Ck 09 by Brother Roger

012 Vision. Missions,

Corporate Values and Strategies for 2010

013

014

Financial Highlights

Message from the Chairman

016 Message from Chairman of the Executive Board and Chief Executive Officer

018

019

The Board of Directors

Management Team

019

020

046

Advisors Committee for Board of Directors and

the Executive Board

Shareholding and Management Structure

Nature of Business operations

048

054

058

Construction Industry Outlook and CKâ&#x20AC;&#x2122;s Strategic Direction

Corporate Social

and Environment Responsibility

General Information

062

064

070

Corporate Governance Policy

Risk Factors

Connected Transactions

080

082

102

Audit Committeeâ&#x20AC;&#x2122;s Report

Financial Position and Operational Results

Financial Statement

CONTENTS

Rise to higher level...the full potential Lay the foundation...the solid organization

for the firm step forward and the preparation for the worldâ&#x20AC;&#x2122;s

c h a n g e

SYNERGY Create synergy connecting

every divisions with sophisticated systems

toward rapid arrival of our destination

OPERATE Full efficiency in operation and continuous development of HR system for higher standard of work and professionalism

LEADERSHIP The perfect leader

recognizes the importance of lives along with business missions for the sustainable growth

INTEGRITY Integrity is the practice of transparency and information disclosure with

attention in every business unit under

the principle of Corporate Governance

DEVELOP Drive good ideas into practical actions through effective risk management toward accurate business targets

CH. KARNCHANG PUBLIC COMPANY LIMITED

V I S I O N To be the leader in construction business and the pre-eminent and comprehensive basic infrastructure developer in the region.

MISSIONS • Deliver quality work for our customers while committed to creating work that contributes to the society and country with good returns to our shareholders and providing fair treatment to all our stkeholders • Manage our business with professionalism and in accordance with the guidelines of good Corporate Governance • Be responsible to the community, society and the country • Develop human capital and organization on a continuous and consistent basis

Corporate Values (Q-C-I-S-T) • Quality of Services • Customer Satisfation • Intergrity • Social Responsibility • Teamwork

Strategies : Sustainable Growth • Select projects with good contribution to the society and our country and with fair business returns

• Manage construction projects under the principles of effective cost management, timeliness and quality of work • Expand to regional market with an emphasis on Southeast Asia • Enhance business opportunities in basic infrastructure investment projecte that contribute to the country’s development in order to generate construction works and to create opportunities for long-term infrastructure concessions • Develop organizational capacity - human capital and management structure - to increase the company’s competitiveness • Develop and continuously update technology and knowledge to strengthen the company’s comparative advantage

ANNUAL REPORT 2009

Financial Highlights Summary of Financial Information of CH. Karnchang Public Company Limited Items

Amount

Unit : Thousand Baht

December 31, 2009

December 31, 2008

December 31, 2007

Total assets

26,393,160

22,227,715

21,927,530

Total liabilities

20,599,514

16,903,013

15,756,393

Shareholdersâ&#x20AC;&#x2122; equity

5,793,646

5,324,702

6,171,137

Total revenue

5,470,743

6,963,315

9,387,994

Gross profit (loss)

(24,884)

166,452

134,877

Net profit (loss)

217,022

98,706

659,488

0.15

0.07

0.47

Profit (loss) per share

Summary of Financial Information of CH. Karnchang Public Company Limited, Subsidiaries and Jointly

controlled entities Items

Amount

Unit : Thousand Baht

December 31, 2009

December 31, 2008

December 31, 2007

Total assets

29,469,863

25,873,213

24,475,770

Total liabilities

23,770,608

20,568,913

18,784,685

Shareholdersâ&#x20AC;&#x2122; equity

5,699,255

5,304,300

5,691,085

Total revenue

13,935,160

14,510,570

14,918,077

Gross profit (loss)

920,861

1,382,234

1,127,020

Net profit (loss)

89,731

544,739

14,537

0.06

0.38

0.01

Profit (loss) per share

CH. KARNCHANG PUBLIC COMPANY LIMITED

Message from the Chairman Business operations have proven to be a challenging task in 2009 due to the domestic political instability as well as the lingering effects of the 2008 global financial crisis. The Thai construction industry has been gravely affected as many construction projects in both the public and private sectors have been delayed. Nevertheless, the year 2009 that started slowly began to show signs of economic recovery, specifically with 4Q2009 GDP turning positive and growing at an impressive rate. Thailandâ&#x20AC;&#x2122;s economic recovery resulted from the commitment and strong cooperation from both the government and private businesses to stimulate the Thai economy, as well as strong growth in the Asian region. Economic stimulus packages and large-scale investment projects were of utmost priority and have begun to be implemented.

ANNUAL REPORT 2009

In this environment of economic challenge, CH. Karnchang Public Company Limited, with prudent business strategies, was able to achieve our targeted performance and generate satisfactory profits in 2009. With the delay in construction projects, we were selective in participating in project bids. We tendered only for projects with secure funding and appropriate returns. This allowed CH. Karnchang to preserve our resources and prepare our company for the large-scale projects that the government planned to push forward. Along with our selective strategy, CH. Karnchang continues to expand our regional market and further develop our infrastructure investments in order to reduce the dependency on the domestic construction market. Our strategy placed us in a position to be awarded Contract 1 (Elevated Structure East) of the Purple Line in August 2009 with construction work commencement in November 2009. Our construction projects overseas and infrastructure investments have been successful as well. The construction of the Hydro-Electric Dam - Nam Ngum 2 Project in Lao PDR - will be completed with operations slated to start in 2010. Another project in Lao PDR - Xayaburi Project - is also expected to commence soon. The strong signs of economic recovery in the fourth quarter of 2009 and the commitment from the Thai government lead us to believe that 2010 will be the year of growth for Thailand’s economy. CH. Karnchang is prepared to be a part of this effort and looks forward to help bring our country back to the road of sustainable growth. Our strategy to prepare and continuously develop our organizational capacity has provided us with a strong competitive edge to participate in large-scale projects in Thailand and overseas in 2010. As we are committed to enhance our business performance, we are also committed to improve our management according to the principles of good corporate governance. We are proud to report that CH. Karnchang Public Company Limited was rated “Very Good” by the Thai Institute of Directors Association (IOD) in their “Corporate Governance Report for Thai Listed Companies 2009.” As always, CH. Karnchang remains committed to bring optimal and fair returns to our shareholders.

Mr. Aswin Kongsiri Chairman of the Board of Directors

CH. KARNCHANG PUBLIC COMPANY LIMITED

Message from Chairman of the Executive Board and Chief Executive Officer In 2009 the Thai economy continued to slow down for the first 3 quarters due to the global financial crisis that created a lasting impact around the world. The Thai government has tried to stimulate the economy by injecting several hundred billions of Baht from the government budget and Stimulus Packages 1 and 2. However, the continuing domestic political instability and delay in projects approval and disbursement have caused further suspensions in the government stimulus projects. The construction industry, the forefront of economic stimulus engine, has been unavoidably affected by these project delays. In this environment of economic downturn from 2008-2009, CH. Karnchang Public Company Limited has operated its business in an increasingly competitive environment. To tackle this, we adopted the policy of emphasizing only high quality and high returns rather than targeting the quantity of the backlog. In stead of engaging in price wars, we opted for preserving our resources and preparing our capacity for large-scale projects from the soon to be implemented government Stimulus Packages. In the third quarter of 2009, we were awarded Contract 1 Elevated Structures (East) of the M.R.T. Purple Line Bang Sue - Bang Yai. The construction contract was signed in August and our work proceeded in November 2009.

ANNUAL REPORT 2009

As there were not many new construction projects in 2009 and CH. Karnchang maintained our selective policy, we have strived to consistently improve our managerial efficiency and effectiveness, explore good opportunities overseas, and develop our capacity for large scale infrastructure investments as well as concessions. All these strategies have helped our company reduce risk of over-dependency on domestic construction market and have provided us with alternative income in addition to our construction income. As a result, in December 2009, CH. Karnchang realized profits via capital gain by selling a portion of our shares in Thai Tap Water Supply Public Company Limited, in which we remain a major shareholder of 31.55 %. It has been proven that with prudent business strategies, CH. Karnchang Public Company Limited was able to achieve our targeted performance and generate satisfactory profits for the year 2008-2009. Our total revenues were Baht 13,935 million, total expenditures were Baht 12,981 million. Our total assets amounted to Baht 29,470 million, total debts were Baht 23,771 million, and CH. Karnchang was able to turn an average gross margin at 7.21% and a net consolidated profit of Baht 90 million. For our separate financial statement, we were able to generate a net profit of Baht 217 million. Thailand’s economy has started to show strong and tangible signs of recovery with the Q4 2009 GDP turning positive. Both the government and the private sector have realized that continued and consistent stimulation are vital in order to bring the Thai economy back to recovery and sustainable growth. We believe that large-scale construction projects will be the priority in 2010, particularly the rail and mass transit systems projects namely the Blue Line Extension, Red Line, etc. Several lines have been approved and the contract tenders are expected to proceed in 2010. In addition to well-anticipated construction projects, CH. Karnchang will further explore new markets in the region as our current overseas projects have proven to be very successful. For example, the Nam Ngum 2 Hydro-Electric dam in Lao PDR. will be completed and start initial operation in 2010; the Xayaburi dam project in Lao PDR is expected to proceed soon; and several other projects in Myanmar, Vietnam, Cambodia and India will be explored. Furthermore, we will also look into opportunities in clean and alternative energy as it has good business prospect, while promising to help preserve the environment. To be prepared to be a part of the economic stimulus effort and to take part in the economic growth in 2010, CH. Karnchang has been improving our organization in many areas. We implemented the second phase of our ERP system to enhance the efficiency and effectiveness of construction management. We have effective risk management process with periodic reports to our Board of Directors so that we can respond to any situation in a timely and effective manner. In addition to improving our business operation and process, CH. Karnchang thoroughly acknowledges the importance of corporate citizenship. We have to be responsible to our staff, shareholders, stakeholders, society, environment and our country. Our social responsibility is evident in various CSR projects starting from the philosophy and the core foundation of our business – we participate in construction and investment projects that are beneficial to the society and the country and we assure that our business processes are responsible as well. Furthermore, we believe in inculcating the volunteer spirit in our staff by getting them involved hands-on in various social and environmental projects. And last but not least, we believe in expressing our corporate social responsibility by being a good business operator and continuously improving our corporate governance. We are proud to report that we were rated “Very Good” for our corporate governance by the Thai Institute of Directors Association (IOD) in 2009. On behalf of CH. Karnchang management, I would like to take this opportunity to thank our shareholders, business partners, customers in the public and private sectors as well as the financial institutions for your continued trust and support. I would also like to thank all of employees of CH. Karnchang who have shown strong dedication to help our company get through difficult times and to achieve good performance. The management team remains committed to continuously improve our company. Going forward to 2010, we believe that CH. Karnchang is well-prepared and are on a SOLID STEP towards a stable and sustainable growth.

Mr. Plew Trivisvavet Chairman of the Executive Board and Chief Executive Officer

CH. KARNCHANG PUBLIC COMPANY LIMITED

The Board of Directors

Mr. Aswin Kongsiri

• Chairman of the Board of Directors • Independent Director

Mr. Plew Trivisvavet

• Director • Chairman of the Executive Board • Nomination Committee Member • Remuneration Committee Member • Corporate Governance and Risk Management Committee Member

Mr. Vitoon Mr. Don Pramudwinai • Director Tejatussanasoontorn • Audit Committee Member • Director • Chairman of the Audit Committee • Independent Director • Chairman of the Nomination Committee • Chairman of the Remuneration Committee • Chairman of the Corporate Governance and Risk Management Committee • Independent Director

Mr. Thawansak Sukhawun Mr. Pavich Tongroach

Mr. Narong Sangsuriya

Mr. Prasert Marittanaporn Mr. Ratn Santaannop

Mr. Sombat Kitjalaksana Mr. Anukool Tuntimas

• Director • Director • Audit Committee Member • Independent Director • Corporate Governance and Risk Management Committee Member • Independent Director

• Director • Executive Director

Mr. Kamthorn Trivisvavet

• Director • Director • Executive Director • Executive Director • Nomination Committee Member • Remuneration Committee Member

• Director

• Director • Executive Director

ANNUAL REPORT 2009

Management Team

1. Mr. Plew Trivisvavet

• Chief Executive Officer

3. Mr. Prasert Marittanaporn

2. Mr. Narong Sangsuriya

4. Mr. Ratn Santaannop

• Senior Executive Vice President : Operation Group

6. Mr. Samai Paiboon

• Executive Vice President : Engineering

5. Mr. Viboon

Mongkolpiyathana

• Senior Executive Vice President : Administration Group

• Executive Vice President : Construction 1

8. Mr. Anukool Tuntimas

• Executive Vice President : Human Resource and General Administration

7. Mr. Sombat Kitjalaksana • Executive Vice President : Business Development

• Executive Vice President : Construction 2

10. Mr. Vorapote Uchupaiboonvong • Executive Vice President : Accounting and Finance

9. Mr. Sittidej Trivisvavet

11. Miss Supamas Trivisvavet

• Executive Vice President : Purchasing

• Executive Vice President : Office of President

Advisors Committee for Board of Directors and the Executive Board

1. Pol. General

Narong Mahanonda

• Chairman of the Advisory Committee

2. General Akapol Somroop 3. Pol. Major General

• Senior Executive Advisor Sawat Vijaranakorn

5. Mr. Thep Trivisvavet

• Advisory Committee for Executive Board

4. Mr. Prasert Trivisvavet

• Senior Executive Advisor

6. Mr. Yim Trivisvavet

• Advisory Committee for Executive Board

7. Mr. Charn Chongchit • Legal Advisor

CH. KARNCHANG PUBLIC COMPANY LIMITED

Shareholding and Management Structure

1. Shareholders Top ten major shareholders of the Company, as at the most recent record date on December 16, 2009, are as follows : Shareholders

Total Shares

Percentage of Shareholding (%)

1.1 Mrs. Sopida Trivisvavet

11,968,425

0.828

1.2 Mr. Plew Trivisvavet

20,847,620

1.442

1.3 Mr. Prasert Trivisvavet

11,600,048

0.802

1.4 Mrs. Saikasem Trivisvavet

3,390,000

0.234

1.5 Mr. Kamthorn Trivisvavet

1,000

0.000

1.6 Mahasiri Siam Co., Ltd.1

295,515,910

20.437

1.7 CH. Karnchang Holding Co., Ltd.2

151,707,400

10.491

1.8 CK. Office Tower Co., Ltd.3

75,000,000

5.187

1.9 Bang Pa-in Land Development Co., Ltd.4

18,935,000

1.309

2. Mrs. Pranee Tongkittikul

55,042,420

3.806

3. Thai NVDR Co., Ltd.5

37,290,100

2.579

4. State Street Bank and Trust Company for London6

36,548,900

2.528

5. Mr. Charnarong Wongseenin

27,000,000

1.867

6. Mrs. Yupphanari Sakphonsub

26,300,000

1.819

7. SCB Dividend Stock 70/30 Long Term Equity Fund

18,707,100

1.294

8. Mrs. Phennapha Pathomwanit

12,600,000

0.871

9. K Equity LTF

8,709,500

0.602

10. Deutsche Wertpapierservice Bank AG

7,267,000

0.503

1. Trivisvavet Family

Remarks 1. The Trivisvavet Family holds shares representing 93.09 percent, and all directors of the company are the Trivisvavet Family.

2. The Trivisvavet Family holds shares representing 87.50 percent, and all directors of the company are the Trivisvavet Family. 3. The Trivisvavet Family holds shares representing 100.00 percent. 4. The Trivisvavet Family holds shares representing 91.66 percent. 5. This is a subsidiary established by the Stock Exchange. NVDR represents automatically listed securities. NVDR investors enjoy the same financial benefits as investment in ordinary shares in companies, except that they have no right to vote in the shareholdersâ&#x20AC;&#x2122; meeting. 6. This is a foreign company trading securities on the Stock Exchange of Thailand without disclosing whether its shareholding is for personal interest or for others. In this regard, the Company has no power to request such shareholder to disclose the said information.

ANNUAL REPORT 2009

2. Management

(1) Management Structure Organization Chart of CH. Karnchang Public Company Limited

Board of Directors

Advisor to the Board of Directors Company Secretary

Audit Committee Nomination Committee Remuneration Committee

Executive Board

Advisor to the Executive Board

Corporate Governance and Risk Management Committee President and Chief Executive Officer Legal Advisor

Executive Vice President : Construction 1

Vice President : Internal Audit Department

Vice President : Information Technology Office

Senior Executive Vice President : Operation Group

Senior Executive Vice President : Administration Group

Executive Vice President : Construction 2

Executive Vice President : Engineering

Executive Vice President : Business Development

Executive Vice President : Purchasing

Executive Vice President : Accounting and Finance

Executive Vice President : Human Resource and General Administration

Executive Vice President : Office of President

CH. KARNCHANG PUBLIC COMPANY LIMITED

The Companyâ&#x20AC;&#x2122;s management structure consists of the Board of Directors and five subcommittees, namely, the Executive Board, the Audit Committee, the Nomination Committee, the Remuneration Committee, and the Corporate Governance and Risk Management Committee, including Chief Executive Officer as the top executive of the management team comprising eleven persons. The Board of Directors consists of six non-executive directors (five independent directors representing more than one-third of the total number of directors) and six executive directors. The names of members of such six boards or committees and executives, including authority and responsibilities of the respective committees are as follows :

A. Board of Directors

1. As at December 31, 2009, the Board of Directors consists of 12 directors as listed below (details are shown in Attachment) : Names

Positions

Category

8. Mr. Kamthorn Trivisvavet

Director Executive Director

Non-Executive Director

9. Mr. Prasert Marittanaporn

Director Executive Director

Executive Director

10. Mr. Ratn Santaannop

Director Executive Director

Executive Director

11. Mr. Sombat Kitjalaksana

Director

Executive Director

12. Mr. Anukool Tuntimas

Director Executive Director

Executive Director

In 2008, the Board of Directors’ Meeting No. 4/2008, held on August 29, 2008, resolved to adjust the requirements relating to independent directors and Audit Committee members in accordance with the requirements set out by the Office of the Securities and Exchange Commission and the Stock Exchange of Thailand, as per the details of independent directors’ qualifications as follows :

Qualifications of Independent Directors

1. Holding shares of not exceeding one percent of the number of voting shares of the Company, its parent company, subsidiaries, associated companies or legal entities which may have conflict of interest, including shares held by related persons ; 2. Not being a director having involvement in the management/employee/staff/advisor receiving regular salary/ controller of the Company, its parent company, subsidiaries, associated companies, subsidiaries at the same level or legal entities which may have conflict of interest at present and during the past two years prior to appointment ; 3. Having neither relationship by blood or by legal registration in the capacity as parent, spouse, sibling and offspring, including spouse of the offspring, with any executive, major shareholder, controller or person to be nominated as executive or controller of the Company or its subsidiaries ; 4. Having neither business relationship with the Company, its parent company, subsidiaries, associated companies, or legal entities which may have conflict of interest at present and during the past two years prior to appointment in the following manners : (1) Provision of professional services, i.e., auditor, other professional service provider receiving fee more than Baht 2 Million per year, such as, legal advisor, financial advisor, property appraiser, etc. (2) Trading/business with a transaction value of Baht 20 Million or more or at least 3 percent of the Company’s net tangible asset value, whichever is lower, and, in considering the transaction value, any transactions executed during the past six months prior to the date of this transaction execution shall be included; 5. Not being a director appointed as representative of the Company’s director, major shareholder or shareholder who is a related person of the Company’s major shareholder; 6. Not having any other characteristics preventing provision of independent opinions. 2. The Company’s authorized signatory directors are two of the following four directors, namely, Mr. Plew Trivisvavet, Mr. Kamthorn Trivisvavet, Mr. Narong Sangsuriya, Mr. Prasert Marittanaporn, jointly sign and affix the Company’s seal, or any one of the said four directors and either Mr. Ratn Santaannop or Mr. Sombat Kitjalaksana or Mr. Anukool Tuntimas, totaling two directors, jointly sign and affix the Company’s seal.

CH. KARNCHANG PUBLIC COMPANY LIMITED

3. Board of Directors’ Authority • Determining policies and directions of the Company’s operation and supervising the management to comply with the specified policies as well as taking steps to ensure that the Company has efficient and effective internal control system and the intention to continue its business operations; • Performing the duties in compliance with laws, objectives and Articles of Association of the Company, as well as resolutions passed by shareholders’ meetings, taking into account the integrity and protection of the Company’s interest; • Being responsible for preparation of balance sheet and income statement at the close of the Company’s accounting period to ensure that they contain accurate information and truly and fairly reflect the Company’s status, in compliance with generally accepted accounting standards, and having said financial statements audited by the Company’s auditor so as to submit the same to the Annual Ordinary General Meeting of Shareholders for consideration and approval; • Focusing on the duty to disclose the Company’s information in accordance with the Stock Exchange of Thailand’s requirements, Re: Rules and Procedures for Disclosure of Information and Acts of Listed Companies, so as to disclose to the public such information which is material and necessary to the decision to invest in securities; • Having the authority to appoint other person to operate the Company’s business subject to the supervision of the Board of Directors or the Managing Director or delegating to such person the authorities as the Board deems appropriate and during a certain period as the Board deems appropriate, provided that the Board of Directors may cancel, revoke or amend such authorities and that said authorization in no way allows such authorized person to approve any transactions in which such authorized person or another person may have conflict, interest or conflicts of interest in other manners with the Company or its subsidiaries; • Considering and granting approval for capital increase, issuance of debentures, for submission to the shareholders’ meeting for further approval; • Considering and granting approval for operating expenses in excess of the amount authorized to be approved by the Managing Director, for submission to the Board of Directors’ meeting for further approval. The authority to take the foregoing actions shall not extend to connected transactions and such transactions relating to acquisition or disposition of significant assets of listed companies in accordance with the rules and regulations of the Stock Exchange and the Company shall comply with the Stock Exchange’s rules, regulations and requirements governing those related matters. In addition, the foregoing authority shall not include any other matters subject to approval by the shareholders’ meeting in accordance with the Company’s Articles of Association.

B. Executive Board

1. As at December 31, 2009, the Executive Board consists of six executive directors, namely : Names

Positions

1. Mr. Plew Trivisvavet

Chairman of the Executive Board

2. Mr. Narong Sangsuriya

Executive Director

3. Mr. Kamthorn Trivisvavet

Executive Director

4. Mr. Prasert Marittanaporn

Executive Director

5. Mr. Ratn Santaannop

Executive Director

6. Mr. Anukool Tuntimas

Executive Director

ANNUAL REPORT 2009

The Executive Board meets monthly for consideration of various matters within the scope of the authority assigned by the Board of Directors and for screening matters to be proposed to the Board of Directors for consideration and approval. 2. Executive Board’s Authority: The Board of Directors authorizes the Executive Board to have the following authority: • Providing policy guidelines, appointing, prescribing powers and duties, supervising, monitoring, coordinating and prescribing powers and duties of special working groups or work management groups, as well as considering and approving various proposals submitted by the management groups or the special working groups; • Approving proposals submitted by various working groups for the purposes of managing work and conducting business in accordance with the Company’s objectives; • Conducting feasibility studies on new projects and having power to consider approving participation in various biddings, including operation of various projects as it deems appropriate, as well as entering into any juristic acts related thereto until completion; • Conducting feasibility studies on investment in new projects and having power to consider granting approval for the Company to invest or jointly invest with other persons, legal entities, groups of persons in various forms for conducting business in compliance with the objectives within the amount of not exceeding Baht 3,000 Million per project, including investment in other manners, such as, purchase of shares, exchange of shares with other legal entities as it deems appropriate, as well as entering into any juristic acts related thereto until completion; • Prescribing, considering, approving regulations, rules, work management and business operation policy guidelines or any actions binding the Company; • Providing advice, consultation and determining policy guidelines and authorities of Chief Executive Officer and special working groups; • Having power to approve, appoint, employ, remove, impose disciplinary action, determine salary, wages, benefits, bonus, allowances, and other remunerations, including expenses and facilities of the Company’s officers or staff in the position of department directors or higher, including Executive Vice President, Senior Executive Vice President or equivalent or various special working groups for specific operation; • Proceeding with other matters in accordance with the policy as assigned by the Board of Directors; • Having power to appoint any person or group of persons to operate the Company’s business under control of the Executive Board or authorize such person or group of persons to take any action as the Executive Board deems appropriate, and change, amend, repeal and revoke such authority; • Having power to appoint the Chairman of the Advisory Committee or advisors or Advisory Committee for Executive Board as appropriate, and determine remuneration, allowances, benefits, facilities and other expenses of the Chairman of the Advisory Committee or advisors or the Advisory Committee as appropriate; • The Executive Board or the Chairman of the Executive Board has power to convene the Executive Board’s meetings and/or determine rules and regulations of the meetings as it deems appropriate; • In the case that the Chairman of the Executive Board cannot perform duties, the Chairman of the Executive Board shall appoint a substitute to perform duties on his or her behalf on each occasion, whereby the substitute shall have authorities equal to the Chairman of the Executive Board; • Considering and approving for authorization of executives to operate and manage business in accordance with the relevant rules, regulations and requirements; • Having power to approve and withdraw money from all accounts of the Company, and use credits provided by all banks or financial institutions for the Company, including apply for opening accounts and/or apply for credits in various forms with all banks or financial institutions, as well as placing securities of the Company as collateral against such debts, regardless of whether or not it requires registration;

CH. KARNCHANG PUBLIC COMPANY LIMITED

C. Audit Committee

1. As at December 31, 2009, the Audit Committee consists of three members, namely : Names

Positions

1. Mr. Vitoon Tejatussanasoontorn*

Chairman of the Audit Committee

2. Mr. Don Pramudwinai

Audit Committee Member

3. Mr. Thawansak Sukhawun

Audit Committee Member

With a three-year term of office. Remark * Serving as Audit Committee member with the knowledge and experience in review of the Company’s financial statements.

The Audit Committee regularly meets at least every three months with the external auditor, internal auditor, management team and executives who are accountable for accounting and finance for review of financial statements on a quarterly basis and reports to the Board of Directors, or in case the management team would execute any connected transactions or transactions relating to acquisition or disposition of assets, which shall take into account appropriateness, justification of such transactions and the utmost benefits of the Company, the Chairman of the Audit Committee may convene additional meeting. In 2009, the Audit Committee convened four meetings. 2. Audit Committee’s Authority • Reviewing to ensure that the Company’s financial reports are accurate and adequate; • Reviewing to ensure that the Company’s internal control and internal audit systems are suitable and effective, considering the independence of the internal audit unit as well as providing opinions on consideration for appointment, transfer, termination of employment of head of the internal audit unit or any other unit responsible for the internal audit; • Reviewing to ensure the Company’s performance in compliance with the securities and exchange law, requirements of the Stock Exchange and the laws relating to the Company’s business; • Considering, selecting, submitting for appointment of person who is independent to serve as the Company’s auditor, proposing remuneration of such person as well as meeting with the auditor without the management team at least once a year; • Considering connected transactions or transactions which may have conflict of interest in compliance with the laws and requirements of the Stock Exchange in order to ensure that such transactions are justified and of the utmost benefit to the Company; • Preparing reports of the Audit Committee to be disclosed in the Company’s Annual Report, whereby such reports must be signed by the Chairman of the Audit Committee and be comprised of at least the following information; (a) opinions on correctness, completeness, and reliability of the Company’s financial reports; (b) opinions on adequacy of the Company’s internal control system; (c) opinions on compliance with the securities and exchange law, requirements of the Stock Exchange or laws relating to the Company’s business; (d) opinions on appropriateness of the auditor; (e) opinions on transactions which may have conflict of interest; (f) number of meetings of the Audit Committee and attendance of each Audit Committee member; (g) overall opinions or observations by the Audit Committee from the performance of duties in accordance with the charter; (h) other matters that should be informed to shareholders and general investors within the scope of the authority and responsibilities assigned by the Board of Director.

ANNUAL REPORT 2009

• Performing any other activities as assigned by the Board of Directors of the Company and approved by the Audit Committee.

D. Nomination Committee The Board of Directors appointed the Nomination Committee to support in the consideration and selection of qualified persons

to hold the position of the Company’s directors, the Managing Director. As at December 31, 2009, the Nomination Committee consists of three members, namely: Names

Positions

1. Mr. Vitoon Tejatussanasoontorn

Chairman of the Nomination Committee

2. Mr. Plew Trivisvavet

Nomination Committee Member

3. Mr. Narong Sangsuriya

Nomination Committee Member

With a three-year term of office.

Nomination Committee’s Authority

1. Considering, selecting and proposing qualified persons to hold the position of the Company’s directors to the Board of Directors so as to nominate them to the shareholders’ meeting, or proposing the nomination to the Board of Directors for appointment; 2. Considering, selecting and proposing qualified persons to hold the position of the Managing Director to the Board of Directors for appointment; 3. Proceeding with other matters as assigned by the Board of Directors.

E. Remuneration Committee

The Board of Directors appointed the Remuneration Committee to support in the consideration and determination of criteria for consideration of remuneration and determine remuneration for directors and the Managing Director, and review rates of salary and other remuneration for the Managing Director. As at December 31, 2009, the Remuneration Committee consists of three members, namely: Names

Positions

1. Mr. Vitoon Tejatussanasoontorn

Chairman of the Remuneration Committee

2. Mr. Plew Trivisvavet

Remuneration Committee Member

3. Mr. Narong Sangsuriya

Remuneration Committee Member

With a three-year term of office.

Remuneration Committee’s Authority

1. Considering and determining criteria for consideration of remuneration for directors and the Managing Director; 2. Considering, determining and proposing remuneration for directors to the shareholders’ meeting for approval; 3. Considering and reviewing rates of salary and other remuneration for the Managing Director and proposing the same to the Board of Directors for approval; 4. Proceeding with other matters as assigned by the Board of Directors.

CH. KARNCHANG PUBLIC COMPANY LIMITED

F. Corporate Governance and Risk Management Committee

The Board of Directors appointed the Corporate Governance and Risk Management Committee to supervise and monitor performance of the directors and the management to ensure compliance with the Good Corporate Governance Principles and to oversee and support the risk management to achieve success in the organizational level. As at December 31, 2009, the Corporate Governance and Risk Management Committee consists of three members, namely: Names

Positions

1. Mr. Vitoon Tejatussanasoontorn

Chairman of the Corporate Governance and Risk Management Committee

2. Mr. Plew Trivisvavet

Corporate Governance and Risk Management Committee Member

3. Mr. Thawansak Sukhawun

Corporate Governance and Risk Management Committee Member

With a three-year term of office.

Corporate Governance and Risk Management Committeeâ&#x20AC;&#x2122;s Authority Corporate Governance

1. Determining and proposing policies and directions of operations in respect of the good corporate governance of the Company, including the code of business ethics, to the Board of Directors for consideration and approval for further compliance at all levels; 2. Supervising and monitoring the business operation of the Company and performance of the Board of Directors, the management and personnel of the Company to ensure compliance with Clause 1; 3. Evaluating and reviewing policies, directions, code of ethics, and best practices or practical guidelines in respect of the good corporate governance of the Company to ensure compliance with the international practices and recommendations of various institutions, as well as proposing the same to the Board of Directors for further consideration and approval; 4. Following up on movement, tendencies, as well as comparing performance in respect of the good corporate governance of the Company with the practices of other leading companies; 5. Overseeing and supporting performance in compliance with the good corporate governance policies to ensure continual effectiveness and appropriateness to the Companyâ&#x20AC;&#x2122;s business; 6. Giving advice to the Company, the Board of Directors, the management and working groups on the matters relating to the good corporate governance; 7. Reporting on the corporate governance of the Company to the Board of Directors on a regular basis, and immediately reporting to the Board of Directors for consideration in case there is any matter materially affecting the Company, as well as providing opinions on the practices and suggestions for improvement and resolution as appropriate; 8. Disclosing information relating to the good corporate governance of the Company to related parties and in the Annual Report, provided that it shall be always proposed to the Board of Directors for prior approval; 9. Establ ishing the working groups as it deems appropriate.

Risk Management

1. Determining policies and scope of risk management operations of the Company, as well as giving advice to the Board of Directors and the management on risk management; 2. Overseeing and supporting the risk management to ensure successful implementation by emphasizing the significance of and taking into account risk factors in support of the decision making as appropriate;

ANNUAL REPORT 2009

3. Considering the Company’s material risks in line with the Company’s business, e.g., in terms of investment, finance, security, law, rules and regulations, by suggesting measures to prevent and minimize risks to stay at an acceptable level, as well as following up, evaluating and improving the working plans for minimizing risks on a continual basis as appropriate to the condition of the business operation; 4. Reporting risk evaluation results and operations for minimizing risks to the Board of Directors on a regular basis, and promptly reporting to the Board of Directors for consideration in case there is any matter materially affecting the Company; 5. Establishing the working groups as it deems appropriate.

G. Management Team

As at December 31, 2009, the management team(1) of the Company consists of 11 persons (as per details in Attachment) as listed below: Names

Positions

1. Mr. Plew Trivisvavet

Chief Executive Officer

2. Mr. Narong Sangsuriya

Senior Executive Vice President: Operation Group

3. Mr. Prasert Marittanaporn

Senior Executive Vice President: Administration Group

4. Mr. Ratn Santaannop

Executive Vice President: Construction 1

5. Mr. Viboon Mongkolpiyathana

Executive Vice President: Construction 2

6. Mr. Samai Paiboon

Executive Vice President: Engineering

7. Mr. Sombat Kitjalaksana

Executive Vice President: Business Development

8. Mr. Sittidej Trivisvavet

Executive Vice President: Purchasing

9. Mr. Vorapote Uchupaiboonvong

Executive Vice President: Accounting and Finance

10. Mr. Anukool Tuntimas

Executive Vice President: Human Resource and General Administration

11. Miss Supamas Trivisvavet

Executive Vice President: Office of President

Remark (1) The management team refers to the definition of “executive” of the Office of the Securities and Exchange Commission.

Managing Director’s Authority

The Managing Director shall have the authority to control and manage the Company’s core business and monitor all businesses of the Company to ensure compliance with resolutions and policies of the Board of Directors, including their suggestions. In this regard, the Board of Directors shall evaluate the Managing Director’s performance in comparison with the annual goals, whereby the Remuneration Committee shall consider remuneration for the Managing Director by evaluating from the performance in the past year for proposal to the Board of Directors for consideration and approval in accordance with the criteria.

CH. KARNCHANG PUBLIC COMPANY LIMITED

H. Company Secretary

The Board of Directors appointed Miss Supamas Trivisvavet to hold the office of the Company Secretary with duties and responsibilities as follows: 1. Providing advice to directors as to relevant legal provisions, rules, criteria, and regulations; 2. Ensuring compliance with laws, the Articles of Association, relevant regulations and the Good Corporate Governance Principles by the Company; 3. Arranging for the meetings as specified by law and the Articles of Association, preparing and keeping directors registration, notices and minutes of the Board of Directors’ meetings and annual reports of the Company, notices and minutes of the shareholders’ meetings as well as coordinating to ensure compliance with resolutions of the Board of Directors or resolutions of the shareholders with efficiency; 4. Ensuring disclosure of information and report on information to the regulatory units; 5. Contacting and communicating with shareholders and the related regulatory units; 6. Promoting training in various courses and providing information useful for new directors; and 7. Proceeding with other matters as assigned by the Board of Directors.

I. Structure of Subsidiaries’ Directors

As at December 31, 2009, the Boards of Directors of subsidiaries consist of qualified persons as listed below: • Construction Material Supply Co., Ltd. 1. Mr. Plew Trivisvavet Chairman of the Board of Directors 2. Mr. Kamthorn Trivisvavet Director 3. Mrs. Saikasem Trivisvavet Director 4. Mr. Narong Sangsuriya Director 5. Mr. Prasert Marittanaporn Director • CH. Karnchang Real Estate Co., Ltd. 1. Mr. Plew Trivisvavet Director 2. Mr. Prasert Trivisvavet Director 3. Mr. Thep Trivisvavet Director 4. Mr. Yim Trivisvavet Director 5. Mr. Kamthorn Trivisvavet Director • CH. Karnchang-Tokyu Construction Co., Ltd. 1. Mr. Plew Trivisvavet Chairman of the Board of Directors 2. Mr. Kamthorn Trivisvavet Director 3. Mr. Thep Trivisvavet Director 4. Mr. Yim Trivisvavet Director 5. Mr. Narong Sangsuriya Director 6. Mr. Prasert Marittanaporn Director 7. Mr. Masami Ichikawa Director 8. Mr. Hideo Miyagawa Director 9. Mr. Iizuka Tsuneo Director 10. Mr. Kunito Sakai Director 11. Mr. Seijiro Motomura Director • CH. Karnchang (Lao) Co., Ltd. 1. Mr. Ratn Santaannop Director

ANNUAL REPORT 2009

• Bangpa-in Cogeneration Limited 1. Mr. Narong Sangsuriya 2. Mr. Kamphuy Jirararuensak 3. Mr. Vorapote Uchupaiboonvong 4. Mr. Woravudh Anuruxwongsri 5. Miss Supamas Trivisvavet

Chairman of the Board of Directors Director Director Director Director

(2) Nomination of Directors and Executives Board of Directors

The Nomination Committee shall select qualified and appropriate persons to hold the position of directors or persons nominated for appointment as directors in advance as it deems appropriate and propose the same to the Board of Directors so as to consider nominating them to the shareholders’ meeting or to the Board of Directors’ meeting for appointment. In the case of appointment of directors by shareholders, the criteria and procedures are as follows: 1. Each shareholder has one vote for one share held. 2. The group election of all directors to be appointed on such occasion shall be by a single vote or if deemed appropriate by the shareholders’ meeting, the election may be on an individual basis, the vote for any candidate by each individual shareholder, whether as individual or group election, shall reflect the number of all shares held by such shareholder at the time of the vote in accordance with Clause 1 and no shareholder shall apportion a partial vote to any specific candidate. 3. In case of an election on an individual basis, the candidates with the highest number of votes in descending order shall be elected as directors up to the number of directors to be elected or vacancies at that time. If more than one candidate has equal votes for the final vacancies, the appointment shall be made by drawing of lots.

Executive Board

The Board of Directors shall appoint the Executive Board in accordance with the Company’s Articles of Association which provide that the Company’s directors may assign one or several directors to perform any activity on behalf of the Board of Directors.

Audit Committee

The Board of Directors shall appoint the Audit Committee as nominated by the Nomination Committee from independent directors of the Company and at least one person thereof shall have accounting and financial knowledge, which shall have a term of office of three years. Audit Committee members who retire by rotation may be re-appointed.

Nomination Committee

The Board of Directors shall appoint the Nomination Committee, which shall have a term of office of three years.

Remuneration Committee

The Board of Directors shall appoint the Remuneration Committee, which shall have a term of office of three years.

Corporate Governance and Risk Management Committee

The Board of Directors shall appoint the Corporate Governance and Risk Management Committee, which shall have a term of office of three years.

(3) Remuneration for Directors and Executives

The Company has considered providing appropriate remuneration to directors and executives as per the criteria of determination of remuneration for directors as follows: (1) Remuneration shall be appropriate for and in line with the scope of duties and responsibilities of each director, e.g., Chairman of the Board of Directors, Chairman of each subcommittee and members of the Executive Board, the Audit

CH. KARNCHANG PUBLIC COMPANY LIMITED

Committee, the Nomination Committee, the Remuneration Committee and the Corporate Governance and Risk Management Committee, who shall receive additional remuneration for such position; (2) Remuneration shall be sufficient to attract and retain knowledgeable and qualified directors to perform duties for the Company; (3) Elements of remuneration are clear, transparent and easy to understand. The remuneration for executives shall be subject to the criteria as specified by the Board of Directors, namely, such remuneration is appropriate and at a sufficient level to attract and retain qualified high level executives to work for the Company, as well as at a rate comparable to companies at the same level or in the same business. In 2009, the remuneration of directors and executives is as follows:

3.1 Monetary Remuneration for the year ended December 31, 2009

(a) Remuneration for directors consists of remuneration and meeting allowance, allowance, bonus, bringing the total remuneration for directors in 2009 to Baht 12,777,000, as per the following details: (Unit: Baht) Office Remuneration and Meeting Allowance in 2009

Directors

Positions

Corporate Governance Board of Executive Audit Nomination Remuneration and Risk Directors Board Committee Committee Committee Management Committee

1. Mr. Aswin Kongsiri

Chairman of the Board of Directors 870,000

2. Mr. Plew Trivisvavet

Chairman of the Executive Board

3. Mr. Vitoon Tejatussanasoontorn

Chairman of the Audit Committee 320,000

Bonus Total 2008

675,000 1,545,000

320,000 400,000

5,000

40,000

675,000 1,445,000

- 440,000 30,000 30,000

140,000

675,000 1,635,000

Committee 4. Mr. Don Pramudwinai Audit Member

300,000

- 220,000

562,000 1,082,000

5. Mr. Thawansak Sukhawun

320,000

- 240,000

40,000

562,000 1,162,000

320,000

450,000 770,000

7. Mr. Narong Sangsuriya Executive Director 320,000 100,000

5,000

562,000 992,000

8. Mr. Kamthorn Trivisvavet Executive Director 320,000 100,000

- 420,000

9. Mr. Prasert Marittanaporn

Executive Director 320,000 100,000

562,000 982,000

10. Mr. Ratn Santaannop Executive Director 320,000 100,000

562,000 982,000

11. Mr. Sombat Kitjalaksana

450,000 770,000

12. Mr. Anukool Tuntimas Executive Director 320,000 100,000

5,000

562,000 992,000

Audit Committee Member

6. Mr. Pavich Tongroach Director

Total

320,000

Director

4,370,000 900,000 900,000 45,000 45,000

220,000 6,297,000 12,777,000

ANNUAL REPORT 2009

(b) Remuneration for executive directors consists of remuneration, meeting allowance as well as allowance. Remuneration for executives consists of salary and bonus. The total remuneration for six executive directors and six executives in 2009 amounted to Baht 57,454,540.

3.2 Other Remuneration - None - Increase or Decrease in Number of Shares Held by Executives in 2009 Executives

Brought Forward as at January 1, 2009

Changes during the Year

Balance as at December 31, 2009

20,847,620

Mr. Vitoon Tejatussanasoontorn

500,000

Mr. Don Pramudwinai

150,000

Mr. Thawansak Sukhawun

Mr. Pavich Tongroach

Mr. Narong Sangsuriya

1,570,000

650,000

920,000

Mr. Kamthorn Trivisvavet

1,000

Mr. Prasert Marittanaporn

Mr. Ratn Santaannop

983,000

3,884,000

Mr. Viboon Mongkolpiyathana

300,000

Mr. Samai Paiboon

100,000

Mr. Sittidej Trivisvavet

3,400,000

200,000

3,200,000

1,500

Mr. Aswin Kongsiri Mr. Plew Trivisvavet

Mr. Sombat Kitjalaksana Mr. Anukool Tuntimas

Mr. Vorapote Uchupaiboonvong Miss Supamas Trivisvavet

CH. KARNCHANG PUBLIC COMPANY LIMITED

(4) Corporate Governance

The Company’s administration has been complying with the good corporate governance principles, focusing on the significance of and responsibilities towards the shareholders and the stakeholders of the Company. The Board of Directors, in recognition of the good corporate governance principles to reinforce the confidence of shareholders, investors and all related parties, has set out the corporate governance policy and scheduled to review such policy and its compliance at least once a year. The Company’s corporate governance policy is as follows:

Corporate Governance Policy 1) Shareholders’ Rights

Promoting shareholders to exercise their basic rights and taking care of shareholders better than their rights as specified by law without any actions in violation of or depriving shareholders of their rights. 2) Equitable Treatment towards Shareholders Monitoring to ensure that all shareholders are equally treated and protected in respect of their basic rights, implementing measures to prevent inside information usage for personal gain or others, which would cause damage to shareholders as a whole. 3) Roles of Stakeholders Taking care of stakeholders based on their rights under applicable laws without any actions in violation of stakeholders’ rights as well as establishing measures to compensate any stakeholders suffering from damage arising from violation of rights, promoting cooperation between the Company and stakeholders for the Company’s prosperity, financial stability and sustainability. 4) Information Disclosure and Transparency Undertaking all activities with transparency, open for inspection, and sufficient information disclosure to all relevant parties as well as monitoring disclosure of material information relating to the Company, both financial and non-financial records, to ensure accuracy, completeness, timeliness and transparency through easy access with equality and reliability. 5) The Board of Directors’ Responsibilities Ensuring that the Board of Directors performs duties with honesty and due care to the best interest of the Company and in fairness to all shareholders under the good internal control system and appropriate risk management, including compliance with the Company’s code of ethics. In 2009, the Company has adhered to the good corporate governance principles for listed companies as stipulated by the Stock Exchange of Thailand as follows:

1. Shareholders’ Rights

The Company realizes the significance of the shareholders and their rights of ownership to control the Company through appointment of the Board of Directors and their rights to make decisions on significant changes of the Company. The Company thus promotes the shareholders to exercise their protected basic rights. In this respect, the shareholders shall be informed of the Company’s correct, complete, sufficient and up-to-date information and news, including the right to attend the shareholders’ meeting, the right to appoint proxy to attend and vote at the meeting, the right to share opinions and make inquiries in the shareholders’ meeting in order to jointly make decisions on the Company’s important matters, e.g., profit allocation, election of directors, determination of remuneration for directors appointment of the auditor, determination of the audit fees, and approval of important transactions which may affect the Company’s business direction, etc. The Board of Directors clearly sets out the corporate governance policy that the Company shall promote the shareholders to exercise their basic rights without taking any actions in violation of or depriving shareholders of their rights., The Company greatly realizes the significance of the shareholders’ meeting, i.e., the meeting place must be convenient for the shareholders’ commute, including suitable and sufficient time. The Company thus uses its office as the meeting place, which is located at No. 587 Viriyathavorn Building, Sutthisarnvinitchai Road, Dindaeng Subdistrict, Dindaeng District, Bangkok, and which is convenient for commuting, close to a subway station and an expressway onand off-ramp, with sufficient parking areas for shareholders.

ANNUAL REPORT 2009

In 2009, the Company convened one shareholders’ meeting, i.e., the 2009 Annual Ordinary General Meeting of Shareholders on April 23, 2009 at Supunnika Room on 4th Floor, No. 587, Viriyathavorn Building, Sutthisarn Road, Dindaeng Subdistrict, Dindaeng District, Bangkok. The notice of the meeting, together with information in support of each agenda item, along with opinions of the Board of Directors, proxy as required by law, clarification, method of proxy, profiles of directors due to retire by rotation, the Company’s Articles of Association regarding the shareholders’ meeting, details of independent directors, and procedures for attendance of the shareholders’ meeting, as well as route map of the meeting place, was sent in advance to the shareholders 14 days prior to the meeting date, and advertised in a newspaper for three consecutive days prior to the meeting date. Moreover, the Company also posted the notice of the meeting, together with details of each agenda item on the Company’s website in advance 21 days prior to the meeting date for the shareholders to have time to consider details of each agenda item. As for those shareholders unable to attend the meeting in person, the Company suggested them authorizing the Chairman of the Audit Committee or an Audit Committee member or another person to attend the meeting and vote on their behalf. On the meeting date, the shareholders can register to attend the meeting at least two hours prior to the meeting time. The Company arranged for staff to facilitate the meeting registration for shareholders and proxies, and used the barcode system in the convenient and rapid registration of the meeting and vote counting. Refreshments and duty stamps were provided, free of charge, to the shareholders and their proxies who attended the meeting on their behalf. The Board of Directors realizes the significance of their attendance of the shareholders’ meeting for answering questions and taking suggestions of the shareholders into consideration. In 2009, all 11 directors attended the said meeting, including the chairman, Chairman of the Audit Committee and all subcommittees, the Managing Director and the management team of the Company. The shareholders’ meeting proceeded in accordance with the order of the agenda as specified in the notice of the meeting sent in advance to the shareholders, and the shareholders were allowed to express their opinions and make inquiries in each agenda item. Before starting the meeting, the chairman of the meeting clearly informed the shareholders of the voting method and the shareholders’ rights as follows: 1. One share represents one vote. For agenda items requiring resolutions, such resolutions shall be passed by the majority of votes. Agenda item for acknowledgment shall not require any resolution. As for agenda item for determination of remuneration for directors, resolution shall be passed by votes of not less than two-thirds of the total number of votes of the shareholders present at the meeting. 2. In case that shareholders have appointed their proxies and voted on various matters, the Company’s staff would collect and record such votes in the computer, and the Company’s legal advisor would check the vote casting to ensure the transparency and compliance with the laws and regulations. Proxies would not be required to vote again in the meeting unless the information on such agenda item would change. Any shareholders intending to change their votes shall request the voting cards from the Company’s staff. 3. The shareholders attending the meeting in person and intending to vote against or abstain from voting shall use the voting cards as provided by the Company’s staff. 4. The shareholders who attend the meeting after the meeting was already called to order shall be allowed to exercise their rights to vote or vote on such agenda item which is currently pending the consideration and resolution has not yet been passed. In regard to the minutes of the shareholders’ meeting, the Company has clearly recorded the list of directors attending the meeting, material clarifications, questions and answers or opinions in brief, the resolutions of the meeting with the voting results, divided into agree, disagree or abstain, which shall be available in Thai and English languages on the Company’s website: www.ch-karnchang.co.th within 14 days from the shareholders’ meeting date. The shareholders shall then have convenient access to such information and news instead of until the next shareholders’ meeting. Thereafter, the said minutes would be proposed to the shareholders for approval in the next meeting.

CH. KARNCHANG PUBLIC COMPANY LIMITED

2. Equitable Treatment towards Shareholders

The Company has a policy to promote and ensure equal and fair treatment towards all shareholders, including minority and foreign shareholders, with the following measures for protection of the shareholders’ basic rights : 1. Shareholders may propose any agenda item of the Ordinary General Meeting of Shareholders and nominate qualified persons to be appointed as directors for the Company’s Annual Ordinary General Meeting of Shareholders prior to the meeting date, as published on the Stock Exchange of Thailand’s website, subject to the criteria for consideration as posted on the Company’s website. The Board of Directors will consider the appropriateness to include or not include such agenda item proposed by the shareholders. As for the nominated persons to be appointed as directors, the management will propose the same to the Nomination Committee for further consideration and submission to the Board of Directors and the shareholders’ meeting. 2. The shareholders’ meeting shall proceed in accordance with the order of the agenda as specified in the notice of the meeting, and no additional agenda item would be considered at the meeting without prior notice to the shareholders. This is to ensure that the shareholders have opportunity to study information in support of consideration of each agenda item. 3. Any shareholder unable to attend the meeting in person may vote by proxy. In this regard, at least two independent directors are nominated for proxy appointment. Proxy form is in accordance with the form as set out by the Ministry of Commerce, in which each shareholder may direct his/her voting decisions. This is to encourage the shareholders to exercise their rights to attend the meeting and vote on each agenda item. In this regard, the proxy form is enclosed with the notice of the shareholders’ meeting, clearly listing the documents and evidence required for proxy appointment, along with instructions as to the proxy procedures for the shareholders to make proper arrangements without any complication. 4. Voting cards shall be provided for every agenda item for the shareholders to vote as they consider appropriate. The Company uses the barcode system to record and display the voting results, and arranges for its staff to collect voting cards in the meeting room. To ensure transparency, the Company also has its legal advisor oversee the counting of votes. 5. As for the appointment of directors in replacement of the retired directors, the shareholders may exercise the right to appoint any director individually. 6. The Company has set out the guidelines on confidentiality of information and measures to prevent directors and executives from using inside information for personal gain. All directors and executives are well informed of the roles and duties to report their own securities holding, and on the Company’s securities holding by spouses or minor children; and to report every change in such securities holding from purchase, sale, transfer or acceptance of transfer of securities, to the Securities and Exchange Commission in accordance with Section 59 of the Securities and Exchange Act B.E. 2535 (1992) within three business days from the date of purchase, sale, transfer or acceptance of transfer of securities, whereby the Company gives prior notice thereof in every meeting of the Board of Directors and the Executive Board. Moreover, directors and executives have also been informed of their duties and responsibilities, including penalties under the Securities and Exchange Act B.E. 2535 (1992). In addition, the Company prohibits executives who have access to inside information from taking any actions contrary to Section 241 of such Act, including relevant rules and regulations. 7. The information on the Company’s connected transactions and opinions of the Board of Directors regarding such transactions shall be disclosed to the shareholders, and no connected transactions shall be executed in violation of or against the rules of the Stock Exchange of Thailand and/or the Office of the Securities and Exchange Commission. Moreover, the Company discloses the connected transactions in the Annual Report.

3. Roles of Stakeholders

The Company realizes the significance of rights of all groups of stakeholders, whether inside, such as staff and executives of the Company and the subsidiaries, or outside, such as customers, traders, competitors, creditors, communities, society, public sector and other relevant authorities, to ensure that the basic rights of these stakeholders are well protected and taken care of under the provisions of the laws and other relevant rules and regulations. The

ANNUAL REPORT 2009

Company recognizes support from these stakeholders which could help building up the Company’s competitiveness and profitability to result in long-term success for the Company. The Company’s Board of Directors has set out the corporate governance policy that the Company shall take care of the stakeholders based on their rights under the relevant laws, shall not take any acts in violation of the rights of stakeholders, and shall establish measures to compensate any stakeholders suffering from damage arising from violation of rights. In addition, the Company also realizes the significance of communication with all groups of stakeholders to exchange information, as well as listening to opinions and suggestions of all groups of stakeholders for common interest. In case where any stakeholders are not fairly treated by the Company, they may file complaints directly with the Company at the Office of President, Telephone 0-2275-0026 ext. 2315 or e-mail: president_office@ch-karnchang.co.th. In 2009, the Company has taken care of the rights of all groups of stakeholders, both inside and outside the Company, as follows: Shareholders :

- The Company has performed duties with integrity, honesty and fairness, taking into account both major and minor shareholders, and for the benefit of the group of related persons as a whole; - The Company has managed its business to ensure prosperity, stability and good return for the shareholders; - The Company has protected its assets from depreciation or unnecessary loss; - The Company has, regularly and in a timely manner, disclosed the accurate and sufficient information, both financial and non-financial, relating to the Company’s business and the operational results, and representing the Company’s actual operational and financial status;

Traders and/or - Every trader and/or creditor/debtor has been equally and fairly treated by the Company, Creditors/Debtors : taking into account the Company’s optimum benefit and based on the fair returns for both parties; - The Company has avoided the situation which causes a conflict of interest, as well as complying with the contractual obligations; - The Company has provided actual information and accurate report. The negotiation for problem resolution is based on the business relation; Customers : - The Company maintains the optimism and gives priority to customers, treats customers willingly, actively, politely, keeps customers’ confidential information from misuse for personal gain or others, as well as treating all customers equally without discrimination; Competitors : - The Company has free trading policy and believes that competition is a positive factor to encourage the development of service standard and innovations to be offered to customers; - The Company has complied with the fair competition framework; - The Company in no way discredits any trading competitor’s reputation by negative accusation without actual information; - The Company in no way accesses any competitor’s confidential information through any dishonest or other inappropriate methods; Business interested parties : - The Company has clearly determined policies and procedures for approval of connected transactions to prevent any potential conflicts of interest; Staff : - The Company truly realizes the significance of its staff, and to meet its objectives, the Company recruits and employs knowledgeable, capable and experienced personnel to perform works, and in response to the Company’s requirements and growth, by continually organizing programs for development of staff knowledge and capacities to advance their skills;

CH. KARNCHANG PUBLIC COMPANY LIMITED

- The Company has equally and fairly treated its staff through proper and fair remuneration and welfare, such as, establishment of a provident fund, medical treatment packages in hospitals designated by the Company, and loans for staff; - The Company truly realizes the significance of personnel development by establishing clear internal personnel development plans, encouraging all levels of its staff up to high ranking executives to receive training for improvement of their knowledge and capacities, both in theory and practice, so as to ensure the efficient performance skills, including fair employment conditions suitable for the market and in compliance with the labor laws; Society and Public : - The Company has taken into account the public interest and refrained from taking any acts which may cause damage to the country’s reputation, natural resources, environment and public interest; - The Company has promoted and instilled into its staff at all levels the corporate social responsibility; - The Company in no way facilitates, supports or allows to be instrumental in any avoidance of compliance with the law; Communities : - The Company has considered communities as part to be concerned and facilitated, and thus focuses on various activities for improvement of the quality of life and environment as its contribution to society; Environment : - The Company has developed and improved the environmental management system in all activities of the Company to continuously minimize pollution and impact on the environment, with clear objectives, goals, action plans and evaluation; - The Company has promoted the environment preservation, as well as publicizing the information and news, and cooperated with the staff, customers, government agencies and private entities, including the public, as a gesture of the Company’s image and awareness of the environmental management; - The Company has rapidly and efficiently responded to any events giving rise to impact on the environment and communities caused by the Company’s operation.

4. Information Disclosure and Transparency

1. The Board of Directors establishes the policy that the Company shall undertake activities with transparency and open for inspection with sufficient information disclosure to all relevant parties as well as monitoring to ensure disclosure of correct, complete, timely and reliable information, and everyone can easily access to such information on an equal basis. In disclosing the Company’s significant information, other than by way of dissemination under the specified criteria via the Stock Exchange’s channels, the Company also disseminates such information on the Company’s website, both Thai and English, such as, Annual Report, Annual Registration Statement (Form 56-1), Corporate Governance Policy, the Company’s information, and public relations news. The Company regularly updates the website for up-to-date information and news for the convenience and to the best interest of users. 2. In respect of investor relations, the Board of Directors is well aware of the significance of accurate, complete, transparent, thorough and timely disclosure of information relating to the Company. Therefore, the Company has set up an Investor Relations unit to be responsible for disclosure of information to shareholders and investors, both financial and non-financial, such as, financial report, operational results, financial ratio,

ANNUAL REPORT 2009

dividend history and other information which may impact the Company’s securities value. Such information and news in support of their decision making are published for investors and relevant parties through various channels and media of the Stock Exchange of Thailand, the Office of the Securities and Exchange Commission, including the Company’s website at http://www.ch-karnchang.co.th in both Thai and English languages. Those interested to receive information in support of investment may contact Khun Rakchanok Trivisvavet at Investor Relations, Telephone 0-2275-0026 ext. 2317-2319 3. The Company discloses its financial information and reports the responsibilities of the Board of Directors towards the financial report, together with the auditor’s report, the management discussion and analysis, general information and significant information in the Annual Report correctly and in a timely manner in accordance with the regulations of the Office of the Securities and Exchange Commission. 4. The Company discloses the roles and duties of the Board and various subcommittees, number of meetings and attendances of each director in 2009. 5. In regard to the policy on payment of remuneration for directors and executives, the Company establishes clear and transparent policy on remuneration for directors and executives, subject to review by the Remuneration Committee. The remuneration shall be at the same level as that in the same industry and sufficient to retain the qualified directors and the Managing Director, and remuneration for executives, excluding the Managing Director, shall be in accordance with the principles and policies determined by the Executive Board corresponding to the Company’s operational results and performance of the executives, as per the details of Remuneration for Directors and Executives on pages 31 to 33.

5.The Board of Directors’ Responsibilities

5.1 The Board of Directors’ Structure The structure of the Board of Directors consists of 12 qualified members, comprising: six executive directors, and six non-executive directors (five independent directors representing more than one-third of the total number of directors). The Chairman of the Board of Directors is an independent director by the definition of the Office of the Securities and Exchange Commission and has no relationship with the management and is not the Managing Director, so as to separate the policy making and supervisory duty from the regular managerial duty. The Board of Directors has not yet determined the policy on holding the position of director in other companies since, after considering the matter, it deems that all directors of the Company devote their time to regularly attend meetings and provide useful suggestions to the Company. Furthermore, the Board of Directors also appointed the Company Secretary in accordance with the guidelines for the good corporate governance principles to perform the duty to provide suggestions relating to various laws and regulations as required by the Board of Directors and to supervise activities of the Board of Directors as well as coordinating to ensure performance in compliance with the Board of Directors’ resolutions. 5.2 Subcommittees The Company has established five subcommittees to closely monitor and supervise the operation and regularly report to the Board of Directors, namely, the Executive Board, the Audit Committee, the Nomination Committee, the Remuneration Committee, and the Corporate Governance and Risk Management Committee. In this regard, the Board of Directors has determined duties and responsibilities of each subcommittee as detailed on pages 24 to 29. 5.3 Role, Duties and Responsibilities of the Board of Directors 1. The Board of Directors comprises personnel having knowledge, ability, skills and experiences in various fields to exercise their judgment independently with leadership, who determine vision, missions, strategies, goals, business plan and budget of the Company, and supervise the management to take actions in compliance

CH. KARNCHANG PUBLIC COMPANY LIMITED

with the business plans and forecast budget with efficiency and effectiveness so as to optimize the economic value to the business, including monitoring the operational results to meet the objectives and comply with the policies, rules, laws and other relevant regulations. 2. The Board of Directors has established written corporate governance policy which has already been approved and subject to review at least once a year. 3. The Company has prepared its code of business ethics since the year 2003, with the approval by the Board of Directors. The code of business ethics contains proper conduct and practices for directors, executives and staff, and guidelines for conduct and treatment towards the Company, colleagues, third parties and society, in accordance with the ethics. In the past, all directors, executives and staff have been informed and well understood of the proper and ethical conduct and complied with such practices in the performance of their duties in line with the Companyâ&#x20AC;&#x2122;s mission, with honesty, integrity and equality, to build up confidence of shareholders and all groups of stakeholders, including the public and society. 4. Conflict of Interest The Board of Directors has considered the transactions which may have conflict of interest or connected transactions or related party transactions properly under the good ethics subject to review by the Audit Committee to ensure compliance with the rules of the Stock Exchange of Thailand and the Office of the Securities and Exchange Commission, as well as the disclosure of information on the execution of such transactions which may have conflict of interest to the public. In this regard, the Company has established the policy, rules and regulations, and procedures for approval of the transactions which may have conflict of interest for the executives, staff and the relevant persons for compliance with the significant principles, as follows : 4.1 Compliance with the rules set out by the Stock Exchange of Thailand in the execution of connected transactions to propose the connected transactions to the Audit Committee for consideration and approval prior to seeking approval of the Board of Directors under the good corporate governance principles. 4.2 Disclosure of information on the transactions which may have conflict of interest or connected transactions or related party transactions pursuant to the rules set out by the Office of the Securities and Exchange Commission/the Stock Exchange of Thailand, by disclosing in the Annual Registration Statement (Form 56-1) and the Annual Report, as well as disclosing the information of such transactions in the financial statements in accordance with the accounting standard. 4.3 In the consideration of the execution of the transactions which may have conflict of interest, the interested directors shall not attend the meeting nor vote on such agenda. 5. Policy on Risk Management The Board of Directors greatly realizes the significance of the risk management. The Board of Directors appointed the Corporate Governance and Risk Management Committee on December 7, 2007. The Company has determined and assessed its business risks, and measures to prevent and manage such risks. Risk Management Policy 1. The Board of Directors, all executives, staff and units own the risks and have the duties to be responsible for, assess, follow up, and support the risk management process with efficiency. 2. All units of the Company shall have the risk management process, as well as having the systematic and continuous assessment and follow-up, subject to regular review at least once a year in line with changes in business sector. 3. The risk assessment shall be determined as part of the annual work plan of all units, by considering all risks of the entire organization, taking into account such risk factors, both inside and outside the organization, including proper risk management. 4. The Corporate Governance and Risk Management Committee has the duties to assess the risk management and propose its opinion to the Board of Directors.

ANNUAL REPORT 2009

5. The organization culture will focus on common understanding and awareness of risks. The body of knowledge shall be established for staff at all levels to have access for study and research and sharing of experiences, which would pave the way for development and improvement of the risk management process to become an efficient mechanism in the strategic administration. In addition, the Company’s code of business ethics shall be regularly reviewed. Should the proper conduct and practices in the Company’s code of business ethics not cover its business operation, the Company will immediately make revisions as appropriate. The Company has continuously supported training on corporate governance to high and middle level executives, so as to enhance their knowledge, understanding, visions, good attitudes towards the Company’s management in compliance with the good corporate governance principles to build leadership and succession to the management. The Board of Directors and executives adhere to the guidelines for the good corporate governance principles by regularly improving their conduct and practices towards stakeholders to ensure compliance with such guidelines, e.g., independence of the Board of Directors, giving priority to shareholders to the extent that the Company was awarded a “Very Good” rating of the ordinary general meeting of shareholders by the Office of the Securities and Exchange Commission in association with the Listed Companies Association and the Thai Investors Association. Furthermore, all staff also share the corporate social responsibility by participating in the mangrove forestation project to honor His Majesty the King in the celebration of His Majesty the King’s 80th birthday at the Mangrove Forest Resources Development Station 2 (Chanthaburi Province) and participating in lunch and activities with the elderly at Ban Bang Khae Social Welfare Development Center for the Elderly (Ban Bang Khae 1), the “One Drop is Life, CH. Karnchang Creates New Life” program: the management, staff and local residents jointly donated blood on the occasion of the “World Blood Donor Day” to the National Blood Center in order to solve the blood shortage problem, the program of building check dam and saltlicks at the Kui Buri National Park, Prachuap Khiri Khan Province, etc. 5.4 The Board of Directors’ Meetings The Company schedules the Board of Directors’ meetings in advance for directors to manage their time to attend the meetings, except for special agenda, the Chairman of the Board of Directors or the directors in the number specified by law may convene additional meetings as necessary. The Board of Directors regularly meets every three months. The President Office shall deliver the notice of the meeting, together with agenda and supporting documents, at least seven days prior to the meeting date for the Board’s review prior to attending each meeting. The agenda shall be determined by mutual discussion between the Chairman of the Board of Directors and the Managing Director. In 2009, the Board of Directors convened six meetings. Most of the directors were able to attend the meetings, except where they were engaged by urgent business. In every meeting, the Chairman of the Board of Directors shall serve as the chairman of the meeting to ensure each item shall be carefully considered and all directors shall be allowed to express their opinions and take part in discussions. In addition, the high level executives will attend the meeting to clarify the information in the capacity as persons directly relevant to the problems to the satisfaction prior to voting on each item. Furthermore, the minutes of the meetings are recorded in writing and systematically kept for inspection.

CH. KARNCHANG PUBLIC COMPANY LIMITED

Meeting attendance of each director (attendances/total number of meetings) shall be summarized as follows : Corporate Audit Nomination Remuneration Governance and Risk Committee Committee Committee Management Committee

Board of Directors

Executive Board

1. Mr. Aswin Kongsiri

6 / 6

2. Mr. Plew Trivisvavet

6 / 6

19 / 19

1 / 1

4 / 4

3. Mr. Vitoon Tejatussanasoontorn

6 / 6

4 / 4

1 / 1

4 / 4

4. Mr. Don Pramudwinai*

1 / 6

0 / 4

5. Mr. Thawansak Sukhawun

6 / 6

4 / 4

6. Mr. Pavich Tongroach

6 / 6

7. Mr. Narong Sangsuriya

5 / 6

19 / 19

1 / 1

8. Mr. Kamthorn Trivisvavet

5 / 6

19 / 19

9. Mr. Prasert Marittanaporn

6 / 6

19 / 19

10. Mr. Ratn Santaannop

6 / 6

19 / 19

11. Mr. Sombat Kitjalaksana

6 / 6

12. Mr. Anukool Tuntimas

6 / 6

19 / 19

Directors

Remark * Mr. Don Pramudwinai attended two meetings of the Board of Directors via video-conference and attended two Audit Committee’s meetings via video-conference.

5.5 Self-Evaluation of the Board of Directors The Company has a policy for the Board of Directors to evaluate its overall performance at least once a year. In 2009, the Company Secretary delivered the performance evaluation form to each director for evaluating the overall performance of the Board of Directors so as to use the evaluation results for improvement of the Board of Directors’ performance. In this regard, the evaluation results, divided into six subjects, namely, structure and qualifications of the Board of Directors; roles, duties and responsibilities of the Board of Directors; the Board of Directors’ meetings, directors’ performance of duties; relations with the management; and self-development of directors and development of executives, are summarized as follows : 1. Structure and Qualifications of the Board of Directors. Most directors are of the view that the structure and qualifications of the Board of Directors are proper, namely, there are 12 directors, comprising six non-executive directors (five independent directors or more than one-third of the total number of directors) and six executive directors which are suitable to the nature of business operations of the Company. The Board of Directors comprises personnel with sufficient knowledge, ability and experiences in a variety of fields and performed their overall duties efficiently. In this

ANNUAL REPORT 2009

regard, the Board of Directors appointed another five subcommittees, namely, 1. the Audit Committee with the duty to help supervise and monitor the business as well as considering the appropriateness and justifications of various transactions for the optimum benefit of the Company; 2. the Nomination Committee with the duty to consider criteria and procedures for nomination of qualified persons to be appointed as the Company’s directors based on transparency, fairness, without influence of any persons; 3. the Remuneration Committee with the duty to consider determining criteria for consideration of remuneration for directors and the Managing Director; 4. the Corporate Governance and Risk Management Committee with the duty to establish policies and directions of operations in respect of the good corporate governance of the Company; and 5. the Executive Board with the duty to supervise and provide suggestions to the management, and proceed with other matters as assigned by the Board of Directors. 2. Roles, Duties and Responsibilities of the Board of Directors Most directors are of the view that the roles, duties and responsibilities of the Board of Directors are proper, namely, the Board of Directors gives priority and contributes sufficient time to consider significant matters relating to directions of the Company’s business operations, review the good corporate governance policy of the Company, as well as ensuring compliance with various policies, review of the code of business ethics, together with monitoring to ensure no conflict of interest. The Board of Directors also follows the procedures by taking into account the optimum benefit of the Company. Furthermore, the Board of Directors regularly reviews the internal control system to ensure good and sufficient internal control system and appropriate risk management, as well as following up and monitoring the performance of duties of the management in accordance with the policies as assigned by the Board of Directors. 3. The Board of Directors’ Meetings Most directors are of the view that the Board of Directors’ meetings are proper, namely, the Company gives prior notice of annual schedule of the meetings to directors so that they would be able to manage their time to attend every meeting. The number of meetings and agenda are suitable, thereby supporting the Board of Directors to perform duties efficiently and be able to supervise and monitor the Company’s business operations with success. Moreover, directors also receive supporting documents prior to each meeting and have sufficient time to study additional information in preparation for each meeting. The supporting documents contain sufficient information for decision making to the benefit of the Company. Furthermore, the atmosphere at each Board of Directors’ meeting allows all directors to express constructive opinions without any influence of any persons. In addition, directors could fully discuss significant issues at each meeting. 4. Directors’ Performance of Duties Most directors are of the view that directors’ performance of duties is satisfactory, namely, they are well prepared and sufficiently study information prior to each meeting and regularly attend the meetings. In addition, directors independently provide their opinions and impartially consider various matters and are independent on voting, including useful suggestions for the Company’s operations; and understand the significance of each matter and properly contribute their time to consider such matter. 5. Relations with the Management Most directors are of the view that the relations with the management are proper. Directors could straightforwardly discuss with the Managing Director and maintain good relations with the management, whereby the Managing Director could request directors’ advice as necessary and the Board of Directors does not intervene in performance of duties of the management. Moreover, the Board of Directors also participates in solving problems as appropriate in case the management’s performance of duties does not meet the operational plans and forecast budget.

CH. KARNCHANG PUBLIC COMPANY LIMITED

6. Self-Development of Directors and Development of Executives Most directors are of the view that the self-development of directors and development of executives are satisfactory, namely, directors understand their roles, duties and responsibilities, have sufficient knowledge and understanding of the Company’s business, pay attention to significant information or news relating to economic and industrial conditions, changes in rules and regulations and the state of competition, which would allow directors to efficiently perform their duties. In this regard, all directors are trained to ensure their understanding of performance of duties in the capacity of directors. Furthermore, in case of new directors, the Board of Directors would have the management provide documents or briefing for the new directors to understand the business and performance of duties as directors. In addition, the Board of Directors also sets out the succession plan to ensure continuity of performance of duties of the Company’s high level executives. The Corporate Governance and Risk Management Committee adopts the self-evaluation results of the Board of Directors for proposing the practice and guidelines of the Board of Directors in compliance with the good corporate governance principles to the Board of Directors for consideration as appropriate. 5.6 Remuneration for Directors and Executives Remuneration : The Company establishes clear and transparent policy on remuneration for directors and for directors the Managing Director, subject to review by the Remuneration Committee. The remuneration shall be at the same level as that in the same industry and sufficient to retain the qualified directors and the Managing Director. Remuneration : Remuneration for executives shall be in accordance with the principles and policies for executives determined by the Board of Directors corresponding to the Company’s operational results and performance of the executives. 5.7 Development of Directors and Executives • Training for Directors and Executives The Board of Directors and the high level executives realize the significance of participation in training or seminars in various courses or development of their knowledge and skills. The Board of Directors attends training courses organized by the Thai Institute of Directors Association (IOD), namely, Director Certification Program (DCP) and Directors Accreditation Program (DAP), the Audit Committee Program. In this regard, the Company also continues to coordinate with IOD to send its directors to participate in various training courses as provided by IOD. • Orientation for New Directors The Company also arranges for orientation for newly-appointed directors, whereby the Board of Directors assigns the Company Secretary to meet newly-appointed directors by convening a meeting with the relevant directors and/or executives and/or officers for clarification and answer to questions, as well as preparing documents and briefing for new directors, such as, information relating to the Company, listed company director’s handbook, the good corporate governance principles, code of ethics, power and duties of the Board of Directors, the annual schedule of the Board of Directors’ meetings. 5.8 Succession Plan The Board of Directors sets out succession plan in the executive level and in the primary line, by significantly taking into account the performance and potentials of each person. In this regard, the Company makes preparations for those potential successors in the development of their knowledge, competency and skills as required for their work positions.

ANNUAL REPORT 2009

(5) Control of Inside Information Usage

The Company introduces measures requiring executives to report their securities holding on every purchase/sale /transfer of securities to the Office of the Securities and Exchange Commission. Executives are reminded at every meeting of the Board of Directors of such measures and also required to sign their names in the acknowledgment of such obligations and responsibilities for report on securities holding. The Company also has an information disclosure policy in line with the guidelines set forth by the Stock Exchange of Thailand. In this respect, the Company shall disclose such information necessary to the decision of the public. Such information must be accurate, sufficient and made available in a timely manner. In addition, the Company shall endeavor to ensure that all investors in the Company’s securities shall equally obtain such information. The Company also maintains good inside information control system. As for information having impact or effect on prices, such information is sensitive or confidential and shall be subject to measures to prevent improper usage of inside information. For example, only high ranking executives would be granted access to such information and disclosure of such information to staff of the Company shall be made on a need to know basis. Staff who has such access shall be reminded that such information is confidential and subject to restrictions on usage as well as prohibition from purchase or sale of the Company’s securities in reliance upon such information. Should any staff violate or fail to comply with such requirements, the Company shall impose disciplinary actions starting from written warning, wage cut, work suspension without pay or dismissal, depending upon the severity of such violation.

(6) Internal Control

The Board of Directors continuously realizes the significance of the internal control system to prevent and minimize the risk which may arise, by assigning the Audit Committee comprising independent directors to review the evaluation of the internal control system. The Internal Audit Department shall report directly to the Audit Committee and review the operation systems in various departments of the Company in accordance with the annual audit plan as approved by the Audit Committee, for the purpose of ensuring that the work performance is efficient and effective, that the Company’s resources are used cost-efficiently, that the financial reporting is properly controlled to ensure correctness, reliability and timeliness, that it complies with the policy in accordance with the provisions of the laws and the official regulations, and that the efficiency of the internal control system is regularly reviewed, to ensure the best interest of the shareholders on the basis of fair returns to all stakeholders. In addition, the Audit Committee also has the duty to consider disclosing the Company’s correct and complete information in case of connected transactions and transactions which may have conflict of interest. The Company recognizes the significance of the risk management, by assigning the Corporate Governance and Risk Management Committee to consider the risk factors currently being encountered or expected to be encountered by the Company, to analyze the impact and the possibility of such risks and then establish measures to prevent and manage such risks. The risk management system shall be reviewed and evaluated for its effectiveness every year and every interval in which the risk level has changed, subject to regular monitoring. In 2009, the Board of Directors and the Audit Committee have evaluated the adequacy and suitability of the Company’s internal control system as per the internal control adequacy evaluation form, comprising five elements, namely, organization and environment; risk management; operational control of the management; information technology and communications system; and monitoring system, together with the audit results by the Internal Audit Department. They are of the opinion that the Company’s internal control system is adequate and suitable to the business operation without any material fault, which would prevent the Company’s and the subsidiaries’ assets from misuse or unauthorized use by the executives. The Company’s financial reports have been prepared in accordance with the generally accepted accounting principles. The information disclosed in the financial reports is correct and reliable. The Company operates its business in compliance with the securities and exchange law and other relevant laws. 3. Policy on Dividend Payment The Company has the policy on dividend payment for the shareholders at the rate expected to be paid at least 40 percent of net profit after tax for each year, which shall be payable in the following year should there be no any other necessary grounds and such dividend payment not materially affect the Company’s normal operations. As for the subsidiaries, joint ventures and associated companies of the Company, the policy on dividend payment has not yet been set out.

CH. KARNCHANG PUBLIC COMPANY LIMITED

Nature of Business Operations 1. Summary of Nature of Business Operations of the Company

and Subsidiaries CH. Karnchang Public Company Limited was incorporated as a limited company on November 27, 1972 to engage in general construction business. Initially, the Company’s scope of work covered construction of buildings and general civil works and its major clients were government agencies, such as, the Royal Thai Army and the Royal Thai Air Force. The achievements bringing reputation to the Company in the initial period included, for example, various buildings, hospitals and public utilities for the Royal Thai Army and the television station building for the Mass Communication Organization of Thailand (MCOT). Subsequently, the Company realized the need to enlarge the scope of its business operations for long-term prosperity. In this respect, in 1981, the Company entered into a joint venture with Tokyu Construction Co., Ltd., one of Japan’s top ten construction contractors, for the purpose of acceptance of technology transfer and business alliance. Since 1994, the Company was converted into a public company and listed on the Stock Exchange of Thailand, at which time the Company has been rapidly growing and improving its capabilities and potential by both work management and development of human resources, as well as construction technology development through its joint ventures with foreign companies which possess expertise, to improve the Company’s work potential for more efficiency. This enabled the Company to expand its scope of capabilities to engage in various construction works to the point at which the Company became one of a few construction contractors which were sufficiently well-prepared to carry out sophisticated construction requiring advanced construction technology, such as, large scale infrastructure projects. In addition to the contracts for normal large scale infrastructure projects, the Company also developed its capabilities in terms of both engineering and management, allowing the Company to operate construction projects on a design and construction basis, i.e., the so-called turnkey, including investments in concession projects on a build-transfer-operate (BTO), build-operate-transfer (BOT), buildown-operate (BOO) and acquire-operate-transfer (AOT) basis, as well as other small, medium and large scale projects. Among these outstanding and successful projects were, for example, the Bang Na - Chon Buri Expressway Construction Project; the Development Project for Enhancement of the Capabilities of the Bangkok International Airport; the Park and Ride Building Construction Project for Bangkok Metro Public Company Limited; the Bang Pli - Suksawad (Bang Pli - Bang Khun Thien) Expressway Project; Concession Projects for Water Production and Distribution for the Provincial Waterworks Authority in Nakhon Pathom, Samut Sakhon and Pathum Thani Provinces; the MRTA Initial System Project, Chaloem Ratchamongkhon Line; and the Concession Project for Electricity Generation and Distribution for the Electricity Generating Authority of Thailand.

ANNUAL REPORT 2009

Nature of Business Operations 2. Revenue Structure Products

Revenue from Construction

Operated By

CH. Karnchang Public Company Limited CH. Karnchang (Lao) Co., Ltd. CH. Karnchang-Tokyu Construction Co., Ltd. Phrompratharn Construction Limited Partnership Joint Venture CKLX Joint Venture CKNNL Joint Venture CKTC

Unit : Million Baht % Share holding of the Company

- 100.00 55.00 - 75.00 51.89 70.00

Total Revenue from Construction Construction Material Supply Co., Ltd. Bangkok Concrete Industry Co., Ltd. (3) CH. Karnchang Public Company Limited

2007

2008

2009

Revenues

6,973.43 5,350.16 962.99 68.45 65.89 19.51 -

46.74 35.86 6.46 0.46 0.44 0.13 -

4,890.95 5,162.52 1,631.00 340.68 1,109.60 14.27 -

33.71 35.58 11.24 2.35 7.65 0.10 -

3,368.12 7,593.12 816.59 122.29 765.53 - 42.74

24.17 54.49 5.86 0.88 5.49 0.31

13,440.43

90.09 13,149.02

90.63

12,708.39

91.20

Revenues

86.16 0.34 -

0.58 0.00 -

47.18 3.57 -

0.33 0.02 -

18.00 15.83 3.25

0.13 0.11 0.02

Total Revenue from Sales of Construction Materials

86.50

0.58

50.75

0.35

37.08

0.26

Interest Income

462.11

3.10

255.16

1.76

264.02

1.90

Dividend Income and Profit Sharing from Jointly Controlled Entities

125.43

0.84

138.64

0.96

262.08

1.88

Other Income (2)

803.60

5.39

917.00

6.30

663.59

4.76

Revenue from Sales of Construction Materials

TOTAL

99.99 - -

14,918.07 100.00 14,510.57 100.00

13,935.16 100.00

Remarks: 1) The figures of revenue from the respective companies as indicated in the foregoing table have been net of connected transactions. 2) Other income comprises gain on disposal of property, gain on sales of investments, gain on exchange rate, miscellaneous income, reversal of provision for doubtful debts, reversal of provision for impairment of assets, reversal of interest payable, miscelleneous income, etc. 3) As at December 31, 2006, the Company held shares in Bangkok Concrete Industry Co., Ltd. representing 49.99 percent, and on December 25, 2007, the Company sold all such shares to other company.

3. Summary of Significant Changes over the Previous Year in the Nature of

Business Operations There is no significant change over the previous year. The industrial trend in the future will continue to slow down due to the overall ongoing economic problems. Howover, the government has managed to help the economy to improve gradually and imposed measures providing assistance to those business operators encountering difficulty, which would likely render the construction industry to become more promising

CH. KARNCHANG PUBLIC COMPANY LIMITED

Construction Industry Outlook

and CK’s Strategic Direction

ANNUAL REPORT 2009

Construction Industry Outlook and CKâ&#x20AC;&#x2122;s Strategic Direction Economic Stimulation in 2009 Resulting in Economic Recovery 2009 is another year that Thai economy and the global economy continue to slow down from the previous year, mainly due to the sub-prime mortgage crisis in the United States of America. Such crisis gave rise to adverse impact and resulted in economic recession in various countries worldwide, as well as tight monetary condition and liquidity problems in money market. In addition, Thailand also faces the political uncertainty which is another factor affecting the economy amid various crises. In this regard, the government implemented strategies to cope with the economic problems in two phases of its economic recovery plan to stimulate local consumptions and disbursements as well as investments, with an allocated mid-2009 budget of Baht 100,000 Million to the Stimulus Package 1 (SP1) to boost income and reduce expenses for people, and reserve another Baht 800,000 Million to the Stimulus Package 2 (SP2), as well as measures for reduction of SME business tax and increase of tax deductible allowances for house buyers, and provision of fast track credit for business operators. However, due to the political factors and delay in certain projects, as well as the global economic recession as a whole, the gross domestic product (GDP) thus declined from a positive level in 2008 to a deficit (-3.5%) in 2009. The growth of Thai economy is tentatively expected to return to 3.7% in 2010 (based on the projections by the International Monetary Fund: World Economic Outlook October 2009 & January 2010, World Bank, December 2009). We expect that in 2010, Thai economy would likely improve as a result of the governmentâ&#x20AC;&#x2122;s continued economic stimulations. Moreover, the recovery in private sector also positively supported the economic recovery of Thailand. The economic circumstances of the neighboring countries and overseas counterparts should likely improve and grow with positive outlook as well.

CH. KARNCHANG PUBLIC COMPANY LIMITED

Table 1 : Annual GDP Growth and Construction Industry Growth in Thailand GDP Growth (%)

2007

2008

2009

2010

Cambodia (B)

10.2

6.7

(-2.7)

4.3

Indonesia (A)

6.3

6.1

4.0

4.8

Laos (B)

7.5

7.2

4.6

5.4

Malaysia (A)

6.2

4.6

(-3.6)

2.5

Philippines (A)

7.1

3.8

1.0

3.2

Singapore (A)

7.8

1.1

(-3.3)

4.1

Thailand (A)

4.9

2.6

(-3.5)

3.7

Vietnam (A)

8.5

6.2

4.6

5.3

China (A)

13.0

9.0

8.5

9.0

Korea (A)

5.1

2.2

(-1.0)

3.6

Japan (B)

2.3

(-0.7)

(-5.4)

1.7

U.S.A. (B)

2.1

0.4

(-2.7)

1.5

Europe (B)

2.7

0.7

(-4.2)

0.3

Sources : (A) World Bank, December 2009 (B) IMF : World Economic Outlook, October 2009 & January 2010 Construction Industry Growth (%)

2007

2008

2009e

2010e

Private

0.5

13.8

3.0

4.0

Public

10.7

(-0.6)

5.1

5.9

Overall

5.8

5.9

4.1

5.0

Source : e Projections by Business Research, Krung Thai Bank Public Company Limited, October 2009

ANNUAL REPORT 2009

Thai Economic Recovery in 2010 Thai economy in 2010 is recovering due to such various factors as the recovery of the United States of America from its adverse recession, including the Stimulus Packages in respect of local consumptions and disbursements, as well as the governmentâ&#x20AC;&#x2122;s large scale investment projects, e.g., the Stimulus Package 2 (SP2) with positive effects on economy in respect of disbursements, employment and investment. However, the overall macroeconomic index in 2009 was under pressure by the inflation rate from 5.0 percent in 2008 to a deficit (-0.9 percent) in 2009 (Office of the National Economic and Social Development Board, November 2009), as a result of the economic recession and declining consumption. The public debt increased to accommodate the demand of money for economic stimulation (but not exceeding 50% of GDP). In overall, the government has successfully managed to administer the macroeconomics for recovery and sustainable growth of the country, whereby the government has administered the credit liquidity by determining the minimum lending rate (MLR) to stay at a low level, representing a decrease from 6.75% - 7.5% in 2008 to 5.85% - 6.25% in 2009 (The Bank of Thailand, December 2009) as incentives for investment, including administering public debts, both domestic and overseas, to remain at acceptable level. Table 2 : Thailandâ&#x20AC;&#x2122;s Public Debt and Investment Budget Debt (% of GDP)

2006

2007

2008

2009

Public Debt

40.4

38.8

38.1

45.6

External Debt

22.3

17.1

11.9

11.8

Public Investment Budget (Billion Baht) and Disbursement Rate (%)

2006

2007

2008

2009

Investment

137.99

179.60

183.56

213.98

Disbursement

71.52

60.08

49.50

60.25

Source : Asian Development Bank, December 2009

Source : Information and Communication Technology Center Ministry of Finance, October 2009

The Growth of Economy and Construction Industry in Thailand in 2010 The growth of construction industry of Thailand in 2010 is likely to improve from the continued budget injection for economic stimulation under the Stimulus Package 2 (SP2) in a total amount of Baht 1.43 Trillion during 2010 - 2012 for the approved projects in the first portion (Type 1) of the Ministry of Transport, for which budget has been allocated in the total amount of Baht 39,900 Million for transportation network improvement and development projects for public transportation services and transportation infrastructure of the State Railway of Thailand, and in the amount of more than Baht 100,000 Million for civil work, signaling and telecommunications work, urgent construction of dual railroads in the Northern, Northeastern and Southern lines. In addition, there are various projects for irrigation, including investment in various infrastructures. The large scale investment projects pending approval or under implementation which will continuously generate a great amount of investments to the construction sector in 2010 are the mass rapid transit projects which have already commenced in late 2009, particularly, the Extension of the Purple Line Project, Bang Yai - Bang Sue, Contract 1, Bang Yai - Rat Burana Section, at the value of Baht 14,292 Million. Joint Venture CKTC, comprising CH. Karnchang Public Company Limited (70%) and

CH. KARNCHANG PUBLIC COMPANY LIMITED

Tokyu Construction Co., Ltd. (30%) is the contractor and the contract for the project was signed with the Mass Rapid Transit Authority of Thailand in August 2009; the Extension of the Blue Line Project (Hua Lamphong - Bang Khae and Bang Sue - Tha Phra), covering a total distance of 27 kilometers, 5 contracts, with a total value of civil work of Baht 52,257 Million, scheduled for bid submission in April 2010; the Extension of the Green Line Project, Dark Green Line Extension, Mo Chit - Saphan Mai Section, covering a distance of 12 kilometers, with a value of Baht 36,511 Million, and the Light Green Line, Bae Ring - Samut Prakan Section, covering a distance of 13 kilometers, with a value of Baht 28,027 Million; and the Extension of the Red Line Project (Bang Sue - Rangsit - Thammasat University, Rangsit Campus), with a value of Baht 75,549 Million, pending the bidding process and under the acceleration plan of the mass rapid transit system network (Bureau of the Budget: Office of the Prime Minister), expected to be completed in 2015, etc. Moreover, the Ministry of Finance has jointly signed with the World Bank and the Asian Development Bank (ADB) for approval of loans for construction of four-lane highways of the Department of Highways for 8 projects, covering a total distance of 63 kilometers.

The Mass Rapid Transit Network (12 Lines)

Source : Mass Rapid Transit Authority of Thailand

CH. Karnchang Affirms Commitment to Future Works Although the public sector investment projects represent key factor to the recovery of the construction industry, the political stability is considered a more risky and variable factor which may give rise to uncertainty and delay in the public construction projects. In addition, in light of the efficiency in the public sectorâ&#x20AC;&#x2122;s budget disbursements, as well as the tentative prices of commodity goods and raw materials in construction which may fluctuate in the market, CH. Karnchang has adapted its strategies in market and project development, as well as its construction potentials, to secure its planning management, cost control and selection of proper technology, consideration for investment in concession businesses relating to public utilities system to minimize the risk from construction revenue, e.g., investment in Bangkok Expressway Public Company Limited or Thai Tap Water Supply Public Company Limited, which consistently generated construction revenue to CH. Karnchang, including good dividends and gains on investment. In this regard, our investment also included SouthEast Asia Energy Limited, a concessionaire for power production in the Nam Ngum 2 Hydroelectric Power Project for distribution to the Electricity Generating Authority of Thailand (EGAT) in late 2010, which is under construction; and the Small Power Plant Project (SPP), with a value of Baht 5,000 Million, in Bang Pa-in Industrial Estate, Phra

ANNUAL REPORT 2009

Nakhon Si Ayutthaya Province. Moreover, in order to minimize risk from depending on local construction market, CH. Karnchang has successfully completed various construction projects overseas last year, such as, the National Highway No. 67 Construction Project in Cambodia; and the Kraft Paper Mill Construction Project in Vietnam. At present, CH. Karnchang is implementing the construction of the Nam Ngum 2 Hydroelectric Power Plant in the Lao Peopleâ&#x20AC;&#x2122;s Democratic Republic, with a value of Baht 22,000 Million, which the project is nearly completed in 2010. The government of the Lao Peopleâ&#x20AC;&#x2122;s Democratic Republic has confidence in CH. Karnchang to develop the Xayaburi Hydroelectric Power Plant, with the project value of approximately Baht 100,000 Million. Furthermore, we have conducted the feasibility study in various construction projects and investments in other countries in this region and in Asia, such as, Myanmar and India, etc.

Xayaburi Hydroelectric Power Project

L o uangp h aban g HP P

Pak Ben g HPP

Lao PDR Xay abu ri HPP

New Access

Access Road 200 km. from Thai -La o Border Pak Lay

4 Rd.

M e kong R i ve r

HPP

Sanakha m HPP

Tha Li

Thailand

Source : CH. Karnchang Public Company Limited

From 2008 to 2009, CH. Karnchang has made preparations for competitive benchmarking and its strength to accommodate the recovery of economic and construction industry growth in the future. We have developed the internal management system and construction management administration by implementing the Enterprise Resource Planning (ERP) system for development of risk management and human resource systems, in order to enhance the efficiency and effectiveness of the resource and operation management, as well as competitive advantage. CH. Karnchang believes that based on the positive economic trend, both in Thailand and worldwide, the construction industry in 2010 will grow and expand significantly. Construction projects would be driven by both public and private sectors, including overseas markets. Given our preparations since last year, we are confident to move forward with stability to reach our goal of sustainable growth.

CH. KARNCHANG PUBLIC COMPANY LIMITED

Corporate Social and Environmental Responsibility

ANNUAL REPORT 2009

CORPORATE SOCIAL

AND ENVIRONMENTAL RESPONSIBILITY

Thailand is like a house in which all family members living together under the same roof, surrounded by big and small trees lending themselves to produce air and provide shelter. It needs cooperation from all family members to help create and preserve the environment in the house to become a decent and happy home. Thai people’s happiness and well-being are a result of His Majesty the King’s gracious concern and fatherly care for Thai people to uplift Thai people’s living together with happiness and peace. As such, Thai people should realize their duties and contribute to preserve and develop the country to become a decent home for the next generations. We, CH. Karnchang Public Company Limited, have truly realized His Majesty the King’s gracious efforts, and have always been operating business with good corporate governance up until now 2010, taking into account the Corporate Social and Environmental Responsibility. In 2009, the Company continues to focus on business operation with our commitment and awareness of the Corporate Social and Environmental Responsibility, which may be summarized as follows: 1. Business Operation CH. Karnchang Public Company Limited has operated the core business of the large-sized project construction concession and concession business in respect of basic infrastructure, such as, expressways, highways, tap water and electricity systems, including buildings and places throughout the country. The Company realizes the significance of the environmental management, particularly during the construction operation; i.e., the Company employs the advanced construction technology and techniques to minimize environmental impacts, with proper monitoring and responsibility towards local communities within and near the construction sites. It has become one of the standard procedures regularly proceeded by the Company to set out and implement the environmental management plans for projects, for instance, to minimize air pollution and risks, to improve traffic routes surrounding the construction sites which may affect local communities, to minimize impacts resulting from waste, flood, to minimize impacts on underground water, to maintain and preserve the existing water sources in the sites, along with the public relations, listening to feedbacks and complaints from local residents, prevention of dust and vibration from construction, such as, the Nam Ngum 2 Hydroelectric Power Project in the Lao PDR, the Construction of Drainage Canal and Road Project in the Suvarnabhumi Airport, PTT Natural Gas Pipeline Construction Project to Chememan Company Limited, Energy Complex Center Construction Project, PTT, Bang Sue Environmental Education and Conservation and Wastewater Treatment System Project of Bangkok Metropolitan Administration, Toll Collection System Construction for the Bang Pli - Suksawad Expressway Project, etc. 2. Awareness of the Corporate Social and Environmental Responsibility CH. Karnchang Public Company Limited realizes that the organization’s commitment to the Corporate Social Responsibility (CSR) is conducted through not only financial support, but also self-awareness from personal contribution, participation, as well as becoming decent members of the country, which will enable us to create and maintain the better environment and society with concrete results. The Company has thus regularly organized the CSR activities for its staff participation yearly. In 2009, our activities may be summarized as follows:

CH. KARNCHANG PUBLIC COMPANY LIMITED

2.1 Environment

CH. Karnchang Public Company Limited has initiated campaigns for the awareness of the environmental preservation by encouraging staff to volunteer in building salt licks as supplementary food sources for wild animals, and check dam to increase humidity towards the forest ecological system, as initiated by His Majesty the King, and to celebrate His Majesty the King’s 82nd Birthday Anniversary, at the Kui Buri National Park, Prachuap Khiri Khan Province, on December 4, 2009, led by Mr. Plew Trivisvavet, Chairman of the Executive Board and Chief Executive Officer, the management team, and staff, totaling 140 persons, participating in such activities as part of our concerted efforts to preserve the natural resources and wild animals in Thailand. Moreover, in 2009, the Company has launched the Shred 2 Shared campaign for staff to realize the significance of recycling materials and papers, in order to help reduce the global warming by way of proper recycling of used papers and CDs. In this regard, boxes for collection of such materials are available in 12 locations in the vicinity of the Company’s work premises. Apart from such volunteer activities and the Shred 2 Shared campaign, in 2009, the Company has also supported other environmental preservation campaigns, such as, sponsorship for the “Global Warming VS. Life” seminar organized by the Prince Mahidol Foundation.

2.2 Social Contribution

As for social and charitable activities which the Company has been making contributions regularly every year, in 2009, one of our campaigns for voluntary social activities was the “One Drop is Life, CH. Karnchang Helps Create New Life” program, namely, blood donation by the management team and staff of CH. Karnchang Public Company Limited and its affiliated companies, totaling around 318 persons, at the Head Office of CH. Karnchang Public Company Limited, on June 15, 2009, with the total donated blood of 223 bags or 89,000 cubic centimeters, including organ and body donations at the time of death, as well as monetary donation of Baht 40,340, to The Thai Red Cross Society. Apart from the aforesaid voluntary activities, the Company has also sponsored other social activities all over the country, such as, sponsorship in the “Yuwawitsawakornborpit 37” program by the Work Camp Club of the Faculty of Engineering, Chulalongkorn University, sponsorship in the installation of curtains for elderly buildings, sponsorship in the program of engineer-nurse camp for rural development by the Faculty of Engineering, King Mongkut’s Institute of Technology Ladkrabang, sponsorship in the Red Cross Fair prizes, sponsorship in the “Help Mentally Retarded Day” event by The Foundation for the Welfare of the Mentally Retarded of Thailand, contributions to the Srinagarind Day Fund of the Faculty of Medicine, Khon Kaen University, sponsorship in the purchase of vans for Thai athletes in the Athletic Association of Thailand, support in the public relations for the SEA Games, as well as contributions to the “Jointly Help Southern Flood Victims” program, together with support to the “Sai Jai Thai to Southern People” program by the Statesman Foundation, etc.

2.3 Education

CH. Karnchang Public Company Limited has realized the significance of improvement of Thai youths to play the key role in the national development from generation to generation. This is to ensure that they are knowledgeable and skilled for the national development with the awareness of protecting the environment. Therefore, the Company has continuously provided educational support every year. In 2009, the Company’s educational contributions may be summarized as follows:

ANNUAL REPORT 2009

The Ministry of Education, through the work plan of Khurusapha Office, campaigned for school contest in the “One School One Innovation” or “Britannica Concise’s Inno-School Awards 2009” project to alert people to the significance of knowledge, creation of innovations, and to praise the schools with outstanding innovations for inspiring new ideas for integration. In this respect, CH. Karnchang Public Company Limited provided sponsorship to such project, represented

by Khun Rakchanok Trivisvavet to give the awards

to the winners. Moreover, the Company’s educational contributions included sponsorship in the compilation of an English encyclopedia titled “Chronicle

of Thailand” of The Bangkok Post, support in the

purchase of blood testing equipment and freezers for

the Aquatic Animal Disease Research Center,

the Faculty of Medicine, Chulalongkorn University, sponsorship in the repair of building of Huai Phuk Withaya School in Phichit Province, sponsorship in the Rock Mechanics Symposium of Institutes of Engineering, Suranaree University of Technology, support to the

“M.L. Chuchart Kamru” Fund of Kasetsart University, Kamphaeng Saen Campus, support in the purchase of computer equipment of Uthongsuksalai School, sponsorship in the 22nd KKCNN Symposium on Civil Engineering, Chulalongkorn University, support in the 2009 camp activities of the Prapakarnpanya Lighthouse Special Learning Center, including sponsorship in

the CU-TU Traditional Rugby Football competition, etc.

2.4 Religions

CH. Karnchang Public Company Limited group has also realized the significance of supporting the religions and made our continued contributions to religious activities in various provinces. In 2009, our activities included donations for construction of Buddhist monks’ dwellings for Wat Ban Payang Pha Taek in Chiang Rai Province of the Phithak Phum Thai Foundation, offering of the Kathin robes at Wat Pathum Wanaram, Wat Samphraya Woravihan, Wat Bang Na Nai, Wat Saket Woramahavihan and other temples in Bangkok, including Wat Mon Mahinsilaram in Lamphun Province, Wat Nong Muang in Kanchanaburi Province, Wat Wua Daeng Tai in Phichit Province, Wat Phra Ngam in Nakhon Pathom Province, Wat Thepprathan in Chantaburi Province, Wat Pa Roi Rai in Sa Kaeo Province, Wat Sri Bun Rueng in Mae Hong Son Province, Wat Pathawarisrisakorndonwiwek in Udon Thani Province, Wat Ban Yang Noi in Ubon Ratchathani Province, Wat Tan Chet Yot in Prachuap Khiri Khan Province, offering of forest robes to Buddhist monks and necessary items for underprivileged children under the “Krung Thai San Fan” program of Chit Aree Welfare School at Wat Phrathat Khing Kaeng in Phayao Province, Wat Pong Yaeng Chalermphrakiat in Chiang Mai Province, Wat Sapathumthong in Nong Bua Lam Phu Province, etc.

CH. KARNCHANG PUBLIC COMPANY LIMITED

General Information 1. Company Profile

CH. Karnchang Public Company Limited Head Office : 587 Viriyathavorn Building, Sutthisarn Road, Dindaeng Subdistrict, Dindaeng District, Bangkok 10400 Telephone 66(0)2277-0460, 66(0)2275-0026 Fax 66(0)2275-7029 Business Category : To operate the business of general contract construction for government agencies, state

enterprises and private entities, in the form of main contractor, subcontractor or joint

venture or consortium. Registered Capital : Baht 1,450,000,000 Divided into Ordinary Shares : 1,450,000,000 shares Par Value : Baht 1 per share Paid-up Capital : Baht 1,446,012,169

2. T he Company invested in each of its subsidiaries through a shareholding ratio of at least 10 percent of the number of shares sold in each subsidiary as follows: Shares Shareholding Type of Par by the Ratio Shares Value Held Company

Company Name

Business Category

Total Number of Shares

• Construction Material Supply Co., Ltd. The head office is located at No. 587 Sutthisarn Road, Dindaeng Subdistrict, Dindaeng District, Bangkok Telephone 66(0) 2275-0026 Fax 66(0) 2275-7029

Trading of Construction Materials

300,000

Baht 100

299,992

99.99%

Ordinary Shares

• CH. Karnchang Real Estate Co., Ltd. Trading of Land, Allocation The head office is located at No. 587 Sutthisarn Road, Dindaeng Subdistrict, of Land and Residential Dindaeng District, Bangkok Buildings Telephone 66(0) 2275-0026 Fax 66(0) 2275-7029

1,600,000

Baht 100

1,584,000

99.00%

Ordinary Shares

• CH. Karnchang-Tokyu Construction Co., Ltd. The head office is located at No. 587 Sutthisarn Road, Dindaeng Subdistrict, Dindaeng District, Bangkok Telephone 66(0) 2275-3651-5 Fax 66(0) 2275-3657

1,000,000

Baht 100

549,994

55.00%

Ordinary Shares

Contract for All Kinds of Construction

ANNUAL REPORT 2009

Company Name

Business Category

Operation of • Bangpa-in Cogeneration Limited The head office is located at No. 587 Business of Power Plants, including Sutthisarnvinijchai Road, Businesses Relating Dindaeng Subdistrict, to Electricity and Dindaeng District, Bangkok All Types of Telephone 66(0) 2275-0026 Energies Fax 66(0) 2275-7029

Total Number of Shares

5,000,000

Shares Shareholding Type of Par by the Ratio Shares Value Held Company

Baht 10

4,050,000

81.00%

Ordinary Shares

The Company also invested in other companies through a shareholding ratio of at least 10 percent of the number of shares sold in each company as follows: Company Name

Business Category

Total Number of Shares

Shares Shareholding Type of Par Held by the Ratio Shares Value Company

3,990,000,000 Baht 1 1,258,777,400 Supply and • Thai Tap Water Supply Public Development of Company Limited Projects for The head office is located at No. 30/10 Moo 12, Tambon Rai Khing Production and Distribution of Tap Amphoe Sam Phran, Water Nakhon Pathom Province, Telephone 66(0) 2811-7526 Fax 66(0) 2811-7687

31.55 %

Ordinary Shares

• Pathum Thani Water Co., Ltd.* The head office is located at No. 43 Moo 3, Chiang Rak Noi - Bang Sai Road, Tambon Ban Pathum, Amphoe Sam Khok, Pathumthani Province 12160 Telephone 66(0) 2979-8530-2 Fax 66(0) 2979-8533

Supply and Development of Projects for Production and Distribution of Tap Water under Arrangement with the Provincial Waterworks Authority

12,000,000 Baht 100

• SouthEast Asia Energy Limited The head office is located at No. 587, 20th Floor, Viriyathavorn Building, Sutthisarnvinijchai Road, Dindaeng Subdistrict, Dindaeng District, Bangkok Telephone 66(0) 2275-4873 Fax 66(0) 2691-8307

Operation of Business of All Types of Power Plants and Distribution of Electricity inside and outside Thailand

660,675,000 Baht 10 251,056,499

38.00 %

Ordinary Shares

Construction, 11,950,000,000 Baht 1 2,940,999,916 Operation and Maintenance of Railway System, Train, Electric Train System or Other Powered Carriage System

24.61 %

Ordinary Shares

• Bangkok Metro Public Company Limited The head office is located at No. 189 Rama IX Road, Huai Khwang Subdistrict, Huai Khwang District, Bangkok Telephone 66(0) 2354-2000 Fax 66(0) 2354-2000

CH. KARNCHANG PUBLIC COMPANY LIMITED

Company Name

Business Category

• Bangkok Expressway Public Company Limited The head office is located at No. 238/7 Asoke-Dindaeng Road, Bangkapi Subdistrict, Huaykwang District, Bangkok Telephone 66(0) 2641-4611 Fax 66(0) 2641-4610

Construction and Operation of the Second Stage Expressway Project and Various Extensions, including Related Businesses

Total Number of Shares

Shares Shareholding Type of Par by the Ratio Shares Value Held Company

770,000,000 Baht 10 116,669,550

15.15 %

Ordinary Shares

Remark * CH. Karnchang Public Company Limited indirectly holds shares in Pathum Thani Water Co., Ltd. via Thai Tap Water Supply Public

Company Limited, namely, currently, CH. Karnchang Public Company Limited holds shares representing 31.55 percent in Thai Tap Water

Supply Public Company Limited and Thai Tap Water Supply Public Company Limited holds shares representing 98.00 percent in

Pathum Thani Water Co., Ltd.

The Company also invested in the form of joint venture as follows: Joint Venture Name

Nature of Work

Investment Ratio

• CKAE Consortium comprising CH. Karnchang Public Company Limited, 110 Architect Co., Ltd., Arun Chaiseri Consulting Engineers Co., Ltd., Environmental Engineering Consultants Co., Ltd. and Epsilon Co., Ltd. The head office is located at No. 587 Sutthisarn Road, Dindaeng Subdistrict, Dindaeng District, Bangkok Telephone 66(0) 2275-0026, Fax 66(0) 2275-7029

Design and Construction of the Development Project for Enhancement

of the Capacities of the Bangkok International Airport

98.00 %

Project Operation and Management under the Agreement for Concession for Design, Manufacture, Delivery, Installation, Testing and Commissioning of M&E Equipment

and for Operation and Maintenance of

the MRTA Initial System, Chaloem Ratchamongkhon Line

80.00 %

• Joint Venture BBCT comprising CH. Karnchang Public Company Limited, Bilfinger + Berger Bauaktiengesellschaft, Tokyu Construction Co., Ltd. and CH. Karnchang-Tokyu Construction Co., Ltd. The head office is located at No. 587 Sutthisarn Road, Dindaeng Subdistrict, Dindaeng District, Bangkok Telephone 66(0) 2275-0026, Fax 66(0) 2275-7029

Construction of the

(Bang Pa-in - Pak Kret) Expressway (Sectors D and C1 A)

99.97 %

• Joint Venture BBCD comprising Bilfinger + Berger AG, CH. Karnchang Public Company Limited and Walter Bau AG The head office is located at No. 587 Sutthisarn Road, Dindaeng Subdistrict, Dindaeng District, Bangkok Telephone 66(0) 2275-8414, Fax 66(0) 2691-9167

Construction of the

(Bang Na - Bang Pli - Bang Pakong) Expressway

35.00 %

• Joint Venture CKET comprising CH. Karnchang Public Company Limited and Expert Transport Co., Ltd. The head office is located at No. 587 Sutthisarn Road, Dindaeng Subdistrict, Dindaeng District, Bangkok Telephone 66(0) 2275-0026, Fax 66(0) 2354-1919

ANNUAL REPORT 2009

Nature of Work

Investment Ratio

Design and Construction of the Underground Structure, Subway Project, South Section (Hua Lamphong - Huai Khwang)

25.00 %

Construction of Buildings, together with Public Utility, and Landscaping for the International Horticultural Exposition 2006

51.89%

• Joint Venture CKLX comprising CH. Karnchang Public Company Limited and Loxley Public Company Limited The head office is located at No. 587 Sutthisarn Road, Dindaeng Subdistrict, Dindaeng District, Bangkok Telephone 66(0) 2275-0026, Fax 66(0) 2275-7029

Construction of the Toll Collection and Traffic Safety Control Systems for the Bang Pli - Suksawad Expressway and Highway

No. 37, Outer Bangkok Ring Road (the Bang

Pli - Bang Khun Thien Expressway in respect of Suksawad - Bang Khun Thien Section)

75.00%

• Joint Venture CKTC comprising CH. Karnchang Public Company Limited and Tokyu Construction Co., Ltd. The head office is located at No. 587 Sutthisarn Road, Dindaeng Subdistrict, Dindaeng District, Bangkok Telephone 66(0) 2275-0026, Fax 66(0) 2275-7029

Operations for Construction Project of the Purple Line, Bang Yai - Rat Burana, Bang Yai - Bang Sue Section; Contract 1: Elevated Structures (East)

70.00%

Joint Venture Name

• Joint Venture BCKT comprising Bilfinger + Berger Bauaktiengesellschaft, CH. Karnchang Public Company Limited, Kumagai Gumi Limited and Tokyu Construction Co., Ltd. The head office is located at No. 587 Sutthisarn Road, Dindaeng Subdistrict, Dindaeng District, Bangkok Telephone 66(0) 2275-0026, Fax 66(0) 2275-7029 • Joint Venture CKNNL comprising CH. Karnchang Public Company Limited and Nongnuch Landscape & Garden Design Company Limited The head office is located at No. 587 Sutthisarn Road, Dindaeng Subdistrict, Dindaeng District, Bangkok Telephone 66(0) 2275-0026, Fax 66(0) 2275-7029

3. Reference

Securities Registrar : Auditors :

Thailand Securities Depository Co., Ltd. 2/7 Moo 4, Capital Market Academy Building The Stock Exchange of Thailand, 2nd Floor North Park Project, Vibhavadi Rangsit Road, Km. 27 Thung Song Hong Subdistrict, Lak Si District, Bangkok 10210 Telephone 0-2596-9000, 0-2596-9302-11, Fax 0-2832-4994-6 or 62 The Stock Exchange of Thailand Building 4th, 7th Floors, Rachadapisek Road Klongtoey Subdistrict, Klongtoey District, Bangkok 10110 Telephone 0-2229-2800, Fax 0-2359-1262-3 Miss Siraporn Ouaanunkul, CPA License No. 3844 Mr. Narong Puntawong, CPA License No. 3315 Mr. Supachai Phanyawattano, CPA License No. 3930 Ernst & Young Office Limited 33rd Floor, Lake Rajada Office Complex, 193/136-137 New Ratchadaphisek Road, Klongtoey District, Bangkok 10110 Telephone 0-2264-0777, Fax 0-2264-0789-90

CH. KARNCHANG PUBLIC COMPANY LIMITED

Corporate

Governance Policy SHAREHOLDERS The Board of Directors focuses on compliance with good corporate governance so as to improve transparency and responsibility for duties of directors and executives, and build up confidence for shareholders, investors and all parties concerned. In this regard, the policy in support of good corporate governance has been introduced covering important matters as follows: 1. Shareholders and interested parties shall be equally and fairly treated. 2. The Board of Directors is committed to create value added to the operations in the long term through careful and prudent management, is responsible to perform the duties to ensure sufficient for the optimum benefit to shareholders, and to prevent any conflicts of interest, as well as is also responsible for any decisions and arrangements made by the Company itself. 3. All activities are undertaken with transparency and are open for inspection with disclosure of sufficient information to all relevant parties. 4. The business operations always take into account various risks with appropriate risk control and management. The Company realizes the shareholdersâ&#x20AC;&#x2122; right to receive the Companyâ&#x20AC;&#x2122;s information correctly, completely, sufficiently, instantly, and equally for decision making in the shareholders meeting. The Company offers opportunity to shareholders to have equal right to scrutinize the Companyâ&#x20AC;&#x2122;s operations, make inquiries and provide comments and suggestions.

ANNUAL REPORT 2009

Corporate Governance Policy

PERSONNEL The Company arranges for continuous human resource development, are the management realizes the significance of development of employees’ capabilities and potentials in management, team building and specific professional learning, including encouraging employees to have knowledge about information technology, foreign languages and business working skills of employees and executives, which the Company intends to develop its personnel, both employees and the management, to catch up with changes in the world of technology and the business nature which constitutes a more intense competition, so as to be in line with the whole organization. The Company issues the code of business ethics in respect of the Board of Directors, the management and staff, as guidelines for compliance in the performance of their duties in accordance with the Company’s mission, with honesty, integrity and equality as well as responsibility towards the interested parties, shareholders and all parties concerned. The code of ethics also covers disciplinary actions. The Company provides such information to new employees in the employee orientation and distribute information via leaflets and office newsletters on a regular basis. GOVERNANCE Due to the national development and industrial sector promotion, the demand for construction in various fields has increased. The Company has been considering the market growth, and developing personnel, machinery and equipment for the works. The construction works in the past projects, as well as the Company’s reputation in respect of construction and work quality, including responsibility towards customers in the operations, has caused the Company to gain trust in the carrying out of a number of construction projects of the government sector. The Company realizes the significance of rights of all interested groups, whether inside, such as staff and executives of the Company and the subsidiaries, or outside, such as competitors, creditors, government sectors and other relevant authorities. The Company recognizes support from these interested parties which could help building up the Company’s competitiveness and profitability to result in long term success for the Company. BUSINESS PARTNERS The Company engages in the business of contract construction as a primary business activity, for government agencies, state enterprises and private entities, in the form of main contractor or subcontractor, by way of bidding and negotiation through the cooperation with overseas contractors in the form of joint venture, which is a joint investment in the construction projects in which items or volume of works are indivisible among the partners. Each partner shall be responsible for profit or loss in the proportion as mutually agreed upon in respect of all items of the work. The Company also engaged in construction in the form of consortium, which is a joint investment in the construction project in which items or volume of works are divisible among the partners. Each partner shall be independently responsible for profit or loss. The Company has experience and expertise in construction, engineering, namely infrastructure works such as roads, bridges, elevated ways, expressways, construction of buildings and industrial factories, mechanical and electrical system work, such as installation of equipment and machinery for factories. CUSTOMERS The Company encourages the policy on team effort and enhancing state of the art technology to ensure the optimum safety and efficiency in the operation to meet the requirements and offer benefits to the customers with satisfaction in quality and services, including strict compliance with the terms of the agreements made with counterparties. The Company also provides care and is responsible to customers, ensure confidentiality for customers, as well as completion of work in a timely manner or earlier than scheduled. PUBLIC The Company’s business operation regularly focuses on promotion in activities for improvement of the quality of life and environment, representing our gratitude to society.

CH. KARNCHANG PUBLIC COMPANY LIMITED

Risk Factors 1.1 Risk from Management and Risk from Delays in Projects The Company realized the risks from management and therefore, determined guidelines to prevent any flaws which might occur, by implementing the quality management system of ISO 9001:2000 to maintain the operation standards both in projects and in the Company’s head office, taking into account the continued improvement of quality management system. The Company group also set out guidelines for staff improvement to ensure that staff would have knowledge, skills, ethics and accountability towards the organization, including all interested persons, so as to minimize and prevent damage which might be caused by such risk. The Company obtained the international quality system standard accreditation of ISO 9001:2000 in 2002 from two institutions, namely, UKAS and NAC Thailand, to the business of construction work design and management for buildings, roads, bridges, underground structure and tunneling and piping work and aviation fueling hydrant control system. Generally, risks from delays in various projects might be caused by delays on the part of employers or contractors or by events without any liable party. Delays on the part of employers included, for example, site delivery, review and approval on various matters relating to construction work. These delays might affect the construction period and costs. However, the Company minimized risks from such delays through cooperation and coordination with employers to ensure successful completion of the construction works. Delays on the part of contractors included, for example, shortages of construction materials. The Company prevented such problem by entering into forward agreements for purchase – sale of various materials, as evidenced by the signed agreements for purchase - sale of cements and metals to accommodate the Company’s projects, of which contracts have already been executed. Delays caused by any events without any liable party included, for example, natural perils. In the execution of a contract, there generally is a requirement for the contractor to take out insurance for various construction projects undertaken by the Company. Based on the Company’s past experience, the Company has never encountered any events caused by delays on the part of the Company group, but risks from delays caused by the Company’s contractual party, such as, in the Bang Na - Bang Pli Bang Pakong Expressway Construction Project, and the Company group rectified such circumstance by requiring the employer to promptly resolve such problems and the Company also accelerated the construction to meet the specified schedule. 1.2 Risk from Accounts Receivable in the Form of Compensation for Increased

Costs as per Arbitral Award Joint Venture BBCD (Bilfinger Berger AG, CH. Karnchang Public Company Limited and Dyckerhoff & Widmann AG), in which the Company has 35 percent interest, claimed for increased costs due to changes by the Expressway Authority of Thailand (the Employer) in the scope of work, additional work orders, requirements of relevant authorities, delayed design approval, design revision and delay of site handover. The Arbitral Tribunal rendered an award in the dispute on September 20, 2001 requiring the Employer to pay said increased costs to the Joint Venture in the amount of approximately Baht 6,000 Mil ion (the increased costs, together with interest, as calculated until September 30, 2001 amounting to approximately Baht 6,800 Mil ion). Subsequently, the Employer issued a letter dated November 22, 2001, informing the Joint Venture that the Employer deemed it appropriate to comply with the arbitral award. Based on such reason, the Joint Venture then recorded such amount as revenue in the third quarter of the accounting year 2001 since the opportunity of receiving such amount and the relevant figures became certain at that time, which was in accordance with the normal accounting principles. Such increased costs to be paid by the Employer were recorded in the consolidated financial statements for 2001 as revenue and assets based on the group’s participation in the Joint Venture, amounting to approximately Baht 2,500 Mil ion (Baht 23.81 per share).

ANNUAL REPORT 2009

Subsequently, the Expressway Authority of Thailand issued a letter dated December 21, 2001 indicating that it could not comply with the arbitral award due to the argument of the government agency requiring a review of such matter which caused delay of such payment as per the arbitral award. The Company group confirmed the compliance with the procedures as specified by the laws, and therefore, believed that there would be no impact from the news regarding the argument of the government agency. Due to such delay, on May 1, 2002, the Joint Venture therefore filed a lawsuit against the Expressway Authority of Thailand with the Civil Court of Southern Bangkok for enforcement of compliance with the arbitral award. On December 30, 2003, the Civil Court of Southern Bangkok adjudged enforcing the compliance with the arbitral award, by requiring the Expressway Authority of Thailand (the Employer) to make payment to the Joint Venture as per the arbitral award. Thereafter, in January 2004, the Expressway Authority of Thailand filed an appeal in respect of such matter with the Supreme Court. On February 15, 2007, the Supreme Court adjudged in favor of the appeal of the Expressway Authority of Thailand and then rendered its judgment reversing the Civil Court of Southern Bangkok’s judgment which enforced the compliance with the arbitral award. The Joint Venture and the Company therefore recorded a loss from accounts receivable in respect of claims for increased costs previously recorded in 2006, and as a result, the Joint Venture and the Company had no risk from such accounts receivable on claims for increased costs. However, the said judgment did not prejudice the Joint Venture’s legal right to claim for the increased costs of Baht 6,039.89 Million, together with interest at the rate of 7.50 percent per annum. Subsequently, after the Company’s management had thoroughly reviewed the said judgment by the Supreme Court, it then filed a lawsuit against the Employer with the Civil Court on February 11, 2008 to claim for costs paid by Joint Venture BBCD against the Employer on grounds of undue enrichment, in the total amount, inclusive of interest calculated until the date of the plaint, of approximately Baht 3,400 Million (based on the group’s participation in such Joint Venture). The case is now pending the consideration of the Civil Court. 1.3 Risk from Exchange Rate Given the fact that the Company group earned income and incurred costs in certain projects in foreign currencies, the fluctuation of the foreign currencies against Baht would affect the Company’s costs or performance. The Company has managed the risk from exchange rate by matching revenue with expenses in foreign currencies, i.e., depositing income in foreign currencies in the “FCD” (Foreign Currency Deposit) account. When the project incurs any expenses in foreign currencies, the Company shall use funds in the FCD account to pay such expenses. However, at present, there is only one project deriving income and incurring costs in foreign currencies, namely, the construction of the Hydroelectric Power Project (Nam Ngum 2). The proportions of revenue and costs denominated in foreign currencies are rather small as compared to the total revenue and expenses of the Company group, representing merely 8.90 percent and 24.09 percent of the total revenue and expenses as at December 31, 2009.

CH. KARNCHANG PUBLIC COMPANY LIMITED

As at December 31, 2009, the Company group had an unrealized loss on exchange rate in the amount of Baht 2.55 Million in the consolidated financial statements. Details of assets and liabilities denominated in foreign currencies as at December 31, 2009 in the consolidated financial statements can be summarized as follows: As at December 31, 2009

EURO

VND

US DOLLARS

YEN

Cash at bank

7,061,426,236

5,152,475

Trade accounts receivable

827,648,444

3,177,857

94,207

3,227,476

94,207

7,889,074,680

11,557,808

Bank loan

725,166

Trade accounts payable

14,963,360

302,627,220

15,688,526

302,627,220

94,207

7,889,074,680

(4,130,718)

(302,627,220)

4,534,032

14,200,334

(138,448,417)

(110,643,235)

Assets

Advance payments to subcontractors Total Liabilities

Total Assets (Liabilities), net Assets (Liabilities), net (Baht)*

Remark: * Average exchange rate calculated by The Bank of Thailand at the close of December 31, 2009.

1.4 Risk from Construction Material Price and Fluctuation of Oil Price Costs of construction in the respective projects depended on not only construction material price which fluctuates by the demand and supply circumstances, but also oil price, which is indirect cost towards the operating costs. However, in 2008, the fluctuation of material price, especially metals and oil, considerably affected the construction cost. The Company group managed said risk through construction contracts in two manners as follows: - In case of a construction contract with construction price adjustment in accordance with an escalation (K) factor, said K factor would vary depending on the changing production costs, such as, prices of construction materials, metals, cements, high speed diesel oil, and there would not be any impact on the construction price. Most customers in this category were government sector, as at December 31, 2009, representing 88.19 percent of the remaining project value to be recognized in the future;

ANNUAL REPORT 2009

- In case of a construction contract with fixed costs or lump sum, whereby it does not specify or it is not possible to identify a K factor, which would mostly apply to turnkey projects, provisional sums would also be included to accommodate the case where the higher construction material costs would be included in the total project value. Most customers in this category were private sector, as at December 31, 2009, representing 11.81 percent of the remaining project value to be recognized in the future; - Furthermore, the Company also established a subsidiary for the purpose of manufacturing necessary construction materials so as to minimize risk from shortage of materials and unrealistic price increase, as well as to strengthen its bargaining power with major traders of construction materials under high competition. However, the Company has a policy to prevent such risk by considering and reviewing the construction plan every month, as well as completing the construction of all projects before or within the period of time specified by employers 1.5 Risk from Changes of Government’s Policies Given the fact that the Company group’s revenue structure in the future from the total value of projects in hand which would be recognized as revenue in the future, as at December 31, 2009, representing 88.19 percent involves works for the government sector, the Company group’s revenue therefore relates to the national budget spending, which depends on the economic growth rate and investment climate, including the political stability. As for the government projects for which the contracts have already been signed, the Company group did not have any risk from economic and political circumstances since such projects would be supported by the allocated budgets in the form of tied budgets, which represent guarantee of budgets to be spent by the government in said projects. Nevertheless, in respect of the government projects which were awarded to the Company group, but the contracts have not yet been signed, the government may hold a new bidding for said project based on the justifications of each respective project. The Company group reengineered to expand its channel of revenue sources by way of project investment and management. The Company group thus expanded its investments to business activities which would derive more definite revenue, such as, the Company’s investments in Bangkok Expressway Public Company Limited, which manages the expressway projects; Bangkok Metro Public Company Limited, which manages the M.R.T. Chaloem Ratchamongkhon Line; Pathum Thani Water Co., Ltd., which produces tap water for sale to the Provincial Waterworks Authority for distribution to the public in Pathum Thani Province; Thai Tap Water Supply Public Company Limited, which produces tap water for sale to the Provincial Waterworks Authority for distribution to the public in Samut Sakhon Province and Nakhon Pathom Province; SouthEast Asia Energy Limited, which would generate electricity for distribution to the Electricity Generating Authority of Thailand; and Bangpa-in Cogeneration Limited, which is the Company’s subsidiary operating a business relating to public utilities on energy. These projects are long-term concession projects which would not be affected by political changes. 1.6 Risk from Investments in Subsidiaries, Associated Companies, Joint Ventures,

Related Companies and Other Companies The Company group’s structure comprises several subsidiaries, associated companies, including jointly controlled entities, related companies and other companies which accorded with the Company group’s nature of business, namely, investment and construction of several projects, which are being implemented by different groups of investors. However, most jointly controlled entities are established with the objectives to carry out a few projects, and would be dissolved upon completion of the projects. In this respect, the number of companies or legal entities in the group would decrease accordingly. Risks that might be caused by investments in subsidiaries, associated companies, jointly controlled entities, related companies and other companies would be limited to the investments in each respective organization. In each investment, the Company would carefully conduct feasibility study of each project or company in addition to the consideration of the rate of return to be derived in the future. The Company might appoint third party advisors or specialists to serve in certain projects prior to submission of such matter to the Executive Board and the Board of Directors. Most of the companies invested by the group have satisfactory performance and derive profits from their business operations. As at December 31, 2009, the Company’s investments in subsidiaries, associated companies, jointly controlled entities, related companies and other companies amounted to Baht 10,721.25 Mil ion, representing 40.62 percent of the total asset value. In 2007, the Company changed its accounting policy on investments in subsidiaries, jointly controlled entities and associated companies in the separate financial statements from the equity method to the cost method in accordance with the Notification of the Federation of Accounting 67

CH. KARNCHANG PUBLIC COMPANY LIMITED

Professions No. 26/2549 Re: Thai Accounting Standards No. 44. Moreover, the Company also arranged for a provision for loss from investments in subsidiaries, jointly controlled entities and associated companies, and unrealized gain (loss) on changes in value of investment from related companies in the total amount of Baht 1,406.51 Mil ion, respectively, which was a balance of the provision for deficit on investments in jointly controlled entities comprising Joint Venture BBCT and Joint Venture BBCD, associated company comprising Bangkok Metro Public Company Limited, related company comprising Bangkok Expressway Public Company Limited, and other companies comprising Nava Finance and Securities Public Company Limited and Kruasakul Company Limited.

1.7 Risk from Loans to Subsidiaries, Associated Companies, Jointly Controlled

Entities, Related Companies and Other Companies The Company had risks from loans to subsidiaries, associated companies, related companies and jointly controlled entities, namely, only short-term loans were provided for use as working capital. As at December 31, 2009, the Company had a balance of loans and accrued interest receivable in respect of subsidiaries, associated companies, related companies and jointly controlled entities in the total amount of Baht 7,807.08 Million, representing 29.57 percent of the total assets. In addition, the Company arranged for a provision for loss from such loans to a subsidiary and a jointly controlled entity in the amount of Baht 3,174.18 Million. Said loans were short-term working capital subject to interest at the minimum lending rate of interest (MLR + margin) per annum and at a fixed rate of interest per annum, which shall become due for repayment upon demand. Moreover, Joint Venture CKET entered into agreements granting loans to two other companies, in the total amount of Baht 1,600 Million. As at December 31, 2009, such two companies gradually made partial repayment of the loans and interest, therefore, the balance of long-term loans to other companies with accrued interest receivable amounted to Baht 1,431.97 Million (in proportion to the Companyâ&#x20AC;&#x2122;s participation in the Joint Venture) for use as working capital. Such loans are subject to interest at the minimum lending rate of interest (MLR + margin) per annum and would become due for repayment by June 2007. Thereafter, the borrowers notified to repay the loans to the Joint Venture in the amount of half of the outstanding loans by March 31, 2008 and the remaining loans by June 30, 2008 in full. Subsequently, the borrowers issued a letter requesting an extension of time for loan repayment in the amount of half of the outstanding loans by December 31, 2008 and the remaining loans by June 30, 2009 in full. On December 24, 2008, the Board of Directors considered granting approval for the Company in the name of Joint Venture CKET to extend the time for loan repayment to the borrowers as per the repayment schedule proposed by the borrowers. As a result, the repayment schedule was requested to be extended from the existing schedule which required to make loan repayment in the amount of half of the outstanding loans by December 31, 2008 and the remaining loans by June 30, 2009 in full to gradually make repayment of the principal on a quarterly basis for 23 installments, starting in March 2009 until September 2014, and payment of accrued interest payable in September and December 2014 and March 2015. This was because the national economic condition was affected by the domestic political circumstances, as well as economic slowdown, as a result, the borrowersâ&#x20AC;&#x2122; business operations had insufficient income to repay the debts as per the existing schedule and the real estate, golf course, resort and housing development projects required to be postponed, therefore, the projects could not proceed according to plan, but the borrowers prepared and proposed the business plan and debt repayment schedule to the Joint Venture to show their loan serviceability. Therefore, as at December 31, 2009, the Joint Venture reclassified the current portion of long-term loans to other companies and accrued interest receivable as current assets and non-current assets in the balance sheet.

ANNUAL REPORT 2009

The borrowers furnished security to the Joint Venture, namely, certain land with structures in the total value of Baht 1,588.9 Million (in proportion to the Companyâ&#x20AC;&#x2122;s participation in the Joint Venture) as appraised by an independent appraiser in January 2008 and the major shareholders of the borrowers also provided personal guarantee for the repayment of the outstanding loans in full and allowed the Joint Venture to charge additional interest at the rate of 1.25 percent per annum of the loans from the borrowing date until the repayment would be made in full by the borrowers. In addition, as at December 31, 2009, the Company provided guarantee for two subsidiaries for the purposes of applying for credit facilities from banks and financial institutions in the total amount of Baht 8,884.0 Million. Nevertheless, the Company has policies on management of risks that might occur from loans to subsidiaries, associated companies and jointly controlled entities, significantly taking into account the necessity and justification of transactions as well as the Companyâ&#x20AC;&#x2122;s benefits. Such policies need to be approved by the Companyâ&#x20AC;&#x2122;s Audit Committee to scrutinize any possible consequences.

CH. KARNCHANG PUBLIC COMPANY LIMITED

Connected Transactions

1. Connected Transactions between the Company, Subsidiaries, Associated and

Related Companies (Only connected transactions with value of Baht

500,000 or higher are shown) Company Name / Interested Party

Relationship

Nature of Transaction

1.1 The Company - This is an associated company. - The Company was hired to manage and - The Company holds shares maintain the existing civil infrastructure work in representing 24.61 percent. the area of the depot for 7 years, with a project - Mahasiri Siam Co., Ltd., as a major Operation of concession value of Baht 85 Million, expected to be shareholder in the Company, holds business for mass transit in completed in February 2011. shares representing 2.95 percent. Bangkok by the metro - A director of the Company, namely, Mr. Vitoon 1.2 Joint Venture CKET Tejatussanasoontorn, serves as - The Joint Venture was hired to supervise and director in Bangkok Metro Public manage the electric train construction project Company Limited and manage the maintenance of the project

- Three executive directors of the for first 5 years after the commencement of

Company, namely, the operations, with a contract value of

Mr. Plew Trivisvavet, Mr. Sombat Baht 2,181.7 Million. Kitjalaksana and Mr. Anukool Tuntimas, serve as directors in 1.3 The Company extended a loan in its capacity

Bangkok Metro Public Company as a shareholder under the Sponsor Loan Limited. Agreement, which requires that shareholders

shall arrange for a loan to Bangkok Metro Public Company Limited in the total loan amount of not exceeding Baht 3,000 Million. - Principal at the end of the period - Interest receivable at the end of the period

1. Bangkok Metro Public Company Limited

2. Thai Tap Water Supply - This is an associated company. Public Company Limited - The Company holds shares representing 31.55 percent. - Four executive directors of the Operation of concession Company, namely, business for water - Mr. Plew Trivisvavet, production and Mr. Narong Sangsuriya, distribution in Samut Mr. Prasert Marittanaporn and Sakhon Province and Mr. Sombat Kitjalaksana, serve as certain areas of Nakhon directors in Thai Tap Water Supply Pathom Province for the Public Company Limited. Provincial Waterworks Authority

2.1 The Company was engaged to carry out construction of Expansion Phase 1, with a value of approximately Baht 639 Million in the areas of Nakhon Pathom-Samut Sakhon Provinces, scheduled to be completed in 2010.

2.2 The Company - The Company received dividend from its shareholding in Thai Tap Water Supply Public Company Limited.

ANNUAL REPORT 2009

Unit : Baht

Transaction Value of 2009

Necessity / Justification

15,458,333

- This transaction is an ordinary course of business. - The Company has earned a return at market price at a rate not lower than the rate of return generally received in other projects. - This project is of a nature in which the Company has experience and expertise. - This transaction provides a credit term of 30-45 days.

15,600,000

- This transaction is an ordinary course of business. - The Company has earned a return at market price at a rate not lower than the rate of return generally received in other projects. - This project requires a team with experience and expertise, and coordination with all parties concerned so as to achieve the target construction completion. - This transaction provides a credit term of 30-45 days.

2,183,090,793 368,511,897

- Such loan is extended by the Company at the interest rate of MLR+0.5. - The loan is scheduled to be repaid after Bangkok Metro Public Company Limited has repaid loans to local financial institutions (pursuant to the conditions of the Sponsor Loan Agreement), provided that all loans are scheduled to be repaid to local financial institutions by 2024. The Company has a policy to require Bangkok Metro Public Company Limited to repay the loan in full within one year after Bangkok Metro Public Company Limited has repaid loans to financial institutions or when the Company has excess cash. - This is in accordance with the agreement of shareholders in Bangkok Metro Public Company Limited with financial institutions providing financial support.

398,567,328

- This transaction is an ordinary course of business. - This project is of a nature in which the Company has experience and expertise. - The Company has earned a return at market price at a rate not lower than the rate of return generally received in other projects.

436,720,994

- This project is of a nature in which the Company has experience and could be completed within the scheduled period. - This transaction is an ordinary course of business.

CH. KARNCHANG PUBLIC COMPANY LIMITED

Company Name / Interested Party

Relationship

- This is a related company. 3. Bangkok Expressway Public Company Limited - The Company holds shares representing 15.15 percent.

An executive director of the Operation of concession Company, namely, Mr. Plew business for expressway Trivisvavet, serves as director in construction and Bangkok Expressway Public management Company Limited. - Director and managing director

of Bangkok Expressway Public Company Limited, namely, Mrs. Payao Marittanaporn, Mr. Prasert Marittanapornâ&#x20AC;&#x2122;s spouse, serves as director in the Company.

4. Expert Transport

Co., Ltd.

Operation of business of large vehicles for transportation

Nature of Transaction

3.1 The Company - The Company received dividend from its shareholding in Bangkok Expressway Public Company Limited.

3.2 The Company - The Company was engaged to carry out construction, repair and improvement of the expressway system, with a project value of Baht 151.5 Million.

3.3 CH. Karnchang-Tokyu Construction Co., Ltd. - The company received dividend from its shareholding in Bangkok Expressway Public Company Limited.

3.4 CH. Karnchang-Tokyu Construction Co., Ltd. - CH. Karnchang-Tokyu Construction Co., Ltd. was engaged to construct toll booths at Bang Sue, Khlong Prapa Toll Plazas, with a value of Baht 8.05 Million.

4.1 Joint Venture BBCT - This is a related company. - Vehicles, such as, trucks, trailers, etc., were sold to - Mahasiri Siam Co., Ltd., as a major Expert Transport Co., Ltd. at the replacement cost. shareholder in the Company, holds shares representing 90.00 percent. - A director of the Company, namely, Mr. Kamthorn Trivisvavet, serves as director in Expert Transport Co., Ltd. 4.2 The Company - Two executive directors of the - This company took on lease of area and public Company, namely, Mr. Plew utilities services from the Company. Trivisvavet and Mr. Prasert Marittanaporn, serve as directors in Expert Transport Co., Ltd. - An executive of the Company, namely, Mr. Sittidej Trivisvavet, serves as director in Expert Transport Co., Ltd. 4.3 CH. Karnchang (Lao) Co., Ltd. - CH. Karnchang (Lao) Co., Ltd. used the construction material transportation service.

ANNUAL REPORT 2009

Unit : Baht

Transaction Value of 2009

Necessity / Justification

134,953,103

- This transaction is an ordinary course of business.

119,876,053

- This transaction is an ordinary course of business. - This project is of a nature in which the Company has experience and could be completed within the scheduled period. - The Company has earned a return at market price at a rate not lower than the rate of return generally received in other projects. - This transaction provides a credit term of 30-45 days.

10,983,811

- This transaction is an ordinary course of business. - The Company has earned a return at market price at a rate not lower than the rate of return generally received in other projects.

8,046,916

3,369,939

- This is a sale of vehicles, which the Joint Venture does not use, at the reasonable rate not different from sale to the general public. - Trade accounts receivable were accrued for a long period due to the economic crisis during 1997-2000 and a portion of revenue must be used for loan repayment.

The company could make periodic repayment to the Joint Venture by 2010. - This transaction provides a credit term of 30-45 days.

5,477,046

- Expert Transport Co., Ltd. took on lease for a total area of 1,119 square meters at the rental rate of Baht 148 per square meter and service fee of Baht 222 per square meter, with a lease term of three years from June 1, 2008 to May 31, 2011. - Expert Transport Co., Ltd. took on lease and paid public utilities fees in the amount of approximately Baht 0.4 Million per month. - This rental rate is close to market rate, representing an ordinary course of business. - This transaction provides a credit term of 30-45 days.

2,337,367

- The rate is close to market rate, representing an ordinary course of business. - This transaction provides a credit term of 30-45 days.

CH. KARNCHANG PUBLIC COMPANY LIMITED

Company Name / Interested Party

5. North Bangkok Expressway Company Limited Operation of concession business for expressway construction and management

Relationship

Nature of Transaction

5.1 CH. Karnchang-Tokyu Construction Co., Ltd. - This is a related legal entity. - CH. Karnchang-Tokyu Construction Co., Ltd.

- Bangkok Expressway Public was engaged to construct toll booths at

Company Limited holds shares Mueang Thong Thani Toll Plaza, with a value

representing 53.33 percent. of Baht 4.6 Million - An executive director of the Company, namely, Mr. Plew Trivisvavet, serves as Chairman of the Executive Boards in North Bangkok Expressway Company Limited. - Acting managing director of North Bangkok Expressway Company Limited, namely, Mrs. Payao Marittanaporn, Mr. Prasert Marittanapornâ&#x20AC;&#x2122;s spouse, serves as director in the Company.

6.1 The Company - This is an associated company. - The Company extended a loan in its capacity

- The Company holds shares as a shareholder under the Shareholders Loan representing 38.00 percent. Agreement, which requires that shareholders shall Operation of concession - Three executive directors of the arrange for a loan to SouthEast Asia Energy Company, namel y , business for design, Limited in the total loan amount of Baht 156.25 Mr. Plew Trivisvavet, development, Million, at the interest rate of the average MLR of Mr. Narong Sangsuriya, construction and three lending banks of SouthEast Asia Energy and Mr. Prasert Marittanaporn, management of the Limited, plus one (MLR+1), with the due date of serve as directors in SouthEast Asia Hydroelectric Power repayment of the principal, together with interest, Energy Limited. Project (Nam Ngum 2) for within 18 months or the date of Financial Closing the government of the of the Project, whichever occurs first. Lao Peopleâ&#x20AC;&#x2122;s Democratic - Principal at the end of the period Republic - Interest receivable at the end of the period

6.2 CH. Karnchang (Lao) Co., Ltd. - SouthEast Asia Energy Limited Company Limited) to carry out construction of the Hydroelectric Power Project (Nam Ngum 2), with a project value of Baht 22,472 Million engaged CH. Karnchang (Lao) Co., Ltd. (in which 100 percent of shares are held by CH. Karnchang Public Company.

6. SouthEast Asia Energy Limited

ANNUAL REPORT 2009

Unit : Baht

Transaction Value of 2009

2,031,078

156,250,000 20,526,571

7,582,657,933

Necessity / Justification

- This is considered a financial support based on the shareholding percentage, and the interest rate equals the loan interest rate of the existing creditors of SouthEast Asia Energy Limited for survey and development of new project which would enhance the capacity of the Nam Ngum 2 Project and which would be beneficial to the Company as a shareholder. - In 2009, SouthEast Asia Energy Limited requested an extension of time for repayment of the loan for another 12 months from the due date until March 2010. - In 2010, SouthEast Asia Energy Limited has requested an extension of time for repayment of the loan for another 18 months from the due date until September 2011.

- CH. Karnchang (Lao) Co., Ltd. is capable to carry out the works properly and is wellprepared to promptly start the works. In addition, the project value is reasonable, representing an ordinary course of business. - This transaction provides a credit term of 30 days.

CH. KARNCHANG PUBLIC COMPANY LIMITED

Company Name / Interested Party

Relationship

Nature of Transaction

- This is a related company. 7.1 The Company 7. Bang Pa-in Land - The Company rendered transportation services Development Co., Ltd. - CK. Office Tower Co., Ltd.,

as a major shareholder in the and other services, such as, lease of water tank Company, holds shares trailers, shovels, backhoe. Operation of Bang Pa-in representing 25 percent. Industrial Estate - Mahasiri Siam Co., Ltd., as a major 7.2 Phrompratharn Construction Limited Partnership shareholder in the Company, holds - Phrompratharn Construction Limited Partnership shares representing 25 percent. was engaged to carry out construction of the

- An executive director of the tap water production system in Bang Pa-in Company, namely, Mr. Plew Industrial Estate, with a value of Baht 398,582,302 Trivisvavet, serves as director in in 2007. (In 2008, there were additional works Bang Pa-in Land Development from the employer of Baht 33,556,033. In 2009, Co., Ltd. compensation for construction materials at higher - A director of the Company, price and interest from delayed payment were namely, Mr. Kamthorn Trivisvavet, incurred, totaling Baht 108.3 Million.) serves as director in Bang Pa-in Land Development Co., Ltd. 7.3 The Company - An executive of the Company, - The Company leased out area and charged namely, Miss Supamas Trivisvavet, public utilities fees. serves as director in Bang Pa-in Land Development Co., Ltd.

- This is a related company. - Bangkok Metro Public Company Limited (CH. Karnchang Public Company Limitedâ&#x20AC;&#x2122;s associated Operation of service company) holds shares business for common

representing 65.19 percent. areas and public utilities

- Two executive directors of the in the metro Company, namely, Mr. Sombat Kitjalaksana and Mr. Anukool Tuntimas, serve as directors in Bangkok Metro Networks Limited. 8. Bangkok Metro Networks Limited

Remark: Bangkok Metro Networks Limited was incorporated through the amalgamation of Metro Mall Development Limited, BMCL Network Limited, and Triads Networks Company Limited.

7.4 The Company - The Company was engaged to carry out the construction for improvement of earth dike and roads surrounding the projects in the Bang Pa-in Industrial Estate, with a value of Baht 72.7 Million, scheduled to be completed in 2010.

8.1 The Company - The Company leased out area and charged public utilities fees.

8.2 The Company - Interest income from construction

ANNUAL REPORT 2009

Unit : Baht

Transaction Value of 2009

1,829,444 145,270,925

805,704

Necessity / Justification

- The rate is close to market rate, representing an ordinary course of business. - This transaction provides a credit term of 30-45 days. - This is an ordinary course of business. This project is of a nature in which the Company has experience and could be completed within the scheduled period.

The Company has earned a return at a rate not lower than the rate of return generally received in other projects. - This transaction provides a credit term of 30-45 days

- Bang Pa-in Land Development Co., Ltd. took on lease from the Company for a total area of 174 square meters at the rental rate of Baht 128 per square meter and service fee of Baht 192 per square meter, with a lease term of three years from November 1, 2008 to October 31, 2011. - Bang Pa-in Land Development Co., Ltd. took on lease and paid public utilities fees in the amount of approximately Baht 0.06 Mil ion per month. - This rental rate is close to market rate, representing an ordinary course of business. - This transaction provides a credit term of 30-45 days.

64,401,273

- This is an ordinary course of business. This project is of a nature in which the Company has experience and could be completed within the scheduled period.

The Company has earned a return at a rate not lower than the rate of return generally received in other projects. - This transaction provides a credit term of 30-45 days.

6,141,744

- Bangkok Metro Networks Limited took on lease from the Company for a total area of 1,291.4 square meters at the rental rate of Baht 140 per square meter and service fee of Baht 210 per square meter, with a lease term of three years from February 10, 2010 to February 9, 2013. - Bangkok Metro Networks Limited took on lease and paid public utilities fees in the amount of approximately Baht 0.5 Mil ion per month. - This rental rate is close to market rate, representing an ordinary course of business. - This transaction provides a credit term of 30-45 days.

18,044,887

- Metro Mall Development Limited executed a contract engaging CH. Karnchang Public Company Limited for a project value of Baht 292.5 Mil ion to construct the interior of the train stations to support the lease of retail shops. However, since Metro Mall Development Limited has insufficient revenue from commercial development, it has paid the construction cost in installment. The Company has charged interest at the rate of MLR+1% per annum. - This is an ordinary course of business. This project is of a nature in which the Company has experience and could be completed within the scheduled period. The Company has earned a return at a rate not lower than the rate of return generally received in other projects. - This transaction provides a credit term of 30-45 days.

CH. KARNCHANG PUBLIC COMPANY LIMITED

2. The Opinion of Company Directors and the Audit Committee - The Companyâ&#x20AC;&#x2122;s contracts with its related companies to carry out construction on a subcontract basis are undertaken at reasonable prices, whereby the costs of relevant projects under such contracts were reviewed and deemed appropriate by the Companyâ&#x20AC;&#x2122;s engineers and based on an ordinary course of business. - Project management fees are derived from transactions where the Company arranged for personnel to various related companies and joint ventures for the purpose of project management, whereby the Company entered into contracts for management fees with those related companies and joint ventures, and such management fees covered salaries, bonuses, benefits and other management expenses. - Service fees are derived from transactions where the Company leased out to joint ventures and subsidiaries equipment and machinery at the rental rates close to market rates, representing an ordinary course of business. - Costs of goods are derived from transactions where the Company traded goods with related companies at the price close to market price, representing an ordinary course of business. - Accounts receivable in the form of intercompany loans bear interest at an appropriate rate and subject to an ordinary course of business. Connected transactions have been submitted to the meeting of the Board of Directors or the Executive Board, for consideration in respect of their suitability. 3. Measures or Procedures for Approval of Connected Transactions The Company has complied with the relevant rules, regulations and requirements of the Securities and Exchange Commission. As for any transactions that might give rise to conflict of interest and require approval of the Board of Directors and of the Audit Committee, the Company has already complied with such rules, regulations or requirements, whereby the grant of approval for the said connected transactions shall take into account the optimum benefits to the Company, fairness and justifications of the transactions as well as based on market prices in the ordinary course of business. In addition, the interested parties or those who might have conflict of interest in such connected transactions shall not be allowed to participate in the consideration and approval of the connected transactions so as to ensure the fairness and the optimum benefits to the Company. As for any connected transactions falling under the criteria as specified in the regulations, notifications, orders, requirements or rules of the Stock Exchange of Thailand, the Company has complied with the applicable requirements of the Stock Exchange of Thailand. 4. Policy or Trend of Future Connected Transactions The Company shall comply with the relevant rules, regulations and requirements of the Securities and Exchange Commission. As for any transactions that might give rise to conflict of interest and require approval of the Board of Directors and of the Audit Committee, the Company has already complied with such rules, regulations or requirements, whereby the grant of approval for the said connected transactions shall take into account the optimum benefits to the Company, fairness and justifications of the transactions as well as based on market prices in the ordinary course of business. In addition, the interested parties or those who might have conflict of interest in such connected transactions shall not be allowed to participate in the consideration and approval of the connected transactions so as to ensure the fairness and the optimum benefits to the Company. As for any connected transactions falling under the criteria as specified by the regulations, notifications, orders, requirements or rules of the Stock Exchange of Thailand, the Company shall comply with the applicable requirements of the Stock Exchange of Thailand.

ANNUAL REPORT 2009

Furthermore, the Company’s related businesses have the shareholding structures as follows: (1) Such businesses with shareholding structure in which the Company and its major shareholders jointly hold shares include Bangkok Metro Public Company Limited, etc. The shareholding structure is based on general investment pattern by which the major shareholders may jointly invest with the Company in those businesses in which the Company’s investment might be limited by, among others, the Company’s cash flow, investment policy, etc. The fact that the Company’s major shareholders also hold shares in those businesses would render the Company to be in an advantageous position in regard to the controlling power so as to ensure that the operation of these businesses would be consistent. (2) Such businesses with shareholding structure in which the Company holds shares include Bangkok Expressway Public Company Limited, Thai Tap Water Supply Public Company Limited, SouthEast Asia Energy Limited, etc. (3) Such businesses with shareholding structure in which the Company’s major shareholders hold shares include

CK. Office Tower Co., Ltd., Mahasiri Co., Ltd., Expert Transport Co., Ltd., Silasaicrete Limited Partnership, etc. The policy on consideration and approval of connected transactions with related businesses shall comply with the procedures that require consideration by the Board of Directors and the Audit Committee while those who have interest or might have conflict of interest in connected transactions shall not be allowed to participate in the approval of such connected transactions. The criteria by which the Board of Directors and the Audit Committee use as guidelines in the consideration is that related businesses are required to propose competitive products or services in terms of price and quality. On the contrary, should the Company be to render services to any related businesses, the Company is required to propose price and quality in line with standards or market price without giving any favorable benefit to the related businesses, which may result in transfer of benefits to those who might have conflict of interest with the Company. Future connected transactions in the form of loans tend to be loans among the Company, subsidiaries and joint ventures for the purpose of financial support in business operation so as to support and facilitate each other, which will be deemed as ordinary course of business. Consideration and approval for such transactions will be mainly based on the optimum benefits of the Company. However, for the loans between the Company, subsidiaries or joint ventures, and related companies in which the Company’s major shareholders, directors or executives hold shares, the Company group has no policy to extend any intercompany loans in the future. However, in the past, the advantage of connected transactions with related businesses is that it gives rise to flexibility in work performance and results in timely delivery of work, which constitute factors material to construction business and continuously support the Company’s operations. As for any future connected transactions, the Company group will strictly comply with the regulations of the Office of the Securities and Exchange Commission and the Stock Exchange of Thailand.

CH. KARNCHANG PUBLIC COMPANY LIMITED

Audit Committee’s Report

The Audit Committee of CH. Karnchang Public Company Limited, by the appointment of the Company’s Board of Directors, comprises three qualified independent directors, namely, Mr. Vitoon Tejatussanasoontorn, Chairman of the Audit Committee, Mr. Don Pramudwinai and Mr. Thawansak Sukhawun, Audit Committee Members, and President of Internal Audit as secretary to the Audit Committee. The Audit Committee has performed under the scope, duties and responsibilities as assigned by the Company’s Board of Directors, in accordance with the regulations of the Stock Exchange of Thailand, as well as relevant suggestions on various matters, which were fully cooperated by the Company’s management, internal auditors and auditor. In 2009, the Audit Committee held four meetings with the executives, internal auditors and auditor as appropriate, including a meeting with the auditor without the management once a year, which may be summarized as follows: 1. The Audit Committee has reviewed the quarterly financial statements

and the 2009 financial statements, by making inquiries and taking into consideration the

clarifications of the executives and the auditor in respect of accuracy and completeness of the financial statements

and sufficiency of information disclosure, which the Audit Committee is of the opinion in line with the auditor that the

said financial statements are fairly accurate in all material aspects and comply with generally accepted accounting

standards. 2. The Audit Committee has reviewed the compliance with the provisions of

laws and the Company’s internal control system, and is of the opinion according to the

assessment that the internal control system is sufficient, proper and efficient without any material fault in order to

support the operations to achieve the specified goal. The Company properly maintains its property and work operations

in compliance with the law on securities and exchange and the relevant rules and regulations on business. The

authorization and approval are systematically conducted in accordance with the good internal control system, and the

corporate governance is transparent, as well as being amended to efficiently conform to the changed situation. 3. The Audit Committee has reviewed the internal audit, by taking into consideration

the mission, scope of work, duties, responsibilities and independence of the Internal Audit in order to conform to the

guidelines on internal audit of the Stock Exchange of Thailand, which the Audit Committee is of the opinion that the

Company’s internal audit system is sufficient and proper, including the consideration for approval of the appointment of

President of Internal Audit and secretary to the Audit Committee. The Audit Committee is of the opinion that the

Company’s internal audit system is sufficient, proper and efficient in accordance with the international standards.

ANNUAL REPORT 2009

4. The Audit Committee has reviewed the risk management in order to connect with

the internal control system to manage general risks. The Company has specified objectives and criteria for assessment of

the overall risks and risk levels, risk assessment and rating, determination of management plan on existing risks, and

preparation of report on risk assessment and management plan on existing risks, which the Audit Committee is of the

opinion that the Company’s risk management system is efficient and effective, by determining objectives for indicating,

assessing, managing and monitoring risks on a quarterly basis, risk appetite and risk tolerance, as well as regularly

reviewing the risks to be in line with the current situation. 5. The Audit Committee has reviewed and provided an opinion on the

connected transactions or transactions which may have conflict of

interest, including disclosure of such transactions in accordance with the regulations of

the Stock Exchange of Thailand and the Office of the Securities and Exchange Commission, which the auditor is of the

opinion that the transactions with material aspects executed with the related companies have already been disclosed

and shown in the financial statements and notes to the financial statements. The Audit Committee is of the opinion in

line with the auditor, as well as providing an opinion that such transactions are reasonable and for the optimum benefit

to the Company’s business operations, and the information disclosure is accurate and complete. 6. The Audit Committee has considered selecting the auditor for

appointment and proposing the remuneration of the auditor, by taking into

account the performance of the auditor in the previous year, reliability, capability to provide service and consultation

on accounting standards, auditing and certification of the financial statements in a timely manner, and has then

provided an opinion to the Company’s Board of Directors to seek approval of the Shareholders’ Meeting for

appointment of either Miss Siraporn Ouaanunkun or Mr. Supachai Phanyawattano or Mr. Narong Puntawong of Ernst &

Young Office Limited as the Company’s auditor for 2010, with the auditing fee in the amount of not exceeding Two

Million Four Hundred Sixty Thousand Baht. (Mr. Vitoon Tejatussanasoontorn) Chairman of the Audit Committee

CH. KARNCHANG PUBLIC COMPANY LIMITED

Financial Position and Operational Results

Operational Results for 2009 As at December 31, 2009, with respect to the operational results of CH. Karnchang Public Company Limited, its subsidiaries and jointly controlled entities as compared to that of the same accounting period of 2008, the profits in the consolidated financial statements decreased by 83.5 percent, but in the separate financial statements increased by 119.7 percent. The main causes of the decreased profits in the consolidated financial statements are as follows: (1) In 2008, the Company derived revenue from reversal of provision for loss on investments in the jointly controlled entities amounting to Baht 408 Million, resulting from decrease in liabilities for which the Company must take responsibility for Joint Venture BBCD under the mutual agreement with joint venture partners in relation to sharing of liabilities of the Joint Venture and in accordance with the resolution of the Board of Directors’ Meeting No. 3/2008, which the Company had notified to the Stock Exchange of Thailand per the letter dated May 15, 2008. (2) The revenue derived from the construction contracts in 2009 decreased since various construction projects were completed in 2009, and as a result, the revenue recognition decreased as compared to that of the previous year. (3) The Company’s finance cost in 2009 increased by Baht 58 Million from that of 2008, since during 2009, the Company issued the debentures amounting to approximately Baht 6,900 Million. 1. Financial Position and Operational Results for 2009

Operational Results

(1) Total revenues amounted to Baht 13,935.16 Million, which decreased from the same period of the previous year by Baht 575.41 Million, or representing 3.97 percent, due to the fact that the large-sized projects are nearly completed, thereby causing slight progress in construction, with the details as follows: • Core revenues comprise revenue from construction, sales of construction materials, and project management

amounting to Baht 12,780.60 Million, representing 91.71 percent of total revenues, which decreased by Baht

449.45 Million or representing 3.40 percent, due to the fact that the large-sized projects are nearly completed,

thereby causing slight progress in construction, including financial crisis in the United States of America,

fluctuation of materials prices, including local political problems, which caused the volume of investments in

new projects from government sector and private sector to decline, and as such, core revenues decreased,

with the details as follows: • Revenue from construction for 2009 decreased by Baht 440.63 Million or presenting 3.35 percent. • Revenue from sales of construction materials for 2009 decreased by Baht 13.67 Million or representing 26.94 percent. • Revenue from project management for 2009 increased by Baht 4.85 Million or representing 16.02 percent due to assignment of personnel for management of the construction of the Purple Line Project, Contract 1. • Rental income and transportation income amounted to Baht 48.69 Million, representing 0.34 percent of total revenues in 2009, which increased by Baht 26.78 Million or representing 46.11 percent, namely, increased revenues from rental service and transportation and equipment and machinery for construction of the Nam Ngum Hydroelectric Power Project in Lao People’s Democratic Republic.

ANNUAL REPORT 2009

• Other income amounted to Baht 1,079.10 Million, representing 7.74 percent of total revenues, which decreased by Baht 152.74 Million or representing 12.40 percent, comprising: • Interest income of 2009 increased from that of 2008 by Baht 8.87 Million or representing 3.48 percent, due to the fact that in 2009, the Company invested in securities, government bonds and debt instruments with interest rates higher than deposits at commercial banks. • Dividend income and profit sharing from jointly controlled entities amounted to Baht 262.08 Million, which increased from that of 2008 by Baht 123.44 Million or representing 89.04 percent, since the Company signed an agreement for amendment to the joint venture agreement of Joint Venture BBCT in respect of change in the Company’s participation in Joint Venture BBCT, thereby rendering the Company to recognize the increased participation in the Joint Venture. • Gain on sale of property, plant and equipment amounted to Baht 41.76 Million from sales of construction equipment to Joint Venture CKTC for use in the construction of the Purple Line Project, Contract 1. • Gain on exchange rate amounted to Baht 94.31 Million, which increased from that of 2008 by Baht 15.36 Million or representing 19.45 percent, as realized gain in full from the construction of the Nam Ngum 2 Hydroelectric Power Project in Lao People’s Democratic Republic. • Gain on sales of investments in 150 million ordinary shares in Thai Tap Water Supply Public Company Limited (“TTW”) or representing 3.76 percent of the registered capital of TTW was recognized as gain on sales of investments amounting to Baht 343.07 Million or representing 2.46 percent of total revenues, which increased from that of 2008 by Baht 64.41 Million or representing 23.11 percent. • Revenue from reversal of provision for loss on investments in joint ventures, which had no record in 2009; but in 2008, amounted to Baht 408.12 Million, representing 2.81 percent of total revenues, resulting from decrease in liabilities for which the Company must take responsibility for Joint Venture BBCD under the mutual agreement with joint venture partners in relation to sharing of liabilities of the Joint Venture. • Miscellaneous and others amounted to Baht 51.56 Million, which decreased from that of 2008 by Baht 20.76 Million or representing 28.70 percent.

(2) Total expenses amounted to Baht 12,980.93 Million, which decreased from that of 2008 by Baht 54.20 Million or representing 0.42 percent, due to the fact that: • Cost of construction, sales of construction materials and services amounted to Baht 11,859.74 Million, representing 85.11 percent of total revenues, which increased from that of 2008 by Baht 11.92 Million or representing 0.10 percent, resulting from the fact that the construction cost was increased for the construction of the toll collection and traffic safety control systems project for the Bang Pli - Suksawad Expressway and Highway No. 37, Outer Bangkok Ring Road (the Bang Pli - Bang Khun Thien Expressway, Suksawad - Bang Khun Thien Section), the Information Technology Centre Building construction project of the Office of His Majesty’s Principal Private Secretary, and the Nam Ngum 2 Hydroelectric Power Project. • Selling and administrative expenses amounted to Baht 1,034.42 Million, representing 7.42 percent of total revenues, which decreased from that of 2008 by Baht 70.05 Million or representing 6.34 percent. (3) Share of profit (loss) from investments in associated companies amounted to Baht 81.89 Million, representing 0.59 percent of total revenues, which increased from that of 2008 by Baht 107.91 Million or representing 414.76 percent, due to the fact that Thai Tap Water Supply Public Company Limited’s net operating income was higher than the total operating losses of Bangkok Metro Public Company Limited and SouthEast Asia Energy Limited. (4) Finance cost amounted to Baht 882.30 Million, representing 6.33 percent of total revenues, which increased from that of 2008 by Baht 58.04 Million or representing 7.04 percent, due to the Company’s issuance of debentures and

CH. KARNCHANG PUBLIC COMPANY LIMITED

additional drawdown of the long-term loan for use in the operations and for preparations to accommodate the Extension Projects, as well as investment in concession business of the Nam Ngum 2 Hydroelectric Power Project, the small power plant project in Bang Pa-in Industrial Estate and the Xayaburi Hydroelectric Power Project, etc.

(5) Corporate income tax amounted to Baht 56.25 Million, representing an increase by Baht 3.49 Million or 6.21 percent from 2008, due to increase in operating income of subsidiaries and jointly controlled entities. (6) Net income before minority interests of the subsidiaries for the year ended December 31, 2009 amounted to Baht 97.57 Million, which decreased from that of 2008 by Baht 474.83 Million or representing 82.95 percent, comprising: • Equity holders of the parent company amounted to Baht 89.73 Million, representing a decrease from that of 2008 by Baht 455.01 Million or 83.53 percent. • Minority interests of the subsidiaries amounted to Baht 7.84 Million, representing a decrease from that of 2008 by Baht 19.82 Million or 71.65 percent. (7) Earnings per share (EPS) for the year ended December 31, 2009 amounted to Baht 0.06 per share, compared to Baht 0.38 per share of 2008.

Financial Position

(1) Total assets amounted to Baht 29,469.86 Million, representing an increase by Baht 3,596.65 Million or 13.90 percent as compared to that as at December 31, 2008, with the details of significant increases and decreases as follows: • Cash and cash equivalents amounted to Baht 3,519.43 Million, which increased from that of 2008 by Baht 962.77 Million or representing 37.66 percent. • Current investments amounted to Baht 2,669.02 Million, which increased from that of 2008 by Baht 2,656.28 Million or representing 20,862.31 percent, as the Company additionally invested in government bonds and bonds of government authorities, as well as state enterprise debt instruments and private debt instruments. • Trade accounts receivable amounted to Baht 1,080.90 Million, which decreased from that of 2008 by Baht 1,030.32 Million or representing 48.80 percent, as a result of the completion of various construction projects in 2009. • Income pending collection amounted to Baht 3,840.53 Million, which increased from that of 2008 by Baht 773.67 Million or representing 25.23 percent, due to the fact that the Company accelerated the construction. • Inventories and supplies for construction-net amounted to Baht 343.27 Million, which decreased from that of 2008 by Baht 535.72 Million or representing 60.95 percent. • Advance payment to subcontractors-net amounted to Baht 1,050.31 Million, which decreased from that of 2008 by Baht 311.68 Million or representing Baht 22.88 percent. • Other current assets amounted to Baht 585.36 Million, which increased from that of 2008 by Baht 47.27 Million or representing 8.79 percent. • Restricted bank deposits amounted to Baht 408.28 Million, which increased from that of 2008 by Baht 85.84 Million or representing 26.62 percent, since these bank deposits were placed as security for credit with banks. • Long-term loans to jointly controlled entities and interest receivable amounted to Baht 244.87 Million, which increased from that of 2008 by Baht 8.41 Million or representing 3.56 percent, comprising loans to Joint Venture CKET. • Long-term loans to associated companies and interest receivable amounted to Baht 2,728.38 Million, which increased from that of 2008 by Baht 741.36 Million or representing 37.31 percent, namely, loan under the Subordinated Loan Agreement which the Company as shareholder extended to Bangkok Metro Public Company Limited in the amount of Baht 3,000.00 Million, and loan under the Shareholders’ Loan Agreement in the amount of Baht 156.25 Million by the Company to SouthEast Asia Energy Limited (“SEAN”) in order to conduct the feasibility study and development of the Nam Bak 1-2 Hydroelectric Power Project.

ANNUAL REPORT 2009

• Long-term loans to other companies and interest receivable-net of current portion amounted to Baht 1,276.22 Million, which decreased from that of 2008 by Baht 156.00 Million or representing 10.89 percent, comprising the long-term loans to other companies and interest receivable due to the fact that Joint Venture CKET received debt repayment from other companies, namely, Rayong Real Estate Co., Ltd. and Private Inter Construction Co., Ltd., and such loans were secured by certain land and buildings, as well as the personal guarantee by the principal shareholder of the borrowers. • Investments in associated companies-net amounted to Baht 4,692.44 Million, which decreased from that of 2008 by Baht 35.25 Million or representing 0.75 percent, with the details as follows: • Investment in CH. Karnchang (Qatar) Contracting Co., Ltd. as at December 31, 2009 remained unchanged from that of 2008. • Investment in Bangkok Metro Public Company Limited (“BMCL”) as at December 31, 2009 at book value based on the equity method amounted to Baht 861.17 Million, which decreased from that of 2008 by Baht 321.77 Million, whereby the Company’s investment in BMCL represented 24.61 percent of the paid-up registered capital. • Investment in Thai Tap Water Supply Public Company Limited (“TTW”) as at December 31, 2009 at book value based on the equity method amounted to Baht 2,344.37 Million, which decreased from that of 2008 by Baht 183.96 Million. On December 21, 2009, the Company’s Board of Directors resolved to grant approval for the Company to sell 180 million ordinary shares in TTW or 4.51 percent of the paid-up registered capital and in 2009, the Company sold 150 million ordinary shares, whereby the Company’s investment in TTW decreased from 35.31 percent to 31.55 percent of the paid-up registered capital. • Investment in SouthEast Asia Energy Limited (“SEAN”) as at December 31, 2009 at book value based on the equity method amounted to Baht 1,486.90 Million, which increased from that of 2008 by Baht 470.47 Million, resulting from additional payment of shares. The Company’s shareholding in SEAN represented 38.00 percent of the paid-up registered capital. • Other long-term investments-net were Baht 2,243.61 Million, representing a decrease from that of 2008 by Baht 674.61 Million or 23.12 percent as a result of changes in value of investment at market price, namely, ordinary shares in Bangkok Expressway Public Company Limited as at December 31, 2008 which were priced lower than cost. • Long-term trade accounts receivable totaled Baht 380.26 Million, representing a decrease from that of 2008 by Baht 269.70 Million or 41.49 percent, comprising: • Long-term trade accounts receivable to related company amounted to Baht 133.56 Million, representing

a decrease from that of 2008 by Baht 200.70 Million or 60.04 percent, comprising construction cost owed by Bangkok Metro Networks Limited, which requested for an extension of time for repayment for four years, subject to interest rate at MLR plus 1 per annum; • Long-term trade accounts receivable to other company amounted to Baht 246.70 Million, representing

a decrease from that of 2008 by Baht 69.00 Million or 21.86 percent, comprising construction cost owed by Rayong Real Estate Co., Ltd., which the Board of Directors granted approval for it to make repayment in

13 installments on a quarterly basis, from December 2009 to December 2012. • Other non-current assets totaled Baht 3,091.31 Million, representing a decrease from that of 2008 by Baht 157.70 Million or 5.38 percent, mostly comprising advance payments to construction project costs to subsidiaries in the amount of Baht 12.36 Million, representing an increase by Baht 6.88 Million or 125.55 percent.

CH. KARNCHANG PUBLIC COMPANY LIMITED

(2) Total liabilities amounted to Baht 23,770.61 Million, as compared to the end of 2008, representing an increase by Baht 3,201.70 Million or 15.57 percent, with the details of significant increases and decreases as follows: • Bank overdrafts and short-term loans from financial institutions amounted to Baht 2,659.72 Million, representing a decrease from that of 2008 by Baht 14.56 Million or 0.54 percent. • Trade accounts payable amounted to Baht 2,074.06 Million, representing a decrease from that of 2008 by Baht 872.62 Million or 42.07 percent. • Current portion of hire purchase creditors amounted to Baht 98.14 Million, representing a decrease from that of 2008 by Baht 25.60 Million or 20.69 percent. • Current portion of long-term loans amounted to Baht 624.42 Million, representing an increase from that of 2008 by Baht 245.72 Million or 64.89 percent. • Current portion of debentures amounted to Baht 3,100.00 Million, representing an increase from that of 2008 by Baht 100.00 Million or 3.33 percent. • Accounts payable and loans from related parties amounted to Baht 125.29 Million, representing an increase from that of 2008 by Baht 123.18 Million or 5,838.14 percent, as a result of Joint Venture CKTC’s commencement of construction of the Purple Line Project, Contract 1, and withdrawal of advances from the joint venture partners in proportion. • Advances received from employers and construction revenue amounted to Baht 1,613.00 Million, representing an increase from that of 2008 by Baht 174.10 Million or 12.10 percent, as a result of Joint Venture CKTC’s receipt of advances of the Purple Line Project, Contract 1, and the Company’s withdrawal of advances of the construction project of Phetchabun - Amphur Lom Sak Highway No. 21, Phase II, and the Thanon Charan Sanit Wong - Thanon Borommaratchachonnani Underpass Project. • Retention money amounted to Baht 525.85 Million, representing an increase from that of 2008 by Baht 182.92 Million or 53.34 percent. • Other current liabilities totaled Baht 499.27 Million, representing a decrease from that of 2008 by Baht 27.86 Million or 5.29 percent. • Hire purchase creditors-net of current portion amounted to Baht 14.40 Million, representing a decrease from that of 2008 by Baht 71.52 Million or 83.24 percent. • Long-term loans-net of current portion amounted to Baht 3,348.01 Million, representing a decrease from that of 2008 by Baht 93.77 Million or 2.72 percent. • Debentures-net of current portion amounted to Baht 8,877.76 Million, representing an increase from that of 2008 by Baht 3,786.06 Million or 74.36 percent. In 2009, the Company issued the debentures in the amount of Baht 6,900.00 Million to replace the debentures due in 2009 in the amount of Baht 3,000.00 Million and to use as working capital, including to accommodate the Company’s investments in various metro line construction projects as well as the concession business in the Nam Ngum 2 Hydroelectric Power Project, the small power plant project in Bang Pa-in Industrial Estate and the Xayaburi Hydroelectric Power Project, etc. • Long-term accrued interest amounted to Baht 324.35 Million, which represented the Company’s acceptance of the transfer of Joint Venture BBCD’s long-term accrued interest owed to commercial banks as the Company’s debts. • Provision for loss on investments in joint ventures amounted to Baht 758.96 Million, representing a decrease from that of 2008 by Baht 286.18 Million or 27.38 percent, as a result of the Company’s reversal of such provision when interest expenses were incurred since the Company’s accepted the transfer of Joint Venture BBCD’s longterm accrued interest owed to three commercial banks as the Company’s debts.

ANNUAL REPORT 2009

(3) Shareholders’ equity as at December 31, 2009 amounted to Baht 5,699.26 Million, representing an increase by Baht 394.96 Million or 7.45 percent from the end of 2008, with the details of significant increases and decreases as follows: • Unrealized gain (loss) on changes in value of investments represents revaluation of investment in securities available for sale , amounting to Baht 36.59 Million, representing an increase from that of 2008 by Baht 414.34 Million or 109.69 percent (in 2009, BECL closing price = Baht 20.80 per share, and in 2008, BECL closing price = Baht 17.30 per share). • Retained earnings increased from the net operating income of Baht 214.97 Million in 2009 due to lower operating income in 2009. • Minority interests of subsidiaries amounted to Baht 218.21 Million, representing an increase from that of 2008 by Baht 12.87 Million or 5.90 percent. (4) The Company’s net debt to equity ratio as at December 31, 2009 in the consolidated financial statements was 2.10, which decreased from 2008 in which the net debt to equity ratio was 2.24.

Liquidity

In the cash flow statements for the year ended December 31, 2009, the Company’s cash increased during the year in

the amount of Baht 962.77 Million, and when combined with cash brought forward from 2008 in the amount of Baht 2,556.66

Million, the cash balance carried forward as at December 31, 2009 amounted to Baht 3,519.43 Million, with the details as follows: (1) Net cash flows from operating activities after interest expenses and corporate income tax amounted to Baht 250.75 Million, as a result of progress of construction pending collection and receipt of advances for such projects signed in 2009. (2) Net cash flows used in investing activities amounted to Baht 2,952.73 Million, with the followings essence: • The Company’s provisional investments amounted to Baht 6,282.96 Million. • The Company extended a loan to an associated company, namely, Bangkok Metro Public Company Limited (“BMCL”) under the Subordinated Loan Agreement for another Baht 600.00 Million. • The Company increased its investments in an associated company, namely, SouthEast Asia Energy Limited (“SEAN”) in the amount of Baht 598.94 Million. • The Company additionally invested in property, plant and equipment in the amount of Baht 531.81 Million. (3) Net cash flows from financing activities amounted to Baht 3,666.86 Million, as a result of the Company’s new issue of debentures in 2009 in the amount of Baht 6,900.00 Million, and long-term loan drawdown to replace the debentures due in 2009 in the amount of Baht 3,000.00 Million and to use as working capital, including to accommodate the Company’s investments in various metro line construction projects as well as the concession business in the Nam Ngum 2 Hydroelectric Power Project, the small power plant project in Bang Pa-in Industrial Estate and the Xayaburi Hydroelectric Power Project, etc. 87

CH. KARNCHANG PUBLIC COMPANY LIMITED

Attachment

Details of the Company’s Directors, Executives and Authorized Persons Information of the Company’s Directors, Executives and Authorized Persons are as follows : Name-Surname/Position

Age

(Years)

Education

1. Mr. Aswin Kongsiri

64 • B.A. (Hons.) in Philosophy, Politics and Economics, Oxford University, England • Chairman 2000 Course, (Class 5/2001) Thai Institute of Directors Association • Director Certification Program (DCP 11/2001) Thai Institute of Directors Association

2. Mr. Plew Trivisvavet

64 • M.Sc. (Electrical Engineering), Osaka University, Japan • B.A. (Electrical Engineering), Osaka University, Japan • Director Accreditation Program (DAP 18/2004) Thai Institute of Directors Association • Director Certification Program (DCP 50/2004) Thai Institute of Directors Association • Financial for Non-Finance Directors (FND 13/2004) Thai Institute of Directors Association • Capital Market Academy Leadership Program, Capital Market Academy (CMA Course), Class 4/2007

• Chairman of the Board of Directors

• Director • Chairman of the Executive Board • Nomination Committee Member • Remuneration Committee Member • Corporate Governance and Risk Management Committee Member • Authorized Signatory Director

Proportion of Shareholding (%)

Family Relationship Among Executives

- None -

1.44

Mr. Kamthorn’s brother Miss Supamas’s father

ANNUAL REPORT 2009

Experience in the Last Five Years Period

Position

2009-Present 2009-Present September 2007-Present 2005-Present 2005-Present 1999-Present 1994-Present 1993-Present 1981-Present 2006-2008 1999-2003 December 2007-Present 2006-Present 2004-Present February 2003- Present 1998-Present 1998-Present 1994-Present 2004-2008

Director and Audit Committee Member Vice Chairman and Nomination and Remuneration Committee Member Chairman of the Board of Directors Director and Executive Director Director and Chairman of the Risk Management Committee and Chairman of the Nomination Committee Director and Chairman of the Audit Committee Independent Director Director, Audit Committee Member and Nomination Committee Member Director and Audit Committee Member and Nomination and Remuneration Committee Member Member of the National Legislative Assembly Director and Executive Director Corporate Governance and Risk Management Committee Member Director Director Nomination Committee Member and Remuneration Committee Member Chairman of the Board of Directors and Chairman of the Executive Board Director and Chairman of the Executive Board President and Chief Executive Officer Director

Organization/Company/Business

Thoresen Thai Agencies Plc. Electricity Generating Plc. CH. Karnchang Plc. Krung Thai Bank Plc. Bangkok Aviation Fuel Services Plc. OHTL Plc. CH. Karnchang Plc. Thai Reinsurance Plc. Padaeng Industry Plc. The National Legislative Assembly Siam Commercial Bank Plc. CH. Karnchang Plc. Thai Tap Water Supply Plc. SouthEast Asia Energy Limited CH. Karnchang Plc. Bangkok Metro Plc. Bangkok Expressway Plc. CH. Karnchang Plc. BMCL Network Limited

CH. KARNCHANG PUBLIC COMPANY LIMITED

Attachment

Details of the Company’s Directors, Executives and Authorized Persons Information of the Company’s Directors, Executives and Authorized Persons are as follows : Name-Surname/Position

3. Mr. Vitoon Tejatussanasoontorn

• Director • Chairman of the Audit Committee • Chairman of the Nomination Committee • Chairman of the Remuneration Committee • Chairman of the Corporate Governance and Risk Management Committee

4. Mr. Don Pramudwinai • Director • Audit Committee Member

Age

(Years)

Education

69 • B.A. in Commerce, Thammasat University • Director Certification Program (DCP 2/2000)Thai Institute of Directors Association • IOD Chartered Directors, Thai Institute of Directors Association, Class 1/2007 • Monitoring the Quality of Financial Reporting (MFR 8/2009) Thai Institute of Directors Association • Monitoring the System of Internal Control and Risk Management (MIR 6/2009) Thai Institute of Directors Association • Audit Committee Program (ACP 27/2009) Thai Institute of Directors Association • Monitoring the Internal Audit Function (MIA 6/2009) Thai Institute of Directors Association 59 • M.A. (International Relations), Tufts University, U.S.A. • M.A. (International Relations), University of California, Los Angeles, U.S.A. • B.A. in Political Science (Hons.), University of California, Los Angeles, U.S.A.

Proportion of Shareholding (%)

Family Relationship Among Executives

0.03

- None -

0.01

- None -

ANNUAL REPORT 2009

Experience in the Last Five Years Period

Position

December 2007-Present September 2007-Present 2005-Present 2002-Present 2001-Present 1999-Present 1991-Present 1986-Present February 2003September 2007 2009-Present 1994-Present 2007-2008 2004-2007 2001-2004 1999-2000

Chairman of the Corporate Governance and

Risk Management Committee Chairman of the Nomination Committee and Chairman of the Remuneration Committee Director, Audit Committee Member and

Nomination and Remuneration Committee Member Advisor of the Federation of Thai Industries of Samutprakarn Province Vice Chairman of Thai Chamber of Commerce

of Samutprakarn Province Director and Chairman of the Audit Committee Deputy Senior Managing Director Director and Executive Director Nomination Committee Member and

Remuneration Committee Member Ambassador Director and Audit Committee Member Ambassador and Permanent Representative

of Thailand Ambassador Ambassador Director-General of the Department of Information

Organization/Company/Business

CH. Karnchang Plc. CH. Karnchang Plc Bangkok Metro Plc. CH. Karnchang Plc. Thai Asahi Glass Plc. Sakata-Thai Corporation Ltd. CH. Karnchang Plc. Embassy in Washington DC, U.S.A. CH. Karnchang Plc. In the United Nations, New York City In Belgium In The Peopleâ&#x20AC;&#x2122;s Republic of China Ministry of Foreign Affairs

CH. KARNCHANG PUBLIC COMPANY LIMITED

Attachment

Details of the Company’s Directors, Executives and Authorized Persons Information of the Company’s Directors, Executives and Authorized Persons are as follows : Name-Surname/Position

5. Mr. Thawansak Sukhawun • Director • Audit Committee Member • Corporate Governance and Risk Management Committee Member

6. Mr. Pavich Tongroach • Director

Age

(Years)

Education

72 • M.A. in Political Science with the Certificate in International Affairs, University of North Carolina at Chapel Hill, N.C., U.S.A. • Bachelor of Arts, Chulalongkorn University • Certificate of Modern Management, National Defence College (NDC) of Thailand • Director Certification Program (DCP 61/2005) Thai Institute of Directors Association • Financial for Non-Finance Directors (FND 19/2005) Thai Institute of Directors Association • Fraud and Corruption Risk in Economic Downturn Thai Institute of Directors Association • Monitoring the Quality of Financial Reporting (MFR 9/2009) Thai Institute of Directors Association • Monitoring the System of Internal Control and Risk Management (MIR 7/2009) Thai Institute of Directors Association • Audit Committee Program (ACP 29/2009) Thai Institute of Directors Association 63 • Doctor of Philosophy (Ph.D.) in Pharmacology, (The School of Pharmacy, The University of London, U.K.) • Post-doctoral Research at Faculty of Medicine, University of Tokyo (specialisation : neuronal signaling & learning model) • Master of Science (M.Sc.) in Neurobiology, (Bedford & Chelsea Colleges, The University of London, U.K.) • Bachelor of Pharmacy, Mahidol University

Proportion of Shareholding (%)

Family Relationship Among Executives

- None -

ANNUAL REPORT 2009

Experience in the Last Five Years Period

Position

Organization/Company/Business

December 2007-Present 2000-Present 1989-1998

Corporate Governance and Risk Management Committee Member Director and Audit Committee Member Director General Deputy Director General

CH. Karnchang Plc. CH. Karnchang Plc. Thai News Agency Mass Communication

2007-Present Present Present Present Present Present 2005-2006 2005 2005-September 2006 2005-September 2006 June 2004-September 2006 June 2004-September 2006

Director President of the Council President President Emeritus President Advisory member, Senateâ&#x20AC;&#x2122;s Research and Development Committee President President Acting Chairman of the Administrative Board Chairman of the Administrative Board Secretary General, Commission on Higher Education Member, Education Council

CH. Karnchang Plc. Nakhon Pathom Rajabhat University The Pharmacy Council Thai Neuroscience Society Mahasarakham University The National Legislative Assembly Nakhon Phanom University Princess of Narathiwat University National Institute of Academic Testing Service (Public Organization) Office of Higher Education Financial Reform Ministry of Education

CH. KARNCHANG PUBLIC COMPANY LIMITED

Attachment

Details of the Company’s Directors, Executives and Authorized Persons Information of the Company’s Directors, Executives and Authorized Persons are as follows : Name-Surname/Position

Age

(Years)

Education

Proportion of Shareholding (%)

Family Relationship Among Executives

7. Mr. Narong Sangsuriya

65 • Bachelor of Engineering (Civil), Chulalongkorn University • Director Certification Program (DCP 54/2005) Thai Institute of Directors Association

0.06

- None -

8. Mr. Kamthorn Trivisvavet

60 • Master of Business Administration, Kasetsart University • Bachelor of Agricultural Technology, Bandit Sakonnakhon College • Director Certification Program (DCP 50/2004) Thai Institute of Directors Association • Financial for Non-Finance Directors (FND 13/2004) Thai Institute of Directors Association • The Leadership Grid of 2008, Grid Thailand

0.0001

Mr. Plew’s brother

9. Mr. Prasert Marittanaporn

53 • Master of Business Administration, Kasetsart University • Bachelor of Accounting, Chulalongkorn University • Director Certification Program (CP 54/2005) Thai Institute of Directors Association • Role of the Compensation Committee (RCC 6/2008) Thai Institute of Directors Association • Capital Market Academy Leadership Program, Capital Market Academy (CMA Course), class 9/2009 • Successful Formulation & Execution of Strategy (SFE 6/2010) Thai Institute of Directors Association

- None -

• Director • Executive Director • Nomination Committee Member • Remuneration Committee Member • Authorized Signatory Director

• Director • Executive Director • Authorized Signatory Director

ANNUAL REPORT 2009

Experience in the Last Five Years Period

March 2009-Present September 2007-Present 2004-Present 2001-Present 2000-Present 1994-Present 1994-2000

Position

Director Nomination Committee Member and Remuneration Committee Member Director Director and Senior Executive Vice President: Operation Group Director Executive Director Director and Senior Executive Vice President: Construction Group 2009-Present Director and Executive Director Present Advisor 1999-Present Director 1994-Present Director 1992-Present Director 1990-Present Director 1988-Present Director 1983-Present Director 1981-Present Director 1973-Present Managing Partner January 2009-Present Senior Executive Vice President :

Administration Group September 2007-Present Executive Director 2007-Present Director 2006-Present Director 2004-Present Director 2000-Present Director 2005-September 2007 Director 2001-2008 Executive Vice President: Accounting and Finance 1994-2000 Senior Vice President: Accounting and Finance

Organization/Company/Business

Bangpa-in Cogeneration Limited CH. Karnchang Plc. SouthEast Asia Energy Limited CH. Karnchang Plc. Thai Tap Water Supply Plc. CH. Karnchang Plc. CH. Karnchang Plc. CH. Karnchang Plc. Pathum Thani Water Co., Ltd. Construction Material Supply Co., Ltd. CH. Karnchang Holding Co., Ltd. CK. Office Tower Co., Ltd. Expert Transport Co., Ltd. Bang Pa-in Land Development Co., Ltd. Mahasiri Siam Co., Ltd. CH. Karnchang-Tokyu Construction Co., Ltd. Presertvit Construction Limited Partnership CH. Karnchang Plc. CH. Karnchang Plc. CH. Karnchang-Tokyu Construction Co., Ltd. CH. Karnchang Plc. SouthEast Asia Energy Limited Thai Tap Water Supply Plc. Pathum Thani Water Co., Ltd. CH. Karnchang Plc. CH. Karnchang Plc.

CH. KARNCHANG PUBLIC COMPANY LIMITED

Attachment

Details of the Company’s Directors, Executives and Authorized Persons Information of the Company’s Directors, Executives and Authorized Persons are as follows : Name-Surname/Position

Age

(Years)

Education

10. Mr. Ratn Santaannop

66 • Bachelor of Engineering (Civil), Chulalongkorn University • Director Certification Program (DCP 88/2007) Thai Institute of Directors Association • Understanding the Fundamental of Financial Statements (UFS 9/2007) Thai Institute of Directors Association

11. Mr. Sombat Kitjalaksana

52 • Ph.D. of Engineering (Soil Mechanic), University of Innsbruck, Austria • Master of Engineering (Civil), Chulalongkorn University • Bachelor of Engineering (Civil), Chulalongkorn University • Director Accreditation Program (DAP 36/2005) Thai Institute of Directors Association • Financial for Non-Finance Directors (FND 19/2005) Thai Institute of Directors Association • Director Certification Program (DCP 81/2006) Thai Institute of Directors Association • DCP Refresher Course (RE DCP 2/2009) Thai Institute of Directors Association

• Director • Executive Director • Authorized Signatory Director

• Director • Authorized Signatory Director

Proportion of Shareholding (%)

Family Relationship Among Executives

- None -

0.07

- None -

ANNUAL REPORT 2009

Experience in the Last Five Years Period

Position

2010-Present September 2007-Present 2006-Present 2001-Present 2007-2009 2007-March 2008 2005-September 2007 1994-2000 March 2009-Present 2006-Present 2004-Present 2001-Present 2000-Present 2005-September 2007 2004-2008 1994-2000

Director Executive Director Director Executive Vice President: Construction 1 Director Director Director First Senior Vice President: Project Construction Group Director Director Director, Executive Director and Managing Director Executive Vice President: Business Development Director Director Director Director Director Senior Vice President: International Business

Organization/Company/Business

Thai Water Operations Co., Ltd. CH. Karnchang Plc. CH. Karnchang Plc. CH. Karnchang Plc. BJT Water Co., Ltd. Bangkok Concrete Industries Co., Ltd. Pathum Thani Water Co., Ltd. CH. Karnchang Plc. Bangkok Metro Networks Limited CH. Karnchang Plc. Bangkok Metro Plc. CH. Karnchang Plc. Thai Tap Water Supply Plc. Pathum Thani Water Co., Ltd. Metro Mall Development Limited BMCL Network Limited Triads Networks Co., Ltd. CH. Karnchang Plc.

CH. KARNCHANG PUBLIC COMPANY LIMITED

Attachment

Details of the Company’s Directors, Executives and Authorized Persons Information of the Company’s Directors, Executives and Authorized Persons are as follows : Name-Surname/Position

12. Mr. Anukool Tuntimas • Director • Executive Director • Authorized Signatory Director

13. Mr. Viboon

Mongkolpiyathana 14. Mr. Samai Paiboon 15. Mr. Sittidej Trivisvavet

Age

(Years)

Education

42 • Doctor of Business Administration, University of South Australia • Master of Laws, Chulalongkorn University • Master of Business Administration, Kasetsart University • Barrister at Law, The Institute of Legal Education • Bachelor of Business Administration (Accounting and Financial), Ramkhamhaeng University • Bachelor of Laws, Chulalongkorn University • Director Certification Program (DCP 43/2004) Thai Institute of Directors Association • Audit Committee Program (ACP 20/2007) Thai Institute of Directors Association • Corporate Governance and Social Responsibility (CSR 1/2007) Thai Institute of Directors Association • Monitoring Fraud Risk Management (MFM 1/2009) Thai Institute of Directors Association • Role of the Compensation Committee (RCC 9/2009) Thai Institute of Directors Association 59 • Bachelor of Engineering (Civil), Songklanakarin University 65 • Bachelor of Engineering (Civil), Chulalongkorn University 56 • Bachelor of Business Administration in Construction Management, Sukhothai Thammathirat Open University

Proportion of Shareholding (%)

Family Relationship Among Executives

0.27

- None -

0.22

- None -

ANNUAL REPORT 2009

Experience in the Last Five Years Period

Position

Organization/Company/Business

March 2009-Present September 2007-Present 2006-Present 2004-Present 2001-Present 2004-2008 2004-2006

Director Executive Director Director Director and Executive Director Executive Vice President: Human Resource and General Administration Director Director Director Director and Vice President, Academic Affairs

Bangkok Metro Networks Limited CH. Karnchang Plc. CH. Karnchang Plc. Bangkok Metro Plc. CH. Karnchang Plc. Metro Mall Development Limited Triads Networks Co., Ltd. BMCL Network Limited Lawyers Association of Thailand

2001-Present 1997-2000 1994-1996 2001-Present 1994-2000

Executive Vice President: Construction 2 Project Manager Engineering Manager Executive Vice President: Engineering Senior Vice President: Civil Engineering and Architecture Executive Vice President: Purchasing Director Director Director

CH. Karnchang Plc. CH. Karnchang Plc. CH. Karnchang-Tokyu Construction Co., Ltd. CH. Karnchang Plc. CH. Karnchang Plc.

January 2009-Present 2000-Present 1994-Present 1979-Present

CH. Karnchang Plc. Expert Transport Co., Ltd. Vetprasert Co., Ltd. Song Wate Co., Ltd.

CH. KARNCHANG PUBLIC COMPANY LIMITED

Attachment

Details of the Company’s Directors, Executives and Authorized Persons Information of the Company’s Directors, Executives and Authorized Persons are as follows : Name-Surname/Position

16. Mr. Vorapote Uchupaiboonvong

17. Miss Supamas Trivisvavet

100

Age

(Years)

Education

48 • Master of Business Administration (International Finance and Banking). The Birmingham Business School, The University of Birmingham, UK • Master of Accounting (Costing), Chulalongkorn University • Bachelor of Accounting, Thammasat University • Director Certificaion Program (DCP 61/2005) Thai Institute of Directors Association • Audit Committee Program (ACP 10/2005) Thai Institute of Directors Association • Monitoring the System of Internal Control and Risk Management (MIR 2/2008) Thai Institute of Directors Association • Company Secretary Program (CSP 25/2008) Thai Institute of Directors Association • Developing Corporate Governance Policy Thai Institute of Directors Association • Effective Minute Taking (EMT 12/2008) Thai Institute of Directors Association • Successful Formulation & Executive of Strategy (SFE 6/2010) Thai Institute of Directors Association 35 • Doctor of Public Administration, University of Southern California, U.S.A. • Master of Public Policy, Duke University, U.S.A. • Bachelor of Arts, Chulalongkorn University • Director Certification Program (DCP 106/2008) Thai Institute of Directors Association • Developing Corporate Governance Policy, Thai Institute of Directors Association • Corporate Secretary Program, Thai Listed Companies Association

Proportion of Shareholding (%)

Family Relationship Among Executives

0.0001

- None -

Mr. Plew’s daughter

ANNUAL REPORT 2009

Experience in the Last Five Years Period

Position

Organization/Company/Business

March 2009-Present January 2009-Present 2005-Present 2006-2009 1990-2008

Director Executive Vice President: Accounting and Finance Independent Director Director Vice President, Project Administration

Bangpa-in Cogeneration Limited CH. Karnchang Plc. Union Petrochemical Plc. BJT Water Co., Ltd. CH. Karnchang Plc.

August 2009-Present March 2009-Present July 2008-Present July 2008-Present

Executive Vice President: Office of President Director Director Director

CH. Karnchang Plc. Bangpa-in Cogeneration Limited Bang Pa-in Land Development Co., Ltd. Cholavet Civil Co., Ltd.

101

CH. KARNCHANG PUBLIC COMPANY LIMITED

Financial Statement

102

ANNUAL REPORT 2009

Report of Independent Auditor CH. Karnchang Public Company Limited, its subsidiaries and its jointly controlled entities

31 December 2009 and 2008

To the Shareholders of CH. Karnchang Public Company Limited

I have audited the accompanying consolidated balance sheets of CH. Karnchang Public Company Limited, its subsidiaries and its jointly controlled entities as at 31 December 2009 and 2008, the related consolidated statements of income, changes in shareholdersâ&#x20AC;&#x2122; equity and cash flows for the years then ended, and the separate financial statements of CH. Karnchang Public Company Limited for the same periods. These financial statements are the responsibility of the management of the Company,

its subsidiaries and its jointly controlled entities as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of

CH. Karnchang Public Company Limited, its subsidiaries and its jointly controlled entities and of CH. Karnchang Public Company Limited as at 31 December 2009 and 2008, and the results of their operations, and cash flows for the years then ended, in accordance with generally accepted accounting principles. Siraporn Ouaanunkun Certified Public Accountant (Thailand)

No. 3844

Ernst & Young Office Limited Bangkok: 24 February 2010

103

CH. KARNCHANG PUBLIC COMPANY LIMITED

Balance sheets

CH. Karnchang Public Company Limited, its subsidiaries and its jointly controlled entities

As at 31 December 2009 and 2008

Assets Current assets Cash and cash equivalents Current investments Trade accounts receivable Related parties, net Unrelated parties, net Accounts receivable and loans to related parties, net Unbilled receivables Inventories and construction supplies, net Advance payment to subcontractors, net Current portion of loans to subcontractors and interest receivable Current portion of long-term loans to other companies and

interest receivable Other current assets Prepaid expenses Accrued income Interest receivable Refundable input tax, net Unbilled input tax Withholding tax deducted at source Others Total current assets Non-current assets Restricted bank deposits Long-term loans to jointly controlled entities and interest receivable Long-term loans to associated companies and interest receivable Loans to subcontractors and interest receivable, net of current portion Long-term loans to other companies and interest receivable, net of current portion Investments in subsidiaries, net Investments in joint ventures, net Investments in associated companies, net Other long-term investments, net Long-term accounts receivable Related party Unrelated party Property, plant and equipment, net Investments in land, net Intangible assets, net Accounts receivable - claims for additional costs Less: Allowance for doubtful accounts Accounts receivable - claims for additional costs, net The accompanying notes are an integral part of the financial statements.

104

Note

8 7, 9 9 7 10 11 7 13

3,519,433,926 2,669,015,838 519,249,577 561,655,157 168,568,161 3,840,530,566 343,266,423 1,050,314,607 177,544,214

155,749,495

24,800,000

12 7 7 13

Separate financial statements 2009 2008

2,556,659,169 12,732,450 825,312,153 1,285,910,181 142,536,641 3,066,855,877 878,989,706 1,361,995,953 107,275,019

(Unit: Baht)

Consolidated financial statements 2009 2008

1,890,662,136 2,669,015,838 407,454,593 430,941,729 1,228,291,350 2,463,514,865 123,603,858 273,381,502 -

104,297,563 12,732,450 462,950,733 1,009,284,864 731,839,873 2,704,299,410 544,572,881 552,232,828 -

44,419,088 21,239,698 22,279,962 17,364,061 233,919,850 118,389,394 233,919,851 123,389,364 8,686,700 5,665,875 - 62,877 106,771,863 175,287,199 8,657,496 109,465,261 43,429,398 71,033,320 18,470,006 26,633,824 132,764,823 119,833,466 95,251,155 91,522,730 15,369,863 26,637,826 8,027,043 12,608,627 13,590,689,549 10,801,153,927 9,873,471,384 6,503,257,346 408,276,703 322,439,563 244,242,890 231,417,054 244,872,648 236,458,703 1,245,518,207 1,300,612,859 2,728,379,261 1,987,022,420 2,728,379,261 1,987,022,420 - 160,869,946 - -

1,276,224,979

1,432,224,979

14 15 16 17 7, 9 9 18 19 20 26 26

- - 4,692,442,183 2,620,184,328 133,564,400 246,698,655 2,202,339,221 281,888,858 59,079,310 2,515,620,262 (2,515,620,262) -

- 283,162,501 - - 4,727,694,513 7,386,986,694 2,243,613,941 2,420,195,730 334,260,978 133,564,400 315,698,655 246,698,655 2,216,652,419 1,489,635,736 281,888,858 140,511,922 41,603,077 59,079,310 2,515,620,262 - (2,515,620,262) - - -

266,476,501 - 7,108,729,789 2,076,099,220 334,260,978 315,698,655 1,393,701,874 140,511,922 41,603,077 - - -

ANNUAL REPORT 2009

Balance sheets (continued)

CH. Karnchang Public Company Limited, its subsidiaries and its jointly controlled entities

As at 31 December 2009 and 2008

Other non-current assets Advances for future projects Withholding tax deducted at source Deposits Others Total non-current assets Total assets

Note

Liabilities and shareholdersâ&#x20AC;&#x2122; equity Current liabilities Bank overdrafts and short-term loans from financial institutions Trade accounts payable Related parties Unrelated parties Current portion of hire purchase creditors Current portion of long-term loans Current portion of debentures Accounts payable and loans from related parties Advances received from employers and construction revenue received in advance Retention for construction Other current liabilities Accrued interest Corporate income tax payable Accrued expenses Unbilled output tax Other payables Others Total current liabilities Non-current liabilities Hire purchase creditors, net of current portion Long-term loans, net of current portion Debentures, net of current portion Long-term accrued interest Provision for loss on investments in joint ventures Total non-current liabilities Total liabilities

Note

Consolidated financial statements 2009 2008

(Unit: Baht)

Separate financial statements 2009 2008

941,832,750 261,485,429 124,673,122 41,021,838 5,200,442 487,980,662 - 468,836,878 18,247,322 19,572,396 11,917,744 13,341,891 19,942,280 2,592,145 5,122,926 5,122,926 15,879,173,340 15,072,058,684 16,519,689,098 15,724,457,882 29,469,862,889 25,873,212,611 26,393,160,482 22,227,715,228 (Unit: Baht) Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

21 7 22 23 24 7

2,659,717,619 31,070,496 1,170,369,692 98,136,105 624,420,000 3,100,000,000 125,286,738

2,674,273,427 1,890,300,000 109,377,758 39,417,428 1,964,683,117 461,268,538 123,737,027 89,569,408 378,700,000 624,420,000 3,000,000,000 3,100,000,000 2,109,866 -

7, 10

1,613,001,594

1,438,897,640

7 22 23 24 15

484,705,822

1,042,587,585 15,140,930 1,245,622,968 112,664,965 378,700,000 3,000,000,000 195,100,941 323,931,001

525,853,206 342,934,712 155,168,359 134,023,800 179,882,535 158,514,387 179,267,885 157,184,453 26,955,760 12,204,115 - - 125,801,618 111,306,727 71,475,639 65,626,739 107,558,036 165,325,187 126,197,455 165,527,447 12,470,202 18,172,244 8,281,524 14,329,819 46,602,583 61,609,172 32,641,607 39,765,932 10,447,126,184 10,561,845,379 7,262,713,665 6,890,206,580 14,401,582 85,917,946 11,077,535 74,027,203 3,348,005,212 3,441,775,212 3,348,005,212 3,441,775,212 8,877,760,492 5,091,697,717 8,877,760,492 5,091,697,717 324,349,959 342,529,357 324,349,959 342,529,357 758,964,424 1,045,147,155 775,607,246 1,062,776,977 13,323,481,669 10,007,067,387 13,336,800,444 10,012,806,466 23,770,607,853 20,568,912,766 20,599,514,109 16,903,013,046

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

105

CH. KARNCHANG PUBLIC COMPANY LIMITED

Balance sheets (continued)

CH. Karnchang Public Company Limited, its subsidiaries and its jointly controlled entities

As at 31 December 2009 and 2008

Note

Shareholders’ equity Share capital Registered 1,450,000,000 ordinary shares of Baht 1 each Issued and paid up 1,446,012,169 ordinary shares of Baht 1 each Share premium Unrealised gain (loss) Revaluation surplus (deficit) on changes in value of investments Retained earnings Appropriated - statutory reserve Unappropriated Difference on reorganization of business of group companies Equity attributable to the company’s shareholders Minority interest - equity attributable to minority shareholders of subsidiaries Total shareholders’ equity Total liabilities and shareholders’ equity

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

106

Consolidated financial statements 2009 2008

(Unit: Baht)

Separate financial statements 2009 2008

1,450,000,000 1,450,000,000 1,450,000,000 1,446,012,169 1,446,012,169 1,446,012,169 3,972,882,594 3,972,882,594 3,972,882,594 36,594,257 (377,744,905) 5,096,000 45,670,523 34,819,415 40,170,523 169,297,505 234,974,096 329,485,087 (189,414,484) (211,988,128) - 5,481,042,564 5,098,955,241 5,793,646,373 218,212,472 205,344,604 - 5,699,255,036 5,304,299,845 5,793,646,373 29,469,862,889 25,873,212,611 26,393,160,482

1,450,000,000 1,446,012,169 3,972,882,594 (391,382,531) 29,319,415 267,870,535 - 5,324,702,182 - 5,324,702,182 22,227,715,228

ANNUAL REPORT 2009

Income statements

CH. Karnchang Public Company Limited, its subsidiaries and its jointly controlled entities

For the years ended 31 December 2009 and 2008

Note

Revenues Revenues from construction services Sales of construction materials Project management income Rental income Transportation income Other income Interest income Dividend income and profit sharing from jointly controlled entities Gain on disposal of property, plant and equipment Gain on exchange Gain on sales of investments in associated company Reversal of allowance for doubtful accounts Revenue from reversal of provision for loss on investment in subsidiary Revenue from reversal of provision for loss on investment in joint venture Miscellaneous income Others Total revenues Expenses Cost of construction services, sales of construction materials and services Administrative expenses Management benefit expenses Loss on exchange Total expenses Income before share of profit (loss) from investments in associated companies, finance cost and corporate income tax Share of profit (loss) from investments in associated companies Income before finance cost and corporate income tax Finance cost Income before corporate income tax Corporate income tax Net income for the year Net income attributable to: Equity holders of the parent Minority interests of the subsidiaries Earnings per share Basic earnings per share Net income attributable to equity holders of the parent Weighted average number of ordinary shares (shares)

7 28 16 7 15 7 28 16 30 31

Consolidated financial statements 2009 2008

12,708,395,908 37,080,969 35,126,473 74,332,824 1,128,640 264,025,775 262,079,960 41,756,272 94,308,769 343,065,996 - 22,300,937 - 21,122,519 30,434,811 13,935,159,853 11,859,741,990 1,034,416,453 86,770,130 - 12,980,928,573

13,149,025,829 50,751,417 30,275,950 40,089,995 8,595,729 255,157,751 138,639,529 - 78,953,436 278,657,607 - - 408,107,780 61,837,952 10,476,346 14,510,569,321 11,847,819,048 1,104,467,664 82,841,850 - 13,035,128,562

(Unit: Baht)

Separate financial statements 2009 2008

3,517,953,635 3,248,970 38,537,332 382,893,051 9,927,485 291,339,050 738,930,520 63,267,501 - 324,320,000 42,847,632 - - 48,711,099 8,766,868 5,470,743,143 3,584,623,655 819,730,597 62,222,473 1,849,133 4,468,425,858

5,344,593,379 - 10,710,344 292,727,434 18,968,333 251,586,589 359,687,791 - - 291,040,186 - - 242,792,019 142,507,926 8,701,012 6,963,315,013 5,188,851,670 929,580,233 55,884,740 2,723,137 6,177,039,780

954,231,280 1,475,440,759 1,002,317,285 786,275,233 81,892,179 (26,017,681) - - 1,036,123,459 1,449,423,078 1,002,317,285 786,275,233 (882,299,114) (824,257,768) (785,295,128) (687,569,345) 153,824,345 625,165,310 217,022,157 98,705,888 (56,252,708) (52,762,108) - - 97,571,637 572,403,202 217,022,157 98,705,888 89,731,014 544,738,379 217,022,157 98,705,888 7,840,623 27,664,823 97,571,637 572,403,202 0.06 0.38 0.15 0.07 1,446,012,169 1,446,012,169 1,446,012,169 1,446,012,169 The accompanying notes are an integral part of the financial statements.

107

CH. KARNCHANG PUBLIC COMPANY LIMITED

Statements of changes in

shareholders’ equity

CH. Karnchang Public Company Limited, its subsidiaries and its jointly controlled entities

For the years ended 31 December 2009 and 2008 Consolidated financial statements

Equity attributable to parent’s shareholders

Balance as at 31 December 2007 Expenses recognised directly in equity: Investment in available-for-sale securities Loss recognised in shareholders’ equity Net expenses recognised directly in equity Net income for the year Total income (expenses) for the year Dividend payment (Note 35) Unappropriated retained earnings transferred to statutory reserve (Note 25) Difference on reorganization of business of group companies Decrease in minority interests in subsidiaries from dividend payment of subsidiary Balance as at 31 December 2008 Balance as at 31 December 2008 Income recognised directly in equity: Investment in available-for-sale securities Gain recognised in shareholders’ equity Net income recognised directly in equity Net income for the year Total income for the year Dividend payment (Note 35) Unappropriated retained earnings transferred to statutory reserve (Note 25) Difference on reorganization of business of group companies Increase in minority interests from investment in subsidiary Decrease in minority interests in subsidiaries from dividend payment of subsidiary Balance as at 31 December 2009

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

108

Issued and paid-up share capital

Share premium

Revaluation surplus (deficit) on changes in value of investments

1,446,012,169 - - - - - - -

3,972,882,594 - - - - - - -

384,117,665 (761,862,570) (761,862,570) - (761,862,570) - - -

1,446,012,169 1,446,012,169 - - - - - - - -

3,972,882,594 3,972,882,594 - - - - - - - -

(377,744,905) (377,744,905) 414,339,162 414,339,162 - 414,339,162 - - - -

1,446,012,169

3,972,882,594

36,594,257

ANNUAL REPORT 2009

(Unit: Baht) Retained earnings

Minority interest quity attributable to Total equity minority attributable to the parent’s shareholders shareholders of subsidiaries 5,467,897,843 223,187,065 (761,862,570) (27,507,284) (761,862,570) (27,507,284) 544,738,379 27,664,823 (217,124,191) 157,539 (216,897,745) - - - 65,079,334 -

Appropriated

Unappropriated (Deficit)

Difference on reorganization of business of group companies

29,884,121 - - - - - 4,935,294 -

(87,931,244) - - 544,738,379 544,738,379 (216,897,745) (4,935,294) -

(277,067,462) - - - - - - 65,079,334

(18,000,000)

34,819,415 34,819,415 - - - - - 10,851,108 - -

234,974,096 234,974,096 - - 89,731,014 89,731,014 (144,556,497) (10,851,108) - -

(211,988,128) (211,988,128) - - - - - - 22,573,644 -

5,098,955,241 5,098,955,241 414,339,162 414,339,162 89,731,014 504,070,176 (144,556,497) - 22,573,644 -

205,344,604 205,344,604 14,613,245 14,613,245 7,840,623 22,453,868 - - - 3,914,000

5,304,299,845 5,304,299,845 428,952,407 428,952,407 97,571,637 526,524,044 (144,556,497) - 22,573,644 3,914,000

(13,500,000)

45,670,523

169,297,505

(189,414,484)

5,481,042,564

218,212,472

5,699,255,036

Total

5,691,084,908 (789,369,854) (789,369,854) 572,403,202 (216,966,652) (216,897,745) - 65,079,334

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

109

CH. KARNCHANG PUBLIC COMPANY LIMITED

Statements of changes in

shareholdersâ&#x20AC;&#x2122; equity (continued)

CH. Karnchang Public Company Limited, its subsidiaries and its jointly controlled entities

For the years ended 31 December 2009 and 2008 Separate financial statements

Balance as at 31 December 2007 Expenses recognised directly in equity: Investment in available-for-sale securities Loss recognised in shareholdersâ&#x20AC;&#x2122; equity Net expenses recognised directly in equity Net income for the year Total income (expenses) for the year Dividend payment (Note 35) Unappropriated retained earnings transferred to statutory reserve (Note 25) Balance as at 31 December 2008 Balance as at 31 December 2008 Income recognised directly in equity: Investment in available-for-sale securities Gain recognised in shareholdersâ&#x20AC;&#x2122; equity Net income recognised directly in equity Net income for the year Total income for the year Dividend payment (Note 35) Unappropriated retained earnings transferred to statutory reserve (Note 25) Balance as at 31 December 2009

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

110

Issued and paid-up share capital

Share premium

1,446,012,169 - - - - - - 1,446,012,169 1,446,012,169 - - - - - - 1,446,012,169

3,972,882,594 - - - - - - 3,972,882,594 3,972,882,594 - - - - - - 3,972,882,594

ANNUAL REPORT 2009

(Unit: Baht)

Retained earnings

Revaluation surplus (deficit) on changes in value of investments

Retained earnings

ToTal

Appropriated

Unappropriated (Deficit)

336,860,027 (728,242,558) (728,242,558) - (728,242,558) - - (391,382,531)

24,384,121 - - - - - 4,935,294 29,319,415

390,997,686 - - 98,705,888 98,705,888 (216,897,745) (4,935,294) 267,870,535

6,171,136,597 (728,242,558) (728,242,558) 98,705,888 (629,536,670) (216,897,745) - 5,324,702,182

(391,382,531) 396,478,531 396,478,531 - 396,478,531 - - 5,096,000

29,319,415 - - - - - 10,851,108 40,170,523

267,870,535 - - 217,022,157 217,022,157 (144,556,497) (10,851,108) 329,485,087

5,324,702,182 396,478,531 396,478,531 217,022,157 613,500,688 (144,556,497) - 5,793,646,373

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

111

CH. KARNCHANG PUBLIC COMPANY LIMITED

Cash flow statements

CH. Karnchang Public Company Limited, its subsidiaries and its jointly controlled entities

For the years ended 31 December 2009 and 2008

(Unit: Baht)

Consolidated financial statements 2009 2008

Cash flows from operating activities Net income before tax Adjustments to reconcile net income before tax to net cash provided by (paid from) operating activities: Depreciation and amortisation Amortisation of prepaid expenses and other assets Withholding tax deducted at source written off Dividend income and profit sharing from jointly controlled entities Gain on sales of current investments Gain on sales of investments in associated company Gain on sales of investments in related company Provision for doubtful accounts Reversal of allowance for doubtful accounts Loss (gain) on disposal of property, plant and equipment Transfer of cost of construction service to equipment Unrealised loss (gain) on exchange Revenue from reversal of provision for loss on investment in subsidiary Revenue from reversal of provision for loss on investment in joint venture Unrealised loss (gain) on changes in value of investments in marketable securities Amortisation of deferred debenture issuing cost Share of profit (loss) from investments in associated companies Interest expenses Income from operating activities before changes in operating assets and liabilities Operating assets (increase) decrease Trade accounts receivable Accounts receivable - related parties Unbilled receivables Inventories and construction supplies Advance payment to subcontractors Other current assets Other non-current assets Operating liabilities increase (decrease) Trade accounts payable Accounts payable - related parties Advances received from employers and construction revenue received in advance Retention for construction Other current liabilities Cash flows from (used in) operating activities Cash paid for interest expenses Cash paid for corporate income tax Net cash flows from (used in) operating activities

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

112

Separate financial statements 2009 2008

153,824,345

625,165,310

217,022,157

98,705,888

329,453,086 481,232,298 6,231,065 6,426,968 7,743 2,779,896 (148,996,131) (138,639,529) (21,847,243) (8,059,235) (343,065,996) (278,657,607) (403,804) (580,880) 3,327,355 9,184,409 - - (41,756,272) 20,205,892 - (5,174,752) 2,546,699 (94,782,306) (22,300,937) - - (408,107,779) (293,700) 1,174,700 7,646,575 3,681,279 (81,892,179) 26,017,681 871,217,857 814,355,013 713,698,463 1,056,221,358 1,296,604,059 (673,766,205) (6,925,400) (10,011,751) (773,674,689) (168,431,469) 535,723,283 (471,623,690) 312,849,667 (312,315,008) 457,555,285 (183,630,039) (696,406,176) 22,377,478 (795,106,547) 589,974,922 46,979,476 (174,327) 174,103,954 153,414,310 181,210,221 142,090,001 (56,257,215) 76,134,849 1,390,354,381 220,260,429 (965,339,329) (859,263,608) (174,265,941) (166,645,344) 250,749,111 (805,648,523)

214,263,137 258,558,536 - - - - (738,930,520) (359,687,791) (21,847,243) (8,059,235) (324,320,000) (291,040,186) (403,804) (580,880) - 17,313,293 (42,847,632) - (63,267,501) 22,886,361 - - 1,415,694 (1,857,585) - - - (242,792,019) (293,700) 1,174,700 7,646,575 3,681,279 - - 774,213,871 677,666,590 22,651,034 175,968,951 903,453,087 (458,439,474) 33,958,373 139,266,523 240,784,545 113,827,457 420,969,023 (375,935,961) 278,851,326 (318,819,502) (130,094,588) (133,393,585) 490,489,811 12,658,085 (746,549,520) 487,555,818 (208,582,641) 171,260,022 160,774,821 (485,491,234) 21,144,559 27,369,523 (52,096,373) 53,329,159 1,435,753,457 (590,844,218) (869,823,514) (707,239,686) (95,251,155) (91,522,730) 470,678,788 (1,389,606,634)

ANNUAL REPORT 2009

Cash flow statements (continued)

CH. Karnchang Public Company Limited, its subsidiaries and its jointly controlled entities

For the years ended 31 December 2009 and 2008 Consolidated financial statements 2009 2008

Cash flows from investing activities Increase in restricted bank deposits Cash payment for purchase of current investments Cash received from sales of current investments Increase in loans to related parties Increase in long-term loans to associated companies Decrease in loans to subcontractors Decrease in long-term loans to other companies Cash received from profit sharing from jointly controlled entities Dividend received from subsidiary Dividend received from associated and related companies Increase in investments in associated companies Increase in investments in subsidiary Increase in other long-term investments Cash received from sales of investments in related company Cash received from sales of investments in associated company Cash received from sales of other long-term investments Cash received from minority interest from investment in subsidiary Cash received from return of investments in joint ventures Increase in property, plant and equipment Increase in intangible assets Proceeds from disposals of property, plant and equipment Net cash flows used in investing activities Cash flows from financing activities Increase (decrease) in bank overdrafts and short-term loans from financial institutions Decrease in loans from related parties Increase in long-term loans Repayment for loans from venturers under the Payment Agreement Cash received from issuance of debentures Repayment of debentures Dividend payment Dividend payment of subsidiary Net cash flows from financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental disclosures of cash flows information Non-cash transactions Sale of equipment on credit Received transfer of loan debt from Joint Venture BBCD Decrease in liabilities from the Payment Agreement Profit sharing receivable from jointly controlled entity

(85,837,139) (6,282,962,129) 3,682,995,000 (9,072,225) (600,000,000) 66,686,951 25,050,505 2,917,278 - 582,799,907 (598,936,905) - - 21,140,750 645,000,000 - 3,914,000 - (531,807,969) (21,114,284) 146,497,277 (2,952,728,983) (14,661,528) (2,109,866) 151,950,000 (188,680,000) 6,878,416,200 (3,000,000,000) (144,556,497) (13,500,000) 3,666,858,309 (2,103,680) 962,774,757 2,556,659,169 3,519,433,926

(Unit: Baht)

Separate financial statements 2009 2008

(21,338,793) (12,825,837) (19,600,154) (1,529,818,396) (6,282,962,129) (1,529,818,396) 1,733,000,000 3,682,995,000 1,733,000,000 (302,736,148) (395,398,982) (684,168,791) (701,278,697) (600,000,000) (692,500,000) 5,892,213 - - - - - - 15,655,674 112,906 - 16,500,000 22,000,000 348,081,139 571,816,097 337,574,885 (562,946,160) (598,936,905) (562,946,160) - (16,686,000) - (118,989,970) - (118,989,970) - 21,140,750 - 600,860,400 645,000,000 600,860,400 6,798,110 - 6,798,110 - - - - - 966,250 (423,694,015) (448,884,126) (244,662,437) (40,813,988) (21,114,284) (40,813,988) 20,671,895 7,244,051 11,571,613 (986,312,410) (3,416,456,691) (1,180,615,732) 243,245,537 847,712,415 (8,776,974) (62,668,134) - - 1,420,300,000 151,950,000 1,430,800,000 - - - 1,994,000,000 6,878,416,200 1,994,000,000 (1,700,000,000) (3,000,000,000) (1,700,000,000) (216,897,745) (144,556,497) (216,897,745) (18,000,000) - - 1,659,979,658 4,733,522,118 1,499,125,281 6,341,876 (1,379,642) 1,350,118 (125,639,399) 1,786,364,573 (1,069,746,967) 2,682,298,568 104,297,563 1,174,044,530 2,556,659,169 1,890,662,136 104,297,563

18,447,840 - - 1,493,619,591 - 1,980,356,000 - -

61,492,800 - - 134,958,750

- 2,297,876,293 - -

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

113

CH. KARNCHANG PUBLIC COMPANY LIMITED

Notes to consolidated financial statements CH. Karnchang Public Company Limited, its subsidiaries and its jointly controlled entities

For the years ended 31 December 2009 and 2008

1. General information CH. Karnchang Public Company Limited (“the Company”) is a public company incorporated and domiciled in Thailand. The major shareholder of the Company is Mahasiri Siam Company Limited, which was also incorporated in Thailand. The Company is principally engaged in the provision of construction services and its registered address is 587 Suthisarn Road, Khwaeng Dindaeng, Khet Dindaeng, Bangkok. 2. Basis of preparation 2.1 The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Professions Act B.E. 2547 and their presentation has been made in compliance with the stipulations of the Notification of the Department of Business Development dated 30 January 2009, 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 CH. Karnchang Public Company Limited (“the Company”), its subsidiaries (“the subsidiaries”) and its jointly controlled entities (“jointly controlled entities”) as follows: Country of

Nature of business incorporation

Name of entity

Percentage of

shareholding

2009

2008

Assets as a percentage to the consolidated total assets as at 31 December

Revenues as a percentage to the consolidated total revenues for the year ended

31 December

2009

2008

Percent Percent Percent Percent Percent Percent

Investments in subsidiaries (held by the Company) Construction Material Supply Company Limited CH. Karnchang Realestate Company Limited (included equity interest in Prompratarn Construction Limited Partnership and Prasertwit Construction Limited Partnership) CH. Karnchang-Tokyu Construction Company Limited (included equity interest in Joint Ventures CKCT) Bangkok Concrete Industries Company Limited (2008: under the Company’s control)

CH. Karnchang (Lao) Company Limited

Construction

Bangpa-in Cogeneration Limited

Generation and sale of electricity and other energy Thailand

114

Manufacturer and distributor of

construction materials

Thailand

99.99

0.32

0.49

0.15

0.34

Investment company

Thailand

99.00

0.89

1.94

1.14

2.35

Construction

Thailand

55.00

2.22

2.69

5.98

11.36

Manufacturer and distributor of

construction materials

Thailand

0.48

0.03

The Lao People’s 100.00 Democratic Republic

100.00

12.79

16.03

55.18

35.69

0.07

81.00

ANNUAL REPORT 2009

Name of entity

Nature of business

Percentage of

Profit sharing

Country of in jointly controlled

entities incorpora-

tion

2009

2008

Assets as a percentage to the consolidated total assets as at 31 December

Revenues as a percentage to the consolidated total revenues for the year ended

31 December

2009

2008

Percent Percent Percent Percent Percent Percent

Equity interest in jointly controlled entities (proportionate consolidation) Joint Venture CH. Karnchang Public Company Limited, Tokyu Construction Company Limited in joint venture with CH. Karnchang-Tokyu Construction Company Limited (hereinafter called “Joint Venture CKCT”) - Highway Project - Expressway Project Joint Venture CH. Karnchang Public Company Limited, Bilfinger Berger AG, Tokyu Construction Company Limited and

CH. Karnchang-Tokyu Construction Company Limited (hereinafter called

“Joint Venture BBCT”) - Second Stage Expressway Project Sector B Route Phayathai - Bangkhlo - Second Stage Expressway Project Sector C+ Route Chaeng Wattana - Bang Phun & Bang Sai - Second Stage Expressway Project Sector D Route Asoke - Srinakarin - Second Stage Expressway Project Sector C1A Route Ngam Wong Wan - Chaeng Wattana The TWCK (Thames Water International (Thailand) Limited and CH. Karnchang Public Company Limited) Joint Venture (hereinafter called

“The TWCK Joint Venture”) Joint Venture BCKT (Bilfinger Berger AG, CH. Karnchang Public Company Limited, Kumagai Gumi Company Limited and Tokyu Construction Company Limited) (hereinafter called “Joint Venture BCKT”) Joint Venture BBCD (Bilfinger Berger AG, CH. Karnchang Public Company Limited

and Dyckerhoff & Widmann AG)

(hereinafter called “Joint Venture BBCD”) Joint Venture CKSL (CH. Karnchang Public Company Limited and SNC - Lavalin Inc.) (hereinafter called “Joint Venture CKSL”) Joint Venture CKAE Consortium Joint Venture CKET CKOBA Joint Venture Joint Venture BBC (Bilfinger Berger (Thai) Construction Company Limited, Bilfinger Berger AG, International Division and CH. Karnchang Public Company Limited) (hereinafter called “Joint Venture BBC”) Joint Venture CKNNL CKLX Joint Venture CKTC Joint Venture

Construction

(No trading activities during the years 2008 and 2009)

60.00 40.00

- -

Thailand Thailand

Construction

Thailand

99.97

53.20

0.04

0.02

Thailand

99.97

59.99

0.01

Thailand

99.97

59.99

1.09

0.74

0.01

Thailand

99.97

59.99

0.02

0.01

Construction and project management

(Dissolution during 2009)

Thailand

50.00

0.01

Construction

Thailand

25.00

0.08

0.10

Construction

Thailand

35.00

0.04

0.05

8.68

Construction (Dissolution during 2009)

Thailand

99.90

0.02

Construction Project management Construction (Dissolution during 2008)

Thailand Thailand

98.00 80.00

0.88 5.20

1.38 6.04

0.16 0.12

0.18 0.56

Thailand

Construction (Dissolution during 2008)

Thailand

0.01

Construction Construction Construction

Thailand Thailand Thailand

51.89 75.00 70.00

51.89 75.00 -

0.01 0.77 4.06

0.02 2.15 -

- 5.50 0.31

0.10 7.65 -

115

CH. KARNCHANG PUBLIC COMPANY LIMITED

Name of entity

Nature of business

Country of

incorporation

Percentage of indirect

shareholding 2009 2008 Percent

Investments in subsidiaries (held by subsidiary company) Prompratarn Construction Limited Partnership (99.00 percent held by CH. Karnchang Realestate Company Limited) Prasertwit Construction Limited Partnership (99.00 percent held by CH. Karnchang Realestate Company Limited)

Percent

Construction and construction equipment rental service

Thailand

98.01

Construction and construction equipment rental service

Thailand

98.01

b) Subsidiaries are fully consolidated as from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. c) Jointly controlled entities are fully consolidated applying the proportionate consolidation method as from being the date on which the Company assumed joint control, and continue to be consolidated until the date when such control ceases. d) The financial statements of the subsidiaries and jointly controlled entities are prepared for the same reporting period as the parent company, using consistent significant accounting policies. e) Material balances and transactions between the Company, its subsidiaries and its jointly controlled entities have been eliminated from the consolidated financial statements. f) Minority interests represent the portion of net income or loss and net assets of the subsidiaries that are not held by the Company and are presented separately in the consolidated income statement and within equity in the consolidated balance sheet. 2.3 The separate financial statements, which present investments in subsidiaries, joint ventures and associates under the cost method, have been prepared solely for the benefit of the public. 3. Adoption of new accounting standards In June 2009, the Federation of Accounting Professions issued Notification No. 12/2552, assigning new numbers to Thai Accounting Standards that match the corresponding International Accounting Standards. The numbers of Thai Accounting Standards as referred to these financial statements reflect such change. The Federation of Accounting Professions has issued Notification No. 86/2551 and 16/2552, mandating the use of new accounting standards, financial reporting standard and accounting treatment guidance as follows.

3.1 Accounting standards, financial reporting standard and accounting treatment guidance which are

effective for the current year Framework for the Preparation and Presentation of Financial Statements (revised 2007) TAS 36 (revised 2007) Impairment of Assets TFRS 5 (revised 2007) Non-current Assets Held for Sale and Discontinued Operations Accounting Treatment Guidance for Leasehold Right Accounting Treatment Guidance for Business Combination under Common Control

116

ANNUAL REPORT 2009

These accounting standards, financial reporting standard and accounting treatment guidance became effective for the financial statements for fiscal years beginning on or after 1 January 2009. The management has assessed the effect of these standards and believes that TFRS 5 (revised 2007), Accounting Treatment Guidance for Leasehold Right and Accounting Treatment Guidance for Business Combination under Common Control are not relevant to the business of the Company, while Framework for Preparation and Presentation of Financial Statements (revised 2007) and TAS 36 (revised 2007) do not have any significant impact on the financial statements for the current year.

3.2 Accounting standards which are not effective for the current year

TAS 20

Effective date Accounting for Government Grants and Disclosure of Government 1 January 2012 Assistance Related Party Disclosures 1 January 2011 Investment Property 1 January 2011

TAS 24 (revised 2007) TAS 40 However, TAS 24 (revised 2007) and TAS 40 allow early adoption by the entity before the effective date. The management of the Company has assessed the effect of these standards and believes that TAS 20 and TAS 40 are not relevant to the business of the Company, while TAS 24 (revised 2007) will not have any significant impact on the financial statements for the year in which it is initially applied. 4. Change of accounting policy Commencing January 2009, the Company and its subsidiaries changed their accounting policy for valuation of construction supplies under a cost basis, from the first-in, first-out method to the weighted average method. However, since the Company and its subsidiaries are unable to determine the cumulative effect of the change, it is applied prospectively, with effect as from 1 January 2009.

Changes in estimation of useful lives of assets

During the third quarter of 2009, the Company and subsidiaries reviewed the useful lives of their machinery and equipment, and this resulted in changes in the estimated useful lives of the assets from 5 years to 5 to 15 years, which have been reflected retrospectively, as from 1 January 2009. The Company and subsidiaries have adjusted depreciation of machinery and equipment for the year ended 31 December 2009 to reflect the new estimated useful lives, and this had the effect of increasing net income in the consolidated financial statements and separate financial statements for the year ended 31 December 2009 by approximately Baht 49.3 million (Baht 0.03 per share) and Baht 58.7 million (Baht 0.04 per share), respectively. 5. Significant accounting policies

5.1 revenues and expenses recognition a) Revenues from construction services

The Company, its subsidiaries and its jointly controlled entities recognised revenues from construction on a percentage of completion basis. The percentage of completion is measured based on comparison of actual construction costs incurred up to the end of the period and total anticipated construction costs to be incurred to completion. The recognised revenue which is not yet due per the contracts has been presented under the caption of â&#x20AC;&#x153;Unbilled receivablesâ&#x20AC;? in the balance sheets.

117

CH. KARNCHANG PUBLIC COMPANY LIMITED

Revenues from additional work and other contracted work for which the working period does not exceed one year are recognised on the basis of work done and billed to the customer. Revenues from moving infrastructure, additional work and other contracted work are recognised on the basis of work done and billed to the customer.

b) Sales of construction materials

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

c) Interest income

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

d) Dividends

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

e) Other revenues and expenses

Other revenues and expenses are recognised on an accrual basis. Provision for losses on construction projects is made in the accounts in full when the possibility of loss is ascertained.

5.2 Cash and cash equivalents

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

5.3 Trade accounts receivable.

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.

5.4 Unbilled receivables

Unbilled receivables comprises the costs of materials and labor, subcontractor charges, services and overheads plus the attributable net gains or losses less the amounts already billed to customers. The excess of the value of a construction contract in progress over the amount billed to the customer is presented as current assets. The excess of the amount billed to a customer over the value of the construction contract in progress is presented as â&#x20AC;&#x153;Construction revenue received in advanceâ&#x20AC;? under current liabilities.

5.5 Inventories and construction supplies

Inventories and construction supplies are valued at the lower of cost (weighted average) and net realisable value. Supplies in process for installation and construction in progress are valued at cost. Work in process and construction in progress comprise the costs of materials and labor, subcontractor charges, cost of service and overheads of projects for which contracts are in the process of being executed.

118

ANNUAL REPORT 2009

5.6 Investments

a) Investments in securities held for trading are stated at fair value. Gains or losses arising from changes in the carrying amounts of securities are included in determining income. b) Investments in available-for-sale securities are stated at fair value. Changes in the carrying amounts of securities are recorded as separate items in shareholdersâ&#x20AC;&#x2122; equity until the securities are sold, when the changes are then included in determining income. c) Investments in debt securities, both due within one year and expected to be held to maturity, are recorded at amortised cost. The premium/discount on debt securities is amortised by the effective rate method with the amortised amount presented as an adjustment to the interest income. d) Investments in non-marketable equity securities, which the Company classifies as other investments, are stated at cost net of allowance for loss on diminution in value (if any). e) Investments in associates are accounted for in the consolidated financial statements using the equity method. f) Investments in subsidiaries, joint ventures and associates are accounted for in the separate financial statements using the cost method. The fair value of marketable securities is based on the latest bid price of the last working day of the year as quoted on the Stock Exchange of Thailand. The fair value of unit trusts is determined from their net asset value.

5.7 Property, plant and equipment/Depreciation

Land is stated at cost. Building and equipment are stated at cost less accumulated depreciation and allowance for loss on impairment of assets (if any).Depreciation of building and equipment is calculated by reference to their costs on the straight line basis over the following estimated useful lives: Condominium building 35 years Buildings and construction 15 and 20 years Land improvement 5 years Machinery and equipment 5 to 15 years (2008 : Previous estimated useful lives 5 years) Future, fixtures and office equipment 5 years Motor vehicles 5 years Building improvements 10 years In 2009, the Company and subsidiaries reviewed the useful lives of their machinery and equipment, and this resulted in changes in the estimated useful lives of the assets from 5 years to 5 to 15 years. Depreciation is included in determining income. No depreciation is provided on land and construction in progress.

5.8 Investments in land

Investments in land are recorded at cost. If the fair value of the land declines to significantly less than its cost, the land is stated at cost net of provision for impairment loss

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CH. KARNCHANG PUBLIC COMPANY LIMITED

5.9 Intangible assets

Acquired intangible assets are measured at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. 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 the income statement. Intangible assets of the Company with finite useful lives comprise computer software, and have useful lives of

5 and 20 years.

5.10 Related party transactions

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

5.11 Long-term leases

5.12 Foreign currencies

Leases of 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 the income statements over the lease period. The property, plant or equipment acquired under finance leases is depreciated over the useful life of the asset. 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 balance sheet date. Gains and losses on exchange are included in determining income.

5.13 Impairment of assets

At each reporting date, the Company, its subsidiaries and its jointly controlled entities 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. 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, its subsidiaries and its jointly controlled entities could obtain from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal. An impairment loss is recognised in the income statement.

5.14 Employee benefits

Salarys, wages, bonuses and contributions to the social security fund and provident fund are recognised as expenses when incurred.

120

ANNUAL REPORT 2009

5.15 Income tax

Leases

Allowance for doubtful accounts

Fair value of financial instruments

Income tax is provided in the accounts based on taxable profits determined in accordance with tax legislation. 6. 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: 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 has been transferred, taking into consideration terms and conditions of the arrangement. 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. In determining the fair value of financial instruments that are not actively traded and for which quoted market prices are not readily available, the management exercise judgment, using a variety of valuation techniques and models. The input to these models is taken from observable markets, and includes consideration of liquidity, correlation and longer-term volatility of financial instruments.

Impairment of equity investments

The Company and the subsidiary treat available-for-sale investments and other investments as impaired when the management judges that there has been a 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 managements are required to make estimates of the useful lives and salvage values of the Company, its subsidiaries and its jointly controlled entities’ plant and equipment and to review estimate useful lives and salvage values when there are any changes. In addition, the managements are 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.

Estimated construction project costs

The Company, its subsidiaries and its jointly controlled entities estimate costs of construction projects based on details of the construction work, taking into account the volume and value of construction materials to be used in the project, labour costs and other miscellaneous costs to be incurred to completion of service, taking into account the direction of the movement in these costs. Estimates are reviewed regularly or whenever actual costs differ significantly from the figures used in the original estimates.

121

CH. KARNCHANG PUBLIC COMPANY LIMITED

Provision for losses on construction projects

Litigation

Management applied judgement in estimating the loss they expect to be realised on each construction project, based on estimates of anticipated costs that take into account the progress of the project and actual costs incurred to date, together with fluctuations in costs of construction materials, labour and the current situation. The Company and its jointly controlled entity have contingent liabilities as a result of litigation. The Company and its jointly controlled entityâ&#x20AC;&#x2122;s management have used judgment to assess of the results of the litigation and believe that no loss will result. Therefore no contingent liabilities are recorded as at the balance sheet date. 7. Related party transactions During the years, the Company, its subsidiaries and its jointly controlled entities had significant business transactions with related parties. Such transactions, which are summarised below, arose in the ordinary course of business and were concluded on commercial terms and bases agreed upon between the Company and those related parties. (Unit: Million Baht)

Consolidated Separate financial statements financial statements 2009 2008 2009 2008

Transactions with subsidiaries (eliminated from the consolidated financial statements) Revenues from construction services - - - 2.6 Rental and transportation income - - 301.4 257.5 Space rental and service income - - 6.0 6.0 Interest income - - 24.3 18.5 Dividend income - - 16.5 22.0 Other income - - 14.3 82.1 Cost of construction materials and - - 51.5 104.5 construction work Administrative expenses - - 0.5 0.4 Transactions with jointly controlled entities Revenues from construction services 49.9 156.1 199.8 606.7 Project management income 8.2 2.2 28.9 8.9 Rental and transportation income 0.5 - 1.8 - Space rental and service income 0.5 0.3 1.7 0.5

Transfer Pricing Policy

Based on construction contracts Close to service fee charged to third parties Based on contracts Interest rates of 6.25% to 8.25%, MLR + 0.25% and MLR + 0.5% (2008: 6.25% to 8.25%, MLR + 0.25%, MLR + 0.5% and LIBOR + 4%) As declared Based on contracts Close to prices charged by third parties Agreed between the parties Based on construction contracts Based on contracts Based on contracts Based on contracts Interest rates of 8% to 10%, MLR + 0.25%, MLR + 1%, MLR + 2% and MOR + 0.75% (2008: 8% to 10%, MLR + 0.5%, MLR + 1%,

MLR + 2% and MOR + 0.75%)

Interest income

15.5

17.5

82.4

94.6

Profit sharing from

jointly controlled entities Gain on disposal of equipment Other income Cost of construction materials and construction work Administrative expenses

2.9

0.1

150.6

0.1

18.3 1.1

- -

61.1 3.2

- -

0.1

0.2

0.1

Closed to prices changed by third parties

0.1

0.2

0.4

Agreed between the parties

122

As declared Agreed between the parties Cost plus margin

ANNUAL REPORT 2009

Transactions with associated companies Revenues from construction services 8,007.8 Project management income 17.1 Space rental and service income 2.7 Interest income 141.4 Dividend income - Other income 0.1 Cost of construction materials

0.1 and construction work Administrative expenses - Interest expenses 7.5 Transactions with related parties Revenues from construction services 316.8 Sales of construction materials 2.2 Project management income 1.8 Rental and transportation income 4.5 Space rental and service income 13.5 Interest income 52.1 Dividends income 145.9 Other income 0.4 Cost of construction materials and 220.6 construction work Administrative expenses 1.6

(Unit: Million Baht)

Consolidated Separate financial statements financial statements 2009 2008 2009 2008

Transfer Pricing Policy

5,489.1 26.2 2.7 105.6 - -

414.6 1.5 2.7 141.4 436.7 -

273.3 1.7 2.6 105.6 209.4 -

Based on construction contracts Based on contracts Based on contracts Interest rates of MLR + 0.5% and MLR + 1% As declared Based on contracts

1.5

0.3

Close to prices charged by third parties

- -

0.1 -

- -

Agreed between the parties Interest rates of MLR, MLR + 1% and LIBOR + 3%

141.0 1.1 0.3 0.9 12.8 21.2 138.5 1.9

184.3 - - 1.7 13.5 18.0 135.0 0.3

133.9 - - 0.9 12.8 20.6 128.0 1.9

186.5

0.7

4.1

Based on construction contracts Cost plus margin Based on contracts Close to service fee charged to third parties Based on contracts Interest rate of MLR + 1% As declared Based on contracts Close to prices charged by third parties Agreed between the parties

The balances of the accounts as at 31 December 2009 and 2008 between the Company and those related parties are as follows: (Unit : Baht)

Trade accounts receivable - related parties Construction contract receivables Jointly controlled entities - Joint Venture BBCD - Joint Venture CKET - CKLX Joint Venture - CKTC Joint Venture Associated companies - Bangkok Metro Public Company Limited - Thai Tap Water Supply Public Company Limited - Nam Ngum 2 Power Company Limited

Consolidated financial statements 2009

2008

Separate financial statements 2009

2008

- 30,007,785 11,074,251 3,852 41,085,888 6,905,907 29,295,045 200,016,785 236,217,737

- 29,935,475 52,582,484 - 82,517,959 3,611,250 - 308,095,386 311,706,636

253,358,255 149,677,378 44,297,003 - 447,332,636 5,171,667 29,295,045 - 34,466,712

253,358,255 149,677,378 210,329,938 - 613,365,571 3,611,250 - - 3,611,250

123

CH. KARNCHANG PUBLIC COMPANY LIMITED

(Unit : Baht)

Related companies - Bangkok Expressway Public Company Limited - Bangpa-in Land Company Limited - Siam Wire Industry Company Limited - Bangkok Metro Networks Limited Total construction contract receivables Less: Allowance for doubtful accounts Construction contract receivables, net Retention as per contracts Jointly controlled entitiy - CKLX Joint Venture Associated company - Thai Tap Water Supply Public Company Limited Related companies - Bangkok Expressway Public Company Limited - Northern Bangkok Expressway Company Limited Total retention as per contracts Total trade accounts receivable - related parties, net

Consolidated financial statements

Separate financial statements

2009

2008

2009

2008

17,759,999 91,223,385 - 100,000,000 208,983,384 486,287,009 - 486,287,009

7,732,924 358,349,038 45,298,582 - - 411,380,544 805,605,139 - 805,605,139

16,790,609 - - 100,000,000 116,790,609 598,589,957 (253,358,255) 345,231,702

7,732,924 44,104,330 - - 51,837,254 668,814,075 (253,358,255) 415,455,820

10,005,694 10,005,694 7,900,746 7,900,746 15,056,128 - 15,056,128 32,962,568 519,249,577

9,380,770 9,380,770 - - 9,959,075 367,169 10,326,244 19,707,014 825,312,153

40,022,775 40,022,775 7,900,746 7,900,746 14,299,370 - 14,299,370 62,222,891 407,454,593

37,523,081 37,523,081 - - 9,604,663 367,169 9,971,832 47,494,913 462,950,733

As at 31 December 2009 and 2008, an allowance for doubtful accounts amounting to Baht 253.4 mil ion was set up in the separate financial statements of the Company for trade accounts receivable from a jointly controlled entity of which overdue for more than 12 months. (Unit: Baht)

Long-term trade accounts receivable - related party

Related company - Metro Mall Development Limited - Bangkok Metro Networks Limited Total long-term trade accounts receivable - related party

Consolidated financial statements 2009

2008

Separate financial statements 2009

2008

- 133,564,400 133,564,400

334,260,978 - 334,260,978

- 133,564,400 133,564,400

334,260,978 - 334,260,978

During the first quarter of 2007, Metro Mall Development Limited issued a letter requesting that the Company grant a grace period for repayment of construction costs, whereby that company would pay all construction costs within 4 years (within the year 2010), and the Company issued a letter agreeing to such request. The Company charged interest on the outstanding balance of construction costs at the Minimum Loan Rate plus 1 percent (MLR + 1%) per annum. Subsequently, a meeting of the Board of Directors of Bangkok Metro Public Company Limited, the parent company of Metro Mall Development Limited passed a resolution to approve the restructuring of the operations of Metro Mall Development Limited and two subsidiaries by business combination and registration of the new company, Bangkok Metro Networks Limited, with the Ministry of Commerce on 25 February 2009. As a result, Bangkok Metro Networks Limited will receive the assets, liabilities, rights and obligations of the three subsidiaries.

124

ANNUAL REPORT 2009

The outstanding balance of such account receivable is due within 2010. However, the Company expects to receive settlement of Baht 133.6 million of such debt more than one year in the future, and has reclassified Baht 133.6 million of the trade account receivable from that company to non-current assets under the caption â&#x20AC;&#x153;Long-term trade accounts receivable - related partyâ&#x20AC;? in the balance sheet as at 31 December 2009. (Unit: Baht)

Accounts receivables and loans to related parties

Receivables from sales of construction materials and others Subsidiaries - Construction Material Supply Company Limited - Bangkok Concrete Industries Company Limited - Prompratarn Construction Limited Partnership - CH. Karnchang (Lao) Company Limited - Other subsidiaries Jointly controlled entities - Joint Venture BBCT - Joint Venture BBCD - Joint Venture BCKT - Joint Venture CKAE Consortium - Joint Venture CKET - Joint Venture CKNNL - CKLX Joint Venture - CKTC Joint Venture Associated companies - SouthEast Asia Energy Limited - Bangkok Metro Public Company Limited Related parties - Bangpa-in Land Company Limited - Mahasiri Company Limited - Expert Transport Company Limited - Bangkok Concrete Industries Company Limited - Silasaicrete Limited Partnership - Other related companies and related parties

Consolidated financial statements 2009

2008

Separate financial statements 2009

2008

- - - - - - 47,871 - 67,183,222 5,706 24,620,797 - 137,227 27,921,638 119,916,461 473,828 47,016 520,844 34,195,013 211,280 5,720,861 12,976,178 44,733 370,683 53,518,748

- - - - - - 9,841,629 - 68,600,196 5,706 23,527,707 18,359 - - 101,993,597 195,207 - 195,207 17,042,327 207,000 4,421,576 - - 15,681,921 37,352,824

2,921,930 - 196,711 100,976,262 359,307 104,454,210 159,571,286 382,845,800 89,577,630 285,291 122,742,436 - 548,910 93,072,125 848,643,478 193,656 47,016 240,672 169,261 211,280 95,570 12,976,178 44,733 130,815 13,627,837

2,601,363 65,754,076 1,568,565 100,862,719 334,181 171,120,904 24,597,850 382,845,800 91,466,929 285,291 117,638,536 38,160 - - 616,872,566 195,207 - 195,207 164,751 207,000 1,042,161 - - 14,870,431 16,284,343

125

CH. KARNCHANG PUBLIC COMPANY LIMITED

(Unit: Baht)

Venturers in jointly controlled entities - Tokyu Construction Company Limited - Bilfinger Berger (Thai) Construction Company Limited Total receivables from sales of construction materials and others Less: Allowance for doubtful accounts Total receivables from sales of construction materials

and others, net Loans to related parties and interest receivable Subsidiaries - Bangkok Concrete Industries Company Limited - Construction Material Supply Company Limited - CH. Karnchang (Lao) Company Limited - Prompratarn Construction Limited Partnership - Prasertwit Construction Limited Partnership Jointly controlled entities - Joint Venture BBCD - Joint Venture CKAE Consortium Total loans to related parties and interest receivable Less: Allowance for doubtful accounts Total loans to related parties and interest receivable, net Total accounts receivables and loans to related parties, net

Separate financial statements

2009

2008

2009

2008

2,306,775 4,020,682 6,327,457 180,283,510 (12,976,178)

- 2,392,464 2,392,464 141,934,092 -

- - - 966,966,197 (397,677,771)

- - - 804,473,020 (384,701,593)

167,307,332 - - - - - - 895,050 365,779 1,260,829 1,260,829 - 1,260,829 168,568,161

141,934,092 - - - - - - 253,500 349,049 602,549 602,549 - 602,549 142,536,641

569,288,426 - 84,465,671 552,440,000 - 22,097,253 659,002,924 3,174,180,377 - 3,174,180,377 3,833,183,301 (3,174,180,377) 659,002,924 1,228,291,350

419,771,427 130,443,198 61,547,696 - 217,859,050 8,852,916 418,702,860 2,984,513,377 - 2,984,513,377 3,403,216,237 (3,091,147,791) 312,068,446 731,839,873

During 2009, movements of loans to related parties and interest receivable were as follows:

Consolidated financial statements

Loans to related parties and interest receivable

Jointly controlled entities - Joint Venture BBCD - Joint Venture CKAE Consortium - CKTC Joint Venture

126

Balance as at 1 January 2009

(Unit: Baht)

Consolidated financial statements During the year Increase

Decrease

Balance as at

31 December 2009

253,500 349,049 - 602,549

641,550 16,730 16,227,185 16,885,465

- - (16,227,185) (16,227,185)

895,050 365,779 - 1,260,829

ANNUAL REPORT 2009

(Unit: Baht)

Loans to related parties and interest receivable Subsidiaries - Bangkok Concrete Industries Company Limited - Construction Material Supply Company Limited - CH. Karnchang (Lao) Company Limited - Prompratarn Construction Limited Partnership - Prasertwit Construction Limited Partnership Jointly controlled entities - Joint Venture BBCD - CKTC Joint Venture

Balance as at 1 January 2009

Separate financial statements During the year

Balance as at

31 December 2009

Increase

Decrease

130,443,198 61,547,696 - 217,859,050 8,852,916 418,702,860 2,984,513,377 - 2,984,513,377 3,403,216,237

6,003,613 22,917,975 552,440,000 128,789,863 13,244,337 723,395,788 189,667,000 54,090,616 243,757,616 967,153,404

(136,446,811) - - (346,648,913) - (483,095,724) - (54,090,616) (54,090,616) (537,186,340)

- 84,465,671 552,440,000 - 22,097,253 659,002,924 3,174,180,377 - 3,174,180,377 3,833,183,301

Loans to related parties are subject to interest at the Minimum Loan Rate plus a stipulated margin (MLR + margin) per annum and certain fixed rates per annum and due for repayment at call. On 16 February 2007, Bilfinger Berger AG and the Company, which are venturers in Joint Venture BBCD, agreed to waive the entire amount of interest accrued up to the agreed date on the loan from the venturers, but they retain the right to claim such interest if the joint venture receives compensation for additional costs from the Expressway and Rapid Transit Authority of Thailand. On 29 September 2008, the Company entered into a Baht 2,984.1 million loan agreement with Joint Venture BBCD, covering loans to such joint venture and the transfer to the Company of banks loans of the Joint Venture BBCD (as discussed in Note 15). This loan carries interest at the Minimum Loan Rate plus a stipulated margin (MLR + margin) per annum and interest is waived under the same conditions as applied to the loans discussed in the preceding paragraph. The loan principal and interest are to be paid on the earlier of (a) the Joint Venture BBCD receives compensation for additional costs from the Expressway and Rapid Transit Authority of Thailand and (b) the Company calls the loan. In September 2009, Bangkok Concrete Industries Company Limited sold and transferred land, plant and machinery to the Company in order to settle loans from the Company and outstanding accounts payable. As a result of the transfer of such assets, the Company recorded reversal of allowance for doubtful accounts amounting to approximately Baht 38 million to income in the separate income statements for the current year.

127

CH. KARNCHANG PUBLIC COMPANY LIMITED

(Unit: Baht)

Consolidated financial statements 2009

Advance payment to subcontractor related party Venturer in jointly controlled entity - Loxley Public Company Limited - Total Advance payment to subcontractor - related party - Long-term loans to jointly controlled entities and interest receivable Jointly controlled entities - Joint Venture CKAE Consortium 470,110 - Joint Venture CKET 244,402,538 Total long-term loans to jointly controlled entities and interest 244,872,648 receivable

2008

Separate financial statements 2009

2008

19,875,090 19,875,090

- -

2,629,319 233,829,384

23,505,518 1,222,012,689

131,465,938 1,169,146,921

236,458,703

1,245,518,207

1,300,612,859

During 2009, movements of long-term loans to jointly controlled entities and interest receivable were as follow:

Loans: - Joint Venture CKAE Consortium - Joint Venture CKET Total loans Interest receivable: - Joint Venture CKAE Consortium - Joint Venture CKET Total interest receivable

Balance as at

1 January 2009

1,736,587 208,235,314 209,971,901 892,732 25,594,070 26,486,802 236,458,703

Consolidated financial statements During the year Increase

144,000 1,720,000 1,864,000 109,040 15,378,406 15,487,446 17,351,446

(Unit: Baht)

Decrease

Balance as at 31 December 2009

(1,411,431) - (1,411,431) (1,000,818) (6,525,252) (7,526,070) (8,937,501)

469,156 209,955,314 210,424,470 954 34,447,224 34,448,178 244,872,648 (Unit: Baht)

Loans: - Joint Venture CKAE Consortium - Joint Venture CKET Total loans Interest receivable: - Joint Venture CKAE Consortium - Joint Venture CKET Total interest receivable

128

Balance as at

1 January 2009

86,829,373 1,041,176,571 1,128,005,944 44,636,565 127,970,350 172,606,915 1,300,612,859

Separate financial statements During the year Increase

Decrease

7,200,000 8,600,000 15,800,000 5,451,989 76,892,030 82,344,019 98,144,019

(70,571,574) - (70,571,574) (50,040,835) (32,626,262) (82,667,097) (153,238,671)

Balance as at 31 December 2009

23,457,799 1,049,776,571 1,073,234,370 47,719 172,236,118 172,283,837 1,245,518,207

ANNUAL REPORT 2009

Loans to Joint Venture CKAE Consortium were previously subject to interest at fixed rates of 6.25 to 8.25 percent per annum and the Minimum Loan Rate plus 0.25 percent (MLR + 0.25%) per annum. Loans to Joint Venture CKET were previously subject to interest at the Minimum Loan Rate (MLR) per annum. These loans to the joint ventures were due for repayment at call. Subsequently, on 21 January 2008, the joint ventures entered into memorandums of agreement with the Company, whereby the Joint Venture CKAE Consortium agreed to pay an additional interest charge of 1.75 percent per annum from the borrowing date until the date on which repayment is made and agreed to make repayment in full within 31 March 2009, and the Joint Venture CKET agreed to pay an additional interest charge of 1 percent per annum from the borrowing date until the date on which repayment is made and agreed to make repayment in full within 30 September 2009. Subsequently, in January 2009, the joint ventures entered into memorandums of agreement with the Company, whereby the Joint Venture CKAE Consortium requested to extend the due date for all debt repayment from 31 March 2009, such that loan principal and accrued interests would be paid in installments within June 2011; and the Joint Venture CKET requested to extend the due date for all debt repayment from 30 September 2009, such that loan principal and accrued interest would be paid in installments within December 2015. Consolidated and

separate financial statements 2009 2008

Long-term loans to associated companies and interest receivable Loans: - Bangkok Metro Public Company Limited 2,183,090,793 - SouthEast Asia Energy Limited 156,250,000 Total loans 2,339,340,793 Interest receivable: - Bangkok Metro Public Company Limited 368,511,897 - SouthEast Asia Energy Limited 20,526,571 Total interest receivable 389,038,468 2,728,379,261

(Unit: Baht)

Transfer Pricing Policy

1,583,090,793 156,250,000 1,739,340,793 238,555,999 9,125,628 247,681,627 1,987,022,420

MLR + 0.5% per annum MLR + 1% per annum

During 2009, movements of long-term loans to associated companies and related interest receivable were as follows:

(Unit: Baht)

Loans: - Bangkok Metro Public Company Limited - SouthEast Asia Energy Limited Total loans Interest receivable: - Bangkok Metro Public Company Limited - SouthEast Asia Energy Limited Total interest receivable

Consolidated and separate financial statements Balance as at During the year Balance as at

1 January 31 December Increase Decrease 2009 2009

1,583,090,793 156,250,000 1,739,340,793 238,555,999 9,125,628 247,681,627 1,987,022,420

600,000,000 - 600,000,000 129,955,898 11,400,943 141,356,841 741,356,841

- - - - - - -

2,183,090,793 156,250,000 2,339,340,793 368,511,897 20,526,571 389,038,468 2,728,379,261

129

CH. KARNCHANG PUBLIC COMPANY LIMITED

Bangkok Metro Public Company Limited

The outstanding balances represent loans to Bangkok Metro Public Company Limited under the Subordinated Loan Agreement that the Company entered into with Bangkok Metro Public Company Limited and a group of lenders of such company, under which the Company granted long-term loan facilities totaling Baht 3,000 million. The loans carry interest at the Minimum Loan Rate plus 0.5 percent (MLR+0.5%) per annum, and principal and interest are to be paid after Bangkok Metro Public Company Limited has paid all indebtedness under the Onshore Facilities Agreement or when the associated company has excess cash. During 2009, the Company entered into 13 subordinated loan agreements with Bangkok Metro Public Company Limited, under which the Company granted long-term loan facilities totaling Baht 600 million to that company.

SouthEast Asia Energy Limited

On 4 September 2007, the Company and two shareholders of SouthEast Asia Energy Limited entered into the Shareholders’ Loan Agreement with SouthEast Asia Energy Limited, granting a facility of Baht 250 million, with the Company agreeing to provide a portion of the loans as stipulated in the agreement, amounting to Baht 156.25 million, in order to fund a feasibility study and the development of the Nam Bak 1-2 Hydroelectric Power Project. The loan carries interest at MLR plus 1 percent (MLR + 1%) per annum, and principal and interest are to be paid in full on the earlier of (a) the Financial Closing of the Project and (b) the date eighteen months after the agreement is signed. On 2 March 2009, the Company and two shareholders of SouthEast Asia Energy Limited entered into an agreement to extend the term of the shareholders’ loan with SouthEast Asia Energy Limited, whereby the loan and interest are to be paid in full in one repayment on the earlier of (a) the Financial Closing of the Project and (b) within 4 March 2010. Subsequently, On 12 February 2010, the Company received a letter from SouthEast Asia Energy Limited requesting for extension of its debts repayment under the Shareholders’ Loan Agreement for another 18 months as from the due date to 4 September 2011. On 24 February 2010, a meeting of the Board of Directors approved the extension of the debt repayment to that company.

Trade accounts payable - related parties Subsidiaries - Construction Material Supply Company Limited - Bangkok Concrete Industries Company Limited - Prompratarn Construction Limited Partnership Jointly controlled entities - Joint Venture BBCT - Joint Venture CKAE Consortium - Other jointly controlled entities Assosiated companies - Thai Tap Water Supply Public Company Limited - Pathum Thani Water Company Limited

130

Consolidated financial statements 2009 2008

(Unit: Baht)

Separate financial statements 2009 2008

- - - - 27 2,730 - 2,757 11,876 - 11,876

- - - - 5,052 2,730 19,265 27,047 - 89,377 89,377

38,043,025 - 1,012,507 39,055,532 88,917 136,480 - 225,397 - - -

10,880,978 1,451 2,651,223 13,533,652 12,626 136,479 29,639 178,744 - 89,377 89,377

ANNUAL REPORT 2009

Related companies - Silasaicrete Limited Partnership - CH. Karnchang Holding Company Limited - Mahasiri Company Limited - Expert Transport Company Limited - Tokyu Construction Company Limited - Other related companies and related parties Venturers in jointly controlled entities - Bilfinger Berger AG - Loxley Public Company Limited Total trade accounts payable - related parties Accounts payable and loans from related parties Other payable Venturer in jointly controlled entity - Bilfinger Berger AG Total Other payable Advance received from related parties Subsidiaries - CH. Karnchang (Lao) Company Limited Venturer in jointly controlled entity - Tokyu Construction Company Limited Total advance received from related parties Loans from related party and accrued interest Related company - Siam Wire Industry Company Limited Total loans from related party and accrued interest Total accounts payable and loans from related parties Advances received from employers - related parties Associated company - Thai Tap Water Supply Public Company Limited

(Unit: Baht)

Consolidated financial statements 2009 2008

52,651 - - - 3,015,575 431,161 3,499,387 5,013,496 22,542,980 27,556,476 31,070,496

431,470 260,000 980,436 997,045 - 698,925 3,367,876 2,999,500 102,893,958 105,893,458 109,377,758

96,976 20,000 - - - 19,523 136,499 - - - 39,417,428

253,296 20,000 - 997,045 - 68,816 1,339,157 - - - 15,140,930

15,036,738 15,036,738 - - 110,250,000 110,250,000 110,250,000

- - - - - - -

- - 195,100,941 195,100,941 - - 195,100,941

- - - 125,286,738

Separate financial statements 2009 2008

2,109,866 2,109,866 2,109,866 2,109,866

- - - -

- - - 195,100,941

41,452,975 41,452,975

- -

41,452,975 41,452,975

- -

131

CH. KARNCHANG PUBLIC COMPANY LIMITED

(Unit: Baht)

Consolidated financial statements 2009 2008

Related companies - Bangkok Expressway Public Company Limited - Bangpa-in Land Company Limited Total advances received from employers - related parties Retention for construction - related parties Subsidiaries - CH. Karnchang-Tokyu Construction Company Limited - Construction Material Supply Company Limited Venturer in jointly controlled entity - Loxely Public Company Limited Total retention for construction - related parties

Separate financial statements 2009 2008

15,452,201 - 15,452,201 56,905,176

19,075,275 1,750,028 20,825,303 20,825,303

15,452,201 - 15,452,201 56,905,176

19,075,275 - 19,075,275 19,075,275

- - - 30,911,050 30,911,050 30,911,050

- - - 5,883,401 5,883,401 5,883,401

- 5,429,344 5,429,344 - - 5,429,344

4,927,843 4,006,189 8,934,032 - - 8,934,032

Directors and managementâ&#x20AC;&#x2122;s remuneration

In 2009 the Company and its subsidiaries had expenses related to the salaries, bonuses and meeting allowances to their directors and management totaling Baht 86.8 million (Separate financial statements: Baht 62.2 million) (2008: Baht 82.8 million, Separate financial statements: Baht 55.9 million).

Guarantee obligations with related parties

The Company has outstanding guarantee obligations with its related parties, as described in Note 36.4 to the financial statements.

8. Current investments

(Unit: Baht)

Fixed Deposit Investments in trading securities Marketable equity securities - Fair value Investments in held-to-maturity debt securities - due within one year Debentures of Bank of Ayudhya Public Company Limited Debentures of Thai Airways International Public Company Limited Investments in available-for-sale securities Unit trust in fixed income open-ended fund Government and state-owned enterprise bonds State-owned enterprise debt securities Private sector debt securities Add : Unrealised gain on changes in value of investments Fair Value Total current investments

132

Consolidated and separate financial statements 2009 2008

9,940,082 9,940,082 2,180,550 2,180,550 20,000,000 10,000,000 30,000,000 151,532,451 2,357,513,321 20,615,396 97,010,888 223,150 2,626,895,206 2,669,015,838

9,838,396 9,838,396 1,886,850 1,886,850 - - - 1,002,246 - - - 4,958 1,007,204 12,732,450

ANNUAL REPORT 2009

9. Trade accounts receivable The balances of trade accounts receivable as at 31 December 2009 and 2008, aged on the basis of due dates, are summarised below. (Unit: Baht)

Consolidated financial statements

Construction contract receivables Not yet due Overdue - Less than 3 months - 3 - 6 months - 6 - 12 months - Over 12 months Less : Allowance for doubtful accounts Construction contract receivables, net Retention as per contracts Total

Related parties

Unrelated parties

Total

2009

2008

2009

2008

2009

2008

351,582,876 4,696,347 72,310 - 263,499,876 619,851,409 - 619,851,409 32,962,568 652,813,977

368,824,403 137,986,992 109,054,327 102,725,052 421,275,343 1,139,866,117 - 1,139,866,117 19,707,014 1,159,573,131

341,759,856 33,597,579 731,207 22,191,953 339,982,052 738,262,647 (9,984,814) 728,277,833 80,075,979 808,353,812

1,031,608,856 36,747,817 25,726,422 37,408,220 282,628,856 1,414,120,171 (25,851,269) 1,388,268,902 213,339,934 1,601,608,836

693,342,732 38,293,926 803,517 22,191,953 603,481,928 1,358,114,056 (9,984,814) 1,348,129,242 113,038,547 1,461,167,789

1,400,433,259 174,734,809 134,780,749 140,133,272 703,904,199 2,553,986,288 (25,851,269) 2,528,135,019 233,046,948 2,761,181,967 (Unit: Baht)

Separate financial statements

Related parties 2009

2008

76,784,342 18,769,982 - - 636,600,033 732,154,357 (253,358,255) 478,796,102 62,222,891 541,018,993

208,883,550 12,790,562 - - 781,400,941 1,003,075,053 (253,358,255) 749,716,798 47,494,913 797,211,711

Unrelated parties 2009

2008

Total 2009

2008

260,781,038 873,846,236 337,565,380 1,082,729,786 30,648,121 33,828,261 49,418,103 46,618,823 - 25,726,422 - 25,726,422 22,191,953 28,424,550 22,191,953 28,424,550 315,698,655 257,814,003 952,298,688 1,039,214,944 629,319,767 1,219,639,472 1,361,474,124 2,222,714,525 - - (253,358,255) (253,358,255) 629,319,767 1,219,639,472 1,108,115,869 1,969,356,270 48,320,617 105,344,047 110,543,508 152,838,960 677,640,384 1,324,983,519 1,218,659,377 2,122,195,230

On 24 December 2008, the Company’s Board of Directors approved the terms of repayment of construction contract debt of Baht 325.7 million for a trade receivable, Rayong Real Estate Company Limited, whereby payment is to be made in 13 quarterly installments, with the first of these due in September 2009 and the last installment due in December 2012 (as discussed in Note 13). The Company reclassified the accounts receivable of such company as at 31 December 2009, amounting to Baht 246.7 million, as non-current assets under the caption of “Long-term trade accounts receivable” in the balance sheet, as per the repayment plan. The management of the Company believes that the allowance for doubtful accounts as set up in the accounts is adequate at this current stage.

133

CH. KARNCHANG PUBLIC COMPANY LIMITED

10. U nbilled receivables / advances received from employers and construction

revenue received in advance (Unit: Baht)

Unbilled receivables Project value as per contract Accumulated amount recognised as revenue on

percentage of completion basis Less : Value of total billed Unbilled receivables Retentions as per contracts Advances received from employers and construction revenue received in advance Project value as per contract Value of total billed Less : Accumulated amount recognised as revenue on percentage of completion basis Construction revenue received in advance Advances received from employers Total

Consolidated financial statements 2009

2008

2009

2008

66,312,314,103

30,056,297,270

30,545,000,910

27,171,599,498

52,554,213,451

25,684,334,095

27,939,926,937

23,642,847,022

(48,713,682,885) 3,840,530,566 113,038,547

(22,617,478,218) 3,066,855,877 233,046,948

(25,476,412,072) 2,463,514,865 110,543,508

(20,938,547,612) 2,704,299,410 152,838,960

1,228,707,639 1,009,043,498

22,814,143,869 16,002,406,827

79,699,290 2,001,230

863,781,631 736,613,130

(878,920,883)

(14,988,779,331)

(727,501,279)

130,122,615 1,482,878,979 1,613,001,594

1,013,627,496 425,270,144 1,438,897,640

2,001,230 482,704,592 484,705,822

9,111,851 314,819,150 323,931,001

11. Inventories and construction supplies

Construction supplies Spare parts Construction in progress and work in process Finished goods Total Less : Allowance for loss on diminution in value of finished goods Inventories and construction supplies, net

Separate financial statements

(Unit: Baht)

Consolidated financial statements

Separate financial statements

2009

2008

2009

2008

110,057,368 226,262,415 6,946,640 - 343,266,423 - 343,266,423

420,740,927 230,052,145 224,396,982 11,591,648 886,781,702 (7,791,996) 878,989,706

47,334,998 71,315,588 4,953,272 - 123,603,858 - 123,603,858

248,528,965 79,576,445 216,467,471 - 544,572,881 - 544,572,881

12. Restricted bank deposits The outstanding balances represent bank deposit accounts which have been pledged with banks to secure the issuance of bank guarantees for electricity utilisation, bidding, issuance of other bank guarantees, letters of credit opened as security for part of the facilities under the Subordinated Loan Agreement of an associated company, the bank overdraft of a subsidiary, and as a guarantee of loans from bank of a subsidiary.

134

ANNUAL REPORT 2009

13. Loans to subcontractors and interest receivable/long-term loans to other

companies and interest receivable

Loans to subcontractors and interest receivable

The balance of loans to subcontractors and related interest receivable as at 31 December 2009, amounting to Baht 177.5 million (in proportion to the Company’s interest in the joint venture), represented loans to the former subcontractors of Joint Venture CKAE Consortium, Modern Construction Material Company Limited and Best Plan Technology Company Limited, in the form of promissory notes. These loans are subject to interest at fixed rates per annum which were tied to the Minimum Loan Rate plus 0.25 percent (MLR + 0.25%) as at borrowing dates and repayable within 31 December 2007. In January 2007, the borrowers issued letters confirming that they agreed to pay an additional charge of interest of 2.25 percent per annum from the borrowing date until the date on which repayment is made in full. In addition, the major shareholders of the borrowers have provided personal guarantees for the full amount of the outstanding loans. The loans are also secured by the share certificates of a company listed on the Stock Exchange of Thailand, worth approximately Baht 9.4 million (Baht 9.2 million in proportion to the Company’s interest in the joint venture) as at 31 December 2009, which are owned by the borrower and have been endorsed to transfer them to the joint venture. Therefore, the joint venture recorded the additional interest of 2.25 percent per annum for all loans made in the past up to the repayment date and will recognise interest on the basis of this new rate until the joint venture receives full settlement from the borrowers. In November 2007, the borrowers issued letters requesting an extension of the period for loan repayment, whereby from repayment being due in full by no later than 31 December 2007, repayment would be due in full by no later than 31 December 2008. In addition, the borrower placed the title deeds to plots of land with independently appraised values (appraised in June 2006) totaling approximately Baht 236.9 million (Baht 232.2 million in proportion to the Company’s interest in the joint venture) with the joint venture as security for these loans. On 24 December 2008, the Company’s Board of Directors granted approval for CH. Karnchang Public Company Limited, in the name of Joint Venture CKAE Consortium, to extend the loan repayment schedule for the borrowers as per the repayment plan proposed by the borrowers. Modern Construction Material Company Limited, whose outstanding debt as at 31 December 2008 amounted to Baht 6.34 million (in proportion to the Company’s interest in the joint venture), requested an extension of the period for loan repayment, whereby from repayment being due in full by no later than 31 December 2008, repayment would be due in full by no later than 30 June 2009 (the company paid such debt in June 2009). Best Plan Technology Company Limited requested an extension of the period for loan repayment, whereby from repayment being due in full by no later than 31 December 2008, repayment of principal and interest would be due in 8 installments in a quarterly basis, with the first of these due in 31 March 2009 and the last installment due in 31 December 2010. Subsequently, on 26 December 2008, the borrowers and the Joint Venture CKAE Consortium entered into memorandums, whereby the joint venture agreed to extend the loans for the borrowers as per this repayment plan. The joint venture reclassified the loans to subcontractors and interest receivable as current assets and non-current assets in accordance with payment schedule stipulated in the repayment plan in the balance sheet.

135

CH. KARNCHANG PUBLIC COMPANY LIMITED

Long-term loans to other companies and interest receivable

The balance of long-term loans to other companies and related interest receivable as at 31 December 2009, amounting to Baht 1,432.0 million (in proportion to the Company’s interest in the joint venture), represented loans to two other companies, Rayong Real Estate Company Limited and Private Inter Construction Company Limited. Joint Venture CKET entered into long-term loan agreements with these companies granting facilities during 2003, with the loans subject to interest at the Minimum Loan Rate plus 0.25 percent (MLR + 0.25%) per annum and to be repaid within June 2005. Subsequently, the repayment term was extended such that payment was to be made within June 2006. The borrowers placed the title deeds to plots of land and construction thereon with independently appraised values (appraised in January 2008) totaling approximately Baht 1,986.1 million (Baht 1,588.9 million in proportion to the Company’s interest in the joint venture) to the joint venture as security for these loans. In addition, the borrowers allowed the Company to use part of the land and construction thereon as security for bank guarantee facilities of Baht 500 million and long-term loans provided to the Company by banks, and provided guarantees for the Company’s bank loans. On 1 July 2006, the Joint Venture CKET entered into an addendum to these agreements with these two other companies, whereby the repayment term was extended until June 2007. Subsequently, in March 2007, the borrowers issued letters confirming that they would repay one half of the loan balances no later than 31 December 2007, and that the remaining debts would be repaid in full by 30 June 2008, and agreeing to pay an additional interest charge of 1.25 percent per annum from the borrowing date until the date on which the repayment is made in full. In addition, a major shareholder of both of the borrowers entered into an agreement to provide a personal guarantee of settlement of the full amount of the outstanding debt to the joint venture. Therefore, the joint venture recorded the additional interest of 1.25 percent per annum for all loans made in the past up to the repayment date, and wil recognise interest on the basis of this new rate until the joint venture receives full settlement from the borrowers. In November 2007, the borrowers issued letters requesting an extension of the period for loan repayment, whereby from half of the loan balances being due no later than 31 December 2007 and full settlement of the remaining debts due by 30 June 2008, half of the loan balance would be due no later than 31 December 2008 and full settlement of the remaining debts would be due by 30 June 2009. On 24 December 2008, the Company’s Board of Directors granted approval for CH. Karnchang Public Company Limited, in the name of Joint Venture CKET, to extend the loan repayment schedule for the borrowers, as well as the construction contract debt of one borrower to the Company, as per the repayment plan proposed by the borrowers. The borrowers, Rayong Real Estate Company Limited and Private Inter Construction Company Limited, had requested an extension of the period for loan repayment, whereby from half of the loan balances being due no later than 31 December 2008 and full settlement of the remaining debts due by 30 June 2009, repayment of principal would be due in 23 installments in a quarterly basis, from March 2009 until September 2014, and interest payment would be due in September and December 2014 and in March 2015. In addition, Rayong Real Estate Company Limited had requested an extension of the period for settlement of its construction contract debt to the Company, amounting to Baht 325.7 million, whereby payment would be made in 13 quarterly installments, from September 2009 until December 2012 (as discussed in Note 9). Subsequently, on 26 December 2008, the borrowers and the Joint Venture CKET entered into an addendum to the loan agreement, whereby the loans and construction contract debt were extended as per this repayment plan. The joint venture reclassified the long-term loans to other companies and interest receivable to current assets and non-current assets in accordance with payment schedule stipulated in the repayment plan in the balance sheet. For reasons of prudence, the Joint Venture CKET ceased recognition of interest income from the borrowers from 1 July 2008. 136

15,000,000 160,000,000 100,000,000 200,000,000 39,636,203 -

15,000,000 160,000,000 100,000,000 200,000,000

39,636,203

20,600,000

2008

Paid-up capital

2009

81.00

100.00

(%) 99.99 99.00 55.00 -

2009

100.00

(%) 99.99 99.00 55.00 -

2008

Shareholding percentage

16,686,000 284,721,403 (1,558,902) 283,162,501

39,636,203

14,999,600 158,400,000 54,999,600 -

2009

2008

- 268,035,403 (1,558,902) 266,476,501

39,636,203

14,999,600 158,400,000 54,999,600 -

Cost

- 16,500,000

- - 16,500,000 - - 22,000,000

- - 22,000,000 -

Dividend received during

the years 2009 2008

(Unit: Baht)

Bangpa-in Cogeneration Limited

In June 2009 the Company invested in 81,000 ordinary shares of Bangpa-in Cogeneration Limited with a par value of Baht 10 each, or a total of Baht 0.81 million, which is equivalent to 81 percent of shareholding in such company. The subsidiary is principally engaged in the generation and sale of electricity and other energy. The Company has included the financial statements of this subsidiary in the consolidated financial statements from the second quarter of 2009. Subsequently, on 15 June 2009, an Extraordinary General Meeting of the shareholders of Bangpa-in Cogeneration Limited approved an increase in registered share capital of such company from Baht 1 million to Baht 50 million by issuing 4.9 million ordinary shares with a par value of Baht 10 each and the new shares are to be allocated to the existing shareholders of the company according to their shareholding proportions and 40 percent payment for new shares is to be called up. In July 2009, the Company made payment of the share in proportion to shareholding percentage in such company amounting to Baht 15.9 million.

On 25 December 2007, the Company sold all of the 999,994 ordinary shares that the Company held in Bangkok Concrete Industries Company Limited to Widen Holding Company Limited. Since the Company remained the major source of financial support of Bangkok Concrete Industries Company Limited, it continued to include the financial statements of such company in the consolidated financial statements for the year ended 31 December 2008. Subsequently, in September 2009, Bangkok Concrete Industries Company Limited sold and transferred land, plant and machinery to the Company in order to settle loans from the Company and outstanding accounts payable. In addition, such company made additional payment of debt to the Company in October 2009. As a result of the debts repayment, the Company has not been the major source of financial support of such company, and its financial statements have been excluded from the consolidated financial statements as from October 2009.

Bangkok Concrete Industries Company Limited

Construction Material Supply Company Limited CH. Karnchang Realestate Company Limited CH. Karnchang-Tokyu Construction Company Limited Bangkok Concrete Industries Company Limited CH. Karnchang (Lao) Company Limited (paid-up share capital of USD 1,000,000) Bangpa-in Cogeneration Limited Total Less : Allowance for loss on investments in subsidiaries Total investments in subsidiaries, net

Companyâ&#x20AC;&#x2122;s name

Separate financial statements

14.Investments in subsidiaries Details of investments in subsidiaries as presented in separate financial statements are as follows:

ANNUAL REPORT 2009

137

138

Jointly controlled

entitiesâ&#x20AC;&#x2122; name

(Unit: Baht)

99.90 98.00 80.00 51.89 75.00 -

- 98.00 80.00 51.89 75.00 70.00

- - - 26,250,000

- 26,250,000

2009

- - - 26,250,000

- 26,250,000

- - - (801,857,246)

- (783,837,424)

(18,019,822)

- - - (1,089,026,977)

- (1,071,007,155)

- - - (775,607,246) - (775,607, 246)

- (757,587,424)

(18,019,822)

- - - (1,062,776,977) - (1,062,776,977)

- (1,044,757,155)

Carrying amounts based on cost method - net 2009 2008

The outstanding balances of provision for loss on investments in joint ventures comprise of provision for loss in excess of investments in Joint Venture BBCT and Joint Venture BBCD.

25.00 35.00

59.99

25.00 35.00

99.97

59.99

50.00

99.97

59.99

53.20

2008 (%)

99.97

Construction and project management The TWCK Joint Venture (Dissolution during 2009) Joint Venture BCKT Construction Joint Venture BBCD Construction Construction Joint Venture CKSL (Dissolution during 2009) Joint Venture CKAE Consortium Construction Project Joint Venture CKET management Joint Venture CKNNL Construction CKLX Joint Venture Construction CKTC Joint Venture Construction Total Presented as: Investments in joint ventures Provision for loss on investments in joint ventures

99.97

2009 (%)

Shareholding percentage

Construction

Nature of business

Separate financial statements Allowance for loss on Cost investments 2008 2009 2008

Investments in joint ventures represent investments in entities which are jointly controlled by the Company and other companies. Details of these investments are as follows:

Joint Venture BBCT - Second Stage Expressway Project Sector B Route Phayathai - Bangkhlo - Second Stage Expressway Project Sector C+ Route Chaeng Wattana Bang Phun & Bang Sai - Second Stage Expressway Project Sector D Route Asoke - Srinakarin - Second Stage Expressway Project Sector C1A Route Ngam Wong Wan Chaeng Wattana

15.1 Details of investments in joint venture

15. Investments in joint ventures/Provision for loss on investments in joint ventures CH. KARNCHANG PUBLIC COMPANY LIMITED

Joint Venture BBCT Joint Venture CKSL The TWCK Joint Venture CKOBA Joint Venture Joint Venture CKNNL Total

Jointly controlled entitiesâ&#x20AC;&#x2122; name

134,958,750 9,000,000 5,773,544 - 882,130 150,614,424

- - - 112,906 - 112,906

Separate financial statements Profit sharing from jointly controlled

entities during the years 2009 2008

(Unit: Baht)

During the years, the Company recognised its share of profit from investments in the jointly controlled entities in the separate financial statements as follows :

15.2 Share of profit

ANNUAL REPORT 2009

139

140

Total revenues Total expenses Net income (loss)

Current assets Non-current assets Current liabilities Non-current liabilities Net assets (liabilities)

203.9 0.3 204.2 (18.1) - 186.1

2008

1.0 (1.7) (0.7)

2008

196.3 160.9 357.2 (150.8) - 206.4

22.3 (12.7) 9.6

26.0 (14.3) 11.7

Joint Venture CKAE Consortium 2009 2008

260.8 - 260.8 (44.9) - 215.9

Joint Venture CKAE Consortium 2009 2008

52.8 1,509.0 1,561.8 (1,169.3) - 392.5

2008

226.5 1.5 228.0 (195.3) - 32.7

2009

17.1 (91.6) (74.5)

2009

80.8 (104.1) (23.3)

2008

Joint Venture CKET

765.8 (747.9) 17.9

2009

1,109.8 (1,095.5) 14.3

2008

CKLX Joint Venture

555.5 1.6 557.1 (542.3) - 14.8

2008

CKLX Joint Venture

For the years ended 31 December

177.9 1,353.9 1,531.8 (1,213.8) - 318.0

2009

Joint Venture CKET

(Unit: Million Baht)

- - - - - -

2008

42.8 (49.4) (6.6)

2009

- - -

2008

CKTC Joint Venture

1,145.7 51.6 1,197.3 (1,203.9) - (6.6)

2009

CKTC Joint Venture

(Unit: Million Baht)

On 7 February 2008, the Company entered into the Payment Agreement with Bilfinger Berger AG, which is a venturer in Joint Venture BBCD, whereby details of the agreement are as follow : 1. The Company is to provide loans to Joint Venture BBCD, for the joint venture to use to make full settlement of loans from banks and related accrued interest, or to accept the transfer of loans from banks of the joint venture totaling approximately Baht 2,400 million. 2. Bilfinger Berger AG agrees to waive its claims in loans to Joint Venture BBCD amounting to 70 million euros (or approximately Baht 3,500 million). 3. The Company is to provide loans to Joint Venture BBCD, with which it is to make payment of loans from Bilfinger Berger AG totaling 13.5 million euros

(or approximately Baht 675 million) as per the scheduled payments. The joint venture will make such payments within 2010.

1.1 (2.5) (1.4)

2009

Joint Venture BBCT

338.3 0.5 338.8 (180.1) - 158.7

2009

Joint Venture BBCT

As at 31 December

The Companyâ&#x20AC;&#x2122;s proportionate shares of the assets, liabilities, revenues and expenses of significant jointly controlled entities, according to proportion under joint venture agreements, are as follows :

15.3 Summarised financial information of significant jointly controlled entities

Joint Venture BBCD

CH. KARNCHANG PUBLIC COMPANY LIMITED

ANNUAL REPORT 2009

During 2008, the Company entered into agreements to accept the transfer of debts in the form of banks loans from Joint Venture BBCD, comprising loan principal and accrued interest totaling approximately Baht 2,290 million (as presented in item 1 of the above details). On 30 September 2008, Bilfinger Berger AG issued a letter stating that it had forgiven loans to the Joint Venture BBCD in an amount of 70 million euros (as presented in item 2 of the above details). Since the conditions stipulated in the Payment Agreement, as detailed above in items 1 to 3, have been fully met, debts of the Company and Bilfinger Berger AG that are outstanding in the accounts of the Joint Venture BBCD, in the form of trade accounts payable and loans, are the responsibility of each party. Therefore, the Company has excluded the debts of the Joint Venture BBCD to Bilfinger Berger AG from the preparation of the consolidated financial statements, effective from 30 September 2008. As a result of this transaction, the liabilities from the Joint Venture BBCD for which the Company was responsible decreased by approximately Baht 408 million. The Company therefore reversed the provision for loss on investments in joint ventures previously recorded and presented as “Revenue from reversal of provision for loss on investments in joint venture” in the consolidated income statements for the third quarter of 2008 (Separate financial statements: Baht 242 million). During the year ended 31 December 2009, the Company granted a loan to the joint venture, with which it is to settle loans from Bilfinger Berger AG amounting to approximately Baht 188.7 million. The Company recorded future interest liabilities in respect of the loans transferred from the Joint Venture BBCD detailed above in 1, and the loans to Joint Venture BBCD detailed above in 3, with outstanding balances amounting to approximately Baht 757.6 million and Baht 1,044.8 million, under the caption of “Provision for loss on investments in joint ventures” in the balance sheets as at 31 December 2009 and 2008, respectively.

CKTC Joint Venture

Joint Venture BBCT

In August 2009, CKTC Joint Venture signed an engagement contract for the construction works of the Mass Transit System Project (Purple Line), Bang Yai to Rat Burana, Bang Yai to Bang Sue Section, Contract 1: Elevated Structures (East) with the Mass Rapid Transit Authority of Thailand. The CKTC Joint Venture comprises a joint investment between the Company and Tokyu Construction Company Limited, with the Company’s interest in the venture being 70 percent. The Company therefore included the financial statements of the jointly controlled entity (applying the proportionate consolidation method) in the consolidated financial statements since the third quarter of 2009. In December 2009, the Company and Bilfinger Berger AG, which are venturers in the Joint Venture BBCT, entered into an addendum to the joint venture agreement stipulating a change in the Company’s interest in the venture, as follows : Shareholding percentage

Joint Venture BBCT - Second Stage Expressway Project Sector B Route Phayathai - Bangkhlo - Second Stage Expressway Project Sector C+ Route Chaeng Wattana - Bang Phun & Bang Sai - Second Stage Expressway Project Sector D Route Asoke - Srinakarin - Second Stage Expressway Project Sector C1A Route Ngam Wong Wan - Chaeng Wattana

New

(%)

99.97 99.97 99.97 99.97

53.20 59.99 59.99 59.99

The Company has therefore included the financial statements of the Joint Venture BBCT in the consolidated financial statements based on the new interest as from December 2009. The Company recognised the result of the change, amounting to approximately Baht 116 million, under the caption of “Share of profit from jointly controlled entities” in the consolidated income statements for the year 2009.

141

142

Companyâ&#x20AC;&#x2122;s name

Construction

Nature of business

Qatar

(%)

49.00 49.00

(%)

7,922,489,566

2,169,294,265

2,159,052,517

3,593,304,884

837,900

2009

837,900

2008

7,644,232,661

1,570,357,360

2,479,732,517

3,593,304,884

Cost

837,900

(837,900)

(Unit : Baht)

- 861,173,720

(Unit : Baht)

4,727,694,513

1,016,425,695

2,528,328,726

Carrying amounts based on cost method - net 2552 2551

4,692,442,183

1,486,897,675

- 1,182,940,092

Carrying amounts based

on equity method 2009 2008

2,344,370,788

(837,900)

Separate financial statements Allowance for loss on Cost investments 2552 2551 2552 2551

38.00

35.31

24.61

49.00

(%)

2008

31.55

24.61

49.00

(%)

2009

Shareholding percentage

Country of Shareholding incorpora- percentage tion 2552 2551

Operation of the MRTA Intitial System Project - Chaloem Ratchamongkhon Thailand Line and Commercial development Production and sale of treated water to the Provincial Waterworks Authority Thailand Making investment in as well as provision of consulting services Thailand relating to electricity generating projects both locally and overseas

Qatar

Construction

Nature of business

Consolidated financial statements

Operation of the MRTA Intitial

Project Thailand 24.61 24.61 3,593,304,884 3,593,304,884 (534,664,972) (534,664,972) 3,058,639,912 3,058,639,912 Bangkok Metro Public Company Limited System - Chaloem Ratchamongkhon Line and Commercial development Thai Tap Water Supply Public Production and sale of treated water Thailand 31.55 35.31 2,159,052,517 2,479,732,517 - - 2,159,052,517 2,479,732,517 Company Limited to the Provincial Waterworks Authority Making investment in as well as provision of consulting services

Thailand 38.00 38.00 2,169,294,265 1,570,357,360 - - 2,169,294,265 1,570,357,360 SouthEast Asia Energy Limited relating to electricity generating projects both locally and overseas Total 7,922,489,566 7,644,232,661 (535,502,872) (535,502,872) 7,386,986,694 7,108,729,789

CH. Karnchang (Qatar) Contracting Company

Total

SouthEast Asia Energy Limited

Thai Tap Water Supply Public Company Limited

Bangkok Metro Public Company Limited

CH. Karnchang (Qatar) Contracting Company

Companyâ&#x20AC;&#x2122;s name

Country of incorporation

16.1 Details of associated companies :

16. Investments in associated companies CH. KARNCHANG PUBLIC COMPANY LIMITED

ANNUAL REPORT 2009

16.2 Share of income (loss) and dividend received

During the years, the Company has recognised its share of net income (loss) from investments in associated companies in the consolidated financial statements and dividend income in the separate financial statements as follows : (Unit : Baht) Consolidated financial statements Share of income (loss) from investments in associated companies during the years 2009 2008

Company’s name

CH. Karnchang (Qatar) Contracting Company Bangkok Metro Public Company Limited and its subsidiaries Thai Tap Water Supply Public Company Limited and

its subsidiaries SouthEast Asia Energy Limited and its subsidiary Total

Separate financial statements Dividend received during the years 2009

2008

- (321,766,371)

- (352,607,311)

- -

532,123,476

521,711,604

436,721,054

209,441,610

(128,464,926) 81,892,179

(195,121,974) (26,017,681)

- 436,721,054

- 209,441,610

16.3 Fair value investments in listed associates

The fair values of investments in associated companies that are listed on the Stock Exchange of Thailand are based on the latest bid price of the last working days of December 2009 and 2008, as quoted on the Stock Exchange of Thailand. Such fair values are as follow : (Unit : Million Baht)

Fair values as at 31 December

Company’s name

Bangkok Metro Public Company Limited Thai Tap Water Supply Public Company Limited Total

2009

2008

2,294.0 5,589.0 7,883.0

1,176.4 5,888.7 7,065.1

16.4 Summarised financial information of associated companies

Financial information of the associated companies is summarised below.

Company’s name

(Unit : Million Baht)

Paid-up capital as Total assets as at at 31 December 31 December

revenues for Total liabilities as Total the years ended at 31 December 31 December

2009

2008

2009

2008

Bangkok Metro Public Company 11,950.0 11,950.0 18,876.1 19,187.6 14,658.3 13,680.7 Limited and its subsidiaries Thai Tap Water Supply Public Company Limited and its 3,990.0 3,990.0 21,064.3 17,894.6 12,369.5 9,558.2 subsidiaries SouthEast Asia Energy Limited and 5,708.7 4,132.5 25,997.9 19,148.6 18,696.8 13,846.7 its subsidiary

Net income (loss) for the years ended 31 December 2009 2008

2009

2008

1,687.3

1,578.7 (1,334.0) (1,459.3)

4,067.1

3,638.8

1,593.6

1,358.4

7.1

0.8

(77.3)

(16.2)

Bangkok Metro Public Company Limited

The Company has pledged part of its share certificates of investment in Bangkok Metro Public Company Limited with a group of banks to secure parts of the long-term loans obtained from that group of banks by the associated company.

143

CH. KARNCHANG PUBLIC COMPANY LIMITED

Thai Tap Water Supply Public Company Limited

In May 2008, the Company sold 143 million ordinary shares of Thai Tap Water Supply Public Company Limited to the public at the public offering price (Baht 4.2 per share), or for a total of Baht 600.9 million, and recognised gain from the sale of investment in associated company amounting to Baht 278.7 million in the consolidated income statements for the second quarter of the year 2008 (Separate income statements: Baht 291.0 million). On 17 December 2008, Extraordinary General Meeting of the shareholders of Thai Tap Water Supply Public Company Limited resolved to approve the payment of dividend of Baht 0.15 per share from the earnings of the promoted operations for the year 2007, or a total of Baht 598.5 million, to shareholders listed in the share register as at 20 November 2008. Thai Tap Water Supply Public Company Limited paid such dividend in December 2008. The Company recorded dividend received of Baht 209.4 million as other income in the separate income statement for the year 2008. On 25 February 2009, a meeting of the Board of Directors of Thai Tap Water Supply Public Company Limited passed a resolution to propose a dividend payment of Baht 0.2 per share to the shareholders from the earnings of the promoted operations for the year 2008, or a total of Baht 798 million, for approval by the Annual General Meeting of the company’s shareholders. The share register is to be closed as of 13 March 2009 with respect to determining the entitlement to receive dividend payment. This dividend was approved by the Annual General Meeting of the company’s shareholders on 3 April 2009. Subsequently, on 11 August 2009, a meeting of the Board of Directors of Thai Tap Water Supply Public Company Limited passed a resolution to approve an interim dividend payment of Baht 0.11 per share to the shareholders from the earnings of the promoted operations for January to June 2009, or a total of Baht 438.9 million. The share register is to be closed as of 28 August 2009 with respect to determining the entitlement to receive dividend payment. The Company recorded dividend income of Baht 281.8 million and Baht 154.9 million, in proportion to its investment in the ordinary shares of such company, in the separate income statement for the first quarter and the third quarter of the year 2009, respectively. On 21 December 2009, a meeting of the Company’s Board of Directors passed a resolution granting approval for the Company to sell 180 million of the ordinary shares it held in Thai Tap Water Supply Public Company Limited to persons or legal entities who have no relationship and/or connection with the Company, or its directors, executives, related parties or major shareholders, representing 4.51 percent of the registered capital of such company. The offering price was to be not less than Baht 4.15 per share, equivalent to a total price of not less than Baht 747 million, based on the average closing price of such shares for the 15 business days prior to the date of the meeting of the Company’s Board of Directors. Subsequently, the Company sold 150 million ordinary shares of Thai Tap Water Supply Public Company Limited, equivalent to 3.76 percent of its registered capital, to Histeel Products Company Limited at a price of Baht 4.30 per share, or a total of Baht 645 million. The buyer and seller agreed to pay for and transfer the shares on 29 December 2009. As a result, the Company’s equity interest in the above company fell from 35.31 percent to 31.55 percent. The Company recognized a gain of Baht 343.1 million from the sale of this investment in associated company in the consolidated income statements for the year 2009 (Separate income statements: Bath 324.3 million). The Company has pledged part of the share certificates for its investment in Thai Tap Water Supply Public Company Limited with a group of banks to guarantee a loan facility granted to that company by the group of banks and as a security for loans from banks of the Company. 144

ANNUAL REPORT 2009

SouthEast Asia Energy Limited

On 26 May 2006, the Company entered into an Equity Contribution Agreement with SouthEast Asia Energy Limited and Nam Ngum 2 Power Company Limited (co-borrower), other shareholders and lenders of SouthEast Asia Energy Limited. Under the agreement, the Company agreed to provide equity contributions to SouthEast Asia Energy Limited in the proportion stipulated in the agreement (62.5 percent), or in total not more than Baht 2,469 million, in the following 3 cases: 1) Equity contribution of not more than Baht 781 million for income tax liabilities which may arise if such company fails to be granted tax exemption under the double taxation treaty between Thailand and the Lao People’s Democratic Republic. 2) Equity contribution of not more than Baht 1,219 million for income tax liabilities which may arise if such company fails to obtain the BOI Promotion Certificate from the Board of Investment. 3) Equity contribution of not more than Baht 469 million for any revenue shortfall in the event that the construction of the Nam Ngum 3 Hydropower plant negatively impacts on the energy production of the above company, causing such company to be unable to comply with its obligations under the Financing Documents. In addition, the Company agrees to provide additional equity contributions of not more than USD 12.5 million to SouthEast Asia Energy Limited in the event of any budget cost overruns in the Nam Ngum 2 Hydroelectric Power Project, and additional equity contributions of not more than Baht 313 million if the co-borrower of that company defaults on loan payment or is unable to comply with its obligations under the Financing Documents. On 11 April 2007, SouthEast Asia Energy Limited entered into the Memorandum of Understanding with the Lao People’s Democratic Republic for exclusive rights to carry out the feasibility study and the development of the Nam Bak 1-2 Hydroelectric Power Project within 18 months after the signing date. On 9 January 2008, the branch of SouthEast Asia Energy Limited entered into a novation agreement to transfer all rights and obligations under the Project Documents of the Nam Ngum 2 Hydroelectric Power Project to Nam Ngum 2 Power Company Limited (the subsidiary of SouthEast Asia Energy Limited), as approved by the meeting of the Board of Directors of SouthEast Asia Energy Limited. In this regard, SouthEast Asia Energy Limited transferred its major assets and liabilities to Nam Ngum 2 Power Company Limited in payment of the additional share capital of the subsidiary. The result of the novation agreement is that the rights and obligations under the Nam Ngum 2 Hydroelectric Power Project and rights to carry out the feasibility study and the development of the Nam Bak 1-2 Hydroelectric Power Project have been transferred to the subsidiary. On 9 October 2008, Nam Ngum 2 Power Company Limited entered into the Addendum to Memorandum of Understanding with the Government of the Lao People’s Democratic Republic for the extension of the exclusive rights to carry out the feasibility study and the development of the Nam Bak 1-2 Hydroelectric Power Project for the further period of 1 year after the expiration date, as approved by the resolution of meeting of the company’s Executive Board. Currently, the company is in the process of further extending the period of operation under the Memorandum of Understanding. During the year 2008, SouthEast Asia Energy Limited called up further for a total of 45.5 percent and 6.4 percent of the value of the 102.6 million ordinary shares and the 137.1 million ordinary shares, respectively, held by the Company which were not fully paid (par value of Baht 10 each), or totals of Baht 554.5 million. The Company made payment of the share prices in such year.

145

CH. KARNCHANG PUBLIC COMPANY LIMITED

During the year 2009, SouthEast Asia Energy Limited called up further for a total of 43.7 percent of the value of the 137.1 million ordinary shares held by the Company which were not fully paid (par value of Baht 10 each), or a totals of Baht 598.9 million. The Company made payment of the share prices during such year. On 25 December 2009, SouthEast Asia Energy Limited called up an additional 1.9 percent of the value of the

137.1 million ordinary shares held by the Company which were not fully paid (par value of Baht 10 each), or a total of Baht 26.0 million. The Company made payment of the share prices in January 2010. The Company has pledged share certificates for its investment in SouthEast Asia Energy Limited with a group of banks to guarantee a loan facility granted to that company by the group of banks. 17. Other long-term investments (Unit: Baht)

Investments in available for sale - related company Bangkok Expressway Public Company Limited Add (less): Unrealised gain (loss) on

changes in value of investments Other Investments - other companies Nava Finance and Securities Public Company Limited Bangkok Tokyu Department Store Company Limited Kruasakul Company Limited The Bangkok Club Company Limited Chanthaburi Country Club Company Limited Other related parties Less : Provision for loss on diminution in value of investments Investments in held-to-maturity debt securities Debentures of Bank of Ayudhya Public

Company Limited Debentures of Thai Airways International Public Company Limited Other long-term investments, net

Consolidated financial statements Shareholding Investments percentage Percent 2009 2008

16.39

Separate financial statements Shareholding Investments percentage Percent 2009 2008

2,552,052,757

2,572,789,703

15.15

60,715,527

(366,591,806)

- 19.00 10.14 0.57 0.25

2,612,768,284 27,291,095 2,280,000 43,750,000 3,000,000 2,000,000 136,044 78,457,139

2,206,197,897 27,291,095 2,280,000 43,750,000 3,000,000 2,000,000 136,044 78,457,139

(71,041,095)

7,416,044 20,000,000

7,416,044 -

- 2,620,184,328

2,411,613,718

2,432,350,664

3,445,968

(391,387,488)

- - 10.14 0.57 0.25

2,415,059,686 27,291,095 - 43,750,000 3,000,000 2,000,000 136,044 76,177,139

2,040,963,176 27,291,095 - 43,750,000 3,000,000 2,000,000 136,044 76,177,139

(71,041,095)

5,136,044 -

5,136,044 20,000,000

10,000,000

30,000,000 2,243,613,941

- 2,420,195,730

30,000,000 2,076,099,220

The Company has pledged part of the share certificates for its investment in Bangkok Expressway Public Company Limited with banks to secure its long-term loans from banks.â&#x20AC;&#x2C6;

146

Land and land Condominium improvement building

Consolidated financial statements Furniture, Machinery Buildings and Building fixtures and and construction improvements equipment office equipment

Cost 31 December 2008 313,794,550 631,756,243 201,332,169 325,618,103 3,116,510,904 188,804,380 Additions 83,089,070 - 37,910,538 98,265 220,970,765 12,322,903 Disposals /write off - - - - (136,047,566) (8,426,592) Reclassification/transfer in (out) (92,901,512) - (93,318,331) 5,339,628 (208,234,470) (4,636,790) 31 December 2009 303,982,108 631,756,243 145,924,376 331,055,996 2,993,199,633 188,063,901 Accumulated depreciation 31 December 2008 11,089,529 17,245,712 142,106,690 321,209,646 2,002,232,151 133,208,522 Depreciation for the year 6,811,565 14,761,495 8,038,278 1,378,189 218,287,333 20,538,003 Depreciation on disposals /write off - - - - (134,026,160) (7,826,829) Reclassification/transfer in (out) - - (61,015,747) - (213,092,071) (4,457,808) 31 December 2009 17,901,094 32,007,207 89,129,221 322,587,835 1,873,401,253 141,461,888 Allowance for impairment loss 85,147,523 - - - - - 31 December 2008 (11,287,755) - - - - - Decrease during the year 73,859,768 - - - - - 31 December 2009 Net book value 217,557,498 614,510,531 59,225,479 4,408,457 1,114,278,753 55,595,858 31 December 2008 212,221,246 599,749,036 56,795,155 8,468,161 1,119,798,380 46,602,013 31 December 2009 Depreciation for the year 2008 (Baht 411 million included in cost of construction services, sales of construction materials and services, and the balance in administrative expenses) 2009 (Baht 300 million included in cost of construction services, sales of construction materials and services, and the balance in administrative expenses)

18. Property, plant and equipment

143,743,170 123,675,230

378,619,436 10,720,903 (20,916,648) 28,483,428 396,907,119 234,876,266 56,000,172 (17,644,549) - 273,231,889 - - -

Motor vehicles

7,332,673 69,806,180 - (42,108,853) 35,030,000 - - - - - - - - 7,332,673 35,030,000

Construction in progress

2,216,652,419 2,202,339,221 480,554,405 325,815,035

5,163,768,458 434,918,624 (165,390,806) (407,376,900) 5,025,919,376 2,861,968,516 325,815,035 (159,497,538) (278,565,626) 2,749,720,387 85,147,523 (11,287,755) 73,859,768

Total

(Unit : Baht)

ANNUAL REPORT 2009

147

148

Land and land Condominium improvement building

Buildings and construction

Motor vehicles

7,332,673 30,612,245 - (7,508,871) 30,436,047 - - - - - - - 7,332,673 30,436,047

Construction in progress

2,928,204,480 311,990,198 (152,853,468) (20,617) 3,087,320,593 1,460,642,838 210,625,086 (147,384,118) (58,717) 1,523,825,089 73,859,768 73,859,768 1,393,701,874 1,489,635,736 257,880,643 210,625,086

Total

As at 31 December 2009, certain plant and equipment items have been fully depreciated but are still in use. The original cost of those assets amounted to approximately Baht 1,429 million (2008: Baht 1,252 million) (Separate financial statements: Baht 773 million, 2008: Baht 842 million).

As at 31 December 2009, the Company and a subsidiary had machinery, vehicles and equipment under hire purchase agreements with net book values amounting to Baht 192 million (Separate financial statements: Baht 171 million).

Cost 31 December 2008 207,276,649 631,756,243 79,260,294 11,037,396 1,599,798,066 91,988,781 299,754,378 Additions 83,089,070 - 35,896,555 - 142,434,999 9,376,613 10,580,716 Disposals /write off - - - - (127,224,546) (6,815,253) (18,813,669) Reclassification/transfer in (out) - - 2,169,243 5,339,628 - (20,617) - 31 December 2009 290,365,719 631,756,243 117,326,092 16,377,024 1,615,008,519 94,529,524 291,521,425 Accumulated depreciation 31 December 2008 8,593,869 17,245,712 58,824,222 6,628,961 1,125,888,528 63,263,440 180,198,106 Depreciation for the year 6,550,905 14,761,495 4,631,054 1,372,915 128,510,582 11,007,556 43,790,579 Depreciation on disposals /write off - - - - (125,367,091) (6,402,456) (15,614,571) Reclassification/transfer in (out) - - - - - (58,717) - 15,144,774 32,007,207 63,455,276 8,001,876 1,129,032,019 67,809,823 208,374,114 31 December 2009 Allowance for impairment loss 73,859,768 - - - - - - 31 December 2008 73,859,768 - - - - - - 31 December 2009 Net book value 124,823,012 614,510,531 20,436,072 4,408,435 473,909,538 28,725,341 119,556,272 31 December 2008 201,361,177 599,749,036 53,870,816 8,375,148 485,976,500 26,719,701 83,147,311 31 December 2009 Depreciation for the years 2008 (Baht 212 million included in cost of construction services, sales of construction materials and services, and the balance in administrative expenses) 2009 (Baht 191 million included in cost of construction services, sales of construction materials and services, and the balance in administrative expenses)

Separate financial statements Furniture, Building Machinery fixtures and improveand office ments equipment equipment

(Unit : Baht) CH. KARNCHANG PUBLIC COMPANY LIMITED

ANNUAL REPORT 2009

19. Investments in land Consolidated financial statements 2009 2008

Cost Less: Provision for decline in value of investments in land Investments in land, net

341,737,495 (59,848,637) 281,888,858

(Unit : Baht)

Separate financial statements 2009 2008

182,346,124 (41,834,202) 140,511,922

The Company and its subsidiaries appraised the value of investments in land and adjusted them to fair value, which is equivalent to the price appraised by the Land Department. 20. Intangible assets Details of intangible assets which are computer software are as follows : (Unit : Baht)

Consolidated and separate financial statements 2009 2008

Cost Accumulated amortisation Net book value Amortisation expenses included in the income statements for the year

63,639,772 (4,560,462) 59,079,310 3,638,051

42,525,488 (922,411) 41,603,077 677,893

21. Bank overdrafts and short-term loans from financial institutions Bank overdrafts and short-term loans from financial institutions as at 31 December 2009 and 2008 are comprised of :

(Unit : Baht)

Bank overdrafts Short-term loans from banks Bills of exchange Total

Interest rate

Consolidated financial statements

Separate financial statements

(% p.a.)

2009

2008

2009

2008

7.0 to 15.5, and MOR + 0.5 MLR - 1, MLR - 1.5 and MOR 4.25

19,227,322 1,140,490,297 1,500,000,000 2,659,717,619

70,243,427 2,604,030,000 - 2,674,273,427

- 390,300,000 1,500,000,000 1,890,300,000

3,057,585 1,039,530,000 - 1,042,587,585

CH. Karnchang (Lao) Company Limited

CH. Karnchang (Lao) Company Limited entered into credit facilities agreements totaling Baht 9,622.3 million with a local commercial bank to obtain the following 6 types of credit facilities for the Nam Ngum 2 Hydroelectric Power Project : 1) Promissory note facility of Baht 726 million for use as working capital in the construction of the project, carrying interest at the Minimum Overdraft Rate (MOR) per annum. 2) Bank guarantee facility of Baht 1,532.7 million to provide guarantees for the project under the construction contract. 3) Bank guarantee facility of Baht 400 million to provide guarantees for purchases of construction material and utilities. 4) Letter of credit, trust receipt, and domestic letter of credit facilities totaling Baht 2,643.6 million for ordering machinery and equipment. 5) Bank overdraft facility of Baht 20 million for use as working capital. 6) Forward contract facility of Baht 4,300 million to hedge exchange risk. 149

CH. KARNCHANG PUBLIC COMPANY LIMITED

The collateral for these credit facilities comprises the transfer of the rights to make collection on construction payments for the Nam Ngum 2 Hydroelectric Power Project, the transfer of bank guarantees provided by subcontractors, the transfer of the rights over saving deposits of the subsidiary, saving deposits of the subsidiary, and the provision of a guarantee by the Company, as discussed in Note 36.4 The outstanding balance of bills of exchange represented bills of exchange issued to commercial banks and open-ended funds, which carried interest at a rate of 4.25 percent per annum, and matured within 1 year. Parts of the bank overdrafts and short-term loans from financial institutions of the Company are secured by the transfer of rights over collection of revenues from construction projects. Bank overdrafts and short-term loans from financial institutions of subsidiaries are secured by certain bank deposits of the Company, the transfer of the rights over saving deposits of a subsidiary, the transfer of rights over receipt of payment under construction contracts of subsidiaries, the transfer of bank guarantees provided by subcontractors, the mortgage of part of land, building and construction thereon and machinery of a subsidiary and are guaranteed by the Company and subsidiaries’ shareholders. The bank overdrafts of two limited partnerships, which were invested in by a subsidiary, are secured by the mortgage of the securities of a related company and are guaranteed by the partners of these partnerships and the Company’s directors. 22. Hire purchase creditors Consolidated financial statements 2009 2008

Liabilities under hire purchase Less: Deferred interest expenses Less: Portion due within one year Liabilities under hire purchase, net of current portion

118,424,300 (5,886,613) (98,136,105) 14,401,582

225,853,210 (16,198,237) (123,737,027) 85,917,946

(Unit: Baht)

Separate financial statements 2009 2008

105,999,173 (5,352,230) (89,569,408) 11,077,535

201,176,970 (14,484,802) (112,664,965) 74,027,203

The Company and its subsidiary has entered into hire purchase agreements with leasing companies for rental of equipment and motor vehicles for use in their operation, whereby they are committed to pay rental on a monthly basis. The terms of the agreements are generally between 3 to 5 years. As at 31 December 2009, Future minimum lease payments required under the hire purchase agreements were as follows : (Unit: Million Baht)

Future minimum lease payments Deferred interest expenses Present value of future minimum lease payments

150

Consolidated financial statements Less than 1 - 5 years Total 1 year

103.2 (5.1) 98.1

15.2 (0.8) 14.4

118.4 (5.9) 112.5 (Unit: Million Baht)

Separate financial statements Less than 1 - 5 years Total 1 year

94.2 (4.7) 89.5

11.8 (0.7) 11.1

106.0 (5.4) 100.6

ANNUAL REPORT 2009

23. Long-term loans Loans

(Unit: Baht)

Repayment schedule

The Conpany 1 Quarterly installments as from 18 August 2006 to 18 May 2011 2 Quarterly installments as from 31 October 2009 to 31 July 2013 3 Quarterly installments as from 30 June 2009 to 30 September 2013 4 Semi-annual installments as from 30 June 2009 to 30 December 2015 5 Semi-annual installments as from 31 December 2008 to 30 December 2015 6 Semi-annual installments as from 30 September 2008 to 30 March 2014 7 Semi-annual installments as from 28 February 2011 to 31 August 2015 Total Less: Current portion Long-term loans, net

Consolidated and separate

financial statements 2009 2008

150,000,000 516,500,000 880,000,000 628,000,000 609,570,000 438,355,212 750,000,000 3,972,425,212 (624,420,000) 3,348,005,212

250,000,000 750,000,000 1,000,000,000 658,000,000 648,370,000 514,105,212 - 3,820,475,212 (378,700,000) 3,441,775,212

The long-term loans of the Company carry interest rates between the Minimum Loan Rate minus stipulated margins (MLR margin) per annum and Minimum Loan Rate (MLR) per annum. Long-term loans presented in item 4 in the above table represent the loans under a debt conversion agreement between the Company and a bank (as discussed in Note 15) to be responsible for all indebtedness of the Joint Venture BBCD under existing agreements, comprising loan principal of Baht 688 mil ion and accrued interest of approximately Baht 219.8 mil ion. Loan payments and accrued interest payments of Baht 165.9 mil ion are scheduled to be made in 16 semi-annual installments. The loan is subject to interest at the Minimum Loan Rate (MLR) per annum. However, during the period of loan payment, the Company requested to pay interest at the Minimum Loan Rate minus a stipulated margin (MLR - margin) per annum on a monthly basis and suspend the difference. If the Company complies with the term of payment of loan principal, accrued interest and monthly interest, the bank wil waive the remaining accrued interest of Baht 53.9 mil ion and all suspended interest. However, if the Joint Venture BBCD or the Company receives compensation for damages or other payment of claims from the Expressway and Rapid Transit Authority of Thailand, the Company wil additionally repay debt to the bank not less than the percentage of the compensation stipulated by the bank. The long-term loans presented in item 5 in the above table represent the loans under a debt restructuring agreement between the Company and a bank (as discussed in Note 15) to restructure debt that the Company assumed on behalf of the Joint Venture BBCD, comprising loan principal of Baht 667.6 million and accrued interest of Baht 138.4 million. Loan payments and accrued interest payments of Baht 126.9 million are scheduled to be made in 15 semi-annual installments. The loan is subject to interest at the Minimum Loan Rate (MLR) per annum. However, during the period of loan payment, the Company requested to pay interest at the Minimum Loan Rate minus a stipulated margin (MLR - margin) per annum on a monthly basis and suspend the difference. If the Company complies with the term of payment of loan principal, accrued interest and monthly interest, the bank will waive the remaining accrued interest of Baht 11.5 million and all suspended interest. In addition, if the Company complies with the repayment conditions and other conditions, the bank will waive the difference in accrued interest of Baht 11.5 million. However, if the Joint Venture BBCD receives compensation for additional costs from the Expressway and Rapid Transit Authority of Thailand and the Company receives such compensation from the joint venture, the Company will repay all remaining principal and outstanding interest to the bank.

151

CH. KARNCHANG PUBLIC COMPANY LIMITED

Long-term loans presented in item 6 in the above table represent the loans under a agreement to restructure the debts between the Company and a bank (as discussed in Note 15) to convert indebtedness of the Joint Venture BBCD to the bank of Baht 584.1 million to a loan to the Company. The loan is subject to interest at the Minimum Loan Rate minus a stipulated margin (MLR - margin) per annum and the interest will be paid on a quarterly basis. However, if Joint Venture BBCD receives compensation for additional costs from the Expressway and Rapid Transit Authority of Thailand, all indebtedness in the agreement are due immediately and the Company will repay all remaining indebtedness to the bank within the period stipulated by the bank. Long-term loans were secured by the pledge of parts of share certificates of investments in associated and related companies, the transfer of part of the rights over receipt of payment under construction contracts, the transfer of parts of the rights to receive deposits in bank accounts, the mortgage of land and construction thereon of other company (as discussed in Note 13) and the guarantee of the Company’s directors, the venturers in certain joint ventures, certain related companies and other companies. The loan agreements contain covenants that, among other things, require the Company to maintain certain debt to equity and debt to collateral value ratios. 24. Debentures (Unit: Baht)

Interest rate

Debentures

Life

Date of issue

Maturity date

1 2

5 years 5 years 4 years, 7 months

and 12 days 3 years 3 years 3 years 3 years 5 years 3 years 2 years 4 years

18 October 2004 18 October 2004

18 October 2009 18 October 2009

5.45 MLR - 0.75

July 2005

26 February 2010

September 2006 July 2007 April 2008 6 February 2009 6 February 2009 25 June 2009 22 October 2009 22 October 2009

20 September 2009 26 July 2010 30 April 2011 6 February 2012 6 February 2014 25 June 2012 22 October 2011 22 October 2013

(% p.a.)

4 5 6 7 8 9 10 11 Total Less: Current portion of debentures Debentures, net of current portion

Consolidated and Separate financial statements 2009 2008

- -

120,000,000 880,000,000

5.2

1,100,000,000

6.5 5.25 5.0 5.3 and 5.9 5.5 and 6.3 5.3 and 6.0 5.0 5.4 and 6.2

- 1,998,683,105 1,997,347,945 1,612,777,198 880,888,545 1,396,528,767 997,178,311 1,994,356,621 11,977,760,492 (3,100,000,000) 8,877,760,492

2,000,000,000 1,996,349,772 1,995,347,945 - - - - - 8,091,697,717 (3,000,000,000) 5,091,697,717

All debentures of the Company are unsecured, registered, senior debentures with trustees and with a par value of Baht 1,000 each. The interest is payable every 6 months throughout the life of the debentures. The balance of the debentures, as presented in items 5 to 11 in the above table, presented net of deferred debenture issuing costs. On 30 April 2007, the Annual General Meeting of the Company’s shareholders passed a resolution approving, in principle, the issue and offer of new debentures whenever any amount of existing debentures mature, but with the outstanding balance of all debentures not at any time to exceed a total of Baht 12,000 million.

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ANNUAL REPORT 2009

On 6 February 2009, the Company offered and issued debentures. The details of such debentures are as follows : 1) Debentures No. 1/2009 Tranche 1 comprises 1,616,200 units with terms of 3 years, bearing interest at a rate of 5.3 percent for the first two years and then at 5.9 percent per annum until maturity, as presented in item 7 in the above table. 2) Debentures No. 1/2009 Tranche 2 comprises 883,800 units with terms of 5 years, bearing interest at a rate of 5.5 percent for the first two years and then at 6.3 percent per annum until maturity, as presented in item 8 in the above table.

On 25 June 2009, the Company offered and issued 1,400,000 units of 3-year Debentures No. 2/2009, bearing interest at a rate of 5.3 percent for the first two years and then at a rate of 6.0 percent per annum until maturity, as presented in item 9 in the above table.

On 22 October 2009, the Company offered and issued debentures. The details of such debentures are as follows : 1) Debentures No. 3/2009 Tranche 1 comprises 1,000,000 units with terms of 2 years, bearing interest at a rate of 5.0 percent, as presented in item 10 in the above table. 2) Debentures No. 3/2009 Tranche 2 comprises 2,000,000 units with terms of 4 years, bearing interest at a rate of 5.4 percent for the first two years and then at 6.2 percent per annum until maturity, as presented in item 11 in the above table. The conditions of the debentures include covenants that, among other things, require the Company to maintain a certain debt to equity ratio. 25. Statutory reserve Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a statutory reserve at least 5 percent of its net income after deducting accumulated deficit brought forward (if any), until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution. 26. Accounts receivable - claims for additional costs In 2000, Joint Venture BBCD had claimed for payment of additional construction costs from the Expressway and Rapid Transit Authority of Thailand (the employer). The employer’s consulting engineer considered the joint venture’s claims and issued a letter confirming its acceptance of the additional costs. Subsequently, the Arbitral Tribunal issued its award, ruling that the employer was to pay the joint venture for such additional costs and accrued interest. Later the employer sent a letter to the joint venture informing that, after consideration, the employer had decided to comply with the arbitral award. Consequently, the joint venture had recorded such amounts as asset and income in the financial statements of 2001. The Group’s proportionate interest in such amounts is approximately Baht 2,500 million. As a result of the delay in the payment, the joint venture filed a lawsuit against the employer with a Civil Court to ordering compliance with the arbitral award. On 30 December 2003, the court ruled in favor of the joint venture, ordering compliance with the arbitral award requiring the Expressway and Rapid Transit Authority of Thailand (the employer) to pay the joint venture in accordance with the arbitral award. Subsequently, in January 2004, the employer appealed the ruling to the Supreme Court of Thailand. On 15 February 2007, the Supreme Court handed down a judgment reversing that of the Civil Court enforcing the arbitral award requiring the employer to make payments to the Joint Venture BBCD. The joint venture therefore recorded allowance for doubtful accounts for the full amount of the accounts receivable recorded in respect of the claim for additional costs as an expense in the income statement of 2006, with the Group’s proportionate interest in such allowance being approximately Baht 2,500 million.

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CH. KARNCHANG PUBLIC COMPANY LIMITED

Subsequently, after the management of the Company carefully reviewed the details of the Supreme Court’s judgment, on 11 February 2008 a lawsuit was filed against the employer with the Civil Court, to recover costs paid by the Joint Venture BBCD from the employer, on the grounds of undue enrichment. Such costs and accrued interest calculated up to the date of filing of the lawsuit amounted to approximately Baht 3,400 million (per the Group’s proportionate interest). Currently, the case is in the process of consideration of the Civil Court. 27. Advances for future projects This mostly represents cash payments made for the new hydroelectric power plant projects in the Lao People’s Democratic Republic, which the Company will establish a new company or assign a group company to operate in the future. The Company will refund these advances from the companies that operate the projects. 28. Gain (loss) on exchange The Company, its subsidiaries and its jointly controlled entities recorded the following gain (loss) on exchange for the years ended 31 December 2009 and 2008. (Unit: Baht)

Gain (loss) on exchange - Realised - Unrealised Total

Consolidated financial statements

Separate financial statements

2009

2008

2009

2008

96,855,468 (2,546,699) 94,308,769

(15,828,870) 94,782,306 78,953,436

(433,439) (1,415,694) (1,849,133)

(4,580,722) 1,857,585 (2,723,137)

29. Expenses by nature Significant expenses by nature are as follow:

Salary and wages and other employee benefits Depreciation Construction materials and consumables used and subcontractors costs Repair and maintenance expenses

(Unit: Baht) Consolidated financial statements

Separate financial statements

2009

2008

2009

1,277,296,642 325,815,035

1,323,606,900 480,554,405

488,162,021 210,625,086

516,682,087 257,880,643

2008

11,148,325,713

9,822,063,414

3,167,307,123

4,565,159,526

255,895,992 335,933,754 107,880,795 270,320,032 30. Corporate income tax The Company has no corporate income tax liabilities for the years 2009 and 2008 since the Company has tax losses for such years. Corporate income tax of subsidiaries and jointly controlled entities for the year 2009 and 2008 were calculated on net income before income tax after adding back expenses and deducting income which are disallowable for tax computation purposes. 31. Earnings per share Basic earnings per share is calculated by dividing the net income for the year by the weighted average number of ordinary shares in issue during the year. 32. Contracts in progress As at 31 December 2009, the aggregate amount of construction cost incurred and recognised profits or losses to date for contracts in progress of the Company, its subsidiaries and its jointly controlled entities was approximately Baht 46,967.1 million (Separate financial statements: Baht 21,852.7 million), gross amounts due from customers for contracts in progress were approximately Baht 3,847.5 million (Separate financial statements: Baht 2,468.5 million), and gross amounts due to customers for contracts in progress were approximately Baht 130.1 million (Separate financial statements: Baht 2.0 million).

154

ANNUAL REPORT 2009

33. Segment information The Company, its subsidiaries and its jointly controlled entities’ operations involve principally a single industry segment, construction service, and are carried on in two geographic areas in Thailand and in the Lao People’s Democratic Republic, as operated by a subsidiary. The financial information of the Company, its subsidiaries and its jointly controlled entities by geographical segment, for the years ended 31 December 2009 and 2008 are as follows :

Revenue from external customers Inter-segment revenues Total revenues Segment operating profit (loss) Unallocated income and expenses : Other income Share of profit (loss) from investments in

associated companies Finance cost Corporate income tax Minority interests Net income

Thailand

The Lao People’s Democratic Republic 2009 2008

Elimination of intersegment revenues 2009 2008

2009

2008

5,263 331 5,594 (372)

8,116 277 8,393 (256)

7,593 - 7,593 341

5,163 - 5,163 578

- (331) (331)

- (277) (277)

12,856 - 12,856 (31) 985

13,279 - 13,279 322 1,154

(26)

(882) (56) (8) 90

(824) (53) (28) 545

Trade accounts receivable, net Unbilled receivables Advance payment to subcontractors, net Property, plant and equipment, net Unallocated assets Total assets

(Unit : Million Baht)

Consolidated financial statements 2009 2008

Thailand 2009

2008

1,264 2,554 794 1,543 20,204

2,458 3,067 661 1,576 14,069

The Lao People’s Democratic Republic 2009 2008

200 1,287 256 659 1,365

308 - 701 641 2,693

Elimination of intersegment revenues 2009 2008

(3) - - - (653)

(5) - - - (296)

(Unit : Million Baht)

Consolidated financial statements 2009 2008

1,461 3,841 1,050 2,202 20,916 29,470

2,761 3,067 1,362 2,217 16,466 25,873

Transfer prices between business segments are as set out in Note 7. 34. Provident fund The Company, some subsidiaries and their employees have jointly established provident funds in accordance with the Provident Fund Act B.E. 2530. The Company, the subsidiaries and their employees contribute to the funds monthly at the rate of 5 percent of basic salary. The funds, which are managed by TMB Asset Management Company Limited and TISCO Asset Management Company Limited (Separate financial statements: TMB Asset Management Company Limited) will be paid to employees upon termination in accordance with the fund rules. During the years 2009 and 2008, the Company and the subsidiaries contributed Baht 19.9 million and Baht 19.1 million, respectively (Separate financial statements: Baht 12.5 million and Baht 11.9 million, respectively) to the funds.

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CH. KARNCHANG PUBLIC COMPANY LIMITED

35. Dividends On 30 April 2008, the Annual General Meeting of the Company’s shareholders passed resolutions approving the payment of a dividend of Baht 0.15 per share for the operations of July to December 2007, a total of Baht 216.9 million. The dividend was paid on 30 May 2008. On 23 April 2009, the Annual General Meeting of the Company’s shareholders passed resolutions approving the payment of a dividend for 2008 of Baht 0.10 per share, or a total of Baht 144.6 million. The dividend was paid on 22 May 2009. 36. Commitments and contingent liabilities

36.1 Capital commitments

36.2 Operating lease commitments

36.3 Service commitments and other commitments

36.4 Related party guarantees

36.5 Bank guarantees

As at 31 December 2009, the Company had capital commitment of approximately Baht 0.7 million, relating to the acquisition of fixed assets. A subsidiary and a jointly controlled entity have entered into lease agreements in respect of the lease of land and office building space. The term of the agreements are between 1 to 3 years. As at 31 December 2009, future minimum lease payments required under the operating lease contracts were as follows: Payable within : (Unit : Million Baht) (Unit : US dollar) 1 year 3.4 10,000 2 to 3 year 6.2 - As at 31 December 2009, the Company, its subsidiaries and its jointly controlled entities had the following service commitments and other commitments : a) The Company, its subsidiaries and its jointly controlled entities have commitments totaling Baht 2,665.5 million (Separate financial statements: Baht 973.2 million) in respect of project construction costs and services, which the Company, its subsidiaries and its jointly controlled entities had already entered into agreements. b) The Company has commitment in respect of uncalled portion of investments in a subsidiary and an associated company of approximately Baht 380.1 million (2008: Baht 955.3 million). c) The Company has commitments of Baht 816.9 million in respect of the Subordinated Loan Agreement to provide funding to Bangkok Metro Public Company Limited, as stipulated in the agreement (as discussed in Note 7). d) The Company has commitments of up to Baht 2,782 million and USD 12.5 million in respect of its undertaking to provide equity contributions to SouthEast Asia Energy Limited as stipulated in the agreement (as discussed in Note 16). e) The Company has commitments as stipulated in the Payment Agreement (as discussed in Note 15). As at 31 December 2009, the Company has provided guarantees totaling Baht 9,788.3 million for bank credit facilities on behalf of two subsidiaries. As at 31 December 2009 and 2008, there were outstanding bank guarantees of approximately Baht 8,884.0 million and Baht 7,962.3 million, respectively (Separate financial statements: Baht 4,895.7 million and Baht 6,129.6 million, respectively) issued by banks on behalf of the Company, its subsidiaries and its jointly controlled entities (in proportionate of the Company’s interest in joint ventures) in respect of certain performance bonds as required in the normal course of business of the Company, its subsidiaries and its jointly controlled entities. The details of bank guarantees are as follows :

156

ANNUAL REPORT 2009

(Unit: Million Baht)

Guarantee of construction contracts bidding and debt repayment Guarantee of advance payment bond and retention Other guarantees

Consolidated financial statements

Separate financial statements

2009

2008

2009

2008

5,078.7

4,940.6

2,853.5

3,824.9

3,719.2 86.1 8,884.0

2,019.0 1,002.7 7,962.3

2,005.8 36.4 4,895.7

1,430.1 874.6 6,129.6

36.6 Contingent liabilities The Company

In October 2008, the Company was sued for damages of Baht 75.5 million, plus interest at the rate of 7.5 percent per annum calculated from the day following the date of filing of the case. Currently, the case is under consideration by the Civil Court. However, since the management of the Company believes that the Company has no liability in respect of such claim, it has not set aside provision for loss in the accounts.

Joint Venture BBCD

In 2006, the Central Tax Court issued a judgement ordering the Joint Venture BBCD to pay additional customs duties on construction equipment imports amounting to approximately Baht 109 million (in proportion to the Company’s interest in the joint venture). The joint venture filed an appeal against the judgement with the Supreme Court and the case is currently before the Supreme Court. However, since the management of the Joint Venture BBCD believes that the joint venture has no liability in respect of such additional customs duties, it has not set aside provision for loss for the customs duty assessment in the accounts. 37. Financial instruments

37.1 Financial risk management

The Company’s, its subsidiaries’ and its jointly controlled entities’ financial instruments, as defined under Thai Accounting Standard No.32 “Financial Instruments: Disclosure and Presentations”, principally comprise the following : Financial assets

- Cash and cash equivalents - Trade accounts receivable - Accounts receivable and loans to related parties - Advance payment to subcontractors - Loans to subcontractors and interest receivable - Long-term loans to other companies and interest receivable - Restricted bank deposits - Long-term loans to jointly controlled entities and interest receivable - Long-term loans to associated companies and interest receivable - Advances for future projects

Financial liabilities

- Bank overdrafts and short-term loans from financial institutions - Trade accounts payable - Hire purchase creditors - Accounts payable and loans from related parties - Advances received from employers and construction revenue received in advance - Retention for construction - Long-term loans - Debentures

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CH. KARNCHANG PUBLIC COMPANY LIMITED

The financial risks associated with these financial instruments and how they are managed is described below .

a) Credit risk

b) Interest rate risk

The Company, its subsidiaries and its jointly controlled entities are exposed to credit risk primarily with respect to construction receivables and loans. However, since the majority of the Company’s, its subsidiaries’ and jointly controlled entities’ construction contracts are made with government agencies and other creditworthy customers, they do not anticipate material losses from their debt collection outside those for which provision has already been set aside. The Company’s, its subsidiaries’ and its jointly controlled entities’ exposure to interest rate risk relates primarily to its cash at banks, lendings, bank overdrafts and short-term loans, hire purchase creditors, long-term borrowings and debentures. However, since most of these financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate, the interest rate risk is expected to be minimal. Significant financial assets and liabilities as at 31 December 2009 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 Fixed interest rates NonFloating Within 1-5 years Over interest rate interest bearing 1 year 5 years

(Unit: Million Baht)

Total

Financial assets Cash and cash equivalents

2,368

1,113

3,519

Trade accounts receivable, net

134

1,313

1,461

Accounts receivable and loans to related parties, net Advance payment to subcontractors, net Loans to subcontractors and interest receivable Long-term loans to other companies and interest receivable Restricted bank deposits Long-term loans to jointly controlled entities and interest receivable Long-term loans to associated companies and interest receivable Advances for future projects

- - 178 156 315

- - - 1,276 15

- - - - -

- - - - 78

169 1,050 - - -

169 1,050 178 1,432 408

245

2,728

- 701

- 1,291

- -

- 5,553

942 4,587

942 12,132

158

Effective interest rate

(% p.a.)

0.5 to 1.75 8.5 and

MLR + 1 - - 9.5 MLR + 1.5 0.5 to 3.0 MLR + 1 and MLR + 2 MLR + 0.5 and MLR + 1 -

ANNUAL REPORT 2009

Financial liabilities Bank overdrafts and short-term loans from financial institutions Trade accounts payable Hire purchase creditors Advances received from employers and construction revenue received in advance Retention for construction Long-term loans

Debentures

Financial assets Cash and cash equivalents Trade accounts receivable, net Accounts receivable and loans to related parties, net Advance payment to subcontractors, net Restricted bank deposits Long-term loans to jointly controlled entities and interest receivable Long-term loans to associated companies and interest receivable Advances for future projects Financial liabilities Bank overdrafts and short-term loans from financial institutions Trade accounts payable Hire purchase creditors Advances received from employers and construction revenue received in advance Retention for construction Long-term loans Debentures

Consolidated financial statements Fixed interest rates NonFloating Within 1-5 years Over interest rate interest bearing 1 year 5 years

(Unit: Million Baht) Total

Effective interest rate

(% p.a.)

1,500

1,136

2,660

- 98

- 15

- -

1,312 -

1,312 113

4.25, 7.5 to 15.5, MLR - 1, MLR - 1.5, MOR, and MOR + 0.5 - 2.66 to 4.65

1,613

526

3,972

3,100 4,698

8,878 8,893

- -

- 5,108

- 3,475

Separate financial statements Fixed interest rates Floating Noninterest interest Within 1-5 Over rate bearing 1 year year 5 year

- - Margin 3,972 MLR and MLR 11,978 5.0 to 6.5 22,174 (Unit: Million Baht) Total

Effective interest rate

(% p.a.)

34 - - - 238

- - - - -

776 134 659 - 6

1,081 1,085 569 273 -

1,891 1,219 1,228 273 244

1,246

2,728

- 272

- -

- 5,549

125 3,133

125 8,954

1,500

390

1,890

- 90

- 11

- -

501 -

501 101

0.5 to 1.75 MLR + 1 MLR + 0.25 - 0.5 to 1.75 MLR + 1 and MLR + 2 MLR + 0.5 and MLR + 1 - 4.25, MLR - 1

and MLR - 1.5 - 2.66 to 4.65

485

155

3,972

3,100 4,690

8,878 8,889

- -

- 4,362

- 1,141

11,978 19,082

- MLR - Margin and MLR 5.0 to 6.5

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CH. KARNCHANG PUBLIC COMPANY LIMITED

c) Foreign currency risk

The Company’s, its subsidiaries’ and its jointly controlled entities’ exposure to foreign currency risk arises mainly from construction contracts, purchasing transactions, advances received from employers and borrowings that are denominated in foreign currencies. The balances of financial assets and liabilities denominated in foreign currencies as at 31 December 2009 are summarised below. Foreign currency

US Dollar Euro Japanese yen Vietnamese Dong

Consolidated financial statements Financial Financial assets liabilities (Million) (Million)

11.6 0.1 - 7,889.1

15.7 - 302.6 -

Separate financial statements Financial Financial assets liabilities (Million) (Million)

0.2 - - 7,889.1

- - - -

Average exchange rate as at 31 December 2009 (Bath per 1 foreign

currency unit)

33.3688 47.7934 0.3623 0.0018

The Company, its subsidiaries and its jointly controlled entities do not utilise forward exchange contracts to hedge foreign exchange rate risk.

37.2 Fair values of financial instruments

Since the majority of the Company’s, its subsidiaries’ and its jointly controlled entities’ financial instruments are

short-term in nature, and the significant financial assets and liabilities comprise loans to, loans from and debentures which bear interests at rates close to market rates, the fair values of these financial assets and liabilities are not expected to differ materially from the amounts presented in the balance sheets. A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable willing parties in an 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. 38. Capital management The primary objective of the Company’s capital management is to ensure that it has an appropriate financial structure and preserves the ability to continue its business as a going concern. The Group has to maintain a debt-to-equity ratio

as stipulated in long-term loan agreements and condition of debentures. 39. Subsequent events On 30 November 2009, a meeting of the Company’s Board of Directors passed resolutions regarding to share capital of the Company as follows : 1) Approved the reduction of the Company’s registered capital by means of canceling 3,987,831 unissued ordinary shares, or registered capital of Baht 3,987,831, from Baht 1,450,000,000 to Baht 1,446,012,169, which is equivalent to the paidup capital. This was to be proposed to Extraordinary General Meeting of Shareholders No.1/2010 for approval. 2) Approved the increase of the Company’s registered capital by Baht 206,573,167, from Baht 1,446,012,169 to Baht 1,652,585,336, by issuing 206,573,167 new ordinary shares with a par value of Baht 1. This was to be proposed to Extraordinary General Meeting of Shareholders No.1/2010 for approval. 3) Approved the allotment of 206,573,167 ordinary shares, whereby it is to be proposed that the Extraordinary General Meeting of Shareholders No.1/2010 approve allotment of such shares to existing shareholders entitled to participate in a rights offering in proportion to their shareholding. The shares are to be offered in a ratio of 1 new ordinary share for every 7 existing ordinary shares, with fractions of shares to be discarded. The offering price is to be

160

ANNUAL REPORT 2009

discounted by 15 percent from the weighted average price during the 15 working days prior to the date of the Board of Directors’ Meeting, which is Baht 5.34, and the subscription and payment periods are from 22 to 26 February 2010. If any shares remain after the rights offering, the Board of Directors and/or any person(s) appointed by the Board of Directors are authorized to offer the remaining shares to investors by way of private placement, including institutional investors and/or investors with specific characteristic, at any price that the Board of Directors deems fit, but not lower than the price at which the shares were offered to existing shareholders, in compliance with the notification of the Capital Market Supervisory Board. The offer can be made in multiple tranches or a single tranche. If the Company offers to sell the shares to a connected person of the Company, it must comply with the regulations of the Stock Exchange of Thailand regarding connected transactions prior to making such offer.

Subsequently, on 20 January 2010 the Extraordinary General Meeting of the Company’s Shareholders No.1/2010 approved the resolutions relating to share capital of the Company, as described in no. 1 to 3.

On 24 February 2010, a meeting of the Company’s Board of Directors passed resolutions approving the appropriation of

5 percent of the 2009 net income, or Baht 10.9 million, to the statutory reserve and the payment of a dividend for 2009 of Baht 0.1 per share, or a total of not exceeding Baht 165.3 million. This resolution will be proposed for approval by the Annual General Meeting of the Company’s shareholders for the year 2010. In addition, a meeting of the Company’s Board of Directors passed a resolution approving an increase in the maximum outstanding balance of debentures approved for issue at any particular time, from a limit of Baht 12,000 million (as discussed in Note 24) to a limit of Baht 17,000 million. This resolution will be proposed for approval by the 2010 Annual General Meeting of the Company’s shareholders. 40. Reclassification Certain amounts in the financial statements for the year ended 31 December 2008 have been reclassified to conform to the current year’s classification but with no effect to previously reported net income or shareholders’ equity. The reclassifications are as follow: (Unit: Baht)

Inventories and construction supplies Advance for construction of subsidiary’s project Other current asset - others Advances for future projects Other non-current assets - others

Consolidated financial statements As previously As reclassified reported

878,989,706 - 26,637,826 261,485,429 2,592,145

1,099,453,297 12,357,340 14,280,486 - 43,613,983

Separate financial statements As previously As reclassified reported

544,572,881 - 12,608,627 41,021,838 5,122,926

544,572,881 12,357,340 251,287 - 46,144,764

41. Approval of financial statements These financial statements were authorised for issue by the Company’s Board of Directors on 24 February 2010.

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LAOS THAILAND

CAMBODIA VIETNAM

Presentation Map for Construction CH. Karnchang Public Company Limited

CH. KARNCHANG PUBLIC COMPANY LIMITED

Buildings Environments Energy Industrial Estates Road/Bridges Airports Tunnels Harbours MRTA

CH. Karnchang Public Company Limited Ensure this report is environmentally friendly, so we printed it on paper

produced from agro-industry waste and recycled fiber,

use soy ink, without laminated or any special printing technic.