creditable 3% annual sales growth. In 2012, Fisho has set its annual growth target at 20% although the annual growth rate of overall

& # ? level. Fisho expects to increase its market share to 15% by 2012 year-end via fully integrated brand building campaign in order to further enhance its brand strength. Along with the efforts to increase K & $ # will also be promoted in parallel with reinforcement of brand perception and brand awareness among teen and new generation consumers, its main target groups during 2012. Aside from attempting to promote greater brand recognition among target consumers, a number of improvements will be made across Fisho product ranges. Among them is product re-formulation that encompasses taste, aroma and texture quality to achieve greater consumer satisfaction. During re-formulation process, research efforts will be made to create the best new Fisho formulation.

42

ANNUAL REPORT 2011

Moreover, improvements in packaging formats and styles will also be made to better suit target groups as well as to project Fisho’s unique brand image when it is distributed to sales outlets. Majority of sales efforts during 2012 will be taken through constant promotional activities to be implemented in partnership with participating convenience stores, one of the major sales channels for Fisho and other snack products. Aside from this, special attention will be given to on-shelf product orientation and display to ! ] & }# among consumers within store environment, both in retail stores and general grocery outlets in regions. Sales activities during 2012 will be focused more on product distribution in regional areas. In the mean time, K# K in addition to conventional general grocery outlet. 2012 will also see more joint promotional campaigns between Fisho and other alliance commodities. “Bellotta� Wet-based Dog and Cat Food Family An increasingly upward trend in keeping pets has been obvious recently along with constantly growing interest among keen keepers in the quality and nutritious value of pet nourishment. Underpinned by these favorable trading conditions, “Bellotta� wet-based dog and cat food products have successfully broaden their customer base accordingly over the years. In particular, the cat food product ranges under premium category have proved widely popular among target customers due to their trust in Bellotta’s product quality and brand strength. Such this strong customer acceptance and feedback are creditably achieved through a number of contributing factors. Export-standard processing facilities, coupled with top-quality raw materials of tuna light meat, play crucial roles in acquiring the reputation and brand loyalty among the target customers. In addition, strong product offerings are another major factor, as demonstrably evident from a broad range of available product choices, taste varieties and formulae. Moreover, Bellotta has continually introduced innovative packaging designs and formats in order to best meet cat’s appetite and every need and functional requirement by pet keepers.

THAI UNION FROZEN PRODUCTS PCL.

Bellotta continued to see good growth in 2011 albeit a number of unusually severe natural disasters during the year. Sales were substantially generated from the cat food products, accounting for 70% of total Bellotta sales. While there were less deployment of marketing communications and public relations materials in the year, stronger focus was shifted to marketing campaigns designed to gain business foothold in new potential market frontiers. In order to materialize the strategy, Bellotta-sponsored dog and cat contest events were launched both on regional and national levels to further promote brand recognition and loyalty among target customers.

Owing mainly to shrimp price volatility during the year, TUS revamped its sales strategies accordingly with more stress on short-term sales contracts as a proactive measure to minimize potential impacts of volatile raw material prices and currency exchange rates. With regard to capital investment in 2011, TUS constructed its own ice-making facilities with daily production capacity of 60 metric tons. The facilities were housed in the initial processing area within its shrimp plant compound. The purpose of the investment was to better control ice quality as well as meet growing market demand for its shrimp products.

Bellotta’s marketing strategy for 2012 will continue to center on cat food products. In parallel with %K $ ! into premium pellet cat food to extend its branded product range under premium category. There will be an intense focus on direct and comprehensive access to target customer groups and commercial stores. Joint sales promotional campaigns will be implemented in partnership with selected participating pet shops and animal hospitals on a regular basis through the entire year. In addition, Bellotta will also sharpen its focus on sponsorship of cat contest events. Meanwhile, continued marketing efforts will be made to reinforce the marketing position of its proprietary dog food products.

As for business strategy for 2012, TUS has set its annual growth target at 30% for production capacity and sales performance [from the total annual quantity of processed raw materials of 23,000 metric tons in 2011]. As another area of great emphasis, more strenuous efforts will be taken to extend its geographical and product reach to K such as China, Singapore, Taiwan and Europe. Apart from these planned actions, a couple of plant improvement initiatives have also been in the pipeline to support continuing business growth. Namely, initial processing area will be enlarged along with an increase in staff and worker head counts. In addition, more automation will be introduced in the production lines to improve # $ * ! $ # equipment to be introduced in the plant include sushi processor, scale unit and packaging machine.

Thai Union Seafood Co., Ltd. (TUS) Thai Union Seafood Co., Ltd. (TUS) is involved in frozen shrimp processing and export. TUS reported a robust year-on-year sales growth of 44% to USD134 million in 2011, with across-the-board pleasing and improving performance seen among # * # K growth in the year included marinated, breaded and alive shrimp varieties, among others. In particular, live shrimp product ranges shipped to Japan enjoyed as much as 20-30% higher selling prices against their normal shrimp counterparts. Furthermore, competition was less intense in the premium quality live shrimp-based product varieties.

Thai Union Feedmill Co., Ltd. (TFM) Thai Union Feedmill Co., Ltd. (TFM) is a manufacturer and distributor of aquatic feed varieties with $ # & both domestic and overseas markets. TFM operates under its corporate vision of “Thailand-based manufacturer of top-quality aquatic feed� and adheres to the following commitments: ^ # the entire work procedures in parallel with continued improvements to achieve maximum $ # $ ’

ANNUAL REPORT 2011

43

^ < {„ & # K to provide customers with unparalleled quality products and services; and ^ # K K # # # cooperation with customers, trading partners, employees and shareholders.

and plant/production line improvement projects will require capital investment worth Bt420 million and are expected to complete around 2012 year-end. It is anticipated that all these new facilities should be able to meet TFM’s production capacity requirement during the next 3 – 5 years in minimum.

TFM could achieve 90% of its annual sales target in 2011. Benchmarked against its original commercial targets for the year, the sales performance delivered by its two core product categories were individually ”V? $ $ V? $ $ *

Aside from the capital investments to be made in production line improvements and extension during 2012, TFM also plans to invest in the erection of additional shrimp farming facility in Satun Province on 154-rai plot of land. The new shrimp farming facility will house 24 ponds and operate for dual # $ {„ # $ =… and as shrimp breed development unit for Thai Union Hatchery Co., Ltd. (TUH).

# $ $ # $ grew by 50% from 2010 level, with extraordinary sales achievement 24% above set target for the * $ " $ $ & # ” ? $ $ * for sales breakdown by shrimp feed products, feed for white shrimp accounted for 55% of the total shrimp feed sold throughout the year, followed respectively by supplementary feed (25%), feed for black tiger shrimp (20%) In 2012, TFM has set its annual growth target at 17% K $ $ # * plans to broaden customer base among its existing core markets while also concurrently embarking on penetrating into new promising markets. In implementing its annual market plan during 2012, TFM will deploy strategies with primary focus on good quality on a stable basis, satisfaction-guaranteed % { % # & ' promotional sales campaign with potential customers. Concerning investment projects within 2012, TFM plans to replace and improve its existing obsolete machinery at Mahachai processing plant to a more advanced system. The new machinery is equipped with superior technological capability, % $ K $ product quality. Apart from this investment project, new feed mill will be constructed at the current manufacturing site in Amphoe Ranot, Songkhla Province along with two additional shrimp feed production lines. The new plant and additional feed production lines will increase TFM’s production capacity by approximately 4,000 – 5,000 metric tons per month. Both the machinery improvement

Pertaining to overall landscape of Thai shrimp farming industry in 2011, annual output shrank by approximately 8-10% from the level in the prior year thanks to a few contributing factors. Among & $ " the beginning of the year and the subsequently % " K Â… early April. As a consequence of the floods, immediate extensive damages to shrimp farms in southern region were seen across Chumphon, Surat Thani, Nakhon Si Thammarat, Songkhla,

# Â? K & * these affected areas, Surat Thani Province was hardest hit with an estimated decline in annual yield by approximately 50,000 metric tons out of this natural disaster alone, apart from repeated pond preparation and delayed start of next farming cycle among local farmers in the wake of the event. Also contributing to the less impressive annual farming output in 2011 was climatic uncertainty which affected the growth rate among farmed shrimps and therefore made the $ # # # $ * factor to blame was the outbreak of white spot syndrome in different farming areas countrywide, beginning in June and continuing through the entire year. In the meantime, other shrimp-producing countries also delivered less lackluster annual farming performance as a consequence of a host of unfavorable factors during the year. These negative and positive factors for Thai shrimp farming industry in the year, along with their impacts in combination, eventually resulted in Thai average

shrimp prices being favorable all the year round K $ * In reference to the shrimp epidemics, the unprecedented presence of EMS (Early Mortality Syndrome) among Thai farmed shrimps was detected for the first time in farming areas in Chanthaburi Province, in addition to the already prevailing white spot syndrome. The spread of the recently detected disease, if occurred, would inevitably damage Thai shrimp farming crops, akin to the earlier occurrences in China and Malaysia. With alarming sign in sight, Thai farmers need to develop and have in place their proactive measures against probable EMS epidemics along with & " ! K * $$ them properly and timely realign their strategies in response to emerging challenges and therefore maintain their competitiveness in global shrimpfarming industry. However, TFM anticipated that 2012 should see annual Thai shrimp farming output hover around the same level of 2011, namely with either increase or decrease within a 10% range from 2011. Concerning price trends, shrimp prices should remain favorable until April 2012 with possibility to further stay in satisfactory level through the entire year provided that there is no considerable year-on-year increase in farming output in Thailand and other shrimp-producing countries during the year. Statistics show that over 99% of commercial shrimp farming activities in Thailand involves white shrimp whereas there is less than 1% farming activities related to black tiger shrimp. Currently, over 25% of Thai farmers has introduced auto feed device in their farms in order to ward off pressures from the ongoing tight labor supply and the forthcoming hike of minimum daily wage to Bt300, to be in effect in April 2012. It is estimated that the auto feed users in commercial shrimp farming environment will double in number to 50% by 2012 year-end.

Thai Union Hatchery Co., Ltd. (TUH) Thai Union Hatchery Co., Ltd. (TUH) is a manufacturer of high-quality white shrimps (Penaeus vannamei) nauplii for distribution to customers of Thai Union Feedmill Co., Ltd. (TFM) and domestic shrimp farmers. TUH operates under strong quality commitment to ensure continual provision of unparalleled products and services to customers. In 2011, TUH delivered 30% year-on-year sales growth for its nauplii products while shrimp juvenile posted sales in the neighborhood of the prior year level. During the third quarter of the year, plankton production house was adapted and its function was shifted to sand worm production. The output of the in-house sand worm production was used $ $ # # [ on imported sand worm supply. During the year, TUH was accredited with Best Aquaculture Practices ‹@ Œ K }# # # # * (ACC) for its standard practices on shrimp culture and processing in compliance with international institutional guidelines. In 2012, TUH has set its annual growth target at 50% from 2011 for both nauplii and shrimp juvenile products. Areas of special emphasis in 2012 will be maintenance and improvement of product and service quality. TUH also plans to implement hatchery facility extension plan during the year to its production site in Amphoe Sathingphra, Songkhla Province. The purpose of the hatchery extension project is to increase production capacity to better serve target customer groups in upper southern region. In addition, another initiative in the pipeline is improvement and development of commercially viable white shrimp breeds with special characteristics in order to provide support for shrimp business growth in the future. The breed engineering efforts will be made in collaboration with other respective state agencies.

THAI UNION FROZEN PRODUCTS PCL.

TUF STRENGTHS 1.

2.

3.

46

TUF and other Thailand-based subsidiaries are all major seafood manufactures with combined raw material processing capacities of tuna, frozen shrimp, canned pet food and frozen cephalopod of 568,000, 75,000, 57,000 and \ * annual output, we manage to keep our production costs low through economies of scale. TUF is a truly brand owner of various world’s top canned and frozen seafood products, ranging from “John West�, the number-one K < � the Netherlands; Petit Navire and Hyacinthe Parmentier, the dominant brands in France market; “Mareblu�, the third-largest brand in Italy; “Chicken of the Sea�, the third-largest brand in U.S. market; “Century�, the foremost brand in China and “Sealect�, the leading brands in Thailand, thus further broadening and diversifying our customer base with greater overall strengths. TUF’s overseas investments help expand overall production capacity and acquire remarkable industry ranking the largest tuna canner in the world and concurrently the leader in global frozen and canned seafood industry.

ANNUAL REPORT 2011

4.

TUF and subsidiaries have wide range of processed seafood variety and are readily equipped with 76,000 –ton cold storage capacity. Both strengths in combination enable TUF to better meet customer needs in terms of product choice and order volume.

5.

Thai Union Group products are consumed by large customer base and available in different countries and territories, thus making global product presence and simultaneously lowering economic impacts in any certain country on TUF.

6.

Thai Union Group has strong international competitiveness. Standard quality products at competitive price as well as experienced and capable marketing personnel with regular customer visits play roles in acquiring us such a strong competitiveness in global market.

7.

Management team member carry with them long experience in, and insight into, frozen seafood business and are well recognized in the industry. Additionally, our operation personnel are fully equipped with professional capabilities necessary for their roles. Our management and personnel strengths are among the drives that propel our continued growth.

THAI UNION FROZEN PRODUCTS PCL.

FINANCIAL HIGHLIGHTS Financial Highlights

Unit: Million Baht Year 2011

Year 2010

Year 2009

Sales

98,670

71,507

68,995

Total Revenues

99,589

72,810

69,697

?

16,369

9,531

10,444

Total Assets

83,230

74,777

35,870

Total Liabilities

56,161

51,541

17,459

Shareholders’ Equity

27,069

23,236

18,411

Per Share (Baht) Year 2011

Year 2010

Basic Earnings per Share

5.30

3.20

3.79

Diluted Earnings per Share

5.17

3.15

3.79

Dividend

1.56

1.60

1.92

Par Value

1.00

1.00

1.00

25.53

23.36

18.49

Book Value

Year 2009

ANNUAL REPORT 2011

47

AWARDS, CERTIFICATES Š„ Š� Š‡| ~# $ %$ # $$ & strategic management, coupled with a strong determination to grow consistently in all relevant business segments that would lead to achievement of competitiveness, helped us to land a host of prestigious awards granted by $$ & K and organizations, trade partners and the

# $ _ 1. Accredited with Thailand Trust Mark K „ $ Trade Promotion, Ministry of Commerce, as high potential Thai exporter having the capability to consistently maintain product quality standard and to securely acquire # # international markets. * ‚ [ @ … % consecutively in FinanceAsia Magazine’s annual Best Managed Companies Poll, and also named among award-winning Thai companies in Overall Best Managed Company, Best Corporate Governance and Best Investor Relations subcategories. Q* ‚ # & … = & ~ and the Most Favorite CFO in the Food and Agribusiness sector by the Securities Analysts Association (SAA) of Thailand’s annual awards. 4. Named the winner of Green Leadership Award by Enterprise Asia in Asia Responsible Entrepreneurship Award - Southeast Asia 2011 for the “Regaining Coastal Ecosystem Balance through 1,000,000 Mangrove Sprouts�

program, a TUF’s internally developed initiative, based on CSR program judgment criteria with emphasis on conservation and revival of natural resources and environment. \* $ $ ž bond ratings with a stable outlook by TRIS Rating Co., Ltd. despite the sizeable acquisition of MW Brands and increased debt burden. In addition, we place hygiene and food safety & $ # order to ensure the highest level of customer satisfaction, which is evident from numerous }# # by various institutes and agencies as follows: ^ |~ X _ ” `# … | K < � | & ‹<� |Œ* ^ |~ V & … | K < � | & ‹<� |Œ* ^ |~– > \ K @# # $ Z K `# | „ of Medical Sciences, Ministry of Public Health and by the National Bureau of Agricultural Commodity and Food Standards (ACFS), Ministry of Agriculture and Cooperatives of Thailand. ^ @ ‡ K | $ = | $ K < � | & ‹<� |Œ*

^ K |‡| % Service GmbH (Germany) for compliance with food processing requirements within Shrimp, Cephalopod and Salmon Production Lines. ^ K | ‡ K $ food processing requirements within Fish 1, Fish 2, Meal and Bakery Production Lines. ^ = | ‚ \ ‹ =|Œ K |‡| % | & ‡ K+ ‹‡ Œ for compliance with food processing requirements within Shrimp Production Line. ^ � K < $ Orthodox Jewish Congregations of America. ^ K <| = „ # Administration (FDA), a US agency in charge of inspecting the quality of imported food and medicines. ^ K = Agency (CFIA), a Canadian agency in charge of monitoring quality of imported food and medicines. ^ + ] Control Points (HACCP) by Department of Fishery and Department of Agriculture, Ministry of Agriculture and Cooperatives of Thailand and with HACCP USFDA by SGS (Thailand) Limited. The Hazard Analysis Critical Control Points system is a quality assurance system on food safety, which can effectively prevent hazards, including biological, chemical and physical contamination by placing emphasis on monitoring manufacturing procedures, especially the points or stages that are critical control points (CCP), with consumer safety as the key objective. ^ ‡ … #$ # Practices (GMP) for food manufacturing operation by Department of Fishery, Department of Livestock and Department of Agriculture, Ministry of Agriculture and & $ K ~$ of Public Health of Samut Sakhon Province. ^ + K Islamic Committee of Thailand. ^ K | # $ @# # $ Standards (SABS) for compliance with food processing requirements within Fish 1 Production Line.

^ @ }# # # ‹@ Œ K }# # # # Inc. (ACC) in terms of standard practices on shrimp culture and processing, covering shrimp hatchery, shrimp farm and shrimp processing factories with emphasis on social and environmental responsibility as well as attention to the safety of food products and product traceability. ^ € `# # ‹€` Œ K € Z Australia, as an operator in compliance with the Global Food Safety Standards and International Retailing Best Practice within Canned Tuna and Canned Sardine Production Lines. ^ ` … K Department of Fishery, Ministry of Agriculture and Cooperatives of Thailand. ^ ~ # # $ with ACT Organic Standards within Shrimp Production Line.

SUSTAINABLE Z~

THAI UNION FROZEN PRODUCTS PCL.

TUF has thrived rapidly and continuously during the past several years in various aspects, as demonstrably evident from obvious increases in the sizes of our organization, business, capital investment, production capacity, new market frontiers and various development initiatives to propel sustainable growth. Being in such a rapid growth has prompted us to realize the potential impacts of our operations on the country’s economy, society and environment. Being conscious of this fact, we envision that corporate sustainability should be built on well-balanced ! # $ { & & strategy and business strategy so that both " # K * In addition, we also attach great importance to determination of our own criteria and guidelines on sustainable development practices that meet international standards for the purpose of acquiring K " # K # # of management transparency. The development process of the mentioned criteria and guideline encompasses comprehensive analysis of potential impacts of our operations on society and environment. We are determined to further drive our best practices on minimizing the societal and environmental impacts of our operations. As a result of the above commitment and the strenuous efforts taken in turning it into reality, we were proudly named the winner of “Green Leadership Award� for the year 2011 by Enterprise Asia, a famous NGO in pursuit of entrepreneurship development. We were judged the award winner due to our proven leadership roles in environmental protection in Southeast Asia. Based on the criteria, # K }# environmentally responsible enterprise that realizes the potential adverse impacts of its operations on environmental welfare and attempts to minimize those impacts. Successful award winner is required to demonstrate strong evidence of commitments $ & & friendly product design, recyclable waste reduction and management, and powerful visions as well as strategies for integrating environmental aspects into business practices. The framework for our progress towards sustainable development consists of the following key components:

Continuous Protection with Sustainable Growth With our heavy dependency on natural seafood supplies, particularly tuna, which is the raw material of our core product category, we are therefore acutely aware that our main business activities are directly related to marine ecosystem, from # * € making commercial progress, we also place strong emphasis on marine ecosystem pollution potentially caused by our operations with the intention of helping sustain marine ecosystem balance. In this regard, we have been cooperating closely with the Regional Fisheries Management Organizations (RFMOs), an international organization dedicated # K $ # or highly migratory species (including tuna), in data exchange program for improved fishery management. Among our cooperative actions on this front includes provision of our tuna procurement data to RFMOs so as to enable them to trace back to the origins of our tuna raw materials. Another concrete example of our commitment to promote sustainable marine ecosystem balance can be seen through our active participation in the establishment of the International Sustainable Seafood Foundation (ISSF) as one of its co-founding members. ISSF is established through the brainchild and mutual cooperation of 9 global seafood and tuna industry leaders, which include TUF together with its two subsidiaries, MWB and Chicken of the Sea. The implementation of the ISSF’s environmentally critical mission is also joined by leading scientists and experts in marine ecosystem and representatives from non-governmental organizations, such as World Wide Fund for Nature (WWF). The objectives of ISSF are to develop science-based measures on sustainable marine resource management to ensure optimum balance of global marine ecology, based on new technological innovations that are made possible through research projects. In attaining the objectives, we and other founding members are ready to provide support and resources to facilitate experiments and research projects to }# $ }# K K * In addition, ISSF supports monitoring and alarming

ANNUAL REPORT 2011

51

THAI UNION FROZEN PRODUCTS PCL.

scheme that ensures appropriate stock of each # K preventing their population from falling below acceptable safety levels. Furthermore, prevention against illegal, unreported and unregulated (IUU)

& & $ ||=*

under the international environmental and quality management standards of ISO 14001 and ISO 9001. On-site surveillance audits are carried out annually at our processing facilities by certified accreditation bodies to ensure their continued compliance with the requirements of those standards.

Contribution to Future Challenge Thai Union Group are fully aware that sustainable development requires a huge investment of time and effort. In harmony with ISSF’s opinion, we realize the paramount importance of long-term planning in order to achieve the goals of sustainable development. Therefore, ISSF has developed a set of 6 long-term development guidelines as set forth below:

We are very conscious of fully observing statutory rules and regulations governing our business activities and those associated with various aspects of environmental management. These include our full respect to requirements pertaining to environmental management systems and organizational capability to maintain required levels of environmental performance. Among them are all forms of pollution prevention and waste mitigation measures that are taken with special emphasis on responsible consumption of natural resources such as energy, raw materials, water and packaging. Also central to this approach is to encourage organization-wide employee involvement in any corporate missions intended to drive environmental performance. Such employee involvement is made possible through building a powerful sense of common purpose among personnel of all levels, creating nature-care awareness and providing appropriate technical training sessions.

1. 2. 3. 4. 5. 6.

Control and Reduce Fishing Capacity Mitigate by Catch Eliminate IUU Fishing Expand Data Support – Collection and Analysis Enhance Performance in Monitoring, { |# & Improve Overall Tuna Stock’s Health

+ & $ & sustainability requires strong support from high standards and risk prevention measures to preserve & * have been working closely with our suppliers, national governments, the EU, RFMOs and NGos to maintain and improve the environment from the viewpoints of seafood processor. Our partnership with those like-minded parties is also intended to promote experiment of new innovations to mitigate environmental impacts, including research projects involving lower emissions of carbon dioxide. All these international collaborative efforts are taken to ensure that we will be able to grow our business whilst concurrently fostering sustainable development. Operation and Environmental Management

# $ with environmental performance commitment serves as one of the major contributing factors for our proven commercial successes. We are committed to full compliance with legislative requirements and institutional guidelines

52

ANNUAL REPORT 2011

Energy Conservation Measures We have actively been seeking to promote the growing importance of reduced consumption of natural resources across all our manufacturing bases. This clear insight into the global energy agenda should lead to lower energy consumption within our organization, with strong emphasis on % $ # * K of knowledge and expertise among our able engineering and process development teams has proudly resulted in the following internally developed innovations in support of our energy conservation initiatives: Heat Recover Project: The project is designed to utilize the heat in water exiting the cooling system to preheat input water before it enters the boiler’s deaerator. The objectives of the project are as follows:

THAI UNION FROZEN PRODUCTS PCL.

1. To cut coal consumption through preheating input water before it enters the boiler’s deaerator. 2. To reduce consumption of electrical energy in the cooling system’s evaporative condenser. Biogas is a form of alternative energy that can be produced through biochemical process. As seafood processor, our manufacturing process generates organic waste on a daily basis. In order to deal with the organic waste responsibly, our {„ K # ! # K $ waste with the following objectives: ^ & K $# ! the byproducts of seafood processing. ^ ] # $ # available within our organization. ^ # # # lowered use of conventional commercial gas. ^ & K $ reducing greenhouse gas emission and therefore contributing constructively to global warming agenda. Providing Quality of Life Sustainable Human Capital Development We have adopted a progress-oriented HR policy, as we believe in the utmost importance of human capital in our business and the vital contribution it makes to our achievement of common goals. Therefore, we are committed to promoting greater professional capability among our employees in parallel with continued improvements in their quality of life. We help expand their career potential as well as provide exciting and challenging career opportunities with the intention of encouraging them to perform their respective functions at their best. In doing so, we develop, and capitalize on, our tailored individual development plan on a continued basis. The individual development plan is implemented in conjunction with systematic follow-up and performance evaluation conducted to our personnel training and development programs. In addition, the availability of Human Resource

Information System (HRIS) within our organization $ # $ # HR data management but also lowers our operating costs. Under this human capital management policy, all people across the business are engaged side by side in continual process of knowledge acquisition and management. Each year, our personnel management system focuses mainly on competency, which is composed of 3 major elements; Core Competency, Management Competency and Functional Competency. In addition to this, the Individual Development Plan (IDP) is applied organization-wide to personnel of all & � %K & # $ appraisal system. Meanwhile, 360-degree competency assessment is required for senior supervisory and departmental management personnel. Apart from these competency-intensive appraisals, assistant departmental manager and other higher-ranking positions are additionally subject to succession planning performance appraisal. $ $ $# management and soft skills development among each position level as one of the job enhancement factors, the following personnel development efforts have been made: ^ }# $ # K personnel such as Occupational Health and Safety ‹~+|Œ `# … | ‹`…|Œ ^ „ & $ $# # practical communicative English course provided to marketing and internal audit personnel, and Total Productivity Management (TPM) training & ` `… ^ „ & $ $ such as communicative skills, supervisory skills and time management skills ^ „ & $ # Z Program ^ ’ }# tools and techniques required for providing effective coaching sessions to their subordinates. ^ | ’ ! K $ % $ – high-potential people, in preparation for their future roles as TUF executives.

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53

In addition to the implementation of the abovementioned initiatives, our business decisions take account of the welfare of all employees. We are committed to fair employment practices regardless of races and positions. We are also committed to observing all applicable labor and employment laws wherever in the world we operate. Among our core HR policies is full compliance with those laws that pertain to the prohibition of child and forced labor. Meanwhile, we have continuously made every effort to ensure that all our production sites are safe workplaces for our employees and those of our business alliances. We seek to embed safety awareness in our corporate culture through organization-wide implementation of occupational safety strategies and initiatives with vigor. With steady progress made on our accident and incident control performance, we were presented with The Outstanding Industrial Establishment Award for the year 2011 in recognition of our occupational health, safety and environmental achievements. Furthermore, our particular attention in this regard has all along included the vital issue of good health and health maintenance among our employees.

1. Annual health checkup 2. Medical diagnosis to identify health risk factors 3. Randomized urine/blood tests to detect habitual substance uses

1. New Year’s Party 2. Songkran Festival 3. Harmony-promoting activity

1. TUF Music Event 2. Company-sponsored Annual Trip Package 3. Annual Mini-Half Marathon Propelling Society and Community We are well placed to play our part in propelling society on a path of sustainable development # # K# #K K projects, supporting participatory community development programs, as well as encouraging our employees to play an active role in social development. !" #$%& '

( &

'

) # (

* +

, ( &

( * . ) / Natural Habitat Rehabilitation for Mangroves: Regaining Coastal Ecosystem Balance through 1,000,000 Saplings The project is a collaboration between us and the Mangrove Forest Resources Development Station 6 in Phetchaburi Province. Under the project, we are to support the cultivation of 1,000,000 saplings of mangrove species - red mangrove, true mangrove and Indian mangrove – through the entire 5-year period of the project. The objective of the project is to promote the conservation and restoration of mangrove forests along the coast of Thailand. In addition, we organize two mangrove forest reforestation trips per year for interested employees and business partners with the aim of increasing the country’s green area.

0 ' 1 This is our annual philanthropic program with the aim of promoting employee participation in nominating community development projects. This program cultivates a sense of community pride and develops and maintains ties between the workers and their hometowns. We strongly believe that sustainable community development can only be achieved through fostering a powerful $ # * With this logic in mind, we have embarked on the mission of growing such awareness among # & * $ # $ program is to encourage our employees to think about community services and social contribution K # * outcome of their choices could lead to mutual concept among all other community members while also being viewed as a positive role model for them to follow, thereby providing a healthy environment for building a further sense of common purpose. All our employees are invited to submit proposals $ ' # K communities. Their community development proposals may vary greatly from public infrastructure to educational facility and to luncheon project, to name a handful. As a rule, all well-thought-out proposals are submitted to program committee for review and judgment in accordance with selection criteria.

Besides projects already mentioned, we have continuously undertaken a number of other public-benefit projects, including: ^ #K & emergency relief assistance to victims; ^ @ & K the Thai Red Cross Society; and ^ K# & #K National Children’s Day 2 At TUF, we are very conscious of our roles in relation to the communities where we operate. Through the Community Relations Program, our representatives are dispatched on a quarterly basis to meet regularly with residents of neighboring communities to discuss issues of their environmental concerns and receive their feedback and suggestions of our environmental performance. The gathered information is subsequently reviewed and used as a basis to develop bilateral proactive and corrective actions. We establish a Community Relations Steering Group to oversee and follow up the implementation of those actions. We promote community involvement in our implementation of environmental improvement measures, as in the case of noise pollution management, among others. Today, we no longer receive any complaint about noise pollution from surrounding communities as a consequence of our well-maintained noise level of not over 70 dB –A in accordance with statutory standard criteria.

THAI UNION FROZEN PRODUCTS PCL.

Š„<| ‰ ~< Z~~� AND COMPETITION Thai seafood industry in 2011 still saw continued growth despite persisting global economic # }# $ $ 2010. The main European economies, in particular, #$$ # * crisis became a cause for concern for potential adverse impacts on Thai food export sector. The concerns were based on the fact that European consumption and its market potential make up a sizeable proportion of Thai exports, thus perennially being one of Thailand’s major export destinations. Nevertheless, as food commodities are among K & did not have any adverse impacts on Thai food exports. Meanwhile, Thailand experienced one $ " havoc on different regions throughout the country, as well as many local industrial operators. Although food industry was not directly affected K " & $ packaging materials to manufacturing sites was interrupted thanks to paralyzed logistics services. Such this natural disaster has been considered as an additional business risk factor and prompted domestic industrial players to establish their site emergency preparedness plans to better cope in the future. Incidents and crises during the course of the year inevitably created considerably challenging trading conditions for Thai seafood exporters, who otherwise managed to deal with the unfavorable situations successfully. This was demonstrably evident from a robust year-on-year growth of 16.9% in export value of canned and processed seafood # @ \ \ * products, canned seafood reported total annual export volume of 591,609 metric tons, a slight 56

ANNUAL REPORT 2011

decline by 0.8% from 2010, and total annual export value of Bt70,537 million, representing a 14.5% year-on-year growth. In contrast to the canned seafood category, processed seafood witnessed annual export growth in both volume and value at 405,160 metric tons and Bt81,513 million, accounting for 2.3% and 19% year-on-year growth respectively. The statistics demonstrated continued development of Thai seafood exports. Although weaker performance was observed among certain Thai seafood items during the last quarter of the year due primarily to the impacts of " pressure on the overall performance of Thai seafood industry during 2011 given demonstrable whole-year growth figures. Nevertheless, in consideration of all the uncertainties during the course of the year, Thai seafood exporters will need to keep close monitoring of market situations to get themselves prepared for any unexpected challenges and to maintain their competitiveness in global marketplace. FROZEN SEAFOOD PRODUCTS Frozen Tuna Loin The volume of Thai frozen tuna loin exports during 2011 reached 40,908 metric tons on export value of Bt6,124 million. When compared to their 2010 # # % % decline in both volume and value by 23.2% and 2.1%, respectively. The US was the largest market for Thai frozen tuna loin exports with 21,877 metric tons in volume and Bt3,380 million in value and carved 55.2% share of the total export value. The second largest export market for Thai frozen tuna loin was Italy with export value of Bt617 million, followed respectively by Israel with export value of Bt586 million, accounting for 10% and 9.6% of the total export value, respectively.

THAI UNION FROZEN PRODUCTS PCL.

Frozen and Value-added Shrimp Thai frozen and value-added shrimp export during 2011 reported lower export volume by 7.7% to 394,880 metric tons against 427,925 metric tons recorded in 2010. In contrast to export volume, the export value of Thai frozen and value-added shrimp products expanded by 9.4% year-on-year to Bt110,643 million. „ # & # under this category revealed a decline in both volume and value of frozen shrimp exports by 17% and 1%, respectively. In contrast, value-added shrimp exports registered year-on-year growth in both volume and value to 178,662 metric tons and Bt54,606 million, up by 7.9% and 25.6%, respectively. The statistical export breakdown by product suggested that Thai seafood exporters have increasingly placed more emphasis on value-added shrimp than frozen shrimp. <| for Thai frozen and value-added shrimp products, with export value reaching Bt51,316 million, or equivalent to 46% of the total export value. Ran second was Japan, and followed respectively by < � ? •? 5% share of the total export value, respectively. Frozen and Value-added Cephalopod Annual export statistics indicated that the volume of Thai frozen and value-added cephalopod exports during 2011 shrank by 8.5% year-on-year to 64,790 metric tons. In contrast, the export value increased by 9.6% year-on-year to Bt12,859 million. Japan was the largest market for Thai frozen and value-added cephalopod exports with export value hitting Bt5,722 million, followed by Italy (Bt3,362 million)

and the US (Bt835 million). The three major export markets represented 45%, 26% and 7% of the total export value, respectively. CANNED SEAFOOD PRODUCTS Canned Tuna Thai canned tuna export during 2011 saw a year-on-year value expansion by 18% to Bt61,462 million. On the contrary, the whole year export volume dropped slightly by 0.6% year-on-year to 518,279 metric tons against 521,205 metric tons registered in 2010. Tuna raw material prices were highly volatile during the year with wholeyear average price at record-breaking level of USD1,766 per metric ton. Top export destination for Thai canned tuna products was the US, whose imports from Thailand amounted in volume to 99,314 metric tons and in value to Bt12,207 million. The second largest market was Australia with export volume of 42,279 metric tons and export value of Bt6,081 million. Japan was ranked third with 29,941 metric tons in export volume and Bt4,749 million in export value. Canned Shrimp Thailand’s 2011 canned shrimp export was less vibrant both in terms of volume and value when # * % export volume in 2011 was recorded at 12,131 metric tons, or a 38% decline from 19,438 metric tons in 2010. In line with the decline in export volume, the whole-year export value of Thai canned shrimp products in 2011 stood at Bt3,193 million, representing a 27% drop from Bt4,349 * <| ANNUAL REPORT 2011

57

THAI UNION FROZEN PRODUCTS PCL.

the number-one export market for canned shrimp products from Thailand with 53% share of the total export value. Japan was the second largest market with 12% share and Canada was ranked third with 11% share. Canned Crab Meat The 2011 export statistics indicated that Thai canned crab meat export was lower both in terms of volume and value from a year ago. The 2011

# Q \• ! & # and Bt1,475 million in export value, posting a year-on-year decline of 22% and 6%, respectively. As much as 82% of Thai canned crab meat exports were shipped to the US, the largest market in 2011. Other important export markets by ranking were France, Canada and Japan, with a share of 5%, 3% and 2% of the total export value, respectively. Canned Pet Food Thai canned pet food export during 2011 showed an upward trend in both volume and value from a year ago. The whole-year export volume rose by 11% year-on-year to 305,038 metric tons and the whole-year export value grew by 9% year-on-year to Bt21,457 million. Japan continued to remain the top export destination for Thai canned pet food products with 121,836 metric tons in export volume, or 40% of the total export volume, and with Bt8,433 million in export value, representing 39% of the total export value. By ranking, the US and Italy were the other important export markets, sharing Bt3,406 million and Bt2,055 million, or 16% and 10% of the total export value, respectively.

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ANNUAL REPORT 2011

INDUSTRY TRENDS The overall situation of Thai seafood export for 2011 continued to see more vibrant expansion. Annual sales achieved value growth both in US dollar and Thai baht terms. Canned and value-added seafood registered year-on-year growth rate of 22% and 17%, respectively. Annual export statistics also indicated that value-added shrimp products delivered exceptionally strong expansion in comparison with other items within shrimp product range. ‚ # % K US dollar and Thai baht terms by 31% and 26%, & * # " among Thai seafood exporters to add more value to their products. Thai seafood industry this year was dominated by " * „# # $ the year, tuna prices soared to USD2,000 per metric ton with annual average ceiling of USD1,766 per metric ton, or jumping by 37% year-on-year. Such these unfavorable price movements drove manufacturing costs up and eventually forced Thai seafood exporters to adjust their selling prices upwards accordingly. With regard to shrimp, prices were not as much volatile as the year before. Decline in global shrimp farming yields was seen as direct consequence of natural disaster among major shrimp-producing countries such as ‚ * # yields for 2011 dropped by 8% year-on-year to 510,000 metric tons. Albeit weaker shrimp harvest worldwide this year, world market prices remained satisfactorily stable due to sustainably strong demand among consumers.

THAI UNION FROZEN PRODUCTS PCL.

We anticipate that Thai seafood industry outlook for 2012 should continue to expand on the back of a few supporting reasons. Firstly, demand for seafood has remained sustainably strong around the world. Secondly, seafood exports from Thailand have enjoyed good global reputation and recognition because of its proven track records of high quality and food safety standard compliance. Thirdly, being a good source of protein with relatively affordable prices when compared to other protein food items, seafood products such as canned tuna should be in constant demand and therefore should not encumber Thai seafood export performance in 2012. Despite these highly likely positive scenarios, year 2012 will be dominated by a host of challenges that call for strong attention and close monitoring among Thai seafood exporters. Among those challenges lying ahead to overcome include the volatile nature of raw material prices, oil prices and currency exchange rates. In addition, the statutory increase in minimum daily wage to Bt300, to be effective around April 2012, is expected to drive up labor cost by 40%. Besides, there are ongoing challenges from non-tariff trade barriers (NTBs) that are being deployed or to be imposed by importing nations in the future.

CANNED SARDINE

FROZEN TUNA LOIN AND CANNED TUNA

Among them are the European Union (EU)’s Generalized Preference of System (GSP) and the US shrimp antidumping duty (AD), including the FDA Food Safety Modernization Act (FSMA), which has been introduced by the US since early 2011. These risk factors require Thai seafood exporters to monitor their business environment closely and also to position themselves at their advantages that would allow most effective responses to any emerging or unforeseen challenges. We have been strictly adhering to prudential business practices throughout the entire organization and closely monitoring the macro and market situations on continued basis in order to ensure that any potential impacts of key business risks are kept to the minimal. Besides, we seek to achieve continued developments through the entire organization. The efforts extend from production process improvement, marketing strategy revamp, to continual innovative product developments, inventory management and to raw material sourcing. All of these proactive measures are for the sole purpose of building our potential for $# K # # competitiveness in the global marketplace.

CANNED PET FOOD

FROZEN SHRIMP

FROZEN CEPHALOPOD

MARKET SHARE OF THAI UNION GROUP AMONG THAI EXPORTERS Sources: ^ # „ ^ @# # $ # # ~$ $ # # ^ … $ ^ Š = #

ANNUAL REPORT 2011

59

THAI UNION FROZEN PRODUCTS PCL.

Risk Factors and Other Related

= ~ | =~ Š‚ | … Š CONSIDERATIONS BUSINESS RISKS Trade Barriers [ $ # to become one of the world’s leading players, both in terms of production potential and competitiveness as well as acceptance by countries throughout the world in its recognized food safety and world-class quality. These factors in combination have placed Thailand on a strategic position to gain strong reputation and unwavering trust in global marketplace as one of the world’s top seafood processing and exporting countries. Seafood exports bring tremendous amount of export revenues into the Thai economy each & $ � [ economic growth. However, this remarkable growth is not without obstacles. Thailand has been continuously facing trade barriers erected by its trade partners. Such barriers include both tariff and non-tariff measures, the latter of which have particularly become more prevalent and * � K further incorporating sensitive topics into their more rigid international trade standards, creating more hurdles for Thai seafood operators to overcome. Under this continually unfavorable circumstance, close monitoring of situations and keeping abreast of new conditional updates and developments are all a must among Thai seafood operators to ensure their timely adoption of appropriate measures in order to stay compliant with any upcoming non-tariff barriers. The Company’s Policy and Actions Taken We have been closely monitoring all situations that may affect our exports and have undertaken measures to adapt to new regulations and rapidly changing market trends. As a result of our policy to always maintain our status as a good corporate citizen in the global seafood market, TUF and its

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ANNUAL REPORT 2011

# & # $ trade partners and customers, both within Thailand and throughout the world. We continuously emphasize sustainable development in all aspects of our operations under our internally Sustainability at TUF encompasses protection of natural resources and the environment through our responsible environmental management, fair and equitable treatment of our workers, and meaningful long-term contributions to sustainable social development of the surrounding communities as well as on the national and international levels. Marketing and investment policies are also developed and implemented with the aim to broaden our markets to cover all parts of the world and to diversify our product portfolio, with strong emphasis on value added products, in order to better serve our customers’ needs. Through a series of strategic investments, we now have or are constructing manufacturing facilities in 10 countries, including ‚ # Š Guinea, the United States, France, Portugal, Ghana and Seychelles with Thailand as the main production base. Such diverse production locations enable us to successfully take advantage of, or manage risks of, the country of origin requirement that is normally stipulated in preferential trade measures or trade barriers. PRODUCTION RISKS Raw Material Price and Procurement The cost of raw materials accounts for about 70 to 80 percent of our overall production cost. Raw material procurement is therefore a major driver of the Company’s costs and profits. Prices of $ # # # "# # in accordance with world market situations. Therefore, it is our policy to set our prices based on the prevailing market trend which could occasionally result in cost differential between raw

THAI UNION FROZEN PRODUCTS PCL.

material inventory and products sold owing to their variances in purchase costs and selling prices. "# # K "# factors that have constant impacts on several # $ packaging materials, seasoning and other ingredients, which have also varied accordingly. The Company’s Policy and Actions Taken Tuna To minimize the cost difference between the time $ # products are sold, and to allow the shortest period $ & K # $ # and purchase of tuna are made between 30-45 days in advance, while maintaining inventory turnover at an appropriate level. Shrimp We source our shrimp directly from shrimp farmers in various farming regions throughout the country # #$ " $ # * enables us to match costs and selling prices to $ shrimp price. Cephalopod With continually growing demand for cephalopod raw materials, we pursue both local and overseas procurement, which in turn protects us from the risk of the raw material shortage. We have responded effectively to price increases by maximizing production $ & & $ of value-added products, a strategy that has # K in this segment. Energy Price Energy is one of our key inputs, and we have in recent years adapted our production process to minimize potential losses and lower our production costs in other areas. We will continue to seek ways to improve our management system and raise # # $ K & $ "# # * Human Resources The seafood industry is a labor-intensive industry that also requires a certain level of industry * K & industries, workers in the seafood industry must undergo trainings to develop their production

skills to match the types and characteristics of the # * =# in the industry may not be as attractive compared to other sectors, such as textiles or electronics, in terms of odor and temperature. In a seafood #$ # $ š › $ unavoidable, and in some areas, temperature # K & * $ the industry constantly faces a high turnover and worker shortages. In addition, the statutory increase in minimum daily wage to Bt300, to be effective on April 2012, is expected to drive up labor cost. The Company’s Policy and Actions Taken Recognizing that our workers, at every level, are # K # we have focused on making our company an attractive place to work. We regularly review our compensation package to ensure fairness and }# & $ $ K * € emphasize equitable treatment of our workers regardless of position, race, and gender as well as provide all workers with opportunities to grow personally and in their career. Regarding to the increasing in minimum daily wage, we are well prepared for this situation, the solution of making use of machine-driven automation to replace certain portion of indirect or support daily workers (who are mostly involved in material handling and record-keeping activities) would help address both problems at the same time. A smaller labor pool would allow us to stabilize our costs despite the wage hike. Moreover, our intention to move some of the indirect / support daily workers into the direct production sections, such as cleaning and cutting, should allow us to increase our production capacity as well as productivity which would otherwise be not possible without enough labor. After all, with the combination of automation and converting support workers into direct production workers should lead to cost savings, allowing us to stay competitive regardless of any potential minimum daily wage hike pursued by the new Thai government. NATURAL DISASTER RISKS Dramatic changes in environmental and climatic conditions worldwide have been evident through the past several years and unprecedentedly resulted in unusually frequent occurrence of severe natural disasters in each region across the globe. Among those catastrophic events include a series of massive

ANNUAL REPORT 2011

61

THAI UNION FROZEN PRODUCTS PCL.

earthquakes in different parts of the world such as Chile, New Zealand and Japan, resulting in enormous $ $ on trading and economy. = K $ }# natural disaster in Thailand. In particular, the recent " # # $ $ year 2011 was reported the worst of all in the # [ " * „ $$ $ including Bangkok and its peripheral areas, suffered extensive damages and losses. There were a couple $ ' K# $ " crisis this year. Firstly, the country had been hit by a series of storms one after another with short intervals in between. Secondly, the water reserve in some major reservoirs and dams at the time had nearly exceeded their safe storage levels, with some no longer able to receive incoming water " $ K $ to natural waterways to prevent disastrous collapse of the structures. These two factors in combination " [ wreaked havoc on the country’s economy. The damages to national economy as consequence of " # * # K electronics were among a few concrete samples of many affected industries within Thai manufacturing sector. In the mean time, agricultural sector was also faced with direct impacts thanks to extensive damages to crop-producing and farming areas in many parts of the country. As with the manufacturing and agricultural sectors, labor sector was not an exception when plant closures inevitably became the last resort among business # * " Thai industrial operators to develop and have in place their site emergency preparedness programs with particular emphasis on prevention of future impacts of natural disasters. The Company’s Policy and Actions Taken We have had in place a set of well-planned preventive measures to be deployed in emergencies $ # # }# $ # disaster. It is intended that all these available established measures will help cushion the severity of the impacts of future natural disaster threats. The measures are developed into corporate emergency preparedness plan, which encompasses various aspects of emergency during natural disaster period, including training session, emergency response rehearsal and evacuation drill. The

62

ANNUAL REPORT 2011

purpose of the emergency preparedness plan is to equip all employees with necessary survival skills and allow them to learn how to react properly and effectively with minimum panic whenever natural disaster strikes. In addition, we have also developed two-level emergency response plan as detailed below: ^ … _ … $ any occurrence of natural disaster emergency outside the area where our business operates; & & to our employee welfare as well as business operations; and within handling capacity of $ # – # team. Required preparedness during minor emergency consists of close monitoring of latest situation updates, direct report of any situation ‡ … & further report to Emergency Director and response actions by emergency team in accordance with pre-determined procedures. ^ … ' _ … ' $ any occurrence of natural disaster emergency & & our employee welfare, business operations, surrounding communities as well as overall company environment; and beyond handling $ $ # – rescue team. Required preparedness during major emergency consists of immediate evacuation and strict adherence to evacuation plan to proceed towards pre-determined escape routes to safe areas. Unlike many other industrial establishments, our manufacturing facilities and business operations remained unaffected and safe from any serious & $ " * Although our processing plant and those of our subsidiaries (Thai Union Manufacturing and % Œ ' $ " $ " & we successfully managed to survive. This was an outcome of well-coordinated efforts and keen cooperation among Samut Sakhon provincial $ # to their proactive measures taken both before and throughout the crisis period. Despite being & # $ $ $ " # $ # * ‚ # K #

deployed to best protect our plant and machineries " & * € also closely monitored the situations and stayed abreast of the latest updates on water levels, as publicized through concerned agencies, on a daily basis. Responsible personnel were dispatched to patrol the areas surrounding plant compound for real-time and on-site consideration of the situations. Meeting session of our Flood Steering Committee was arranged on a daily basis to discuss and evaluate the latest situations and potential risk exposure. In parallel with the preparations to safeguard our physical plant assets from the " " $ # to help our affected employees at our best. ADMINISTRATIVE AND MANAGEMENT RISKS Operational System Our strategy of investment expansion has currently resulted in 24 subsidiaries and associated companies with each being active in different business areas. Such diverse collection of business operations, K $ $ $ K# "# # & # poses a risk associated with ensuring that all entities operate under harmonized policies aim at generating satisfactory returns on investments. The Company’s Policy and Actions Taken TUF places great emphasis on business administration and operational management. We have developed comprehensive corporate policies providing strategic directions to our subsidiaries and associated companies. Our management teams possess extensive experiences and expertise directly relevant to the business that they manage. While our corporate executives provide strategic guidance and policies, management teams based at the subsidiaries and associated companies are given full authority to run the operations. Our investments in subsidiaries usually feature agreements of minority ownership by relevant management teams for the purpose of ensuring appropriate incentives for running the business. As the parent company, TUF monitors and controls operations in the area of annual business plans, business expansion, and further investments to maintain harmony among all subsidiaries. As part of its monitoring and auditing responsibility, our Internal Audit Department ensures that the highest $ # [ & operations are preserved and that full compliance with the Board’s policy is achieved.

FINANCIAL RISK Volatility of Foreign Exchange Rates In recent years, foreign exchange rates have been relatively volatile and consequently impacted our business, given the fact that over 90% of revenues from Thailand-based operations of Thai Union Group is generated from shipping products to overseas markets, such as the US, the EU, and Japan. Because of this, a majority of our revenues are recognized in foreign currencies, mostly in U.S. * $ # & # are subject to the risk of foreign exchange volatility. The Company’s Policy and Actions Taken We have maintained a close watch on movements of currency exchange rates as well as considered all appropriate measures in managing our exposure to exchange rate risks. Our revenue and expense streams have provided an effective natural hedge, as we import most of our raw materials and export most of our products, using US dollar as the transactional currency. Other measures taken include the utilization of forward contracts and currency options to minimize our ! # # "# # $ # $ # # * Interest Rate Risks Globalization has connected economies in all parts of the world together, allowing rapid movement of investment funds across borders. This implies a world where interest rates can change very quickly, requiring business operators $# # address risks associated with shifting interest rates. The Company’s Policy and Actions Taken As in the case of currency exchange rate situations, we have continuously monitored interest rate movement. Thai Union Group as a whole has been carefully maintaining an optimal debt structure given interest rate situations and trends, with $ ! " % loans. The debt structure can be also adjusted to match changing circumstances via various

# # | and Cross Currency Swap. OTHER RELATED FACTORS FOR INVESTMENT CONSIDERATION Lawsuits TUF and its subsidiaries are not involved in any lawsuit affecting their assets by more than 5% of shareholders’ equity.

THAI UNION FROZEN PRODUCTS PCL.

Report on the Practice of Good

CORPORATE ‡~‚ Š Š The Board of Directors of Thai Union Frozen Products PCL. perceives the importance of good corporate governance within the Company in order to promote sustainable operational growth and to gain public acceptance of the Company both locally and internationally. Being guided by this perception, the Board is determined to adhere to good corporate governance principles and therefore embraces such principles directed by the Stock Exchange of Thailand, in conjunction with honesty, transparency, responsibility, business # & $ standards in accordance with the Code of Best Practices of listed company. This principle adoption is intended to enhance the Company’s competitiveness, # $# K the Company’s operations among shareholders, investors and all stakeholders, thereby creating effective, prosperous and sustainable growth in the Company’s business, as well as adding value to shareholders while also taking into account all stakeholders. Following the perception of the importance of good corporate governance above mentioned, the Board therefore promotes and supports the practice of good corporate governance principles directed by the Stock Exchange of Thailand through devising its own policy centered on 5 pillars as set forth below: 1. 2. 3. 4. 5.

Right of Shareholders Equitable Treatment of Shareholders Roles of Stakeholders Information Disclosure and Transparency Board of Directors’ Responsibilities

1. Right of Shareholders The Company follows good corporate governance principles and sets clear business policy perceiving equitable treatment of shareholders and stakeholders. This can be evident from the fact that the Board and the management cooperate their efforts to $ & $ # careful administration for the best interests of the Company and shareholders. Operations are transparent and can be verified. Information 64

ANNUAL REPORT 2011

disclosure is made in the complete, accurate, punctual, and equitable manner to all parties concerned. The Company has appropriate controlling system and risk management adequate for facilitating well-informed decision making. The Company adheres to business ethics as a main pillar to prevent damages to all stakeholders. The Board oversees the Company’s disclosure of all material information to ensure its accuracy, fairness and timeliness in order to secure investor * The Company’s information disclosures to shareholders are made on the basis of equity regardless of share volume owned, individuals or juristic person and being local or overseas. In each shareholders’ meeting, the Company places emphasis on, and respects, the right of shareholders by strictly carrying out the meeting pursuant to the Public Limited Companies Act. This can be evident from the Company’s following arrangements for the hosting of the Annual General Meeting of Shareholders (AGM) on April 25, 2011. Meeting Preparation Procedure and Delivery of Meeting Invitation ^ @ K to propose name list of potential director candidates and meeting agenda for 2011 Annual General Meeting of Shareholders. Company secretary was assigned to publicize such information electronically through the Stock Exchange of Thailand communication systems and forwarded to corporate website 32 days prior to the date of meeting invitation delivery in order to allocate appropriate time for their proposals. ^ #K ] & along with sufficiently-detailed relevant documentation and opinions of the Board given in each agenda (except for annual report) on www.thaiuniongroup.com since March 25, 2011 and such information dissemination was available for 31 days prior to the date of AGM. ^ # ] | # Depository Co., Ltd., in its capacity as registrar, to deliver to shareholders meeting invitation

THAI UNION FROZEN PRODUCTS PCL.

along with sufficiently-detailed relevant documentation, opinions of the Board given in each agenda, proxy form for convenience of shareholder who is unable to attend the meeting and wishes to authorize an appropriate person or any independent director to act as proxy and vote on his/her behalf, and including annual report CD-ROM 21 days prior to the date of AGM.

K $ * ‚ # clearly announced onsite to make known to all attending shareholders immediately following the end of voting procedure in each agenda. The meeting session was also videotaped for further dissemination afterwards. Interested shareholders may request copy of the videotape $ ~$ $ *

Post-meeting Procedure ^ #K ] & Post Today newspapers (in Thai) and Bangkok Post (in English) for 3 consecutive days and 7 days prior to the date of meeting to reassure shareholder attendance on the scheduled meeting date and time. On-site Meeting Procedure ^ $ ‡… between 8:00 a.m. - 10:00 a.m. of April 25, 2011 at the well-known Dusit Thani Bangkok Hotel to provide convenient access to shareholders. In the past year, there were totally 425 shareholders in attendance with aggregate share volume of 690,040,101 units, equivalent to 72.16% of the total issued and paid-up shares. ^ $ @ # General Meeting of Shareholders, in which there were 13 board members, including the Chairman, in attendance out of the whole board of 15 members. The board members in attendance comprised Chairman, President, Managing Director, Financial Executives and Audit Committee members, who are independent directors. As some Board members are representatives of overseas shareholders, not all Board members were able to attend the meeting. However, without their presence, all such members could express their opinions about the issues through the agendas being directly delivered to them prior to the meeting. ^ $ secretary to clearly explain vote-casting and vote-counting procedures for each agenda to eligible shareholders. No additional agenda may be added to meeting session unless it is proposed in advance. The meeting was conducted in the manner that allowed and encouraged all shareholders to raise questions, express opinions and give suggestions about the issues through the entire meeting session. Furthermore, in each meeting session, Company’s auditors were required to participate in vote-counting procedure as witnesses as well as to answer questions raised. ^ & & Company made available ballots to facilitate exercise of voting right by shareholders in case of their disapproval or abstention of any agenda being considered. Shareholders were allowed to freely cast their votes for each director candidate on an individual basis, not on the

^ #K ] # $ agenda considered in 2011 Annual General Meeting of Shareholders on www.thaiuniongroup.com immediately on the date of meeting, except for questions raised by shareholders and answers given during the meeting session. Complete resolutions of the meeting were subsequently submitted through the Stock Exchange of Thailand communication systems and forwarded to corporate website on May 9, 2011, or 14 days following the date of AGM. Hosting of shareholders’ meeting with great emphasis on equitable voting right has earned the Company excellent performance in the 2011 annual evaluation of Annual General Meeting of Shareholders conducted by Thai Investors Association.

2. Equitable Treatment of Shareholders The Company perceives the importance of right of shareholders, is well aware of its responsibility to ensure equitable treatment of shareholders and therefore have put the following initiatives into action. ^ @ to prepare data and communicate to shareholders with regards to the Company’s invitation for shareholders to propose name list of potential director candidates and meeting agenda for consideration in 2011 Annual General Meeting of Shareholders. Such information was publicized electronically through the Stock Exchange of Thailand communication systems and forwarded to investor relations section on corporate website 32 days prior to the date of meeting invitation delivery in order to allocate appropriate time for their proposals. Although the Company has provided shareholders with such these proposal opportunities since 2007, no proposals, however, were submitted for either director candidates or meeting agenda during the past year. In addition, we do not have the additional agendas that did not notice. ^ @ $ 4 independent directors who were to act as proxies to vote in each meeting agenda on behalf of shareholders. In 2011 Annual General Meeting of Shareholders, there were ANNUAL REPORT 2011

65

THAI UNION FROZEN PRODUCTS PCL.

74 shareholders who authorized Mr. Sakdi � $ # to act as proxy and vote on his/her behalf, there were 18 shareholders who authorized … * � # K $ # Committee, 15 shareholders who authorized Dr. Thamnoon Ananthothai, and 3 shareholders # ] … * � # $ purpose. All of them have been serving as independent directors and had earlier been proposed by the Board to act as proxies. ^ @ # # a correct and complete manner and to publicize the resolutions of all agenda considered in 2011 Annual General Meeting of Shareholders in investor relations section on www.thaiuniongroup.com immediately on the date of meeting, except for questions raised by shareholders and answers given during the meeting session. Complete resolutions of the meeting were subsequently submitted through the Stock Exchange of Thailand communication systems and forwarded to corporate website within 14 days following the date of meeting. ^ & & # guard against the use of internal information for personal gains among the Board and management members by communicating their mandatory duties to report any changes made to the securities ownership of their own, those of their spouses and children below lawful age to the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET) pursuant to Section 59 of the Securities and Exchange Act B.E. 2535 on immediate basis and not later than 3 business days following the date of purchase, sell, transfer or receipt of such securities. The Board or management members or sections with access to, or acknowledgement of, internal information are not allowed to leak the information to outsiders or other unauthorized persons. In addition, no securities trading by those management is allowed within the period of one month prior to the disclosure $ information to the public in order to prevent illegal use of internal information undisclosed to the public, which can affect the trading of the Company’s share on the Stock Exchange of Thailand. However, this prohibition is exempted $ # "# # $ # trading prices driven naturally by overall stock market mechanism, which encourages those management to trade their securities only in response to the stock market situations and in good faith. Furthermore, the Board and management members are made aware of legal punishment and penalty pursuant to the Securities and Exchange Act B.E. 2535 and relevant regulations. 66

ANNUAL REPORT 2011

^ @ oversee and follow up items with potential " $ * Company secretary is responsible for preparing quarterly summary report of those items and transactions and regularly publicizes such report at year-end in the Company’s annual report and Form 56-1. Furthermore, the Board and management members, in any Board meeting, are required to comply with good corporate governance policy by not participating in casting votes or giving opinions on any issues & " $ & * ^ @ $ $ & as disclosed to the Company by the Board and management members pursuant to Š Š * *ˆ * – \\ $ … ‡ & }# ‚ Interests Disclosure by Listed Company Directors, Management Members and Connected Persons. With regards to this issue, the Section 89/14 of the Securities and Exchange Act B.E. 2535, as subsequently amended under the authority of the Securities and Exchange Act (No. 4) B.E. 2551, stipulates that the Board and management members must report to the Company their vested interests in the Company’s and its subsidiaries’ operations and management, or those of their connected persons. This requirement is aimed to furnish necessary information to the Company and to enable the Company to comply with its own connected transaction handling procedures, which are established to prevent such items with potential " $ $ K siphoning of corporate funds and interests from the Company and its subsidiaries.

3. Roles of Stakeholders The Company perceives the importance of right of all stakeholders and equitable treatment, as the Company foresees the importance of their support and the mutual cooperation between the Company and the various groups of stakeholders in that it can secure long-term business wealth, K * $ the Company adheres to equitable treatment of all stakeholders as well as ensures that effective administration of internal controls and compliance controls are established and maintained, as summarized below; & ! The Company is determined to $ # generating maximum long-term returns on investment with regular and sustainable strong operational performance and continued growth while simultaneously paying attention to accurate, complete and punctual disclosure of material information to all shareholders in response to their unwavering trust and support given to the Company.

THAI UNION FROZEN PRODUCTS PCL.

'@ [ ! The Company treats employees equitably and fairly with appropriate remuneration comparable to remuneration paid in the same industry. Provision of fringe K but also exceeds relevant standard mandatory }# * K & K to employees are provident fund, annual health %# $ � ] safe and sanitary workplace environment, employee recreational activities, and in-house physical workout facility to promote mutual recreation among employees. In addition, the annual mini-marathon run started since 2009 to encourage the employees to be committed to that goal. Although some employees will not do before, but they will try to practice successfully. Besides, much emphasis is also placed on long-term personnel development, ample learning and self-development opportunity for career advancement and improved life quality. In order to put these implementations in actions, the Company introduces organization-wide professional human resources management systems to maximize personnel potentiality and capability throughout the entire business group. Employees of all levels are encouraged to acquire new knowledge and skills through company-subsidized scholarship program along with seminar/training attendance at leading educational institutions. The Company provides employee manual, which equips employees with necessary information on $ K * In addition, the Company has adopted a progress-oriented HR policy, driven by passionate belief in the utmost importance of human capital in business and the vital contribution it makes to the Company’s achievement of common goals. Therefore, the Company is committed to promoting greater professional capability among employees in parallel with continued improvements in their quality of life. Concerning learning and development paths made available to employees, appropriate practical learning programs are developed and applied to $ $ within the Company until their retirement. In this regard, the Company has provided continued support to facilitate their greater learning experiences through time allocation,

K# as detailed below: Human Capital Development: The Company’s human capital development is intended to encourage employees to perform respective $# # $ * to achieve this goal, the Company develops, and capitalizes on, tailored individual development plan on a continued basis. The individual development plan is implemented in conjunction with systematic follow-up and performance evaluation conducted to

personnel training and development programs. Employees of all levels throughout the business K $ ] % of knowledge-based approach. In addition, the availability of Human Resource Information System (HRIS) within the Company not only $ # $ + management but also lowers operating costs. Under this human capital management policy, all people across the business are engaged side by side in continual process of knowledge acquisition and management. Apart from these continued HR development efforts regardless of position levels of employees, the Company has been making regular investment in the area of organizational development since 2004 with the intention of further strengthening organizational performance. In this regard, the Company has }# & ! $$ disciplines to work in advisory capacity on the organizational and human capital development initiatives. Those professional advisory bodies include Accenture, CSR, INWIS and APM Group, among others. The Company’s human capital development policy is created in harmony with corporate visions and business strategies. Great emphasis is placed on development efforts in line with current personnel management system (PMS), which centers on competency development. Such competency is composed of 3 major elements; Core Competency, Management Competency and Functional Competency. Moreover, as the Company $ $ $# management and soft skills development among each position level as one of job enhancement factors, other personnel development efforts have also been made. These efforts encompass a wide range of personnel development aspects; for example, prerequisite knowledge for industrial establishment personnel, development of $# & $ management and soft skills, Leadership Program, Coaching Program, cross-functional rotation system, inter-departmental personnel realignment system, trial function performance in superior position and Star Program.

^ Customer: The Company builds customer satisfaction and is responsible for customers through offering high-quality products in compliance with food safety, occupational health and environment standards, adhering to commitments given to customers, delivering goods and service on-time and at fair prices, making customers accurately well-informed of available goods and service, and also placing # # * The Company also sets aside special unit or appoints persons in charge of handling ANNUAL REPORT 2011

67

THAI UNION FROZEN PRODUCTS PCL.

customer complaints and responding to those complaints without delay. ^ Supplier: The Company treats suppliers equitably and fairly in line with commercial conditions, is willingly open for their opinions and suggestions to forge stronger business relations and places much attention to their * ^ Creditor: The Company strictly adheres to loan agreement commitments given to respective commercial banks so as to ensure the availability of proper and fair returns on their loan investments. Furthermore, the Company takes best efforts ] ! # " $ interests with creditors. ^ Competitor: The Company competes with competitor under fair commercial competition, with business ethics and in compliance with applicable legislation, thereby having no trading disputes with any competitor.

# * prepared in accordance with generally accepted accounting standards by applying appropriate accounting policy on a regular and carefully K * … $ #$ * The Board has provided report indicating its K * Such report is exhibited alongside the auditor’s report in the Company’s annual report to ensure # $ $ regularly following the generally accepted accounting standards and accounting policy. The Board opinions that there is effective administration of internal controls in the Company and that the K $ # $ statements for period ending December 31, 2011, for which the Company’s auditors have conducted the audits on a generally accepted auditing standards. Remuneration for Directors and Management

^ Corporate Social Responsibility: The Company perceives the corporate responsibility for the environment in the society and community and for natural resources conservation. In turning its nature-care spirit into actions, extensive corporate support is given to communities around the plant in terms of both safety and environment at its best. Among our corporate social responsibilities having been materialized include, for example, Mangrove Sapling Bank Program, which is aimed to safeguard intact mangrove areas as well as to regain natural fertility among deteriorated ones, and Hometown Community Development Program, which has been running on continued basis with clear objectives of promoting community strength and fostering pride in hometowns among employees. Other company-sponsored CSR initiatives in actions through the entire 2011 are further described under Sustainable Development heading on page 50-55 of this annual report.

^ „ # $ $ monthly retainer and meeting allowance comparable in average to the general practice in the industry, suitable for the scope and amount of assigned responsibilities, and shareholders approved. Aside from the preceding meeting allowance, directors are not additionally remunerated from the Company’s subsidiaries.

4. Information Disclosure and Transparency

^ $ # the Company does not pay any other remuneration to directors.

The Board devises policy on correct, complete # # # $ % $ # channels of the Stock Exchange of Thailand and investor relations section on corporate website in both English and Thai languages so as to provide equitable and credible access opportunity for shareholders, investors and any persons interested in obtaining such information. The Board stands behind the Company and its #K [

$ [ 68

ANNUAL REPORT 2011

^ ! # & # form of monthly retainer, meeting allowance, salary, provident fund matching contribution and annual bonus based mainly on operational performance of the Company and work performance of each director. ^ # the form of salary, provident fund matching contribution and annual bonus based mainly on operational performance of the Company and work performance of each management member.

The Company considers the total amount of annual remuneration paid to the Board and management members is not high when compared to the average amount paid by other listed companies in the Stock Exchange of Thailand due to the Company’s attention to the best interests of shareholders. The remuneration paid to the Board and management members in the year 2011 in comparison with its counterparts in the year 2010 is set forth below:

THAI UNION FROZEN PRODUCTS PCL.

2011

2010

Board of Directors

Management Team

Board of Directors

Management Team

15

12

15

13

Meeting Allowance

5.55

-

3.85

-

Salary/Annual Bonus

-

72.83

-

52.70

Provident Fund Matching Contribution

-

3.58

-

3.68

Total

5.55

76.41

3.85

56.38

Unit : Million baht Number (Person)

The Board perceives the importance of correct, complete and transparent information disclosure to all shareholders, investors and all parties concerned on equitable treatment basis. Information on # # clearly and timely under relevant laws to provide target groups with correct understanding of the Company, thereby creating acceptance and investment sentiment among investors. The communication also allows the Company to gain insight into public view on the Company’s operations, which will be a part of considerations for future goal and strategy setting. Although the & < $ # Company clearly assigns the management and other personnel to assist in communicating with the pubic as follows:

In addition, the Company provides the public with written information dissemination through corporate website http://www.thaiuniongroup.com and printed media as follows:

1. Mr. Thiraphong Chansiri President 2. Mr. Wai Yat Paco Lee Finance Controller \ Tel: 0-2298-0024 Ext. 670-4

^ $ changes in need of public disclosure pursuant Š $ | # Stock Exchange Commission and the Stock Exchange of Thailand

The past continued communications of operational $ % $ to stock analysts, investors and shareholders during 2010 were as follows: ^ ! & K & and stock analysts ^ Q $ # of operating results ^ & K ^ & K

^ & & $ on operational results issued to investors and stock analysts on a quarterly basis ^ <= %Š K newsletter delivered to shareholders and investors to regularly report new information and updates on the Company’s operations ^ # $ & other interested general public

Due to continued strong adherence to transparent information disclosure, Securities Analysts Association grants to the Company its annual SAA’s Picked Award for being the most-admired listed company’s top executive. The Company wins { = ’ Most-admired CEO Award, The Most-admired CFO Award, The grant of the awards is based on favorable votes cast by stock analysts and fund managers who identify the Company’s regular provision of complete and accurate in-depth information, including facilitating convenient availability and accessibility for interviews as their deciding factors to vote for the Company.

^ & & $

ANNUAL REPORT 2011

69

THAI UNION FROZEN PRODUCTS PCL.

5. Board of Directors’ Responsibilities The Board has set up policy, strategies, goals and budgeting in order to improve operational $ & K $ the Company. The Board follows up and ensures that the management’s work performance is in line with the work plans. The Board also clearly # K $ @ members, the management, staff and other parties concerned. The Board assigns the Audit Committee to oversee the Internal Audit Department, to evaluate the department’s work performance, to ensure an adequacy of internal controls and to promote appropriate risk management in order to preserve the best interests of the Company. In order to be equipped with further knowledge, capability and potentials as visionary directorship,

& $ & „ ‹„ Œ ] K the Thai Institute of Directors Association (IOD); Mr. Thiraphong Chansiri, Mr. Rittirong Boonmechote, … * � … * | # # … * | � „ * … * � # * = „ Program (DAP); Mr. Chuan Tangchansiri, Pol.Maj. ‡ * # … * � # and Dr. Thamnoon Ananthothai independent director. For the Role of Chairman Program (RCP); … * � … * | � and Dr. Thamnoon Ananthothai. For the Role of Compensation Committee (RCC); Mr. Sakdi � … * � # & the course. For the TLCA Executive Development Program; Mr. Rittirong Boonmechote and Mr. Chan | # # * … * � Chairman of the Board, has also attended the Top Executive Program (Class 12) organized by the Capital Market Academy (CMA) during 2011. Although some members of the Board and the management team are shareholders, the management policy is based mainly on the best interests of the Company, particularly decision # & " $ & interests. Those members are not eligible for voting $ # # " $ in order to preserve independence in decision making. Furthermore, the information regarding such consideration is immediately disclosed to the public for transparency. The necessary information is also regularly disclosed in the Company’s annual report and Form 56-1. The Company has created the code of ethics or statement of business conduct for all directors, management team and employees. The code serves as guidelines for their honest and equitable work operations and is made known to all directors, management team and employees to ensure their awareness, understanding and compliance.

70

ANNUAL REPORT 2011

The Company believes that such practice would improve the standards of good corporate & & the Company’s management as well as preserve justice and credibility in the capital market. Board Composition The Company’s Board of Directors comprises 15 members, namely; 7 executive directors, 2 directors from business partners (in support of business strategies), 1 director from Bondholders and 5 independent directors (3 of which also serve as Audit Committee members). Such proportion of the Board members allows effective considerations for the best interests of the Company. For the year 2011, there were totally 5 independent directors to be at one-third of the total number of Board members or the proportion accounts for 33.33%. ] ^ @

Director }# $ }# K Š ‡ & `# K $ # Committee established by the Stock Exchange $ * }# serve as independent director must be able to perform duties to preserve the best interests of all }# K # " of interests and be available in Board meetings to give independent and unbiased opinions and judgments. An independent director must meet the following criteria: 1. Holds no more than 0.05% of total voting stocks of TUF including stocks held by connected persons of the independent director, as well as nominees. 2. Is not or has not ever been a major shareholder. 3. Is not or has not ever been board member of its parent company or an executive director, employee, staff, advisor who receives salary of a controlling person of TUF, its parent company, its subsidiaries or its associated companies. 4. Is not any professional advisor. 5. Has not or has not had a business relationship with the Company, its parent company, its subsidiaries, its associated companies or '# & " $ interests, in the manner that may interfere with his independent judgment. 6. Does not represent the Company’s or its major shareholder’s board members or a shareholder who is related to the Company’s major shareholders.

THAI UNION FROZEN PRODUCTS PCL.

$ % $ director is based on the Company’s Corporate Governance Policy established by the Board. Moreover, the Company’s criteria are stricter than “the criteria� required by the Stock Exchange of Thailand and the Securities Exchange Commission in term of stock holding ratio. Although the title Chairman of the Board and Managing Director are not combined into one position, both represent the same group of major shareholders. However, consideration of important matters requires approval from directors from all groups of shareholders. Independent directors play important roles in giving opinions, balancing and verifying the power of management.

Board Meeting The Board meeting is held regularly on a quarterly K $ # agendas mutually agreed and decided by Chairman and President. Follow-up agenda is regularly included in the meeting. Company secretary sends meeting agendas and meeting invitation to the Board members not less than 12 days in advance to allocate appropriate time for data analysis. The agendas and meeting invitation may be sent to the Board members less than 12 days in advance in the case of urgency or preservation of the Company’s interests. Each meeting session lasts about 2 hours. There were totally 7 ordinary meeting sessions during the year 2011, with each director’s attendance summarized below:

Unit: Time Board Meeting (Times) Directors

Times of Attendance/ Total Sessions Held

Prior Notice via Electronics Media

1.

Mr. Kraisorn Chansiri

6/7

1/7

2.

Mr. Cheng Niruttinanon

5/7

2/7

3.

Mr. Chuan Tangchansiri

7/7

-

4.

Mr. Thiraphong Chansiri

7/7

-

5.

Mr. Rittirong Boonmechote

6/7

1/7

6.

Mr. Yasuo Goto

1/7

6/7

7.

Mr. Kakiuchi Takehino

1/7

6/7

8.

Mr. Ravinder Singh Grewal Sarbjit S

7/7

-

9.

Mr. Chan Tin King

7/7

-

10. Mr. Chan Shue Chung

7/7

-

11. Mr. Sakdi Kiewkarnkha *

7/7

-

12. Pol.Maj.Gen. Pracha Anucrokdilok *

7/7

-

13. Mr. Kiti Pilunthanadiloke *

7/7

-

14. Dr. Thamnoon Ananthothai

7/7

-

15. Mr. Kirati Assakul

6/7

1/7

* Independent Director and Audit Committee

Remarks: * … * ‰ # ‡ … * � # # � $ * 2. The company secretary is assigned to oversee and facilitate the Board meeting including documenting the meeting # & K * ANNUAL REPORT 2011

71

THAI UNION FROZEN PRODUCTS PCL.

Subcommittee The Board has appointed committees to assist in governing the Company. 1. Audit Committee The Audit Committee has 3 years of tenure and is composed of 3 independent directors $ accounting, organizational management and law disciplines. All independent directors neither hold any managerial positions, nor perform employee or consulting roles for the Company. TUF Audit Committee composition is as set forth below: ^ Mr. Sakdi Kiewkarnkha Chairman of Audit Committee ^ Pol.Maj.Gen. Pracha Anucrokdilok Audit Committee ^ Mr. Kiti Pilunthanadiloke Audit Committee The Audit Committee met regularly in 14 meeting sessions during the year 2011 to implement assigned tasks and report performance results directly to the Board. The details of those implemented tasks are described under “Report of Audit Committee� heading on page 90 of this annual report. 2. Nomination Committee The Nomination Committee includes a Chairman and two other members. Majority members must K }# required by the Securities and Exchange Commission and the Stock Exchange of Thailand, and must have the appropriate level and scope of experience and expertise. TUF Nomination Committee composition is as set forth below: ^ Dr. Thamnoon Ananthothai Chairman of Nomination Committee ^ Mr. Sakdi Kiewkarnkha Member of Nomination Committee ^ Mr. Chan Tin King Member of Nomination Committee 3. Remuneration Committee The Remuneration Committee includes a Chairman and two other members. Majority members must be independent directors possessing qualifications required by the Securities and Exchange Commission and the Stock Exchange of Thailand, and must have the appropriate level and scope of experience and expertise. TUF Remuneration Committee composition is as set forth below:

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ANNUAL REPORT 2011

^ Mr. Kirati Assakul Chairman of Remuneration Committee ^ Mr. Kiti Pilunthanadilok Member of Remuneration Committee ^ Mr. Chan Tin King Member of Remuneration Committee 4. Risk Management Committee The Risk management Committee includes a Chairman and four other members. Majority members must be independent directors }# }# K Securities and Exchange Commission and the Stock Exchange of Thailand, and must have the appropriate level and scope of experience and expertise. TUF Risk Management Committee composition is as set forth below: ^ Dr. Thamnoon Ananthothai Chairman of Risk Management Committee ^ Mr. Sakdi Kiewkarnkha Member of Risk Management Committee ^ Pol.Maj.Gen Pracha Anucrokdilok Member of Risk Management Committee ^ Mr. Thiraphong Chansiri Member of Risk Management Committee ^ Mr. Chan Tin King Member of Risk Management Committee Controlling System, Internal Audit and Risk Management Controlling System and Internal Audit: The Company has its own Internal Audit Unit to regularly oversee internal controls system, to # effectiveness of controlling system for greater K $ * has also been set up to be in charge of reviewing $ $ operations, compliance controls, risk management and extraordinary items are incorporated. The past internal audit reports indicated that the Company’s operations have been in line with $ controls, risk assessment, risk management and prevention measures, compliance control and % operations. Risk Management: The Risk Management Committee assigns the management team to regularly identify internal and external risk factors as well as to conduct assessment of their impacts on the Company’s business. Risk management team is diversely composed of management members and top executives who are directly responsible for the work areas where risk factors

THAI UNION FROZEN PRODUCTS PCL.

* analyzes target risk factors in order to determine root causes and create countermeasures. The countermeasures are turned into practical guidance to either prevent or minimize potential impacts of those risks. In addition, the risk management team also follows up and ensures that taken corrective and preventive actions are in line with its directed countermeasures and reports the performance of countermeasure implementation to Audit Committee for subsequent address in Board meeting. < ^ _ ^ ^ ' The Board determines handling procedures and # " $ interests and connected transactions. Much efforts and prudential considerations are independently taken in order to identify the appropriateness of target items under the scope of the Company’s Corporate Governance Policy and for the best interests of the Company. Those items with nature $ " $ transactions are treated in the same manner as # * `# # report of those items and transactions is prepared and regularly publicized at year-end in the Company’s annual report and Form 56-1. Furthermore, the Company requires that the Board and management members report to the Company their vested interests in the Company’s and its subsidiaries’ operations and management, or those of their connected persons. This requirement is aimed to furnish necessary information to the Company and to enable the Company to comply with its own connected transaction handling procedures, which are established to prevent # " $ $ possible siphoning of corporate funds and interests from the Company and its subsidiaries.

The Company imposes preventive measures to guard against the use of internal information for personal gains among the Board and management members by communicating their mandatory duties to report any changes made to the securities ownership of their own, those of their spouses and children below lawful age to the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET) pursuant to Section 59 of the Securities and Exchange Act B.E. 2535 on immediate basis and not later than 3 business days following the date of purchase, sell, transfer or receipt of such securities. The Board or management members or sections with access to, or acknowledgement of, internal information are not allowed to leak the information to the outsiders or other unauthorized persons. In addition, no securities trading by those management is allowed within the period of one month prior # $ other material information to the public in order to prevent illegal use of internal information undisclosed to the public, which can affect the trading of the Company’s share on the Stock Exchange of Thailand.

ANNUAL REPORT 2011

73

THAI UNION FROZEN PRODUCTS PCL.

APPOINTMENT OF DIRECTORS Board of Directors shall appoint a director, whose qualifications are deemed appropriate and qualified pursuant to the Public Companies Limited Act. Such appointment can be made only in the event that directorship either expires K $ # $ & in consequence of whatever causes during the $ * #K # & K $ $ remaining tenure. One third of directors shall retire and new directors shall be elected in an annual general meeting of shareholders according to criteria and procedures set forth below: 1. Each shareholder has a right to vote in proportion to share volume owned; the principle of “one share, one vote� is applied. 2. Each shareholder is required to cast the entire vote owned in 1 for one or more candidates but can not split the vote into portions. 3. Candidates shall be entitled to directorship based on votes received. Candidate with ! # & and followed by the other less voted, respectively. As a rule, the number of newly appointed directors must not exceed the number of new directors intended in that election.

74

ANNUAL REPORT 2011

Shareholders, if necessary, may pass resolutions to remove any director prior to statutory expiration of $ & ‹ Œ $ # $ ' votes of all shareholders present at a meeting is reached; and (b) the aggregate share volume owned by shareholders in (a) must be greater than half of the aggregate share volume owned by all shareholders present at the meeting. Such K $$ & }# of all board members and the management comply fully with Section 68 of the Public Companies Limited Act of 1992 and the SEC’s Regulation Governing the Rules, Conditions and Procedures for the Securities Offer and Permission dated May 18, 1992. Board of Directors shall appoint any person $ ] }# to act as independent director provided that the appointee is (a) not an employee or staff member receiving regular salary from the company or its subsidiaries; (b) independent of major dominant shareholders; (c) a shareholder of not more than 0.05% of the respective paid-up capital of the company; and (d) able to equally protect the interests of minority shareholders. Board of Directors shall consider and vote to appoint }# $# & during meeting of shareholders.

THAI UNION FROZEN PRODUCTS PCL.

Authority of Board of

DIRECTORS AND AUDIT COMMITTEE Authority of Board of Directors

Authority of Executive Directors

Board of Directors is authorized to manage the company in conformity with objectives, regulations and shareholder resolutions with honesty, in good faith, and for the best interest of the company. Additionally, Board of Directors is responsible for setting corporate policy and direction as well as ensure that the management implement the $$ & $ *

(1) Implement the company’s policy, which obliges to laws, conditions, regulations, and rules of the Company, except for those issues subjected to the consent of shareholders. (2) Set, propose and devise business policy and strategy to Board of Directors. (3) Set business plan, business management authority, annual budget estimation, and budget allocation propose all these to Board of Directors for review and approval, as well as follow business plan and strategy in accordance with the corporate policy and business guidelines to committed to Board of Directors. (4) Handle general business administration, set up organization and management structures to cover all aspects of personnel recruitment, training, employment, and employment termination. ‹\Œ & $ }# institution, including giving collateral or making any payment for normal business transactions, e.g. payment made for branch expansion investment or any regular business operations. The approval of the said credit facility must involve not over Bt200 million or equivalent in value, or the value as approved by Board of Directors. However, the credit facility value allowed for approval may be subject to change as deemed appropriate depending on the consideration of Board of Directors. (6) Appoint or dismiss any employee holding position lower than managing director. (7) Perform other duties as assigned by Board of Directors.

Legal binding of the company requires a countersign of two directors in minimum and the seal of the $ ! * & @ $ „ may authorize certain directors to deal with such legal binding. Board members are required to disclose any material interest in transactions or contracts which the company enters into and increase/decrease in share/debenture ownership in the company #K # * @ $ Directors is authorized to implement and direct the company’s activities except for the following issues, which require prior shareholder approval. (1) Any issue that requires shareholder approval, pursuant to the law; (2) Altering the company’s par value or registered capital; (3) Increase in the company’s Board members. (4) Any deed that yields Board of Directors’ gain or loss or any deed that is obliged, by SET regulations, to have shareholder’s approval.

ANNUAL REPORT 2011

75

THAI UNION FROZEN PRODUCTS PCL.

In addition, the above-mentioned approval authorities must not be in nature of any business transactions that allow executive directors, or their authorized persons, to grant further approval $ & " $ & $ $ " $ interest (according to the company’s articles of # # Š $ ~$ $ | ! Stock Exchange of Thailand) with the company or its subsidiaries except that the said approval is given for business transactions in accordance with corporate policy and criteria approved by Board of Directors, provided that executive directors with vested interest in such issue are not eligible for voting right. Board of Directors is authorized to make change to the authority of executive directors as deemed necessary or appropriate. The following policies are under the consideration of managing director or Board of Directors: (1) Financial Policy ^ # K# ’ & K @ $ Directors ^ & ’ & by Board of Directors ^ Z ’ & K ! # & Directors ^ ’ & K President (2) Business and Marketing Policy; approved by Managing Director (3) Management Policy ^ ~ ] # # ’ & K Executive Directors ^ … ’ & K Managing Director ^ # $ K ’ & K … „ (4) Employee Policy ^ | –K # ’ & K Executive Directors ^ # $ & # punishment or resignation of the management; approved by Managing Director (5) Budgeted Purchase of Fixed Assets; approved by Managing Director (6) Unbudgeted Purchase of Fixed Assets; approved by Board of Directors 76

ANNUAL REPORT 2011

In the case where Board of Directors authorizes another person to perform duties on behalf of Board of Directors regarding ordinary business conduct, such authorization is made following the resolution passed in Board of Directors’ # and responsibility. Such authorization does not give authority to the said authorized person to approve issues that the said authorized person, or other persons may have vested interest " $ $ company or its subsidiaries.

Authority of Audit Committee The company requires that Audit Committee consist in minimum of 3 independent members with assigned duties in accordance with those # ~$ $ | ! Commission’s and the Stock Exchange of Thailand’s regulations. Audit Committee is #$ }# competent experience to review the fairness of [ # performing other duties in their capacity as Audit Committee, as summarized below: (1) Perform the followings: (a) ensure that Board’s directions are fully followed; (b) maintain transparency; (c) provide Internal Audit Department with task guidelines; (d) review and approve annual internal audit plan submitted by Internal Audit Department; (e) manage " $ ’ ‹$Œ # $# compliance with applicable requirements, laws and regulations; and (g) give opinions and assess an adequacy of internal controls and report to Board of Directors. ‹ Œ & $ reports and provide guidelines for preparing such reports and relevant analysis prior to submission to Board of Directors. (3) Devise policy on commercial best practice with emphases on prohibitions and responsibilities applied to staff. (4) Coordinate with external parties, e.g. # ~$ $ | Exchange Commission, the Stock Exchange of Thailand, for opinions on the company’s internal controls and review of relevant regulations.

THAI UNION FROZEN PRODUCTS PCL.

Shareholding

STRUCTURE AND MANAGEMENT Shareholder Shares

%

241,519,925

25.25

02. Niruttinanon Family

75,823,508

7.93

03. Mitsubishi Corporation

72,446,900

7.58

04. Thai NVDR Co., Ltd.

38,283,856

4.00

05. Merrill Lynch International – GEF Account Client General

29,840,000

3.12

06. Boonmechote Family

26,326,500

2.75

07. Chase Nominees Limited 42

26,316,700

2.75

`{ & & [

22,607,819

2.36

09. Hogoromo Foods Corporation

18,900,000

1.98

10. Mr. Tin King Chan

18,553,327

1.94

01. Chansiri Family

Remark: On the closing date of register book (August 30, 2011) and based on total number of shares of X\• Q X V > & # $ @ Š‚„ * Z * K K for exercising their right to vote in shareholder meeting 4.00% of total votes will be excluded.

ANNUAL REPORT 2011

77

THAI UNION FROZEN PRODUCTS PCL.

Shareholding Structure as of December 30, 2011 Types

% Holding

JURISTIC PERSONS

2011

2010

Thai

33.84

31.76

Foreign

33.63

34.64

Total

67.47

66.40

32.21

32.22

0.32

1.38

32.53

33.60

100.00

100.00

PRIVATE INDIVIDUALS Thai Foreign Total GRAND TOTAL

Change in Shareholdings of The Board of Director as of December 31, 2011 and 2010 Board of Directors

01. Mr. Kraisorn Chansiri

As of December 31, 2011

As of December 31, 2010

122,282,016

122,282,016

02. Mr. Cheng Niruttinanon

60,716,605

61,417,272

03. Mr. Chuan Tangchansiri

9,400,000

9,400,000

04. Mr. Thiraphong Chansiri

82,422,782

78,602,082

05. Mr. Rittirong Boonmechote

13,100,000

13,100,000

06. Mr. Yasuo Goto

-

-

07. Mr. Kakiuchi Takehiko

-

N/A

18,553,327

18,553,327

2,878,182

2,978,182

10. Mr. Ravinder Singh Grewal Sarbjit S

-

-

11. Mr. Sakdi Kiewkarnkha

-

-

6,310

6,310

13. Mr. Kiti Pilunthanadiloke

-

22,845

14. Dr. Thamnoon Ananthothai

-

-

21,000

21,000

309,380,222

306,383,034

08. Mr. Chan Tin King 09. Mr. Chan Shue Chung

12. Pol.Maj.Gen. Pracha Anucrokdilok

15. Mr. Kirati Assakul TOTAL

Remark: Shareholders of TUF that included spouse and children

THAI UNION FROZEN PRODUCTS PCL.

Remuneration for

DIRECTORS AND MANAGEMENT Remuneration 2011 (Baht) Board of Directors

Audit Committee Fees

Monthly Retainer

Meeting allowance

1. Mr. Kraisorn Chansiri

360,000

120,000

2. Mr. Cheng Niruttinanon

180,000

75,000

3. Mr. Chuan Tangchansiri

180,000

105,000

4. Mr. Thiraphong Chansiri

180,000

105,000

5. Mr. Rittirong Boonmechote

180,000

90,000

6. Mr. Yasuo Goto

180,000

15,000

7. Mr. Kakiuchi Takehiko

180,000

15,000

8. Mr. Chan Tin King

180,000

105,000

9. Mr. Chan Shue Chung

180,000

105,000

10. Mr. Ravinder Singh Grewal Sarbjit S

180,000

105,000

11. Mr. Sakdi Kiewkarnkha

240,000

105,000

540,000

12. Pol.Maj.Gen. Pracha Anucrokdilok

240,000

105,000

240,000

13. Mr. Kiti Pilunthanadiloke

240,000

105,000

240,000

14. Dr. Thamnoon Ananthothai

240,000

105,000

15. Mr. Kirati Assakul

240,000

90,000

Remuneration 2011 (Baht)

12 members of the management team

Salary, Bonus and Provident Fund

76.41 Million

Other Forms of Remuneration: None

ANNUAL REPORT 2011

79

THAI UNION FROZEN PRODUCTS PCL.

Connected

TRANSACTIONS OF LISTED COMPANY CONNECTED TRANSACTION SUMMARY BY CATEGORY

Connected Company 1. Thai Union Feedmill Co., Ltd.

= { Z Š Mr. Rittirong Boonmechote Mr. Prasert Boonmechote

Position Held in TUF

No. of Shares Owned in Connected Company

Director

3,539,985

11.8%

Relative of Director

1,500,000

5.0%

Relative of Director

1,050,000

3.5%

Director

2,649,900

13.2%

Relative of Director

2,000,000

10.0%

Relative of Director

600,000

3.0%

(Mr. Rittirong’s father) Mr. Wattana Boonmechote (Mr. Rittirong’s brother)

2. Thai Union Seafood Co., Ltd.

Mr. Rittirong Boonmechote Mr. Prasert Boonmechote (Mr. Rittirong’s father) Mr. Wattana Boonmechote (Mr. Rittirong’s brother)

THAI UNION FROZEN PRODUCTS PCL.

The company has transactions with individuals / & " $ K on the shareholding structure of the company, # $ $ such transactions. Nevertheless, those transactions # " $ minority shareholders of the company.

Policy of Price Market Price

With regards to business transactions with & " $ the company has provided the details of such transactions in the Note (Item 10) for reference. Further details related to those transactions, excluding those already provided in the Notes to the Financial Statements, are as follows:

Connected Transactions for year 2011 Commercial Transactions: ^

# $ $ <= # $ @ Q >•X X •*

^

# $ $ <| # $ @ ” ”>”*

^

# $ $ +„ # $ @ • X ”*

^

# $ $ <Â… # $ @ X VQ *

^

| $ <= # $ @ \”V X*

^

| $ <= # $ @ Q\ •\”*

Supporting Commercial Transactions: ^

$ & K & <= at the total amount of Bt780,000.

Asset or Service Transactions: Financial Assistance Transactions: ^

& $ # $ <= at the total amount of Bt1,071 (No balance of loan as of December 31, 2011)

Market Price

Commercial Transactions: ^

# $ $ <= # $ @ Q” >•\ ” Q*

^

| $ ~| # $ @ VX Q” ••*

^

| $ <= # $ @ \> QQ\*

^

| $ =… # $ @ ” ”>”*

^

| $ | # $ @ Q >>•*

Supporting Commercial Transactions: ^

$ & <= # $ @ •” • *

^

$ & <Â… at the total amount of Bt4,286,400.

THAI UNION FROZEN PRODUCTS PCL.

Connected Company

= { Z Š

Position Held in TUF

No. of Shares Owned in Connected Company

3. Lucky Union Foods Co., Ltd.

Mr. Cheng Niruttinanon

Director

102,000

11.3%

4. Chansiri Real Estate Co., Ltd.

Mr. Thiraphong Chansiri

Director

19,680,000

32.8%

Relative of Director

15,260,000

25.4%

Relative of Director

15,260,000

25.4%

Director

7,800,000

13.0%

Relative of Director

2,000,000

3.4%

Mr. Chuan Tangchansiri

Director

-

Mr. Kraisorn Chansiri

Director

2,200

22.0%

Mr. Cheng Niruttinanon

Director

2,000

20.0%

Mr. Chuan Tangchansiri

Director

1,000

10.0%

6. Jana Industry Co., Ltd.

Mr. Cheng Niruttinanon

Director

50,000

25.0%

7. TC Union Agrotech Co., Ltd.

Mr. Cheng Niruttinanon

Director

496,000

49.6%

Mr. Dejphon Chansiri (Mr. Kraisorn’s son) Mr. Disaphol Chansiri (Mr. Kraisorn’s son) Mr. Kraisorn Chansiri Ms. Bussakorn Chansiri (Mr. Kraisorn’s wife)

5. Thai Union Securities Co., Ltd.

82

ANNUAL REPORT 2011

-

THAI UNION FROZEN PRODUCTS PCL.

Connected Transactions for year 2011

Policy of Price Market Price

Commercial Transactions: ^

# $ $ <‡ # $ @ QV V *

^

# $ $ <= # $ @ Q \ •*

^

| $ <Â… # $ @ > XX\ Q *

^

| $ | # $ @ V>” *

Supporting Commercial Transactions: ^ Compare to neighbor areas

$ & <… # $ @ V• •”*

Short-term Rent of Immovable Property Transactions: ^

<= <… | & $ @ $ # $ @ • X QX\* € # @ $ to facilitate business transactions, the three companies entered into rental contract with the Chansiri Real Estate Co., Ltd., a real estate developer. The contracted rental charge is Bt270/square metre/month and the service charge is between Bt180/square metre/month depending on level of the rented area. The rental and service charge is consistent with general market price in the industry and apply only for rented area, excluding other utility charge. The rental period is 3 years. The contract will expire in December 2013. Under the Board of Directors’ Meeting No.8/2010 resolution passed on November 1, 2010.

Commercial Transaction: -

Market Price

Market Price

Commercial Transactions: ^

# $ $ | # $ @ X• • ”X•*

^

| $ =… # $ @ QX> ”\X*

Commercial Transactions: ^

# $ $ <… # $ @ X> ”Q> >”•*

^

# $ $ <= # $ @ Q> >>X V•>*

^

# $ $ <‡ # $ @ ” V *

^

| $ =… # $ @ > V •>\*

^

| $ <… # $ @ ”X •*

Asset or Service Transaction: ^

$ | & <= at the total amount of Bt378,788.

ANNUAL REPORT 2011

83

THAI UNION FROZEN PRODUCTS PCL.

Connected Company

= { Z Š

8. Lucky Surimi Products Co., Ltd.

Mr. Cheng Niruttinanon

9. Ekawat Products Co., Ltd.

Mr.Prasert Boonmechote

Position Held in TUF

No. of Shares Owned in Connected Company

Director

1

0.0%

Relative of Director

100,000

20.0%

Relative of Director

137,500

27.5%

Relative of Director

50,000

10.0%

Relative of Director

-

-

Relative of Director

459,870

92.0%

(Mr. Rittirong’s father) Mr. Wattana Boonmechote (Mr. Rittirong’s brother) Ms.Rungtiwa Boonmechote (Mr. Rittirong’s sister) 10. Pae Rungtiwa (Natural Person) 11. Geminai & Associate Co., Ltd.

Ms. Rungtiwa Boonmechote (Mr. Rittirong’s sister) Mr. Dejphon Chansiri (Mr. Kraisorn’s son)

84

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

Connected Transactions for year 2011

Policy of Price Compare to neighbor areas

Short-term Rent of Immovable Property Transaction: ^

<= & # $ @ Q • > > $ $ # }# service of Lucky Surimi Products Co., Ltd., as a solution for the Company’s inadequate processing area for extension of its value added production line (pie and ready-to-eat food). The rental agreement is effective for 3 years, between January 1st, 2010 and December 31st, 2012 at Bt495,000.00 per month (the said amount is only for the rent and service charge, excluding expenses on water supply, electricity and telephone). Under the Board of Directors’ Meeting No.2/2010 resolution passed on March 24, 2010.

Asset or Service Transaction: ^

& $ # }# $ <Â… at the total amount of Bt45,000.

Market Price

Market Price

Commercial Transaction: ^

| $ <= # $ @ Q ”>X X\\ \•*

^

| $ <| # $ @ V V\ V >*

Commercial Transaction: ^

Market Price

| $ <= # $ @ Q X \Q *

Commercial Transaction: ^

# $ $ +„ # $ @ V• \•*

Asset or Service Transactions: ^

& $ # ‹ Œ $ <= at the total amount of Bt44,968,465. Under the Board of Directors’ Meeting No.5/2010 resolution passed on August 4, 2010.

^

& $ # ‹ # $ Œ $ <‡ at the total amount of Bt3,925,467.

ANNUAL REPORT 2011

85

THAI UNION FROZEN PRODUCTS PCL.

Connected Company 12. Waithai Co., Ltd.

13. Ahead Way

= { Z Š

Position Held in TUF

No. of Shares Owned in Connected Company

Mr. Cheng Niruttinanon

Director

100,000

31.3%

Mr. Kraisorn Chansiri

Director

59,200

18.5%

Mr. Chuan Tangchansiri

Director

20,000

6.3%

Mr. Thiraphong Chansiri

Director

20,000

6.3%

Mr. Cheng Niruttinanon

Director

6,998

70.0%

Mr. Cheng Niruttinanon

Director

20,000

40.0%

Mr. Chan Hon Kit

Director

5,000

10.0%

Mr. Chuan Tangchansiri

Director

5,000

10.0%

Mr. Cheng Niruttinanon

Director

120,181US$

6.2%

International Co., Ltd.

14. Thaipatana Stainless Steel Co., Ltd.

15. Yueh Chyang Canned Food Co., Ltd.

86

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

Connected Transactions for year 2011

Policy of Price Market Price,

Supporting Commercial Transactions:

Compare to general

^

& $ + # $ <… # $ @ Q X ” \> *

supplier

^

& $ + # $ <= # $ @ ” ” \ *

^

& $ + # $ # $ @ > *

^

& $ + # $ | # $ @ V” QX * Under the 2011 AGM resolution passed on April 25, 2011of the expenses for transaction per year not exceeding Bt100 million with connected persons for 3 years.

Market Price

Market Price

Commercial Transactions: ^

# $ $ ˆ = # $ @ VQ >>> X>•*

^

# $ $ +„ # $ @ QQ •V*

^

| $ ~| # $ @ > V X •QX*

Asset or Service Transactions: ^

& $ & $ <… # $ @ • QVX X• *

^

& $ & $ <= # $ @ Q XQ\ >””*

^

& $ & $ | # $ @ \ *

^

| $ }# <… # $ @ •X V XX*

^

| $ }# <= # $ @ X VV• ” *

^

| $ }# # $ @ \ V *

^

| $ }# | # $ @ \ * Under the 2011 AGM resolution passed on April 25, 2011of the expenses for transaction per year not exceeding Bt150 million with connected persons for 3 years.

Short-term Rent of Immovable Property Transaction: ^

& $ $ # $ <Â… at the total amount of Bt90,000.

Market Price

Commercial Transactions: ^

| $ <| Š # $ @ >\X • \*

^

| $ ~|= # $ @ VX •• V\ *

^

| $ <… # $ @ ”> \VV*

^

| $ <= # $ @ > \\” \Q *

^

Purchase of raw materials from TUM at the total amount of Bt69,023,155.

ANNUAL REPORT 2011

87

THAI UNION FROZEN PRODUCTS PCL.

Connected Company 16. Biz Dimension Co., Ltd.

17. Thai Union Properties Co., Ltd.

= { Z Š

Position Held in TUF

No. of Shares Owned in Connected Company

Mr. Kraisorn Chansiri

Director

2,850,000

9.5%

Mr. Chan Tin King

Director

749,997

2.5%

Mr. Thiraphong Chansiri

Director

49,995

0.2%

Mr. Kraisorn Chansiri

Director

16,300

54.3%

Relative of Director

7,700

25.7%

Director

2,400

8.0%

Relative of Director

1,800

6.0%

Relative of Director

1,800

6.0%

Ms. Bussakorn Chansiri (Mr. Kraisorn’s wife) Mr. Thiraphong Chansiri Mr. Dejphon Chansiri (Mr. Kraisorn’s son) Mr. Disaphol Chansiri (Mr. Kraisorn’s son) Mr. Chuan Tangchansiri

Director

-

-

Remarks: ^ $ # $ # $ K# and under general trading conditions under the Board of Directors’ Meeting No. 5/2008 resolution passed on August 20, 2008. ^ = ” • … * � … * Š # … * # … * … * � <= connected company less than 10% of its registered capital but also hold director titles in the said connected company. ^ = \ ‰# = * Z * ‚ & & # number of shares. <= #K & # % Consultants (Thailand) Co., Ltd. as insurer. The transaction is considered connected, as Mr. Chuan Tangchansiri, TUF Director, also has director title in the insurer. Through the entire year 2011, TUF paid ! @ \ *\• # # # % # ‹ Œ * Z * The insurer is entitled to commission only partially from total amount of the paid premium.

88

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

Policy of Price Market Price

Connected Transactions for year 2011 Supporting Commercial Transactions: ^

& $ $ & $ % # and e-Auction service from TUF at the total amount of Bt400,000.

^

& $ $ & $ % # and e-Auction service from TUM at the total amount of Bt300,000

^

& $ $ & $ š * › K # and web-based activities from THD at the total amount of Bt983,944.

ANNUAL REPORT 2011

89

THAI UNION FROZEN PRODUCTS PCL.

REPORT OF AUDIT COMMITTEES To Our Directors and Shareholders, TUF Audit Committee is composed of 3 independent directors who are professionally # ] management, law, internal controls and risk management. All Audit Committee members }# # K ~$ of the Stock Exchange Commission’s and the Stock Exchange of Thailand’s regulations. They neither hold any managerial position, nor perform employee or consulting roles for the Company. TUF Audit Committee composition is as set forth below:

had been prepared in accordance with generally accepted accounting standards and that adequate, complete and reliable information disclosure had been preserved. In addition, the Audit Committee also conducted a review of disclosure of connected transactions between the Company and its subsidiaries and those $ " $ * The review by the Audit Committee also ensured compliance with securities and stock exchange laws, Stock Exchange of Thailand requirements, and laws pertaining to the Company’s business.

Mr. Sakdi Kiewkarnkha, Independent Director, acting in capacity as Audit Committee Chairman; attended 14 meeting sessions during the year 2011.

Pol.Maj.Gen. Pracha Anucrokdilok, Independent Director, acting in capacity as Audit Committee Member; attended 14 meeting sessions during the year 2011.

Mr. Kiti Pilunthanadiloke, Independent Director, acting in capacity as Audit Committee Member; attended 14 meeting sessions during the year 2011. The Audit Committee convened in 14 sessions during the year 2011, with key tasks summarized as follows: The Audit Committee has examined the annual }# $ 2011, and found that all of the Company’s

$ #K

90

ANNUAL REPORT 2011

The Audit Committee also ensured that internal audits were implemented according to approved plans, followed up on corrective actions taken ' }# $ well as preventing or minimizing potential risks. In 2011, the Internal Audit Department conducted internal audits for the Company and 7 domestic subsidiaries. The Audit Committee was informed $ # & K Internal Audit Department on a regular basis. Based on such reports, the Audit Committee declared that the Company’s and its subsidiaries’ internal controls and risk management systems were maintained in an appropriate manner, with each company’s managerial staff closely monitoring their operations. The Company places considerable importance on internal audit & & $ $ $ organizational hierarchy for both the Internal Audit Department and personnel attached to it since January 1, 2011.

THAI UNION FROZEN PRODUCTS PCL.

The Audit Committee visited the Company and 4 of its domestic subsidiaries, and attended meetings with the management of each company to review issues pertaining to risk management, internal & statements problems, and problems concerning independent auditors and internal auditors. Such on-site visits also included observation of manufacturing processes, inventory management, and general environmental conditions. The Audit Committee Chairman visited 5 overseas subsidiaries in France, Portugal, Seychelles and Ghana (2 subsidiaries), and attended meetings with the management of each company to discuss various corporate issues. As with the visits paid to the Company and its domestic subsidiaries in Thailand, such on-site visits also included observation of manufacturing processes, inventory management, and general environmental conditions. The Audit Committee acted according to its terms of reference to assist the Board of Directors $# K * |# were performed with ensured independence and objectivity as well as with fully unconditional access to relevant information. Expression of professional opinions were based on transparency and all in conformity with the Good Practice Guidelines stipulated by the Stock Exchange of

Thailand. As a result of its work during the year under review, the Audit Committee opinioned that the Company had operated under adequate and appropriate internal controls and risk been prepared in accordance with generally accepted accounting standards, and that relevant legislative and regulatory requirements were fully observed. The Audit Committee conducted performance appraisal of independent auditors and found that they had performed their professional roles with independence and had full unconditional access to all data required. The independent auditors made inquiries to the Company’s executives and directors to provide observations and suggestions involving accounting systems, internal controls and risk management to the Company and its subsidiaries as they deemed necessary and appropriate. Seeing that their professional performance, according to the performance appraisal conducted, was satisfactory and proved K [ [ interest, the Audit Committee proposed that { ‰ # ~$ Z K % to act in the same capacity for the year 2012, and proposed the remuneration to the Board of „ & & shareholders’ meeting accordingly.

(Mr. Sakdi Kiewkarnkha) (\KP[ *VTTP[[LL *OHPYTHU

(Pol.Maj.Gen. Pracha Anucrokdilok)

(Mr. Kiti Pilunthanadiloke)

(\KP[ *VTTP[[LL 4LTILY

(\KP[ *VTTP[[LL 4LTILY

ANNUAL REPORT 2011

91

THAI UNION FROZEN PRODUCTS PCL.

FINANCIAL RATIOS 2010-2011 Comparative Financial Ratios Ratios

Year 2011

Year 2010

^ # ‹ Œ

1.59

1.62

^ `# ‹ Œ

0.48

0.49

^ Z K }# ‹ Œ

2.07

2.22

^ „ K }# ‹ Œ˜

1.47

1.61

^ ‹ Œ

3.74

6.21

^ # & ‹ Œ

1.25

1.29

^ & # & ‹ Œ

3.50

3.37

^ # & K # & ‹ Œ

9.72

9.10

13.29

14.52

16.59

13.33

5.10

3.95

^ # & }# ‹?Œ

22.36

15.41

^ # ‹?Œ˜˜

10.75

8.58

^ | ‹@ Œ

5.30

3.20

^ „ & | ‹@ Œ

1.56

1.60

25.53

23.36

1.

2.

Liquidity Ratios

Leverage Ratios

\

[ [ ~

^ # K # & ‹ Œ $

; [ ~ ^ ‡ … ‹?Œ ^ Š … ‹?Œ

^ @ ‚ # | ‹@ Œ

* Debt = Interest-bearing debts only **Pre-tax ROA = EBIT / Average total assets 92

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

Explanation of

FINANCIAL RATIOS The current ratio fell slightly to 1.59 times in 2011 from 1.62 times in 2010 while the quick ratio also dropped to 0.48 time in 2011 from 0.49 time in 2010. The decline in the values of these ratios was caused by the fact that the value of total current assets increased by 18%, while the value of total current liabilities increased by as much as 20% from a year ago. The current liabilities therefore expanded in a faster pace that of current assets, causing the value of the ratio to drop. The total liabilities-to-equity ratio declined to 2.07 times in 2011 from 2.22 times in 2010. Total liabilities (including all debts and liabilities) rose moderately by 9% as sales continued to expand while shareholders’ equity jumped by 16% from a year ago, thanks # $ consolidation of MW Brands and continual business expansion. The debt-to equity ratio, which addresses the interest-bearing debts only, gradually came down from the peak at 1.61 times in 2010 to 1.47 times in & K prepayment of long term debts from MW Brands acquisition. The time-interest-earned ratio decreased to 3.74 times in 2011 from 6.21 times in 2010 when the full year impact of the increased interest costs on debts as the consequence of MW Brands was felt. Asset turnover ratios: The total asset turnover ratio and accounts receivable ratio decreased to 1.25 times from 1.29 times while accounts receivable turnover ratio rose to 9.72 times from 9.10 times a year ago, thanks to a high sales growth rate of 38% (in Thai baht term) during the year. Total assets increased by 11% only (where inventories were up by 22% and accounts receivable by 21%). Inventory turnover ratio increased to 3.50 times from 3.37 times in 2010 as a result of 33% increase in the cost of sales but the average inventory was up by 22% only. Accounts payable turnover ratio declined to 13.29 times from 14.52 times in 2010 due to

the fact that the cost of sales rose 33% from a year ago with accounts payable also increasing only by 10%. $ K stride from a year ago. Sales in Thai baht term or US dollar surged sharply from a year ago, thanks to continual growth of the core business and the European acquisition. Despite some historically high raw material prices, the recovery of shrimp business …€ @ }# $ margin from 13.33% in 2010 to 16.59% in 2011 and $ Q*X\? \* ?* Shareholders’ equity increased by 16% whereas '# K >>?* }# # on average equity in 2011 rose from 15.41% a year ago to 22.36%. The higher shareholders’ equity was # $ @ \ >\ while the amount of dividend payments during the year was kept at Bt1,195 m as part of the de-leveraging policy. As a result, the book value per share rose from Bt23.36 in the previous year to Bt25.53 at the end of 2011. The total number of common shares in 2011 remained # X\•*Q # * Š by 80%, leading to higher earnings per share (EPS). @ \ >\ with Bt2,874 million in 2010 with EPS of Bt5.30 and Bt3.20 respectively. The value of average total assets was by 11% as earnings before interest and tax (EBITDA) rose to 70%, leading to a higher pre-tax return on assets (ROA), up from 8.58 times to 10.75 times in 2011. Despite our long term dividend payout policy of 50%, we limited our payment to Bt 1,200 million at & # $ % & from new debts incurred due to MW Brands acquisition. As a result, the payout ratio dropped to 29%, but the actual payment only decreased by 2.5%, thanks to better earnings in 2011.

THAI UNION FROZEN PRODUCTS PCL.

REFERENCES

Common Share Registrar

Independent Auditor Remuneration

Thailand Securities Depository Co., Ltd 7th Floor, The Stock Exchange of Thailand Building 62 Â? Bangkok 10110 Tel: 66 (0) 2229-2440

1. Audit Fee The Company and subsidiaries paid audit fee to:

Convertible Debentures Registrar Stock Information Department Thai Union Frozen Products PCL. (TUF) 26th Floor, S.M. Tower, Phaholyothin Road, Samsennai, Phayathai, Bangkok 10400 Thailand Tel: 66 (0) 2298-0024 Fax: 66 (0) 2298-0553

Independent Auditors Mr. Sophon Permsirivallop or Ms. Rungnapa Lertsuwankul or Mr. Chayapol Suppasedtanon or Ms. Pimjai Manitkajohnkit { ‰ # ~$ Z XQ– Q•% Q> QQ = Z ' ~$ ! Š � Bangkok 10110 Tel: 66 (0) 2264-0777, 2661-9190 Fax: 66 (0) 2264-0709

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ANNUAL REPORT 2011

^ # # are attached to, individual or entity related to independent auditors and # # 7,405,400 Bt 2. Non-Audit Fee The Company and subsidiaries paid remuneration incurred by the following service: ^ # $ # independent auditors are attached to, individual or entity related to independent # # #

# @ %* ^ # $ $ # # Š V– $ @ $ & # independent auditors are attached to, individual or entity related to independent # # #

# V” @

THAI UNION FROZEN PRODUCTS PCL.

Management

DISCUSSION AND Š Z‰| | ‹…„{ Œ & $ <= & & # could digest and manage the sizeable acquisition $ …€ @ K }# sizeable amount of debts. As the year progressed, $ }# ‹ # performance was still partially dampened by the yet recovering shrimp export business and accounting adjustments due to MW Brands acquisition), operating performance improved sharply and was delivered according to plans despite the high raw material prices in the second half of the year and continual uncertainty in key economies, such as the US and the European Union. The Thai baht situation was K # }# K# only took a plunge in late fourth quarter when the " # & [ * # & & $ # disaster with no negative impact. MW Brands managed to report a very consistent performance throughout the year, which helped ensure investors [ * „ # in interest expenses, the underlying operating $ $ # $ [ & * As expected, the European market becomes [ <|* <| remained as its largest market at 36% of sales (though compared with 46% a year ago), followed by Europe at 32%, while Japan and the Thai market are 10% respectively. This composition led to a more balanced market exposure. Sales generated from Europe (up 190%, thanks to MW Brands acquisition), Middle East (up 71%), Asia ex-Japan (up 36%), Oceania (up 30%), Japan (up 24%), South America (up 18%), Thai domestic market (up 16%), the US (up 10%) and Canada (up 5.0%) were all higher than a year ago as opposed to Africa (down 5%).

In terms of the main operating units, Chicken of the Sea International accounted for 13% of the total group sales while Chicken of the Sea Frozen Products for 19%. In other words, the US operating units added up to 32% of the total. MW Brands also K K# # $ 23% when Thai and other operating units made up for the biggest portion (45%). Total tuna sales (can + loin) in US dollar term were USD1,545 million, up 70% from USD912 million a year ago while volume (tonnage) increased by 30%. The factor behind the increase was essentially consolidation of MW Brands’ full year result, leading & '# # * the historic high raw material prices, particularly in the second half of the year, also led to upward price adjustments. Tuna sales in the US inched up K Q? # there. Nevertheless, tuna sales to all other markets were strong, namely Europe (up 232%), Middle East (up 67%), Asia ex-Japan (up 46%), Japan (up 44%), Oceania (up 37%), Africa (up 27%), South America (up 21%) and Canada (up 6%). The tuna raw material # a new record at USD2,000 in September, then reaching another new high (USD2,030) in December. On average, the price has increased by 37% from a year ago. Therefore, the average selling price was also adjusted upward by 30% when sales volume in tonnage increased by 30%. With regards to the raw material price situation, the average skipjack tuna raw material price for WPO in 2011 was US$1,766 / metric ton, up 37% from a year ago (US$1,287 / metric ton). During the year, tuna prices (skipjack) were generally on an uptrend. The year started with prices at around US$1,500 and stayed stable through April. ANNUAL REPORT 2011

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Then prices rose continuously since May and set a new high (US$2,000) in September. After some brief stability, the price surged to another new high (USD2,030) in December. As of the latest (February 2012), prices dropped slightly to USD1,930. The higher raw material price was generally attributable to periodic poor catches (as a result of unpredictable and sometime extreme weather patterns), increased

# = „% # # & K $ }# ‹ % <<Œ $ < $ K $ $

# % % * Total shrimp sales in US dollar term were USD615 million, up 22% from a year ago while volume (tonnage) growth was also on an uptrend, up 5%. Selling prices were generally adjusted upward to cope with the persistently higher shrimp raw material prices. The demand was healthy thanks to the gradual recovery of the US economy, our successful penetration into the EU markets and increased sourcing from Japan. The dominant market remained the US, followed by Japan while the fast developing market was the EU. Both the EU and Japan are main markets for the higher value-added products. In 2011, the domestic shrimp raw material price has become more stable, though still at high levels, since the upward trend in 2010. In general, the average price (60 pieces / kg) was Bt142 / kg, which was 16% higher than the previous year, partly due to the local shrimp supply disruptions as a result $ & " " # $ … " & the Central Region in the last quarter. It was estimated # ? $ # " sending prices higher upon the strong demand in the market. Nevertheless, it is expected that prices could be slightly higher in 2012 as local supply is still $$ K " * In July, 2011, the US Department of Commerce ‹<|„ Œ # $ # $ <| shrimp anti-dumping (AD) duty rate for Thai exporters $ & ‹= K X ™ ˆ Œ* (and effective) rate for non-mandatory respondents (All Others) was reduced further from last round’s 2.61% to 0.73%. This new rate would serve as a reference rate for TUF’s shrimp exports to the US between now and the announcement of another 96

ANNUAL REPORT 2011

AD rate in the next annual review due September 2012. The lower rate was considered very favorable even though we are becoming less concerned about the impact of the AD rate as an increasing portion of our shrimp shipments to the US are value-added products (e.g. breaded products) which are not subject to the duty. The low rate is a positive development, indicating a fading trade issue. It should allow Thai shrimp exporters to compete more effectively with other shrimp exporting countries, ‚ # Brazil, in the US market. Thanks to the continual expansion of its domestic market, China is becoming less a trade threat, but a potential export market for Thai shrimp exports. Š $ @ \ >\ K >>? from Bt 2,874 million to set a new corporate milestone, as margins expanded in most categories, particularly in shrimp and tuna business. Thai baht exchange rate (vs. USD) was generally stable (except for the last quarter when it weakened considerably due to the fear of any adverse impact of the historic " Œ # # # K * Š & $ ! dropped to Bt305 million from Bt807 million in 2010. Average selling prices were generally adjusted upward to cope with higher raw material costs. & K # EBITDA of Bt10,105 million, jumping by 70% from Bt5,950 million a year ago, thanks to accretive acquisition of MW Brands. The operating cash " # @ \ V• $ @ Q VQ• # new high at Bt2,272 million due to increased debts incurred for the European acquisition. Pre-tax return on assets (ROA) and return on equity (ROE) also increased to 11% and 22% respectively, demonstrating the continual improvement in the ! K# K $ }# * [ K % % }# # to 1.44x from 1.57x at the end of 2010 and Debt-EBITDA ratio fell dramatically to 3.94x from 7.38x a year ago (when the acquisition debts are completely recognized, but only two months of MW Brands operations were included last year). We expect # near 1.0x at the end of 2012 while Debt / EBITDA ratio should fall to close to 2.5x or below during the same time.

THAI UNION FROZEN PRODUCTS PCL.

MW Brands Update

with the longest tenor. Thai institutional investors K # witnessed by a strong response and excessive investor demand on the book-building day when the issues were 1.7 times oversubscribed. $ # size from the initial plan of Bt4,500 million to Bt6,750 million. Considering the arrangements, it is estimated the all-in savings should be approximately 100 basis points in term of interest & * Z managed to re-negotiate with the existing lenders of the euro-denominated loans for lower interest rates in September 2011. Similarly, the annual interest cost savings amounted to approximately 100 basis point on the outstanding euro loans that would expire in less than 4 years on average.

More than one year after the acquisition, MW Brands continued to deliver consistent and predictable performance. In 2011, MW Brands maintained its position as one of the largest shelf-stable/ ambient seafood processors in Europe with annual sales of ÂĄ \ # ? $ * K has been consistent from last year. The biggest $ # K = < Â? # $ around 78% of its sales. Sales from its own brands were also in excess of 80% of the total. Thanks to & # [ & integrated operations and the market leading positions of its brands, MW Brands managed to deliver healthy margins in the past few years. ˆ € K <Â? ‹QV?ÂŒ Ireland (70%) and Netherlands (34%) while Petit Navire remained the No.1 (28%) canned seafood brand in France. Both brands accounted for 90% of MW Brands total sales. Mareblu maintained its No.3 position (6%) in the Italian canned seafood market with market share on the rise.

2. U.S. Pet Nutrition penetrating US pet market

During 2011, the parent company carried out a $ & & * &

€ '

acquisition debts with existing lenders and Thai baht-denominated loans through issuing Thai baht debentures worth Bt6,750 million

< & & [ # acquisition of MW Brands, the maturity of the majority of our Thai baht debentures (only Bt500 million remaining in June) and an opportunity to bring our interest burden down, we launched a series of Thai baht debentures @ • >\ ˆ# of our Thai baht loans originally raised for the acquisition in a year before. The debentures were of 3-year, 5-year and 10-year maturity which were also assigned A+ rating by TRIS Rating. Siam Commercial Bank Public Company Z � @ #K Z + � | @ Limited (Bangkok Branch), were appointed as the joint lead underwriters for such debentures. $ # such a large amount of debentures as well as

Since the announcement of setting a new venture U.S. Pet Nutrition in December 2010, the

$ K# pet food processing plant in Georgia, US, right next to Chicken of the Sea’s existing plant. This new investment is expected to open up new opportunities to penetrate the premium US pet food market. Thanks to its strategic location, it # # K dry pet food, taking advantages of the supply of local raw materials. The new plant started to produce since the beginning of 2012, though still at a very initial stage. In spite of the fact that pet food is positioned to be one of the

[ ! K# $ # # * $ business has in fact a bigger market than that of canned tuna in the US with a potentially attractive margin. The move is meant to develop [ # $ tuna and shrimp which have already established *

3. Investment in 40% of Pakfood Public Company Limited On December 21, the board of directors passed a resolution to purchase shares of Pakfood Public Company Limited (PPC) ANNUAL REPORT 2011

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THAI UNION FROZEN PRODUCTS PCL.

through a voluntary tender offer which would be paid fully in cash and to sign the share purchase agreement (SPA) with major shareholders of PPC to purchase PPC shares of not less than 40 percent. Pakfood is one of the leading Thai frozen seafood processor and exporter with a strong focus in frozen shrimp, pasteurized crab meat and ready-to-eat meals (chilled and frozen). Its main markets are the US, the EU and Japan. It also owns a local brand “T Time� focusing on value-added food products, such as dim sum, * $ @ • X\X $ @ X * As of December 31, 2011, its total assets were worth Bt3,817 million. On February 29, the transacted price was agreed at Bt 51 per PPC share. However, the tender offer is subject to satisfaction of conditions precedent such as 1) approvals of all matters as required under transaction documents by the board of directors; 2) satisfactory completion $ # ! # of PPC.

] & # $ cooperation between the two leading seafood companies which both share similar business in shrimp and value-added frozen food products. # $ material sourcing, improved management of manufacturing capacities and more joint marketing efforts to expand our local and overseas markets, such as the US and the EU which have been offering plenty of growth opportunities. With PPC’s capability of value-added frozen seafood products, this partnership should lead to more business opportunities as TUF can offer more variety of products to serve consumers’ needs. It is estimated that the typical annual shrimp # K K & amount to almost 20% of total Thai shrimp output per year, creating a crucial advantage for the alliance. In addition, as the local labor supply continues to tighten, this linkup should also lead to more optimal capacity utilization at K [ # # expansion. As a result of these, it should lead to

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ANNUAL REPORT 2011

better supply chain management that could potentially create more cost savings and further & K $ K * After the successful purchase of the company’s existing shares, the earnings of PPC will be recognized in TUF’s income statement by the }# & V ? $ # K $ [ outstanding common shares. The share acquisition will be paid in full by cash which will be funded K " * $ }# [ position should be very limited, given that the size of investment relative to the total assets value of TUF. This transaction is expected to be completed in the early second quarter of 2012.

The following paragraphs summarize our 2011 $ *

Financials Sales Consolidated sales in dollar term surged by 43% YoY in 2011. In Thai baht term, sales increased by 38% to Bt98,670 million from Bt71,507 million in 2010. Sales of the group could still grow by 13.2% in 2011 even if the full year sales contribution of MW Brands in 2010 was considered. MW Brands acquisition was indeed completed in late Oct, 2010. Therefore only operating performance for the last two months was consolidated into TUF’s books for that year. The average exchange rate for the year was at Bt30.63 / USD in comparison with 31.53 / USD in 2010. Thai baht, on average, appreciated against US dollar by 2.9%. All products registered sales growth in dollar term from a year ago. The items showed the highest growth rates were namely canned sardine / mackerel products (up 81%), followed by tuna products (up 70%), salmon products (52%), products for the domestic markets shrimp (42%), products for the domestic market (up 28%), frozen shrimp (up 22%), cephalopod (up 19%), pet food (up 10%), shrimp feed (up 8%) and other canned seafood (up 2%). Nevertheless, tuna products still accounted for the biggest portion of our sales at 48%, followed by shrimp at 19%, pet food at 6%, other canned seafood at 5%, shrimp feed at 5%, salmon 5%,

THAI UNION FROZEN PRODUCTS PCL.

canned sardine/mackerel at 4% and frozen cephalopod at 1% and products for the domestic market at 7%. Compared with 2011, key growth markets were Europe (up 190%), Middles East (up 71%), Asia ex-Japan (up 36%), Oceania (up 30%), Japan (up 24%), South America (up 18%), Thai domestic market (up 16%), USA (up 10%), Canada (up 5%) while our sales to Africa were slightly lower than a year ago. The US remained our largest market, closely followed by Europe (32%), but its share dropped from 46% in 2010 to 36%.

Selling and Administrative Expenses Selling and administrative expenses increased by 45% or Bt2,770 million to Bt 8,882 million from Bt6,112 million in 2010. The primary reason for the hike was consolidation of MW Brands into the group. However, this item, especially in terms of percentage of sales (9%), was actually similar to our estimate with no surprise. Given MW Brands a brand-heavy business, selling and promotion expenses were generally * $ # # expected range of 9.0 – 9.5%.

Gross Margin Gross margin in 2011 was 16.6%, up from 13.3% a year ago, thanks to the strong performances of the existing business and full consolidation of K …€ @ # * These key factors helped overcome the challenges of consistently higher raw material prices, particularly tuna. Protection from the high import tariff in the EU, its strong brand leadership and the full integration down its supply chain enabled MW Brands to deliver very consistent results. In addition to encouraging results across all Thailand-based subsidiaries, the recovery of Thai shrimp export business was also a driving factor behind this strong performance. Thanks to customers’ understanding and cooperation, we were able to shorten the term of our shrimp export sales contracts. This mechanism practically allowed us to adjust selling prices more frequently & $ "# # K back to more consistent levels. In the US, there & # * � competition and high raw material prices exerted # K $ # K# * On the bright side, the successful merger between the Chicken of the Sea Frozen Foods and Empress International continued to perform on the back of strong domestic demand for imported shrimp. ! $ }# partially affected by 1) shipments of some remaining shrimp orders that were not priced in the higher raw material prices and 2) the carried-forward accounting impact (₏ 2.8 million) due to inventory step-up as a result of purchase price allocation required for MW Brands & # ~ K K & sharply as expected, starting the second quarter and thru the end of the year.

Other Incomes (Excluding Foreign Exchange Gain/Loss) In 2011, other incomes totaled Bt614 million, which consisted of dividends, export subsidies, compensation from accounts payable, interest income, claims to raw material suppliers and sales of obsolete assets and supplies and others. FOREX Gain/Loss In 2011, we reported a foreign exchange gain of Bt305 million, down 62% from a gain of Bt807 million in 2010 as a result of a more stable Thai baht in general. As a result, any contribution from foreign exchange hedging was limited. Any gain $ of Thai baht appreciation. On average, Thai baht appreciated by 3.2% from a year ago. Forward contract is one of the main tools that we used to minimize any potential impact from the volatility of Thai baht exchange rate. With the existing hedging policy and currency trend, we normally do not ! K K the coming year. Financial Expenses (Including Interest Expenses, Bank Charges & Others) Financial expenses amounted to Bt2,272 million, up 198% from Bt764 million a year ago. Interest expenses alone were Bt2,063 million, compared with Bt667 million a year ago, mainly due to the full $ # $ K incurred in the last quarter of 2010 for acquiring MW Brands. The average effective borrowing rate for the year was 5.88%. Going forward, we expect that the effective rate for 2012 to drop given lower ANNUAL REPORT 2011

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$ ! # Thai baht bond issuance and rate re-negotiation of the euro-denominated acquisition loans (both in the third quarter 2011) and declining interest rate environment in Thailand. Corporate Income Tax Corporate income tax for the group in 2011 was Bt192 million, falling by 69% or a decrease of Bt437 million from Bt629 million in 2010. A lower tax expense was essentially contributed by the ! ' $ leveraged structure deployed for the MW Brands acquisition and the recognition of one-off tax credits upon closing down some France and Thailand operating units which had cumulative losses on their books. Currently, the majority of TUF plants in Thailand enjoy income tax privileges from the Board of Investment (BOI). Therefore, they are generally subject to very low tax rates, as opposed to our overseas subsidiaries, particularly those US based operations which has to pay normal US tax rates that are higher than Thai rates. The effective tax rate for the group during the year dropped to 3.1% from 15.8% in 2010. The rate should return to a higher level in 2012.  Š '# by 77% or Bt2,201 million, to Bt5,075 million from Bt2,874 million a year ago due to earning contribution from MW Brands and improved Thai operations. Earnings per share surged to Bt5.30 from Bt3.20.

selling prices led by high raw material prices. The average age was within the normal range. At the end of 2011, 96% of our accounts receivable were either not yet due or less than 1 month overdue while around 2% was overdue by more than 1 year. The account receivables turnover rate has been stable at 37 days, consistent with the norm and our credit policy. The allowance for doubtful debts was approximately 2% of total accounts receivable. The status is considered healthy and typical. 2. Year-end inventory (net) rose by 22% to Bt 26,132 million from Bt21,346 million a year ago mainly caused by the acquisition of MW Brands and the high raw material costs. Normally, there is an allowance of diminution in value of & * the amount was Bt443 million. This amount is usually composed of four parts: 1) an allowance $ ‹@ \ Œ’ Œ allowance made for raw materials (Bt112 million) and; 3) an allowance made for ingredients and packaging (Bt70 million); and others (Bt10 million). In respect of the inventory turnover rate, the average number of days that stocks were kept was 103 days, slightly lower than a year ago. Nevertheless, we would continue to implement plans to reduce the inventory level while not hurting the service level to our customers going forward. In our case, lower inventory level would directly help reduce working capital requirement. Therefore, the plan to achieve leaner inventory should help reduce our debt burden going forward.

Assets Total assets in 2011 were valued at Bt83,230 million, representing an increase of Bt8,453 million from Bt74,777 million in 2010, thanks to expanded working capital needed for higher costs of production and product selling prices. The assets were mainly composed of: 1. Trade receivables (before allowance for doubtful debts) were worth Bt11,345 million, up 20% from Bt9,451 million in 2010 primarily thanks to the full year consolidation of MW Brands into the group and generally higher 100

ANNUAL REPORT 2011

3. Property, plant and equipment (net) valued Bt15,655 million, an increase of 10% from Bt14,190 million in 2010. New acquisitions amounted to Bt3,365 million. The key reason for the increase was to 1) expanding and improving the existing plant capacity; 2) expanding and improving the existing plant facilities at Thai Union Manufacturing, MW Brands, Songkla Canning and Thai Union Feedmill; 3) building the new plant for U.S. Pet Nutrition in Lyons, Georgia of the US. Also, other new machinery was bought and improvements were made to increase the $ $ # #K [ *

THAI UNION FROZEN PRODUCTS PCL.

Liabilities Total liabilities in 2011 remained stable at Bt56,161 million, compared with Bt51,541 million a year ago. Liabilities were essentially composed of bank overdrafts and loans (Bt14,477 million), trade payables (Bt7,919 million), deferred tax liabilities (Bt4,918 million) and debentures (Bt7,228 million), long-term loans (Bt15,599 million), a convertible bond (Bt 2,462 million) and others. Interest-bearing debts amounted to Bt39,758 million, of which around 64% were considered long term while the rest short term. Moreover, around 51% of these debts were stated in Thai baht while 18% in US dollar and 31% in EURO. Shareholders’ Equity The total number of registered capital was increased to Bt1,000 million while issued and paid-up common shares were 956,329,407 units, remaining unchanged during the year. In 2011, we paid two times of dividends amounting to Bt1,195 million (Bt1.25 per share). This was originally intended for meeting a covenant placed on the debts incurred for the acquisition of MW Brands. Although we successfully K & from those covenants since the third quarter, we maintained those as internal policies for $% K' & $ % & $ [ position. If the operating performance of the group continued to progress as planned on top of these policies, we should be able to restore our

& K & K end of 2012. Then, we should also be able to revert to our long term policy of paying at least 50% of & * Cash Flows " $ & were Bt5,462 million, up 59% to Bt3,436 million, mainly due to the consolidation of MW Brands into the group. The annual depreciation and amortization expenses for the group amounted to Bt1,616 million. Meanwhile, cash spent on investing activities amounted to Bt3,178 million as planned. In addition to the voluntary dividend cap, it was our intention to limit our annual investment budget to around @ Q K # #

position to the pre-acquisition period. During the year, acquisitions of property, plant and equipment were made in the parent company and most of its local and overseas subsidiaries in order to add more capacity to their existing facilities. # " $ & # @ Q•> " $ Bt26,890 million in the previous year (then mainly $ …€ @ }# Œ* # " # $ $ maturing Thai baht bond and some acquisition debts and a sharp increase in interest expenses. During the year, a four-year Thai baht worth Bt3,200 million was repaid while a series of new Thai baht bonds (3/5/10 year maturity) worth Bt6,750 million were issued. Meanwhile, dividend payments amounting to Bt1,195 million were made during the year. After taking into consideration of all these cash " # " <= #K a net decrease in cash and cash equivalent by Bt135 million at the end of the year. Subsequent event K # $ # | # | = K # * of the shrimp processing plant while other production plants, namely tuna, sardine / mackerel and cephalopod, in the same area were all unaffected. There were no heavy damages to the plant assets and no casualty. The plant, facilities and inventories were fully insured, even including any potential impact from business interruption as a result of the

* € & $ ! processing workers at Samut Sakhon plant to our subsidiary’s processing facilities in Songkhla province (Thai Union Seafood), in addition to other production plants in the same area. These emergency measures & K <= # K K $# # and future demand with no glitch. The Samut Sakhon shrimp plant is one of the group’s two main Thailand-based shrimp processing facilities for export markets and generated sales worth USD233 million in 2011, accounting for 7% of the total consolidated sales of Thai Union Group. This plant can process up to 120 metric tons of whole ‹ K Œ* }# $ ANNUAL REPORT 2011

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each year is typically a low-season period for the shrimp processing business. Therefore, the utilization rate of the plant’s capacity was estimated at only • ? $ * # customers, investors, shareholders and all staff in that its production activities should return to normalcy as soon as possible with no major permanent impact on its business operations.

V* & # $ # productivity management approach thru automation, waste reduction, employee skill enhancement, and machine downtime reduction

Future Prospect

>* Â… ‹=ÂŁ ÂŒ # ] " K & actively

We expect the group’s sales (in dollar term) to grow around 16% in 2011, mainly thanks to continual expansion in all business lines with tuna products remaining as the key driver. However, growth should be seen across all products categories. The US should still be our largest market, but emerging markets, namely the Middle East, Africa and Asia (ex-Japan), are expected to post strong growth from their small bases. We would ensure operating margins in 2012 to be stable at levels seen in the previous year. Financial cost should decrease as more acquisition debts would be gradually prepaid. Nevertheless, the effective tax rate should rebound as we do not expect any more tax credit in 2012. The new plant built by US Pet Nutrition is up and running. The new capacity should be gradually

# # <| premium pet food market. MW Brands should continue to improve as we expect more synergies to be realized at its operational level. Our main task in 2012 is to: 1. Optimize MW Brands operations through realization of synergies in terms of cost savings, & & cost savings on packaging and joint procurement % # into higher value-added products 2. Penetrate niche segments of the US pet food market thru U.S. Pet Nutrition and its new plant 3. Restructure labor force and implement automation in Thailand-based operations in order to handle the 40% hike in the minimum wage

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5. Increase the proportion of value-added products through new product development 6. Expand sales to new markets

Food safety and sustainability continue to be very, or potentially the most, critical factors for food exporting business going forward. They can serve as an advantage as well as a disadvantage (in form of trade barriers) to any food company. Given our % frequent factory audits by customers from most food safety-stringent markets, we are reassured that our high standards and track record will work to our advantage. Besides, our management also takes note of consumers and investors’ growing awareness of the impact of each business on the environment in terms of preservation and sustainability. That intention led to our involvement in co-founding the International Seafood Sustainability = # X $ research and promote preservation of tuna resources. =# # $ # % # hatchery, shrimp feed mill, partner farms and $ K }# # # Council (ACC) is another proof of this intention. In addition to proper execution of our focused strategy and our staff’s determination to success, we believe the likelihood of meeting our goal this year will also be subject to the following critical factors: € €

As 90% of the group’s revenues are in foreign currencies, any extreme "# # $ $ ! & # K * K # a portion of our Thai plants’ expenses are in Thai baht. In 2011, around 80% of our group (consolidated) operating expenses were in foreign currencies. As a dollar earner, we normally K $ # * @# to our non-speculative and timely currency hedging policy, we have been successful in riding out most of the foreign exchange rate

THAI UNION FROZEN PRODUCTS PCL.

"# # $ ! gains in the past few years as a proof. ^ Raw material price. The average skipjack tuna raw material price for WPO in 2011 was USD 1,766 / metric ton, which was 37% higher than a year ago (USD1,287 / metric ton). The key factors driving up prices were poorer catching (normally caused by extreme and unseasonal Œ regulations. There is indeed no immediate concern for any long term shortage of skipjack # $ # such as survey reports from International Seafood Sustainability Foundation. Chicken of the Sea International and TUF are founding members $ % ] * | ' # the species primarily used for packing canned tuna. Skipjack tuna packed in a can is commonly called “light tuna� in the US. Tuna raw material price was high in 2010. The year started with prices at around USD1,500 and stayed stable through April. Then prices continued to surge to hit a new high at USD2,000 in September. After some brief stability, it went further up to USD 2,000 in December setting a new record. As a matter of fact, it set a new record (USD2,030) again in January, 2012. The price is now stabilizing at slightly below USD2,000. The raw material price volatility from time to time could exert some pressure on margins as price adjustments might not be as timely as we wish, but we can generally achieve that over a longer period of time. 2011 was another year on record to demonstrate our ability to sustain our margins despite raw material price volatility. Our long term track record shows that non-speculative purchase, careful inventory management of raw materials and timely adjustment of the selling price has helped us ride out most of the potential impact from such volatility. Our selling prices are normally set on (raw material) cost-plus (processing fees)basis. ^ Interest rates. The direction of the world interest was mixed, but Thai rates were generally heading # $ " quarter in 2011. With the majority of our long term debts (64% of all interest bearing debts, }# % Œ ! either by default or with use of hedging instruments, we can be certain that any potentially negative impact from interest rate volatility should be minimal. The remaining 36% of the group’s

interest-bearing debts, which are mainly used $ % ‹" Œ* }# $ # attention in the year to come.

Most of these factors are beyond our control, but close monitoring and punctual adjustments will allow us to minimize risk exposure or take advantage of any opportunities that might arise. We uphold corporate governance, transparency and professional management, in light of corporate social responsibility (CSR), as our long time guiding principles. We treat shareholders, whether major or minority, in the fairest and most responsible manner by committing to full and timely information disclosure and returning cash in form of dividend to them # K * & [ # commitments has been consistently proved in numerous awards which we received over the years. Furthermore, consistent coverage by analysts from world and local leading investment banks # K $ }# & K "# investment managers are just some of the proofs of our long term commitment to good corporate governance. Moreover, as countries around the world are becoming more integrated and dependent on each other, awareness and care for the sustainability of each company’s business practices in respect to the environment and the society become consumers’ interests. Our management has been taking proactive measures to ensure that our business practices are sustainable through & # & |# K „ # for the business under the group. Our long time dividend policy is to pay at least 50% $ # * # # management and ability to adapt to changing business environments, we have managed to report # & K }# & payments since our listing in the Stock Exchange of XXV* + & $% discipline, we limit our annual capital expenditure to not more than Bt3 billion and the annual dividend ! # $ @ * K $ & $ # # # # # Debt / EBITDA ratio drops to a satisfactory level (say 1:1). Based on our expectation, this new policy should stay for next 2 years. ANNUAL REPORT 2011

103

THAI UNION FROZEN PRODUCTS PCL.

Statement of the Board of Director’s Responsibilities for the

FINANCIAL STATEMENTS As the Company is a listed company on the Stock Exchange of Thailand, the Board of Directors hereby expresses its responsibility for # [ # " #

# # K on accounting principles which require accurate, complete, and adequate recording of accounting & * € $ # and attention have been taken in the reporting $

104

comply with the generally accepted accounting standards. We also wish to assure that adequate disclosure of all pertinent material data has K accordance with the updated Accounting | * Independent auditors have unconditionally ! # statements in the Report of Independent Auditors.

(Mr. Kraisorn Chansiri)

(Mr. Thiraphong Chansiri)

*OHPYTHU

7YLZPKLU[

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

REPORT OF INDEPENDENT AUDITOR TO THE SHAREHOLDERS OF THAI UNION FROZEN PRODUCTS PUBLIC COMPANY LIMITED & # $ $ < = ] # Public Company Limited and its subsidiaries as at 31 December 2011, the related consolidated statements $ & [ }# " $ & # $ < = ] # #K Z $ * K $ [ as to their correctness and the completeness of the presentation. My responsibility is to express an opinion K # * # $ & subsidiaries, Thai Union International, Inc. and its subsidiaries and PT Juifa International Foods and ‰# = * Z * # * 31 December 2011, these subsidiaries had total assets of Baht 15,617 million, and total revenues for the year $ @ Q Q>\ * $ #K # K auditors whose reports have been furnished to me, and my opinion, in so far as it relates to the amounts # $ #K K $ auditors. I conducted my audit in accordance with generally accepted auditing standards. Those standards }# $ # K K # K # statements are free of material misstatement. An audit includes examining, on a test basis, evidence # # # * # # # # K & # & * K & # $ # $ & K K $ * K # # $ # $ K & $ $ < = ] # Public Company Limited and its subsidiaries and of Thai Union Frozen Products Public Company Limited as Q „ K # $ " $ with generally accepted accounting principles. $ < = ] # #K Z #K $ < = ] # #K Z for the year ended 31 December 2010 were audited in accordance with generally accepted auditing K # $ # # ” = K # ! # }# $ & # $ K * Without qualifying my opinion on the aforementioned

Š Q Š \ * „# current year, the Company adopted a number of revised and new accounting standards as issued by the Federation of Accounting Professions, and applied them in the preparation and presentation $ *

Sophon Permsirivallop *LY[PĂ„LK 7\ISPJ (JJV\U[HU[ ;OHPSHUK 5V ,YUZ[ @V\UN 6MĂ„JL 3PTP[LK )HUNRVR! -LIY\HY`

THAI UNION FROZEN PRODUCTS PCL.

Thai Union Frozen Products Public Company Limited and its subsidiaries Statements of financial position As at 31 December 2011 and 2010 (Unit: Baht) Consolidated financial statements Note

2011

Separate financial statements

2010

2011

2010

Assets Current assets Cash and cash equivalents

8

Trade and other receivables

9, 10

902,520,399

1,037,296,710

55,908,174

14,912,270

11,160,791,416

9,261,819,663

4,088,187,150

3,066,632,071

Short-term loans to subsidiaries

10

-

-

80,000,000

625,824,650

Current portion of long-term loans to subsidiaries

10

-

-

440,335,000

2,691,738,000

4,070,571

1,430,750

-

-

26,131,954,501

21,346,117,741

3,618,231,368

2,423,325,643

Prepaid income tax

106,600,895

286,323,491

28,162,734

28,162,734

Current portion of forward exchange contracts receivables

142,731,953

748,337,711

140,443,542

558,700,840

Value added tax refundable

664,015,221

538,929,720

42,214,924

60,726,120

Others

817,680,910

739,834,454

34,631,753

51,494,323

1,731,028,979

2,313,425,376

245,452,953

699,084,017

39,930,365,866

33,960,090,240

8,528,114,645

9,521,516,651

Current portion of long-term loans to other companies Inventories

11

Other current assets

Total other current assets Total current assets Non-current assets Restricted deposits with financial institution

12

12,024,282

11,031,720

-

-

Investments in subsidiaries

13

-

-

4,566,571,387

4,396,708,852

Investments in associates

14

923,968,413

837,717,064

66,231,008

66,231,008

Other long-term investments

15

70,305,372

72,669,275

34,579,160

34,579,160

Long-term loans to subsidiaries - net of current portion

10

-

-

17,007,904,981

15,429,105,300

24,557,502

28,630,292

-

-

15,654,960,315

14,190,173,390

3,204,693,088

3,004,741,748

11,674,495,827

11,396,141,526

-

-

13,349,544,156

13,027,293,393

1,675,667

1,508,855

76,264,500

387,308,300

76,264,500

387,308,300

175,671,012

21,094,331

-

-

Long-term loans to other companies - net of current portion Property, plant and equipment

16

Goodwill Intangible assets

17

Other non-current assets Forward exchange contracts receivables - net of current portion Leasehold rights Advance payment for purchase property, plant and equipment

8,251,306

35,227,356

-

-

1,062,569,162

498,561,829

35,156,604

18,609,334

185,529,121

246,928,814

185,529,121

246,928,815

81,058,709

64,055,054

16,195,821

10,773,125

Total non-current assets

43,299,199,677

40,816,832,344

25,194,801,337

23,596,494,497

Total assets

83,229,565,543

74,776,922,584

33,722,915,982

33,118,011,148

Deferred tax assets

24

Unamortized discount from forward exchange contracts Others

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

106

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

Thai Union Frozen Products Public Company Limited and its subsidiaries Statements of financial position (continued) As at 31 December 2011 and 2010 (Unit: Baht) Consolidated financial statements Note

2011

Separate financial statements

2010

2011

2010

Liabilities and shareholders' equity Current liabilities Bank overdrafts and short-term loans from financial institutions Trade and other payables

19

14,477,174,817

8,363,776,804

3,553,985,552

1,992,669,842

10, 18

7,919,074,759

7,194,757,157

1,372,242,118

1,297,504,736

Short-term loans from subsidiaries

10

-

-

-

245,840,000

Current portion of long-term loans

20

983,548,345

516,057,950

-

-

Current portion of debentures

21

-

3,200,000,000

-

3,200,000,000

202,584,061

187,665,033

36,862,821

25,084,196

1,559,477,746

1,479,031,528

343,641,837

265,745,009

25,141,859,728

20,941,288,472

5,306,732,328

7,026,843,783

Income tax payable Other current liabilities Total current liabilities Non-current liabilities Long-term loans - net of current portion

20

14,615,040,023

22,500,817,529

2,250,000,000

8,896,807,865

Debentures - net of current portion

21

7,228,325,702

500,000,000

7,228,325,702

500,000,000

Convertible bond

22

2,462,169,097

2,390,745,712

2,462,169,097

2,390,745,712

Provision for long-term employee benefits

23

992,478,495

-

190,432,553

-

Deferred tax liabilities

24

4,918,293,992

4,641,052,228

626,052

-

411,350,702

88,683,600

362,851,125

88,683,600

391,011,166

478,800,280

88,236,570

47,267,248

Total non-current liabilities

31,018,669,177

30,600,099,349

12,582,641,099

11,923,504,425

Total liabilities

56,160,528,905

51,541,387,821

17,889,373,427

18,950,348,208

1,000,000,000

1,000,000,000

1,000,000,000

1,000,000,000

956,329,407

956,329,407

956,329,407

956,329,407

8,158,890,230

8,158,890,230

8,158,890,230

8,158,890,230

100,000,000

89,000,000

100,000,000

89,000,000

15,207,087,354

11,850,241,901

6,618,322,918

4,963,443,303

-

-

Forward exchange contracts payable - net of current portion Other non-current liabilities

Shareholders' equity Share capital

25

Registered 1,000,000,000 ordinary shares of Baht 1 each Issued and paid-up 956,329,407 ordinary shares of Baht 1 each Share premium Retained earnings Appropriated - statutory reserve Unappropriated

26

Other components of shareholders' equity Equity attributable to owners of the Company

(4,663,470)

(87,474,610)

24,417,643,521

20,966,986,928

15,833,542,555

14,167,662,940

2,651,393,117

2,268,547,835

-

-

Total shareholders' equity

27,069,036,638

23,235,534,763

15,833,542,555

14,167,662,940

Total liabilities and shareholders' equity

83,229,565,543

74,776,922,584

33,722,915,982

33,118,011,148

-

-

-

-

Non-controlling interests of the subsidiaries

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

ANNUAL REPORT 2011

107

THAI UNION FROZEN PRODUCTS PCL.

Thai Union Frozen Products Public Company Limited and its subsidiaries Income statements For the years ended 31 December 2011 and 2010 (Unit: Baht) Consolidated financial statements Note

2011

2010

Separate financial statements 2011

2010

Revenues 10

Sales

98,670,377,747

71,507,401,428

23,725,730,352

21,183,980,131

828,755

351,530

1,214,008,607

1,218,830,079

Interest income

9,813,442

5,458,483

1,049,605,168

437,024,383

Exchange gains

304,755,850

806,951,116

47,608,703

356,087,169

Others

603,149,130

489,528,362

203,671,429

197,178,319

918,547,177

1,302,289,491

2,514,893,907

2,209,119,950

99,588,924,924

72,809,690,919

26,240,624,259

23,393,100,081

82,301,395,646

61,976,442,881

20,907,255,927

19,586,410,643

Selling expenses

4,943,658,813

3,887,944,873

793,262,577

933,906,512

Administrative expenses

3,938,537,211

2,224,376,582

731,729,179

502,777,272

91,183,591,670

68,088,764,336

22,432,247,683

21,023,094,427

8,405,333,254

4,720,926,583

3,808,376,576

2,370,005,654

83,729,560

23,521,321

-

-

8,489,062,814

4,744,447,904

3,808,376,576

2,370,005,654

Other income Dividend income

Total other income Total revenues Expenses Cost of sales

Total expenses Profit before share of profit from investments in associates, finance cost and corporate income tax Share of profit from investments in associates Profit before finance cost and corporate income tax Finance cost

(2,272,152,444)

Profit before corporate income tax Corporate income tax

6,216,910,370 24

Profit for the year

(192,158,813) 6,024,751,557

(763,644,302) 3,980,803,602 (628,569,170) 3,352,234,432

(675,156,144) 3,133,220,432 (110,110,413) 3,023,110,019

(341,496,134) 2,028,509,520 (77,560,909) 1,950,948,611

Profit attributable to: Equity holders of the Company Non-controlling interests of the subsidiaries

Earnings per share

5,074,540,384

2,873,694,317

950,211,173

478,540,115

3,023,110,019

1,950,948,611

6,024,751,557

3,352,234,432

5.30

3.20

3.16

2.17

5.17

3.19

3.11

2.17

29

Basic earnings per share Profit attributable to equity holders of the Company Diluted earnings per share Profit attributable to equity holders of the Company

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

108

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

Thai Union Frozen Products Public Company Limited and its subsidiaries Statements of comprehensive income For the years ended 31 December 2011 and 2010

(Unit: Baht) Consolidated financial statements 2011

Profit for the year

2010

Separate financial statements 2011

2010

6,024,751,557

3,352,234,432

3,023,110,019

1,950,948,611

80,905,135

51,778,081

-

-

1,168,445

1,249,855

-

498,600

(28,937,425)

(14,102,896)

-

-

Increase (decrease) in other reserves

(5,471,986)

5,940,220

-

-

Other comprehensive income for the year

47,664,169

44,865,260

-

498,600

Total comprehensive income for the year

6,072,415,726

3,397,099,692

3,023,110,019

1,951,447,211

5,157,351,524

2,918,559,577

915,064,202

478,540,115

6,072,415,726

3,397,099,692

Other comprehensive income: Exchange differences on translation of financial statements in foreign currency Gain on change in value of available-for-sale investments Loss on change in the value of pension fund

Total comprehensive income attributable to: Equity holders of the Company Non-controlling interests of the subsidiaries

3,023,110,019

1,951,447,211

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

ANNUAL REPORT 2011

109

110

ANNUAL REPORT 2011

Issued and

to statutory reserve (Note 26)

-

956,329,407

-

-

-

-

-

8,158,890,230

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

Balance as at 31 December 2011

the subsidiaries

Decrease in non-controlling interests of

-

-

Total comprehensive income for the year

Unappropriated retained earnings transferred

-

-

8,158,890,230

956,329,407

8,158,890,230

-

3,640,093,372

-

-

4,518,796,858

Share premium

956,329,407

Dividend paid (Note 33)

policy for employee benefits (Note 5)

Cumulative effect of change in accounting

Balance as at 31 December 2010

Balance as at 31 December 2010

of the subsidiaries

Increase in non-controlling interests

73,158,457

-

Issued ordinary share capital (Note 25)

-

Total comprehensive income for the year

883,170,950

share capital

fully paid-up

Dividend paid (Note 33)

Balance as at 31 December 2009

For the years ended 31 December 2011 and 2010

Statements of changes in shareholders' equity

Thai Union Frozen Products Public Company Limited and its subsidiaries

100,000,000

-

11,000,000

-

-

-

89,000,000

89,000,000

-

-

-

-

89,000,000

Appropriated

15,207,087,354

-

(11,000,000)

5,074,540,384

(1,195,364,996)

(511,329,935)

11,850,241,901

11,850,241,901

-

-

2,873,694,317

(1,995,945,703)

10,972,493,287

Unappropriated

Retained earnings

on changes in value of

financial

68,413,682

-

-

116,052,106

-

-

(47,638,424)

(47,638,424)

-

-

51,778,081

-

(99,416,505)

foreign currency

(16,943,947)

-

-

1,168,445

-

-

(18,112,392)

(18,112,392)

-

-

1,249,855

-

(19,362,247)

investments

statements in available-for-sale

Surplus (deficit)

translation of

Exchange differences on

(56,601,439)

-

-

(28,937,425)

-

-

(27,664,014)

(27,664,014)

-

-

(14,102,896)

-

(13,561,118)

pension fund

the value of

changes in

Provision for

Other comprehensive income

-

-

4 468,234

-

-

(5,471,986)

-

-

5,940,220

5,940,220

-

-

5,940,220

reserves

Other

Other components of shareholders' equity

Equity attributable to owners of the Company

Consolidated financial statements

(4,663,470)

-

-

82,811,140

-

-

(87,474,610)

(87,474,610)

-

-

44,865,260

-

(132,339,870)

equity

shareholders'

components of

Total other

24,417,643,521

-

-

5,157,351,524

(1,195,364,996)

(511,329,935)

20 966 986 928 20,966,986,928

20,966,986,928

-

3,713,251,829

2,918,559,577

(1,995,945,703)

16,331,121,225

the Company

owners of

attributable to

Total equity

2,651,393,117

(16,284,303)

-

915,064,202

(455,841,067)

(60,093,550)

2,268,547,835

2,268,547,835

88,180,954

122,500,000

478,540,115

(500,316,794)

2,079,643,560

the subsidiaries

interests of

to non-controlling

Equity attributable

27,069,036,638

(16,284,303)

-

6,072,415,726

(1,651,206,063)

(571,423,485)

23,235,534,763

23,235,534,763

88,180,954

3,835,751,829

3,397,099,692

(2,496,262,497)

18,410,764,785

equity

shareholders'

Total

(Unit: Baht)

THAI UNION FROZEN PRODUCTS PCL.

-

956,329,407

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

Balance as at 31 December 2011

statutory reserve (Note 26) -

-

Total comprehensive income for the year

Unappropriated retained earnings transferred to

-

Dividend paid (Note 33)

for employee benefits (Note 5)

-

956,329,407

Balance as at 31 December 2010

Cumulative effect of change in accounting policy

956,329,407

Balance as at 31 December 2010

73,158,457

Total comprehensive income for the year

Issued ordinary share capital (Note 25)

-

883,170,950

share capital

fully paid-up

Issued and

Dividend paid (Note 33)

Balance as at 31 December 2009

For the years ended 31 December 2011 and 2010

Statements of changes in shareholders' equity

8,158,890,230

-

-

-

-

8,158,890,230

8,158,890,230

3,640,093,372

-

-

4,518,796,858

Share premium

Thai Union Frozen Products Public Company Limited and its subsidiaries

100,000,000

11,000,000

-

-

-

89,000,000

89,000,000

-

-

-

89,000,000

Appropriated

6,618,322,918

(11,000,000)

3,023,110,019

(1,195,364,996)

(161,865,408)

4,963,443,303

4,963,443,303

-

1,950,948,611

(1,995,945,703)

5,008,440,395

Unappropriated

Retained earnings

-

-

-

-

-

-

-

-

498,600

-

(498,600)

investments

available-for-sale

changes in value of

Surplus (deficit) on

income

-

-

-

-

-

-

-

-

498,600

-

(498,600)

equity

shareholders'

components of

Total other

shareholders' equity

Other components of

Other comprehensive

Separate financial statements

15,833,542,555

-

3,023,110,019

(1,195,364,996)

(161,865,408)

14,167,662,940

14,167,662,940

3,713,251,829

1,951,447,211

(1,995,945,703)

10,498,909,603

equity

shareholders'

Total

(Unit: Baht)

THAI UNION FROZEN PRODUCTS PCL.

ANNUAL REPORT 2011

111

THAI UNION FROZEN PRODUCTS PCL.

Thai Union Frozen Products Public Company Limited and its subsidiaries Cash flows statements For the years ended 31 December 2011 and 2010 (Unit: Baht) Consolidated financial statements

Separate financial statements

2010

2011

2011

2010

Cash flows from operating activities Profit before tax

6,216,910,370

3,980,803,602

3,133,220,432

2,028,509,520

1,616,173,839

1,218,951,112

273,012,582

321,396,732

(16,151,035)

Adjustments to reconcile profit before tax to net cash provided by (paid from) operating activities: Depreciation and amortisation Amortisation of premium/discount from forward foreign exchange contracts

63,014,522

(20,092,691)

63,413,780

Amortisation of issue cost of convertible bond, debentures 163,988,942

24,622,866

111,307,543

6,519,270

Allowance for doubtful accounts (reversal)

and long-term loans from financial institutions

14,684,702

28,431,144

22,572,912

(5,553,031)

Decrease of inventory to net realisable value

84,431,465

60,876,793

34,941,812

5,151,959

Allowance for loss on impairment of assets

17,938,239

-

29,772,627

-

Allowance for loss on impairment of goodwill

16,743,910

-

-

-

(9,677,789)

-

-

(83,729,560)

(23,521,321)

-

-

1,401,327

1,672,850

-

459,050

146,852,225

-

24,739,652

-

(1,113)

-

-

-

30,275,050

4,705,935

5,076,340

1,504,070

1,231,079

-

Reverse of allowance for loss on impairment of other long-term investments

-

Share of profit from investments in associates Loss on sale of investments Provision for long-term employee benefits Gain on dissolution of subsidiaries Loss (gain) on sale / write-off of property, plant and equipment and other intangible assets Loss on write-off of leasehold right Unrealised exchange loss (gain)

812,917,376

Dividend income Interest income Interest expense

(193,805,314)

611,414,570

(467,262) (74,126,280)

(828,755)

(351,530)

(1,214,008,607)

(1,218,830,079)

(9,813,442)

(5,472,882)

(1,049,605,168)

(437,024,383)

2,063,502,112

675,995,934

558,153,628

329,299,896

11,155,965,279

5,744,369,788

2,604,012,103

939,184,357

Profit from operating activities before change in operating assets and liabilities Decrease (increase) in operating assets Trade and other receivables

(1,617,843,008)

(545,450,821)

(950,398,721)

Inventories

(4,301,590,313)

(603,777,734)

(1,228,040,546)

Other current assets Other non-current assets

(148,078,403) 1,475,559,827

(225,389,433)

193,796,342

32,891,163

6,171,700

10,984,622

(78,651,292)

(16,194,681)

(4,264,187)

653,779,147

(146,678,004)

111,324,157

Increase (decrease) in operating liabilities Trade and other payables Other current liabilities Other non-current liabilities Cash flows from operating activities Cash paid for corporate income tax Net cash from operating activities

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

112

ANNUAL REPORT 2011

(1,828,977) 115,970,729 5,790,048,046 (328,043,131) 5,462,004,915

(273,636,674)

(463,083,360)

15,797,820

12,772,392

(45,232,836)

49,125,531

(19,668,925)

4,055,292,083 (618,967,962) 3,436,324,121

618,516,826 (107,022,356) 511,494,470

1,988,040,087 (53,747,447) 1,934,292,640

THAI UNION FROZEN PRODUCTS PCL.

Thai Union Frozen Products Public Company Limited and its subsidiaries Cash flows statements (continued) For the years ended 31 December 2011 and 2010 (Unit: Baht) Consolidated financial statements

Separate financial statements

2010

2011

2011

2010

Cash flows from investing activities Increase in restricted deposits with financial institutions

(735,191)

(67,050)

(3,364,840,178)

(2,727,955,535)

(556,106,161)

(849,726,010)

Acquisitions of intangible assets

(37,306,973)

(10,529,932)

(640,038)

(982,829)

Acquisitions of leasehold rights

(2,365,337)

(5,210,703)

Acquisitions of property, plant and equipment

Decrease in short-term loans to subsidiaries

-

Decrease (increase) in long-term loans to subsidiaries

-

Decrease (increase) in long-term loans to other companies Cash paid to purchase of investments in subsidiaries (Note 2.2) Increase in investments in subsidiaries

Decrease (increase) in other long-term investments

-

-

-

545,824,650

880,900,360

-

1,119,297,720

(14,241,728,600)

(18,467,276)

-

-

-

(28,371,146,505)

-

-

(44,548,168)

Dissolution of subsidiaries

-

1,304,154

-

Increase in investments in associates

-

(35,688,000)

(169,862,535)

(1,052,755,665)

-

4,565,950

(1,040,989)

-

-

(174,911)

-

-

-

4,433,406

1,040,025,013

300,032,832

Interest received

9,802,775

Dividend received

35,828,755

11,851,530

1,214,008,607

1,218,830,079

3,154,823

23,638,101

-

-

Proceeds from sale of investments Proceeds from sales of property, plant and equipment and intangible assets

222,988,668

Net cash from (used in) investing activities

369,573,119

1,262,886

19,705,711

(3,177,932,572)

(30,759,568,845)

3,193,810,142

(13,721,158,172)

5,838,799,223

3,096,225,965

1,561,315,710

1,109,682,138

-

-

(245,840,000)

(7,964,450,950)

22,989,777,010

(6,750,000,000)

9,000,000,000

3,550,000,000

(1,500,000,000)

3,550,000,000

(1,500,000,000)

Cash flows from financing activities Increase in bank overdrafts and short-term loans from financial institutions Decrease in short-term loans from subsidiaries Increase (decrease) in long-term loans from financial institutions Increase (decrease) in debentures Cash paid for interest expense

(2,059,765,423)

(589,445,249)

(560,455,101)

(887,504,570)

(23,964,321)

(732,770,000)

(258,781,706)

Cash paid for unamortized front end and deferred debentures fees Increase in convertible bond Proceeds from issued additional share capital Decrease in non-controlling interests of the subsidiaries

(23,964,321)

(133,749,693)

-

2,502,060,000

-

2,502,060,000

-

3,713,251,829

-

3,713,251,829

(511,958,582)

(438,633,033)

Dividend paid

(1,195,364,996)

(1,995,945,703)

(1,195,364,996)

(1,995,945,703)

Net cash from (used in) financing activities

(2,366,705,049)

26,889,786,249

(3,664,308,708)

11,703,746,865

(52,143,605)

742,380,572

Increase (decrease) in translation adjustment Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year (Note 8)

(134,776,311)

-

-

-

-

308,922,097

40,995,904

(83,118,667)

1,037,296,710

728,374,613

14,912,270

98,030,937

902,520,399

1,037,296,710

55,908,174

14,912,270

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

ANNUAL REPORT 2011

113

THAI UNION FROZEN PRODUCTS PCL.

Thai Union Frozen Products Public Company Limited and its subsidiaries Cash flows statements (continued) For the years ended 31 December 2011 and 2010 (Unit: Baht) Consolidated financial statements

Separate financial statements

2011

2010

2011

2010

95,370,986

180,495,494

24,143,691

70,611,788

(1,168,445)

(751,255)

-

-

Supplement cash flows information Non-cash items: Undue installment of acquisition of property, plant and equipment Unrealised gain on changes in the value of investments Transfer of properties foreclosed to property, plant and equipment

57,056,539

-

57,056,539

-

3,371,006

-

-

-

152,767,975

-

-

-

511,329,935

-

161,865,408

-

Transfer of property, plant and equipment to other current assets Transfer of property, plant and equipment to leasehold rights An adjustment provision for long-term employee benefits to the beginning balance of retained earnings

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

114

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

Thai Union Frozen Products Public Company Limited and its subsidiaries Notes to consolidated financial statements For the years ended 31 December 2011 and 2010 1.

General information

1.1

Corporate information Thai Union Frozen Products Public Company Limited (“the Company”) is a public company incorporated and domiciled in Thailand. The Company operates its business in Thailand and its subsidiaries operate their businesses in Thailand and overseas. Their principal activities in Thailand are the manufacture and export of frozen and canned seafood, and local subsidiaries are also engaged in the packaging and printing, pet food businesses and fishery. The principal activities of the overseas subsidiaries such as the subsidiaries in United States are the manufacture and distribution of canned seafood, and the import of shrimp and other frozen seafood products for sale to restaurant chains, retailing, wholesaling and food processing, the subsidiaries in Europe are the manufacturer and distributor of ambient seafood products to countries in Europe under their trademarks, and two subsidiaries in Asia, principally located in Indonesia and Vietnam are the manufacturer and distributor of seafood. The Company’s registered address is 72/1 Moo 7, Sethakit 1 Road, Tambon Tarsrai, Amphoe Muangsamutsakorn, Samutsakorn. The Company has 5 branches in Bangkok and Samutsakorn.

1.2

Acquisition of PPC’s shares The Board of Directors’ Meeting held on 21 December 2011 of the Company has approved a resolution for the Company to make a voluntary tender offer for all shares of Pakfood Public Company Limited (PPC or Pakfood). The details of this transaction are as follows.

ANNUAL REPORT 2011

115

THAI UNION FROZEN PRODUCTS PCL.

On 21 December 2011, the Company and a group of existing shareholders of Pakfood have entered into the Share Sale and Purchase Agreement (SPA) of PPC. The Company, pursuant to Thai applicable laws, is required to make a voluntary tender offer for all shares in PPC. The acquisition will be executed when all conditions precedent stated in the SPA are fully satisfied. The transaction is expected to take place in second quarter of 2012. The Company will purchase Pakfood’s common in a voluntary tender offer process with conditions that the aggregate number of shares acquired in the tender offer shall not be less than 40% of total issued and paid-up shares of Pakfood. The offer price per share is equal to the net book value per share of the audited Pakfood’s consolidated financial statements for the year ended 31 December 2011. The Company will pay fully in cash. Pakfood is a listed company in the Stock Exchange of Thailand. Pakfood and its subsidiaries operate as a manufacturer and distributor of food products, semi-finished food products, ready to eat meal, both chilled and frozen, domestically and internationally. The Company will purchase Pakfood’s shares if conditions precedent including but not limited to the following conditions are satisfied. 1.

The purchase price per share shall be based on the net book value per share of Pakfood pursuant of the audited financial statement of Pakfood as of 31 December 2011.

2.

The meetings of the board of directors and/or the shareholders of Pakfood shall have been duly convened and approve all matters as required under transaction documents.

3.

Legal, customs, tax and financial due diligence of Pakfood shall be completed at satisfaction of the Company.

4.

Documentation in relation to waivers of event of defaults and consents by lenders to Pakfood shall be signed in a form satisfactory to the Company.

This investment will strengthen frozen food and ready to eat meal sectors especially in terms of export. The source of fund is from cash flow from the operation of the Company. 2.

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, except for the early adoption of TAS No. 12 “Income Taxes”.

116

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

The presentation of the financial statements has been made in compliance with the stipulations of the Notification of the Department of Business Development dated 28 September 2011, issued under the Accounting Act B.E. 2543. The financial statements in Thai language are the official statutory financial statements of the Company. The financial statements in English language have been translated from the Thai language financial statements. 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 Thai Union Frozen Products Public Company Limited (“the Company�) and the following subsidiary companies (“the subsidiaries�):

company’s name

Nature of business

Country of

Percentage of

incorporation

shareholding 2011

2010

Percent

Percent

Held by the Company Thai Union Manufacturing Co., Ltd.

Manufacturer & exporter of

Thailand

Songkla Canning Pcl.

Manufacturer & exporter of

Thailand

Thai Union Seafood Co., Ltd.

Manufacturer & exporter of

Thailand

T-Holding Co., Ltd.

Distributor

Thailand

Thai Union Feedmill Co., Ltd.

Manufacturer & distributor of

Thailand

canned tuna and pet food

canned seafood

frozen shrimp

animal feeds Thai Union Graphic Co., Ltd.

Printing manufacturer

Thai Union International, Inc. (TUI)

Holding company

PT Juifa International Foods

Manufacturer & distributor of

Thailand

USA

Indonesia

88.78

76.50

Mauritius

100.00

100.00

USA

100.00

100.00

canned tuna and seafood Thai Union Investment Holding

Holding company

Co., Ltd. (TUIH) Held by subsidiaries Tri-Union Seafoods, LLC (100% held by TUI)

Manufacturer & distributor of canned tuna and seafood

ANNUAL REPORT 2011

117

THAI UNION FROZEN PRODUCTS PCL.

Company’s name

Nature of business

Country of

Percentage of

incorporation

shareholding 2011

2010

Percent Tri-Union Samoa Packing Corporation

Percent

Liquidated

USA

-

100.00

Importer and distributor

USA

82.00

82.00*

USA

-

-*

USA

-

-*

USA

100.00

100.00

Sales office

USA

-

-*

Sales office

USA

-

-*

Thailand

81.85

81.85

Vietnam

46.12

46.12

Shrimp breeding and rearing

Thailand

51.00

51.00

Shrimp breeding and species

Thailand

48.45

48.45

Thailand

-

90.08

(100% held by Tri-Union Seafoods, LLC) Tri-Union Frozen Products, Inc. (TUFP) (82% held by TUI) Empress International, Ltd. (Empress) (100% held by TUI) Tri-Union Frozen Foods, LLC (70% held by TUI) US Pet Nutrition, LLC (USPN) (99% held by TUI and 1% held by

of frozen seafood Importer and distributor of frozen shrimp and other seafood Importer and distributor of frozen seafood Manufacturer & distributor of premium pet food

Tri-Union Seafoods, LLC) Empress International of California Ltd. (100% held by Empress) Empress International Midwest Ltd. (100% held by Empress) Asian-Pacific Can Co., Ltd.

Manufacturer &

(90.5% held by Songkla Canning

distributor of packaging

Pcl.)

for food products

Yueh Chyang Canned Food Co., Ltd.

Manufacturer &

(51% held by Songkla

distributor of canned

Canning Pcl.)

tuna and seafood

Thai Union Hatchery Co., Ltd. (99.99% held by Thai Union Feedmill Co., Ltd.) Thai Quality Shrimp Co., Ltd. (95% held by Thai Union Feedmill

developer

Co., Ltd.) Phuket Fishing Co., Ltd. (100% held by Thai Union Manufacturing Co., Ltd.)

118

ANNUAL REPORT 2011

Liquidated

THAI UNION FROZEN PRODUCTS PCL.

Company’s name

Samui Fishing Co., Ltd.

Nature of business

Country of

Percentage of

incorporation

shareholding 2011

2010

Percent

Percent

Liquidated

Thailand

-

90.08

Liquidated

Thailand

-

90.08

Liquidated

Thailand

-

90.08

Singapore

90.08

90.08

Holding company

Mauritius

100.00

100.00

Holding company

Luxembourg

100.00

100.00

Holding company

Luxembourg

100.00

100.00

Holding company

France

100.00

100.00

Liquidated

France

-

100.00

Headquarter activity

France

100.00

100.00

Seychelles

100.00

100.00

(100% held by Thai Union Manufacturing Co., Ltd.) Phang-nga Fishing Co., Ltd. (100% held by Thai Union Manufacturing Co., Ltd.) Songkla Fishing Co., Ltd. (100% held by Thai Union Manufacturing Co., Ltd.) Siam Fishing Pte. Ltd. (100% held by Thai Union Manufacturing Co., Ltd.) Mauritius Company

General wholesale trade (including importers and exporters)

(100% held by TUIH) Thai Union EU Seafood 1 SA (100% held by TUIH) Thai Union EU Seafood 2 SA (100% held by Thai Union EU Seafood 1 SA) Thai Union France Holding SAS (100% held by Thai Union EU Seafood 2 SA) MW Brands Holding SAS (100% held by Thai Union France Holding SAS) MW Brands SAS (100% held by MW Brands Holding SAS) MW Brands Seychelles Limited

Exporter of canned Tuna

(100% held by MW Brands SAS)

ANNUAL REPORT 2011

119

THAI UNION FROZEN PRODUCTS PCL.

Company’s name

Etablissements Paul Paulet SAS (100% held by MW Brands SAS)

Nature of business

Manufacturer, importer,

Country of

Percentage of

incorporation

shareholding 2011

2010

Percent

Percent

France

100.00

100.00

Portugal

100.00

100.00

Ghana

100.00

100.00

Italy

100.00

100.00

United

100.00

100.00

Seychelles

60.00

60.00

United

100.00

100.00

Ireland

100.00

100.00

Netherland

100.00

100.00

50.00

50.00

distributor and exporter of canned seafood

European Seafood Investment Portugal (74% held by MW Brands SAS and 26% held by Thai Union France

Manufacturer and exporter of canned sardines and mackerel

Holding SAS) Pioneer Food Cannery Limited

Manufacturer of canned tuna

(100% held by Etablissements Paul Paulet SAS) Mareblu SRL (74% held by MW Brands SAS and

Importer and distributor of canned seafood

26% held by Thai Union France Holding SAS) UK Seafood Investments Limited

Holding company

(100% held by MW Brands SAS) Indian Ocean Tuna Limited (60% held by Thai Union France

Kingdom Manufacturer and exporter of canned tuna

Holding SAS) John West Foods Limited (100% held by UK Seafood

Importer and distributor of canned seafood

Kingdom

Investments Limited) Irish Seafood Investments Limited (100% held by MW Brands SAS) John West Holland BV (100% held by Irish Seafood

Importer and distributor of canned seafood Importer and distributor of canned seafood

Investments Limited) TTV Limited (50% held by Etablissements Paul Paulet SAS)

120

ANNUAL REPORT 2011

Deep-sea fishing fleet operation

Ghana

THAI UNION FROZEN PRODUCTS PCL.

*

On 31 December 2010, Tri-Union Frozen Foods, LLC (TUFF) was merged with and into Empress International Ltd. (Empress), a subsidiary of Thai Union International, Inc. The merger was accounted for as a combination of entities under common control. The surviving entity was Empress and its name was changed to Tri-Union Frozen Products, Inc. (TUFP). As at 31 December 2010, TUFP is 82% owned by TUI.

On 7 October 2011, Phuket Fishing Co., Ltd., Samui Fishing Co., Ltd., Phang-nga Fishing Co., Ltd. and Songkla Fishing Co., Ltd., subsidiaries of Thai Union Manufacturing Co., Ltd. were registered to close the operation and completed the liquidation in November 2011. During 2010, the overseas subsidiary established US Pet Nutrition LLC, (USPN) in the USA to engage in the manufacture and distribution of pet food. On 5 October 2010, the overseas subsidiary sold its production facility on the America Samoa Island, including all equipment and machineries that remained at the facility, to a third party. Tri-Union Samoa Packing Corporation was liquidated effective 31 December 2010. MW Brands Holding SAS was liquidated effective 31 January 2011. During 2010, the Company invested in 100% ordinary shares of Thai Union Investment Holding Co., Ltd., a company registered in the Republic of Mauritius, to acquire MW Brands Holdings SAS in France. The consolidated financial statements include the statement of financial position of that company as at 31 December 2010 and the profit or loss for the period from the investment date to 31 December 2010. Such company has recorded the net assets acquired at their fair value as of the acquisition date. The remaining excess of the purchase price over the fair value of the net assets acquired has been recorded as goodwill. However, the Company has recorded some tangible assets acquired at their net book value, not fair value. The Company is awaiting tangible a third party appraisal in order to allocate the fair value associated with the assets. During the second quarter of current year, the subsidiary obtained these appraisals of the tangible assets from such third party. The appraisal value immaterially differs from net book value. The Company therefore has not adjusted the value of goodwill. During the third quarter of the current year, a subsidiary revised the component approach of certain assets, resulting in an increase of their net book value by EUR 0.86 million or Baht 36 million. This adjustment has been reduced in the goodwill from the acquisition of MW Brands and in accumulated depreciation in those assets.

ANNUAL REPORT 2011

121

THAI UNION FROZEN PRODUCTS PCL.

Details of the fair values of identifiable assets, liabilities and contingent liabilities of MW Brands and their net book values, are as follow: (Unit: Million Baht) Fair value

Net book value

Assets Cash and cash equivalents

643

643

Trade accounts receivable

3,311

3,311

Inventories

5,863

5,519

Property, plant and equipment, net

3,841

3,782

12,944

172

558

391

27,160

13,818

Trade accounts payables

4,608

4,608

Deferred tax liabilities (Note 24)

4,162

-

982

963

Total liabilities

9,752

5,571

Net asset value

17,408

8,247

Intangible assets (Note 17) Other assets Total assets Liabilities

Other liabilities

Equity of the Company (%)

100

Net assets value attributable to the company’s investment

17,408

Positive goodwill

11,606

Purchase price

29,014

Less: Cash and cash equivalents of subsidiaries

(643)

Net cash paid for purchase of subsidiaries

28,371

Details of acquisition of MW Brands Group are as follows. (Unit: Million Baht)

122

Purchase price Cash paid Direct costs related to the acquisition

28,742 272

Total Fair value of net assets received

29,014 17,408

Goodwill

11,606

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

The largest fair value adjustments above relate to the recognition of the present value of the portfolio of trademarks comprising Petit Navire, John West, Hyacinthe Parmentier, Mareblu and Starkist. The values derived from the royalty approach have been considered and they have also been corroborated by the profit premium approach. The royalty approach consists in applying to the trademark revenues derived from a royalty rate determined by a qualitative and quantitative analysis of the positioning of the trademarks in the market. The profit premium approach is based on the difference of EBIT per ton between trademark and private labels activities, which is then applied on the projected trademark volumes to determine the present value of the forecasted cash flows. The determined fair value of the trademarks amounts to Baht12,334 million (EUR296 million), with related deferred tax liabilities of Baht3,917 million (EUR94 million). Relationship with distributors in France of Baht235 million (EUR6 million) and a free license agreement of the Weight Watchers trademark of Baht210 million (EUR5 million). The distributor relationship relates to the long term tracked record of the private label activities in France and has been valuated using the excess earning methodology which expresses the discounted excess of profitability over the post tax contributory assets charges. This asset has a definite life of 20 years. The same approach has been retained to evaluate the Weight Watchers free license agreement corroborated by a relief from the royalty approach. A definite life of 39 years has been retained. Both intangible assets have related deferred tax liabilities of Baht140 million (EUR3.4 million). The Baht1 million amortisation of these two assets has been included in the consolidated profit or loss for 2010. The finished goods have also been subject to a fair value evaluation. This resulted in a Baht344 million (EUR8 million) increased in inventories, with related deferred tax liabilities of Baht105 million (EUR2.5 million). These inventories had 3 months selling maturity therefore an amount of Baht156 million (EUR3.8 million), net of deferred tax, has been released in the consolidated profit or loss for 2010. The contingent liabilities have also been subject to a review bringing an additional EUR0.4 million provision related to a withholding tax risk in Ghana. This provision has been released offsetting the risk effect on the consolidated profit or loss for 2010.

ANNUAL REPORT 2011

123

THAI UNION FROZEN PRODUCTS PCL.

The residual goodwill of EUR272 million represents MW Brands specific positioning in the whole value chain thanks to its global tax rate which is lower than the tax rates applied on the recognised items, the cost of the assembled workforce and future synergies expected to arise in the combined life operations. The operating loss of MW Brands Group (included TUIH) from the acquisition date to 31 December 2010 amounting to Baht7 million was included in the consolidated financial statements. If the combination had taken place at the beginning of the year, the operating results of MW Brands Group had been included in the consolidated financial statements as though it had been the Company’s subsidiaries since 1 January 2010, total revenues and profit in profit or loss for the year ended 31 December 2010 would have been by Baht18,520 million (EUR458.4 million) and Baht818 million (EUR20.3 million), respectively. b) Subsidiaries are fully consolidated, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. c) The financial statements of the subsidiaries are prepared using the same significant accounting policies as the Company. d) The assets and liabilities in the financial statements of overseas subsidiaries are translated to Baht using the exchange rate prevailing on the end of reporting period, and revenues and expenses translated using monthly average exchange rates. The resulting differences are shown under the caption of “Exchange differences on translation of financial statements in foreign currency” in the statements of changes in shareholders’ equity. e) Material balances and transactions between the Company and its subsidiaries have been eliminated from the consolidated financial statements. f)

Non-controlling interests represent the portion of profit or loss and net assets of the subsidiaries that are not held by the Group and are presented separately in the consolidated profit or loss and within equity in the consolidated statement of financial position.

2.3

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

124

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

3.

Adoption of new accounting standards during the year During the current year, the Company adopted a number of revised and new accounting standards, issued by the Federation of Accounting Professions, as listed below. Accounting standards: TAS 1 (revised 2009)

Presentation of Financial Statements

TAS 2 (revised 2009)

Inventories

TAS 7 (revised 2009)

Statement of Cash Flows

TAS 8 (revised 2009)

Accounting Policies, Changes in Accounting Estimates and Errors

TAS 10 (revised 2009)

Events after the Reporting Period

TAS 11 (revised 2009)

Construction Contracts

TAS 16 (revised 2009)

Property, Plant and Equipment

TAS 17 (revised 2009)

Leases

TAS 18 (revised 2009)

Revenue

TAS 19

Employee Benefits

TAS 23 (revised 2009)

Borrowing Costs

TAS 24 (revised 2009)

Related Party Disclosures

TAS 26

Accounting and Reporting by Retirement Benefit Plans

TAS 27 (revised 2009)

Consolidated and Separate Financial Statements

TAS 28 (revised 2009)

Investments in Associates

TAS 29

Financial Reporting in Hyperinflationary Economies

TAS 31 (revised 2009)

Interests in Joint Ventures

TAS 33 (revised 2009)

Earnings per Share

TAS 34 (revised 2009)

Interim Financial Reporting

TAS 36 (revised 2009)

Impairment of Assets

TAS 37 (revised 2009)

Provisions, Contingent Liabilities and Contingent Assets

TAS 38 (revised 2009)

Intangible Assets

TAS 40 (revised 2009)

Investment Property

Financial reporting standards: TFRS 2

Share-Based Payment

TFRS 3 (revised 2009)

Business Combinations

TFRS 5 (revised 2009)

Non-current Assets Held for Sale and Discontinued Operations

TFRS 6

Exploration for and Evaluation of Mineral Resources

ANNUAL REPORT 2011

125

THAI UNION FROZEN PRODUCTS PCL.

Financial Reporting Standard Interpretations: TFRIC 15

Agreements for the Construction of Real Estate

Accounting Standard Interpretations: SIC 31

Revenue-Barter Transactions Involving Advertising Services

These accounting standards do not have any significant impact on the financial statements, except for the following accounting standards. TAS 19 Employee Benefits This accounting standard requires employee benefits to be recognised as expense in the period in which the service is performed by the employee. In particular, an entity has to evaluate and make a provision for post-employment benefits using actuarial techniques. The Company and its subsidiaries previously accounted for such employee benefits when they were incurred. The Company and its subsidiaries have changed this accounting policy in the current year and recognise the liability in the transition period through an adjustment to the beginning balance of retained earnings in the current period. The change will have the effect of decreasing the profit of the Company and its subsidiaries for the years ended 31 December 2011 by Baht147 million, or 0.15 Baht per share (Separate financial statements: decreasing profit by Baht25 million, or 0.02 Baht per share). The cumulative effect of the changes in the accounting policy has been presented in Note 5 to financial statements. 4.

New accounting standards issued during the years not yet effective The Federation of Accounting Professions issued the following new/revised accounting standards that are effective for fiscal years beginning on or after 1 January 2013. Accounting standards: TAS 12

Income Taxes

TAS 20 (revised 2009)

Accounting for Government Grants and Disclosure of Government Assistance

TAS 21 (revised 2009)

The Effects of Changes in Foreign Exchange Rates

Accounting Standard Interpretations:

126

SIC 10

Government Assistance - No Specific Relation to Operating Activities

SIC 21

Income Taxes - Recovery of Revalued Non-Depreciable Assets

SIC 25

Income Taxes - Changes in the Tax Status of an Entity or its Shareholders

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

The Company’s management believes that these accounting standards will not have any significant impact on the financial statements for the year when they are initially applied, except for the following accounting standards. TAS 21 (revised 2009) The Effects of Changes in Foreign Exchange Rates This accounting standard requires an entity to identify its functional currency in accordance with certain conditions in the standard and to record transactions and report its financial position and operating results in this functional currency, which may not be Baht. At present, the management is still evaluating the impact on the financial statements in the year when this standard is adopted. 5.

Cumulative effect of changes in accounting policies due to the adoption of TAS 19 During the current year, the Company made the changes to its significant accounting policies described in Note 3, as a result of the adoption of TAS 19 Employee Benefits. The cumulative effect of the changes in the accounting policies has been separately presented in the statements of changes in shareholders' equity. The amounts of adjustments affecting the provision for long-term employee benefits (net of deferred tax assets of Baht32 million) and unappropriated retained earnings in the statement of financial position as at 1 January 2011 resulted decreased of Baht571 million (Separate financial statements: Baht162 million (net of deferred tax assets of Baht7 million)), excluding the provision that the overseas subsidiaries had already established.

6.

Significant accounting policies

6.1

Revenue recognition 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 of goods supplied, excluding value added tax, of goods supplied after deducting discount and allowances.

Sales of merchandise by an overseas subsidiary under commercial agreements are recognised when the subsidiary’s distributor sells such merchandise. The overseas subsidiary may be reimbursed for bank charges, warehousing, and certain other costs incurred in connection with these agreements, and the subsidiary records such reimbursements as a deduction from cost of sales.

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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. Tax coupon received Subsidies granted by the Ministry of Finance in the form of tax coupons are recognised as income when the Company obtains written notification of approval of the tax coupon. 6.2

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

6.3

Trade accounts receivable 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 debt aging.

6.4

Inventories 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 are valued at cost (first-in, first-out method). Ingredients and packaging are valued at cost (weighted average method). Some local subsidiaries record ingredients and packaging using the first-in, first-out method. The effect of the difference in accounting policy is immaterial to profit and the book values of inventories in the consolidated financial statements as at 31 December 2011 and 2010.

6.5

Investments a) Investments in available-for-sale securities are stated at fair value. Changes in the fair value of these securities are recorded as a separate item in shareholders’ equity, and will be recorded in profit or loss when the securities are sold. b) Investments in non-marketable equity securities, which the Company classifies as other investment, are stated at cost net of allowance for loss on diminution in value (if any).

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c) Investments in associates are accounted for in the consolidated financial statements using the equity method. d) Investments in subsidiaries and associates are accounted for in the separate financial statements using the cost method. The weighted average method is used for computation of the cost of investments. 6.6

Property, plant and equipment and Depreciation Land is stated at cost. Land improvement, plant and equipment are stated at cost less accumulated depreciation and allowance for impairment of assets (if any). Depreciation of land improvement, plant and equipment is calculated by reference to their costs on the straight-line basis over the following estimated useful lives: Land improvement, buildings and construction

-

3 - 40

years

Machinery and equipment

-

3 - 25

years

Furniture and fixtures

-

3 - 20

years

Motor vehicles

-

3 - 20

years

Depreciation of machinery and equipment, furniture and fixtures and motor vehicles of an overseas subsidiary is calculated on the declining balance basis over their estimated useful lives of 5 - 20 years. The effect of the difference in accounting policy is immaterial to profit or loss. No depreciation is provided for land and construction in progress. Equipment under a capital lease is stated at the present value of the minimum lease payments and amortised on a straight-line method over the lesser of the lease term or the estimated useful life of the equipment. Depreciation is included in determining income. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on disposal of an asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss when the asset is derecognised.

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THAI UNION FROZEN PRODUCTS PCL.

6.7

Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

6.8

Intangible assets Intangible assets acquired through business combination are initially recognised at their fair value on the date of business acquisition while intangible assets acquired in other cases are recognised at cost. Following the initial recognition, the intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses (if any). Intangible assets with finite lives are amortised on a systematic basis over the economic useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method of such intangible assets are reviewed at least at each financial year end. The amortisation expense is charged to profit or loss. A summary of the intangible assets with finite useful lives is as follows. Useful lives Trademarks

-

5, 10 ,20, 39

years

Copyrights

-

1-7

years

Computer software

-

3, 5, 10

years

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually either individually or at the cash generating unit level. 6.9

Goodwill Goodwill is initially recorded at cost, which equals to the excess of cost of business combination over the fair value of the net assets acquired. If the fair value of the net assets acquired exceeds the cost of business combination, the excess is immediately recognised as gain in profit or loss. Goodwill is carried at cost less any accumulated impairment losses. Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired.

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ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the Company and its subsidiaries’ cash generating units (or group of cash-generating units) that are expected to benefit from the synergies of the combination. The Company and its subsidiaries estimate the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in profit or loss. Impairment losses relating to goodwill cannot be reversed in future periods. 6.10 Leasehold right and amortisation Leasehold right is stated at cost less accumulated amortisation. Amortisation of leasehold right is calculated by reference to its cost on a straight-line basis over the period of lease. 6.11 Deferred financial fees Financial expenses related to borrowings that are typically incurred on or before signing facility agreements and before actual draw down of the loans are recorded as deferred financial fees. A portion of deferred financial fees proportionate to the amount of the loan facility already drawn is presented as a deduction against the related loan account and amortised using the effective interest rate method over the term of the loans. The amortisation of deferred financial fees is included in determining borrowing costs. 6.12 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 associates 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 Company’s operations.

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THAI UNION FROZEN PRODUCTS PCL.

6.13 Long-term leases Leases of property, plant or equipment which transfer substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lower of the fair value of the leased assets and the present value of the minimum lease payments. The outstanding rental obligations, net of finance charges, are included in other long-term payables, while the interest element is charged to profit or loss over the lease period. The assets acquired under finance leases is depreciated over the useful life of the leased assets. Operating lease payments are recognised as an expense in profit or loss on a straight line basis over the lease term. 6.14 Foreign currencies Transactions in foreign currencies are translated into Baht at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Baht at the exchange rate ruling at the end of reporting period. Gains and losses on exchange are included in determining income. 6.15 Impairment of assets At the end of each reporting period, the Company and its subsidiaries performs impairment reviews in respect of the property, plant and equipment and other intangible assets whenever events or changes in circumstances indicate that an asset may be impaired. The Company and its subsidiaries also carries out annual impairment reviews in respect of goodwill and intangible assets with indefinite useful lives. An impairment loss is recognised when the recoverable amount of an asset, which is the higher of the asset’s fair value less costs to sell and its value in use, is less than the carrying amount. In determining value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by a valuation model that, based on information available, reflects the amount that the Company and its subsidiaries could obtain from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal. The Company and its subsidiaries recognized an impairment loss in profit or loss.

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ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

6.16 Employee benefits Short-term employee benefits Salaries, wages, bonuses and contributions to the social security fund are recognised as expenses when incurred. Post-employment benefits (Defined contribution plans) The Company and its subsidiaries and its employees have jointly established a provident fund. The fund is monthly contributed by employees and by the Company and its subsidiaries. The fund’s assets are held in a separate trust fund and the Company and its subsidiaries' contributions are recognised as expenses when incurred.

Post-employment benefits (Defined benefit plans)

The Company and its subsidiaries have obligations in respect of the severance payments it must make to employees upon retirement under labor law. The Company and its subsidiaries treat these severance payment obligations as a defined benefit plan. The obligation under the defined benefit plan is determined by a professionally qualified independent actuary based on actuarial techniques, using the projected unit credit method. For the first-time adoption of TAS 19 Employee Benefits, the Company and its subsidiaries elected to recognise the transitional liability, which exceeds the liability that would have been recognised at the same date under the previous accounting policy, through an adjustment to the beginning balance of retained earnings in the current period. The oversea subsidiary has a define benefit plan covering all of its former production employees in American Samoa. The benefit are based on a percentage of compensation during each year of service. The oversea subsidiary makes annual contributions to the plan equal to the minimum required by applicable regulations.

6.17 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.

ANNUAL REPORT 2011

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THAI UNION FROZEN PRODUCTS PCL.

6.18 Income tax Income tax expense represents the sum of corporate income tax currently payable and deferred tax. Current tax Income tax is provided in the accounts at the amount expected to be paid to the taxation authorities, based on taxable profits determined in accordance with tax legislation of each country. Income tax of the overseas subsidiaries is provided for in the accounts based on the taxable profits determined in accordance with tax legislation of their countries. Deferred tax Deferred income tax is provided on temporary differences between the tax bases of assets and liabilities and their carrying amounts at the end of each reporting period, using the tax rate enacted at the end of the reporting period. The Company and its subsidiaries recognise deferred tax liabilities for all taxable temporary differences while they recognise deferred tax assets for all deductible temporary differences and tax losses carried forward to the extent that it is probable that future taxable profit will be available against which such deductible temporary differences and tax losses carried forward can be utilised. At each reporting date, the Company and its subsidiaries review and reduce the carrying amount of deferred tax assets to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. The Company and its subsidiaries record deferred tax directly to shareholders' equity if the tax rates to items that are recorded directly to share holders' equity. 6.19 Asset retirement obligations The overseas subsidiary accounts for asset retirement obligations in accordance with FASB statement No. 143, “Accounting for Asset Retirement Obligations�. The effect of the difference in accounting policy is immaterial to profit or loss for the years 2011 and 2010.

134

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

6.20 Derivatives Forward exchange contracts Receivables and payables arising from forward exchange contracts are translated into Baht at the rates of exchange ruling at the end of reporting period. Unrecognised gains and losses from the translation are included in determining income. Premiums or discounts on forward exchange contracts are amortised on a straight-line basis over the contract periods. Interest rate swap contracts The net amount of interest to be received from or paid to the counterparty under the interest rate swap contracts is recognised as income or expenses on an accrual basis. Foreign currency option agreements The notional amounts of the foreign currency option agreements utilised by the Company and its subsidiaries are not recognised as assets or liabilities upon inception of the agreements. Gain and loss from the translation are included in determining income. 7.

Significant accounting judgments and estimates The preparation of financial statements in conformity with generally accepted accounting principles at times requires management to make subjective judgments and estimates regarding matters that are inherently uncertain. These judgments and estimates affect reported amounts and disclosures and actual results could differ. Significant judgments and estimates are as follows: Leases In determining whether a lease is to be classified as an operating lease or finance lease, the management is required to use judgment regarding whether significant risk and rewards of ownership of the leased asset have been transferred, taking into consideration terms and conditions of the arrangement. Allowance for doubtful accounts In determining an allowance for doubtful accounts, the management needs to make judgment and estimates based upon, among other things, past collection history, aging profile of outstanding debts and the prevailing economic condition. Impairment of equity investments The Company and its subsidiaries treat available-for-sale investments and other investments as impaired when the management judges that there has been a ANNUAL REPORT 2011

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THAI UNION FROZEN PRODUCTS PCL.

significant or prolonged decline in the fair value below their cost or where other objective evidence of impairment exists. The determination of what is “significant” or “prolonged” requires judgment. Property plant and equipment/Depreciation In determining depreciation of plant and equipment, the management is required to make estimates of the useful lives and residual values of the Company’s plant and equipment and to review estimate useful lives and residual values when there are any changes. In addition, the management is required to review property, plant and equipment for impairment on a periodical basis and record impairment losses in the period when it is determined that their recoverable amount is lower than the carrying amount. This requires judgments regarding forecast of future revenues and expenses relating to the assets subject to the review. Goodwill and intangible assets The initial recognition and measurement of goodwill and other intangible assets, and subsequent impairment testing, require management to make estimates of cash flows to be generated by the asset or the cash generating units and to choose a suitable discount rate in order to calculate the present value of those cash flows. Deferred tax assets Deferred tax assets are recognised in respect of temporary differences only to the extent that it is probable that taxable profit will be available against which these differences can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of estimate future profits. Post-employment benefit under defined benefit plans and other long-term employee benefits The obligation under the defined benefit plan and other long-term employee benefit plans is determined based on actuarial techniques. Such determination is made based on various assumptions, including discount rate, future salary increase rate, mortality rate and staff turnover rate. Litigation The Company and its subsidiaries have contingent liabilities as a result of litigation. The management has used judgement to assess of the results of the litigation and believes that no loss will result. Therefore no contingent liabilities are recorded as at the end of reporting period. 136

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

8.

Cash and cash equivalents (Unit: Thousand Baht) Consolidated financial statements 2011 Cash

Separate financial statements

2010

2011

2010

3,398

3,057

1,572

1,238

Bank deposits

899,122

1,034,240

54,336

13,674

Total

902,520

1,037,297

55,908

14,912

As at 31 December 2011, bank deposits in saving accounts and fixed deposits carried interests between 0.17 and 1.93% per annum (2010: between 0.04 and 1.37% per annum). 9.

Trade and other receivables (Unit: Thousand Baht) Separate financial statements

Consolidated financial statements 2011

2010

2011

2010

Trade receivables - related parties Aged on the basis of due dates Not yet due

21,050

21,681

1,134,315

1,369,499

Past due 1 - 30 days

40,341

39,254

534,394

249,097

31 - 60 days

-

4

358,201

151,800

61 - 90 days

-

-

447,824

12,672

91 - 120 days

-

-

-

5,082

61,391

60,939

2,474,734

1,788,150

Total trade receivables - related parties

Trade receivables - unrelated parties

Aged on the basis of due dates Not yet due

9,222,755

7,026,107

1,226,524

1 - 30 days

854,306

Past due

1,421,944

1,717,161

170,386

31 - 60 days

210,035

280,892

5,791

160,023 45,664

61 - 90 days

102,888

82,706

1,560

11,109

91 - 120 days

58,582

65,733

-

12,345

121 - 180 days

37,279

50,708

-

9,191

181 - 365 days

66,298

43,026

-

4,768

Over 365 days

164,281

123,853

20,915

326

11,284,062

9,390,186

1,425,176

1,097,732

11,345,453

9,451,125

3,899,910

2,885,882

Total trade receivables - unrelated parties Total trade receivables Less: Allowance for doubtful accounts Total trade receivables - net 2WKHU UHFHLYDEOHV ,QWHUHVW UHFHLYDEOH UHODWHG parties

(250,793) 11,094,660

(233,267) 9,217,858

576

(25,518)

(2,945)

3,874,392

2,882,937

565

184,652

175,072 8,378

Accrued income

26,688

16,953

11,668

Advance payment

38,867

26,444

17,475

245

Total oWKHU UHFHLYDEOHV

66,131

43,962

213,795

183,695

11,160,791

9,261,820

4,088,187

3,066,632

Total trade and other receivables - net

ANNUAL REPORT 2011

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THAI UNION FROZEN PRODUCTS PCL.

As at 31 December 2011 and 2010, certain trade accounts receivable of two overseas subsidiaries have secured their credit facilities as mentioned in Note 19. 10.

Related party transactions During the years, the Company and its subsidiaries had significant business transactions with related parties. Such transactions are summarised below. (Unit: Million Baht) Consolidated

Separate

financial statements

financial statements

2011

2011

2010

Transfer Pricing Policy

2010

Transactions with subsidiaries: (Eliminated from consolidated financial statements) Sales

-

-

10,348

9,222

Cost plus margin

Dividend income

-

-

1,196

1,207

As declared

Interest income

-

-

1,049

435

2.55 - 6.40% per annum (2010: 1.85 - 6.40% per annum)

Other income

-

-

Sale of assets

-

-

Purchases of goods

-

-

Purchase of assets

-

-

-

111

Interest expense

-

-

3

12

2.50% per annum (2010:

Management fee

-

-

52

41

Contract price

Other expenses

-

-

87

48

Near market price

41

37

Near market price

-

44

Near market price

1,115

981

Cost plus margin Near market price

1.10 - 1.95% per annum)

Transactions with associates: Sales

26

19

7

6

Dividend income

35

12

35

12

Other income

Cost plus margin As declared

21

16

-

-

Near market price

Purchases of goods

9

11

-

-

Cost plus margin

Purchases service expense

1

1

-

-

Near market price

Transactions with related companies:

Sales

1,064

1,139

238

248

Purchases of goods

4,775

3,124

3,910

2,244

44

42

8

10

Near market price

132

286

54

197

Near market price

Transportation expense Expenses relating to assets

Cost plus margin Cost plus margin

The Company and its subsidiaries have insured with Asia-Pacific Risk Consultants (Thailand) Co., Ltd. which is an insurance broker related by way of having common directors. During the year 2011, insurance premiums paid through that company amounted to Baht 52 million (2010: Baht 60 million).

138

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

The relationships between the Company and the related parties are summarised below. List of related companies

Relationship

Songkla Canning Pcl.

Subsidiary

Thai Union Manufacturing Co., Ltd.

Subsidiary

Thai Union Seafood Co., Ltd.

Subsidiary

T-Holding Co., Ltd.

Subsidiary

Thai Union Feedmill Co., Ltd.

Subsidiary

Thai Union Graphic Co., Ltd.

Subsidiary

Thai Union International, Inc. (TUI)

Subsidiary

PT Juifa International Foods

Subsidiary

Thai Union Investment Holding Co., Ltd. (TUIH)

Subsidiary

Tri-Union Seafoods, LLC

Subsidiary (Held by subsidiary)

Tri-Union Frozen products, Inc. (TUFP)

Subsidiary (Held by subsidiary)

Empress International, Ltd. (Empress)

Subsidiary (Held by subsidiary)

Tri-Union Frozen Foods, LLC

Subsidiary (Held by subsidiary)

US Pet Nutrition, LLC (USPN)

Subsidiary (Held by subsidiary)

Canadian Pet Nutrition, ULC

Subsidiary (Held by subsidiary)

Empress International of California Ltd.

Subsidiary (Held by subsidiary)

Empress International Midwest Ltd.

Subsidiary (Held by subsidiary)

Asian-Pacific Can Co., Ltd.

Subsidiary (Held by subsidiary)

Yueh Chyang Canned Food Co., Ltd.

Subsidiary (Held by subsidiary)

Thai Union Hatchery Co., Ltd.

Subsidiary (Held by subsidiary)

Thai Quality Shrimp Co., Ltd.

Subsidiary (Held by subsidiary)

Phuket Fishing Co., Ltd.

Subsidiary (Held by subsidiary)

Samui Fishing Co., Ltd.

Subsidiary (Held by subsidiary)

Phang-nga Fishing Co., Ltd.

Subsidiary (Held by subsidiary)

Songkla Fishing Co., Ltd.

Subsidiary (Held by subsidiary)

Siam Fishing Pte. Ltd.

Subsidiary (Held by subsidiary)

Thai Union EU Seafood 1 S.A.

Subsidiary (Held by subsidiary)

Thai Union EU Seafood 2 S.A.

Subsidiary (Held by subsidiary)

MW Brands SAS

Subsidiary (Held by subsidiary)

European Seafood Investment Portugal

Subsidiary (Held by subsidiary)

UK Seafood Investment Limited

Subsidiary (Held by subsidiary)

John West Food Limited

Subsidiary (Held by subsidiary)

Mareblu SRL

Subsidiary (Held by subsidiary)

MW Brands Seychelles Limited

Subsidiary (Held by subsidiary)

Indian Ocean Tuna Limited

Subsidiary (Held by subsidiary)

Pioneer Food Cannery Limited

Subsidiary (Held by subsidiary)

TTV Limited

Subsidiary (Held by subsidiary)

Mauritius Company

Subsidiary (Held by subsidiary)

ANNUAL REPORT 2011

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THAI UNION FROZEN PRODUCTS PCL.

List of related companies

Relationship

Thai Union France Holding SAS

Subsidiary (Held by subsidiary)

Etablissements Paul Paulet SAS

Subsidiary (Held by subsidiary)

Irish Seafood Investments Limited

Subsidiary (Held by subsidiary)

John West Holland BV

Subsidiary (Held by subsidiary)

Lucky Union Foods Co., Ltd.

Associated company

Biz Dimension Co., Ltd.

Associated company

Avanti Thai Aqua Feeds Private Limited

Associated company

Century Trading (Shanghai) Co., Ltd.

Associated company (Held by subsidiary)

TN Fine Chemicals Co., Ltd.

Associated company (Held by subsidiary)

Moresby International Holdings Inc.

Associated company (Held by subsidiary)

LDH (La Doria) Limited

Associated company (Held by subsidiary)

Geminai & Associate Co., Ltd.

Common shareholders/Relative of directors

Chansiri Real Estate Co., Ltd.

Common major shareholders/Common directors

Thai Union Securities Co., Ltd.

Common major shareholders/Common directors

Asian Pacific Thai Tuna Co., Ltd.

Common major shareholders/Common directors

T.C. Union Global Pcl.

Common major shareholders/Common directors

Jana Fish Industries Limited

Common major shareholders/Common directors

T.C. Union Agrotech Co., Ltd.

Common major shareholders/Common directors

Waithai Co., Ltd.

Common major shareholders/Common directors

Merchant Partners Securities Co., Ltd.

Common shareholders/Common directors

Thaipatana Stainless Steel Co., Ltd.

Common major shareholders/Common directors

Hanhong Kanchang Registered Ordinary Partnership Lucky Surimi Products Co., Ltd.

Common major shareholders/Common directors Common directors

Asia-Pacific Risk Consultants (Thailand) Co., Ltd Common shareholders/Common directors

140

Asia-Pacific Risk Insurance Broker Co., Ltd.

Common shareholders/Common directors

Ahead Way International Co., Ltd.

Common major shareholders/Common directors

Ekawat Products Co., Ltd.

Relative of director

Miss Rungtiwa Boonmechote

Relative of director

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

The balances of the accounts as at 31 December 2011 and 2010 between the Company and those related parties are as follows:

(Unit: Thousand Baht)

Consolidated

Separate

financial statements

financial statements

2011

2010

2011

2010

Trade accounts receivable - related parties (Note 9) Subsidiaries

-

-

2,465,524

1,778,370

4,622

7,750

1,056

1,073

Related companies

56,769

53,189

8,154

8,707

Total trade accounts receivable - related parties

61,391

60,939

2,474,734

1,788,150

-

-

220,906

235,982

1,584

2,928

48

56

Related companies

64,724

88,300

22,288

40,036

Total trade and other payables - related parties

66,308

91,228

243,242

276,074

Thai Union International, Inc.

-

-

-

545,825

Thai Union Graphic Co., Ltd.

-

-

80,000

80,000

Total

-

-

80,000

625,825

Thai Union Investment Holding Co., Ltd.

-

-

15,207,249

13,963,603

Thai Union International, Inc.

-

-

2,240,991

2,362,748

Thai Union Manufacturing Co., Ltd.

-

-

-

1,794,492

Total

-

-

17,448,240

18,120,843

Thai Union International, Inc.

-

-

Thai Union Manufacturing Co., Ltd.

-

-

-

-

-

-

Associated companies

Trade and other payables - related parties (Note 18) Subsidiaries Associated companies

Short-term loans to subsidiaries (Eliminated from consolidated financial statements)

Long-term loans to subsidiaries (Eliminated from consolidated financial statements)

Less: Current portion

Net

(440,335) (440,335) 17,007,905

(897,246) (1,794,492) (2,691,738) 15,429,105

ANNUAL REPORT 2011

141

THAI UNION FROZEN PRODUCTS PCL.

(Unit: Thousand Baht) Consolidated

Separate

financial statements

financial statements

2011

2010

2011

2010

Short-term loans from subsidiaries (Eliminated from consolidated financial statements) Songkla Canning Pcl.

-

-

-

245,840

Total

-

-

-

245,840

During 2011, movements of loans to/from related parties were as follows: (Unit: Thousand Baht) Separate financial statements Balance as at

Balance as at

During the year

1 January 2011

Increase

Decrease

Revaluation

31 December 2011

Short-term loans to subsidiaries Thai Union International, Inc. Thai Union Manufacturing Co., Ltd. Songkla Canning Pcl. Thai Union Graphic Co., Ltd.

545,825

-

(583,055)

37,230

-

-

254,970

(254,970)

-

-

-

107,460

(107,460)

-

-

80,000

13,840

(13,840)

-

80,000

625,825

376,270

(959,325)

37,230

80,000

-

Long-term loans to subsidiaries Thai Union Investment Holding Co., Ltd.

13,963,603

898,265

345,381

15,207,249

Thai Union International, Inc.

2,362,748

674,175

(897,246)

101,314

2,240,991

Thai Union Manufacturing Co., Ltd.

1,794,492

-

(1,794,492)

-

-

18,120,843

1,572,440

(2,691,738)

446,695

17,448,240

-

804,360

(804,360)

-

-

245,840

635,090

(880,930)

-

-

-

11,500

(11,500)

-

-

245,840

1,450,950

(1,696,790)

-

-

Short-term loans from subsidiaries Thai Union Manufacturing Co., Ltd. Songkla Canning Pcl. Thai Union Feedmill Co., Ltd.

142

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

Directors and management’s benefits During the years ended 31 December 2011 and 2010, the Company and its subsidiaries had employee benefits expenses payable to their directors and management as follows: (Unit: Million Baht) Separate

Consolidated financial statements

financial statements

2011

2011

Short-term employee benefits Post-employment benefits Other long-term benefits Termination benefits Total

11.

2010

2010

614

410

78

52

17

-

4

-

5

101

-

-

45

24

-

-

681

535

82

52

Inventory (Unit: Thousand Baht) Consolidated financial statements Reduce cost to net realisable value

Cost 2011 Finished goods

2010

2011

2010 (207,525)

13,932,395

11,878,951

(251,014)

66,796

63,625

(328)

Raw materials

7,047,991

5,244,553

(112,276)

Ingredient and packaging

1,477,321

1,179,481

(70,225)

542,705

2,923,102

(9,206)

3,507,796

411,664

26,575,004

21,701,376

Work in process

Goods in transit Spare parts Total

Inventories - net

(443,049)

2011

2010

13,681,381

11,671,426

66,468

63,625

(84,921)

6,935,715

5,159,632

(62,812)

1,407,096

1,116,669

-

533,499

2,923,102

-

3,507,796

411,664

26,131,955

21,346,118

-

(355,258)

ANNUAL REPORT 2011

143

THAI UNION FROZEN PRODUCTS PCL.

(Unit: Thousand Baht) Separate financial statements Reduce cost to net Cost

realisable value

2011

2010

1,248,738

841,306

21,529

19,875

1,745,004

1,276,836

(43,817)

Ingredient and packaging

260,433

258,200

(13,463)

Goods in transit

421,724

74,798

-

23,115

19,681

-

3,720,543

2,490,696

Finished goods Work in process Raw materials

Spare parts Total

2011

Inventories - net

2010

(45,032)

2011

(46,123)

1,203,706

795,183

21,529

19,875

(4,567)

1,701,187

1,272,269

(16,680)

246,970

241,520

-

421,724

74,798

-

23,115

19,681

3,618,231

2,423,326

-

-

(102,312)

2010

(67,370)

Two overseas subsidiaries have mortgaged the certain inventories of that company to financial institutions to secure its credit facilities as mentioned in Note 19. Restricted deposits with financial institutions

12.

These represent fixed deposits pledged with financial institution to secure credit facilities. 13.

Investments in subsidiaries Details of investments in subsidiaries as presented in separate financial statements are as follows. (Unit: Thousand Baht) Shareholding Company’s name

Paid-up capital 2011

Dividend received

percentage 2010

2011 %

Cost

2010

2011

during the year 2010

2011

2010

%

Songkla Canning Pcl.

Baht 360 million

Baht 360 million

90.44

90.44

1,379,791

1,379,791

569,744

406,960

Thai Union Manufacturing

Baht 300 million

Baht 300 million

90.08

90.08

1,212,172

1,212,172

270,254

364,842

Co., Ltd. Thai Union Seafood Co., Ltd.

Baht 300 million

Baht 300 million

51.00

51.00

189,316

189,316

-

30,600

T-Holding Co., Ltd.

Baht 70 million

Baht 70 million

90.00

90.00

20,699

20,699

3,150

-

Thai Union Feedmill Co., Ltd.

Baht 500 million

Baht 500 million

51.00

51.00

255,000

255,000

307,020

367,200

Thai Union Graphic Co., Ltd.

Baht 40 million

Baht 40 million

74.00

74.00

45,331

45,331

5,180

10,360

Thai Union International, Inc.

USD 13.1 million

USD 8.1 million

100.00

100.00

482,170

325,770

-

-

(TUI) PT Juifa International Foods

USD 2.7 million

USD 2.7 million

88.78

76.50

82,972

69,510

26,577

27,151

EUR 22 million

EUR 22 million

100.00

100.00

925,256

925,256

-

-

4,592,707

4,422,845

1,181,905

1,207,113

Thai Union Investment Holding Co., Ltd. (TUIH) Total

Less: Provision for impairment of investments

Net

144

ANNUAL REPORT 2011

(26,136) 4,566,571

(26,136) 4,396,709

THAI UNION FROZEN PRODUCTS PCL.

The shares of MW Brands and its subsidiaries, subsidiaries of Thai Union Investment Holding Co., Ltd., were pledged as collateral of their subsidiaries long-term loans as described in Note 20. During the second quarter of the current year, US Pet Nutrition, LLC (USPN), which is the subsidiary of Thai Union International, Inc. (TUI), established Canadian Pet Nutrition, ULC in Canada to engage in the distribution of pet food. During the fourth quarter of the current year, the Company increased portion of investment in PT Juifa International Foods, which is the subsidiary of the Company from 76.50% to 88.78% or amount of Baht 13.5 million. On 21 December 2011, the meeting of the Board of Directors approved the additional investment in TUI of not over USD 15 million. During the fourth quarter of the current year, the Company invested in this company amounting to USD 5 million. During the first quarter of 2010, Thai Union Seafood Co., Ltd., subsidiary, called-up the additional 25% of its share capital. The Company additionally invested Baht 25.5 million in this company. During the third quarter of 2010, Thai Union Feedmill Co., Ltd., subsidiary, increased in the registered share capital of Baht 200 million. The Company additionally invested Baht 102 million in this company. Acquisition of MW Brands On 27 July 2010, the meeting of the Company’s Board of Directors approved the acquisition of MW Brands, which can be summarised as follow. -

Approval of the entry into Share Purchase Agreement and associated ancillary agreements in regards to the acquisition of shares and business of MW Brands Holdings SAS (“MW Brands”). MW Brands is a vertically integrated group, which manufactures and distributes the ambient seafood products through its trademarks. MW Brands, headquartered in France, has factories in strategic locations close to two major fishing grounds, Seychelles and Ghana, and also in Portugal and France. MW Brands market its products across Europe through four main trademarks. The details of the transaction as prescribed in the Acquisition Rule as follows. -

The Company and the Seller have entered into a sale and purchase agreement in relation to the Company's proposed acquisition of MW Brands on 27 July 2010. Completion of the Transaction is conditional on approval from the Extraordinary General Meeting of Shareholders, which will be held on 2 September 2010 and Competition Clearance. ANNUAL REPORT 2011

145

THAI UNION FROZEN PRODUCTS PCL.

-

The purchaser, Thai Union EU Seafood 2 S.A. incorporated in Luxembourg for the purposes of the acquisition, which is wholly owned by the Company.

-

The Company will purchase 31,367,000 shares of MW Brands, equivalent to 100 % of the issued share capital as at 27 July 2010 of MW Brands and a maximum number of 417,517 additional shares of MW Brands to be issued upon exercise of stock-option granted by MW Brands together with the repayment of long-term debt and shareholders' debt for the amount equivalent to an enterprise value of EUR 680 million.

-

The Company has agreed to pay for 100% of the share capital of MW Brands as at 27 July 2010 from the sources of funds derived from domestic financial institutions and overseas for the total enterprise value of up to EUR680 million (equivalent to Baht28,496 million). The payment shall be made to the seller and its creditors on the closing date.

-

Source of funds -

Long-term loans from 3 leading domestic financial institutions for the total credit line of up to Baht15,000 million. Such loans will have maturities of 6 years and 8 years.

-

Long-term loans contract with 4 leading foreign financial institutions in the amount of EUR340 million. Such loans will have maturities of 6 years and 7 years and collateral in the form of shares of MW Brands and its subsidiaries.

-

The Company will issue a convertible bond to private placement investor worth EUR60 million. The bond will have a tenor of 4 years from the issue date and an annual coupon of 5% p.a. and an overall yield of 8% p.a. unless converted into common shares. The bond can be converted into common shares at any time after the first year at a conversion price of Baht56 per share (Revised).

-

Approval of the execution of Credit Facility Agreements for the acquisition of shares and business of MW Brands as described above.

-

Approval of the reduction of the Company's registered capital from Baht885,090,950 to Baht883,170,950.

-

Approval of the increase of the Company's registered capital in the additional amount of 116,829,050 shares (Baht 1 per share) from the current registered capital of Baht883,170,950 and the new registered capital will be Baht 1,000,000,000 for the purpose of reserving the issuance of newly issued convertible bond.

146

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

-

Approval of the allotment of new ordinary shares from capital increase of the Company reserving for the issuance of convertible bond as described above.

-

Approval of the issuance and offering of newly issued convertible bond to specific investors (Private Placement) in the amount not exceeding EUR60 million as described above.

-

Approval of the allotment of remaining ordinary shares from those shares reserved for the issuance of convertible bond, as preceding paragraph, to the existing shareholders on a pro rata basis (Right Offering) or to the investors on a Private Placement basis.

-

Approval of the Company's incorporation of its new overseas subsidiary, commercially referred to as Thai Union Investment Holding Co., Ltd. on the territory of Republic of Mauritius under total registered capital of EUR 1, which will be wholly owned by the Company. The Company additionally invested EUR22 million during 2010. The purpose of the incorporation of Thai Union Investment Holding is to acquire MW Brands Holdings SAS.

-

Approval of the appointment of the Company's appointment of CIMB Securities (Thailand) Co., Ltd. as an independent financial advisor to give the Company's directors and shareholders its professional opinions on the acquisition of MW Brands Holdings SAS.

-

Approval of the date and agendas for the Extraordinary General Meeting of Shareholders No.1/2010 that shall be held on 2 September 2010.

On 2 September 2010, the Extraordinary General Meeting of Shareholders approved the acquisition of MW Brands, the execution of credit long-term loan agreements, the reduction and increase of the Company’s registered capital and the issuance and offering of new convertible bond. The bond are to partially fund the acquisition of MW Brands’ shares and business in accordance with the resolution of the Board of Directors meeting held on 27 July 2010. The Company subsequently received confirmation from the UK Office of Fair Trading regarding its anti-trust obligations in respect of the merger. Thai Union EU Seafood 1 S.A., by the Company, purchased 100% interests in MW Brands and settled the long-term loans and loans from shareholders, which equaled the total enterprise value of EUR 680 million. The completion date of this acquisition is 29 October 2010 as described in Note 2.2.

ANNUAL REPORT 2011

147

THAI UNION FROZEN PRODUCTS PCL.

14.

Investments in associates

14.1 Details of associates: (Unit: Thousand Baht) Consolidated financial statements

Company's name

Nature

Country of

of business

incorporation

Carrying amounts Shareholding percentage 2011

2010

%

%

Thailand

25.00

25.00

Thailand

20.00

20.00

India

50.00

50.00

The People's

45.04

45.04

Thailand

44.14

British Virgin

Cost 2011

based on equity method 2010

2011

2010

Investments in associates, directly held by the Company Lucky Union Foods Co., Ltd.

Manufacturer & exporter of

37,500

37,500

298,386

295,100

1,010

1,010

19,711

17,911

27,721

27,721

27,721

27,721

75,900

75,900

25,265

18,337

44.14

44,070

44,070

44,894

38,000

33.33

33.33

96,981

52,433

96,981

52,433

20.00

20.00

95,940

95,940

411,010

388,215

379,122

334,574

923,968

837,717

crab sticks Biz Dimension Co., Ltd.

E-Commerce under website

Avanti Thai Aqua Feeds Private

Manufacturer & distributor

Limited

of animal feeds

Investments in associates, directly held by subsidiaries Century Trading (Shanghai) Co., Ltd. (50% held by Thai Union

Importer & exporter of food products

Republic of

Manufacturing Co., Ltd.)

China

TN Fine Chemical Co., Ltd.

Manufacturer & exporter

(49% held by Thai Union

of by-products from

Manufacturing Co., Ltd.)

seafoods

Moresby International Holdings Inc. (33% held by Thai Union

Holding in fishing company

Island

Manufacturing Co., Ltd.) LDH (La Doria) Limited

Distributor of food products

United

(20% held by MW Brands)

Kingdom

Unit: Thousand Baht

Company's name

Lucky Union Foods Co., Ltd.

Separate financial statements

Country of

Shareholding

Nature of business

incorporation

percentage

Manufacturer & exporter of

Cost

2011

2010

%

%

2011

2010

Thailand

25.00

25.00

37,500

37,500

Thailand

20.00

20.00

1,010

1,010

India

50.00

50.00

27,721

27,721

66,231

66,231

crab sticks Biz Dimension Co., Ltd.

148

E-Commerce under website

Avanti Thai Aqua Feeds Private Limited

Manufacturer & distributor of animal feeds

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

14.2 Share of income/loss During the year, the Company and its subsidiaries have recognised its share of net income (loss) from investments in associated companies in the consolidated financial statements as follows:

Unit: Thousand Baht

Consolidated financial statements

Share of income (loss) from investments in associates Company’s name

during the year

2011

Lucky Union Foods Co., Ltd.

2010

38,287

25,958

Biz Dimension Co., Ltd.

1,801

1,671

Century Trading (Shanghai) Co., Ltd.

6,927

(538)

TN Fine Chemicals Co., Ltd.

6,894

(3,570)

LDH (La Doria) Limited

29,821

-

Total

83,730

23,521

14.3 Summarised financial information of associates Financial information of associates is summarised below. (Unit: Million Baht

Company’s name

Paid-up capital as at

Total assets as at

Total liabilities as at

Total revenues

Profit (loss) for the

31 December

31 December

31 December

for the years ended

years ended

(Unit: Million)

31 December

31 December

2011

2010

2011

2010

2011

Lucky Union Foods Co., Ltd.

Baht150

Baht150

1,726

1,719

Biz Dimension Co., Ltd.

Baht25

Baht25

49

Avanti Thai Aqua Feeds

Rupee

Rupee

76.9

76.9

USD4

TN Fine Chemicals Co., Ltd.

Baht 90

Moresby International Holdings Inc.

USD9.4

USD5.0

295

149

-

-

-

-

-

-

LDH (La Doria) Limited

GBP 1

GBP 1

3,758

2,658

2,796

1,602

11,567

9,178

363

244

Private Limited Century Trading (Shanghai) Co., Ltd.

2010

2011

2010

2011

2010

560

552

1,297

1,035

153

104

42

6

5

74

76

9

8

71

52

24

1

1

2

1

1

USD4

55

46

4

13

225

177

14

(1)

Baht 90

99

116

8

39

100

55

14

(7)

ANNUAL REPORT 2011

149

THAI UNION FROZEN PRODUCTS PCL.

During the current year, Moresby International Holdings Inc. increased the registered share capital of USD4.4 million. Thai Union Manufacturing Co., Ltd. additionally invested USD1.5 million in this company. Investments in some associates were determined on the basis of financial information provided by those companies' management. These were unaudited by their external auditors due to time constraints. However, the values of the investments in associates are immaterial. 15.

Other long-term investments (Unit: Thousand Baht) Consolidated financial statements 2011 Cost

2010 Fair value

Cost

Fair value

Other long-term investments Available-for-sale securities - Unit trusts

50,546

33,577

55,101

36,989

Unrealised loss on changes in the value of investments Total available-for-sale securities

(16,969)

(18,112)

33,577

36,989

36,628

35,580

100

100

70,305

72,669

Other investments - Ordinary shares - Unit trusts Total other long-term investments

(Unit: Thousand Baht) Separate financial statements 2011

2010

34,579

34,579

Other long-term investments Other investments - ordinary shares

150

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

16.

Property, plant and equipment Unit: Thousand Baht

Consolidated financial statements Buildings

Assets under

Land and

and

Machinery

Furniture

land

building

and

and

Motor

installation and under

improvement

improvement

equipment

fixtures

vehicles

construction

1,248,104

4,437,996

9,645,069

366,040

418,971

1,104,878

17,221,058

48,664

1,979,489

4,955,046

292,320

198,649

330,902

7,805,070

2,169,735

Total

Cost 1 January 2010 Increase from acquisition of subsidiaries during the year (Note 2.2) Additions Disposals/write off

409,111

38,148

(116,349)

(207,788)

(1,051,767) 1,317,522

Transfer in (out)

31,057

539,753

Translation adjustment

(3,682)

(123,496)

31 December 2010 Additions Disposals/write off Transfer to other assets

1,616,905 44,332 -

6,664,102

75,483

(242,559) 14,698,794

31,574

27,376

(43,191)

(33,647)

(678)

30,660

59,545

(1,978,537)

(22,470)

(8,041)

(28,754)

654,933

2,751,427 (1,453,420) (429,002)

662,853

1,597,546

25,895,133

2,724,477

3,279,715

65,307

370,512

27,239

47,848

(145,839)

(301,968)

(42,436)

(27,660)

(12,412)

(530,315) (156,138)

-

-

-

-

-

(156,138)

Transfer in (out)

6,830

546,388

1,595,738

71,631

25,349

(2,245,936)

Translation adjustment

3,233

67,005

153,337

15,467

6,337

7,768

253,147

1,671,300

7,196,963

16,516,413

726,834

714,727

1,915,305

28,741,542

17,925

1,793,468

5,229,436

284,361

277,713

-

7,602,903

991

778,613

2,855,075

172,766

156,801

-

3,964,246

4,809

225,011

873,228

35,220

50,108

-

1,188,376

31 December 2011

-

Accumulated depreciation 1 January 2010 Increase from acquisition of subsidiaries during the year (Note 2.2) Depreciation for the year Depreciation for disposals/write off

(887)

(141,928)

(685,292)

(37,065)

(28,184)

-

(893,356)

Translation adjustment

(131)

(51,334)

(135,886)

(15,360)

(6,257)

-

(208,968)

450,181

-

11,653,201 1,551,699

31 December 2010 Depreciation for the year Depreciation for disposals/write off Translation adjustment 31 December 2011

22,707 4,722

2,603,830

8,136,561

325,686

1,094,947

439,922 72,736

53,608

-

(137,489)

(111,802)

(40,153)

(23,443)

-

(312,887)

89

19,468

90,485

9,220

4,667

-

123,929

27,518

2,811,495

9,210,191

481,725

485,013

-

13,015,942

-

32,371

215,823

-

3,483

-

251,677

-

Allowance for loss on impairment of assets 1 January 2010 Decrease during the year

-

-

(190,088)

-

-

-

(190,088)

Translation adjustment

-

-

(9,830)

-

-

-

(9,830)

31 December 2010

-

32,371

15,905

-

3,483

-

51,759

Increase during the year

-

33,255

-

-

-

-

33,255

Decrease during the year

-

-

-

(3,483)

-

(15,317)

Translation adjustment

-

-

943

-

-

-

943

31 December 2011

-

65,626

5,014

-

-

-

70,640

(11,834)

ANNUAL REPORT 2011

151

THAI UNION FROZEN PRODUCTS PCL.

Unit: Thousand Baht

Consolidated financial statements Buildings

Assets under

Land and

and

Machinery

Furniture

installation and

land

building

and

and

Motor

under

improvement

improvement

equipment

fixtures

vehicles

construction

31 December 2010

1,594,198

4,027,901

6,546,328

215,011

209,189

1,597,546

14,190,173

31 December 2011

1,643,782

4,319,842

7,301,209

245,109

229,714

1,915,304

15,654,960

Total

Net book value

Depreciation for the years 2010 (Baht1,039 million include in manufacturing cost and the balances in selling and administrative expenses)

1,188,376

2011 (Baht1,446 million include in manufacturing cost and the balances in selling and administrative expenses)

1,551,699

(Unit: Thousand Baht) Separate financial statements Buildings

Assets under

Land and

and

Machinery

Furniture

installation and

land

building

and

and

Motor

under

improvement

improvement

equipment

fixtures

vehicles

construction

1 January 2010

387,280

1,525,668

1,690,486

51,429

127,518

341,308

4,123,689

Additions

369,912

-

19,158

2,130

7,092

527,717

926,009

Disposals/write off

(17,079)

-

(2,867)

(1,851)

(1,125)

Total

Cost

Transfer in (out) 31 December 2010

(2,617)

(25,539)

-

177,158

131,663

6,115

2,710

740,113

1,702,826

1,838,440

57,823

136,195

548,762

5,024,159

-

41,758

120,531

5,134

23,464

318,751

509,638

Additions Disposals/write off

(317,646)

-

-

-

(14,192)

(257)

(7,913)

(114)

2,257

269,410

160,925

441

(6,484)

(426,549)

742,370

2,013,994

2,105,704

63,141

145,262

440,850

5,511,321

1 January 2010

-

560,751

993,951

26,238

85,311

-

1,666,251

Depreciation for the year

-

81,833

216,386

8,465

14,318

-

321,002

Transfer in (out) 31 December 2011

(22,476) -

Accumulated depreciation

Depreciation for disposals/ write off

-

-

(1,731)

(1,125)

-

31 December 2010

-

642,584

1,209,503

32,972

98,504

-

1,983,563

Depreciation for the year

-

62,929

190,820

9,381

9,409

-

272,539

Depreciation for disposals/write off

-

-

(7,851)

-

(15,100)

31 December 2011

-

705,513

1,393,301

42,126

100,062

-

2,241,002

-

32,371

-

-

3,483

-

35,854

(834)

(7,022)

(227)

(3,690)

Allowance for loss on impairment of assets 1 January 2010

152

Increase (Decrease)

-

-

-

-

-

-

-

31 December 2010

-

32,371

-

-

3,483

-

35,854

Increase during the year

-

33,255

-

-

-

-

33,255

Decrease during the year

-

-

-

-

31 December 2011

-

65,626

-

-

ANNUAL REPORT 2011

(3,483) -

-

(3,483)

-

65,626

THAI UNION FROZEN PRODUCTS PCL.

(Unit: Thousand Baht) Separate financial statements Buildings

Assets under

Land and

and

Machinery

Furniture

land

building

and

and

Motor

installation and under

improvement

improvement

equipment

fixtures

vehicles

construction

31 December 2010

740,113

1,027,871

628,937

24,851

34,208

548,762

3,004,742

31 December 2011

742,370

1,242,855

712,403

21,015

45,200

440,850

3,204,693

Total

Net book value

Depreciation for the years 2010 (Baht 304 million include in manufacturing cost and the balances in selling and administrative expenses)

321,002

2011 (Baht 255 million include in manufacturing cost and the balances in selling and administrative expenses)

272,539

As at 31 December 2011, certain plant and equipment items of the Company and its subsidiaries have been fully depreciated but are still in use. The gross carrying amount (before

deducting

accumulated

depreciation)

of

those

assets

amounted

to

approximately Baht5,189 million (2010: Baht4,664 million). 17.

Intangible assets (Unit: Million Baht) Consolidated financial statements Covenant

Licences

Trademark

Patents

Customer

not to

Computer

Distributor

relationships

complete

software

relationships

Others

Total

Cost At 1 January 2010

47

874

36

141

14

92

-

-

1,204

210

12,585

-

-

-

159

235

2

13,191

Additions

2

-

-

-

-

9

-

-

11

Disposal/write off

-

-

-

-

-

(3)

-

-

(3)

(14)

(1)

(8)

(10)

-

(662)

Increase from acquisition of subsidiaries (Note 2.2)

Translation adjustment At 31 December 2010

(7)

(622)

-

252

12,837

36

127

13

249

225

2

13,741

Addition

-

1

-

-

-

37

-

1

39

Disposal/write off

-

-

-

-

-

-

-

(36)

12

376

-

7

-

3

7

-

405

264

13,214

-

134

13

289

232

3

14,149

Translation adjustment 31 December 2011

(36)

ANNUAL REPORT 2011

153

THAI UNION FROZEN PRODUCTS PCL.

(Unit: Million Baht) Consolidated financial statements Covenant

Licences

Trademark

Patents

Customer

not to

Computer

Distributor

relationships

complete

software

relationships

Others

Total

Amortisation At 1 January 2010

12

296

-

90

14

78

-

-

490

-

-

-

-

-

65

-

-

65

6

-

-

13

-

8

1

-

28

-

Increase from acquisition of subsidiaries (Note 2.2) Amortisation Amortisation for disposal/ write off

-

-

-

-

(3)

-

-

(3)

(28)

-

(8)

(1)

(3)

-

-

(40)

18

268

-

95

13

145

1

-

540

Amortisation

9

-

-

13

-

31

8

-

61

Translation adjustment

-

13

-

5

-

1

-

-

19

At 31 December 2011

27

281

-

113

13

177

9

-

620

-

-

-

-

-

-

-

-

-

-

182

-

-

-

-

-

-

182

-

-

-

-

-

-

Translation adjustment At 31 December 2010

-

Impairment At 1 January 2010 Increase from acquisition of subsidiaries (Note 2.2) Translation adjustment

-

At 31 December 2010

-

174

-

-

-

-

-

-

174

Translation adjustment

-

5

-

-

-

-

-

-

5

At 31 December 2011

-

179

At 31 December 2010

234

12,395

At 31 December 2011

237

12,754

(8)

-

-

-

(8)

-

179

-

-

36

32

-

104

224

2

13,027

-

21

-

112

223

3

13,350

Net book value

(Unit: Million Baht) Separate financial statements Computer software Cost

154

At 1 January 2010

8.0

Additions

1.0

At 31 December 2010

9.0

Additions

0.7

At 31 December 2011

9.7

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

(Unit: Million Baht) Separate financial statements Computer software Amortisation At 1 January 2010

7.1

Amortisation

0.4

At 31 December 2010

7.5

Amortisation

0.5

At 31 December 2011

8.0

Net book value At 31 December 2010

1.5

At 31 December 2011

1.7

Acquisition during the year Licenses, distributor relationships trademark and intangible assets acquired through business combinations. These licenses and distributor relationships have been granted for approximately 39 years and 20 years, respectively. Trademarks acquired have indefinite useful life. As at 31 December 2011, some trademark of the overseas subsidiary was incorporated at eligible collateral as mentioned in Note 19. 18.

Trade and other payables

(Unit: Thousand Baht) Consolidated financial statements

Separate financial statements

2011

2010

2011

2010

Trade payables - related parties

28,047

39,975

231,330

243,513

6,444,194

5,869,655

833,626

696,100

-

-

8

445

38,261

51,253

11,904

32,116

95,371

180,495

24,144

70,612

Accrued expenses

1,313,202

1,053,379

271,230

254,719

Total trade and other payables

7,919,075

7,194,757

1,372,242

1,297,505

Trade payables - unrelated parties Accrued interest expenses to related parties Accrued expenses - related parties Other payables construction and asset purchase

ANNUAL REPORT 2011

155

THAI UNION FROZEN PRODUCTS PCL.

19.

Bank overdrafts and short-term loans from financial institutions The Company entered into interest rate swap agreements for short-term loans from financial institution to hedge interest rate risk, as mentioned in Note 35.1 TUI entered into an amended and restated credit agreement (the TUFP credit facility) with Bank of America N.A. The TUFP credit facility provides for a USD85 million revolving facility and expires on 15 October 2013. Borrowings under the credit facility bear interest, at TUFP’s option, at LIBOR plus a margin of 2.00 to 2.50% per annum, or the bank’s prime rate plus 1.00 to 1.50% per annum, subject to excess availability evaluated on a quarterly basis. An unused line fee is charged at 0.25% per annum, subject to adjustment, on the average daily unused portion of the credit facility. The credit facility is secured by all accounts receivable and inventory of TUFP. This revolving credit agreement includes a requirement that all borrowers maintain a lockbox arrangement whereby cash receipts are used to repay the amounts outstanding under the revolving agreement. Therefore, all borrowings made under the TUFP credit agreement will be classified as short-term. On 16 February 2011, TUFP entered into a second amendment to the TUFP credit agreement with Bank of America, N.A. for USD15 million temporary increase in the availability under the TUFP Credit Agreement through 16 May 2011, which was extended through 15 June 2011 under a TUFP third amendment. Borrowings under the TUFP amendments No. 2, 3 and 4 bear interest at LIBOR plus 2.25% per annum or the bank's prime rate plus 1.25% per annum, subject to excess availability evaluated on a quarterly basis. The unused line fee remains at 0.25% per annum, subject to adjustment on the average daily unused portion of the credit facility. On 6 June 2011, TUFP entered into a fourth amendment to the Credit Agreement (TUFP Amendment No. 4) with BOA, which increased the temporary credit line to USD115 million through 15 July 2011. On 16 July 2011, TUFP further amended the TUFP Credit Agreement (TUFP Amendment No. 5) to increase the credit line to USD140 million through the 15 October 2013 expiration date, with other terms remaining unchanged from the initial TUFP Credit Agreement. As at 31 December 2011, the balance under the credit facility was USD126 million at interest rate between 2.28 to 4.25% per annum and actual unused availability was approximately USD12 million. TUFP is subject to certain financial covenants including interest coverage ratio and leverage coverage ratio and others. As at 31 December 2011, TUFP determined it was in compliance with these covenants.

156

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

Tri-Union Frozen Foods, LLC (TUFF) maintained a revolving credit facility with Wells Fargo Foothill, LLC until 15 October 2010, which was replaced by TUFP credit facility. The TUFP Facility provided for borrowing and the issuance of letter of credit of up to USD45 million subject to limitations based on eligible accounts receivable and inventory and may be increased to USD75 million under certain conditions. The issuance of letters of credit reduces the borrowing capacity. Borrowings under the credit agreement bear interest, at TUFF’s option, at LIBOR plus a margin of 2.75% per annum or the Central Bank's rate plus 2% per annum. TUFF was subject to certain financial covenants including fixed coverage ratio and leverage coverage ratio as well as other operating covenants including limitation capital expenditures, transactions with affiliates, distributions, and dividends. The facility is guaranteed by the Company and collateralised by TUFF’s accounts receivable and inventory. In association with the TUFP Credit Facility in place, TUFF repaid Wells Fargo Foothill, LLC for the entire outstanding balance on 15 October 2010. On 11 March 2011, Tri-Union Seafoods, LLC (Tri-U) entered into an amended revolving credit facility with Bank of America N.A. The credit facility, which expires on 11 March 2014, provides for borrowings and the issuance of letters of credit up to USD95 million subject to limitations based on eligible accounts receivable and inventory. The issuance of letters of credit reduces the amount of borrowing capacity. Borrowings under the credit facility bear interest, at Tri-U’s option, at LIBOR plus a margin of 2.00% per annum or 2.25% per annum, the bank's prime rate, or the bank’s prime rate plus 1.00% per annum or 1.25% per annum, depending upon the ratio of amounts outstanding to secured accounts receivable and inventory, subject to quarterly adjustment. An unused line fee is charged at 0.375% per annum, subject to adjustment, on the average daily unused portion of the credit facility. The credit facility is secured by accounts receivable and inventory of Tri-U. On 6 June 2011, Tri-U amended its credit facility with the above financial institution to incorporate the "Chicken of the Sea" trademark at eligible collateral with USD10 million additional availability component loan at LIBOR plus a margin of 3.75% or 4.00% per annum or the bank's prime rate plus 2.75% or 3.00% per annum within the USD95 million credit line. Until repayment in full of the additional component loan, borrowing under Tri-U credit facility bears interest at LIBOR plus 2.25% or 2.50% per annum, or the bank's prime rate plus 1.25% or 1.50% per annum at Tri-U option. As at 31 December 2011, the balance under the credit facility was USD87 million with interest rate at 2.63 to 6.00% per annum and actual unused availability was approximately USD5 million. Tri-U is subject to certain financial covenants including an interest coverage ratio and leverage ratio and other covenants, including limitations on indebtedness capital leases capital expenditures, transactions with affiliates, distributions, and dividends. Tri-U determined it was not in compliance with these covenants as of ANNUAL REPORT 2011

157

THAI UNION FROZEN PRODUCTS PCL.

31 December 2011. The financial institution has the right to call the debt immediately due and payable. As of 10 February 2012, management has not received any notification from the bank that it intends to call the debts. The Company is currently engaged in negotiations with the financial institution to modify the terms of the covenants in order to be in compliance through at least 31 December 2012. There can be no assurances that Tri-U will be successful in negotiating a debt modification. The Company has confirmed to Tri-U that it will provide financial support sufficient for Tri-U to satisfy its obligations and debt service requirements as they come due until at least 1 January 2013. 20.

Long-term loans Long-term loans as at 31 December 2011 and 2010 consist of: (Unit: Million Baht) Consolidated

Separate

financial statements

financial statements

2011

2010

2011

2010

USD loans

9

8

-

-

Baht loans

3,092

10,259

2,250

9,000

EUR loans

13,240

13,589

-

-

Less: Deferred financial fees Total Less: Current portion Net

(742) 15,599 (984) 14,615

(839) 23,017 (516) 22,501

-

(103)

2,250

8,897

-

-

2,250

8,897

During the third quarter of 2006, a local subsidiary entered into two loan agreements amounting to Baht150 million with two local financial institutions. The loans carry interest at MLR minus 1.25% per annum and MLR minus 0.50% per annum. These loans are to be repaid within year 2013 and have been guaranteed by a local subsidiary. During the second quarter of the current year, the above subsidiary had already paid the principal in full amount. During the second quarter of 2007, a local subsidiary drew Baht380 million of two loan agreements from a local financial institution. The loans carry interest at 4.85% per annum, and THBFIX plus 0.5% per annum. These loans are to be repaid within year 2012. As at 31 December 2011, the balance of this loan is Baht24 million.

158

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

During the third quarter of 2007, a local subsidiary entered into a 7-year loan agreement amounting to Baht1,190 million with a local financial institution. The loan carries interest at THBFIX plus 0.39% per annum and is to be repaid in semi-annually installments, the first of which will be due in January 2011. The loan contains covenants relating to various matters stipulated in the agreement. However, during 2008, the above subsidiary had repaid principal amount of Baht100 million. As at 31 December 2011, the balance of this loan was Baht818 million. During the last quarter of 2010, the Company has entered into, two unsecured loan agreements 6-year and 8-year, amounting to Baht9,000 million in total with the group of financial institutions. The loan carries interest at THBFIX plus 1.50 to 1.75% per annum and is to be repaid within year 2019. However, during the current quarter, the Company had restructured and had already paid in full. In 2010, an overseas subsidiary has entered into loan agreements with four overseas financial institutions to acquire EUR340 million loans. The loans carry interest at the LIBOR plus 4.5 to 5.0% per annum, are to be repaid within 6 years and 7 years and secured by the shares of MW Brands and its subsidiaries. During the third quarter of 2011, the Company has entered into a 7-year loan agreement amounting to Baht2,250 million with a local financial institution. The loan carries interest at THBFIX per annum and is to be repaid in quarterly installments, the first of which will be due in October 2013. The loan contains covenants relating to various matters stipulated in the agreement. As at 31 December 2011, the balance of this loan was Baht2,250 million. 21.

Debentures On 26 October 2005, a meeting of the Company’s Board of Directors approved the issuance of debentures of the Company and/or its subsidiary companies in an amount of up to Baht8,500 million or the equivalent of another currency, for the purposes of refinancing debt and future expansion. Such debentures may be offered to the public and/or institutional investors and/or local and/or foreign investors. On 7 June 2007, the Company issued Baht3,200 million (3,200,000 units of debentures of Baht1,000 each) of registered, unsubordinated, unsecured debentures with no trustee, with interest rate at 3.91% per annum and the redemption in full is due in June 2011. The Company already paid in full in June 2011.

ANNUAL REPORT 2011

159

THAI UNION FROZEN PRODUCTS PCL.

On 12 November 2008, the Company issued the 2-year debentures of Baht1,500 million (1,500,000 units of debentures of Baht1,000 each) of registered, unsubordinated, unsecured debentures with no trustee, with interest rate at 4.7% per annum, which redeemed on the maturity date in 2010 and the 5-year debentures of Baht500 million (500,000 units of debentures of Baht1,000 each) of registered, unsubordinated, unsecured debentures with no trustee, with interest rate at 5.5% per annum and the redemption is due in 2013. On 25 April 2011, the Annual General Meeting of Shareholders approved the increase of credit limit for issuance of debentures of the Company and/or its subsidiaries in an amount of up to Baht15,000 million or the equivalent in other currencies, for the purpose of refinancing debt and future expansion. Such debentures may be offered to the public and/or institutional investors and/or local and/or foreign investors. On 27 July 2011, the Company issued three debentures the 3 to 10 year debentures of Baht6,750 million (6,750,000 units of debentures of Baht1,000 each) of registered, unsubordinated, unsecured debentures with no trustee, with interest rate at 4.51 to 5.02% per annum and the redemption is due in 2014, 2016 and 2021. The debentures contain covenants relating to various matters such as the maintenance of debt to shareholders’ equity ratio and interest cover ratio, and certain conditions in issuance of debentures agreements, for example, annual dividend payment in the form of cash exceeding 60 percent of net income of the year is prohibited, etc. 22.

Convertible bond On 2 September 2010, the Extraordinary General Meeting of Shareholders approved the issuance non-secured convertible bond to specific investors (Private Placement) of EUR 60 million. The bond has a tenor of 4 years and an annual coupon of 5% p.a. and an overall yield of 8% p.a. unless converted into common shares. The bond can be converted into common shares at any time after the first year at a conversion price of Baht 56 per share. On 27 October 2010, the Company issued these convertible bond. The convertible bond contains covenants relating to various matters. According to the Thai Accounting Standard No. 107 “Financial Instruments: Disclosure and Presentation”, the issuer of convertible bond is required to classify the bond’s liability and equity components and present them separately from the owner’s equity in the statements of financial position. However, the rate of interest payable in the future on the convertible bond was the same as the market rate prevailing on the date of bond issuance. The Company therefore recorded all the convertible bond as liabilities. The liability component continues to be presented on an amortised cost basis, until conversion to ordinary shares or maturity of the bond.

160

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

23.

Provision for long-term employee benefits The amount related to long-term employee benefits recognised in profit or loss and the statements of financial position are summarised below. (Unit: Thousand Baht) 2011

Current service cost Interest cost Long-term employee benefit expenses for the years

Defined benefit obligation

Consolidated

Separate

financial statements

Financial statements

85,501

16,958

61,351

7,782

146,852

24,740

1,062,945

190,433

Fair value of plan assets

(70,467)

Provisions for long-term employee benefits

992,478

190,433

The changes in the present value of the defined benefit obligation are as follow: (Unit: Thousand Baht) 2011

Defined benefit obligation at beginning of year

Consolidated

Separate

financial statements

financial statements

397,714

-

603,395

169,096

Current service cost

91,535

16,958

Interest cost

62,821

7,782

(125,326)

(3,403)

Cumulative effect of change in accounting policy for employee benefits adjusted against beginning balance of retained earnings (Note 5)

Benefits paid during the year Actuarial losses

17,934

-

Translation adjustment

14,872

-

1,062,945

190,433

Defined benefit obligation at end of year

ANNUAL REPORT 2011

161

THAI UNION FROZEN PRODUCTS PCL.

The change in the fair value of plan assets is as follows: (Unit: Thousand Baht) 2011 Consolidated

Separate

financial statements

financial statements

Fair value of plan assets at beginning of year

115,292

-

Expected return on plan assets

(8,851)

-

Contributions

41,745

-

(87,471)

-

Actuarial losses

5,482

-

Translation adjustments

4,270

-

70,467

-

Benefits paid during the year

Fair value of plan assets at end of year

The major categories of plan assets as a percentage of total plan assets are as follows: 2011 Consolidated

Separate

financial statements

financial statements

%

%

Equity securities

64

-

Debt securities

36

-

Principal actuarial assumptions at the valuation date were as follows:

Discount rate

Consolidated financial statements

Separate financial statements

2011

2010

2011

2010

(% per annum)

(% per annum)

(% per annum)

(% per annum)

4.2 - 12.4

4.2 - 12.4

4.7

4.7

3.0 - 10.0

3.0 - 10.0

3.5 - 10.0

3.5 - 10.0

1.0 - 30.0

1.0 - 30.0

2.5 - 30.0

2.5 - 30.0

Future salary increase rate (depending on age of employee) Staff turnover rate

162

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

24.

Income tax/deferred tax assets (liabilities) Income tax expenses for the years ended 31 December 2011 and 2010 are made up as follows: (Unit: Million Baht) Consolidated

Separate

financial statements

financial statements

2011

2010

2011

2010

Current income tax: Current income tax charge

586

293

119

79

11

13

-

-

(405)

323

(9)

(1)

192

629

Translation adjustment Expense (income) in deferred income tax Income tax expense reported in income statements

110

78

Reconciliation between tax expenses and the product of accounting profit multiplied by the applicable tax rates for the year ended 31 December 2011 and 2010. (Unit: Million Baht) Consolidated

Separate

financial statements

financial statements

2011 Accounting profit before corporate income tax Applicable tax rate

2010

2011

2010

6,217

3,981

3,133

2,029

10-35%

10-35%

30%

25-30%

2,075

1,150

940

594

-

-

-

-

Accounting profit before tax multiplied by applicable tax rate Tax adjust for prior year Tax effect of intercompany transactions

(2) (345)

(1) 449

Tax effect for: investment promotion (Note 28) tax-exempt incomes and non-deductible expenses Increase in deferred tax assets Increase in deferred tax liabilities Corporate income tax in income statements

(1,310) (168)

(665) 2

(481)

(149)

(341)

(366)

(155)

(693)

(9)

(1)

97

387

1

-

192

629

110

78

ANNUAL REPORT 2011

163

THAI UNION FROZEN PRODUCTS PCL.

As at 31 December 2011 and 2010 the components of deferred tax assets and deferred tax liabilities are as follows: (Unit: Million Baht) Consolidated

Separate

financial statements

financial statements

2011

2010

2011

2010

Deferred tax assets Tax losses brought forward

566

157

-

-

20

19

5

1

118

73

4

9

Assets value

13

9

13

9

Other allowance

21

2

-

-

Provision for long-term employee benefit

49

-

5

-

Accrued liabilities

125

159

-

-

Inventory cost capitalisation

142

79

-

-

9

1

8

-

1,063

499

35

19

472

373

1

-

Intangible assets

3,853

3,749

-

-

Prepaid expense

19

14

-

-

Others reserves

207

149

-

-

Other

367

356

-

-

Total

4,918

4,641

1

-

Tax effect of non-deductible expenses Allowance for doubtful accounts Allowance for devaluation in the value of inventories

Others Total Deferred tax liabilities Depreciation and amortisation

The above deferred tax liabilities included the deferred tax liabilities of EUR 100 million from the appraised value of fair value of intangible assets at acquisition date as discussed in note 2.2. In October 2011, the cabinet passed a resolution to reduce the corporate income tax rate from 30 percent to 23 percent in 2012, and then to 20 percent from 2013. In addition, in order to comply with the resolution of the cabinet, in December 2011, the decreases in tax rates for 2012 - 2014 were enacted through a royal decree. The Company reflected the changes in tax rates in its deferred tax calculation, as presented above.

164

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

25.

Share capital

On 2 September 2010, the Extraordinary General Meeting of Shareholders of the Company approved the following resolutions relating to changes in the Company’s registered share capital.

1) Approved the reduction of registered share capital of the Company from Baht885,090,950 to Baht883,170,950. 2) Approved the increase of registered share capital of the Company from Baht883,170,950 to Baht1,000,000,000. The above reduction and increase of registered share capital were made for the purposes of the acquisition of MW Brands, as described in Note 13. The Company registered the reduction and increase in its registered share capital with the Ministry of Commerce on 10 September 2010 and 13 September 2010, respectively. Reconciliation of the number of issued and paid-up share capital Unit: Shares

For the years ended 31 December 2011 Number of ordinary shares at the beginning of year

956,329,407

2010 883,170,950

Increase in the number of ordinary shares due to share capital increase* Number of ordinary shares at the end of year

956,329,407

73,158,457 956,329,407

* The Company allocated the new 73,158,457 shares to the existing shareholders at the ratio of 20 existing common shares to 1 newly issued shares. The shares were offer at a price of Baht 50 per share, totaling 44,158,457 shares. In addition, the Company allocated 29,000,000 shares through private placement at the subscription price of Baht53 per share. The Company registered its additional shares with the Ministry of Commerce on 27 October 2010 and the shares were first traded on Stock Exchange of Thailand on 29 October 2010. 26.

Statutory reserve Pursuant to section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside a statutory reserve at least 5% of its net income after deducting accumulated deficit brought forward (if any) until the reserve reaches 10% of the registered share capital. The statutory reserve is not available for dividend distribution.

ANNUAL REPORT 2011

165

THAI UNION FROZEN PRODUCTS PCL.

27.

Expenses by nature Significant expenses by nature are as follow: (Unit: Thousand Baht) Consolidated financial statements 2011

Separate financial statements

2010

2011

2010

Salary and wages and other employee benefits

8,620,366

5,486,862

1,944,049

1,740,563

Depreciation

1,551,699

1,188,376

272,539

321,002

Amortisation expenses

64,475

30,575

473

394

Loss on impairment

34,681

-

29,772

-

737,568

582,988

184,220

249,438

59,485,850

49,226,353

17,867,630

15,440,499

(2,056,615)

(2,892,682)

Rental expenses under operating lease agreements Raw materials, consumables used and finished goods purchased Changes in inventories of finished goods and work in progress

28.

(409,086)

702,711

Promotional privileges The Company has been granted promotional privileges by the Board of Investment to carry on the activity of producing frozen seafood, processed and semi- processed food and others. In addition, five subsidiaries were granted promotional privileges by the Board of Investment to produce frozen seafood, processed and semi-processed food, processed animal feeds and others. Subject to certain imposed conditions, the tax privileges of the Company and these subsidiaries include the following: -

Exemption from corporate income tax on income from the promoted activities for a period of 8 years, to the extent that the amount of tax exempted does not exceed investment capital exclusive of land and working capital for manufacturing frozen seafood and canned pet food and for a period of 8 years for semi-canned food and frozen ready-meal commencing as from the date of first earning operating income. In case that there are losses incurred during the corporate income tax exemption period, the Company and its subsidiaries are allowed to utilise the losses as a deduction against net income of future years after the expiry of the tax exemption period but with a time limit of 5 years after that period.

-

Exemption from income tax on dividend paid to the shareholders from the income of the promoted operation during the corporate income tax exemption period.

166

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

-

Exemption from import duty on raw materials and essential materials imported for use specifically in producing for export for a period of 1 year and/or 5 years as from the date of first import.

-

Exemption from import duty on items which the promoted person imports for re-export for a period of 1 year and/or 5 years as from the date of first import.

-

Five percent of any increment in export income over that of the preceding year is deductible from taxable income for a period of ten years commencing as from the date of first earning operating income, provided that the export sales of that year are not lower than the average export sales of the past three years, except for the first two years.

-

Exemption from import duty on machinery as approved by the Board.

In addition, subsidiaries have been accorded the following additional privileges: -

A fifty percent reduction of corporate income tax on their net income, for a period of 5 years after the corporate income tax exemption expired.

-

Permission to double deduct the costs of transportation, electricity and water supply for corporate income tax purpose, for a period of 10 years, commencing as from the date of first earning operating income.

-

Permission to deduct twenty five percent of the cost of public utilities, in addition to normal depreciation charges.

The Company’s operation revenues for the years are below shown divided according to promoted and non-promoted activities. (Unit: Thousand Baht) 2010

2011 B.O.I.

Non - B.O.I.

promoted

promoted

Total

B.O.I.

Non - B.O.I.

promoted

promoted

Total

Revenues Sales

29.

Local

2,784,983

775,403

3,560,386

1,930,745

1,025,087

2,955,832

Export

19,735,527

429,818

20,165,345

15,716,541

2,511,607

18,228,148

Other income

126,051

2,388,842

2,514,893

405,829

1,803,291

2,209,120

Total revenues

22,646,561

3,594,063

26,240,624

18,053,115

5,339,985

23,393,100

Earnings per share Basic earnings per share is calculated by dividing profit for the year attributable to equity holders of the Company (excluding other comprehensive income) by the weighted average number of ordinary shares in issue during the year. ANNUAL REPORT 2011

167

THAI UNION FROZEN PRODUCTS PCL.

Diluted earnings per share is calculated by dividing profit for the year attributable to equity holders of the Company (excluding other comprehensive income) 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. For the year ended 31 December 2011 Weighted average

Profit for the year

Earnings per share

Consolidated

Separate

number of

Consolidated

Separate

financial

financial

ordinary

financial

financial

statements

statements

shares

statements

statements

Million Baht

Million Baht

Million share

Baht

Baht

5,075

3,023

956.3

90

90

-

-

-

42.9

5,165

3,113

999.2

Basic earnings per share Profit attributable to equity holders of the parent

5.30

3.16

5.17

3.11

Add: Interest expense from convertible bond recognised during the year Effect of dilutive potential ordinary shares Diluted earnings per share Profit of ordinary shareholders assuming the conversion of warrants to ordinary shares

For the year ended 31 December 2010 Weighted average

Profit for the year

Earnings per share

Consolidated

Separate

number of

Consolidated

Separate

financial

financial

ordinary

financial

financial

statements

statements

shares

statements

statements

Million Baht

Million Baht

Million share

Baht

Baht

2,874

1,951

897.4

22

22

-

-

-

7.8

2,896

1,973

905.2

Basic earnings per share Profit attributable to equity holders of the parent

3.20

2.17

3.19

2.17

Add: Interest expense from convertible bond recognised during the year Effect of dilutive potential ordinary shares Diluted earnings per share Profit of ordinary shareholders assuming the conversion of warrants to ordinary shares

168

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

30.

Segment information The operations of the Company and its subsidiaries principally involve the production, distribution and export of frozen seafood products. Some overseas subsidiaries of which the principal business activity is overseas investments. These activities are carried out in Thailand and overseas. Their income comes from both local and export sales. Below is the consolidated financial information for the years ended 31 December 2011 and 2010 of the Company and its subsidiaries by segment. (Unit: Million Baht) Frozen and canned food products 2011

Other businesses

Total

2010

2011

2010

Elimination

2011

2010

2011

Grand total

2010

2011

2010

Sales - Local

4,571

3,704

11,221

10,532

15,792

14,236

(6,129)

(4,893)

9,663

9,343

- Export

102,509

74,844

898

668

103,407

75,512

(14,400)

(13,348)

89,007

62,164

Total sales

107,080

78,548

12,119

11,200

119,199

89,748

(20,529)

(18,241)

98,670

71,507

7,772

3,275

1,323

1,297

9,095

4,572

(646)

8,449

4,724

Segment operating income

152

Unallocated income (expenses): Interest income Administrative expenses Share of profit from investment in associated companies

10

5

(54)

(8)

84

Finance cost Corporate income tax Profit attributable to non-controlling interests of the subsidiaries

24

(2,272)

(764)

(192)

(629)

(950)

Profit attributable to equity holders of the company

(478) 2,874

5,075

Financial information of the Company and its subsidiaries presented by geographical segment for the years ended 31 December 2011 and 2010 is as follows: (Unit: Million Baht)

Overseas

Thailand 2011

2010

2011

Total

2010

Elimination

Grand total

2011

2010

2011

2010

2011

2010

Sales - Frozen and canned food products

51,330

44,430

55,750

34,118

107,080

78,548

(18,433)

(16,278)

88,647

62,270

12,119

11,200

-

-

12,119

11,200

(2,096)

(1,963)

10,023

9,237

63,449

55,630

55,750

34,118

119,199

89,748

(20,529)

(18,241)

98,670

71,507

8,449

4,724

15,655

14,190

Unallocated assets

67,575

60,587

Total assets

83,230

74,777

- Other businesses Total sales Segment operating income Property, plant and equipment

9,248

9,562

6,219

4,592

15,467

14,154

188

36

Transfer prices between the Company and its subsidiaries are as set out in Note 10.

ANNUAL REPORT 2011

169

THAI UNION FROZEN PRODUCTS PCL.

31.

Provident fund The Company, the local subsidiaries and their employees have jointly established provident funds under the Provident Fund Act B.E. 2530. The funds are contributed to on a monthly basis, by the employees at rates ranging from 2 to 5 percent of the basic salaries, and by the Company and its local subsidiaries at rates ranging from 2 to 10 percent, based on the length of employment. The Company’s fund is managed by MFC Asset Management Pcl. and the local subsidiaries’ fund is managed by American International Assurance Co., Ltd. and TISCO Asset Management Co., Ltd. During the year 2011, the Company and its local subsidiaries contributed approximately Baht45 million (2010: Baht42 million) to the fund

32.

Provision for changes in the value of pension fund An overseas subsidiary has established a pension fund under which it matches participants’ contributions under these plans at a rate of 50 percent of an employee’s contribution up to a maximum of 6 percent of eligible compensation. The overseas subsidiary contributed USD0.4 million to the fund in the year 2011 (2010: USD0.4 million).

33.

Dividends (Unit: Million Baht) Dividend Dividends

Approved by

Total dividends

per share (Baht per share)

Final dividends for 2009

Annual General Meeting of the shareholders on 22 March 2010

Interim dividends for 2010

Total dividends for 2010

170

ANNUAL REPORT 2011

230

0.26

Annual General Meeting of the 325

0.34

870

0.91

Board of Directors’ meeting on 5 August 2011

Total dividends for 2011

1.00

1,996

shareholders on 25 April 2011 Interim dividends for 2011

883

Board of Directors’ meeting on 30 September 2010

Interim dividends for 2011

1.00

Board of Directors’ meeting on 4 August 2010

Interim dividends for 2010

883

1,195

THAI UNION FROZEN PRODUCTS PCL.

34.

Commitments and contingent liabilities

34.1 Commitments As at 31 December 2011, the Company and its subsidiaries have the following commitments: a) The Company and its subsidiaries have the commitments under the following agreements: Payable within Less than 1 year Office rental and service agreements Baht

52 million

EUR

1 million

Land lease agreements

USD

3 million -

Car lease agreements

Machine lease agreements

Baht

5 million

EUR

1 million

Baht

2 million -

1 to 5 years Baht

57

million

EUR

2

million

Baht

3

million

More than 5 years Baht

9

Baht

3

Total

million

Baht EUR

3

million

million

Baht

6

million

-

118

million

USD

9

million

USD

3

million

USD

15

million

EUR

1

million

EUR

1

million

EUR

2

million

Baht

4

million

-

Baht

9

million

-

EUR

1

million

Baht

4

million

-

Baht

6

million

USD

1

million

-

USD

1

million

Baht

66

million

-

Baht

105

million

Computer & copy machine lease Agreements

Baht

39 million

Baht

65 million

-

-

Baht

65

million

Baht

58 million

-

-

Baht

58

million

Advertising agreements

Baht

9 million

Communication agreements

Baht

1 million

Advisory agreements

Baht

14 million

Warehouse and factory construction agreements Purchase machinery, equipment and vehicle agreements

Baht

1

million

-

-

Baht

9

million

-

Baht

2

million

-

Baht

14

million

Marketing and management Baht

1 million

Internet network service agreements Baht

service agreements

3 million

Baht

7

million

-

Baht

1

million

-

Baht

10

million

b) The Company and its subsidiaries are committed to pay the uncalled portions of their investments as follows: Amount The local subsidiary

Baht

51.0 million

The overseas subsidiary

USD

1.9 million

The overseas associates

USD

2.3 million

c) The overseas subsidiary has agreed to make payments under royalty agreements for the use of certain production machinery and equipment. The agreements require fixed payments plus an additional sum based on output. Total payments made under these arrangement for the year ended 2011 amounting to USD1 million (2010: USD1 million). ANNUAL REPORT 2011

171

THAI UNION FROZEN PRODUCTS PCL.

d) The Office of the Attorney General of a US state filed a lawsuit against the three largest canned tuna companies in the US, including TUI, for failure to warn consumers that certain tuna contains mercury. Such case was dismissed on 8 January 2007. However, the plaintiff filed a notice of appeal and the appeal was granted on 19 August 2008. TUI filed a petition for an en banc appeal, which was denied. On 13 January 2009, TUI filed a petition with the Supreme Court, which the Court has declined to hear. Each party has subsequently filed motions and are currently awaiting the Judge’s rulings. TUI is unable to predict the probable outcome of this matter. As such, TUI has no accrual related to this matter as of 31 December 2011. 34.2 Guarantees a) As at 31 December 2011, there were outstanding bank guarantees of approximately Baht54 million and USD4 million (2010: Baht58 million and USD5 million) issued by banks on behalf of the Company in respect of certain performance bonds as required in the normal course of business. b) As at 31 December 2011, there were outstanding bank guarantees of approximately Baht92 million (2010: Baht103 million) issued by banks on behalf of the subsidiaries in respect of certain performance bonds as required in the normal course of business. 35.

Financial instruments

35.1 Financial risk management The Company and its subsidiaries’ financial instruments, as defined under Thai Accounting Standard No. 107 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equivalents, restricted deposits with financial institutions, trade accounts receivable, loans, investments, accounts payable, short-term loans, long-term loans, debentures and convertible bond. The financial risks associated with these financial instruments and how they are managed are described below.

172

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

Credit risk The Company and its subsidiaries are exposed to credit risk primarily with respect to trade accounts receivable and loans. The Company and its subsidiaries manage the risk by adopting appropriate credit control policies and procedures and therefore do not expect to incur material financial losses. The maximum exposure to credit risk is limited to the carrying amounts of receivables and loans as stated in the statement of financial position. Interest rate risk The Company and its subsidiaries’ exposure to interest rate risk relates primarily to its deposits at financial institutions, bank overdrafts, short-term borrowings, long-term borrowings, debentures and convertible bond. However, since most of the Company and its subsidiaries’ financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate, including the Company and its subsidiaries had entered into interest rate swap agreements. The interest rate risk is expected to be minimal. Significant financial assets and liabilities as at 31 December 2011 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. Consolidated financial statements as at 31 December 2011 Fixed interest rates Within 1 year

1-5 years

Over

Floating

Non- interest

5 years

interest rate

bearing

Total

Interest rate

(Million Baht)

(% p.a.)

Financial assets Cash and cash equivalents

-

-

-

543

360

903

0.17 - 1.93

Trade and other receivables

-

-

-

-

11,161

11,161

-

Restricted deposits with financial institutions Long-term loans to other companies

-

-

-

12

-

12

0.62

4

12

13

-

-

29

3.00 - 3.75

4

12

13

555

11,521

12,105

7,673

-

-

6,804

-

14,477

-

-

-

-

7,919

7,919

-

10

-

9

15,580

-

15,599

3.69 - 5.00

-

5,733

1,495

-

-

7,228

4.69

-

2,462

-

-

-

2,462

5.00

7,683

8,195

1,504

22,384

7,919

47,685

Financial liabilities Bank overdrafts and short-term loans from financial institutions Trade and other payables Long-term loans Debentures Convertible bond

2.43 - 4.70

ANNUAL REPORT 2011

173

THAI UNION FROZEN PRODUCTS PCL.

Separate financial statements as at 31 December 2011 Fixed interest rates Within

Over

1 year

1-5 years

5 years

Floating

Non- interest

interest rate

bearing

Total

Interest rate

(Million Baht)

(% p.a.)

Financial assets Cash and cash equivalents

-

-

-

30

26

56

Trade and other receivables

-

-

-

-

4,088

4,088

-

80

-

-

-

-

80

3.05 0.48 - 6.25

Short-term loans to subsidiaries Long-term loans to subsidiaries

440

-

15,207

1,801

-

17,448

520

-

15,207

1,831

4,114

21,672

3,554

-

-

-

-

3,554

0.17

Financial liabilities Bank overdrafts and short-term loans from financial institutions Trade and other payables

-

-

-

-

1,372

1,372

-

Long-term loans

-

-

-

2,250

-

2,250

3.91

Debentures

-

5,733

1,495

-

-

7,228

4.69

Convertible bond

-

2,462

-

-

-

2,462

5.00

3,554

8,195

1,495

2,250

1,372

16,866

The Company and its subsidiaries entered into interest rate swap agreements to manage risk associated with the financial liabilities carrying floating interest. The details of short-term loans from financial institutions and long-term loans are set out in Notes 19 and 20. The detail of the interest rate swap agreement outstanding as at 31 December 2011 is as follows: The Company Principal amount 1

Baht2,040 million

Interest Revenue Rate Swap

Interest Expense Rate

agreements

Swap agreements

Float rate 3-month

(first 2 years)

THBFIX-Reuters plus

Baht170-1,700

1.50% (first 2 years)

million (remaining 4 years)

Terminal date

Fixed rate 4.522%

October 2016

Fixed rate 4.48%

October 2016

Fixed rate 3.39%

August 2015

Fixed rate 3.50%

August 2015

Float rate 3-month THBFIX-Reuters plus 1.75% (remaining 4 years)

2

Baht510 million (first 2 years) Baht42.5-425 million (remaining 4 years)

Float rate 3-month THBFIX-Reuters plus 1.50% (first 2 years) Float rate 3-month THBFIX-Reuters plus 1.75% (remaining 4 years)

3

Baht500 million

Float rate 3-month THBFIXReuters

4

174

3.24

Baht500 million

ANNUAL REPORT 2011

Float rate 6-month THBFIX

THAI UNION FROZEN PRODUCTS PCL.

Subsidiaries Principal

Interest Expense Rate

Interest Revenue Rate Swap

amount

Swap agreements

agreements

Terminal date

1

EUR94 million

Float rate 3-month EURIBOR

Fixed rate 2.70 %

October 2017

2

EUR132 million

Float rate 3-month EURIBOR

Fixed rate 2.73 %

October 2017

3

USD40 million

Float rate 3-month LIBOR

Fixed rate 1.85 - 2.55%

February 2016

4

USD40 million

Float rate 3-month LIBOR

Fixed rate 1.85 - 2.55%

February 2016

Cross currency and interest rate swap agreements The Company Currency and Interest Revenue Rate Swap agreements Principal amount 1*

Baht397.8 million

Currency and Interest Expense Rate Swap agreements

Interest rate Float rate 3-month

Principal amount

Terminal date

Interest rate

USD 12 million

Fixed rate 4.4086%

July 2012

USD 35 million

Float rate 3-month

July 2013

THBFIX 2

Baht1,134 million

Float rate 3-month THBFIX - Reuters

LIBOR-BBA plus 0.665%

3

Baht674 million

Float rate 3-month

USD 22 million

THBFIX plus 2.31%

Float rate 3-month

June 2014

LIBOR plus 3.00%

* No initial exchange

Subsidiaries Currency and Interest Revenue Rate Swap agreements Principal amount 1

Baht976 million

Currency and Interest Expense Rate Swap agreements

Interest rate Float rate 3-month

Principal amount USD 32 million

Terminal date

Interest rate Fixed rate 5.65%

March 2015

THBFIX plus 2.94%

Foreign currency risk The Company and its subsidiaries’ exposure to foreign currency risk arises mainly from trading transactions and borrowings that are denominated in foreign currencies. The Company and its subsidiaries seek to reduce this risk by entering into forward exchange contracts when it considers appropriate.

ANNUAL REPORT 2011

175

THAI UNION FROZEN PRODUCTS PCL.

The balances of financial assets and liabilities denominated in foreign currencies of the Company and its subsidiaries as at 31 December 2011 are summarised below. Financial

Financial

Average exchange rate

assets

liabilities

as at 31 December 2011

(Million)

(Million)

(Baht per 1 foreign currency unit)

USD

308

17

31.64

JPY

83

91

0.41

EUR

376

60

40.97

Foreign currency

Foreign exchange contracts outstanding as at 31 December 2011 are summarised below.

Foreign currency

Bought

Sold

amount

amount

(Million)

(Million)

Contractual exchange rate Bought

Sold

Contractual maturity date

The Company USD against Baht

-

213

-

29.89 - 43.00

January 2012 - December 2014

JPY against Baht

-

107

-

0.41

April 2012 - June 2012

EUR against Baht

1

320

41.29 - 41.93

39.10 - 44.66

January 2012 - December 2014

USD against Baht

-

164

-

30.26 - 32.13

January 2012 - January 2013

USD against GBP

4

-

1.58

-

December 2012

USD against EUR

3

-

1.45

-

January - March 2012

EUR against GBP

9

-

0.84

-

January - December 2012

Subsidiaries

As at 31 December 2011, the Company and its local subsidiaries have outstanding option agreements with special conditions with financial institutions under which they have obligations to sell amounts of between USD30 million up to USD67 million, depending on conditions stipulated in the agreements, at rates ranging from Baht 30.25 to Baht31.70 per USD. These agreements will terminate within September 2012. Moreover, as at 31 December 2011, the overseas subsidiaries have outstanding option agreements as follow. Contractual

Sold

amount

amount

(Million)

(Million)

EUR against USD

18.6

26.8

1.4435

1.4435

December 2012

GBP against USD

24.2

40.0

1.6500

1.6500

December 2012

EUR against GBP

34.0

41.8

0.8125

0.8125

December 2012

Foreign currency

176

Contractual exchange rate

Bought

ANNUAL REPORT 2011

Bought

Sold

maturity date

THAI UNION FROZEN PRODUCTS PCL.

35.2 Fair values of financial instruments Since the majority of the Company and its subsidiaries’ financial instruments bear floating interest rates, their fair value is not expected to be materially different from the amounts presented in the statement of financial position. A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm’s 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. 36.

Capital management The primary objective of the Company’s capital management is to ensure that it has an appropriate financial structure in order to support its business and maximise shareholder value. As at 31 December 2011, the Group’s debt to equity ratio was 2.07:1 (2010: 2.22:1) and the Company’s was 1.12:1 (2010: 1.33:1).

37.

Subsequent events On 11 February 2012, there was a fire incident in one section of the Company’s plant located in Samutsakorn province, which has no effect to other production lines. The Company is currently estimating the resultant damage. However, the Company has comprehensive insurance coverage for damage to inventories and assets as well as business interruption insurance. The financial impact of the incident will be reflected in 2012 accounts. In addition, the Company has a plan to reallocate some its production lines to group companies and can thus assure that its production capacity is adequate to meet all customer orders both in terms of production and delivery. The meeting of the Company's Board of Directors No. 1/2012, held on 21 February 2012, passed the resolution to approve dividend payment of Baht0.65 per share from its income for the period from 1 July 2011 to 31 December 2011, to the Company's shareholders totaling Baht622 million. The dividend will be paid on 4 April 2012.

ANNUAL REPORT 2011

177

THAI UNION FROZEN PRODUCTS PCL.

38.

Reclassification To comply with the Notification of the Department of Business Development relating to the financial statement presentation as described in Note 2 and as the result of the adoption of revised and new accounting standards as described in Note 3 and Note 5, certain amounts in the financial statements for the year ended 31 December 2010 have been reclassified to the current year’s classification, without any effect to the previously reported profit or shareholdersಏ equity. The reclassification are as follow: (Unit: Thousand Baht)

Trade and other receivables

Consolidated

Separate

financial statements

financial statements

As

As previously

As

As previously

reclassified

reported

reclassified

reported

9,261,820

-

3,066,632

-

-

9,217,858

-

2,882,937

21,346,118

20,934,454

2,423,326

2,403,645

286,324

543,165

28,163

28,163

Prepaid expense

-

164,410

-

23,443

Spare parts

-

448,702

-

20,158

Interest receivables

-

565

-

175,072

Advance payment

-

26,444

-

245

739,834

339,436

51,495

35,962

14,190,173

14,092,179

3,004,742

2,947,676

-

57,057

-

57,057

Goodwill

11,396,143

-

-

-

Intangible assets

13,027,293

24,423,435

1,509

1,509

7,194,757

-

1,297,505

-

Trade accounts payable

-

5,909,630

-

939,613

Accrued expenses

-

1,104,632

-

287,280

-

180,495

-

70,612

-

162,793

-

-

1,479,031

1,316,238

265,745

265,745

Trade accounts receivable -net Inventories Prepaid income tax

Other current assets Property ,plant and equipment - net Properties foreclosed - net

Trade and other payables

Accounts payable - construction and asset purchase Billback Other current liabilities

178

ANNUAL REPORT 2011

THAI UNION FROZEN PRODUCTS PCL.

(Unit: Thousand Baht) Consolidated

Separate

financial statements

financial statements

As

As previously

As

As previously

reclassified

reported

reclassified

reported

Revaluation deficit on change in value of investments

-

(18,112)

-

-

-

(27,664)

-

-

Other reserve

-

5,941

-

-

Translation adjustment

-

(47,640)

-

-

-

-

-

Provision for change in the value of pension fund

Other components of shareholders’ equity Compensation from accounts payable

-

61,085

-

59,049

Tax coupon received

-

104,931

-

22,436

489,528

323,512

197,178

115,693

2,224,377

2,162,497

502,777

444,861

Management benefits expenses

-

56,383

-

56,383

Other expenses

-

5,497

-

1,533

Other income Administrative expenses

39.

(87,475)

Approval of financial statements These financial statements were authorised for issue by the Audit Committee and the Company’s management on 21 February 2012.

ANNUAL REPORT 2011

179

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