contents · 2011. 5. 11. · prasit patana public company limited 2003 present : president advisor...

Financial Highlights 1

Message from the Chairman 2

Audit Committee Report 3

General Information 5

Shareholders Structure 6

Subsidiaries and Affiliates 7

References 8

Board of Director 9

Organization Chart 16

Shareholder Structure 17

Management Structure 18

Nature of Operation 38

Industrial condition and Competition 40

Marketing Strategies 45

Risk Factors 47

Legal Dispute 52

Connected Transactions 53

Future Project 56

Social Activities 57

Financial Status and Operation Results 59

Financial Statements 66

Contents

Yarnapund Public Company Limited 1

2006 2007 2008

Reconstructed Reconstructed

Consolidated Consolidated Consolidated

(Adjust) (Adjust)

Financial Statement (Unit:Million Baht)

Total Assets 10,715.32 11,844.98 13,708.96

Total Liabilities 7,376.84 8,762.55 10,445.04

Total Shareholder�s Equity 3,338.49 3,082.43 3,263.91

Revenues from sales and services 4,936.24 5,444.38 9,407.32

Gross Profit 594.47 229.13 275.44

Profit from Operation 317.19 (81.67) (78.15)

Net Profit 147.29 (240.06) (179.12)

Financial Ratio

Net Profit Margin (%) 2.98% -4.41% -1.90%

ROE (%) 4.41% -7.79% -5.49%

EPS (Baht) 0.46 -75.00% -11.19%

Dividend per Share (Baht) 0.05 -

Book Value per Share (Baht) 10.43 9.63 2.04

* Converted actual par value of Baht 5 to Baht 1 according to the Extraordinary General�s Meeting No. 1/2008

Financial Highlights

2 Annual Report 2008

Dear Shareholder

Yarnapund Public Company Limited

As a result of the economy and politics fluctuation together with various barriers in the year 2008, entrepreneurs

have had to adjust themselves to solve the intense difficulties affecting their organization management. It has

expected that in 2009 the automotive industry as a whole might be surely slow down.

Under such tough conditions, each and every executive and employee has had to remain committing to the

business guidelines and strategies by considering the best interests of shareholders as a principal and aiming to be

a major automotive producer of the country as determined.

So far, the Board of Directors has had a clear policy to conduct business with fairness and transparency that

could have been verifiable complying with corporate governance philosophy. Taking into account of the interests of

stakeholders as well as our partners are so important to our operation. As a result, this year the Board of Directors has

held firm with good corporate governance principle for any listed company in SET to be the guidelines for our operation.

The Board has recognized that the growth and progress of the company is important for running business,

while emphasizing on social and environmental responsibility as well. We have various activities to return profits to

society, such as providing scholarships to the destitute students, donating blood to The Thai Red Cross Society to

provide humanitarian aid etc.

With a commitment to move forward under the current volatility in the economy, the Board of Directors has been

confident that these obstacles can be overcome by devoting to fully manage and handle with all our strength in order

that the company will be healthy and firmly survival in the future

Wichai Thongtang

Chairman

Message from the Chairman


Audit Committee was appointed at the Board of Director Meeting No. 3/2008 on March 27, 2008 with a 2-years

term in office and the member were comprised of 4 independent committees as follows:

�Lt. Gen Trirat Pinmanee President of Audit Committee

�Pol. Maj. Gen. Wanchai Wisuttinan Audit Committee

�Ms. Kanya Bussayaratsamee Audit Committee

�Mr. Piyaporn Limcharoen Audit Committee

The office of Internal Audit as Secretary of Audit Committee

Audit Committee uses the meeting as a tool in performing their duty. For the year 2008, the audit committee held

altogether 7 meetings and participated in all of the Board of Director Meeting, in performing their duties and

responsibilities of good Corporate Governance as assigned by the Board of Directors, which can be summarized as

follows:

1. To review the quarterly financial statements and the annual 2008 financial statement in conjunction with

the Executives and the auditors, to ensure conformity with general certified accounting standards and

sufficient disclosure of important information including consider to the risk factor along with to consider

the risk factor that should be related the financial statement general certified accounting standard

including to the internal control process to make the financial statement by consulted with the auditor

and the executive regularly for make sure that correct, clear and believable before present the board of

director to approve.

2. To review connected transactions and any transactions this may lead to potential conflicts of interest

and ensure compliance with the laws and relevant rules and regulation.

3. To acknowledge the report from the risk management committee usually and meeting with the

management team about the others risk factor such as risk of financial, risk of safety and environment

and risk of operating including to the risk assessment by self for the recognize to the influence of risk

and find the method to operating of company risk and suggestion to the office of internal audit take the

result of risk assessment to development and improvement the method of verify to success.

4. To consider, reviewing the result of operation and improvement follow up of the office of internal audit

and internal audit plan year 2009 that cover all of the risk factor as well as suggestion the control internal

audit to high capability as the international standard and make surely the internal control system go

along with the success and review the supporting in man power and man power development.

5. To consider, review and revise the Charter of Audit Committee to harmony of the duty and responsibility

in present and as same as the revision of regulation for internal audit committee of Stock Markets of

Thailand (SET)

Audit Committee Report


6. Push forward and reviewing with the board of director for improvement Corporate Governance Policy as

per the Good Principles of Corporate Governance of 5 modules as same as the improvement and

additional of Stock Markets of Thailand (SET)

7. To push on the assessment of board director through the Corporate Governance policy that is adjustment.

8. To consider , select and propose the appointment of auditor of the company and to consider the auditor�s

compensation

9. To consider, review the procedure of purchasing installation and payment of factory 3�s machinery that

incomplete.

10. To consider, reviewing the fact of machine installation and production line through the adjustment of

factory 3 land.

From the above-mentioned performance results, the Audit Committee opinions that the Company reliable

disclosure of its financial information, its operation and performance concerning connected transactions are in

compliance with the laws and relevant rules and regulations, and its has in possession good and effective internal

control system.

Lt.Gen Trirat Pinmanee

President of Audit Committee


Company name : Yarnapund Public Company Limited

Authorized share capital : Total value 1,600 million Bath, No. of common shares 1,600 million shares,

Par value per share 1 Baht.

Paid � up capital : Total value 1,600 million Baht, No. of common shares 1,600 million shares,

Par value per share 1 Baht.

Type of business : Manufacture auto parts (Press Parts) for OEM (Original Equipment Manufacturing) and

REM (Replacement Equipment Manufacturing), with the core product being:

1. Exhaust System

2. Accelerator, Brake, Clutch Pedal of ABC-SET

3. Press parts for cars and others The Company�s subsidiaries are responsible for

design and production of Tooling which is used for manufacturing process such as

Die, Jig, Checking Fixture (C/F), and Equipments.

Head office : 42 Sukhumvit 81 Bangjak, Prakanong, Bangkok, 10260

YNP 1 factory location : 70 Bangna-Trad Rd., Km. 12, (Kingkaew-Ladkrabang Rd.)

T.Rachathawa, A.Bangplee, Samutprakarn 10540

YNP 2 factory location : 3 Moo 7 Bangna-Trad Rd. Km. 12 (Kingkaew-Ladkrabang Rd.)

T.Rachathawa, A.Bangplee, Samutprakarn 10540

YNP 3 factory location : 55 Moo 3, T.Nongjok, A.Bangpakong, Chachoengsao 24130

YNPE factory location : 64 Bangna-Trad Km.12, (Kingkaew-Ladkrabang Rd.) T. Rachathawa,

A.Bangplee, Samutprakarn 10540

YNPI factory location : 42 Sukhumvit 81 Bangjak, Prakanong, Bangkok, 10260

Register Number : 0107574700165

Website : www.yarnapund.com

Tel : +66 (0) 2331 8000, +66 (0) 2311 1000

Fax : +66 (0) 2331 7398

General Information


Shareholders Structure

100% Yarnapund Public Company Limited

100% YNP EngineeringCompany Limited

100% Yarnapund InternationalCompany Limited

20.24% YS Pund Company Limited 25% Walker Exhaust (Thailand)Company Limited

30% Yarnapund Daiso (Thailand)Company Limited


Subsidiaries and Affiliates

Name Type of BusinessPaid-up Capital

% Holding(Million Baht )

Subsidiaries

YNP Engineering Co.,Ltd. (YNPE) Design and Manufacture Tooling 300 100

Address : 64 Bangna-Trad Rd., Km. 12,

Kingkeaw, T. Rachathawa

A. Bangplee, Samutprakarn 10540

Tel : +66 (0) 2750 2299

Fax : +66 (0) 2750 3808

Yarnapund International Co.,Ltd. (YNPI) Manufacture Exhaust Systems 240 100

Address : 42 Soi Sukhumvit 81, Bangjak, and Press Parts

Prakanong, Bangkok 10260

Tel : +66 (0) 2331 8000, +66 (0) 2311 1000

Fax : +66 (0) 2331 7398

Affiliates / Joint Ventures

Walker Exhaust (Thailand) Co.,Ltd. ( WETCO ) Assembly of Exhaust Systems 80 25

Address : 70 Bangna-Trad Rd., Km. 12,

Kingkeaw, T. Rachathawa

A. Bangplee, Samutprakarn 10540

Tel : +66 (0) 2750 1620, +66 (0) 2316 8010

Fax : +66 (0) 2750 1615

YS Pund Co.,Ltd. ( YSP ) Assembly of Exhaust Systems 1,414 20.24

Address : 90/3 Moo 9, Wellgrow Industrial Pipe for Automotive Manufacturer

Estate, Bangna-Trad Rd. (KM. 36),

T. Bangwua, A. Bangpakong,

Chachoengsao 24180

Tel : +66 (0) 3857 0875 to 9,

+66 (0) 3852 2330

Fax : +66 (0) 3852 2373

Yarnapund Daiso (Thailand) Co.,Ltd. (YDT) Electronic Deposit Painting (EDP) 20 30

Address : 700/507 Moo.2 T.Bankao,

A. Phantong, Chonburi 20160

Tel : +66 (0) 3845 4717 - 9

Fax : +66 (0) 3845 4721


Register : Thailand Securities Depository Company Limited

62 Ratchadapisek Road, Klongtoey, Bangkok 10110

Tel : +66 (0) 2229 2800

Fax : +66 (0) 2654 5599

http://www.tsd.co.th

Auditor : Mr.Somchai Kurujitkosol Certified Public Accountant Registration No.3277

And/Or Mr.Ampol Chamnongwat Certified Public Accountant Registration No.4663

And/Or Mr.Naris Saowalagsakul Certified Public Accountant Registration No.5369

And/Or Ms.Wanraya Puttasatiean Certified Public Accountant Registration No.4387

S.K. Accountant Services Co., Ltd.

128/151, 14th Floor, Phayathai Plaza, Phayathai Road, Rajthevee,

Bangkok 10400

Tel : +66 (0) 2215 4771, +66 (0) 2215 6464, +66 (0) 2216 5595,

+66 (0) 2219 1847-9

Fax : +66 (0) 2215 4772

E-mail : [email protected]

Legal Advisor : Siam Premier International Law Office Limited

26th Floor The Offices At Central World, 999/9

Rama 1st Road, Pathumwan, Bangkok 10330

Tel : +66 (0) 2646 1888

Fax : +66 (0) 2642 1919

http://www.siamlaw.co.th

References


Working Experience

2007 � Present : Chairman


1987 � Present : Deputy President of The Board Director

Metro Machinery Company Limited and Subsidiary

Company


Wichai Thongtang Law Office

2003 � Present : Chairman and President of The Board Director

Phyathai Hospital 1,2,3 Company Limited

2003 � Present : President Advisor

Board Director of Paolo Metic Company Limited


Prasit Patana Public Company Limited

2003 � Present : President Advisor of Board Director

Paolo Samutprakarn Hospital Company Limited


Srirachanakorn Hospital Public Company Limited

1998 � 2006 : Deputy Chairman

KPN Group

2004 � 2006 : President of Audit Committee and Director

KPN Automotive Public Company Limited

2000 � 2003 : President of The Board Director

Paolo Metic Company Limited

2000 � 2001 : President of The Board Director

Sikarin Public Company Limited

Board of Director

Mr. Wichai Thongtang


Working Experience

2006 � Present : President of Board Director



YNP Engineering Company Limited


Yarnapund International Company Limited


YS Pund Company Limited

1996 � Present : Board Director


2001 � Present : Director

Walker Exhaust (Thailand) Company Limited


Yarnapund Daiso (Thailand) Company Limited


Rachamongkol Rice Company Limited

1980 � 2006 : Managing Director






Mr. Samphan Phanpanit


Working Experience

2006 � Present : Managing Director


2005 - Present : Risk Management Committee








2001 - Present : Director

Walker Exhaust (Thailand) Company Limited


Yarnapund Daiso (Thailand) Company Limited


P-Ploy Yon Partnership Limited

1979 � 2006 : Deputy Managing Director






Mr. Palits Phanpanit

Working Experience

2004-Present : Senior Executive Director


2007-Present : Executive Director of Accounting and Financial


2001-Present : Director




Mrs. Orazalochaya Bunnag


Mrs. Amornrat Angkhasekvilai

Mrs. Amporn Nilpirom

Working Experience



2006 � Present : Nomination Committee


1983-Present : Deputy Managing Director

General Candy Company Limited


General Care Product Company Limited


G.C.Distribution Company Limited

Working Experience

2007 � Present : Deputy Managing Director


2008 � Present : Risk Management Committee


2007 � Present : Deputy Managing Director


2006 � 2007 : Compensation Committee


2001 � 2007 : Assistant Managing Director


1991 - 2007 : Assistant Managing Director


1990 - 2003 : Purchasing Manager

Yarnapund Company Limited


Mrs. Pornchit Phanpanit

Ms. Pilaiphan Lattanan

Working Experience



2005 � Present : President of Risk Management Committee


2004 � Present : Assistant Managing Director


2002 � 2004 : Assistant Deputy Managing Director


2000-2002 : Project Controller (URS Corporation, Washington, DC, U.S.A.)

Working Experience



2007 � Present : Compensation Committee


2002- Present : Deputy Managing Director, Sale Manager


2002-2003 : Assistant Managing Director, Sale Manager



Lt. Gen. Trirat Pinmanee

Working Experience

2004 - Present : Director and President of Audit Committee


2006 � Present : President of Compensation Committee



One Chuan Company Limited

2001 - 2004 : Supreme Command Advisor

Working Experience

2006 � Present : Deputy of President Compensation Committee


2004 - Present : Director and Audit Committee


2004 - Present : Special case officer of DSI

2003 - 2004 : Legal Division Area Revenue Branch Office

1999 - 2002 : Area Revenue Branch Office

Ms. Kanya Bussayaratsamee


Working Experience



2006 � Present : Nomination Committee and Compensation Committee


1986-Presesnt : Advisor Rayong Star Company Limited

Mr. Piyaporn Limcharoen

Pol. Maj. Gen. Wanchai Wisuttinan

Working Experience



2006 � Present : President of Nomination Committee


2008 � Present : Advisor of Committee on Armed Forces of Assembly of

the People�s Representatives

2008 � Present : Honorary Advisor of Committee On Labor and Social

Welfare

2008 � Present : Advisor of Information and Communication Technology

Minister (ICT)

2005 - 2006 : Advisor to the Committee on Police

2004 - 2006 : Advisor to the Committee on Independent Organ under

Constitution, House of Senator

2003 - 2006 : Advisor to Committee on Military Affairs House of

Representatives

Remark: 1) Consist of mother amount 502,999,120 shares / Wife 400,000 sahres

2) Consist of son amount 770,000 shares


Organization Chart

The Office of Internal Audit Director

Mr.Kitt Kraiwee

Senior Executive Director and

Executive Director of Accounting

and Financial

Mrs.Ornzalochaya Bunnag

Head Office Director

Mrs.Savitree Singhakachen

Executive Co-Ordinator

Mr.Kongphan Phanpanit

Factory 2

Plant Manager

Mr.Suchat Sriboonyakaew

The Office of Corporate Planning

& Development Director

Ms.Vasana Kitcharoen

Executive Director

Mr.Suraphant Kankhetr

Assistant General Manager

Mr.Yingsak Lohitabut



Executive Director


Executive Director


Factory 1

(Executive Director)

(Mr.Suraphant Kankhetr)

Production Manager

Mr.Armin Baosuwan

Company Secretary

Ms.Prapatsorn Siripunyo



Deputy Managing Director

Mrs. Amporn Nilpirom

Managing Director

Mr.Palits Phanpanit

President

Mr.Samphan Phanpanit

Board of Directors

Chairman

Mr.Wichai Thongtang

Compensation

Committee

Nomination

Committee

Risk Management

Committee

Audit Committee

Engineering Center

Assistant Plant Manager

Mr.Somchart Phongsuphap

Factory 3

Assistant Plant Manager

Mr.Vicharn Srimook

Executive Director

Mr.Thanit Dhanasunthorn

Financial 2

Business Development

Legal

Information Technology

Accounting

Cost Planning

Administrative

& Development

Marketing 1

Marketing 2

Marketing 3

Purchasing 2

Purchasing 1

Human Resource

Plant Administration

Production

Facility

Quality Control

QMS, EMS &

Customer Service

TPS


Production

Facility

Quality Control

Financial 1

Internal Audit 1

Internal Audit 2


Production

Facility

Quality Control

Research & Development

Production Engineer 1



Quality Assurance

The Office of Secretary


Major Shareholders as on 30 December 2008

Name No. Of Shares % of Paid-up Capital

1. Phanpanit family 1)

693,941,040 43.37

2. Government Pension Fund 21,891,802 5.03

3. Mr.Rattavit Porapukkham 69,750,000 4.36

4. Mr.Yuttapong Serideelert 53,261,000 3.33

5. Mr.Amnuay Pichitpongchai 53,000,000 3.31

6. Mr.Nuttapong Chulangkun 43,421,900 2.71

7. Mr.Chan Lertprasertpakorn 41,232,800 2.58

8. Mrs.Sopha Wongruksanga 30,850,000 1.93

9. Mr.Kanit Prukprakarn 21,300,000 1.33

10. Ms.Pachara Pacharawanich 19,150,000 1.20

Note:

1) Phanpanit Family consists of a total 11 Shareholders of the same surname as well as related persons

namely Mrs. Chamlong Phanpanit, Mr. Samphan Phanpanit, Mr.Palits Phanpanit, Mrs. Ornzalochaya Bunnag,

Mrs. Amornrat Angkhasekvilai, Mrs. Amporn Nilpirom, Mrs. Pornchit Phanpanit, Miss Pilaiphan Lattanan, Mr.

Thanapatr Tantakom, Mrs. Wantana Phanpanit, Mr.Kittipatr Phanpanit and Ms. Kawekarn Phanpanit

Dividend Policy

Dividend payout policy is at a minimum of 30% of net profit after tax and legal reserve. Disbursement of the

dividend shall take into account the operating result, financial status, liquidity, business expansion and other factors

related to the operation of the company and under the conditions that maximize the benefit to the shareholders

Dividend Policy for the subsidiaries

For dividend payout of the subsidiaries, the Board of Directors shall take into consideration, Net Cash Flow

in comparison with capital Expenditure of the subsidiaries, and shall pay out dividend on a regular basis. The

subsidiaries namely YNPE and YNPI shall allocate an amount for legal reserves at least one-twentieth of Net Profits

derived from business operation, until the legal reserve amount reaches one-tenth of the company’s equity or more.

Shareholder Structure


The Management Structure comprises of the Board of Director, Executive Committee Director and Sub

Committee comprises of 4 sets as Audit Committee, Risk Management Committee Nomination Committee and

Compensation Committee with the list of names and duties and responsibilities as follows:

Board of Directors

The Board of Directors, as at December 31, 2008 comprised of the following 12 members:

Name Position

1. Mr. Wichai Thongtang Chairman

2. Mr. Samphan Phanpanit Director

3. Mr. Palits Phanpanit Director

4. Mrs. Ornzalochaya Bunnag Director

5. Mrs. Amornrat Angkhasekvilai Director

6. Mrs. Amporn Nilpirom Director

7. Mrs. Pornchit Phanpanit Director

8. Miss Pilaiphan Lattanan Director

9. Lt. Gen. Trirat Pinmanee Director

10. Miss Kanya Bussayaratsamee Director

11. Mr. Piyaporn Limcharoen Director

12. Pol. Maj. Gen. Wanchai Wisuttinan Director

Authorized Directors, as specified by the Company�s certified letter, are �Mr. Samphan Phanpanit, Mr. Palits

Phanpanit, Mrs.Ornzalochaya Bunnag and Mrs. Amporn Nilpirom whereby 2 of 4 Directors must jointly sign and with

the Company�s seal.�

Scope of Duties and Responsibilities of the Board of Directors

1. To administer and manage the Company according to the laws, the objectives, and the Article of

Association of the Company, as well as the resolution from the Shareholders� Meeting with the consent

of the laws;

2. To formulate and/or approve Company�s objectives, direction, policies, business plans, and budget.

Supervising administration and management activities of the Executive Committee and the Meeting;

Management Structure


3. To appoint Directors and/or Executive Committee with the authority to perform management function as

assigned by the Board of Directors;

4. To appoint a Managing Director or assign authoritative power to a third party to perform management

duty for the Company under the supervision of the Board;

5. To consider and approve pledge of the Company�s or subsidiaries� assets as collaterals or for guarantees

that will cause the Company contingencies and commitments;

6. To consider and approve investment for business expansion, as well as joint-venture activities with

other business operators;

7. To consider and approve delegation of authoritative power within the Company.

8. To conduct performance evaluation on the Chairman of the Executive Committee and the Executive

Directors on a regular basis.

9. To take responsibility in the Company�s operating results and the operations/ actions taken by the

management, to ensure utmost determination and caution in daily operations.

10. To arrange for a reliable accounting system, financial reporting and audit process, as well as an evaluation

process to ensure suitability of internal control and internal audit systems, for the purpose of efficiency

and productiveness.

11. To prevent the possibility of conflicts of interest as a result of connected transactions.

12. To perform according to good Corporate Governance principles and ensure ethical behavior.

13. To report own responsibility in the preparation of financial reports, by presenting it in conjunction with

the Auditor�s Report section of the Annual Report; and to cover important issues in entirety, as per the

policy on Appropriate Conduct by the Directors of Companies Listed on the Stock Exchange of Thailand.

Executive Committee

The Executive Committee as at December 31, 2008 comprised of 6 members as follows:

Name Position

1. Mr. Samphan Phanpanit President

2. Mr. Palits Phanpanit Managing Director

3. Mrs. Ornzalochaya BunnagSenior Executive Director and

Executive Director of Accounting and Financial

4. Mrs. Amporn Nilpirom Deputy Managing Director

5. Mr. Suraphan Kankhetr Executive Director

6. Mr. Thanit Dhanasunthorn Executive Director

Scope of Duties and Responsibilities

1. To establish business policies, directions, strategies, operating procedures and practices in accordance

with the objectives assigned by the Board of Directors;

2. To establish the corporation�s structure and allocate management authority;


3. To consider and allocate annual budget;

4. To audit and follow up implementation of policies and conformity of management guidelines;

5. Authorized to consider and screen investment activities in other businesses, related or unrelated to the

core business, prior to proposing to the Board of Directors for consideration and approval;

6. Authorized to consider and approve borrowings or loans from financial institutions, as well as repayment

and expenses concerning the Company�s normal business operation within operation within the limit for

each transaction, not to exceed 300 million Baht;

7. Authorized to consider and allocate pension, financial rewards, or other remunerations with approval

from the Board of Directors;

8. To perform other duties assigned by the Board of Directors.

However, the Management Committee may delegate authoritative power to an Executive, in order to approve

one or more financial issues deemed appropriate by the Board of Directors.

Management

The Company�s Management as at December 31, 2008 comprised of 6 members as follows:

Name Position

1. Mr. Samphan Phanpanit President

2. Mr. Palits Phanpanit Managing Director

3. Mrs. Ornzalochaya BunnagSenior Executive Director and

Executive Director of Accounting and Financial

4. Mrs. Amporn Nilpirom Deputy Managing Director

5. Mr. Suraphant Kankhetr Administration Director

6. Mr. Thanit Dhanasunthorn Plant Director

Scope of Duties and Responsibilities of Managing Director

1. Authorized to supervise administrative activities of the Company in accordance with the policies set by

the Board of Directors and to report the operating results to the Executive Committee respectively;

2. To consider and allocate annual budget as well as control each and every business unit�s expense and

annual budget;

3. To consider and assess the Company�s business operation;

4. Authorized to issue order, regulations, announcements, and memorandum to ensure compliance with

the Company�s policies and for the benefits of the Company;

5. Authorized to consider and approve purchase orders and expenses concerning normal business practice

within the set credit line for each transaction, not to exceed 100 million Baht, exclusive of land purchase;


6. To consider pledging the Company�s rights and asset which cause contingencies and commitment

onto the Company with an individual, a company, a store, or a financial institution and propose to the

Executive Committee for approve;

7. To consider the Company�s profits and losses, proposal to pay out in term dividend or the annual

dividend, and propose to the Executive Committee for approval;

8. To proceed with any activities that support the Company�s operation, as authorized by the Board of

Directors, and under the Board�s policies.

The executive power mentioned above does not include power to approve items that can constitute conflicts

of interest (or related interest) between the executive and the company or sub-company (based on the rules of the

company and the SEC), except items that are dealt in regular business with clear scope

Audit Committee

The Audit Committee as at December 31, 2008 comprised of 4 members as follows:

Name Position

1. Lt. Gen. Trirat Pinmanee President of Audit Committee

2. Miss Kanya Bussayaratsamee Audit Committee

3. Mr. Piyaporn Limcharoen Audit Committee

4. Pol. Maj. Gen. Wanchai Wisuttinan Audit Committee

With Mr. Kitt Kraiwee as Secretary of Audit Committee was appointed at the audit committee meeting no. 3/

2008, held on May 13, 2008


1. To review and ensure accuracy of financial reports, conformity to general certified accounting standards

and sufficient information disclosure, through coordination with the Auditor and Executives responsible

for the preparation of quarterly and annual financial statements. The Audit Committee also holds the

right to suggest any review or examination made by the Auditor, on any particular transaction deemed

necessary and important during the course of audit.

2. To ensure that the Company has an effective and efficient internal control and internal audit system.

3. To ensure that the Company abide by the Securities Exchange Act and rules and regulations of the

Stock Exchange of Thailand or other laws governing its operation;

4. To Consider, select, and propose the appointment of the auditor of the Company and to consider the

auditor�s compensation;

5. Meeting with the auditor at least 1 time by exclude management to request the auditor opinion.

6. To review the related item or conflict of interest as the law and regulation of Stock Exchange of Thailand

to ensure that equal and benefit to the company


7. To prepare Audit Committee report by disclosing in annual report and certified by Chairman of Audit

Committee

8. To review and ensure appropriate and effective Risk management System and suggestion to the Risk

management Committee and Good Corporate Governance

9. To review the independent of internal audit division including to review and opinion to internal audit

plan, work of the office of internal audit, man power of the office of internal audit and co-ordinate with the

auditor.

10. To review and approve to appoint remove or relieve include to evaluation of director of internal audit and

staff.

11. To review and resolve the charter of Audit Committee to update and properly with the company

environment and evaluation audit committee every year.

12. To perform any duty assigned by the Board of Directors with the consent of the Audit Committee.

13. On duty the power of Audit Committee can invite the management or staff that related to give the opinion,

meeting or sent the related document as necessary.

14. To search for the independent of the other profession advisor when necessary with the company expense

to perform the duty on target.

Risk Management Committee

The Risk Management Committee as at December 31, 2008 comprised of 3 members as follows:

Name Position

1. Miss Pilaiphan Lattanan President of Risk Management Committee

2. Mrs. Amporn Nilpirom Risk Management Committee

3. Mr. Somsak Klinkulab Risk Management Committee

With Mr. Prayoon Changkwein as Secretary of Risk Management Committee was appointed at the Risk

Management Meeting no. 1/2008, held on August 20, 2008


1. To establish policies, scope of the completely company�s risk management that should be cover any

risks may affect to company�s operation that may occur by either internal or external factors.

2. To establish any strategies to correspond to overall risk management policies of the company including

able to evaluate, monitor, and maintain proper risk level together with providing early warning system.

3. Reviewing adequacy of policy, risk management system, its efficiency, and constantly complying with

such policy to improve overall risk management of company circumspectly, concisely, and efficiently.


4. To establish, consider, select and propose the appointment of the subcommittee or member of risk

management team with reasonably and has to prepare the report to Committee and Board of Director.

5. To regulate that supervising, tracking, controlling and inspecting any operation of subcommittee or

risk management team as well as has an authority to demand any report, information, and person to

explain the facts for achievement of operation.

6. To prepare risks and risk management report by included the factors that may affect to any operations

to Board of Director with introduce solution for its problem to considering to Board of Director.

7. To report with Audit Committee of Investigation to link risk management system to internal control and

correspond to stipulated policies and strategies.

Nomination Committee

The Nomination Committee as at December 31, 2008 comprised of 4 members as follows:

Name Position

1. Pol. Maj. Gen. Wanchai Wisuttinan President of Nomination Committee

2. Mrs. Porntip Lattanan Nomination Committee

3. Mrs. Amornrat Angkhasekvilai Nomination Committee

4. Mr. Piyaporn Limcharoen Nomination Committee

Chairman of the Nomination Committee appointed Mr. Ratchada Suwanjinda as the Secretary to the

Nomination Committee.

Scope of Duty and Responsibility for the Nomination Subcommittee

(1) To select and nominate a person deemed suitable for a Director position, with transparency and according

to the requirements, as well as propose from a list of nominees recommended by the shareholders (if

any). The nominee must possess the following qualities: sound knowledge, capability and independency;

perform the duty as a Director with prudence, honesty and utmost dedication; proper age, healthy and

mentally sound; and an ability to attend the Directors� Meeting on a regular basis together with preparation

well in advance.

(2) To make an arrangement in advance for a slate of nominees and/or in the event of vacancy of the

Director or President position.

(3) To request for opinions and suggestions from the Board of Directors and/or other Committees to support

the consideration process on selection and nomination, before proposing a list of nominees for election

by the Board of directors or the Shareholders� Meeting.

(4) To perform any other assigned duties in relation to nomination of Directors.


Compensation Committee

The Compensation Committee as at December 31, 2008 comprised of 4 members as follows:

Name Position

1. Lt. Gen. Trirat Pinmanee President of Compensation Committee

2. Ms. Kanya Bussayaratsamee Deputy President of Compensation Committee

3. Mr. Piyaporn Limcharoen Compensation Committee

4. Ms.Pornchit Phanpanit Compensation Committee

With Ms. Chuntra Jessadapitak as the secretary of compensation Committee on January 1 2008 � April 30,

2008

With Mr. Kitt Kraiwee as the secretary of compensation Committee from May 21, 2008 � Present

Scope of Duty and Responsibility for the Compensation Subcommittee

(1) To propose the remuneration structure for the Board of Directors and high-ranked Executives of the

Company, inclusive of meeting allowances, annual bonus, welfare allowances and other fringe benefits

and compensations, both in monetary and non-monetary terms.

(2) To propose a policy and guidelines on remuneration method for high-ranked Executives on an annual

basis.

(3) To evaluate the Company�s achievements in order to establish the annual rates for bonus and wage

increase.

(4) To propose the wage structure as well as structures for other benefits and compensations for the Company.

(5) To perform any other duties assigned by the Company�s Directors and approved by the Audit Committee.

In performing the above-mentioned duties, the Compensation Committee had requested for consultation

with an independent expert, which was carried out on the Company�s expense previously approved by the Board of

Directors.

Company Secretary

The Board of Director Meeting no. 6/2008, held on August 14, 2008 appointed Ms. Prapatsorn Siripanyo as

company secretary

Scope of Duty and Responsibility for the Company Secretary

(1) To give the suggestion of the legal provision, regulation and the other related procedure.

(2) To control, company performs follow as the legal, company regulation, related rule and good corporate

governance.

(3) To arrange the meeting as legal and regulation, arrange and maintain meeting report including to co-

ordinate as the approval of board meeting or shareholder meeting.

(4) To arrange disclosure the information and report to the regulated institute.


(5) Contact and Communication with the shareholders and the regulated institute. The shareholder can

contact or request information by telephone no. 02-331-8000, 02-311-1000 ext. 3301 or send the questions

pass the e-mail at [email protected]

(6) To permit the others training course and present the useful information to new director

(7) To perform any other assigned duties in relation to nomination of Directors.

Nomination of Board Members and Executives

The Company has appointed a Nomination Committee for the purpose of seeking nominees with qualifications,

knowledge, experience and expertise appropriate to manage the tasks, and proposing a slate of nominees for the

Director positions. In the event that a Director position is vacant, Chairman of the Nomination Committee and its

Directors shall gather a list of candidates with qualifications, knowledge, capability, experience and expertise in

management and supervision appropriate for the Director position. Then the slate of nominees is proposed to the

Nomination Committee for consideration, screening and selection in the first stage. The Nomination Committee shall,

thereafter, propose the nominees who have passed the first stage of selection criteria to the Board of Directors in

order to consider, screen and select only a number equivalent to the vacant positions. The finalists shall then be

proposed for election by the shareholders at the Annual Shareholders� Meeting via the process of majority votes of

attending shareholders eligible to vote for a Director, according to the following regulations and methods:

(1) Each shareholder holds the right to a number of votes equivalent to that of the number of shares he/she

has in possession.

(2) Each shareholder shall cast all of the votes described in (1) to appoint one or more persons to assume

the Director positions. In the case of voting for several persons to assume the Director positions, unequal

votes to each person are strictly prohibited.

(3) Each and every person to receive highest votes in respective order shall be appointed Directors, equaling

to the number of vacant positions thereof. In the event that a number of respective appointees with the

same number of votes exceed the number of vacant positions, the Chairman of the Meeting shall hold

the right to make the final decision.

As for the selection criteria for a list of suitable candidates, the Nomination Committee shall consider and

select in accordance with the requirements and qualifications set forth in Section 68 of the Public Company Act B.E.

2535, as per the related notification of the Securities and Exchange Commission, in conjunction with consideration on

the candidates� knowledge, capability, experience and expertise in management. These procedures will ensure that

the nominees for election at the Annual Shareholders� Meeting have in their possession all of the qualifications required

by the law, as well as knowledge, capability, experience and expertise in management, which will beneficially contribute

to the Company�s business operation.


Composition and Election of Board Members

1. The Board of comprises of at least 5 Directors, with at least half of the number of Directors residing in the

country. The Board of Directors will consider and appoint a candidate according to qualification criteria

specified by Section 68 of Public Company Act B.E. 2535 and related notifications issued by the Securities

and Exchange Commission. Moreover, experience, knowledge, and skills related to the business must

also be taken into considerations before making recommendations and proposing candidate at the

Shareholders� Meeting for further consideration and election;

2. At each annual Shareholder�s Meeting, one-third of the Directors are required to retire by rotation. If the

exact number divided by three cannot be accomplished, the closest number is acceptable. The name

will be drawn to determine whose term will expire in the first year and the second year after listing of the

Company. As for the following years, the next directors to retire are those with the longest tenure, whereby

a retired Director is eligible for re-election by the shareholders;

3. The Shareholders� Meeting is in charge of electing Directors through majority votes according to the

following criteria and methods:

A shareholder has the right to the same number of votes as the number of shares he/she has in possession;

Each shareholder must use up the entire number of votes as in 3.1, to appoint one or many candidates for

the Director position, but the number of votes cannot be unequally divided in voting for different candidates;

The candidates next in line with majority votes are also the ones elected Directors, but only up to the number

of seats available. In the case that the respective candidates receive the same number of votes, and at the point, the

number of Directors needed for the positions already exceed the limit, the Chairman of the Meeting will determine the

final resolution;

4. In the case of casual vacancies, the Board of Directors is to pass resolution with no less than three-

quarter of the votes, in electing an individual not forbidden by the law of public to fill the vacant position

in the next Board Meeting. Unless the term of office is less than 2 months, as the elected individual can

only hold the Director position as long as the remaining term of the one he/she has replaced;

5. The Shareholders� Meeting may pass the resolution to terminate a Director prior to term with no less than

three-quarter of the votes from the number of shareholders attend with the rights to vote, and the number

of shares must add up to no less than half of the number of shares held by the shareholders attended

with the rights to vote.

Composition and Election of Executive Committee

The Board of Directors appointed Executive Directors by electing from a number of Company�s Directors.

Composition and Election of Audit Committee

The Board of Directors and/or the Shareholders� Meeting appointed Audit Committee by electing at least 3

candidates with complete qualification consistent with the announcement of The Stock Exchange of Thailand and

with an office term of 2 years each.


Composition and Election of Risk Management Committee

Risk Management Committee comprised of the member who electing with complete qualification moral and

ethic, to assume a 2-year term rotation of duties

Composition and Election of Nomination Committee

Chairman of the Nomination Committee has been appointed by Chairman of the Board of Directors, through

a selection from the list of independent directors and nominees proposed by the Board of Directors, to assume a 2-

year term rotation of duties.

Composition and Election of Compensation Committee

Chairman of the Compensation Committee has been appointed by Chairman of the Board of Directors,

through a selection from the list of independent directors and nominees proposed by the Board of Directors, to

assume a 2-year term rotation of duties.

Appointment of Company Secretary

Chairman has been nominated to the board meeting to appointed the Company Secretary by the electing

according to qualification, moral and ethic criteria specified by the Stock and Stock Market Act (Issue 4) B.E. 2541


Management Remuneration

Financial Remuneration

TransactionSalary and Bonus Provident and Social

(Million Baht) Security Funds

Directors1) (Director Status)

1. Mr. Wichai Thongtang 1.20 (9,000)

2. Mr. Samphan Phanpanit 4.94 (9,000)

3. Mr. Palits Phanpanit 4.43 (9,000)

4. Mrs. Ornzalochaya Bunnag 3.82 (9,000)

5. Mrs. Amornrat Angkhasekvilai 0.24 (9,000)

6. Mrs. Amporn Nilpirom 3.00 (9,000)

7. Mrs. Pornchit Phanpanit 0.24 (9,000)

8. Miss Pilaiphan Lattanan 0.24 (9,000)

9. Lt. Gen. Trirat Pinmanee 0.60 -

10. Miss Kanya Bussayaratsamee 0.60 -

11. Mr. Piyaporn Limcharoen 0.36 -

12. Pol. Maj. Gen. Wanchai Wisuttinan 0.36 -

Executive Directors and Management

1. Mr. Thanit Dhanasunthorn 1.58 (9,000)

2. Mr. Suraphant Kankhetr 1.59 (9,000)

Note: 1)

Executive Remuneration includes President of Executive Committee, Managing Director, Deputy Managing

Director, Senior Executive Directors, Assistant Managing Director, and Executive Directors


Corporate Governance

The Board has well understood its roles, obligations and responsibilities to the company and shareholders,

thus has practiced complying with the Code of Best Practices for the board of director issued by The Stock Exchange

of Thailand (SET). By doing this, the company would have good corporate governance and an efficient performance

evaluation system to support our development and suitable growth in line with the corporate governance.

The policy of the Board has been to improve corporate governance to be consistent with the principles of

good corporate governance for listed companies for the year 2006 issued by the Stock Exchange of Thailand. Improving

this, the company has envisioned the importance and the need for business to have sustainable growth by running

business with integrity; having a professional management system and transparency; focusing equally for both

shareholders and other stakeholders; clearly defining and setting roles, obligations, and responsibilities for each

board and managing director; providing accountability and disclosing precise information to investors at the right

time; providing risk assessing, controlling and managing system with conservative; continuously and suitably setting

solving strategies and monitoring paths; and encouraging officers and employees to be in line with good business

ethics and righteousness. By doing this, the company has set principles and practices for corporate governance

classified to be 5 sectors as follows:

1. Right of Shareholders

2. Equitable Treatment of Shareholders

3. Role of Stakeholders

4. Disclosure and Transparency

5. Responsibilities of the Board

Sector 1: Right of Shareholders

The management of the company has been focusing on the equal rights of shareholders and other

stakeholders, not committing any action that has limited the access of the company information. In fact, the company

has recognized the importance of the right to access the company information of shareholders. Each and every

shareholder also has had equal right to express his or her opinion or pose any question to the meeting agendas. In

addition, the company has also provided the followings to support the right exercising of our shareholders:

• The company has published its letter of appointment through its website (www.yarnapund.com), the

website of SET and Stock News Online in order that the shareholders might study the related issues before the

meeting date.

• The company has sent the letter of invitation accompany with the meeting documentation to shareholders

7 days before the meeting date, which has been required by law.

• To shareholders, the company has informed any rule and principle for attending the meeting and sufficient

information in the letter of appointment.

• The company has had policy that each and every shareholder also has had equal right to inspect the

operation, pose any related question, express his or her opinion, and give recommendation to the meeting. Any

essential and important question and opinion would be recorded in the minute.


Sector 2 : Equitable Treatment of Shareholders

The company has had policy to equally treat of each shareholder; no matter big or minority ones, institution

or foreign investors in order to be genuinely equitable treatment. For example:

• The company has had policy to provide shareholders with the opportunity to give proxy to independent

committee or trusted individual in case that the shareholders do not want to attend the meeting.

• In the shareholder meeting, the company has provided the ballot for voting each agenda and assigned

Siam Premier International Law Office Limited to be the intermediate for counting the vote in order that the shareholders

would be confident that the vote might be transparent and correct.

• The company has offered each shareholder to vote for individual board.

Sector 3: Role of Stakeholders

The company has focused on the rights of all groups of stakeholders, whether they are insiders, including

employees and executives within the company and its subsidiaries, or who are outsiders, including customers, partners,

competitors, debtors, government agencies and other related parties. The company has set the guidelines for our

employees to be in line with business ethics as follows:

Shareholders

• The company has seized the equality and parity of every shareholder and has done as if we have been

in shareholders� shoes.

• All personnel have had to operate their duties with honesty, precaution and deliberation for maximizing

shareholders� benefits as a whole.

• The company has had to look after all Yarnapund�s assets; not to misuse or illegally use, not to be lost,

destroyed, or in the procession of unauthorized parties.

• The company has ministered the internal usage of information not for personal benefits or of dependent

parties before disclose the information to public.

Employee

• Personnel of the company have been as if the main cog in the operations. We believe in training,

coaching and skills developing regularly. We have treated our personnel with impartiality, upright and honest.

• Personnel of the company should treat their supervisors, colleagues and subordinate with civility and

fairness. We should respect opinions, dignity and humanity of others the same way we want from them.

• All personnel have duties and responsibilities to jointly maintain a safety working condition in order to

satisfy and complete our own lives, minds, and properties.

• The remuneration of Yarnapund�s personnel has to be fair, upright, and honest.

• All personnel have has to operate complying with related laws, rules, or other predetermined regulations

of the company strictly.


Customer

• The company has realized that customers are ones who have encouraged Yarnapund to lend a steady

and sustainable growth. Therefore, customer satisfaction is a primary goal of the operation of Yarnapund.

• The company has believed that persistent and continuously developing and improving our manufacturing

and service processes together with willful and enthusiastic mind might help the company to produce products of

quality, on-time delivery, and also provide politely superb services.

• The company has operated with fairness, upright, and honest, not to conceal or provide exaggerated

information that might undermine customers� reputation and manufacturing processes.

• The company has kept the privacy and confidentiality of our customers, and bewared of the misuse of

such confidential data.

Partners

• The company has seized the equality and parity of every partner on the basis of mutually sustainable

benefits.

• The Company will not demand, receive or pay any benefit that could cause any dishonest and

untransparent action to partners.

• The company has avoided running businesses with infamous partners that might deteriorate our

reputation, such as partners with substandard; with untimely delivery; with infamousness in the society; or with the

likely significant law or ethic violation, etc.

• The company has held firm and strictly followed the commitment given to our customers. In case we are

unable to follow them, we will notify through systematic channel promptly in order to jointly solve the problems.

Competitors

• The company has competed under generally accepted rules in the society. The qualities of our products

and services, and the commitment in what we have promised have been the key success factors for the competition.

• The company will not use the unethical methods in searching and collecting data for creating our

competitive advantages.

• The use of trade secret information of others without the prior consent is prohibited.

Social and Environment

• As one part of the society, the company has duties and responsibilities to create livable society by

producing quality products, reducing the wasteful use of nonrenewable resources, monitoring the production processes

to be in control, and maintaining or even upgrading the environment to be safety and livable.

• The company has fully encouraged our personnel to jointly assist the society and environment by doing

charity or helping accepted public charitable organization. We have charity projects in the year 2008

♦ The �divide kindness to brothers and sisters, the 2nd

� Project. The company has given scholarship

and study and sports equipments to the young student in Samut Prakan province and

Chachoengsao provinces on the occasion of National Children�s Day in 2008.


♦ The �save the buffalo� project. The company has redeemed 7 buffalos and given them to Royally-

initiated Cattle Bank for agriculturists to salute for the merit for Her Majesty Queen Regent Sirikit�s

birthday celebration on August 12, 2008.

♦ The �one drop of blood for friends, the 3rd� project. The company has encouraged our employees

and executives to donate blood and other commodities to support the operation of Thai Red

Cross Society.

• The company has strictly operated compliance with related laws, rules, regulations, moralities, customs

and traditions. This code of conduct is the general guideline for all personnel of Yarnapund.

Sector 4: Disclosure and Transparency

Company ensure that all important information relevant to the company, both financial and non-financial, is

disclosed correctly, accurately on a timely basis and transparently through easy-to-access channels that are fair and

trustworthy follow as:-

• Company disclosed information both financial and non-financial such as Corporate Governance Policy,

Statement of the board of directors responsibilities concerning the company�s financial reports, Auditor report in the

annual report, Remunerations Policy of the board of directors and executives in annual report including the form or

the amount of payment and duty of director through the channel of the SET, annual statements and annual report and

the company web site, www.yarnapund.com, both in Thai and English

• Company designate Business Development Department to perform the �Investor Relations� function to

communicate and disclosure all important information with precision, completeness and transparency for both financial

and non-financial data, especially the significant ones that affecting company�s share price; by publishing these

information to institute investors, shareholders, government agencies, and public through various channels. By

doing this, the company are able to communicate the essential data to investors, analysts, shareholders, journalists

and interested individuals more efficiently, giving true effective value to shareholders and can be utilized this information

more effectively as well.

Sector 5 : Responsibilities of the Board

The Board of Director has realized the important role of corporate governance in light of maximization of

company�s wealth, responsibility to make best results for shareholders, independency to management in line with

related laws, rules, and other regulations with accountability, fairness, and conservative. The Board has held firm the

�Best practices for the board of listed company� as seen below:

1. Board of Director Structure

1.1 The Board of Director has to consist of skilled, educated, and able persons. The company has to

suitably determine the number of board by its size. For Yarnapund, we have 12 persons in the board consisting of:

• The board with managing position 4 persons

• The board without managing position 8 persons

• Independent board 4 persons or 33.33 per cent of all number of the board.


1.2 The Board of Director has clearly set the agenda of the tenure period as follows:

• The board of director has the 2 years mandate consisting of 12 persons.

• The audit committee has the 2 years mandate consisting of 4 persons, and each and every

person has to be independent committee.

• Risk Managing Committee has 2 years mandate consisting of suitably skilled and expertise

persons with good virtue.

• Procurement Committee has 2 years mandate consisting of 4 persons, one from the Board of

Director, two from audit committee and the other from outsiders.

• Remuneration Committee had 2 years mandate consisting of 3 persons, one form the Board of

Director, and the other 3 from audit committee.

1.3 The CEO can not be the same person of Managing Director. The Board of Director has clearly set

the authority and responsibility for Managing Director and CEO in order that no one has fully unlimited power for

counterbalancing and verifying reasons.

1.4 The Board of Director has assigned a secretary to prepare/collect the invitation letters for meeting

and the minutes of meeting of the board and shareholders in the meeting of 6/2008 on August 14, 2008, and already

informed the name to Securities and Exchange Commission, Thailand (SEC) and The Stock Exchange of Thailand

(SET).

2. Supplement Committees

The Board of Director has assigned 4 groups of Supplement Committees, namely Audit Committee,

Remuneration Committee, Procurement Committee, and Risk Managing Committee, to help them study and screen

all related details contingently. By doing this, the Board can be relieved the burden and has more time to consider

significant issues which is complying to corporate governance principles. Each of supplement committee has clear

authorities and responsibilities as follows:

• The Audit Committee, see detail in 9.2.4

• The Risk Managing Committee, see detail in 9.2.5

• The Procurement Committee, see detail in 9.2.6

• The Remuneration Committee, see detail in 9.2.7

3. Roles, Authorities and Responsibilities of The Board

3.1 The Board of Director has consisted of skilled, educated, and able persons in term of policy setting,

vision-strategy-target setting, preparing business plan, and budgeting. The Board has determined one set of KPIs

and financial targets for various plan at the beginning of the year and then followed-up the performance monthly,

quarterly and yearly. In addition, the Board has to monitor all management to practice in line with the settled policies

in order to add optimal economic value and maximize shareholders� wealth.

Moreover, the company has highly focused on internal control system. Internal control, sufficient risk

management, and verifying system can be used as tools for creating effective and efficient control system that

comply with related laws, rules, and regulations. Besides, the crystal-clear identification and classification of authorities

and responsibilities of each and every committee and board can counterbalance the power of each group.


3.2 The Board has set monitoring policy in written form in order that all executives, management, and

employees can well understand the ethic standards that company has used in doing business. Besides, the written

version can be easily verified and reviewed.

3.3 The Board has clearly known that they have to use their skills, expertise, and experiences to do the

business with virtue; comply with related laws, rules, regulations, and the meeting resolution with fairness, upright and

honest; and also consider about company�s and shareholders� benefit prominently. The Company has set the code

of conduct in written form in order that executives, managements, and employees of the company and our subsidiaries

might hold as guidelines in doing their tasks with fairness, upright, and honest to all stakeholders and societies. The

continuous follow-up system is also a part of the principles, if ones violate them might be punished.

3.4 The company has already set the solution for the conflict of interest. In case of such conflict, the

non-beneficial committee and audit committee will carefully adjudicate on the basis of SET principles.

3.5 The Board has realized the importance of risk controlling and managing system, thus assigned the

Risk Managing Committee to set the related policies and frameworks for the whole company. These risks might

significantly affect the operation of the company. Besides, the Board has set the Internal Control Office to set the

operational control system, financial control system, and compliance verifying system to ensure that the main operations

and financial activities are in line with all related rules and be efficient. For independency, counterbalance and

auditing reason, the Internal Control Office has to report directly to the Audit Committee.

4. The meeting of the Board

The Board has to set the meeting periodically and might have extraordinary meeting as needs. Concerned

about fully opinion sharing throughout the board, the CEO has set the sufficient period of time for management to

present and discuss essential issue carefully. The company has to sent the invitation letter for meeting together with

meeting agendas and supplement document to each of the board at least 7 days before the date of meeting. By

doing this, each of the board might have time to consider each issue thoroughly. In addition, each of the board has

to attend all meetings except in case of urgent necessary. For the year 2008 (Jan 1, 2008 to Dec 31, 2008), there

have been 7 meetings for the audit committee, 13 meetings for the risk managing committee, 2 meetings for the

remuneration committee ,1 meeting for procurement committee, and 7 meetings for the board. Each of the directors

has attended the meetings as the details below:


Risk

NameBoard of Audit Compensation Nomination

Management

Directors Committee Committee Committee Committee

1. Mr. Wichai Thongtang 7/7

2. Mr. Samphan Phanpanit 7/7

3. Mr. Palits Phanpanit 7/7

4. Mrs. Ornzalochaya Bunnag 7/7

5. Mrs. Amornrat Angkhasekvilai 4/7 1/1

6. Mrs. Amporn Nilpirom 7/7 13/13

7. Mrs. Pornchit Phanpanit 6/7 2/2

8. Ms. Pilaiphan Lattanan 7/7 13/13

9. Lt. Gen. Trirat Pinmanee 7/7 7/7 2/2

10. Ms. Kanya Bussayaratsamee 6/7 7/7 1/2

11. Mr. Piyaporn Limcharoen 7/7 7/7 2/2 1/1

12. Pol. Maj. Gen. Wanchai Wisuttinan 7/7 6/7 1/1

Remark : Mrs. Porntip Lattanan, Nomiation Committee, has attended only 1 meeting,

while Mr. Somsak Klinkularb has attended 13 meetings.

5. Self Assessment

The company has provided the performance evaluation for the whole board in order to be the guidelines for

improving for better performance. The result of the last year performance has been derived from the measurement of

corporate governance and self-assessment principles issued by SET. For concrete improvement, this process might

be occurred each and every year to improve the effectiveness and efficiency of the operations.

6. The remuneration for directors and executives

The company has assigned the remuneration committee to consider the all compensation to all boards.

The compensation for directors and executives is in suitable level and attractive enough to maintain the qualified

directors and executives, no excessive compensation exists comparing with the industry and the aptitude of each

responsibility. For the compensation of executives, the committee has linked the compensation with the company

performance and each executive performance, and the compensation has been in the limit of authority by shareholder

meeting.

The company has to disclose the compensation paid to directors and executives in line with the principles

issued by SEC and SET as seen in 9.4.1.


7. The Improvement program for directors and executives

7.1 The Board has encouraged and facilitated various programs to educate all directors and committees

by attending the courses provided by Thai Institute of Directors (IOD) as details below:

No. Name Program

1. Mr. Wichai Thongtang Director Accreditation Program

2. Mr. Samphan Phanpanit Director Accreditation Program

3. Mr. Palits Phanpanit Director Accreditation Program

4. Mrs. Ornzalochaya Bunnag Director Accreditation Program

5 Mrs. Amornrat Angkhasekvilai Director Accreditation Program

6 Mrs. Amporn Nilpirom Director Accreditation Program

7 Mrs. Pornchit Phanpanit Director Accreditation Program

8 Miss Pilaiphan Lattanan Director Accreditation Program

9 Lt. Gen. Trirat Pinmanee Director Accreditation Program

10 Ms. Kanya Ms. Kanya Director Accreditation Program

11 Mr. Piyaporn Limcharoen Director Accreditation Program

12 Pol. Maj. Gen. Wanchai Wisuttinan Director Accreditation Program

For the year 2008, the risk managing committee and the audit committee has attended the seminar provided

by Federation of Accounting Professions in the patronage of His Majesty the King as details below:

No. Name Program

1. Mrs. Amporn Nilpirom Risk Management and Enterprise Risk Management

2. Lt. Gen. Trirat Pinmanee Costing and Firm Survival

3. Ms. Kanya Ms. Kanya Costing and Firm Survival

4. Pol. Maj. Gen. Wanchai Wisuttinan Costing and Firm Survival


Policy and Method for the Usage of Internal Data

The Company has established a policy and method to prevent Directors and Executive from exploiting

internal information; disclosing unauthorized information to the public for their own interests; as well as preventing

them from trading the Company�s securities as follows:

• To instruct and inform Directors and Executives concerning their responsibility to declare their own, their

spouses� and their minor children�s possession of securities; provide knowledge on Penalty Section 275

under the Securities and Stock Exchange Act B.E. 2535 and the regulations of the Stock Exchange of Thailand;

• To obligate the Executives in reporting any changes in their possessions of securities, as per Section 59, to

the Securities and Exchange Commission and The Stock Exchange of Thailand according to the set criteria,

by submitting a copy of such report to the Company to keep as evidence;

• To send out circulation letter to inform the Executives and staff concerning important internal information

which may produce an impact upon the price of securities, and prohibit them in trading the Company�s

securities for a period of one month prior to the release of financial information or internal information to the

public, and prohibit them from releasing important information to others;

• The regulations and operating procedure clearly state the prohibition of the Company�s staff in disclosing

the Company�s confidential information to external individuals, or the exploitation of their positions in the

Company for own or others� benefits, with the disciplinary punishment already set in case of violation.


Nature of Operation

The company was established on 21 April 1952 as OEM manufacturer for auto parts. Its production expertise

or the core products being exhaust parts, accelerators, brakes and clutches pedal set (ABC-SET). The company

also manufactures press part for motorcycles, electric components, and agricultural equipments. Yarnapund

International Company Limited (YNPI) was later on established to manufacture and distribute REM parts at a national

level, while YNP Engineering Company Limited (YNPE) was set up to design and manufacture Tooling including

DIE, JIG, Checking Fixture (C/F) and Equipments

The group currently is a full-fledge provider of auto parts, with an overall picture as follows:


Sale Brakedown by Product

Products 2006 2007 2008

Exhaust 44.90% 41.47% 59.10%

ABC Pedal Sets 11.25% 12.16% 8.14%

Press Part 38.78% 39.77% 32.17%

Tooling 5.07% 6.60% 0.59%

Total Sales 100% 100% 100%


Industrial condition and Competition

Global Financial Crisis

Financial Crisis in USA, consequently diffusing to global financial crisis, has begun from either boom or bust

in housing markets causing profit speculation, investment and loaning to/granting credit to high risk borrowers, then

becoming Sub-prime in housing markets in 2007.

The conundrum in financial institutes has been rapidly apparent and progressive since September 2008.

U.S. government had seized the assets of Fannie Mae and Freddie Mac, ones of the big U.S. housing loan institutes

since September 7, 2008. And a week later, Lehman Brothers, the fourth biggest U.S. Investment Banking, had

declared bankruptcy. It had estimated that more than 100 U.S. financial institutes would be insolvent as well.

The Impact on Thai Economics

As discussed earlier, the problem of financial crisis in U.S., erupted since 2008, consequently diffusing to

global financial crisis, had influenced the economics of Thailand, which relying on exports for more than 70 percent

of GDP. The economics of the partners those have purchased goods from Thailand, whether they are EU, China,

Australia, etc. had slowed down or even step into a recession in several countries. The impact has come to reflect the

economic contraction of the 4th quarters of the year 2008. In fact, it had been expected that GDP would shrink 2.0 to

3.0 percent per year.

Given the export of Thailand, over 75 percent of exports have been industrial goods. The global economic crisis has

obstructed the growth rate of such industrial goods exports, especially the top 3 export goods, namely electronics

industry, electrical appliances and vehicles those have had highly World Demand Growth Linkage Effect. There had

been a signal of economic contraction (or minus growth) in November 2008. And the export volume of the three

industries in November 2008 has shrunk down to -22.9, -16.2 and -3.0 per cent per annum respectively.

The Impact on the automotive industry

The automotive industry is the key industry that is vital to economic growth of Thailand. The government has

made the industry one of the targeted industry, the export has been around 50 per cent of all selling volume. The

structure of the export has consisted of 49.0 percent from van and pickup truck, 37.6 per cent from car, 8.2 percent

from bus and truck, 4.0 percent from motorcycle, and 1.3 percent from bicycle. When considering the value of

exports in the period of Jan � Nov 2008, there has been totaled 16,947 million U.S. dollars, representing a growth rate

of 32.5 percent per year slowed down from year the year 2007 with 24.6 per cent growth per year. The top 4 biggest

key partners of the automotive products have been Australia, Indonesia, EU15 and Japan respectively. During the

first 11 months of the year 2008, there had been a badly worse outlook from the beginning of the year.


Domestic Market of Automobiles

Vehicle Production

In the year 2008, there had been total vehicle production of 1,394,029 vehicles, consisting of 401,474

passenger cars, 974,775 1-ton-trucks and 17,780 commercial vehicles (excluding 1-ton-trucks), 8.29 percent increased

comparing to the same period of the year 2007. Given this increasing, passenger cars had increased the most by

27.27 per cent, followed by 2.78 percent increased of 1-ton-truck, while the commercial cars had decreased by

24.41 per cent.

Source: Thailand Automotive Institute

Domestic Vehicle Selling

In the year 2008, the volume of cars sold had totaled 615,269 vehicles, representing the decreased growth

rate by 2.53 per cent comparing with the same period of the year 2007 (631,251 vehicles).

Source : Thailand Automotive Institute

Domestic Vehicle Production Y2008

Domestic Vehicle Selling Y2008


Passenger car Market Passenger car Market had a significant growth with sales of 239,954 vehicles,

representing a growth rate of 31.29 per cent comparing with the same period of the year 2007 (182,767 vehicles).

Given this increasing, 1501-1800 CC passenger car had increased the most by 46.90 per cent, while 2501-3000 CC

passenger car has decreased the most by 29.07 percent.

One-ton pickup truck One-ton pickup truck market, which is a part of commercial car market and the

biggest market of Thailand had had the units sold of 334,282 vehicles, including the sales of pickup passenger

vehicle of 22,812 vehicles, decreased by 17.64 per cent comparing with the same period of the year 2007 (405,865

vehicles).

Commercial vehicle market (One-ton pickup truck) This market includes trucks of various sizes, i.e. less-

than-1-ton pickup truck, less-than-5-ton pickup truck, big truck and large buses (VAN & MICRO BUS). There had

been the sales volume of 41,033 vehicles, decreased by 3.72 per cent comparing with the same period of the year

2007 (42,619 vehicles). The less-than-5-ton pickup truck had the most decreasing growth rate of 28.33 per cent,

while less-than-1-ton pickup truck had the most increasing growth rate of 246.54 per cent.

Source: Thailand Automotive Institute

Export and Import of Vehicle

In 2008, the exporting value of 346,162.54 million baht had increased from the same period of the year 2007,

which had valued at 297,168.81 million baht, by 16.49 per cent. The most export vehicle had been passenger car

valued at 165,895.03 million baht, increasing from the same period of the year 2007, which had valued at 127,571.28

million baht, by 30.04 percent. Van and Pickup vehicle valued at 148,745.45 million baht had increased from the

same period of the year 2007, which had valued at 141,793.45 million baht, by 4.90 per cent. Bus and trucks worth

a total of 31,522.06 million baht, had increased from the same period of the year 2007, which had valued at 27,804.08

million baht, by 17.60 per cent. Given this increasing in 2008 (Jan � Dec), the top five most significant buyers of van

and pickup had been Australia, Saudi Arabia, Russia, United Kingdom and Indonesia respectively, while the top five

most significant buyers of passenger car had been Australia, Indonesia, Saudi Arabia, Philippines and Malaysia

respectively.

Passenger 239,954

Commercial Vehicle 41,033

One-Ton Picup 334,282

Domestic Car Sale Ratio Y2008


In 2008, the Import of vehicle valued of 31,844.76 million baht had increased from the same period of the

year 2007, which had been worth 22,740.88 million baht, by 40.03 percent. The most import vehicle had been

passenger car and truck valued at 16,385.19 million baht, increasing from the same period of the year 2007, which

had valued at 14,162.56 million baht, by 15.69 percent. Sitting Car valued at 15,459.58 million baht had increased

from the same period of the year 2007, which had valued at 8,578.32 million baht, by 80.22 per cent. Given this

increasing in 2008, the top five most significant sellers of passenger car and truck had been Japan, Indonesia,

Singapore, India and China respectively, while the top five most significant sellers of sitting car had been Japan,

Philippines, Indonesia, Germany and South Africa respectively.

Export - Import automotive parts (Auto parts and motorcycle parts)

In 2008, the export of automotive part for both auto part and motorcycle part valued at 345,886.18 million

baht had increased from the same period of the year 2007, which had valued at 300,125.03 million baht, by 15.25 per

cent. This amount had comprised of the export value of 322,051.23 million baht from auto part and 23,834.95 million

baht from motorcycle part. The most export valued had been from component parts and other equipment of 143,995.03

million baht , internal combustion engines plunger of 69,492.99 million baht, vehicle tyre of 68,956.98 million baht,

motorcycle component of 23,834.95 million baht, electrical wiring harness of 13,093.51 million baht, electrical equipment

for ignition and components of 6,691.86 million baht, input shaft and crank of 6,852.05 million baht, and safety glass

and automotive glass of 5,181.02 million baht.

In 2008 (Jan � Dec), the Import of automotive part for both auto parts and motorcycle part totally valued of

3244,566.93 million baht had increased from the same period of the year 2007, which had been worth 206,463.39

million baht, by 18.46 percent. This amount had comprised of the import value of 230,453.23 million baht from auto

part increasing from the same period of 2007 by 17.32 percent and 14,113.70 million baht from motorcycle part

increasing from the same period of 2007 by 40.58. The most import auto parts had been automotive components

and equipment including car body and frame at 111,552.54 million baht, increasing from the same period of the year

2007 by 13.04 percent; input shaft engine and other part at 97,513.10 million baht, increasing from the same period

of the year 2007 by 21.40 per cent; vehicle tyre at 7,577.61 million baht, decreasing from the same period of 2007 by

0.64 per cent; and other component and part at 13,809.98 million baht, increasing from the same period of 2007 by

39.68 per cent.

Thai automotive industry trends

The production of automobiles in the first quarter of 2009 had been expected to decrease significantly for

the whole industry, resulting from the impact of U.S. financial crisis diffusing around the world. However, in the

second and third quarter, the industry might be recovered. In fact, it has been expected that there will be 1.07 million

vehicles produced, decreasing from the same period of 2008 by 23 per cent. From this amount, there might be

490,000 vehicles sold domestically which has decreased by 21 per cent comparing to the same period of 2008, and

580,000 vehicles sold internationally which has decreased by 25% comparing to the same period of 2008. Motorcycle


industry has expected to have 1.67 million vehicle produced, decreasing by 13 per cent comparing to 2008. . From

this amount, there might be 1.5 million vehicles sold domestically which has decreased by 13 per cent comparing to

2008, and 157,000 vehicles sold internationally which has decreased by 4% comparing to 2008.

Type 2009 2008 %Growth

Production 1,070,673 1,394,029 -23.41%

Sale 487,457 615,269 -20.77%

Export 583,216 776,241 -24.87%

However, it has also expected that there will be an opportunity amid crisis for the automotive industry, since

there will have positive factors against the decreasing growth. Thailand might receive special tariff (Generalized

System of Preferences: GSP) from the European Union (EU). As a result, the export of pickup truck that represents

100% or all of the finished vehicle exports to the EU market will be received tax reduction to 6.5% for any engine more

than 2500 CC from the usual 10% tax rate and the import duty for any engine less than 2500 CC might be reduced

from usual rate of 22% to 15.4%, become effective on Jan 1, 2009.

In 2008, there has been free trade between Thailand in cooperation with some countries in automotive

sector such as ASEAN and India. For ECO Car investment projects, although some camps has signaled the slow

down due to the global economic crisis and the shrinkage of purchasing power, such projects has been suitable for

future market. So it has been believed that if the automotive industry is starting better, the small energy-saving vehicle

and alternative energy vehicle will become outstanding and will return as a main line for the development of Thai auto

parts industry. Therefore, there might have the room for the expanding industry as well.

In addition, operators in the form of Original Equipment Manufacturer (OEM) have been trying to expand its

REM market. Automotive parts market is a good market in the bad economic crisis. So it may take advantage from

the domestic manufacturing that guarantees the quality of products is not different from parts of the new car and the

prices may be down due to the economies of scale. In fact, these parts can replace the imported from abroad.

Although the Thai automobile market in the last few years may be found to some stagnation, with the strength of the

basic system of the Thai automotive industry including continuously focus on the industry by the public sector, Thai

automotive industry might continue to be invested in the future.


Marketing Strategies

Quality Control

The company and its subsidiaries has focused on the production of quality so there have been quality

control in material and manufacturing processes both intermediated processes in the line and finished goods at the

end of the processes. The company have received international quality certificate that is ISO/TS 16949. In addition,

the company also has received many awards from many vehicle manufacturers in many aspects

YNPE has developed its personnel to be skillful in design and had improved updated Tooling technology as

well in order to manufacture Tooling of international quality standard.

YNPE were receiving ISO/TS 16949:2000 certificates and YNPI were receiving ISO 9001:2000 certificates

might prove not only the quality emphasis of the company but also ascertain the confidence of existing customers

and attract new prospects as well.

Delivery

In addition to quality emphasis, the company group still accentuates of arranging superb service to our

customers by on-time delivery. By using TPS (TOYOTA Production System) with Just-in-Time: JIT principles, the

company and its subsidiaries have an efficient system that can deliver products to customers within schedule and

also can reduce the manufacturing cost. In fact, the company has received the reward from TOYOTA to be the

prototype company effectively implementing TPS in manufacturing management.

Wide-Spectrum Manufacturing Potential

The company group has a wide-spectrum manufacturing potential from design and tooling production to

metal forming production. By using highly updated machinery and technology, the company has been able to

produce diverse products in large quantity. Press Machine size 35-2,400 Tons more than 290 sets, Welding Machine,

Bending Machine (CNC Bending), Forming Machine and others more than 780 sets, that can support our production

in variety parts. Furthermore, YNPE has many dexterous engineers and modernized instruments such as CAD

(Computer Aided Design) / CAM (Computer Aided Manufacturing), CNC (Computer Numerical Control) total 15 Sets

so the company has been able to efficiently and effectively design and produce tooling to meet the standard.

Good Customer Relationship

The company always maintains good relationship to vehicle groups proving from the company has been a

part producer of TOYOTA and HINO groups for more than 30 years and has become a part producer of ISUZU since

1999.


Vigorous Customer Base

Most of the customers of the company are regular customers who have dealt business with the company for

a long time and the company usually maintains a good relationship with them. Besides, the company has focused on

the production enlargement to other vehicle-parts along with searching for new prospects. The regular customers of

the company are:

Automotive Groups : Toyota / Hino Group, Isuzu /GM Group, Honda Group, Ford & Mazda Group, Mitsubishi

Group, Nissan Group

Electrical Groups : Emerson (Copeland)

Agriculture Groups : Chokechai Agricultural Machinery, Kubota Corporation, Bangkok Komutsu


Risk Factors

In the auto part manufacturing industry, we can assess the risk factors that could occur and affect the future

operations as follows:

1 Risk for dependence on major customers

Currently, the company has had main revenue from sales of automotive parts to Toyota camp. If the customer

has changes the procurement policy, it might have affected the Company�s operation; however, the company has

had a trusted long-standing relationship with Toyota car camp for more than 30 years. In fact, the proportion of

revenue from Toyota camp had increased from approximately 54 percent of total revenue of the year 2006 to

approximately 61 percent of total revenue year of the year 2007and to approximately 80 percent of total revenue of

the year 2008.

Since the company�s revenue has had com from a few major customers, the company could have taken a

thorough care, jointly developed new products to customers, and together solved the occurring problems or as

requested. This has been evidenced by the continuously growing revenue of the company. In addition, the company

has the continuously expanding customer policy to reduce the dependence on major customers.

2 Risk for the fluctuation of material price

The main material the company used in vehicle production has been steel, constituting 83 per cent of the

total sales of 2008, mostly from the import which has had intense price fluctuation and foreign exchange instability.

The Main factors that have affected the volatility of steel prices have been demand conditions - both in the region and

in the global market, which these factors have been beyond the control of the company and also affected the profit

margin ratio in the light of high price compensating of increasing material costs.

However, the company has purchased steel, which is the main raw materials from two major suppliers,

which are subsidiaries of Toyota group, namely Toyota Tsusho (Thailand) Co., Ltd. and YS Pund Co., Ltd., constituting

68 per cent of total steel material costs. Although the Company has had the ability to order steel materials from

several sources, the company has kept buying from these sources because of their products of quality, reasonable

prices and terms of trade. In addition, the company has been able periodically (every 6 � 8 months) to adjust the

price in case of there has been the change of material price and this adjustment has been able to compensate

retroactively. If the actual steel price has been greater than the initially agreed price, the company has been able to

be compensated in the form of increase or decrease the debt that is a formality in the automotive industry. The

adjusted cost of raw materials will reduce the impact of the fluctuations in raw material prices.


3 Financial Risk

• Currency Risk

The company has had low currency risk because most of our business transaction has occurred

in Thailand with mainly in Baht currency.

• Interest Rate Risk

The company has had interest rate risk for having debt from financial institutions as of December

31, 2008 amount 7,100 million baht with MLR (Minimum Loan Rate) interest rate. The company has believed that the

volatility of future interest rates might not affect our operations. Indeed, our debt to equity ratio (D / E) was 3.2 times in

2008.

• Risk for providing credit

From conservative credit policies accompany with the strong and stable financial position of

our large multinational clients who have had financial support from their parent in foreign countries, the company has

had the risk for providing credit; it has been unlikely that the company might have a significant damage from the

possible uncollectible though. Moreover, the company has sufficiently estimated the allowance for uncollectible by

assessing the ability to pay debt of the outstanding receivables at the end of year.

4 Risk for changes in government policies

Since our business is related to both the manufacturing and selling of automotive parts, the company could

be affected both positively and negatively by changes in tariffs and trade protectionism. For example, the decrease

in import duty of automotive parts might negatively affect the competitive ability of the company by enabling the

foreign competitors to compete with price and cost more comfortably and vice versa. The current government has

agreed with ASEAN countries on the liberalization of the automotive industry under the treaty of trade liberalization

under the AFTA agreement with Common Effective Preferential Tariff (CEPT). The AFTA will reduce tariffs for auto

parts produced within ASEAN to 0-5 per cent and it has been expected that the partners within ASEAN countries will

take advantages of this agreement to increase the inter-trade. Although this treaty might help the company in export

to the partners within ASEAN, in turn, the foreign competitors can increase their sales in domestic markets as well. In

addition, the political uncertainty in the country may also affect the stability and continuity of government policies and

other government projects such as the project of promoting automotive industry with the country�s long-term energy

plan; including ECO vehicle project, NGV gas combining with gasoline vehicle project, hybrid vehicle project, gasohol

E85 vehicle project, etc., which might be significant to the setting of direction of Thai automotive industry. In fact, the

uncertainty might have slow down such essential vehicle projects, especially the ECO vehicle project that might have

affected the volume of the export of Thai vehicle and auto parts. However, in preparing our company to handle the

condition of more severe competition and political uncertainty, the company has had to design and develop new

products and continuously decrease our costs in order to make our prices competitively reasonable.


5 Risk of changes in the economy

Company has realized that the more severe and chronic economic crisis at present has directly and

unavoidably affected the business operations in 2009. As a result, all agencies have a joint meeting to identify the

potential related risks with prospective solving approaches to alleviate such damages and the potential approaches

can be summarized as follows:

Risk Solving Approaches

1. Marketing

1.1 Decreasing Revenue 1.1 Seek for the new customers other than vehicle group

1.2 Uncollectible 1.2 Divide the receivable port folio into subgroups enabling our collection

employees to closely follow up

2. Manufacturing

2.1 The redundant number of 2.1 Combine the separated job into the same one, request

employees in production line the outsourced work to be in-house producing, and retain

the outstanding employees by efficient performance evaluation

3. Human Resources

3.1 The redundancy of total 3.1 Lay off / reduce temporary staffs and offer Early Retirement program

employees

4. Financial

4.1 High production cost 4.1 The purchasing department has to negotiate and seek for

the more reasonable material suppliers, while the production department

has to increase Yield Ratio and reduce waste and defective units

4.2 Lack of liquidity 4.2 Negotiate for extend our credit period

6 Risk for having only one major executive

The Phanpanit Family has been the main and important executives of the company. They have

been not only the founders and had experience in automotive industry for more than 50 years, but also have had the

good relationship with the major customer, Toyota Group. So far, the Phanpanit have been major executives and

responsible for customers finding. Without the family, the company might have had problems in retaining existing

customers and finding the new ones. Nevertheless, the Phanpanit has a majority of 43.37 per cent of shares, so the

family might have enough motivation to drive the company to grow continuously and might not leave the company. In

addition, the family has devoted all endeavors to create professional management team in order to help the company

in running all businesses such as creating marketing team for both domestic and international market, studying

production plan of many vehicle manufacturers, presenting our products to vehicle manufacturers and auto part

designers of various camps, etc. Due to the controlling share of 43.37 per cent, the Phanpanit has been able to

control the direction of the company for almost aspects, except for legal and regulation issues that have been set to

receive three-fourth of the voting. Although other shareholders might not oppose against or check over and


counterbalance the family�s direction, the company has set the suitable organizing structures by selecting only high

potential management and set the authorities for each and every executive clearly and transparently. Especially for

the interrelated transactions, the related parties, whether they are major shareholders or top executives, might not

have the right to vote for those cases.

7 Risks of competition in the automotive parts industry

The company has primarily operated in producing automotive parts; in fact more than 95 per cent of the total

revenue of our company in the year 2006, 2007, and 2008 has come from automotive parts. In automotive parts

industry, there have been more competitors from both domestic and international companies who have moved

production base into Thailand. But the company has believed that we might maintain our leading status in the

industry, given the following reasons:

• The company has integrated and standardized manufacturing processes, from tooling to metal rolling

process.

• New foreign competitors settling the production base in Thailand might require high investments and

long-term preparation related to factories, machineries, and personnel.

• The company has received invaluable technical support and advice from the developers and copyright

owners for the world�s leading manufacturers of automotive parts and components including Sango Co., Ltd. (Japan),

Tenneco Automotive Inc. (U.S.A.), Inter Seiko Co., Ltd. (Japan), Shonan Unitech Co., Ltd. (Japan) and Drivesole

Worldwide INC.

• The company has been a part of the IMV project in its major customers to establish a research and

development center in Asia Pacific with the development of human resources and technology transfer in order to

design and develop products to be most suitable for our customers� needs.

• In vehicle industry, the vehicle manufacturers have been likely to order the identical parts from the same

and only automotive part producer during the whole part life of the vehicles, averaging 4 to 7 years. Moreover, it is

more likely that the vehicle manufacturers might order the auto parts of the new car model from the existing supplier

due to their familiarity, good quality, technical expertise, and on-time delivery.

From these reasons, the company has convinced that it is difficult for other entrepreneurs to compete with

our low cost and also difficult to penetrate our existing customers.

8 Security, environmental and community risks

Running automotive parts manufacturing business might have risks of harm and losses that negatively affecting

the company, so we have realized the severe of the possible risks by clearly setting the policy about safety, environment

and community. The company has implemented ISO 14001 Version 2004 to cope with environment issues and

committed to meet or even exceed standards or requirements of various laws and regulations. We have focused on

every step of the operation ranging from manufacturing infrastructure design, manufacturing process, production


control system, to surveillance and control system; and also updating these system frequently. We have also

emphasized on increasing employees� potentials by providing safety and environmental training regularly in order

that the employees might learn how to prevent any accident from working, how to work safely, and how to suitably

solve problems in exigencies. In addition, in order to empower the employees to seek and assess hazards as well as

improving the working condition to fit the safety standards, the company has also continually promoted many activities

that preventing safety and environmental risks such as the training about fire extinguish and fire evacuation. This

includes performing the activities associated with the legal requirements and other regulations strictly and activities

that promote safety awareness and occupational health both inside and outside the workplace.

For environmental social and community performance, the company, required by law, has measured and

monitored the air quality in the working area, the quality of wastewater and air discharged to the outside in order to

control air quality not to harm the employees and nearby community health. The company has also implemented

environmental pollution management applications such as installing hazardous chemical vapor treatment system,

installing wasted water treatment from manufacturing process, activities to reduce waste from manufacturing and

general processes, etc. In addition, the company has used saving-energy technologies and encouraged the employees

to save resources in various ways in order to minimize bad effects to the environment. By doing this, the company

has printed the manual identifying the responsibilities of each related departments and setting the step-by-step

solution to safety and environmental problems in any area. Besides, the management has to join monthly assessment

of the factories in order to give any useful advice to the operations and also ensure that each and every of them is

complied with the setting standards.

9 Risks of quality control non-compliance to customers� setting

Since the auto part manufacturing has various complex parts from diverse part producers, the identical

quality is one of the most important factors that entrepreneurs should consider. The defective quality means serious

safety issue for customers and non-standardized parts might negatively affect both financial and image of the

manufacturers. Thus, the set of quality standards has been set for the basis in assessing quality of auto part

manufacturers.

However, to ensure that the product quality standards have been met in all stages of production and be able

to increase competitive advantages in both domestic and international, the company has focused on the development,

standardization and controlling of quality in manufacturing, as seen from the company has implemented the TS16949

and Q1 quality which is a quality system used for production to clients in Auto Alliance (Thailand) group.


Legal Dispute

As of December 31, 2008, the company is currently engaged in a legal dispute, in which the Company is a

party in a case at The Court of Appeals as:-

Lawsuit that the company is a party as the plaintiff to claim the damages cost from the independent appraiser

that the Civil Court was acquitted. But at the present the company filed the petition to the Appeal Court so as to

reverse adjudication of the Primary Court.


Connected Transactions

During the year 2008, there had been some connected transactions between the company, the subsidiaries,

and the parties with potential conflicts of interest with detail as follow:

1. Normal Transactions

1) Walker Exhaust (Thailand) Company Limited (WETCO)

Related company a shareholder of 25% with shared Directors, namely Mr. Samphan Phanpanit and


Value of

Transactions Transactions Details and Reasons Pricing Policy

(MB)

Year 2008

1.1) - Revenues from Sales 216.21 The company sells exhaust parts for ISUZU Market price and/or Agreed condition

and Services to WETCO through normal transacting practice

- Account Receivables 49.66

1.2) - Account Payables - The Company purchased parts from WETCO

through normal transacting practice

1.3) - Others Revenues and 15.34 Rental and service income with WETCO under

Interest Income the agreement that WETCO rents the space for Market price and/or Agreed condition

- Other Receivables 2.55 its office location and production plant, with the

company agreeing to supply labor, service,

tools, equipments, and machinery.


2) YS Pund Company Limited (YSP)

Related company a shareholder of 20.24% with shared Directors, namely Mr. Samphan Phanpanit and


Value of


(MB)

Year 2008

2.1) - Revenues from Sales and 5,484.74 The Company sells exhaust parts and other Market price and/or Agreed condition

Services small auto parts for TOYOTA to YSP through

normal transacting practice

- Account Receivables 1,097.66

2.2) - Purchase of Products, 4,739.31 The Company purchased raw materials such as Market price and/or Agreed condition

raw materials and services steel pipes for production of exhaust parts

through normal transacting practice.

- Account Payables 2,174.00

2.3) - Others Revenues and 0.50 Rental income from renting space to YSP to Market price and/or Agreed condition

Interest Income use as office location.

- Other Receivables 0.04

2.4) - Other Payables 4.61 The Company purchased parts from YSP Market price and/or Agreed condition

- Interest Expense and 12.78 and overdue

Other Expense

3) Yarnapund Daiso (Thailand) Company Limited (YDT)

Related company a shareholder of 30% with shared Directors, namely Mr. Samphan Phanpanit and Mr.

Palits Phanpanit

Value of


(MB)

Year 2008

2.1) - Revenues from Sales 0.17 The subsidiaries sells Tooling for Automotive Market price and/or Agreed condition

and Services press parts through YDT

- Others Revenues and -

Interest Income

- Account Receivables 0.03

2.2) - Purchase of raw 42.58 The company purchase EDP services and Market price and/or Agreed condition

materials and services Tooling

- Account Payables 10.21


2. Special Transactions

- Non -

Measures or Approval Procedure for Connected Transactions

In the case that connected transaction concerns parties with potential conflicts of interest, a proposal must be

submitted to the Board of Directors� Meeting for further consideration and approval, plus the Audit Committee must be present

at the Meeting to ensure that the process for connected transaction is fair, reasonable is fair, reasonable, and pricing policy is

appropriately set by taking into consideration the utmost benefits to the company

Policy or Trend towards Potential connected Transactions

1. Normal Transactions

For normal business practice, the company had set certain rules and guidelines in line with normal transacting

process, with reference to the price and conditions which deem appropriate, fair, reasonable, and auditable

and proposed to the Audit Committee for further consideration and approval.

2. Special Transactions

As for special transactions, the Audit Committee will evaluate the rationale of the transactions and the

appropriateness of the pricing condition.

In entering into any future connected transactions, the Board of Directors must be in compliance with the rules

concerning securities and stock exchange, and the regulations, announcement, order, or Article of Association of The Stock

Exchange of Thailand.


Future Project

- NONE �


Yarnapund Public Company Limited organized �Donation to Child

No.II�

Yarnapunbd PCL. organized �Donation to Child No. II�

gave the scholarship, the stationary and sport equipment to the

student and education institute located at Samutprakarn and

Chanchoengsoa Province in chance of National Childeren�s Day

2008, led by Mrs. Amporn Nilpirom, Deputy of Managing Director

(6th from left) on Jan 9, 2008 at Yarnapund Factory II

�Cows � Buffaloes to be rescued for the Royal Charity on the

Auspicious Occasion of Her Majesty the Queen�s Birthday�

Yarnapund Public Company Limited and subsidiaries

organized �Cows � Buffaloes to be rescued for the Royal Charity

on the Auspicious Occasion of Her Majesty the Queen�s

Birthday�total 7 cows and buffaloes, donated to Cow-Buffalo Bank

for agricultural use under the Royal Initiative to celebrate on the

auspicious occasion of her majesty the queen�s birthday led by

the company�s executive and the officer representative.

Yarnapund Group organized blood donation to Thai Red Cross

Society.

Yarnapund Group organized �One Drop for a friend No.

III� on September 25, 2008, a blood donation activity to National

Blood Center. This activity was organized to help disaster victims

in need of blood and also provided snacks and beverage during

the event, in support the activity carried out by National Blood

Center, Thai Red Cross Society.

Social Activities


1. QCC Presentation contest �Honorable Mention�

Award 2008

2. QA Improvement Activity (Certificate of

Success Volunteer Group)

3. QA Improvement Activity (Completion in the Contest) 4. TPS Leader Award (TPS Activity)

6. HRD Activity �Best Improvement�5. TPS Activity (Completion in the Contest)

7. Safety Activity (Successful Completion in level B) 8. Safety Activity (For great support as core

company)


Financial Status and Operation Results

Financial Statements

Auditor�s Report

Consolidated Financial Statement for the year 2006

Auditor : Susan Eiamvanicha, Certified Accountant, license no. 4306, SP Audit Co., Ltd.

Summary of Auditor�s Report : The auditor has performed an audit on the Company�s financial statements and

provided unconditional comments that the Company�s consolidated financial

statements and the Company only financial statements that present consolidated and

company only financial status; consolidated and company only operating results;

consolidated and company only net cash flow as at December 31, 2006 of Yarnapund

Public Company Limited and subsidiaries, and Yarnapund Public Company Limited

(Company only), represent an accurate perception, in accordance with certified

accounting standards.


Auditor : Susan Eiamvanicha, Certified Accountant, license no. 4306, SP Audit Co., Ltd.

: Suchart Panicharorn, Certified Accountant, license no. 4475, SP Audit Co., Ltd.

Summary of Auditor�s Report : The auditor has performed an audit on the Company�s financial statements and

provided unconditional comments that the Company�s consolidated financial

statements and the Company only financial statements that present consolidated and

company only financial status; consolidated and company only operating results;

consolidated and company only net cash flow as at December 31, 2006 and 2005 of

Yarnapund Public Company Limited and subsidiaries, and Yarnapund Public Company

Limited (Company only), represent an accurate perception, in accordance with certified

accounting standards.


Auditor : Mr.Somchai Kurujitkosol Certified Public Accountant Registration No.3277


And/Or Mr.Ampol Chamnongwat Certified Public Accountant Registration No.4663


And/Or Mr.Naris Saowalagsakul Certified Public Accountant Registration No.5369


And/Or Ms.Wanraya Puttasatiean Certified Public Accountant Registration No.4387



Summary of Auditor�s Report: The auditor has performed an audit on the Company�s financial statements

and provided conditional comments that were scope restriction by the situation the event is the financial statements

for the year ended on December 31, 2008 of the Walker Exhaust (Thailand) Co., Ltd. which is the associated company

of the Company. The consolidated financial statements as of December 31, 2008 have combined investment in

such associated company in accordance with equity method from the data of financial statements of associated

company which prepared by management that was not audited by auditor since such associated company is

under the procedure of being audited by auditor of the associated company. And the Company constitutes investment

in 3 associated companies while such associated companies constitute the accounting policy different from the

company�s group in respect of value measurement after the initial recognition of land by cost method while the

Company�s group recognizes the land value by revaluation method which determined from appraisal by independent

appraiser. The management of the Company�s group anticipates that it will be completed in quarter 1 of 2009. As a

result, investment in associated companies and surplus from land appraisal in the consolidated financial statements

as of December 31, 2008 of the Company still have not combined adjustment transaction of affected result of the

different accounting policy. Moreover, I cannot apply any other auditing method. Such event is regarded as scope

restriction by situation.

Summary of Financial Statements

Unit: Million Baht

Income Statement2006 2007 2008

Consolidated (Restated) Consolidated Consolidated

Revenues from Sales and Services 4,936.24 100.00% 5,444.38 100.00% 9,407.32 100.00%

Cost of Sales and Services 4,341.77 87.96% 5,215.25 95.79% 9,131.88 97.07%

Gross Profit 594.47 12.04% 229.13 4.21% 275.44 2.93%

Selling and Administrative Expense 277.28 5.62% 310.80 5.71% 353.59 3.76%

Profit from Sales and Services 317.19 6.43% -81.67 -1.50% -78.15 -0.83%

Gains from Sales of Fixed Assets 0.00 0.00% 0.00 0.00% 0.00 0.00%

Other Revenues 51.26 1.04% 49.77 0.91% 75.80 0.81%

Negative Goodwill Recognized as Income 0.00 0.00% 0.00 0.00% 0.00 0.00%

Loss from Impairment of Land Value -2.38 -0.05% 0.00 0.00% 0.00 0.00%

Profit from Operation 367.47 7.44% -32.92 -0.60% -2.35 -0.02%

Equity in Net Income of Subsidiaries and Affiliates 132.77 2.69% 181.98 3.34% 259.26 2.76%

Earnings before Interest and Tax 500.24 10.13% 149.05 2.74% 256.91 2.73%

Interest Expense 334.48 6.78% 383.66 7.05% 430.15 4.57%

Income Tax 18.47 0.37% 5.45 0.10% -5.88 -0.06%

Net Profit 147.29 2.98% -240.06 -4.41% -179.12 -1.90%


Balance Sheet 2006 2007 2008

Consolidated(Restated) Consolidated Consolidated

Current Assets

Cash and Cash Equivalents 246.51 8.75% 351.72 11.04% 245.69 5.83%

Account Receivables-net-Related Companies 377.06 13.38% 338.27 10.62% 1,154.78 27.42%

Account Receivables-net-Other Customes 749.07 26.57% 1,141.03 35.81% 1,083.37 25.73%

Short-term Loans to Related Companies 0.00 0.00% 0.00 0.00% 0.00 0.00%

Account Receivables from selling Land,Building,

Equipment 0.00 0.00% 0.00 0.00% 0.00 0.00%

Inventory 1,242.63 44.08% 1,116.40 35.04% 1,478.93 35.12%

Other Cuurent Assets 203.52 7.22% 238.71 7.49% 248.45 5.90%

Total Current Assets 2,818.79 26.31% 3,186.13 26.90% 4,211.22 30.72%

Pledged Deposits at Banks 1.11 0.01% 1.27 0.01% 1.22 0.01%

Investment in Subsidiaries,Affiliates,and Related

Companies 589.90 7.47% 732.57 8.46% 928.91 9.78%

Land, Building, and Equipment-net 6,673.90 84.52% 7,430.94 85.82% 8,449.77 88.97%

Non-Tangible Assets 17.13 0.22% 36.22 0.42% 41.11 0.43%

Goodwill 0.00 0.00% 0.00 0.00% 0.00 0.00%

Deposit for Machinery Purchased 537.07 6.80% 381.72 4.41% 2.11 0.02%

Other Non-Current Assets 62.61 0.79% 76.13 0.88% 74.63 0.79%

Total Non-Current Assets 7,896.53 73.69% 8,658.85 73.10% 9,497.74 69.28%

Total Assets 10,715.33 100.00% 11,844.98 100.00% 13,708.96 100.00%

Current Liabilities

Bank Overdraft and Loans 2,755.04 59.67% 3,595.92 60.52% 2,973.12 46.98%

Account Payable-Related Companies 367.80 7.97% 559.47 9.42% 2,145.42 33.90%

Account Payable-Other Companies 672.42 14.56% 812.25 13.67% 648.57 10.25%

Account Payble from Factoring 0.00 0.00% 0.00 0.00% 0.00 0.00%

Account Payble from Purchase of Land,Building,

Equipment 36.10 0.78% 30.51 0.51% 50.77 0.80%

Long-term Loan due within 1 year 656.88 14.23% 831.67 14.00% 437.28 6.91%

Payable for Financial Lease due within 1 year 28.32 0.61% 20.24 0.34% 17.17 0.27%

Payable for Lease due within 1 year 0.00 0.00% 0.00 0.00% 0.00 0.00%

Short-term Loans from Related Companies/Parties 0.00 0.00% 0.00 0.00% 0.00 0.00%

Other Cuurent Liabilities 100.20 2.17% 91.74 1.54% 55.78 0.88%

Total Current Liabilities 4,616.76 62.58% 5,941.81 67.81% 6,328.10 60.58%

Long-term Loan 2,725.76 98.76% 2,798.44 99.21% 4,102.26 99.64%

Liabilities under Financial Lease Agreement 29.36 1.06% 16.35 0.58% 14.40 0.35%

Liabilities under Lease Agreement 4.96 0.18% 5.95 0.21% 0.00 0.00%

Total Non-Current Liabilities 2,760.07 37.42% 2,820.74 32.19% 4,116.94 39.42%

Total Liabilities 7,376.84 68.84% 8,762.55 73.98% 10,445.05 76.19%

Paid-Up Capital/ Share Capital 1,600.00 47.93% 1,600.00 51.91% 1,600.00 49.02%

Premium on Ordinary Shares 1,230.40 36.85% 1,230.40 39.92% 1,230.40 37.70%

Reversal loss from Impairment of land 0.00 0.00% 0.00 0.00% 360.60 2.63%

Retained Earnings (Appropriated)

-Legal Reserves 31.46 0.94% 38.82 1.26% 38.82 1.19%

-Others 1.00 0.03% 1.00 0.03% 1.00 0.03%

Retained Earnings (Unappropriated) 475.64 14.25% 212.21 6.88% 33.10 1.01%

Minority Interest 0.00 0.00% 0.00 0.00% 0.00 0.00%

Total Shareholder�s Equity 3,338.49 31.16% 3,082.43 26.02% 3,263.91 23.81%

Total Liabilities and Shareholders� Equity 10,715.33 100.00% 11,844.98 100.00% 13,708.96 100.00%

Unit: Million Baht


Ratio2006

2007 2008(Restated)

Liquidity Ratio

Current Ratio (times) 0.61 0.54 0.67

Quick Ratio (times) 0.34 0.35 0.43

Account Receivable Turnover (times) 4.02 4.18 4.20

Collection Period (days) 91 87 87

Inventory Turnover (times) 3.49 4.67 6.17

Sales Turnover (days) 104 78 59

Account Payable Turnover (days) 3.49 4.67 4.38

Payable Period (days) 90 86 83

Profitability Ratio

Gross Margins (%) 12.04% 4.21% 2.93%

Operating Profit Margins (%) 6.43% -1.50% 0%

Net Profit Margins (%) 2.98% -4.41% -1.90%

Return on Equity (%) 4.41% -7.79% -5.49%

Efficiency Ratio

Return on Assets 1.37% -2.03% -1.31%

Return on Fixed Assets 1.87% -2.77% -2.12%

Asset Turnover 0.46 0.46 0.69

Financial Policy Ratio

Debt to Equity Ratio (%) 2.21 2.84 3.20

Debt Service Coverage Ratio (%) 1.50 0.39 1.97

Per Share Analysis*

Number of Shares (thousand shares) 320,000 320,000 1,600,000

Par Value Per Share (Baht) 5.00 5.00 1.00

Earnings Per Share (Baht) 0.46 -0.75 -0.11

P/E** 10.65 -5.09 -2.45

Growth Ratio

Total Assets (%) 11.48% 10.54% 15.74%

Total Liabilities (%) 15.76% 18.78% 19.88%

Sales Revenue (%) 4.94% 10.29% 72.79%

Cost of Goods Sold (%) 4.91% 20.12% 75.10%

Sales and Administrative Expense (%) 36.97% 12.09% 13.77%

Net Profit (%) 137.92% -262.98% -25.39%

Note

*Earning Per Share in 2005, calculated by dividing Net Profits with weight Average Number of Share

** P/E Ratio, calculated by stock price on the ending of year (December 31)


Analyses of Operating Results and Financial Status

Operating Results

Revenues

Revenues from Sales and Services of the Company and subsidiaries increased from 5,444 million baht in

2007 to 9,407 million baht in 2008, an increase of 3,963 million baht or 72.79 percent growth. The mainly reason form

moving exhaust production line from YS Pund Co., Ltd. to factory 3, considered with the sale revenues found the

company and its subsidiaries as the continually growth from 2006 was 4,936 million baht to present, year 2008 the

company had sale revenue were 9,407 million baht that shown the growth trend of automotive industry and sale

revenue in chance of expand of in future.

The other income amount 75.80 million baht increased 26.03 million baht or 52.30 percent growth as from

year 2008 the company adjusted the transfer loss of devalues of part of land. In year 2008 the company recognized

equity from the joint venture amount 259.26 million baht increased 42.47 percent compared with 2007 amount 181.98

million baht as the year 2008 the joint venture company had the operation result better than the last year specially YS

Pund Co.,Ltd. Shareholder ratio 20.24 percent.

Revenue Structure for the Company and subsidiaries can be classified by line of business as follows:

Product 2005 2006 2007

Exhaust 44.90% 41.47% 59.10%

ABC Pedal Set 11.25% 12.16% 8.14%

Press Part 38.78% 39.77% 32.17%

Tooling 5.07% 6.60% 0.59%

Total 100% 100% 100%

• Revenues from Sales of Exhaust

The Company and subsidiaries� revenues from sales of Exhaust Parts and Exhaust Systems in 2008

were 59.10 percent of total sales in 2008, following sold to TOYOTA and GM/ISUZU that�s our mainly customer.

• Revenues from Sales of Accelerators, Brakes, and Clutches Pedal Set (ABC-SET)

The Company and subsidiaries� revenues from sales of ABC-SET in 2008 were 8.14 percent of total

sales in 2008, following sold to TOYOTA and GM/ISUZU that�s our mainly customer.

• Revenues from Sales of Other Press Parts

The Company and subsidiaries� revenues from sales of Other Press Parts in 2008 were 32.17 percent

of total sales in 2008, following sold to the car makers and the other industrial sector as Electrical and

Agriculture.


• Revenues from Sales of Tooling

The Company and subsidiaries� revenues from sales of Tooling in 2008 were 0.59 percent of total sales in

2008, with the main reason sold to the car maker such as model: 669L and model: Honda 2AP.

Cost of Goods Sold

Cost of Goods Sold in 2008 for the Company and subsidiaries were 9,131.88 million baht increase of 75.10%

% compare with 5,444.38 in year 2007 and gross profit margin were 2.93% in year 2008 compare with 4.21% in year

2007 or decrease of 1.28% that reason from the increasing of labour cost and the production cost such as depreciation

and moving production line cost. As from the 2008 the company had moving production line of exhaust from its joint

venture company by move to factory 3 that cause to loss from machine test.

Selling and Administrative Expense

Selling and Administrative Expense for the Company and subsidiaries slightly increased from 310.80 million

baht in 2007 to 353.59 million baht in 2008 or 5.71 percent compare with sale revenues in year 2007and 3.76 in year

2008, and match with the increasing of sale revenues.

Interest Expense

Interest Expense in 2008 for the Company and subsidiaries were 430.15 million. As a result, the increasing

of circulate of capital and long term loan.

Profit

The Company and subsidiaries� Net loss amounted to 179.12 million baht; a decrease of 25.39

percent from 2007 as 240.06 million baht .As a result, decreasing of loss as the company improved the efficiency and

got the increased order from moved exhaust production line from the joint venture company to factory 3.

Financial Status

Assets

At the end of 2008, the Company and its subsidiaries were 13,708.96 million, an increase of 1,863.98 million

baht from 2007 or 15.74 percent. The main reason from increase of Trade accounts receivable - related parties were

816.51 million baht the mainly from YS Pund co.,ltd., building and equipment increased 1,018.83 million baht the

cause of company changed the method of land cost record to the historical cost from the independent assessor.

Liabilities

At the end of 2008, the Company�s total liabilities amounted to 10,445.05 million baht, an increase of 1,682.50

million baht compared to 8.762.55 million baht at the end of 2007. The main reason for this is an increase of Trade

accounts payable - related parties were 1,585.95 mainly from YS Pund Co.,Ltd. As the bought raw material for

exhaust production that moved to company.


Shareholders� Equity

At the end of 2008, total shareholders� equity were 3,263.91 million baht, an increase of 181.48 million baht

or 5.90 percent, in comparing to 3,082.43 million baht at the end of 2007. The mainly reason from the company and

its subsidiaries recognized the surplus of land assessment in year 2008.

Liquidity

Unit: Million Baht

Transaction Year 2007 Year 2008

Operating profit before changes in working capital 344.09 738.57

- Net Cash Flow from Operations 351.36 945.81

- Net Cash Flow from Investment (1,297.04) (899.39)

- Net Cash Flow from Financing 1,050.88 (152.46)

Net Change in Cash Flow 105.21 (106.03)

The Company and subsidiaries�s net cash flow from operations in 2008 was 945.81 million baht, with net

cash flow from investment showing a negative 899.39 million baht; however net cash from financing was negative

152.46 million baht and the net change in cash flow decreased of 106.03 million baht.

Adequacy of Capital Structure

The Company and subsidiaries debt to equity ratio was 3.20 times for the year 2008, an increase from 2.84

times in 2007. This is a result of long-term loan of financial restructure for support the new order in the future and

prepare to the expand capacity that reason why the increasing of debt to equity ration increase in 2008.

Auditor�s Remuneration for an Accounting Period ending 31 December 2008

Audit Fee

Transaction Payer Auditor Audit Fee

1 Yarnapund Public Company Limited Mr.Somchai Kurujitkosol 980,000

2 YNP Engineering Company Limited Mr.Ampol Chamnongwat 400,000

3 Yarnapund International Company Limited Mr.Naris Saowalagsakul 320,000

Ms.Wanraya Puttasatiean


Total Audit Fee 1,700,000

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