PEOPLE S GARMENT PUBLIC COMPANY LIMITED FINANCIAL STATEMENTS DECEMBER 31, 2006 AND 2005

Transcription

1 PEOPLE S GARMENT PUBLIC COMPANY LIMITED FINANCIAL STATEMENTS DECEMBER 31, 2006 AND 2005

2 AUDITOR S REPORT To The Shareholders of PEOPLE S GARMENT PUBLIC COMPANY LIMITED I have audited the balance sheets of People s Garment Public Company Limited as at December 31, 2006 and 2005, the related statements of income, changes in shareholders equity and cash flows for the years then ended. These financial statements are the responsibility of the Company s management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the aforementioned financial statements present fairly, in all material respects, the financial position of People s Garment Public Company Limited as at December 31, 2006 and 2005, the results of its operations, changes in shareholders equity and cash flows for the years then ended in accordance with generally accepted accounting principles. Febuary 8, 2007 (Mr. Chaiyakorn Aunpitipongsa) Certified Public Accountant Registration No. 3196

3 PEOPLE'S GARMENT PUBLIC COMPANY LIMITED BALANCE SHEETS AS AT DECEMBER 31, 2006 AND 2005 ASSETS BAHT Current Assets Cash and cash equivalents 194,822,622 83,065,762 Current investments Fixed deposit at bank 132,000,000 - Promissory note 100,000,000 - Total current investments 232,000,000 - Trade accounts receivable (Note 4) 281,655, ,800,077 Less Allowance for doubtful accounts (Notes 3.2 and 4) (625,681) (777,478) Allowance for goods returned (Note 3.4) (16,500,000) (16,500,000) Trade accounts receivable-net 264,529, ,522,599 Inventories-net (Notes 3.3 and 5) 181,097, ,557,157 Other current assets Other receivables 4,758,940 1,833,780 Others 3,252,475 4,187,081 Total other current assets 8,011,415 6,020,861 Total Current Assets 880,461, ,166,379 Non-current Assets Long-term investments Available-for sale securities-net (Notes 3.5 and 6) 135,204, ,311,262 Investments in related companies-net (Notes 3.6 and 7) 29,552,275 28,959,675 Property, plant and equipment-net (Notes 3.7 and 8) 183,423, ,819,540 Intangible assets-net (Notes 3.8 and 9) 7,349,649 5,245,891 Leasehold right-net (Notes 3.9 and 10) 6,692,482 7,162,422 Other non-current assets 108, ,945 Total Non-current Assets 362,331, ,607,735 TOTAL ASSETS 1,242,792, ,774,114 Notes to the financial statements form an integral part of these statements.

4 PEOPLE'S GARMENT PUBLIC COMPANY LIMITED BALANCE SHEETS AS AT DECEMBER 31, 2006 AND 2005 LIABILITIES AND SHAREHOLDERS' EQUITY BAHT Current Liabilities Trade accounts payable 131,495, ,684,633 Other current liabilities Accrued bonus 41,740,856 35,499,066 Accrued corporate income tax 15,159,597 13,214,512 Accrued expenses 24,029,069 29,468,207 Assets payable 5,119,720 4,645,171 Others 5,759,685 7,301,664 Total other current liabilities 91,808,927 90,128,620 Total Current Liabilities 223,304, ,813,253 TOTAL LIABILITIES 223,304, ,813,253 Shareholders' Equity Share capital (Note 11) Authorized share capital 72,000,000 common stocks of Baht 1 par value 72,000,000 96,000,000 common stocks of Baht 1 par value 96,000,000 Issued and paid-up share capital 72,000,000 common stocks of Baht 1 each 72,000,000 96,000,000 common stocks of Baht 1 each 96,000,000 Additional paid-in capital Premium on common stocks 325,200,000 61,200,000 Unrealized gain on investment revaluation (Note 6) 80,475,037 67,628,415 Retained earnings Appropriated Legal reserve (Note 12) 9,600,000 7,200,000 General reserve (Note 13) 2,500,000 2,500,000 Unappropriated 505,713, ,432,446 Total Shareholders' Equity 1,019,488, ,960,861 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,242,792, ,774,114 Notes to the financial statements form an integral part of these statements.

5 PEOPLE'S GARMENT PUBLIC COMPANY LIMITED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 BAHT REVENUES Income from sales 1,304,631,497 1,173,081,377 Other income Subcontracts income 4,917, ,962 Dividend income 6,934,694 11,023,894 Rental income 3,528,000 3,896,000 Interest income 11,877, ,119 Gain on exchange rate 2,612,716 2,785,239 Others 9,040,836 7,423,384 Total other income 38,910,903 26,635,598 Total Revenues 1,343,542,400 1,199,716,975 EXPENSES Cost of sales 859,940, ,220,116 Selling and administrative expenses 265,257, ,779,728 Directors's remuneration (Note 14) 7,555,000 7,747,500 Total Expenses 1,132,753,294 1,004,747,344 Profit before Interest and Income Tax Expenses 210,789, ,969,631 Interest Expenses 7,278 1,082,216 Income Tax Expenses 29,100,901 23,369,237 Net Profit 181,680, ,518,178 Basic Earnings Per Share (Note 3.11) Net profit The number of common stocks used in computation basic earnings per share. 82,454,795 72,000,000 Notes to the financial statements form an integral part of these statements.

6 PEOPLE'S GARMENT PUBLIC COMPANY LIMITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 BAHT Issued and paid-up Premium on Unrealized gain Retained earnings Total share capital common stocks on investment Appropriated Unappropriated revaluation Legal reserve General reserve Beginning balances, January 1, ,000,000 61,200,000 53,141,204 7,200,000 2,500, ,114, ,155,472 Unrealized gain on investment revaluation 14,487,211 14,487,211 Net profit 170,518, ,518,178 Dividend payment (Note 14) (7,200,000) (7,200,000) Ending balances, December 31, ,000,000 61,200,000 67,628,415 7,200,000 2,500, ,432, ,960,861 Capital increase (Note 11) 24,000, ,000, ,000,000 Unrealized gain on investment revaluation 12,846,622 12,846,622 Net profit 181,680, ,680,927 Legal reserve (Note 12) 2,400,000 (2,400,000) - Dividend payment (Note 14) (72,000,000) (72,000,000) Ending balances, December 31, ,000, ,200,000 80,475,037 9,600,000 2,500, ,713,373 1,019,488,410 Notes to the financial statements form an integral part of these statements.

7 PEOPLE'S GARMENT PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 BAHT CASH FLOWS FROM OPERATING ACTIVITIES Net Profit 181,680, ,518,178 ADJUSTMENTS TO RECONCILE NET PROFIT TO NET CASH PROVIDED FROM (USED IN) OPERATIONS Depreciation and amortization of lease right 40,114,260 33,455,153 Amortization of intangible assets 1,314,649 1,877,430 Amortization of withholding tax - 367,034 Increase (decrease) in doubtful debts (151,797) 105,866 Increase in allowance for goods returned - 3,900,000 Increase (decrease) in provision for diminution in inventory values 510,254 (4,153,926) Increase in provision for diminution in investment values 421,700 1,650,000 Gain on reverse entry of provision for diminution in investment values (1,014,300) - Dividend income from investments (6,934,694) (11,023,894) Loss from unused fixed assets 2,080 - Gain on fixed assets disposal (699,006) (869,599) Loss from unused intangible assets - 1,610,078 Gain on intangible assets disposal - (15,886) (Gain) loss on exchange rate 2,861 (9,072) Profit from operation before changes in operating assets and liabilities items 215,246, ,411,362 (INCREASE) DECREASE IN OPERATING ASSETS Trade accounts receivable (55,828,232) (16,325,792) Inventories (2,050,244) 16,464,841 Other current assets (1,990,554) 720,057 Other non-current assets - (5,000) INCREASE IN OPERATING LIABILITIES Trade accounts payable 18,780,405 28,123,027 Other current liabilities 1,680,307 37,140,462 NET CASH PROVIDED FROM OPERATING ACTIVITIES 175,838, ,528,957 Notes to the financial statements form an integral part of these statements.

8 PEOPLE'S GARMENT PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 BAHT CASH FLOWS FROM INVESTING ACTIVITIES Increase in investments in available-for-sale securities (13,047,074) - Increase in current investments (232,000,000) - Increase in investments in related companies - (3,500,000) Dividend income from investments 6,934,694 11,023,894 Purchase of equipment (44,226,670) (41,666,981) Purchase of intangible assets (3,418,407) (7,442,361) Proceeds from fixed assets disposal 5,675, ,393 Proceeds from intangible assets disposal - 852,728 NET CASH USED IN INVESTING ACTIVITIES (280,081,756) (39,811,327) CASH FLOWS FROM FINANCING ACTIVITIES Decrease in bank overdrafts and short-term loans from financial institutions - (116,924,121) Decrease in short-term loans from related parties - (17,000,000) Dividend payment (72,000,000) (7,200,000) Proceeds from capital increase 288,000,000 - NET CASH PROVIDED FROM (USED IN) FINANCING ACTIVITIES 216,000,000 (141,124,121) NET INCREASE IN CASH AND CASH EQUIVALENTS 111,756,860 82,593,509 CASH AND CASH EQUIVALENTS AS AT JANUARY 1, 83,065, ,253 CASH AND CASH EQUIVALENTS AS AT DECEMBER 31, 194,822,622 83,065,762 ADDITIONAL DISCLOSURE ITEMS TO CASH FLOWS STATEMENTS : CASH PAID DURING THE YEARS FOR : Interest expenses 7,278 1,248,013 Income tax expenses 27,155,815 11,866,044 NON-CASH ITEMS CONSIST OF Unrealized gain on investment revaluation 12,846,622 14,487,211 Increase in other current assets from intangible assets disposal - 1,066,822 Notes to the financial statements form an integral part of these statements.

9 PEOPLE S GARMENT PUBLIC COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2006 AND GENERAL INFORMATION Company status A juristic person established under Thai law and listed on the Stock Exchange of Thailand. Company location - Head office and factory 666 Rama 3 Road, Kwaeng Bangpongpang, Khet Yannawa, Bangkok Factory-branch 1 77 Moo 6, Lampang-Chiengmai Road, Tambol Baanklang, Amphur Muang, Lamphun Factory-branch Moo 5, Wellgrow Industrial Estate, Bangna-Trad Road, Tambol Bangsamak, Amphur Bangpakong, Chachoengsao Factory-branch Moo 5, Suwannasorn Road, Tambol Nonthri, Amphur Kabinburi, Prachinburi Type of business Manufacturing and distributing ready-made clothes. Number of employees as at - December 31, December 31, 2005 Employee expenses for the years ended - December 31, December 31, persons 1,556 persons Baht million Baht million 2. BASIS FOR FINANCIAL STATEMENTS PRESENTATION These financial statements are prepared in accordance with the Accounting Act B.E (2000) including the Accounting Profession Act B.E (2004).

10 -2-3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 3.1 Revenues and expenses recognition The Company recognized sales and cost of sales whenever the goods are delivered to customers. Other revenues and expenses are recognized on an accrual basis. 3.2 Allowance for doubtful accounts The Company provided allowance for doubtful accounts for the estimated losses that may be incurred from the uncollectible accounts receivable. 3.3 Inventories Finished goods are stated at cost or net realizable value, whichever is the lower. Cost is based on the average method. Goods in process are stated at average cost of raw materials including labor and manufacturing expenses. The Company set up provision for diminution in value for the nonmoving stocks over six months. 3.4 Allowance for goods returned The estimation for goods returned is set up by assessing from the past experience and other relative factors. 3.5 Investments in available-for-sale securities Investments in available-for-sale securities are marketable securities which stated at fair value, with the objective for long-term investments. The Company recognizes revaluation of available-for-sale securities as separate item in shareholders equity under the caption Unrealized gain (loss) on investment revaluation. The Company calculated cost of the disposed securities during the year by the weighted average method.

11 Investments in related companies Investments in related companies are those companies in which the Company has shareholding and/or the companies which directly or indirectly have some common management, major shareholders or such related persons. Investments in related companies are recorded at cost and deducted with provision for diminution in investment value. Dividend income is recorded when declared. 3.7 Property, plant and equipment Property, plant and equipment are stated at cost. Depreciation is calculated by the straight-line method based on the estimated useful lives of the following assets: PARTICULARS YEARS OF USEFUL LIVES Office building 20 Factory building 20 Machinery 5 Computer and equipment acquired in Others Intangible assets Intangible assets mean the computer softwares used in the Company s operation which are stated at cost less cumulative amortization. Amortization is calculated by the straight-line method based on the estimated useful lives of 5 years. 3.9 Leasehold right Leasehold right stated at cost less cumulative amortization. Amortization is calculated by the straight-line method based on leases period.

12 Foreign currency transactions Foreign currency transactions are recorded in Baht at the rate ruling on the date of transactions. Outstanding foreign currency assets and liabilities at the balance sheet date are converted to Baht at the rate of exchange in effect at that date. Gain or losses on exchange rate are credited or charged to current operations of each year Basic earnings per share In 2006, basic earnings per share is calculated by dividing the annual net profit by the number of issued and paid-up common stocks during the year by the weighted average method. In 2005, basic earnings per share is calculated by dividing the annual net profit by the number of issued and paid-up common stocks at the end of the year Cash and cash equivalents For the purpose of preparation of cash flows statements, cash and cash equivalents are cash on hand and deposits at financial institutions due not more than 3 months and with no obligation Use of accounting estimates In preparation of financial statements in accordance with generally accepted accounting principles requires management to make various estimates and assumptions that will affect the reported amounts of revenues, expenses, assets and liabilities including the disclosure of contingent assets and liabilities. Actual results may differ from those estimates.

13 -5-4. TRADE ACCOUNTS RECEIVABLE The Company has trade accounts receivable to be classified according to the aging of outstanding as follows : (BAHT) AGING Other Companies Related Companies Total Other Companies Related Companies Current 31,893, ,116, ,010,061 24,611, ,927, ,539,342 Overdue within 2 months 8,625,073 8,462,487 17,087,560 3,637, ,174 4,071,314 Over 2 6 months 2,873,178 20,281 2,893,459 1,365,535-1,365,535 Over 6 12 months 38,782-38,782 46,408-46,408 Over 12 months 625, , , ,478 Total 44,056, ,599, ,655,543 30,438, ,361, ,800,077 Allowance for doubtful accounts 625, , , , INVENTORIES consist of the following : PARTICULARS Finished goods 58,167,961 76,384,583 Raw materials 90,723,957 74,193,703 Goods in process 33,594,430 30,148,979 Packaging materials 139, ,540 Spare parts 2,011,534 1,714,505 Total 184,637, ,587,310 Less Provision for diminution in value (3,540,407) (3,030,153) Inventories-net 181,097, ,557,157 Total (BAHT)

14 -6-6. INVESTMENTS IN AVAILABLE-FOR-SALE SECURITIES Available-for-sale securities are listed securities on the stock exchange. (BAHT) % HOLDING INVESTMENT DIVIDEND COMPANIES Investments in Related Companies 1. Saha Pathana Inter-Holding Plc ,154,514 3,154, , , I.C.C. International Plc ,317,291 15,270,217 1,015,580 1,015, Boutique New City Plc , ,000 1,400 2, Far East DDB Plc , ,800 12,000 12, Thai President Foods Plc ,046,000 1,046, ,375 95, Bangkok Rubber Plc , , Saha Pathanapibul Plc , , ,000 70, Thai Wacoal Plc , ,000 55,000 55, President Bakery Plc ,500,000 7,500,000 1,410, , Sahacogen (Chonburi) Plc ,605,616 7,605, ,000 1,127,500 Total 49,729,221 36,682,147 3,743,769 3,238,119 Add Unrealized gain on investment revaluation in related companies 78,576,037 65,982,615 Total Investments in Related Companies net 128,305, ,664,762 3,743,769 3,238,119 Other Company 11. Bangkok Bank Plc. 5,000,700 5,000, , ,775 Total 5,000,700 5,000, , ,775 Add Unrealized gain on investment revaluation in other company 1,899,000 1,645,800 Investments in Other Company net 6,899,700 6,646, , ,775 Total Investments in Available-for-sale Securities-net 135,204, ,311,262 3,886,194 3,348,894

15 -7- In 2006, the Company additionally invested in I.C.C International Plc. amount of 173,000 shares, worth Baht 7.05 million. Thus, making the shareholding proportion in such company equals to 0.41% of the issued and paid-up capital. And the additional investment in the President Bakery Plc. according to the subscription right obtained from such company amount of 150,000 shares, worth Baht 6 million. RELATED COMPANIES TYPE OF BUSINESS RELATIONSHIP (BAHT) PAID-UP CAPITAL As at December 31, 2006 As at December 31, Saha Pathana Inter-Holding Plc. Investment Co-director and 494,034, ,034,000 shareholders 2. I.C.C. International Plc. Commerce Co-director and 290,633, ,633,730 shareholders 3. Boutique New City Plc. Garment Shareholders 120,000, ,000, Far East DDB Plc. Agency and Co-director and 75,000,000 75,000,000 advertising shareholders 5. Thai President Foods Plc. Food Shareholders 180,000, ,000, Bangkok Rubber Plc. Footwear Co-director and 1,392,666,900 1,392,666,900 shareholders 7. Saha Pathanapibul Plc. Commerce Shareholders 275,875, ,875, Thai Wacoal Plc. Garment Shareholders 120,000, ,000, President Bakery Plc. Food Shareholders 450,000, ,000, Sahacogen (Chonburi) Plc. Generating and Co-director and 955,000, ,000,000 distributing electricity shareholders

16 -8-7. INVESTMENTS IN RELATED COMPANIES : (BAHT) COMPANIES % HOLDING INVESTMENTS DIVIDENDS Thai Sports Garment Co., Ltd ,900,000 1,900, ,000 5,700, Champ Ace Co., Ltd ,000,000 6,000,000 1,500,000 1,500, S.T.G.C. Co., Ltd *250,000 *250, Waseda Education (Thailand) Co., Ltd *2,000,000 *2,000, The International Knitting Mills Co., Ltd *1,500,000 *1,500, Thai Takaya Co., Ltd ,000,000 1,000, , Cosmo Express Trading Co., Ltd *256,000 *256, Sriracha Aviation Co., Ltd *1,000,000 *1,000, SSDC (Tigertext) Co., Ltd ,709,675 7,709, , Sahapat Properties Co., Ltd *400,000 *400, Thai Staflex Co., Ltd ,200,000 1,200, , , Treasure Hill Co., Ltd *4,000,000 *4,000, Sahapat Real Estate Co., Ltd ,000,000 5,000, Thai Naxis Co., Ltd , ,000 45,000 75, Thanara Co., Ltd , , Pan Land Co., Ltd *2,000,000 *2,000, Five Star Plus Co., Ltd *2,500,000 2,500, Thai Bunka Fashion Co., Ltd *1,000,000 1,000, Total investments in related companies 38,765,675 38,765,675 3,048,500 7,675,000 Less *Provision for diminution in investment value (9,213,400) (9,806,000) - - Total investments in related companies net 29,552,275 28,959,675 3,048,500 7,675,000 In 2006, the Company increased the provision for diminution in investment values amount of Baht 421,700 and reverse the entry of provision for diminution in investment values amount of Baht 1,014,300. In 2005, the Company increased the provision for diminution in investment values amount of Baht 1,650,000.

17 COMPANIES -9- TYPE OF BUSINESS RELATIONSHIP (BAHT) PAID-UP CAPITAL December 31, December 31, Thai Sports Garment Co., Ltd. Manufacturing and Co-management 10,000,000 10,000,000 distributing garment /directors and shareholders 2. Champ Ace Co., Ltd. Manufacturing and Co-management 40,000,000 40,000,000 distributing /directors and garment and leatherware shareholders 3. S.T.G.C. Co., Ltd. Research and develop Co-management 2,500,000 2,500,000 weaving materials /directors and shareholders 4. Waseda Education Language institute Co-directors 25,000,000 25,000,000 (Thailand) Co., Ltd. and shareholders 5. The International Manufacturing and Shareholders 30,000,000 30,000,000 Knitting Mills Co., Ltd. distributing weaving materials 6. Thai Takaya Co., Ltd. Manufacturing and Co-directors 30,000,000 30,000,000 distributing garment and shareholders 7. Cosmo Express Trading Co., Ltd. Trading Shareholders 8,000,000 8,000, Sriracha Aviation Co., Ltd. Maintenance Shareholders 33,000,000 33,000, SSDC (Tigertext) Co., Ltd. Bleaching and dyeing Co-directors 270,000, ,000,000 and shareholders 10. Sahapat Properties Co., Ltd. Investing Shareholders 20,000,000 20,000, Thai Staflex Co., Ltd. Manufacturing and Shareholders 60,000,000 60,000,000 distributing paste lining 12. Treasure Hill Co., Ltd. Golf course Co-directors 200,000, ,000,000 and shareholders 13. Sahapat Real Estate Co., Ltd. Real estate Shareholders 250,000, ,000, Thai Naxis Co., Ltd. Producing and distributing Shareholders 20,000,000 20,000,000 label 15. Thanara Co., Ltd. Real estate Shareholders 60,000,000 60,000, Pan Land Co., Ltd. Real estate Co-directors 300,000, ,000,000 and shareholders 17. Five Star Plus Co., Ltd. Manufacturing and Co-directors 50,000,000 50,000,000 distributing garment and shareholders 18. Thai Bunka Fashion Co., Ltd. Design institute Co-directors 25,000,000 25,000,000 and shareholders

18 PROPERTY, PLANT AND EQUIPMENT consist of the following : (BAHT) PARTICULARS 2005 Increase Sale/ Transfer Amortization 2006 Cost Land 43,927, ,927,180 Office building 23,119, ,119,385 Factory building 51,282, ,282,478 Office furniture & fixtures 28,666,603 1,123,199-4,700,030 34,489,832 Factory furniture & fixtures 15,959, ,009-4,291,290 20,911,436 Office furniture & equipment 61,164,857 8,173,314 (872,923) (1,221,530) 67,243,718 Factory furniture & equipment 19,453,280 1,037,076 (186,080) 1,257,380 21,561,656 Machinery 178,163,997 23,042, ,206,611 Tools equipment 36,286,389 5,269,382 (3,370) (35,850) 41,516,551 Vehicles 23,238, ,449 (6,976,470) - 16,792,836 Furniture and fixtures under process 4,914,093 4,217,627 - (8,991,320) 140,400 Furniture & equipment under installation - 170, ,000 Machinery under installation - 2, ,000 Total 486,176,256 44,226,670 (8,038,843) - 522,364,083 Accumulated depreciation Office building 9,377,199 1,157, ,534,985 Factory building 26,306,009 2,564, ,870,134 Office furniture & fixtures 10,609,567 6,445,210 - (493) 17,054,284 Factory furniture & fixtures 11,596,546 1,556, ,153,914 Office furniture & equipment 43,845,885 6,844,147 (870,003) (1,194,829) 48,625,200 Factory furniture & equipment 17,735, ,599 (185,746) 1,200,799 19,491,223 Machinery 141,398,722 14,246, ,644,845 Tools equipment 30,381,205 2,496,145 (3,368) (5,970) 32,868,012 Vehicles 11,106,012 3,593,310 (2,000,951) - 12,698,371 Total 302,356,716 39,644,320 (3,060,068) - 338,940,968 Property, plant and equipment-net 183,819, ,423,115 Depreciation for the years 32,985,211 39,644,320

19 -11- As at December 31, 2006 and 2005 the Company has fully depreciated fixed assets and currently are usable at the cost of Baht million and Baht million, respectively. 9. INTANGIBLE ASSETS consist of the following : (BAHT) Deferred computer softwares 2005 Increase 2006 Cost 5,522,811 3,418,407 8,941,218 Less Accumulated amortization (276,920) (1,314,649) (1,591,569) Intangible assets-net 5,245,891 2,103,758 7,349,649 Amortization for the years 1,877,430 1,314,649 In 2005, the Company has loss from unused intangible assets at net value of Baht 1,610, LEASEHOLD RIGHT (BAHT) Leasehold right 2005 Increase 2006 Cost 12,688,421-12,688,421 Less Accumulated amortization (5,525,999) (469,940) (5,995,939) Leasehold right-net 7,162,422 (469,940) 6,692,482 Amortization for the years 469, ,940 The Company has entered into Lease Contract of 2 places of building with the leasehold right worth Baht million for 27 year period of both buildings, commencing form December 1, 1993 to November 30, 2020.

20 SHARE CAPITAL On April 24, 2006, the Ordinary General Shareholders Meeting was held and approved a resolution to increase authorized capital from Baht 72 million (72,000,000 shares of Baht 1 par value) to Baht 96 million. The new issues of 24,000,000 common stocks of Baht 1 par value will be offered to the existing shareholders at the ratio of 3 old shares to 1 new share at Baht 12 per share, total proceeds to be obtained from capital increase were Baht 288 million. The period for subscribing share capital increase was during June 26-30, The Company has registered the capital increase to be Baht 96 million (96,000,000 shares of Baht 1 par value) with the Ministry of Commerce on June 23, The Company completely received its share subscription and has registered the change of paid-up capital with the Ministry of Commerce on July 26, Therefore, the Company has authorized and paid-up share capital amount of Baht 96 million (96 million shares of Baht 1 par value) and premium on common stocks amount of Baht million. 12. LEGAL RESERVE In compliance with the Public Company Act, B.E (1992), the Company has to set aside legal reserve at last 5% of annual net profit until meet 10% of authorized share capital. Such legal reserve in not allowed to pay for dividend. The Company has appropriated the 2006 annual net profit for the legal reserve amounting to Baht 2.40 million, which duly met 10% of authorized share capital. 13. GENERAL RESERVE The Company allocated portion of profit as general reserve without specific objective.

21 DIVIDEND PAYMENT AND DIRECTORS REMUNERATION On April 24, 2006, the Ordinary General Shareholders was held and approved a resolution to pay dividend to the shareholders of 72 million shares at Baht 1.00 each. Dividend was paid from promotional business at Baht 0.75 per share, totalling Baht 54 million and from nonpromotional business at Baht 0.25 per share, totalling Baht 18 million. Total dividend payable following the resolution is Baht 72 million, which was duly paid on May 19, The Meeting also has a resolution to pay the directors remuneration at the maximum Baht 10 million On April 25, 2005, the Ordinary General Shareholders Meeting was held and approved a resolution to pay dividend to the shareholders of 72 million shares at Baht 0.70 each. The Company has paid the interim dividend from promotional business exempted from income tax at Baht 0.60 per share, totalling Baht million on December 14, 2004, and the remaining is to be paid from net profit of non-exemption from corporate income tax at Baht 0.10 per share, totalling Baht 7.20 million, which was duly paid on May 20, Total dividend payable following the resolution is Baht million and the Meeting also approved to pay the directors remuneration at the maximum Baht 10 million. 15. FOREIGN CURRENCY TRANSACTIONS The Company has outstanding assets and liabilities denominated in foreign currencies which are not covered by any hedging as follows : (THOUSAND) PARTICULARS Foreign currencies Converted to Baht Foreign currencies Converted to Baht Assets USD , , Total 16, , Liabilities USD , , EUR , , HKD Total 7, ,478.53

22 COMMITMENTS AND CONTINGENT LIABILITIES consist of the following : (BAHT) PARTICULARS Letters of guarantee from commercial banks 11,450,100 12,360,540 Letters of credit 6,990,347 7,315,144 Letters as guarantor on loans from commercial banks for Naraporn Co., Ltd. 5,000,000 5,000,000 The Company has entered into an agreement with the person who is granted in a trademark license agreement for manufacturing and distributing ready-made garment. It is the counteragreement which each party must comply according to the conditions stipulated in the agreement of totalling 5 trademarks. The royalty fees are payable at 5.00% % on sale income. 17. TRANSACTIONS WITH RELATED PARTIES The Company has certain transactions with its related parties which are related through the shareholding or having co-shareholders, management or some co-directors. The effects of these transactions were reflected in the accompanying financial statements according to the conditions as specified in the mutual agreement and in normal business. RELATED PARTIES RELATIONSHIP 1. Listed companies on the stock exchange See Note 6 2. Related companies See Note 7 3.Thanulux Plc. Co-directors and shareholders 4.Thai Monster Co., Ltd. Co-directors

23 -15- The significant accounting transactions with related parties are as follows : (BAHT) Related transactions in balance sheets Trade accounts receivable - I.C.C. International Plc. 224,495, ,582,337 - Other companies 13,104, ,575 Total 237,599, ,361,912 Other accounts receivable 370,709 1,375,654 Investments-net (Notes 6 and 7) 157,857, ,624,437 Trade accounts payable 3,055,391 2,788,155 Accrued expenses 21, ,638 (BAHT) Related transactions in income statements Sales - I.C.C. International Plc. 969,692, ,279,330 - Thai Sports Garment Co., Ltd. 4,114, ,933 - Other companies 14,636,741 5,386,795 Total 988,443, ,910,058 Dividend income (Notes 6 and 7) 6,792,269 10,913,119 Other income 11,663,933 8,379,160 Purchase of goods and raw materials 4,031,458 9,628,867 Royalty fees 21,001,516 18,168,644 Other expenses 6,669,810 5,876,287 Interest expenses - 11,570 Income from sales, purchase of goods and raw materials, selling expenses, other income and expenses as shown in the statements of income are in accordance with general trading conditions under fixing price or at market price. For the transactions with no reference of market price, the agreed prices according to the agreement are applied.

24 PROVIDENT FUND The Company has set up provident fund for the employees, with partly contributed by them and the Company contributes another part as defined. The Company has appointed the fund manager for managing such fund according to the Ministerial Regulation. The fund was approved on July 20, 1992 to be the registered fund according to the Provident Fund Act, B.E (1987). The members are entitled to the Company s contribution and benefit following the regulations and conditions as defined. 19. PROMOTIONAL PRIVILEGES The Company was granted four promotional certificates as follows: 1. Promotional certificates Nos. 7010/ / / (2)/ Date of promotional certificates June 20, 1994 October 4, 1994 October 20, 1995 December 17, Effective dates July 31, 1995 January 3, 1997 February 5, 1998 May 12, To promote investment in the business of Weaving or Manufacturing knitting ready-made garment ready-made garment Manufacturing ready-made garment Manufacturing ready-made garment 5. Important privileges which are granted: 5.1 Exemption from corporate income tax on 8 Years 8 Years 7 Years 8 Years net profit from promotional operation (Expired on (Expired on (Expired on Not exceeded commencing from the revenue generating July 30, 2003) January 2, 2005) February 4, 2005) Baht 40 million date. 5.2 Exemption from income tax on dividend 8 Years 8 Years 7 Years 8 Years from promoted business which was (Expired on (Expired on (Expired on exempted from income tax as 5.1. July 30, 2003) January 2, 2005) February 4, 2005) 5.3 Allowance for reduction the corporate 5 Years 5 Years - - income tax from promotional net profit at 50% of normal rate after the exemption for corporate income tax ended, as Allowance for double deduction of 10 Years 10 Years - - transportation expenses, electricity and (Expired on (Expired on water supplies, commencing from the July 30, 2005) January 2, 2007) revenue generating date. 5.5 Allowance for deduction the investment 25 % 25 % - 25 % for installation or construction of facility of investment of investment of investment in addition to normal depreciation. (Expired on (Expired on July 30, 2003) January 2, 2005)

25 As a promoted industry, the Company must strictly comply with certain terms and conditions stipulated in the promotional certificates FINANCIAL INFORMATION BY SEGMENT The Company operates in one business segment, that is the business of manufacturing and distributing ready-made garment and has geographical segment with both local and export sales, which are classified as follows: (THOUSAND BAHT) PARTICULARS Local Export Total Local Export Total Income from sales 1,117, ,971 1,304, , ,132 1,173,081 Result of operation by segment 165,557 32, , ,512 26, ,415 Non-allocation expenses (26,489) (24,163) Other income 38,911 26,635 Income tax (29,101) (23,369) Net profit 181, ,518 Property, plant and equipment-net 183, ,819 Total assets 1,242, , INCOME TAX Corporate income taxes of the Company for the years ended December 31, 2006 and 2005 have been calculated from the accounting profit and adjustment with other revenues and some expenses which are exempted from income tax or being disallowable expense in tax computation purposes. Net profit from the non-boi business, the income tax computation will be calculated at the rate of 25 per cent. Net profit from BOI business, the income tax computation will be calculated following the promotional privileges which are granted (see also Note 19).

26 DISCLOSURE OF FINANCIAL INSTRUMENTS The Company has information relating to financial instruments both in and off balance sheets, as follows : 22.1 Accounting policies and procedure Accounting policies are disclosed in Note 3 to the financial statements Risk from breach of contracts - Due to the counterparty does not follow the requirement in the contract which caused damage to the Company. - The credit risk with respect to the concentration of trade accounts receivable mainly due to the majority of sales are supplied to limited number of customers. However, the Company expects no material loss from its debt collection, due to most of major customers are settled according to the terms of payment. - For the financial assets shown in the balance sheets, the book value of such assets is net from various provisions to be estimated fair value. Such provisions are assumed to be the highest value of risk incurred from breach of contracts Risk relating to interest rate of financial assets and liabilities Risk from the fluctuation in interest rate may have negative effect to the Company for the current and the future years. The Company expects that they can manage the contingent risk, due to the Company has set a plan and follow up the situation closely.

27 22.4 Risk from exchange rate -19- The Company has risk from the fluctuation of foreign exchange rates, due to some debtors and creditors arisen from the trading in foreign currencies. The Company does not enter into the forward exchange contract, because it realizes the short term of these assets and liabilities. The Company, therefore, expects no risk from the exchange rate Fair value of financial instruments The following methods and assumptions are used to estimate the fair value of financial instruments: - Financial assets shown at book value which equal to estimated fair value. - Financial liabilities shown at book value which equal to estimated fair value. Loans carry interest rates close to market rates. 23. RECLASSIFICATION OF ACCOUNTS Certain accounts in the 2005 financial statements have been reclassified to conform with the presentation of 2006 financial statements. 24. FINANCIAL STATEMENTS APPROVAL These financial statements are duly approved by the Company s directors.