ANNUAL REPORT 2008
Humming Bird Humming Bird is a kind of powerful bird especially gifted by nature with the most graceful and amazing ways of flying. Even though tiny in size and cute in appearance, it can fly for longer time and with farther distance than other larger fowls, and brave enough to fight against foes that are several times larger in size. It is also intelligent to choose and eat only the food what are good for its health.
Strong Brand Value
Strategic Business Partnership
Leader in Distribution Channel
Quality Product for Quality of Life
Corporate Social Responsibility
Professional Team with Commitment
Hyacinth the symbol of new birth Hyacinth is a kind of flower that has the shape of a tiny bell when budding, and later resembles a five-ray star when burst forth in full blooms. With its outstanding quality of sweet fragrant smell, Hyacinth was highly popular in the Royal Courts of Europe.
Contents
3 •
Report of Board of Directors
4 •
Board of Directors and Executives
8 •
General Information
11 •
Summary of Financial Data of Company
13 •
Type of Business
17 •
Risk Factors
19 •
Shareholding Structure and Management
31 •
Related Transactions
33 •
Explanation and Analysis of Financial Position and
34 • 35 •
Operating Performance Report of Board of Directors’ Responsibilities for Financial Statements Report of the Audit Committee
36 •
Report of Independent Auditor
37 •
Financial Statements
Annual Report 2008
Board of Directors

Annual Report 2008
Report of Board of Directors Operating Performance for 2008
Year 2008 records another successful year for Premier Marketing Public Co., Ltd. Apart from being approved by Securities and Exchange Commission to list and traded in the Stock Exchange of Thailand on 27 May 2008, the overall performances of the parent company and its subsidiaries remain in a highly satisfactory level. Considering the Shareholders’ Equity, the Board of Directors had a resolution to increase its capital from 500 Mil Baht to 650 Mil Baht by issuing 150 millon new ordinary shares at 1 Baht par value to the public. The capital increase had received a good response from both the institutional investors as well as the retail investors, resulting in a strong financial status in terms of loan prepayment and financial cost reduction, in addition to the increase in working capital to generate future revenues. With reference to the operating performance of 2008, the teams of Premier Marketing Public Co., Ltd. and its subsidiaries have delivered impressive results. These reflect from the increase in total revenues of 3,343.48 Mil Baht, an increase of 19.89% yoy, leading to net profit of 432.24 Mil Baht, an increase of 47.69% yoy from 2007. This amount is classified into profit from normal operations of 155.36 Mil Baht and profit from loan prepayment (a discount) of 276.88 Mil Baht. Furthermore, the financial position of the parent company and its subsidiaries as of 31 December 2008 has been improved with total assets of 1,444.96 Mil Baht, total liabilities of 652.88 Mil Baht, and total shareholders’ equity of 792.08 Mil Baht. Though the economic downturn and negative factors may cause some threats to the current operations, however, strength and potential of the company workforce showing for the past performances make the Board of Directors believe that the business will be able to go through all the obstacles and grow continuously. Finally, may we take this opportunity to thank all the shareholders, customers, business partners, employees, and all the related parties for your consistent support and trust in the company.
Board of Directors Premier Marketing Public Co., Ltd.
Annual Report 2008
Board of Directors and Executives Details of Directors and Executives
Mr. Vichien Phongsathorn Chairman
Mrs. Duangthip Eamrungroj Director
Mr. Udom Chatiyanont Director
Annual Report 2008
Age 52 years Present Position Chairman Education - Bachelor’s degree of Nuclear Engineering and - Master’s degree of Business Administration Rensselaer Polytechnic Institute, Troy, New York, U.S.A. Percentage of Shareholding (%) None Relationship with Company’s Executive(s) None Experiences over the Past 5 Years Present President, Premier Group of Companies Present Director, Companies in Premier Group of Companies Present Director, Chiangmai Night Bazaar Co., Ltd. Present Director, Calbee Tanawat Co., Ltd.
Age 53 years Present Position Director Education - Bechelor’s degree of Mechanical Engineering, Chulalongkorn University - Master’s degree of Business Administration, Thammasart University - Diploma in Clinical Organizational Psychology, INSEAD, France - Training on Director Accreditation Program (DAP) Course, Batch 22 Year 2004 from Thai Institute of Directors (IOD) Percentage of Shareholding (%) None Relationship with Company’s Executive(s) None Experiences over the Past 5 Years Present President, Support Line of Premier Group of Companies Present Director, Companies in Premier Group of Companies
Age 72 years Present Position Director Education - Bachelor’s degree Faculty of Commerce and Accountancy, Thammasart University - Training on Director Accreditation Program (DAP) Course, Batch 37 Year 2005 from Thai Institute of Directors (IOD) Percentage of Shareholding (%) None Relationship with Company’s Executive(s) None Experiences over the Past 5 Years Nov 1992 – Present Independent Director and Chairman of the Audit Committee, Premier Technology (Public) Co., Ltd. Jul 1993 – Present Director, Premier Enterprise (Public) Co., Ltd. 1999 – Present Independent Director and Chairman of the Audit Committee, Singer (Thailand) Public Co., Ltd. Present Director, Suvitdumri Group Co., Ltd. Present Director, Chiangmai Night Bazaar Co., Ltd. 1978 – Present Director and Managing Director, Fivetor Co., Ltd.
Mr. Katiya Greigarn Independent Director and Chairman of Audit Committee
Mr. Wichai Hirunwong Independent Director and Audit Committee
Miss Naengnoi Chai-Onnom Independent Director and Audit Committee
Age 56 years Present Position Independent Director and Chairman of Audit Committee Education - Bachelor’s degree of Electrical Engineering, Chulalongkorn University - Master’s degree of Electrical Engineering, University of Missouri-Rolla, U.S.A. - Doctorate of Electrical Engineering , University of Missouri-Rollar, U.S.A. - Training on Director Accreditation Program (DAP) Course, Batch 37 Year 2005 from Thai Institute of Directors (IOD) - Training on Financial Statement for Directors (FSD)Course, Batch 3 Year 2008 from Thai Institute of Directors (IOD) - Training on Director Certification Program (DCP) Course, Batch 110 Year 2008 from Thai Institute of Directors (IOD) Percentage of Shareholding (%) None Relationship with Company’s Executive(s) None Experiences over the Past 5 Years Mar 2005 – Present Independent Director and Audit Committee, Premier Technology (Public) Co., Ltd. Mar 2006 – Present Director, The Federation of Thai Industries Feb 2006 – Present President, Electrical Industry Group, The Federation of Thai Industries Jan 2006 – Present Director, Electrical and Electronics Institute (EEI), Ministry of Industry 2007 – Present Director, National Nanotechnology Center (NANOTEC) Jan 2007 – Present Director, National Electronics and Computer Technology Center (NECTEC) Jan 2007 – Present Director, Telecommunications Research and Industrial Development Institute Jan 1989 – Present Director and General Manager, KV Electronics Co., Ltd. Mar 2006 – Present Director, Choke-Udom Property Co., Ltd. Mar 2006 – Present Director, Sub-Udom Property Co., Ltd. Feb 2006 – Present Director, Mekfah Real Estate Co., Ltd. May 2006 – Present Director, Viptel Co., Ltd. Age 62 years Present Position Independent Director and Audit Committee Education - Bachelor’s degree of Laws, Thammasat University - Bachelor’s degree of Economics, Thammasat University - Master’s degree of Economics, Pittsburg State University, U.S.A. - Training on Director Accreditation Program (DAP) Course, Batch 67 Year 2007 from Thai Institute of Directors (IOD) - Training on Financial Statement for Directors (FSD) Course, Batch 3 Year 2008 from Thai Institute of Directors (IOD) - Training on Director Certification Program (DCP) Course, Batch 110 Year 2008 from Thai Institute of Directors (IOD) Percentage of Shareholding (%) None Relationship with Company’s Executive(s) None Experiences over the Past 5 Years Present Director and Treasurer, Puey Ungphakorn Institute Present Vice President, Thammasat Alumni Econ Association Present Faculty Director,Graduate Voluntee Center, Thammasart University Present Director planning opinions on urgent public issues for presentation to National Economic and Social Advisory Council 2005 – 2006 Director, Library and Chronicle, Bank of Thailand 2002 - 2005 Director, Money Market Management Operation Department, Bank of Thailand 2002 Senior Executive, Money Market Credit Division, Bank of Thailand 2001 Senior Executive, Strategic Communication Planning Division – Media Communication Office, Bank of Thailand Age 66 years Present Position Independent Director and Audit Committee Education - Bachelor’s degree of Commerce, Thammasat University - Bachelor’s degree of Accounting, Thammasat University - MBA (Accounting), University of Detroit, U.S.A. - Training on Director Accreditation Program (DAP) Course, Batch 73 Year 2008 from Thai Institute of Directors (IOD) Percentage of Shareholding (%) None Relationship with Company’s Executive(s) None Experiences over the Past 5 Years 2002 – Present Dean, Faculty of Business, University of Thai Chamber of Commerce 1997 – Present Chairman, Measures Supervision on Faculty of Accounting, North Eastern University 2002 – Present Women, Youth and Family Working Team, The Foundation of Islamic Center of Thailand 2002 – Present Director, Institute of Trade Strategies, Thai Chamber of Commerce 2004 – Present Director, Accounting Education and Technology, Federation of Accounting Professions 2004 – Present Sub-Committee, Qualifications of Candidate for Certified Public Accountant of Federation of Accounting Professions 2005 – Present President, Accounting Sub-Committee and Academic and Education Assurance Committee, Association of Private Higher Education Institution of Thailand 2005 – Present Professional, Academic Evaluation, Faculty of Businsess Administration, National Institute of Development Administration 2005 – Present Professional Team, Investment Project of Managerial Accounting System Installation and Human Resource System Planning, Port Authority of Thailand 1986 – 2004 Director, The Institute of Certified Accountants and Auditors of Thailand 2001 – 2003 Director and Member of the Audit Committee, Asset Management Corporation 1998 – 2001 Dean, Faculty of Commerce and Accountancy, Thammasart University
Annual Report 2008
Age 63 years Present Position Director Education - Bachelor’s degree of Accounting, Chulalongkorn University - Certificate – Dynamic Management, Syracuse University, New York , U.S.A. - Senior Executive Program - SASIN - Training on Director Accreditation Program (DAP) Course, Batch 67 Year 2007 from Thai Institute of Directors (IOD) Percentage of Shareholding (%) None Relationship with Company’s Executive(s) None Experiences over the Past 5 Years Present Director, Premier Capital (2000) Co., Ltd. 1996 - Present Managing Director, Premier Inter Leasing Co., Ltd. Present Director, Premier LMS Co., Ltd. Mrs. Nangnoi Bunyasaranand Present Director, Premier Brokerage Co., Ltd. Director 1992 - Present Director, Premier Resort Krabi Co., Ltd. Present Director, Raya Heritage Co., Ltd. Present Director, Sea Harrier Co., Ltd.
Mr. Somchai Choonharas Director, Managing Director
Age 58 years Present Position Director, Managing Director Education - Bachelor’s degree of General Business Management , Ramkhamhaeng University - Advanced Certificate in Marketing (MIM), Faculty of Commerce and Accountancy, Thammasat University - Master’s degree of Business Administration, Faculty of Commerce and Accountancy, Thammasat University - Doctoral degree of Organization Psychology, California School of Professional Psychology, Los Angelis, U.S.A. - Training on Director Accreditation Program (DAP) Course, Batch 68 Year 2008 from Thai Institute of Directors (IOD) Percentage of Shareholding (%) None Relationship with Company’s Executive(s) None Experiences over the Past 5 Years 2003 – Present Director, P.M. Food Co., Ltd. 2003 – Present Director, Premier Canning Industry Co., Ltd. 2003 – Present Director, Premier Frozen Products Co., Ltd. 2004 – Present Director, Premier Fission Capital Co., Ltd. 2000 – 2002 Executive Director, The Thai Chamber of Commerce & Board of Trade of Thailand
List of Companies in the Premier Group of Companies 1. Premier Fission Capital Co., Ltd.
16. Raya Heritage Co., Ltd.
2. Premier Enterprise Public Co., Ltd.
17. Seri Premier Co., Ltd.
3. Premier Capital (2000) Co., Ltd.
18. Seri Properties Holding Co., Ltd.
4. Premier Inter Leasing Co., Ltd.
19. Moo Ban Seri Co., Ltd.
5. Premier Brokerage Co., Ltd.
20. Premier TDO Co., Ltd.
6. Premier LMS Co., Ltd.
21. Seri Assets Co., Ltd.
7. Premier Motors Co., Ltd.
22. Premier Global Capital Co., Ltd.
8. Premier Products Co., Ltd.
23. Premier Capital Co., Ltd.
9. Premier Manufacturing Co., Ltd.
24. Premier Pet Products Co., Ltd.
10. Premier Home Appliance Co., Ltd.
25. Sarasuk Co., Ltd.
11. Imperial Eagle Co., Ltd.
26. Premier Sukhumvit Center Co., Ltd.
12. Premier Alternative Motors Co., Ltd.
27. Premier Planner Co., Ltd.
13. Premier Technology Public Co., Ltd.
28. Premier Metro Bus Co., Ltd.
14. Datapro Computer Systems Co., LTd.
29. Sea Harrier Co., Ltd.
15. Premier Resort Krabi Co., Ltd.
Annual Report 2008
Present 1992 - Present Present Present
Director, Premier Brokerage Co., Ltd. Director, Premier Resort Krabi Co., Ltd. Director, Raya Heritage Co., Ltd. Director, Sea Harrier Co., Ltd.
Details of Manager and Executives Age Present Position Education
66 years Deputy Managing Director – Sales
Mathayom 8, Assumption College Percentage of Shareholding (%) None Relationship with Company’s Executive(s) None Experiences over the Past 5 Years 2005 – Jun 2007 Deputy Managing Director – Sales , Premier Marketing Co., Ltd. 2002 - 2004 Assistant Director of Sales, Burli Jucker (Public) Co., Ltd. Mr. Suthep Vangtal Deputy Managing Director – Sales
Age Present Position Education
44 years Deputy Managing Director – Marketing 1
Master’s degree of Business Administration, Bangkok University Percentage of Shareholding (%) None Relationship with Company’s Executive(s) None Experiences over the Past 5 Years Mar2007 – Jun 2007 Deputy Managing Director – Marketing 1, Premier Marketing Co., Ltd. 2002 - 2006 Assistant Deputy Manager – Marketing 1, Premier Marketing Co., Ltd. Mr. Pornsak Sinkanarak Deputy Managing Director – Marketing 1
Age Present Position Education
54 years Deputy Managing Director – Personnel and Administration
Master’s degree of Industrial Education, King Monkut’s Institute of Technology, Lat Krabang Percentage of Shareholding (%) None Relationship with Company’s Executive(s) None Experiences over the Past 5 Years 2002 – Jun 2007 Deputy Managing Director – Personnel and Administration, Premier Marketing Co., Ltd.
Mr. Sarawut Jornjit Deputy Managing Director – Personnel and Administration
Age Present Position Education
47 years Assistant Managing Director – Marketing 2
Master’s degree of Business Administration, Thammasat University Percentage of Shareholding (%) None Relationship with Company’s Executive(s) None Experiences over the Past 5 Years 2002 – Jun 2007 Assistant Managing Director – Marketing 2, Premier Marketing Co., Ltd. 1997 - 2002 Marketing Manager, Better Way (Thailand) Co., Ltd. Miss Malee Sukareechai Assistant Managing Director – Marketing 2
Age Present Position Education
Mrs. Somjai Boonrawdchu
52 years Assistant Managing Director – Finance and Accounting
Bachelor’s degree of Accounting, Thammasat University Percentage of Shareholding (%) None Relationship with Company’s Executive(s) None Experiences over the Past 5 Years Jul 2007 - Present Assistant Managing Director – Finance and Accounting, Premier Marketing Public Co., Ltd. 2006 – Jun 2007 Assistant Managing Director – Finance and Accounting, Premier Marketing Co., Ltd. 2005 - 2006 Manager – Finance and Credit, Premier Marketing Co., Ltd. 2002 – 2004 Manager – Finance and Accounting, P.M. Food Co., Ltd.
Assistant Managing Director – Finance and Accounting
Annual Report 2008
General Information
Premier Marketing Public Co., Ltd. Address
: :
Telephone Fax Home Page Type of Business Registered Capital No. of Ordinary Shares Issued
: : : : : :
Company Registration No. 0107550000122 No. 1, Premier Corporate Park, Soi Premier 2 Sinakharin Road, Nong Bon Sub-district Prawet District, Bangkok 10250 0-2301-1600, 0-2301-1700 0-2398-2050 www.premier-marketing.co.th Distribute and sales of consumer products 650,000,000 Baht 650,000,000 Shares
Over 10% of Shareholding in Juristic Persons
P.M. Food Co., Ltd. Address
: :
Factory Address
:
Telephone Fax Type of Business Registered Capital No. of Ordinary Shares Issued No. of Shares Holding
: : : : : :
Premier Canning Industry Co., Ltd. Address
: :
Factory Address
:
Telephone Fax Type of Business
: : :
Registered Capital No. of Ordinary Shares Issued No. of Shares Holding
: : :
Annual Report 2008
Company Registration No. 0105525019069 No. 1, Premier Corporate Park, Soi Premier 2 Sinakharin Road, Nong Bon Sub-district Prawet District, Bangkok 10250 No. 505, Moo 9, Nong Ki Sub-district Kabin Buri District, Prachin Buri 25110 037-204417 – 20, 037-204314 - 6 037-204416 Manufacture snack “Taro” 140,000,000 Baht 14,000,000 Shares 13,999,994 Shares Company Registration No. 0105528034204 No. 1, Premier Corporate Park, Soi Premier 2 Sinakharin Road, Nong Bon Sub-district Prawet District, Bangkok 10250 No. 326, Village No. 1, Rattanarach Road Bang Bo Sub-district, Bang Bo District Samut Prakan Province 10560 0-2338-1327 - 31 0-2338-1102 Manufacture ketchup and chilli sauce under “King’s Kitchen” Manufacture ready-to-eat pouched tuna and canned tuna, and tuna pet food products 93,000,000 Baht 930,000 Shares 929,994 Shares
Premier Frozen Products Co., Ltd. Address
: :
Factory Address
:
Telephone Fax Type of Business
: : :
Registered Capital No. of Ordinary Shares Issued No. of Shares Holding
: : :
Company Registration No. 0105531062655 No. 1, Premier Corporate Park, Soi Premier 2 Sinakharin Road, Nong Bon Sub-district Prawet District, Bangkok 10250 No. 98/1, Village No. 12, Soi Wat Bang Phli Yai Bang Na-Trat KM. 13 Road, Bang Phli Yai Sub-district Bang Phli District, Samut Prakan Province 10540 0-2317-1134 – 6, 0-2317-1140 - 1 0-2317-1450 Manufacture frozen-food products and operate cold storage business Provide factory, machinery and cold storage rental services 230,000,000 Baht 230,000 Shares 229,994 Shares
Other References (1)
Securities Registrar Thailand Securities Depository Co., Ltd. The Stock Exchange of Thailand Building No. 62, Ratchadaphisek Road, Khlong Toei Sub-district, Khlong Toei District, Bangkok 10110 Telephone 0-2229-2800 Fax 0-2654-5599
(2)
Auditor Miss Siraporn Ouaanunkun CPA Registration No. 3844 or Mr. Supachai Phanyawattano CPA Registration No. 3930 or Miss Thipawan Nananuwat CPA Registration No. 3459 Ernst & Young Office Limited 33rd Lake Ratchada Office Complex, 193/136-137, New Ratchadaphisek Road, Bangkok 10110 Telephone 0-2264-0777, 0-2261-9190 Fax 0-2264-0789 - 90, 0-2661-9192
(3)
Consultant or Manager under Management Contract - Management and Business Consulting Contract Premier Fission Capital Co., Ltd. No. 1, Premier Corporate Park, Soi Premier 2, Srinakarin Road Nong Bon Sub-district, Prawet District, Bangkok 10250 Telephone 0-2301-1000 Fax 0-2398-2350
Annual Report 2008

Value • Strong Brand Value Brand • St r on duct for Quality of gB Quality Pro Life • ran Qu
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2007 Market Share Profit Sales Customer Satisfaction New Customers Employee Happiness Shareholder Return Business Partner Relationship Environment Concern Corporate Social Responsibility
Annual Report 2008
2008
Summary of Financial Data
(Unit : Mil Baht) 2008
2007
2006
Financial Data Total Assets
1,444.96
1,244.06
1,261.23
Total Liabilities
652.88
1,313.80
1,528.60
Shareholders’ Equity (capital deficit)
792.08
(69.74)
(267.37)
Sales and Service Revenues
3,037.81
2,668.17
2,435.81
Total Revenues
3,343.48
2,788.69
2,458.96
Gross Profit
737.97
674.75
598.76
Net Profit (Loss)
432.24
292.66
147.66
Gross Profit Margin (%)
24.29
25.29
24.58
Net Profit Margin (%)
12.93
10.49
6.01
Return on Equity (%)
119.68
n.m.
n.m.
Return on Assets (%)
40.00
26.78
17.80
0.73
0.59*
0.35
-
-
-
Financial Ratio
Earnings (Deficit) per Share (Baht) Dividend per Share (Baht)
* On 20 July 2007, the company registered the change of share price from 100 Baht per share to 1 Baht per share. Therefore, number of shares increased from 5 million shares to 500 million shares. And the company increased its registered capital from 500 Million Baht to 650 Million Baht by issuing the new 150 million ordinary shares at 1 Baht per share.
Annual Report 2008
Strategic Business Partnership
Leader in Distribution Channel
Professional Team with Commitment
Quality Product for Quality of Life
Annual Report 2008
Corporate Social Responsibility
Strong Brand Value

•
Type of Business
Premier Marketing Public Co., Ltd. (“Company”) was established on 28 July 1977. It was later registered as a public company on 20 July 2007 and was listed in Stock Exchange of Thailand on 27 May 2008. The company has a registered and paid-up capital of 650 Mil Baht. Regarding progress in its operations, in addition to introducing the new products in 2008, the company has been appointed as a representative to distribute Body Shape Coffee Mix of Body Shape Corporation Group Co., Ltd. and Dailio Cookies of S&P Syndicate (Public) Co., Ltd. as well. The company distributes and is the distributor to sell consumer products such as snack, food and beverage, confectionery, nutritional food and pastille, personal care, and household products, etc. The company has 3 subsidiariy companies consisting of P.M. Food Co., Ltd. (PMF), Premier Canning Industry Co., Ltd. (PCI), and Premier Frozen Products Co., Ltd. (PFP) manufacturing and selling food products i.e. fish snack under “Taro” brand, tuna products, chilli sauce and ketchup, and frozen ready-to-eat foods.
Annual Report 2008
Revenue structure of the company and its subsidiaries:
Type of Revenues
1. Sales and distribution
Operated by
Shareholding %
Company
2008 Mil Baht
2007 %
Mil Baht
2006 %
Mil Baht
%
1,888
56.48
1,611
57.76
1,415
57.54
2. Tuna and sauce products
PCI
100.00
1,113
33.29
1,002
35.93
961
39.08
3. Fish snack for export1/
PMF
100.00
12
0.36
12
0.43
9
0.37
4. Frozen foods
PFP
100.00
10
0.30
11
0.39
11
0.45
320
9.57
153
5.49
63
2.56
3,343
100.00
2,789
100.00
2,459
100.00
5. Rental, services and other income e.g. interest income, gain from debt forgiveness, gain on sales of investment in associated company Total Revenues
1/
Revenue from sales of fish snack is the part that PMF sells to outside parties.
Competition and Product Procurement of the Company can be summarized as follows:
• Industrial Competition At present, Premier Marketing Public Co., Ltd. is one of the leading distributors of consumer products in Thailand. Direct competitors are for example Diethelm Co., Ltd., Berli Jucker (Public) Co., Ltd. Each of them is skillful possessing remarkable experiences in product distribution and comprehensive distribution network nationwide. Therefore, new entrepreneur entry into this zone may be painstaking since the acquisition of consumer base and distribution channels with retailers require long-term and good relationship with the customers. In addition, investment in the strong distribution network construction requires the professional sales team and marketing strategies, which are significant parts to the success of distribution and agent business. The snack industry is highly competitive with major players being the leaders in each type of snack. For example, Frito-Lay Co., Ltd. is the leader in potato chip segment. P.M. Food Co., Ltd., manufacturer of fish snack under “Taro” brand, is the leader in fish snack category. Each market leader holds the highly strong brand position. Therefore, the new comer entering into this business needs a big amount of investment and marketing expense for advertising and sales promotion activities to gain acceptance from consumers. In addition, major selling point in the snack market is to present the good taste, premium to motivate children and teenagers who are the target groups to buy more. Therefore, new product introduction into the market is another method to stimulate sales and create brand recognition among consumers in the long run.
Annual Report 2008
• Industry Trend and Competition In response to the consistent change in consumers’ needs, the manufacturers, especially of consumer products, are expected to introduce new products to the market and widely distribute them. Therefore, these manufacturers may realize the necessity of hiring professional distributor in order to better control its sales and marketing expenses e.g. listing fee in modern trade, distribution expense, sales promotion expense, etc. In addition, trend in healthy food consumption requires brand owners to improve or develop new products in response to this sophisticated eating behavior. In another aspect of the competition, manufacturers of various kinds of snacks may have to consider the surrounding factors that may affect the market growth i.e. strict measures on snack products issued by The Food and Drug Administration or FDA e.g. no advertisement is allowed for kids broadcast program and no giveaway is allowed in the package. These are the famous marketing strategies used in the industry which have been a major impact in previous years. However, fish snack under “Taro” brand is not affected since the product is made of fish, which has nutritional values with rich of proteins and are healthy product. Therefore, it receives a favourable response and serves the health conscious demands at present.
• Product Selection and Handling Products distributed by the company are manufactured by its affiliated companies and from external parties. However, the company has policies in emphasizing the distribution and sales of quality and variety of products. The company will select its manufacturers based on their capabilities, potential, product quality, and policies on support of sales promotion and marketing activities. Some manufacturers have been in business alliances with the company for many years. Some are new partners to the company. However, the company will consider quality of long-term relationship rather than number of trading partners, which leads to the good support from the partners in terms of operations and problem solving. When purchasing the goods from manufacturers to distribute to consumers, the company has placed advance purchase orders with appropriate quantities based on its inventories, trends of market demand, and related sales promotion activities. This will be a good preparation for sufficient distribution volume to meet each sales cycle and reduce opportunity loss from shortages stock. At the same time, the company needs to control in order not to have excess inventories, which will result in damages from obsolete products. The followings are the list of manufacturers or principals
Manufacturer’s name
Type of products
1. P.M. Food Co., Ltd.
Fish Snack
2. Calbee Tanawat Co., Ltd.
Fried Potato Stick, Green Peas, Prawn Cracker
3. Namchow (Thailand) Ltd.
Rice Cracker
4. Premier Canning Industry Co., Ltd.
Tomato Ketchup and Chili Sauce
5. Lampang Food Product Co., Ltd.
Pickled Food
6. Osotspa Co., Ltd.
Confectionaries, Food Supplements and Medicine
7. Rubia Industries Ltd.
Confectionaries
8. P Z Cussons (Thailand) Ltd.
Household and Personal Care Products
9. 3 M Food Products Co., Ltd.
Chewy Tamarind
10. San Miguel Marketing (Thailand) Ltd.
Fruit Juice
11. S&P Syndicate Public Co., Ltd.
Cookies
12. Body Shape Corporation Group Co., Ltd.
Instant Coffee
The Company is the authorized distributor for the above manufacturers or principals with agreed distribution fees and conditions provided in the agreement except for our own brands and trade marks ”Coryfin-C”, the confectionary products produced by Rubia Industries Ltd. and other products produced by affiliated companies.
Annual Report 2008
Quality Moral & Ethic
Efficiency The will to Learn
Premier People
Annual Report 2008
Risk Factors Risk Factors 1. Operation Risk Sales and Distribution Business 1.1 Risk from Non-Renewal of Sales Agent Contract In rendering sales agent services, the company will consult with its trading partners for the operating guidelines in order to have clear objectives and mutual benefits in the long run. However, The Distributorship Agreement is an important tool for product distribution service. Normally, each contract will last 3-5 years and provide clear terms and conditions for renewal process. The company may have some risks that the other party does not renew or cancel the contract when it becomes due, which leads to the loss of income from not being the sales agent for particular products. In addition, it may be possible that the other party may request for changes in terms and conditions upon contract renewal, which may bring disadvantages or decrease in returns to the company. The above-mentioned operating guidelines with the trading partners for mutual benefits in the long run help reduce the chance of losing trading partners by contract cancellation or non-renewal. Moreover, the company has diversified its risks by distributing products from several manufacturers under several brands, including products mainly manufactured by its subsidiaries. During the past years, the company and the manufacturers or product owners who are the trading partners worked together for a long time. The company strictly complies with terms and conditions as indicated in the contract, which gains trustworthiness from its trading partners in reviewing the contract. The company can negotiate for appropriate return rate as well. 1.2 Risk from Obsolete or Expired Products The company is the distributor for consumer products whose quality relates to their product shelf life. The company takes some risks if the products expire prior to reaching to ultimate consumers. However, the company determines policies and management control system for the circulation of goods placed in the retail stores to remain fresh all the time. Planning emphasizes on the control of product life starting from storage in the company’s warehouse, delivery to retail stores, circulation of goods in the market, and frequent inspection of products in the retail stores by sales persons in order to learn the movement of goods and the control of their shelf life in compliance with predetermined policies. The company has never experienced any problem or petition from consumers regarding obsolete or expired product.
Food Manufacturing Business 1.3 Risk from Price Volatility and Raw Material Supply Products of the subsidiaries must rely on major raw materials like tuna, shrimp, squid and frozen minced fish meat. Such raw materials are natural products depending on seasonalities, weather, natural phenomena, natural disaster, etc. Prices are volatile based on market demand and supply. Any events that affect the raw material supply will rapidly change their related price as well, which leads to production cost. Thus, effective management of raw material costs will reduce the volatility risk of raw materials. Persons in charge of raw material purchase must closely monitor related news and information. Experiences and skills in business operations over the long period will facilitate the prompt forecast and decision-making under such changes. In addition, the subsidiaries will coordinate with the trading partners in terms of production and raw material reserves at appropriate volumes and prices in the long run. 1.4 Exchange Rate Risk The company and its subsidiaries earn export revenues at the proportions of 33.70% and 32.34% from total revenues in 2007 and 2008 respectively. Major revenues are in US dollars. Therefore, the business exposes to foreign exchange risk, Annual Report 2008

especially, in the event of high exchange rate volatility which affects its revenues and profits. However, for imported raw materials and packaging, the company will match the collection of sales revenues with the payment of raw materials and packaging (natural hedge). This will partly help reduce the risk from exchange rate volatility. Furthermore, the company closely follows up related news and buy forward contracts in dealing with exchange rate volatility at each appropriate interval. 1.5 Risk from Dependence on Major Customers and Export to Japan Major export market for tuna and pet food products of the subsidiary company is Japan. This may affect in the event of economic downturn, which leads to the business revenues. However, related businesses have not yet experienced such problems. On the contrary, good relationship and coordination from the business partners provides consistent growth in export, good returns, and new product development with the partners under the company’s principles of emphasizing consumers’ confidence on quality and food safety.
2. Risk from Not Receiving Dividend As of 31 December 2007, the company had retained deficits valuing 500.67 Mil Baht and a decrease to 89.39 Mil Baht on 31 December 2008. Parts of the decrease are from its profits valuing 108.80 Mil Baht and the transfer of reserves from share premium valuing 302.48 Mil Baht upon the resolution from the extraordinary shareholders’ meeting on 19 December 2008. The Company expects that its continuous operating profits over the past years in combination with the attempt to win over all the manageable external impacts can possibly wipe out the existing retained loss within 2009. This will finally bring back the strong financial position in order to pay dividends to the shareholders.
Annual Report 2008
Shareholding Structure and Management Shareholding Structure and Management 1. Shareholders
1.1 Top 10 Shareholders Details of the top 10 shareholders whose names are shown in the shareholder register as of 31 December 2008 are as follows: No. of Shares
Name 1. Premier Fission Capital Co., Ltd.
Shareholding %
424,999,400
65.38
2. Bangkok Insurance (Public) Co., Ltd.
10,500,000
1.62
3. Taib-Jaic Asian Balanced Private Equity Fund
10,000,000
1.54
4. Premier Pet Products Co., Ltd.
9,999,200
1.54
5. Thai Capital Fund
5,813,200
0.89
6. Mrs. Arthittaya Yiamwech
4,848,700
0.75
7. MAI SCB Long-term Equity Open Fund
4,834,600
0.74
8. Mr. Umpon Deelerdwongse
3,100,000
0.48
9. Mr. Somchai Tharapaisarnsuk
3,039,700
0.47
10. Mr. Wichit Shinnawongworagul
2,326,600
0.36
479,461,400
73.76
Total Major Shareholders
Remark: No. of shares counted from related shareholders under Securities and Exchange Act B.E. 2535 Section 258 1.2 Major shareholders who are related persons participating in the company management are as follows: Type of Business
Name 1. Premier Fission Capital Co., Ltd.
Business management service and investment
2. Premier Pet Products Co., Ltd.
Factory rental
Related Persons Mr. Vichien Phongsathorn Mrs. Duangthip Eamrungroj and Mr. Somchai Choonharas are co-directors Mr. Vichien Phongsathorn and Mrs. Duangthip Eamrungroj are co-directors
2. Management 2.1 Organization Structure The company has 2 sets of committee consisting of Board of Directors Committee and Audit Committee with the following details: 2.1.1 Board of Directors As of 31 December 2008, the company had 8 directors as follows: 1. Mr. Vichien Phongsathorn
Chairman
2. Mr. Udom Chatiyanont
Director
3. Mr. Katiya Greigarn
Independent Director and Chairman of Audit Committee
4. Mr. Wichai Hirunwong
Independent Director and Audit Committee
5. Miss Naengnoi Chai-Onnom
Independent Director and Audit Committee
6. Mrs. Duangthip Eamrungroj
Director
7. Mrs. Nangnoi Bunyasaranand
Director
8. Mr. Somchai Choonharas
Director and Managing Director
Mrs. Suchada Samaisut works as Committee Secretary and Corporate Secretary. Annual Report 2008
Board of Directors Term In the annual general meeting every year, one-thirds of the directors must give up their offices. If the numbers of directors cannot be divided into 3 equal portions, then take the nearest numbers of one-thirds to leave the post. The directors, who leave the post in the first and the second years after the company registration, use draw a lot method to choose those to leave first. In the following years, the directors who stay longest are the first to leave. Directors who have left the post may be re-elected in the future. Scope of Responsibilities of Board of Directors 1. Manage the company in compliance with law, objectives and articles of association as well as the resolution from the shareholders’ meeting, except for the issues that must be approved by the shareholders’ meeting before implementation e.g. issues required the resolution from the shareholders’ meeting by law, related transactions, and purchase or sales of significant assets under the criteria of Stock Exchange of Thailand or as determined by other government agencies, etc. 2. Review and approve significant issues e.g. policies, plans and budget, organization structure, management powers in the company, corporate governance policies, and other items as determined by Stock Exchange of Thailand or by law. 3. Monitor the executives to comply with the approved policies, plans and budget. 4. Appoint the qualified person who does not possess prohibited characters as specified in Public Company Limited Act B.E. 2535 (including the revised Act), securities and exchange laws, notification, related rules and/or regulations in the case that there is a vacation of office by other reasons apart from term expiration. 5. Appoint Audit Committee and other sub committee. 6. Prepare reliable accounting system, financial report and audit as well as effective and efficient internal control system and internal audit. 7. Ensure that the company has comprehensive risk management system, risk management process, effective report and follow-up. 8. Report Board of Directors’ responsibilities in preparing financial report in comparison with report of the independent auditors in the annual report. 9. Monitor major shareholders’ and minority shareholders’ benefits moderately; provide fair treatement to major shareholders, minority shareholders and stakeholders rights; take into consideration conflict of interest, operating transparency and sufficient information disclosure. 10. The following authorities can be exercised upon receiving prior approval from the shareholders’ meeting. However, directors or any persons, who have conflicts, stakes or any other conflicts of interests in the company or subsidiaries (if any), have no rights to vote on certain issues. (a) Transactions requiring the resolution from the shareholders’ meeting by law (b) Transactions that the directors have some interests and in the scope that require the shareholders’ meeting approval in compliance with laws or SET requirements. 11. The Board of Directors may assign one or more director(s) or any other person to carry out particular activities for the Board. However, the above-mentioned authorization excludes authorizing or sub-authorizing the director(s) or appointee(s) to approve transactions that he/she/they may have conflicts, stakes or any other conflicts of interests in the company or subsidiaries. Approval from the shareholders’ meeting is required for related transactions, acquisition or sales of the company’s significant assets in compliance with Stock Exchange of Thailand’s requirement.
Annual Report 2008
In 2008, there were 7 Board’s meetings. Attendance of each director can be summarized as followed: Attendance / Total Number of Meetings (times)
List of Board of Directors 1. Mr. Vichien Phongsathorn
6/7
2. Mr. Udom Chatiyanont
6/7
3. Mr. Katiya Greigarn
6/7
4. Mr. Wichai Hirunwong
7/7
5.* Miss Naengnoi Chai-Onnom
5/6
6. Mrs. Duangthip Eamrungroj
6/7
7.** Mrs. Nangnoi Bunyasaranand
4/4
8. Mr. Somchai Choonharas
7/7
Remark: * has been the company’s director since 21 January 2008 ** has been the company’s director since 24 April 2008 2.1.2 Audit Committee As of 31 December 2008, 3 members of the Audit Committee consist of: 1. Mr. Katiya Greigarn
Chairman of Audit Committee
2. Mr. Wichai Hirunwong
Audit Committee
3. Miss Naengnoi Chai-Onnom
Audit Committee possessing skills and experiences in reviewing the company’s financial statements
Mrs. Suchada Samaisut is the secretary to the Audit Committee Member of the Audit Committee Term Members of the Audit Committee can remain in the post for 3 years. In the event that members of the Audit Committee resign from the post prior to the term expiry, the newly appointed director(s) can sit in the office for the remaining period of the resigned director(s). Scope of Responsibilities of Audit Committee Audit Committee have the following scope, duties and responsibilities as assigned by Board of Directors: 1. Review that the company has accurate financial reports and sufficient disclosure by coordinating with the external auditors and the executives in charge of preparing both quaterly and annual financial reports. 2. Review that the company has appropriate and effective internal control system and internal audit. 3. Review the company’s performance to comply with securities and exchange laws, requirements of the exchange or laws related to the company’s businesses. 4. Recruit and propose the company’s external auditor as well as the auditor’s remuneration to the Board of Directors for further appointment from the shareholders’ meeting. 5. Disclose the accurate and complete company’s information regarding related transactions or conflicts of interest to further present to the Board’s meeting and/or the shareholders’ meeting. 6. Prepare and disclose the report regarding Audit Committee’s activities in the company’s annual report by affixing Chairman of the Audit Committee’s signature in such report. Such report should contain the following information: • Opinion on the company’s financial reports preparation procedures and disclosure. • Opinion on the company’s sufficient internal control system. • Opinion on compliance to securities and exchange laws, requirements of the exchange or laws related to the company’s businesses.
Annual Report 2008
• Any other reports that the shareholders or general investors should acknowledge under the scope, duties and responsibilities as assigned by the Board of Directors. 7. Any other transactions as appropriately assigned by the Board of Directors. For implementation in compliance with the scope, duties and responsibilities, the Audit Committee has the power to invite the executives, manager or employees of the related companies to report their opinion, attend the meeting, or submit related information if necessary. However, Board of Directors has the power to change the Audit Committee’s scope, duties, and responsibilities as deemed appropriate. In 2008, there were 5 Audit Committee’s meetings. Attendance of each director can be summarized as followed: Attendance / Total Number of Meetings (times)
List of Audit Committee 1.
Mr. Katiya Greigarn
5/5
2.
Mr. Wichai Hirunwong
5/5
3.* Miss Naengnoi Chai-Onnom
4/4
Remark: * has been members of the Audit Committee since 24 January 2008 2.1.3 Management Team As of 31 December 2008, the management team consisted of 6 members in the following list: 1. Mr. Somchai Choonharas
Managing Director
2. Mr. Suthep Vangtal
Deputy Managing Director – Sales
3. Mr. Pornsak Sinkanarak
Deputy Managing Director – Marketing 1
4. Mr. Sarawut Jornjit
Deputy Managing Director – Personnel and Administration
5. Miss Malee Sukareechai
Assistant Managing Director – Marketing 2
6. Mrs. Somjai Boonrawdchu
Assistant Managing Director – Finance and Accounting
Authorities and Responsibilities of Managing Director Managing Director has power and duties to manage the company’s businesses as assigned by the Board of Directors, which includes the following transactions or activities: 1. Administer and/or manage the company’s daily activities. 2. Prepare policies, plans and budget organization structure and management powers in the company for presentation to the Board of Directors for approval. 3. Operate or implement in compliance with the approved policies, plans and budget. 4. Approve the budgeted investment for the amount not exceeding 10 Mil Baht per project and approve the non-budgeted investment or expenses over budgeted amount of not more than 2 Mil Baht per year. 5. Develop the organization and personnel with consistent quality and effectiveness. 6. Act as the company’s authorized person in administering related activities to meet the objectives, rules, policies, regulations, requirements, orders, resolution from the shareholders’ meeting and/or resolution from Board’s meeting. 7. Monitor and maintain corporate image. 8. Perform any other duties as assigned by the Board of Directors and/or Audit Committee. However, Managing Director’s power or assignment to other persons as deemed appropriate will not include power or authorization to approve any transactions that he/she or related persons may have conflicts, stakes or any other conflicts of interests in the company or subsidiaries or any transactions not under normal business practice. The approval of such transactions must be presented for consideration and approval from the Board’s meeting and/or the shareholders’ meeting as determined in the articles of association or related laws.
Annual Report 2008
2.2 Director and Executive Nomination Method The company does not appoiont Director and Executive Nomination Committee but has the directors and executives selection and appointment criteria as found below: Board of Directors In selecting the persons to be appointed as directors, Board of Directors will consider various qualifications e.g. education, experiences and skills from various professions before presenting to the shareholders’ meeting for approval. Appointment of company’s directors will follow the procedures as indicated in articles of association as found below: 1. Not fewer than 5 Board members approved by the shareholders’ meeting and not fewer than half of all the residential directors are authorized to approve this transaction. 2 The shareholders’ meeting elect the directors based on the following criteria and procedures: (1) One shareholder has one vote. (2) Each shareholder must use all of his/her votes in (1) to elect one or many person(s) to be the company’s director(s). However, the votes for each candidate will be the equal. (3) The person earning highest votes in respective order will be elected as directors by the number of directors expected in each election. In the event that the elected persons in the subsequent order get equal votes which results in excess director expected in such election, Chairman of the meeting will have a casting vote. 3. In the annual general meeting every year, one-third of the directors must give up their offices. If the numbers of directors cannot be divided into 3 equal portions, then take the nearest numbers of one-third to leave the post. The directors, who leave the post in the first and the second years after the company registration, use draw a lot method to choose those to leave first. In the following years, the directors who stay longest are the first to leave. Directors who have left the post may be re-elected in the future. 4. Any director to be leaving the office must submit letter of resignation to the company. Resignation is effective from the date that resignation letter received by the company. Director resigning in the first paragraph will inform his/her resignation to the registrar as well. 5. In the case that there is a vacation of office by other reasons apart from term expiration, the Board of Directors may select its qualified member who possesses characters by law to replace the vacant seat in the next Board Meeting. Unless the term of the resigned director is less than 2 months, the newly appointed director(s) can sit in the office for the remaining period of the resigned director(s). Resolution from Board’s meeting in paragraph 1 must consists of the votes from not fewer than three-forths of the remaining directors. 6. Shareholders’ Meeting may have a resolution to remove certain director from his office before his term expiration with the constitution of three-fourths majority of the votes from shareholders and proxy attending the meeting and who hold more than half of the outstanding shares held by shareholders and proxy (if any) in that particular Meeting. Independent Director Board of Directors or the shareholders’ meeting (depending on the case) will appoint independent directors to participate in Board of Directors’ activities. However, the company sets up policies to appoint independent directors from not fewer than one-third of the Board members and have at least 3 independent directors. Independent directors selection criteria are based on selection criteria for Board of Directors. Qualifications of the candidates who will work as independent directors will be considered from the qualified person who does not possess prohibited characters as specified in Public Company Limited Act and Securities and Exchange laws, including notification, related rules and/or regulations. In selecting the persons to be appointed as independent directors, Board of Directors will be presented with information regarding qualifications e.g. education, specific skills, experiences and other appropriate factors for consideration for further appointment as the company’s directors in the following period. However, in the case that there is a vacation of office of any independent director by other reasons apart from term expiration, the Board of Directors may appoint the qualified independent director who possesses qualifications as mentioned above to replace the vacant seat for the remaining period of the resigned independent director. Member of the Audit Committee Board of Directors appoints at least 3 members of the Audit Committee to work for the company. Each member of the Audit Committee must be an independent director. Members of the Audit Committee must possess the qualifications as specified in Securities and Exchange laws, including Stock Exchange of Thailand notification, related rules and/or regulations specifying the following qualifications and scope of operations of Audit Committee: Annual Report 2008
1. Hold not more than 1% of the paid-up capital of the company, company(ies) in the group, affiliated company(ies) or related company(ies), including the shares held by related persons as well. 2. Become a director(s) who do(es) not participate in administering the company, company(ies) in the group, affiliated company(ies), related company(ies) or major shareholder(s). 3. Become a director(s) who is (are) not worker(s), employee(s) or consultant(s) receiving permanent salaries from the company, company(ies) in the group, affiliated company(ies), related company(ies) or major shareholder(s). 4. Become a director(s) who do(es) not have direct or indirect financial and administrative interests or stakes in the company, company(ies) in the group, affiliated company(ies) or major shareholder(s). 5. Become a director(s) not having interests or stakes similar to the above mentioned characters 1 year prior to the appointment as member of the Audit Committee, except for the case that the Board of Directors consider that having the particular interests or stakes do not affect the duties and independence. 6. Become a director(s) not being related person(s) or close relative(s) to the company’s executive(s) or major shareholder(s). 7. Become a director(s) not appointed as a representative(s) to maintain the interests of the company’s director(s), major shareholder(s) or shareholder(s) being related person(s) to the company’s major shareholder(s). 8. Can perform duties, opinions or performance reports as per the assigned duties from the company’s Board of Directors not under the supervision of the company’s executive(s) or major shareholder(s), including related person(s) or close relative(s) to such persons. However, at least 1 member of the Audit Committee must be a skilful or sufficiently experienced person in the finance or accounting area who can review the reliability of the financial statements and other functions as a member of the Audit Committee. Executive The company does not have Executive Nomination Committee. However, the company sets up policies to nominate the executives by selecting the person with skills, capabilities and experiences related to the business. Selection procedures are in compliance with the human resource regulations and must be approved from Board of Directors and/or the person assigned by the Board of Directors. 2.3 Executive’s Remuneration 2.3.1 Monetary Remuneration (1) Directors In the annual general shareholders’ meeting for 2008 dated 24 April 2008, there was a resolution to pay remuneration to the directors not participating in the management funtions for the amount not exceeding 1 Mil Baht by assigning the directors who do not have stakes to consider payment criteria as deemed appropriate. In 2008, the company paid remuneration to the directors not participating in the administration, which consists of 1 director and 3 independent directors in the forms of meeting allowance and pension as follows: Name
Remuneration (Baht)
1. Mr. Udom Chatiyanont
175,000
2. Mr. Katiya Greigarn
230,000
3. Mr. Wichai Hirunwong
220,000
4. Miss Naengnoi Chai-onnom
190,000 Total
815,000
For the remuneration that 3 directors receive from Premier Fission Capital Co., Ltd. when performing manage ment duties for the company e.g. Mr. Vichien Phongsathorn Mrs. Duangthip Eamrungroj and Mrs. Nangnoi Bunyasaranand receive the total remuneration of 600,000 Baht. This remuneration is displayed in the employment contract. Premier Fission Capital Co., Ltd. provides management service, consulting service and other supporting services.
Annual Report 2008
(2) Executives In 2008, the company paid the following remuneration to the executives: 2008
Remuneration No. of Executive
Remuneration (Baht)
Salaries and Bonus
6
20,574,836
Contributtion to Provident Fund
6
1,024,940
Total
21,599,776
2.3.2 Other Remunerations -NA 2.4 Corporate Governance The company emphasizes on good corporate governance because it is important and necessary for business operations to grow with sustainability. The company identifies the following policies for its good corporate governance: 1. Running business with honesty, fairness and transparency which can be audited and disclosed to all related parties. 2. Providing internal control system for risk managemeng with appropriate and effective internal audit. 3. Emphasizing shareholders’ rights with equal treatment to the shareholders and fairness to every party. 4. Complying with related laws, rules and business ethics for the rights of every group of stakeholders. 5. Organizing structure, roles and responsibilities of each director group clearly. By principle, the company’s good corporate governance comply with good corporate governance guidelines as determined by Stock Exchange of Thailand which cover 5 chapters of principles with the following operating guidelines: Chapter 1 The Rights of Shareholders The company realizes and emphasizes on various basic rights of the shareholders both as securities investors and as the company’s owners e.g. rights to trade, transfer the holding securities, rights to receive profit appropriation from the company, rights to receive sufficient information of the company, rights in the shareholders’ meeting, rights to express opinion, rights to make joint decision for the company’s important issues e.g. appropriation of deividend, director appoint ment or withdrawal, auditor appointment, approval of important transactions influencing directions of business operations, change of memorandum of association and articles of association, etc. In addition to basic rights as mentioned above, the company has performed other transactions to promote and facilitate the utilization of shareholders’ right as found below: 1. The company will send a notice summoning the meeting together with supplemental documents related to the agenda to the shareholders at least seven days prior to the meeting; or by the methods in compliance with the requirements of Office of Securities and Exchange Commission and Stock Exchange of Thailand, and advertise in the newspapers for at least 3 consecutive days prior to the meeting. Opinion of the directors will be attached to each agenda and such information will be disclosed on the company’s website so that the shareholders can have sufficient time to study the information prior to the meeting. 2. In the event that the shareholder cannot attend the meeting by himself, the company gives an opportunity to the shareholder to authorize the independent directors or any persons to sit in the meeting for him by using any form of letter of attorney that the company attaches to the invitation letter to the meeting. In addition, the shareholder can also download letter of attorney via the company’s website as well.
Annual Report 2008
3. The meeting opens an opportunity to the shareholders to send opinion, recommendation, questions prior to the meeting . 4. The meeting opens an opportunity to the shareholders with the equal rights to express their opinion, recommendation or questions independently before making any resolution to each agenda. However, the shareholders’ meeting consists of related directors and executives to answer questions to the meeting and will take records of significant questions and opinions in minutes of the meeting which can be examined by the shareholders. 5. After the meeting, the company will prepare minutes of the meeting exhibiting accurate and complete information for the shareholders to examine. Minutes of the meeting will be disseminated via the company’s website. Chapter 2 The Equitable Treatment of Shareholders The company sets up policies to build up egalitarium among every and every group of shareholder, especially minority group by providing opportunities to the minority group to propose the name of representation from minority group in the meeting agenda in order to be selected as a director in the annual general shareholders’ meeting. In 2008, the company gave the said opportunity to the shareholders since 17 November 2008 to 15 January 2009 and disseminate criteria and operating procedures via the company’s website and through Stock Exchange of Thailand. In each meeting the company provides equal opportunity to every shareholder. Before the meeting, Chairman of the meeting will explain voting rights, shareholder votes counting for each agenda. Every participant at the meeting is encouraged to express his/her opinion, recommendations, question for each agenda appropriately and sufficiently. Chairman of the meeting will preside the meeting by order of the agenda and will not add any agenda not informed to the shareholders in advance, especially agenda significant to the shareholders may take time to study before making decisions. In the event that the shareholder cannot attend the meeting, the company allows the shareholder to authorize independent directors or any persons to sit in the meeting for him/her by using any form of letter of attorney that the company attaches to letter of invitation to the meeting. In determining measures on the utilization of insider trading for the management’s or employees’ benefits in an unethical manner (see details in 2.5. Supervision on Inside Information Utilization,page 30). Chapter 3 The Role of Stakeholders The company emphasizes on the rights of every stakeholder group, no matter internal stakeholders e.g. executives, employees or external stakeholders e.g. creditors, customers, etc. The company realizes that support and opinion from each stakeholder group will benefit the company’s operations and business development. The company will comply with related laws and requirements so that such stakeholders will be properly treated. In addition, in running the company’s business, the company takes into consideration the rights of each stakeholder by using the following guidelines: Shareholders Customers
: :
Trading partners and creditors Competitors Employees
:
Society and environment
:
: :
Perform duties with honesty, transparency, benefits to the company and shareholders. Take care and be responsible for customers, manufacture and distribute goods/ services of quality standards, safety and strictly comply with conditions and agreements to the customers. Run business with honesty, fairness, respect and compliance with the conditions as specified in the contract. Trade competition under good competition rules. Treat employees equally and fairly in terms of opportunity, return, potential, confidence in quality of life, and safety in working environment. Be responsible to the community and society’s environment and set up policies to donate for education to poor students in the provinces via Yuwaphat Foundation.
Chapter 4 Disclosure and Transparency Board of Directors emphasize on disclosing accurate, complete and transparent information, financial report and general information based on S.E.C. and Stock Exchange of Thailand’s criteria. Other significant information affecting the securities price influences decision-making process of the investors and stakeholders. The company has disclosed its information to the shareholders, investors and the public via various channels and media of Stock Exchange of Thailand and the company’s website.
Annual Report 2008
For investor relations function, the company has not yet set up specific unit for this purpose. But the company has assigned Managing Director to communicate with institutional investors, shareholders, analysts and related government bodies. Board of Directors are responsible for the company’s and its subsidiaries’ consolidated financial statements and financial information as exhibited in annual report. Such financial statements are prepared based on the generally accepted accounting standards in Thailand by selecting appropriate accounting policies and practice them consistently, including sufficient disclosure in the financial statements. In this case, the Audit Committee will review financial report quality, internal control system and sufficient disclosure in notes to financial statements and report to Board of Directors. Chapter 5 Responsibilities of the Board of Directors 1. Board of Directors Structure Board of Directors consists of skilful and capable persons, holding experiences beneficial to the company, who have important roles in determining corporate policies and overview as well as in monitoring the audit and assessing the company’s operating performance to follow the plans. Board of Directors structure consists of 1/3 of independent directors so as to balance the voting rights for several issues. The Audit Committee consists of 3 independent directors. At present, there are 8 members in the Board of Directors, consisting of 7 non-executive Board members and 1 company’s executives i.e. Managing Director and 3 qualified independent directors in compliance with the criteria as specified by S.E.C. The articles of association require that in the annual general meeting every year, one-thirds of the directors must give up their offices. If the numbers of directors cannot be divided into 3 equal portions, then take the nearest numbers of one-third to leave the post. The directors, who leave the post in the first and the second years after the company registration, use draw a lot method to choose those to leave first. In the following years, the directors who stay longest are the first to leave. Directors who have left the post may be re-elected in the future. In addition, Board of Directors have appointed the Audit Committee to perform specific duties and present them to the Board of Directors for consideration and acknowledgement. The Audit Committee has rights and responsibilities as determined in Authorization of the Audit Committee. The company does not clearly segregate duties and responsibilities between Board of Directors and executives. The Board of Directors determine policies and monitor the executives’ operations in the policy level. The executives administer various aspects of the companies’ performance in compliance with the predetermined policies. Therefore, Chairman and Managing Director must be different persons. However, the company has Corporate Secretary responsible for running Board’s meeting and shareholders’ meeting; preparing minutes of the Board’s meeting, minutes of the shareholders’ meeting , annual report; filing documents as required by law; supporting the Board of Directors’ job regarding legal requirement and related rules and regulations. 2. Board of Directors’ Roles, Duties and Responsibilities Board of Directors consider and approve significant issues regarding the company’s operations e.g. vision and mission, strategies, risks, plans and budgets and moniture that the management comply with the specified policies and plans effectively and efficiently.
Annual Report 2008
Corporate Governance Policies The company prepared its own corporate governance policies in writing, which was approved by the Board’s meeting on 22 August 2007. However, the Board of Directors frequently review the policies and compliance to such policies. Business Ethics Board of Directors insists in accurate and fair business operations and has specified the following 7 guidelines in writing so that the executives and employees can use as implementation principles: 1) Guidelines for customers 2) Guidelines for trading partners and accounts payable 3) Guidelines for trading competitors 4) Guidelines for shareholders 5) Guidelines for society 6) Guidelines for employees 7) Guidelines among employees The company announces and informs every employee to strictly acknowledge and comply to such guidelines above. Conflicts of Interest Board of Directors determine policies on conflicts of interest with the principles that any decisions on business operations must be for the company’s ultimate benefits only and should avoid any actions which may create conflicts of interest. The policies determine related persons or related transactions that must be considered. The company then must inform Board member’s related transactions and the related Board members must not participate in the decision-making and must not approve such transactions. Audit Committee will present related transactions and conflicts of interest to the Board of Directors, who will carefully consider the appropriateness and compliance with the criteria as determined by Stock Exchange of Thailand. This information will also be disclosed in the annual report and annual information presentation (Form 56-1) as well. Internal Control System (See details in 2.6. Internal Control page 30) Risk Management Board of Directors emphasize on risk management in the overall corporate image, assess risks and manage corporate risks in order to maintain them in acceptable levels. The company prepares control self assessment both at management level and operating level in order to jointly assess risks/obstacles, uncertainty affecting operations to meet the company’s objectives, events resulting in business opportunities loss, probable internal and external risks. The criteria specify that should there be any risk which may obstruct the business operations from reaching the planned targets, the company will have measures on risk management, support and stimulate everyone to build the cultures that realize the importance of risks, understand causes of risks and perform corrective actions e.g. appropriate improvement of operating procedures and resource utilization to meet the objectives of protection and probable loss. On the other hand, the above systematic operations will result in ultimate new business opportunities to the company, which will further create values to the organization. In 2008, the company assessed its risk and sufficiency of the existing internal control system in order to find guidelines for operation improvement so as to have more efficiency. The topics cover administration, management, marketing, sales, inventories, logistics and human resources. However, the company assigns and follows up with the responsible executives in each division, implements the specified improvement guidelines and related persons as operating guidelines in order to have more effective operating performance.
Annual Report 2008
Report of the Board of Directors Board of Directors are responsible for the company’s and its subsidiaries’ consolidated financial statements, including financial information technology (report of Board of Directors’ responsibilities for the financial report) as appeared in the annual report. Such financial statements are prepared in accordance with the accounting standards accepted and audited by the external auditor. Significant disclosure on information technology including financial and non-financial information is based on the complete and consistent fact. Board of Directors appointed the Audit Committee responsible for reviewing the financial report from the joint meeting between the accounting department and the auditor before presenting the financial report to the Board of Directors every quarter. 3. Board’s Meeting Members of the Board must hold a Board Meeting once every three months and may hold extraordinary meeting as found necessary. Agenda must be clearly identified. Related documents must be submitted in advance so that the Board of Directors have enough time to study prior to the meeting, except for the urgent case. Minutes of the meeting will be taken and certified minutes will be filed for further reference and audit. In addition, the company prepares operating performance reports to the Board of Directors every month so that the Board of Directors can monitor the management’s performance consistently and in time. In the meeting, Chairman and Managing Director jointly determine the agenda and related issues. The Board’s meeting will give opportunities to each director to present any issues which may be considered as meeting agenda. Upon the consideration, Chairman acting as Chairman of the Meeting will give opportunities to the directors to share their opinion independently. In certain agenda, the top executives, as the related persons, may participate in the meeting in order to provide additional detailed information beneficial to the meeting. The meeting will directly acknowledge the policies so as to implement them effectively. However, a resolution from the Board Meeting must constitute of a majority of the votes cast by the remaining member of the Board. One director has one vote. Director having stakes in the transaction will not attend the meeting and/or will not exercise his/her voting rights on certain issue. In the case of an equality of votes, Chairman of the Meeting shall have an additional vote as a casting vote. In each meeting, the company will send supplemental documents of the meeting agenda in advance so that the directors can have enough time to study the details. In each Board’s meeting, corporate secretary will also attend and take minutes of the meeting before sending to Chairman for certifying the accuracy before presenting to the next meeting for approval. Corporate secretary will also file information and documents related to the meetings for future search and reference. Normally, all members of the Board of Directors will attend the meeting, except for special case, they will inform to the meeting in advance. Moreover, Board of Directors set up policies for the directors who are not executives to have joint meetings among themselves as found necessary in order to discuss any problems relating to any management topics of interest without any participation from the management before informing Managing Director results of the meeting. However, participation of each Board member has been disclosed in 2.1.1 Board of Directors page 19. 4. Remuneration Determinaton of directors and executives remuneration is not approved by Remuneration Committee since the company has not yet appointed such committee. However, the company has policies to pay remuneration to the directors and executives at the appropriate level considering the company’s operating performance in comparison with the same industry as reference as well as appropriateness to each director’s and executive’s responsibilities. Remuneration is in the form of pension, meeting allowance, salaries and bonus. Details of remuneration expense for each director and executive in 2008 are exhibited on page 24.
Annual Report 2008
5. Development of Director and Executive Board of Directors set up policies promoting and facilitating training courses and knowledge to the directors and related persons regarding the company’s corporate governance system e.g. directors, members of the Audit Committee, executives, corporate secretary, etc. in order to consistently improve the operations. In the event of changing directors or having new directors, the management will prepare documents and information beneficial to the new directors’ duties, including provide recommendation of business type and business operation guidelines to the new directors as well. 2.5 Supervision on Inside Information Utilization For transparency and prevention of seeking personal benefits from inside information utilization for the information not yet disclosed to the public as well as for avoidance of criticism regarding appropriateness of insider’s securities trading, the company issued rules and regulations for the directors, executives and employees to follow as found below: 1) Directors, executives and employees must keep company’s secrets and/or inside information and will not disclose or take benefits for themselves or for others either directly or indirectly. They must not trade, transfer or receive the company’s securities by means of using the company’s secrets and/or inside information and/or enter into any transactions by using the company’s secrets and/or inside information, which may incur loss to the company either directly or indirectly. 2) Directors, executives and employees in the organizations receiving the company’s inside information must not use such information prior to disclosure to the public and must not trade, transfer or receive the company’s securities within 1 month prior to the disclosure of quarterly financial statements and annual financial statements to the public. However, such requirements include the company directors’, executives’ and employees’ spouses and dependent child(ren). In violation of such requirements, punishment by the company’s rules and/or by laws must be implied depending on each case. The company provides information regarding the directors and executives whose responsibilities are to report the holding of company’s securities and punishment term based on Securities and Exchange Act B.E. 2535 and Stock Exchange of Thailand’s requirements. In the event that the directors or executives trade the company’s securities, they must report their, their spouses, and their dependents’ holding of company’s securities in accordance with Section 59 of Securities and Exchange Act B.E. 2535 within 3 days to S.E.C. for further dissemination to the public. 2.6 Internal Control The company realizes the importance of risk management and good internal control system, which will enhance the accurate, transparent operations that can be audited and can diminish or prevent probable risks. Consistent development of effective and efficient internal control system in coordination with Internal Audit Department independent from the executives to examine and review the system as well as the evaluation of effective operations in various organizations will ensure that every employee has complied with the internal control system determined by the company. The report should be submitted to the Audit Committee and the Board of Directors for acknowledgement and consider approve any corrective actions. In 2008, assessment results of the company’s internal control system dividing into 5 major parts i.e. organization and environment, risk management, the executives’ operation control, information technology system, communication and follow-up system can be concluded that the company has sufficient and appropriate internal control system as well as operations monitoring system that can protect the company and its subsidiaries’ asset arising from the misuse or unauthorization implementation by the executives. 2.7 Dividend Payment Policy The company and its subsidiaries set up policies for paying dividends to the shareholders at the rate of not less than 50% of net profit after income tax and legal reserve. However, such dividend payment policies may be changed based on the necessary and appropriate plan in the future. Resolution from the Board of Directors approving dividend payment must be presented to shareholders’ meeting for approval, except for the interim dividend payment, which must be authorized by the Board of Directors with a report informing the shareholders’ meeting in the next meeting date.
Annual Report 2008
Related Transactions Related Transactions 1. Related Transactions with Persons with Mutual Benefits During the year, the company and its subsidiaries had the following businesses with the related comapanies (related by common shareholders and/or directors) e.g. Premier Fission Capital Co., Ltd. Premier Enterprise (Public) Co., Ltd. Premier Manufacturing Co., Ltd. Premier Pet Products Co., Ltd. Premier CE Co., Ltd. Calbee Tanawat Co., Ltd. Premier Resort Krabi Co., Ltd. IQA Laboratory Co., Ltd. Premier Products Co., Ltd. Premier Inter Leasing Co., Ltd. Imperial Eagle Co., Ltd. Brand Connections Co., Ltd. Datapro Computer Systems Co., Ltd. Premier Capital (2000) Co., Ltd. Seri Center Management Co., Ltd. Seri Properties Holding Co., Ltd. and KV Electronics Co., Ltd. Currently (Quarter 3/2008), IQA Laboratory Co., Ltd. is no longer the related company due to the sales of investment to external parties and in Quarter 4/2008, Seri Center Management Co., Ltd. is no longer the related company due to the sales of all investments to other parties. Such related transactions are based on trade conditions and criteria in the contracts agreed between the company as those related companies e.g. sales Interest income, gain from debt forgiveness, dividend income, goods purchase, management expense, selling and administrative expense and remuneration from accounts payable transfer, such related transactions of which are explained in No. 8 of notes to financial statements for 2008.
2 Related Transactions of the Company and Its Subsidiaries The company had related transactions with the affiliated companies. Such transactions incurred during normal business practice e.g. sales and service income, management income/expense, interest income, selling and administrative expense and interest expense, etc. Such transactions are explained in no. 8 of notes to financial statements for 2008.
3. Measures or Procedures for Related Transaction Approval Approval of related transactions of the companies and/or its subsidiaries must comply with securities and exchange laws, Office of Securities and Exchange Commission requirement. In order to consider doing the related businesses, take into consideration the benefits of the company and its subsidiaries. If there is any related transactions of the company or its subsidiaries with the person having conflict of interest, stakes, or future conflict of interest, the company will request an approval from the Board’s meeting where member of the Audit Committee will give opinion on the necessity and appropriateness of such transactions. Directors who have interest in the transactions will not voting rights for such transactions. In the event that the Audit Committee have no skills in determining the probable related transactions, the company will request the independent expert or the company’s external auditor to provide opinion on such related transactions for the Board of Directors’ or shareholders’ decision making as deemed appropriate. However, the company will disclose related transactions in notes to financial statements, which will be audited by the company’s external auditor.
4. Policies or Trends of Related Transactions in the Future The company and/or its subsidiaries expect that in the future related transactions still remain based on normal business practice or normal business support e.g. purchase of goods for resale, leasehold amortization, service on office space rental contract, management under management and consulting contract, information technology service contract, car rental for business operations and accounts receivable discount, etc. All of the related transactions will incur as necessary and for business operation effectiveness within the group. Pricing policies are clearly determined based on the appropriate and fair price and conditions by significantly considering the company’s benefits. However, the company’s Audit Committee will review related transactions as normal business practice or normal business support every quarter. Borrowings between the company and its subsidiaries incur as necessary for business operations and as working capital. Contract with clear and fair terms and conditions are prepared. However in the future, the company and its subsidiaries have no borrowing policies for persons who may have conflicts of interest. Probable related transactions in the future, which are not of normal business practice, are based on the company’s reasons and necessity by significantly considering the company’s benefits. Annual Report 2008
The company’s policy is to request the Audit Committee to consider and provide opinion for such transactions before making the transactions. In the mean time, for related transactions that may incur conflict of interest in the future, it requires that the Board of Directors must comply to securities and exchange laws and Office of Securities and Exchange Commission’s rules, notification, order and requirement. The company must also follow requirements on disclosure regarding related transactions, acquisition and sales of the company’s and its subsidiaries’ assets as well as the accounting standards as determined by The Institute of Certified Accountants and Auditors of Thailand.
Annual Report 2008
Explanation and Analysis of Financial Position and Operating Performance
Explanation and Analysis of Financial Position and Operating Performance 1. Operating Performance In 2008, the company and its subsidiaries had operating profit valuing 432.24 Mil Baht derived from sales revenue, rental revenue and service revenue valuing 3,037.81 Mil Baht, interest revenue valuing 10.93 Mil Baht, other revenues valuing 17.86 Mil Baht and profit from loan prepayment (a discount) valuing 276.88 Mil Baht, gross profit from sales and services valuing 737.97 Mil Baht equivalent 24.3% of profit, selling and administration expense valuing 500.88 Mil Baht, other expenses valuing 4.96 Mil Baht, financial expense valuing 25.93 Mil Baht, appropriation of loss from investment in affiliated companies valuing 1.25 Mil Baht, and corporate income tax valuing 78.38 Mil Baht. Changes in financial position and operating performance for 2008 in comparison with 2007 exhibit 139.58 Mil Baht increase in net profit in 2007 when the company had gains from sales of investment valuing 72.03 Mil Baht, transfer impairment of investment valuing 14.09 Mil Baht for 2008. The company had the increase in gain from debt compromise valuing 270.52 Mil Baht, increase in gross profit from sales and services valuing 63.22 Mil Baht, increase in selling and administrative expense and other expense valuing 45.99 Mil Baht, decrease in financial expense valuing 5.51 Mil Baht, increase in appropriation of loss from investment in affiliated companies valuing 6.33 Mil Baht and increase in corporate income tax valuing 61.97 Mil Baht.
2. Financial Position Total Assets 1,444.97 Mil Baht with an increase of 200.90 Mil Baht consisting of increase in cash and cash equivalent valuing 43.58 Mil Baht, increase in short-term investment valuing 48.74 Mil Baht, increase in accounts receivable valuing 55.17 Mil Baht, decrease in short-term borrowings and advances to related businesses valuing 22.54 Mil Baht, increase in inventories valuing 37.32 Mil Baht, increase in current assets valuing 5.54 Mil Baht, increase in reserves for debt repayment valuing 4.74 Mil Baht, increase in long-term investment valuing 50.87 Mil Baht, decrease in long-term borrowings to related businesses valuing 18.35 Mil Baht, decrease in investment in debtors acquiring related business valuing 4.30 Mil Baht, decrease in investment in affiliated companies valuing 1.38 Mil Baht, decrease in property, plant and equipment valuing 48.66 Mil Baht, decrease in non-operating assets valuing 3.58 Mil Baht, increase in advance expense valuing 57.83 Mil Baht and decrease in non-current assets valuing
4.16 Mil Baht.
Total Liabilities 652.88 Mil Baht with a decrease of 660.92 Mil Baht consisting of increase in bank overdraft valuing 11.45 Mil Baht, increase in accounts payable valuing 6.89 Mil Baht, decrease in long-term borrowings from financial institutions and long-term borrowings for debt restructuring from financial institutions valuing 732.12 Mil Baht, increase in accrued corporate income tax valuing 43.95 Mil Baht, increase in estimates of short-term liabilities and other non-current liabilities valuing
9.81 Mil Baht.
Total Shareholders’ Equity 792.08 Mil Baht with an increase of 861.83 Mil Baht consisting of subscription of capital increase valuing 150 Mil Share at 3.10 Baht per share resulting in an increase in ordinary share capital valuing 150 Mil Baht, an increase in discrepancy from reorganization of business operations in the group valuing 18.40 Mil Baht, a decrease in premium from assets revaluation valuing 41.29 Mil Baht, an increase in retained earnings valuing 734.72 Mil Baht derived from the transfer of share premium to offset retained deficits valuing 302.48 Mil Baht and net profit of the company and its subsidiaries valuing 432.24 Mil Baht in 2008.
Annual Report 2008
Report of Board of Directors’ Responsibilities for Financial Statements
Report of Board of Directors’ Responsibilities for Financial Statements Board of Directors are responsible for the financial report as prepared by Premier Marketing Public Co., Ltd. and its subsidiaries in order to ensure the accurate and reasonable presentation of financial position, revenues and expenses and statement of cash flow. The presentation reflects accurate, complete and sufficient data entry of assets; prevents frauds and abnormal business operations. In preparing the financial report, appropriate accounting policies have been practiced consistently and in compliance with the generally accepted accounting standards. Significant information has also been sufficiently disclosed in notes to financial statements and the auditors provided their opinion in Report of the Independent Auditors Board of Directors appointed Audit Committee consisting of the independent directors monitoring the financial report and assessing the internal control system, which have been approved by Audit Committee as appeared in Report of the Audit Committee, which has been exhibited in the annual report.
(Mr. Vichien Phongsathorn) Chairman
Annual Report 2008
(Mr. Somchai Choonharas) Managing Director
Report of the Audit Committee Report of the Audit Committee Board of Directors of Premier Marketing Public Co., Ltd. appointed Audit Committee in 2007, which consisted of 3 independent directors. At present, the company’s Audit Committee consists of
Mr. Katiya Greigarn as Chairman of the Audit Committee,
Mr. Wichai Hirunwong and Miss Naengnoi Chai-onnom as members of the Audit Committee. The Audit Committee comply to scope, duties and responsibilities as assigned by the Board of Directors in compliance with Stock Exchange of Thailand’s requirements. In 2008 Audit Committee held a total of 5 meetings with the executives, external auditor and internal auditor, which can significantly be summarized as follows: 1. Review quarterly financial statements and annual financial statements 2008 by asking and listening to the executives’ and the auditor’s explaination regarding the accuracy and completeness of financial statements as well as the sufficiency of disclosure that the Audit Committee express their opinions in compliance with the auditor that the substances of such financial statements are appropriately accurate following the generally accepted accounting standards. 2. Review and provide opinion on related transactions or transactions that may result in conflicts of interest including disclosure of such transaction in compliance with the requirement of Stock Exchange of Thailand and Office of Securities and Exchange Commission, which the auditor express their opinion that significant transactions with related companies has already been disclosed and presented in the financial statements and notes to financial statements. The Audit Committee express their opinion in the same direction as the external auditor and that such transactions are reasonable and beneficial to the company. 3. Review the sufficiency of internal control system considering results from the examination of Internal Audit Department, which the Audit Committee conclude that the company has sufficient and appropriate internal control system regarding the business type and that significant weaknesses have not been found. 4. Consider internal audit plan and advise the internal auditor to perform their jobs effectively and efficiently. 5. Review its compliance with securities and exchange laws, Stock Exchange of Thailand requirement and laws related to the company’s businesses, which the Audit Committee conclude that significant issues regarding non-compliance with laws and requirements have not been found. 6. The Audit Committee report results of the performance as well as recommendations to the Board of Directors every time in the Board’s meeting. The Audit Committee present to the Board of Directors to further present to the shareholders’ meeting to appoint Miss Siraphon Uea-anankun or Mr. Supphachai Panyawatthano or Miss Thipphawan Nananuwat from Ernst & Young Office Limited to be the company’s external auditor for 2009.
On behalf of Audit Committee
(Mr. Katiya Greigarn) Chairman of the Audit Committee
Report of Independent Auditor
Premier Marketing Public Company Limited and its subsidiaries Report and consolidated financial statements 31 December 2008 and 2007
Report of Independent Auditor To the Shareholders of Premier Marketing Public Company Limited I have audited the accompanying consolidated balance sheets of Premier Marketing Public Company Limited and its subsidiaries as at 31 December 2008 and 2007, the related consolidated statements of income, changes in shareholders’ equity and cash flows for the years then ended, and the separate financial statements of Premier Marketing Public Company Limited for the same periods. These financial statements are the responsibility of the management of the Company and its subsidiaries as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my 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 Premier Marketing Public Company Limited and its subsidiaries and of Premier Marketing Public Company Limited as at 31 December 2008 and 2007, 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: 20 February 2009

Annual Report 2008
Premier Marketing Public Company Limited and its subsidiaries Balance sheets
•
As at 31 December 2008 and 2007
Financial Statements (Unit: Baht)
Consolidated financial statements
Separate financial statements
Note 2008
Assets Current assets Cash and cash equivalents Current investment Trade accounts receivable Related parties Unrelated parties Total trade accounts receivable Less: Allowance for doubtful accounts Trade accounts receivable - net Interest receivable from related parties Amounts due from related parties Short-term loans to related parties Advance payment to related parties Receivable from sale of investment - related parties Less: Allowance for doubtful accounts Receivable from sale of investment - related parties - net Inventories - net Other current assets Receivable from Revenue Department Prepaid expenses Other receivable Others Total other current assets Total current assets Non-current assets Escrow account for debt repayment Restricted bank deposits Long-term investment Long-term loans to related parties Interest receivable from related parties Investment in receivable purchased - related parties Investments in subsidiaries - net Investment in associated company - net Other long-term investments - net Property, plant and equipment - net Non-operating assets - net Other non-current assets Prepaid rent - net Others Total other non-current assets Total non-current assets Total assets
6 8
7 8, 9 8 8, 9 8, 10
8 11
12 13 14 8, 15 8, 16 8, 16 17 18 19 20 21 8, 22
2007
2008
2007
88,907,835 48,744,197
45,327,369 -
29,333,777 48,744,197
26,758,259 -
1,439 377,336,132 377,337,571 (7,013,005) 370,324,566 -
317,003,453 317,003,453 (1,848,711) 315,154,742 320,808
309,823,851 309,823,851 (1,658,234) 308,165,617 54,590
253,880,721 253,880,721 (790,330) 253,090,391 320,808
751,399 169,550,611
2,975,278 20,000,000 18,400,000 (18,400,000) 132,227,951
6,738,777 80,145,144 25,286,693
2,977,584 18,400,000 (18,400,000) 21,564,613
4,080,228 5,155,774 19,031,242 9,403,481 37,670,725 715,949,333
4,846,036 3,779,670 14,368,035 9,132,733 32,126,474 548,132,622
234,539 18,655,214 5,671,761 24,561,514 523,030,309
715,817 13,277,287 4,593,058 18,586,162 323,297,817
4,908,358 2,838,732 50,871,567 2,255,962 55,861,906 44,746,503 19,206,600 441,983,648 35,588,479
164,818 2,764,940 18,349,000 2,255,962 60,158,976 46,128,506 19,206,600 490,648,469 39,170,770
4,908,358 50,871,567 2,255,962 55,861,906 165,220,200 36,766,046 5,208,053 -
164,818 18,349,000 2,255,962 60,158,976 181,220,200 36,766,046 4,502,924 -
4,384,338 62,211,763 12,699,592 8,543,094 17,083,930 70,754,857 695,931,971 729,016,612 1,444,965,945 1,244,064,593
62,211,763 6,972,772 69,184,535 390,276,627 913,306,936
4,384,338 11,004,379 15,388,717 318,806,643 642,104,460
The accompanying notes are an integral part of the financial statements. Annual Report 2008

Premier Marketing Public Company Limited and its subsidiaries Balance sheets (continued) As at 31 December 2008 and 2007
(Unit: Baht) Consolidated financial statements
Separate financial statements
Note 2008
2007
2008
2007
Liabilities and shareholders' equity Current liabilities Bank overdrafts
23
19,945,967
8,496,216
-
-
Trade accounts payable Related parties
8
62,431,370
47,395,785
69,235,136
345,344,869
246,770,292
254,917,432
81,020,889
81,686,094
309,201,662
302,313,217
150,256,025
427,030,963
24
7,574,493
79,004,943
2,177,219
2,177,219
25
27,774,418
27,813,335
-
-
Unrelated parties Total trade accounts payable Current portion of restructured long-term loans - financial institutions Current portion of long-term loans - financial institutions Current portion of restructured long-term loans
-
-
5,286,000
5,286,000
Amounts due to related parties
- related parties
8, 24 8
91,738
1,001,535
174,063
727,225
Short-term provisions
26
4,728,850
-
4,728,850
-
Other current liabilities Accrued interest to financial institutions
155,710
1,013,913
144,972
145,811
Accrued expenses
65,687,354
61,087,509
37,922,254
38,696,574
Corporate income tax payable
51,534,146
7,582,134
16,038,279
3,162,808
Other payable
21,482,253
26,015,354
7,531,195
8,870,757
10,151,961
4,275,688
5,906,658
2,615,234
Total other current liabilities
Others
149,011,424
99,974,598
67,543,358
53,491,184
Total current liabilities
518,328,552
518,603,844
230,165,515
488,712,591
24
109,081,182
741,974,627
37,814,233
39,769,118
25
25,472,956
53,228,590
-
-
Non-current liabilities Restructured long-term loans from financial institutions - net of current portion Long-term loans from financial institutions - net of current portion Restructured long-term loans from related parties -
-
84,718,162
114,294,162
Total non-current liabilities
- net of current portion
8, 24
134,554,138
795,203,217
122,532,395
154,063,280
Total liabilities
652,882,690 1,313,807,061
352,697,910
642,775,871
The accompanying notes are an integral part of the financial statements.

Annual Report 2008
Premier Marketing Public Company Limited and its subsidiaries Balance sheets (continued) As at 31 December 2008 and 2007
(Unit: Baht) Consolidated financial statements
Separate financial statements
Note 2008
2007
2008
2007
650,000,000
650,000,000
650,000,000
650,000,000
650,000,000
500,000,000
650,000,000
500,000,000
17
(124,855,178)
(143,255,178)
-
-
28
244,440,681
285,730,831
-
-
22,497,752
(712,218,121)
(89,390,974)
(500,671,411)
792,083,255
(69,742,468)
560,609,026
(671,411)
1,444,965,945
1,244,064,593
913,306,936
642,104,460
Shareholders' equity Share capital
27
Registered 650,000,000 ordinary shares of Baht 1 each Issued and fully paid up 650,000,000 ordinary shares of Baht 1 each (31 December 2007: 500,000,000 ordinary shares of Baht 1 each) Unrealized gain (loss) Difference on reorganisation of business of group companies Revaluation surplus on assets Retained earnings (deficit) Total shareholders' equity (capital deficit) Total liabilities and shareholders' equity
The accompanying notes are an integral part of the financial statements.
Annual Report 2008

Premier Marketing Public Company Limited and its subsidiaries Income statements For the years ended 31 December 2008 and 2007
(Unit: Baht) Consolidated financial statements
Separate financial statements
Note 2008
2007
2008
2007
Revenues Sales
3,022,585,772 2,634,962,078
Rental and service income Interest income
1,887,900,410 1,610,832,529
15,224,583
33,204,861
41,094
355,135
10,934,456
11,710,892
12,716,019
11,411,462
Gain from debt forgiveness
24
276,880,561
6,356,485
-
6,356,485
Gain on sales of investment in associated company
18
-
72,033,346
-
72,033,346
-
14,093,434
-
12,523,745
-
-
18,400,000
-
17,857,555
16,332,814
87,918,496
17,733,142
Reversal of allowance for impairment in value of investments Reversal of allowance for doubtful accounts Other income Total revenues
3,343,482,927 2,788,693,910
2,006,976,019 1,731,245,844
2,299,838,644 1,993,415,040
1,444,114,070 1,174,350,748
Expenses Cost of sales and services Selling expenses
275,875,369
252,295,517
267,765,350
229,693,309
Administrative expenses
225,013,888
194,992,102
116,840,536
106,694,812
4,961,054
12,567,867
16,072,009
2,015,243
Other expenses
2,805,688,955 2,453,270,526
Total expenses
1,844,791,965 1,512,754,112
Income before finance cost and corporate income tax Finance cost Share of income (loss) from investment in
18
537,793,972
335,423,384
162,184,054
218,491,732
(25,926,641)
(31,433,734)
(17,518,025)
(15,485,645)
(1,253,576)
5,075,836
-
-
510,613,755
309,065,486
144,666,029
203,006,087
associate Income before corporate income tax Corporate income tax
(78,377,278)
(16,407,499)
(35,864,988)
(8,887,414)
Net income for the year
432,236,477
292,657,987
108,801,041
194,118,673
0.73
0.59
0.18
0.39
592,622,951
500,000,000
592,622,951
500,000,000
Basic earnings per share
31
Net income Weighted average number of ordinary shares (shares)
The accompanying notes are an integral part of the financial statements.

Annual Report 2008
-
-
Net income and expenses recognised directly
-
500,000,000
Balance as at 31 December 2007
-
650,000,000
The accompanying notes are an integral part of the financial statements.
Balance as at 31 December 2008
Offseting share premium with deficit (Note 27)
302,479,396
-
-
Total income and expenses for the year
(302,479,396)
-
-
Net income for the year
-
-
-
Net income and expenses recognised directly in equity
150,000,000
-
-
Amortization of revaluation surplus on assets (Note 28)
Issuance of share capital during the year (Note 27)
-
-
Reversal of allowance for doubtful accounts (Note 17)
Income and expenses recognised directly in equity:
-
-
Offsetting legal reserve with deficit (Note 29) 500,000,000
-
-
Total income and expenses for the year
Balance as at 31 December 2007
-
-
Net income for the year
in equity
group companies (Note 17)
Amortisation of revaluation surplus on assets (Note 28)
-
Cash receipt from sale of investment - related parties
Share premium
-
500,000,000
Issued and fully paid-up share capital
-
Difference on reorganisation of business of
Income and expenses recognised directly in equity:
Balance as at 31 December 2006
For the years ended 31 December 2008 and 2007
Statements of changes in shareholders' equity
Premier Marketing Public Company Limited and its subsidiaries
(124,855,178)
-
-
18,400,000
-
18,400,000
-
18,400,000
(143,255,178)
(143,255,178)
-
(59,990,000)
-
(59,990,000)
-
10,000
(60,000,000)
(83,265,178)
Difference on reorganisation of business of group companies
244,440,681
-
-
(41,290,150)
-
(41,290,150)
(41,290,150)
-
285,730,831
285,730,831
-
(35,044,474)
-
(35,044,474)
(35,044,474)
-
-
320,775,305
Revaluation surplus on assets
-
-
-
-
-
-
-
-
-
-
(1,000,000)
-
-
-
-
-
-
1,000,000
22,497,752
302,479,396
-
432,236,477
432,236,477
-
-
-
(712,218,121)
(712,218,121)
1,000,000
292,657,987
292,657,987
-
-
-
-
(1,005,876,108)
Unappropriated (Deficit)
Retained earnings Appropriated statutory reserve
Consolidated financial statements
792,083,255
-
452,479,396
409,346,327
432,236,477
(22,890,150)
(41,290,150)
18,400,000
(69,742,468)
(69,742,468)
-
197,623,513
292,657,987
(95,034,474)
(35,044,474)
10,000
(60,000,000)
(267,365,981)
Total
(Unit: Baht)

Annual Report 2008
Balance as at 31 December 2008
Offsetting share premium with deficit (Note 27)
302,479,396 (302,479,396) -
650,000,000
-
-
Total income and expenses for the year -
-
-
Net income for the year 150,000,000
-
500,000,000
Balance as at 31 December 2007
Issuance of share capital during the year (Note 27)
-
Offsetting legal reserve with deficit (Note 29)
-
-
-
Total income and expenses for the year -
-
-
Net income for the year
500,000,000
-
Balance as at 31 December 2007
-
-
-
-
Share premium
Net income and expenses recognised directly in equity
500,000,000
Issued and fully paid-up share capital
Set up allowance for impairment in value of investment (Note 17)
Income and expenses recognised directly in equity:
Balance as at 31 December 2006
For the years ended 31 December 2008 and 2007
Statements of changes in shareholders' equity (continued)
Premier Marketing Public Company Limited and its subsidiaries
-
-
-
-
-
-
-
(1,000,000)
-
-
-
-
1,000,000
Appropriated statutory reserve
(89,390,974)
302,479,396
-
108,801,041
108,801,041
(500,671,411)
(500,671,411)
1,000,000
134,118,673
194,118,673
(60,000,000)
(60,000,000)
(635,790,084)
Unappropriated (Deficit)
Retained earnings
Separate financial statements
560,609,026
-
452,479,396
108,801,041
108,801,041
(671,411)
(671,411)
-
134,118,673
194,118,673
(60,000,000)
(60,000,000)
(134,790,084)
Total
(Unit: Baht)
Premier Marketing Public Company Limited and its subsidiaries Cash flow statements For the years ended 31 December 2008 and 2007 (Unit: Baht) Consolidated financial statements
Separate financial statements
2008
2007
2008
2007
510,613,755
309,065,486
144,666,029
Cash flows from operating activities Net income before tax
203,006,087
Adjustments to reconcile net income before tax to net cash provided by (paid from) operating activities: Share of (income) loss of associated company
1,253,576
(5,075,836)
-
-
30,179,316
31,188,596
5,091,217
4,932,393
Allowance for doubtful accounts
5,276,078
1,620,838
979,687
601,257
Increase (decrease) in allowance for stock obsolescence
1,044,037
(558,368)
1,692,752
1,295,518
128,427
7,655,000
16,000,000
-
-
(14,093,434)
-
(12,523,745)
(516,551)
-
-
-
-
-
(18,400,000)
-
Depreciation and amortisation
Allowance for impairment in value of investments Reversal of allowance for impairment in value of investments Reversal of allowance for impairment of assets Reversal of allowance for doubtful accounts Realised deferred gain from debt restructuring (Gain) loss on sales of equipment
(7,195,850)
-
-
-
(118,950)
1,024,808
(23,101)
(77,950)
-
(72,033,346)
-
(72,033,346)
(276,880,561)
(6,356,485)
-
(6,356,485)
Gain on sales of investment in associated company Gain from debt forgiveness Accrual of provisions
4,728,850
-
4,728,850
-
Unrealised gain (loss) on exchange rate
3,644,738
(1,105,559)
(929)
-
Dividend received from other long-term investments Interest income Interest expenses
(171,090)
(171,000)
-
-
(10,934,456)
(11,710,892)
(12,716,019)
(11,411,462)
22,277,417
28,241,483
16,585,113
14,692,607
283,328,736
267,691,291
158,603,599
122,124,874
(61,230,284)
(42,024,301)
(56,057,913)
(28,585,061)
2,223,879
1,146,760
(3,761,193)
1,146,050
(38,366,697)
(24,118,840)
(5,414,832)
(8,804,695)
(5,299,035)
(3,959,088)
(5,334,941)
(6,690,178)
(55,883,826)
(725,748)
(57,148,030)
(1,964,464)
3,031,570
69,922,553
(276,774,009)
40,559,536
(909,797)
850,454
(556,371)
628,153
Income from operating activities before changes in operating assets and liabilities Operating assets (increase) decrease Trade accounts receivable Amounts due from related parties Inventories Other current assets Other non-current assets Operating liabilities increase (decrease) Trade accounts payable Amounts due to related parties Other current liabilities Cash flows from (used in) operating activites Cash paid for corporate income tax Net cash flows from (used in) operating activities
6,275,004
(12,210,631)
1,177,541
(8,868,757)
133,169,550
256,572,450
(245,266,149)
109,545,458
(35,572,435)
(10,050,944)
(22,989,517)
(5,724,606)
97,597,115
246,521,506
(268,255,666)
103,820,852
The accompanying notes are an integral part of the financial statements.
Annual Report 2008

Premier Marketing Public Company Limited and its subsidiaries Cash flow statements (continued) For the years ended 31 December 2008 and 2007 (Unit: Baht) Consolidated financial statements 2008
2007
Separate financial statements 2008
2007
Cash flows from investing activities Increase in current investment and long-term investment
(99,335,449)
-
(99,335,449)
-
Decrease in receivable from sales of investment - related parties
18,400,000
10,000
18,400,000
10,000
(Increase) decrease in loans and interest receivable from
18,669,808
400,703
(80,145,144)
400,703
-
-
18,349,000
-
(73,792)
(100,967)
-
-
4,297,070
4,297,070
4,297,070
4,297,070
-
80,207,264
-
80,207,264
10,013,730
11,420,495
12,061,512
11,121,065
171,090
171,000
-
-
related parties Decrease in long-term loans from related parties Increase in restricted bank deposits Decrease in investment in receivable purchased - related parties Proceeds from sales of investment in associated company Interest income Dividend received Proceeds from sales of equipment
122,406
1,231,831
25,327
90,642
Acquisition of equipment
(14,289,464)
(15,941,556)
(2,443,360)
(2,061,855)
Net cash flows from (used in) investing activities
(62,024,601)
81,695,840
(128,791,044)
94,064,889
(Increase) decrease in advance payment to related parties
20,000,000
(20,000,000)
-
-
Increase in escrow account for debt repayment
(4,743,540)
(14,638)
(4,743,540)
(14,638)
(Increase) decrease in bank overdrafts
11,449,751
(3,786,685)
-
-
-
(73,195,657)
-
(73,195,657)
(413,479,020)
(146,176,325)
(1,954,885)
(88,589,814)
(25,800,000)
(25,802,453)
-
-
Cash flows from financing activities
Decrease in factoring payable Repayment of restructured long-term loans from financial institutions Repayment of long-term loans from financial institutions Repayment of restructured long-term loans from related parties
-
-
(29,576,000)
(2,330,400)
Net cash received from issuance of ordinary shares
452,479,396
-
452,479,396
-
Interest expenses
(31,898,635)
(52,821,859)
(16,582,743)
(25,556,584)
8,007,952
(321,797,617)
399,622,228
(189,687,093)
Net cash flows from (used in) financing activities Net increase in cash and cash equivalents
43,580,466
6,419,729
2,575,518
8,198,648
Cash and cash equivalents at beginning of year
45,327,369
38,907,640
26,758,259
18,559,611
Cash and cash equivalents at end of year
88,907,835
45,327,369
29,333,777
26,758,259
Supplemental cash flows information: Non-cash items Investing activities Purchases of investments of which payment was made by debt offset Amortisation of revaluation surplus on assets Debt collection by receiving equipment
-
60,000,000
-
60,000,000
41,290,150
35,044,474
-
-
1,003,000
-
3,000
-
The accompanying notes are an integral part of the financial statements.

Annual Report 2008
Premier Marketing Public Company Limited and its subsidiaries Notes to consolidated financial statements For the years ended 31 December 2008 and 2007
1. General information 1.1 Corporate information Premier Marketing Public Company Limited (“the Company”) is a public company incorporated and domiciled in Thailand. Its parent company is Premier Fission Capital Company Limited, which was incorporated in Thailand. The Company is principally engaged in the distribution of consumer products and its registered address is 1 Premier Corporate Park, Soi Premier 2, Srinakarin Road, Kweang Nongbon, Khet Prawet, Bangkok. 1.2 Economic crisis The financial crisis experienced by the United States of America over the past year has had a far reaching adverse effect on the global economy as evidenced by sharp falls in share prices worldwide, a tight squeeze on credit including interbank lending, failures of large financial institutions and reduced consumer confidence. The crisis has substantially affected the business and financial plans of Thailand enterprises and asset value. Despite efforts made by governments of many countries to contain the crisis, it remains uncertain as to when the global economy will return to normalcy. These financial statements have been prepared on the bases of facts currently known to the Company, and on estimates and assumptions currently considered appropriate. However, they could be adversely affected by an array of future events.
2. Basis of preparation 2.1 The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Profession Act B.E. 2547 and their presentation has been made in compliance with the stipulations of the Notification of the Department of Business Development dated 14 September 2001, issued under the Accounting Act B.E. 2543. The financial statements in Thai language are the official statutory financial statements of the Company. The financial statements in English language have been translated from such financial statements in Thai language. 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 Premier Marketing Public Company Limited (“the Company”) and the following subsidiary companies (“the subsidiaries”): Assets as a percentage
Company’s name
1. Premier Frozen
Nature of business
Country of incorporation
Manufacturer and distributor Thailand
Percentage of shareholding
Revenues as a percentage
to the consolidated
to the consolidated
total assets as at
total revenues for the year
31 December
ended 31 December
2008 Percent
2007 Percent
2008 Percent
2007 Percent
2008 Percent
2007 Percent
100.0
100.0
17.1
21.4
0.8
1.5
100.0
100.0
23.3
24.3
33.6
36.4
100.0
100.0
13.5
16.9
8.9
0.6
Products Company Limited of frozen products and rent out space 2. Premier Canning
Manufacturer and distributor Thailand
Industry Company Limited of canned food and sauces 3. P.M. Food
Manufacturer and distributor Thailand
Company Limited
of snack foods
Annual Report 2008
b) In December 2006, the Company sold all direct investment in a subsidiary, Premier Pet Products Company Limited, to the parent company, Premier Fission Capital Company Limited, at the price of Baht 313.8 million. Because the sale of these shares was made for the purpose of organisational restructuring within the group companies, the result of the above transaction is considered to be “Difference on reorganisation of business of group companies” and presented in the shareholders’ equity in the balance sheets. c) In December 2006, the Company purchased two previous indirect investments in subsidiaries, Premier Frozen Products Company Limited and Premier Canning Industry Company Limited, from Premier Pet Products Company Limited, at the prices of Baht 193.3 million and Baht 102.1 million, respectively. As a result, its shareholding in these two subsidiaries is 100 percent. Because the purchase of these shares was made for the purpose of organisational restructuring within the group companies, the results of the above transactions are considered to be “Difference on reorganisation of business of group companies” and presented in the shareholders’ equity in the balance sheets. d) In August 2007, the Company purchased investment in P.M. Food Company Limited, of which was the Company’s indirect investment in 2006, from Premier Pet Products Company Limited, at a price of Baht 60.0 million. As a result, its shareholding in this subsidiary is 100 percent. Because the purchase of these shares was made for the purpose of organisational restructuring within the group companies, the result of the above transaction is considered to be “Difference on reorganisation of business of group companies” and presented in the shareholders’ equity in the balance sheets. This investment purchase is made for the purpose of organisational restructuring within the group companies, the consolidated income statement for the year ended 31 December 2007 thus included the operating results of P.M. Food Company Limited since 1 January 2007, ignoring the actual date of the business combination under common control (the date of acquiring shares of the subsidiary). e) 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. f) The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent significant accounting policies. g) Material balances and transactions between the Company and its subsidiary companies have been eliminated from the consolidated financial statements. h) Investments in the subsidiaries as recorded in the Company's books of account are eliminated against the equity of the subsidiaries. 2.3 The separate financial statements, which present investments in subsidiaries and associated company presented under the cost method, have been prepared solely for the benefit of the public.
3. Adoption of new accounting standards 3.1 Accounting standards which are effective for the current year The Federation of Accounting Professions has issued Notifications No. 9/2550, 38/2550 and 62/2550 mandating the use of new accounting standards as follows: TAS 25 (revised 2007)
Cash Flow Statements
TAS 29 (revised 2007)
Leases
TAS 31 (revised 2007)
Inventories
TAS 33 (revised 2007)
Borrowing Costs
TAS 35 (revised 2007)
Presentation of Financial Statements
TAS 39 (revised 2007)
Accounting Policies, Changes in Accounting Estimates and Errors
TAS 41 (revised 2007)
Interim Financial Reporting
TAS 43 (revised 2007)
Business Combinations
TAS 49 (revised 2007)
Construction Contracts
TAS 51 Intangible Assets These accounting standards become effective for the financial statements for fiscal years beginning on or after 1 January 2008. The management has assessed the effect of these standards and believes that TAS 33, TAS 49 and TAS 51 are not relevant to the business of the Company, while TAS 25, TAS 29, TAS 31, TAS 35, TAS 39, TAS 41 and TAS 43 do not have any significant impact on the financial statements for the current year.
Annual Report 2008
3.2 Accounting standards which are not effective for the current year The Federation of Accounting Professions has also issued Notification No. 86/2551 mandating the use of the following new accounting standards: TAS 36 (revised 2007)
Impairment of Assets
TAS 54 (revised 2007)
Non-current Assets Held for Sale and Discontinued Operations
These accounting standards will become 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 they will not have any significant impact on the financial statements for the year in which they are initially applied.
4. Significant accounting policies 4.1 Revenue recognition Sales of goods Sales of goods are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are the invoiced valued, excluding value added tax, of goods supplied after deducting discounts and allowances. Rental income Rental income is monthly recognised as revenue at the amount as fixed under the related rental agreement. Rendering of services Service revenue is recognised when service have been rendered. Interest income Interest income is recognised on accrual basis based on the effective interest rate. Dividends Dividends are recognised when the right to receive the dividends is established. 4.2 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. 4.3 Trade accounts receivable and allowance for doubtful accounts Trade accounts receivable are stated at the net realisable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection experience and analysis of debt aging. 4.4 Inventories and allowance for stock obsolescence Finished goods and work in process are valued at the lower of cost (first in-first out method and average method) and net realisable value. Cost includes all production costs and attributable factory overheads. Other inventories are valued at the lower of cost (Average method and weighted average method) and net realisable value and are charged to production costs whenever consumed. Allowance for stock obsolescence is set up for old, obsolete, slow-moving or deteriorated inventories. 4.5 Investments a) Current investment and long-term Investment, which represent 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. b) 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). c) Investment in associated company is accounted for in the consolidated financial statements using the equity method. d) Investments in subsidiaries and associated company are accounted for in the separate financial statements using the cost method. The weighted average method is used for computation of the cost of investments.
Annual Report 2008

4.6 Investment in receivable purchased Investment in receivable purchased, which is classified as other investments, is valued at acquisition cost net of allowance for impairment (if any). Losses on impairment of investment are included in determining income. 4.7 Property, plant and equipment/Depreciation Land is stated at cost or revalued amount. Buildings and equipment are stated at cost or revalued amount less accumulated depreciation and allowance for loss on impairment of assets (if any). Land, buildings and equipment of subsidiaries are initially recorded at cost on the acquisition date, and subsequently revalued by an independent professional appraiser to their fair values. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from fair value at the balance sheet date. Differences arising from the revaluation are dealt with in the financial statements as follows: - When an asset’s carrying amount is increased as a result of a revaluation of the subsidiaries’ assets, the increase is credited directly to equity under the heading of “Revaluation surplus on assets”. However, a revaluation increase will be recognised as income to the extent that it reverses a revaluation decrease of the same asset previously recognised as an expense. - When an asset’s carrying amount is decreased as a result of a revaluation of the subsidiaries’ assets, the decrease is recognised as an expense in the income statement. However, a revaluation decrease is to be charged directly against the related “Revaluation surplus on assets” to the extent that the decrease does not exceed the amount held in the “Revaluation surplus on assets” in respect of those same assets. Any excess amount is to be recognised as an expense in the income statement. Depreciation of plant and equipment is calculated by reference to their costs or the revalued amounts on the straight-line basis over the following estimated useful lives: Land improvement
5 - 20
years
Buildings and structures
5 - 25
years
Machinery
3, 5 - 15 years
Improvement of leased building
20
years
Tools and equipment
5 - 10
years
Furniture, fixtures and office equipment
3, 5 - 10 years
Motor vehicles
5
years
The depreciation is dealt with in the financial statements as follows: - Depreciation attributed to the original cost portion is included in determining income. - Depreciation attributed to the surplus portion is deducted against revaluation surplus on assets in shareholders’ equity. No depreciation is provided on land, construction in progress and machinery under installation. 4.8 Prepaid rent and amortisation Prepaid rent, which represents office rent from the related company, is stated at cost less accumulated amortisation. Amortisation is calculated by reference to cost on a straight-line basis over the expected future period of 20 years, for which the assets are expected to generate economic benefit. The amortisation is included in determining income.
Annual Report 2008
4.9 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 company 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. 4.10 Foreign currencies Transactions in foreign currencies are translated into Baht at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Baht at the exchange rate ruling at the balance sheet date. Gains and losses on exchange are included in determining income. 4.11 Impairment of assets At each reporting date, the Company and its subsidiaries perform impairment review in respect of the property, plant and equipment 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 and its subsidiaries could obtain from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal. Impairment losses are recognised in the income statement. However in cases where property, plant and equipment was previously revalued and the revaluation was taken to equity, a part of such impairment is recognised in equity up to the amount of the previous revaluation. 4.12 Employee benefits Salaries, wages, bonuses and contributions to the social security fund and provident fund are recognised as expenses when incurred. 4.13 Provisions Provisions are recognised when the Company and its subsidiaries have a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. 4.14 Income Tax Income tax is provided in the accounts based on taxable profits determined in accordance with tax legislation. 4.15 Troubled debt restructuring The Company and its subsidiaries adopt an accounting policy related to troubled debt restructuring whereby, when the debt restructuring involves the amendment of repayment conditions, the Company and its subsidiaries record the impact of the debt restructuring from the date of restructuring to the maturity date under the new conditions. If the book value of the debt is less than the amount to be paid in the future under the new conditions, the book value of the debt as at the date of the debt restructuring is not changed. The Company and its subsidiaries record interest expenses by multiplying the effective interest rate by the book value of the debt as at the beginning of each period.
Annual Report 2008
5. Significant accounting judgments and estimates The preparation of financial statements in conformity with generally accepted accounting principles at times requires management to make subjective judgments and estimates regarding matters that are inherently uncertain. These judgments and estimates affect reported amounts and disclosures and actual results could differ. Significant judgments and estimates are as follows: Leases In determining whether a lease is to be classified as an operating lease or finance lease, the management is required to use judgment regarding whether significant risk and rewards of ownership of the leased asset has been transferred, taking into consideration terms and conditions of the arrangement. Allowance for doubtful accounts In determining an allowance for doubtful accounts, the management needs to make judgment and estimates based upon, among other things, past collection history, aging profile of outstanding debts and the prevailing economic condition. Impairment of equity investments The Company and its subsidiaries treat available-for-sale investments and other investments as impaired when the management judges that there has been a significant or prolonged decline in the fair value below their cost or where other objective evidence of impairment exists. The determination of what is “significant” or “prolonged” requires judgment. Property plant and equipment/Depreciation In determining depreciation of plant and equipment, the management is required to make estimates of the useful lives and salvage values of the Company and its subsidiaries’ plant and equipment and to review estimate useful lives and salvage values when there are any changes. The subsidiaries measure land, buildings and machineries at revalued amounts. Such amounts are determined by the independent valuer using the market approach for land and the depreciated replacement cost approach for buildings and machineries. The valuation involves certain assumptions and estimates. In addition, the management is required to review property, plant and equipment for impairment on a periodical basis and record impairment losses in the period when it is determined that their recoverable amount is lower than the carrying amount. This requires judgments regarding forecast of future revenues and expenses relating to the assets subject to the review. Post-retirement benefits Post-retirement benefits are provided in the accounts by reference to the provisions of labour laws and the Company and its subsidiaries’ personnel regulations, and are assumptions as to the employees retirement age.
6. Current investment As at 31 December 2008, the Company has an investment in Bank of Thailand bond with a face value of Baht 50 million, maturing in October 2009 and no interest bearing (2007: Nil).
Annual Report 2008
7. Trade accounts receivable The balances of trade accounts receivable as at 31 December 2008 and 2007, aged on the basis of due dates, are summarised below.
(Unit: Baht) Consolidated financial statements 2008
Separate financial statements
2007
2008
2007
Age of receivables Not yet due
359,283,915
303,111,076
298,138,523
247,387,390
10,576,373
6,266,486
9,562,816
5,015,594
3 - 6 months
741,703
4,431,414
741,703
344,341
6 - 12 months
(61,168)
2,905,646
(61,168)
900,246
Past due Up to 3 months
Over 12 months Total Less: Allowance for doubtful accounts Trade accounts receivable - net
6,796,748
288,831
1,441,977
233,150
377,337,571
317,003,453
309,823,851
253,880,721
(7,013,005)
(1,848,711)
(1,658,234)
(790,330)
370,324,566
315,154,742
308,165,617
253,090,391
8. Related party transactions During the years, the Company and its subsidiaries 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 financial statements 2008
Transactions with parent company Administrative expenses Transactions with subsidiaries (eliminated from the consolidated financial statements) Interest income Other income Purchases of goods Interest expenses
Separate financial statements 2008 2007
2007
21.1
21.1
6.2
-
-
2.1 86.5 749.7 6.7
4.4 1.8 -
3.0 1.8 0.1
4.4 1.8 -
1.6 85.0 0.2 375.0 35.1 24.6 4.2 1.4
8.2 0.2 328.8 6.5 25.1 0.5 0.6
1.6 374.9 35.1 16.5 1.4
Pricing policy
6.2 Contract price
16.8 609.9 7.5
4.55 percent per annum Contract price Cost plus a certain margin MLR rate per annum
Transactions with associated company
Interest income Administrative expenses Interest expenses
3.0 4.5 percent and MLR rate per annum 1.8 Contract price 0.1 MLR rate plus 0.5 percent per annum
Transactions with related companies
Interest income Gain from debt forgiveness Dividend income Purchases of goods Selling expenses Administrative expenses Other expenses Interest expenses Purchases of equipment
8.2 328.3 6.5 16.1 0.5 -
8.0 to 15.0 percent and MLR rate per annum Contract price Announced rate Cost plus a certain margin Contract price Contract price Market price MLR rate plus 0.5 percent per annum Market price
Annual Report 2008

As at 31 December 2008 and 2007, the balances of the accounts between the Company and those related companies are as follows: (Unit: Baht) Consolidated financial statements 2008
Separate financial statements
2007
2008
2007
Trade accounts receivable - related parties Related company Premier Resort Krabi Limited
1,439
-
-
-
-
-
54,590
-
-
320,808
-
320,808
-
320,808
54,590
320,808
-
-
5,987,378
2,306
Calbee Tanawat Company Limited
751,399
2,975,278
751,399
2,975,278
Total amounts due from related parties
751,399
2,975,278
6,738,777
2,977,584
-
-
80,145,144
-
-
20,000,000
-
-
Interest receivable from related parties Subsidiary P.M. Food Company Limited Associated company Premier Enterprise Public Company Limited Total interest receivable from related parties Amounts due from related parties Subsidiary P.M. Food Company Limited Related company
Short-term loans to related parties Subsidiary P.M. Food Company Limited Advance payment to related parties Related company Premier CE Company Limited Receivable from sale of investment - related parties Parent company Premier Fission Capital Company Limited
-
18,400,000
-
18,400,000
Less: Allowance for doubtful accounts
-
(18,400,000)
-
(18,400,000)
-
-
-
-
-
18,349,000
-
18,349,000
2,255,962
2,255,962
2,255,962
2,255,962
55,861,906
60,158,976
55,861,906
60,158,976
Receivable from sale of investment - related parties - net Long-term loans to related parties Related companies Premier Manufacturing Company Limited Interest receivable from related parties Associated company Premier Enterprise Public Company Limited Investment in receivable purchased - related parties Associated company Premier Enterprise Public Company Limited

Annual Report 2008
(Unit: Baht) Consolidated financial statements 2008
Separate financial statements
2007
2008
2007
Trade accounts payable - related parties Subsidiaries Premier Canning Industry Company Limited
-
-
6,803,766
7,049,584
P.M. Food Company Limited
-
-
-
290,899,500
-
-
6,803,766
297,949,084
Calbee Tanawat Company Limited
50,421,066
47,395,785
50,421,066
47,395,785
Brand Connections Company Limited
12,010,304
-
12,010,304
-
62,431,370
47,395,785
62,431,370
47,395,785
62,431,370
47,395,785
69,235,136
345,344,869
Premier Canning Industry Company Limited
-
-
84,046,829
87,912,829
P.M. Food Company Limited
-
-
5,957,333
31,667,333
-
-
90,004,162
119,580,162
Premier Canning Industry Company Limited
-
-
26,974
57,861
P.M. Food Company Limited
-
-
55,351
21,255
-
-
82,325
79,116
62,400
620,699
62,400
620,699
Total trade accounts payable - subsidiaries Related companies
Total trade accounts payable - related companies Total trade accounts payable - related parties Restructured long-term loans from related parties Subsidiaries
Total restructured long-term loans from related parties Amounts due to related parties Subsidiaries
Total amounts due to subsidiaries Related companies Datapro Computer Systems Company Limited Premier Brokerage Company Limited
-
(12)
-
(12)
Premier Pet Products Company Limited
-
2,900
-
-
Premier Products Company Limited Premier Inter Leasing Company Limited Imperial Eagle Company Limited IQA Laboratory Company Limited Total amounts due to related companies Total amounts due to related parties
-
229,862
-
-
4,756
62,649
4,756
4,869
24,582
22,553
24,582
22,553
-
62,884
-
-
91,738
1,001,535
91,738
648,109
91,738
1,001,535
174,063
727,225
During the year, the Company has entered into an office rental agreement with a related company, by which the Company has paid the prepaid rent to such related company amounting to Baht 59.6 million. The office rental agreement covers the rental period of twenty years, starting from June 2010 to June 2030.
Annual Report 2008

During 2008, movements of loans to related parties were as follow: (Unit: Baht) Balance
During the year
Balance as at
as at Increase
1 January 2008
Decrease
31 December 2008
Consolidated financial statements Long-term loans to related parties Related companies Premier Manufacturing Company Limited
18,349,000
-
(18,349,000)
-
60,158,976
-
(4,297,070)
55,861,906
Investment in receivable purchased - related parties
Associated company Premier Enterprise Public Company Limited
(Unit: Baht) Balance
During the year
Balance as at
as at Increase
1 January 2008
Decrease
31 December 2008
Separate financial statements Short-term loans to related parties Subsidiary P.M. Food Company Limited
-
240,525,105
(160,379,961)
80,145,144
18,349,000
-
(18,349,000)
-
60,158,976
-
(4,297,070)
55,861,906
Long-term Loans to related parties Related company Premier Manufacturing Company Limited Investment in receivable purchased - related parties
Associated company Premier Enterprise Public Company Limited
Directors and management’s remuneration In 2008, the Company and its subsidiaries paid salaries, bonus, meeting allowances and gratuities to their directors and management totaling Baht 35.6 million (2007: Baht 33.4 million) and for the Company Only Baht 22.4 million (2007: Baht 20.7 million).
9. Short-term loans to related parties The balance of short-term loans to related parties as at 31 December 2008 is an uncollateralised loan to P.M. Food Company Limited in the form of a promissory note, carrying interest at a rate of 4.55 percent per annum. The loan amounts to Baht 80.1 million and is repayable at call.
10. Advance payment to related parties P.M. Food Company Limited, a subsidiary, intended to repay the loans before maturity dates by the amount equal to the present value of the debt which was arrived from discounted the current balance of loan by the discount rate as agreed by the lender. According to the memo dated 1 August 2007, the subsidiary assigned a related company to proceed this matter. If a deposit was involved in the process, the subsidiary paid the deposit to the creditors through the related company. And if the negotiation process succeeded, the subsidiary paid the remuneration to the related company at a mutually agreed rate. The subsidiary also received all discounts which the creditors granted to the related company. Two creditors agreed with the offered conditions and signed the agreements for transfer of rights in indebtedness to the related company in early October 2007. The subsidiary paid a deposit of Baht 20 million to the related company to proceed this matter. As at 31 December 2007, such deposit was presented under the caption of “Advance payment to related parties” in the balance sheet.
Annual Report 2008
Subsequently, in January 2008, the related company repaid loans of such subsidiary to two financial institutions, and the right to collection of the subsidiary’s indebtedness was transferred to such related company. Subsequently, the subsidiary and the related company mutually agreed in the memorandum dated 1 March 2008 which stipulated that the subsidiary repaid loans of Baht 126.2 million to the related company by way of offsetting the loans with the advance payment as per the memorandum dated 1 August 2007. After the subsidiary repaid the loans, the related company was to forgive the remaining loans of Baht 85.0 million, which it received as a discount from such financial institutions, to the subsidiary. In March 2008, the subsidiary had repaid such loans and paid remuneration to the related company. The discount received was recorded as “Gain from debt forgiveness” in the income statement since the first quarter of the current year.
11. Inventories (Unit: Baht)
Consolidated financial statements Allowance of diminution in value of inventory Cost 2008
Stock obsolescence 2007
Inventory - net
2008
2007
2008
2007
(752,513)
(994,381)
29,134,949
26,611,538
Finished goods
29,887,462
27,605,919
Work in process
19,807,819
11,478,499
(338,690)
(657,606)
19,469,129
10,820,893
Raw materials
89,220,980
71,803,794
(1,382,315)
(1,161,591)
87,838,665
70,642,203
Packing materials
30,231,474
22,939,946
(1,303,690)
(1,635,350)
28,927,784
21,304,596
Factory supplies
5,454,889
5,400,243
(2,474,063)
(2,780,769)
2,980,826
2,619,474
Other supplies
275,881
229,247
-
-
275,881
229,247
Goods in transit
923,377
-
-
-
923,377
-
175,801,882
139,457,648
(6,251,271)
(7,229,697)
169,550,611
132,227,951
Total
(Unit: Baht)
Separate financial statements Allowance of diminution in value of inventory Cost 2008
Finished goods
25,842,497
Stock obsolescence 2007
22,450,127
2008
2007
(555,804)
(885,514)
Inventory - net 2008
2007
25,286,693
21,564,613
12. Escrow account for debt repayment As at 31 December 2008, the Company’s bank deposit of approximately Baht 4.9 million (2007: Baht 0.2 million) has been committed in respect of repayment of loans in accordance with the debt restructuring agreement dated 3 September 1999 of Baht 0.2 million and pensions of Baht 4.7 million (2007: Baht 0.2 million and Nil, respectively).
13. Restricted bank deposits Deposits of the subsidiaries have been pledged as security against bank guarantees issued by the banks on behalf of the subsidiaries and as security required in the normal course of business of the subsidiaries.
14. Long-term investment As at 31 December 2008, the Company has investment in a government bond with a face value of Baht 50 million, maturing in March 2013 and carrying interest rate at 4.25% per annum (2007: Nil).
Annual Report 2008
15. Long-term loans to related parties The balance of long-term loan to related parties as at 31 December 2007 was the loan to Premier Manufacturing Company Limited in the form of promissory note, carrying interest rate at 15.0 percent per annum, amounted to Baht 18.3 million, and was repayable at call. This loan was secured by the mortgaged land and the structures of Premier Pet Products Company Limited. In addition, the Company and Premier Pet Products Company Limited entered into a guarantee agreement, in which Premier Pet Products Company Limited guaranteed the above loan repayment of Premier Manufacturing Company Limited. In the third quarter of the current year, the Company received full repayment of loan from Premier Manufacturing Company Limited. In December 2008, the Company released the collateral to Premier Pet Products Company Limited.
16. Investment in receivable purchased - related parties In the fourth quarter of 2005, the Company purchased debts of an associated company amounting to Baht 523.7 million from a financial institution at a price of Baht 100.0 million. From this purchase, the Company received repayment from that associated company in a form of 177.2 million ordinary shares of the associated company while the remainder amounting to Baht 64.5 million will be repaid in accordance with the repayment schedule, commencing from the year 2007 to 2015, carrying interest at the rates of 4.5% per annum for the year 2006 and 2007 and at MLR afterwards. In 2006, the Company received interest from such associated company at the rate of 1.0% per annum and the remaining interest of 3.5% per annum will be received with the final repayment in the year 2015 which is in accordance with the rehabilitation plan of such associated company.
17. Investments in subsidiaries Details of investments in subsidiaries as presented in separated financial statements are as follows: (Unit: Baht) Paid-up capital
Shareholding percentage
Cost
Company’s name 2008
2007
2008
2007
(%)
(%)
2008
2007
Premier Frozen Products Company Limited
230,000,000
230,000,000
100.00
100.00
311,699,369
311,699,369
Premier Canning Industry Company Limited
93,000,000
93,000,000
100.00
100.00
92,999,200
92,999,200
P.M. Food Company Limited
140,000,000
140,000,000
100.00
100.00
182,499,812
182,499,812
Total
463,000,000
463,000,000
Less: Loss from impairment in value of investments Total Less: Allowance for impairment in value of investments Investments in subsidiaries - net
587,198,381
587,198,381
(211,775,181)
(211,775,181)
375,423,200
375,423,200
(210,203,000)
(194,203,000)
165,220,200
181,220,200
The Company’s Board of Directors’ meeting No.3/2006 on 15 December 2006 passed the resolution approving the Company’s sale of all direct investments in a subsidiary, Premier Pet Products Company Limited, to Premier Fission Capital Company Limited, a parent company, at the price of Baht 313.8 million. In addition, the meeting of the Company’s Board of Directors passed the resolution approving the Company’s purchases of two previous indirect investments in Premier Frozen Products Company Limited and Premier Canning Industry Company Limited from Premier Pet Products Company Limited at the price of Baht 193.3 million and Baht 102.1 million, respectively. Subsequently, the Company’s Board of Directors’ meeting No.1/2007 on 22 August 2007 passed the resolution approving the Company’s purchase of the previous indirect investment in P.M. Food Company Limited from Premier Pet Products Company Limited at the price of Baht 60.0 million. Because the sale and purchase of these shares were made for the purpose of organisational restructuring within the group companies, the Company therefore presents original investment costs of these subsidiaries as the investment costs since these three subsidiaries were purchased from Premier Pet Products Company Limited and have been the subsidiaries of the Company since the beginning, and the results of the sale and purchase transactions are considered to be “Difference on reorganisation of business of group companies” and presented in the shareholders’ equity in the balance sheets.
Annual Report 2008
Repayment conditions of the purchase and sale of investments made on 15 December 2006 were in accordance with the purchase and sale of investment agreement dated 29 December 2006, whereby purchase and sale transactions were offset. The Company was to receive payment from Premier Fission Capital Company Limited amounting to Baht 18.4 million, after transaction offsetting occured. This debt was to be repaid in June 2007. Therefore, the Company set up an allowance for doubtful account for receivable from sale of investment until the payment was received in full. This allowance set was recorded as “Difference on reorganisation of business of group companies”, and presented in the balance sheets by deducting this amount from “Receivable from sale of investment - related parties”. Subsequently, in June 2007, Premier Fission Capital Company Limited sent a letter to the Company requesting to extend the repayment date to be 30 June 2008, and issued promissory note to the Company. This promissory note amounted to Baht 18.4 million, with the maturity date on 30 June 2008, and bared interest rate of MLR of a commercial bank. The collateral was the secondary mortgage in land with the structures of Premier Pet Products Company Limited. In January 2008, Premier Fission Capital Company Limited renewed promissory note to the Company. The promissory note amounted to Baht 18.4 million, with the maturity of repayable at call and bared interest rate of 13.25 percent per annum. In addition, repayment conditions for the purchase of investment made on 22 August 2007 are in accordance with the purchase and sale of investment agreement dated 31 August 2007. The repayment was made by the offsetting of Baht 9.8 million against loan to Premier Pet Products Company Limited, and the Company transferred to Premier Pet Products Company Limited its rights to receive loan payment from Premier Manufacturing Company Limited as settlement of the remaining Baht 50.2 million. Subsequently, in June 2008, the Company received the payment relating to the sale of investment amounted to Baht 18.4 million from Premier Fission Capital Company Limited. As a result, the Company made a reversal on the allowance for doubtful account for the receivable from sale of investment against the caption of “Difference on reorganisation of business of group companies” in the balance sheet. In the separate financial statements, the Company had receivable from sale of investment amounting to Baht 18.4 million. The Company set up an allowance for doubtful account until the payment was received in full, and the allowance was presented in the balance sheets by deducting this amount from “Receivable from sale of investment - related parties”. Subsequently, in June 2008, the Company received the payment relating to the sale of investment amounted to Baht 18.4 million from Premier Fission Capital Company Limited. As a result, the Company made a reversal on the allowance for doubtful account for the receivable from sale of investment, and the reversal amount had been separately shown in the income statement since the second quarter of the current year. On 28 June 2007, the Company’s Extraordinary General Meeting of Shareholders No. 2/2007 passed the resolution approving offsetting premium from sale of investment with deficit. Premier Frozen Products Company Limited, Premier Canning Industry Company Limited and P.M. Food Company Limited did not declare a dividend during the current year. The outstanding balances of “Difference on reorganisation of business of group companies” as at 31 December 2008 and 2007 are presented as follows: (Unit: Baht) Consolidated financial statements 2008
Difference on reorganisation of business of group companies Less:
2007
(124,855,178)
(124,855,178)
(18,400,000)
(18,400,000)
18,400,000
-
(124,855,178)
(143,255,178)
Allowance for doubtful accounts, presented deducting from "Receivable from sale of investment - related parties"
Add: Reversal of allowance for doubtful account Difference on reorganisation of business of group companies, presented in shareholders' equity
Annual Report 2008
18. Investment in associated company 18.1 Details of associated company: (Unit: Baht)
Nature of business
Company’s name
Premier Enterprise Public Company
Investing
Limited
in various
Country of incorporation Thailand
Shareholding percentage
Carrying amounts based on equity method
Cost
2008 (%)
2007 (%)
20.08
20.08
2008
2007
2008
2007
186,065,416 186,065,416
44,746,503
46,128,506
(145,141,174) (145,012,746)
-
-
44,746,503
46,128,506
businesses Less: Allowance for impairment in value of investment Investment in associated company - net
40,924,242
41,052,670
(Unit: Baht) Separate financial statements
Company’s name
Premier Enterprise Public Company Limited
Shareholding Nature Country percentage of of 2007 business incorporation 2008 (%) (%) Investing in Thailand
18.22
18.22
2008
Carrying amounts based on cost method - net
Allowance for impairment of investment
Cost 2007
2008
36,766,046 36,766,046
2007 -
2008
2007
- 36,766,046 36,766,046
various businesses
18.2 Share of income/loss and dividend received During the year, the Company has recognised its share of net income/loss from investments in associate company in the consolidated financial statements and dividend income in the separate financial statements as follows: (Unit: Baht)
Company’s name
Consolidated financial statements
Separate financial statements
Share of income/loss from investment in associated company during the year
Dividend received during the year
2008 Premier Enterprise Public Company Limited
Annual Report 2008
(1,253,576)
2007 5,075,836
2008
2007 -
-
18.3 Fair value of investment in listed associate In respect of investment in associated company that is listed company on the Stock Exchange of Thailand, the fair value is as follows: (Unit: Million Baht) Fair value as at 31 December
Company’s name 2008
2007
48
185
Premier Enterprise Public Company Limited
18.4 Summarised financial information of associated company Financial information of the associated company is summarised bellows: (Unit: Million Baht)
Company’s name
Paid-up capital
Total assets
Total liabilities
as at
as at
as at
31 December
31 December
31 December
2008
2007
2008
2007
2008
2007
Total revenues Net income (loss) for the year ended for the year ended 31 December 31 December 2008
2007
2008
2007
Premier Enterprise Public Company Limited
800
8,000
1,250
922
1,026
700
430
563
(4)
136
18.5 In 2007, the Company sold certain investment in the associated company, at the sale value of approximately Baht 80.2 million and had gain from sales of Baht 72.0 (2008: Nil).
19. Other long-term investments Consolidated financial statements Paid-up capital
2008
2007
(Thousand (Thousand Baht) Baht) Suvitdumri Group Company
2008 (%)
2007 (%)
Shareholding percentage
Cost 2008 (Baht) 100,000
Separate financial statements
2007 (Baht)
2008 (%)
Cost
2007 (%)
2008 (Baht)
2007 (Baht)
1,000
1,000
10.00
10.00
100,000
10.00
10.00
100,000
100,000
18,000
18,000
19.00
19.00 26,861,600 26,861,600
-
-
-
-
100,000
100,000
Limited Calbee Tanawat Company Limited Total
26,961,600 26,961,600
Less: Allowance for impairment in value of investments Total other long-term investments - net
(7,755,000) (7,755,000) 19,206,600 19,206,600
(100,000) (100,000) -
Annual Report 2008
-

Annual Report 2008 -
Transfer in
Transfer out
Write-off
-
Depreciation for the year
Amortisation of revalued properties
Depreciation for transfer out
Depreciation on disposals
Depreciation on write-off assets
As at 31 December 2008
-
Decrease during the year
As at 31 December 2008
221,065,000
As at 31 December 2008
structures
improvement
Machinery
-
-
192,240
-
285,900
-
(7,302,700)
8,999,108
(307,790)
1,493,221
-
-
-
8,947,029
11,006,865
-
(307,784)
(6,903,388)
32,233,838
6,404,984
-
-
-
7,957,734
8,698,314
-
-
-
3,196,355
2,972,956
-
-
-
33,154,198
(876,220)
(1,555,719)
-
-
1,043,018
34,543,119
36,350,553
(877,382)
-
-
(1,558,387)
1,270,247
37,516,075
equipment
and office
fixtures
2,527,735
1,800,562
-
-
-
8,633,091
-
(221,201)
-
-
694,226
8,160,066
11,160,826
-
-
-
(221,202)
1,421,400
9,960,628
vehicles
Motor
Total
(1,290,528)
(17,487,651)
9,486,976
(3,460,900)
15,280,291
1,906,988
2,197,163
8,018,539
(516,551)
8,535,090
-
-
-
-
-
-
-
441,983,648
490,648,469
8,018,539
(516,551)
8,535,090
619,624,785
(956,828)
(3,457,987)
(7,183,151)
41,290,150
22,017,376
567,915,225
9,925,527 1,069,626,972
(265,446)
(9,486,976)
-
-
8,945,696
10,732,253 1,067,098,784
installation
machinery under
progress and
Construction in
22,017,376
606,199
1,059,989
-
-
-
37,770,813
-
(1,373,283)
(279,763)
-
2,481,585
36,942,274
45,728,547
-
(697,975)
295,628
(1,373,521)
1,863,827
45,640,588
equipment
Tools and
Furniture,
22,876,680
52,655,304
81,201,115
-
-
-
7,068,808
(80,608)
-
-
-
386,698
6,762,718
7,675,007
(147,700)
-
-
-
-
7,822,707
building
of leased
Improvement
Cost basis
(Unit: Baht)
2008 (Baht 14.5 million included in manufacturing cost, and the balance in administrative expenses)
874,262 151,194,071
983,545 170,669,825
-
-
-
1,989,038 206,999,462 324,009,375
-
-
-
109,283
-
1,879,755 187,045,568 292,581,725
2,863,300 358,193,533 376,664,679
-
-
-
-
-
2,863,300 357,715,393 373,782,840
Buildings and
Land
Revaluation basis
Consolidated financial statements
2007 (Baht 15.9 million included in manufacturing cost, and the balance in administrative expenses)
Depreciation for the year
221,065,000
As at 31 December 2007
Net book value:
-
As at 31 December 2007
Allowance for impairment loss:
-
As at 31 December 2007
Accumulated depreciation:
221,065,000
-
Disposals
As at 31 December 2008
-
221,065,000
Additions
As at 31 December 2007
Cost/Revalued amount:
Land
20. Property, plant and equipment
(Unit: Baht) Separate financial statements Furniture, fixtures
Improvement of
and office
leased building
Motor vehicles
Total
equipment
Cost: As at 31 December 2007
7,822,707
11,133,823
9,739,426
28,695,956
Additions
-
1,024,960
1,421,400
2,446,360
Disposals
-
(1,041,921)
-
(1,041,921)
(147,700)
(877,382)
-
(1,025,082)
7,675,007
10,239,480
11,160,826
29,075,313
6,762,718
9,491,449
7,938,865
24,193,032
386,698
589,827
694,226
1,670,751
-
(1,039,695)
-
(1,039,695)
(80,608)
(876,220)
-
(956,828)
7,068,808
8,165,361
8,633,091
23,867,260
As at 31 December 2007
1,059,989
1,642,374
1,800,561
4,502,924
As at 31 December 2008
606,199
2,074,119
2,527,735
5,208,053
Write-off As at 31 December 2008 Accumulated depreciation: As at 31 December 2007 Depreciation for the year Depreciation on disposals Depreciation on write-off asset As at 31 December 2008 Net book value:
Depreciation for the year 2007 (included in administrative expenses)
1,676,355
2008 (included in administrative expenses)
1,670,751
The subsidiaries arranged for the independent professional valuers to appraise the value of certain assets in December 2007 on an asset-by-asset basis. The basis of the revaluation was as follows: - Land was revalued using the market approach. - Buildings and machinery were revalued using the depreciated replacement cost approach.
Annual Report 2008

A breakdown of property, plant and equipment carried on the revaluation basis and their accumulated depreciation is as follows: (Unit: Baht) Consolidated financial statements 2008
2007
Land Buildings improvement and
Land
Machinery
Land Buildings improvement and
Land
structures Original cost Surplus from revaluation Revalued amount
Machinery
structures
129,232,055
1,770,473
273,230,576
288,932,438
129,232,055
1,770,473
272,752,436
91,832,945
1,092,827
84,962,957
87,732,241
91,832,945
1,092,827
84,962,957
87,732,241
221,065,000
2,863,300
358,193,533
376,664,679
221,065,000
2,863,300
357,715,393
373,782,840
-
1,770,472
190,523,371
266,647,212
-
1,770,472
179,516,506
267,453,400
-
218,566
16,476,091
57,362,163
-
109,283
7,529,062
25,128,325
-
1,989,038
206,999,462
324,009,375
-
1,879,755
187,045,568
292,581,725
Accumulated depreciation on original cost
286,050,599
Accumulated depreciation on surplus from revaluation Accumulated depreciation on revalued amount
In October 2006, the Federation of Accounting Professions issued Notification No. 25/2006 allowing entities which carry their property, plant and equipment at revalued amounts to calculate depreciation to be charged to the income statements based on the historical costs of the assets instead of on the revalued amounts. The subsidiaries have decided to follow the notification. However, had the depreciation charge been calculated based on the revalued amounts, net income and earnings per share would have been changed to the following:
Consolidated financial statements 2008 Net income (Baht) Basic earnings per share (Baht per share)
2007 390,946,327
257,613,513
0.66
0.52
The subsidiaries have mortgaged their land with structures thereon and pledged/mortgaged most of their machinery with a total net book value (revalued amount) as at 31 December 2008 of Baht 374.8 million (2007: Baht 407.1 million) as collateral for liabilities according to the conditions stipulated in the debt restructuring agreements from financial institutions, the long-term loans, credit facilities and bank guarantees granted to the subsidiaries by banks. As at 31 December 2008, certain equipment items of the Company and its subsidiaries have been fully depreciated but are still in use. The original cost of those assets amounted to approximately Baht 211.3 million (2007: Baht 74.0 million) and for the Company Only approximately Baht 14.5 million (2007: Baht 15.8 million).

Annual Report 2008
21. Non-operating assets (Unit: Baht) Consolidated financial statements 2008
2007
Land
24,319,476
24,319,476
Buildings and building improvement
61,031,829
61,031,829
Machinery, tools and equipment
142,910,158
134,959,941
Total
228,261,463
220,311,246
(190,820,833)
(179,288,325)
(1,852,151)
(1,852,151)
35,588,479
39,170,770
4,399,272
4,877,000
Less:
Accumulated depreciation Allowance for impairment of assets
Non-operating assets - net Impairment loss included in the income statements for the year
Non-operating assets comprise the land, buildings and building improvement, machinery, tools and equipment of three subsidiaries used in non-operational sections, a closed plant and a new project which has not yet started. During 2006, some of these assets were appraised by an independent appraiser and their value was not lower than their carrying costs presented in the financial statements. Subsidiaries have mortgaged their land with structures thereon and pledged/mortgaged most of their machinery with a total net book value as at 31 December 2008 of Baht 34.6 million (2007: Baht 37.7 million) as collateral for liabilities according to the conditions stipulated in the debt restructuring agreements from financial institutions, the long-term loans, credit facilities and bank guarantees granted to the subsidiaries by banks.
22. Prepaid rent (Unit: Baht) Consolidated and Separate financial statements 2008 Prepaid rent Less: Accumulated amortization Prepaid rent - net Amortisation expenses included in the income statements for the year
2007
95,847,465
36,206,258
(33,635,702)
(31,821,920)
62,211,763
4,384,338
1,813,782
1,808,826
Annual Report 2008

23. Bank overdrafts (Unit: Baht) Interest rate (percent per annum) Bank overdrafts
MOR
Consolidated financial statements 2008
2007 19,945,967
8,496,216
Bank overdrafts are secured by the mortgage of the subsidiaries’ land with structures thereon and pledged/mortgaged
most of their machinery, as mentioned in Note 20 and Note 21 to the financial statements.
24. Restructured long-term loans
In 1999, the Company entered into debt restructuring agreements with the financial institution creditors. The debt repay-
ment schedules and related interest rates are as follows: 1. Interest rates
MLR for bank overdrafts and loans
2. Repayment schedules - Principal
- Quarterly, from March 2001 to December 2007 - Quarterly, from September 2005 to December 2014
- Accrued interest
Within 2014
- Interest
Monthly
In addition, in July 2007, the Company has successfully negotiated with such related parties by amending repayment conditions. Conditions after debt restructure are as follows: 1. Interest rates
MLR (KTB)
2. Repayment schedules
- Principal
Quarterly, from September 2007 to December 2016
- Accrued interest
Within December 2016
- Interest
Monthly
In September 2008, the Company repaid full amount of the loan from P.M. Food Company Limited and debt of Baht 3.5
million was forgiven. The discount received was recorded as “Gain from debt forgiveness” in the income statement. Subsequently, there was an amendment to such loan repayment for the sake of the Company and such subsidiary in order to comply with the restructuring agreement. As a result, as at 31 December 2008, the Company has outstanding balance of loan from such subsidiary amounting to Baht 6.0 million, of which Baht 2.5 million is the principal and Baht 3.5 million is the discount (the Company made a reversal of the “Debt forgiveness” in the fourth quarter of this year). Such discount will be forgiven when the Company repays the principal in full.
Annual Report 2008
In 2002 and 2003, P.M. Food Company Limited, a subsidiary, defaulted on the payments of principal and related interest due under its debt restructuring agreement dated 3 September 1999. During 2003, this subsidiary filed a petition for business rehabilitation with the Court and consequently in December 2003, the Court issued an order approving the business rehabilitation plan of the above subsidiary. The business rehabilitation plan mainly involves the restructuring of debts. The subsidiary recorded the accounts of year 2003 in accordance with such business rehabilitation plan. The business rehabilitation plan of the subsidiary expired on 21 December 2008. The subsidiary filed a petition to the Court to cancel the business rehabilitation, by which the Court schedules the hearing in March 2009. Since December 2007, P.M. Food Company Limited, a subsidiary, stopped repaying the due loan principal amounting to Baht 16.7 million to two financial institutions since these two financial institutions are in the process of transferring the rights in indebtedness to a related company. In the first quarter of the current year, such financial institutions transferred the right to collection of the subsidiary’s indebtedness to such related company. The subsidiary repaid such loans and paid remuneration to the related company and received debts forgiveness of Baht 85.0 million as discussed in Note 10 to the financial statements. In the current year, P.M. Food Company Limited repaid the full amount of loans from six financial institutions, and received the discounts totaling Baht 191.9 million. The discount received was recorded as “Gain from debt forgiveness” in the income statement of the current year. Conditions of long-term loans according to the business rehabilitation plan of P.M. Food Company Limited are as follows: 1. Interest rates
- MLR (KTB) for creditors group one, group two/one and group four/one - 2 % per annum for creditors group two/two and group four/two
2. Repayment schedules - Principal and accrued interest
Creditor group one - Principal: Bi-annually, from June 2004 to June 2009 - Accrued interest : December 2010 Creditors group two/one and group four/one - Principal: Bi-annually, from June 2004 to June 2011 Creditors group two/two and group four/two - Principal and accrued interest: December 2015
- Interest
Monthly
Note Credit group one :
Loan from financial institution creditor with collateral
Credit group two :
Loans from financial institutions with secondary mortgage
Credit group four :
Loan from related company creditor with secondary mortgage
Details of long-term loans as at 31 December 2008 and 2007 are as follows: 31 December 2008 Consolidated financial statements
Separate financial statements
(Unit: Baht) 31 December 2007
Consolidated financial statements
Separate financial statements
Financial Related Financial Related Financial Related Financial Related institutions companies institutions companies institutions companies institutions companies Long - term loans
116,655,675
- 39,991,452 90,004,162 820,979,570
- 41,946,337 119,580,162
Less: Current portion of long-term loans (7,574,493)
- (2,177,219) (5,286,000) (79,004,943)
- (2,177,219) (5,286,000)
- 37,814,233 84,718,162 741,974,627
- 39,769,118 114,294,162
Long - term loans - net of current portion
109,081,182
Annual Report 2008
Movements in the long-term loans account during the current year ended 31 December 2008 are summarised below. (Unit: Thousand Baht) Consolidated financial statements
Separate financial statements
Financial institutions Related companies Financial institutions Related companies Balance as at 1 January 2008
820,979,570
-
41,946,337
119,580,162
(413,479,020)
-
(1,954,885)
(29,576,000)
(13,964,314)
-
-
-
Less: Gain from debt forgiveness
(276,880,561)
-
-
-
Balance as at 31 December 2008
116,655,675
-
39,991,452
90,004,162
Less: Repayment Less: Realised deferred gain from debt restructuring
Some parts of long-term loans have been guaranteed by the associated company and the mortgage of land and buildings
and the pledge of some part of the subsidiary’s machinery, as mentioned in Note 20 and Note 21 to the financial statements.
25. Long-term loans from financial institutions
Long-term loans as at 31 December 2008 are loans from financial institutions of Premier Canning Industry Company Limited
(a subsidiary). During 2003, this subsidiary entered into agreements with all financial institution creditors to repay restructured long-term loans according to the debt restructuring agreement date 3 September 1999. The subsidiary repaid principal and all related interest to two financial institution creditors totaling approximately Baht 118 million in March 2003 and repaid principal and partial related interest to the remaining financial institution creditors in April 2003. The remaining interest of Baht 13.69 million according to the debt restructuring agreement will be repaid during the period of seven years without interest. In addition, such subsidiary entered into long-term loan and credit facilities agreement with a financial institution. Under the long-term loan and credit facilities agreement, such subsidiary is required to comply with certain conditions stipulated in the agreement. Details of the long-term loan agreements of Premier Canning Industry Company Limited are as follows: 1. Principal
Baht 200 million
2. Interest rates
MLR (KTB)
3. Repayment schedules - Principal
Payable on a monthly basis for an amount of not less than Baht 2.15 million per month, starting from April 2003 (Total 84 months)
- Remaining interest
Payable on a monthly basis Baht 0.16 million per month, starting from April 2003
- Interest
Monthly basis
(Total 84 months), no interest charged Details of long-term loans as at 31 December 2008 and 2007 are as follows:
(Unit: Baht)
Consolidated financial statements 2008 Long-term loans
50,784,048
76,584,048
2,463,326
4,457,877
Less: Current portion of long-term loans
(27,774,418)
(27,813,335)
Long-term loans - net of current portion
25,472,956
53,228,590
Remaining interest
2007
Annual Report 2008
Under this long-term loan agreement and credit facilities agreement with this financial institution, the subsidiary is to comply with certain conditions stipulated in the agreement as follows: 1. The subsidiary is not allowed to pay dividend, make any allocation to shareholders and/or subsidiary if the subsidiary has deficit (according to the annual financial statements). 2. The subsidiary is not allowed to grant loans to related companies, except for those provided in the ordinary course of business. 3. The subsidiary is not allowed to invest or establish any subsidiary or grant loans thereto. 4. The subsidiary is not allowed to lend, make commitments and guarantees within a period of three years starting from the loan agreement date except in the ordinary course of business or the subsidiary is able to maintain the debt to equity ratio of no higher than 3:1 according to the annual financial statements.
If the subsidiary does not comply with conditions in long-term loan agreement, the conformity violated long-term loan
agreement and all liabilities on credit facilities of the above condition will immediately repay. Long-term loans granted by financial institutions are secured by the mortgage of all of the subsidiary’s land with structures thereon, the pledge/mortgage of most of its machinery (as mentioned in Note 20 and Note 21 to the financial statements) and the mortgage of land with structures thereon of another subsidiary.
26. Short-term provision The balance of short-term provision is as follows:
(Unit: Baht) Consolidated and Separate financial statements 2008
Pensions
2007 4,728,850
-
27. Share capital
On 28 June 2007, the Company’s Extraordinary General Meeting of Shareholders No. 2/2007 passed the resolution
approving the followings: - Change the par value of the Company’s shares from 5 million ordinary shares of Baht 100 each to 500 million ordinary shares of Baht 1 each. The Company registered the change in the par value of its shares with the Ministry of Commerce on 20 July 2007. - Increase the Company’s registered share capital from Baht 500 million to Baht 650 million through the issuance of 150 million new ordinary shares with a par value of Baht 1 each. These shares are to be allocated, in whole or in part, to the public. The Company registered the increase in its registered share capital with the Ministry of Commerce on 20 July 2007. During 14 to 16 May 2008, the Company made a public offering of the 150 million additional shares at a price of Baht 3.1 per share, or for a total of Baht 465 million, and on 20 May 2008 received payment of this share capital increment. All expenses related to the share offering amounting to Baht 12.5 million are presented as a deduction from the share premium. The Company registered the increase in its
paid-up capital with the Ministry of Commerce on 20 May 2008.
On 27 May 2008, the Board of the Stock Exchange of Thailand ordered the listing of the Company’s ordinary shares on the Stock Exchange of Thailand. On 19 December 2008, the Company’s Extraordinary General Meeting of Shareholders No. 1/2008 passed the resolution approving offsetting premium on share capital with deficit.
Annual Report 2008
28. Revaluation surplus on assets
This represents surplus arising from revaluation of property, plant and equipment. Movements during the year are as follows: (Unit: Baht) Consolidated financial statements 2008
2007
Balance - beginning of year
285,730,831
320,775,305
Less: Amortisation of the year
(41,290,150)
(35,044,474)
Balance - end of year
244,440,681
285,730,831
The revaluation surplus on assets can neither be offset against deficit nor used for dividend payment.
29. 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. On 28 June 2007, the Company’s Extraordinary General Meeting of Shareholders No. 2/2007 passed the resolution approving offsetting legal reserve with deficit.
30. Expenses by nature
Significant expenses by nature are as follow: (Unit: Baht)
Consolidated financial statements 2008 Salary and wages and other employee benefits
2007
Separate financial statements 2008
2007
259,551,014
232,772,502
132,927,580
118,244,035
26,416,648
27,753,680
1,670,751
1,676,355
3,762,668
3,434,916
3,352,212
3,256,038
Loss on exchange
12,588,531
1,240
-
-
Rental expenses
26,460,197
23,210,856
16,646,898
16,904,013
717,887,275
1,207,713,256
1,467,590,901
1,208,774,826
1,303,829,207
1,139,011,360
-
-
(11,143,957)
(1,540,718)
(3,392,370)
(7,603,963)
Depreciation Amortisation expenses
Purchases of goods Raw materials and consumables used Changes in inventories of finished goods and work in process
Annual Report 2008
31. Earnings per share
Basic earnings per share is calculated by dividing net income for the year by the weighted average number of ordinary shares
in issue during the year.
32. Promotional privileges
A subsidiary has been granted the following promotional privileges under the Investment Promotion Act B.E. 2520 by the
Board of Investment. Company
Number
P.M. Food Company Limited
Date granted
Business
1478/2538
29 June 1995
Manufacturing of snacks
1572/2540
3 September 1997
Manufacturing of snacks
Subject to certain imposed condition, the privileges include the followings: 32.1 Exemption from corporate income tax on net income for period of 8 years, commencing as from 4 June 1996 and 1
December 1998, respectively (the date of first earning operating income) and these privileges expired on 3 June 2004 and 30 November 2006, respectively. 32.2 A fifty percent reduction of corporate income on net income for a period of 5 years after the expiration of the corporate income tax exemption period as mentioned in Note 32.1. 32.3 Permission for foreign technicians and experts to work in positions as approved by the Board. 32.4 Exemption from import duty on machinery and equipment as approved by the Board. 32.5 Dividends paid from the income of promoted operations which are exempted from corporate income tax, are in turn exempted from inclusion in the determination of corporate income tax. 32.6 Permission to double deduct the cost of transportation, electricity and water supply for corporate income tax purpose for a period of 10 years commencing from the date of earning operating income and these privileges of certificate no 1572/2540 expired on 30 November 2008 32.7 Permission to deduct 25 percent of the cost of public utilities, in addition to normal depreciation charges.
Annual Report 2008
33. Segment information
The Company and its subsidiaries’ business operations involve three principal segments: (1) distribution of consumer
products (2) manufacture of food and (3) rent out space and services. These operations are mainly carried on in Thailand. Below is the consolidated financial information for the years ended 31 December 2008 and 2007 of the Company and its subsidiaries For the years ended 31 December
(Unit: Million Baht)
Manufacture
Rent out space
Elimination of
consumer products
of food
and services
inter-segment
segment
segment
segment
revenues
Distribution of
2008
2007
2008
2007
2008
2007
2008
Consolidation
2007
2008
2007
Revenues from external customers Local
1,888
1,611
54
84
15
33
-
-
1,957
1,728
-
-
1,081
940
-
-
-
-
1,081
940
1,888
1,611
1,135
1,024
15
33
-
-
3,038
2,668
-
-
750
610
10
10
(760)
(620)
-
-
1,888
1,611
1,885
1,634
25
43
(760)
(620)
3,038
2,668
443
436
294
229
1
9
738
674
11
12
277
6
-
72
-
14
17
16
Selling expenses
(276)
(252)
Administrative expenses
(225)
(195)
(5)
(12)
(26)
(31)
(1)
5
(78)
(16)
432
293
Export Total revenues from external customers Inter-segment revenues Total revenues Segment income Unallocated income and expenses: Interest income Gain from debt forgiveness Gain on sales of investment in associated company Reversal of allowance for impairment in value of investments Other income
Other expenses Finance cost Share of income (loss) from investment in associated company Corporate income tax Net income
(Unit: Million Baht)
As at 31 December Manufacture
Rent out space
Elimination of
consumer products
of food
and services
inter-segment
segment
segment
segment
revenues
Distribution of
2008 Property, plant and equipment - net
2007
2008
2007
2008
2007
2008
2007
2008
2007
5
5
203
235
234
251
-
-
442
491
Other assets
908
637
413
679
13
16
(331)
(579)
1,003
753
Total assets
913
642
616
914
247
267
(331)
(579)
1,445
1,244
Transfer prices between business segments are as set out in Note 8 to the financial statements.
Consolidation
Annual Report 2008
34. Provident fund
The Company and the subsidiaries and their employees have jointly established separate provident funds in accordance with
the Provident Fund Act B.E. 2530. The Company, the subsidiaries and their employees contributed to the fund monthly at the rate of 5 percent of basic salary. The funds, which are managed by TISCO Asset Management Company Limited, will be paid to employees upon termination in accordance with the fund rules. During the year 2008, the Company and its subsidiaries contributed Baht 5.7 million (2007: Baht 5.3 million) to the funds, with the Company Only contributing Baht 3.0 million (2007: Baht 2.7 million).
35. Commitments and contingent liabilities 35.1 Operating lease commitments
The Company and its subsidiaries have entered into several lease agreements in respect of lease of office space, warehouse,
motor vehicles, and equipment with related parties and other companies. The terms of the agreements are generally between 1 year and 5 years. As at 31 December 2008, future minimum lease payments required under these operating lease contract were as follows: (Unit: Million Baht) Consolidated financial statements
Separate financial statements
Payable within:
Less than 1 year
11.2
6.8
1 to 5 years
16.6
13.3
35.2 Long-term service commitments The Company and its subsidiaries have entered into several long-term service agreements in respect of computer services,
consultancy services, advertising fees, and other services with related parties and other companies. As at 31 December 2008, future minimum long-term service payments required under these agreements are as follows: (Unit: Million Baht) Consolidated financial statements
Separate financial statements
Payable within: Less than 1 year
56.7
18.7
1 to 5 years
31.4
24.3
More than 5 years
60.3
60.3
Annual Report 2008
35.3 Guarantees
(a) A subsidiary and the associated company have guaranteed bank credit facilities of another subsidiary amounting to Baht
101.5 million and Baht 0.5 million, respectively. (b) As at 31 December 2008, there were outstanding bank guarantees of approximately Baht 13.2 million issued by the banks on behalf of the subsidiaries in respect of certain performance bonds as required in the normal course of business. These included letters of guarantee amounting to Baht 8.1 million to guarantee import duty and Baht 5.1 million to guarantee electricity use.
36. Financial instruments
36.1 Financial risk management The Company and its subsidiaries’ financial instruments, as defined under Thai Accounting Standard No. 48 ?Financial
Instruments: Disclosure and Presentations?, principally comprise cash and cash equivalents, trade accounts receivable, loans, investments, and short-term loans and long-term loans. The financial risks associated with these financial instruments and how they are managed is described below. Credit risk
The Company and its subsidiaries are exposed to credit risk primarily with respect to trade accounts receivable, loans,
receivable from sale of investment - related parties and investment in receivable purchased - related parties. The Company and its subsidiaries manage the risk by adopting appropriate credit control policies and procedures and therefore do not expect to incur material financial losses. In addition, the Company and its subsidiaries do not have high concentration of credit risk since they have large customer bases. The maximum exposure to credit risk is limited to the carrying amounts of trade accounts receivable, loans, receivable from sale of investment - related parties and investment in receivable purchased - related parties as stated in the balance sheet.
Interest rate risk The Company and its subsidiaries’ exposure to interest rate risk relates primarily to their cash at banks, bank overdrafts,
short-term and long-term borrowings. However, since most of the Company and its subsidiaries’ financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate, the interest rate risk is expected to be minimal. Significant financial assets and liabilities as at 31 December 2008 classified by type of interest rates are summarised in the table below, with those financial assets and liabilities that carry fixed interest rates further classified based on the maturity date, or the repricing date if this occurs before the maturity date. Fixed interest rates Consolidated financial statements
Within 1 year
Floating interest rate
1-5 years
Non-interest bearing
Interest rate
Total
(Million Baht)
(% p.a.)
Financial assets Cash and cash equivalents
-
-
89
-
89
0 - 0.5
Current investment
-
-
-
Trade accounts receivable
-
-
-
49
49
-
370
370
-
Escrow account
-
-
5
-
5
0 - 0.5
Restricted bank deposits
3
-
-
-
3
2.35 - 2.75
Long-term investment
-
51
-
-
51
4.25
-
-
56
-
56
MLR
3
51
150
419
623
Bank overdrafts
-
-
20
-
20
MOR
Trade accounts payable
-
-
-
309
309
-
-
41
56
20
117
MLR, 2.0 MLR
Investment in receivable purchased related parties Financial liabilities
Restructured long-term loans from financial institutions Long-term loans from financial institutions
Annual Report 2008
-
-
51
2
53
-
41
127
331
499
Fixed interest rates Separate financial statements
Within 1 year
Floating interest rate
1-5 years
Non-interest bearing
Interest Rate
Total
(Million Baht)
(% p.a.)
Financial assets Cash and cash equivalents
-
-
29
-
29
0 - 0.5
Current investment
-
-
-
49
49
-
Trade accounts receivable
-
-
-
308
308
-
80
-
-
-
80
4.55
Escrow account
-
-
5
-
5
0 - 0.5
Long-term investment
-
51
-
-
51
4.25
-
-
56
-
56
MLR
80
51
90
357
578
-
-
-
150
150
-
-
-
40
-
40
MLR
-
-
90
-
90
MLR
-
-
130
150
280
Short-term loans to related parties
Investment in receivable purchased related parties
Financial liabilities Trade accounts payable Restructured long-term loans from financial institutions Restructured long-term loans from related parties
Foreign currency risk The subsidiary’s exposure to foreign currency risk arises mainly from trading transactions that are denominated in foreign currencies. The balances of financial assets and liabilities denominated in foreign currencies of the subsidiary as at 31 December 2008 which are unhedged are summarised below.
Foreign currency
US dollar Japanese yen
Financial
Financial
Exchange rate
assets
liabilities
as at 31 December 2008
1.7
2.6
34.8051 and 35.0824
-
36.1
0.389808
Annual Report 2008
36.2 Fair values of financial instruments
Since the majority of the Company and its subsidiaries’ financial instruments are short-term in nature or bear floating interest
rates, their fair value is not expected to be materially different from the amounts presented in the balance sheets. A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an 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.
37. 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. According to the balance sheet as at 31 December 2008, the Group’s debt-to-equity ratio was 0.8:1 and the Company’s was 0.6:1.
38. Credit facilities Credit facilities (bank overdrafts, loans from financial institutions, bank guarantees, trust receipts and letters of credit etc.) provided by financial institutions to the subsidiaries are secured by the pledged deposits at financial institutions of the subsidiaries and the mortgage of the subsidiaries’ land and structures thereon and the mortgage/pledge of most of subsidiaries’ machinery.
39. Approval of financial statements These financial statements were authorised for issue by the Company’s Board of Directors on 20 February 2009.
Remuneration of the Auditor
1. Remuneration for Auditing (Audit Fee) The company and its subsidiaries pay auditing remuneration to Ernst & Young Office Limited, which includes the audit office
supervising the auditors, personnel or businesses related to the auditors and the audit office in the previous year is equivalent to 3,635,000 Baht.
2. Other Fees (Non-Audit Fee) The company and its subsidiaries do not acquire any other services from Ernst & Young Office Limited, which includes the
audit office supervising the auditors, personnel or businesses related to the auditors and the audit office in the previous year.
Annual Report 2008
No. 1, Premier Corporate Park, Soi Premier 2, Sinakharin Road, Nong Bon Sub-district, Prawet District, Bangkok 10250 www.premier-marketing.co.th