:: Annual Report 2011 EN ::

"OOVBM 3FQPSU

£ ² ¢ ² £ ° Í ² u £²¢ ² £° Í² u £´©± ¨£µ £± ÁÂ £´ ±ª £µ ³ ± ¡«² "OOVBM 3FQPSU 4SJ 5SBOH "HSP *OEVTUSZ 1VCMJD $PNQBOZ -JNJUFE

:FBS PG (SPXUI

£´©± ¨£µ £± ÁÂ £´ ±ª £µ ³ ± ¡«²

4SJ 5SBOH "HSP *OEVTUSZ 1VCMJD $PNQBOZ -JNJUFE

)FBE 0GGJDF 4PJ 1FUDILBTFN 3PBE )BU :BJ %JTUSJDU 4POHLIMB 5IBJMBOE 5FM "VUPNBUJD /VNCFS 'BY

£´©± ¨£µ £± ÁÂ £´ ±ª £µ ³ ± ¡«²

4SJ 5SBOH "HSP *OEVTUSZ 1VCMJD $PNQBOZ -JNJUFE

Content Corporate Fact Sheet Message from Chairman Financial Highlights Board of Directors Executive Management Organisation Structure Nature of Business Risk Factors Capital Structure Dividend Policy Management Structure Corporate Governance Corporate Social Responsibility Related Party Transactions and Interested Party Transactions Management Discussion and Analysis The Audit Committee Report Utilisation of IPO Proceed Consolidated and Company Financial Statements 2011 General Corporate Information Defined Terms and Abbreviations

Page 1 2 4 6 12 16 18 30 36 40 42 56 72 77 97 112 113 114 201 209

World Leading Natural Rubber Processor 9% market share of

952,000 tons

world consumption 2011

sales volume in 2011

18% of Thailandûs

21 processing factories

production volume in 2011

in Thailand and Indonesia

Lampang Sukhothai Pisanulok Pichit

Fully Integrated Natural Rubber Supply Chain

Buengkarn Mukdaharn Buriram

Countries of Operations

Upstream ë 2,800 hectares of rubber plantation ë Located in northern part of Thailand

Chumporn Surathani Nakornsrithammarat

Trang

SongKhla

Midstream ë 1,100,000 tons capacity per annum ë 21 factories in Thailand and Indonesia ë Cover full range of products from RSS, TSR and Concentrated Latex

Downstream Shareholding Structure (5 March 2012) Others shareholders 60%

133,704

Sri Trang Holdings Co., Ltd. 19% Dr. Viyavood Sincharoenkul 13% Mr. Aram Sirisuwat 4% CITIBANK NOMS SPOREPTE LTD 4%

Sales of Goods and Services (THB million)

Annual Report 2011

83,845 50,017

2007

60,134 45,910

2008

2009

2010

2011

ë Investment in one of world leading glove manufacturing company ë 12.5 billion pieces per annum capacity of gloves ë Produce both latex and nitrile examination gloves

Message from Chairman

Financial Year 2011 was another memorable year for us. It was our Ă§Year of GrowthĂŠ in many milestone aspects. We delivered an industry record sales volume of 952,000 tons. Our capacity expansion has been far beyond the old territory. Highly potential locations have become our footprints in 2011 and more in future.

Annual Report 2011

Dear Shareholders Year 2011 was our Ă§Year of GrowthĂŠ in various aspects including sales volume, capacity expansion and access to international capital market despite being one of challenging periods amidst global economy uncertainties. Tonnage of sale volume in 2011 increased to a record 952,000 tons, 13% growth from the year earlier. Our revenue increased 60% to THB 133,704 million due to the increase in sale volume and increase in price of natural rubber. Our net profit was recorded at THB 1,329 million, decrease 65% from the previous year. This was due mainly to volatile natural rubber price which created a very challenging environment for our business. Our balance sheet remains healthy with the net cash of THB 2,273 million, total equity of THB 18,031 million with a lower debt gearing at 1.24 times. We have expanded our business throughout our value chain from the upstream rubber plantation to the midstream of natural rubber processing and downstream of our glove manufacturing. In 2011, we achieved a world record of natural rubber capacity of 1.1 million tons per annum for the midstream which enabled us to be the world leader of natural rubber processor. Our target of 1.5 million ton capacity is expected to come on stream in 2013. We realize that our industry is very fragmented in nature. Therefore, higher market share through investment in capacity expansion will subsequently enable our profits to stray from fluctuation in commodity price. The synergy creation with the upstream business would be more and more prominent. Our rubber plantation are located in the new phase areas of rubber plantation in Thailand. Significant economy of scale in procurement and production activities will be realised when it is ready to provide yield starting from year 2016. Our downstream business through the joint venture entities are also in expansion mode. Resilient demand growth and best support of raw materials from us have strengthened our leading position in glove industry. Under the competitive environment of the industry, we believe that our excellent sales and procurement platforms together with our strongholds in high-demand destination markets will be the headways to growth for the next years to persist. We are not just strived to become larger in size, but we have ambition to be top-of-mind midstream processor amongst suppliers and customers. Driven by our gratitude, we place great emphasis in manufacturing quality products for our customers and at the same time giving back to our community and conserving our planetĂťs resources. We value sustainable business practices and grow contingently with the community and the environment. On behalf of board of directors, I would like to convey appreciation to our dedicated staffs around the globe, the most prized asset of our group, for every initiative, devotion and passion-to-excellence spirit in developing our business up to this milestone. I would also like to thank our valued investors, banks and other stakeholders for your continued support and confidence in our company. We are steadfast in our commitment to continue our fine tradition of quality and growth in pursuit of our ultimate goal: to maintain our worldclass standard as the second-to-none natural rubber processor in the world. Sincerely yours,

Dr. Viyavood Sincharoenkul Chairman Sri Trang Agro-Industry Public Company Limited March 2012

Financial Highlights (UNIT : THB million)

FY 2011

FY2010

FY2009

FY2008

FY2007

STATEMENT OF COMPREHENSIVE INCOME Revenue from sale EBITDA Profit before tax Net profit

133,704 3,311 1,959 1,329

83,845 4,877 4,113 3,841

45,910 2,972 2,298 2,182

60,134 1,598 652 603

50,017 975 144 102

STATEMENT OF FINANCIAL POSITION Total assets Total liabilities Shareholders没 equity

40,412 22,381 18,031

37,656 27,264 10,392

23,105 15,736 7,369

15,181 9,773 5,408

18,015 14,010 4,005

4.3 1.0 1.5 1.1

6.2 4.6 1.2 2.5

7.7 4.7 1.1 2.0

4.9 1.0 1.0 1.6

4.3 0.2 1.0 3.3

FINANCIAL RATIOS Gross profit margin (%) Net profit margin (%) Current ratio (times) Net debt to equity ratio (times) Note :

Financial statement for FY2007 - FY2009 have been prepared in accordance with Thai generally accepted accounting principles under the Accounting Act B.E. 2543 while Financial statement for FY2010 and FY2011 have been prepared based on the early adoption of some accounting standards.

Revenues Breakdown by Products Others 2% LTX 7%

Others 2% LTX 10%

RSS 19%

2011

RSS 18%

2010

TSR 72% RSS - Ribbed Smoked Sheet

Others 3%

TSR 70% TSR - Technically Specified Sheet

Annual Report 2011

LTX 11%

RSS 19%

2009

TSR 67% LTX - Concentrated Latex

Financial Highlights (Cont没d) Revenue from sale

Net Profit

(Tons)

(THB million)

1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 -

160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 2007

2008

2009

2010

(THB million)

2011

2007

Sale volume (LHS) Revenues (RHS)

2007 2008 2009 2010 2011

2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0

2010

2011

ROE (%) 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

2007 2008 2009 2010 2011

Fixed asset turnover (Times) 45 40 35 30 25 20 15 10 5 0

2007 2008 2009 2010 2011

2009

ROA (%) 14% 12% 10% 8% 6% 4% 2% 0%

Current ratio (Times)

2008

Net profit (LHS) Net profit margin (RHS)

Earning per share (THB) 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0

(%)

5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%

4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 -

2007 2008 2009 2010 2011

Net debt to equity (Times) 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0

2007 2008 2009 2010 2011

Sri Trang Agro-Industry Public Company Limited

Board of Directors

1. Mr. Viyavood Sincharoenkul Chairman/ Managing Director Age: 56 years Academic Background ë Ph.D. in Chemistry, Queen Elizabethûs College, University of London ë Bachelorûs Degree in Chemistry (First Class), Queen Elizabethûs College, University of London Training Program Work Experience present ë Chairman, STA ë Chairman, Sri Trang International ë Managing Director, STA ë Director, Rubberland Products ë Director, Nam Hua Rubber ë Director, Sadao P.S. Rubber ë Director, Thai Tech Rubber ë Director, SSC ë Director, Semperflex Asia ë Director, Semperform Pacific ë Director, Anvar Parawood ë Director, Premier System Engineering ë Director, Startex Rubber ë Director, Starlight Express Transport ë Director, Sri Trang Rubber & Plantation ë Director, PT Sri Trang Lingga ë Director, Shanghai Sempermed ë Director, Semperflex Shanghai ë Director, Shi Dong Investments ë Director, Shi Dong Shanghai ë Director, Sri Trang USA, Inc. ë Director, Sempermed Singapore ë Director, Sempermed USA, Inc. ë Director, Pattana Agro Futures ë Director, Shanghai Semperit ë Director, PT Star Rubber 1987 - 1993 ë Managing Director, Sri Trang Agro-Industry Co., Ltd. 1985 - 1987 ë General Manager, Paktai Rubber

Annual Report 2011

2. Mr. Prasit Panidkul Vice Chairman/ Executive Director Age: 64 years Academic background ë Executive Micro MBA, Thammasat University Training Program ë DAP 75/2008 by Thai Institute of Directors Association Work Experience present ë ë ë ë ë ë ë 1987 - 1993 ë 1986 - 1991 1975 - 1997

Vice-chairman, STA Director, Nam Hua Rubber Director, Sadao P.S. Rubber Director, Premier System Engineering Director, Starlight Express Transport Director, Sri Trang Rubber & Plantation Director, PT Sri Trang Lingga Vice-chairman, Sri Trang Agro-Industry Co., Ltd. ë Member of Trang Provincial Council, Trang Province ë Managing Partner, Trang Sahakarn Khonsong Ltd.

3. Mr. Chaiyos Sincharoenkul

4. Mr. Anan Pruksanusak

Director/ Executive Director Age: 60 years

Director/ Executive Director Age: 57 years

Academic background ë Executive Micro MBA, Thammasat University

Training Program ë DAP 66/2007 by Thai Institute of Directors Association

Work Experience Present ë ë ë ë ë ë ë ë ë ë ë ë ë ë ë 1987 - 1993 ë

Work Experience Present ë Director, STA ë Director, Rubberland Products ë Director, Nam Hua Rubber ë Director, Sadao P.S. Rubber ë Director, Anvar Parawood ë Director, Premier System Engineering ë Director, Startex Rubber ë Director, Starlight Express Transport ë Director, Semperflex Shanghai ë Director, Sempermed Singapore

1990 - 1992 1970 - 1986

Director, STA Director, Rubberland Products Director, Nam Hua Rubber Director, Sadao P.S. Rubber Director, Anvar Parawood Director, Premier System Engineering Director, Startex Rubber Director, Starlight Express Transport Director, Sri Trang Rubber & Plantation Director, PT Sri Trang Lingga Director, Shanghai Sempermed Director, Semperflex Shanghai Director, Sempermed Singapore Director, Shanghai Semperit Director, Sri Dong Shanghai Director, Sri Trang Agro-Industry Co., Ltd. ë Member of Chamber of Commerce, Trang Province ë Assistant Manager, TTR Production Division, Yang Thai Pak Tai Co., Ltd.

Sri Trang Agro-Industry Public Company Limited

5. Mr. Kitichai Sincharoenkul Director/ Executive Director/ Nomination Committee Member Age: 52 years Academic background ë Master of Business Administration, Indiana State University, United States ë Bachelor in Economics, Thammasat University Training Program ë DAP 67/2007 by Thai Institute of Directors Association ë SGX Listed Companies Development Programme: Understanding the Regulatory Environment in Singapore: What Every Director Ought to Know Work Experience Present ë Executive Director, STA Bangkok branch ë Director, STA ë Manager of legal and administration, STA ë Director, Sadao P.S. Rubber ë Director, Siam Sempermed ë Director, Semperflex Asia ë Director, Semperform Pacific ë Director, Sri Trang Rubber & Pantation ë Director, Shanghai Sempermed ë Director, Semperflex Shanghai ë Director, Sri Trang International ë Director, Shi Dong Investments ë Director, Sri Trang USA, Inc. ë Director, Sempermed Singapore ë Director, Sempermed USA, Inc. ë Director, Pattana Agro Futures 1988 - 2006 ë Branch Manager, STA 1984 - 1987 ë Credit Department of Citibank

Annual Report 2011

6. Mr. Veerasith Sinchareonkul Director Age: 27 years Academic background ë Bachelor of Computer Science and Cybernetics, University of Reading, United Kingdom Training Program ë DAP 85/2010 by Thai Institute of Directors Association Work Experience Present ë Director, STA ë Director, Siam Sempermed ë Director, Semperflex Asia ë Director, Semperform Pacific 2008 - 2011 ë Corporate Credit Analyst, KASIKORNBANK PLC

7. Mr. Paul Sumade Lee

8. Mr. Prakob Visitkitjakan

Director/ Executive Director Age: 57 years Academic background ë Master of Business Administration, International Institute for Management Development, Lausanne, Switzerland ë Bachelor of Commerce University of New South Wales, (Sydney) Australia Training Program ë SGX Listed Companies Development Programme: Understanding the Regulatory Environment in Singapore: What Every Director Ought to Know Work Experience Present ë ë ë ë ë ë ë ë

Marketing Manager, STA Director, PT Star Rubber Director, Thai Tech Rubber Director, Shi Dong Investments Director, Sri Dong Shanghai Director, PT Sri Trang Lingga Director, Sri Trang USA, Inc. Director, and Vice Chairman, Sri Trang International

Independent Director/ Chairman of Audit Committee/ Chairman of Remuneration Committee Age: 71 years Academic background ë Master of Business Administration, Indiana University, USA ë Bachelor of Science in Business (Honors), Indiana University, USA Training Program ë Audit Committee Program (ACP) 27/2009 by Thai Institute of Directors Association ë Monitoring the Quality of Financial Reporting (MFR) 8/2009 by Thai Institute of Directors Association ë Monitoring Fraud Risk Management (MFM) 1/2009 by Thai Institute of Directors Association ë Chartered Director Class (CDC) 3/2008 by Thai Institute of Directors Association ë Director Certification Program (DCP) 33/2003 by Thai Institute of Directors Association ë Role of the Chairman Program (RCP) 5/2001 by Thai Institute of Directors Association ë SGX Listed Companies Development Programme: Understanding the Regulatory Environment in Singapore: What Every Director Ought to Know Work Experience Present ë Chairman of Audit Committee, STA ë Independent Director and Chairman of the Audit Committee, ARIP PLC. ë Director, Lease It Co., Ltd. ë Independent Director, STA 1999 - 2011 ë Independent director and Chairman of the Audit Committee, Siam City Cement PLC. 1999 - 2008 ë Audit Committee, STA 2006 - 2008 ë Independent Director/ Audit Committee, Bank of Ayudhya Public Company Limited 1999 - 2002 ë Executive Vice Prisident, Bank of Auydhya Public Company Limited

Sri Trang Agro-Industry Public Company Limited

9. Mr. Kriang Yanyongdilok

Independent Director/ Audit Committee member/ Nomination Committee member/ Remuneration Committee member Age: 68 years

Academic background ë Bachelor of Science in Business Administration (Major in Accounting), Thammasat University

Academic background ë Master Degree in Governmental Administration, Thammasat University ë Thai barrister-at-law

Training Program ë DAP 11/2004 by Thai Institute of Directors Association Work Experience Present ë Independent Director and Audit Committee, STA ë Certified Public Accountant (Thailand) No. 4250 2002 - 2005 ë Audit Committee, Oishi Group PLC. 1985 - 1998 ë Provincial Revenue, Area Revenue Office, Regional Revenue Office 3, Revenue Office 1968 ë Ombudsman, third class, Revenue Office, Phuket 1965 ë Class-three government official, Office of the Auditor-General of Thailand

10. Mr. Samacha Potavorn

Independent Director/ Audit Committee member/ Chairman of the Nomination Committee/ Remuneration Committee member Age: 73 years

Annual Report 2011

Training Program ë DAP 75/2008 by Thai Institute of Directors Association ë SGX Listed Companies Development Programme: Understanding the Regulatory Environment in Singapore: What Every Director Ought to Know Work Experience Present ë Independent Director and Audit Committee, STA 2006 - 2008 ë Assistant Secretary of Ministry of Interior 2003 - 2004 ë Governor, Phang-nga province 2002 - 2003 ë Legal counsel, Ministry of Interior 2000 - 2002 ë Assistant Permanent Secretary, Vice-Director of Southern Border Provinces Administration Center, Ministry of Interior 1997 - 2000 ë Vice-Governor, Pattalung Province, Trang Province 1996 - 1997 ë Permanent Secretary 1984 - 1996 ë Sheriff 1969 - 1983 ë Assistant District Officer

11. Mr. Neo Ah Chap Independent Director Age: 67 years Academic background ë Diploma in Accountancy, Perth Technical College ë Certified Public Accountant (Australia) ë Certified Public Accountant (Singapore) Training Program ë SGX Listed Companies Development Programme: Understanding the Regulatory Environment in Singapore: What Every Director Ought to Know Work Experience Present ë Independent Director, STA ë Sole - prorietor of NAC Consultancy Services 1971 - 2009 ë Marketing Director of Tan Chong & Sons Motor Company (Singapore) Private Limited

Sri Trang Agro-Industry Public Company Limited

Executive Management

Annual Report 2011

Executive Management 1. Mrs. Prapai Srisuttiphong Procurement Manager Age: 58 years Academic background Vocational Certificate in Accountancy from the Polytechnic Bangkok College Training Program Work Experience 2005 - 2010 ë Procurement Manager, STA 1997 - 2004 ë Head of Accounting, Raw Materials Verification Division, STA 1993 - 1996 ë Accountant, STA

2. Mr. Chalermpop Khanjan Production Manager Age: 40 years Academic background Diploma in General Management from Industrial and Community Education College Training Program Work Experience 2006 - 2010 ë Production Manager, Rubberland Products 1998 - 2005 ë Factory Manager, Rubberland Products 1994 - 1997 ë Assistant to TTR Factory Manager, STA

3. Mr. Arsom Aksornnam Production Manager Age: 44 years Academic background Bachelor of Science (General Science), Prince of Songkhla University Training Program Work Experience 2009 - Present ë Factory Manager, Siam Sempermed 2004 - 2008 ë Factory Manager, Shanghai Sempermed 1998 - 2003 ë Factory Manager, Siam Sempermed 1995 - 2007 ë Production Manager, Siam Sempermed 1989 - 1994 ë Line Chemist, Siam Sempermed

Sri Trang Agro-Industry Public Company Limited

4. Mr. Chaidet Pruksanusak Quality Assurance Manager Age: 43 years Academic background Diploma in Finance and Banking, Bangkok Commercial College Training Program Work Experience Present ë Director, Prueksa Rubber 2009 - 2010 ë Quality Assurance Manager, STA 2007 - 2008 ë Coordinated Officer, STA 1999 - 2006 ë Factory Manager, STA

5. Mr. Patrawut Panitkul Chief Financial Officer (CFO) Age: 43 years Academic background Bachelor of Accounting, Prince of Songkhla University Training Program Work Experience 2010 ë Accounting and Financing Manager, STA 2001 - 2009 ë Accounting Manager, STA 1989 - 2000 ë Accounting Manager, Siam Sempermed

6. Miss Lim Li Ping Controller Age: 39 years Academic background ë Certified Public Accountant (Australia) ë Diploma in Accountancy, Ngee Ann Polytechnic, Singapore ë Bachelor of Business (Accountancy), Royal Melbourne Institute of Technology Training Program SGX Listed Companies Development Programme: Understanding the Regulatory Environment in Singapore: What Every Director Ought to Know Work Experience 2002 - Present ë Accounting Manager and General Manager, Sri Trang International 2001 ë Assistant Accounting Manager, Clarent Singapore Pte Ltd. 1993 - 2000 ë Senior Accountant, Glenayre Electronics (S) Pte Ltd.

Annual Report 2011

7. Mr. Rattapong Laparojkit Engineering Manager Age: 38 years Academic background Bachelor of Civil Engineering Technology, University of Southern Colorado at Pueblo, United States Training Program Work Experience ë Engineering Manager, Premier System Engineering 2009 - 2010 2003 - 2009 ë System Engineering Manager, Premier System Engineering 2001 - 2003 ë Factory Manager, Premier System Engineering 2000 - 2001 ë Assistant to Factory Manager, Premier System Engineering

8. Mr. Phanlert Wangsuphadilok Engineering Manager Age: 39 years Academic background Bachelor of Engineering, Kasem Bundit University Master of Engineering, King Mongkutûs University of Technology Thonburi Training Program Work Experience 2009 - 2010 ë System Engineering Manager, Premier System Engineering 2006 - 2009 ë Factory Manager, Semperflex Asia 1998 - 2006 ë Production Manager, Semperflex Asia

9. Mr. Udom Pruksanusak Human Resources Manager Age: 50 years Academic background ë Bachelor of Agriculture, Prince of Songkhla University ë Master of Agriculture, Kasetsart Unitversity Training Program Work Experience Present ë Director, Prueksa Rubber 2000 - Present ë Human Resources Manager, Siam Sempermed 1998 - 1999 ë Factory Manager, Semperflex Asia 1998 - 1997 ë Production Manager, Siam Sempermed

10. Miss Nuchanart Chaiyarat Human Resources Manager Age: 44 years Academic background Bachelor of Marketing Science, Prince of Songkhla University Training Program Work Experience 2008 - Present ë Human Resources Manager, STA 2000 - 2007 ë Purchasing Manager, Siam Sempermed

Sri Trang Agro-Industry Public Company Limited

Organisation Structure

Annual Report 2011

Sri Trang Agro-Industry Public Company Limited

Group Procurement Manager

Co-Group Production Managers

Group Quality Assurance Manager Chief Financial Officer Controller

Managing Director

Executive Directors

Board of Directors

Co-Group Engineering Managers

Manager of Sales and Marketing

Co-Group Human Resource Managers

Internal Audit Department

Board of Directors

Organization Structure as at 31 December 2011

Manager of Legal & Administration

Nature of Business Background STA was established by our founders, Mr. Somwang Sincharoenkul and Dr. Viyavood Sincharoenkul in Thailand in 23 April 1987, as a private limited company with an initial registered capital of Baht 31 million to produce RSS in Hat Yai, Thailand. STA is a producer and exporter of Natural Rubber, which is one of the most important agricultural products in the southern part of Thailand. STA has continuously expanded its business to support the growth of the domestic and international rubber industries. In 1991, we undertook an initial public offering exercise in Thailand and were listed on the SET on 22 August 1991. STA was converted as a public limited company in 27 December 1993. In January 2011, STA made an offering of its newly issued shares to the public (Public Offering) including institutional investors in Singapore and listed its shares on the SGX-ST. At present, STA shares are listed securities on both the SET and SGX-ST (Dual Listing). Since our inception as a Natural Rubber processor in Thailand, we have expanded our product mix, our production capacity and our geographical operations to become a dominant Natural Rubber supply chain operator with integrated end-to-end capabilities on a multi-national platform.

Significant Changes and Developments Our significant changes and developments are as follows: October 1987 Established Anvar Parawood for the production of rubber wood for the furniture industry. March 1988 Established Rubberland Products for the production of Concentrated Latex, our Group没s first processing facility producing Concentrated Latex. January 1989 Jointly established SSC to produce latex examination gloves. March 1990 Thai Tech Rubber was jointly established with Southland Rubber Co., Ltd and Itochu Corporation Limited increasing our product mix to include TSR. January 1994 Starlight Express Transport was established to provide logistical support to our Group没s business. March 1994 Premier System Engineering was established to support our Group没s research and development and provide engineering services. May 1995 Jointly established Shanghai Semperit to produce escalator handrails. September 1995 Established Startex Rubber to diversify upstream into the ownership of rubber plantations in the southern region of Thailand. April 1998 Our Company started TSR production at our Thungsong facility. April 2002 Sri Trang International was established in Singapore, a purchasing hub for key users of Natural Rubber, for the distribution of the Natural Rubber Products that we sell globally. March 2004 Established Sri Trang USA to focus on the distribution of the Natural Rubber Products that we sell in the United States. July 2004 We expanded substantially in the PRC by establishing our sales teams in Qingdao and Shanghai to conduct direct sales of the Natural Rubber Products that we sell and to provide after sales services to our customers within the PRC.

Annual Report 2011

January 2005 December 2007 May 2008 August 2009 August 2010 January 2011

We established PT Sri Trang Lingga, our first Natural Rubber procurement and processing capability outside of Thailand. Sri Trang Rubber & Plantation was established to manage the ownership of rubber plantations in northern Thailand. Established Sempermed Singapore with Semperit Technische for the acquisition of Sempermed Brasil, our examination glove distributor in Brazil. We established PT Star Rubber to acquire our second Indonesian TSR processing facility. We established our first PRC subsidiary, Shi Dong Shanghai, in Shanghai, to expand our presence in the PRC. STA made an offering of its newly issued shares to the public (Public Offering) in Singapore, including institutional investors and listed its shares on the SGX-ST.

Other significant events in the operational history of our Group are as follows: April 1987 Commenced operations producing ribbed smoked sheets in Hat Yai, Thailand with an initial registered capital of Baht 31.0 million. December 1994 Our subsidiary, Nam Hua Rubber, commenced production of Concentrated Latex. March 1996 Jointly founded Semperflex Asia which commenced the production of high-pressure hydraulic hoses. March 1996 Jointly established Semperform Pacific which produces rubber and plastic parts. April 1998 Sempermed USA was jointly established to manage the sales and marketing of examination gloves which are used for medical and industrial purposes and other finished products in the United States. July 2005 Semperflex Shanghai was jointly established to commence production of highpressure hydraulic hoses in the PRC. February 2007 Our subsidiary, Sri Trang International, was awarded the first prize in the top trading volume award by the Singapore Commodity Exchange Limited. December 2007 Our subsidiary, Sri Trang International, received the Supplier Partnership and Appreciation Day award from Goodyear Orient (Private) Company Limited. February 2008 Our subsidiary, Sri Trang International, was awarded the second prize in the top trading volume award by the Singapore Commodity Exchange Limited. October 2008 Jointly acquired Sempermed Brasil, which distributes examination gloves which are used for medical and industrial purposes in Brazil. November 2009 Semperform Pacific was dormant. Currently, asset disposal process is completed and liquidation is expected to be performed within 2012. December 2009 Our Company received the Prime Minister没s Export Award 2009 (Best Exporter) for being the top Thai exporter into the PRC market by export volume under the Natural Rubber category. September 2011 SSC received Quality Award form Food and Drug Administration for three consecutive years. November 2011 Shanghai Sempemed was dormant. Currently, it is in the process of asset disposal. December 2011 STA successfully issued two tranches of debentures to the institutional and high networth investors totaling Baht 2,150,000.

Sri Trang Agro-Industry Public Company Limited

Type of Products and Services 1. Natural Rubber Products We produce three main types of Natural Rubber Products; RSS, TSR, and Concentrated Latex. ë Ribbbed Smoked Sheet : RSS RSSs are unsmoked rubber sheets which have undergone processing and can be classified into five categories, namely, RSS1, RSS2, RSS3, RSS4 and RSS5. The classification is based on the quality of each sheet, which takes into account factors like purity, elasticity and colour. RSS is used as a raw material in the production of products such as tyres, pipes, shoes and automobile parts. As it is a form of processed Natural Rubber, RSS is of a higher quality and can be subjected to dyeing treatments.

Technically Specified Rubber : TSR TSR or block rubber is produced from raw materials such as cup lump and unsmoked rubber sheets. Cup lump is produced when field latex is allowed or made to coagulate in the cup in which it is collected. Unlike RSS, the quality of TSR is determined through chemical testing to ascertain its technical specifications. We produce two main types of TSRs - the Standard Thai Rubber (STR) and the Standard Indonesian Rubber (SIR). TSR is a raw material used mainly in the production of tyres for automobiles and airplanes.

Concentrated Latex Concentrated Latex is derived from field latex and is liquid latex with a dry rubber content of approximately 60%. It is one of the cleanest forms of rubber and is used primarily in the production of various products such as, latex examination gloves, surgical gloves, condoms, elastic threads and adhesives.

Raw materials procurement and management The raw materials which our rubber processing facilities utilise to produce Natural Rubber Products include unsmoked rubber sheets, cup lumps and field latex. We have established a network of 57 raw material procurement centres comprising 46 procurement centres in Thailand, mainly in the southern region of Thailand, and 11 procurement centres in Indonesia. Our procurement centres consist of our 36 collection centres and our 21 Natural Rubber production facilities, which are located strategically, close to sources of raw materials supply. While we purchase raw materials primarily from dealers, raw materials are also sourced either directly from farmers or from farmer unions and cooperatives and rubber centre markets at which farmers sell the raw materials. As we obtain our raw materials through our procurement network from diverse sources of raw materials, we do not have any supplier of raw materials or Natural Rubber Products who accounts for 5% or more of our purchases for the three most recent completed financial years ended 31 December 2011.

Annual Report 2011

Production facilities and rates of utilisation As at 31 December 2011, we have a total of 19 processing facilities located in Thailand and 2 processing facilities located in Indonesia with a total optimal production capacity of approximately 1.1 million tonnes of Natural Rubber Products per year. Our production capacity is limited by available space, production lines, number of machines and manpower. For the year ended December 2011, utilisation rate was approximately 72.4% of our production capacity.

Sales, marketing and customers Our global sales and distribution function is located in and managed out of Singapore, a global purchasing hub for Natural Rubber Products. We have established three trading and distribution networks based in Singapore, the United States and the PRC for the Natural Rubber Products that we sell, through our subsidiaries Sri Trang International, Sri Trang USA, and Shi Dong Shanghai, respectively. Together with the various sales teams established in Thailand and in our major geographical markets, such as the PRC, we are able to ensure that the Natural Rubber Products that we sell to customers in various countries and territories in Asia such as the PRC, India, Singapore, Japan, Vietnam, Malaysia, and Korea as well as to the United States and Europe are efficiently distributed.

Shipping, logistics and maintenance In local Thailand market, services for shipping and logistics activities in relation to the sale of Natural Rubber Products are provided by our subsidiary, Starlight Express Transport. Such services include the arrangement of product shipping and the preparation of the related import and export documentation. In addition, Starlight Express Transport also undertakes the business of forklift rental and repair services to companies within our Group. For international market, we typically engage third party transportation and freight forwarding companies to provide services in relation to shipping and logistics activities relating to the export of the Natural Rubber Products that we sell. Premier System Engineering, our subsidiary, provides maintenance services for some of our group没s machinery and equipment. Our maintenance team comprises qualified engineers and technicians who have been appropriately trained. 2. Finished Products In addition and complementary to our Natural Rubber Products business, we have diversified our income stream through our interest in SSC, our associate, in which we have an aggregate interest (direct and indirect) of approximately 40.2%. We are closely involved in the day-to-day operations of SSC which primarily produces Natural Rubber examination gloves and nitrile examination gloves. These examination gloves are used for medical and industrial purposes. Sri Trang Agro-Industry Public Company Limited

Production facilities and capacity SSC has a total of four production facilities with a total production capacity as at 31 December 2011 of approximately 12.5 billion glove pieces annually. We believe that SSC is one of the largest examination gloves producers in Thailand and one of the leading producers of Natural Rubber and nitrile examination gloves globally.

Raw materials procurement and management The base raw material that our associate, SSC, requires for its production of its latex examination gloves is Concentrated Latex. Under the terms of the SSC JVA, our Group supplies all of the Concentrated Latex which SSC requires for its production of latex examination gloves.

Sales and marketing SSC in cooperation with Semperit Technische, Sempermed USA and Sempermed Brasil regularly markets its products and sources for customers by participating in regional Asia-Pacific and international fairs and exhibitions. Through its participation in such trade fairs and exhibitions, SSC is able to promote its products, obtain up-to-date information on industry developments and market trends, meet potential customers and secure new customers. We have, together with our business partner Semperit Technische, also established two companies, Sempermed USA and Sempermed Brasil, which focus on the sales and distribution of the examination gloves produced by SSC in North America and Brazil respectively. Our business partner, Semperit Technische, distributes and sells the examination gloves produced by SSC in Europe. 3.

Other Businesses Rubber wood processing Through our subsidiary, Anvar Parawood, we are also involved in the production and distribution of rubber wood for the furniture industry in both local and global market. High-pressure hydraulic hoses

Escalator hanrails

We have expanded our business operation to manufacture and distribute finished products through investments in our associates that we have jointly established with Semperit Technische, namely Semperflex Asia, Semperflex Shanghai, and Shanghai Semperit. We have participated in the production and sale of high-pressure hydraulic hoses for industrial, mining, and other specific applications through Semperflex Asia and Semperflex Shanghai and participated in the production and sale of escalator handrails through Shanghai Semperit.

Annual Report 2011

Sri Trang Agro-Industry Public Company Limited

42.5%

50.0%

10.0%

Sadao P.S. Rubber

PT Sri Trang Lingga

Thai Tech Rubber

99.9%

90.0%

33.5%

40.2%

Nam Hua Rubber

Rubberland Products

99.9%

Natural Rubber Product

Shanghai Semperit

Semperflex Shanghai

Semperform Pacific

Semperflex Asia

SSC

Finished Goods Shanghai Sempermed

100.0%

50.0%

45.1%

100.0%

Sempermed Singapore

Sempermed USA, Inc.

Shi Dong Shanghai

Sri Trang USA, Inc.

Sri Trang International

Distribution

STA

The group structure of the Company as of 31 December 2011 is shown in the diagram below.

Group Structure

Sempermed Brasil

100.0%

Shi Dong Investment

100.0% PT Star Rubber

99.0%

Pattana Agro Futures Sri Trang Rubber & Plantation 99.9%

Starlight Express Transport

Startex Rubber

Premier System Engineering

Anvar Parawood

40.0%

99.9%

Other Products & Services

In addition, through our associate, Pattana Agro Futures, we are also a commodity futures broker in the Agricultural Futures Exchange of Thailand.

Revenue Structure The revenue from sales and services according to the consolidated financial statements ended 31 December 2009, 2010 and 2011 are shown below: Revenue breakdown by product segment TSR RSS Concentrated Latex Others 1 Total revenue from sales and services

Year ended 31 December 2010

2009 Baht million 30,584.8 8,677.0 5,314.0 1,334.0 45,909.8

% 66.6 18.9 11.6 2.9 100.0

Baht million 58,909.1 15,046.4 8,168.8 1,721.0 83,845.3

% 70.3 17.9 9.7 2.1 100.0

2011 Baht million

96,138.6 24,942.8 10,236.6 2,385.8 133,703.8

71.9 18.7 7.6 1.8 100.0

Note : 1 Comprises (i) the sale of dried rubber wood and wood packing products and (ii) the provision of certain services (such as logistics, research and development and information technology services) to our associates and a joint venture entity as well as other external third parties.

Further vertical integration of business model

Capitalise on emerging expertise

Increase scale and processing capacity

Our Business Strategy Our vision is to be a global leader in the Natural Rubber industry. To achieve this vision, we have established our business model as an integrated Natural Rubber supply chain operator and our principal strategy is to make long-term investments in establishing and expanding our capabilities and capacity at each stage of the Natural Rubber supply chain, namely planting, procurement, processing, and sales and distribution.

Vertical integration of business model Our business model of operating an integrated Natural Rubber supply chain is instrumental in enabling us to strengthen our market position as a dominant Natural Rubber supply chain operator with integrated end-to-end capabilities on a multi-national platform since we are able to maximise our cost

Annual Report 2011

efficiency, competitive edge and ultimately, our profit potential. In establishing our business model, we have developed all-round capabilities throughout the Natural Rubber supply chain. Over the years, we have integrated and synergised the operations, domain knowledge and management expertise of the inter-linked processes of the entire Natural Rubber supply chain, as well as reduced the need to transact with third-party intermediaries. As a result, we are able to achieve greater operational efficiency and capture value across the entire Natural Rubber supply chain. Through operating an integrated Natural Rubber supply chain, we are also able to gain direct access to supply and customer demand information, which in turn enables us to respond to changes in market conditions and adjust our procurement, production and inventory levels accordingly. We identify potential investment and expansion opportunities (such as plantations, establishment of processing plants and establishment of capabilities in new geographical markets) on the basis of their potential long-term benefits to our business model. We have been developing our upstream business since we believed that it can create a better cost control as well as harmonize the entire supply chain, for instance, strategy of raw material procurement in the new plantation area such as Northern Thailand. To implement our principal strategy, our Company plans to acquire additional land to achieve 50,000 rai (or 8,000 hectares) in the next three year for rubber plantation. Apart from our midstream business, our core business, to process Natural Rubber Products and upstream business to expand rubber plantation, our Company has also been focusing on our downstream examination gloves business. Siam Sempermed, our associated company, has also been continually expanding its capacity to support the demand growth of latex examination glove.

Increase scale and processing capacity In line with our principal strategy of making long-term investments in establishing and expanding our capabilities and capacity at each stage of the Natural Rubber supply chain, we constantly invest in both organic and inorganic growth initiatives, as we believe such growth momentum is critical in creating a scalable integrated Natural Rubber supply chain. We will expand our production capacity to strengthen our largest Natural Rubber processor in the market. To implement our principal strategy, we will acquire and/or build new processing plants as well as increase procurement units in order to expand our production capacity to achieve 1,500,000 tonnes per year by the end of 2013.

Capitalise on emerging expertise With vision of our management, we believe that we can identify business opportunity in emerging market even in the light of economic crisis. As an example, during the economic downturns such as the 1997 financial crisis, the burst of the dotcom bubble in 2000 and the recent credit crisis in 2008, we undertook the following strategic investments and corporate developments: 毛 Starting from 2000, we enhanced our competitiveness by consolidating our position as a key Natural Rubber supply chain operator through the expansion of our network of raw material procurement centres and the increase of our production capacities in Thailand. We have also made investments in Indonesia, world没s second largest Natural Rubber producer after Thailand, to strengthen our group没s market position.

Sri Trang Agro-Industry Public Company Limited

In 2004, we made a strategic decision to substantially expand into the PRC market, as we believed that the PRC would become the largest consuming country of Natural Rubber. In 2009, the PRC was the largest consumer of Natural Rubber globally at approximately one-third of world demand. In 2007, we started expanding our operations upstream by investing in large-scale rubber plantations in Thailand.

Leveraging on our dominant market position, in-depth industry knowledge and proven track record of successfully implementing our strategy, we believe that we will be able to continue to realise future growth opportunities for our business. Through our multi-national platform, we have acquired on-theground knowledge and insights that will enable us to undertake our investments in the geographical locations and business environments that we identify as being most strategically favourable and beneficial to our business.

Our Future Plan Going forward, in line with our strategy, we intend to pursue the following initiative to grow our business and further strengthen our dominant market position;

Upstream Business

Acquire land to achieve 50,000 rai (approx. 8,000 hectares) within 2014.

Midstream Business Build/ acquire/ expand rubber processing facilities to increase our production capacity to 1.5 million tonnes per year within 2013.

Downstream Business

Expand production capacity of latex examination gioves to reach 14 billion pieces within 2012.

Industry and Competition ë

Natural Rubber industry According to International Rubber Study Group (IRSG) Rubber Statistical Bulletin Vol. 66, No.7-9, world demand of Natural Rubber in 2011 was 10,924,000 tonnes whereas world production of natural rubber was 10,974,000 tonnes. China is a worldûs major natural rubber consumer accounting for 33.0% of total global consumption followed by European Union and USA who consumed about 11.1% and 9.4% of total global consumption, respectively. Thailand, worldûs topmost natural rubber producing country, produced 3,393,800 tonnes or 30.9% of worldûs natural rubber production followed by Indonesia whose production contributed 27.2% of worldûs natural rubber production.

Annual Report 2011

Diagram exhibits Demand and Supply of Natural Rubber during 2002-2012 Unit : Million Tonnes 11.5 11.4 12 10.810.4 10.9 11.0 10.2 10.2 10.1 9.9 9.7 9.8 9.3 9.7 10 8.7 8.7 9.2 8.9 8 7.6 7.3 7.9 8.0 6 4 2 -

2002

2003

2004

2005 Demand

2006

2007

2008

2009

2010

2011

2012 (f)

Supply

Global没s Natural Rubber consumption in 2012 is expected to be 11,494,000 tonnes (Source: IRSG - The World Rubber Industry Outlook, Review and Prospect to 2020, December 2011). The increase in demand coincides with growth of tyre industry which accounted for more than 70% of global Natural Rubber demand. Most growing demand comes primarily from emerging countries such as China, Brazil, Africa, and the Middle East whose relatively high GDP growth would benefit automotive industry which is directly related to tyre industry, as part of component. Meanwhile, IRSG forecasted that total global Natural Rubber production will be increased to 11,417,000 tonnes. Such increase is mainly contributed by Thailand and Indonesia, world没s major Natural Rubber producing countries. Even though growth rate of demand in Natural Rubber forecasted to surpass that of supply, it is anticipated that a supply deficit of 77,000 tonnes still continues in 2012. Diagram exhibits Supply Surplus (Deficit) of Natural Rubber during 2002-2012 Unit : Tonnes

361,000 400,000 300,000 200,000 137,000 69,000 28,000 50,000 100,000 2008 2009 2010 2011 2012 (f) (100,000) 2002 2003 2004 2005 2006 2007 (47,000) (77,000) (200,000) (300,000) (246,000) (288,000) (298,000) (400,000) (377,000) (500,000)

Sri Trang Agro-Industry Public Company Limited

Being one of the worldรปs largest Natural Rubber processing company, in 2011 our sales volume accounted for 8.7%1 of worldรปs Natural Rubber consumption while our production volume in Thailand accounted for 18.4%2 of Thailand production volume. Our sales volume in 2011 to the PRC accounted for 11.9%3 of the PRCรปs total Natural Rubber import in 2011. Diagram Exhibits Worldรปs Major Natural Rubber Producing Countries during 2002-2011 Unit : Thousand Tonnes

12,000 10.000 8,000 6,000 4,000 2,000 -

2002

2003

2004 Thailand

2005

2006

Indonesia

2007

2008

Malasia

2009

2010

2011

Others

Diagram Exhibits Worldรปs Major Natural Rubber Consuming Countries during 2002-2011 Unit : Thousand Tonnes

12,000 10.000 8,000 6,000 4,000 2,000 -

2002

2003

2004

2005

China

EU Countries

2006 USA

2007 India

2008 Japan

2009

2010

2011

Others

Price of Natural Rubber throughout 2011 shown in below diagram was relatively volatile due to various factors such as Tsunami in Japan, curb of high inflation in China, sovereign debt in Europe, and weak economic recovery in the United States. 1

Based on our sales volume of Nutural Rubber Products of approximately 951,935 tonnes for the financial year ended 31 December 2011 and the total global demand for Natural Rubber Products of approximately 10,924,000 tonnes in 2011. Based on our production volume in Thailand of 625,673 tonnes for the financial year ended 31 December 2011 and production volume of Thailand of approximately 3,393,800 tonnes in 2011. Based on our sale volume to the PRC of 317,513 tonnes for the financial year ended 31 December 2011 and gross import of Natural Rubber of the PRC of approximately 2,665,400 tonnes in 2011.

Annual Report 2011

Diagram Exhibits Price of STR20 in 2011 USD : Ton

6,000 5,500 5,000 4,500 4,000 3,500 3,000

High inflation in China Sovereign debt in Europe

03/12/11

03/11/11

03/10/11

03/09/11

03/08/11

03/07/11

03/06/11

03/05/11

03/04/11

03/03/11

03/02/11

03/01/11

Tsunami in Japan

ĂŤ

Competition The main Natural Rubber producing and exporting countries are Thailand, Indonesia and Malaysia. The majority of rubber processors and exporters in such countries are relatively small in scale and do not possess the same scale of operations, technical and product development capabilities as us. We are a dominant Natural Rubber supply chain operator carrying out our business operations on a multinational platform. With our high international standard quality of products, we are a certified supplier to all of top 20 global tyre manufacturers. We believe that there are currently no companies that are directly comparable to us in terms of business model and scale of business operations. To the best of our knowledge, we believe that our main competitors are primarily larger Natural Rubber processors and exporters such as Von Bundit Company Limited, Southland Group and Thai Hua Rubber Public Company Limited based in Thailand, The Tat Lee Group and The Kirana Group based in Indonesia, and Lee Rubber Group based in Malaysia and Indonesia. Majority of our products are globally sold to conventional tyre manufacturers. Diagram below exhibits the proportion of geographic sale during the past three years. 1% 6% 8%

0.4% 7%

15%

10%

2% 8%

17%

18%

11% 25%

29%

2009

2010 45%

China

Other Asia

27%

2011 34%

37%

Thailand

America

Europe

Others

We believe that the major competitive factors in the Natural Rubber processing industry include product quality, production capability and capacity, economies of scale, customer service, product pricing, geographical presence and management capability.

Sri Trang Agro-Industry Public Company Limited

Risk Factors

Annual Report 2011

Risk Factors Our Company is exposed to a number of risks that may affect its business and the value of its shares. The following sets out some of the significant risks that may affect the Company. However, there are some risks that may be unknown to the Company and other risks that the Company currently considers to be immaterial. These risks could have an impact upon the operation of the Company in the future.

Risks Relating to Our Industry and Our Business

Prices of commodities in general, including natural rubber, are susceptible to price fluctuations. Prices of commodities in general, including natural rubber, have been volatile and we, like other participants in the natural rubber industry, have limited influence over the timing and extent of the price changes for natural rubber. The price of natural rubber and the Natural Rubber Products that we sell, like most commodities, are affected by a number of factors including but not limited to the following: ë Supply and demand for natural rubber - An increase in the supply of natural rubber or a decrease in world consumption levels of natural rubber could result in an oversupply which could in turn result in a decrease in average selling prices of the Natural Rubber Products that we sell; ë Prices of crude oil, energy and oil-based chemicals - Crude oil prices may affect the prices of natural rubber and other input materials such as oil-based chemicals used in rubber processing. In addition, the prices of synthetic rubber usually move along with crude oil prices, and the price fluctuations of synthetic rubber affects the pricing and demand for natural rubber; ë Currency movements - As natural rubber is traded mainly in US Dollars, any fluctuations in the natural rubber exporting currencies against US Dollars may result in corresponding fluctuations in natural rubber prices in the relevant exporting countries; ë Speculation - As natural rubber and certain of the Natural Rubber Products that we sell are traded at various commodity future exchanges, they are susceptible to price speculation in addition to local and global economic factors; and ë Government intervention - The governments of natural rubber producing countries such as Thailand, Indonesia and Malaysia may from time to time introduce policies to support the natural rubber industry in their respective countries. For example, the Indonesian government had imposed export quotas in relation to natural rubber in 2009, in response to the drop in the price of natural rubber, which restricted our ability to operate our factories in Indonesia at full capacity. In addition, in January 2012, the Thai government has announced a price intervention scheme to provide loans to the state-run Rubber Estate Organization and cooperatives through the Bank for Agriculture and Agricultural Cooperatives to buy rubber from farmers at prices above market prices. Other unpredictable factors which affect the price of natural rubber and the Natural Rubber Products that we sell include economic growth rates, foreign and domestic interest rates and trade policies.

Sri Trang Agro-Industry Public Company Limited

If we are unable to pass on any increase in raw material costs to our customers and/or suppliers, our profitability may be adversely affected. If the market prices of the Natural Rubber Products that we sell are volatile, our business, financial condition and results of operations could be materially and adversely affected. A significant portion of the sales of the Natural Rubber Products that we sell are for use in the tyre manufacturing industry which exposes us to downturns in this industry. The Natural Rubber Products that we sell include RSS, TSR and Concentrated Latex. Global demand for such products, in particular TSR, is dependent significantly upon the tyre manufacturing industry. Our customers include tyre manufacturers in the emerging markets such as the PRC and India and leading global tyre manufacturers. The majority of our sales of Natural Rubber Products are made to tyre manufacturers. If the level of activity in the tyre manufacturing industry declines, the demand for the Natural Rubber Products that we sell may decrease and our business, financial condition and results of operations may be adversely affected. Our business, financial condition and results of operations may be adversely affected by fluctuations in exchange rates and foreign exchange controls. While our financial reporting currency is Baht and our raw material purchases for the Natural Rubber Products that we produce are transacted in Baht and Indonesian Rupiah, approximately 83.0% of our total revenues is denominated in US Dollars. In addition, the Company没s shares will also be quoted in Singapore dollars on the SGX-ST while dividends, if any, will be paid in Baht. Fluctuations in the exchange rates between the Baht, Indonesian Rupiah, US Dollars, Singapore dollar or other currencies, could adversely affect our business, financial condition and operating results as well as the foreign currency value of any dividend distributions. Any fluctuations in the exchange rates between the Baht, Indonesian Rupiah and Malaysian Ringgit could adversely affect our price competitiveness in relation to other natural rubber processors from Indonesia and Malaysia. We attempt to mitigate foreign exchange risks using forward foreign exchange contracts and foreign exchange options to hedge our foreign exchange exposures arising from purchase and sale of products in currencies other than Baht. Should we be unable to successfully hedge our foreign exchange exposures, we may have a greater exposure to foreign exchange fluctuations and our financial condition and results of operations may be adversely affected. Our Group is dependent upon the services of key management staff. One of the key reasons for the growth of our Group has been our ability to attract and retain a team of experienced professional managers. Our continued success will depend on our ability to retain key management staff, such as Dr. Viyavood Sincharoenkul, Mr. Kitichai Sincharoenkul, and Mr. Paul Sumade Lee, and to attract and train new managers. If members of our senior management team are unable or unwilling to continue in their present positions, we may not be able to hire satisfactory replacements and our business may be adversely affected. In addition, the process of hiring new managers with the required combination of skills and attributes may be time-consuming and competitive. We may not be able to attract additional qualified persons to complement our expansion plans. As a result, our business and results of operations may be adversely affected.

Annual Report 2011

We are a capital intensive business and our operations could be adversely affected if we fail to maintain sufficient levels of working capital. We expend a significant amount of cash in our operations, principally on the purchase of raw materials such as unsmoked rubber sheets, cup lumps and field latex, the Natural Rubber Products which we purchase from third party producers and our joint venture entity, Thai Tech Rubber, from time to time, to meet demand from customers, and the storage of the Natural Rubber Products to facilitate our sales in overseas markets. The working capital cycle for the Natural Rubber Products that we produce, from the purchase of raw materials to the receipt of payment from our customers, is approximately two to four months. We may also require substantial capital expenditures to maintain, upgrade and expand our processing and storage facilities, logistics services and other facilities to keep pace with competitive developments, technological advances and changing safety and environmental standards in our industry. We fund our operations principally through cash flow from our operations and short and long-term bank loans. As at 31 December 2011, we had cash and cash equivalents of approximately Baht 2,273.0 million and the majority of our total borrowings comprised short-term borrowings. We can provide no assurance that we will not experience negative cash and cash equivalents in the future. In the event that we are unable to obtain or secure sufficient borrowings or generate sufficient revenue from our operations, or if we fail to maintain sufficient cash, we may not have sufficient cash flow to fund our operations and our business and operating results will be adversely affected. Difficult conditions in the global credit markets could adversely impact the cost or other terms of our existing financing. As at 31 December 2011, we have an aggregate of Baht 18,010.5 million in short and long term bank loans, accounting for approximately 85.6% and 14.4% of the aggregate amount of bank loans respectively, with interest rates ranging from 1.1% to 7.7% per annum depending on the currency on which the loans are denominated. Difficult conditions in the global credit markets could adversely impact the cost or other terms of our existing financing as well as our ability to obtain new credit facilities or access the capital markets on favourable terms. A significant increase in our borrowing costs could impair our ability to compete effectively in our business relative to competitors with lower amounts of indebtedness. We may be affected by adverse weather conditions and/or diseases which could lead to price fluctuations and an increase in our operating costs. Unsmoked rubber sheets, cup lumps and field latex are the primary raw materials for Natural Rubber Products. The availability of these raw materials from suppliers, as well as our ability to harvest field latex from our own rubber plantations in the future, may be adversely affected by unfavourable weather conditions such as drought, floods, prolonged periods of rainfall, storms etc. and/or diseases which has infected the rubber plantations from which suppliers purchase the raw materials or our own rubber plantations in the future. Such events, especially if continued for a prolonged period, could affect the overall yield of such raw materials and consequently lead to price fluctuations. Any substantial decrease in the supply of, and increase in the cost of, raw materials could increase our operating costs, affect Sri Trang Agro-Industry Public Company Limited

our production capacity and consequently have a material adverse effect on our business, financial condition and results of operations. There may be disruptions at our processing facilities as well as the processing facilities of our associates and joint venture entity which would have an adverse effect on our operations and those of our associates and joint venture entity. Our production processes and those of our associates and joint venture entity require significant use of resources such as water and electricity to power our processing facilities and those of our associates and joint venture entity. Natural disasters, acts of God, a shortage of labour, major or sustained disruptions in the supply of utilities such as water or electricity and other calamities or events beyond our control. For example, the torrential floods occurred in southern Thailand in November 2010 and January 2012 may lead to significant disruption or a cessation in processing at our processing facilities and those of our associates and joint venture entity. Such disruptions would have an adverse effect on our operations and those of our associates and joint venture entity and would result in longer lead-time for processing and delayed delivery to customers. Our Company depends on distributions from our principal operating subsidiaries, associates and joint venture entity which may in turn affect our Company没s cashflow Our Company is dependent on distributions from our principal operating subsidiaries, associates and joint venture entity to meet our financial obligations, including the payment of principal and interest of our indebtedness. Our Company will receive distributions made by our subsidiaries, associates and joint venture entity based on our ownership interest. However, should revenues or operating performance of our principal operating subsidiaries, associates and joint venture entity be decreased, the amount of distributions in terms of both rate and value made by such principal operating subsidiaries, associates and joint venture entity will decline. Accordingly, our Company没s cashflow might be adversely affected. Our Group may be adversely affected by the imposition and enforcement of more stringent environmental regulations. Our Group is subject to a variety of laws and regulations that promote environmentally and socially sound operating practices. Our Group没s principal environmental concerns relate primarily to the discharge of effluent resulting from the processing of natural rubber. Any environmental claims or the failure to comply with any present or future regulations could result in the assessment of damages or the imposition of fines, the suspension or a cessation of our Group没s operations. Environmental regulations and social practices in the countries in which our Group operates tend to be less stringent than those in developed countries. It is possible that these regulations and/or social practices could become more stringent in the future and consequently have an adverse effect on our operations and financial condition. Any failure to comply with the laws and regulations could subject our Group to liabilities which may affect our business, financial condition, results of operations and prospects.

Annual Report 2011

The demand for Natural Rubber Products could be affected by the emergence of synthetic rubber substitutes. Our sales of Natural Rubber Products, which are produced from natural rubber, accounted for 98.2% of our Groupûs revenue for the financial year ended 31 December 2011. There are a variety of synthetic rubber substitutes available in the market which can be used as substitutes for natural rubber in the manufacture of rubber products. Factors such as increased global demand for rubber, volatile pricing of natural rubber, increased natural rubber price compared to synthetic rubber, long transport distances, risks of supply disruption driven by political events, regional constraints and seasonal supply patterns may lead to an increase in demand for such synthetic rubber substitutes. Any resulting decrease in demand for Natural Rubber Products may have a material adverse effect on our business, financial condition and results of operations. Expiry of concessionary tax rates and/or exempt tax status for certain of our subsidiaries and associates will have an adverse impact on our profitability. Our subsidiary, Sri Trang International, enjoys certain tax benefits under the Global Trader Programme launched by International Enterprise Singapore, pursuant to which Sri Trang International is only taxed on 10.0% of its qualifying income (i.e. income which is derived from offshore sales or sales to companies under the Global Trader Programme). In addition, our Company and certain of our subsidiaries and associates which are incorporated in Thailand have been granted certain privileges, including exemption from certain taxes, at various times by the Board of Investment of Thailand, in relation to our respective operations In the event of any expiry of such tax benefits, Sri Trang International, our Company and our relevant subsidiaries and associates which are incorporated in Thailand will be liable to the applicable taxes at the prevailing rates and accordingly, there will be an adverse impact on our profitability.

Risks Relating to the Countries in Which We Operate

Economic, political, legal and regulatory conditions in the countries in which we operate may materially and adversely affect our business, financial condition, results of operations, prospects and the market price of our Shares. We have operations in and investments in countries such as Thailand, Singapore, USA, Indonesia, and the PRC, each of which contributed 61.2%, 28.4%, 6.1%, 3.4%, and 0.9% of total revenues, respectively. Accordingly, we are subject to the risks associated with our business activities in these countries. Our business, financial condition, results of operations and prospects may be materially and adversely affected by a variety of conditions and developments in these countries including: ë inflation, interest rates and general economic conditions; ë civil unrest, military conflict, terrorism, change in political climate and general security concerns; ë changes in legal and regulatory conditions; ë changes in duties payable and taxation rates; ë natural disasters; ë imposition of restrictions on foreign currency conversion or the transfer of funds; or ë expropriation or nationalisation of private enterprise or confiscation of private property or assets. Should any of the aforesaid risks materialise and we are unable to adapt our business strategies or operations accordingly, our business, financial condition, results of operations and prospects may be materially and adversely affected. Sri Trang Agro-Industry Public Company Limited

Capital Structure

Annual Report 2011

Capital Structure Information on Share Capital and Shareholding of STA As of 5 March 2012 Share Capital Authorised Share Capital : Baht 1,280,000,000 Issued and fully paid-up Share Capital : Baht 1,280,000,000 (representing 1,280,000,000 ordinary shares with a par value of Baht 1 each) Class of Shares : Ordinary shares with a par value of Baht 1 each Voting Rights : One vote per share

Distribution of Shareholdings As of 5 March 2012 Size of shareholdings 1 - 999 1,000 - 10,000 10,001 - 1,000,000 1,000,0001 and above Total

Number of shareholders % 1,858 10.34 11,618 64.67 4,390 24.43 100 0.56 17,966 100.00

Number of shares 765,315 48,890,620 269,812,467 960,531,598 1,280,000,000

% 0.06 3.82 21.08 75.04 100.00

Note : Includes shareholders holding through CDP

Public Float Based on information available to the Company, approximately 58.14% of the Company没s shares are held in the hands of the public as of 5 March 2012. Accordingly, the Company has complied with Rule 723 of the Listing Manual.

Substantial Shareholders (Holding 5% and above) (As of 5 March 2012) Direct interest Number of shares % STH(1) Dr. Viyavood Sincharoenkul(2)

246,852,060 168,523,970

19.29 13.17

Deemed interest Number of shares % 255,302,060

19.95

Notes : (1) The largest group of shareholders in STH is the Sincharoenkul family which holds 4,924,140 shares, representing 55.96% of the total issued and paid up shares in STH. Dr. Viyavood Sincharoenkul is interested in approximately 31.7% of the total issued and paid up shares in STH. Certain directors of STH are also directors of our Company (2) Dr. Viyavood Sincharoenkul is deemed interested in the 8,450,000 shares held by his wife and the 246,852,060 shares held by STH.

Sri Trang Agro-Industry Public Company Limited

Top Twenty Largest Shareholders of STA Based on information available to STA, the top twenty largest shareholders of STA as of 5 March 2012 are as follows: Name 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

No. of Shares

STH Dr. Viyavood Sincharoenkul Mr. Aram Sirisuwat CITIBANK NOMS S没PORE PTE LTD Thai NVDR Co., Ltd CITIBANK NOMINEES SINGAPORE PTE LTD-MANTARAY INVESTMENTS (MAURITIUS) PTE LTD Mr. Veerasith Sinchareonkul Mr. Somwang Sincharoenkul Mr. Kitichai Sincharoenkul Mr. Tsai Wu-Ying Ms. Suwanna Kowitsopol Southland Rubber Co., Ltd. UOB Kay Hian Private Limited RAFFLES NOMINEES (PTE) LTD DBS NOMINEES PTE LTD Mr. PAUL SUMADE LEE Mrs. Promsuk Sinchareonkul Mrs. Sungai Cherdkiatgamchai STATE STREET BANK AND TRUST COMPANY FOR AUSTRALIA CITIBANK INTERNATIONAL PLC (LUXEMBOURG BRANCH)-UBS LUXEMBOURG S.A. Total

246,852,060 168,523,970 54,787,505 44,980,000 42,926,231

19.29 13.17 4.28 3.51 3.35

22,950,000 22,441,000 18,913,305 14,250,000 13,153,420 12,300,000 11,605,920 10,000,000 9,851,000 9,312,000 8,906,955 8,450,000 8,357,875 8,224,600 7,706,000 744,491,841

1.79 1.75 1.48 1.11 1.03 0.96 0.91 0.78 0.77 0.73 0.70 0.66 0.65 0.64 0.60 58.16

Note : Information obtained from TSD and CDP

Directors没 Interests The Directors holding office as of 31 December 2011 had the following interests in the ordinary shares of the Company as of 31 December 2011 below: As of 31 December 2011 Name (1) (2)

Dr. Viyavood Sincharoenkul , Mr. Prasit Panidkul Mr. Chaiyos Sincharoenkul(3) Mr. Anan Pruksanusak Mr. Kitichai Sincharoenkul(4) Mr. Paul Sumade Lee(5) Mr. Veerasith Sinchareonkul Mr. Prakob Visitkitjakarn(6) Mr. Kriang Yanyongdilok Mr. Samacha Potavorn Mr. Neo Ah Chap(7)

Annual Report 2011

Direct interest 168,523,970 9,181,475 7,410,825 100,000 14,250,000 8,906,955 22,441,000 450,060 -

Deemed interest 255,302,060 4,300,000 3,246,500 18,615,075 17,940 1,100,000

Notes: (1) The largest group of shareholders in STH is the Sincharoenkul family which holds 4,924,140 shares, representing 55.96% of the total issued and paid-up shares in STH. Dr. Viyavood Sincharoenkul is interested in approximately 31.7% of the total issued and paid-up shares in STH. Certain directors of STH are also directors of our Company. (2) Dr. Viyavood Sincharoenkul is deemed interested in the 8,450,000 shares held by his wife and the 246,852,060 shares held by STH. (3) Mr. Chaiyos Sincharoenkul is deemed to be interested in the 4,300,000 shares held by his wife. (4) Mr. Kitichai Sincharoenkul is deemed to be interested in the 3,246,500 shares held by his wife. (5) Mr. Paul Sumade Lee is deemed to be interested in the 18,615,075 shares held by his wife. (6) Mr. Prakob Visitkitjakarn is deemed to be interested in the 17,940 shares held by his wife. (7) Mr. Neo Ah Chap is deemed interested in 1,100,000 shares held through Thai NVDR Co., Ltd.

List of Direct Interests of Each Director as of 31 December 2011 Name Dr. Viyavood Sincharoenkul

Mr. Prasit Panidkul Mr. Chaiyos Sincharoenkul Mr. Anan Pruksanusak Mr. Kitichai Sincharoenkul

Mr. Paul Sumade Lee Mr. Veerasith Sinchareonkul Mr. Prakob Visitkitjakarn Mr. Kriang Yanyongdilok Mr. Samacha Potavorn Mr. Neo Ah Chap Note :

Direct Interests STA Nam Hua Rubber Sadao P.S Rubber Thai Tech Rubber Anvar Parawood Premier System Engineering Sri Trang Rubber & Plantation STA Sri Trang Rubber & Plantation STA Thai Tech Rubber STA Sri Trang Rubber & Plantation STA Sadao P.S Rubber Premier System Engineering Sri Trang Rubber & Plantation STA STA STA STA STA STA

Increase (decrease) during the Number of Shares accounting period 168,523,970 1 1 1 1 1 1 9,181,475 1 7,410,825 1 100,000 1 14,250,000 1 1 1 8,906,955 22,441,000 450,060 1,100,000

This is to comply with the requirement of the PLCA that a director holding shares or debentures of the Company or an affiliate company held directly by a board member under his name, and shall indicate the total number of shares increasing or decreasing during a fiscal year (if any).

Sri Trang Agro-Industry Public Company Limited

Dividend Policy

Annual Report 2011

Dividend Policy of STA Our policy is to pay a dividend of approximately 30% of our net profit as reported in our Companyรปs stand-alone financial statements for each financial year, but not in excess of our retained earnings. In considering the level of dividend payments, we intend to take into account various factors, including: STAรปs financial position, results of operations and cash flow; the ability of our subsidiaries, associates and joint venture entities to make dividend payment to STA; STAรปs expected working capital requirements to support STAรปs future growth; and general economic conditions and such other external factors that STA believes will have an impact on the business operations of STA.

Dividend Policy of Our Subsidiaries The dividend payment of our subsidiaries shall be approved by the Board of Directors of each subsidiary and shall be presented to the shareholdersรป meeting for approval. The Company does not fix the percentage of dividend payment. The dividend payment made by our subsidiaries will depend on the business profits, financial position and the future investment plans of each subsidiary and shall be according to its Articles of Association and the relevant laws.

Sri Trang Agro-Industry Public Company Limited

Management Structure Committees of STA As of 31 December 2011, the corporate structure of STA consists of five committees which are the Board of Directors of STA, the Audit Committee, the Executive Committee, the Nominating Committee and the Remuneration Committee.

The Board of Directors of STA As of 31 December 2011, our Board of Directors consists of 11 directors as follows: Name 1. Mr. Viyavood Sincharoenkul 2. Mr. Prasit Panidkul 3. Mr. Chaiyos Sincharoenkul 4. Mr. Anan Pruksanusak 5. Mr. Kitichai Sincharoenkul 6. Mr. Paul Sumade Lee 7. Mr. Veerasith Sinchareonkul 8. Mr. Prakob Visitkitjakarn

9. Mr. Kriang Yanyongdilok

10. Mr. Samacha Potavorn

11. Mr. Neo Ah Chap

Position Chairman /Managing Director/ Executive Committee Vice-chairman/ Executive Committee Director/ Executive Committee Director/ Executive Committee Director/ Executive Committee/ Nominating Committee member Director/ Executive Committee Director Lead Independent Director/ Chairman of the Audit Committee/ Chairman of the Remuneration Committee Independent Director/ Audit Committee member/ Chairman of the Nominating Committee/ Remuneration Committee member Independent Director/ Audit Committee member/ Nominating Committee member/ Remuneration Committee member Independent Director

Remarks Executive Director Executive Director Executive Director Executive Director Executive Director Executive Director Non-Executive Director Non-Executive Director

Non-Executive Director

Mrs. Pacharin Anuwongwattanachai is a secretary to the Board of Directors of the Company.

Authorized Directors of STA Mr. Viyavood Sincharoenkul, Mr. Chaiyos Sincharoenkul, Mr. Prasit Panidkul, Mr. Anan Pruksanusak, Mr. Kitichai Sincharoenkul, Mr. Veerasith Sinchareonkul, and Mr. Lee Paul Sumade, any two of these seven directors jointly sign with STA没s seal affixed.

Annual Report 2011

Engagement of Mr. Somwang Sincharoenkul as Honorary Adviser The Board of Directors Meeting of STA No. 4/2010 held on 6 May 2010 resolved to approve the engagement of Mr. Somwang Sincharoenkul as the Honorary Adviser of STA. Such advisory services are as follows: 1. Advise on the formulation of the Companyûs goals and vision. 2. Advise on the Companyûs investment and business plans and the business operation policy of the Company, both domestically and internationally. 3. Advise on strategies in relation to the use of raw materials, procurement, price and quantity in each period pursuant to the local conditions. 4. Advise on dealings with communities, local authorities and government agencies in the southern part of Thailand. Mr. Somwang Sincharoenkul does not have any participation in the Companyûs operation. His remuneration during 2 years starting from 6th May 2010 to 6th May 2012 is Baht 400,000 per month or Baht 4,800,000 per year. This transaction is considered as a connected transaction which continues to be carried out in the future. As the Honorary Advisor period of Mr. Somwang Sincharoenkul will be ended on 6th May 2012, the Board of Directors meeting no.2/2012 held on 9th March 2012 have approved the extension period of his services for two years which will be ended on 6th May 2014. The remuneration rate remains the same at Baht 400,000 per month or Baht 4,800,000 per year. Scope of Duties and Responsibilities of the Board of Directors of STA STA has determined the scope of duties and responsibilities of the Board of Directors as follows: 1. Duties of the Board of Directors The Board of Directors of STA shall perform its duties with knowledge, ability, and experience to benefit the business operation of the Company. The Board of Directors shall also perform its duties in accordance with STAûs objectives, and its Articles of Association and shareholderûs resolutions with due care in order to protect the interests of STA and be responsible to STA shareholders. According to the Articles of Association of STA, a meeting of the Board of Directors shall be held at least once every three months. 2. Review and Approve the Appropriate Policies The Board of Directors of STA is responsible for reviewing and approving STAûs policies and business direction as proposed by the Board of Directors. 3. Supervision of the Executive Committee The Board of Directors of STA shall supervise the Executive Committee to follow the policies setting out efficiently and to notify the Board of Directors to propose material matters in relation to the significant business operations of STA and connected transactions to be in accordance with the regulations of the SEC, the SET, and the SGX-ST. If necessary, the Board of Directors of STA may appoint advisor(s) to advise or provide professional opinions to support the significant business decisions of STA. Sri Trang Agro-Industry Public Company Limited

Arrange the Efficient Internal Control and Internal Audit Systems The Board of Directors of STA shall arrange efficient internal control and internal audit systems, in particular in respect of transactions in which the director(s) have an interest and are required to be approved by the shareholders没 meeting pursuant to the law and the SET regulations.

In any case, the assignment of the duties and responsibilities of the Board of Directors of STA shall not constitute an authorization or sub-authorization which may cause the Board of Directors of STA or its assignee to be able to approve any transaction in which such person or other related party (as defined in the Notification of the SEC or the notification of the Capital Market Supervisory Board) may have a conflict of interest or may benefit in any manner, or any other conflict of interest with STA or its subsidiaries, except when the approvals of such transactions are consistent with the policy and criteria approved by the shareholders meeting or the Board of Directors meeting of STA. Composition and Appointment of the Board of Directors of STA The following is a summary of the composition, appointment, removal or retirement from the Board of Directors of STA set forth in the Articles of Association: 1. The number of members of the Board of Directors of STA shall be determined by a shareholders meeting but shall be not less than five persons and not less than one-half of the total number of Directors must reside in the Kingdom of Thailand. 2. Directors shall be elected at a shareholders meeting in accordance with the following criteria and procedures: (1) Each shareholder shall have one vote for one share. (2) A shareholder must use all of his/her votes in (1) to elect one or several persons as Director or Directors, however, he or she may not split his/her votes unequally between any person in any number. (3) The persons who receive the most votes shall be elected as Directors, in the number of Directors required or to be elected on the relevant occasion. In the event that votes of two or more nominees, are equal in number, causing the number of Directors required or to be elected on such relevant occasion to be exceeded, the chairman of the meeting shall have a casting vote. 3. At every annual general meeting, one-third of the Directors, or, if the number of Directors is not a multiple of three, then the number nearest to one-third, shall retire from office. The Directors who are to retire from office in the first and the second years after registration of the Company shall be drawn by lots. In subsequent years, the Directors who have been holding office for the longest time shall retire. 4. Any Director wishing to resign from office shall submit his or her resignation letter to STA. The resignation shall be effective from the date on which STA receives the resignation letter. 5. The shareholders meeting may pass a resolution to remove any Director from office prior to rotation, by a vote of not less than three-fourths of the number of the shareholders attending the meeting and having the right to vote, and whose shares represent a total of not less than one half of the number of shares held by the shareholders attending the meeting and having the right to vote.

Annual Report 2011

The Board currently comprises eleven Directors, four of whom are Independent Directors. The Company has six Executive Directors and five Non-executive Directors. The composition of the Board takes into consideration the nature and scope of the GroupĂťs operations to allow constructive discussion, a diversity and balance of judgment for effective decision making. The Directors have invaluable experience in accounting, finance, business management, strategic planning, marketing, law and the rubber industry. Selection of Independent Director Qualifications of Independent Director 1. Holding shares not exceeding one percent of the total number of shares with voting rights of STA, its parent company, subsidiary company, associate company, major shareholder or controlling person of STA, including shares held by related persons of such independent director. 2. Neither being nor having been an executive director, employee, staff, advisor who receives salary, or a controlling person of STA, its parent company, subsidiary company, associate company, same-level subsidiary company, major shareholder or controlling person of STA, unless the foregoing status ended not less than two years prior to the date of filing an application with the Office of the SEC. Such prohibited characteristic shall not include the case where the independent director used to be a government official or advisor of a government unit which is a major shareholder or controlling person of STA. 3. Not being a person related by blood or legal registration as father, mother, spouse, sibling, and child, including spouse of child, director, executive, major shareholder, controlling person, or person to be nominated as director, executive or controlling person of STA or its subsidiary company. 4. Not have an immediate family member including spouse, child, adopted child, stepchild, brother, sister, and parent who is, or has been in any of the past three financial years, employed by the Company or any of its related companies as a senior executive officer whose remuneration is determined by the remuneration committee. 5. Not being a director or having an immediate family member including spouse, child, adopted child, stepchild, brother, sister, and parent accepting any compensation from STA or any of its subsidiaries other than compensation for board service for the current or immediate past financial year. 6. Neither having nor having had a business relationship with STA, its parent company, subsidiary company, associate company, major shareholder or controlling person, in the manner which may interfere with his independent judgement, and neither being nor having been a significant shareholder or controlling person of any person having a business relationship with STA, its parent company, subsidiary company, associate company, major shareholder or controlling person, unless the foregoing relationship ended not less than two years prior to the date of filing an application with the Office of the SEC. (The term Ă§business relationshipĂŠ and the calculation of the value of the business relationship shall have the same meaning as defined in the Notification of the Capital Market Supervisory Board Re: Application for and Approval of Offer for Sale of Newly Issued Shares).

Sri Trang Agro-Industry Public Company Limited

9. 10.

11.

Neither being nor having been an auditor of STA, its parent company, subsidiary company, associate company, major shareholder or controlling person of STA, and not being a significant shareholder, controlling person, or partner of an audit firm which employs auditors of STA, its parent company, subsidiary company, associate company, major shareholder or controlling person of STA, unless the foregoing relationship ended not less than two years prior to the date of filing an application with the Office of the SEC. Neither being nor having been a provider of any professional services including those as legal advisor or financial advisor who receives service fees exceeding two million baht per year from STA, its parent company, subsidiary company, associate company, major shareholder or controlling person of STA, and not being a significant shareholder, controlling person or partner of the provider of professional services, unless the foregoing relationship ended not less than two years prior to the date of filing an application with the Office of the SEC. Not being a director appointed as representative of directors of STA, major shareholder or shareholder who is related to a major shareholder. Not undertaking any business in the same nature and in competition to the business of STA or its subsidiary company or not being a significant partner in a partnership or being an executive director, employee, staff, advisor who receives salary or holds shares exceeding one percent of the total number of shares with voting rights of other company which undertakes business in the same nature and in competition to the business of STA or its subsidiary company. Not having any other characteristics which would cause the inability to express independent opinions with regard to STA没s business operations.

The qualifications of the Independent Director shall be in accordance with the definitions as specified in the notification of the Capital Market Supervisory Board. The Nominating Committee is also guided by the Code of Corporate Governance in determining independence.

Executive Committee As of 31 December 2011, the Executive Committee consisted of 6 Directors as shown below. Name 1. 2. 3. 4. 5. 6.

Mr. Mr. Mr. Mr. Mr. Mr.

Viyavood Sincharoenkul Prasit Panidkul Chaiyos Sincharoenkul Anan Pruksanusak Kitichai Sincharoenkul Paul Sumade Lee

Annual Report 2011

Position Chairman of Executive Director Executive Director Executive Director Executive Director Executive Director Executive Director

Scope of Duties and Responsibilities of the Executive Committee 1. To order, plan, and operate the business of STA to be in accordance with the policies set out by the Board of Directors of STA. 2. To appoint STAûs management to efficiently and transparently manage STAûs businesses. 3. Any two of the Executive Committee members jointly signing and affixing the company seal are eligible to grant proxies to any person to perform on behalf of STA in respect of any business that will benefit STA. 4. To determine the appropriate employeesû benefits and welfare in compliance with corporate culture and applicable laws. 5. To approve the credit limits of the normal business transactions or other transactions that bind STA. In any case, the assignment of duties and responsibilities of the Executive Committee shall not constitute an authorization or sub-authorization which may cause the Executive Committee or its assignee to be able to approve any transaction in which such person or other related party (as defined in the Notification of the SEC or the Capital Market Supervisory Board) may have a conflict of interest or may benefit in any manner or any other conflict of interest with STA or its subsidiaries. Such approval must be proposed to the meeting of the Board of Directors and/or the meeting of shareholders, as the case may be, for approval, as stipulated in the Articles of Association of STA or subsidiaries, or any applicable laws.

Audit Committee The Audit Committee consists of 3 independent directors and all have the qualifications required by the Capital Market Supervisory Board and the SET. As of 31 December 2011, the Audit Committee consists of the following directors: Name 1. Mr. Prakob Visitkitjakarn 2. Mr. Kriang Yanyongdilok 3. Mr. Samacha Potavorn

Position Chairman of the Audit Committee Audit Committee Member Audit Committee Member

Mr. Prakob Visitkitjakarn and Mr. Kriang Yanyongdilok are the Audit Committee members who have sufficient knowledge and experience to review the reliability of financial statements of STA. Mr. Wittawas Grungtanmuang is a secretary to the Audit Committee. Scope of Duties and Responsibilities of the Audit Committee 1. To assist the Board of Directors in the discharge of its responsibilities on financial and accounting matters (including reviewing STAûs financial reporting process and our Companyûs consolidated financial statements to ensure accuracy and adequacy). 2. To review our Companyûs internal control system and internal audit system to ensure that they are suitable and efficient, to determine an internal audit unitûs independence, as well as to approve the appointment, transfer and dismissal of the chief of an internal audit unit or any other unit in charge of an internal audit. Sri Trang Agro-Industry Public Company Limited

3. 4.

8. 9. 10.

11.

To review our Companyûs compliance with the law on securities and exchange, the regulations of the SET and the laws relating to business of STA. To consider, select and nominate an independent person to be STAûs auditor, and to propose such personûs remuneration, as well as to attend a non-management meeting with an auditor at least once a year. To review the connected transactions, interested person transactions or the transactions that may lead to conflicts of interest, to ensure that they are in compliance with the laws and the regulations of the SGX-ST and the SET, and are reasonable and in the best interests of STA. To prepare, and to disclose in our Companyûs annual report, an Audit Committeeûs report which must be signed by the Chairman of the Audit Committee and consist of at least the following information: (1) an opinion on the accuracy, completeness and credibility of the companyûs financial report; (2) an opinion on the adequacy of the companyûs internal control system; (3) an opinion on the compliance with the law on securities and exchange, the regulations of the SET or the laws relating to the STAûs business; (4) an opinion on the suitability of an auditor; (5) an opinion on the transactions that may lead to conflicts of interests; (6) the number of the Audit Committee meetings, and the attendance at such meetings by each committee member; (7) an opinion or overview of comments received by the Audit Committee from its performance of duties in accordance with the charter; and (8) other transactions which, according to the Audit Committeeûs opinion, should be known to the shareholders and general investors, within the scope of duties and responsibilities assigned by the companyûs board of directors. To commission and review the findings of significant internal investigations and/or consult with the auditor in relation to such findings and report the findings to the Board of Directors of STA in the event that there is any suspected fraud or irregularity or infringement of any law or regulations of Singapore or SGX-ST which has or is likely to have a material impact on our results of operations and/or financial position of STA. To review the audit plans, scope of work and results of our audits compiled by our internal and external auditors. To review the co-operation given by our officers to the external auditors. To review our risk management structure (including all hedging policies) and any oversight of our risk management processes and activities to mitigate and manage risk at acceptable levels determined by our Directors. To perform any other act as delegated by the Board of Directors and approved by the Audit Committee.

Apart from the duties listed above, the Audit Committee is required to commission and review the findings of internal investigations into matters where there is any suspected fraud or irregularity, or failure of internal controls or infringement of any law, rule or regulation which has or is likely to have a material impact on the results of operations and/or financial position of STA.

Annual Report 2011

Nominating Committee As of 31 December 2011, the Nominating Committee of STA consists of 3 Directors as follows: Name 1. Mr. Kriang Yanyongdilok 2. Mr. Samacha Potavorn 3. Mr. Kitichai Sincharoenkul

Position Chairman of the Nominating Committee Nominating Committee Member Nominating Committee Member

Scope of Duties and Responsibilities of the Nominating Committee 1. Reviewing and assessing candidates for directorships (including executive directorships) before making recommendations to our Board for the appointment of Directors. 2. Reviewing and recommending nominations for appointment, re-appointment or re-election or renewal of appointment of our Directors having regard to the Directorûs contribution and performance. 3. Determining annually whether or not a Director is independent. 4. Deciding whether or not a Director is able to and has been adequately carrying out his duties as a director. Certain factors considered by the Nominating Committee in order to carry out their responsibilities above include: ë independence of mind; ë capability of the individual and how it meets the needs of the Company and simultaneously complements the skill set of the other Board members; ë experience and track record as directors in other companies; and ë ability to commit time and effort toward discharging his responsibilities as a Director.

Nomination of Directors The Nominating Committee will nominate candidates who have appropriate qualifications to be a director. At the end of the office term of any director or when it is necessary to appoint more directors, the Nominating Committee will jointly discuss and consider determining the person(s) with appropriate experience, knowledge and ability to benefit STA to be a director of STA. The nomination of the aforementioned person(s) will be proposed to the meeting of the Board of Directors of STA and the meeting of shareholder respectively for further approval. The resolution of the meeting of shareholders for an approval of directors will be the majority of votes of the shareholders attending the meeting and having the right to vote.

Sri Trang Agro-Industry Public Company Limited

Remuneration Committee As of 31 December 2011, the Remuneration Committee consists of 3 Directors as follows: Name

Position

1. Mr. Prakob Visitkitjakarn 2. Mr. Kriang Yanyongdilok 3. Mr. Samacha Potavorn

Chairman of the Remuneration Committee Remuneration Committee Member Remuneration Committee Member

Scope of Duties and Responsibilities of the Remuneration Committee Our Remuneration Committee is responsible, among other things, for recommending to our Board of Directors a framework and criteria of remuneration for the Directors and executive officers, and for recommending specific remuneration packages for each Director and the Managing Director and to perform any other act as delegated by the Board of Directors.

Details of Attendance for the Meetings of the Board of Directors and Board Committees Details of the meeting attendance for the meetings of the Board of Directors, Executive Committee and Audit Committee in 2010 and 2011 are as follows:

Name

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Mr. Viyavood Sincharoenkul Mr. Prasit Panidkul Mr. Chaiyos Sincharoenkul Mr. Anan Pruksanusak Mr. Kitichai Sincharoenkul Mr. Paul Sumade Lee (1) Mr. Veerasith Sinchareonkul(2) Mr. Prakob Visitkitjakarn Mr. Kriang Yanyongdilok Mr. Samacha Potavorn Mr. Neo Ah Chap (1)

No. of Attendances No. of Attendances No. of Attendances No. of Attendances No. of Attendances Board of Directors Executive Audit Nominating Remuneration Committee3 of STA Committee Committee Committee3

2010

2011

2010

2011

2010

2011

2010

2011

2010

2011

8/9 8/9 9/9 9/9 9/9 3/4 6/6 9/9 9/9 9/9 4/4

7/7 7/7 7/7 6/7 7/7 7/7 7/7 7/7 7/7 7/7 6/7

3/3 3/3 3/3 3/3 3/3 3/3 -

8/8 8/8 8/8 8/8 8/8 8/8 -

8/8 8/8 8/8 -

7/7 7/7 7/7 -

1/1 1/1 1/1 -

Notes : (1) Appointed as a new director of STA at the Extraordinary General Meeting of Shareholders No. 1/2010 held on 28 June 2010. (2) Appointed as a new director of STA at the 2010 Annual General Meeting of Shareholders held on 28 April 2010. (3) The Nominating Committee and the Remuneration Committee were recently established in July 2010; therefore, there were no meetings of both Committees during 2010.

Annual Report 2011

Executives (pursuant to the definition of çExecutiveé in the SECûs notification no. GorJor. 17/2551 re: Determination of Definitions under Notifications relating to Issuance and Offering of Securities) As of 31 December 2011, the list of Executives of STA is as follows: Name 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21.

Mr. Viyavood Sincharoenkul Mr. Prasit Panidkul Mr. Chaiyos Sincharoenkul Mr. Anan Pruksanusak Mr. Kitichai Sincharoenkul Mr. Paul Sumade Lee Mr. Veerasith Sinchareonkul Mr. Prakob Visitkitjakarn Mr. Kriang Yanyongdilok Mr. Samacha Potavorn Mr. Neo Ah Chap Mrs. Prapai Srisuttiphong Mr. Chalermpop Khanjan Mr. Arsom Aksornnam Mr. Chaidet Pruksanusak Mr. Rattapong Laparojkit Mr. Phanlert Wangsuphadilok Mr. Udom Pruksanusak Ms. Nuchanart Chaiyarat Ms. Lim Li Ping Mr. Patrawut Panitkul

Note :

Position Chairman and Managing Director Vice Chairman Director Director Director and Manager of Legal and Administration Director and Manager of Sales and Marketing Director Independent Director and Chairman of the Audit Committee Independent Director and Member of the Audit Committee Independent Director and Member of the Audit Committee Independent Director Group Procurement Manager Co-Group Production Manager Co-Group Production Manager Group Quality Assurance Manager Co-Group Engineering Manager Co-Group Engineering Manager Co-Group Human Resource Manager Co-Group Human Resource Manager Controller Chief Financial Officer

çExecutiveé means a director, manager or the next four executives succeeding the manager, a person holding an equivalent position to the fourth executive, including a person holding the position of manager or equivalent in the accounting or finance departments

Scope of Authorities and Responsibilities of the Managing Director 1. 2.

3. 4.

Approve any juristic act binding the company for the normal business operation of STA in an amount not exceeding Baht 200,000,000. Issue and amend the rules, orders, and work rules of STA, for example, the acceptance, appointment, removal and disciplining of staff and employees, and the determination of salary and other monies, including compensation and other welfare. Determine the salary rate and other remuneration, including expenses rate and facilities of the manager or equivalent for proposing to the Executive Committee for further approval. Administer STA pursuant to the resolutions and policies of the Board of Directors of STA.

Sri Trang Agro-Industry Public Company Limited

5. 6. 7.

Propose significant matters to the Board of Directors of STA or the meeting of shareholders for further approval or other appropriate action. Study the feasibility of new projects and consider and approve the projects as delegated by the Board of Directors of STA and the Executive Committee. Perform other matters as delegated by the Board of Directors of STA and/or the Executive Committee from time to time.

However, the abovementioned approvals shall not be given in a way that may cause the Managing Director or his authorized representative to be able to approve any transaction in which he himself or any related person has or may have a conflict of interest with STA or its subsidiaries as defined in the Notification of the SEC or the Capital Market Supervisory Board.

Company Secretary The Board of Directors of STA resolved to approve the appointment of Mrs. Pacharin Anuwongwattanachai as the Company Secretary (the çCompany Secretaryé) having the duties and responsibilities as provided in the Securities and Exchange Act, including providing advice on and ensuring compliance with relevant laws and regulations which the Board is required to know and follow. The Company Secretary attends and documents all Board meetings and ensures Board procedures are followed. The appointment and removal of the Company Secretary is subject to the approval of the Board.

Remuneration of Directors and Executive Officers Financial Remuneration (1) Directorsû Fees For the fiscal year ended 31 December 2011, STA paid the directorsû fees to the Directors in the amount of Baht 5,472,000 for services rendered by them in forms of monetary remuneration. The details are as follows: Name 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Amount of Directorsû Fees (Baht) Fiscal year ended 31 December 2011 576,000 432,000 432,000 432,000 432,000 432,000 432,000 720,000 576,000 576,000 432,000

(2) Remuneration of the Directors and Executive Officers For the fiscal year ended 31 December 2011, STA paid remuneration to the Executive Directors and Executive Officers, totaling 19 persons, in the amount of Baht 192,184,217. Such remuneration was in the form of salary, bonus and other compensation. Note :

çExecutiveé means manager(s), first four executives immediately followed the manager and all the fourth executives.

Fees and compensation paid by our Company to each of our Directors and each of the top five Executive Officers of STA (for services rendered by them in all capacities to STA and our subsidiaries), in remuneration bands(1) for year ended 31 December 2011, are as follows: Name

1. Mr. Viyavood Sincharoenkul 2. Mr. Prasit Panidkul 3. Mr. Chaiyos Sincharoenkul 4. Mr. Anan Pruksanusak 5. Mr. Kitichai Sincharoenkul 6. Mr. Paul Sumade Lee 7. Mr. Veerasith Sinchareonkul 8. Mr. Prakob Visitkitjakarn 9. Mr. Kriang Yanyongdilok 10. Mr. Samacha Potavorn 11. Mr. Neo Ah Chap Top five Executive Officers 1. Ms. Lim Li Ping 2. Mrs. Prapai Srisuttiphong 3. Mr. Chalermpop Khanjan 4. Mr. Rattapong Laparojkit 5. Mr. Chaidet Pruksanusak Notes : (1)

Amount of Remuneration Paid by STA

Directorûs Fees (%)

Salary (%)

Performance based bonuses (%)

Total (%)

Band N Band B Band B Band A Band B Band I Band A Band A Band A Band A Band A

0.75 4.52 5.53 23.22 4.15 0.83 100 100 100 100 100

25.54 53.28 52.72 42.85 60.40 15.55 -

73.72 42.20 41.75 33.94 35.45 83.62 -

100 100 100 100 100 100 100 100 100 100 100

Band B Band A Band A Band A Band A

51.69 61.01 61.01 61.01 61.01

48.31 38.99 38.99 38.99 38.99

100 100 100 100 100

Remuneration bands: Band A means between SGD 1 and SGD 250,000. Band B means between SGD 250,001 and SGD 500,000. Band C means between SGD 500,001 and SGD 750,000. Band D means between SGD 750,001 and SGD 1,000,000. Band E means between SGD 1,000,001 and SGD 1,250,000. Band F means between SGD 1,250,001 and SGD 1,500,000. Band G means between SGD 1,500,001 and SGD 1,750,000. Band H means between SGD 1,750,001 and SGD 2,000,000. Band I means between SGD 2,000,001 and SGD 2,250,000. Band J means between SGD 2,250,001 and SGD 2,500,000. Band K means between SGD 2,500,001 and SGD 2,750,000. Band L means between SGD 2,750,001 and SGD 3,000,000. Band M means between SGD 3,000,001 and SGD 3,250,000. Band N means between SGD 3,250,001 and SGD 3,500,000.

Sri Trang Agro-Industry Public Company Limited

Remuneration bands are based on the average (Baht: SGD) foreign exchange rates for the stipulated year, being SGD 1 to Baht 24.2591. Compensation includes benefit-in-kinds and compensation that has already been paid includes any deferred compensation accrued for the financial year in question and payable at a later date. The estimated amount of compensation payable in the current financial year includes bonus or profit-sharing plan or any other profit-linked agreement or arrangement. Sri Trang International Pte. Ltd. have entered into employment agreements with each of our Directors, Dr. Viyavood Sincharoenkul and Mr. Paul Sumade Lee. Each of these employment agreements does not have a fixed term of employment. Pursuant to their respective employment agreements, each of Dr. Viyavood Sincharoenkul and Mr. Paul Sumade Lee will be entitled to the following:

ë ë

a monthly salary and a variable bonus, as determined by the Profit Incentive Scheme (as defined below); and coverage of all reasonable business expenses incurred or paid for during the term of employment, in connection with the discharge of their duties to Group.

Profit Incentive Scheme Each of our Directors, Dr. Viyavood Sincharoenkul and Mr. Paul Sumade Lee are entitled to participate in a profit incentive scheme (the çProfit Incentive Schemeé) in respect of each financial year of our subsidiary, Sri Trang International. Under the Profit Incentive Scheme, in respect of each financial year, if the board of directors of Sri Trang International determines that there is a surplus (çSurplusé) after deducting (i) 10% of Sri Trang Internationalûs issued and paid-up capital of US$ 8 million, or such other amount as may be determined by the board of directors of Sri Trang International, at their sole discretion, from time to time, (ii) 5% of any retained profits as at the beginning of the relevant financial year and (iii) accumulated losses as at the beginning of the relevant financial year from Sri Trang Internationalûs profit after tax (as reflected in its audited accounts), 20% of such Surplus will be payable under the Profit Incentive Scheme (çProfit Incentiveé). Retirement and Re-election of Directors A retiring Director shall be eligible for re-election. The Directors to retire in every year shall be those, subject to retirement by rotation, who have been longest in office since their last re-election or appointment. The details of the retirement and re-election of the Directors are set out as follows:

Annual Report 2011

Name of Director 1. 2. 3. 4. 5.

Mr. Viyavood Sincharoenkul Mr. Prasit Panidkul Mr. Chaiyos Sincharoenkul Mr. Anan Pruksanusak Mr. Kitichai Sincharoenkul

6. Mr. Paul Sumade Lee 7. Mr. Veerasith Sinchareonkul 8. Mr. Prakob Visitkitjakarn 9. Mr. Kriang Yanyongdilok 10. Mr. Samacha Potavorn 11. Mr. Neo Ah Chap

Position Chairman and Managing Director Vice-chairman Director Director Director and Manager of Legal and Administration Director and Manager of Sales and Marketing Director Independent Director and Chairman of the Audit Committee Independent Director and Member of the Audit Committee Independent Director and Member of the Audit Committee Independent Director

Date of first appointment to the Board 27 December 1993 27 December 1993 27 December 1993 5 November 1993 10 April 1995 28 June 2010

Date of last re-election as Director 28 April 2010 28 April 2011 28 April 2011 28 April 2011 29 April 2009 -

28 April 2010 27 December 1993

28 April 2010

25 January 2000

28 April 2011

1 February 2008

29 April 2009

28 June 2010

Sri Trang Agro-Industry Public Company Limited

Corporate Governance

Annual Report 2011

CORPORATE GOVERNANCE The Board of Directors of STA has conducted the business operation appropriately and effectively in accordance with its objectives by utilizing expertise, diligence, and due care to protect the interests of the Company and to comply with the laws, objectives, and the Articles of Association. The Board of Directors of STA has also followed the Principles of Good Corporate Governance for Directors of Listed Companies and the Principles of Good Corporate Governance for Listed Companies of 2006 as well as the Code of Corporate Governance. The roles and responsibilities of the Board of Directors of STA are all managed with due care, in particular in the process of decision making. Careful consideration is given using reasonable judgment based on honesty, transparency, ethics, and the concern of stakeholders as well as all aspects of the best interests of shareholders.

Principles of Good Corporate Governance under the Principles of Good Corporate Governance for Listed Companies of 2006 STA has established principles for good corporate governance in accordance with the Principle of Good Corporate Governance for Listed Companies of 2006 as prescribed by the SET. The details of 5 principles of good corporate governance areas are as follows: 1.

Rights of Shareholders STA always realizes that the main factors for building shareholdersû trust and confidence for investing in the businesses of STA are the application of policies and operations that protect the fundamental rights of the shareholders as well as the equality of all shareholders as prescribed by the laws, and encouraging the shareholders to exercise their fundamental rights. For example: (1) Right to Receive Profit Sharing in the Form of Dividend: STA has a policy on dividend payment which is based on careful consideration of the financial position, results of operation and cash flow of STA, the ability of our subsidiaries, associates and joint venture entity to make dividend payment, STAûs expected working capital requirements to support the future growth of STA, the economic situation, and other external factors that STA expects will have an impact on its operations. In order to manage the business operation efficiently, the dividend payment policy is at approximately 30 percent of the net profit. (2) Right to Attend the Shareholdersû meeting: STA pays great attention to the sufficiency of information so that the shareholders are able to make a well-informed decision in the shareholdersû meeting, including casting their votes and expressing their opinions on significant changes and the election of the Board of Directors of STA, based on information which is accurate, complete, transparent, and equally shared. Where the STAûs shares are held through CDP, CDP will be the only holder on record of such shares. Accordingly, as a matter of Thai law, CDP will be the only person or entity recognised as a shareholder and legally entitled to vote on any matter to be submitted to the vote of the Companyûs shareholders at a general meeting of shareholders.

Sri Trang Agro-Industry Public Company Limited

(3)

(4)

CDP has appointed a Thai custodian to safekeep all the shares held by CDP. Such Thai custodian will act as CDPûs proxy during a general meeting of shareholders and CDP will instruct such Thai custodian to split its votes in accordance with the instructions that CDP receives from investors holding shares through CDP. However, shareholders who desire to attend shareholdersû meetings and exercise their voting rights under their names with regard to the shares beneficially owned by them will be required to transfer their shares out of the CDP system and have the share transfer registered in the share register book. In addition, a shareholder who transfers the Companyûs shares out of the CDP system will not be able to trade such shares on the SGX-ST unless he first transfers such shares back into the CDP system. In order to provide the equivalent of the annual general meeting to shareholders in Singapore holding shares through the CDP, STA will hold an annual investor forum in Singapore at around the same time as the annual general meeting is held in Thailand, to enable as even a level of access to information as possible at the time of such forum. Shareholders will be given the opportunity to air their views and ask Directors any questions they may have. The representation of the Board at the forum will include at the minimum, the Managing Director, two other Executive Directors and two Independent Directors, one of whom will be the Lead Independent Director. Right to Vote on Agenda Items in the Shareholdersû meeting: The completed invitation to shareholdersû meeting and attachments will be forwarded to shareholders in advance. The invitation to shareholdersû meeting includes details on agenda items, attachments to agenda items, opinions of the Board of Directors of STA, proxy forms as prescribed by the Ministry of Commerce, a name list of all independent directors to whom the shareholders are able to give their proxy, and a map of the meeting venue. The invitation to the shareholdersû meeting also includes the information regarding the required documents that shareholders have to present to the meeting in order to protect their right to attend the meeting, the Articles of Association of STA pertaining to the shareholdersû meeting, and voting instructions. Furthermore, so that the investors can obtain information thoroughly, the shareholders can access all information with respect to the agenda of the shareholdersû meeting at www.sritranggroup.com and the website of the SGX-ST at www.sgx.com (çSGXNETé). Equitable Right to Express Opinions and Make Inquiries in the Shareholdersû meeting: With respect to agenda items and proposed agenda items, the Chairman of the shareholdersû meeting should allocate sufficient time and encourage the shareholders to express their opinions and make inquiries in the meeting. STAûs Lead Independent Director, Mr Prakob Visitkitjakarn, also the Chairman of the Audit Committee and Remuneration Committee, will be present at the annual general meeting to address questions that shareholdersû may have. External auditors will also be present to address queries in relation to the audit of the Group and the auditorsû report.

Annual Report 2011

Fair Treatment for Shareholders (1) The shareholdersû meeting shall be held in accordance with the agenda mentioned in the invitation to shareholdersû meeting. The policy is that no additional agenda item is included in the meeting without prior notice to the shareholders. STA sends a complete invitation to shareholdersû meeting, including attachments, with all sufficient information relevant to the meeting to the shareholders. Moreover, STA posts all information which is relevant to the meeting at its website (www.sritranggroup.com) and on SGXNET so that the shareholders will have sufficient time to carefully study this information. In addition, the invitation to shareholdersû meeting shall be advertised no less than three days prior to the shareholdersû meeting in a daily newspaper for at least three consecutive days in order to allow shareholders to have sufficient time to prepare for attending the shareholdersû meeting. Before the commencement of each meeting, the Chairman will give instructions on the voting and the counting methods as clearly prescribed. During the meeting, the Chairman allows the shareholders, equitably, to make inquiries and express their opinions as well as to make recommendations. The Chairman also answers questions and provides complete information as requested by the shareholders. After the meeting, STA will send the minutes of the shareholdersû meeting to the SET within the prescribed period. (2) STA has encouraged the shareholders to use ballots for voting on each agenda item. The ballots shall be kept in the meeting room for vote counting prior to the announcement of the resolutions. For the purpose of transparency, STA will keep all ballots having signatures of the shareholders or their proxy for future reference. (3) Minutes of the shareholdersû meeting must be accurately and completely recorded and submitted to the SET within 14 days after the shareholdersû meeting. The resolutions of the shareholdersû meeting will be posted on the website of STA at www.sritranggroup.com and on SGXNET. (4) The policy regarding the monitoring of the use of insider information has been established for strict compliance by personnel at all levels. (5) A full and clear disclosure of shareholding structure in the subsidiaries and associates is made to assure shareholders that the operational structure of STA is transparent and accountable. (6) STA places importance on the accurate, full, timely, and transparent disclosure of information on various issues to shareholders. As such, significant information is disclosed on a regular basis. (7) STA has established a channel of communication for minority shareholders to directly access information on various issues e.g. the activities of the Board of Directors, supervision and monitoring of the operation, and auditing through the email address of the independent directors. Furthermore, minority shareholders may directly seek information from the Company Secretary of STA or the Investor Relations Office.

Sri Trang Agro-Industry Public Company Limited

Role of Stakeholders STA fully realizes that the growth and development of STA has resulted from the full support given by all interested parties. STA places importance on the rights of all stakeholders, both internal stakeholders such as personnel, staff members, and the executives of STA and the subsidiaries and external stakeholders such as commercial partners ranging from the suppliers of raw materials to various groups of customers of finished products, financial institutions, government agencies that provide close co-operation, and finally, the shareholders of STA. In this regard, STA realizes its responsibilities towards the above-mentioned stakeholders. The details of such responsibilities are as follows: Shareholders: STA is committed to be the representative of its shareholders in conducting its business operation in a transparent manner, and having a reliable accounting and finance system that brings the highest satisfaction to shareholders by continuous considering the long-term, sustainable growth of STA and an adequate return. Employees: STA treats its employees equally and fairly by providing a good and safe working environment and adequate remuneration. Moreover, STA supports its employees in terms of providing the opportunity to develop knowledge, skills and experiences for career improvement. STA has established a Health and Working Environment Committee. A training program is specially designed for relevant personnel responsible for overseeing, providing advice, and giving accurate information on safety, occupational heath, and the working environment, and the prevention of accidents resulting from work as well as providing other interesting health information to the employees. Considering the employee没s welfare with respect to the safe and maximum working efficiency, STA has introduced various activities that promote the quality of life of employees, such as establishing a library and creating entertainment programs as well as various activities which are designed to promote employees没 good physical and mental health. Moreover, a handbook for employees has been published and is publicized through STA Intranet. Customers: STA is committed to create customer satisfaction by producing quality products and delivering the products on a timely basis and maintaining a good sustainable relationship. A guideline for customer relations practice is included in the Employees没 Handbook. Business Partners: STA purchases goods and services from its business partners pursuant to commercial conditions and always complies with the agreements entered into with its business partners and strictly follows the laws and regulations and possesses good business ethics in regard to business competition. Government Agencies and Related Organizations: STA strictly complies with various laws and regulations e.g. laws pertaining to the environment, safety, labour, tax management and accounting, as well as the government notifications relating to

Annual Report 2011

the business operations of STA. Society and Environment: STA is aware of and concerned about the safety, environment, and the quality of life of the people, and the importance of natural resources conservation, the promotion of energy sufficiency, the alternative use of natural resources to minimize the impact on society, the environment and people没s quality of life to the greatest possible extent. As such, STA supports activities in the neighborhood community of the factories by providing the most efficient management of safety and environment. In addition, STA has supervised and monitored its management system to ensure full compliance with laws and regulations of regulatory agencies and the fair and strict equitable treatment of all stakeholders. 4.

Information Disclosure and Transparency (1) The Board of Directors of STA is responsible for the accurate, complete, timely, and transparent disclosure of both significant financial and non-financial information of STA through easy-to-access channels, which reflects fairness and reliability so that the stakeholders are all equally able to receive information in compliance with the requirements of various regulators. (2) STA has set up a public relations department in order to communicate with investors and related third parties. The Investor Relations Office is the center for communication between shareholders, stakeholders, investors, and analysts. (3) The Board of Directors of STA supports the preparation of information in an accurate, reliable, timely, and regular manner in both Thai and English through communication channels at SET and the website of STA. (4) The Board of Directors of STA has a duty to report its corporate governance policy through the Annual Report and website of STA. (5) The Board of Directors of STA has a duty to disclose meeting attendance of Directors and the Audit Committee members. (6) The Board of Directors of STA is responsible for the preparation of the balance sheet, profit and loss statement, auditor没s report, annual report, and other relevant reports for shareholders approval. (7) The Board of Directors of STA has a duty to report risk factors, types of risk, and the cause and impact of risk upon the business operation of STA through the Annual Report. The Board of Directors of STA ensures that the disclosure of significant information is conducted in an accurate, precise, reliable, and timely manner in accordance with the regulations of the SEC and SET, and that such information is disclosed in the Annual Registration Statement (Form 56-1) and the Annual Report (Form 56-2) so that the shareholders are equally informed. Furthermore, the Investor Relations Office has been established to act as a contact person for communication with investors, shareholders, securities analysts, and other related agencies.

Sri Trang Agro-Industry Public Company Limited

The STA website is updated regularly. Information which should be disclosed is posted on the STA website. The Investor Relations Office at Bangkok Branch can be contacted at Tel: 0-2259-2964-71 or at www.sritranggroup.com 5.

Responsibility of the Board of Directors (1) The Structure of the Board of Directors The Board of Directors of STA, consisting of directors who have knowledge, competence and experience in business, has the duty to determine policies, visions, strategies, goals, missions, business plans and budgets of STA, as well as to monitor the management team to effectively and efficiently manage the business of STA in accordance with the policies under the legal framework, objectives, the Articles of Association and the resolutions of the shareholders meeting and the Board of Directors Meeting. Such duties must be performed with responsibility, due care and loyalty under the principles of good corporate governance in order to increase the best economic value for the business and the highest stability for the shareholders. The Board of Directors of STA consists of 11 directors, including four independent directors who are fully qualified under the notifications of the Capital Market Supervisory Board and the SET. No director of STA shall hold the office of director in more than five listed companies. In the case that any director holds the office of director in more than five listed companies, the Board of Directors will review the efficiency of such director没s performance. According to the Articles of Association of STA, at every annual general meeting, one-third of the Directors, or, if the number of Directors is not a multiple of three, then the number nearest to one-third, shall retire from office. The Directors who are to retire from office in the first and the second years after registration of the company shall be drawn by lots. In the subsequent years, the Directors who have been holding office for the longest time shall retire STA has appointed a Company Secretary to provide advice on compliance with relevant laws and regulations which the Board of Directors is required to know. The Company Secretary shall also supervise the activities of the Board of Directors and ensure that the resolutions of the Board of Directors meeting have been complied with. (2) Sub-Committees The Board of Directors has a duty to carefully and effectively consider and give approval on significant operational matters; therefore, sub-committees are formed to assist the Board of Directors in various aspects. An Audit Committee is appointed consisting of at least three independent directors and at least one of them must have knowledge of accounting and finance and must have a qualification on independence as prescribed by the notifications of the Capital Market Supervisory Board and by the definition of an independent director. The Audit Committee was established for the purpose of monitoring the internal control system,

Annual Report 2011

(3)

(4)

financial report system, corporate governance, risk management, as well as the selection and the appointment of the auditor. Moreover, STA has formed other sub-committees such as the Remuneration Committee and the Nominating Committee in order to manage the businesses of STA. The majority of members of the sub-committees are independent committee members in order to ensure a transparent and independent business operation. Roles, Duties, and Responsibilities of the Board of Directors The Board of Directors of STA oversees the business operation and the mission of STA to be in accordance with the approval given by shareholders, applicable laws, objectives, the Articles of Association, and resolutions of the Board of Directors meeting and the shareholders meeting. The Board of Directors of STA must exercise good business judgment in making business decisions and perform its duty with responsibility, due care, and loyalty in the best interests of STA. Conflict of Interests The Board of Directors of STA has established a policy for preventing conflicts of interests on the basis that any decision-making on business transactions must be made only for the best interest of STA, and that any act which may cause a conflict of interest should be avoided. It is required that a person involved in or having a conflict of interest in any agenda item to be discussed in a meeting shall report the relationship or conflict of interest in such agenda item to STA, as well as abstain from voting and shall have no authority to grant approval for such transaction. The Board of Directors Meeting According to the Articles of Association of STA, the Board of Directors shall hold a meeting at least once every three months and any additional meetings as necessary. A meeting notice will be delivered to directors at least seven days prior to the date of the meeting, except in the case where it is necessary or urgent to preserve the rights and benefits of STA. At each meeting, the agenda items of the meeting must be clearly specified and supported by complete and sufficient documents, and must be delivered to the directors in advance so that the directors will have sufficient time to study such information prior to the meeting. At the meeting, each director is allowed to openly discuss and express his/her opinion. In addition, at the meeting of the Board of Directors, the senior executives will be invited to participate in order to present additional details of information on such matters in which they are directly involved. STA is committed to providing the Board of Directors with adequate, complete, continuous information in a timely manner prior to a Board of Directors meeting. The Directors can directly and independently contact the Company Secretary. The Company Secretary is responsible for advising the Board of Directors on compliance with legal and regulatory requirements.

Sri Trang Agro-Industry Public Company Limited

(5)

(6)

Remuneration The remuneration for directors must be made on a practical industry level based on working experience, role, responsibilities, and must be in line with the average market practice of the same industry. Training for Directors and Executives The Board of Directors has a policy to enhance and accommodate the provision of training on good corporate governance. Regular and continuous training programs are provided to directors so that they can improve their knowledge.

Dealings in Securities STA has a policy and procedure to monitor its executives in relation to their use of inside information of STA and its subsidiaries for personal interest as follows: 1. Educate the Directors and executives of each department regarding their duties to prepare and disclose the report of securities holding and the report of changes in securities holding of STA to the Office of the SEC, the SET and SGX-ST, as the case may be, including the applicable penalty in the case of breach according to the SEC Act, the regulations of the SET and the SGXST Listing Manual. 2. Arrange for the Directors and executives of STA and their spouses and minor-children to prepare and disclose the report of securities holding and the report of changes in securities holding of STA to the Office of the SEC pursuant to Section 59 of the SEC Act and deliver copies of such documents to STA on the same day, and to report to SGX-ST as stipulated in the Listing Manual of SGX-ST. 3. The Directors and executives of STA and its subsidiaries who know material inside information affecting changes in securities price, must be cautious in the trading of securities of STA within one month prior to the time when the financial statement or such inside information is disclosed to the public. Moreover, within 24 hours after such inside information has been disclosed to the public, no person involved with such inside information shall disclose any inside information to any person before such inside information has been notified to the SET and/or SGX-ST. Regarding penalty measures in the case of a violation of the above-mentioned regulations, STA deems such violation as warranting a disciplinary penalty according the working rules of STA. 4. The directors, executives, staff members and employees of STA shall not, whether directly or indirectly, purchase or sell, offer to purchase or sell or invite any other person to purchase, sell or offer to purchase or sell shares or other securities (if any) of STA by using inside information which has or may have an impact on the change of the price of STA securities and has not been disclosed to the public, in a manner that may directly or indirectly cause damage to STA and whether or not such act is done for their own or another person没s benefit, or to disclose such information so that they will receive consideration from the person who engages in the aforementioned acts. Directors and employees are also expected to observe applicable insider trading laws at all times even when dealing in securities within permitted trading periods. In addition, the Directors and employees are expected not to deal in the Company没s securities for short-term considerations.

Annual Report 2011

Principles of Good Corporate Governance under the Code of Corporate Governance THE BOARDûS CONDUCT OF AFFAIRS Principle 1: Effective Board to lead and control the Company The Boardûs principal roles are set out under çScope of Duties and Responsibilities of the Board of Directors of STAé. The membership and attendance of the members of the Board and Board Committees at Board and Board Committee meetings held in FY 2010 and FY 2011, are disclosed in the table set out under çDetails of Attendance for the Meetings of the Board of Directors, Executive Committee and Audit Committeeé. BOARD COMPOSITION AND GUIDANCE Principle 2: Strong and independent element on the Board The Board composition of the Company is set out under çScope of Duties and Responsibilities of the Board of Directors of STA - Composition and Appointment of the Board of Directors of STAé. In determining independence, the Nominating Committee is guided by the factors set out under çSelection of Independent Directoré. The Nominating Committee reviews nominations for re-appointment as set out under çScope of Duties and Responsibilities of the Nominating Committeeé. Brief profiles of the Companyûs Directors are provided under the section çBoard of Directorsé. CHAIRMAN AND CHIEF EXECUTIVE OFFICER Principle 3: Chairman and Chief Executive Officer to be separate persons to ensure appropriate balance of power; increased accountability and greater capacity of the Board for independent decision making Dr. Viyavood Sincharoenkul is the Chairman and Managing Director (the equivalent of the Chief Executive Officer) (çMDé) of the Company. The Board believes that Dr. Sincharoenkul should continue to lead the Group as Chairman and MD. Dr. Sincharoenkul manages the day-to-day operations of the Group as its MD and is responsible for the strategic direction and growth of the Group. As Chairman, he ensures that Board meetings are held when necessary and sets agendas in consultation with other Directors. He ensures that Board members are provided with complete, accurate and timely information on a regular basis. There is accountability and independent decision making by the Board by virtue of the following factors: ë The Board is of the view that there are sufficient safeguards and checks in place to ensure that management is accountable to the Board as a whole. The Nominating Committee, Remuneration Committee and Audit Committee are all chaired by Independent Directors. ë Active participation by Independent Directors during Board meetings, who challenge the assumptions and proposals of the management on all issues affecting the affairs and businesses of the Group. ë The appointment of Mr. Prakob Visitkitjakarn as Lead Independent Director, to address shareholder concerns which could not have been resolved through the normal channels of the Chairman or MD, or for which such contact is inappropriate. The Lead Independent Director also acts as the principal liaison between the Independent Directors and the Chairman on sensitive issues. Sri Trang Agro-Industry Public Company Limited

BOARD MEMBERSHIP Principle 4: Formal and transparent process for the appointment of new directors to the Board The Nominating Committee comprises a majority of Independent Directors, including the Chairman. The members of the Nominating Committee are Mr. Kriang Yanyongdilok, Mr. Samacha Potavorn and Mr. Kitichai Sincharoenkul. The Chairman of the Nominating Committee is Mr. Yanyongdilok. The duties and responsibilities of the Nominating Committee are set out in the section titled çNominating Committee Scope of Duties and Responsibilities of the Nominating Committeeé. The selection, nomination, appointment and re-election processes of the Companyûs Directors according to the articles of association are set out under the section titled çComposition and Appointment of the Board of Directors of STAé and çNomination of Directorsé. For details of the factors taken into consideration for the selection of independent Directors, please refer to the section çSelection of Independent Director - Qualifications of Independent Directoré. The Independent Directors shall not be under anyoneûs influence and controlled by any situation. A retiring Director shall be eligible for re-election. The Directors to retire in every year shall be those, subject to retirement by rotation, who have been longest in office since their last re-election or appointment. The details of the retirement and re-election of the Directors are set out under the section titled çRetirement and re-election of Directorsé. The directorships or chairmanships both present and those held over the preceding three years in other listed companies and other major appointments by the Directors are set out below: Name of Director 1. Mr. Prakob Visitkitjakarn

2. Mr. Neo Ah Chap

Note : *

Present Name of Company Position ARIP PLC

Three preceding years Name of Company Position

Independent ARIP PLC Director and Chairman of the Audit Committee Siam City Cement PLC

NAC Consultancy Sole-Proprietor Services

Tan Chong International Limited*

Independent Director and Chairman of the Audit Committee Director and Chairman of the Audit Committee Executive Director

Tan Chong International Limited is listed in Hong Kong Stock Exchange.

BOARD PERFORMANCE Principle 5: Formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board Details of the assessment carried out by the Nominating Committee in relation to the effectiveness of the Directors are set out under çScope of Duties and Responsibilities of the Nominating Committeeé and çNomination of Directorsé.

Annual Report 2011

ACCESS TO INFORMATION Principle 6: Board members should be provided with complete, adequate and timely information The Board has separate and independent access to senior management and the Company Secretary at all times. The management provides information requested by the Board promptly and keeps the Board informed of all material events and transactions as they occur. Meeting agendas and board materials are provided to all Directors with sufficient time prior to meetings, so that there is sufficient time to seek clarification if required. The management consults Board members as necessary and appropriate. The role of the Company Secretary is set out under çCompany Secretaryé. The Directors may, in fulfilling their duties, as a group or individually, when necessary, direct the Company to appoint external professionals to render advice. REMUNERATION MATTERS Principle 7: Formal and transparent procedure for developing policy on executive remuneration Principle 8: Remuneration of directors should be adequate but not excessive Principle 9: Disclosure on remuneration policy, level and mix of remuneration, and procedure for setting remuneration The Remuneration Committee comprises entirely of Non-executive and Independent Directors. The Remuneration Committee comprises Mr. Prakob Visitkitjakarn, Mr. Kriang Yanyongdilok, and Mr. Samacha Potavorn. The Chairman of the Remuneration Committee is Mr. Visitkitjakarn. The roles and functions of the Remuneration Committee is set out in the section çScope of Duties and Responsibilities of the Remuneration Committeeé. The recommendations of the Remuneration Committee are submitted for endorsement by the entire Board. All aspects of remuneration, including but not limited to directorsû fees, salaries, allowances, bonuses, options and benefits-in-kind shall be covered by the Remuneration Committee. Please refer to the section titled çRemuneration of Executive Officersé for information on the remuneration of the Companyûs Directors, Executive Officers and employees who are immediate family members of any Director. ACCOUNTABILITY AND AUDIT Principle 10: The Board should present a balanced and understandable assessment of the Companyûs performance, position and prospects The Board has adopted a policy of openness and transparency in the conduct of the Companyûs affairs while preserving the commercial interests of the Company. The Company reports its financial results quarterly and presents such financial results in a balanced and understandable manner. Financial results and other price sensitive information are disseminated to shareholders via SGXNET and on the website of the SET, to the SGX-ST and SET as required, press releases, the Companyûs website and through media and analyst briefings. Any information disseminated on the website of one stock exchange is simultaneously released on the other as well, in order to preserve parity of information between shareholders on both exchanges. Sri Trang Agro-Industry Public Company Limited

The Company will also hold annual investor forums in Singapore where CDP depositors can meet the Directors. At least three of the Companyûs Executive Directors and two of its Independent Directors will be present at the investor forum. Shareholders will have the opportunity to be briefed on the Companyûs performance and may raise any queries directly with the Directors present. Principle 11: Establishment of Audit Committee with written terms of reference The Audit Committee comprises entirely of Non-executive Directors, namely, Mr. Prakob Visitkitjakarn, Mr. Kriang Yanyongdilok and Mr. Samacha Potavorn. The Chairman of the Audit Committee is Mr. Visitkitjakarn. The Audit Committee meets periodically and has the duties and responsibilities as set out under çScope of Duties and Responsibilities of the Audit Committeeé. The Companyûs auditors have not provided any non-audit services and as such, the Company has not paid non-audit fees to the auditors. INTERNAL CONTROLS AND INTERNAL AUDIT Principle 12: Sound system of internal controls Principle 13: Independent internal audit function The Company recognises the importance of an internal control system, risk management system, and operational control, to ensure that all employees and the Executive Board share their duties and responsibilities so that all share the same goals. Independent internal audit function The Companyûs Internal Audit Department is an independent unit, which reports directly to the Audit Committee. Under the Companyûs yearly internal audit plan, the Internal Control Department will perform an audit of the internal control system, implement the risk management system, and provide general advice under the çStandard for the Professional Practice of Internal Auditingé. This standard is an operating guideline and framework of internal audit that focuses on independent, just, and international standard operations with high quality auditing work. Guidelines for the development and training of internal audit staff are also included in the standard. The Internal Audit Department has full, free and unrestricted access to all data of the Company that it requires to carry out its function. The Internal Audit Department is responsible for the internal auditing of all business unit operations of the Group under its annual internal auditing plan and provides advice to improve the internal audit system. The main considerations are primarily business and operational risks. The Audit Committee continuously reviews the performance and the adequacy of the internal audit function. In addition, the Audit Committee may recommend improvements to the internal audit and internal control systems to the Board of Directors.

Annual Report 2011

Risk Management Risks As a result of the Companyûs multi-national platform, it is exposed to various types of financial risks, such as foreign exchange risk, interest rate risk, credit and counterparty risks and liquidity risk. The Company uses forward and simple option contracts and interest rate swaps to hedge certain risk exposures. The Company actively monitors and manages these risks associated with its business activities through an experienced risk management group which is responsible for identifying, evaluating, managing and controlling such risks. Foreign exchange risks The Company is exposed to foreign exchange risks arising from its exposure to currencies such as Indonesian Rupiah and US Dollars. These foreign exchange risks arise primarily from the difference of currencies dominated in the Companyûs sales and costs. As the Company presents its income statement in Baht, it generally benefits in the event the US Dollar appreciates against the Baht. The Company generally manages its foreign exchange risk through the use of forward and simple option contracts. The Company is also exposed to foreign currency translation risks in respect of its investments in foreign operations. The Company does not hedge its exposure to such risks as the management believes that the exposure to such risks is not significant due to the long-term nature of the Companyûs investments in foreign operations. Price risks Prices of commodities in general, including natural rubber, have been volatile and the Company, like other participants in the natural rubber industry, is exposed to the risk of fluctuations in the price of natural rubber. To mitigate such risks, the Company monitors the demand and supply of natural rubber as well as prices of Natural Rubber Products. Through its long-established relationships, diversified customer base and negotiation power with buyers, the Company is able to transact sales of Natural Rubber Products either on a spot basis or long-term contracts, depending on various factors, including the price of natural rubber. In the event the Company is unable to transact its sales of Natural Rubber Products, it may enter into hedging arrangements through the use of rubber futures contracts. Interest rate risks The Company has fixed and floating interest rate borrowings. Interest rate risks refer to the Companyûs exposure to interest rate fluctuations on the Groupûs borrowings. The Company manages its exposure to interest rate risks by ensuring that the majority of the borrowings have a suitable repayment term as necessary for the use in such period and considering the trend of the interest rate in such period. Credit and counterparty risks A large portion of the Companyûs sales are to customers in various countries and territories in Asia such as, the PRC, India, Singapore, Japan and Korea and to the United States and Europe, for which the Company will require letters of credit from customers or cash against the presentation of documents of title. As such, the Company is exposed to credit and counterparty risks arising from normal business activities if its customers or counterparties fail to meet their contractual obligations. To mitigate such Sri Trang Agro-Industry Public Company Limited

risks, the Company only transacts with counterparties after taking steps to assess their creditworthiness while also taking into account past transactional experience with such counterparties and their financial position. The Company also regularly monitors its counterpartiesû use of the credit limits which have been granted, with a specific focus on the counterparties identified as being of higher risk of default. Additionally, for sales into the PRC, the Company generally requires payment of cash on delivery and may grant substantial customers credit terms from the date of issuance of the invoice. The Company is also exposed to credit risks with respect to the cash deposits which it places with and derivative financial instruments which it enters into with banks and financial institutions. The Company assess the creditworthiness of the banks and financial institutions with whom it transacts and mitigates its exposure by increasing the number of banks and financial institutions with which such cash deposits are placed. Liquidity risks The working capital cycle for the Natural Rubber Products produced, from the purchase of raw materials to the receipt of payment from customers, is approximately two to four months. As such, the Company regularly monitors its liquidity requirements to ensure it has sufficient cash to meet its operational needs while also maintaining sufficient headroom on unutilised committed borrowing facilities at all times so that the borrowing limits or covenants on its credit facilities are not breached. Additionally, the Company believes that due to the global demand for Natural Rubber Products, there is a ready market for its inventory and should be able to sell them quickly in the event that the Company is in need of funds. Internal control systems The following sets out a summary of the Companyûs internal control system and functions implemented to handle the risks related to the business: ë Management Activity Control System - The Board of Directors sets the operating goals of the Company by determining the clear mission, detailed operating plan of each department, and Key Performance Indicators (KPIs) in financial outcome, operating output, and customer satisfaction. Such control is closely monitored every month. ë Risk Assessment - Changing environments may cause business at risk and negative impacts, therefore continuous risk assessment and monitoring are required. Each department shall assess its risk and prepare the solution plan. In addition, there is a management meeting every month to evaluate the current situation and select strategy to cope with the possible risks. ë Control System - The Company clearly determines measures and implementation plans by issuing orders, rules, approval authority, and working procedures for the management and all employees. ë Information and Communication - STA has moved towards çIT governanceé to manage and control IT system efficiently with IT risk management system based on international standard level. Goal and plan of IT system are set based on our nature of business and conformed with related laws and regulations. To prevent the changes, errors, or misleading information, users can only access IT system through the channel provided by STA. In addition, STA provides backup and IT continuity plan in preparation for an emergency event. Nowadays,

Annual Report 2011

the Company has various communication networks, via both the Internet and its Intranet. The Internet is a communications channel between the Company and stakeholders such as shareholders, investors, and other external parties. For internal communication within the Group, the Intranet is the key method for correspondence. This ensures efficiency and accuracy of information, and that information is delivered in time to all related parties. Monitoring and Evaluation Systems - To monitor operating performance of all business units. Each business unit reports its operating performance to the management every month. The internal audit team also frequently audits all operating units and reports to the Audit Committee quarterly. Risk Reporting - Daily reports setting out the aggregate amount and cost of raw materials purchased are generated by the managers of each of the Companyûs rubber processing facilities. In addition, the Companyûs sales and marketing department also generates a daily sales and inventory report. The senior management team utilises these reports to determine the net position of the Companyûs sales and cost of goods sold, and hence, the exposure to the various risks. Reviews - The managers of the Companyûs rubber processing facilities meet with the procurement and sales and marketing teams on a monthly basis, to prepare the budget (including the targeted monthly production capacities for each of the Companyûs rubber processing facilities as well as the sales targets for the month). These targets are set after taking into account several factors such as the estimated effective production capacity at each of the rubber processing facilities, the supply of raw materials that the Company is able to acquire, the demand of Natural Rubber Products, the price of natural rubber in the commodities markets and other general economic conditions. Such budgets are then reviewed by the senior management team before they are implemented. Through these monthly budget meetings and the setting of targets, the Company has established procedures which it believes allows it to achieve maximum return on investments within the appropriate risk parameters that are set by the senior management team from time to time.

COMMUNICATION WITH SHAREHOLDERS Principle 14: Regular, effective and fair communication with shareholders Principle 15: Greater shareholder participation at annual general meetings The Company aims to provide timely information to shareholders, and such information should be substantial and clear in relation to the matters at hand. The Company ensures that all shareholders should be equally informed of all major developments impacting the Group, and is accessible and responsive to the public at all times. For more information on communication with shareholders, please refer to the section titled çCorporate Governance - Principles of Good Corporate Governance under the Principles of Good Corporate Governance for Listed Companies of 2006 - Rights of Shareholdersé and çCorporate Governance Principles of Good Corporate Governance under the Principles of Good Corporate Governance for Listed Companies of 2006 - Fair Treatment for Shareholdersé.

Sri Trang Agro-Industry Public Company Limited

Corporate Social Responsibility

Annual Report 2011

Corporate Social Responsibility (CSR) Grow Together with Community Besides being committed to continue realising future growth opportunities for our business, we sincerely value better society and community as one of our mission. Driven by our gratitude, we place great emphasis in manufacturing quality products for our customers and at the same time giving back to our community and conserving our planetûs resources. Natural rubber has become the most important agricultural product for the country. As part of it, we strive to maintain our concept of çgrowing togetheré with the people who live around the area. It is our mission to improve the quality of life of the local people and community surrounded to our factories. In the context of long-term sustainable growth, it is not just the expansion of our capacity and sales volume, but the better living conditions of the people, improvement of infrastructure, the happiness of community and greener environment are our definition of growth as well. The activities employed in 2011 can be summarized as follow: ë To clean, dredge up and free marine creatures into the Trang canal, a main water resource for agricultural activities in community in Sikao subdistrict, Trang province. ë Educational tools donation to Wat Chaeng School, close to our Trang factory.

ë Building a playground and sponsored sport equipment to Baan Nong Jade School, Trang province.

ë Provide blood donation to Red Cross. This programme has been carried out every year across our factories nationwide.

Sri Trang Agro-Industry Public Company Limited

ë Sponsorship for çbetter job, better lifeé, an intensive labor training programme developed with Department Skill Development, Labor Ministry for villagers in Mukdaharn province.

ë Develop çJob Creation Projecté, a labor training programme developed with Office of the Rubber Replanting Aid Fund for villagers in Lampang province.

ë Green growth project to plant and grow trees in various locations including our offices, factories and encroached forest.

ë Donate survival bags for flood victims in various areas including Songkha, Surat Thani, Trang, Nakorn Ratchsima and Buriram.

√A “n ¬n ßu “a lπ ªR√e– p®Ì o“ rªït 22 50 51 41

Our charitable activities also stretch far beyond business territory. Donations to the victims of various natural disasters have been regularly carried out.

In addition, we aim to have our products associated with not only being of quality, but being environmentally friendly and natural resources saving as well. In our normal operational and strategic policies, we also have focused on the following initiatives.

Plantation We will only develop plantations on land which has been approved by the government for the cultivation of rubber trees. We have documented and will continue to strive to document our agreements with individuals for the purchase of the land for planting, thus demonstrating clear evidence of ownership of our land. We adhere strictly to environmentfriendly and community-friendly policies. Sri Trang Agro-Industry Public Company Limited

Processing Efficiency We continually seek to improve the efficiency of our processing methods through the modification of our production machinery. This will help us to minimise the production costs of Natural Rubber Products through material savings and optimise existing production processes through the development of innovative processing methods and systems. For example, we have developed various processes and systems which reduce the loss of raw materials through in-process recycling of raw materials.

Energy Savings and Waste Management We have implemented energy and cost saving measures and other measures related to waste management in our processing facilities. We have also instituted waste water treatment measures, such as conducting periodic measurements of the effluent discharged from the processing of natural rubber. We also regularly assess the quality of air emissions from our productions facilities.

Behavioral Change We also regularly promote behavioral change of our staffs towards environmental friendly habits. For example, we have instituted campaigns to reduce global warming by encouraging the use of cloth bags in place of plastic bags and the use of bicycle instead of fuel-consuming vehicles at our production facilities.

Annual Report 2011

Sri Trang Agro-Industry Public Company Limited

1. SSC

Related Parties

ë ë

Value of Transaction (THB Million) Necessity / Reasonableness of Relationship Type of Transaction Consolidated Consolidated the Transaction FY 2010 FY 2011 An associate company. 1.1 STA A company in which STH, ë Revenue from the STA sold Concentrated Latex to SSC based 2,344.06 2,684.48 the majority shareholder of sale of Concentrated on the market price. STA and Rubberland STA, holds 6% of the Products were responsible for procuring Latex shares. Concentrated Latex for SSC in accordance A company in which Mr. with the terms of the Joint Venture Viyavood Sincharoenkul, Agreement. the majority shareholder 5.47 5.47 STA entered into an agreement with SSC in and the Chairman of STA, ë Revenue from the relation to the provision of computer provision of office holds, directly and equipment and office supplies, legal services, related services indirectly, in an aggregate accounting and financial services, including of 11.83% of the shares. export and import services. The service fee Three directors of STA, that was charged by STA to SSC for the who are Mr. Viyavood Bangkok branch office was Baht 50,000 per Sincharoenkul, Mr. Kitichai month and for the Hat Yai branch office Baht Sincharoenkul and Mr. 434,000 per month, same rate with year 2010, Veerasith Sinchareonkul, which were comparable to the market price. are the directors of SSC.

The rate of service fee charged to SSC was comparable to the market price rate for services of a similar nature.

The price of the Concentrated Latex that STA sold to SSC was based on the market price that was quoted by SICOM (Singapore Commodity Exchange).

Opinion(s) of the Audit Committee

The related party transactions that are material with value of transaction exceeding THB 5.0 million that were disclosed in the notes to the financial statements of STA and the interested persons transactions that were not disclosed in the notes to the financial statements of STA for the financial year ended 31 December 2010 and 31 December 2011 are as follows:

Related Party Transactions

Related Party Transactions and Interested Party Transactions

Annual Report 2011

Related Parties

Relationship

ë Accounts payable

77.07

103.11

Most of the accounts payable came from the purchase of latex examination gloves for domestic sale.

Outstanding balance according to the payment terms under normal trade conditions and the accounts payable were normal.

Value of Transaction (THB Million) Necessity / Reasonableness of Opinion(s) of the Type of Transaction Consolidated Consolidated the Transaction Audit Committee FY 2010 FY 2011 22.63 8.53 Outstanding accounts receivable from the sale Outstanding balance according ë Accounts of field latex and advance payments at the end to the payment terms under receivable of the period. normal trade conditions and normal accounts receivable. 396.44 559.10 STA purchased latex examination gloves from SSC has neither sales nor ë Expense in relation SSC for selling to its domestic customers as marketing unit for latex to the purchase of STA has its own sales office for the domestic examination gloves in Thailand latex examination market while SSC does not. The purchase as most of the SSC sales gloves price of the latex examination gloves was came from overseas customers. comparable to the wholesale price of other For this reason, in order to latex examination glove producers in the penetrate into Thailand market country. and to maximize the utilization of STA resources, STA purchased latex examination gloves from SSC for domestic sale at a price comparable to the market price. STA received adequate profit from entering into such transaction.

Sri Trang Agro-Industry Public Company Limited

Related Parties

Relationship

ë Revenue from the sale of ground water

1.3 Rubberland Products ë Revenue from the sale of Concentrated Latex

ë Accounts receivable

1,192.49

44.14

41.01

31.34

888.02

The price of the Concentrated Latex that was sold by Nam Hua Rubber to SSC was based on the market price that was quoted by SICOM (Singapore Commodity Exchange).

Opinion(s) of the Audit Committee

Rubberland Products sold ground water to SSC as its factories were located in the same area. The sale price was at Baht 16 per cubic meter, which was comparable to the price of tap water sold by the Provincial Waterworks Authority.

Rubberland Products sold Concentrated Latex to SSC at the market price. The Group was responsible for procuring Concentrated Latex to SSC pursuant to the Joint Venture Agreement.

SSC factory was located near the factory of Rubberland Products and SSC did not possess its own ground water well. The price of ground water sold to SSC was comparable to the price of tap water sold by the Provincial Waterworks Authority to the business sector.

The price of the Concentrated Latex sold by Rubberland Products to SSC was based on the market price that was quoted by SICOM (Singapore Commodity Exchange).

Outstanding accounts receivable from the sale Outstanding balance according of field latex and advance payments at the end to the payment terms under of the period. normal trade conditions and the accounts receivable were normal.

Value of Transaction (THB Million) Necessity / Reasonableness of Type of Transaction Consolidated Consolidated the Transaction FY 2010 FY 2011 1.2 Nam Hua Rubber ë Revenue from the 744.70 875.65 Nam Hua Rubber sold Concentrated Latex to sale of Concentrated SSC at a price comparable to the market Latex price, which was the same price as sold by STA and Rubberland Products pursuant to the Joint Venture Agreement.

Annual Report 2011

Related Parties

Relationship

1.4 Starlight Express Transport ĂŤ Revenue from import-export freight forwarding fees 7.22

6.83

Starlight Express Transport provided export and import services to SSC as Starlight Express Transport has expertise and personnel suitable for the provision of services. The fees for the preparation of the related export and import documentation for the year 2010 and 2011 were Baht 280 per container and Baht 500 per set respectively and the fee for the trailer service was USD 60 per container. These rates were comparable to the market price of other service providers in the same industry.

Value of Transaction (THB Million) Necessity / Reasonableness of Type of Transaction Consolidated Consolidated the Transaction FY 2010 FY 2011 5.00 15.99 Rubberland Products entered into the leasing ĂŤ Revenue from the of field latex tank agreement with SSC as SSC provision of field did not have its own tank to store the field latex tank latex. The service fee for 100 ton was Baht 40,000 per month per tank, for 250 ton was Baht 100,000 per month per tank which reflected the relevant cost and an adequate profit of Rubberland Products.

Starlight Express Transport has expertise in the logistics services and the documentation work concerning logistics. The rate of service fee reflected the reasonable cost of its business operation and was comparable to other service providers in the same industry.

The service fee for the provision of field lalex tank did not have a comparable market price. However, the service fee charged by Rubberland Products covered and reflected the relevant cost and an adequate profit margin.

Opinion(s) of the Audit Committee

Sri Trang Agro-Industry Public Company Limited

Related Parties

Relationship

1.5 Premier System Engineering ĂŤ Revenue from the manufacturing of machinery and equipment 378.76

411.96

Premier System Engineering produced and sold machinery and equipment to SSC as the machinery used in the manufacturing process of SSC required special specification and SSC needed to keep its production technology and equipment as its business secret. Premier System Engineering has equipment and personnel suitable for the manufacturing of machinery and equipment. The price of the machinery and equipment sold by Premier System Engineering were comparable to the market price which reasonably reflected the cost of production, operation, and an adequate profit margin.

Value of Transaction (THB Million) Necessity / Reasonableness of Type of Transaction Consolidated Consolidated the Transaction FY 2010 FY 2011 39.99 46.97 Starlight Express Transport provided logistics ĂŤ Revenue from services to SSC as Starlight Express Transport logistic services conducted logistics services and has equipment and personnel ready to support such service. The service fee was at the market price according to the transportation route and was adjusted according to the change of the oil price in each period.

The price of the machinery and equipment sold to SSC reflected the reasonable cost of its production and an adequate profit margin of Premier System Engineering and was comparable to the market price.

Opinion(s) of the Audit Committee

Annual Report 2011

Related Parties

Relationship

14.71

27.06

9.90

ë Revenue from information technology services ë Revenue from purchasingmaintenance the machines

Premier System Engineering provided maintenance services of machinery to SSC. The service fee was based on actual works which was comparable with market rates.

Premier System Engineering supported Time Charge-IT to SSC in order to select SAP system advisor.

Value of Transaction (THB Million) Necessity / Reasonableness of Type of Transaction Consolidated Consolidated the Transaction FY 2010 FY 2011 51.76 48.86 Premier System Engineering provided cleaning ë Revenue from service for the machinery and equipment to cleaning service SSC as Premier System Engineering has expertise in machinery and equipment and was the seller of machinery and equipment to SSC. The rate of service fee was comparable to the market price and reflected an adequate profit margin of Premier System Engineering.

Service fee was comparable with market rates.

The service fee was comparable to the market price.

The rate of service fee for cleaning the machinery and equipment of Premier System Engineering reflected the reasonable cost of its business operation and an adequate profit margin of Premier System Engineering and was comparable to other service providers in the same industry.

Opinion(s) of the Audit Committee

Sri Trang Agro-Industry Public Company Limited

Related Parties

Relationship

1.6 Anvar Parawood ë Revenue from the sale of firewood

ë Expense from purchasing supplies

ë Accounts receivable

579.73

4.62

54.49

833.04

5.43

37.08

Anvar Parawood sold firewood to SSC as Anvar Parawood operates the business of the sale of rubber wood and has personnel suitable to provide such service. The price of the firewood was the price on the date the transaction was entered into plus the operation cost and an adequate profit margin which was comparable to the market price.

The selling price of the firewood was comparable to the price offered by other sellers.

Outstanding balance according to the payment terms under normal trade conditions and the accounts receivable were normal. Premier System Engineering purchased supplies Large purchasing quantity of from SSC in order to save purchasing cost and supplies enables the Group to efficiently manage supplies of the Group. The receive discounts and increase purchasing price of supplies was weighted bargaining power. The average cost of SSC excluding any other purchasing price of supplies related processing expenses. that Premier System Engineering purchased from SSC was comparable to market price without any other related processing expenses.

Outstanding accounts receivable from the aforementioned services.

Value of Transaction (THB Million) Necessity / Reasonableness of Opinion(s) of the Type of Transaction Consolidated Consolidated the Transaction Audit Committee FY 2010 FY 2011 ë Revenues from 139.98 Premier System Engineering provided stock The service fee was sales of equipment management services and procured equipment comparable to the market and machinery and machinery spare part to SSC since it has price. spare part expertise and specializes in machinery and equipment.

Annual Report 2011

Relationship

2. Semperflex Asia ë An associate company. ë A company in which STH, the majority shareholder of STA, holds 5.0% of the shares. ë A company in which Mr. Viyavood Sincharoenkul, the majority shareholder and the Chairman of STA, holds directly and indirectly, in an aggregate of 12.38% of the shares. ë Three directors of STA, who are Mr. Viyavood Sincharoenkul, Mr. Kitichai Sincharoenkul and Mr. Veerasith Sinchareonkul, are the directors of Semperflex Asia.

Related Parties

2.2 Rubberland Products ë Revenue from dividends

2.1 STA ë Revenue from dividends

10.00

75.00

5.00

37.50

Value of Transaction (THB Million) Type of Transaction Consolidated Consolidated FY 2010 FY 2011

Rubberland Products received dividends paid from Semperflex Asia based on its operating results.

STA received dividends from Semperflex Asia paid from the operation results of Semperflex Asia.

Necessity / Reasonableness of the Transaction

The payment of dividend was made in accordance with the resolution of the shareholdersû meeting of Semperflex Asia. Rubberland Products received dividend in proportion to its shareholding in Semperflex Asia.

The payment of dividend was made in accordance with the resolution of the shareholdersû meeting of Semperflex Asia. STA received dividend in proportion to its shareholding in Semperflex Asia.

Opinion(s) of the Audit Committee

Sri Trang Agro-Industry Public Company Limited

Related Parties

Relationship

2.4 Premier System Engineering ĂŤ Revenue from the manufacturing of machinery and equipment 14.71

15.17

Premier System Engineering sold machinery and equipment to Semperflex Asia as the machinery used in the manufacturing process of Semperflex Asia required special specification and Semperflex Asia needed to keep its production technology and equipment as its business secret. Premier System Engineering has equipment and personnel suitable for the manufacturing of machinery and equipment. The price of the machinery and equipment sold by Premier System Engineering were comparable to the market price.

Value of Transaction (THB Million) Necessity / Reasonableness of Type of Transaction Consolidated Consolidated the Transaction FY 2010 FY 2011 2.3 Starlight Express Transport 5.17 7.02 Starlight Express Transport provided logistics ĂŤ Revenue from services to Semperflex Asia as Starlight Express transportation Transport conducted logistics services and has equipment and personnel ready for the provision of such service. The service fee was comparable to the market and changed according to the oil price level.

Premier System Engineering has expertise in the development, production, and maintenance of machinery and equipment in relation to the production of natural rubber and finished products from natural rubber. The price of the machinery and equipment sold to Semperflex Asia reflected the reasonable cost of its production and an adequate profit margin of Premier System Engineering and was comparable to the market price.

Starlight Express Transport has expertise in logistics services and documentation work concerning logistics. The rate of service fee reflected the reasonable cost of its business operation and was comparable to other service providers in the same industry.

Opinion(s) of the Audit Committee

Annual Report 2011

Related Parties

Relationship 6.22

11.93

40.08

1.41

ë Revenue from cleaning service

ë Revenue from selling and maintenance machine ë Revenues from sales of equipment and machinery spare part

Value of Transaction (THB Million) Type of Transaction Consolidated Consolidated FY 2010 FY 2011

Service fee was comparable with market rates.

Premier System Engineering has expertise in the development, production, and maintenance of machinery and equipment in relation to the production of natural rubber and finished products from natural rubber. The service fee for cleaning of machinery reflected the reasonable cost of its production and an adequate profit margin of Premier System Engineering and was comparable to the market price.

Opinion(s) of the Audit Committee

Premier System Engineering provided stock The service fee was management services and procured equipment comparable to the market and machinery spare part to Semperflex Asia price. since it has expertise and specializes in machinery and equipment.

Premier System Engineering provided maintenance services of machinery to SSC. The service fee was based on actual works which was comparable with market rates.

Premier System Engineering, who is a specialist in machinery and equipment and a seller of machinery and equipment to Semperflex Asia, provided cleaning services to Semperflex Asia with service fee comparable to market rate.

Necessity / Reasonableness of the Transaction

Sri Trang Agro-Industry Public Company Limited

3. Thai Tech Rubber

Related Parties

2.5 Anvar Parawood ë Revenue from the sale of pallets

ë An associate company. 3.1 STA ë Two directors of STA, who ë Revenue from are Mr. Viyavood dividends Sincharoenkul and Mr. Paul Sumade Lee, are the directors of Thai Tech Rubber.

Relationship

6.36

30.15

8.99

The price of the pallets was comparable to the price of other sellers.

Outstanding balance according to the payment terms under normal trade conditions and the accounts receivable were normal.

Opinion(s) of the Audit Committee

STA received dividends from Thai Tech The payment of dividend was Rubber paid from the operation results of Thai made in accordance with the Tech Rubber. resolution of the shareholdersû meeting of Thai Tech Rubber. STA received dividend in proportion to its shareholding in Thai Tech Rubber.

Anvar Parawood sold pallets to Semperflex Asia as Anvar Parawood conducted the business of selling rubber wood and has personnel suitable for providing such service. The price of pallets sold to Semperflex Asia was comparable to the market price.

Value of Transaction (THB Million) Necessity / Reasonableness of Type of Transaction Consolidated Consolidated the Transaction FY 2010 FY 2011 2.88 14.57 Account receivable from the above services. ë Accounts receivable

Annual Report 2011

Related Parties

Relationship

ĂŤ Accounts payable

3.2 Sri Trang International ĂŤ Cost of the purchase of TSR 6,045.30

155.99

6,269.56

771.60

Value of Transaction (THB Million) Type of Transaction Consolidated Consolidated FY 2010 FY 2011

Accounts payable from the provision of the aforementioned services.

Sri Trang International purchased TSR from Thai Tech Rubber for selling to international market. The purchase price was based on SICOM

Necessity / Reasonableness of the Transaction

Outstanding balance according to the payment terms under normal trade conditions and the accounts payable were normal.

The natural rubber that the Group produced to international customers was distributed by Sri Trang International as Thai Tech Rubber did not do marketing or sale of natural rubber to international customers. The natural rubber price that Thai Tech sold to Sri Trang International was comparable to the market price that third party sold to Sri Trang international.

Opinion(s) of the Audit Committee

Sri Trang Agro-Industry Public Company Limited

5. Pruksa Rubber ë The Executives Officer of STA, Mr. Udom Co., Ltd. Pruksanusak and siblings, hold more than 50% of the shares in Pruksa Rubber Co., Ltd. Mr. Udom Pruksanusak is the authorized signatory of Pruksa Rubber Co., Ltd. 5.1 STA ë Revenue from the sale of field latex 5.32

7.95

STA sold field latex to Pruksa Rubber Co., Ltd. The sale was made at the STA rubber plantation because STA did not have any department to handle the transportation of field latex on its own and in order to save cost on the management, sales, and related personnel. The price at which field latex was sold to Pruksa Rubber Co., Ltd. was at the price determined daily by the procurement department of STA.

Due to the fact that STA only had a few rubber plantation areas ready for tapping. In order to save cost, STA decided to minimize its obligations on transportation and management by selling field latex to Pruksa Rubber Co., Ltd. at the price determined by the procurement department of the Group.

Value of Transaction (THB Million) Necessity / Reasonableness of Opinion(s) of the Related Parties Relationship Type of Transaction Consolidated Consolidated the Transaction Audit Committee FY 2010 FY 2011 ë An associate company. 4. Pattana Agro 4.1 STA ë Two directors of STA, who ë Accounts Futures 81.27 71.42 Accounts receivable from the trading of natural Normal business transaction for are Mr. Viyavood receivable rubber future contracts future trading Sincharoenkul and Mr. (payable) for the Kitichai Sincharoenkul, are future trading of the directors of Pattana natural rubber Agro Futures. 2.77 44.06 Deposit made for trading in futures market in Normal business transaction for ë Amount due from future trading accordance with AFET criteria. futures brokers

Annual Report 2011

Related Parties

Relationship

5.3 Sadao P.S. Rubber ĂŤ Cost of the purchase of unsmoked sheet rubber 12.26

16.38

Sadao P.S. Rubber purchased unsmoked sheet rubber from Pruksa Rubber Co., Ltd., a dealer who buys unsmoked sheet rubber from the farmers and sells it to factories located in the Sadao District where is close to the Sadao P.S. factory. Moreover, Pruksa Rubber was capable to supply unsmoked sheet rubber at the quality and quantity as required by Sadao P.S. Rubber. The purchase price of unsmoked sheet rubber was the price that the Group made an announcement to general customers in front of its factory.

Value of Transaction (THB Million) Necessity / Reasonableness of Type of Transaction Consolidated Consolidated the Transaction FY 2010 FY 2011 5.2 Nam Hua Rubber ĂŤ The purchase of 120.09 191.59 Nam Hua Rubber purchased field latex from field latex Pruksa Rubber Co., Ltd. because the rubber plantations of Pruksa Rubber Co., Ltd. were located close to the factory and the purchasing center for purchasing field latex of Nam Hua Rubber. Moreover, Pruksa Rubber Co., Ltd. was capable of supplying rubber of the quality and quantity as required by Nam Hua Rubber. The purchasing price of the field latex was at the price that the Group made an announcement to general customers in front of its factory.

Sadao P.S. Rubber required unsmoked sheet rubber as the raw material for the production of RSS. The purchase price was at the market price determined daily by the procurement department of the Group for the purpose of purchasing raw materials from general suppliers.

Nam Hua Rubber required field latex as a raw material for the production of Concentrated Latex. The purchase price was at the market price determined daily by the procurement department of the Group for the purpose of purchasing raw materials from general suppliers.

Opinion(s) of the Audit Committee

Sri Trang Agro-Industry Public Company Limited

6.2 Sri Trang International ë Transportation Cost 15.73

15.00

The fee was reasonable and comparable to the market price.

Opinion(s) of the Audit Committee

Worldwide Shipping Logistic Service Pte., The fee was reasonable and provided freight forwarding service for comparable to the market price. transportation of goods to overseas customers. The service fee paid by Sri Trang International to Worldwide Shipping Logistic Service Pte., was comparable with the service fee of other service providers who are not related party of the Group. Sri Trang International will conduct a price comparison each time it enters into an agreement for receiving such services.

Value of Transaction (THB Million) Necessity / Reasonableness of Related Parties Relationship Type of Transaction Consolidated Consolidated the Transaction FY 2010 FY 2011 ë A company with 100% of its 6.1 STA 6. Worldwide 5.38 4.42 Worldwide Shipping Logistic Service Pte., shares owned by a spouse ë Transportation Shipping provided freight forwarding service for expense Logistic Service of a child of a Director of transportation of goods from STA factories to STA - Mr. Prasit Panidkul Pte. overseas customers. The service fee paid by STA to Worldwide Shipping Logistic Service Pte., was comparable with the service fee of other service providers having no connection with the Group. STA will conduct a price comparison each time it enters into an agreement for receiving such services.

Annual Report 2011

Relationship

8. Mr. Somwang Sincharoenkul

3.20

ë Purchasing field latex

Father of ë Fee of advisor ë Mr. Viyavood Sincharoenkul, service Major shareholder, Chairman and Managing Director of the Company ë Mr. Kitichai Sincharoenkul, director of the Company and Subsidiaries ë Mr. Lee Paul Sumade, director of the Company Grandfather of ë Mr. Veerasith Sinchareonkul

7. Tham Phannara Wife (Mrs. Jiraporn Aksornnam) of Co-Group Rubber Fund Production Manager (Mr. Cooperative Arsom Aksornnam) is an authorized person on behalf of the cooperative.

Related Parties

4.80

89.68

The Board of Directors approved the engagement of Mr. Somwang Sincharoenkul as the Honorary Adviser of STA for period of two years in order to advise on the formulation of the Companyûs goals and vision, investment and business plan, procurement strategies, as well as strategies to deal with communities and local authorities. His remuneration is Baht 400,000 per month.

STA purchased filed latex from Thum Phannara Rubber Fund Cooperative as it situates nearby STAûs procurement unit. Moreover, it was capable of supplying rubber of the quality and quantity as required by STA. The purchasing price of the field latex was at the price that the Group made an announcement to general customers in front of its factory.

There is no available comparable fee for such advise service. However, with his knowledge, experience, competency, and time devotion, the Company considers the compensation of Mr. Somwang Sincharoenkul reasonable.

STA required field latex as a raw material for the production of Concentrated Latex. The purchase price was at the market price determined daily by the procurement department of the Group for the purpose of purchasing raw materials from general suppliers.

Value of Transaction (THB Million) Necessity / Reasonableness of Opinion(s) of the Type of Transaction Consolidated Consolidated the Transaction Audit Committee FY 2010 FY 2011 6.3 P.T. Star Rubber ë Document fee (Bill 13.19 Worldwide Shipping Logistic Service Pte was The fee was reasonable and of Lodging) hired by P.T. Star Rubber to provide export comparable to the market price. document at the rate of RPH 2,400,000 per set of Bill of Lodging. The fee was comparable to other independent companies.

Sri Trang Agro-Industry Public Company Limited

Relationship

9. The Board of Directors of STA and the Director of STA subsidiaries and subsidiaries consists of: ë Mr. Somwang Sincharoenkul ë Mr. Viyavood Sincharoenkul ë Mr. Kitichai Sincharoenkul ë Mr. Prasit Panidkul ë Mr. Chaiyos Sincharoenkul ë Mrs. Promsook Sincharoenkul ë Mr. Anan Pruksanusak

Related Parties

Value of Transaction (THB Million) Necessity / Reasonableness of Type of Transaction Consolidated Consolidated the Transaction FY 2010 FY 2011 Personal guarantees 3,890.00 1,235.00 Directors of STA and the subsidiaries provided have been provided personal guarantees on the loans that have on the loans that been extended to STA and subsidiaries by have been extended financial institutions as a requirement of to STA and borrowing specified by certain financial subsidiaries by institutions. financial institutions

Such support complied with the requirements of sponsor support agreement and was made for the benefit of STA and the subsidiaries. The directors acting as guarantors did not charge any fee for providing the personal.

Opinion(s) of the Audit Committee

Annual Report 2011 -

8.0 208.0 19.4 4.8 1,235.0

Aggregate value of all Interested Person Transactions conducted under shareholdersû mandate (excluding transactions less than SGD 100,000)

Unit : THB million

Save as disclosed in çRelated Party Transactionsé, there were no other material contracts entered into by the Company or any of its subsidiaries involving the interests of any director or controlling shareholder which are either still subsisting at the end of the financial year or entered into since the end of the previous financial year.

Pruksa Rubber Co., Ltd - STA sold field latex to Pruksa Rubber Co., Ltd Pruksa Rubber Co., Ltd - Nam Hua Rubber purchased field latex and Sadao P.S. Rubber purchased unsmoked sheet rubber from Pruksa Rubber Co., Ltd Worldwide Shipping Logistic Service Pte - STA and Sri Trang International made payment for logistic services to Worldwide Shipping Logistic Service Pte Mr Somwang Sincharoenkul - remuneration for engagement as honorary adviser for STA Guarantees and security provided by the Board of directors of STA and their associates, namely; ë Mr. Somwang Sincharoenkul ë Mr. Viyavood Sincharoenkul ë Mr. Kitichai Sincharoenkul ë Mr. Prasit Panidkul ë Mr. Chaiyos Sincharoenkul ë Mrs. Promsuk Sincharoenkul ë Mr. Anan Pruksanusak ë Mr. Somboon Pruksanusak

Name of Interested Person

Aggregated value of all Interested Person Transactions for the year ended 2011 under review (excluding transactions less than SGD 100,000 and transactions conducted under shareholdersû mandate)

Interested Person transactions as defined in the SGX listing manual Rule: 920 for the financial year ended 31 December 2011 are as follows:

Interested Person Transactions

Audit Committeeûs Opinion on Related Party Transactions The Audit Committee of STA evaluated and expressed its opinion on the above related party transactions that such transactions were carried out reasonably and were necessary to the business operation of STA.

Measures or Procedures for Approving the Related Party Transactions In the event that STA or its subsidiaries carries out its business with a party who may have a conflict of interest, whether at present or in the future, or have an interest with STA, the Audit Committee will express its opinion regarding the necessity and the reasonableness of the price of such transaction. The Audit Committee will ensure that the terms and conditions of these transactions are consistent with market practice and the prices charged for these transactions compared with third party or market prices. If the Audit Committee is unable to evaluate related party transactions due to lack of expertise in certain areas, STA will arrange an independent expert or the auditor of STA to give an opinion on such transactions. The Board of Directors or Audit Committee or the STA shareholders, as the case may be, will use this opinion from the independent expert as a supplement to form their own conclusion. Those directors who may have an interest in the transaction are prohibited from voting on such transactions. In addition, related party transactions will be disclosed in the notes to the STAûs audited or reviewed financial statements. At present, STA has a pricing policy for it subsidiaries, associates, joint venture entities and related companies as follows: Pricing Policy Sales of products and raw materials At armûs length as if it was transacted with a third party Revenues from services - logistic services At armûs length as if it was transacted with a third party Revenues from services - management At fixed rate pursuant to the contract which is comparable services to the market price Interest income from trade credit At armûs length as if it was transacted with a third party Rental income At a contract price which had been agreed upon and is comparable to the market price Product purchase At armûs length as if it was transacted with a third party Rental and Service Expenses At armûs length as if it was transacted with a third party Guarantee No fee charged Fixed assets acquisition At armûs length as if it was transacted with a third party Furthermore, the Board of Directors Meeting resolved to approve in principle business transactions with general trading conditions or supporting normal business transactions with general trading conditions between STA or its subsidiaries and the Directors, Executive Officers or any related parties. STA and its subsidiaries may purchase raw materials, sell products, provide transportation services or enter into any other transactions between the Directors, Executive Officers or related parties, whether at present or in the future. In this regard, STA authorizes the management to approve such transactions if the purchase price, selling price, transportation fees or other related transactions is not different from Sri Trang Agro-Industry Public Company Limited

the price offered to other customers (market price) and the conditions and commercial terms are the same as those an ordinary person would agree with any party under similar circumstances. The transportation fee shall be the same as the rate of transportation used by the general public. In respect of the transportation fee, the fee will be according to the normal market rate, but shall not be more than 10% compared with the fee paid by other trade partners. In addition, STA shall prepare a report on the summary of the transactions every quarter to present to the Board of Directors Meeting or upon the request of the Board of Directors.

Policy on Future Related Party Transactions In the event that STA engages in related party transactions in the future, STA will ensure that such transactions are carried out in compliance with the SEC Act, the Securities Law of Singapore, regulations, notifications, orders or rules of the SET and SGX-ST. In addition, STA must also comply with the Thai GAAP on disclosure rules related to related party transactions and other requirements as specified by the Institute of Certified Accountants of Thailand and the Company没s policy or other relevant laws. In addition, when STA enters into related party transactions, STA will seek the Audit Committee没s opinion on the reasonableness of such transactions. In the event that the Audit Committee is unable to evaluate related party transactions due to lack of expertise in certain areas, the Committee may for arrange an independent expert, such as auditor or independent appraiser, to give opinion on the transactions. The opinion of the Audit Committee or the independent expert will be used by the Company没s Board of Directors or shareholders, as the case may be, for making a decision to ensure that these related party transactions are carried out without any conflict of interest and for the best interest of all shareholders.

Annual Report 2011

Managementûs Discussion and Analysis of Financial Condition and Results of Operations 1.

Financial Statements

Accounting Policy Changes Commencing on 1 July 2011, the Group has adopted TAS 12 çIncome Taxesé before the standard comes into effect as published in the Government Gazette. This accounting standard comes into effect for periods beginning on or after 1 January 2013. In addition, the Group has adopted the accounting for derivative financial instruments, of which comprise rubber forward contracts made with traders, rubber futures contracts, interest rate swaps and forward foreign exchange contracts, that are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at fair value, and the resultant gains and losses are recognised in the statements of comprehensive income. The Group also applies the presentation and disclosures of financial instruments under TAS 107 (formerly TAS 48) çFinancial Instruments: Presentation and Disclosuresé. Statements of Financial Position as at 31 December 2011 have been presented in comparison with as at 31 December 2010 and Statements of Comprehensive Income have been presented in comparison with the year ended 31 December 2010 which are retrospectively restated for comparative purposes. Financial statement for FY2009 presented below; however, has been prepared in accordance with Thai generally accepted accounting principles under the Accounting Act B.E. 2543. 1.1 Statements of Financial Position (Unit : THB million) Statements of Financial Position Assets Current assets Cash and cash equivalents Derivative financial instruments Trade accounts receivable and other receivables, net Amounts due from futures brokers Inventories - net Other current assets Total current assets Non-current assets Long-term loan to an associate Fixed deposits pledged as collateral Investments in associates Investment in a joint venture Available-for-sale financial assets Property, plant and equipment, net Intangible assets, net

2011

2010

2009

2,273.0 329.3 7,787.4 406.4 17,336.6 198.9 28,331.7

1,774.0 459.6 6,239.8 135.1 20,282.4 60.2 28,951.0

980.6 4,131.7 52.5 10,173.2 581.9 15,920.0

62.9 143.5 3,122.6 456.5 43.7 7,475.6 24.2

125.4 2,615.4 325.3 46.3 5,213.4 21.7

83.5 2,371.6 255.0 36.7 4,245.3 14.3

Sri Trang Agro-Industry Public Company Limited

(Unit : THB million) Statements of Financial Position Investment properties Witholding tax deducted at source Deferred income tax assets Other non-current assets Total non-current assets Total assets Liabilities and shareholdersû equity Current liabilities Short-term loans from financial institutions Trade accounts payable and other payables Current portion of long-term loans from financial institutions Current portion of finance lease liabilities Derivative financial instruments Current income tax liabilities Other current liabilities Total current liabilities Non-current liabilities Long-term loans from financial institutions Debentures Finance lease liabilities Deferred income tax liabilities Provision for post employment benefit obligations Total non-current liabilities Total liabilities Shareholdersû equity Issued and paid-up share capital Premium on share capital Deduction arising from acquisition of additional interest in subsidiaries from non-controlling interests Revaluation surplus, net of accumulated depreciation Unrealised gain on available-for-sale financial assets Cumulative translation adjustments Retained earnings Appropriated - legal reserve Unappropriated Total parentûs shareholdersû equity Non-controlling interests Total shareholdersû equity Total liabilities and shareholdersû equity

Annual Report 2011

2011

2010

2009

102.3 76.6 537.7 35.0 12,080.5 40,412.2

48.0 143.3 130.3 35.6 8,704.7 37,655.8

22.9 121.2 35.0 7,185.4 23,105.4

15,425.6 2,543.7 120.0 11.5 1,112.2 192.4 65.2 19,470.6

20,452.6 3,042.1 597.6 17.2 493.5 119.7 64.9 24,787.6

11,988.8 1,695.2 206.2 12.2 76.5 87.0 14,066.0

314.9 2,150.0 12.3 328.8 104.8 2,910.7 22,381.4

2,226.1 22.9 138.4 89.3 2,476.7 27,264.3

1,578.1 15.3 77.2 1,670.6 15,736.6

1,280.0 8,551.0

1,000.0 1,123.8

(173.1) 833.2 0.6 (120.5)

(173.1) 850.0 3.0 (283.8)

(173.1) 1,010.7 (6.2) (46.0)

128.0 7,437.3 17,936.4 94.4 18,030.9 40,412.2

100.0 7,729.4 10,349.3 42.2 10,391.5 37,655.8

100.0 4,323.4 7,332.5 36.3 7,368.8 23,105.4

1.2 Statements of Comprehensive Income (Unit : THB million) Statements of Comprehensive Income Sales of goods and services Cost of sales and services Gross profit Other income Selling expenses Administrative expenses Gains (losses) on exchange rates Other gains (losses) - net Operating profit Share of profit of investments in associates and a joint venture Profit before net financial costs and income tax Finance income Finance costs Finance costs - net Profit before income tax Income tax expenses Profit for the year Owners of the parent Non-controlling interests

2011

2010

2009

133,703.8 (127,941.3) 5,762.5 165.2 (3,199.9) (1,032.4) (22.7) 505.7 2,178.4 648.9 2,827.3 16.2 (885.0) (868.8) 1,958.5 (629.2) 1,329.3 1,306.2 23.0

83,845.3 (78,678.5) 5,166.8 77.2 (1,780.7) (576.5) 925.5 (10.4) 3,801.8 702.8 4,504.7 6.2 (397.7) (391.5) 4,113.2 (272.7) 3,840.5 3,819.6 20.9

145,909.8 (42,375.3) 3,534.5 105.9 (1,437.0) (539.5) 538.0 (324.7) 1,877.1 744.5 2,621.7 6.0 (329.9) (323.8) 2,297.8 (115.4) 2,182.5 2,142.0 40.5

1.3 Statements of cash flows (Unit : THB million) Statements of cash flows Cash flows from operating activities Profit before income tax Adjustments for: Unrealised (gain) loss on foreign currency translations Unrealised (Gain) loss from revaluation of derivative financial instuments Unrealised gain from revaluation of futures Allowance for (reversal of) impairment of trade accounts receivable Allowance for (reversal of) inventory cost in net realisable value Allowance for impairment of other receivables - non-controlling interests Provision for post-employment benefit obligations Depreciation Amortisation Loss on asset revaluation Finance costs Dividend income Loss in liquidation in other company Share of profit of investments in associates and a joint venture Gain from revaluation of investment properties

2011

2010

2009

1,958.5

4,113.2

2,297.8

139.8 749.0 31.2 869.6 18.4 15.7 476.1 7.1 5.2 885.0 (1.2) (648.9) (15.4)

(462.7) 79.7 (36.4) (1.0) 15.8 366.0 6.0 397.7 (17.6) (702.8) -

(257.3) (56.4) 31.6 (683.6) 7.8 341.9 8.0 329.9 (0.6) 0.1 (744.5) -

Sri Trang Agro-Industry Public Company Limited

(Unit : THB million) Statements of cash flows (Gain) loss on disposal and write-off of property, plant and equipment and intangible assets Changes in operating assets and liabilities: (Increase)/decrease in operating assets Trade accounts receivable and other receivables Amounts due from futures brokers Inventories Other current assets Other non-current assets Increase/(decrease) in operating liabilities Trade accounts payable and other payables Other current liabilities Cash (used in)/provided by operating activities Interest paid Income tax paid Net cash (used in)/provided by operating activities Cash flows from investing activities Increase in long-term loan to an associate (Increase) Decrease in fixed deposits at financial institutions Increase in fixed deposits pledged as collateral Increase in available-for-sale financial assets Dividends received Cash paid for investments in subsidiaries and associates Proceeds from disposal of property, plant and equiment and intangible assets Purchases of property, plant and equipment Purchases of intangible assets Purchases of investment property Proceed form liquidation in other company Proceeds from a decrease in share capital of an associate Net cash (used in)/provided by investing activities Cash flows from financing activities Increase/(decrease) in short-term loans from financial institutions Proceeds from long-term loans from financial institutions Repayments of long-term loans from financial institutions Proceeds from issuance of debentures Payments on finance lease liabilities Dividends paid to minority interests Dividend payment Proceeds from capital increase from non-controlling Interest Proceeds from issuance of new shares Costs directly attributable to the issue of new shares Net cash (used in)/provided by financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year

100

Annual Report 2011

2011 (8.0)

2010

2009 6.7

3.2

(1,565.8) (271.4) 2,076.2 (138.7) 0.7

(1,946.3) 177.5 (10,108.2) (18.2) (25.8)

(1,448.0) 118.4 (5,057.1) 93.0 (22.8)

(490.4) 0.1 4,093.1 (878.2) (628.2) 2,586.7

1,068.0 234.8 (6,853.9) (390.2) (284.9) (7,528.9)

1,042.1 56.5 (3,940.0) (328.0) (110.0) (4,378.0)

(62.9) (18.0) (0.1) 75.8 (30.3) 162.5 (2,844.1) (9.4) (6.8) (2,733.4)

0.3 (42.0) (0.0) 749.0 37.5 (1,383.8) (13.5) 19.1 (633.4)

(0.0) (27.0) 270.3 16.5 (788.9) (6.8) 1.5 (534.4)

(4,854.1) 62.3 (2,695.9) 2,150.0 (21.9) (1,600.0) 7.2 8,034.9 (436.7) 645.7 499.1 1,774.0 2,273.0

8,163.5 1,609.6 (192.4) (16.8) (8.0) (600.0) 8,955.9 793.6 980.4 1,774.0

5,016.1 (13.2) (200.0) 2.7 4,805.6 (106.7) 1,087.1 980.4

1.4 Financial Ratios Financial Ratios Liquidity Ratios Current ratio Quick ratio Cash flow liquidity ratio Account receivable turnover1 Average collection period Inventory turnover2 Inventory period Account payable turnover3 Average payment period Cash Cycle Profitability Ratios Gross profit margin Operating profit margin Operating cashflow to operating profit ratio Net profit margin Return on equity (ROE)4 Efficiency Ratios Return on assets (ROA)5 Return on fixed assets6 Fixed assets turnover ratio7 Total assets turnover ratio8 Financial Leverage Ratios Net debt to equity ratio Debt to equity ratio Interest coverage ratio Debt service coverage ratio Dividend payout ratio

2011

2010

2009

Times Times Times Times Days Times Days Times Days Days

1.46 0.52 0.12 20.38 17.67 6.80 52.93 55.75 6.46 64.14

1.17 0.32 (0.39) 17.05 21.11 5.17 69.68 38.54 9.34 81.45

1.13 0.36 (0.37) 13.36 26.94 5.80 62.04 40.17 8.96 80.02

(%) (%) (%) (%) (%)

4.31 1.63 1.19 0.98 9.19

6.16 4.53 (1.98) 4.56 43.01

7.70 4.09 (2.33) 4.67 33.53

(%) (%) Times Times

3.35 28.09 21.07 3.43

12.57 88.50 17.73 2.76

11.19 62.03 11.47 2.40

Times Times Times Times (%)

1.12 1.24 4.63 0.21 n.a.

2.45 2.62 (17.25) (3.43) 41.66

2.00 2.14 (11.92) (4.34) 27.49

Notes : 1 Computed by dividing sales of goods and services by average trade accounts receivable 2 Computed by dividing cost of sales and services by average inventories 3 Computed by dividing cost of sales and services by trade accounts payable 4 Computed by dividing net profit for the year (attributable to owners of the parent) by average shareholders没 equity 5 Computed by dividing net profit for the year (attributable to owners of the parent) by average total assets 6 Computed by dividing summation of net profit for the year (attributable to owners of the parent) and depreciation by average fixed assets 7 Computed by dividing sales of goods and services by average fixed assets 8 Computed by dividing total revenues by average total assets

Sri Trang Agro-Industry Public Company Limited

101

Management没s Discussion and Analysis of Financial Condition and Results of Operations

Financial Result Overview Year 2011 has been further year of growth in which the Group没s revenues and sale volume satisfactorily grew. Nonetheless, the Group has been facing various challenging factors that have affected overall demand of Natural Rubber such as uncertainty of global economic conditions stemmed from sovereign debt in Europe, the slow recovery of US economy, the credit tightening policy to control inflation in the PRC who is the world largest consuming country of Natural Rubber with one-third of global demand, and natural disaster in many countries around the world. All aforementioned factors have created a large volatility in Natural Rubber price throughout the year and posted some difficulties to strategically manage business operation particularly second half of the year. The decline of net profit margin of the Group compared with the previous year was primarily attributable to 1) the volatility of Natural Rubber price during the year and the downward price movement during the last nine months of 2011 2) the inventory allowance resulted from continual decline in price of Natural Rubber in the fourth quarter of 2011 due to a concern of deepened and prolonged sovereign debt in Europe. This happened during the period that the the Group usually stocks up raw materials and Natural Rubber Products in preparation for the wintering period in Thailand starting from February to May, 3) an increase in cess rate from Baht 1.40 to Baht 5.00 per kilogram since 1 October 2010, and 4) an increase income tax expenses as a result of full utilisation of loss carried forward and the expiration of tax benefits from some BOI certificates. Income Statement Overview In 2011, total sales of goods and services was Baht 133,703.8 million, increased by 59.5% YoY due mainly to the increase in average selling price of 41.2% and the increase in sale volume of 13.3%. Such increase in average selling price and sale volume were as a result of a continual increase in demand of Natural Rubber Products, particularly from the tyre manufacturing industry which is heavily influenced by growth of automotive sector. In terms of sale volume, the Group sold 951,935 tons of Natural Rubber in 2011, increased by 13.3% YoY which was the highest record since inception amidst the uncertainty of world economic conditions. Domestic market, EU countries, and the US contributed a significant growth rate of 17.0%, 40.1%, and 27.0%, respectively. Sale volume to the PRC was 317,513 tons, up 3.2% YoY. Such marginal increase in the PRC market was due to the slowdown of industrial sector resulted from credit tightening policy to prevent overheating economy in the PRC started from Q2 2011 as well as the slowdown of demand in Natural Rubber due to high level of stock during last quarter of the year. Gross profit in 2011 was recorded at Baht 5,762.5 million, up 11.5%. The Group没s gross profit margin of 2011 was 4.3%, fell from 6.2 % compared with last year. Part of the decline in gross profit margin was as a result of the decline in Natural Rubber price during the last 9 months, particularly during the last quarter of 2011. Consequently, the Group had to recognise inventory allowance of Baht 869.6 million. Assuming the inventory allowance was not made in 2011, gross profit of the Group would have been Baht 6,632.1 million and gross profit margin would have been at 5.0%. The decline in gross profit margin compared to the previous year was mainly attributable to global economic turbulence from EU, the US, and the PRC which adversely affected the price movement and market sentiment during the year. TSR, core product of the Group, was largely affected by this phenomenon and recorded gross profit margin at 3.6% whereas gross profit margin of RSS and Concentrated Latex were maintained at 5.9% and 4.7%, respectively.

102

Annual Report 2011

Operating profit in 2011 amounted to Baht 2,178.4 million, down from operating profit of Baht 3,801.8 million in 2010, or 42.7% YoY. Operating profit margin was 1.6%, declined from 4.5% in 2010. The lower operating profit was due principally to a decline in gross profit, an increase in cess expenses of Baht 1,392.4 million due to the adjustment of cess rate from Baht 1.40 to Baht 5.00 per kilogram which has been in effect since 1 October 2010, and an increase of Baht 211.6 million in administrative expenses of which mainly comprised personal expenses to support the capacity expansion even though partially offset by increases in other income and other gains. Net profit in 2011 was Baht 1,329.3 million declined by 65.4% YoY. Net profit margin was 1.0%, declined from 4.6% in 2010 due mainly to lower operating profit, an increase in finance cost as a result of expanded amount of loans in support of the increase in sale volume and average selling price of Natural Rubber as well as higher interest rates, and an increase in income tax expenses due to full utilisation of tax loss carried forward and the expiration of tax benefits from some BOI certificates. Key Factors Affecting the Group没s Operation 1. Price and Volatility of Natural Rubber

US Dollar : Ton

margin 7,000 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500

Q1 10

Q2 10

Q3 10

Q4 10

Q1 11

Q2 11

Q3 11

Q4 11

1 1 1 1 0 0 0 0 0 1 0 0 0 1 0 1 1 1 1 1 1 0 0 0 1/1 /02/1 /03/1 /04/1 /05/1 /06/1 /07/1 /08/1 /09/1 /10/1 /11/1 /12/1 /01/1 /02/1 /03/1 /04/1 /05/1 /06/1 /07/1 /08/1 /09/1 /10/1 /11/1 /12/1 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

4/0

RSS

TSR

Daily Price Movement of TSR20 and RSS3 at SICOM Price of Natural Rubber has been highly volatile throughout 2011 due principally to the earthquake in Japan, the inflationary pressure in the PRC and the European没s debt crisis that put pressure the Natural Rubber price in Q4 2011. Given that the closing price of TSR as at 31 December 2011 of USD 3,270 per ton which was lower than annual average price of USD 4,504 by 37.8%, the Group had to record inventory allowance for Baht 869.6 million in 2011. Price Movement of TSR20 and RSS3 at Singapore Commodity Exchange Limited (SICOM) during 2011 (Unit : US dollar per ton) 2010 Q1 Average Q2 Average Q3 Average Q4 Average Year Average Closing price as at 31 December

3,195 3,731 3,374 4,328 3,665 5,000

RSS3 2011 5,688 5,290 4,652 3,598 4,802 3,275

%Change 78% 42% 38% -17% 31%

2010 3,103 3,023 3,141 4,259 3,390 5,000

TSR20 2011

%Change

5,216 4,668 4,564 3,579 4,504 3,270

Sri Trang Agro-Industry Public Company Limited

68% 54% 45% -16% 33%

103

Foreign Exchange rate

Baht : US

Q1 10

34 33 32 31 30 29

Q2 10

Q3 10

Q4 10

Q1 11

Q2 11

Q3 11

Q4 11

0 0 1 0 0 1 1 0 0 0 1 0 0 0 0 0 1 1 1 1 1 1 1 1 1/1 /02/1 /03/1 /04/1 /05/1 /06/1 /07/1 /08/1 /09/1 /10/1 /11/1 /12/1 /01/1 /02/1 /03/1 /04/1 /05/1 /06/1 /07/1 /08/1 /09/1 /10/1 /11/1 /12/1 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

4/0

Historical Exchange Rate of Thai Baht against US dollar Overall, Thai Baht against US Dollar has strengthened from yearly average of 31.46 Baht/US dollar in 2010 to 30.25 Baht/US dollar in 2011, representing an increase of 3.9%. However, the depreciation of Thai Baht against US Dollar at the end of 2011 has required the Group to record an unrealised loss on foreign currency exchange in accordance with the early adoption of some accounting policies. The Group, thus, posted total loss on foreign exchange of Baht 22.7 million in 2011 compared with gain in foreign exchange gain of Baht 925.5 million in 2010. However, if unrealised loss on foreign exchange of Baht 618.1 million was not included, the Group would have recorded gain on foreign exchange of Baht 595.4 million. 3. Finance costs The Group has been further approved for credit facilities both short and long-term loans from several commercial banks to support capacities expansion and working capital financing of the Group. During 2011, the average selling price of TSR increased by 40.4% from 2010. Moreover, the policy rate of the BOT had been increasing by 125 basis point to the peak of 3.5% in October 2011. The Group没s finance costs, therefore, increased by Baht 477.3 million or 121.9% from Baht 391.5 million in 2010 to Baht 868.8 million. Being a leader in rubber industry allows the Group to better access and manage source of funding. Graph below exhibited that the Group没s average interest rate during 2010-2011 when compared to the average Minimum Loan Rate (MLR) of three large commercial banks; Bangkok Bank, Kasikorn Bank, and Siam Commercial Bank were much lower and closed to policy rate. 8% 7% 6% 5% 4% 3% 2%

MLR 2011 MLR 2010

STA 2011 STA 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

104

Annual Report 2011

4. Shares of Profit from Investment in Affiliates In 2011, the Group received share of profit from 10 investments in affiliates and joint venture companies in total of Baht 648.9 million of which 56.8% contributed by SSC, 24.9% by Thaitech Rubber, and 15.3% by Semperflex Asia. Share of profit from investment in affiliates decreased by 7.7% compared to the previous year due mainly to the decrease in net profit of examination gloves business of the Group. The switching from NR gloves to NBR gloves of some certain customers due to the increase in price of fresh latex compared to Butadiene Nitrile has generally affected operating results of SSC as it mainly produces and distributes NR gloves. However, TSR business operated by Thaitech Rubber and high pressure hydraulic hose business operated by Semperflex Asia performed better in 2011 with the growth in profits of 129.5% and 37.9%, respectively. Business Segmentation Analysis Revenue breakdown by product segment (Baht million) RSS % TSR % Concentrated Latex % Others(1) % Total revenue

2011 24,942.8 18.7% 96,138.6 71.9% 10,236.6 7.7% 2,385.8 1.8% 133,703.8

2010 15,046.4 17.9% 58,909.1 70.3% 8,168.8 9.7% 1,721.0 2.1% 83,845.3

% YoY 65.8% 63.2% 25.3% 38.6% 59.5%

Note : (1) Comprises revenue from (i) the sale of dried rubber wood and wood packing products and (ii) the provision of certain services (such as logistics, research and development and information technology services) to associates of the Group and a joint venture entity as well as other external third parties.

Tonnage breakdown by product segment (tons) RSS % TSR % Concentrated Latex % Total sale volume

2011 165,154 17.3% 675,648 71.0% 111,132 11.7% 951,934

2010 140,206 16.7% 581,212 69.2% 119,044 14.2% 840,462

% YoY 17.8%

Sri Trang Agro-Industry Public Company Limited

16.2% -6.6% 13.3%

105

Business segment breakdown: 2011 (Baht million) RSS Revenue Cost of sales Gross profit

24,942.8 23,462.7 1,480.1

% to sales

TSR

100.0 96,138.6 94.1 92,643.7 5.9 3,495.0

% to % to sales Con. Latex sales 100.0 10,236.6 96.4 9,755.9 3.6 480.7

100.0 95.3 4.7

Others

2,385.8 2,079.1 306.7

% to sales

Total

100.0 133,703.8 87.1 127,941.3 12.9 5,762.5

% to sales 100.0 95.7 4.3

Business segment breakdown: 2010 (Baht million) RSS Revenue Cost of sales Gross profit

15,046.4 14,131.5 914.9

% to sales

TSR

100.0 58,909.1 93.9 55,183.2 6.1 3,725.9

% to % to sales Con. Latex sales 100.0 93.7 6.3

8,168.8 7,877.5 291.3

100.0 96.4 3.6

Others

1,721.0 1,486.3 234.7

% to sales

Total

100.0 83,845.3 86.4 78,678.5 13.6 5,166.8

% to sales 100.0 93.8 6.2

Total sales and services income was Baht 133,703.8 million of which 98.2% or Baht 131,318.1 million contributed by Natural Rubber Products. Total sales and services income comprised TSR of Baht 96,138.6 million or 71.9%, RSS of Baht 24,942.8 million or 18.7%, concentrated latex of Baht 10,236.6 million or 7.7%, and other products and services including parawood, transportation, and engineering service of Baht 2,385.8 million or 1.8%. Ribbed Smoked Sheet (RSS) Revenue from the sale of RSS was up 65.8% YoY. Such increase was largely attributed to 40.7% increase in average selling price and increase in sale volume by 17.8% in line with the expansion of tyre industry Cost of sales of RSS increased 66.0% YoY. The increase in cost of sales was in line with a rise in sale volume and higher price of raw materials owing to higher market price of Natural Rubber. Also, there was an inventory allowance for RSS amounted Baht 61.5 million in 2011. In 2011, the Group没s gross profit from the sale of RSS amounted to Baht 1,480.1 million, 61.8% increase YoY. Gross profit margin of 2011 was 5.9% decreased from 6.1% in 2010. The decrease in gross profit margin comparing to last year was owe to a faster rate of increase in the price of raw materials in comparison with the rate of increase in the average selling price for the same period. Assuming the inventory allowance was not made, the gross profit margin of RSS would have been at 6.2%, slightly better than 2010.

106

Annual Report 2011

Technically Specified Rubber (TSR) Revenue from the sale of TSR recorded a growth of 63.2% YoY due mainly to an increase in average selling price of 40.4% and the increase in sale volume of 16.2% YoY. The expansions of tyre industry as well as the switch from the use of RSS to TSR by many tyre makers due to its standardised quality were key drivers of the continuous rising in demand of TSR. Cost of sales of TSR increased 67.9% YoY. The increase was attributable to a rise in price of raw materials according to higher price of Natural Rubber. However, sovereign debt in Europe has brought concerns to industrial sector including tyre manufacturing business. Therefore, price of Natural Rubber continually declined during the past 9 months of 2011 particularly in the fourth quarter of 2011. Such decrease in price in the fourth quarter occurred during the period that the Group needs to stock up raw materials and Natural Rubber Products in preparation for the wintering period in Thailand which normally starting from February to May. As a result of this, the Group needed to recorded inventory allowance of Baht 732.3 million in 2011. Due to the aforesaid difficulty as well as a faster rate of increase in the price of raw materials in comparison with the rate of increase in the average selling price for the same period, gross profit from the sale of TSR decreased to Baht 3,495.0 million, decreased 6.2% YoY. Gross profit margin of 2011 was 3.6% down from 6.3% in 2010. Assuming the inventory allowance was not made, the gross profit margin of TSR would have been at 4.4%. Concentrated Latex Revenue from the sale of Concentrated Latex was up 25.3% YoY. The increase was mainly attributable to the increase in average selling price of 34.2% despite a decrease in sale volume by 6.6% due to the increase in price of fresh latex compared to Butadiene Nitrile during 2011. Latex examination glovemakers, therefore, switched from using Natural Rubber to NBR (synthetic rubber) to feed their production. Cost of sales of Concentrated Latex increased 23.8% YoY. The increase in cost of sales was attributable to the higher price of raw materials along the line with the increasing Natural Rubber price as well as the inventory allowances of Baht 75.9 million. The Group没s gross profit from the sale of Concentrated Latex amounted to Baht 480.7 million, increase 65.0% YoY. The Group没s gross profit margin in 2011 was 4.7% increased from 3.6% in 2010. This increase in gross profit margin was primarily driven by improvement of production efficiency in reducing production loss and waste, particularly from the new machine equipped in the plants that recently expanded. Assuming the inventory allowance was not made, the gross profit margin of Concentrated Latex would have been at 5.4%. Consolidated Statement of Financial Position Current assets Current assets decreased by Baht 619.3 million, or 2.1%, from Baht 28,951.0 million for the year end 2010 to Baht 28,331.7 million for the year end 2011 which due primarily to a decrease in inventories of Baht 2,945.8 million from a decrease in Natural Rubber price at the end of 2011, which was partially

Sri Trang Agro-Industry Public Company Limited

107

offset by an increase in trade accounts receivables and other receivables of Baht 1,547.7 million due mainly to growth volume and increase in average selling price, an increase in cash and cash equivalent for Baht 499.1 million partly from capital increase through the equity offering in Singapore, and an increase in amounts due from futures brokers of Baht 271.4 million which is deposit money to support Natural Rubber hedging activities during volatile period. Non-current assets Non-current assets increased by Baht 3,375.8 million, or 38.8%, from Baht 8,704.7 million for the year end 2010 to Baht 12,080.5 million for the year end 2011 which primarily consists of an increase in property, plants and equipments for Baht 2,262.2 million (net of depreciation and write-off) for the construction of the Group没s new factories in Chonburi, Mukdaharn, Udorn Thani, Ubonratcha Thani, for the expansion of existing factories in Songkhla, Nong Khai, Pontianak and Palembang (Indonesia) as well as for acquisition of landbank for rubber plantation, an increase in investment in associates and joint venture of Baht 638.4 million from their operating results, and an increase in deferred income tax assets of Baht 407.4 million Net book value of the Group没s land and buildings as at 31 December 2011 (THB million): Freehold land including land improvements 2,539.2 Leasehold land 76.0 Buildings and structures 2,036.6 Total 4,651.8 Current liabilities Current liabilities decreased by Baht 5,316.9 million, or 21.5%, from Baht 24,787.6 million for the year end 2010 to Baht 19,470.6 million for the year end 2011 which was mainly on account of a decrease in shortterm loans of Baht 5,027.0 million as the Group required less working capital during a downward movement of Natural Rubber price, a decrease in trade accounts payable and other payables of Baht 498.4 million, and a decrease in a current portion of long-term loan of Baht 477.6 million, which was partially offset by an increase in derivative financial instruments of Baht 618.8 million. Non-current liabilities Non-current liabilities increased by Baht 434.1 million, or 17.5%, from Baht 2,476.7 million for the year end 2010 to Baht 2,910.7 million for the year end 2011. The increase was primarily due to an increase in deferred income tax liabilities of THB 190.4 million and an issuance of debentures amounted Baht 2,150.0 million to refinance long-term loan. As a result, long-term loan (net of current portion) was decreased by Baht 1,911.2 million. Shareholders没 equity Equity increased by Baht 7,639.4 million, or 73.5%, from Baht 10,391.5 million for the year end 2010 to Baht 18,030.9 million for the year end 2011 due mainly to a capital increase through the equity offering in Singapore of Baht 7,707.2 million (net of fund raising expense) and net profit during the year.

108

Annual Report 2011

Consolidated Cash Flow As at 31 December 2011, the Group had cash and cash equivalents of Baht 2,273.0 million, an increase of Baht 499.1 million, or 28.1% increase from the balance of Baht 1,774.0 million as at 31 December 2010. The Group generated cash flows from operations before net change in operating assets and liabilities of Baht 4,482.3 million. The Group utilised Baht 389.2 million arising from an increase in operating assets which was due primarily to an increase in trade accounts receivable and other receivables of Baht 1,565.8 million as well as an increase in amounts due from futures brokers of Baht 271.4 million and a decrease in operating liabilities which mainly contributed by a decrease in trade accounts payable and other payables of Baht 490.4 million, which partially offset by a decrease in inventories of Baht 2,076.2 million from a decrease of Natural Rubber price during the fourth quarter of 2011. The increase in trade accounts receivable and other receivables was due mainly to an increase in the average selling prices and sales volumes of Natural Rubber Products of the Group. The increase in amounts due from futures brokers was made to support rubber hedging activities. Meanwhile, the decrease in trade accounts payable and other payable was solely contributed by a decrease in the payable to the Group没s associate company due to lower purchase of Natural Rubber Products from them. The Group paid interest and income tax of Baht 1,506.4 million. Overall, the Group had net cash flows of Baht 2,586.7 million provided by operating activities. Investing activities utilised net cash flows of Baht 2,733.4 million, principally from investment in property, plants and equipments of Baht 2,844.1 million for the construction of the Group没s new factories in Chonburi, Mukdaharn, Udorn Thani, Ubonratcha Thani, for the expansion of existing factories in Songkhla, Nong Khai, Pontianak and Palembang (Indonesia) as well as for acquisition of landbank for rubber plantation. This was partially offset by dividend received of Baht 75.8 million from associate and joint venture companies and cash received from disposal of intangible assets and fixed assets of Baht 162.5 million. Net cash inflow from financing activities amounted to Baht 645.7 million. This consisted mainly of a capital fund raising through the equity offering in Singapore of Baht 7,598.1 million (net of fund raising expense and relevant taxes), debenture of Baht 2,150.0 million to refinance long-term loan, which was partially offset by a repayment of long-term loans from financial institutions of Baht 2,695.9 million (majority from refinance scheme), a repayment of short-term loans from financial institutions of Baht 4,854.1 million, and dividend payment of Baht 1,600.0 million. Financial Ratios Current ratios Current ratio is calculated by dividing total current assets by total current liabilities. As at 31 December 2011 and 31 December 2010 the Group没s current ratios were 1.46 and 1.17 times, respectively. The increase in current ratio was due primarily to an increase in cash and cash equivalents, and trade accounts receivable in line with the increasing sale volume and price of Natural Rubber Products.

Sri Trang Agro-Industry Public Company Limited

109

Fixed asset turnover ratio Fixed asset turnover ratio is calculated by dividing sales of goods and services by average property, plant and equipment (net). As at 31 December 2011 and 31 December 2010, the Groupûs fixed asset turnovers were 21.07 and 17.73 times, respectively. An increase in fixed asset was due mainly to an increase in sale volume and price of Natural Rubber Products. Return on assets (çROAé) ROA is calculated by dividing net profit (parent company) for the year by average total assets. As at 31 December 2011 and 31 December 2010, the Groupûs ROA were 3.35% and 12.57%, respectively. The decrease in ROA was due to a decrease in net profit for the year ended 2011 as well as an increase in total assets which mainly contributed by a rise in capacity expansion, trade accounts receivable, cash and cash equivalents, and investment in associates and joint venture. Return on equity (çROEé) ROE is calculated by dividing net profit (parent company) for the year by average total equity. As at 31 December 2011 and 31 December 2010, the Groupûs ROE were 9.19% and 43.01%, respectively. The decrease in ROE was due mainly to decrease in net profit and the increase in shareholdersû equity through the equity offering in Singapore. Debt to equity ratio (çD/Eé) D/E is calculated by dividing total debt by total equity. As at 31 December 2011 and 31 December 2010, the Groupûs D/E were 1.24 and 2.62 times, respectively. The decrease in D/E was due mainly to the increase in shareholdersû equity through equity offering in Singapore and the decrease in short-term loans from financial institutions as the Group required less working capital during a downward movement of Natural Rubber price during 2011. 3. Audit Fee Audit Fee STA paid audit fee to the auditors of STA for the preparation of the 2011 consolidated financial statements and stand-alone financial statements in amount of Baht 4,370,000 and SGD 143,000. STA paid audit fee for its subsidiaries in amount of Baht 1,410,000 and USD 37,600. Non-Audit Fee -None4. Business Outlook Industry in general Global economy development, main indicator for tyre consumption, remains the key driver for Natural Rubber consumption as 70% of Natural Rubber demand is driven by tyre industry. The slowdown of global economic growth mainly results from the adverse spillovers from the EU area via trade and financial channels. However, it is expected that macroeconomic policy easing would offset such

110

Annual Report 2011

deterioration. As of January 2012, International Monetary Fund (IMF) has revised down its forecast that global economy for 2012 and 2013 are expected to grow at 3.3% and 3.9% respectively, whereas emerging markets are expected to grow at 5.4% and 5.9% respectively, and the PRC, which is the major Natural Rubber consumption country, is forecasted to grow at 8.2% and 8.8%, respectively. The existing of high sovereign debt level of major advanced countries without clear fiscal and monetary remedies may continue to be a concern for global consumption and commodity price. However, it is expected to see improvement of market sentiment as the commodity prices have seemingly already absorbed all global economic concerns during 2011. Pessimistic global outlook has also eliminated those speculative investors and thus should create more price stability. In short term conservative outlook, given that there are no other significant negative factors, Natural Rubber price in 2012 should better reflect the balance of demand and supply and should move in a sideway consolidation. The Group still expects revenue growth to be higher than the overall growth of Natural Rubber demand due to its continuance of capacity expansion in upstream, midstream, and downstream products both in Thailand and Indonesia. Progress of the Group没s businesses in value chain As at 31 December 2011, the Group没s optimum annual capacity was registered at industry record at 1.1 million tons per annum, the highest capacity in the industry. At the end of 2012, production capacity of the Group should be arrived at 1.27 million tons per annum with additional capacity from new TSR plants in the in Udon Thani, Thailand and the expansion capacity of Palembang, Indonesia. The Group also plans to achieve capacity of 1.5 million tons per annum in 2013. Thailand remains to be primary production base of the Group with additional 3 plants to be completed in different timeline. The Group will also build new plants and expand the existing plant in Indonesia within 2-year time horizon. Upstream integration through rubber plantation that the Group has earmarked for future entry remains on track. As at 31 December 2011, the Group has acquired land approximately 17,400 rai (2,784 hectares), most of them are in the North of Thailand. Approximately 250 rai (40 hectares) are under tapping, 6,900 rai (1,104 hectars) have been planted and will be mature to start tapping in 2016. The vacant land of 10,250 rai (1,640 hectars) will be planted during raining season in 2012. The Group没s achievement of plan to have 50,000 rai of rubber plantation in 2014 will depend on the reasonability of land price and advantages of location as well as sufficiency of saplings. Although the Group has yet to achieve mature plantation at the necessary scale, the Group believes that the upstream integration shall further enhance Natural Rubber supply chain that the Group has capitalized on with sustained profitability. Financial management On financial front, the Group has successfully raised capital of approximately Baht 7,700 million through the listing in Singapore Stock Exchange since 31 January 2011 and have successfully issued the debentures in two tranches to the institutional and high net-worth investors totaling Baht 2,150 million for the refinancing of long-term loan in order to achieve lower cost of financing and extension of the loan tenure. All in all, the Group has maintained gearing at a more conservative level compared with the previous financial years and competitors.

Sri Trang Agro-Industry Public Company Limited

111

The Audit Committee Report The Audit Committee, appointed by the Board of Directors of Sri Trang Agro-Industry Public Company Limited (the çCompanyé), consists of 3 independent directors, two-thirds of whom have finance and accounting knowledge, as follows: 1. Mr. Prakob Visitkitjakarn Chairman of Audit Committee 2. Mr. Kriang Yanyongdilok Audit Committee 3. Mr. Samacha Potavorn Audit Committee The Audit Committee performs its duties and responsibilities as assigned by the Board of Directors of the Company. In year 2011, the Audit Committee members attended a total of 7 meetings. All the members of the Audit Committee attended all the meetings, and, where the agendas were related, meetings were also attended by the senior management, manager of the internal audit department and auditor. The responsibilities of the Audit Committee can be summarized as follows: ë The Audit Committee reviewed quarterly and year end financial statements of 2011 together with the auditor and the management to ensure that they are accurate and comply with generally accepted accounting principles. Through the meetings there were discussions, opinion exchanges, and assessment on the reporting before granting the approval of such financial statements. ë Considered internal audit plan and reviewed the results of the audit conducted by the internal audit department, as well as the sufficiency and appropriateness of the internal control system, to ensure that they are suitable and efficient. ë Reviewed the Companyûs compliance with the regulations, relevant laws and the principles of good corporate governance and ensured that the Company has complied with its Articles of Association, regulations of the Securities and Exchange Commission and the Stock Exchange of Thailand, relevant laws and the principles of good corporate governance and has disclosed information sufficiently and transparently. ë Reviewed the entering into and disclosure of connected transactions and interested person transactions which may lead to conflicts of interest between the interested party and the Company. The review concluded that such transactions have complied with the laws and the regulations of the Stock Exchange of Thailand and Singapore Exchange Securities Trading Limited. ë Reviewed the risk management policy and any oversight of risk management processes and activities to mitigate and manage risk at acceptable levels determined by the Board of Directors. ë Selected and nominated auditors of the Company and auditing fees for 2012 to be proposed to the Board of Directors to obtain an approval from the 2012 Annual General Meeting of Shareholders. The Audit Committee has considered the performance, the independence, and the appropriate of the remuneration of the auditors. In conclusion, it is the opinion of the Audit Committee that the Companyûs operations in the past year have sufficient and appropriate internal control system, financial statements were prepared under the generally accepted accounting principles, and complied with relevant laws of the Securities and Exchange, the regulations of the Stock Exchange of Thailand and the law relating to the business of the Company. In the performance of its duties the Audit Committee has had full discretion to give all relevant matters its independent consideration, and there has been no limitation on its access to information. Yours sincerely,

(Mr. Prakob Visitkitjakarn) Chairman of Audit Committee 23 February 2012

112

Annual Report 2011

Utilisation of IPO Proceed The Company refers to the gross proceeds amounting to SGD 336 million raised from the initial public offering of its shares on the Singapore Exchange Securities Trading Limited January 2011. As at 31 December 2011, the status on the use of proceeds raised from the initial public offering of the Company is as follows:

Allocation Objectives

(SGD million) (1)

Acquisition and/or construction of new and expansion of existing rubber processing facilities Acquisition of land for rubber plantation General working capital purposes Listing expenses Total

Approximate Approximate amount yet accumulated actual utilisation to be utilised (SGD million) (1) (approximately)(1) (SGD million)

204.75

73.16

131.59

63.00 47.25 21.00 336.00

34.04 47.25 19.50 173.95

28.96 1.50 162.05

Notes : (1) Based on a foreign exchange rate SGD 1 to Baht 24.1566

The utilisation is in accordance with the intended use of proceeds of the initial public offering and in accordance with the percentage allocated, as stated in the prospectus, which was registered by the Monetary Authority of Singapore on 20 January 2011.

Sri Trang Agro-Industry Public Company Limited

113

Consolidated and Company Financial Statements 2011 SRI TRANG AGRO-INDUSTRY PUBLIC COMPANY LIMITED 31 DECEMBER 2011

114

Annual Report 2011

Auditorûs Report To the Shareholders of Sri Trang Agro-Industry Public Company Limited I have audited the accompanying consolidated and company statements of financial position as of 31 December 2011 and 2010, and the related consolidated and company statements of comprehensive income, changes in shareholdersû equity and cash flows for the years then ended of Sri Trang AgroIndustry Public Company Limited and its subsidiaries (çthe Groupé), and of Sri Trang Agro-Industry Public Company Limited, respectively. The Companyûs management is responsible for the correctness and completeness of information in these financial statements. 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 an 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 consolidated and company financial statements referred to above present fairly, in all material respects, the consolidated and company financial position as at 31 December 2011 and 2010, and the consolidated and company results of operations and cash flows for the year then ended of Sri Trang Agro-Industry Public Company Limited and its subsidiaries, and of Sri Trang Agro-Industry Public Company Limited, respectively, in accordance with generally accepted accounting principles. Without qualifying my opinion, I draw attention to Notes 2, 3 and 6 to the consolidated and company financial statements, beginning 1 January 2011 the Group has adopted the new and revised financial reporting standards as announced by the Federation of Accounting Professions. Beginning 1 July 2011, the Group has early adopted the Thai Accounting Standard No. 12 çIncome Taxesé and has applied accounting for derivative financial instruments. The consolidated and company statements of financial position as at 31 December 2010 and the related consolidated and company statements of comprehensive income, changes in shareholdersû equity and cash flows for the year then ended, which are presented for comparative purposes, which I have audited and on which I have issued a report, have been restated retrospectively and presented in the new format to conform with the current year financial statements. I have audited the adjustments as stated above. I have not performed any other auditing procedures subsequent to the date of that report, except for the adjustments as stated above.

Unakorn Phruithithada Certified Public Accountant (Thailand) No. 3257 PricewaterhouseCoopers ABAS Ltd. Bangkok 24 February 2012

Sri Trang Agro-Industry Public Company Limited

115

Statements of Financial Position Sri Trang Agro-Industry Public Company Limited and its subsidiaries As at 31 December 2011 and 2010

Consolidated Company (Restated) (Restated) 31 December 31 December 31 December 31 December 2011 2010 2011 2010 Notes Baht Baht Baht Baht Assets Current assets Cash and cash equivalents Derivative financial instruments Trade accounts receivable and other receivables, net Amounts due from futures brokers Inventories - net Other current assets

8 9 10, 37.3 37.3 11 12

Total current assets

2,273,020,951 1,773,962,249 329,304,538 459,558,936 7,787,446,884 6,239,766,690 406,419,876 135,054,146 17,336,596,468 20,282,433,067 198,898,231 60,247,004

766,433,932 686,844,087 44,430,250 98,248,193 6,125,343,153 3,947,756,981 115,479,473 84,046,854 6,570,252,082 10,505,003,800 36,283,658 30,136,709

28,331,686,948 28,951,022,092 13,658,222,548 15,352,036,624

Non-current assets Long-term loan to an associate Fixed deposits pledged as collateral Investments in subsidiaries Investments in associates Investment in a joint venture Available-for-sale financial assets Property, plant and equipment, net Intangible assets, net Investment properties Witholding tax deducted at source Deferred income tax assets Other non-current assets

37.3 13 14 14 14 15 16 17 18 19 20

62,905,000 143,483,323 125,444,193 3,122,562,093 2,615,422,132 456,500,685 325,283,320 43,652,348 46,267,525 7,475,597,194 5,213,369,663 24,204,164 21,700,028 102,327,410 48,031,578 76,624,253 143,304,822 537,688,934 130,263,643 34,982,831 35,643,792

62,905,000 12,594,670 12,550,742 5,130,765,514 2,553,696,099 709,802,500 679,507,500 20,099,800 20,099,800 42,778,669 45,105,924 2,690,400,416 2,130,526,410 10,651,107 10,566,822 22,850,000 22,850,000 38,724,575 120,310,910 124,956,144 12,853,715 8,115,155 10,561,720

Total non-current assets

12,080,528,235 8,704,730,696 8,874,643,550 5,618,629,642

Total assets

40,412,215,183 37,655,752,788 22,532,866,098 20,970,666,266

The notes to the consolidated and Company financial statements on pages 127 to 200 form an integral part of the financial statements.

116

Annual Report 2011

Statements of Financial Position (Cont没d) Sri Trang Agro-Industry Public Company Limited and its subsidiaries As at 31 December 2011 and 2010

Consolidated Company (Restated) (Restated) 31 December 31 December 31 December 31 December 2011 2010 2011 2010 Notes Baht Baht Baht Baht Liabilities and shareholders没 equity Current liabilities Short-term loans from financial institutions Trade accounts payable and other payables Current portion of long-term loans from financial institutions Current portion of finance lease liabilities Derivative financial instruments Current income tax liabilities Other current liabilities

22 21, 37.3 22 22 9 19 23

Total current liabilities

15,425,613,869 20,452,626,308 2,543,715,563 3,042,117,125 120,000,000 11,451,377 1,112,238,950 192,381,061 65,235,361

597,610,000 17,165,140 493,487,531 119,671,329 64,908,153

4,551,591,000 10,641,378,000 1,537,325,200 1,207,522,195 6,361,631 541,893,664 154,380,736 41,273,833

575,000,000 10,505,841 65,410,102 43,824,820

19,470,636,181 24,787,585,586 6,832,826,064 12,543,640,958

Non-current liabilities Long-term loans from financial institutions Debentures Finance lease liabilities Deferred income tax liabilities Provision for post employment benefit obligations Total non-current liabilities Total liabilities

22 22 22 19 24

314,860,000 2,226,050,000 2,150,000,000 12,309,850 22,927,273 328,763,683 138,402,245 104,787,664 89,285,660

- 2,031,250,000 2,150,000,000 8,000,715 13,531,353 106,875,360 71,649,954 41,923,427 37,865,261

2,910,721,197 2,476,665,178 2,306,799,502 2,154,296,568 22,381,357,378 27,264,250,764 9,139,625,566 14,697,937,526

The notes to the consolidated and Company financial statements on pages 127 to 200 form an integral part of the financial statements.

Sri Trang Agro-Industry Public Company Limited

117

Statements of Financial Position (Contûd) Sri Trang Agro-Industry Public Company Limited and its subsidiaries As at 31 December 2011 and 2010

Consolidated Company (Restated) (Restated) 31 December 31 December 31 December 31 December 2011 2010 2011 2010 Notes Baht Baht Baht Baht Liabilities and shareholdersû equity (Contûd) Shareholdersû equity Share capital Authorised share capital Ordinary shares, 1,280,000,000 shares of par Baht 1 each (2010: 1,280,000,000 shares of par Baht 1 each) Issued and paid-up share capital Ordinary shares, 1,280,000,000 shares of par Baht 1 each (2010: 1,000,000,000 shares of par Baht 1 each) Premium on share capital Deduction arising from acquisition of additional interest in subsidiaries from non-controlling interests Revaluation surplus, net of accumulated depreciation Unrealised gain on available-for-sale financial assets Cumulative translation adjustments Retained earnings Appropriated - legal reserve Unappropriated

1,280,000,000 1,280,000,000

1,280,000,000 1,000,000,000 8,550,989,821 1,123,800,000

27 27 27

(173,134,488) 833,185,039 600,390 (120,534,770)

(173,134,488) 850,018,523 3,022,987 (283,842,793)

128,000,000 100,000,000 7,437,342,052 7,729,396,328

541,438,028 159,618 -

610,628,497 2,299,988 -

128,000,000 100,000,000 2,892,653,065 3,436,000,255

Total parentûs shareholdersû equity Non-controlling interests

17,936,448,044 10,349,260,557 13,393,240,532 6,272,728,740 94,409,761 42,241,467 -

Total shareholdersû equity

18,030,857,805 10,391,502,024 13,393,240,532 6,272,728,740

Total liabilities and shareholdersû equity

40,412,215,183 37,655,752,788 22,532,866,098 20,970,666,266

The notes to the consolidated and Company financial statements on pages 127 to 200 form an integral part of the financial statements.

118

Annual Report 2011

Statements of Comprehensive Income Sri Trang Agro-Industry Public Company Limited and its subsidiaries For the years ended 31 December 2011 and 2010

Consolidated Company (Restated) (Restated) 31 December 31 December 31 December 31 December 2011 2010 2011 2010 Notes Baht Baht Baht Baht Sales of goods and services Cost of sales and services

30 133,703,841,648 83,845,328,841 76,862,112,971 44,040,706,709 (127,941,331,065) (78,678,531,873) (71,835,474,372) (41,121,586,298)

Gross profit Other income Selling expenses Administrative expenses Gains (losses) on exchange rates Other gains (losses) - net

5,762,510,583 5,166,796,968 5,026,638,599 2,919,120,411 31

Operating profit

2,178,397,065 3,801,832,863 2,015,438,426 2,689,212,640

Share of profit of investments in associates and a joint venture 14 Profit before net financial costs and income tax Finance income Finance costs Finance costs - net Profit before income tax Income tax expenses Profit for the year Other comprehensive income (loss): Revaluation surplus, net of tax Change in tax rate used in deferred tax recognition Disposal of assets, net of tax Change in fair value of available-for-sale financial assets, net of tax Currency translation differences Other comprehensive income (loss) for the year Total comprehensive income for the year

165,216,010 77,162,994 154,464,019 394,750,751 (3,199,881,826) (1,780,698,903) (2,810,039,869) (1,316,673,395) (1,032,413,541) (576,498,371) (387,173,776) (220,138,655) (22,692,004) 925,460,794 (42,330,407) 808,609,694 505,657,843 (10,390,619) 73,879,860 103,543,834

648,938,352

702,833,127

2,827,335,417 4,504,665,990 2,015,438,426 2,689,212,640 16,173,685 6,160,470 4,634,173 2,756,402 (884,996,710) (397,660,146) (418,916,472) (239,203,958) 32 34

(868,823,025)

(391,499,676)

(414,282,299)

(236,447,556)

1,958,512,392 4,113,166,314 1,601,156,127 2,452,765,084 (629,241,543) (272,661,891) (534,576,925) (86,033,514) 1,329,270,849 3,840,504,423 1,066,579,202 2,366,731,570 35,556,592 (16,591,686) (6,215,786)

(45,073,286) (6,215,786)

(2,308,390) 166,821,447 177,262,177

8,395,782 (234,636,825) (226,241,043)

(1,968,159) (53,257,231)

7,855,168 7,855,168

1,506,533,026 3,614,263,380 1,013,321,971 2,374,586,738

The notes to the consolidated and Company financial statements on pages 127 to 200 form an integral part of the financial statements.

Sri Trang Agro-Industry Public Company Limited

119

Statements of Comprehensive Income (Cont没d) Sri Trang Agro-Industry Public Company Limited and its subsidiaries For the years ended 31 December 2011 and 2010

Consolidated Company (Restated) (Restated) 31 December 31 December 31 December 31 December 2011 2010 2011 2010 Notes Baht Baht Baht Baht Profit attributable to: Owners of the parent Non-controlling interests

1,306,248,913 3,819,626,625 23,021,936 20,877,798

Profit for the year

2,366,731,570 -

1,329,270,849 3,840,504,423 1,066,579,202 2,366,731,570

Total comprehensive income attributable to: Owners of the parent Non-controlling interests

1,479,997,666 3,600,329,184 26,535,360 13,934,196

Total comprehensive income for the year Earnings per share Basic earnings per share

1,066,579,202 -

1,013,321,971 -

2,374,586,738 -

1,506,533,026 3,614,263,380 1,013,321,971 2,374,586,738

1.04

3.82

0.85

2.37

The notes to the consolidated and Company financial statements on pages 127 to 200 form an integral part of the financial statements.

120

Annual Report 2011

Sri Trang Agro-Industry Public Company Limited

121

25 26 36

833,185,039

35,556,592 - (16,477,479) - (29,696,811) (6,215,786) - (16,833,484) - (16,833,484)

280,000,000 7,427,189,821 280,000,000 7,427,189,821 1,280,000,000 8,550,989,821 (173,134,488)

Issued and paid-up share capital Baht 1,000,000,000 1,000,000,000 163,308,023 163,308,023 163,308,023

600,390 (120,534,770)

(114,207) (2,308,390) (2,422,597) (2,422,597)

28,000,000 (28,000,000) - (1,600,000,000) 28,000,000 (1,628,000,000) 128,000,000 7,437,342,052

29,696,811 29,696,811 - 1,335,945,724

7,204,008 18,428,926 25,632,934 94,409,761

7,707,189,821 (1,600,000,000) 7,204,008 18,428,926 6,132,822,755 18,030,857,805

35,556,592 - (16,591,686) (6,215,786) (2,308,390) 3,513,424 166,821,447 3,513,424 177,262,177 26,535,360 1,506,533,026

Consolidated Deduction arising (Restated) from acquisition (Restated) Unrealised of additional Revaluation gain (loss) on interest in surplus, available- (Restated) (Restated) subsidiaries from net of for-sale Cumulative Retained earnings NonPremium on non-controlling accumulated financial translation Appropriated (Restated) controlling share capital interests depreciation assets differences - legal reserve Unappropriated interests Total Baht Baht Baht Baht Baht Baht Baht Baht Baht 1,123,800,000 (173,134,488) 974,058,915 3,338,245 (268,299,700) 100,000,000 7,612,689,752 42,210,859 10,414,663,583 - (124,040,392) (315,258) (15,543,093) - 116,706,576 30,608 (23,161,559) 1,123,800,000 (173,134,488) 850,018,523 3,022,987 (283,842,793) 100,000,000 7,729,396,328 42,241,467 10,391,502,024 - 1,306,248,913 23,021,936 1,329,270,849

The notes to the consolidated and Company financial statements on pages 127 to 200 form an integral part of the financial statements.

Opening balance as at 1 January 2011 - as previously reported Retrospective adjustments from changes in accounting policy Opening balance as at 1 January 2011 - as restated Profit for the year Other comprehensive income Revaluation surplus, net of tax Change in tax rate used in deferred tax recognition Depreciation transfer on assets revaluation, net of tax Disposal of assets, net of tax Change in fair value of available-for-sale financial assets, net of tax Currency translation differences Total other comprehensive income Total comprehensive income Transactions with shareholders没 equity Increase in share capital net of costs directly attributable to the issue of new shares - net of tax Appropriation of legal reserve Dividend payment Shares issued to non-controlling interests shareholders of a subsidiary Adjustment of non-controlling interests Total transactions with shareholders没 equity Closing balance as at 31 December 2011

Notes

Sri Trang Agro-Industry Public Company Limited and its subsidiaries For the years ended 31 December 2011 and 2010

Statements of Changes in Shareholders没 Equity

122

Annual Report 2011 36

1,000,000,000 1,123,800,000 (173,134,488)

850,018,523

4,460,248 4,460,248 4,460,248

1,000,000,000 1,123,800,000 (173,134,488) 1,010,671,137 - (165,112,862) 1,000,000,000 1,123,800,000 (173,134,488) 845,558,275

(45,996,843) (10,152,868) (56,149,711)

3,022,987 (283,842,793)

8,395,782 - (227,693,082) 8,395,782 (227,693,082) 8,395,782 (227,693,082)

(6,200,239) 827,444 (5,372,795)

- (600,000,000) - (600,000,000) 100,000,000 7,729,396,328

(4,460,248) (4,460,248) - 3,815,166,377

100,000,000 4,323,361,132 - 190,868,819 100,000,000 4,514,229,951 3,819,626,625

Total Baht

(7,962,750) (607,962,750) (7,962,750) (607,962,750) 42,241,467 10,391,502,024

8,395,782 (6,943,743) (234,636,825) (6,943,743) (226,241,043) 13,934,055 3,614,263,380

36,270,162 7,368,770,861 16,430,533 36,270,162 7,385,201,394 20,877,798 3,840,504,423

Consolidated Deduction arising from acquisition (Restated) (Restated) of additional Revaluation Unrealised interest in surplus, gain (loss) on (Restated) (Restated) Issued and subsidiaries from net of available- Cumulative Retained earnings Nonpaid-up Premium on non-controlling accumulated for-sale translation Appropriated (Restated) controlling share capital share capital interests depreciation financial assets differences - legal reserve Unappropriated interests Baht Baht Baht Baht Baht Baht Baht Baht Baht

The notes to the consolidated and Company financial statements on pages 127 to 200 form an integral part of the financial statements.

Opening balance as at 1 January 2010 - as previously reported Retrospective adjustments from changes in accounting policy Opening balance as at 1 January 2010 - as restated Profit for the year Other comprehensive income Depreciation transfer on assets revaluation, net of tax Change in fair value of available-for-sale financial assets, net of tax Currency translation differences Total other comprehensive income Total comprehensive income Transactions with shareholders没 equity Dividend payment Total transactions with shareholders没 equity Closing balance as at 31 December 2010 - as restated

Notes

Sri Trang Agro-Industry Public Company Limited and its subsidiaries For the years ended 31 December 2011 and 2010

Statements of Changes in Shareholders没 Equity (Cont没d)

Sri Trang Agro-Industry Public Company Limited

123

25 26 36

Notes

Company

280,000,000 7,427,189,821 280,000,000 7,427,189,821 1,280,000,000 8,550,989,821

541,438,028

(44,901,075) (18,073,608) (6,215,786) (69,190,469) (69,190,469)

679,263,975 (68,635,478) 610,628,497 -

1,000,000,000 1,123,800,000 1,000,000,000 1,123,800,000 -

159,618

(172,211) (1,968,159) (2,140,370) (2,140,370)

2,515,995 (216,007) 2,299,988 -

Total Baht

28,000,000 (28,000,000) - (1,600,000,000) 28,000,000 (1,628,000,000) 128,000,000 2,892,653,065

7,707,189,821 (1,600,000,000) 6,107,189,821 13,393,240,532

- (45,073,286) 18,073,608 (6,215,786) (1,968,159) 18,073,608 (53,257,231) - 1,084,652,810 1,013,321,971

100,000,000 3,393,106,918 6,298,686,888 42,893,337 (25,958,148) 100,000,000 3,436,000,255 6,272,728,740 - 1,066,579,202 1,066,579,202

(Restated) (Restated) Unrealised Revaluation gain (loss) Retained earnings Issued and surplus, net of on available Appropriated paid-up Premium on accumulated -for-sale - legal (Restated) share capital share capital depreciation financial assets reserve Unappropriated Baht Baht Baht Baht Baht Baht

The notes to the consolidated and Company financial statements on pages 127 to 200 form an integral part of the financial statements.

Opening balance as at 1 January 2011 - as previously reported Retrospective adjustments from changes in accounting policy Opening balance as at 1 January 2011 - as restated Profit for the year Other comprehensive income Change in tax rate used in deferred tax recognition Depreciation transfer on assets revaluation, net of tax Disposal of assets, net of tax Change in fair value of available-for-sale financial assets, net of tax Total other comprehensive income Total comprehensive income Transactions with shareholders没 equity Increase in share capital net of costs directly attributable to the issue of new shares - net of tax Appropriation of legal reserve Dividend payment Total transactions with shareholders没 equity Closing balance as at 31 December 2011

Sri Trang Agro-Industry Public Company Limited and its subsidiaries For the years ended 31 December 2011 and 2010

Statements of Changes in Shareholders没 Equity (Cont没d)

124

Annual Report 2011 6

Notes

Company

1,000,000,000 1,123,800,000

610,628,497

5,108,678 5,108,678 5,108,678

706,108,043 (100,588,224) 605,519,819 -

1,000,000,000 1,123,800,000 1,000,000,000 1,123,800,000 -

2,299,988

7,855,168 7,855,168 7,855,168

(6,369,462) 814,282 (5,555,180) -

Total Baht

(5,108,678) (5,108,678) 2,361,622,892

7,855,168 7,855,168 2,374,586,738 - (600,000,000) (600,000,000) 100,000,000 3,436,000,255 6,272,728,740

100,000,000 1,583,638,201 4,507,176,782 90,739,162 (9,034,780) 100,000,000 1,674,377,363 4,498,142,002 - 2,366,731,570 2,366,731,570

The notes to the consolidated and Company financial statements on pages 127 to 200 form an integral part of the financial statements.

Opening balance as at 1 January 2010 - as previously reported Retrospective adjustments from changes in accounting policy Opening balance as at 1 January 2010 - as restated Profit for the year Other comprehensive income Depreciation transfer on assets revaluation, net of tax Change in fair value of available-for-sale financial assets, net of tax Total other comprehensive income Total comprehensive income Transactions with shareholders没 equity Dividend payment Closing balance as at 31 December 2010 - as restated

Sri Trang Agro-Industry Public Company Limited and its subsidiaries For the years ended 31 December 2011 and 2010

Statements of Changes in Shareholders没 Equity (Cont没d)

Statements of cash flows Sri Trang Agro-Industry Public Company Limited and its subsidiaries For the years ended 31 December 2011 and 2010

Consolidated Company (Restated) (Restated) 31 December 31 December 31 December 31 December 2011 2010 2011 2010 Notes Baht Baht Baht Baht Cash flows from operating activities Profit before income tax 1,958,512,392 4,113,166,314 1,601,156,127 2,452,765,084 Adjustments for: Unrealised (gain) loss on foreign currency translations 139,816,666 (462,736,541) 23,223,129 Unrealised (Gain) loss from revaluation of derivative financial instuments 749,005,815 79,717,272 530,301,505 (39,414,130) Allowance for (reversal of) impairment of trade accounts receivable 31,216,341 (36,441,260) 31,400,605 (389,027) Allowance for (reversal of) inventory cost in excess of net realisable value 869,632,841 (953,235) 111,752,672 Allowance for impairment of other receivables - non-controlling interests 18,428,927 Provision for post-employment benefit obligations 24 15,733,004 15,750,990 4,289,165 4,281,939 Depreciation 16 476,131,295 365,979,363 176,309,029 176,275,533 Amortisation 17 7,126,804 5,988,056 3,170,907 2,662,813 Loss on asset revaluation 5,248,890 Finance costs 32 884,996,709 397,660,146 418,916,472 239,203,958 Dividend income 31 (1,176,655) (17,597,956) (70,808,511) (355,580,872) Share of profit of investments in associates and a joint venture 14 (648,938,352) (702,833,127) Gain from revaluation of investment properties 18 (15,436,844) (Gain) loss on disposal and write-off of property, plant and equipment and intangible assets 31 (7,983,952) 6,720,587 (16,895,220) 1,918,684 Changes in operating assets and liabilities: (Increase)/decrease in operating assets - Trade accounts receivable and other receivables (1,565,760,111) (1,946,286,181) (2,208,986,779) (1,070,607,051) - Amounts due from futures brokers (271,365,729) 177,527,206 (31,432,619) (103,738,721) - Inventories 2,076,203,759 (10,108,240,868) 3,822,999,047 (3,819,340,772) - Other current assets (138,651,228) (18,183,997) (6,146,949) (9,933,487) - Other non-current assets 660,961 (25,827,563) 2,446,565 (2,756,120) Increase/(decrease) in operating liabilities - Trade accounts payable and other payables (490,361,103) 1,067,971,964 325,081,784 373,521,948 - Other current liabilities 96,208 234,763,562 (2,781,989) 5,838,841 Cash (used in)/provided by operating activities Interest paid Income tax paid

4,093,136,638 (6,853,855,268) 4,690,771,811 (2,122,068,251) (878,201,511) (390,182,248) (410,550,758) (235,644,557) (628,224,496) (284,864,571) (310,011,366) (69,450,881)

Net cash (used in)/provided by operating activities

2,586,710,631 (7,528,902,087) 3,970,209,687 (2,427,163,689)

The notes to the consolidated and Company financial statements on pages 127 to 200 form an integral part of the financial statements.

Sri Trang Agro-Industry Public Company Limited

125

Statements of cash flows (Cont没d) Sri Trang Agro-Industry Public Company Limited and its subsidiaries For the years ended 31 December 2011 and 2010

Consolidated Company (Restated) (Restated) 31 December 31 December 31 December 31 December 2011 2010 2011 2010 Baht Baht Baht Baht Cash flows from investing activities Increase in long-term loan to an associate Decrease in fixed deposits at financial institutions Increase in fixed deposits pledged as collateral Increase in available-for-sale financial assets 15 Dividends received Cash paid for investments in subsidiaries and associates 14 Proceeds from disposal of property, plant and equiment and intangible assets Purchases of property, plant and equipment Purchases of intangible assets Purchases of investment property 18 Proceeds from a decrease in share capital of an associate 14.2 Net cash (used in)/provided by investing activities Cash flows from financing activities Increase/(decrease) in short-term loans from financial institutions Proceeds from long-term loans from financial institutions Repayments of long-term loans from financial institutions Proceeds from issuance of debentures Payments on finance lease liabilities Dividends paid to minority interests Dividend payment 36 Proceeds from capital increase from non-controlling Interest Proceeds from issuance of new shares Costs directly attributable to the issue of new shares Net cash (used in)/provided by financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 8 Supplementary information for cash flows Cash paid for acquisition of property, plant and equipment and intangible assets: Property, plant and equipment and intangible assets acquired Increase in liabilities under finance lease contracts Increase in payable from acquisition of assets Cash paid for acquisition of property, plant and equipment and intangible assets

(62,905,000) (18,039,129) (60,000) 75,826,355 (30,295,000)

- (62,905,000) 261,023 (41,956,721) (43,929) (30,000) 748,955,456 70,808,511 - (2,607,364,415)

261,023 (82,168) 670,580,872 (454,650,140)

162,479,985 37,512,163 36,870,407 (2,844,121,981) (1,383,763,899) (761,596,824) (9,422,235) (13,486,945) (3,255,191) (6,823,591) 19,125,000 (2,733,360,596) (633,383,923) (3,327,486,441)

32,532,876 (179,898,179) (8,203,468) 16,875,000 77,415,816

(4,854,142,602) 62,260,000 (2,695,860,000) 2,150,000,000 (21,886,946) (1,600,000,000) 7,204,008 8,034,868,800 (436,734,593) 645,708,667 499,058,702 1,773,962,249 2,273,020,951

8,163,500,477 (6,089,787,000) 2,052,995,000 1,609,600,000 - 1,200,000,000 (192,415,267) (2,606,250,000) (93,750,000) - 2,150,000,000 (16,840,277) (15,230,608) (6,637,345) (7,962,750) (600,000,000) (1,600,000,000) (600,000,000) - 8,034,868,800 - (436,734,593) 8,955,882,183 (563,133,401) 2,552,607,655 793,596,173 79,589,845 202,859,782 980,366,076 686,844,087 483,984,305 1,773,962,249 766,433,932 686,844,087

(2,843,497,000) (1,441,627,428) 5,555,760 29,374,610 (15,602,976) 15,001,974

(766,763,284) 5,555,760 (3,644,491)

(217,346,812) 20,064,200 9,180,965

(2,853,544,216) (1,397,250,844) (764,852,015) (188,101,647)

The notes to the consolidated and Company financial statements on pages 127 to 200 form an integral part of the financial statements.

126

Annual Report 2011

Notes to the consolidated and Company financial Statement For the years ended 31 December 2011 ·and 2010 1

General information Sri Trang Agro-Industry Public Company Limited (çthe Companyé) is a public limited company, incorporated and resident in Thailand. The Company was listed on the Stock Exchange of Thailand on 22 August 1991. The address of its registered office is as follows: 10 Soi 10, Phetkasem Road, Hadyai, Songkhla, Thailand. In addition, the Company placed new ordinary shares on the Singapore Exchange Securities Trading Limited (çSGX-STé) on 31 January 2011. The Company and its subsidiaries (çthe Groupé) manufacture and distribute natural rubber products such as ribbed smoked sheets, concentrated latex, STR block rubber, gloves and other products. In addition, the Group provides engineering and logistics services. These consolidated and Company financial statements were authorised for issue by the Board of Directors on 24 February 2012.

Basis of preparation The consolidated and company financial statements have been prepared in accordance with Thai generally accepted accounting principles under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the Accounting Profession Act B.E. 2547, and the financial reporting requirements of the Securities and Exchange Commission under the Securities and Exchange Act. The consolidated and company financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below. The preparation of financial statements in conformity with Thai generally accepted accounting principles requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Groupûs accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4. On 31 January 2011, the Company successfully listed new ordinary shares on the Singapore Exchange Securities Trading Limited (çSGX-STé). The interim consolidated and company financial statements for the period ended 31 March 2011 and 30 June 2011 prepared in accordance with Singapore Financial Reporting Standards are available on the SGX-STûs website (çwww.sgx.comé). On 10 August 2011, the Board of Directors of the Group passed a resolution to approve the adoption of some Thai Accounting Standards (çTASé) before the standards come into effect as described in Note 3.2 and the application of accounting for derivative financial instruments as described in Note 3.13 in the Thai generally accepted accounting principles (çThai GAAPé) financial statements. Therefore, from the third quarter of 2011 onward, the Group will prepare only Thai GAAP financial statements and submit these to both the Stock Exchange of Thailand and SGX-ST. Commencing on 1 July 2011, the Group has early adopted TAS 12 çIncome Taxesé before the standard comes into effect as published in the Government Gazette which are mandatory for accounting periods beginning on or after 1 January 2013. In addition, the Group has adopted the accounting for derivative financial instruments as disclosed in Note 3.13.4. The Group is also applying the presentation and disclosures of financial instruments under TAS 107 çFinancial Sri Trang Agro-Industry Public Company Limited

127

Instruments: Presentation and Disclosuresé (formerly TAS 48) as described in Note 3.13. Where necessary, comparative figures have been reclassified to conform with changes in presentation in the current year. To comply with the announcement of Department of Business Development Regulation dated 7 November 2011 in relation to the format of Financial Statements B.E. 2554, the Group has reclassified some balances as at 31 December 2010 which were previously reported as other current assets to çtrade accounts receivable and other receivablesé and çamount due from futures brokersé, and which were previously reported as accrued expenses and other currents liabilities to çtrade accounts payable and other payablesé. The reclassification can be summarised as follows:

Trade accounts receivable and other receivables, net As previously reported: Trade accounts receivable, net - other companies, net - related companies Included in çOther currents assetsé - Advances for inventories - Prepaid expenses - Accrued income Reclassified to: Trade accounts receivable and other receivables, net Amounts due from futures brokers As previously reported: Amounts due from futures brokers - other companies - an associate Included in çOther currents assetsé - Advance payments to futures brokers Reclassified to: Amounts due from futures brokers Trade accounts payable and other payables As previously reported: Trade accounts payable - other companies - related companies Accrued expenses Included in çOther currents liabilitiesé - Deferred income - Deposits and retentions received from customers Reclassified to: Trade accounts payable and other payables

128

Annual Report 2011

Consolidated 31 December 2010 Bahtû000

Company 31 December 2010 Bahtû000

5,611,477 91,211

2,956,296 658,406

184,466 323,028 29,585

107,117 225,831 107

6,239,767

3,947,757

31,223 81,275

81,275

22,556

2,772

135,054

84,047

1,689,078 849,450 247,160

842,170 243,723 119,976

97,267 159,162

19 1,634

3,042,117

1,207,522

An English version of the consolidated and company financial statements have been prepared from the statutory financial statements that are in the Thai language. In the event of a conflict or a difference in interpretation between the two languages, the Thai language statutory financial statements shall prevail.

Accounting policies The principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out below: 3.1 New accounting standards, new financial reporting standards, amendments to accounting standards and new financial reporting interpretations which are effective for the period beginning on or after 1 January 2011 New accounting standards, new financial reporting standards, new interpretation and amendments to accounting standards effective for the periods beginning on or after 1 January 2011 and adopted by the Group: TAS 1 (Revised 2009) Presentation of Financial Statements TAS 2 (Revised 2009) Inventories TAS 7 (Revised 2009) Statement of Cash Flows TAS 8 (Revised 2009) Accounting Policies, Changes in Accounting Estimates and Errors TAS 10 (Revised 2009) Events after the Reporting Period TAS 11 (Revised 2009) Construction Contracts TAS 16 (Revised 2009) Property, Plant and Equipment TAS 17 (Revised 2009) Leases TAS 18 (Revised 2009) Revenue TAS 19 Employee Benefits TAS 23 (Revised 2009) Borrowing Costs TAS 24 (Revised 2009) Related-Party Disclosures TAS 26 Accounting and Reporting by Retirement Benefit Plans TAS 27 (Revised 2009) Consolidated and Separate Financial Statements TAS 28 (Revised 2009) Investments in Associates TAS 29 Financial Reporting in Hyperinflationary Economies TAS 31 (Revised 2009) Interests in Joint Ventures TAS 33 (Revised 2009) Earnings per Share TAS 34 (Revised 2009) Interim Financial Reporting TAS 36 (Revised 2009) Impairment of Assets TAS 37 (Revised 2009) Provisions, Contingent Liabilities and Contingent Assets TAS 38 (Revised 2009) Intangible Assets TAS 40 (Revised 2009) Investment Property TFRS 2 Share-based Payment TFRS 3 (Revised 2009) Business Combinations TFRS 5 (Revised 2009) Non-current Assets Held-for-sale and Discontinued Operations TFRS 6 Exploration for and Evaluation of Mineral Resources TFRIC 15 Agreements for the Construction of Real Estate

Sri Trang Agro-Industry Public Company Limited

129

The following are the new accounting standards/new financial reporting standards/ amendments to accounting standards/interpretations that are mandatory for the first time for the financial year beginning 1 January 2011, and that impact the financial statements for the year ending 31 December 2011: ë TAS 1 (Revised 2009) çPresentation of Financial Statementsé: the revised standard will prohibit the presentation of items of income and expenses in the statement of changes in equity. Entities can choose to present the statement of comprehensive income as one statement or two statements (the income statement and statement of comprehensive income). Where entities restate or reclassify comparative information, they are required to present a restated statement of financial position as at the beginning comparative period in addition to the current requirement to present the statement of financial position at the end of the current period and comparative period. However, for the financial statements for the period beginning on or after 1 January 2011 which is the first period to apply this standard, an entity can choose to present statement of financial position as only two statements without the statement of financial position as at the beginning comparative period. The Groupûs management has chosen to present the statement of comprehensive income as one statement and has chosen to present the statement of financial position as only two statements without the statement of financial position as at the beginning comparative period. TAS 1 (Revised 2009) affects the presentation of the financial statements as follows: The statement of income has been re-presented and is now called the statement of comprehensive income. The increase or decrease in nonshareholder equity that used to be presented in the statement of changes in shareholdersû equity is now included in the statement of comprehensive income as other comprehensive income. The comparative information of the statement of comprehensive income and the statement of changes in equity for the year ended 31 December 2010 has also been re-presented so that it is in conformity with the revised standard. The balance sheet is now called the çstatement of financial positioné. The change in TAS 1 (Revised 2009) only impacts the presentation of the financial information, and thus there is no impact on earnings per share. ë TAS 16 (Revised 2009) çProperty, Plant and Equipmenté: the revised standard requires that entities include in the cost of property plant and equipment, an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, when the entity has an obligation to do so. It also requires that any component of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately. In addition, the revised standard also requires that entities review the useful life, residual value and depreciation method at least at each financial year-end.

130

Annual Report 2011

3.2

The Groupûs management has determined that the adoption of TAS 16 (revised 2009) will impact the financial statements when the Group acquires significant property, plant and equipment during the year. TAS 40 (Revised 2009) çInvestment Propertiesé: the standard has specific presentation and measurement requirements for investment property. An entity has to present investment property separately in the statement of financial position. The entity can choose to measure it using either the cost model or fair value model. Under the fair value model, any changes in fair value are recognised in profit or loss for the period in the statement of comprehensive income. The Group has adopted this accounting standard from 1 January 2011 and has chosen the fair value model for measurement. The investment properties of the Group comprise the land not used in operations and properties that used to be presented as part of other non-current assets. The effects of the adoption of TAS 40 (revised 2009) on the previously reported statement of financial position are presented in Note 6.1.

The new accounting standards, amendments to accounting standards and new interpretations which are mandatory for accounting periods beginning on or after 1 January 2013. The Group has applied the following accounting standards and interpretations before the standards come into effect: TAS 12 Income Taxes TSIC 21 Income Taxes - Recovery of Revalued Non-Depreciable Assets TSIC 25 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders The impact of the adoption of these income tax related accounting standards on the previously reported statement of financial position is presented in Note 6.2. The Group has not applied the following accounting standards and interpretations before the standards come into effect: TAS 20 (revised 2009) TAS 21 (revised 2009) TSIC 10

Accounting for Government Grants and Disclosure of Government Assistance The Effects of Changes in Foreign Exchange Rates Government Assistance - No Specific Relation to Operating Activities

The Groupûs management has determined that the new accounting standards, new financial reporting standards, new interpretation and amendments to accounting standards, which are mandatory for accounting periods beginning on or after 1 January 2013 and the Group has not applied, will not significantly impact the financial statements being presented.

Sri Trang Agro-Industry Public Company Limited

131

3.3

Group accounting - investments in subsidiaries and associates and an interest in a joint venture (1) Subsidiaries Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible including potential voting rights held by another entity, are considered when assessing whether the Group controls another entities. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisitionrelated costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interestรปs proportionate share of the acquireeรปs net assets. The Company applies the predecessor value method for business combination acquired under common control. The excess of consideration paid compared to book values of the business acquired is recorded as a separate item and presented in equity. In the Companyรปs separate financial statements, investment in subsidiaries is accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes direct attributable costs of investment. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Groupรปs share of the identifiable net asset acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss. Inter-company transactions, balances and unrealised gains on transactions between group of companies are eliminated; unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. A list of the Groupรปs subsidiaries is set out in Note 14.1. (2)

132

Transactions and non-controlling interests The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gain or losses on disposals to non-controlling interests are also recorded in equity.

Annual Report 2011

When the Group ceases to have control or significant influence, any retained interest in the entity is re-measured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of the entity are accounted for as if the Group had directly disposed of the related assets or liabilities. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate. (3)

Associates Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. In the consolidated financial statement, the Groupûs investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss (if any). The Groupûs share of its associatesû post-acquisition profits or losses is recognised in the profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Groupûs share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Groupûs interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group. Dilution gains and losses arising in investments in associates are recognised in the profit or loss. In the Companyûs separate financial statements, investment in associates is accounted for using the cost method of accounting. A list of the Groupûs associates is set out in Note 14.2.

(4)

Joint venture The Groupûs joint venture is entity over which the Group has contractual arrangements to jointly share the control over the economic activity of the entity with one or more parties. In the Companyûs separate financial statements, the interest in a jointly controlled entity is accounted for using the cost method. The Groupûs interest in joint venture is accounted for in the consolidated financial statements using the equity method of accounting.

Sri Trang Agro-Industry Public Company Limited

133

The Groupûs share of its joint ventureûs post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Groupûs share of losses in a joint venture equals or exceeds its interest in the joint venture, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint venture. Unrealised gains on transactions between the Group and its joint venture are eliminated to the extent of the Groupûs interest in the joint venture. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint venture have been changed where necessary to ensure consistency with the policies adopted by the Group at the consolidated financial statements. The Groupûs joint venture is set out in Note 14.3.

134

3.4

Foreign currency translation Items included in the financial statements of each entity in the Group are measured using Thai Baht. The consolidated financial statements are presented in Thai Baht. Foreign currency transactions are translated into Thai Baht using the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated to Thai Baht at the exchange rate prevailing at the date of statements of financial position. Gains and losses resulting from the settlement of foreign currency transactions and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognised in the profit or loss. Translation differences on investments in debt securities and other monetary financial assets measured at fair value are included in foreign exchange gains and losses. Translation differences on non-monetary items such as investments in equity securities held for trading are reported as part of the fair value gain or loss. Translation differences on available-forsale investments in equity securities are included in the revaluation reserve in equity. The statements of comprehensive income and cash flows of foreign entities are translated into the Groupûs reporting currency at the weighted average exchange rates for the year and statements of financial position are translated at the exchange rates ruling on the date of statements of financial position. Currency translation differences arising from the retranslation of the net investment in foreign entities are taken to shareholdersû equity. On disposal of a foreign entity, accumulated currency translation differences are recognised in the statement of comprehensive income as part of the gain or loss on disposal.

3.5

Cash and cash equivalents Cash and cash equivalents comprise cash on hand, deposits held at call with banks (but do not include deposits with banks which are held to maturity), and other short-term highly liquid investments with maturities of three months or less from the date of acquisition and bank overdrafts. Bank overdrafts are included in current liabilities on the statements of financial position. Deposits at financial institutions that are restricted in use are presented as çFixed deposits pledged as collateralé under non-current assets in the statements of financial position.

Annual Report 2011

3.6

Trade accounts receivable Trade accounts receivable are carried at the original invoice amount and subsequently measured at the remaining amount less any allowance for impairment of receivables based on a review of all outstanding amounts at the year end. The amount of the allowance is the difference between the carrying amount of the receivable and the amount expected to be collectible. Bad debts are written off during the year in which they are identified and recognised in the statement of comprehensive income within administrative expenses.

3.7

Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined by the weighted average method. The cost of purchase comprises both the purchase price and costs directly attributable to the acquisition of the inventory, such as import duties and transportation charges, less all attributable discounts. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity), but excludes borrowing costs. Net realisable value is the estimate of the selling price in the ordinary course of business, less the costs of completion and selling expenses. Allowance is made, where necessary, for obsolete, slow moving and defective inventories.

3.8

Investments Investments other than the investments in subsidiaries, associates and an interest in a joint venture are classified into the following four categories: 1. Trading investments, 2. Held-tomaturity investments, 3. Available-for-sale investments, and 4. General investments. The classification is dependent on the purpose for which the investments were acquired. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. 1. Investments that are acquired principally for the purpose of generating a profit from short-term fluctuations less than three months from the date of acquisition in price are classified as trading investments and included in current assets. 2. Investments with fixed maturity that the management has the intent and ability to hold to maturity are classified as held-to-maturity and are included in non-current assets, except for maturities within 12 months from the statement of financial position date which are classified as current assets. 3. Investments intended to be held for an indefinite period of time, which may be sold in response to liquidity needs or changes in market prices or interest rates, are classified as available-for-sale; and are included in non-current assets unless management has expressed the intention of holding the investment for less than 12 months from the statement of financial position date or unless they will need to be sold to raise operating capital, in which case they are included in current assets. 4. Investments in non-marketable equity securities are classified as general investments. All categories of investment are initially recognised at cost, which is equal to the fair value of consideration paid plus transaction cost. Trading investments and available-for-sale investments are subsequently measured at fair value. The fair value of investments is based on quoted bid price at the close of business on the statement of financial position date by reference to the Stock Exchange of Thailand. Held-to-maturity investments are carried at amortised cost using the effective yield method less impairment loss. Sri Trang Agro-Industry Public Company Limited

135

General investments are carried at cost less impairment. A test for impairment is carried out when there is a factor indicating that an investment might be impaired. If the carrying value of the investment is higher than its recoverable amount, impairment loss is charged to the statement of comprehensive income. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the statement of comprehensive income. When disposing of part of the Groupûs holding of a particular investment in equity security, the carrying amount of the disposed part is determined by the weighted average carrying amount of the total holding of the investment. 3.9

Property, plant and equipment Land and buildings are initially recognised at cost. Land is subsequently carried at the revalued amount less accumulated impairment losses, if any. Land improvements, buildings and structures are subsequently carried at the revalued amounts less accumulated depreciation and accumulated impairment losses. Land, land improvements, buildings and structures are revalued by independent professional valuers every 5 years or whenever there is an indication that their carrying amounts are likely differ materially from their revalued amounts. When an asset is revalued, any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset. The net amount is then restated to the revalued amount of the asset. Increases in the carrying amount arising on revaluation of land and building are credited to statement of comprehensive income and shown as çrevaluation surplusé in shareholdersû equity. Decreases that offset previous increases of the same asset are charged in other comprehensive income and debited against çrevaluation surplusé directly in equity; all other decreases are charged to profit or loss. Each year, the difference between depreciation based on the revalued carrying amount of the asset charged to profit or loss and depreciation based on the assetûs original cost is transferred from çrevaluation surplusé to retained earnings. All other items of property, plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation is calculated on the straight line basis to write off the cost (or the revalued amount) of each asset, except for land which is considered to have an indefinite life, to its residual value over the estimated useful life as follows: Land improvements Buildings and structures Machinery and equipment Vehicles Fixtures and office equipment

5 - 30 years 20 - 40 years 5 - 10 years 5 years 3 - 5 years

The assetsû residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

136

Annual Report 2011

The asset没s carrying amount is written-down immediately to its recoverable amount if the asset没s carrying amount is greater than its estimated recoverable amount. Repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset. Gains and losses on disposals are determined by comparing proceeds with the carrying amounts and are included in operating profit. On disposals of revalued assets, the fair value reserve is transferred to retained earnings. Interest costs on borrowings to finance the construction of property, plant and equipment are capitalised as part of cost of the asset, during the period of time required to complete and prepare the property for its intended use. All other borrowing costs are expensed. 3.10 Intangible assets Computer software Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of 3 - 5 years. Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Costs that are directly associated with identifiable and unique software products controlled by the Group and will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs include staff costs of the software development team and an appropriate portion of relevant overheads. 3.11 Investment properties Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the companies in the consolidated Group, is classified as investment property. Investment property also includes property that is being constructed or developed for future use as investment property. Investment property is measured initially at its cost including related transaction costs. After initial recognition, investment property is carried at fair value, as determined by an independent professional valuer. Changes in fair values are recognised in profit or loss. Subsequent expenditure is capitalised to the asset没s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Group and the cost of the item can be measured reliably. All other repair and maintenance costs are expensed when incurred. 3.12 Impairment of assets Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount which is the higher of an asset没s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there is separately identifiable cash flows. Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. Sri Trang Agro-Industry Public Company Limited

137

3.13 Financial instruments 3.13.1 Financial assets (a) Classification The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, held-to-maturity and availablefor-sale. The classification depends on the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition. The designation of financial assets at fair value through profit or loss is irrevocable. (i) Financial assets at fair value through profit or loss This category has two sub-categories: financial assets held for trading and those designated at fair value through profit or loss at inception. A financial asset is classified as held for trading if it is acquired principally for the purpose of selling in the short term. Financial assets designated at fair value through profit or loss at inception are those that are managed and their performances evaluated on a fair value basis, in accordance with a documented Group investment strategy. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are presented as current assets if they are either held for trading or are expected to be realised within 12 months after the date of the statement of financial position. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with determinable payments that are not quoted in an active market. They are presented as current assets, except for those maturing later than 12 months after the date of the statement of financial position, which are presented as non-current assets. Loans and receivables are presented as çtrade and other receivablesé and çcash and cash equivalentsé in the statement of financial position. (iii) Financial assets held-to-maturity Financial assets held-to-maturity are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Groupûs management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant amount of held-tomaturity financial assets, the whole category would be tainted and reclassified as available-for-sale. They are presented as non-current assets, except for those maturing within 12 months after the date of the statement of financial position, which are presented as current assets. (iv) Financial assets available-for-sale Financial assets available-for-sale are non-derivatives that are either designated in this category or not classified in any of the other categories. They are presented as non-current assets unless management intends to dispose of the assets within 12 months after the date of the statement of financial position.

138

Annual Report 2011

(b)

(c)

(d)

(e)

Recognition and derecognition Regular way purchases and sales of financial assets are recognised on the trade-date - the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all of the risks and rewards of ownership. On disposal of a financial asset, the difference between the carrying amount and the sales proceeds is recognised in the statement of comprehensive income. Any amount in the fair value reserve relating to that asset is transferred to the statement of comprehensive income. Trade receivables that are factored out to banks and other financial institutions with recourse to the Group are not derecognised until the recourse period has expired and the risks and rewards of the receivables have been fully transferred. The corresponding cash received from the financial institutions is recorded as bills payable under short-term loans from financial institutions. Initial measurement Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair value through profit or loss, which are recognised at fair value. Transaction costs for financial assets at fair value through profit and loss are recognised immediately in the statement of comprehensive income. Subsequent measurement Financial assets, both available-for-sale and at fair value through profit or loss, are subsequently carried at fair value. Loans and receivables and financial assets held-to-maturity are subsequently carried at amortised cost using the effective interest method. Changes in the fair values of financial assets at fair value through profit or loss, including the effects of currency translation, interest and dividend, are recognised in the statement of comprehensive income when the changes arise. Interest and dividend income on financial assets available-for-sale are recognised separately in the statement of comprehensive income. Changes in the fair values of available-for-sale debt securities (i.e. monetary items) denominated in foreign currencies are analysed into currency translation differences on the amortised cost of the securities and other changes; the currency translation differences are recognised in the statement of comprehensive income and the other changes are recognised in the fair value reserve. Changes in fair values of available-for-sale equity securities (i.e. non-monetary items) are recognised in the fair value reserve, together with the related currency translation differences in equity. Impairment The Group assesses at the date of each statement of financial position whether there is objective evidence that a financial asset or a group of financial assets is impaired, and recognises an allowance for impairment when such evidence exists. Sri Trang Agro-Industry Public Company Limited

139

(i)

Loans and receivables / financial assets - held to maturity Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy, and default or significant delay in payments are classed as objective evidence that these financial assets are impaired. The carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated as the difference between the carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. When the asset becomes uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised against the same line item in the statement of comprehensive income. The allowance for impairment loss account is reduced through the statement of comprehensive income in a subsequent period when the amount of impairment loss decreases and the related decrease can be objectively measured. The carrying amount of the asset previously impaired is increased to the extent that the new carrying amount does not exceed the amortised cost had no impairment been recognised in prior periods. (ii) Financial assets, available-for-sale Significant or prolonged declines in the fair value of the security below its cost and the disappearance of an active trading market for the security are classed as objective evidence that the security is impaired. The cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from shareholders没 equity and recognised in profit or loss. Impairment losses recognised in the consolidated statement of comprehensive income on equity instruments are not reversed through the consolidated statement of comprehensive income. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the consolidated statement of comprehensive income. 3.13.2 Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. 3.13.3 Fair value estimation of financial assets and liabilities The fair values of financial instruments traded in active markets (such as exchange traded and over-the-counter securities and derivatives) are based on quoted market prices at the date of the statement of financial position. The quoted market prices used for financial assets are the current bid prices; the appropriate quoted market prices for financial liabilities are the current asking prices.

140

Annual Report 2011

The fair values of financial instruments that are not traded in an active market are determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on the market conditions existing at each statement of financial position date. Where appropriate, quoted market prices or dealer quotes for similar instruments are used. Valuation techniques, such as discounted cash flow analysis, are also used to determine the fair values of the financial instruments. The fair values of current financial assets and liabilities carried at amortised cost approximate their carrying amounts. 3.13.4 Derivative financial instruments Derivative financial instruments comprise rubber forward contracts made with traders, rubber futures contracts, interest rate swaps and forward foreign exchange contracts. Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at fair value, and the resultant gains and losses are recognised in the statement of comprehensive income. Fair value is determined based on quoted market prices at the date of the statement of financial position. Derivative financial instruments are reported in the financial statements on a net basis where legal right of setoff exists. Derivative financial instruments are carried as assets when their fair value is positive and as liabilities when their fair value is negative. 3.14 Borrowings Borrowings are recognised initially at the fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective yield method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent that there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of reporting date. 3.15 Leases - where a Group company is the lessee Leases of property, plant or equipment which substantially transfer all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated to the principal and to the finance charges so as to achieve a constant rate on the finance balance outstanding. The outstanding rental obligations, net of finance charges, are included in other long-term payables with current portion of the finance lease liabilities presented as current liabilities. The interest element of the finance cost is charged to the statement of comprehensive income over the lease period so as to achieve a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant or equipment acquired Sri Trang Agro-Industry Public Company Limited

141

under finance leases is depreciated over the shorter period of the useful life of the asset or the lease term. Leases not transferring a significant portion of the risks and rewards of ownership to the lessee are classified as operating leases. Payments made under the operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the periods of the leases. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which the termination takes place. 3.16 Current and deferred income tax The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the date of statements of financial position in the countries where the company没s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the statement of financial position. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the date of statements of financial position and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates, and joint ventures, except where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. 3.17 Employee benefits (a) Defined contribution plans Defined contribution plans are post-employment benefit plans under which some entities in the Group pay fixed contributions into separate entities on a mandatory, contractual or voluntary basis. Some entities in the Group have no further payment obligations once the contributions have been paid.

142

Annual Report 2011

(b)

The contributions from those entities to the post-employment benefit plans are charged to the statement of comprehensive income in the year to which they relate. Post employment benefit obligations The Group provides for post-employment benefits, payable to employees under the Thai Labour Law. The amounts payable in the future depend on the salary and years of service of the respective employees. The defined benefit obligations are measured, using the Projected Unit Credit method calculated with sufficient regularity that the amounts recognised in the financial statements do not differ materially from the amounts that would be determined at the end of the reporting period, by an independent actuary, in accordance with actuarial technique as the present value of the estimated future cash outflows, based on employee salaries, turnover rate, retirement ages, mortality rate, length of service and others, and using interest rates of government bonds, which have terms to maturity approximating to the terms of the related obligations. Prior to 2011, actuarial gains or losses arising from changes in the actuarial assumptions of the present value of defined benefit obligations are recognized through statement of income using a straight-line basis over the expected average remaining working lives of the employees. Commencing 2011, actuarial gains or losses arising from changes in the actuarial assumptions of the present value of defined benefit obligations are charged or credited to equity in other comprehensive income in the period which they arise. However, there is no significant impact to the financial statements as a result of such change.

3.18 Provisions Provisions, excluding the provisions for employee benefits, are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. 3.19 Share capital Ordinary shares are classified as equity. Incremental external costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds. 3.20 Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and service net of output tax, rebates and discounts, and after eliminating sales within the Group for the consolidated financial statements. The Group recognises revenue when the amount of revenue and related costs can be reliably measured; it is probable that future economic benefits will flow to the entity and when the specific criteria for each of the Group没s activities are met as follows:

Sri Trang Agro-Industry Public Company Limited

143

(a)

(b) (c)

(d) (e)

Sales of goods The Group manufactures and sells a range of natural rubber products. Sales of goods are recognised when significant risks and rewards of ownership of the products are transferred to the buyer and the collectability of the related receivable is reasonably assured. Rendering of services Revenue from services is recognised when the services are rendered. Interest income Interest income is recognised on an accrual basis unless collectibility is in doubt using the effective interest method. Dividend income Dividend income is recognised when the right to receive payment is established. Rental income Rental income is recognised on an accrual basis in accordance with the relevant rental agreements.

3.21 Dividend distribution Dividends are recorded in the consolidated and Company没s financial statements in the period in which the dividends are approved by the Company没s shareholders. 3.22 Segment reporting Business segments provide products or services that are subject to risks and returns that are different from those of other business segments. Geographical segments provide products or services within a particular economic environment that are subject to risks and returns that are different from those of components operating in other economic environments.

Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 4.1 Impairment of non-financial assets Assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts exceed their recoverable amounts. The assessment of the carrying amounts often requires the use of estimates and assumptions such as discount rates, exchange rates, commodity prices, future capital requirements and future operating performance. The key line item affected will be 莽Property, plant and equipment茅 as disclosed in Note 16. 4.2

144

Income taxes and deferred income taxes The Group are subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. In addition, deferred tax assets and liabilities are recognised for temporary difference arising

Annual Report 2011

between tax bases of assets and liabilities and their carrying amount for accounting purposes as at the date of statement of financial position. Significant management judgment is used in considering whether it is highly probable that the Group will generate sufficient taxable profits from its future operations to minimise these deferred tax assets. The Groupûs assumptions regarding the future taxable profits and the anticipated timing of minimise of deductible temporary differences and significant changes in these assumptions from period to period may have a material impact on financial position and results of operations. 4.3

Employee benefits The present value of post employment benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations. The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability. The key line items affected will be çPost employment benefit obligationsé and çEmployee costsé as disclosed in Note 24 and 29, respectively.

Financial risk management 5.1

Financial risk factors The Groupûs activities expose it to a variety of financial risks: market risk (including currency risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Groupûs overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Groupûs financial performance. The Group uses derivative financial instruments to hedge certain risk exposures. Risk management is carried out under supervision by the management, who identifies, evaluates and hedges financial risks but does not apply hedge accounting. (a) Market risk (i) Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar. Foreign exchange risk arises from commercial transactions, net investment in foreign operations and borrowings. Management has set up policies to manage their foreign exchange risk against their functional currency. To manage the foreign exchange risk arising from future commercial transactions and borrowings, entities in the Group use forward contracts. Foreign exchange risk arises when future commercial transactions are denominated in a currency that is not the Companyûs functional currency.

Sri Trang Agro-Industry Public Company Limited

145

The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. If Thai Baht had changed by 3% against the US dollar with all other variables held constant, post-tax profit for the year, and shareholdersû equity would have been impacted as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 Impact to profit after tax in the statement of comprehensive income THB against USD - Weakened - Strengthened Impact to shareholdersû equity in the statement of financial position THB against USD - Weakened - Strengthened

(ii)

Company 2011 Bahtû000

2010 Bahtû000

(47,926) 47,926

57,854 (57,854)

(150,588) 150,588

(104,854) 104,854

(57,273) 57,273

(47,326) 47,326

Price risk The Group is exposed to commodity price risk from the natural rubber industry. The Group has managed the risks arising from price fluctuations by managing raw material sourcing. If the price of natural rubber increase/decrease by 10% with all other variables held constant, post-tax profit for the year will increase/decrease as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 Profit and loss

680,885

414,472

Company 2011 Bahtû000 73,632

2010 Bahtû000 10,086

The Group is also exposed to equity securities price risk because of investments held by the Group and classified on the consolidated statement of financial position as available-for-sale. Some of the Groupûs investments in equity securities are publicly traded in the Stock Exchange of Thailand. To manage its price risk arising from investments in equity, the Group diversifies its portfolio. The table below summarises the impact of increases/decreases of the equity securities on the Groupûs and Companyûs equity. The analysis is based on the assumption that the price per share of the invested securities had increased/ decreased by 5% (2010: 21%) with all other variables held constant and all the Groupûs and Companyûs available-for-sale equity instruments moved according to the historical correlation with the index:

146

Annual Report 2011

Consolidated 2011 2010 Bahtû000 Bahtû000 Equity - unrealised gain/loss on available-for-sale financial assets

(iii)

1,786

7,519

Company 2011 Bahtû000

2010 Bahtû000

1,953

7,448

Cash flow and fair value interest rate risk The Groupûs and Companyûs interest rate risk arises from borrowings. Borrowings which are issued at floating rates expose the Group and Company to cash flow interest rate risk. The Group and Company manages its cash flow interest rate risk by entering into interest rate swap contracts. If the interest rate increase/decreases by 0.5%, the post-tax profit for the year will increase/decrease as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 Profit and loss

17,906

30,572

Company 2011 Bahtû000

2010 Bahtû000 -

12,500

Borrowings which are issued at fixed rates expose the Group and Company to fair value interest rate risk. However, changes in market interest rates will not have an impact on the statement of comprehensive income as borrowings are accounted for on an amortised cost basis. (b)

(c)

Credit risk Credit risk arises from cash and cash equivalents, derivative financial instruments, deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions. The Group and Company also assesses credit quality of banks, financial institutions, and customer, taking into account its financial position, past experience and other factors. The utilisation of credit limits is regularly monitored. Liquidity risk The Group and Company monitor its liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants on any of the borrowing facilities. The table below analyses the Groupûs and Companyûs maturity grouping based on the remaining period at the date of statements of financial position to the contractual maturity date. The negative figures represent cash inflows and positive figures represent cash outflows. The amounts disclosed below are the contractual undiscounted cash flows.

Sri Trang Agro-Industry Public Company Limited

147

Less than 1 year Baht没000 31 December 2011 Short-term loans from financial institutions Trade accounts payable Accrued expenses Long-term loans from financial institutions Debentures Finance lease liabilities Gross and net settled derivative financial instruments - Foreign exchange options - Rubber futures (Buy) - Rubber futures (Sell) - Forward - (Baht against USD) payments - Forward - (Baht against USD) receipts - Physical forward (Buy) - Physical forward (Sell) 31 December 2010 Short-term loans from financial institutions Trade accounts payables Accrued expenses Long-term loans from financial institutions Finance lease liabilities Gross and net settled derivative financial instruments - Rubber futures (Buy) - Rubber futures (Sell) - Forward - (Baht against USD) payments - Forward - (Baht against USD) receipts - Forward - (IDR against USD) payments - Forward - (IDR against USD) receipts - Physical forward (Buy) - Physical forward (Sell)

148

Annual Report 2011

Consolidated Between Between 1 and 2 years 2 and 5 years Baht没000 Baht没000

Over 5 years Baht没000

15,505,145 2,051,590 339,086 142,629 12,540

128,067 9,523

215,663 1,811,393 3,261

679,392 -

(29,700) 137,831 (2,742,222)

14,460,613 (14,861,738) 2,808,091 (1,120,707)

20,512,862 2,538,527 247,160 751,942 18,840

2,311,696 12,657

2,682,259 11,447

612,506 (661,774)

12,648,605 (12,526,831) 284,969 (300,063) 1,756,404 (1,114,042)

Less than 1 year Bahtû000 31 December 2011 Short-term loans from financial institutions Trade accounts payable Accrued expenses Debentures Finance lease liabilities Gross and net settled derivative financial instruments - Foreign exchange options - Rubber futures (Sell) - Forward - (Baht against USD) payments - Forward - (Baht against USD) receipts 31 December 2010 Short-term loans from financial institutions Trade accounts payables Accrued expenses Long-term loans from financial institutions Finance lease liabilities Gross and net settled derivative financial instruments - Rubber futures (Sell) - Forward - (Baht against USD) payments - Forward - (Baht against USD) receipts

5.2

Company Between Between 1 and 2 years 2 and 5 years Bahtû000 Bahtû000

Over 5 years Bahtû000

4,581,022 1,390,506 140,549 7,055

6,172

1,811,393 2,180

679,392 -

(29,700) (736,317)

13,430,465 (13,798,546)

10,677,954 1,085,893 119,976 589,748 11,540

5,667

2,323,795 8,504

(100,864)

12,099,050 (11,977,248)

Capital risk management The Groupûs and Companyûs objectives when managing capital are to safeguard the Groupûs and Companyûs ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group and Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Management regards total equity as its capital. The Group and Company monitor capital on the basis of the net debt to total equity ratio. This ratio is calculated as net debt divided by total equity. Net debt is calculated as total liabilities as shown in the consolidated statement of financial position less cash and cash equivalents. Total equity is as shown in the statement of financial position. Sri Trang Agro-Industry Public Company Limited

149

The net debt to total equity ratios at 31 December 2011 and 2010 were as follows:

Total liabilities Less cash and cash equivalents Net debt Total equity Net debt to total equity ratio

5.3

Consolidated (Restated) 2011 2010 Bahtû000 Bahtû000

Company (Restated) 2011 2010 Bahtû000 Bahtû000

22,381,357 (2,273,021) 20,108,336 18,030,858 1.12

9,139,626 (766,434) 8,373,192 13,393,241 0.63

27,264,251 (1,773,962) 25,490,289 10,391,502 2.45

14,697,938 (686,844) 14,011,094 6,272,729 2.23

Fair value measurements Assets and liabilities measured at fair value are classified by level of the following fair value measurement hierarchy: Level 1 : quoted prices in active markets for financial assets Level 2 : inputs other than quoted prices included within level 1 that are observable for the assets or liabilities, either directly (that is, as prices) or indirectly Level 3 : inputs for the assets or liabilities that are not based on observable market data The following table presents the Groupûs and Companyûs assets and liabilities that are measured at fair value. Level 1 Bahtû000 31 December 2011 Available-for-sale financial assets - Equity securities Financial assets at fair value through profit or loss - Trading derivatives Financial liabilities at fair value through profit or loss - Trading derivatives 31 December 2010 Available-for-sale financial assets - Equity securities Financial assets at fair value through profit or loss - Trading derivatives Financial liabilities at fair value through profit or loss - Trading derivatives

150

Annual Report 2011

Consolidated Level 2 Level 3 Bahtû000 Bahtû000

Total Bahtû000

33,225

10,427

43,652

329,305

1,112,239

35,841

10,427

46,268

459,559

493,488

Level 1 Bahtû000 31 December 2011 Available-for-sale financial assets - Equity securities Financial assets at fair value through profit or loss - Trading derivatives Financial liabilities at fair value through profit or loss - Trading derivatives 31 December 2010 Available-for-sale financial assets - Equity securities Financial assets at fair value through profit or loss - Trading derivatives Financial liabilities at fair value through profit or loss - Trading derivatives

Company Level 2 Level 3 Bahtû000 Bahtû000

Total Bahtû000

32,352

10,427

42,779

44,430

541,893

34,679

10,427

45,106

98,248

65,410

The fair value of financial instruments traded in active markets is based on quoted market prices at the date of statement of financial position. A market is regarded as active if quoted prices are readily and regularly available. These instruments are included in Level 1. Instruments included in Level 1 comprise primarily equity securities classified as availablefor-sale. The fair value of financial instruments that are not traded in active markets (interest rate swap, forward, option) is determined by using fair value obtained from financial institutions and using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable and fair value is readily available from financial institutions, the instrument is included in Level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. During the current financial year, there was no movement in those instruments included in Level 3 (2010: no movement). Specific valuation techniques used to value financial instruments include: ë Quoted market prices ë Financial institution quotes for derivatives

Sri Trang Agro-Industry Public Company Limited

151

Fair value of forward foreign exchange contracts is determined using forward exchange rate at the date of the statement of financial position, with the resulting value discounted back to present value. Fair value of physical forward contracts is determined based on quoted market prices at the date of the statement of financial position.

Effect of the adoption of new accounting policies The impact on the statement of financial position as at 31 December 2010 and the statements of comprehensive income for the year ended 31 December 2010 from the adoption of the new accounting policies can be summarised as follows: 6.1 Accounting policy relating to çInvestment propertiesé as described in Note 3.11 6.2 Accounting policy relating to çIncome taxesé as described in Note 3.16 6.3 Accounting policy relating to derivative financial instruments as described in Note 3.13 Consolidated (Before Adjustment) 31 December 2010 Notes Bahtû000

Statements of financial position Current assets Derivative financial instruments - assets 9 Non-current assets Investments in associates Deferred income tax assets 19 Investment properties Land not used in operations Other non-current assets Current liabilities Derivative financial instruments - liabilities 9 Non-current liabilities Deferred income tax liabilities 19 Shareholdersû equity Revaluation surplus, net of accumulated depreciation Unrealised gain on available-for-sale financial assets Cumulative translation adjustments Retained earnings Non-controlling interests

152

Annual Report 2011

Retrospective Adjustments 6.1 6.2 6.3 Bahtû000 Bahtû000 Bahtû000

(Restated) 31 December 2010 Bahtû000

459,559

2,596,516 22,850 25,182

48,032 (22,850) (25,182)

17,698 129,024 -

1,208 1,240 -

2,615,422 130,264 48,032 -

493,488

138,402

974,059

(10,318)

(113,722)

850,019

3,338 (268,300) 7,612,690 42,211

10,318 -

(315) (5,746) 128,103 -

(9,797) (21,715) 30

3,023 (283,843) 7,729,396 42,241

Consolidated (Before Adjustment) 1 January 2010 Bahtû000 Statements of financial position Shareholdersû equity Revaluation surplus, net of accumulated depreciation Unrealised gain on available-for-sale financial assets Cumulative translation adjustments Retained earnings Statements of comprehensive income For the year ended Share of profit of investments in associates and a joint venture Gains on exchange rates Other gains (losses) - net Income tax expenses Profit for the year Earnings per share (Baht)

(Restated) 1 January 2010 Bahtû000

Retrospective Adjustments 6.1 6.2 6.3 Bahtû000 Bahtû000 Bahtû000

1,010,671

(10,318)

(154,795)

845,558

(6,200) (45,997) 4,323,361

10,318

827 (498) 131,373

(9,655) 49,178

(5,373) (56,150) 4,514,230

695,860 878,783 96,464 (292,806) 3,873,564 3.85

3,528 18,905 22,433 0.02

3,445 46,678 (106,855) 1,239 (55,493) (0.05)

702,833 925,461 (10,391) (272,662) 3,840,504 3.82

Company (Before Adjustment) 31 December 2010 Notes Bahtû000 Statements of financial position Current assets Derivative financial instruments - assets Non-current assets Deferred income tax assets Investment properties Land not used in operations Current liabilities Derivative financial instruments - liabilities Non-current liabilities Deferred income tax liabilities Shareholdersû equity Revaluation surplus, net of accumulated depreciation Unrealised gain on available-for-sale financial assets Retained earnings

Retrospective Adjustments 6.1 6.2 6.3 Bahtû000 Bahtû000 Bahtû000

(Restated) 31 December 2010 Bahtû000

98,248

22,850

22,850 (22,850)

11,615 -

1,239 -

12,854 22,850 -

65,410

71,650

679,264

(10,318)

(58,317)

610,629

2,516 3,393,107

10,318

(216) (1,502)

34,077

2,300 3,436,000

Sri Trang Agro-Industry Public Company Limited

153

Company (Before Adjustment) 1 January 2010 Bahtû000 Statements of financial position Shareholdersû equity Revaluation surplus, net of accumulated depreciation Unrealised gain on available-for-sale financial assets Retained earnings

(Restated) 1 January 2010 Bahtû000

Retrospective Adjustments 6.1 6.2 6.3 Bahtû000 Bahtû000 Bahtû000

706,108

(10,318)

(90,270)

605,520

(6,369) 1,583,638

10,318

814 86,997

(6,576)

(5,555) 1,674,377

Company (Before Adjustment) 31 December 2010 Notes Bahtû000 Statements of comprehensive income For the year ended Gains (losses) on exchange rates Other gains (losses) - net Income tax expenses Profit for the year Earnings per share (Baht)

754,760 117,980 (30,726) 2,382,625 2.38

Retrospective Adjustments 6.1 6.2 6.3 Bahtû000 Bahtû000 Bahtû000

(56,546) (56,546) (0.05)

53,850 (14,436) 1,239 40,653 0.04

(Restated) 31 December 2010 Bahtû000

808,610 103,544 (86,033) 2,366,732 2.37

Segment information The chief operating decision maker has been identified as the Managing Director (çMDé). The MD reviews the Groupûs internal reporting regularly in order to assess the performance and allocate resources. The MD measures the business based on a measure of segment profit, which is derived on a basis consistent with the measurement of profit for the year in the consolidated statement of comprehensive income. Operating segments are defined as components of the Group for which separate financial information is available by a Company basis that is evaluated regularly by the MD. There are two reportable segments: (1) Natural Rubber Products: This segment is engaged in manufacturing, selling and trading in ribbed smoked sheets, concentrated latex and block rubber. This segment also includes manufacturing and selling of powdered and powder-free latex examination gloves, handrails escalator, injection-moulded rubber and high-pressure hydraulic hose. (2) Other business: This segment comprises logistic services, research and development in machinery/production process and IT services. The majority of the services provided under this segment are provided internally within the Group with a small amount provided to third parties. The Group operates two business segments in five main geographical areas (2010 : five main geographical areas). The basis of allocating revenue to each geographical area is based on the origin of sales.

154

Annual Report 2011

Breakdown of reportable segments by geography on the consolidated financial statements for the year ended 31 December 2011:

Segment revenues Inter-segment revenues Revenues from external customers Depreciation and amortisation (Notes 16 and 17) Finance income Finance costs Share of profits from associates and a joint venture Income tax expenses Profit (loss) for the year Total assets

Other Intersegmental Products natural rubber business balances Thailand Indonesia Singapore USA China Thailand Total Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 102,101,730 16,191,252 40,588,541 8,100,811 1,240,027 2,532,336 - 170,754,697 (21,951,874) (11,579,225) (2,658,345) - (861,411) - (37,050,855) 80,149,856 4,612,027 37,930,196 8,100,811 1,240,027 1,670,925 (330,918) (117,968) 6,170 5,503 (601,471) (188,042)

(5,331) 2,689 (50,959)

(1,254) 36 (43,329)

648,938 (544,157) (77,210) (53,349) 113,019 1,281,567 160,487 161,605 (12,185) 31,413,586 3,259,233 6,733,723 3,646,540

(1,197) 758 -

(26,590) 1,018 (1,196)

- 133,703,842 -

(483,258) 16,174 (884,997)

- 648,938 (2,786) (64,759) - (629,242) 5,254 115,962 (383,419) 1,329,271 249,322 2,961,284 (7,851,473) 40,412,215

Breakdown of reportable segments by geography on the consolidated financial statements for the year ended 31 December 2010:

Thailand Bahtû000 55,132,328 (6,471,833)

Other Intersegmental Products natural rubber business balances Indonesia Singapore USA China Thailand Total Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 9,018,961 29,226,344 5,632,972 11,153 1,661,708 - 100,683,466 (5,960,182) (3,891,174) (22,411) (6,215) (486,322) - (16,838,137)

48,660,495 3,058,779 25,335,170 5,610,561 (259,924) 3,241 (284,539)

(83,204) 896 (64,835)

(4,642) 1,511 (30,265)

(632) 49 (17,562)

702,833 (154,867) (73,080) 18,566 (19,316) 3,558,553 211,108 333,909 29,972 26,962,475 3,287,824 6,192,143 1,961,186

4,938 1,175,386 (47) 37 -

(23,518) 426 (459)

- 83,845,329 -

(371,967) 6,160 (397,660)

702,833 (144) (43,821) - (272,662) 2,366 95,088 (390,492) 3,840,504 174,906 1,552,543 (2,475,324) 37,655,753

Sri Trang Agro-Industry Public Company Limited

155

The non-current assets, excluding financial instruments, deferred tax assets and withholding tax deducted at source, can be presented by geography as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 Thailand Indonesia Singapore USA China Total

6,178,424 1,329,547 102,313 3,761 12,356 7,626,401

4,380,154 856,208 57,224 1,763 6,107 5,301,456

Company 2011 Bahtû000

2010 Bahtû000

2,727,889 2,727,889

2,167,091 2,167,091

Cash and cash equivalents

Cash on hand Deposits held at call with banks Total cash and cash equivalents

Consolidated 2011 2010 Bahtû000 Bahtû000 49,488 81,397 2,223,533 1,692,565 2,273,021 1,773,962

Company 2011 Bahtû000 39,040 727,394 766,434

2010 Bahtû000 28,107 658,737 686,844

The effective interest rates on short-term bank deposits were between 0.1% and 3.1% per annum (2010 : 0.1% and 3.5% per annum). The carrying amounts of the Groupûs cash and cash equivalents are denominated in the following currencies: Consolidated 2011 2010 Bahtû000 Bahtû000 USD IDR JPY SGD RMB THB Total cash and cash equivalents

156

Annual Report 2011

1,139,524 192,188 50,865 43,148 85,760 761,536 2,273,021

631,459 57,619 76,657 11,711 8,310 988,206 1,773,962

Company 2011 Bahtû000 368,610 2,456 395,368 766,434

2010 Bahtû000 11,019 675,825 686,844

Derivative financial instruments Consolidated 2011 Assets Bahtû000 Foreign exchange options Forward foreign exchange contracts Rubber futures Physical forward contracts Total derivative financial instruments (Note 6)

Liabilities Bahtû000

171,365 157,940 329,305

(Restated) 2010 Assets Liabilities Bahtû000 Bahtû000

(29,700) (544,460) (40,201) (497,878) (1,112,239)

100,455 98,181 260,923 459,559

(56,512) (150,697) (286,279) (493,488)

Company 2011

Foreign exchange options Forward foreign exchange contracts Rubber futures Total derivative financial instruments (Note 6)

Notional amount Foreign exchange options Forward foreign exchange contracts Rubber futures Physical forward contracts

Assets Bahtû000

Liabilities Bahtû000

44,430 44,430

(29,700) (502,328) (9,865) (541,893)

(Restated) 2010 Assets Liabilities Bahtû000 Bahtû000 98,248 98,248

(50,974) (14,436) (65,410)

Consolidated 2011 2010 Bahtû000 Bahtû000

2011 Bahtû000

2010 Bahtû000

935,232 14,460,613 2,880,053 3,928,798

935,232 13,430,465 736,317 -

12,099,050 100,864 -

12,933,574 1,274,279 2,870,445

Company

Sri Trang Agro-Industry Public Company Limited

157

Trade accounts receivable and other receivables, net Consolidated 2011 2010 Bahtû000 Bahtû000 Trade accounts receivable - other companies Less Allowance for impairment of trade receivables Total trade accounts receivable - other companies, net Trade accounts receivable - related companies (Note 37.3) Trade accounts receivable, net Add Advances for inventories Add Prepaid expenses Add Accrued income Trade accounts receivable and other receivables, net

7,381,482 (63,307) 7,318,175 103,140 7,421,315 88,540 251,091 26,501 7,787,447

5,643,108 (31,632) 5,611,476 91,212 5,702,688 184,466 323,028 29,585 6,239,767

Company 2011 Bahtû000

2010 Bahtû000

4,120,582 (39,248) 4,081,334 1,922,252 6,003,586 13,484 107,143 1,130 6,125,343

2,964,143 (7,847) 2,956,296 658,406 3,614,702 107,117 225,831 107 3,947,757

Outstanding trade accounts receivable as at 31 December can be analysed as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 Within credit terms Overdue 1 - 30 days Overdue 31 - 60 days Overdue 61 - 90 days Overdue 91 - 120 days Overdue 121 - 365 days More than 365 days Less allowance for impairment of trade receivables Trade accounts receivable, net

6,559,515 828,872 43,160 16,522 4,163 7,247 25,143 7,484,622 (63,307) 7,421,315

5,277,954 404,114 23,534 829 714 289 26,886 5,734,320 (31,632) 5,702,688

Company 2011 Bahtû000

2010 Bahtû000

5,476,819 492,060 43,131 16,092 12 6,797 7,923 6,042,834 (39,248) 6,003,586

3,132,733 369,469 68,015 14,953 29,526 6 7,847 3,622,549 (7,847) 3,614,702

As at 31 December 2011 and 2010, trade accounts receivable - other companies as presented in the following table were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The aging analysis of these trade receivables - other companies is as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 Overdue 1 - 90 days Overdue 91 - 365 days More than 365 days Total

158

Annual Report 2011

751,435 5,818 757,253

389,298 51 1,620 390,969

Company 2011 Bahtû000 526,090 1,642 527,732

2010 Bahtû000 280,921 51 280,972

As at 31 December 2011 and 2010, trade receivables - other companies as presented in the following table were impaired and provision for impairment have been made. It was assessed that a portion of the receivables is expected to be recovered. The aging of these receivables before provision of impairment is as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 Current Overdue 1 - 90 days Overdue 91 - 365 days More than 365 days Total

47,515 136,586 5,593 25,143 214,837

39,025 953 25,265 65,243

Company 2011 Bahtû000

2010 Bahtû000

27,907 25,088 5,167 7,923 66,085

7,847 7,847

Movements on the Groupûs allowance for impairment of trade receivables are as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 Opening net book amount Allowance for impairment of trade accounts receivable Reversal of allowance for impairment of trade accounts receivable Written off during the year Ending net book amount

Company 2011 Bahtû000

2010 Bahtû000

31,632 40,493

68,074 2,237

7,847 31,401

8,236 186

(8,796) (22) 63,307

(4,377) (34,302) 31,632

39,248

(575) 7,847

The creation and release of allowance for impairment of trade receivables have been included in the statement of comprehensive income. Amounts charged to the allowance account are generally written off, when there is no expectation of recovering any cash. The carrying amounts of the Groupûs and Companyûs trade receivables are denominated in the following currencies: Consolidated 2011 2010 Bahtû000 Bahtû000 USD RMB THB Total trade accounts receivable - other companies

6,007,317 21,732 1,352,433 7,381,482

4,759,360 883,748 5,643,108

Company 2011 Bahtû000 2,782,907 1,337,675 4,120,582

2010 Bahtû000 2,137,446 826,697 2,964,143

Sri Trang Agro-Industry Public Company Limited

159

Inventories, net Consolidated Allowance for inventory cost in At cost excess of net realisable value Inventories, net 2011 2010 2011 2010 2011 2010 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000

Finished goods Work-in-progress Raw materials, vessels and chemicals Spare parts and supplies Total

10,998,589 3,636,838

10,715,743 2,749,258

(869,398) (2,302)

10,129,191 3,634,536

10,715,743 2,749,258

3,483,282 94,027 18,212,736

6,758,137 63,779 20,286,917

(4,440) (876,140)

(4,484) (4,484)

3,478,842 94,027 17,336,596

6,753,653 63,779 20,282,433

Company Allowance for inventory cost in At cost excess of net realisable value Inventories, net 2011 2010 2011 2010 2011 2010 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Finished goods Work-in-progress Raw materials, vessels and chemicals Spare parts and supplies Total

3,493,928 1,259,676 1,899,051 29,350 6,682,005

4,904,516 1,087,570 4,488,554 24,364 10,505,004

(111,753) (111,753)

3,382,175 1,259,676 1,899,051 29,350 6,570,252

4,904,516 1,087,570 4,488,554 24,364 10,505,004

The cost of inventories recognised as expense and included in ùcosts of sales and servicesû amounting to Baht 124.21 million (2010: Baht 76.66 million). Inventories are carried at lower of cost and net realisable value. As at 31 December 2011, the Group reserved an allowance for inventory cost in excess of net realisable value amounting to Baht 876.14 million (Company: Baht 111.75 million) as a result of a decline in market prices.

Other current assets Consolidated 2011 2010 Bahtû000 Bahtû000 Value added tax refundable Others Total other current assets

160

Annual Report 2011

86,703 112,195 198,898

36,888 23,359 60,247

Company 2011 Bahtû000 15,459 20,825 36,284

2010 Bahtû000 10,199 19,938 30,137

Fixed deposits pledged as collateral Fixed deposits amounting to Baht 143.48 million (2010: Baht 125.44 million) are pledged as collateral for short-term loan facilities with several financial institutions and for bank guarantees. The fixed deposits earn average interest rate of 0.1% to 3.1% per annum (2010: 0.1% to 3.5%). The carrying amounts of the fixed deposits pledge as collateral are denominated in the following currencies: Consolidated 2011 2010 Bahtû000 Bahtû000 USD THB Total fixed deposits pledged as collateral

106,802 36,681 143,483

88,853 36,591 125,444

Company 2011 Bahtû000

2010 Bahtû000

12,595 12,595

12,551 12,551

Investments in subsidiaries, associates and an interest in a joint venture Consolidated

Net book amount at 1 January Share of profits after tax Acquisitions Disposals Dividends received (Note 37.1) Gain on disposal of land to an associate Currency translation differences Net book amount at 31 December

2011 Bahtû000

2010 Bahtû000

2,940,705 648,938 30,295 (74,650) (3,469) 37,243 3,579,062

2,638,483 702,834 (19,125) (329,058) (52,429) 2,940,705

Company (Restated) 2011 2010 Bahtû000 Bahtû000 3,253,303 2,607,365 5,860,668

2,815,528 454,650 (16,875) 3,253,303

Sri Trang Agro-Industry Public Company Limited

161

14.1 Subsidiaries The principal subsidiaries are:

Name Sri Trang International Pte Ltd. Sri Trang USA, Inc. PT Sri Trang Lingga Indonesia Anvar Parawood Co., Ltd. Rubberland Products Co., Ltd. Nam Hua Rubber Co., Ltd. Sadao P.S. Rubber Co., Ltd. Startex Rubber Co., Ltd. Premier System Engineering Co., Ltd. Starlight Express Transport Co., Ltd. Sri Trang Rubber & Plantation Co., Ltd. Shi Dong Shanghai Rubber Co., Ltd. Indirect subsidiaries Shi Dong Investments Pte Ltd. (held by Sri Trang International Pte Ltd.) P.T. Star Rubber (held by Shi Dong Investments Pte Ltd.)

Business

Country of incorporation

% Ownership interest 2011 2010

Distribution of rubber products Distribution of rubber products Manufacture of STR block rubber Manufacture of parawood Manufacture of latex Manufacture of rubber products Manufacture of rubber products Rubber plantation Provision of engineering services Provision of logistics services Rubber plantation

Singapore USA Indonesia Thailand Thailand Thailand Thailand Thailand Thailand Thailand Thailand

100.00 100.00 90.00 99.94 99.99 99.99 99.99 99.99 99.99 99.99 99.99

Distribution of rubber products

China

100.00

Investment holding

Singapore

100.00

Manufacture of STR block rubber

Indonesia

99.0

99.00

In January 2011, the Company invested in the increased share capital of Sri Trang Rubber & Plantation Co., Ltd., a subsidiary, by paying cash amounting to Baht 40 million. In February 2011, the Company invested in the increased share capital of Sri Trang International Pte Ltd., a subsidiary, by paying cash amounting to USD 24 million (approximately Baht 727 million). In March 2011, the Company invested in the increased share capital of Nam Hua Rubber Co., Ltd., a subsidiary, by paying cash amounting to Baht 325 million. In March 2011, the Company invested in the increased share capital of Rubberland Products Co., Ltd., a subsidiary, by paying cash amounting to Baht 512.5 million. In May and June 2011, the Company invested in the increased share capital of Sri Trang Rubber & Plantation Co., Ltd., a subsidiary, by paying cash amounting to Baht 40 million and 300 million, respectively. In July 2011, the Company invested in the increased share capital of Rubberland Products Co., Ltd., a subsidiary, by paying cash amounting to Baht 512.5 million. In August and September 2011, the Company invested in the increased share capital of Sri Trang Rubber & Plantation Co., Ltd., a subsidiary, by paying cash amounting to Baht 84 million and Baht 36 million, respectively.

162

Annual Report 2011

In February 2010, the Company invested in the increased shares of Sri Trang Rubber & Plantation Co., Ltd., a subsidiary, by paying cash amounted to Baht 60 million. In April 2010, the Company invested in the increased shares of Sri Trang Rubber & Planatation Co., Ltd. by paying cash of Baht 40 million. In August 2010, the Company invested in the increased shares of Sri Trang Bubber & Plantation Co., Ltd. by paying cash amounted to Baht 80 million. In September 2010, the Company invested in the increased shares of Sri Trang Rubber & Plantation Co., Ltd. by paying cash amounting to Baht 80 million. In addition, the Company invested in the shares of Shi Dong Shanghai Rubber Co., Ltd., a subsidiary which was incorporated in August 2010, by paying cash of USD 5 million (approximately Baht 154.6 million). In December 2010, the Company invested in the increased shares of Sri Trang Rubber & Plantation Co., Ltd. by paying cash amounted to Baht 40 million. 14.2 Associates The Group没s share of the results of its associates, all of which are unlisted, and its share of the assets including goodwill and liabilities are as follows: Baht没000 Name

2011 Siam Sempermed Corporation Ltd. Semperflex Asia Corporation Ltd. Semperform Pacific Corporation Ltd. Sempermed USA, Inc. Pattana Agro Futures Co., Ltd. Semperflex Shanghai Co., Ltd.

Business

Manufacture of medical gloves Manufacture of hydraulic hose Manufacture of moulded parts Sales of medical gloves Futures broker Manufacture of hydraulic hose Sempermed Singapore Pte Ltd. Investment holding Indirect associates Sempermed Brazil Comercio Sales of medical gloves Exterior LTDA. (held by Sempermed Singapore Pte Ltd.) Shanghai Foremost Plastic Manufacture of Industrial Co., Ltd. medical gloves (held by Siam Sempermed Co., Ltd.)

% Profits ownership (losses) interest

Country of incorporation

Assets

Thailand

3,079,237

837,488

4,637,184

368,317

40.23

Thailand

545,271

140,770

647,334

98,980

42.50

Thailand

6,791

160

42.50

USA Thailand China

660,504 142,136 418,401

494,924 98,166 122,791

1,982,373 11,336 192,921

34,786 4,788 15,536

45.12 40.00 50.00

Singapore

151,522

8,176

9,579

6,038

50.00

Brazil

252,697

134,886

474,621

4,569

50.00

China

57,819

14,307

106,026

(45,582)

40.23

Liabilities Revenues

Sri Trang Agro-Industry Public Company Limited

163

Baht没000 Name

Business

2010 Siam Sempermed Corporation Ltd. Semperflex Asia Corporation Ltd. Semperform Pacific Corporation Ltd. Sempermed USA, Inc. Pattana Agro Futures Co., Ltd. Semperflex Shanghai Co., Ltd.

% Profits ownership (losses) interest

Country of incorporation

Assets

Thailand

2,406,552

554,325

3,987,505

520,784

40.23

Thailand

429,706

81,177

460,043

74,772

42.50

Thailand

6,879

190

634

102

42.50

USA Thailand China

421,600 99,828 318,783

301,449 58,395 67,065

1,797,830 10,449 168,864

22,007 2,648 21,253

45.12 40.00 50.00

Singapore

108,800

8,691

(2,044)

50.00

Brazil

168,109

28,620

283,119

(8,018)

50.00

China

89,624

8,411

159,541

(5,958)

40.23

Liabilities Revenues

In June 2011, the Company invested in the increased share capital of Sempermed Singapore Pte. Ltd., an associate, by paying cash amounting to USD 1 million (approximately Baht 30 million). In November 2010, the Company and Rubberland Products Co., Ltd. received proceeds from a decrease in share capital of Semperform Pacific Corporation Ltd., an associate, amounted to Baht 16.9 million and Baht 2.3 million, respectively, as a result of the change in the par value of the associate没s ordinary shares from Baht 100 per share to Baht 25 per share. 14.3 An interest in a joint venture The jointly controlled entity is: Baht没000 Name

2011 Thaitech Rubber Corporation Ltd. 2010 Thaitech Rubber Corporation Ltd.

164

Business

Country of incorporation

Assets

Liabilities Revenues

% Profits ownership (losses) interest

Manufacture of STR block rubber

Thailand

1,474,668 1,011,399

7,442,183

161,367

33.50

Manufacture of STR block rubber

Thailand

1,684,081 1,327,711

4,922,555

70,314

33.50

Annual Report 2011

Available-for-sale financial assets The movement in the available-for-sale financial assets for the years is as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 Opening net book amount Additions Disposals Changes in fair values of available-for-sale investments Ending net book amount

46,267 60 (126) (2,549) 43,652

36,699 30 9,538 46,267

Company 2011 Bahtû000

2010 Bahtû000

45,106 (2,327) 42,779

36,220 8,886 45,106

Available-for-sale financial assets are analysed as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 As at 31 December Listed equity securities Unlisted equity securities Total available-for-sale financial assets

33,225 10,427 43,652

35,840 10,427 46,267

Company 2011 Bahtû000

2010 Bahtû000

32,352 10,427 42,779

34,679 10,427 45,106

Listed equity securities

Listed equity securities at cost Cumulative changes in fair value Listed equity securities at fair value

Consolidated 2011 2010 Bahtû000 Bahtû000 32,562 32,502 663 3,338 33,225 35,840

Company 2011 Bahtû000 32,163 189 32,352

2010 Bahtû000 32,163 2,516 34,679

The table below shows deferred income tax impact on unrealised gains (losses) on available-forsale financial assets. Consolidated 2011 2010 Bahtû000 Bahtû000 Cumulative net gains from change in fair value Effect on deferred income tax Cumulative net gains from change in fair value, net of tax (Note 27)

Company 2011 Bahtû000

2010 Bahtû000

663 (63)

3,338 (315)

189 (29)

2,516 (216)

600

3,023

160

2,300

Sri Trang Agro-Industry Public Company Limited

165

Non-listed equity securities Consolidated 2011 2010 Bahtรป000 Bahtรป000 10,427 10,427

Non-listed equity securities at cost

Company 2011 Bahtรป000 10,427

2010 Bahtรป000 10,427

The management of the Group is of the opinion that the cost of the non-listed equity securities remains the best estimate of the fair value unless the investment is impaired.

Property, plant and equipment, net Bahtรป000 Consolidated Cost basis

Revaluation/cost basis Land and Buildings land and improvements structures At 1 January 2010 Cost Add surplus on asset revaluation Less cumulative losses from asset revaluation Less accumulated depreciation Less provision for impairment Net book amount For the year ended 31 December 2010 Opening net book amount Additions Transfers in (out) Disposals and write-offs Depreciation charge (Note 28) Currency translation differences Closing net book amount At 31 December 2010 Cost Add surplus on asset revaluation Less cumulative losses from asset revaluation Less accumulated depreciation Less provision for impairment Net book amount

166

Machinery and equipment

Vehicles

Assets under Fixtures and construction office and equipment installation

1,032,506 554,341

1,269,661 503,648

2,093,164 -

443,392 -

187,378 -

(98,963) (111,880) 1,376,004

(22,384) (193,646) (1,201,437) (7,541) 1,557,279 884,186

(358,635) 84,757

(151,900) 35,478

1,376,004 328,713 88,661 (1,494) (31,423) (2,826) 1,757,635

1,557,279 12,774 282,214 (320) (90,819) (18,232) 1,742,896

884,186 39,613 399,722 (7,479) (198,426) (21,408) 1,096,208

84,757 39,085 20,413 (109) (28,225) (3,160) 112,761

35,478 12,398 4,582 (78) (17,086) 3,097 38,391

307,631 995,557 (795,592) (34,747) (7,370) 465,479

4,245,335 1,428,140 (44,227) (365,979) (49,899) 5,213,370

1,443,683 554,341

1,542,634 503,648

2,399,349 -

491,319 -

200,241 -

465,479 -

6,542,705 1,057,989

(98,943) (141,446) 1,757,635

(22,384) (281,002) (1,295,600) (7,541) 1,742,896 1,096,208

(378,558) 112,761

(161,850) 38,391

Annual Report 2011

307,631 -

Total 5,333,732 1,057,989

- (121,347) - (2,017,498) (7,541) 307,631 4,245,335

- (121,327) - (2,258,456) (7,541) 465,479 5,213,370

Baht没000 Consolidated Revaluation/cost basis Land and Buildings land and improvements structures For the year ended 31 December 2011 Opening net book amount Additions Transfers in (out) Reclassification to investment property (Note 18) Disposals and write-offs Revaluation surplus Depreciation charge (Note 28) Currency translation differences Closing net book amount At 31 December 2011 Cost Add surplus on asset revaluation Less cumulative losses from asset revaluation Less accumulated depreciation Less provision for impairment Net book amount

Cost basis Machinery and equipment

Vehicles

Assets under Fixtures and construction office and equipment installation

38,391 465,479 28,253 1,842,553 22,254 (1,188,403)

Total

1,757,635 838,417 132,238

1,742,896 28,639 368,871

1,096,208 60,637 629,475

112,761 35,393 35,565

5,213,370 2,833,892 -

(120,405) 39,197 (35,155) 3,249 2,615,176

(3,545) (116,598) 16,355 2,036,618

(13,223) (267,267) 20,299 1,526,129

(956) (36,795) 2,977 148,945

(1,329) (20,316) 618 67,871

(29,544) (18,812) 9,585 1,080,858

(29,544) (158,270) 39,197 (476,131) 53,083 7,475,597

2,303,477 591,437

1,956,228 503,648

3,043,959 -

555,914 -

239,752 -

1,080,858 -

9,180,188 1,095,085

(104,192) (175,546) 2,615,176

(22,385) (400,873) (1,510,289) (7,541) 2,036,618 1,526,129

(406,969) 148,945

(171,881) 67,871

- (126,577) - (2,665,558) (7,541) 1,080,858 7,475,597 Baht没000

Company Revaluation/cost basis Land and Buildings land and improvements structures At 1 January 2010 Cost Add surplus on asset revaluation Less cumulative losses from asset revaluation Less accumulated depreciation Less provision for impairment Net book amount

Cost basis Machinery and equipment

Vehicles

Assets under Fixtures and construction office and equipment installation

574,462 396,843

598,325 342,742

1,161,132 -

131,635 -

129,663 -

(73,636) (76,634) 821,035

(15,765) (104,016) 821,286

(739,245) (7,541) 414,346

(115,058) 16,577

(105,177) 24,486

34,380 -

Total 2,629,597 739,585

(89,401) - (1,140,130) (7,541) 34,380 2,132,110

Sri Trang Agro-Industry Public Company Limited

167

Baht没000 Company Revaluation/cost basis Land and Buildings land and improvements structures For the year ended 31 December 2010 Opening net book amount Additions Transfers in (out) Disposals and write-offs Depreciation charge (Note 28) Closing net book amount At 31 December 2010 Cost Add surplus on asset revaluation Less cumulative losses from asset revaluation Less accumulated depreciation Less provision for impairment Net book amount For the year ended 31 December 2011 Opening net book amount Additions Transfers in (out) Disposals and write-offs Depreciation charge (Note 28) Closing net book amount At 31 December 2011 Cost Add surplus on asset revaluation Less cumulative losses from asset revaluation Less accumulated depreciation Less provision for impairment Net book amount

Cost basis Machinery and equipment

Vehicles

Assets under Fixtures and construction office and equipment installation

Total

821,035 44,160 2,180 (1,378) (21,403) 844,594

821,286 773 29,224 (36) (47,534) 803,713

414,346 13,808 23,632 (5,934) (90,096) 355,756

16,577 12,118 (109) (7,750) 20,836

24,486 2,581 1,079 (52) (9,493) 18,601

34,380 135,703 (56,115) (26,942) 87,026

2,132,110 209,143 (34,451) (176,276) 2,130,526

617,704 396,843

628,055 342,742

1,105,619 -

138,658 -

125,462 -

87,026 -

2,702,524 739,585

(73,636) (96,317) 844,594

(15,765) (151,319) 803,713

(742,322) (7,541) 355,756

(117,822) 20,836

(106,861) 18,601

844,594 232,964 3,337 (21,266) (15,422) 1,044,207

803,713 3,808 56,823 (1) (49,704) 814,639

355,756 27,489 129,435 (2,967) (91,824) 417,889

20,836 8,571 3,874 (325) (9,415) 23,541

18,601 12,015 10,927 (41) (9,944) 31,558

87,026 478,661 (204,396) (2,725) 358,566

2,130,526 763,508 (27,325) (176,309) 2,690,400

840,089 389,493

688,685 342,742

1,248,053 -

145,047 -

141,490 -

358,566 -

3,421,930 732,235

(73,636) (111,739) 1,044,207

(15,765) (201,023) 814,639

(822,623) (7,541) 417,889

(121,506) 23,541

(109,932) 31,558

(89,401) - (1,214,641) (7,541) 87,026 2,130,526

(89,401) - (1,366,823) (7,541) 358,566 2,690,400

The Group没s land, land improvements, buildings and structures thereon were revalued by independent valuers in the third quarter of 2008 using the market approach, the depreciated replacement cost approach and the income approach. The revaluation surplus was credited to fair value reserves in shareholders没 equity.

168

Annual Report 2011

The table below shows deferred income tax impact on revaluation surplus.

Revaluation surplus Less accumulated depreciation on revaluation surplus Less deferred income tax Revaluation surplus, net of accumulated depreciation and deferred income taxes

Consolidated 2011 2010 Bahtû000 Bahtû000 1,095,085 1,057,989 (128,754) (94,248) (133,146) (113,722)

833,185

850,019

Company 2011 Bahtû000 732,235 (92,010) (98,787)

2010 Bahtû000 739,585 (57,735) (71,222)

541,438

610,628

If the land, land improvements, buildings and structures were stated on the historical cost basis, the total carrying amount of the property, plant and equipment would be as follows:

Cost Less accumulated depreciation Less provision for impairment Net book amount

Consolidated 2011 2010 Bahtû000 Bahtû000

2011 Bahtû000

2010 Bahtû000

9,248,557 (3,242,318) (7,541) 5,998,698

3,421,930 (1,756,761) (7,541) 1,657,628

2,702,524 (1,611,598) (7,541) 1,083,385

6,542,705 (2,836,522) (7,541) 3,698,642

Company

Consolidated financial statements The Groupûs depreciation expense of Baht 427 million (2010: Baht 330 million) has been charged in çcosts of sales and servicesé and of Baht 49 million (2010: Baht 36 million) in çadministrative expensesé. As at 31 December 2011, certain land, land improvements, buildings and structures thereon, and machinery and equipment of some subsidiaries with the total net book values amounted to Baht 1,445.3 million (2010 : Baht 1,940.3 million) are mortgaged as collateral for credit facilities and short-term and long-term loans from banks as explained in Note 22. As at 31 December 2011 and 2010, the Group had gross carrying amounts of land improvements, buildings, structures, machinery and equipment, vehicles, fixtures and office equipment that are fully depreciated but they are still in active use totaling Baht 1,338 million and Baht 1,217 million, respectively. Company financial statements The Companyûs depreciation expense of Baht 155 million (2010: Baht 158 million) has been charged in çcosts of sales and servicesé and of Baht 21 million (2010: Baht 18 million) in çadministrative expensesé. As at 31 December 2011 and 2010, the Company had gross carrying amounts of land improvements, buildings, structures, machinery and equipment, vehicles, fixtures and office equipment that are fully depreciated but they are still in active use totaling Baht 783.2 million and Baht 671.9 million, respectively. Sri Trang Agro-Industry Public Company Limited

169

Leased assets included above, where the Group and the Company are lessees under finance leases, comprise vehicles, fixtures and office equipment: Consolidated 2011 2010 Bahtรป000 Bahtรป000 Cost of assets acquired under finance leases Less accumulated depreciation Net book amount

141,951 (107,253) 34,698

144,497 (89,748) 54,749

Company 2011 Bahtรป000 31,702 (19,316) 12,386

2010 Bahtรป000 39,298 (25,211) 14,087

The Group leases various vehicles and fixtures and office equipment under non-cancellable finance lease agreements. The lease terms are between 3 to 5 years, and ownership of the assets lies within the Group.

Intangible assets, net Bahtรป000 Computer software Consolidated Company

170

At 1 January 2010 Cost Less accumulated amortisation Net book amount

49,146 (34,850) 14,296

29,366 (24,340) 5,026

For the year ended 31 December 2010 Opening net book amount Additions Write-offs Amortisation charge (Note 28) Currency translation differences Net book amount

14,296 13,487 (6) (5,988) (89) 21,700

5,026 8,204 (2,663) 10,567

At 31 December 2010 Cost Less accumulated amortisation Net book amount

61,721 (40,021) 21,700

37,096 (26,529) 10,567

For the year ended 31 December 2011 Opening net book amount Additions Write-offs Amortisation charge (Note 28) Currency translation differences Net book amount

21,700 9,605 (7,127) 26 24,204

10,567 3,255 (3,171) 10,651

At 31 December 2011 Cost Less accumulated amortisation Net book amount

71,437 (47,233) 24,204

40,351 (29,700) 10,651

Annual Report 2011

Investment properties Consolidated 2011 2010 Bahtรป000 Bahtรป000 Opening net book amount Additions Acquisitions Reclassification from assets under Construction (Note 16) Net fair value gain recognised in profit or loss Gain(loss) from translation differences Ending net book amount

Company 2011 Bahtรป000

2010 Bahtรป000

48,032

39,843

22,850

6,824

9,852

29,544 15,437 2,490 102,327

(1,663) 48,032

22,850

The investment property of the Group is property held for a currently undetermined future use and land not in use. The Group has not determined whether it will be held as owner-occupied property or for short-term capital appreciation. The land not used in operations was revalued by an independent valuer in the third quarter of 2008 using the market approach. Investment property of a subsidiary is carried at fair value at the date of statement of financial position as determined by the most recent transacted market value of a property in the location and of the same category as the one held by the subsidiary. Valuation is made annually based on the propertyรปs highest-and-best-use using the Direct Market Comparison Method.

Deferred income tax Deferred income taxes are calculated in full on temporary differences, using the liability method and using a principal tax rate of 1.70% - 38.75% (2010: 8.59% - 38.75%). The deferred income taxes are temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax assets are recognised for all deferred income tax assets to the extent that the realisation of the related tax benefit through future taxable profits is probable.

Sri Trang Agro-Industry Public Company Limited

171

The analysis of deferred income tax assets and deferred income tax liabilities is as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 Deferred income tax assets: Deferred income tax assets to be recovered after more than 12 months Deferred income tax assets to be recovered within 12 months Deferred income tax liabilities: Deferred income tax liabilities to be settled after more than 12 months Deferred income tax liabilities to be settled within 12 months Deferred income tax - net

Company 2011 Bahtû000

2010 Bahtû000

487,573

66,647

103,456

12,854

50,116 537,689

63,617 130,264

21,500 124,956

12,854

188,702

22,447

5,333

13,333

140,062 328,764 208,925

115,956 138,403 (8,139)

101,542 106,875 18,081

58,317 71,650 (58,796)

The movement of deferred income tax for the years is as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 As at 1 January (Charged)/credited to profit or loss (Charged)/credited to other comprehensive income Cumulative translation differences As at 31 December

172

Annual Report 2011

(8,139) 233,091 (23,980) 7,953 208,925

(21,892) 20,144 (1,143) (5,248) (8,139)

Company 2011 Bahtû000 (58,796) 120,457 (43,580) 18,081

2010 Bahtû000 (2,459) (55,307) (1,030) (58,796)

Consolidated Recorded Recorded (Restated) to other (Restated) to other 1 January Recorded to comprehensive 31 December Recorded to comprehensive 31 December 2010 profit or loss income 2010 profit or loss income 2011 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000

Deferred income tax assets Tax losses carried forward Unrealised gain/(loss) on derivative financial instruments Allowance for inventory cost in excess of net realisable value Cumulative loss from revaluation Provision for post employment benefit obligations Others Deferred income tax liabilities Revaluation surplus Fair value estimation of investment properties Unrealised gain/(loss) on derivative financial instruments Allowance for inventory cost in excess of net realisable value Others Deferred income tax assets (liabilities), net

80,124

(71,621)

(79)

8,424

5,725

14,209

30,653

34,240

(4,789)

60,104

361,932

5,439

427,475

1,311 21,163

(7,225)

1,311 13,938

45,181 4,074

46,492 18,012

15,778 21,386 170,415

733 13,557 (30,316)

(94) (4,873) (9,835)

16,417 30,070 130,264

441 (17,875) 399,478

963 1,485 7,947

17,821 13,680 537,689

154,795

(41,958)

112,837

(690)

24,232

136,379

885

706

1,591

37,333

(20,656)

(3,551)

13,126

(8,255)

463

5,334

179 192,307

11,269 (50,460)

107 (3,444)

11,555 138,403

162,900 11,726 166,387

(768) 47 23,974

162,132 23,328 328,764

(21,892)

20,144

(6,391)

(8,139)

233,091

(16,027)

208,925

Company Recorded Recorded (Restated) to other (Restated) to other 1 January Recorded to comprehensive 31 December Recorded to comprehensive 31 December 2010 profit or loss income 2010 profit or loss income 2011 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000 Bahtû000

66,943

(66,943)

2,595

(1,356)

1,239

80,853

82,092

12,393

(4,070)

8,323

21,364 6,635

21,364 14,958

4,293 3,341 89,565

(1,042) (2,270) (75,681)

(1,030) (1,030)

3,251 41 12,854

3,218 32 112,102

6,469 73 124,956

Sri Trang Agro-Industry Public Company Limited

173

Deferred income tax liabilities Revaluation surplus Fair value estimation of investment properties Unrealised gain/(loss) on derivative financial instruments Others Deferred income tax assets (liabilities), net

90,270

(32,839)

57,431

(1,277)

43,767

99,921

886

706

1,592

1,755 92,025

2,304 9,274 (20,375)

4,059 9,274 71,650

1,274 (9,058) (8,355)

(187) 43,580

5,333 29 106,875

(2,460)

(55,306)

(1,030)

(58,796)

120,457

(43,580)

18,081

Other non-current assets Consolidated 2011 2010 Bahtû000 Bahtû000 Refundable deposits Prepayments Others Total other non-current assets

10,711 1,027 23,245 34,983

17,288 188 18,168 35,644

2011 Bahtû000

2010 Bahtû000

4,127 1,027 2,961 8,115

7,413 188 2,961 10,562

Trade accounts payable and other payable Consolidated 2011 2010 Bahtû000 Bahtû000 Trade accounts payable - other companies Trade accounts payable - related companies (Note 37.3) Accrued expenses Deferred income Deposits and retentions received from customers Total trade accounts payable and other payable

174

Company

Annual Report 2011

1,791,933 259,657 339,086 90,859 62,181 2,543,716

1,689,078 849,450 247,160 97,267 159,162 3,042,117

Company 2011 Bahtû000 970,656 419,849 140,550 1,312 4,958 1,537,325

2010 Bahtû000 842,170 243,723 119,976 19 1,634 1,207,522

The carrying amounts of the Groupûs trade accounts payable - other companies are denominated in the following currencies: Consolidated 2011 2010 Bahtû000 Bahtû000 520,571 626,508 17,727 13,589 3,508 62 3,439 31 1,246,688 1,048,888 1,791,933 1,689,078

USD IDR SGD RMB THB Total trade accounts payable - other companies

Company 2011 Bahtû000 28,031 942,625 970,656

2010 Bahtû000 10,302 831,868 842,170

Borrowings Consolidated 2011 2010 Bahtû000 Bahtû000 Current Loans for packing credit Short-term loans from financial institutions Bills payable Total short-term borrowings from financial institutions Current portion of long-term borrowings Bank borrowings Finance lease liabilities Total current borrowings Non-current Bank borrowings Debentures Finance lease liabilities Total non-current borrowings Total borrowings

Company 2011 Bahtû000

2010 Bahtû000

1,647,104 11,777,387 2,001,123 15,425,614

3,023,338 15,058,080 2,371,208 20,452,626

1,562,091 2,989,500 4,551,591

3,001,338 7,640,040 10,641,378

120,000 11,451 15,557,065

597,610 17,165 21,067,401

6,361 4,557,952

575,000 10,506 11,226,884

314,860 2,150,000 12,310 2,477,170 18,034,235

2,226,050 22,927 2,248,977 23,316,378

2,150,000 8,001 2,158,001 6,715,953

2,031,250 13,531 2,044,781 13,271,665

22.1 Short-term loans from financial institutions (a) Consolidated financial statements The Group has facilities of overdrafts, loans for packing credit and short-term loans with several financial institutions totalling Baht 29,545.9 million, USD 457.8 million and Rp 85 billion (2010 : Baht 22,521 million, USD 259.1 million and Rp 75 billion). The overdrafts bear interest at the rate of 7.55% per annum (2010: 6.25% per annum). The loans for packing credit and short-term loans bear interest at the rates ranging from 1.05% to 7.66% per annum (2010: 1.09% to 11.5% per annum). In addition, the balance of short-term loans for the Group as at 31 December 2011 amounting to Baht 15,425.6 million (2010: Baht 20,452.6 million) included loans from banks of two subsidiaries as follows: Sri Trang Agro-Industry Public Company Limited

175

As at 31 December 2011, Rubberland Products Co., Ltd., a subsidiary of the Company, has a long-term loan from financial institutions balance of Baht 244.8 million, which was reclassified as short-term loan from financial institutions since the subsidiary was not in full compliance with the terms of the underlying loan agreement. During the year 2011, the counterparty bank has changed the terms of the underlying loan agreement and has waived the non-compliance with the terms of the underlying loan agreement and consequently the balance of the loan was reclassified back to long-term loan in the first quarter of 2011. As at 31 December 2011, the ending balance under the underlying loan agreement was Baht 192.8 million, the loan bears interest at the rate of MLR minus a fixed percentage per annum and the interest is payable on a monthly basis. A short-term loan of PT Sri Trang Lingga Indonesia amounting to USD 5 million (approximately Baht 158.5 million) (2010: USD 9.95 million or equivalent to Baht 297.9 million) bears interest at SIBOR plus a fixed percentage per annum (2010: SIBOR plus a fixed percentage per annum) and the interest is payable on a monthly basis. As at 31 December 2010, the subsidiary was not in full compliance with the terms of the underlying loan agreement and the counterparty bank has waived the non-compliance with the terms of the underlying loan agreement. During the year 2011, the counterparty bank has changed the terms of the underlying loan agreement and the subsidiary was in full compliance. A long-term loan of PT Sri Trang Lingga Indonesia amounting to USD 2.2 million (approximately Baht 69.7 million) (2010: USD 4.2 million or equivalent to Baht 125.8 million), which was classified as a short-term term because under the terms of the underlying loan agreement, the counterparty bank reserves the right to request repayment of this loan on demand although the loan is repayable in 20 quarterly installments starting from April 2008 and the last installment is in January 2013. The loan bears interest at the rate of OBR minus a fixed percentage per annum and the interest is payable on a monthly basis.

As at 31 December 2011, the Group没s facilities of overdrafts, loans for packing credit and short-term loans are guaranteed by land, land improvements, buildings and structures thereon, and machinery and equipment of some subsidiaries as described in Note 16, fixed deposits of a subsidiary balance of Baht 22.4 million (2010: Baht 22.4 million) and certain of the Company没s directors (no fee charged) (2010: guaranteed by certain of the Company没s directors). According to a condition of the loan agreements, the Company and its two subsidiaries are not allowed to create any encumbrance on their assets, except for encumbrances created with the prior consent of the banks and permitted liens. In addition, the Company and the subsidiaries must comply with other conditions and restrictions stated in the loan agreements.

176

Annual Report 2011

(b)

Company financial statements The Company has facilities of overdrafts, loans for packing credit and short-term loans with several financial institutions totalling Baht 21,024 million (2010: Baht 16,490 million). The loans for packing credit and short-term loans amounted to Baht 4,552 million (2010: Baht 10,641 million) bear interest at the rates ranging from 1.5% to 3.7% per annum (2010: 1.28% to 2.4% per annum). As at 31 December 2011, under a condition specified in the loan agreements, the Company is not allowed to create any encumbrance on its assets, except for encumbrances created with the prior consent of the banks and permitted liens. In addition, the Company must comply with other conditions and restrictions stated in the loan agreements

22.1 Long-term loans from financial institution (a) Consolidated financial statements Nam Hua Rubber Co., Ltd. The first loan, As at 31 December 2010, balance of Baht 10.9 million payable in quarterly installments in principal starting from July 2005 and the last installment in April 2011, interest payable on a monthly basis, which bears interest at the rate of MLR per annum. The second loan, As at 31 December 2010, balance of Baht 3.8 million payable in quarterly installments in principal starting from October 2007 and the last installment in July 2011, interest payable on a monthly basis, which bears interest at the rate of MLR per annum. The third loan, As at 31 December 2011, balance of Baht 10 million (2010 : Baht 18 million), payable in quarterly installments in principal starting from April 2008 and the last installment in January 2013, interest payable on a monthly basis, which bears interest at the rate of MLR per annum. As at 31 December 2011, this subsidiary has no balance of long-term loans from financial institutions from the first and second loans because this subsidiary has made fully repayments without any fee from early repayments. Rubberland Products Co., Ltd. The first loan, As at 31 December 2011, balance of Baht 192.8 million (2010 : Baht 244.8 million and classified as short-term loan), payable in quarterly installments in principal starting from November 2010 and the last installment in August 2015, interest payable on a monthly basis, which bears interest at the rate of MLR minus a fixed percentage per annum. The second loan, As at 31 December 2011, balance of Baht 232.1 million (2010 : Baht 184.8 million), granted by a bank in 2010, payable in quarterly installments in principal starting from December 2011 and the last installment in September 2016, interest payable on a monthly basis, which bears interest at the rate of MLR minus a fixed percentage per annum. Sri Trang Agro-Industry Public Company Limited

177

(b)

Company financial statements The first loan, As at 31 December 2010, balance of Baht 200 million, payable in December 2011, interest payable on a monthly basis, which bears interest at the rate of 3.87% per annum. The second loan, As at 31 December 2010, balance of Baht 2,406.3 million, which is a syndicated loan granted by three banks, payable in quarterly installments in principal starting from November 2010 and the last installment in August 2014, interest payable on a monthly basis, which bears interest at the rates of Thai Baht fixed deposit with maturity of three months plus a fixed percentage per annum and MLR minus a fixed percentage per annum. Under a condition specified in the loan agreements, the Company is not allowed to create any encumbrance on its assets, except for encumbrances created with the prior consent of the banks and permitted liens. In addition, the Company must comply with other conditions and restrictions stated in the loan agreements As at 31 December 2011, the Company has no balance of long-term loans from financial institutions from both loans because the Company has made fully repayments without any fee from early repayments. 22.3 Debentures On 1 December 2011, the Company issued and offered the unsecured, unsubordinate, with name registered, and with debenture holders没 representative debentures, amounting to 2,150,000 units. The debentures are divided into 2 tranches as follows: Debentures of Sri Trang Agro-Industry Public Company Limited No. 1/2011 Tranche 1 due 2014 Debentures of Sri Trang Agro-Industry Public Company Limited No. 1/2011 Tranche 2 due 2016 The movement of the balance of the debentures can be presented as follows: Consolidated and Company 2011 2010 Baht没000 Baht没000 2,150,000 2,150,000 -

Opening balance Issuing during the year Ending balance

The details of the debentures in the consolidated and company financial statements can be presented as follows: Interest 31 December Issuing during 31 December rate Par value 2010 the year 2011 (%) (Baht) (shares) (shares) (shares) STA14DA

4.40 p.a.

1,000

1,600,000

STA16DA

4.70 p.a.

1,000

550,000

2,150,000

178

Annual Report 2011

1,600,000

Term of interest payment

Due for redemption

1 June and 1 December 2014 1 December every year 550,000 1 June and 1 December 2016 1 December every year 2,150,000

22.4 Additional information for the borrowings from financial institutions and debentures The interest rate exposure on the borrowings from financial institutions and debentures (excluding finance lease liabilities) of the Group and the Company is as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 Short-term borrowings - at fixed rates - floating rates Long-term borrowings - at fixed rates - floating rates Debentures - at fixed rates - floating rates Total borrowings - at fixed rates - floating rates

Company 2011 Bahtû000

2010 Bahtû000

15,425,614 15,425,614

20,452,626 20,452,626

4,551,591 4,551,591

10,641,378 10,641,378

434,860 434,860

200,000 2,623,660 2,823,660

200,000 2,406,250 2,606,250

2,150,000 2,150,000

2,150,000 15,860,474 18,010,474

200,000 23,076,286 23,276,286

2,150,000 4,551,591 6,701,591

200,000 13,047,628 13,247,628

Fair values of the long-term borrowings and debentures are based on discounted cash flows using discount rates based upon the borrowing rates which the management expects would be available to the Group and the Company at the date of statements of financial position. The carrying amounts of short-term borrowings and lease obligations approximate their fair values. Maturity of long-term borrowings and debentures (excluding finance lease liabilities) is as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 15,545,614 21,050,236 1,914,860 1,238,750 550,000 987,300 18,010,474 23,276,286

Not later than 1 year Later than 1 year but not later than 3 years Later than 3 year but not later than 5 years

Company 2011 Bahtû000 4,551,591 1,600,000 550,000 6,701,591

2010 Bahtû000 11,216,378 1,093,750 937,500 13,247,628

The carrying amounts of the Groupûs borrowings from financial institutions and debentures are denominated in the following currencies:

USD IDR THB Total borrowings from financial institutions and debentures

Consolidated 2011 2010 Bahtû000 Bahtû000 4,979,750 5,527,877 468,060 569,771 12,562,664 17,178,638 18,010,474 23,276,286

Company 2011 2010 Bahtû000 Bahtû000 6,701,591 13,247,628 6,701,591 13,247,628

Sri Trang Agro-Industry Public Company Limited

179

22.5 Finance lease liabilities The minimum lease payments recognised as liabilities from the finance leases are summarised as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 12,540 18,840 12,784 24,103 25,324 42,943 (1,563) (2,851) 23,761 40,092

Not later than 1 year Later than 1 year but not later than 5 years Less future finance charges on finance leases Present values of finance lease liabilities Finance lease liabilities - Current - Non-current

11,451 12,310 23,761

17,165 22,927 40,092

Company 2011 Bahtû000 7,056 8,352 15,408 (1,046) 14,362

2010 Bahtû000 11,540 14,171 25,711 (1,674) 24,037

6,361 8,001 14,362

10,506 13,531 24,037

The present value of finance lease liabilities is as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 11,451 17,165 12,310 22,927 23,761 40,092

Not later than 1 year Later than 1 year but not later than 5 years

Company 2011 Bahtû000 6,361 8,001 14,362

2010 Bahtû000 10,506 13,531 24,037

22.6 Borrowing facilities The Group and the Company have the following undrawn committed borrowing facilities: Consolidated

Bahtû000 Floating rate - Expiring within one year

19,893,246

2011 Million USDû000 300,868

Rupiah 85,000

Bahtû000 9,063,000

2010 Million USDû000

Rupiah

75,146

55,000

Company 2011 Bahtû000 Floating rate - Expiring within one year

16,472,319

2010 Bahtû000 5,848,622

The facilities expiring within one year are annual facilities subject to reviews at various dates during year. The other facilities have been arranged to help finance the proposed expansion of activities for the Group and the Company.

180

Annual Report 2011

Other current liabilities Consolidated 2011 2010 Bahtû000 Bahtû000 Social security and other taxes Others Total other current liabilities

40,949 24,287 65,236

Company 2011 Bahtû000

42,740 22,168 64,908

2010 Bahtû000

17,698 23,576 41,274

25,305 18,520 43,825

Provision for post employment benefit obligations The amounts recognised in the statement of financial position are determined as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 Present value of unfunded obligation

104,788

Company 2011 Bahtû000

89,286

2010 Bahtû000

41,923

37,865

The movements in the defined benefit obligations over the year are as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 At 1 January Current service costs Interest costs Benefits paid At 31 December

89,286 14,205 3,256 (1,959) 104,788

Company 2011 Bahtû000

73,535 13,732 2,972 (953) 89,286

2010 Bahtû000

37,865 3,062 1,227 (231) 41,923

33,583 2,961 1,321 37,865

The amounts recognised in the statement of income are as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 Current service costs Interest costs Total

14,205 3,256 17,461

Company 2011 Bahtû000

13,732 2,972 16,704

2010 Bahtû000

3,062 1,227 4,289

2,961 1,321 4,282

The principal actuarial assumptions used were as follows: Percentage

Discount rate Inflation rate Future salary increases (monthly staff) Future salary increases (daily staff)

Consolidated 2011 2010 4.7 4.7 3.0 3.0 6.5 6.5 3.0 3.0

Company 2011

2010 4.7 3.0 6.5 3.0

Sri Trang Agro-Industry Public Company Limited

4.7 3.0 6.5 3.0

181

Share capital and premium on share capital Consolidated and Company Number of Issued and registered paid-up Ordinary Share shares shares shares premium (Shares) (Shares) (Bahtû000) (Bahtû000)

Par value (Baht)

Total (Bahtû000)

At 1 January 2009 Issue of shares At 31 December 2009, pre-split share

5 5

200,000,000 200,000,000

1,000,000 1,000,000

1,123,800 1,123,800

2,123,800 2,123,800

At 28 June 2010, post-split share (split share 1 : 5) Issue of shares At 31 December 2010

1 1,000,000,000 1 280,000,000 1 1,280,000,000

1,000,000,000 1,000,000,000

1,000,000 1,000,000

1,123,800 1,123,800

2,123,800 2,123,800

At 1 January 2011 Issue of shares

1 1,280,000,000 1 -

1,000,000,000 280,000,000

1,000,000 280,000

1,123,800 7,427,190

2,123,800 7,707,190

At 31 December 2011

1 1,280,000,000

1,280,000,000

1,280,000

8,550,990

9,830,990

At the Extraordinary General Shareholdersû Meeting 1/2010 held on 28 June 2010, the shareholders approved a resolution to change the par value of the Companyûs shares from Baht 5 to Baht 1 (split share 1:5) and increase the authorised share capital by Baht 280,000,000 from Baht 1,000,000,000 to Baht 1,280,000,000 by registering an additional 280,000,000 ordinary shares of Baht 1 each. The Company registered the increased share capital with the Ministry of Commerce on 29 June 2010. As at 31 December 2011, the total authorised number of ordinary shares was 1,280,000,000 shares (31 December 2010: 1,280,000,000 shares) with a par value of Baht 1 per share (31 December 2010: Baht 1 per share). 1,280,000,000 shares were issued and fully paid-up (31 December 2010: 1,000,000,000 shares). On 31 January 2011, the Company completed a placement of its ordinary share offering of 280 million shares on the Singapore Exchange Securities Trading Limited (çSGX-STé) at the offering price of SGD 1.20 per share, totalling SGD 336 million (approximately Baht 8,035 million). In addition, the SGX-ST set the new ordinary shares of the Company to be traded on its main board on that date. Incremental costs directly attributable to the issuance of the new ordinary shares amounting to Baht 437 million, net of tax of Baht 109 million, have been recognised in equity as a deduction of the premium on share capital.

182

Annual Report 2011

Legal reserve Consolidated and Company 2011 Bahtû000 At 1 January Appropriation during the year At 31 December

2010 Bahtû000

100,000 28,000 128,000

100,000 100,000

In accordance with the Public Limited Company Act., B.E. 2535, the Company is required to set aside a legal reserve based on 5% of its net profit until the reserve is not less than 10% of the registered capital. On 28 April 2011 the Annual General Meeting of Shareholders resolved to set aside Baht 28 million of net profit to the legal reserve.

Other component of equity Other component of equity can be analysed as follows: Consolidated Deduction arising from acquisition of additional interest in subsidiaries from non-controlling interests Bahtû000

For the year ended 31 December 2011 Opening balance as at 1 January 2011 - as restated Revaluation surplus, gross Revaluation surplus, tax Depreciation transfer on assets revaluation, gross Depreciation transfer on assets revaluation, tax Disposal of assets, gross Disposal of assets, tax Change in fair value of availablefor-sale financial assets, gross Change in fair value of availablefor-sale financial assets, tax Change in tax rate used in deferred tax recognition Currency translation differences Closing balance as at 31 December 2011

(Restated) (Restated) Unrealised Revaluation gain (loss) on surplus, net of availableaccumulated for-sale depreciation financial assets Bahtû000 Bahtû000

(Restated) Cumulative translation differences Bahtû000

Total Bahtû000

(173,134) -

850,018 44,446 (8,889) (34,506) 4,809 (7,350) 1,134

3,023 -

(283,843) -

396,064 44,446 (8,889) (34,506) 4,809 (7,350) 1,134

(2,675)

(173,134)

(16,477) 833,185

367 (115) 600

163,308 (120,535)

367 (16,592) 163,308 540,116

Sri Trang Agro-Industry Public Company Limited

183

Consolidated Deduction arising from acquisition of additional interest in subsidiaries from non-controlling interests Bahtû000 For the year ended 31 December 2010 Opening balance as at 1 January 2010 - as restated Depreciation transfer on assets revaluation, gross Depreciation transfer on assets revaluation, tax Change in fair value of availablefor-sale financial assets, gross Change in fair value of availablefor-sale financial assets, tax Change in tax rate used in deferred tax recognition Currency translation differences Closing balance as at 31 December 2010 - as restated

(Restated) (Restated) Unrealised Revaluation gain (loss) on surplus, net of availableaccumulated for-sale depreciation financial assets Bahtû000 Bahtû000

845,558 (24,290) 3,684

(5,373) -

(56,150) -

610,901 (24,290) 3,684

9,539

25,066 -

(855) (288) -

(227,693)

(855) 24,778 (227,693)

(173,134)

850,018

3,023

(283,843)

396,064

For the year ended 31 December 2011 Opening balance as at 1 January 2011 - as restated Depreciation transfer on assets revaluation, gross Depreciation transfer on assets revaluation, tax Disposal of assets, gross Disposal of assets, tax Change in fair value of available-for-sale financial assets, gross Change in fair value of available-for-sale financial assets, tax Change in tax rate used in deferred tax recognition Closing balance as at 31 December 2011

Annual Report 2011

Total Bahtû000

(173,134) -

(Restated) Revaluation surplus, net of accumulated depreciation Bahtû000

184

(Restated) Cumulative translation differences Bahtû000

610,628 (21,371) 3,298 (7,350) 1,134 (44,901) 541,438

Company (Restated) Unrealised gain (loss) on available-for-sale financial assets Bahtû000 2,300 (2,327) 359 (172) 160

Total Bahtû000 612,928 (21,371) 3,298 (7,350) 1,134 (2,327) 359 (45,073) 541,598

(Restated) Revaluation surplus, net of accumulated depreciation Bahtû000 For the year ended 31 December 2010 Opening balance as at 1 January 2011 - as restated Depreciation transfer on assets revaluation, gross Depreciation transfer on assets revaluation, tax Change in fair value of available-for-sale financial assets, gross Change in fair value of available-for-sale financial assets, tax Change in tax rate used in deferred tax recognition Closing balance as at 31 December 2011 - as restated

605,520 (26,844) 2,305 29,648 610,629

Company (Restated) Unrealised gain (loss) on available-for-sale financial assets Bahtû000

Total Bahtû000

(5,555) 8,885 (763) (267) 2,300

599,965 (26,844) 2,305 8,885 (763) 29,381 612,929

Expense by nature The following significant items have been charged to the operating profit for the year.

For the years ended 31 December Raw materials and consumables used Allowance for inventory cost in excess of net realisable value Employee costs and key management benefits Depreciation Amortisation Transportation and distribution expense Energy expense Cess expense

Consolidated 2011 2010 Bahtû000 Bahtû000

2011 Bahtû000

2010 Bahtû000

90,445,985

55,464,757

47,891,806

34,327,986

869,633

111,753

29 16 17

1,254,180 476,131 7,127 795,075 627,914 2,192,649

822,057 365,979 5,988 818,241 480,679 800,286

449,867 176,309 3,171 671,459 265,417 1,946,217

362,317 176,276 2,663 522,074 246,424 684,056

Notes

Company

Additional information The cess expense is a fee charged to exporters of natural rubber products to be deposited into the rubber replanting aid fund managed by the office of the Rubber Replanting Aid Fund (ORRAF) in Thailand for the purpose of replanting support.

Sri Trang Agro-Industry Public Company Limited

185

Employee costs and key management benefits Consolidated 2011 2010 Bahtû000 Bahtû000 Wages and salaries Social security costs Post-employment benefit expenses Other employment benefits Total employee costs and key management benefits

420,965 10,271 4,289 14,342 449,867

338,565 9,275 4,282 10,195 362,317

Consolidated 2011 2010 Bahtû000 Bahtû000

2011 Bahtû000

2010 Bahtû000

133,549,712 154,130 133,703,842

76,838,862 23,251 76,862,113

44,033,004 7,703 44,040,707

83,683,992 161,337 83,845,329

Consolidated 2011 2010 Bahtû000 Bahtû000 1,177 17,598 10,981 10,346 20,177 16,434

7,984 124,897 165,216

(6,721) 39,506 77,163

Company

Company 2011 Bahtû000 70,809 1,439 13,318

2010 Bahtû000 355,580 1,359 7,131

16,895 52,003 154,464

(1,919) 32,600 394,751

Finance costs - net Consolidated 2011 2010 Bahtû000 Bahtû000 Finance income Interest income from bank deposits Interest income from customers and brokers Interest income from related parties Total finance income

186

2010 Bahtû000

Other income

Dividend income Rental income Income from sales of scraps Gains (losses) on disposals of and write-offs of property, plant and equipment, and intangible assets Others Total other income

743,557 16,729 16,704 45,067 822,057

2011 Bahtû000

Sales of goods and services

Revenues from sales of goods Service revenues Total sales of goods and services

1,136,664 32,600 17,461 67,455 1,254,180

Company

Annual Report 2011

12,377 2,847 950 16,174

2,890 3,270 6,160

Company 2011 Bahtû000 3,277 407 950 4,634

2010 Bahtû000 874 1,882 2,756

Consolidated 2011 2010 Bahtû000 Bahtû000 Finance costs Interest expenses on bank borrowings Interest expenses on finance leases Net foreign exchange gains on financing activities Total finance costs Finance costs - net

899,759 1,304 (16,066) 884,997 868,823

445,854 1,665 (49,859) 397,660 391,500

2011 Bahtû000

2010 Bahtû000

418,289 627 418,916 414,282

238,463 741 239,204 236,448

Other gains (losses) - net Consolidated 2011 2010 Bahtû000 Bahtû000 Gains (losses) from derivative financial instruments Other gain (losses) - net

Company

505,658 505,658

(10,391) (10,391)

Company 2011 Bahtû000

2010 Bahtû000

73,880 73,880

103,544 103,544

Income tax expenses The estimated average annual tax rate for the consolidated financial statements for the year ended 31 December 2011 was 32.13% (the tax rate for the year ended 31 December 2010 was 6.63%), and for the company financial statements, it was 33.39% (the tax rate for the year ended 31 December 2010 was 3.51%). For the year ended 31 December 2010, the Company had tax losses carried forward which could be used to offset the income tax expenses, and the promotional privileges under some promotional certificates were fully utilised during the year 2010. On 11 October 2011, the Thai Cabinet has passed a resolution to reduce the corporate income tax rate from 30% to 23% for 2012 and to 20% for 2013 onward. The Royal Decree No. 530, B.E. 2554 dated 21 December 2011 promulgated that the tax rate for 2012 will be 23% and 2013 - 2014 will be 20%. In January 2012, the Thai Federation of Accounting Professions (çFAPé) has issued a clarification about the change in corporate income tax rate. FAP believed that it is highly probable that the Thai government will amend the tax rate for 2015 onward to the rate not more than 20%. According to this clarification from FAP, the deferred income taxes that expected to be reversed in 2012 and 2013 onward are re-measured using the tax rate of 23% and 20%, respectively. The reduction of this tax rate resulted in the decrease in deferred income tax assets and deferred income tax liabilities of the Group. The impacts were recognised as income tax expenses for the year ended 2011 except for the deferred income tax which recognised through the shareholdersû equity, the impact from the change in tax rate is recognised in the other comprehensive income.

Sri Trang Agro-Industry Public Company Limited

187

Consolidated 2011 2010 Bahtû000 Bahtû000 Current income tax: Current income tax on profit of the year Deferred income tax: Origination and reversal of temporary differences Income tax expenses

Company 2011 Bahtû000

2010 Bahtû000

862,333

292,806

655,034

30,727

(233,091) 629,242

(20,144) 272,662

(120,457) 534,577

55,307 86,034

The taxes on the Groupûs profits before income tax differ from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 Profit before income tax Tax calculated at domestic tax rates applicable to profits in the respective countries Share of tax on profits of associates and a joint venture Tax effect of: - Income not subject to tax - Expenses not deductible for tax purpose - Double deductable expenses - Change in tax rate - Tax losses of the current year for which no deferred income tax asset was recognised - Tax at concessionary rate of 10% see note (a) - Utilisation of previously unrecognised tax losses - Recognition of temporary differences which were not recognised in previous periods - Under estimation of income tax liability in the prior year - Others Total income tax expenses

Company 2011 Bahtû000

2010 Bahtû000

1,958,512

4,113,166

1,601,156

2,452,765

767,123 (216,684)

514,986 (59,742)

534,635 -

179,785 -

(25,620) 31,078 (1,733) 16,118

(34,786) 5,252 (9,827) (25,722)

(23,643) 23,025 (403) 7,844

(22,959) 554 (29,648)

334

2,269

30,122

(38,230)

(29,553)

(27,788)

(2,460) 30,964 629,242

(59,954) 7,969 272,662

(6,881) 534,577

(13,910) 86,034

Additional information (a) On 11 May 2007, the Ministry of Trade and Industry of Singapore awarded the Global Trader Programme status to one of the subsidiaries for the period from 11 May 2007 to 31 December 2009. Under this programme, incomes derived from qualifying trading transactions of approved products are taxed at the concessionary rate of 10%. On 21 January 2010, this status was extended from 1 January 2010 to 31 December 2014.

188

Annual Report 2011

(b)

The Company and certain subsidiaries in Thailand were granted tax incentives relating to the manufacturing of certain natural rubber products. The tax incentives include the following: ë Exemption from payment of import duty on imported machinery and equipment. ë Exemption from payment of income tax for the period of eight years starting from the commencement date of the promoted business, and 50 percent reduced from the normal tax rate for the next five years after the period of eight years are expired. Consolidated 2011 Tax (charge) Before tax credit Bahtû000 Bahtû000

Revaluation surplus Change in tax rate used in deferred tax recognition Disposal of assets Change in fair value of availablefor-sale financial assets Cumulative translation adjustments Total income tax charges to other comprehensive income

After tax Bahtû000

2010 Tax (charge) Before tax credit Bahtû000 Bahtû000

After tax Bahtû000

44,446

(8,889)

35,557

(7,350)

(16,592) 1,134

(16,592) (6,216)

(2,675) 158,868

367 7,953

(2,308) 166,821

9,538 (229,388)

(1,142) (5,249)

8,396 (234,637)

193,289

(16,027)

177,262

(219,850)

(6,391)

(226,241)

Company 2011 Tax (charge) Before tax credit Bahtû000 Bahtû000 Change in tax rate used in deferred tax recognition Disposal of assets Change in fair value of availablefor-sale financial assets Total income tax charges to other comprehensive income

After tax Bahtû000

2010 Tax (charge) Before tax credit Bahtû000 Bahtû000

After tax Bahtû000

(7,350)

(45,073) 1,134

(45,073) (6,216)

(2,327)

359

(1,968)

8,885

(1,030)

7,855

(9,677)

(43,580)

(53,257)

8,885

(1,030)

7,855

Sri Trang Agro-Industry Public Company Limited

189

Earnings per share Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares in issue during the year, excluding treasury shares.

Net profit attributable to ordinary shareholders (Baht没000) Weighted average number of ordinary shares in issue (shares) Basic earnings per share (Baht)

Consolidated (Restated) 2011 2010

Company (Restated) 2011 2010

1,306,249

1,066,579

3,819,627

1,256,666,667 1,000,000,000 1.04 3.82

2,366,732

1,256,666,667 1,000,000,000 0.85 2.37

There are no potential dilutive ordinary shares in issue during the years ended 31 December 2011 and 2010

Dividends A dividend in respect of the year ended 31 December 2010 of Baht 1.25 per share (amounting to a total of Baht 1,600 million) was paid on 27 May 2011 to all shares outstanding (the year ended 31 December 2009 : Baht 3 per share amounting to a total of Baht 600 million).

Related party transactions Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Company and close members of the family of these individuals and companies associated with these individuals also constitute related parties. In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form. The following transactions were carried out with related companies:

190

Annual Report 2011

37.1 Sales of goods and services Consolidated 2011 2010 Bahtû000 Bahtû000

For the years ended 31 December Sales of goods to: Subsidiaries Associates Sales of services to: Subsidiaries Associates Dividend income received from: Subsidiaries Associates A joint venture Rental income from: A subsidiary An associate Revenue interest from: Associates

Company 2011 Bahtû000

2010 Bahtû000

6,287,304 6,287,304

5,002,056 5,002,056

6,019,552 2,684,485 8,704,037

2,276,290 2,344,059 4,620,349

166,090 166,090

136,679 136,679

41,367 6,219 47,586

22,370 6,370 28,740

44,500 30,150 74,650

329,058 329,058

39,500 30,150 69,650

71,665 266,362 338,027

5,412 5,412

5,538 5,538

227 768 995

894 894

951 951

37.2 Purchases of goods and services

For the years ended 31 December Purchases of goods from: Subsidiaries Associates A joint venture Purchases of services from: Subsidiaries Associates

Consolidated 2011 2010 Bahtû000 Bahtû000

Company 2011 Bahtû000

2010 Bahtû000

565,817 6,045,302 6,611,119

401,339 6,269,563 6,670,902

15,937,775 559,189 16,496,964

4,191,735 396,509 4,588,244

1,156 1,156

2,019 2,019

429,773 1,141 430,914

311,553 1,551 313,104

Sri Trang Agro-Industry Public Company Limited

191

37.3 Outstanding balances arising from sales/purchases of goods and services and other income as at 31 December Consolidated 2011 2010 Bahtû000 Bahtû000 Trade accounts receivable (Note 10) Subsidiaries Associates Amounts due from futures broker An associate Other receivable An associate Accrued interest Associates Long-term loan to Associates Trade accounts payable (Note 21) Subsidiaries Associates A joint venture

Company 2011 Bahtû000

2010 Bahtû000

103,140 103,140

91,212 91,212

1,913,722 8,530 1,922,252

635,777 22,629 658,406

71,415

81,275

71,415

81,275

44,064

2,772

44,064

2,772

948

62,905

103,671 155,986 259,657

77,852 771,598 849,450

316,734 103,115 419,849

166,731 76,992 243,723

The carrying amounts of the Groupûs outstanding balances with related parties are denominated in the following currencies: Consolidated 2011 2010 Bahtû000 Bahtû000 Trade accounts receivable (Note 10) USD THB Amounts due from futures broker THB Other receivable THB Accrued interest USD Long-term loan to USD Trade accounts payable (Note 21) USD THB

192

Annual Report 2011

Company 2011 Bahtû000

2010 Bahtû000

201 102,939 103,140

91,212 91,212

1,911,576 10,676 1,922,252

558,240 100,166 658,406

71,415

81,275

71,415

81,275

44,064

2,772

44,064

2,772

948

62,905

155,986 103,671 259,657

771,598 77,852 849,450

15,447 404,402 419,849

5,614 238,109 243,723

The trade receivables from related parties arose mainly from sales transactions and are due approximately one month after the date of sales. The receivables are unsecured in nature and bear no interest. There is no allowance for impairment against receivables from related parties (2010: Nil). The long-term loan to an associate is the loan to Semperflex Shanghai Ltd. denominated in USD amounting to USD 2 million (approximately Baht 62.91 million). The loan bears interest at 5.5 percent per annum and is to be repaid in a single lump sum three years from the lending date. The loan is unsecured. The accounts payable to related parties arose mainly from purchase transactions and are due approximately one month after the date of purchase. The payables bear no interest. 37.4 Key management compensation Key management includes all directors and non-directors. The compensation paid or payable to key management for their services is shown below: Consolidated 2011 2010 Bahtû000 Bahtû000

For the years ended 31 December Salaries and other employee benefits

232,591

Company 2011 Bahtû000

88,559

2010 Bahtû000

33,121

24,199

Financial instruments by category

Loans and receivables Bahtû000 Assets as per statement of financial position Long-term loan to an associate Available-for-sale financial assets Derivative financial instruments Trade accounts receivable Fixed deposits pledged as collateral Cash and cash equivalents Total

62,905 7,421,315 143,483 2,273,021 9,900,724

Consolidated 31 December 2011 Assets at fair value through Available the profit and loss -for-sale Bahtû000 Bahtû000 329,305 329,305

43,652 43,652

Total Bahtû000 62,905 43,652 329,305 7,421,315 143,483 2,273,021 10,273,681

Sri Trang Agro-Industry Public Company Limited

193

Consolidated 31 December 2011 Liabilities at fair Other financial value through the liabilities at profit and loss amortised cost Bahtû000 Bahtû000 Liabilities as per statement of financial position Short-term loans from financial institutions Current portion of long-term loans Current portion of finance lease liabilities Long-term loans from financial institutions Debentures Finance lease liabilities Derivative financial instruments Trade accounts payable Total

1,112,239 1,112,239

Total Bahtû000

15,425,614 120,000 11,451 314,860 2,150,000 12,310 2,051,590 20,085,825

15,425,614 120,000 11,451 314,860 2,150,000 12,310 1,112,239 2,051,590 21,198,064

Consolidated 31 December 2010 Assets at fair Loans and value through the Available receivables profit and loss -for-sale Bahtû000 Bahtû000 Bahtû000 Assets as per statement of financial position Available-for-sale financial assets Derivative financial instruments Trade accounts receivable Fixed deposits pledged as collateral Cash and cash equivalents Total

5,702,688 125,444 1,773,962 7,602,094

459,559 459,559

Liabilities at fair value through the profit and loss Bahtû000 Liabilities as per statement of financial position Short-term loans from financial institutions Current portion of long-term loans from financial institutions Current portion of finance lease liabilities Long-term loans from financial institutions Finance lease liabilities Derivative financial instruments Trade accounts payable Total

194

Annual Report 2011

46,267 46,267

Consolidated 31 December 2010 Other financial liabilities at amortised cost Bahtû000

Total Bahtû000 46,267 459,559 5,702,688 125,444 1,773,962 8,107,920

Total Bahtû000

20,452,626

493,488 493,488

597,610 17,165 2,226,050 22,927 2,538,528 25,854,906

597,610 17,165 2,226,050 22,927 493,488 2,538,528 26,348,394

Company 31 December 2010 Assets at fair Loans and value through the Available receivables profit and loss -for-sale Bahtû000 Bahtû000 Bahtû000 Assets as per statement of financial position Long-term loan to an associate Available-for-sale financial assets Derivative financial instruments Trade accounts receivable Fixed deposits pledged as collateral Cash and cash equivalents Total

62,905 6,003,586 12,595 766,434 6,845,520

44,430 44,430

Liabilities at fair value through the profit and loss Bahtû000 Liabilities as per statement of financial position Short-term loans from financial institutions Current portion of long-term loans from financial institutions Current portion of finance lease liabilities Long-term loans from financial institutions Debentures Finance lease liabilities Derivative financial instruments Trade accounts payable Total

42,779 42,779

Consolidated 31 December 2010 Other financial liabilities at amortised cost Bahtû000

Total Bahtû000

62,905 42,779 44,430 6,003,586 12,595 766,434 6,932,729

Total Bahtû000

4,551,591

541,893 541,893

6,362 2,150,000 8,001 1,390,506 8,106,460

6,362 2,150,000 8,001 541,893 1,390,506 8,648,353

Sri Trang Agro-Industry Public Company Limited

195

Company 31 December 2010 Assets at fair Loans and value through the Available receivables profit and loss -for-sale Bahtû000 Bahtû000 Bahtû000 Assets as per statement of financial position Available-for-sale financial assets Derivative financial instruments Trade accounts receivable Fixed deposits pledged as collateral Cash and cash equivalents Total

3,614,702 12,551 686,844 4,314,097

98,248 98,248

45,106 45,106

Other financial liabilities at amortised cost Bahtû000

Total Bahtû000

45,106 98,248 3,614,702 12,551 686,844 4,457,451

Total Bahtû000

10,641,378

65,410 65,410

575,000 10,506 2,031,250 13,531 1,085,893 14,357,558

575,000 10,506 2,031,250 13,531 65,410 1,085,893 14,422,968

Credit quality of financial assets The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates:

196

Annual Report 2011

Consolidated 2011 2010 Baht没000 Baht没000

Company 2011 Baht没000

2010 Baht没000

Deposits held at call with banks AAA+ Aaa Aa1 Aa2 Aa3 A1 A3 Baa1 Baa2 Baa3 Ba1 Ba2 B2 C1 No rating Total deposits held at call with banks

63,993 229,686 217 18,367 506,303 194,517 342,739 158,645 32,842 667,542 8,682 2,223,533

10,620 286,338 217 285,547 147,784 21,543 563,495 315,489 32,808 1,926 322 14,387 12,089 1,692,565

217 1,782 394,443 159,247 104,339 33,813 32,648 905 727,394

217 135 11,019 466,321 149,061 30,105 1,879 658,737

Trade accounts receivable Counterparties without external credit rating Group 1 Group 2 Group 3 Total unimpaired trade accounts receivable

333,718 5,947,694 1,139,903 7,421,315

370,522 5,329,912 2,254 5,702,688

6,003,586 6,003,586

3,699 3,611,003 3,614,702

Derivative financial instruments Counterparties with external credit rating A2 Baa1 Baa2 Baa3 Ba1 Counterparties without external credit rating Group 2 Total derivative financial instruments

56,876 536 35,451 243 7,349

56,223 515 33,918 243 7,349

329,305 329,305

359,104 459,559

98,248

Fixed deposit pledged as collateral Aaa Aa1 Aa3 A1 A2 Baa1 Baa2 Total

14,147 76,809 15,846 22,798 13,883 143,483

36,414 24,263 28,176 400 36,191 125,444

12,595 12,595

12,551 12,551

Sri Trang Agro-Industry Public Company Limited

197

Group 1 new customers/ related parties (less than 6 months) Group 2 existing customers/ related parties (more than 6 months) with no defaults in the past. Group 3 existing customers/ related parties (more than 6 months) with some defaults in the past. All defaults were fully recovered. Maintenance margins are held with high quality counterparties with no history of default. None of the financial assets that are fully performing has been renegotiated during the financial year.

Promotional privileges By virtue of the provisions of Industrial Investment Promotion Act. B.E. 2520, the Group and the Company were granted certain privileges on their manufactures of concentrated latex, STR block rubber and Skim Crepe, which included among others, as follows: (a) Exemption from payment of import duty on imported machinery and equipment. (b) Exemption from payment of income tax for the period of eight years starting from the commencement date of the promoted business, and 50 percent reduced from the normal income tax rate for the next five years after the period of eight years is expired. As a promoted industry, the Group and the Company must comply with certain conditions and restrictions provided for in the promotional certificates. Sales classified as promoted and non-promoted business for the years ended 31 December 2011 and 2010 of the Company are summarised as follows:

Export sales and service income - net Domestic sales and service income - net Total

198

Promoted business Bahtû000

2011 Nonpromoted business Bahtû000

Promoted Total Bahtû000

NonPromoted business Bahtû000

28,055,004

30,198,378

58,253,382

12,866,806

20,305,490

33,172,296

7,797,095 35,852,099

10,811,636 41,010,014

18,608,731 76,862,113

3,015,633 15,882,439

7,852,778 28,158,268

10,868,411 44,040,707

Annual Report 2011

2010

business Bahtû000

Total Bahtû000

Contingencies and commitments 41.1 Sales and purchase commitments The Group and the Company are committed to certain sales and purchases for which the contractual prices are fixed and will be settled at future dates and for which the contractual prices are uncertain. The values of these commitments presented at the fixed contractual prices or the market prices at the end of period in case of the uncertain contractual price are as follows: Consolidated 2011 2010 Bahtû000 Bahtû000 Purchases From associates From third parties Sales To associates To third parties

Company 2011 Bahtû000

2010 Bahtû000

578,079 8,576,177 9,154,256

1,177,510 19,073,929 20,251,439

2,024,819 28,817,425 30,842,244

1,317,675 22,350,071 23,667,746

114,885 13,201,954 13,316,839

261,843 8,408,782 8,670,625

41.2 Capital commitments The Group and the Company have capital commitments as the following: Consolidated 2011 2010 Bahtû000 Bahtû000 Capital commitments

535,211

442,410

Company 2011 Bahtû000

2010 Bahtû000

301,324

134,151

41.3 Commitments to guarantee loans of subsidiaries, a joint venture and associates 41.3.1 The Company has a commitment to guarantee loans of Sri Trang USA, Inc., a subsidiary, amounted to USD 68.25 million (approximately Baht 2,162.9 million) (2010 : USD 45 million or equivalent to Baht 1,354.6 million) (no fee charged). 41.3.2 The Company has a commitment to guarantee loans of PT Sri Trang Lingga Indonesia, a subsidiary, amounted to USD 15.8 million and Rp 123.0 billion (approximately Baht 936.7 million) (2010 : USD 45.6 million and Rp.126.1 billion or equivalent to Baht 1,783.9 million) (no fee charged). 41.3.3 The Company has a commitment to guarantee loans of P.T. Star Rubber, a subsidiary, amounted to USD 13.0 million and Rp 10 billion (approximately Baht 450.1 million) (2010 : USD 14.6 million and Rp 50 billion or equivalent to Baht 587.9 million) (no fee charged). 41.3.4 The Company has a commitment to guarantee loans of Sadao P.S. Rubber Co., Ltd., a subsidiary, amounted to Baht 46.8 million (2010 : Baht 107.5 million) (no fee charged). Sri Trang Agro-Industry Public Company Limited

199

41.3.5 The Company has a commitment to guarantee loans and credit facilities of Thaitech Rubber Corporation Ltd., a joint venture, limited to its percentage of holding amounting to USD 1 million (approximately Baht 30.5 million) and Baht 36.9 million (2010 : USD 1 million (approximately Baht 30.5 million) and Baht 36.9 million) (no fee charged). 41.3.6 The Company has a commitment to guarantee loans of Sempermed USA, Inc., an associated company, limited to its percentage of holding amounting to USD 2 million (approximately Baht 63.4 million) (2010 : USD 2 million or equivalent to Baht 60.2 million) (no fee charged). 41.3.7 The Group has contingently liabilities for bank guarantees issued in favor of government agency totalling Baht 44.4 million (2010: Baht 33.6 million) and has pledged its fixed deposits of Baht 13.0 million (2010: Baht 14.2 million) as collateral for these bank guarantees. 41.4 Operating lease commitments - where the Group/Company is the lessee The future aggregate minimum lease payments under non-cancellable operating leases of the Group and the Company are as follows: Baht没000

Not later than 1 year Later than 1 year but not later than 5 years Later than 5 years Total

Consolidated 2011 2010 71,107 43,759 120,156 67,897 2,894 3,060 194,157 114,716

Company 2011 22,643 31,451 54,094

2010 16,666 13,989 30,655

Contingent assets On 30 June 2011, Office of the Rubber Replanting Aid Fund (莽ORPAF茅) has issued a letter to notify about the consideration results that allow the payment of cess at the former rate which is lower than the rate that the Company has paid to ORPAF. The content of this letter mentioned that in order to follow the announcement of The Ministry of Agriculture dated 20 June 2011 about the guidance for consideration to allow the payment of cess at the former rate, the rubber inventories, which ORPAF has examined during 20 - 30 September 2010 which is the period before the new cess rate come into effect, will be allowed to pay cess at the former rate and order the Company to submit the supporting documents as specified in this letter to ORPAF in order to request for the payment of cess at former rate. As at 31 December 2011, the Company has not yet received the result of examination to approve the refund of cess. If the ORPAF approves and refunds the cess according to the Company没s request in full amount, the Group will receive the cess refund about Baht 252 million (Company: Baht 175 million). The Group did not recognise these contingent assets in the statement of financial position as at 31 December 2011 because there is an uncertainty from the process of document examination.

200

Annual Report 2011

General Corporate Information Information of the Company Name of the Company (Thai) Name of the Company (English) Head Office

Type of Business Registration No. Company Secretary Website Type of Shares Registered Capital Paid-up Capital Issued Shares

: ∫√‘…—∑ »√’μ√—ß·Õ‚°√Õ‘π¥— ∑√’ ®”°—¥ (¡À“™π) : Sri Trang Agro-Industry Public Company Limited : 10 Soi 10, Phetkasem Road, Hatyai, Songkhla 90110, Thailand Telephone +66-7434-4663 (Automatic 14 Lines) Fax +66-7434-4676, +66-7434-4677, +66-7423-7423 : Production and export of RSS, TSR and Concentrated Latex : 0107536001656 : Mrs. Pacharin Anuwongwattanachai : http://www.sritranggroup.com : Ordinary shares : Baht 1,280,000,000 : Baht 1,280,000,000 : Baht 1,280,000,000 with a par value of Baht 1 each

Information of juristic persons in which the Company holds more than 10% of the issued shares of such juristic persons 1.

Nam Hua Rubber Head Office

: 10 Soi 10 Phetkasem Road, Hatyai Subdistrict Hatyai District, Songkhla, 90110 Thailand Branch Office : 1. 99 Moo 3 Samnuk Kham Subdistrict, Sadao District, Songkhla Province, 90120 2. 41 Moo 3 Samnuk Kham Subdistrict, Sadao District, Songkhla Province, 90120 Type of Business : Production and export of RSS, TSR and Concentrated Latex Telephone : 66-7441-2268, 66-7441-1982-5 Fax : 66-7441-2255 Type of Shares : Ordinary shares Total number of shares directly held by STA: 1,749,994 shares or 99.99% 2.

Anvar Parawood Head Office

: 101 Moo 3, Padangbezar Road, Samnuk Kham Subdistrict Sadao District, Songkhla Province, 90120 Thailand Type of Business : Lumber production and manufacture of wooden furniture Telephone : 66-7441-2756-7 Fax : 66-7441-2853 Type of shares : Ordinary shares Total number of shares directly held by STA : 9,994 shares or 99.94%

Sri Trang Agro-Industry Public Company Limited

201

Premier System Engineering Head Office : 123 Moo 8, Karnchanawanich Road, Banpru Subdistrict Hatyai District, Songkhla, 90250, Thailand Branch Office : 133 Rakpru Road, Banpru Subdistrict, Hatyai District, Songkhla Province, 90250 Type of Business : Engineering services, design, installation and maintenance machinery Telephone : 66-7447-1480-3, 66-7447-1368 Fax : 66-7447-1290, 66-7447-1430 Type of Shares : Ordinary shares Total number of shares directly held by STA : 409,996 shares or 81.99%

Rubberland Products Head Office

: 109 Karnchanawanich Road, Pahtong Subdistrict Hatyai District, Songkhla Province, 90230, Thailand Branch Office : 1. 10 Soi 10 Phetkasem Road, Hatyai Subdistrict Hatyai District, Songkhla, 90110 2. 36/82 P.S.Tower 23rd Floor, Soi Sukhumvit 21, Asoke Road, Klongtory Nua Subdistrict, Wattana District Bangkok 10110 3. 338 Moo 2 Nonsomboon Subdistrict, Mueang Bungkarn District, Bungkarn, 38000 4. 338 Moo 1 Kokma Subdistrict, Prakonchai District, Burirum, 31140 5. 188 Moo 10 Bangsaiyai Subdistrict, Mueang Mukdahan Subdistrict, Mukdahan, 49000 Type of Business : Production of Concentrated Latex/ Block rubber Telephone : 66-7429-1223-4, 66-7429-1755, 66-7429-1476 Fax : 66-7429-1477 Type of Shares : Ordinary shares Total number of shares directly held by STA : 749,994 shares or 99.99% 5.

SSC Head Office Branch Office

202

: 110 Karnchanawanich Road, Pahtong Subdistrict Hatyai District, Songkhla, 90230, Thailand : 1. 10 Soi 10 Phetkasem Road, Hatyai Subdistrict Hatyai District, Songkhla Province, 90110 2. 36/82 P.S.Tower 23rd Floor, Soi Sukhumvit 21, Asoke Road, Klongtoey Nua Subdistrict, Wattana District, Bangkok 10110 3. 109/2 Karnchanawanich Road, Pahtong Subdistrict Hatyai District, Songkhla Province, 90230 4. 352 Karnchanawanich Road, Pahtong Subdistrict Hatyai District, Songkhla Province, 90230 5. 189 Moo 7 Plaiwat Subdistrict, Karnchanadit district, Surat Thani Province, 84160 6. 39/1 Moo 9 Tungkai Subdistrict, Yantakao District, Trang Province, 92140

Annual Report 2011

Type of Business : Production of examination gloves Telephone : 66-7447-1471, 66-7429-1648-9, 66-7429-1471-5 Fax : 66-7429-1650 Type of Shares : Ordinary shares Total number of shares directly held by STA: 6,300 shares or 31.50% Auditor : BDO Limited 6.

Semperflex Asia Head Office

: 110/1 Karnchanawanich Road, Pahtong Subdistrict Hatyai District, Songkhla Province, 90230, Thailand Branch Office : 10 Soi 10 Phetkasem Road, Hatyai Subdistrict Hatyai District, Songkhla, Province 90110 Type of Business : Production of high-pressure Hydraulic hoses Telephone : 66-7447-1231-5 Fax : 66-7447-1230 Type of Shares : Ordinary shares Total number of shares directly held by STA : 1,425,000 shares or 37.50% Auditor : BDO Limited 7.

Semperform Pacific1 Head Office

: 110/2 Karnchanawanich Road, Pahtong Subdistrict Hatyai District, Songkhla Province, 90230, Thailand Branch Office : 10 Soi 10 Phetkasem Road, Hatyai Subdistrict Hatyai District, Songkhla, Province 90110 Type of Business : Production of injection moulded-rubber and plastic parts Telephone : 66-7447-1231-5 Fax : 66-7447-1230 Type of Shares : Ordinary shares Total number of shares directly held by STA : 56,250 shares or 37.50% Auditor : BDO Limited

Sadao P.S. Rubber Head Office

: 207/1 Padang Besar Road, Sadao Subdistrict Sadao District, Songkhla Province, 90120, Thailand Type of Business : Production of RSS Telephone : 66-7441-1838, 66-7446-0483, 66-7446-0485 Fax : 66-7446-0484 Type of Shares : Ordinary shares Total number of shares held by STA : 399,994 shares or 99.99%

Semperform Pacific ceased its business operations. Currently, asset disposal process was completed. Liquidation is expected to be performed within 2012.

Sri Trang Agro-Industry Public Company Limited

203

Starlight Express Transport Head Office : 13/1 Jingjit Road, Thupthiang Subdistrict Muang District, Trang Province, 92000, Thailand Type of Business : Provision of logistics services Telephone : 66-7521-0900-2 Fax : 66-7521-0903 Type of Shares : Ordinary shares Total number of shares directly held by STA : 114,998 shares or 76.66%

10.

Startex Rubber Head Office

: 10 Soi 10 Phetkasem Road, Hatyai Subdistrict Hatyai District, Songkhla Province, 90110, Thailand Type of Business : Ownership and management of rubber and oil palm plantations Telephone : 66-7521-0900-2 Fax : 66-7521-0903 Type of Shares : Ordinary shares Total number of shares directly held by STA : 419,995 shares or 83.99% 11.

Thai Tech Rubber Head Office

: 2 Juti Utit 3 Road, Hatyai Subdistrict Hatyai District, Songkhla Province, 90110, Thailand Type of Business : Production of TSR Telephone : 66-7423-0768, 66-7423-0406-7, 66-7423-9063-4 Fax : 66-7423-8650 Type of Shares : Ordinary shares Total number of shares directly held by STA : 200,998 shares or 33.50% Auditor : AST Master Co., Ltd. 12.

Pattana Agro Futures Head Office

: Wallstreet Tower, G Floor, 33/19 Surawongse Road Surawongse Subdistrict, Bangrak District, Bangkok, 10500, Thailand Type of Business : Brokerage activities Telephone : 66-2632-8826 Fax : 66-2632-8825 Type of Shares : Ordinary shares Total number of shares directly held by STA : 3,200,000 shares or 40.00% Auditor : Ernst & Young Office Limited 13.

204

Sri Trang Rubber & Plantation Head Office : 13/1 Jingjit Road, Thupthiang Subdistrict Muang District, Trang Province, 92000, Thailand Type of Business : Ownership and management of rubber plantation Telephone : 66-7521-0900-2 Fax : 66-7521-0903 Type of Shares : Ordinary shares Total number of shares directly held by STA : 16,999,993 shares or 99.99%

Annual Report 2011

14.

Sri Trang International Head Office : 1 Raffles Place No. 38-02, One Raffles Place, Singapore 048616 Type of Business : Natural rubber wholesaler in Singapore Telephone : 65-6532-5210, 65-6532-5321 Fax : 65-6532-7501 Type of Shares : Ordinary shares Total number of shares directly held by STA : 42,000,000 shares or 100.00%

15.

Sri Trang USA, Inc. Head Office

: 300 Preston Ave., Suite 400 Charlottesville Virginia 22902 United States Type of Business : Natural rubber wholesaler in the United States Telephone : 1-434-296-0080, 1-434-244-0089 Fax : 1-434-296-0098 Type of Shares : Common stock Total number of shares directly held by STA : 2,000 shares or 100.00% Auditor : Cherry, Bakaert & Holland LLP.2 16.

Sempermed USA, Inc. Head Office : 13900, 49th Street North, Clearwater, Florida 33762 United States Type of Business : Distribution of examination gloves in the United States Telephone : 1-800-366-9545 Fax : 1-800-763-5491 Type of Shares : Ordinary shares Total number of shares directly held by STA : 1,000 shares or 25.00% Auditor : Pender Newkirk & Company LLP, USA

17.

Shanghai Sempermed3 Head Office

: No.8, Xinja Road, Che Dun Town Songjiang District, Shanghai 201611 P.R.C Type of Business : Production of examination gloves Telephone : 86-21-5760-9389 Fax : 86-21-5760-9296 Type of capital : Registered capital Total amount of capital directly held by SSC : USD 3,000,000 or 100.00% Auditor : Deloitte Touche Tohmatsu CPA Ltd.

18.

Shanghai Semperit Head Office Type of Business

: Bei SongSt2, Minhang, Shanghai 20111 P.R.C. North of Bridge No.2 : Manufacture of handrails and related parts for escalators and travelators Telephone : 86-21-6409 0850, 86-21-6409 0300 Fax : 86-21-6409 0850 Type of Interest : Equity Total interest directly held by STA : 10.00%

2 3

The Company没s board and audit committee are satisfied with the standard and effectiveness of the audit of the Company. Shanghai Sempemed is currently dormant and in the process of asset disposal.

Sri Trang Agro-Industry Public Company Limited

205

19.

PT Sri Trang Lingga Head Office

: Jalan TPA2, RT.26 & 29 Keramasan, Palembang, South Sumatera, Indonesia 30259 PO BOX 1230 Palembang Type of Business : Production of block rubber Telephone : 62-711-445 666 Fax : 62-711-445 222 Type of Shares : Ordinary shares Total number of shares directly held by STA : 18,000 shares or 90.00%

20.

Semperflex Shanghai Head Office Type of Business Telephone Fax Type of Interest Total interest held by STA Auditor

: Shanghai Chemical Industry Park, Fengxian Subzone Canggong Road 1255, 201424, Shanghai, P.R.C. : Production of high-pressure Hydraulic hoses : 86-21-5744-8386 : 86-21-5744-8386 : Equity : USD 7,500 shares or 50.00% : Grant Thornton, Shanghai, China

21.

Sempermed Singapore Head Office : 10 Anson Road, #09-24, International Plaza, Singapore 079903 Type of Business : Investment holding in Sempermed Brasil Telephone : N/A Fax : N/A Type of Shares : Ordinary shares Total number of shares directly held by STA : 3,000,000 shares or 50.00% Auditor : Audit Alliance Public Accountants and Certified Public Accountants

22.

Sempermed Brasil Head Office

: Rua João Franco de Oliveira 750 - Unileste, Piracicaba - São Paulo Brazil Zip Code : 13.422-160 Type of Business : Distribution and marketing of natural rubber gloves and synthetic rubber in Brazil Telephone : N/A Fax : N/A Type of capital : Quotas Total number of quotas held by Sempermed Singapore: 12,546,637 shares or approximately 100.00% Auditor: Röedl & Partner Auditores Independentes, Brazil 23.

206

Shi Dong Investments Head Office : 1 Raffles Place No.38-02, One Raffles Place, Singapore 048616 Type of Business : Investment holding in PT Star Rubber Telephone : 65-6532-5210, 65-6532-5321 Fax : 65-6532-7501 Type of Shares : Ordinary shares Total number of shares directly held by Sri Trang International : 100.00%

Annual Report 2011

24.

PT Star Rubber Head Office

: Jalan Trans Kalimantan KM. 16, Desa Jawa Tengah Kec. Sungai Ambawang, Kab Kubu Raya-Kalbar, Pontianak, Kalimantan Barat, Indonesia. PO Box 7864 Type of Business : Production of block rubber Telephone : 62-561-724888 Fax : 62-561-724593 Type of Shares : Ordinary shares Total number of shares directly held by Shi Dong Investment Pte Ltd. 99.00% 25.

Shi Dong Shanghai Head Office Type of Business Telephone Fax Type of Interest Total interest held by STA

: Unit 2701, Wheelock square, No.1717 West Nanjing Road, Jing没 an District, Shanghai 200040 : Distribution of Natural Rubber Products in PRC : 86 21-64137860 : 86 21-64137315 : Equity : USD 5,000,000 or 100.00%

Sri Trang Agro-Industry Public Company Limited

207

References 1.

Share Registrar Thailand Securities Depository Co., Ltd. 62 The Stock Exchange of Thailand Building, Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand Telephone : 66-2229 2800 Fax : 66-2654 5427 TSD Call Center : 66-2229 2888

Singapore Transfer Agent Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623 Telephone : 65-6536 5355 Fax : 65-6536 1360

Auditor (Appointed on 28 June 2010) Mrs. Unakorn Phruithithada, Certified Public Accountant (Thailand) No. 3257; or Mrs. Nattaporn Phan-Udom, Certified Public Accountant (Thailand) No. 3430; or Mr. Boonlert Kamolchanokkul, Certified Public Accountant (Thailand) No. 5339 PricewaterhouseCoopers ABAS Limited 15th Floor, Bangkok City Tower 179/74-80 South Sathorn Road Bangkok, 10120 Thailand Telephone : 66-2344-1000, 66-2286-9999 Fax : 66-2286-5050

Debenture Registrar Siam Commercial Public Company Limited 9 Ratchadapisek Rd., Chatuchak, Bangkok, 10900 Thailand Telephone : 66-2544-1000 Fax : 66-2544-2658

Debenture Holder没s Representative Kasikornbank Public Company Limited 1 Soi Ratburana 27/1 Ratburana Rd., Ratburana, Ratburana, Bangkok 10140 Thailand Telephone : 66-2222-0000 Fax : 66-2470-1144-5

208

Annual Report 2011

Defined Terms and Abbreviations In this document, unless the context otherwise requires, references to çour Companyé, çthe Companyé or çSTAé refer to Sri Trang Agro-Industry Public Company Limited; references to çweé, çusé, çouré, çourselvesé, and çGroupé refer to the Company and its consolidated subsidiaries taken as a whole. Our Group Companies and other Entities Anvar Parawood : Anvar Parawood Company Limited Company or STA : Sri Trang Agro-Industry Public Company Limited Nam Hua Rubber : Nam Hua Rubber Company Limited Paktai Rubber : Paktai Rubber Industries Limited Partnership Pattana Agro Futures : Pattana Agro Futures Company Limited Premier System Engineering : Premier System Engineering Company Limited PT Sri Trang Lingga : PT Sri Trang Lingga Indonesia Rubberland Products : Rubberland Products Company Limited Sadao P.S. Rubber : Sadao P.S. Rubber Company Limited Semperflex Asia : Semperflex Asia Corporation Limited Semperflex Shanghai : Semperflex Shanghai Ltd. Semperform Pacific : Semperform Pacific Corporation Limited Semperit Technische : Semperit Technische Produkte Gesellschaft m.b.H., a subsidiary of Semperit AG Holding Sempermed Brasil : Sempermed Brasil Comë rcio Exterior Ltda. Sempermed Singapore : Sempermed Singapore Pte. Ltd. Sempermed USA : Sempermed USA, Inc. Shanghai Semperit : Shanghai Semperit Rubber & Plastic Products Co., Ltd. Shanghai Sempermed : Shanghai Sempermed Gloves Co., Ltd. Shi Dong Investments : Shi Dong Investments Pte. Ltd. Shi Dong Shanghai : Shi Dong Shanghai Rubber Co., Ltd. Sri Trang International : Sri Trang International Pte. Ltd. Sri Trang Rubber & Plantation : Sri Trang Rubber & Plantation Company Limited Sri Trang USA : Sri Trang USA, Inc. SSC : Our associate, Siam Sempermed Corporation Limited Starlight Express Transport : Starlight Express Transport Company Limited Startex Rubber : Startex Rubber Corporation Limited STH : Sri Trang Holdings Company Limited Thai Tech Rubber : Thaitech Rubber Corporation Limited General CDP : The Central Depository (Pte) Limited Code of Corporate Governance : Singapore Code of Corporate Governance 2005 Concentrated Latex : Liquid latex with a dry rubber content of approximately 60.0% Listing Manual : The listing manual of the SGX-ST Natural Rubber Products : RSS, TSR and Concentrated Latex

Sri Trang Agro-Industry Public Company Limited

209

Office of the SEC OTC Other Finished Products

PLCA RSS SEC SEC Act SET SFRS SGX-ST SICOM STR Thai GAAP TSD TSR Currencies and Measurements Baht IDR or Indonesian Rupiah MYR or Malaysian Ringgit R$ SGD or Singapore dollar US$ or US Dollar

210

: The office of the SEC : Over the counter : Finished products, including high-pressure hydraulic hoses, escalator handrails and various rubber and plastic parts which are mainly used in electrical appliances : The Public Limited Companies Act B.E. 2535 (1992) of Thailand, as amended from time to time : Ribbed smoked sheet : The Securities and Exchange Commission of Thailand : The Securities and Exchange Act. B.E. 2535 (1992) of Thailand, as amended from time to time : The Stock Exchange of Thailand : Singapore Financial Reporting Standards : Singapore Exchange Securities Trading Limited : Singapore Commodity Exchange Limited : Standard Thai rubber : Generally accepted accounting principles in Thailand : The Thailand Securities Depository Co., Ltd. : Technically specified rubber, which includes STR and SIR : : : : : :

Annual Report 2011

The lawful currency of Thailand The lawful currency of Indonesia The lawful currency of Malaysia The lawful currency of the Federative Republic of Brazil The lawful currency of the Republic of Singapore The lawful currency of the U.S.

"OOVBM 3FQPSU

£ ² ¢ ² £ ° Í ² u £²¢ ² £° Í² u £´©± ¨£µ £± ÁÂ £´ ±ª £µ ³ ± ¡«² "OOVBM 3FQPSU 4SJ 5SBOH "HSP *OEVTUSZ 1VCMJD $PNQBOZ -JNJUFE

:FBS PG (SPXUI

4SJ 5SBOH "HSP *OEVTUSZ 1VCMJD $PNQBOZ -JNJUFE

)FBE 0GGJDF 4PJ 1FUDILBTFN 3PBE )BU :BJ %JTUSJDU 4POHLIMB 5IBJMBOE 5FM "VUPNBUJD /VNCFS 'BY

4SJ 5SBOH "HSP *OEVTUSZ 1VCMJD $PNQBOZ -JNJUFE