The interim financial statements were approved for issue by the executive directors on 9 May 2012.

Transcription

1 Note Contents 1 General information 2 Basis of preparation of the interim financial statements 3 Changes in accounting policy 4 Business combinations - buy shares 5 Related party transactions 6 Accounts receivable - trade and others 7 Available-for-sale investments 8 Investments in subsidiaries 9 Investments in associates and jointly-controlled entities 10 Investments in related companies 11 Property, plant and equipment 12 Accounts payable - trade and others 13 Long-term debts 14 Share capital 15 Treasury shares and treasury shares reserve 16 Segment information 17 Income tax expense 18 Basic earnings per share 19 Commitments with non-related parties 20 Event after the reporting period 18

2 These notes form an integral part of the financial statements. The interim financial statements were approved for issue by the executive directors on 9 May General information Charoen Pokphand Foods Public Company Limited, the Company, is incorporated in Thailand and has its registered head office at 313 C.P. Tower, Silom Road, Kwaeng Silom, Khet Bangrak, Bangkok 10500, Thailand. The Company was listed on the Stock Exchange of Thailand on 21 December The major shareholder of the Company is Charoen Pokphand Group Company Limited which is incorporated in Thailand and directly and indirectly owned 44.93% shareholding of the Company. The principal businesses of the Company and its subsidiaries (together referred to the Group ) are operating in agro-industrial and integrated food businesses. The Group s business operations are located throughout Thailand and overseas. The businesses are divided into 2 main segments as follows: 1) The livestock business comprises chicken, duck and pigs 2) The aquaculture business consists of shrimp and fish The two main businesses are vertically integrated, sourcing raw materials for animal feed production, manufacturing animal feed, breeding animals, farming animals for commercial purposes, processing meat, producing ready-to-eat food products, and selling their products to both domestic and overseas markets. The Group s main products are divided into 3 main categories as follows: 1) Animal feed 2) Animal farm products such as animal breeder, live animal and meat, etc. 3) Processed foods and ready meals Details of the Company s subsidiaries as at 31 March 2012 and 31 December 2011 were as follows: Country of Ownership interest Name of the entity Type of business incorporation (%) 31 March 31 December Thailand operations and businesses related to operations in Thailand Livestock business Direct subsidiaries 1) Bangkok Produce Merchandising Public Company Limited Animal feed raw materials distribution and broiler integration Thailand

3 Country of Ownership interest Name of the entity Type of business incorporation (%) 31 March 31 December ) CPF (Thailand) Public Company Limited (a new established company whose amalgamated companies in 2.1 to 2.10) Animal feedmill, livestock farming, food processing plant and broiler chicken integration Thailand ) Bangkok Agro-Industrial Products Public Company Limited Animal feedmill and livestock farming Thailand ) Bangkok Food Products Co., Ltd. Animal feedmill, livestock farming Thailand food processing plant 2.3) Charoen Pokphand Northeastern Public Company Limited Animal feedmill and livestock farming Thailand ) Charoen Pokphand Industry Co., Ltd. Animal feedmill and livestock farming Thailand ) CPF Food Products Co., Ltd. Broiler chicken integration Thailand ) C.P. Agro-Industry Co., Ltd. Livestock farming Thailand ) B.P. Food Products Co., Ltd. Animal feedmill and livestock farming Thailand ) Rajburi Foods Co., Ltd. Animal feedmill and livestock farming Thailand ) International Pet Food Co., Ltd. Pet food production and distribution Thailand ) Klang Co., Ltd. (1) Shrimp processing plant Thailand ) C.P. Merchandising Co., Ltd. Investment and international trading Thailand Indirect subsidiaries 1) CPF Trading Co., Ltd. Wholesale and retail food products Thailand ) CPF Premium Foods Co., Ltd. Food processing plant Thailand ) CPF Logistics Co., Ltd. Transportation services Thailand ) C.P. Food Products Co., Ltd. (2) Restaurant Thailand ) CPF Food Trading Co., Ltd. Importer and distributor of processed The People s meat and ready meals China ) Charoen Pokphand (Taiwan) Co., Ltd. (3) Importer and distributor feedstuff additives and animal vaccines Taiwan ) CP Foods (UK) Limited Importer and distributor of processed United 8) CPF Europe S.A. Importer and distributor of processed meat and ready meals Belgium ) CPF Denmark A/S Importer and distributor of processed meat and ready meals Denmark ) CPF Tokyo Co., Ltd. Importer and distributor of processed meat and ready meals Japan ) Fusion Abbey Park Limited Importer and distributor of processed United 20

4 Country of Ownership interest Name of the entity Type of business incorporation (%) 31 March 31 December ) Fusion Alfrick Limited Importer and distributor of processed United 13) Fusion Bracewell Limited Importer and distributor of processed United 14) Fusion Bransford Limited Importer and distributor of processed United 15) Fusion Broadway Limited Importer and distributor of processed United 16) Fusion Brothwood Limited Importer and distributor of processed United 17) Fusion Calis Limited Importer and distributor of processed United 18) Fusion Carnoustie Limited Importer and distributor of processed United 19) Fusion Charlton Limited Importer and distributor of processed United 20) Fusion Crowle Limited Importer and distributor of processed United 21) Fusion Dalaman Limited Importer and distributor of processed United 22) Fusion Defford Limited Importer and distributor of processed United 23) Fusion Dormington Limited Importer and distributor of processed United 24) Fusion Driscoll Limited Importer and distributor of processed United 25) Fusion Dumbleton Limited Importer and distributor of processed United 26) Fusion Eastoe Limited Importer and distributor of processed United 27) Fusion Elmbridge Limited Importer and distributor of processed United 28) Fusion Everton Limited Importer and distributor of processed United 29) Fusion Exning Limited Importer and distributor of processed United 30) Fusion Fethiye Limited Importer and distributor of processed United 31) Fusion Gatley Limited Importer and distributor of processed United 32) Fusion Gocek Limited Importer and distributor of processed United 33) Fusion Gray Limited Importer and distributor of processed United 34) Fusion Grimley Limited (2) Importer and distributor of processed United 35) Fusion Guarlford Limited (2) Importer and distributor of processed United 36) Fusion Haddenham Limited (2) Importer and distributor of processed United 21

5 Country of Ownership interest Name of the entity Type of business incorporation (%) 31 March 31 December ) Fusion Hadzor Limited (2) Importer and distributor of processed United 38) Fusion Hallow Limited (2) Importer and distributor of processed United 39) Fusion Harper Limited Importer and distributor of processed United 40) Fusion Hartford Limited Importer and distributor of processed United 41) Fusion Haverhill Limited (2) Importer and distributor of processed United 42) Fusion Hawstead Limited Importer and distributor of processed United 43) Fusion Head Street Limited Importer and distributor of processed United 44) Fusion Heath Limited Importer and distributor of processed United 45) Fusion Irvine Limited Importer and distributor of processed United 46) Fusion Kaitaia Limited Importer and distributor of processed United 47) Fusion Kroma Limited Importer and distributor of processed United 48) Fusion Krone Limited Importer and distributor of processed United 49) Fusion Lidgate Limited (2) Importer and distributor of processed United 50) Fusion Lineker Limited Importer and distributor of processed United 51) Fusion Littleworth Limited Importer and distributor of processed United 52) Fusion Madeley Limited Importer and distributor of processed United 53) Fusion Mcmahon Limited Importer and distributor of processed United 54) Fusion Mountfield Limited Importer and distributor of processed United 55) Fusion Moyes Limited Importer and distributor of processed United 56) Fusion Newlands Limited Importer and distributor of processed United 57) Fusion Niamh Limited Importer and distributor of processed United 58) Fusion Pershore Limited Importer and distributor of processed United 59) Fusion Priest Lane Limited Importer and distributor of processed United 60) Fusion Ratcliffe Limited Importer and distributor of processed United 61) Fusion Reid Limited Importer and distributor of processed United 22

6 Country of Ownership interest Name of the entity Type of business incorporation (%) 31 March 31 December ) Fusion Richardson Limited Importer and distributor of processed United 63) Fusion Samui Limited Importer and distributor of processed United 64) Fusion Saxham Limited (2) Importer and distributor of processed United 65) Fusion Sharp Limited Importer and distributor of processed United 66) Fusion Sheedy Limited Importer and distributor of processed United 67) Fusion Soham Limited Importer and distributor of processed United 68) Fusion Southall Limited Importer and distributor of processed United 69) Fusion Stevens Limited Importer and distributor of processed United 70) Fusion Stowmarket Limited (2) Importer and distributor of processed United 71) Fusion Swaffham Limited (2) Importer and distributor of processed United 72) Fusion Thetford Limited Importer and distributor of processed United 73) Fusion Turgay Limited Importer and distributor of processed United 74) Fusion Uzumlu Limited Importer and distributor of processed United 75) Fusion Van Den Hauwe Limited Importer and distributor of processed United 76) Fusion Wadborough Limited Importer and distributor of processed United 77) Fusion Wellington Limited Importer and distributor of processed United 78) Fusion Whistler Limited Importer and distributor of processed United 79) Fusion Wright Limited Importer and distributor of processed United 80) Fusion Yamac Limited Importer and distributor of processed United Aquaculture business Direct subsidiaries 1) Seafoods Enterprise Co., Ltd. (2) Shrimp processing plant Thailand ) Pokphand Aquatech Co., Ltd. (2) Aquatic feed production and distribution and aquaculture farm Thailand Indirect subsidiaries 1) CP Foods West, Inc. (2) Importer and distributor of food United States products (operations wound up of America in September 2010) 23

7 Country of Ownership interest Name of the entity Type of business incorporation (%) 31 March 31 December ) C.P. Food Products, Inc. Importer and distributor of seafood United States products of America Other businesses Direct subsidiaries 1) CPF Training Center Co., Ltd. Training center service provider Thailand ) CPF IT Center Co., Ltd. Information technology service provider Thailand Overseas operations Direct subsidiaries 1) Charoen Pokphand Foods Kenya Co., Ltd. Animal feedmill and livestock farming Kenya ) Charoen Pokphand Foods Philippines Corporation Animal feed production and distribution and shrimp hatchery business Philippines ) CPF Investment Limited Investment British Virgin Islands ) CPF Tanzania Limited Animal feedmill and livestock farming Tanzania ) C.P. Aquaculture (Beihai) Co., Ltd. Aquatic feed production and The People s distribution and aquaculture farming China ) C.P. Aquaculture (Dongfang) Co., Ltd. Shrimp hatchery business The People s China ) C.P. Aquaculture (Hainan) Co., Ltd. Aquaculture farming The People s China Direct and indirect subsidiaries 1) Charoen Pokphand Foods (Overseas) LLC. Animal feedmill and livestock farming Russia ) C.P. Pokphand Co., Ltd. Investment Bermuda ) C.P. Standart Gida Sanayi ve Ticaret A.S. Chicken integration Turkey Indirect subsidiaries 1) A.P.P. Enterprise, Inc. (3) Property lease-out Philippines ) AA Meat Shop Sdn. Bhd. Livestock processing retailer Malaysia ) Arbor Acres (Taiwan) Co., Ltd. (3) Livestock farming Taiwan ) Asia Aquaculture (M) Sdn. Bhd. Shrimp farming and processing plant Malaysia ) Bright Excel Investments Limited Investment British Virgin Islands ) C.P. Aquaculture (Yangjiang) Co., Ltd Production and sale of animal feed The People s China

8 Country of Ownership interest Name of the entity Type of business incorporation (%) 31 March 31 December ) C.P. Enterprises Limited Investment Hong Kong ) C.P. Laos Co., Ltd. Animal feedmill and livestock farming Laos ) C.P. Standard Resources Limited Dormant Hong Kong ) C.P. Vietnam Corporation Animal feed production and distribution and farming and food processing plant Vietnam ) C.T. Progressive (H.K.) Ltd. Investment Bermuda ) Changsha Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Charoen Pokphand Enterprise (Taiwan) Co., Ltd. (3) 14) Charoen Pokhand Foods (Malaysia) Sdn. Bhd. 15) Charoen Pokphand (India) Private Limited Chicken integration and livestock farming Taiwan Investment in aquaculture integration business Malaysia Animal feedmill production and livestock farming India ) Charoen Pokphand (China) Investment Limited Investment British Virgin Islands ) Charoen Pokphand (Taiwan) Investment Limited Investment Bermuda ) Charoen Pokphand (USA), Inc. Broiler chicken integration (operations United States wound up in March 2004) of America ) Chau Yang Farming Sdn. Bhd. Livestock farming Malaysia ) Chengdu Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Chia Tai (China) Investment Co., Ltd. Investment and trading The People s China ) Chia Tai Huazhong Biochemistry Limited Investment Hong Kong ) Chia Tai Lianyungang Co., Ltd. (3) Investment Hong Kong ) Chia Tai Pucheng Biochemistry Limited Investment Hong Kong ) Chia Tai Yongji Enterprise Co., Ltd. Production and sale of animal feed The People s China ) Chia Tai Yueyang Co., Ltd. Production and sale of animal feed The People s China ) Chongqing Chia Tai Co., Ltd. (3) Production and sale of animal feed The People s China

9 Country of Ownership interest Name of the entity Type of business incorporation (%) 31 March 31 December ) Chongqing Shuangqiao Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Chuzhou Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Chun Ta Investment Co., Ltd. Investment Taiwan ) Coinaton Investments Limited Investment British Virgin Islands ) CPF Agro LLC. Livestock farming Russia ) CP China Investment Limited Investment Cayman Islands ) ECI Machinery Co., Ltd. Investment British Virgin Islands ) Ek Chor China Motorcycle Co., Ltd. Investment Bermuda ) Ek Chor Investment Company Limited Investment Hong Kong ) Forward Pass Limited Investment British Virgin Islands ) Fuzhou Da Fu Co., Ltd. Production and sale of animal feed The People s China ) Ganzhou Chia Tai Industrial Co., Ltd. Production and sale of animal feed The People s China ) Golden Industrial Investment Limited Investment Hong Kong ) Guang An Chia Tai Co., Ltd (3) Production and sale of animal feed The People s China ) Guangdong Tai Tong Investment Co., Ltd. Investment The People s China ) Guanghan Chia Tai Feed Tech Co., Ltd. Production and sale of animal feed The People s China ) Guilin Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Guiyang Chia Tai Co., Ltd. Dormant The People s China ) Hangzhou Advance Feed Tech Co., Ltd. Production and sale of animal feed The People s China

10 Country of Ownership interest Name of the entity Type of business incorporation (%) 31 March 31 December ) Hannick Limited Property investment Hong Kong ) Huai Hua Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Huludao Chia Tai Husbandry Co., Ltd. Production and sale of animal feed The People s China ) Inner Mongolia Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Jiang Jin Chia Tai Co., Ltd. (3) Production and sale of animal feed The People s China ) Jiangsu Huai Yin Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Jinan Chia Tai Co., Ltd. (3) Production and sale of animal feed The People s China ) Jiu Jiang Chia Tai Feedstuff Co., Ltd. (3) Production and sale of animal feed The People s China ) Kunming Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Lanzhou Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Lianyungang Chia Tai Agro-industry Development Co., Ltd. (3) Production of animal feed The People s China ) Liuzhou Advance Feed Tech Co., Ltd. Production and sale of animal feed The People s China ) Makin Jernih Sdn. Bhd Investment Malaysia ) Mianyang Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Nanchang Chiatai Livestock Co., Ltd. Production and sale of animal feed The People s China

11 Country of Ownership interest Name of the entity Type of business incorporation (%) 31 March 31 December ) Nanning Chia Tai Animal Husbandry Co., Ltd. Production and sale of animal feed The People s China ) Nantong Chia Tai Co., Ltd. (3) Production and sale of animal feed The People s China ) Nantong Chia Tai Feed Co.,Ltd. (3) Production and sale of animal feed The People s China ) Nantong Chia Tai Technology Feed Co., Ltd. (3) Production and sale of animal feed The People s China ) Nanyang Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Neijiang Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) New Splendid Holdings Limited Investment British Virgin Islands ) Ningbo Chia Tai Agriculture Co., Ltd. Production and sale of animal feed The People s China ) Modern State Investments Limited Investment British Virgin Islands ) Pingdingshan Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Plenty Type Limited (3) Investment Cayman Islands ) Pucheng Chia Tai Biochemistry Limited Production and sale of The People s Chlortetracycline China ) Qingdao Chia Tai Agricultural Development Co., Ltd. Production and sale of animal feed The People s China ) Shaanxi Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Shanxi Chia Tai Co., Ltd. (3) Production and sale of animal feed The People s China

12 Country of Ownership interest Name of the entity Type of business incorporation (%) 31 March 31 December ) Shanghai EK Chor Industrial Trading Co., Ltd. Dormant The People s China ) Shenyang Advance Feed Tech Co., Ltd. Production and sale of animal feed The People s China ) Shenyang Chia Tai Livestock Co., Ltd. Production and sale of animal feed The People s China ) Shijiazhuang Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Shuangliu Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Star Feedmills (M) Sdn. Bhd. Aquatic feed production and distribution Malaysia ) Ta Chung Investment Co., Ltd. Investment Taiwan ) Tai Zhou Chia Tai Feed Co., Ltd. Production and sale of animal feed The People s China ) Taiwan Sizzler Co., Ltd. (2) Restaurant Taiwan ) Tianjin Chia Tai Agro-Industrial Co., Ltd. Production and sale of animal feed The People s China ) Tianjin Chia Tai Feed Tech Co., Ltd. Production and sale of animal feed The People s China ) Tip Top Meat Sdn. Bhd. Processed Meat Malaysia ) Urumqi Chia Tai Animal Husbandry Co., Ltd. Production and sale of animal feed The People s China ) Wuhan Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Xiamen Chia Tai Agriculture Co., Ltd. (3) Production and sale of animal feed The People s China ) Xiang Fan Chai Tai Co., Ltd. Production and sale of animal feed The People s China

13 Country of Ownership interest Name of the entity Type of business incorporation (%) 31 March 31 December ) Xuzhou Chia Tai Feed Co., Ltd. (3) Production and sale of animal feed The People s China ) Yi Chang Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Yinchuan Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Yongan Chia Tai Co., Ltd. Production and sale of animal feed The People s China ) Zhumadian Chia Tai Co., Ltd. (3) Production and sale of animal feed The People s China ) Zhumadian Huazhong Chia Tai Co., Ltd. Production and sale of The People s Chlortetracycline China (1) (2) (3) Transferred the principal activities, shrimp farming and processing plant, to the Company In the process of liquidation The Company has the power to govern those companies. 2 Basis of preparation of the interim financial statements 2.1 Statement of compliance The interim financial statements are prepared on a condensed basis in accordance with Thai Accounting Standard No. 34 (revised 2009) Interim Financial Reporting; including related guidelines promulgated by the Federation of Accounting Professions ( FAP ); applicable rules and regulations of the Thai Securities and Exchange Commission. The interim financial statements are prepared to provide an update on the financial statements for the year ended 31 December They do not include all of the financial information required for full annual financial statements but focus on new activities, events and circumstances to avoid repetition of information previously reported. Accordingly, these interim financial statements should be read in conjunction with the financial statements for the year ended 31 December The Group has early adopted International Accounting Standard No. 41 Agriculture resulted in change in the Group s accounting policy. The effects of the change are disclosed in note 3 to the interim financial statements. 30

14 Except for the change in accounting policy referred to above, accounting policies and methods of computation applied in these interim financial statements are consistent with those applied in the financial statements for the year ended 31 December Presentation currency The interim financial statements are prepared and presented in Thai Baht. All financial information presented in Thai Baht has been rounded in the notes to the interim financial statements to the nearest million Baht unless otherwise stated. 2.3 Use of judgements and estimates The preparation of interim financial statements in conformity with Thai Financial Reporting Standards requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. In preparing these interim financial statements, the judgements made by management in applying the Group s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements for the year ended 31 December 2011, including the change derived from the early adoption of International Accounting Standard No. 41 Agriculture. 3 Changes in accounting policy Accounting for biological assets From 1 January 2012, the Group has early adopted International Accounting Standards ( IAS ) No. 41 Agriculture which has been applied retrospectively in accordance with the transitional provisions of Thai Accounting Standard No. 8 (revised 2009) Accounting Policies, Changes in Accounting Estimates and Errors. New accounting policy Biological assets are measured at its fair value less costs to sell, except for the case where the fair value cannot be measured reliably, they are measured at its cost less accumulated depreciation and impairment losses. Gains or losses on changes in fair value less costs to sell are recognised in the statement of income. Biological assets - breeding pigs are separately presented under the caption Non-current assets and other biological assets are presented under the caption Current assets in the statement of financial position. Previous accounting policy Prior to the year 2012, the Group s biological assets were presented under the caption Inventories and measured at the lower of average cost and net realisable value. Breeding pigs, chickens, ducks and others, and milking cows were measured at cost less amortisation. 31

15 The impact on the financial statements for the periods 2012 and 2011 was as follows: Consolidated financial statements 1 January 31 March 1 January Separate financial statements 1 January 31 March 1 January Statement of financial position Decrease in inventories (14,441) (12,362) (11,960) (2,663) (2,551) (2,370) Increase in biological assets - Current 12,514 10,651 10,216 2,516 2,430 2,255 - Non-current 2,120 1,843 1, Increase in investments in associates Increase in deferred tax liabilities (44) (40) (32) (4) (2) (4) Decrease in other components of equity Increase in retained earnings Consolidated Separate financial statements financial statements 31 March 31 March 31 March 31 March Statement of income for the three-month period ended 31 March Increase in gain (loss) on changes in fair value of biological assets (55) 25 (10) (5) Increase in share of profit (loss) of associates (34) Increase (decrease) in profit (loss) before income tax expense (89) 205 (10) (5) (Increase) decrease in income tax expense 14 (8) 2 2 Increase (decrease) in profit for the year (75) 197 (8) (3) Increase (decrease) in basic earnings per share (in Baht) (0.01)

16 4 Businesses combinations - by share acquisition 4.1 Share acquisition of C.P. Pokphand Company Limited At the extraordinary shareholders meeting of the Company held on 18 January 2012, the Company s shareholders approved the Company and a subsidiary, CPF Investment Limited ( CPFI ) (together referred to the buyers ) to buy shares of C.P. Pokphand Company Limited ( CPP ) whose shares are listed in the Stock Exchange of HongKong. The Company and the subsidiary will buy not exceeding 18,792,774,153 shares by HK Dollar 0.9 per share from 3 shareholders (the connected parties), Orient Success International Limited, Worth Access Trading Limited and CPI Holding Company Limited (together referred to the sellers ). The buyers and sellers agreed to calculate or make the payments in U.S. Dollar, totaling not exceeding U.S. Dollar 2,174 million or approximately Baht billion. Total payment of CPP shares consist of: (1) In part of the Company valued approximately U.S. Dollar 683 million or approximately Baht billion are paid in the amount not exceeding the Company s incremental 694,004,106 ordinary shares at Baht 30 per share; and (2) In part of CPFI valued approximately U.S. Dollar 1,491 million or approximately Baht billion are paid by cash. The principal businesses of CPP consist of: (1) Operating in animal feed business which is operated through its subsidiaries in China; and (2) Integrated livestock and aquaculture businesses in Vietnam which is operated through C.P. Vietnam Corporation ( CPV ), through an indirect subsidiary owned 70.82% shareholding. The Group obtained the control in CPP resulting from the transfer of 9,051,872,450 ordinary shares (equal to 53.28% of the total number of voting share capital) and preferred shares of 3,261,077,748 shares on 20 January 2012 ( Purchase date ). The Group acquired the remaining of ordinary shares and preferred shares of 3,179,283,334 shares (equal to 18.72% of the total number of voting share capital) and 3,300,540,621 shares respectively on 8 March The proportionate ownership of CPP group of companies is considered from the number of paid-up ordinary and preferred shares totaling 24,685,370,746 shares (divided into the ordinary shares of 16,987,835,710 shares and preferred shares of 7,697,535,036 shares). The voting right is considered from the total number of paid-up ordinary shares of 16,987,835,710 shares. The details are as follows: Number of shares held by the Group Ownership interest Voting rights (shares) (%) (%) Ordinary shares 12,231,155, Preferred shares (1) 6,561,618, Total 18,792,774, (1) Preferred shares have no voting rights, but may receive a dividend on the same basis as ordinary shares. The total holding of the Group equals to 85.24% of the total number of paid-up preferred shares of CPP. 33

17 The Group has applied Thai Financial Reporting Standards ( TFRS ) No. 3 (revised 2009) Business Combinations to recognise the business combination transactions. The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired and liabilities assumed at the acquisition date: Consideration transferred (Unit:Million Baht) Fair value Cash 46,959 Issue of ordinary shares (694,004,106 ordinary shares) 24,290 Total 71,249 The fair value of the Company s issued ordinary shares of 694,004,106 shares was based on the listed share price of the Company ( Closing price ) at 20 January 2012 at the price of Baht 35 per share. The difference between the agreed share value and the fair value is Baht 3,470 million, which the Company recorded this difference in the caption Other premium in the statement of financial position as at 31 March Identifiable assets acquired and liabilities assumed (Unit:Million Baht) Fair value Current assets 35,051 Property, plant and equipment 19,095 Non-current assets 18,752 Borrowings from related companies (395) Borrowings from financial institutions (15,892) Current and non-current liabilities (16,665) Net assets 39,946 Non-controlling interests of the acquiree (based on their proportionate interest in the recognised amount of the identifiable asset and liabilities of the acquiree) (12,449) Group s previously held equity interest in CPV (12,184) Goodwill 55,936 Consideration transferred 71,249 The fair value of the identifiable assets acquired and the liabilities assumed and allocation of acquisition-date fair value is calculated by using independent appraisers. The factors contributing to the goodwill are the high potential from the business base expansion into China and Vietnam and the synergy benefits from the exchange of knowledge and skills among personel which increases the operating efficiency of the Group. Moreover, increased centralisation will create economies of scale, which in turn generates cost efficiency, especially in raw materials purchase. Goodwill from the business combination will not qualify for any tax deduction. 34

18 Before the business combination, the Group had an investment in an associate (C.P. Vietnam Corporation ( CPV )), and owned directly 29.18% shareholding. Since CPV was the indirect subsidiary of CPP (the total holding equaled 70.82%), the Group had to measure the fair value of the interest in CPV before the business combination as at the date of acquisition. The measurement resulted in a gain which is recognised as Gain on changes in fair value of investments in associate in the statement of income for the three-month period ended 31 March Details are as follows: Fair value of existing interest in CPV before the business combination at the acquisition date 12,184 Less investment in CPV accounted for equity method at the acquisition date (2,724) Transferred other components in equity to the consolidated statement of income (787) Gain on changes in fair value of investments in associates 8,673 The consolidated statement of income for the three-month period ended 31 March 2012 include operation results of CPP and its subsidiaries for the period from 20 January 2012 to 31 March Revenue from the sale of goods and profit for the period are as follows: For the period from 20 January 2012 to 31 March 2012 Revenue from sale of goods 23,371 Profit for the period attributable to equity holders of the Company 890 If the acquisition had occurred on 1 January 2012, management estimates that revenue from sale of goods and profit for three-month period ended 31 March 2012 would have been as follows: For the three-month period ended 31 March 2012 Revenue from sale of goods 84,116 Profit for the period attributable to equity holders of the Company 12, Share acquisition of Markin Jernih Sdn. Bhd. At the Company s Board of Directors meeting held on 29 December 2011, the Company s Board of Directors approved a resolution for Charoen Pokphand Foods (Malaysia) Sdn. Bhd., a 99.99% owned indirect subsidiary, to buy shares of Makin Jernih Sdn. Bhd. ( MJSB), a listed company in Malaysia, of 33 million shares (equal to 100%) from MKH Berhad, totaling RM 64 million. The principal business of MJSB is investing in shares of other companies. Recently MJSB has 100% investments of issued and paid-up share capital of the following 3 companies: 1) Chau Yang Farming Sdn. Bhd.; main business is livestock farming. 2) Tip Top Meat Sdn. Bhd.; main business is swine slaughter. 3) AA Meat Sdn. Bhd.; main business is retail in swine and relevant products. 35

19 The Group has applied TFRS No. 3 (revised 2009) Business Combinations to recognise the business combination transactions. The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired and liabilities assumed at the acquisition date: Consideration transferred Fair value Cash 667 Total 667 Identifiable assets acquired and liabilities assumed Fair value Current assets 128 Property, plant and equipment 543 Other non-current assets 188 Borrowings from financial institutions (55) Current and non-current liabilities (180) Total identifiable net assets 624 Goodwill 43 Consideration transferred 667 The factors that contributed to goodwill include the potential to expand its integrated swine business in Malaysia. Moreover, the swine abattoir uses modern technology with high standard, and it is the only one private abattoir approved by the Malaysian Authorities. Goodwill from the business combination will not qualify for any tax deduction. The consolidated statement of income for the three-month period ended 31 March 2012 include operation results of MJSB and its subsidiaries for the period from 16 January 2012 to 31 March Revenue from the sale of goods and profit for the period are as follows: For the period from 16 January 2012 to 31 March 2012 Revenue from sale of goods 106 Profit for the period attributable to equity holders of the Company 6 If the acquisition had occurred on 1 January 2012, management estimates that revenue from sale of goods and profit for three-month period ended 31 March 2012 would have no significant impact on the consolidated financial statements for the three-month period ended 31 March

20 5 Related party transactions Related parties are those parties considered to be related to the Group. Related parties have the ability, directly or indirectly, to control the Group or exercise significant influence over the Group in making financial and operating decisions or where the Group and parties are subject to common control or common significant influence. The pricing policies for particular types of transactions are explained further below: Transactions Sale of goods Purchase of raw material and goods Purchase and sale of property, plant and equipment Purchase and sale of investments Interest income/interest expense Dividend income Rental and service fees Technical service fees Insurance premium Trademark license fee Other income/other expenses Pricing policies The price list of the Group The price list of the suppliers Fair value Fair value Source of fund cost plus fund management expenses Right to receive dividends Standard rates as specified by the lessors or service providers Rate per quantity of feed production/rate per sale value of animal feed Standard rates as specified by the insurers Rate per sales value under trademark Standard service rates as specified by the service providers 5.1 Significant transactions with related parties for the three-month periods ended 31 March 2012 and 2011 (a) Consolidated Separate financial statements financial statements Revenues Subsidiaries Sale of goods - - 7,359 5,798 Dividend income Interest income Rental, service and other income Associates, jointly-controlled entities and related companies Sale of goods 4,747 2, Interest income Rental, service and other income Software application income Training and seminar income Gain from sale of investments (b) Expenses and others Major shareholder Purchase of raw materials and goods 2,145 1,

21 Consolidated Separate financial statements financial statements (b) Expenses and others (Continued) Technical service fees Trademark license fees Subsidiaries Purchase of raw materials and goods - - 3,863 2,587 Software application fees Rental and service fees Training and seminar fees Interest and other expenses Associates, jointly-controlled entities and related companies Purchase of raw materials and goods 5,318 2, Rental and service fees Construction costs of buildings, structures and others Insurance premium Purchase of equipment and others Software application fees Trademark license fees Other expenses Balances with related parties as at 31 March 2012 and 31 December Accounts receivable - trade and others Consolidated Separate financial statements financial statements 31 March 31 December 31 March 31 December Subsidiaries C.P. Merchandising Co., Ltd ,317 1,212 CPF (Thailand) Public Company Limited CP Foods (UK) Limited Bangkok Produce Merchandising Public Company Limited CPF Food Trading Co., Ltd CPF Trading Co., Ltd C.P. Food Products, Inc

22 CPF Europe S.A

23 5.2.1 Accounts receivable - trade and others (continued) Consolidated Separate financial statements financial statements 31 March 31 December 31 March 31 December CPF Premium Foods Co., Ltd Charoen Pokphand Foods (Overseas) LLC CPF Tokyo Co., Ltd CPF Food Products Co., Ltd Charoen Pokphand Northeastern Public Company Limited B.P. Food Products Co., Ltd Bangkok Agro-Industrial Products Public Company Limited C.P. Agro-Industry Co., Ltd Other Total - - 3,536 3,731 Associates and jointlycontrolled entities CP ALL Public Company Limited Counter Service Co., Ltd C.P. Retailing and Marketing Co., Ltd C.P. Aquaculture (India) Private Limited Beijing Chia Tai Feedmill Co., Ltd C.P. Cambodia Co., Ltd Henan East Chia Tai Co., Ltd Allianz C.P. General Insurance Co., Ltd Other Total 1,444 1, Related companies Chia Tai Animal Husbandry Investment (Beijing) Co., Ltd. 1, Charoen Pokphand Intertrade Singapore (Pte) Ltd Alliance C.P. General Insurance Co., Ltd

24 5.2.1 Accounts receivable - trade and others (continued) Consolidated Separate financial statements financial statements 31 March 31 December 31 March 31 December Perfect Companion Group Co., Ltd C.P. Consumer Products Co., Ltd Beijing Chia Tai Poultry Tech Co., Ltd Yichang Chia Tai Animal Husbandry Co., Ltd Farm Pichit Thai Livestock Co., Ltd Shanghai Lotus Supermarket Chain Store Co., Ltd Advance Pharma Co., Ltd Chester's Food Co., Ltd Guangdong Zhanjiang Chia Tai Poultry Industry Co., Ltd Nantong Chia Tai Livestock & Poultry Co., Ltd Heilongjiang Chia Tai Enterprise Co., Ltd GuangXi C.P. Livestock Co., Ltd Tacham Farm Co., Ltd Chia Tai Aquaculture (Zhuhai) Co., Ltd Charoen Pokphand Intertrade South Africa (Pty) Ltd Chia Tai Food Product (Shanghai) Co., Ltd Tacham Agriculture- Industrial Co., Ltd Quinhuangdao Chia Tai Co., Ltd Other Total 3, Grand total 4,553 2,404 3,846 4,107 41

25 5.2.2 Short-term loans Consolidated financial statements Outstanding balance 31 March 31 December Average balance Jointly-controlled entities Yunnan ECI-Metro Engineering Machinery Services Co., Ltd Beijing Chia Tai Feedmill Co., Ltd Jilin Chia Tai Enterprise Co., Ltd Total Related company Yiwu Jin Heng Yuan Investments 22-7 Co., Ltd. Total 22-7 Grand total Separate financial statements Outstanding balance 31 March 31 December Average balance Subsidiaries CPF (Thailand) Public Company Limited 7,908-5,405 C.P. Merchandising Co., Ltd. 3,410 2,100 2,537 CPF IT Center Co., Ltd CPF Investment Limited ,454 Charoen Pokphand Foods (Overseas) LLC C.P. Aquaculture (Beihai) Co., Ltd C.P. Aquaculture (Hainan) Co., Ltd C.P. Aquaculture (Dongfang) Co., Ltd C.P. Food Products, Inc Bangkok Food Products Co., Ltd. - 2, Bangkok Agro-Industrial Products Public Company Limited - 1, CPF Food Products Co., Ltd. - 1, Charoen Pokphand Industry Co., Ltd. - 1, Charoen Pokphand Northeastern Public Company Limited Rajburi Foods Co., Ltd B.P. Food Products Co., Ltd C.P.Agro-Industry Co., Ltd International Pet Food Co., Ltd CPF Training Center Co., Ltd Total 12,432 11,221 15,006 The Company computes the average movement from the outstanding balances of short-term loans at the end of each month excluding accrued interest income. 42

26 5.2.3 Accrued interest income Separate financial statements 31 March 31 December Subsidiaries Investment trading transactions The Group invested in related companies as disclosed in note 4 to the financial statements. During the first quarter of 2012, the Group and the Company sold the investments in an associate to Charoen Pokphand Group Company Limited, the major shareholder, amounting Baht 94 million and Baht 69 million, respectively. The Company had a gain on sale of investments in the consolidated and separate financial statements amounting to Baht 4 million and Baht 15 million respectively Long-term loans Separate financial statements Outstanding balance 31 March 31 December Average balance Subsidiaries CPF (Thailand) Public Company Limited 3,290-2,280 Charoen Pokphand Foods (Overseas) LLC. 1,548 1,555 1,551 Bangkok Agro-Industrial Products Public Company Limited - 1, Bangkok Food Products Co., Ltd. - 1, Charoen Pokphand Northeastern Public Company Limited CPF Investment Limited Charoen Pokphand Industry Co., Ltd B.P. Food Products Co., Ltd Total 4,838 5,388 5,196 Less current portion (1,040) (1,323) Net 3,798 4,065 The Company computes the average movement from the outstanding balances of long-term loans at the end of each month excluding accrued interest income. 43

27 5.2.6 Accounts payable - trade and others Consolidated Separate financial statements financial statements 31 March 31 December 31 March 31 December Major shareholder Charoen Pokphand Group Company Limited Subsidiaries Bangkok Produce Merchandising Public Company Limited CPF (Thailand) Public Company Limited CPF IT Center Co., Ltd CPF Training Center Co., Ltd C.P. Vietnam Corporation Bangkok Food Products Co., Ltd CPF Food Products Co., Ltd Bangkok Agro-Industrial Products Public Company Limited Charoen Pokphand Northeastern Public Company Limited Rajburi Foods Co., Ltd B.P. Food Products Co., Ltd Other Total Associates Jilin Chia Tai Enterprise Co., Ltd C.P. Retailing and Marketing Co., Ltd Beijing Chia Tai Feedmill Co., Ltd C.P. Cambodia Co., Ltd CP All Public Company Limited C.P. Vietnam Corporation Other Total

28 5.2.6 Accounts payable - trade and others (continued) Consolidated Separate financial statements financial statements 31 March 31 December 31 March 31 December Related companies Chia Tai Animal Husbrandry Investment (Beijing) Co., Ltd C.P. Trading (China) Co., Ltd Kasetphand Industry Co., Ltd C.P. Poly-Industry Co., Ltd K.S.P. Equipment Co., Ltd CNC International Co., Ltd Dynamic Transport Co., Ltd Shenyang Chia Tai Poultry Co., Ltd True Leasing Co., Ltd Jilin Deda Co., Ltd C.P. Intertrade Co., Ltd PK Agro-Industrial Products (M) Sdn., Bhd Tacham Agriculture - Industrial Company Limited Advance Pharma Co., Ltd C.P. Packaging Industry Co., Ltd C.P. Interfood (Thailand) Co., Ltd Qingdao Chia Tai Co., Ltd WuHan Chia Tai Food Co., Ltd Chia Tai (China) Agro- Industrial Ltd Super Safe Service Co., Ltd C. P. Food Store Co., Ltd Yannan Chia Tai Seed Co., Ltd Charoen Pokphand Enterprise Co., Ltd True Money Co., Ltd CPPC Public Company Limited Yongan Chia Tai Co., Ltd Other Total 1,

29 Grand total 1,904 1,101 1,027 1,025 46

30 5.2.7 Short-term borrowings Consolidated financial statements Outstanding balance 31 March 31 December Average balance Jointly-controlled entities Beijing Chia Tai Feedmill Co., Ltd Handan Chia Tai Feed Co., Ltd Jilin Chia Tai Enterprise Co., Ltd. 8-3 Total Related company Vinasiam Bank Total Grand total Separate financial statements Outstanding balance 31 March 31 December Average balance Subsidiary Klang Co., Ltd Total The Company computes the average movement from the outstanding balances of short-term borrowings at the end of each month excluding accrued interest expense Long-term loans Consolidated financial statements Outstanding balance 31 March 31 December Average balance Related company Vinasiam Bank Total The Company computes the average movement from the outstanding balances of long-term borrowings at the end of each month excluding accrued interest expense. 47

31 5.3 Balances and interest rates Balances and interest rates as at 31 March 2012 and 31 December 2011 were as follows: Consolidated/Separate financial statements Average Balance with Balance with interest rate fixed interest rate floating interest rate (%) March December March December March December Short-term loans to subsidiaries ,117 10, Short-term loans to jointlycontrolled entities and related companies Long-term loans to subsidiaries 4,838 5, Short-term borrowings from subsidiary Short-term borrowings from jointlycontrolled entities and related companies Long-term borrowings from related companies

32 5.4 Key management personnel compensations Key management personnel compensations consist of: Consolidated Separate financial statements financial statements For the three-month period ended 31 March Short-term employee benefits Post-employment under defined benefit plans Total As at 31 March Employee benefit obligations Total Commitments As at 31 March 2012 and 31 December 2011 the Group had commitments with related parties as follows: Capital commitments Consolidated Separate financial statements financial statements 31 March 31 December 31 March 31 December Contracted but not provided for Mainly represents construction contracts of buildings and structures and purchase of machinery and others Total

33 5.5.2 Commitments under operating lease agreements Consolidated Separate financial statements financial statements 31 March 31 December 31 March 31 December Within one year Over one year but within five years 1,140 1, Over five years Total 2,019 2, The Company and certain subsidiaries had lease agreements with related parties covering office premises (including related facilities service agreement), land, farms and vehicles for periods of 1 to 10 years, expiring during 2012 to Significant agreements As at 31 March 2012 the Group had the following significant agreements with related parties: Technical service agreements The Company and certain subsidiaries had technical service agreements with the major shareholder, Charoen Pokphand Group Company Limited ( CPG ). Under the terms of the agreements, CPG agrees to research and develop the raw material ingredients for the production of animal feeds for the Company and subsidiaries. In this regard, the Company and subsidiaries are committed to pay the technical service fee, which is calculated from the feed production quantity dependent upon the types of feed as stipulated in the agreements, to CPG. The minimum service fee ranges from Baht 0.1 million to Baht 1.3 million per month. These agreements shall be in effect starting from 1 July 2007 to 30 June The Company and subsidiaries have extended the agreements for an additional period until 30 June 2012 with the same conditions and fee rates. In addition, certain foreign subsidiaries had agreements to obtain the technical service assistance relating to animal feed manufacturing from CPG. The foreign subsidiaries are committed to pay service fees to CPG in accordance with the terms and conditions stipulated in the agreements Trademark agreements The Company and certain subsidiaries had trademark agreements with the major shareholder, Charoen Pokphand Group Company Limited ( CPG ), for the right to use trademark. In this regard, the Company and subsidiaries are committed to pay the trademark license fees to CPG at the rates of 0.2% and 0.4% of the sale value of each product as stipulated in the agreements. These agreements shall be in effect starting from 1 January 2009 to 31 December The Company and subsidiaries have extended the agreements for an additional period until 30 June 2012 with the same conditions and fee rates. 50