รายงานประจำาปี 2553 annual report · maintaining the operating result...

C.P.L. Group Public Company Limitedบริษัท ซี.พี.แอล กรุ๊พ จำ�กัด (มห�ชน)

รายงานประจำาปี 2553annual report

Contents

Message from Chairman .....................................................................................................1

Audit committee’s Report ..................................................................................................2

The Board of Directors’ Report on the Accountability

of the Company’s Financial Reports ...............................................................................3

1. General Information ........................................................................................................4

2. Summary Financial Information of Company .......................................................6

3. Business Review ...............................................................................................................7

4. Factors of Risk .................................................................................................................. 10

5. Structure of Shareeholder and Management ..................................................... 12

6. Transactions between company and Affiliates ................................................... 23

7. Management Discussion and Analysis .................................................................. 24

8. Financial Statement ...................................................................................................... 27

Note to Financial Statements ......................................................................................... 34

Message from the President

This year the Company celebrates the 22nd year of delivering service to society. Until now, the Company

has enjoyed continuous growth and stability. This shows that we have successfully overcome any threats while

maintaining the operating result at a satisfactory level in the midst of negative economic situations and challenges

and therefore we have the capability and skill in operating the leather-tanning business. More importantly, the

organization appreciates employees who are skillful and knowledgeable about their work achieved by long-term

experience with the Company. Moreover, they also work with determination to achieve success.

Inthefirsthalfof2010,Thailand’seconomyregisteredaconsiderablegrowth,mostlydrivenbythe

export sector. However, its growth was stagnant in the second half due to the economic downturn among

leadingindustrializedcountries.OurCompanywasalsoinfluencedbythisthreat.Secondly,wecopedwiththe

risingcostofrawmaterialby50%comparedtothepreviousyear.Thirdly,astrongappreciationoftheThai

bahthascausedasignificantnegativeimpactonprofitability.Fortunately,wepreparedandplannedaheadby

acquiring additional machinery and tools and upgrading existing equipment as well as increasing investment in

research & development, which led to improved product quality and testing process. Cost-saving activities met

expectations,inventorymanagementwasimproved,andfinancialtoolswereproperlyandeffectivelyutilized.As

aresult,theprofitabilityoftheCompanythisyearwasnotadverselyaffected.

However,weforecastthatin2011thepriceoffuel,commodities,andrawhides–whichisourkeyraw

material–willincrease,andthistrendhascontinuedthisyear.Inflationratewillbehigher,andtheeconomy,

politicalsituation,andtheexchangeratewillbeevenmoreunstable.Allthesefactorswillcertainlychallengethe

Company’sgrowth.Therefore,wemuststrictlyfollowtheannualbusinessplanincludingproductqualitycontrol,

costreduction,inventory,andexpensescontrol.Furthermore,weshalllaunchmorenewproductsandinnovations

toaddvaluetoourproductsinordertoleveragethehigheroperatingcostandensuretheCompany’ssurvival

in this unfriendly and uncertain environment.

Althoughthisyearthesituationstillremainsuncertainandchallenging,weareconfidentthattheCompany

isstrongenoughtogrowsteadily,drivenbytheefficiencyofthemanagementteamandeveryemployee.

The Chairma

Mr.Manoch Wongcharoensin

1 Annual Report 2010C.P.L. Group Public Company Limited


Audit Committee’s Report

ThisyeartheauditcommitteemournsforthepassingofMr.SookpreedaPhanomyonginlate2010.Itiswithgreatsadnessthatduetohispassingtheauditcommittee,thencomprisingofMr.SookpreedaPhanomyongaschairmanwithMr.KamthonVathanalaohaandMr.SukhoVoddhijotiasmembers,hadthechancetomeetwith him chairing only for 3 of the 4 meetings. The 4th meeting was chaired by Mr. Kamthon Vathanalaoha, whowasthenappointedasacting-chairmanafterthepassingofMr.SookpreedaPhanomyong. AsofJanuary2011,wearepleasedtowelcomeMr.MongkonLaoworapongwhojoinedtheauditcommitteeasthenewmember.Mr.MongkolLaoworapongarrivalintheauditcommitteethusbringstheauditcommitteebackasawhole.Companyexecutives,externalauditorandotherconcernedofficershadattendedallsuchmeetingtoclarifyissuesontheagendaoftheirconcernsuchasauditingresultsonfinancialstatements,internalauditingresultsaswellasthecompany’srisksmanagement.Allresolutionofthemeetingsaresummarizedasfollows: 1. Annual Financial Statements Financial statements of theCompany have been prepared in accordancewith the Accounting ActB.E.2543andaccountingstandardsasrecommendedbytheFederationofAccountingProfessionUndertheRoyalPatronageofHisMajestytheKing,andcertifiedbyauthoritiesconcerned.Relevantinformationhasbeensufficientlydisclosedinthefinancialstatements.Anysuggestionrecommendedbytheexternalauditorwouldbereflectedinaccountingrecordscorrectlyandappropriately. 2. Internal Control System TheCompanyhassufficientinternalcontrolsystem.InternalauditorsofthecompanyconductedinternalauditingaccordingtotheplansetupannuallybytheAuditCommittee.InternalcontrolwasevaluatedbyusingmeasuresfromsuggestedbytheStockExchangeofThailandcoveringorganizationandenvironment,managementoperating control, information system, communication and monitoring control. The evaluation results were fairly good. 3. Risk Management The Audit Committee has join with management team to know on financial risk, operational risk,businessriskandexternalfactorsthatareuncontrollable,Soasthemitigateriskstoacceptablelevelortoinitiate remedial measures. The management team was assigned to monitor operation results as compared to price, and raw material price which have director impact on production cost of our product. 4. Appointed the company auditor and remuneration TheAuditCommitteerecommendedtheBoardofDirectortoproposetotheAnnualGeneralMeetingofShareholdertoappointtheCompany’sAuditorsfromS.K.AccountantServicesCo.,Ltd,asMs.WanrayaPuttasatienCPANo.4387,Mr.AmpolChamnongwatCPANo.4663Mr.NairsSaowalagsakulCPANo.5369fortheaccountingyearendingDecember31,2010withtheremunerationamountof470,000bahtincreasedfromlastyear17,500baht. Mr. Kamthon Vathanalaoha ChairmanoftheAuditCommitee


The Board of Directors’ Report on the Accountability of the Company’s Financial Reports

TheBoardofDirector isaccountable forcorrectnessoffinancialstatementsofCPLGroupLimited

CompanyincludingfinancialinformationpresentedintheAnnualReportandform56–1.TheCompanyhas

adopted appropriate accounting policies consistently applied and conformed to generally accepted accounting

standards.Also,significantinformationwassufficientlydisclosedinnotestofinancialstatementforproperbenefits

to shareholders, investors and stakeholders.

FinancialStatementoftheCompanyhavebeenauditedbyS.K.AccountantServicesCo.,Ltd,auditorof

theCompany.TheBoardofDirectorshassupportedtheauditorwillallnecessaryinformationanddocuments

so that external auditor could audit the and express his opinion in accordance with accounting standards. The

externalauditorhasexpressedhisopinioninAuditor’sReport.

TheBoardofDirectorhasappointedanAuditCommitteetoberesponsibleforthereviewingaccounting

policies,qualityoffinancialreports,internalcontrolsystem,riskmanagementsystem.TheAuditCommitteehas

expressedtheiropinionintheAuditCommittee’sReportasshowninthisAnnualReport.

TheBoardofDirectoropinesthatmanagerialstructureandinternalcontrolsystemoftheCompanywas

satisfactory.TheCompany’sauditordidnotqualifyorraisedanyspecificobservationtheCompany’sfinancial

statement.SowecouldassuredthatfinancialstatementofCPLGroupPublicCompanyLimitedasatDecember

31,2010presentfairlyinallmaterialrespectsthefinancialposition,performance,andcashflowinaccordance

with generally accepted accounting principles and other relevant laws and regulations.

Mr.LaiChiHsiang

ManagingDirector


CPL GROUP PUBLIC COMPANY LIMITED

CPL was founded in1989 bya teamofinternational managers with more than 40 years ofexperience in the tanning industry. The founders comprised of leaders in modern tannery management, skilled techniciansandstrongmarketing teams.CPLGroupPublicCoLtd.locatedat700moo6,SukhumvitRoad, Tambol Bangpoomai, Ampour Muang, Samut-prakarn 10280, Thailand, is registeredwith a capitalissuedandpaidupof120millionbahtonJune28,1989toproducebovineleathersuppliestoThailocaland overseas shoes and leather goods manufacturers. Because of its successful performance, CPLbecameaPublicCompanyandamemberofStockExchangeofThailand(SET)onJanuary27,1994,andknowasCPGroupPublicCompanyLimitedwithacapitalissuedandpaidupof240millionbahtdividedinto 24 million ordinary shares with per share value of 10baht.Subsequently,theAnnualExtraordinaryShare-holdersMeetingfor2005hadunanimouslyresolvedtoincreaseditsregisteredcapitalfrom24m.sharesto26.4millionshareeachof10baht,totalvalue264millionbaht to support the issuance of dividend shares pursuant totheresolutionofOrdinaryShareholdersMeetingfor2005ofwhichthecompanyhadsubsequentlyissuedthose dividend shares and registered to increase its capitalwithMinistryofCommerceon1June2005.

SUBSIDIARY COMPANY & ASSOCIATED COMPANY SUBSIDIARY COMPANY On July 1, 1991, CPL Group bought WenHwaTannery(Thailand)Co.,Ltd.locatedat96/2SoiThaipipat,SukhumvitRoad,TambolMuang,CholburiProvinceandbecameasubsidiarycompanyofCPLGroup. The original capital of Wen Hwa Tannery (Thailand)Co.,Ltd.was44millionbaht.Thenincreasedto90millionbahtonJune8,1992with1,000bahtpersharefortotal90,000shares.CPLGroupowns99.99%ofWenHwa’Sshare.Thesubsidiarycompanyhas conducted the contract of acquisition of land and propertydatedonAugust1,2005withonecompanycarried the amount in accordance with the contract of acquisition in total 45 million baht. The subsidiary company has transferred ownership of land and property to purchaser in accordance with letter of contract dated onJanuary17,2007.However,sinceMay30,2007,thesubsidiary has liquidated which is complied with the minuteoftheExtra-OrdinaryShareholders’MeetingNo.1/2007.ItisunanimouslyresolvedtoliquidatefromMay30,2007.ThesubsidiarycompanyhasregisteredtheliquidationwiththeMinistryofCommercesinceJune14,2007. ASSOCIATED COMPANYDuringtheyear2001and2002,thecompanyhad invested a new joint venture company in Hong KongnamedCPLInternationalCo.,Ltd.andhadbeenbuilt up a tannery in Guangzhou, China. CPLinternational Co., Ltd. issued and paid up sharecapitalUSD7millionordinaryshare@USD1,andhadincreasedcapitalfromUSD7milliontoUSD8millionordinarysharein2004.CPLhadinvested15%fromtotalsharecapitalofCPLInternationalCo.,Ltd.

General Information


OTHER REFERENCES

1. Stock registration ThailandSecuritiesDepositoryco.,ltd.

62RatchadapisekRoad,Klongtoey,

Bangkok10110,Tel.02359120001

Fax.02-359-1259

2. Certified Public Accountant S.KAccountantServicesCo.,Ltd.

Mr.AmpholJamnongwatC.P.A No.4663

Mr.NarisSaowalagsakulC.P.A. No.5369

Ms.WanrayaPuttasatienC.P.A. No.4387

14th.fl.PayataiPlazBuilding No.128/150-153

Tel.02-214-6464,Fax.02-215-4772,02-214-6065


Financial Statement Data 2010 2009 2008

Million baht Million baht Million baht

TotalAsset 1,123.26 1,104.51 1,118.55

TotalLiabilities 173.46 154.73 216.34

TotalShareholder‘sEquity 949.80 949.78 902.21

SalesRevenue 1,986.49 1,545.40 1,844.42

TotalRevenue 2,004.60 1,556.01 1,854.57

GrossProfit(Loss) 185.00 211.70 187.88

NetProfit(Loss) 66.02 87.83 76.91

Financial Ratio 2010 2009 2008

Returnonrevenue(%) 3.29 5.64 4.15

ReturnonShareholder’sequity(%) 6.95 9.25 8.52

ReturnonAsset(%) 5.88 7.95 6.67

NetProfit(Loss)PerShare(Baht) 2.50 3.33 2.91

DividendPerShare(Baht) 1.75 2.50 1.50

BookValuePerShare(Baht) 35.98 35.98 34.17

2. Summary Financial Information of Company


3. Business Review

Review Revenue Structure

RevenueStructureOfCPLPublicCompanyLimited

Revenue 2010 2009 2008

MillionBaht % MillionBaht % MillionBaht %

SalesRevenue 1,986.49 99.10 1,545.40 99.32 1,844.42 99.45

Other Revenue

ProfitFromForeign

ExchangeRate 7.520.38 3.22 0.21 6.57 0.35

Other 10.59 0.52 7.39 0.47 3.58 0.20

TotalRevenue 2,004.60 100.00 1,556.01 100.00 1,854.57 100.00

Changes in 2010

Nature of the Company’s business The Company engages in the full-service tanning business. The primary products include full grain leather, suedesplit,andwetblue.WeoperateaccordingtoISO9001andareamemberoftheSatraTechnologyCenter,the world class leather tanning development institute in the UK. Moreover, we have been awarded a silver rating bytheLWG.ThisprovesthattheCompany’sleathertanningfacilitiesaretotheinternationalstandard.Theseproducts are the raw materials for manufacturing leather shoes, luggage, furniture, auto seats, and any other genuine leather ware products.

Changes in 2010 Astheeconomyrecoveredin2009afteraperiodofstagnation,marketdemandisgrowing,particularlyfromtheforeignmarket,tocompensateforlast’syearloss.Inthedomesticmarket,afterthemanufacturingbaseofNike-thesportshoesgiant–leftThailand,localshoecompaniesreducedtheirorders,leadingtoadecreaseintheCompany’sdomesticsalesproportiontoonly25%whiletheinternationalsalesincreasesto75%oftotalsales.However,totalsalesincreasedby16%comparedtothepreviousyear.Therewereseveralreasonsstimulatingchangesin2010;mostimportantly,thepriceofrawhideswasrisingbymorethan50%overthepreviousyear,significantlyimpactingtheCompany’sperformance.Thisleftuswithnoalternativebuttosurviveby boosting sales and increasing product prices. However, it is not always possible to push the cost burden ontothecustomer.Atthesametime,theCompanyisrequiredtocreateoraddvalueintotheproductssothatthe customer will not feel that they are being taken advantage of. Thus, we have launched new products that


meetthecustomer’ssatisfactionandinitiatednewtechnologyandinnovationasaddedvaluetoourproducts.Furthermore,weshallfocusonimprovementanddevelopmentofqualityandspecificationthatmatchessalesorders, reduce defects and returned goods, the delivery service must be timely to reduce logistic expenses, and administrationandprocurementefficiencyisessentialtoreduceproductioncosts.TheCompanyshallrespondto all these requirements to cope with the aforementioned situation of raw material cost. To initiatenew innovation, theCompanyneedssignificantcapital investment foracquisitionofnewmachineryandequipmentintheproductiondepartmentaswellasR&D.Apartfromnewmachinery,weshallhire tanning experts from overseas to initiate experimentation and new product knowledge enhancement, as these will lead to upcoming innovation.

In other areas, we have improved the information management system by installing hardware and software, particularly for the improvement of accuracy in vital transaction processing such as marketing information, sales data,procurementrecords,andfinancial&accountingdataforsupportingcalculationofproductpriceandcosttobeinlinewithtoday’schangingneedforsuchinformation.Thisshallmaintaintheoperatingresultasplanned.Moreover,theCompanyprovidestrainingforproductionstaffandbackofficepersonnel,aimingtoimprovetheirknowledge and skill as well as enabling them to transfer such knowledge and skill to their successors in view of the uncertain future.

Marketing & Distribution Marketing and distribution Thefinishedleatherwaremarketin2010hasrecoveredfromastagnantstatusin2009.Theenormousnumber of sales orders indicates a dynamic market stimulating the shoe manufacturing industry back to life. However, the Company must maintain the quality standard and delivery time accuracy because, in this business, not only the quality, but also punctuality play an important role in retaining the existing customer base and expanding into new markets. AfterNike’sproductionbase leftThailand2yearsago, localshoemakerswhoweretheCompany’scustomersfaceddifficultiesandoperatinglosses,creatingabignegativeimpactonourdomesticsalesvolume.Asaresult,wewereforcedtofindnewcustomersinmarketsoutsidethecountrytocompensatetheloss,andtheresultwassatisfactoryinlastyear.Inthefirsthalfofthecurrentyear,dealerofficesintheUSA,China,Vietnam, and Indonesia received a considerable number of sales orders due to the recovery from the previous downturn and raw material in the stock inventory bought at the old rate. This combination led to an excellent


operating result. Unfortunately, in the second half of the year, the Company found it more challenging as the priceofrawhidesandchemicalsskyrocketedasneverbefore,butoursellingpricewasfixedbycontract.Obviously,hinderedbythischallenge,theCompanycouldnotmaintainitsnormalprofitabilityandsatisfactoryoperating result, regardless of the success in overhead cost reduction and quality control. In2011,tomaintainagoodresultwhilepricesofrawhidesandchemicalscontinuetoincrease,thecompany needs to re-launch the marketing plan by introducing new products to create diversity for and new innovations as customers around the world, well as add value to products to compensate the price increase in raw materials and chemicals. More importantly, the customers should feel that the extra amount of money theypayisnotfornothingbutforaddedvalueintheproduct.Theproductspecificationthatmeetsthesalesorder must be maintained or improved, and also delivery timeliness. These two requirements are deemed highly necessarybyworldclassshoemakers.Fortunately, theCompany isexpertandrenowned for inventingnewtechnology,provenbymorethan50newproductslaunchedeachyear.

Future Trends in Manufacturing and Marketing Competition. Duringthelastyear,thedomesticshoemarketcontinuedtodeclinesincethedepartureofNiketwoyears ago. This caused a reduction in domestic sales so the Company attempted to leverage the loss by increas-inginternationalsales,bychangingthedomesticandinternationalsalesproportionfrom40:60to25:75within2years.However,totalsalesincreasedby16%lastyeardrivenbytheboostindemandafterthelongstagnation.Fromtheannualreport,althoughthesalesvolumewasincreasing,thesellingpriceremainedunchangedwhilethepriceofrawhidesincreasedbymorethan50%.Thus,profitabilitywasweakened. Trendoftherawhidepriceisexpectedtoclimbcontinually,directlyaffectingthepriceoffinishedproducts. However, a high price is only acceptable for a high grade product. Raising prices alone cannot entirely compensatethecostincreasesinrawmaterials.Addingvaluetoproductsallowsthemsurviveinthemarket.Furthermore,themarkettendstoreplacegenuineleatherwithlessexpensivesuede,causingthedemandforbet-ter and more expensive genuine leather to remain unchanged while there is a greater need for suede. Therefore, the Company shall focus not only on new product design, but also development of suede products to expand our product range. FromtheleathermarkettrendinEuropeandChina,themarketinthenext1-2yearswillacceptcolorfulandbrightcoloredproducts.Modelstyleshoeswillbewarmlywelcomedbyconsumers.ThisrequiresR&Dtostudy, examine, and develop products for this trend and support future demand and control cost that may rise to the point of commercial infeasibility. Competition must be taken into serious consideration in a shrinking domestic market. We have lost somemarketsharesinceanumberofcustomerssufferedcashflowrelatedproblemsanddeficits.Thisyear,there emerged 2-3 new factories in Indonesia and 2-3 facilities in Vietnam. These two countries cover the same market as our dealers. In a sizable market as China, the market share is merely maintained. In conclusion, similar tolastyear’ssituation,thecompetitiveenvironmentonlyslightlyaffectedtheCompany.Althoughnewfactoriesstart operations, they are not our direct competitor because, to acquire expertise in the leather tanning business, it requires long-term experience and readiness in terms of tools and machinery as well as skill. Therefore, in order to compete with the Company, one must be in this industry for a long time. This makes the Company oneoftheworld’sleadersintheindustry.


Risk on Operation. In general, the leather tanning business is quite complicated in terms of the production process, uncertainty

ofthefinishedgoodsamount,unpleasantodor,andnegativeimpactontheenvironment.Therefore,itisnot

easy to establish a new tanning facility because it is not welcomed by the local community, expertise in leather

tanning is scarce, and long-term experience and expertise in inventing new products in response highly changeable

fashionarenecessarytoexceedthecustomers’expectations.Moreover,acompanymustcontrolthecostfor

environmental management to avoid causing damage to the community. Heavy capital investment in machinery

andequipmentmustbemadetohavethesameproductioncapacityasourCompany’sexistingcapacity.In

conclusion, new competition that would put the Company at risk is a small concern.

Concerning the risk of substitute material for genuine leather, there is no such material available in the

marketforthetimebeing,asanimalskinpossessesuniquenaturalqualitiessuchasflexibility,softness,durability,

aswellasthesenseofvalue,elegance,andhigh-fashion.Itisdifficulttofindormakeanysyntheticmaterial

that has the same qualities. Therefore, substitute material is also not a major concern.

The market situation at the present time is positive because demand for leather products is growing

consistentlyafterlastyear’seconomicrecovery.Secondly,thereisonlyasmallnumberofnewbleachersin

Indonesia, and it will take a considerable time until they become our competitors. On the other hand, there is

a possibility that some of the existing manufacturers may close, discouraged by the aforementioned adverse

factors,particularlythehighlyfluctuatingrawhidepricein2011.

Generally,aleathertanningbusinessmustkeepitsproductqualityandproductionprocesstothestan-

dardspecifiedbythecustomer.TheCompanythereforefocusesonimprovingthetanningprocesstobestate

of the art. To achieve this goal, grooming personnel to become experts in tanning leather and producing high

quality and beautiful pieces of leather is very important since training a worker to become an artist cannot be

completedwithinashorttime.Insomecases,ittakesyearstodevelopaworkertobecomeanexpert.After

an expert has been trained, the expertise shall be consistently transferred to other workers, and this transfer

process must be carefully determined to ensure concrete and measurable practicability. This is considered one

of the most important policies of the Company.

Fromtheaforementionedreasons,oneofthemajorrisksislackofexpertiseand“artist”resourcesto

meettheCompany’sdemand.Moreover,thenumberoftheseexpertsandartistsisdiminishingastimepasses.

It will be serious if the long expert building process is delayed for any reason.

The other risk the Company faces this year is that the price of raw hides remains high, as this directly

threatenstheCompany’sprofitability.Hence,wecloselymonitorpricesofrawhidesintheglobalmarketand

buy raw hides at the right time and the right cost.

4. Factors of Risk


Credit Risk Atthepresenttime,theCompanyisselling25%ofitsproductdomesticallyandtheother75%tothe

internationalmarket.Theexportsaleshavebeenoperatedincash,prepaid,orbyL/Cterms,whichisloan-risk

free.Fordomesticsales,alltransactionsarewithmajorcustomerswithgoodcreditsothattheloanriskislow.

However,wefindfoundlatelythatsomecustomersfailtopay,ordelaypayment,butonlyinsmallproportion

comparedtothetotalsales.TheCompanymonitorsandevaluatescloselythesecustomerstoallowasufficient

bad debt reserve. In conclusion, the loan risk is low, or one may say that there is no loan risk.

Risk on Exchange Rates. Risk on exchange rate is connected to purchases raw material and sales denominated in foreign

currencies.Thecompanyhasnoholdafixedpolicyonexchangeratetradingbutcompanypaysattentionfor

the timing and import & export volume to manage cleverly the foreign exchange trades with banking facilities.

C.P.Lhasgainfromforeignexchangerateof7.52millionbahtin2010andhasgainfromforeignexchangerate

of3.22millionin2009.


5. Constructure Shareholder and Management

5.1 Shareholder

Thereareregisteredcapital26,400,000share,10bahtpershareandallissuedandpaid-up.Thenameof

shareholdersasatApril10,2011

5.2 Shareholder Equities

GroupofTopTenShareholders

NameofGroup AmountShare %

Million

1. ChareonsinAssetsCo.,Ltd. 10.03 38.00

2. Mr.CHEN,JUIYUNG 2.83 10.74

3. Mr.PrayuthAuewattana 2.56 9.71

4. ThaiNVDRCo.,Ltd 1.87 7.10

5. Ms.NuchnapaWongcharoensin 1.00 3.80

6. Mr.ChenRuiTeng 0.93 3.19

7. Mr.LaiChiHsiang 0.68 2.53

8. Mr.KuoShihLun 0.46 1.75

9. Mr.ManitWongcharoensin 0.45 1.71

10. Ms.WalairatSilchevakijja 0.39 1.47

GroupofMajorShareholders

NameofGroup AmountShare %

Million

1.CharoensinGroup 12.91 48.88

2. ChenGroup 3.76 14.30

Dividend Policy

Thecompanyhavedividendpolicytoshareholderaround50-60%ofnetprofitfromeachyearandwill

pay90%fromnetprofittoshareholder.

Management Structure

1. Mr. Manoch Wongcharoensin Position Chairman Work experience CharoensinGroup Present ChairmanCPLGroupPublicCompanyLimited

2. Mr. David Lai Position ManagingDirector Work Experience 1969-1979 MarketingManager,FormosonChemicalIndustry 1979-1989 GeneralManager,LienDahLtd.. Present DirectorandManagingDirector CPLGroupPublicCompanyLimited

3. Mr. Chen Rui Teng Position DirectorandDeputyManagingDirector Work experience 1972-1989 DeputyGeneralManager,LienDahLtd. Present DirectorandDeputyManagingDirector CPLGroupPublicCompanyLimited


4. Mr. Kua Shin Lun Position DirectorandDeputyManagingDirector Work experience 1976-1988 PurchasingManager,ADIGroupTaiwan 1988-1989 MarketingManager,PanOverseas(Thailand) Co.,Ltd. Present DirectorandAssistantManagingDirector, CPLGroupPublicCompanyLimited,

6. Mr. Suwatchai Wongcharoensin Position Director Work experience 1997-1998 StaffofResearch&DevelopmentDepartment Present DirectorandSeniorManager CPLGroupPublicCompanyLimited,

7. Mr. Kitichai Wongcharoensin Position Director Work experience 1999-2003 SalesSupervisor 2003-2005 SalesCenterManager Present Director



Company Committee can be divided into 3 sets as follows:

1.BoardofDirectorasatMarch10,2011have9personsasfollow

Name Position

1.Mr.ManochWongcharoensin Chairman

2.Mr.SuwatchaiWongcharoensin Director

3.Mr.LaiChiHsiang ManagingDirector

4.MrChenRuiTeng Director

5.Mr.KuoShihLun Director

6.Mr.KitichaiWongcharoensin Director

7.Mr.MongkonLaoworapoong Director/ChairmanofAuditcommittee

8.Mr.SukhoVoddhijoti Director/Auditcommittee

9.Mr.KamthonVathanalaoha Director/Auditcommittee

**Mr.MongkonlaoworapongbeinginpositionasatJanuary18,2011**

Companycommitteeisresponsibleforthefinancialstatementofthecompanyandtechnologyinformation

appearingintheannualreportandannualinformation.Suchfinancialreportisestablishedinaccordancewith

theaccreditedstandardandchoosinganappropriateandcontinuouslyobservedpolicy.Moreover,inthefinancial

statement,importantinformationshouldbesufficientlydisclosed.Thiscommitteealsohasthedutiestomanage

all internal work as assigned by the managing director or general manager to be complied with law, regulations

andobjectives,toobservethelawfulresolutionfromtheshareholder’smeetings,andtodeterminecompany

policy, guideline and operation plan, assign the work to lower administrator so that the company can have a

progressandcreateprofits.Alltheseshouldbeperformedwithcompetency,honestyandcarefulperformance.

Thecommitteeestablishesanefficientinternalcontrollingandmonitoringsystem.Accountingshouldbe

recordedcorrectly,completelyandsufficientlyinordertoknowthecompanyweakpointandtopreventitfrom

any dishonesty and illegal actions.

2. Executive director who is authorized committee of

thecompanyatMach10,2011have6personsasfollow.

1.Mr.ManochWongcharoensin

2.Mr.SuwatchaiWongcharoensin

3.LaiChiHsiang

4. Mr Chen Rui Teng

5.Mr.KuoShihLun

6.Mr.KitichaiWongcharoensin

Numbersornameofthedirectorswhosesignatures

are binding on the company:

Threedirectorsjointlysigntogetherandaffixedseal


of company as evidence by the said directors must be chosen from any directors named below. Each group

chooses one man,

1.Mr.ManochWongcharoensin,Mr.Suwatchaiwongchaorensin

2.Mr.LaiChiHsiang,MrChenRuiTeng

3.Mr.KuoShihLun

Board of Executive directors has the following duties and authorities:

1. setcommercialstrategiesandpolicyforbusinessconducttomeetwiththecompanytarget.

2. inspectandmonitortheinternaldeterminedoperationandadministrationtoreachtheefficiencyandcomply

with the regulations.

3. consider the allocation of annual budget and approve all expenses.

4. consider the distribution of premium, reward and other remuneration to staff and lower administrators.

5. perform other duties concerning the business conduct of the company or assignment from the company

committee.

The duty performances of the company committee and board of directors must not contradict to the

regulationsandrequirementsoftheOfficeoftheSecuritiesandExchangeCommissionandtherequirementsof

theStockExchangeofThailand.

3.TheAuditCommitteeforthecompanywhichisconsistingof3independentdirectorswhoarenot

the member of Management

ThenameoftheBoardasMarch102011are

1.MrKamthonVathanalaoha Chairrman

2.Mr.SukhoVoddhijoti Chairman

3.MrMongkonLaoworapong Committee

4.MissArjareeSuphasinwongchai Secretary

**Mr.mongkonlaowarapongbeinginpositionasatJanuary18,2011**

DefinitionofIndependentDirectoroftheCompany

Independentdirectors are thosenot under the influenceofmajor shareholdersorgroupsofmajor

shareholders,andcommandthefollowingqualifications.:

• Theirshareholdingsmustnotexceed0.5%ofallsharesentitledtovotingrightsoftheCompany,i.e.

theparentcompany,itssubsidiaries,itsjointventures,orjuristicentitiesinpotentialconflictwiththe

Company.

• Theymustnotnowbenoreverhavebeeninvolvedasemployees,hiredworkers,salariedconsultants,

or anyone with controlling authority of the Company, i.e. the parent company, its subsidiaries, its joint

ventures, associated subsidiaries.

• Theyarenotrelatedbybloodorregisteredasbeingparents,spouses,siblings,orspousesofthechildren

of the executives, major shareholders, persons with controlling authority, or persons to be nominated as

executives or persons of controlling authority in the Company or its subsidiaries.


• TheyhavenobusinessrelationswiththeCompany,i.e.theparentcompany,itssubsidiaries,itsjoint

ventures, or juristic entities in potential conflictwith theCompany inways thatmight impair their

independent judgment. They must also not be nor have been major shareholders, directors other than

independent directors, or executives of entities

AllauditcommitteehavepassEffectiveAuditCommitteeProgramfromtheThaiInstituteofDirector.

TheAuditCommitteehadthedutiesandresponsibilitiesasfollows:-

• Reviewandcontrolthecompanytomanagecorrect

andreasonablefinancialreport

• Reviewandcontrolthecompanytoarrangethesuit-

ableandefficientinternalcontrolandaudit

• Reviewandcontrolthecompanytocomplywiththe

law concerning security and security exchange, stipulation of

SETorotherlawsrelatedtothecompany’sbusiness.

• Consider, recruit, propose, appoint andpropose the

remuneration of the auditor.

• Consider,disclosetheinformationofthecompanyin

case of there is any related item or any item which may

objectagainstbenefittobecorrectandcomplete.

• PreparereportofAuditCommitteeexpresslyrecorded

inannualreportdulysignedbytheChairmanoftheAuditCommittee.

• Conductotherbusinessbeingassignedby theBoardofDirectorsunder theapprovalof theAudit

Committee.

Intheyear2010thedirectorshasallmeetingasfollow.

BoardofDirector Auditcommittee

1.Mr.ManochWongcharoensin 5

2.Mr.SuwatchaiWongcharoensin 5

3.Mr.LaiChiHsiang 5

4.MrChenRuiTeng 1

5.Mr.KuoShihLun 5

6.Mr.KitichaiWongcharoensin 5

7.Mr.SookpreedaPhanomyong 3 3

8.MrKamthonVathanalaoha 4 4

9..MrSukhoVoddhijoti 4 4

**Mr.SookpredaPhanomyonghaspassawayonOctober28,2010**


NameofManagementTeamatMarch10,2011

1. Mr.ManochWongcharoensin Chairman

2. Mr.SuwatchaiWongcharoensin Director

3. Mr.LaiChiHsiang ManagingDirector

4. MrChenRuiTeng Director

5. Mr.KuoShihLun Director

6. Mr.KitichaiWongcharoensin Director

7. Mr.SinghaWongcharoensin ChiefFinancialOfficer

8.Mr.VichaiSirivivattana ProductManager

9.Mr.SomphongWongrujipairoj DomesticMarketingManger

10.Ms.ChutimaKititarakul OverseasMarketingManager

11.Ms.TanyatornApichatvicheanchot AccountingManager

12.Ms.ArjareeSuphasinwongchai FinanceManager

ToselectDirectorsandManagement.

DirectorsofcompanywereelectedbymajorshareholdersonShareholder’sMeeting.ManagingDirector

was assigned by board of directors and was charged with company business. The term of position is 3 years.

However,theyhavearighttoreturntobedirectoragainaftershareholders’meetingelection.

TheChairmanandManagingDirectoraretherepresentativesfrom2majorshareholdersgroupwhoare

differently experienced in management shall separately responsible to clearly prescribe the policy and authorities

fluentlymanagement.AuditCommitteewereanindependentdirectorsandnon-executivedirectors.Theterm

for holding 3 years.

TheremunerationforDirectorsandManagement

The remuneration

1.IndividualDirector

Amount Typeremuneration

1. Mr.ManochWongcharoensin 275,000 Position,Meetingfee,Director’sfee

3. Mr.SuwatchaiWongcharoensin 380,000 Position,Meetingfee,Director’sfee

4. Mr.LaiChiHsiang 515,000 Position,Meetingfee,Director’sfee

5. MrChenRuiTeng 200,000 Position,Meetingfee,Director’sfee

6. Mr.KuoShihLun 380,000 Position,Meetingfee,Director’sfee

7. Mr.KitichaiWongcharoensin 180,000 Position,Meetingfee,Director’sfee

8. Mr.SookpreedaPhanomyong 150,000 Position,Meetingfee

9. MrKamthonVathanalaoha 210,000 Position,Meetingfee

10.MrSukhoVoddhijoti 210,000 Position,Meetingfee

Total 2,500,000

**Mr.SookpredaPhanomyonghaspassawayonOctober20,2010**


2.TheremunerationforDirectorsandManagement

TyperemunerationDirectorsandManagement

Number Baht

Salary 12 13,508,080

Bonus 6,719,820

Otherremuneration 1,478,500

Total 12 21,706,400

The Principles of Good Corporate Governance.

1. Rights of Shareholders

CPLrecognizestheimportanceofshareholdersrightsandtreatsallshareholderequitable,fairlyandin

linewithrelevantlaws.AllshareholdershavetheEqualrightsforeachclassofsharestoreceivethedividend

payment,tobuy,sellandtransfersharesincludingtherighttoaccessorobtainthecompany’sinformation

disclosed to shareholders and the public.

Before the meeting day :

Thecompanyholdsthegeneralmeetingofshareholderswithin4monthsafterfinancialstatementyear

end.Fortheyear2010,CPLinvitetheshareholderstoproposetheagendaof2010AnnualGeneralShare-

holders’meetingandnameofqualifiedcandidatestobenominatedforselectionasCPLboardofdirector

inadvancebeforethemeetingstartedandassigntoThailandSecuritiesDepositoryCo.,Ltd.whichwasthe

company’ssecuritiesdepositregistrartosendthenoticetoshareholders’meetingpriortothemeetingdatein

ordertoprovidesufficienttimeforshareholderstoreviewtheagenda.Thenoticeofmeetingexpresslyindicated

the matters to be tabled at the meeting, whether for acknowledgement, approval or consideration, including the

board’sopiniononeachagenda.Othersupportinginformationanddocumentswerealsoattachedtothenotice,

In addition to the direct delivery , the notice of meeting was made available to the shareholder through the

company’swebsitewww.cpl.co.thinadvanceofthemeetingdateinbothThaiandEnglish.

On the meeting day :

The quorum, voting procedures and voting count method are clearly informed to the meeting prior to

discuss the agenda items. There are key directors participating such as the chairman of the board, the Chair-

manoftheAuditCommittee,ManagingDirector,managementofficerincludeexternalauditoralsoattendthe

meetingsothattheycouldlistentoshareholders’opinionsorsuggestionsandalsoansweranyquestions.The

BoardofDirectorallowedshareholderstoelecteachdirectoreligibleforelectiononindividualbasis.

After the meeting day:

TheCompanynotifiedtheAnnualGeneralMeetingresolutionsvietheSetCommunityPortalinthe

nextbusinessday,specifyingthevotingresults(agree/disagree)andallissuesandthevotecounts(abstain)

ofeachissue.TheCompanysenttheminutesresolutionandkeydiscussionissuestotheSETwithin14days.

The minutes were disclosed in both Thai and English version via the website. The minutes are maintained at

theCompany’sheadoffice.

CorporateGovernanceReportofThaiListedCompanies2009fromThaiInstituteofDirectorsCPL

getExcellentGCScoringwithScorerange90–99.


2. Equitable Treatment of Shareholders

TheCompanyensuresfairtreatmentofshareholdersirrespectiveofsizeofholdings.Allofsharehold-

ers,inrespectofeachclassofshares,areentitletothesamedividendpayment.Thecompany’sshareholder

meeting are open to all shareholders and all share of the same class have the same voting rights. Voting at the

annualshareholders’meetingisdonebytheprincipleofoneshareonevote.Shareholders,whocannotattend

theshareholders’meeting,canauthorizeourindependentdirectorsortheirbehalftoattendthemeetingand

votetotheproxyform.financialstatementyearend.TheCompanyallowtheshareholderstoproposethe

agendaforAnnualGeneralShareholders’meetingandnameofqualifiedcandidatestobenominatedforselec-

tionasCPLboardofdirectorinadvancebeforethemeetingstartfromOctobertoJanuaryofthemeetingyear

notlessthan60days

The procedures and criteria to nominate the director to the board and propose items for the agenda

fortheannualgeneralmeetinghavebeenpostedtothecompany’swebsite.

3. Role of Stakeholders

The Company has give precedence to the right of every group of stakeholders, all corporate policies

basedonallstakeholders’rightsandeminencearestrictlyfollowed.

Customers The Company determines to produce high quality consumer products in accordance with

related laws and regulations. It also continuously employs research and development activities to raise its quality

of product.

Employees The Company also focuses on personnel development such as competency, skill, and ex-

pertise in employee career path including healthy work environment, welfare and incentive for every employee.

PartnersTheCompanyhassincerelytreatedallpartnersin

accordance with related agreements and laws based on fair

mutualbenefitandfuturerelationship.

CompetitorsTheCompanyhasspecifiedcompetitor

treatment in its business ethics handbook in accordance with

international standard corresponding to business trade prac-

tice laws and regulations without fraudulent acts in infringing

competitors’confidentialinformation.Inthepastyearthere

was no dispute of such competitor infringement.

Creditors The Company shall strictly follow agreements

and conditions set forth by creditors.

ShareholdersTheCompanydeterminestocarryout

its business activities to increase corporate economic value

andshareholders’value.

CorporateSocialResponsibilityTheCompanyhasperformsitsbusinessactivitieswithessentialsocial

responsibilityincludingefficientproductionprocesstoreduceenvironment.Thecompanyoptstoemploylocal

members of the community and has initiated several projects to develop and raise the quality of living within

the community.


4. Disclosure and Transparency

Company has disclosed essential and adequate information to shareholders on time with transparency

andwithoutdiscriminationinaccordancewithregulationsspecifiedbytheStockExchangeofThailandinclud-

ingfinancialinformation,e.g.,financialreport,financialstatement,detailedfinancialinformation,andnon-financial

informationsuchasrolesandfunctionsofBoardofDirectorsanditssubcommittees,numberofBoardmeetings

andnumberofattendanceofeachmemberinthepastyear,Directors’compensation,InternalControls,Corpo-

rateSocialResponsibility,etc.SuchinformationwasdisclosedthroughtheStockExchangeofThailand’sonline

system,annualreport,shareholdermeetings,minutesofshareholdermeetings,andcorporatewebsite.Additional

informationnotrequiredbytheStockExchangeofThailandthatmightbeusefulforinvestorsandanalystshas

also been prepared and included in the corporate website under investor relations.

Remuneration for Directors

TheCompanyhasmatchedtheindustry’scompensationstandardandhighenoughtoretainDirectors

withdesirablequalificationsatalltime.Theamountofremunerationincludingitspolicieshavebeenapproved

byshareholdersinAnnualGeneralMeetinganddisclosedintheannualreport.

Investor Relations

ChiefFinancialOfficerisresponsibleforinvestorcommunications.TheCompanyhasbeendisclosingaccurate,

complete, transparent, on-time, and fair information to the public as it is well aware of the importance of such

informationforinvestors’analysisanddecisionmakingbyaccommodatinginvestorsandanalysts,e.g.,Company

visitandmeetingwiththeManagementforinformationexchangesandvariousactivities.Forfurtherinformation

onthedisclosureofcorporateinformation,[email protected]@cpl.co.thortelephone

number66270956338Fax6627096033

5 Responsibilities of the Board

TheBoardofDirectorsconsistofqualifiedmembers

with experience and business expertise who devote their

time and effort on their duties in accordance with the law,

corporate objectives and regulations, including resolutions of

shareholder meetings with honesty to protect corporate best

interest. Formore detail please see 5. STRUCTUREOF

SHAREHOLDERANDMANAGEMENT

InsideData

The company prohibit the usage of information for private

purpose, Before the company shall disclose any information

tothepublic, theBoardofDirectorsandallmanagement

muststrictlykeepconfidentialofthesameespeciallythose

related to the business operation of the company according

totheregulationsofthecompanyandregulationsofSET.


Internal Control

TheBoardofDirectorssatisfiestheinternalcontrolsystemthatcreatedreasonablecredibilityofthe

financialstatementofthecompanyat31December2010

TheboardofdirectorandAuditCommitteehasevaluatedtheinternalcontrolsystemoftheCompany’asfollow:

1.TheOrganizationandenvironment

TheCompanyspecifiesthebusinessgoalsannuallywheretheactualperformanceistaken

into consideration and reviewed with the business goals in board of director every quarter.

In addition, the Company has issued the clear job description according following the line of command.

2. Risk Management

The management shall monitor the risks with all relevant departments at least every month. The meeting

have been set and conducted to analyze the performance as well as the situations.

3. The information and communication systems

The Company used the computer system for all part include production line for keep record and im-

portant data which is easy and correct in order to report to the board.

4. The monitoring system

The Company has monitoring system by issued monthly report from all operation, marketing mainte-

nance and has a policy to specify the business goals and to compare the actual performance with such goals

wherethereasonsofthedifferencesshallbeidentified.anyoperationalerrorsmustbepromptlyreportedtothe

management for their actions.

Theboardofdirectorsalsodeemedthattheinternalcontrolsystemsaresufficient.


There was the open report of the

inter-transaction item 5 and 9 from the notes to

financialstatementsalready.

External Committee Commended

The relation transaction between company and

affiliateswere under regularization trade inmarket

price compared with the others and have the signature

approve for selling and purchasing which regulariza-

tion to conduct.

6. Transactions between company and Affiliates


CPLGroupPublicCo.,Ltd.isafullyintegratedtannery,fromthepurchaseofrawhidestopickling,

wetblues,crustinguntilfinalfinishingascowfinishedleatherreadytobecutintoshoes&leatherproducts.

Thebeamhouseandtannerywascompletedin1989dulyoperatedandmanagedbyfoundingpersonnelwith

experienceofmorethan40years.CPLhascontinuouslyexpandedsincethen.In1994CPLwasregisteredin

SETwithregisteredcapitalof240millionbaht.Subsequently,theAnnualExtraordinaryShareholdersMeeting

for2005hadunanimouslyresolvedtoincreaseditsregisteredcapitalfrom24m.sharesto26.4millionshares,

eachof10baht,andtotalvaluingto264millionbaht.CPLhasregisteredthisincreaseincapitalwithMinistry

ofCommerceon1June2005.

Forthepasstime,thecompanyeverhold99.99%sharesinWenHwaTannery(Thailand)Co.,Ltd.

asthecompany’ssubsidiarywithitsregisteredcapitalof90millionbaht.However,sinceMay30,2007,the

subsidiary company was liquidated and the liquidation has been registered with the Ministry of Commerce since

June14,2007.

During2001and2002,thecompanyhadjointlyinvestedwithitsalliestoestablishanewcompany

namedCPLInternationalCo.,Ltd.inHongKongandinvestedintheconstructionofatanneryinGuangZhou.

SubsequentlyCPLInternationalCo.,Ltd.hasincreaseditsregisteredcapitalfrom7millionUSDto8million

USDoftotalregisteredcapital.

CPLGroupPublicCo.,Ltd.procuresimportedsalt-fermentedrawhidesandreadymadetannedleather

fromAmericaundersightL/Cterms.Chemicalproductsarebothimportedandpurchasedwithinthecountry.

Forthepurposesofsuchpurchases,thecompanyhadbeengrantedcreditfromitssuppliersofapprox.30-120

days.Chemicalspurchasedfromabroadarepurchasedunderapprox.90-120dayscreditterms.

In looking for the right raw material for production use, The cost of rawhide from international increased

about16.26%.In2010,thecompanypurchasedabout0.86%ofrawhidesuppliesfromthedomesticmarketwhile

purchasedformoverseaabout99.14%.Withregardstochemicalpurchases,thecompanyconsideredavariety

offactorsinpurchasingchemicals;suchaspricecomparisonsbetweensuppliers,periodofcreditterm,after

salesserviceandtrainingonchemicalusage,etc.In2010localchemicalpurchaseswas60.92%and39.08%

from overseas.

ANALYSIS FROM OPERATION OF COMPANY.

Operationsintheyear2010resultedinanincomeof1,986.49millionbahtincreasefromtheyearbefore

whichwaspostedat1,545.40millionbaht.Salesquantitiesincreasedabout27.98%.Thecompanyhavegross

profitdecreasedfrom211.70millionbahtto185millionbaht.

Themainreasonwastheaveragecostofrawmaterialperhideincreased173.86baht.Sothat,thevalueof

costpersquarefoothigherthanlastyear3.01baht.ForeveryyearThecompanyhavemadeadvancedplan-

ningstartingfromrawmaterialsselection,throughtheproductionprocessintofinishedgoodsbystrictand

7. Management Discussion and Analysis


efficientlymanagingmaterials,chemicalsandexpenses.Theratioofsalesvolumebetweenlocaldomesticand

overseasexportsalesin2009was26.35%:65%,in2010thereisachangetothisratiotobecome26%:

74%.Customersincludebrandnamesthathavebeenloyalwithusbefore;Adidas,Lacoste,Timberland,Marc

Stevensandotherwell-knownbrandnamesinfootwear.ThemajorityofthesaleswasstillbelongtoMarc

steventhesameoftheyearbeforewhichhavetheproportion34.85%fromtotalsale.Therelatedbuyerhave

23.56%oftotalsaleswasTimberland.Therewere16.34:11.05whencomparedthesalesratiobetweenTimber-

land and Marc steven .

Otherthansalesrevenues,therewerealsoearningsfromtheforeignexchangeratesof7.52millionbahtinter-

estincomefrominvestmentabout2.70millionbaht.Taxrefund6.93millionbaht,totalrevenueincreasedfrom

1,556.01.millionbahtin2010tobecome2,004.60millionbaht

in201orincreasedofabout28.83%.Thecompanyhasno

policy toholdor issuefinancial instrument forspeculation

or for trading because such policy or instruments are not

suitable to operate in the company.

CPLmanagementplanstocontrolexpensestonotexceed

the planned budget, avoiding all risks which may effect the

financialstatusandcontrollingcashflowwith thethought

toprovidemaximumbenefitforthecompany.

ANALYSIS FINANCIAL SITUATION OF COMPANY

ASSET

At the end of 2010, the company has cash and

cashequivalentsof58.24millionbaht.Currentratioin2010was4.72times,whilein2009itwas5.46times.

Intheyear2010Thecompayinvestedtopurchaseasset62.05millionbaht,paymentforshorttermloanfrom

financial institutions,48.63millionbahtandtomakedividendpaymentsof66millionbaht,arrivingatanet

balance58.22millionbaht.

Accountreceivabledecreased7.75millionbaht.Althoughtherewascashflowproblefacebymany

customers.However,thecompany’sadministratorsarecertainthattherewillbenorisksofbadpayment.The

occurrence of bad debt happened from the year before where the customer was able to settle the debt result-

ing in a reversal in bad debt to become 5.3 million baht.

Netendinginventoriesconsistofraw-material,chemical,workinprocessandfinishedgoods.In2010,

inventoriesincreasedfrom402.64millionbahttobecome584.89millionbahtinaccordancewithcompanypolicy

to reserve the raw-material stocks to avoid the shortage, then there have reserved raw-material as suitable to

use continuously in production and can delivery on time to prevent the damage which may be happen to the

customer’sbusiness.

LIABILITIES AND INVESTING ACTIVITIES

Duetocontactwithforeigncountries, thecompanyhascredit linefromcommercialbankforbank

overdraft, trust receipts, short-term loan, letter of guarantee, credit line for forward contract, and foreign exchange.

AsofDecember31,2010CPLhasBeengrantedatotalcreditlineof1,048.00millionbahtand3.00million


USD.Itispledgedbythemortgagedoflandregistrationsplusproperty,machinery,equipment,andinventory.

Thetrustreceiptspayablehadaninterestrateof6.125-7.00%peryear.Attheendof2010,therewasloan

fromfinancialsituation53.23millionbaht.

Theregisteredsharecapitaloftheformer24,000,000shares,parvalueof10bahtpersharwasincreased

to26,399,995sharespervalueof10bahtpershare.Thecompanyhasissuedandregisteredtheincrementof

sharesattheMinistryofCommerceonJune1,2005.Intheyear2010,theresultfromoperationhadanetprofit

of66.02millionbahtearning2.50bahtpershare.Shareholders’Equitywas949.80whichwasthesamevalue

aslastyear.Fortheyear2009,Thedividend66millionbahtwasdistributedwhichwaspaidinthesecond

quarterof2010.Itisunanimouslyresolvedfromtheminuteofdirectors’meetingNo.2/54,thatthecompany

appropriatesretained-earningsfor2010asdividendtoshareholdersintherateof1.75pershare.

Future Outlook:

Althoughshowingasmalldecreasefrom2009,theoperatingresultforlastyearwasacceptable.This

was because the price of raw hides in the second half of the year remained higher than usual, leading to a

downturn in the same period. However, in total the overall operation was satisfactory as stated before.

In2011,thepriceofrawhidesiscontinuingtoincreasewithnosignsofslowingdown.Closemonitor-

ing of the raw material price trend indicates a clear upward trend that will certainly affect the operation of the

Company.Ourproductcostwillincrease,andtheCompanymayexpectadeficitifwedonottakeanycoun-

termeasure.Asthepriceofrawhidesisforecasttosetanewhighat$90-100USDcomparedtothelast10

years, the Company must revise the pricing and adopt radical cost-saving activities to leverage the skyrocketing

price of raw materials.

By increasing selling prices in response to the increasing cost of raw materials, the Company will

figureoutthewaythefashiontrendisgoingandlaunchnewproductsaccordinglyinatimelymanner.This

willaddvaluetoournewproductsandsatisfycustomerswhilethepriceriseisunavoidable.Duringthisyear,

theCompanyplanstolaunchmorethan50newproducts.Furthermore,concerningcost-savingactivities,the

Company shall concentrate particularly on quality of products to minimize cost of defect rework and quality

inspectionpriortodelivery,aimingtoreducecostofreturnedgoods.Forotheractivities,suchasrawmaterial

and chemical purchasing management, the Company shall negotiate vigorously with suppliers and decide to only

buy raw materials at the right price for the Company. Inventory shall be controlled to a minimum level in such

aprice-sensitiveenvironment.Theexistingrawmaterialwillbeselectedandclassifiedtoaddvaluetocertain

rawmaterials.Intermsoffinancialmanagement,thesituationintheforeigncurrencyexchangemarketmust

bewatchedcloselyasThaibahtremainsstrongandfluctuating,theinflationrateisincreasing,andthecrude

oilpricethathascomecloseto$100USDabarrelandisestimatedtoexceed$100USDinthenearfuture.

Finally,thereisthepossibilitythatthegovernmentwillraisetheminimumwagerate.Ifthesefactorsbecome

true, the operation of the Company will inevitably drop.

AlltheaforesaidfactorspotentiallyhaveanegativeimpactontheCompany.Itisachallengeforthe

Company to overcome these threats by implementing measures with discipline and patience.


ToTheShareholdersandBoardofDirectorsofC.P.L.GROUPPUBLICCOMPANYLIMITED

sheetsasofDecember31,2010and2009thestatementsofincome,thestatementsofchangesinshare-

holders’equityandthestatementsofcashflowfortheyearthenendedofC.P.L.GROUPPUBLICCOMPANY

LIMITED.Thesefinancialstatementsaretheresponsibilityofthecompany’smanagementastotheircorrectness

andthecompletenessofthepresentation.Myresponsibilityistoreportonthesefinancialstatementsbased

on my audit.

I conducted my audit in accordance with generally accepted auditing standards. Those standards require

thatIplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsare

freeofmaterialmisstatement.Anauditincludesexamining,onatestbasis,evidencesupportingtheamounts

anddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedand

significantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatementpresentation.I

believe that my audit provides a reasonable basis for my opinion.

Inmyopinion, thefinancialstatements referred toabovepresent fairly, inallmaterial respects, the

financialpositionasofDecember31,2010and2009,theoperationsandcashflowsfortheyearthenended

ofC.P.L.GROUPPUBLICCOMPANYLIMITED,respectivelyinaccordancewithgenerallyacceptedaccounting

principles.

S.K.ACCOUNTANTSERVICESCOMPANYLIMITED

(NarisSaowalagsakul)

AuthorizedAuditorNo.5369

Bangkok,

February16,2011.

8. Independent Auditor’s Report


ASSETS

CURRENTASSETS

CashandCashEquivalentsItems (Note6) 58,240,574.52 244,190,118.38

Short-TermInvesment (Note7) - 20,000,000.00

AccountsandNotesReceivable-OtherCompanies-Net (Note8) 117,709,077.72 131,092,251.62

AccountsandNotesReceivable-RelatedCompanies (Note5.2,9) 48,430,804.73 42,796,122.36

Inventories-Net (Note10) 584,889,601.57 402,641,897.72

OtherCurrentAssets 9,874,110.30 3,974,193.98

TOTAL CURRENT ASSETS 819,144,168.84 844,694,584.06

NON-CURRENTASSETS

Long-TermInvestment (Note11) 82,781,260.81 76,325,161.35

Property,PlantandEquipment-Net (Note12) 213,247,664.88 176,819,185.50

OtherNon-CurrentAssets 8,089,616.33 6,673,888.33

TOTAL NON - CURRENT ASSETS 304,118,542.02 259,818,235.18

TOTAL ASSETS 1,123,262,710.861,104,512,819.24

Notestothefinancialstatementsareanintegralpartoftheabovefinancialstatements.

2010 2009

Balance SheetsC.P.L.GROUPPUBLICCOMPANYLIMITED

AsofDecember31,2010and2009


LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENTLIABILITIES

Short-TermLoanfromFinancialInstitution (Note13,14) 53,227,816.38 4,468,687.69

AccountsandNotesPayable 59,368,251.17 64,710,115.69

AccountsPayable-RelatedCompanies (Note5.2) 34,996,522.10 37,898,931.34

OtherCurrentLiabilities

AccruedCorporateIncomeTax - 17,889,660.73

AccruedExpenses 21,804,493.18 25,776,517.75

Others 4,066,189.05 3,987,027.82

TOTAL CURRENT LIABILITIES 173,463,271.88 154,730,941.02

TOTAL LIABILITIES 173,463,271.88 154,730,941.02

SHAREHOLDERS’EQUITY

ShareCapital

AuthorizedShareCapital

26,399,[email protected] 263,999,950.00 263,999,950.00

IssuedandPaid-UpShareCapital

26,399,[email protected] 263,999,950.00 263,999,950.00

PremiumsonShareCapital 198,000,000.00 198,000,000.00

Retained Earnings

Appropriated

LegalReserve 28,940,744.21 28,940,744.21

Unappropriated 458,858,744.77 458,841,184.01

TOTAL SHAREHOLDERS’ EQUITY 949,799,438.98 949,781,878.22

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 1,123,262,710.861,104,512,819.24


2010 2009

Balance SheetsC.P.L.GROUPPUBLICCOMPANYLIMITED

AsofDecember31,2010and2009


Sales 1,986,491,775.261,545,396,114.98

CostofSales (1,801,491,662.52)(1,333,692,334.00)

Gross Profit 185,000,112.74 211,703,780.98

OthersIncome 18,107,129.41 10,616,470.23

Profit Before Expenses 203,107,242.15 222,320,251.21

SellingExpenses (52,527,129.31) (41,768,822.92)

AdministrativeExpenses (37,243,752.84) (32,802,251.86)

LossfromImpairmentofGeneralInvestment (3,543,900.54) (8,493,089.22)

ManagementBenefitExpenses (Note15) (15,868,000.00) (14,665,000.00)

Total Expenses (109,182,782.69) (97,729,164.00)

Profit Before Finance Costs and Corporate Income Tax 93,924,459.46 124,591,087.21

FinanceCosts (3,723,685.26) (3,832,251.66)

Profit Before Corporate Income Tax 90,200,774.20 120,758,835.55

CorporateIncomeTax (Note16) (24,183,225.94) (32,933,063.44)

NET PROFIT 66,017,548.26 87,825,772.11

BASICEARNINGS(LOSS)PERSHARE(UNIT:BAHT) 2.50 3.33

ORDINARYSHARES(UNIT:SHARE) 26,399,995 26,399,995


Income Statements

2010 2009

C.P.L.GROUPPUBLICCOMPANYLIMITED

FortheyearendedonDecember31,2010and2009

(Unit:Baht)

ISSUEDAND PREMIUMS UNREALIZEDGAINRETAINEDEARNINGS

PAID-UPSHARE ONSHARE INSECURITIES APPROPRIATED UNAPPROPRIATED TOTAL

CAPITAL CAPITAL AVAILABLEFORSALE LEGALRESERVE

Balance As of December 31, 2008 263,999,950.00198,000,000.00 653,327.15 28,940,744.21410,615,404.40902,209,425.76

UnrealizedGaininSecuritiesAvailable

forSale - - (653,327.15) - - (653,327.15)

NetProfit - - - - 87,825,772.11 87,825,772.11

PaidDividends(Note18) - - - -(39,599,992.50)(39,599,992.50)

BalanceAsofDecember31,2009 263,999,950.00198,000,000.00 - 28,940,744.21458,841,184.01949,781,878.22

NetProfit - - - - 66,017,548.26 66,017,548.26

PaidDividends(Note18) - - - -(65,999,987.50)(65,999,987.50)

BalanceAsofDecember31,2010 263,999,950.00198,000,000.00 - 28,940,744.21458,858,744.77949,799,438.98


Changes In Shareholders’ Equity StatementsC.P.L.GROUPPUBLICCOMPANYLIMITED




CASH FLOW FROM OPERATING ACTIVITIES ProfitbeforeCorporateIncomeTax 90,200,774.20 120,758,835.55AdjustmentstoProfitbeforeTaxforCashReceipt(Used)from Operation Depreciation 25,876,169.07 25,470,255.26 PrepaidExpenseAmortization 939,258.59 3,355,738.91 ReversalofAllowanceforDoubfulDebt (5,300,000.00) (6,097,569.66) EstimationofDebtReductionfromReturnedGoodsand DiscountPayment (1,145,830.72) (91,154.52) EstimationCostfromReturnedGoods 731,268.03 (68,972.48) LossfromDeclininginValueofInventories(Reversal) 4,799,405.65 (3,965,603.71) Loss(Gain)fromUnrealizedExchangeRate 213,264.68 (392,762.24) Loss(Gain)fromSaleofProperty,PlantandEquipment (287,881.00) (366,257.07) Loss(Gain)fromSaleofGeneralInvestment - (693,169.58) LossfromImpairmentofGeneralInvestment 3,543,900.54 8,493,089.22 InterestIncomefromBankDeposit (236,139.89) (217,717.59) InterestIncomefromDefaultedRepaymentofAccountReceivable (15,594.49) - InterestIncomefromInvestmentinDebtInstrument (2,636,286.01) (2,829,745.20) InterestExpenses 675,273.25 759,009.10 CashReceipt(Paid)beforeChangesinOperatingAssetsandLiabilities 117,357,581.90 144,113,975.99 (Increase)DecreaseinAccountsandNotesReceivableOtherCompanies 19,670,583.84 53,109,165.98 (Increase)DecreaseinAccountsandNotesReceivableRelatedCompanies (5,634,682.37) (8,605,546.61) (Increase)DecreaseinInventories (187,778,377.53) 108,250,289.57 (Increase)DecreaseinOtherCurrentAssets 426,112.22 (3,331,518.50) Increase(Decrease)inAccountsandNotesPayable (5,366,052.00) (37,931,899.94) Increase(Decrease)inAccountsPayable-RelatedCompanies (2,902,409.24) 2,540,390.79 Increase(Decrease)inAccruedExpenses (4,023,567.96) (182,084.39) Increase(Decrease)inOtherCurrentLiabilities 9,611.23 180,678.88 CashReceipt(Paid)fromOperatingActivities (68,241,199.91) 258,143,451.77 CashReceivedinInterestIncomefromBankDeposit 236,139.89 217,717.59 CashReceivedinInterestIncomefromDefaultedRepayment ofAccountReceivable 15,594.49 - CashPaidCorporateIncomeTaxandWithholdingTax (49,480,281.32) (33,330,181.87)CashProvided(Used)fromOperatingActivities-Net (117,469,746.85) 225,030,987.49


Cash Flow StatementsC.P.L.GROUPPUBLICCOMPANYLIMITED


2010 2009


CASHFLOWFROMINVESTINGACTIVITIES CashPaidfromInvestmentinDebtInstrument (10,000,000.00) - CashReceivedfromSaleofInvestmentinMutualFund - 4,101,418.10 CashReceivedfromSaleofInvestmentinDebtInstrument 20,000,000.00 - CashPaidforPurchasesofProperty,PlantandEquipment (62,045,667.45) (27,197,922.65) CashReceivedfromSaleofProperty,PlantandEquipment 287,900.00 474,702.24 CashReceivedinInterestIncomefromLongTermInvestment 2,782,943.53 2,842,000.01 CashPaidinDepositPurchasesAssets (1,609,728.00) (6,668,388.00)CashProvided(Used)fromInvestingActivities-Net (50,584,551.92) (26,448,190.30)CASHFLOWFROMFINANCINGACTIVITIES Increase(Decrease)inShort-TermLoanfromFinancialInstitute 48,627,904.64 (26,372,395.50) PaidDividends (65,999,987.50) (39,599,992.50) CashPaidinInterestExpenses (621,485.89) (813,421.26)CashProvided(Used)fromFinancingActivities-Net (17,993,568.75) (66,785,809.26)Effect from Changes in Exchange Rate of Cash and Cash EquivalentItems 98,323.66 290,166.78CASHANDITSEQUIVALENTINCREASE(DECREASE)-NET (185,949,543.86) 132,087,154.71CASHANDITSEQUIVALENTITEMSATBEGINNINGOF THEPERIOD (Note6) 244,190,118.38 112,102,963.67CASHANDITSEQUIVALENTITEMSATENDINGOF THEPERIOD (Note6) 58,240,574.52 244,190,118.38 AdditionalDisclosuresofCashFlowsInformation: Non-CashTransactions - Property,PlantandEquipmentIncreasefromtransferof DepositPurchasesAssets 194,000.00 950,000.00 - PurchasesAssetsinCredit 65,000.00 444,604.09


Cash Flow StatementsC.P.L.GROUPPUBLICCOMPANYLIMITED


2010 2009


1. General Information TheCompanywasregisteredonJanuary27,1994,haveregistrationnumber0107537000289with

itsregisteredofficesituatedat700Moo6,SukhumvitRd,BangPooMai,MuangSamutprakran,Thailand.ItsmainbusinessactivityisproducingandsellingtannedleatherbywasCHAROENSINHOLDINGCO.,LTD,MajorShareholder.

2. The Basis of Preparation of the Financial Statements2.1 TheCompanyhadpreparedthefinancialstatements inaccordancewithThaiAccountingStan-

dardsincludingrelatedinterpretationsandguidelinespromulgatedbytheFederationofAccountingProfessions,applicablerulesandregulationsoftheSecuritiesandExchangeCommissionandwithgenerally accepted accounting principles in Thailand.

2.2 Thefinancialstatementshavebeenpreparedonahistoricalcostbasisexceptwhereotherwisedisclosed in the accounting policies.

2.3 Inordertopreparethefinancialstatementstocomplywithgenerallyacceptedaccountingstandards,theCompany’smanagementhadtomakesomeestimatesandsuppositionswhichmayhaveaneffect on the amount shown for revenue, expenses, assets and liabilities and also on the disclosures concerning assets and contingent liabilities, therefore the actual result may differ the estimated amount.

2.4 Fortheconvenienceoftheuser,andEnglishtranslationofthefinancialstatementshasbeenpre-paredfromthefinancialstatementsthatareissuedintheThailanguage.

Notes to Financial StetementsC.P.L.GROUPPUBLICCOMPANYLIMITED

December31,2010and2009


3. Adoption to New Accounting Standards, Financial Reporting Standards and Interpretation TheFederationofAccountingProfessionshasissuedNotificationNo.17/2010andNo.50toNo.

55/2010,regardingnewaccountingstandards,financialreportingstandardsandinterpretation.Thesearenoteffectiveforthecurrentyear,exceptFrameworkforthePreparationandPresentationofFinancialStatements,whichwaseffectiveimmediately. Effective date

FrameworkforPreparationandPresentationofFinancialStatements(revised2009) Immediately

TAS1(revised2009) PresentationofFinancialStatements 1January2011

TAS2(revised2009) Inventories 1January2011

TAS7(revised2009) StatementofCashFlows 1January2011

TAS8(revised2009) AccountingPolicies,ChangesinAccountingEstimatesandErrors 1January2011

TAS10(revised2009) EventsAftertheReportingPeriod 1January2011

TAS11(revised2009) ConstructionContracts 1January2011

TAS12 IncomeTaxes 1January2013

TAS16(revised2009) Property,PlantandEquipment 1January2011

TAS17(revised2009) Leases 1January2011

TAS18(revised2009) Revenue 1January2011

TAS19 EmployeeBenefits 1January2011

TAS20(revised2009) AccountingforGovernmentGrantsandDisclosure

ofGovernmentAssistance 1January2013

TAS21(revised2009) TheEffectsofChangesinForeignExchangeRates 1January2013

TAS23(revised2009) BorrowingCosts 1January2011

TAS24(revised2009) RelatedPartyDisclosures 1January2011

TAS26(revised2009) AccountingandReportingbyRetirementBenefitPlans 1January2011

TAS27(revised2009) ConsolidatedandSeparateFinancialStatements 1January2011

TAS28(revised2009) InvestmentsinAssociates 1January2011

TAS29 FinancialReportinginHyperinflationaryEconomies 1January2011

TAS31(revised2009) InterestsinJointVenture 1January2011

TAS33(revised2009) EarningsperShare 1January2011

TAS34(revised2009) InterimFinancialReporting 1January2011

TAS36(revised2009) ImpairmentofAssets 1January2011

TAS37(revised2009) Provisions,ContingentLiabilitiesandContingentAssets 1January2011

TAS38(revised2009) IntangibleAssets 1January2011

TAS40(revised2009) InvestmentProperty 1January2011

TFRS2 Share-basedPayment 1January2011

TFRS3(revised2009) BusinessCombinations 1January2011

TFRS5(revised2009) Non-currentAssetsHeldforSaleandDiscontinuedOperations 1January2011

TFRS6 ExplorationforandEvaluationofMineralResources 1January2011

Interpretation15 AgreementsfortheConstructionofRealEstate 1January2011


ThemanagementoftheCompanyhasassessedtheeffectoftheaccountingstandardsandfinan-cialreportingstandardsbelievethatthesestandardswillnothaveanysignificantimpactonthefinancialstatementsfortheyearinwhichtheyareinitiallyapplied.Except,theTAS19EmployeeBenefits,themanagementoftheCompanyhasbeenevaluatingforthecontingentliabilitiesfromRetirementBenefitPlans.

4. Summary of Significant Accounting Policies4.1 Recognitionofrevenues

- Revenue from sale is recognized when goods are delivered to customer.- Revenue of rental is recognized in accordance with the period of rent.- Revenue of interest receivable is recognized in accordance with the period of receipt which

is computed from outstanding principle.- Revenue from tax return is recorded to other income when tax return are received- Dividendrevenueisrecognizedwhentherighttoreceivedividendarises.

4.2 Recognition of expenses- Expenses are recognized on accrual basis.

4.3 Cash and cash equivalents Cash and cash equivalents include bank deposit in saving account, current account, and not

over3monthsfixedaccountwithnotobligations.4.4Accountsreceivable,otheraccountsreceivable,allowancefordoubtfuldebtandestimationofdebt

reduction allowance Accountsreceivableandotheraccountsreceivablearevaluedatnetrealizablevalue.For

allowance for doubtful debt accounts, estimated from those accounts which are likely to be uncol-lectable.

Estimation of debt reduction allowance is estimation of debt reduction and merchandise returned receipt which is derived from the Company merchandise is not complied with the at-tributethecustomersdefinedwherebytheCompanycomputedfromthedebtreductionrateandmerchandise returned receipt over sales by average multiplication with merchandise sales incurred every three months.

4.5 Inventories Inventories are valued at cost or net realizable value, whichever is lower by calculated as

follow: - RawmaterialsarevaluedatcostpriceunderFIFOmethod.- Work-in-process is valued at actual cost.- Finishedgoodsarerecordedincostpriceinaccordancewithspecificmethod.- SparepartsarevaluedatcostpriceunderFIFOmethod. Estimation of return goods is estimation from average cost of goods sold rate multiplied with

estimation of debt reduction allowance incurred from merchandise returned.


4.6 Short-termandlong-terminvestments- Investments in non-marketable securities which are held as a general investment are shown

at cost price and also adjusted the allowance for impairment. The Company recognized the change of the value of general investments in the income statement when there is a disposal of the investment or the impairment of investment.

- Investment in unit trust in the marketable security which the Company holds as available for salesecurityisreflectedbyfairvalue.Thefairvalueofunittrustisannouncementpricefromopen fund as of the date in the balance sheet. The Company recognized the change of the value as separate transaction in the shareholders equity in the balance sheet and would be recorded in the income statement when there is a disposal of the investment or impairment of investment.

- Held to maturity debt instrument stated at amortized cost.4.7Propertyplantandequipment Propertyplantandequipmentarerecordedatcostonthetransactiondatelessaccumulated

depreciation.Depreciationiscalculatedonastraight-linebasisovertheapproximateusefullifeasfollows:

-BuildingsandConstructions 20years - Buildings Improvement 5 years -MachinesandEquipments 10years -FixturesandofficeEquipments 5,10years - Vehicles 5 years -WasteWaterStorage 10years The Company did not carry depreciation for land and asset being construction.

Expenditure in respect of extension, life renewal or asset improvement which causes the present replacement price increased materially. It will combine as cost of asset. Regarding repairing fee and maintenance, it is recognized as expense in the incurred accounting period.

Gainorlossfromdisposalofland,plantandequipmentiscomputedfromdiscrepancybetweennet cash received and book value and recognized as other revenue or other expense in the state-ment of income.

4.8Intangibleasset IntangibleAsset,typeofcomputersoftwareisvaluedatcostonthetransactiondatede-

ductedaccumulatedamortization;amortizationiscalculatedbyreferencetoitscostonastraightline method over the 5 years useful life.

4.9 Impairment Impairment of outstanding book value of asset is revised as of the balance sheet date as

to whether there is indication of impairment or not. If there is indication, realizable asset value will beestimated.Lossfromimpairmentwillberecognizedwhenbookvalueofassetorbookvalueofassetunitwhichgeneratescashhigherthannetrealizablevalue.Lossfromimpairmentisrecordedin the statement of income.


CalculationofRecoverableAmount-Therecoverableamountisthegreateroftheasset’snetsellingpriceandvalueofusage.In

assessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.Foranassetthatdoesnotgeneratecashinflowslargely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Reversals of Impairment- Animpairmentlossisreversediftherehasbeenachangeintheestimatesusedtodetermine

therecoverableamount.Animpairmentlossisreversedonlytotheextentthattheasset’scarrying amount does not exceed the carrying amount that would have been determined, net ofdepreciationoramortization,ifnoimpairmentlosshadbeenrecognized.Allreversalsofimpairment losses are recognized as revenue in the statement of income.

4.10 Provisions ProvisionsarerecognizedwhentheCompanyhasapresentlegalorconstructiveobligation

asaresultofpastevents,itisprobablethatanoutflowofresourceswillberequiredtosettlethe obligation, and a reliable estimate of the amount can be made. Where the Company expects a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.

4.11Employeesbenefit TheCompanyisrecognizedsalary;wage,bonusandsocialsecurityfundareexpenseon

date when the transactions occur.4.12 Foreigncurrencies Items denominated in foreign currencies are recorded in Baht at the prevailing exchange rate

when the transactions occur, and their balances of assets and liabilities at the ended of period are convertedintoBahtbyclosingratewhichistheprevailingexchangerateonthatdate.Profitorloss arising from such conversion is shown as revenues or expenses in the income statements.

4.13 Financialinstruments Financialassetscarriedonthebalancesheetsincludecashandbankdeposit,investment,

andaccountsreceivable,financialliabilitiescarriedonthebalancesheetsincludeaccountspayable,loan. The particular accounting policies adopted for each items are disclosed in each individual section.

Theperformedtheforwardforeigncurrenciescontractsoastohedgeagainstriskfromfluc-tuation of exchange rates. The forward foreign currencies contract will determine exchange rates in the future that foreign currencies asset and liability will receive or has to be repayable. The forward foreign currencies contract as of period end will be computed by fair value and disclosed in the notetothefinancialstatements.Inaddition,realizedgain(loss)incurredfromtheforwardforeignexchange contract will be recorded in the statement of income.

4.14Earnings(loss)pershare Basicearnings(loss)persharearecalculatedbydividingnetprofit(loss)withtheweighted

averaged number of issued and paid-up shares. The Company did not calculate the fully-diluted earnings(loss)persharesinceithasnoequivalentordinarysharesequivalents.


4.15 Theappropriationofretainedearnings TheappropriationofretainedearningsisattributabletothePublicCompanyAct2535(1992).

TheCompanywillappropriateretainedearningswhenitisapprovedattheshareholders’meeting.

5. Inter - Transactions The Company constitutes important business transaction with the related companies. (common group

shareholdersandexecutives)Suchbusinesstransactionsarecompliedwithtradingtermandcriteriaasper mutually agreed between the Company and related companies which is complied with the normal course of business whereby it can be summarized as follows:5.1 Inter-RevenuesandExpenses

PricingPolicy FortheQuarters

endedonDecember31,

2010 2009

Baht Baht

The Related Company

Inter-SalesMaterial

-EAGLECHEMICALINDUSTRIALCO.,LTD. (1) 95,760.00 151,200.00

Inter-SalesGoods

-MIMIINDUSTRAILCO.,LTD. (2) 674,822.00 442,653.50

-MITNIYUM(MANWOOD)CO.,LTD (2) 9,050,790.90 10,478,010.90

-C.P.L.MARKETINGCO.,LTD. (2) 94,480,712.19 70,198,220.58

Inter-PurchasesMaterial

-EAGLECHEMICALINDUSTRIALCO.,LTD. (2) 109,736,211.00 99,456,998.00

-APPLYD.B.INDUSTRIALCO.,LTD. (2) 11,668,950.00 9,174,000.00

Inter-SaleExpenses

-C.P.L.MARKETINGCO.,LTD. (4) - 485,406.55

Inter-Professionalservice

-CHAROENSINASSETCO.,LTD. (3) 180,000.00 180,000.00

PricingPolicywasasfollows: (1)Costplusmarginapproximate20% (2)Normalbusinesspriceswhichcanbecomparedwithtransactionsincurredbyoutsideparties (3)Pricesinaccordancewiththecontract (4)Basedonmutualagreed


5.2 Inter-AssetsandLiabilities

Asof Asof March31,2010December31,2009 Baht Baht Inter-AccountsandNotesReceivable The Related Companies -C.P.L.MARKETINGCO.,LTD. 45,314,003.55 37,598,026.34 -MIMIINDUSTRAILCO.,LTD. 210,764.32 50,682.96 -MITNIYUM(MANWOOD)CO.,LTD 2,906,036.86 5,147,413.06Total 48,430,804.73 42,796,122.36 Inter-AccountsPayable The Related Companies -EAGLECHEMICALINDUSTRIALCO.,LTD 34,057,597.10 36,987,291.34 -APPLYD.B.INDUSTRIALCO.,LTD. 938,925.00 911,640.00Total 34,996,522.10 37,898,931.34 AccruedExpenses The Related Company -EAGLECHEMICALINDUSTRIALCO.,LTD 130,304.60 468,446.00Total 130,304.60 468,446.00

5.3 TheCompany’sRelationship Consist of: Name Activities Relationship

EAGLECHEMICALINDUSTRIALCO.,LTD. ProducerandImporterofColourandChemicals Related Company by Common Group

ShareholdersandExecutives

APPLYD.B.INDUSTRIALCO.,LTD. ProducerandImporterofColourandChemicals Related Company by Common Group


MIMIINDUSTRAILCO.,LTD. ProducerandSellerofRubber RelatedCompanybyCommonGroup


MITNIYUM(MANWOOD)CO.,LTD. ProducerandSellerofFootwear RelatedCompanybyCommonGroup


CHAROENSINASSETCO.,LTD. RentforProperty RelatedCompanybyCommonGroup


C.P.L.INTERNATIONALCO.,LTD. HoldingInvestment RelatedCompanybyShareholders.

C.P.L.MARKETINGCO.,LTD. TradingofLeatherProducts RelatedCompanybyindirect

shareholdingviaC.P.L.INTERNATIONAL

CO.,LTD.


6. Cash and Cash Equivalent Items Consist of:

Asof Asof December31,2010 December31,2009 Baht Baht Cash 523,783.72 2,612,080.54 BankDeposit-CurrentDeposit 15,490,656.15 52,492,680.28 BankDeposit-SavingDeposit 42,226,134.65 189,085,357.56 Total 58,240,574.52 244,190,118.38

7. Short - Term Investment Consist of :

Asof Asof December31,2010 December31,2009 Baht Baht DebtInstrumentMaturityin1year - 20,000,000.00Total - 20,000,000.00 AsofDecember31,2009,amountofBaht10.00millionwasinvestmentinunsubordinatedsecured

and holder name debentures. The maturity of debentures for 4 years from issue date for since October 2,2006toOctober2,2010withinterestrateof6.25%perannum.Presently,theCompanyhasalreadyredeems the investment in debt instrument.

AsofDecember31,2009,amountofBaht10.00millionwasinvestmentinunsubordinatedsecuredandholdernamedefinableadebentures.Thematuritydebenturesfor7yearsfromissuedateforperiodsinceOctober8,2003toOctober8,2010withinterestrateof3.70%perannum.Presently,theCompanyhas already redeems the investment in debt instrument.

8. Accounts and Notes Receivable Other Companies - Net Consist of:

Asof Asof December31,2010 December31,2009 Baht Baht AccountsReceivable–Oversea 43,064,124.20 32,464,396.32 AccountsReceivable–Domestic 94,712,655.51 134,719,058.51 Total 137,776,779.71 167,183,454.83 NotesReceivable 7,676,896.24 2,187,136.05 Total 145,453,675.95 169,370,590.88 LessAllowanceforDoubtfulDebt (22,928,354.40) (32,316,264.71) EstimationofDebtReductionfromReturnGoodsand DiscountPayment (4,816,243.83) (5,962,074.55) Net 117,709,077.72 131,092,251.62


FortheyearsendedonDecember31,2010and2009,allowancefordoubtfuldebthasmovementas follows:

Fortheyearsendedon December31,2010 December31,2009 Baht Baht AllowanceforDoubtfulDebt–Beginning (32,316,264.71) (38,413,834.37) AddReservewithinPeriod - - LessReceivewithinPeriod 5,300,000.00 6,097,569.66 Writtenoff 4,087,910.31 - AllowanceforDoubtfulDebt-Ending (22,928,354.40) (32,316,264.71)

AnaginganalysisofaccountsreceivableothercompaniesasofDecember31,2010and2009areas follows:

Asof Asof December31,2010 December31,2009 Baht Baht Withincreditterm 69,122,150.86 72,584,102.06 Overdue1to30days 30,344,626.07 41,075,181.92 Overdue31to60days 6,437,537.13 16,015,126.48 Overdue61to90days 499,312.73 4,193,581.74 Overdue91to180days 3,873,260.88 849,135.72 Overdue181to365days 4,571,537.64 150,062.20 Overdueover366days 22,928,354.40 32,316,264.71 Total 137,776,779.71 167,183,454.83

AsofDecember31,2010,accountsreceivableoverdueover181daysinamountofBaht4.49million,SuchaccountreceivablehasnegotiatedwiththeCompanyandconstitutesthelettertonotifyrequesting the gradually debt repaymentwithin 1 years.However, themanagement of theCompanybelieves that the Company does not have risk that will not be able to collect debt.

9. Accounts and Notes Receivable - Related Companies Consist of:

Asof Asof December31,2010 December31,2009 Baht Baht AccountsReceivable–Oversea 45,314,003.55 37,598,026.34 AccountsReceivable–Domestic 2,461,106.46 5,198,096.02 Total 47,775,110.01 42,796,122.36 NotesReceivable 655,694.72 - Total 48,430,804.73 42,796,122.36


AnaginganalysisofaccountsreceivablerelatedcompaniesasofDecember31,2010and2009are as follows:

Asof Asof December31,2010 December31,2009 Baht Baht Withincreditterm 28,074,069.00 25,565,921.86 Overdue1to30days 19,631,191.68 6,852,326.27 Overdue31to60days 69,849.33 7,728,066.23 Overdue61to90days - 2,649,808.00Total 47,775,110.01 42,796,122.36

10. Inventories - Net Consist of:

Asof Asof December31,2010 December31,2009 Baht Baht FinishedGoods 44,182,237.59 19,260,063.68 RawMaterials 26,557,457.92 10,264,029.97 Work-in-Process 409,836,746.39 296,042,196.67 Chemical 40,037,387.24 31,722,394.97 SparePart 3,280,535.24 757,645.96 Goods-in-Transit 65,349,263.56 43,418,919.16Total 589,243,627.94 401,465,250.41 LessAllowancefromDeclininginValueofInventories (7,297,540.90) (2,498,135.25) PlusEstimationCostofAllowanceforReturnedGoods 2,943,514.53 3,674,782.56Net 584,889,601.57 402,641,897.72 AsofDecember31,2010and2009,theCompanyhasinsuredfinishedgoods,rawmaterials,work

inprocess,andsuppliesinBaht614million,equallyfortwoyearswhichthebeneficiaryfrominsuranceisgrantertoonemerchantbankinnote13.

FortheyearsendedonDecember31,2010and2009,allowancefromdeclininginvalueofinven-tories has movement as follows:

Fortheyearsendedon December31,2010 December31,2009 Baht Baht AllowanceforDeclininginValueofInventories-Beginning (2,498,135.25) (6,463,738.96) AddAllowanceincreasedwithinPeriod (16,449,585.99) (1,078,168.09) LessSalewithinPeriod 11,650,180.34 5,043,771.80 AllowanceforDeclininginValueofInventories-Ending (7,297,540.90) (2,498,135.25)


11. Long Term Investment Consist of : Activities Placeof Paidup %of OriginalCost Investment Dividends

incorporation ShareCapital Shareholding ofInvestment Asof Forthequarterendedon

March31,2010December31,2009March31,2010 March31,2009

2010 2009 2010 2009

U.S.Dollar % U.S.Dollar Baht Baht Baht Baht

GeneralInvestment:

C.P.L.INTERNATIONAL Businessof BritishVirgin

COMPANYLIMITED Tannery Islands 8,000,000.00 15 1,200,000.00 51,483,750.00 51,483,750.00 - -

LessAllowanceforImpairment (13,152,489.19) (9,608,588.65) - -

38,331,260.81 41,875,161.35 - -

SIRINRATCOMPANYLIMITED Building Thai Baht Baht

Forrent 15,000,000.00 3 450,000.00 450,000.00 450,000.00 - -

TotalGeneralInvestment 38,781,260.81 42,325,161.35 - -

DebtInstrumentheldtoMaturity:

DebtInstrumentMaturityin2-5years 26,000,000.00 16,000,000.00 - -

DebtInstrumentMaturityin6-10years 18,000,000.00 18,000,000.00 - -

TotalDebtInstrumentheldto

Maturity 44,000,000.00 34,000,000.00 - -

TotalLong-TermInvestment 82,781,260.81 76,325,161.35 - -

InvestmentinDebtInstrumentHeldtoMaturity AsofDecember31,2010,amountofBaht10.00millionwasinvestmentinunsubordinatedsecured

andholdernamedefinableadebentures.Thematuritydebenturesfor4yearsfromissuedateforperiodsinceOctober1,2010toOctober1,2014withinterestrateof3.85%perannum.

AsofDecember31,2010and2009,amountofBaht16.00millionwasinvestmentinunsubordinatedsecuredandholdernamedefinabledebentures.Thematurityofdebenturesfor8yearsfromissueddateforperiodsinceMay20,2004toMay20,2012withinterestrateyears1-4is4.25%perannumandinterestyears5-8is5.75%perannum.

AsofDecember31,2010and2009,amountofBaht18.00millionwasdebenturesintypeofnon–guaranteed,non–convertible.Thematurityofdebenturesfor10yearsfromissueddateforperiodsinceOctober22,2009toOctober22,2019withinterestrateyears1-5is4.80%perannumandinterestyears6-10is6.00%perannum.


12. Property, Plant and Equipment - Net (Unit:Baht) Balanceof Increase Decrease Balanceof Asof Purchase Transferin Sales TransferOut Asof December31, December31, 2009 2010 Cost LandandLandImprovement 49,425,352.00 40,679,418.00 - - - 90,104,770.00Buildings and Constructions BuildingsImprovement 151,952,064.35 - - - - 1,215,438.69MachinesandEquipments 226,260,557.96 18,339,062.15 194,000.00 (12,152,316.46) - 232,641,303.65FixturesandOfficeEquipments 7,281,447.12 1,297,187.30 - - - 8,578,634.42Vehicles 27,743,986.08 1,795,000.00 - - - 29,538,986.08WasteWaterStorage 6,250,000.00 - - - - 6,250,000.00 Total 470,128,846.20 62,110,667.45 194,000.00 (12,152,316.46) - 520,281,197.19 Accumulated Depreciation BuildingsandConstructions (118,065,712.91) (4,169,348.33) - - - (122,235,061.24)BuildingsImprovement - (243,087.74) - - - (243,087.74)MachinesandEquipments (146,014,476.99) (16,159,938.91) - 12,152,297.46 - (150,022,118.44)FixturesandOfficeEquipments (5,313,960.19) (848,382.51) - - - (6,162,342.70)Vehicles (17,665,512.72) (4,455,411.58) - - - (22,120,924.30)WasteWaterStorage (6,249,997.89) - - - - (6,249,997.89) Total (293,309,660.70) (25,876,169.07) - 12,152,297.46 - (307,033,532.31)Property, Plant and Equipment – Net 176,819,185.50 213,247,664.88DepreciationinIncomeStatementsFortheYears EndedonDecember31,2010 25,876,169.07

EndedonDecember31,2009 25,470,255.26

AsofDecember31,2010and,2009,theCompanyhadassetswiththedepreciationfullycalculated

butstilloperatewhichhadacostvalueofBaht156.27millionandBaht159.06millionrespectively.ThenetbookvalueofwhichwasnowBaht276.00andBaht257.00respectively.

AsofDecember31,2010and,2009,theCompanypledgedandmortgagedlandplusproperty,machineryandsomeequipmentwhichthenetbookvalueofBaht105.33andBaht90.88respectively,ascollateralagainstalltypeofliabilityatthemerchantbankandbeneficiaryfromtheinsuranceintheamountaccordingtotheinsurancecontractinBaht216.00million,equallyfortwoyears.ItisgiventomerchantbankaccordingtonoteNo.13.


13. Credit Facilities and Guarantee TheCompanyhascreditlinefromcommercialbankandfinancialinstitutionsinformbankoverdraft,

trust receipts, short-term loan, letter of guarantee, credit line for forward contract, and foreign exchange. AsofDecember31,2010and2009hasgrantedthetotalcreditlineinamountofBath1,048.00millionandamountofUSdollar3.00million,equallyfortwoyears.Itispledgedbymortgageregisteroflandplusproperty,machineryandequipment, andbeneficiary from insurance in inventory, such landplusproperty,machinery,equipment.(Foryears2009directorsoftheCompanypledged.Presently,hasalreadydischargedobligationpledgedofdirectors.)

14. Short - Term Loan from Financial Institution AsofDecember31,2010and2009,thewholeamountisloanfrommerchantbankinformoftrust

receiptpayablewithcarriedtheinterestrateof6.125–7.00%perannumandtermpayableabout60-120days,ifrepaymentoverthetermtheloancarriedtheinterestrateof6.125perannum(Foryears2009termpayableabout62-102days,ifrepaymentoverthetermtheloancarriedtheinterestrateof6.125perannum).Undertermoftrustreceiptcontract,theCompanyreceivesmerchandiseorderedbyusingcreditofthefinanceinstitutes.Hence,theCompanyconstitutesobligationcommitmenttothefinanceinstitutesforsuchmerchandisefeeboththatkeptordisposed.

SuchaboveloanconstitutescollateralaccordingtonoteNo.13.

15. Management Benefit Expenses ThismanagementremunerationisbenefitthatrepayabletomanagementanddirectorsoftheCom-

pany.Itiscomposedofremunerationthatismonetary,i.e.salary,relatedbenefitandremunerationofdirectorsincludingremunerationbenefitinotherform.TheCompany’smanagementisthepersonswhoaredefinedundertheSecuritiesandExchangeAct.

16. Corporate Income Tax FortheyearendedofDecember31,2010and2009,theCompanycalculatescorporateincometax

at25%,whichcomplieswithroyaldecreeNo.475datedonJuly29,2008toreducecorporateincometaxfrom30%to25%ofnetprofitnotoverBaht300millionforthe3consecutivelyaccountingperiodscom-mencedfromthefirstaccountingperiodwhichcommencedwithinorafterJanuary1,2008,forthelistedcompanies according to the law of securities and securities market. The Company computed corporate incometaxofaccountingnetprofitafteraddingadjustedtransactioninaccordancewiththeRevenueCode which is mainly reversal of allowance for doubtful debt, estimation of debt reduction, estimation of return goods, loss from impairment of general investment and loss from declining in value of inventories, etc.


17. Expenses by Nature Expenses by nature items consist of main expenses items are as follows:

Fortheyearsendedon December31,2010 December31,2009 Baht Baht ChangingwithinWorkinProcessandFinishGoods (138,716,723.63) 53,524,071.92 RawMaterialandChemicalUsed 1,759,756,602.07 1,123,676,232.55 LossfromDeclininginValueofInventories(Reversal) 4,799,405.65 (3,965,603.71) Employeeexpenses 104,455,253.19 90,287,967.41 Depreciation 25,876,169.07 25,470,255.26 ReversalofAllowanceforDoubtfulDebt (5,300,000.00) (6,097,569.66) LossfromImpairmentofGeneralInvestment 3,543,900.54 8,493,089.22 Sellingexpenses 52,527,129.31 41,768,822.92 OtherProductionExpenses 77,599,817.57 77,033,390.71 Otherexpenses 26,132,891.44 21,230,841.38 Total 1,910,674,445.21 1,431,421,498.00

18. Payment of Dividends Inaccordancewith theminuteof theAnnualGeneralShareholders’Meeting for theyear2010

whichheldonApril28,2010,itisunanimouslyresolvedthattheCompanyappropriatesretainedearn-ingsfor2009asdividendtoshareholdersinnumberof26.39millionsharesintherateofBaht2.50pershareaggregatingtoamountofBaht66.00million.DividendisrepayableonMay25,2010,wherebytheCompany has already paid dividend.

Inaccordancewith theminuteof theAnnualGeneralShareholders’Meeting for theyear2009whichheldonApril28,2009,itisunanimouslyresolvedthattheCompanyappropriatesretainedearn-ingsfor2008asdividendtoshareholdersinnumberof26.39millionsharesintherateofBaht1.50pershareaggregatingtoamountofBaht39.59million.DividendisrepayableonMay25,2009,wherebytheCompany has already paid dividend.


19. Presentation of Financial Data Segregated by Business Sector The Company operates in only one business sector, namely manufacturing and distribution of leather

productsandoperateinonegeographicalareaonlyinThailand.Thusallincome,profitandentireassetsshowninthefinancialstatementsarerelatedtothesaidbusinesssectorandgeographicalarea.

AsshowninfinancialstatementfortheyearendedonDecember31,2010and2009,theCompanycon-stitutes net foreign sales and domestic sales as follow:

Domestic Foreign Total 2010 2009 2010 2009 2010 2009 ’000Baht ’000Baht ’000Baht ’000Baht ’000Baht ’000Baht Sales512,059 539,015 1,474,433 1,006,380 1,986,492 1,545,396 ProfitfromOperation 30,851 91,790 154,149 119,913 185,000 211,704 OthersIncome 18,107 10,616 ProfitBeforeExpenses 203,107 222,320 SellingExpenses (52,527) (41,769) AdministrativeExpenses (37,244) (32,802) LossfromImpairmentofGeneralInvestment (3,544) (8,493) Managements’Remuneration (15,868) (14,665) ProfitBeforeFinancialCostsandCorporateIncomeTax 93,924 124,591 FinancialCosts (3,724) (3,832) ProfitBeforeCorporateIncomeTax 90,200 120,759 CorporateIncomeTax (24,183) (32,933) NetProfit 66,017 87,826

20. Contingent Liabilities and Obligation20.1 ApartfromliabilitiesshownonthebalancesheetsasofDecember31,2010and2009theCompany

still remains other obligations with commercial banks as follows:

Asof Asof December31,2010 December31,2009 -LettersofCredit

CreditLine770.0MillionBaht,CreditUsed 32.86MillionBaht 46.88MillionBaht CreditLine3.0MillionUSDollar,CreditUsed 4.48MillionBaht 17.78MillionBaht -LettersofGuarantee 3.67MillionBaht 3.41MillionBaht

20.2 AsofDecember31,2010and2009,theCompanyhascommitmentaboutcapitalexpenditureinamountofBaht160,000.00andBaht256,000.00respectively.

20.3 TheCompanycomprisesobligationcommitmentaccordingtothecontractofsecurityengagementwithoneothercompany.ThecontractholdsthelifeofoneyearendedonMay31,2011and2010.Itisdeterminedthatthelifeisautomaticallyrenewedfortheperiodof1year.TheengagementfeeisintherateofBaht82,000.00permonthandBaht63,000.00permonthrespectively,asofDecember31,2010and2009,theCompanyholdsthetotalengagementfeewhichhastofullyrepayuntilthecontractiscompleteinamountofBaht0.41millionandBaht0.31million,respectively.


20.4 TheCompanycomprisesobligationcommitmentaccordingtothecontractofexpertandadviserengagementwithonerelatescompany.ThecontractholdsthelifeoftwoyearendedonDecember31,2011.TheengagementfeeisintherateofBaht15,000.00permonthasofDecember31,2010and2009,theCompanyholdsthetotalengagementfeewhichhastofullyrepayuntilthecontractiscompleteinamountofBaht0.81millionandBaht0.36million,respectively.

21. Financial Instruments21.1PolicyofFinancialRiskManagement The Company constitutes risk in relation to change of interest rates and exchange rates by

whichtheCompanyconsiderstoutilizeanappropriatefinancialinstrumenttohedgeagainstsuchrisk.However,theCompanyhasnopolicytoholdorissuefinancialinstrumentforspeculatingorfor trading.

21.2RiskfromInterestRates Interestrateriskarisesfromthefluctuationofinterestratesinthefuturewhichwillaffect

operationsandcashflowoftheCompany,whichtheCompanyhadassetsandliabilitiesinstrumentsagainst this risk as follow :

Amount Interestrateperannum December31,2010 December31,2009 December31,2010 December31,2009 Million Baht Million Baht % % BankDeposit–SavingAccount 42.23 189.08 0.05–0.50 0.25–1.65 InvestmentinDebtInstrument heldtoMaturity 44.00 54.00 3.85–6.00 3.70–6.70

TrustReceiptsPayable 53.23 4.47 6.125–7.00 -

21.3CreditRisk

TheCompanyhasnotsignificantriskfromcreditriskinconnectiontoaccountsreceivablesincetheCompanyprovidessalesoverseasbyL/Capplicationoralternativelyclientsmakegoodspaymentinadvance.Moreover,domesticsalesaretypicallyperformedtofinanciallysecuredcom-panies whose capability is good at debt repayment. The Company has dealt with these clients foralongtime:therefore,itisanticipatedofnonsignificantriskderivedfromunpaymentofthoseaccountsreceivable.However,theCompanysufficientlyconsideredtheallowanceofdoubtfuldebt.


21.4RiskonExchangeRates Risk on exchange rates is regarded to purchase raw material, machines and sales denominated

inforeigncurrencies.TheCompanyhasfinancialassetsandfinancialliabilitiesinforeigncurrenciesas follows:

Currencies FinancialAssets FinancialLiabilities Asof Asof Asof Asof March31,2010 December31,2009 March31,2010 December31,2009 EUR - 450.00 - - GBP 235.00 - - - CNY - 100.00 - - INR 2,601.00 3,861.00 - - USDollars 3,620,729.81 4,002,600.53 2,373,343.47 1,060,831.68

AsofDecember31,2010and2009,theCompanyhedgetheriskfromforeigncurrencyex-change rate incurred from purchase raw material from overseas by performing the forward foreign currency contract as follows:

Asof Asof December31,2010 December31,2009 CreditLimitforForwardContract 20.00MillionBaht 20.00MillionBaht ValueofForwardContract–Buy 0.50MillionUS - Dollars - ValueofForwardContract-Buy 14.85MillionBaht - FairValue 15.12MillionBaht -

Fairvalueoftheforwardcontract-buyiscomputedbyusingratesdeterminedbythose counter party bank as of the date in balance sheet.

21.5FairValue Duetothefinancialassetsandliabilitiesaremainlyshorttermtype,themanagementbelieves

thatbookvaluesofsuchfinancialassetsandliabilitiesreflectvalueswhichdonotmateriallydifferfrom their fair values. In additional, the book values of long-term investments are equivalent to fair value.

22. Capital Management TheobjectivesoftheCompany’scapitalmanagementarearrangementofappropriatedfinancial

structure and maintenance of ability in continuously business operation whereas there is policy of debt to equity ratio maintenance to hold in the rate that the Company can operate business of the Company while there is appropriated capital cost burden including policy of debt to equity ratio maintenance to complywithtermintheloancontractthattherearerelatedfinancialinstitutes.

AsatDecember31,2010and2009,debttoequityratiointhefinancialstatementsis0.18:1and0.16:1,respectively.

23. Approval of the Financial Statements These financial statements have been approved by authorized directors of the Company on

February16,2011.


Companyname AuditorName FeeBaht

CPLGroupPublicCo.,Ltd. Mr.NarisSaowalagsakul 452,500

The company have no constitutes business transaction or personality relationship with the auditor or

theauditor’sofficeneitherdirectnorindirect,thentherehavenootherremuneratetopaytoauditor

The Remuneration in 2010 for Audit Fee

รายงานประจำาปี 2553 annual report · maintaining the operating result...

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