Interim and Review Report of Certified Public Accountant For the three-month and nine-month periods ended 30 September 2011
Review Report of Certified Public Accountant To the Board of Directors of Charoen Pokphand Foods Public Company Limited I have reviewed the accompanying consolidated and separate statements of financial position as at 30 September 2011 and the related statements of income and comprehensive income for the three-month and nine-month periods ended 30 September 2011 and 2010, and the related statements of changes in equity and cash flows for the nine-month periods ended 30 September 2011 and 2010 of Charoen Pokphand Foods Public Company Limited and its subsidiaries, and of Charoen Pokphand Foods Public Company Limited respectively. The Company s management is responsible for the correctness and completeness of information presented in these. My responsibility is to issue a report on these financial statements based on my reviews. I did not review the of certain foreign subsidiaries and associates included in the consolidation. The of those subsidiaries reflect total assets of Baht 24,755 million as at 30 September 2011; and total revenues for the three-month and nine-month periods ended 30 September 2011 of Baht 14,430 million and Baht 40,335 million respectively (2010: Baht 13,156 million and Baht 37,934 million respectively). The carrying value of the investments in those foreign associates at 30 September 2011 was Baht 4,340 million and the equity in net profits from investments in those associates for the three-month and nine-month periods ended 30 September 2011 were Baht 415 million and Baht 966 million respectively (2010: Baht 121 million and Baht 405 million respectively). The of the foreign subsidiaries and associates were reviewed by other auditors whose reports have been furnished to me and my report, insofar as it relates to the amounts included for those foreign subsidiaries and associates, is based solely on the reports of the other auditors. I conducted my reviews in accordance with the auditing standard on review engagements. This Standard requires that I plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit in accordance with generally accepted auditing standards. I have not performed an audit and, accordingly, I do not express an audit opinion on the reviewed. Based on my reviews and the reports of the other auditors, as referred to in the first paragraph, nothing has come to my attention that causes me to believe that the referred to above are not presented fairly, in all material respects, in accordance with Financial Reporting Standards. As explained in notes 2 and 3 to the interim, during the three-month and nine-month periods ended 30 September 2011 the Company has adopted certain new and revised financial reporting standards for preparing and presenting of the interim for the three-month and nine-month periods ended 30 September 2011. The interim for the three-month and nine-month periods ended 30 September 2010, which are included in the accompanying for comparative purposes, have been restated accordingly. 1
I have previously audited the consolidated and separate for the year ended 31 December 2010 of Charoen Pokphand Foods Public Company Limited and its subsidiaries, and of Charoen Pokphand Foods Public Company Limited respectively, in accordance with generally accepted auditing standards. These include the of certain foreign subsidiaries and associates which had been audited by other auditors. Based on my audit and the reports of the other auditors, I expressed an unqualified opinion on those in my report dated 25 February 2011. As explained in notes 2 and 3 to the interim, those have been restated consequent to the adoption of certain new and revised financial reporting standards. I have audited the adjustments that were applied to the restatement of those and in my opinion those adjustments are appropriate and have been properly applied. Other than the audit of those adjustments, I have not performed any auditing procedures since that date. The consolidated and separate statements of financial position as at 31 December 2010, which are included in the accompanying for comparative purposes, are components of those restated. (Charoen Phosamritlert) Certified Public Accountant Registration No. 4068 KPMG Phoomchai Audit Ltd. Bangkok 9 November 2011 2
Statements of financial position As at 30 September 2011 and 31 December 2010 (Unit: Thousand Baht) Assets Note 30 September 31 December 30 September 31 December Current assets 2011 2010 2011 2010 (Unaudited) (Restated) (Unaudited) (Restated) Cash and cash equivalents 8,703,909 7,761,006 4,720,139 3,785,847 Accounts receivable - trade and others 4, 5 15,392,038 15,384,929 7,327,121 7,766,188 Short-term loans to subsidiaries 4 - - 23,037,745 19,518,990 Current portion of long-term loans to subsidiaries 4 - - 1,755,679 1,474,770 Inventories 4 34,453,523 33,862,996 7,849,906 7,976,891 Accrued dividend income from subsidiaries 4 - - 354,239 1,708,442 Advance payments for purchase of goods 239,645 458,064 39 - Prepaid expenses 591,415 430,281 183,178 154,118 Other current assets 4 1,846,791 1,074,150 543,287 117,106 Total current assets 61,227,321 58,971,426 45,771,333 42,502,352 The accompanying notes are an integral part of these. 3
Statements of financial position As at 30 September 2011 and 31 December 2010 (Unit: Thousand Baht) Assets (Continued) Note 30 September 31 December 30 September 31 December Non-current assets 2011 2010 2011 2010 (Unaudited) (Restated) (Unaudited) (Restated) Available-for-sale investments 6 1,327,442 1,373,940 - - Investments in subsidiaries 7 - - 21,924,746 21,080,396 Investments in associates 8 22,334,478 14,601,277 783,021 289,941 Investments in related companies 9 1,319,975 844,384 426,907 143,631 Long-term loans to subsidiaries 4 - - 4,460,338 5,904,308 Investment properties 3, 10 909,893 893,490 135,975 88,329 Property, plant and equipment 4, 11 49,628,933 47,141,680 18,388,162 17,955,630 Goodwill 442,457 441,916 - - Other intangible assets 435,342 430,514 52,557 44,839 Restricted deposits at financial institutions 94,323 159,818 - - Deferred tax assets 1,868,405 700,497 588,327 197,238 Other non-current assets 548,400 533,529 84,422 69,791 Total non-current assets 78,909,648 67,121,045 46,844,455 45,774,103 Total assets 140,136,969 126,092,471 92,615,788 88,276,455 The accompanying notes are an integral part of these. 4
Statements of financial position As at 30 September 2011 and 31 December 2010 (Unit: Thousand Baht) Liabilities and equity Note 30 September 31 December 30 September 31 December Current liabilities Overdrafts and short-term borrowings 2011 2010 2011 2010 (Unaudited) (Restated) (Unaudited) (Restated) from financial institutions 12,237,653 10,050,702 16,992 5,836 Accounts payable - trade and others 4, 12 10,052,008 9,706,929 3,167,587 3,137,309 Short-term borrowings from subsidiary 4 - - 100,000 49,000 Current portion of long-term debts 1,982,973 8,088,134 1,400,000 7,600,000 Accrued expenses 1,945,528 1,873,053 437,307 559,268 Income tax payable 1,555,425 1,203,304 68,222 - Other current liabilities 3,729,641 1,904,477 1,515,080 700,735 Total current liabilities 31,503,228 32,826,599 6,705,188 12,052,148 Non-current liabilities Long-term debts 37,700,913 28,510,544 36,300,000 27,700,000 Provisions and others 65,559 64,480 - - Deferred tax liabilities 2,633,075 2,602,133 307,010 284,827 Employee benefit obligations 3, 13 4,645,582 1,145,147 1,454,132 128,355 Total non-current liabilities 45,045,129 32,322,304 38,061,142 28,113,182 Total liabilities 76,548,357 65,148,903 44,766,330 40,165,330 The accompanying notes are an integral part of these. 5
Statements of financial position As at 30 September 2011 and 31 December 2010 (Unit: Thousand Baht) Liabilities and equity (Continued) Note 30 September 31 December 30 September 31 December Equity Share capital 2011 2010 2011 2010 (Unaudited) (Restated) (Unaudited) (Restated) Authorised share capital 8,206,664 8,206,664 8,206,664 8,206,664 Issued and paid-up share capital 7,519,938 7,519,938 7,519,938 7,519,938 Treasury shares (2,855,124) (2,855,124) (1,628,825) (1,628,825) Additional paid-in capital Premium on ordinary shares 16,436,492 16,436,492 16,478,865 16,478,865 Retained earnings Appropriated Legal reserve 820,666 820,666 820,666 820,666 Treasury shares reserve 1,628,825 1,628,825 1,628,825 1,628,825 Unappropriated 38,146,508 34,582,386 22,436,186 22,698,182 Other components of equity (942,367) (277,307) 593,803 593,474 Total equity attributable to equity holders of the Company 60,754,938 57,855,876 47,849,458 48,111,125 Non-controlling interests 2,833,674 3,087,692 - - Total equity 63,588,612 60,943,568 47,849,458 48,111,125 Total liabilities and equity 140,136,969 126,092,471 92,615,788 88,276,455 The accompanying notes are an integral part of these. 6
Statements of income For the three-month periods ended 30 September 2011 and 2010 (Unaudited) (Unit: Thousand Baht) Note 2011 2010 2011 2010 (Restated) (Restated) Income 4 Revenue from sale of goods 54,446,292 50,295,941 18,508,152 17,055,371 Interest income 59,466 29,044 510,578 332,537 Dividend income 7,869 4,843 351,402 1,407,253 Net foreign exchange gain 20,566 223,441 6,650 39,084 Gain on sales of investment 167,924 - - - Other income 245,955 509,039 47,376 70,077 Total income 54,948,072 51,062,308 19,424,158 18,904,322 Expenses 4 Cost of sale of goods 44,707,564 41,949,551 15,066,184 14,145,049 Selling expenses 1,750,277 1,582,315 217,576 184,088 Administrative expenses 2,721,390 2,425,509 896,797 697,776 Key management personnel compensations 113,675 162,913 51,023 71,191 Finance costs 652,305 399,634 421,072 360,774 Total expenses 49,945,211 46,519,922 16,652,652 15,458,878 Share of profit of associates 1,123,222 606,872 - - Profit before income tax expense 6,126,083 5,149,258 2,771,506 3,445,444 Income tax expense 1,043,322 777,523 82,917 348,420 Profit for the period 5,082,761 4,371,735 2,688,589 3,097,024 Profit for the period attributable to: Equity holders of the Company 5,086,141 4,283,599 2,688,589 3,097,024 Non-controlling interests (3,380) 88,136 - - Profit for the period 5,082,761 4,371,735 2,688,589 3,097,024 Basic earnings per share (in Baht) 15 0.76 0.64 0.38 0.44 The accompanying notes are an integral part of these. 7
Statements of comprehensive income For the three-month periods ended 30 September 2011 and 2010 (Unaudited) (Unit: Thousand Baht) Note 2011 2010 2011 2010 (Restated) (Restated) Profit for the period 5,082,761 4,371,735 2,688,589 3,097,024 Other comprehensive income Revaluation differences on assets 8,282 - - - Equity in associates (1,051) (42,878) - - Fair value changes on investments (134,531) 367,059 - - Currency translation differences (937,359) (530,607) - - Other comprehensive income before income tax income (1,064,659) (206,426) - - Income tax income (39,199) (137,438) - - Other comprehensive income for the period, net of income tax income (1,025,460) (68,988) - - Total comprehensive income for the period 4,057,301 4,302,747 2,688,589 3,097,024 Total comprehensive income attributable to: Equity holders of the Company 4,133,500 4,302,828 2,688,589 3,097,024 Non-controlling interests (76,199) (81) - - Total comprehensive income for the period 4,057,301 4,302,747 2,688,589 3,097,024 The accompanying notes are an integral part of these. 8
Statements of income For the nine-month periods ended 30 September 2011 and 2010 (Unaudited) (Unit: Thousand Baht) Note 2011 2010 2011 2010 (Restated) (Restated) Income 4 Revenue from sale of goods 153,420,445 141,766,826 49,089,893 45,243,059 Interest income 157,145 89,587 1,389,501 953,399 Dividend income 31,551 30,971 3,230,149 4,622,858 Net foreign exchange gain 13,473 773,020 23,997 194,772 Gain on sales of investment 860,740 209,214 - - Gain on liquidation of subsidiary - - 162,096 - Other income 743,943 888,478 139,406 199,843 Total income 155,227,297 143,758,096 54,035,042 51,213,931 Expenses 4 Cost of sale of goods 126,642,952 117,662,264 40,608,929 38,469,328 Selling expenses 5,278,440 4,758,471 649,208 607,464 Administrative expenses 7,909,262 7,051,932 2,524,652 1,981,122 Key management personnel compensations 422,855 536,031 184,144 222,762 Finance costs 1,730,130 1,346,590 1,296,693 1,073,800 Total expenses 141,983,639 131,355,288 45,263,626 42,354,476 Share of profit of associates 8 2,975,828 1,872,360 - - Profit before income tax expense 16,219,486 14,275,168 8,771,416 8,859,455 Income tax expense 2,708,385 2,567,633 80,490 700,707 Profit for the period 13,511,101 11,707,535 8,690,926 8,158,748 Profit for the period attributable to: Equity holders of the Company 13,434,291 11,510,626 8,690,926 8,158,748 Non-controlling interests 76,810 196,909 - - Profit for the period 13,511,101 11,707,535 8,690,926 8,158,748 Basic earnings per share (in Baht) 15 2.02 1.73 1.23 1.16 The accompanying notes are an integral part of these. 9
Statements of comprehensive income For the nine-month periods ended 30 September 2011 and 2010 (Unaudited) (Unit: Thousand Baht) Note 2011 2010 2011 2010 (Restated) (Restated) Profit for the period 13,511,101 11,707,535 8,690,926 8,158,748 Other comprehensive income Revaluation differences on assets (4,364) 41 470 - Equity in associates (6,819) (523,870) - - Fair value changes on investments (280,546) 432,325 - - Currency translation differences (462,666) (1,170,006) - - Other comprehensive income before income tax expense (income) (754,395) (1,261,510) 470 - Income tax expense (income) (77,412) (121,231) 141 - Other comprehensive income for the period, net of income tax expense (income) (676,983) (1,140,279) 329 - Total comprehensive income for the period 12,834,118 10,567,256 8,691,255 8,158,748 Total comprehensive income attributable to: Equity holders of the Company 12,733,957 10,546,391 8,691,255 8,158,748 Non-controlling interests 100,161 20,865 - - Total comprehensive income for the period 12,834,118 10,567,256 8,691,255 8,158,748 The accompanying notes are an integral part of these. 10
Statements of changes in equity For the nine-month periods ended 30 September 2011 and 2010 (Unaudited) Other components of equity Total equity (Unit: Thousand Baht) Issued and Premium on Treasury Unappropriated Revaluation Fair value Currency Total other attributable to Nonpaid-up Treasury ordinary Legal shares retained differences Equity changes on translation components equity holders of controlling Total Note share capital shares shares reserve reserve earnings on assets in associates investments differences of equity the Company interests equity Balance at 1 January 2010 - as previously reported 7,519,938 (2,855,124) 16,436,492 820,666 1,628,825 26,764,462 2,332,088 1,467,052 (668,000) (1,561,873) 1,569,267 51,884,526 3,094,665 54,979,191 Impact of changes in accounting policies 3 - - - - - - (159,413) - - - (159,413) (159,413) (76) (159,489) Balance at 1 January 2010 - restated 7,519,938 (2,855,124) 16,436,492 820,666 1,628,825 26,764,462 2,172,675 1,467,052 (668,000) (1,561,873) 1,409,854 51,725,113 3,094,589 54,819,702 Transactions with equity holders, recorded directly in equity Distribution to owners Dividends paid - net of dividends paid to subsidiaries (for shares held in treasury) - - - - - (6,656,117) - - - - - (6,656,117) (207,624) (6,863,741) Total distribution to owners - - - - - (6,656,117) - - - - - (6,656,117) (207,624) (6,863,741) Changes in ownership interests in subsidiaries Acquisition of non-controlling interests without a change in control - - - - - - - - - - - - (34,283) (34,283) Total changes in ownership interests in subsidiaries - - - - - - - - - - - - (34,283) (34,283) Total transactions with equity holders, recorded directly in equity - - - - - (6,656,117) - - - - - (6,656,117) (241,907) (6,898,024) Comprehensive income for the period Profit - - - - - 11,510,626 - - - - - 11,510,626 196,909 11,707,535 Other comprehensive income - - - - - - 41 (282,965) 324,871 (1,006,182) (964,235) (964,235) (176,044) (1,140,279) Total comprehensive income for the period - - - - - 11,510,626 41 (282,965) 324,871 (1,006,182) (964,235) 10,546,391 20,865 10,567,256 Balance at 30 September 2010 7,519,938 (2,855,124) 16,436,492 820,666 1,628,825 31,618,971 2,172,716 1,184,087 (343,129) (2,568,055) 445,619 55,615,387 2,873,547 58,488,934 The accompanying notes are an integral part of these. 11
Statements of changes in equity For the nine-month periods ended 30 September 2011 and 2010 (Unaudited) Other components of equity Total equity (Unit: Thousand Baht) Issued and Premium on Treasury Unappropriated Revaluation Fair value Currency Total other attributable to Nonpaid-up Treasury ordinary Legal shares retained differences Equity changes on translation components equity holders of controlling Total Note share capital shares shares reserve reserve earnings on assets in associates investments differences of equity the Company interests equity Balance at 1 January 2011 - as previously reported 7,519,938 (2,855,124) 16,436,492 820,666 1,628,825 34,582,386 2,332,129 304,724 (112,931) (2,641,816) (117,894) 58,015,289 3,087,768 61,103,057 Impact of changes in accounting policies 3 - - - - - - (159,413) - - - (159,413) (159,413) (76) (159,489) Balance at 1 January 2011 - restated; before adjusted retained earnings 7,519,938 (2,855,124) 16,436,492 820,666 1,628,825 34,582,386 2,172,716 304,724 (112,931) (2,641,816) (277,307) 57,855,876 3,087,692 60,943,568 Impact of changes in accounting policies 3 - - - - - (2,215,634) - - - 35,274 35,274 (2,180,360) (126,364) (2,306,724) Balance at 1 January 2011 - restated 7,519,938 (2,855,124) 16,436,492 820,666 1,628,825 32,366,752 2,172,716 304,724 (112,931) (2,606,542) (242,033) 55,675,516 2,961,328 58,636,844 Transactions with equity holders, recorded directly in equity Distribution to owners Dividends paid - net of dividends paid to subsidiaries (for shares held in treasury) - - - - - (7,654,535) - - - - - (7,654,535) (203,645) (7,858,180) Total distribution to owners - - - - - (7,654,535) - - - - - (7,654,535) (203,645) (7,858,180) Changes in ownership interests in subsidiaries Acquisition of non-controlling interests without a change in control - - - - - - - - - - - - (24,170) (24,170) Total changes in ownership interests in subsidiaries - - - - - - - - - - - - (24,170) (24,170) Total transactions with equity holders, recorded directly in equity - - - - - (7,654,535) - - - - - (7,654,535) (227,815) (7,882,350) Comprehensive income for the period Profit - - - - - 13,434,291 - - - - - 13,434,291 76,810 13,511,101 Other comprehensive income - - - - - - (3,055) (6,819) (203,757) (486,703) (700,334) (700,334) 23,351 (676,983) Total comprehensive income for the period - - - - - 13,434,291 (3,055) (6,819) (203,757) (486,703) (700,334) 12,733,957 100,161 12,834,118 Balance at 30 September 2011 7,519,938 (2,855,124) 16,436,492 820,666 1,628,825 38,146,508 2,169,661 297,905 (316,688) (3,093,245) (942,367) 60,754,938 2,833,674 63,588,612 The accompanying notes are an integral part of these. 12
Statements of changes in equity For the nine-month periods ended 30 September 2011 and 2010 (Unaudited) Other components of equity (Unit: Thousand Baht) Issued and Premium on Treasury Unappropriated Revaluation Fair value Total other paid-up Treasury ordinary Legal shares retained differences changes on components Total Note share capital shares shares reserve reserve earnings on assets investments of equity equity Balance at 1 January 2010 - as previously reported 7,519,938 (1,628,825) 16,478,865 820,666 1,628,825 19,221,255 600,629-600,629 44,641,353 Impact of changes in accounting policies 3 - - - - - - (7,155) - (7,155) (7,155) Balance at 1 January 2010 - restated 7,519,938 (1,628,825) 16,478,865 820,666 1,628,825 19,221,255 593,474-593,474 44,634,198 Transactions with equity holders, recorded directly in equity Distributions to owners Dividends to owners of the Company 16 - - - - - (7,048,938) - - - (7,048,938) Total distributions to owners - - - - - (7,048,938) - - - (7,048,938) Total transactions with equity holders recorded directly in equity - - - - - (7,048,938) - - - (7,048,938) Profit for the period - - - - - 8,158,748 - - - 8,158,748 Balance at 30 September 2010 7,519,938 (1,628,825) 16,478,865 820,666 1,628,825 20,331,065 593,474-593,474 45,744,008 The accompanying notes are an integral part of these. 13
Statements of changes in equity For the nine-month periods ended 30 September 2011 and 2010 (Unaudited) Other components of equity (Unit: Thousand Baht) Issued and Premium on Treasury Unappropriated Revaluation Fair value Total other paid-up Treasury ordinary Legal shares retained differences changes on components Total Note share capital shares shares reserve reserve earnings on assets investments of equity equity Balance at 1 January 2011 - as previously reported 7,519,938 (1,628,825) 16,478,865 820,666 1,628,825 22,698,182 600,629-600,629 48,118,280 Impact of changes in accounting policies 3 - - - - - - (7,155) - (7,155) (7,155) Balance at 1 January 2011 - restated; before adjust retained earnings 7,519,938 (1,628,825) 16,478,865 820,666 1,628,825 22,698,182 593,474-593,474 48,111,125 Impact of changes in accounting policies 3 - - - - - (846,643) - - - (846,643) Balance at 1 January 2011 - restated 7,519,938 (1,628,825) 16,478,865 820,666 1,628,825 21,851,539 593,474-593,474 47,264,482 Transactions with equity holders, recorded directly in equity Distributions to owners Dividends to owners of the Company 16 - - - - - (8,106,279) - - - (8,106,279) Total distributions to owners - - - - - (8,106,279) - - - (8,106,279) Total transactions with equity holders, recorded directly in equity - - - - - (8,106,279) - - - (8,106,279) Comprehensive income for the period Profit - - - - - 8,690,926 - - - 8,690,926 Other comprehensive income - - - - - - 329-329 329 Total comprehensive income for the period - - - - - 8,690,926 329-329 8,691,255 The Balance accompanying at 30 September notes are 2011 an integral part of these financial 7,519,938 statements. (1,628,825) 16,478,865 820,666 1,628,825 22,436,186 593,803-593,803 47,849,458 14
Statements of cash flows For the nine-month periods ended 30 September 2011 and 2010 (Unaudited) (Unit: Thousand Baht) Note 2011 2010 2011 2010 (Restated) (Restated) Cash flows from operating activities Profit for the period 13,511,101 11,707,535 8,690,926 8,158,748 Adjustments for Depreciation 3,421,226 3,525,978 1,511,354 1,514,484 Amortisation 60,164 51,412 5,420 3,966 Bad and doubtful debts expense (reversal of allowance for doubtful accounts) (13,739) 27,613 (2,625) 28,406 Losses on decline in value of inventories adjusted to net realisable value 11,076 15,420 1,883 2,659 Interest income (157,145) (89,587) (1,389,501) (953,399) Dividend income (31,551) (30,971) (3,230,149) (4,622,858) Finance costs 1,730,130 1,346,590 1,296,693 1,073,800 Gain on sale of investments (860,740) (209,214) - - Employee benefit obligations 376,208 69,816 111,240 - (Gain) loss on liquidation of subsidiaries - - (162,096) 19,727 Loss on impairment of investment - - - 359 (Gain) loss on sale of property, plant and equipment 1,341 1,371 4,096 (17,475) Loss on write-off of plant and equipment 20,435 9,662 7,942 5,384 Gain on sale of non-current assets held for sale (27,094) - (12,127) - Unrealised (gain) loss on exchange (141,984) 26,348 (76,985) 96,390 Share of profit of associates 8 (2,975,828) (1,872,360) - - Income tax expense 2,708,385 2,567,633 80,490 700,707 17,631,985 17,147,246 6,836,561 6,010,898 The accompanying notes are an integral part of these. 15
Statements of cash flows For the nine-month periods ended 30 September 2011 and 2010 (Unaudited) (Unit: Thousand Baht) Note 2011 2010 2011 2010 (Restated) (Restated) Cash flows from operating activities (Continued) Changes in operating assets and liabilities Accounts receivable - trade and others 176,774 (660,237) 492,444 (153,864) Inventories (892,228) (6,993,693) 125,102 (2,046,068) Other current assets (654,272) (402,326) (253,039) (99,566) Other non-current assets 23,523 (202,671) (14,631) 5,853 Accounts payable - trade and others 257,302 619,131 29,274 434,825 Other current liabilities 1,602,797 1,739,746 523,090 629,168 Employee benefit paid (64,259) - - - Income tax paid (2,512,188) (1,645,867) (23,789) (32,652) Net cash provided by operating activities 15,569,434 9,601,329 7,715,012 4,748,594 Cash flows from investing activities Interest received 151,799 86,258 1,332,570 971,578 Dividends received 1,405,521 1,047,254 4,587,189 8,920,777 Increase in short-term loans to subsidiaries - - (3,501,658) (8,948,600) Purchase of investments (6,966,183) (3,581,150) (2,036,929) (1,488,882) Sale of investments 956,544 225,150 - - Proceeds from collection on long-term receivable from related company for sale of investment - 125,201 - - Sale of non-current assets held for sale 24,419-12,127 - Decrease in long-term loans to subsidiaries - - 1,035,422 2,720,259 Purchase of property, plant and equipment (6,585,552) (3,857,497) (2,025,726) (932,453) Sale of property, plant and equipment 59,442 156,712 18,352 44,244 Purchase of other intangible assets (63,225) (36,636) (9,334) (3,497) Proceeds from liquidation of subsidiaries - - 578,319 21,847 Net cash provided by (used in) investing activities (11,017,235) (5,834,708) (9,668) 1,305,273 The accompanying notes are an integral part of these. 16
Statements of cash flows For the nine-month periods ended 30 September 2011 and 2010 (Unaudited) (Unit: Thousand Baht) Note 2011 2010 2011 2010 (Restated) (Restated) Cash flows from financing activities Interest paid (1,499,755) (1,234,409) (1,121,749) (1,026,781) Increase in short-term borrowings from financial institutions 2,433,064 2,208,730 7,060 - Increase (decrease) in short-term borrowings from subsidiaries - - 51,000 (66,500) Repayment of liabilities under finance leases (1,865) (3,423) - - Proceeds from long-term borrowings from financial institutions 1,238,842 720,775 - - Repayment of long-term borrowings from financial institutions (1,202,130) (737,850) (800,000) (400,000) Proceeds from issue of debentures 10,000,000 1,000,000 10,000,000 1,000,000 Repayment of debentures (6,800,000) (2,000,000) (6,800,000) (2,000,000) Gain on (payment of) financial transaction costs 99,523 (78,563) (6,800) (6,122) Payment of liquidated subsidiary to non-controlling interests (1) - - - Dividend paid of the Company - net of dividends paid to subsidiaries (for share held in treasury) (7,652,887) (6,652,905) (8,104,630) (7,045,726) Dividends paid to non-controlling interests (225,811) (231,050) - - Net cash used in financing activities (3,611,020) (7,008,695) (6,775,119) (9,545,129) Net increase (decrease) in cash and cash equivalents 941,179 (3,242,074) 930,225 (3,491,262) Cash and cash equivalents at beginning of period 7,754,662 10,516,115 3,780,756 7,251,039 Effect of exchange rate changes on balances held in foreign currencies (4,582) (121,127) - - Cash and cash equivalents at end of period 8,691,259 7,152,914 4,710,981 3,759,777 The accompanying notes are an integral part of these. 17
Statements of cash flows For the nine-month periods ended 30 September 2011 and 2010 (Unaudited) Supplemental disclosures of cash flows information: 1. Cash and cash equivalents These consisted of: (Unit: Thousand Baht) Note 2011 2010 2011 2010 (Restated) (Restated) Cash and cash equivalents 8,703,909 7,163,739 4,720,139 3,768,273 Overdrafts (12,650) (10,825) (9,158) (8,496) Net 8,691,259 7,152,914 4,710,981 3,759,777 2. Non-cash transactions During the nine-month period ended 30 September 2011, the Board of Directors of certain subsidiaries approved resolutions to pay interim dividends to the Company totaling Baht 2,866 million (2010: Baht 4,604 million) and the equity holders' meeting of a foreign subsidiary approved the resolution to pay annual dividends to the Company totaling Baht 351 million (2010: nil). As at 30 September 2011 the Company had accrued dividend income of Baht 354 million (2010: nil). The accompanying notes are an integral part of these. 18
Notes to the interim Note Contents 1 General information 2 Basis of preparation of the interim and new Thai Financial Reporting Standards 3 Changes in accounting policies 4 Related party transactions 5 Accounts receivable - trade and others 6 Available-for-sale investments 7 Investments in subsidiaries 8 Investments in associates 9 Investments in related companies 10 Investment properties 11 Property, plant and equipment 12 Accounts payable - trade and others 13 Employee benefit obligations 14 Segment information 15 Basic earnings per share 16 Dividends 17 Amalgamation of local subsidiaries 18 Commitments with non-related parties 19 Events after the reporting period 20 Thai Financial Reporting Standards not yet adopted 21 Reclassification of accounts 19
Notes to the interim These notes form an integral part of the. The interim were authorised for issue by the executive directors on 9 November 2011. 1 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 1987. The ultimate parent company of the Company and subsidiaries (together referred to as the Group ) is Charoen Pokphand Group Company Limited which is incorporated in Thailand. The principal businesses of 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) Livestock business comprises chicken, duck and pigs 2) 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, meat, etc. 3) Processed foods and ready meals Details of the Company s subsidiaries as at 30 September 2011 and 31 December 2010 were as follows: Country of Ownership interest Name of the entity Type of business incorporation (%) 30 September 31 December 2011 2010 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 99.44 99.44 2) Bangkok Agro-Industrial Products Public Company Limited Animal feedmill and livestock farming Thailand 99.98 99.98 3) Bangkok Food Products Co., Ltd. Animal feedmill, livestock farming and food processing plant Thailand 99.99 99.99 4) Charoen Pokphand Northeastern Public Company Limited Animal feedmill and livestock farming Thailand 99.61 99.61 20
Notes to the interim Country of Ownership interest Name of the entity Type of business incorporation (%) 30 September 31 December 2011 2010 5) Charoen Pokphand Industry Co., Ltd. Animal feedmill and livestock farming Thailand 99.99 99.99 6) CPF Food Products Co., Ltd. Broiler chicken integration Thailand 99.99 99.99 7) C.P. Agro-Industry Co., Ltd. Livestock farming Thailand 99.99 99.99 8) C.P. Merchandising Co., Ltd. Investment and international trading Thailand 99.99 99.99 9) B.P. Food Products Co., Ltd. Animal feedmill and livestock farming Thailand 99.99 99.99 10) Bangkok Farm Co., Ltd. (1) Livestock farming and processing plant Thailand 99.99 99.99 11) Rajburi Foods Co., Ltd. Animal feedmill and livestock farming Thailand 99.99 99.99 12) Universal Food and Marketing Co., Ltd. Wholesale and retail food products Thailand 99.99 99.99 13) International Pet Food Co., Ltd. Pet food production and distribution Thailand 99.99 99.99 Indirect subsidiaries 1) CPF Trading Co., Ltd. Wholesale and retail food products Thailand 99.99 99.99 2) CPF Premium Foods Co., Ltd. Food processing plant Thailand 99.99 99.99 3) CPF Logistics Co., Ltd. Transportation services Thailand 99.99 99.99 4) C.P. Food Products Co., Ltd. (2) Restaurant Thailand 99.99 99.99 5) CPF Food Trading Co., Ltd. Importer and distributor of processed The People s meat and ready meals Republic of China 100.00 100.00 6) Charoen Pokphand (Taiwan) Co., Ltd. * Importer and distributor feedstuff additives and animal vaccines Taiwan 29.17 29.17 7) 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 99.99 99.99 9) CPF Denmark A/S Importer and distributor of processed meat and ready meals Denmark 52.00 52.00 10) CPF Tokyo Co., Ltd. Importer and distributor of processed meat and ready meals Japan 99.99 99.99 11) Fusion Abbey Park Limited Importer and distributor of processed United 12) Fusion Alfrick Limited Importer and distributor of processed United 13) Fusion Bracewell Limited Importer and distributor of processed United meat and ready meals Kingdom 52.00-14) 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
Notes to the interim Country of Ownership interest Name of the entity Type of business incorporation (%) 30 September 31 December 2011 2010 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 meat and ready meals Kingdom 52.00-27) 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 meat and ready meals Kingdom 52.00-34) Fusion Grimley Limited Importer and distributor of processed United 35) Fusion Guarlford Limited Importer and distributor of processed United 36) Fusion Haddenham Limited Importer and distributor of processed United 37) Fusion Hadzor Limited Importer and distributor of processed United 38) Fusion Hallow Limited Importer and distributor of processed United 39) Fusion Harper Limited Importer and distributor of processed United meat and ready meals Kingdom 52.00-40) Fusion Hartford Limited Importer and distributor of processed United meat and ready meals Kingdom 52.00-41) Fusion Haverhill Limited 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 meat and ready meals Kingdom 52.00-45) Fusion Irvine Limited Importer and distributor of processed United meat and ready meals Kingdom 52.00-22
Notes to the interim Country of Ownership interest Name of the entity Type of business incorporation (%) 30 September 31 December 2011 2010 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 Importer and distributor of processed United 50) Fusion Lineker Limited Importer and distributor of processed United meat and ready meals Kingdom 52.00-51) 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 meat and ready meals Kingdom 52.00-54) Fusion Mountfield Limited Importer and distributor of processed United meat and ready meals Kingdom 52.00-55) Fusion Moyes Limited Importer and distributor of processed United meat and ready meals Kingdom 52.00-56) 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 meat and ready meals Kingdom 52.00-61) Fusion Reid Limited Importer and distributor of processed United meat and ready meals Kingdom 52.00-62) Fusion Richardson Limited Importer and distributor of processed United meat and ready meals Kingdom 52.00-63) Fusion Samui Limited Importer and distributor of processed United 64) Fusion Saxham Limited Importer and distributor of processed United 65) Fusion Sharp Limited Importer and distributor of processed United meat and ready meals Kingdom 52.00-66) Fusion Sheedy Limited Importer and distributor of processed United meat and ready meals Kingdom 52.00-67) Fusion Soham Limited Importer and distributor of processed United 68) Fusion Southall Limited Importer and distributor of processed United meat and ready meals Kingdom 52.00-69) Fusion Stevens Limited Importer and distributor of processed United meat and ready meals Kingdom 52.00-70) Fusion Stowmarket Limited Importer and distributor of processed United 23
Notes to the interim Country of Ownership interest Name of the entity Type of business incorporation (%) 30 September 31 December 2011 2010 71) Fusion Swaffham Limited 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 meat and ready meals Kingdom 52.00-76) 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 meat and ready meals Kingdom 52.00-80) Fusion Yamac Limited Importer and distributor of processed United Aquaculture business Direct subsidiaries 1) Klang Co., Ltd. (3) Shrimp processing plant Thailand 99.99 99.99 2) Seafoods Enterprise Co., Ltd. (2) Shrimp processing plant Thailand 99.99 99.99 3) Pokphand Aquatech Co., Ltd. (2) Aquatic feed production and distribution and aquaculture farm Thailand 99.99 99.99 4) C.P. Food Products, Inc. Importer and distributor of seafood United States products of America 100.00 100.00 Direct and indirect subsidiary 1) Thai Prawn Culture Center Co., Ltd. (4) Shrimp farming and processing plant Thailand - 99.90 Indirect subsidiary 1) CP Foods West, Inc. Importer and distributor of food United States products (operations wound up of America 100.00 100.00 in September 2010) Other businesses Direct subsidiaries 1) CPF Training Center Co., Ltd. Training center service provider Thailand 99.99 99.99 2) CPF IT Center Co., Ltd. Information technology service provider Thailand 99.99 99.99 Overseas operations Direct subsidiaries 1) Charoen Pokphand Foods Kenya Co., Ltd. Animal feedmill and livestock farming Kenya 99.99 99.99 24
Notes to the interim Country of Ownership interest Name of the entity Type of business incorporation (%) 30 September 31 December 2011 2010 2) Charoen Pokphand Foods Philippines Corporation 3) Charoen Pokhand Foods (Malaysia) Sdn. Bhd. (Formerly Calibre Nature (M) Sdn. Bhd.) Animal feed production and distribution and shrimp hatchery business Philippines 99.99 99.99 Investment in aquaculture integration business Malaysia 100.00 100.00 4) CPF Investment Limited Investment British Virgin Islands 100.00 100.00 5) C.P. Aquaculture (Beihai) Co., Ltd. Aquatic feed production and The People s distribution and aquaculture Republic of farming China 100.00 100.00 6) C.P. Aquaculture (Dongfang) Co., Ltd. Shrimp hatchery business The People s Republic of China 100.00 100.00 7) C.P. Aquaculture (Hainan) Co., Ltd. Aquaculture farming The People s Republic of China 100.00 100.00 Direct and indirect subsidiaries 1) Charoen Pokphand Foods (Overseas) LLC. Animal feedmill and livestock farming Russia 99.99 99.99 2) Charoen Pokphand (India) Private Limited Animal feedmill and livestock farming India 99.99 99.99 3) C.P. Standart Gida Sanayi ve Ticaret A.S. Chicken integration Turkey 100.00 100.00 Indirect subsidiaries 1) A.P.P. Enterprise, Inc. * Property lease-out Philippines 39.60 39.60 2) Arbor Acres (Taiwan) Co., Ltd. * Livestock farming Taiwan 16.21 16.21 3) Asia Aquaculture (M) Sdn. Bhd. Shrimp farming and processing plant Malaysia 100.00 100.00 4) Bright Excel Investments Limited Investment British Virgin Islands 100.00 100.00 5) C.P. Laos Co., Ltd. Animal feedmill and livestock farming Laos 99.61 99.61 6) Charoen Pokphand Enterprise (Taiwan) Co., Ltd. * Chicken integration and livestock farming Taiwan 32.41 32.41 7) Charoen Pokphand (Taiwan) Investment Limited Investment Bermuda Islands 100.00 100.00 8) Charoen Pokphand (USA), Inc. Broiler chicken integration (operations United States wound up in March 2004) of America 99.97 99.97 9) Chia Tai Lianyungang Co., Ltd. * Investment Hongkong 32.41 32.41 10) Chun Ta Investment Co., Ltd. Investment Taiwan 100.00 100.00 25
Notes to the interim Country of Ownership interest Name of the entity Type of business incorporation (%) 30 September 31 December 2011 2010 11) Coinaton Investments Limited Investment British Virgin Islands 100.00 100.00 12) CPF Agro LLC. Livestock farming Russia 99.99 99.99 13) Forward Pass Limited Investment British Virgin Islands 100.00 100.00 14) Lianyungang Chia Tai The People s Agro-industry Development Republic of Co., Ltd.* Animal feedmill China 22.69 22.69 15) New Splendid Holdings Limited Investment British Virgin Islands 100.00 100.00 16) Plenty Type Limited * Investment Cayman Islands 32.41 32.41 17) Star Feedmills (M) Sdn. Bhd. Aquatic feed production and distribution Malaysia 100.00 100.00 18) Ta Chung Investment Co., Ltd. Investment Taiwan 100.00 100.00 19) Taiwan Sizzler Co., Ltd. (2) Restaurant Taiwan 32.41 32.41 (1) Transferred the principal activity, food processing, to CPF Food Products Co., Ltd. (2) In the process of liquidation (3) Transferred the principal activities, shrimp farming and processing plant, to the Company (4) Registered the completeness of liquidation in the second quarter of 2011 * The Company has the power to govern those companies. 2 Basis of preparation of the interim and new Thai Financial Reporting Standards 2.1 Statement of compliance The interim issued for Thai reporting purposes are prepared in the Thai language. This English translation of the interim has been prepared for the convenience of readers not conversant with the Thai language. The interim are prepared on a condensed basis in accordance with Thai Accounting Standard No. 34 (revised 2009) Interim Financial Reporting; including related interpretations and guidelines promulgated by the Federation of Accounting Professions ( FAP ); applicable rules and regulations of the Thai Securities and Exchange Commission. The interim are prepared to provide an update on the for the year ended 31 December 2010. They do not include all of the financial information required for full annual but focus on new activities, events and circumstances to avoid repetition of information previously reported. Accordingly, these interim should be read in conjunction with the for the year ended 31 December 2010. The Group has applied new and revised Thai Financial Reporting Standards ( TFRS ) that have been issued during 2010 by the FAP for the preparation of the interim for the three-month and nine-month periods ended 30 September 2011. Details are as follows: 26
Notes to the interim TFRS TAS 1 (revised 2009) TAS 2 (revised 2009) TAS 7 (revised 2009) TAS 8 (revised 2009) TAS 10 (revised 2009) TAS 12 TAS 16 (revised 2009) TAS 17 (revised 2009) TAS 18 (revised 2009) TAS 19 TAS 23 (revised 2009) TAS 24 (revised 2009) TAS 27 (revised 2009) TAS 28 (revised 2009) TAS 33 (revised 2009) TAS 34 (revised 2009) TAS 36 (revised 2009) TAS 37 (revised 2009) TAS 38 (revised 2009) TAS 40 (revised 2009) TFRS 3 (revised 2009) TFRS 5 (revised 2009) Topic Presentation of Financial Statements Inventories Statement of Cash Flows Accounting Policies, Changes in Accounting Estimates and Errors Events after the Reporting Period Income Tax Property, Plant and Equipment Leases Revenue Employee Benefits Borrowing Costs Related Party Disclosures and Financial Statements Investments in Associates Earnings per Share Interim Financial Reporting Impairment of Assets Provisions, Contingent Liabilities and Contingent Assets Intangible Assets Investment property Business Combinations Non-current Assets Held for Sale and Discontinued Operations The adoption of these new and revised TFRS has resulted in changes in the Group s accounting policies. The effects of these changes are disclosed in note 3 to the interim. Except for the changes referred to above, accounting policies and methods of computation applied in these interim are consistent with those applied in the financial statements for the year ended 31 December 2010. In addition to the above new and revised TFRS, the FAP has issued during 2010 a number of other TFRS which become effective for beginning on or after 1 January 2013 and have not been adopted in the preparation of these interim. These new and revised TFRS are disclosed in note 20 to the interim. 2.2 Presentation currency The interim are presented in Thai Baht. All financial information presented in Thai Baht has been rounded in the notes to the interim to the nearest million Baht unless otherwise stated. 2.3 Use of judgements and estimates The preparation of interim in conformity with TFRS 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. 27
Notes to the interim In preparing these interim, 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 for the year ended 31 December 2010. Except for the changes principally derive from the adoption of new and revised TFRS from 1 January 2011. Measurement of employee benefit obligations The calculation of the employee benefit obligations is subject to the assumptions on discount rate, salary increase rate and mortality rate as set out in note 13 to the interim financial statements. 2.4 Financial information reviewed by other auditors The interim of all subsidiaries and associates included in the preparation of the consolidated interim for the three-month and nine-month periods ended 30 September 2011 and 2010 were reviewed by the Company s auditors, except for the interim for the three-month and nine-month periods then ended of certain foreign subsidiaries and associates which were reviewed by other auditors. Financial information reviewed by other auditors are as follows: Statement of financial position as at 30 September 2011 Total assets of subsidiaries 24,755 Direct and indirect investments in associates 4,340 Total 29,095 Three months Nine months Statement of income for the three-month and nine-month periods ended 30 September 2011 Total revenues of subsidiaries 14,430 40,335 Share of profit of associates 415 966 Total 14,845 41,301 Statement of income for the three-month and nine-month periods ended 30 September 2010 Total revenues of subsidiaries 13,156 37,934 Share of profit of associates 121 405 Total 13,277 38,339 28
Notes to the interim 3 Changes in accounting policies 3.1 Overview From 1 January 2011, the Group has changed its significant accounting policies consequent to the adoption of new and revised Thai Financial Reporting Standards ( TFRS ) as set out in note 2 to the interim are as follows: Presentation of Accounting for investment properties Accounting for employee benefits Details of the new accounting policies adopted by the Group and the impact of the changes in each accounting policies on the interim are included in notes 3.2 to 3.4 to the interim. The impacts of 2011 and 2010 equity are summarised as follows: Note financial financial statements statements Statement of financial position Equity at 1 January 2010 - as previously reported 54,979 44,641 Changes as a result of the adoption retrospectively - Measurement of investment properties 3.3 (159) (7) Equity at 1 January 2010 - restated 54,820 44,634 Equity at 31 December 2010 - as previously reported 61,103 48,118 Changes as a result of the adoption retrospectively - Measurement of investment properties 3.3 (159) (7) Equity at 31 December 2010 and 1 January 2011 - restated prior to retained earnings adjustment 60,944 48,111 Changes as a result of an adjustment to retained earnings as at 1 January 2011 - Accounting for employee benefit obligations 3.4 (2,307) (847) Equity at 1 January 2011 - restated 58,637 47,264 3.2 Presentation of From 1 January 2011, the Group has applied TAS 1 (revised 2009) Presentation of Financial Statements. Under the revised standard, a set of comprises: Statement of financial position; Statement of income; Statement of comprehensive income; Statement of changes in equity; Statement of cash flows; and Notes to the. 29