Tipco Asphalt Public Company Limited · TIPCO ASPHALT PUBLIC COMPANY LIMITED Message from the...

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ANNUAL REPORT 2007TIPCO ASPHALT PUBLIC COMPANY LIMITED

Annual Report 2007 Tipco Asphalt Public Company Limited

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CONTENTS

Message from Chairperson 1

Company Profile 2

Financial Highlights 6

Nature of Business Operation 6

Market and Competition 13

Rick Factors 14

Shareholders 18

Organization Chart 19

Board of Directors 20

Control and Internal Audit 40

Related Persons and Conected Transactions 42

Discussion on Financial Status and Operations 43

The confirmation for the complete correctness of the payment to auditor 44

Report of The Audit Committee 46

Report of Directors Relating to Responsibilities for Financial Statements 47

Report of Independent Auditor and Financial Statements 49

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Message from the Chairperson

2007 was considered to be a challenging year. The Company and Subsidiaries generated record revenue from sales and services of Baht 10,455 million, an increase of 9.28% from the previous year while net profit was Baht 306 million or 3 % of sales. It was also the first year that we surpassed the Baht 10 billion revenue threshold. From the yearʼs performance, the Companyʼs proposed dividend payment shall be 0.80 Baht per share or 45.12% of the net profit of year 2007.

There were several negative factors affecting the Companyʼs performance including political instability, lame government policies, the 30% unremunerated reserve requirement on capital inflows, the continuous appreciation of the Thai Baht and the US sub-prime mortgage crisis. The Company has closely monitored the volatile situation in order to set and adjust the preventive strategies to eliminate and minimize the potential negative impact while maintaining our position as Asiaʼs leading road construction material company both domestically and internationally in accordance with our companyʼs vision.

One important area that we placed strong emphasis is our Customer. Therefore, excellent service is vital. The Company has prepared teams of knowledgeable technicians who are ready to serve our customers at all time, including those overseas. Moreover, the Company also focuses on the efficiency of operations starting from the selection of raw materials to the manufacturing process; strict quality control is applied to ensure all products meet high international standards. The Company has introduced new technologies related to road construction techniques and other asphalt products to Thailand in 2007 with the cooperation of our strategic partner, Colas S.A., to raise the overall safety standards of the countryʼs highways.

In terms of organizational development and human resource management, the Company has used various approaches, including the strategic management, balanced scorecard and performance management system. In 2007, the company was awarded the accreditation for TIS 18001 standard for occupational health and safety management system and the citation award by American Society for Training and Development (ASTD) under the program of Excellent in Practice.

I sincerely hope that all shareholders and stakeholders are satisfied with the 2007 operational result despite various obstacles during the year. On behalf of the Board of Directors, I would like to express our appreciation to the management and our employees for their support, which led the Company through difficult times and yet continued to maintain the Companyʼs market acceptance, both domestically and internationally. Our sincere thanks also go to the shareholders, customers, financial institutions and other stakeholders for their support and trust given to the Company and to our products. Although there are still obstacles ahead, with the determination of the management and employees, right strategies and sound management, I firmly believe that the Companyʼs operations will continue to prosper.

( Mrs. Anurat Tiamtan ) Chairperson

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Tipco Asphalt Public Company Limited

Incorporated in 1979, Tipco Asphalt Public Company Limited (“TASCO” or “the Company”) engages in the business of manufacturing and distribution of asphalt products for domestic market and export which are used in the construction and maintenance of roads. TASCO also distributes diesel and fuel oil to road contractors and other manufacturing companies.

The head office is located at 118/1 Rama 6 Road, Samsen Nai, Phayathai District, Bangkok 10400, Thailand. Telephone number is 02 2736000, fax is 02 2736030.

Factories are located at:

Nakornratchasima : 259 Soi Ror Por Chor 12032, Mittapap Road, Naklang, Soongnoen, Factory Nakornratchasima 30380 Telephone (044) 335495-9, 0-2273-6000 # 5347-9 Facsimile (044) 335-495-9

Pitsanulok : 271 Moo 15 Baan Wang Koom, Bangrakam, Pitsanulok 65140 Telephone (055) 371-581-3, 371-461-2 Facsimile (055) 371-461-2 # 360

Phetchaburi : 90 Moo 5 Nongchumpol Nua, Kao Yoi, Petchaburi 76140 Telephone (032) 565-117-9, 0-2273-6000 # 5502-4 Facsimile 0-2273-6000 # 5501

Suratthani : 139/5 Moo 3, Surat-Takua-pa Road, Tahrongchang, Punpin, (subsidiary) Suratthani 84130 Telephone (077) 357-214-6, 0-2273-6000 #5318-3 Facsimile 0-2273-6000 #5380

Oil depot and asphalt terminals Prapradaeng : 61 Moo 5, Suksawat Road, Bangjak, Prapradaeng, (asphalt and oil terminal) Samutprakarn 10130 Telephone 0-2463-0169-70, 0-2817-5111-5 Facsimile 0-2817-5117

Suratthani : 123 Moo 3, Bangkung, Muang, Suratthani 84000 (subsidiary) Telephone (077) 224-683-5, 0-2273-6000 #5341-3 Facsimile 0-2273-6000 #5340

Registered code : 0107535000044

Paid up : 152,543,726 Home Page : www.tipco.co.th

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Juristic entities that the Company has equity holding in excess of 10 per cent

Subsidiaries in Thailand

Surat Bitumen Co., Ltd. Nature of Business : Producer and distributor of asphalt products Registered capital : Baht 100 million Percentage holding : 99.9993%

Thai Bitumen Co., Ltd. Nature of Business : Holding company for a 50% stake in an asphalt refinery in Malaysia. The refinery will commence operations in 2008. Registered capital : Baht 1,411,643,000 Percentage holding : 99.9999%

Bitumen Marine Co., Ltd. Nature of Business : Owner of two asphalt vessels involving in asphalt transporting business Registered Capital : Baht 150 million Percentage holding : 99.9993%

Delta Shipping Co., Ltd. Nature of Business : Owner of an asphalt vessel involving in asphalt transporting business Registered capital : Baht 80 million Percentage holding : 99.9991%

Alpha Maritime Co., Ltd. Nature of business : Owner of an asphalt vessel involving in asphalt transporting business Registered Capital : Baht 1 million Percentage holding : 99.93%

Tipco Maritime Co., Ltd. Nature of business : Asphalt vessels management company Registered capital : Baht 2 million Percentage holding : 99.965%

Raycol Asphalt Co., Ltd. Nature of business : Producer and distributor of asphalt products Registered capital : Baht 111 million Percentage holding : 41.44%

TASCO Shipping Co., Ltd. Nature of business : Owner of a new asphalt vessel under building. Registered capital : Baht 160 million Percentage holding : 99.9995 %

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Foreign subsidiaries:

Tasco International Co., Ltd. Nature of business : Holding Company for investments in China Address : Cayman Islands Registered capital : USD 3,970,000 Percentage holding : 100.00%

TASCO International (Hong Kong) Ltd. Nature of business : Holding Company for investments in China Address : Room 1 A, 1st Floor, O.T.B. Building, 259-265 Des Voeux Road Central, Hong Kong. Registered capital : USD 3,970,000 Percentage holding : 100%

Associated companies:

Colasie Co., Ltd. Nature of business : Holding Company with investment in asphalt emulsion and polymer modified asphalt plants in India Address : 7, Place Rene Clair F-92653 Boulogne- Billancourt France Cedex Registered capital : EUR 1,040,475 Percentage holding : 40%

Cambodia Asphalt Co., Ltd. Nature of business : Distributor of asphalt products in Cambodia Address : 68 National Road No.1, Sangkat Niroth, Khan Mean Chey, Phnom Penh City Registered capital : USD 10,000 Percentage holding : 40.00%

Kemaman Oil Corporation Sdn Bhd Nature of business : Holding Company of an asphalt refinery in Malaysia Address : L-2-2, Block L, Plaza Damas 60, Jalan Sre Hartamas 1 50480 Kuala Lumpur, Malaysia Registered capital : 114,950,002 Malaysia Ringgit Percentage holding : 0.7% (Thai Bitumen Co., Ltd. also holds another 61.3 %). Have entered into an agreement to grant an option to Aras Jalinan Sdn Bhd to acquire more shares in KOC in order to bring the percentage shareholding in KOC by Aras to 50:50 )

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Other important information:

Sharesʼ registrar : Thailand Securities Depository Co., Ltd. Capital Market Academy Building, 2/7 Moo 4 (North Park) The Stock Exchange of Thailand Vibhavadi-Rangsit Road Km.27, Tung Song Hong, Laksi, Bangkok 10210 Tel. 0-2596-9000, 0-2596-9302-11 Fax. 0-2832-4994-96

Auditors : Mr. Supachai Punyawattana Certified Public Accountant No. 3930 and/or Ms. Siriporn Karanumkul Certified Public Accountant No. 3844 and/or Ms. Tippawan Namwat Certified Public Accountant No. 3459 Ernst & Young Auditing Office Limited 33 rd Floor, Lake Rajada Office Complex 193/136-137 Rajadapisek Road Klongtoey, Bangkok 10110 Tel. 0-2264-0777, 0-2661-9190 Fax. 0-2264-0789-90, 0-2661-9192

Legal Consultants : Mr. Suttiphat Khamsirivatchara Siam Premier International Law Office Ltd. 26th Floor of The Offices at Central World, 999/9 Rama Road, Khwaeng Pathumwan, Khet Pathumwan, Bangkok 10330 Tel. 0-2646-1888 Fax. 0-2646-1919

: Mr. Tawatchai Jaranakaran Chor. Chanasongkram Advocates & Solicitors 52/3 Phrasumeru Rd., Bangkok Tel. 0-2282-2995

Financial Adviser : Thai Military Bank PCL. 3000 Phahon Yothin Road, Chatuchak, Bangkok 10900 Tel. 0-2299-1011 Fax. 0-2273-7857

Consultant or Contract Manager : None

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Financial Highlights

Unit : Baht in million

Financial Statement 2005 2006 2007 (restated) Total Assets 6,267 6,754 7,035 Total Liabilities 3,640 3,727 3,892 Shareholdersʼ Equity 2,627 3,027 3,143 Revenue from Sales 7,368 9,567 10,455 Total Revenue 7,437 9,642 10,556 Gross Profit 813 1,127 973 Net Profit (Loss) 214 343 306

Financial Ratios 2005 2006 2007 Net Profit Margin 2.90% 3.59% 2.90% Return on Equity 9.58% 12.15% 9.92% Return on Total Assets 3.81% 5.27% 4.44% Earning per Share 1.50 2.26 2.01 Dividend per Share 0.00 0.75 1.15 Book Value per Share 18.46 19.93 20.61

Nature of Business Operations

Overview of the Companyʼs and Subsidiaries Business

The Company and Subsidiaries produce and distribute various asphalt products for road construction, road and airport runways maintenance. Subsidiariesʼ asphalt vessels are used to transport asphalt for domestic distribution, export and for general chartering. Sale of asphalt products represents about 90% of total income. The domestic and international sales are divided approximately 53.28% and 46.72% of the total sale of asphalt, respectively. Currently, the Company and Subsidiaries have total production capacity of 616,800 tons per annum. It has four manufacturing facilities, two asphalt terminals and two oil depots as follows:

Manufacturing Facilities

1. Soongneun, Nakornratchasima (Nakornratchasima Factory) having production capacity of 324,000 tons per annum

2. Bangrakam, Pitsanulok (Pitsanulok Factory) having production capacity of 124,800 tons per annum

3. Kao Yoi, Petchaburi (Petchaburi Factory) having production capacity of 96,000 tons per annum

4. Punpin, Surathani (Suratthani Factory 1) having production capacity of 72,000 tons per annum

The factory stated in item no. 4 is owned by Surat Bitumen Co., Ltd which is a subsidiary of the Company.

Oil depot and asphalt terminals

1. Phapradeang, Samutprakarn (Phapradeang Factory) being an oil depot and an asphalt terminal.

2. Thathong, Suratthani (Suratthani Factory 2) being an oil depot and an asphalt terminal.

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All factories have obtained several certificates of industrial standards such as Certificate of Quality Management System (ISO9001:2000) and Certificate of Environmental Management System (ISO14001:2005) Certificate of Occupational Health and Safety Management System (TIS18001-1999) and have been awarded the Best Work Place Award in respect of safety, sanitary and environment at the national level. In additional, the Head office, Nakornratchasima and Phrapradaeng facilities have obtained Certificate of Thai Corporate Social Responsibility (TLS8001-2003).

Revenue Structure

The percentage of revenue from the domestic market compared to the international market sales of the Company and Subsidiaries is approximately 53.28% to 46.72%, respectively. According to the Companyʼs consolidated financial statements for 2004-2006 and 2007, the Companyʼs revenue structure can be classified according to product lines as follows:

Product Percent

Lines/ Operated Share 2004 2005 2006 2007

Business by Holding

Group (%) Revenue % Revenue % Revenue % Revenue %

(1) Asphalt Products Business Group 1/

Tipco Asphalt Plc. 4,213.37 81.71 5,075.96 64.11 6,154.84 63.83 7,275.55 68.92

Surat Bitumen 99.99 502.29 9.74 717.58 9.06 828.31 8.59 753.76 7.14

Co., Ltd.

Thai Bitumen 2/ 99.99 - - - - - - - -

Co., Ltd.

Raycol Asphalt 41.44 - - - - 577.84 5.99 937.10 8.88

Co., Ltd.

Kemaman Oil 50.00 - - - - 0.86 0.01 - -

Corporation Sdn Bhd

Total (1) 4,715.66 91.45 5,793.54 73.17 7,561.84 78.43 8,966.41 84.94

(2) Vessel Business Group

Shipping Management Tipco Maritime 99.97 0.11 0.00 0.12 0.00 0.02 0.00 2.22 0.02

Co., Ltd.

Time Charter Delta Shipping 99.99 4.14 0.08 0.00 0.00 50.97 0.53 10.92 0.10

Co., Ltd.

Time Charter Alpha Maritime 99.93 0.00 0.00 0.37 0.01 0.30 0.00 0.02 0.00

Co., Ltd.

Time Charter Bitumen Marine 99.99 0.00 0.00 0.18 0.00 3.84 0.04 21.06 0.20

Co., Ltd.

Total (2) 4.28 0.08 0.67 0.01 55.13 0.57 34..23 0.32

(3) Holding Companies Group

Tasco International Co., Ltd. 100.00 368.72 7.15 1,573.78 19.88 1,950.97 20.23 1,454.66 13.78

Total (3) 368.72 7.15 1,573.78 19.88 1,950.97 20.23 1,454.66 13.78

(4) Other revenue 3/ Total (4) 67.99 1.32 549.07 6.94 74.11 0.77 100.94 0.96

Total 5,156.65 100 7,917.06 100 9,641.63 100 10,556.23 100

Remarks: 1/ Comprising of revenue from sale of asphalt, diesel oil and fuel oil.

2/ Not yet operational.

3/ Comprising of profit from sale of assets, profit from exchange rate, interest received, delivery truck rental, share of investment profit and others.

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Business Objectives

The Company has set business objectives to strengthen and maintain leadership in the domestic asphalt market while expanding export market in countries with high potentials.

1. Marketing strategies for domestic market

The Company continues to maintain highest market share in the domestic asphalt market with the help of well experienced marketing and sale staff who are responsible in covering all regions in Thailand aiming to satisfy customersʼ needs with diverse distribution channels. The Company has earned the customersʼ trust in prompt delivery, continuing product improvement and new product development enhancing the Companyʼs image of being a leader in bringing the latest technology to the market while being aggressive in providing advises to customers in the field assisting the customersʼ overall work efficiency and effective cost control.

2. Marketing strategies for export

The Company continues to expand its export business as well as seek opportunity to form new joint ventures in countries with high growth potentials. The Company establishes trusting business relationship with customers and other stakeholders in the region including the Peopleʼs Republic of China, India, Tahiti, Philippines, Australia, Vietnam, Cambodia, Indonesia, Laos, Myanmar and Malaysia. Moreover, the Company continues to look for opportunities to appoint representatives in countries with growing customer base to meet overall customersʼ need more timely.

3. Production and distribution

The Company gives importance to standardized production process at all manufacturing factories, products quality and continued improvement in services. Our French strategic partner and major shareholder, Colas S.A., continues to provide latest technology in new product development and technical training for local specialists on a regular basis. The Company has also gained much experience over the years from managing asphalt terminals, manages asphalt transporting business aiming at prompt delivery to our customers.

Types of Products and Services

The Companyʼs activities include trading Asphalt Cement, producing and distributing Asphalt Emulsion, Polymer Modified Asphalt, Cutback Asphalt, Premix, Joint Sealer and Joint Primer, Para Slurry Seal for road construction and maintenance of highways, rural roads and airport runways.

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Types of products that the Company produces

1. Asphalt Emulsion is divided into 3 types:

a. Rapid setting is suitable for single surface treatment and double surface treatments.

b. Medium setting is suitable for repairing and maintenance, which are cold mix overlay and patching.

c. Slow setting is suitable for prime coating, slurry seal and cape seal.

Asphalt Emulsion is a mixture of asphalt cement, water and chemical.

2. Cutback Asphalt is a mixture of asphalt cement and petroleum solvents. It is used mainly for prime coating. Today it has become less popular because it is costly and unfriendly to the environment.

3. Polymer Modified Asphalt (PMA) is a mixture of polymer and asphalt cement. It is durable binder whose elasticity ensures higher rutting resistance on highways. This special property extends the useful life of highways and airport runways.

4. Premix is a ready-mix product that is filled in bags. This product is made from readily mixed asphalt emulsion and aggregates with proper gradation. It is best for small road surface repairs.

5. Tipco Joint Sealer and Tipco Joint Primer are asphalt cement mixed with mass, which is durable for extreme hot and cold weather conditions. Its high flexibility can stick with the joint and used for sealing joints between concrete slabs.

Products that the Company is a distributor:

1. Asphalt Cement: The Company purchases from local and international suppliers. This material has to be maintained at 120-140 degrees centigrade at all time in order to be maintained in a liquid form.

2. Diesel and Bunker: The Company purchases from oil refineries as well as from brokers.

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Key projects using companyʼs products and techniques

Uttra Phimuk Tollway Din Daeng – Laksi, Bangkok

This project is the road surface repairing project of Don Muang Tollway Public Company Limited by using modified asphalt emulsion with para slurry seal or micro surfacing technique to provide high skidding resistance road surface and speedy opening of the repaved road to traffic within 1 hour.

Southern Outer Ring Road Bangplee – Suksawad, Samutprakarn

It is the road surface construction on cable stayed bridge by using asphalt cement with stone mastic asphalt technique to enhance high strength and well profile.

Kart Circuit, Pattaya, Chonburi

This is the first application of excellent process with world class standard by using polymer modified asphalt cement to yield high skidding resistance racing circuit with high speed driving.

Royal Flora Fair, Chiangmai

Using both modified asphalt emulsion and polymer modified asphalt cement for the entrance of the fair with porous asphalt technique to provide excellent rain water drainage ability and low noise emission road surface.

Tollgate Chaleom Mahanakorn Din Daeng – Bangna, Bangkok

Very thin surface repairing at the tollgate to provide high skidding resistance road surface and to mitigate additional dead load of road structure by using modified asphalt emulsion and polymer modified asphalt cement with ultra-thin friction course technique.

Eastern Sea-Shore Project from Rayong – Chanthaburi

This is the first colored asphalt project in Thailand for surface dressing on bicycle lane and shoulder of eastern sea-shore road from Rayong to Chanthaburi to enhance visual appeal and better differentiation of traffic zone as well as to improve safety by using colorless asphalt.

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TRAINING PROGRAM

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Market and Competition

Domestic asphalt industry

Asphalt products are mainly used for road construction, road and airport runways maintenance comprising of two major products mainly asphalt cement and asphalt emulsion. Asphalt cement is the by-product from crude oil refining process.

At present, Thailand consumes about 600,000 to 650,000 tons of asphalt products per year representing about 420,000 to 450,000 tons of asphalt cement and 180,000 to 200,000 tons of asphalt emulsion. While there is demand for other types of asphalt products such as polymer modified asphalt, cutback asphalt, premix, joint sealer and joint primer, application of these products is still relatively small as compared to Asphalt cement and asphalt emulsion.

Future Trend of the Industry

Asphalt business is mainly dependent on the government sectorsʼ budget. It is difficult to make an assessment on the size of business. The National Economic and Social Development Plan which mainly concentrates on infrastructure development can provide some indication on the trend of business growth. Apart from such indication, the economic growth of countries in the Indochina region, such as Vietnam, Laos, Cambodia and Myanmar as well as China and India, plays a major role in relation to the industryʼs growth. This is because these countries are areas which require considerable infrastructure development and have high growth potential in the future.

Competition

Although there are a few domestic asphalt cement suppliers, the tighter budget allocation on infrastructure will make competition remain a challenge for the Com pany.

However, from the customersʼ acceptance of the Companyʼs products due to its high quality standard, prompt service and delivery, latest technology from our French strategic partner, Colas S.A., the world leader in materials for road construction and maintenance, the Company is confident that dominant market share position in all product segment will be maintained.

Competitive strategies

The Company has advantages in many areas to enhance market and sale strategies with an aim to fully satisfy the customersʼ needs.

Quality:

The Company is the first asphalt emulsion manufacturer in Thailand with accreditation conferred with the Certificate of Quality Management System (ISO 9001), Certificate of Environmental Management System (ISO 14001), Certificate of Safety Management System (TIS 18001) and Certificate of Testing Laboratory (ISO/IEC 17025). These accreditations ensure international standard and quality of all products and acceptance of all road related Government Agencies.

Research and Development

The Company continues to develop applications with new premium grade asphalt products and services for our customers via assistance and cooperation from our French strategic partner, Colas S.A. This effort has been widely recognized and accepted by various road related Government Agencies responsible for projects such as the Uttra Phimuk Tollway Din Daeng – Laksi, Bangkok, Southern Outer Ring Road Bangplee – Suksawad, Samutprakarn, Kart Circuit, Pattaya, Chonburi, Royal Flora Fair, Chiangmai, Tollgate Chaleom Mahanakorn Din Daeng – Bangna, Bangkok, Eastern Sea-Shore Project from Rayong – Chanthaburi.

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Distribution

The Company recognizes the importance of producing quality asphalt products as well as providing excellent services to the customers. With 4 manufacturing facilities covering all the regions in Thailand, the Company can promptly deliver asphalt products to all the customers in Thailand and neighboring countries via its 350-truck fleet. The Company also owns and operates 5 asphalt vessels for deliveries to international customers as well as to import asphalt into Thailand when there is inadequate local supply. With the new 8,500 MT asphalt vessel scheduled to be delivered in the 3rd quarter 2009, the Companyʼs distribution capability will further enhanced. Orders from the customers and deliveries are controlled by computer system that links the information via Satellite Network and Hi-Speed Internet. This method ensures accuracy and quick response to customersʼ needs.

Our production process is in accordance with the international standard of The American Society for Testing and Materials (ASTM), The American Association of State Highways and Transportation Officials (AASHTO). The Company places great importance on every step of the quality control process from production to customer delivery. Quality control begins with testing all types of raw material, using internationally accepted testing methods in our well-equipped laboratory. Our company also controls quality during delivery by placing plastic and wax seals on the outlet valves of our tankers to insure that the products are delivered to the customers without adulteration while en route.

Second to none services:

The Company has the experienced and knowledgeable marketing and sale teams responsible in servicing over 800 customers covering all of Thailand. These individuals are trained to provide services and to give technical advises to customers. Furthermore, the Company has manufacturing facilities and asphalt terminals spread out in every region such as at Nakornrachasrima, Phetburi, Phisanulok and Surat Thani, all are center of each region, for prompt delivery of all asphalt products to customers.

Furthermore, the Companyʼs own technical team has vast experience in road work and is ready to solve problems and give advices to any customer. This has strengthened our working relationship with customers in the field ensuring smooth operation.

The Company has initiated Customers Relation Management (CRM) to study complex requirements of each group of customers in order to plan an effective sales and service programs aiming at better serve for our customers.

Risk Factors

Risks relating to Domestic Market

- Political uncertainties have some impact on the Companyʼs operations from delay in Governmentʼs infrastructure budget allocation and disbursement.

- Despite political uncertainties abovementioned with direct impact on the Companyʼs present and future operations, the Companyʼs action plan is to focus on road maintenance as well as promoting technologically advanced products with dominant market share such as Premix, Joint Sealer, Para Slurry, etc.

Risks relating to International Market

- Fluctuation of Demand in China – International market has always been dominated by demand in China posing risks in terms of changes in weather conditions, competition with local traders, uncertainties arising from local regulations, etc. Nonetheless, the Olympics Games in China have prompted the Chinese Government to develop and improve infrastructure in a big way, in particular its road network. It is highly anticipated that demand of asphalt in China will continue to be strong ever after the Games. Chinaʼs medium and long term development plan include infrastructure development in the western provinces aiming at a more equitable distribution of income to promote continuing economic growth. Moreover, the Company has put efforts in development new potential markets such as India, Philippines, Australia and New Zealand via strategic alliances.

- Uncertainties in International Market channels – the Company faces risks doing business with some customer in countries with uncertain political climate. The Company has in the past been involved with collection problems and

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other disputes due to unfamiliar local regulations. However, the Company has given a more emphasis on granting credit and terms of payment to customers with credit checking and track records aiming at prompt payment.

Risks relating to Supply

- Fluctuation in raw material prices poses a major risk to the Company which led to more competition in certain market areas. To remedy the supply risk, the Company put more efforts in adding to its suppliers list all refineries in Asia with regular contracts and enquiries aiming at establishing business relationship. Furthermore, the Company will also source asphalt cement from the asphalt refinery joint venture in Malaysia.

- Expanded corporative network with strategic partner(s) also assists the Company in new supply sourcing at competitive prices as well as in chartering asphalt vessels.

Risks relating to Finance

- The Companyʼs financial risks are largely on the customersʼ credit risk, interest rate and foreign exchange risks. These risks are handled and remedied adequately which are explained in Note 33 of the consolidated financial statements.

Nature of Customers and Targeted Customer Group

The Company sells asphalt cement, asphalt emulsion, diesel oil and fuel oil as its main products with other asphalt products sold in lesser proportion. The Company divides its customers in accordance with the Companyʼs product types as follows:

1. Asphalt customers This group of customers generates most of the Companyʼs revenue. The Companyʼs market share for this product is equal to 45% and such customer type can be divided into 2 group as follows:

1.1 Local customers The Companyʼs local market share is equal to 46% of the total sales amount. Local customers can be segregated as follows:

1.1.1 Private sector (Construction contractors) These customers generate 97% of the Companyʼs total domestic asphalt revenue. These customers are road construction contractors who buy asphalt for road construction and repair projects that they secure by auction from the relevant authorities. There are no written contracts between the Company and these customers as they are mostly regular and long-standing customers that have good working relationship and believe in the quality of the Companyʼs products.

1.1.2 Government sector These customers generate 3% of the Companyʼs total domestic asphalt revenue. These clients are governmental authorities who are directly responsible for road construction and repair. They will purchase various kind of asphalt to carry out their own work. Key customers in this group are the Highway Department, the Department of Rural Road, Irrigation Department, Public Work and City Planning Department, Local Administration, Municipal, etc. The Company regularly participates in auctions arranged by these authorities.

1.2 Foreign customers The sales volume for foreign customers is equal to 44% of total sales. Major customers are the Chinese who account for 70% of total foreign sales while 20% went to Vietnamese customers and customers located adjacent to the Thai border being Laos, Cambodia, Myanmar and others. In addition, the Company has customers outside of the region such as customers in Tahiti, India, Philippines, Australia and New Zealand. The percentage of sales to such customer group is less than 10% of the Companyʼs total foreign sales.

2. Oil Product Customers The Companyʼs distribution of these products domestically account for approximately 10% of total product sales. The customers can be classified as industrial factories with the percentage of sale volume equal to 70% and construction contractors with sales volume equal to 30%.

3. Other Asphalt Customers: These customers are local customers with the Companyʼs market share equal to approximately 60%. These customers are divided into 3 groups such as governmental authorities which account for 40% and private customer groups namely distributors and construction contractors accounting for 45% and 10%, respectively.

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Supply of Raw Materials or Products for Sales and Suppliers

Types and Sources of Raw Materials

1. Asphalt Cement : AC

AC is a by product from the refining crude oil and base lubricating oil processing. AC is used as the raw material for manufacturing asphalt emulsion, PMA, cut back asphalt, and premix asphalt. In the past, the Company obtained the raw material locally. However, as there were only a few manufacturers in Thailand and the raw material was inadequate for supplying local needs. Therefore, a portion of the raw material was imported. In 1997, IRPC Public Company Limited (previously know as Thai Petrochemical Industry Public Company Limited) and Thai Lube Base Public Company Limited started to produce basic lubricating oil which resulted in an increase of asphalt products locally and a corresponding decrease in the importation of AC. The Company also made purchases of AC from other sources, both locally and internationally, in order efficiently control the cost of raw material.

Currently, the Companyʼs purchasing method to acquire the needed AC is based on purchasing from several sources simultaneously, both locally and internationally, to reduce the risk of relying on the same source and to control the cost of raw material for manufacturing.

Handling AC

The raw material for the Company is AC which is a high viscosity substance at normal temperature and will turn into a liquid form when the temperature is higher than 100°C. Therefore, the problem of AC raw material is storage and transportation which requires maintenance of high temperature so that it can be used in the manufacturing process. The Company has solved this problem by constructing sufficient insulated storage tanks at all its production facilities and depots. The Companyʼs trucks are equipped with burning tubes to maintain proper heating to the AC during the transportation process.

The Company purchases AC from approximately 4 local suppliers amounting to about 42.95% of AC raw material purchased with the remaining 57.07% being imported.

2. Chemical Substances

The Company imports approximately 26.76% of its required chemical substances for use in the manufacturing process. The remaining 73.23% of chemical substances is supplied by 13 local suppliers. There were two types of chemical substance required as follows:

2.1 Solvents The price of solvents varies depending on the oil price. It is purchased from local suppliers and there is no shortage of this raw material as its supply is abundent.

2.2 Emulsifiers There are several kinds of emulsifying chemical substances which are purchased from several international suppliers through their sale agents or purchased locally. The price of emulsifiers is quite stable.

The Company does not purchase chemical substance from any single supplier in excess of 5% of the Companyʼs manufacturing cost.

In addition, even though the Company continues sourcing alternative materials for cost saving, it has never compromised on the productʼs quality.

Environmental Impact and Quality of the Products

The Company adopts a manufacturing process that can reuse most of remaining raw material and waste water. All disposed water is treated to required standards before it is released. The Company has an environmental policy to appropriately control and manage waste substance and reuse material to support effective recycling. Therefore, the

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manufacturing process of the Company does not create environmental pollution. All of the Companyʼs factories have obtained certificate of environmental management systems (ISO14001:2004) from MASCI according to Certificate No. EMS 03006/109 dated 4 September 2006. In addition, the Company has obtained the following accreditations:

1. Quality Management System (ISO9001:2001) issued by MASCI according to the Certificate No. QMS 03015/619 dated 24 January 2006 certifying the quality of goods and services. This certificate has created confidence in the Companyʼs products its among customers.

2. Occupational Health and Safety Management System (TIS18001-1999) for the manufacturing system of asphalt products issued by MASCI according to Certificate No. OHS 02010/081 dated 12 April 2005 for the Companyʼs Pitsanulok Factory. And Certificate No. OHS07013/211 dated 14 September 2007 for the Companyʼs Nakornratchasima, Pethaburi and Phrapradaeng Factory

3. General requirements for the competency of testing and calibration laboratories (ISO/IEC 17025:2005) for the testing of AC products issued by the Thai Industrial Standards Institute, Ministry of Industry according to Certificate No. 06T058/00479 dated 20 December 2006 for the Companyʼs Nakornratchasima Factory

4. Thai Corporate Social Responsibility (TLS8001-2003) Certificate at Completion Level Progressive Phase to certify that the Companyʼs Nakhonratchasima Factory has achieved the requirements of Thai Corporate Social Responsibility for Certificate Number CL. 407/2007 issued on 7 November 2007 and CL.6/2007 issued on 21 March 2007 for Head Office and Certificate Completion level Initiative Phase for Certificate Number CL.96/2006 Issued on 28 December 2006

The Company has not incurred extra expenses relating to the preservation of the environment and does not have any criminal record in respect of the violation of environment law.

At present, the Company has no unfulfilled work order.

20


Shareholders

List of top ten shareholders at closing of the Companyʼs share registrar dated April 3, 2007

As of April 3, 2007

Shares %

1. BNP Paribas Peregrine Securities Pte. Ltd. for Colas 46,825,904 30.82

2. Tipco Foods (Thailand) Pcl. Group 37,832,609 24.90

3. Thai NVDR Co., Ltd. 7,671,646 5.05

4. Supsakorn Family 6,574,728 4.33

5. Miss Kanokkaew Veravan 5,358,300 3.52

6. American International Assurance Company, Limited- APEX 4,752,182 3.13

7. Dr. Pichit Lettamrab 3,030,000 1.99

8. American International Assurance Company, Limited-TIGER 2,500,016 1.65

9. Chart Nanavarakorn 2,192,900 1.44

10. Mr. Prayuth Visutwattanasak 1,635,000 1.08

11. Others 33,569,875 22.09

Total 151,943,160 100

Shareholders List

21


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22


Mr. Thaweesin Devahastin Na Ayudhya Independent Director

Mr. Niphon Suthimai Independent Director

Mr. Pahol Chindakul Independent Director

Mr. Parnchalerm Sutatam Independent Director

Mrs. Anurat Tiamtan Chairperson

23


Mr. Emmanuel Scheer Executive Director

Mr. Alain Dupont Director

Mr. Jacques Marechal Director

Mr. Jacques Pastor Executive Director

Mr. Thierry Defrene Executive Director

Mr. Sitilarb Supsakorn Executive Director

Mr. Somchit Sertthin Director

Chief Executive Officer

Mr. Chayongsak Pisitpong Director

Chief Financial Officer

Mr. Chaiwat Srivalwat Director

Managing Director

24


Board of Directors

The names of the Board of Directors are as follows:

1. Mrs. Anurat Tiamtan Chairperson

2. Mr. Pahol Chindakul Independent Director

3. Mr. Thaweesin Devahastin Na Ayudhya Independent Director

4. Mr. Parnchalerm Sutatam Independent Director

5. Mr. Niphon Suthimai Independent Director

6. Mr. Alain Dupont Director

7. Mr. Jacques Pastor Executive Director

8. Mr. Thierry Defrene Executive Director

9. Mr. Emmanuel Scheer Executive Director

10. Mr. Jacques Marechal Director

11. Mr. Sitilarb Supsakorn Executive Director

12. Mr. Somchit Sertthin Director and Chief Executive Officer

13. Mr. Chayongsak Pisitpong Director and Chief Financial Officer

14. Mr. Chaiwat Srivalwat Director and Managing Director

Independent Directors

The Company has 4 independent directors, all are in compliance with the definition of an independent director which are each holding no more than 5 per cent of paid-up capital of the Company, does not take part in the management; not being an employee, staff member or advisor who receives a regular salary from the Company or controlling persons or conflict persons; who has no business related to the Company such as customer, supplier, creditor, debtor who has no direct or indirect benefit or interest in finance and management of the Company; who is not appointed as a representative to safeguard interests of the Companyʼs director, majority shareholders or shareholders who are related to the Companyʼs majority shareholders

Guidelines for selection of Independent Directors

1. Candidates must possess the requisite qualifications;

2. The Director should perform his duties and express opinions using independent judgment and integrity by taking into consideration the benefit of the Company as a priority. The individual should not consider the interests of majority shareholders, individual shareholders or himself;

3. The candidate must possess the complete set of characteristics specified by the Stock Exchange and good code of conduct, as follows:

3.1 Does not have shareholding in excess of 2 percent of the total number of shares with voting rights in the Company, businesses in the Group, associated companies or persons with possible conflict of interest (including connected persons as per Measure 258 of the Securities Act),

3.2 Does not have any involvement in company management, is not an employee or consultant receiving a regular monthly salary, nor an individual with controlling authority in the Company, businesses within the Group, associated companies. This extends to persons who may have possible conflict of interest, and candidates must have had no interest or stake as aforementioned for a period of not less than 1 year,

25


3.3 The nominee may not have any business relation; have no interest or stake - whether direct or indirect - in financial or management matters of the Company, businesses within the Group, associated companies or persons with a possible conflict of interest of a nature that may compromise independence,

3.4 The nominee must not be a close relative of management members, majority shareholders in the Company, business within the Group, associated companies or persons with possible conflict of interest: the individual may not be an appointee to maintain the interest of Directors or major shareholders,

3.5 The individual is obliged to disclose any relations to the Board of Directors which may compromise independence.

Qualifications for Directors

1. An individual with an unblemished record,

2. A person with vision and a broad business perspective,

3. Exhibits good human relations, a sense of justice and an appropriate personality,

4. A person with effective communications skills,

5. An individual with systematic business thinking and decision making processes,

6. Has an understanding of financial matters, commerce, or industry and experience related to business management,

7. Possesses experience and has previously been a Director with a company or State Enterprise.

Guidelines for selection of Directors

1. Candidates must posses the qualifications as specified above,

2. Overall, the Board of Directors should comprise persons with varied skills that are of benefit to the determination of the corporate direction and guidance.

Board of Directors Scope of Authority

The Board of Directors has to conduct the business in accordance to the Companyʼs by laws, objectives, regulations and the shareholdersʼ resolutions with honesty and the Companyʼs interests.

Each director has to inform the Company promptly if there is any gain or loss in any contractual agreements with the Company, holds, acquire more or divest shares or debentures in the Company or subsidiaries.

The Board of Directors has authority to set policies, strategies, scrutinize investment plans of the Company. The Chief Executive Officer is authorized to control the operations of all departments to conform with the Companyʼs policies in order to maximize efficiency in the business and for the shareholders.

26


Audit Committee

1. Mr. Pahol Chindakul Chairman

2. Mr. Thaweesin Sevahastin Na Ayudhya Member

3. Mr. Parnchalerm Sutatam Member

4. Mr. Niphon Suthimai Member

Ms. Aree Kaewprong Secretary

The Company has a process that inspects and controls the business by appointing 4 audit committee members. Their functions are as follows:

1. To oversee the accuracy of the Companyʼs financial report;

2. To oversee internal control and internal audit functions;

3. To ensure that the Company follows the rules and regulations of the Securities Exchange of Thailand and Securities Exchange Commission;

4. To consider, select, assign and propose the remuneration of the auditors;

5. To consider the disclosure of the Companyʼs information to be accurate and connected transactions or transactions that conflict with the Companyʼs benefits;

6. To provide a written report in the Companyʼs annual report, which is signed by the Chairman of Audit Committee;

7. To handle matters assigned by the Board of Directors from time to time.

The Audit Committee directly reports to the Board of Directors. The Audit Committee has a 3-year term and new member shall be appointed by the Board of Directors at the end of the term.

Executive Committee

1. Mrs. Anurat Tiamtan Chairperson

2. Mr. Somchit Sertthin Member

3. Mr. Jacques Pastor Member

4. Mr. Thierry Defrene Member

5. Mr. Chayongsak Pisitpong Member

6. Mr. Chaiwat Srivalwat Member

Mr. Emmanuel Scheer Secretary

The Company established an Executive Committee to assume full executive responsibilities on behalf of the Board of Directors in order to have flexibility in management and operations.

The Executive Committee has responsibilities as established by the Board of Directors. The Chairperson of the Executive Committee has the highest authority to set the operation policy related to the Companyʼs policy and the Chief Executive Officer has the highest authority in implementation.

The Executive Committee, pursuant to the resolutions of the Board of Directors of the company, is responsible for:

1. Proposing agenda for the Board of Directors meetings to be held and counseling the Board of Directors on major decisions; 2. Establishing the policies and operating procedures of the Company; and 3. Managing and directing the business and affairs of the Company and making decisions.

27


The Nomination and Remuneration Committee

The Nomination and Remuneration Committee consisted of 4 members of the Executive Committee and 2 members of the independent directors. One of the independent directors is appointed as the Chairman.

1. Mr. Thaweesin Davahastin Na Ayudhya Chairman

2. Mr. Pahol Chindakul Member

3. Mr. Somchit Sertthin Member

4. Mr. Jacques Pastor Member

5. Mr. Thierry Defrene Member

6. Mr. Sitilarb Supsakorn Member

The Nomination and Remuneration Committeeʼs functions are:

1. To screen and select the appropriate person(s) as member(s) of the Board of Directors and to propose the selected individual to the Board of Directors who then submit to the Shareholdersʼ meeting for approval;

2. To screen and select the appropriate qualified person to be nominated as the Chief Executive Officer, Managing Director and Executive Director and then propose to the Board of Directors for approval;

3. To screen the remuneration of the Companyʼs Directors to the Board of Directors and to further propose same to the shareholdersʼ Meeting for approval;

4. To propose the remuneration packages for the Chief Executive Officer, Managing Director and Executive Director and then propose to the Board of Directors for approval.

Risk Management Committee

Risk Management Committee has been set up in compliance with the principles of Good Corporate Governance. Such Committee would formulate risk management policy to assess, analyze and monitor potential risks, which may arise from uncertainties and apply risk management as a tool to create opportunity and add value for the shareholders. The composition, duties and responsibilities of the Risk Management Committee are as follows:

1. Mr. Somchit Sertthin Chairman

2. Mr. Chayongsak Pisitpong Member

3. Mr. Chaiwat Srivalwat Member

4. Mr. Emmanuel Scheer Member

Mr. Channarong Piyamanotham Secretary

Duties and Responsibilities

1. To consider and approve of the scope or framework of risk management;

2. To monitor development of the scope or of risk management, risk indication process and risk assessment;

3. To assess and approve risk management plan;

4. To report to the Board of Directors about risks and their management and communicate to the Audit Committee.

In managing risks, the Risk Management Committee sets up risk management teams of managers or related persons to carry out day-to-day operations on behalf of the Risk Management Committee. Such team shall adhere to risk management policy, scope or framework and process, and render support, advice or guidance on risk management to all Units. Such teams also report to the Risk Management Committee twice a year on the foreseeable risks in there respective department, remedies and opportunities.

28


Executive Officer

The Companyʼs executive officers comprises of 10 persons as follows:

1. Mr. Somchit Sertthin Chief Executive Officer

2. Mr. Chayongsak Pisitpong Chief Financial Officer

3. Mr. Chaiwat Srivalwat Managing Director

4. Mr. Jacques Pastor Executive Director

5. Mr. Sitilarb Supsakorn Executive Director

6. Mr. Thierry Defrene Director - International Sales

7. Mr. Emmanuel Scheer Deputy Chief Financial Officer

8. Ms. Auchcha Rattrakultip Director - Financial - Credit Control and Legal

9. Mr. Praphot Issariyakul Director - Operations

10. Mr. Kasidis Chareancholwanich Director - Domestic Sales

Nomination of Directors and Executive Officers

In selecting persons to be appointed as the Companyʼs directors or executive officers, the Nomination and Remuneration Committee is empowered to select and screen qualified persons. However, the persons who will be appointed as the Companyʼs directors and executive officers must have the necessary qualification under Section 68 of the Public Companies Act B.E. 2535 (including its amendments) and the Companyʼs Articles of Association. The requirements, nomination, appointment and dismissal of the Companyʼs directors are summarized as follows:

Requirements for Appointment of the Board of Directors

1. The number of Board of Directors will be fixed by the shareholdersʼ meeting resolution. The total number of directors must not be less than 10 persons but not more than 14 persons. One half of the number of directors must reside in Thailand. The Board of Directors may authorize one or more persons to perform any act on behalf of the Board of Directors but cannot authorize any other person to perform any act as a director. Any act carried out by such authorized person will be deemed to have been performed by the Board of Directors and the Company will be bound by such act. In performing their duties, the Board of Directors is entitled to remuneration which will be paid in the form of salary, meeting fees, bonus and allowance.

2. A shareholdersʼ meeting resolution having not less than three-fourth of the total attending and eligible shareholdersʼ votes or the Board of Directorsʼ meeting resolution has the power to determine the names of the authorized directors. The authorized directors who can bind the Company comprises of 2 groups of directors and to bind the Company requires one director from the 1st group of directors and another director from the 2nd group of directors to jointly sign and affix the Companyʼs seal.

3. The shareholdersʼ meeting must elect the directors in accordance with the following procedures and rules:

3.1 The shareholdersʼ meeting must vote to elect directors one person at a time

3.2 In exercising the voting rights for election of each director, each shareholder shall have voting rights according to the number of shares held with one share equal to one vote

3.3 In exercising the voting rights for the election of each director, the person who obtains the highest votes and received not less than three-fourth of the total votes of attending and eligible shareholders will be elected as a director

4. At every annual general meeting of shareholders, one-third (1/3) of the directors, or if it is not a multiple of three, then the number nearest to one-third (1/3) must retire from office. There must be a drawing by lots to determine the directors who will retire in the first and second years following the registration of the Company. In each subsequent

29


year, the directors who occupy the position for the longest period must retire. A retiring director is eligible for re-election.

5. Any director wishing to resign must submit a resignation letter to the Company which will become effective on the date the Company receives the resignation letter. A director who resigns as described above may notify his/her resignation to the Public Companies Registrar.

6. If there is any vacancy among directors other than retirement by rotation, the Board of Directors may at its next meeting elect a person who is qualified and is not subject to any restriction imposed under Section 68 of the Public Companies Act B.E. 2535 to fill the vacancy except where the remaining term of the vacant directorship is less than two (2) months. The term of a new director replacing a vacant directorship will be equal to the remaining term of that vacant directorship. The resolution of the Board of Directors as specified above must be passed by three-quarters (3/4) or more of the votes cast by the remaining directors.

7. A shareholdersʼ meeting may remove any director before the expiration of his/her term by passing a resolution having the approval of not less than three-quarters (3/4) or more of the total attending and eligible number of shareholders and such shareholders must hold in aggregate 75 per cent or more of the total number of shares held by attending and eligible shareholders.

Requirements for Appointment of the Audit Committee

1. The Board of Directors may appoint at least 3 independent directors as the Audit Committee, provided that one of the members of the Audit Committee must have accounting knowledge. The Audit Committee must elect one of the members to be the Chairman.

2. The term of the Audit Committee member is 3 years.

3. The Audit Committee must be independent in carrying out the work and will directly be responsible to the Board of Directors.

4. The status of the Audit Committee member will cease upon any memberʼs death, resignation, dismissal or retirement by rotation.

5. The Audit Committeeʼs remuneration will be decided by the Board of Directors.

6. There must be at least 4 Audit Committeeʼs meetings each year and report the result to the Board of Directors.

Nomination of Independent Directors

Nomination of independent directors is based on the same process for nomination of directors and executive officers.

Record of litigation against the company during the past ten years

None

30


Det

ails

con

cern

ing

man

agem

ent o

r aut

horiz

ed p

erso

ns a

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s fo

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s:

S

hare

hold

ing

Fa

mily

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orki

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xper

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ompa

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Rela

tions

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Typ

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R

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Man

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pany

Mrs

. Anu

rat

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tan

58

B.

A. (H

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s), C

hem

istry

, -

The

elde

r sist

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2003

- pr

esen

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airp

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pco

Food

s (T

haila

nd) P

CL.

/ Pro

duct

ion

and

expo

rt of

can

ned

fruits

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irper

son

Ka

sets

art U

nive

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of M

r. So

mch

it 1

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se S

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o., L

td. /

Roa

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Mai

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ance

A

utho

rized

Dire

ctor

M.S

. (Ch

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wife

19

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pres

ent

Dire

ctor

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alt P

CL. /

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s

Th

e Am

erica

n Un

ivers

ity,

W

ashi

ngto

n, D

.C.,

U.S.

A.

Thai

Inst

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of D

irect

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(IOD)

2001

: Ch

airm

an 2

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Prog

ram

20

04 :

Dire

ctor

Cer

tifica

tion

Pro

gram

(DCP

)

Mr.

Paho

l Chi

ndak

ul

72

M.A

. (So

ciolo

gy),

Utah

Sta

te

0.03

6

- 19

97 -

2006

Ch

airm

an

Ind

epen

dent

Dire

ctor

Unive

rsity

, U.S

.A.

1998

- 20

06

Chai

rman

of A

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Inte

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inee

ring

PCL.

Cha

irman

of A

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Inst

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Com

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omin

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mun

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ion

2002

: Ef

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1998

- 20

03

Advis

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t Com

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C

omm

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mem

ber

20

05 :

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ctor

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Ch

airm

an

Pro

gram

(DAP

)

19

98 -

pres

ent

Inde

pend

ent D

irect

or

2007

: Th

e R

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of T

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hairm

an

an

d Au

dit C

omm

ittee

Prog

ram

mem

ber

2007

: A

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omm

ittee

Prog

ram

20

02 -

pres

ent

Com

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embe

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Tipc

o As

phal

t PCL

. / M

anuf

actu

ring

and

dist

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asph

alt p

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cts

(

ACP)

The

Nom

inat

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and

Rem

uner

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n

2006

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airm

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mm

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31


S

hare

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Typ

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sitio

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Man

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Com

pany

Mr.

Thaw

eesin

Dev

ahas

tin N

a

59

M.B

.A. E

aste

rn N

ew M

exico

-

- 19

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1994

Man

agin

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or

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. / M

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Uni

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.S.A

.

19

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2004

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.P.A

. Nat

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Co

mm

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)

Mr.

Parn

chal

erm

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atam

54

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ccou

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abso

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- 19

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pres

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Dire

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Bo

onm

itra

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I

ndep

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irect

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Col

lege

, Wel

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y, M

ass.

,

19

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pres

ent

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Sei

sen

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it Com

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embe

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U

.S.A

.

20

04 -

pres

ent

Inde

pend

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irect

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M

.B.A

., Un

ivers

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f Brid

gepo

rt,

2006

- pr

esen

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dit C

omm

ittee

B

ridge

port,

Con

n., U

.S.A

.

Th

ai In

stitu

te o

f Dire

ctor

s (IO

D)

2005

: Di

rect

or A

ccre

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tion

P

rogr

am (D

AP)

2006

: Au

dit C

omm

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ram

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Mr.

Niph

on S

uthi

mai

49

19

78 :

Lice

nce

de D

roit (

Law)

-

- 19

90 -

1994

Di

rect

or

Calb

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n Th

aila

nd C

o., L

td.

Ind

epen

dent

Dire

ctor

from

Uni

vers

ite d

e Dr

oit,

1994

- 19

99

Man

ager

Dire

ctor

Ca

lber

son

Tran

spor

t Co.

, Ltd

. A

udit C

omm

ittee

Mem

ber

Ly

on, F

ranc

e

19

99 -

pres

ent

Asso

ciate

Dire

ctor

G

eodi

s-O

vers

eas

Co.,

Ltd.

1980

: M

aste

r in

Ope

ratio

nal

2005

- pr

esen

t Co

nsul

tant

Ai

r Car

go C

o., L

td.

Rese

arch

from

Lon

don

20

03 -

2006

Bu

sines

s De

velo

pmen

t Po

werte

ch 2

004

Co.,

Ltd.

Sc

hool

of E

cono

mics

, UK

M

ange

r

Th

ai In

stitu

te o

f Dire

ctor

s (IO

D)

2006

- pr

esen

t Di

rect

or

CLY

Inte

rnat

iona

l Lim

ited

2006

: Di

rect

or A

ccre

dita

tion

20

06 -

pres

ent

Inde

pend

ent D

irect

or

Prog

ram

(DA

P)

2006

- pr

esen

t Au

dit C

omm

ittee

2006

: Au

dit C

omm

ittee

Prog

ram

(AC

P)

Tipc

o As

phal

t PCL

. / M

anuf

actu

ring

and

dist

ribut

ing

asph

alt p

rodu

cts

Tipc

o As

phal

t PCL

. / M

anuf

actu

ring

and

dist

ribut

ing

asph

alt p

rodu

cts

32


S

hare

hold

ing

Fa

mily

W

orki

ng E

xper

ienc

e du

ring

the

last

5 y

ears

Nam

e –L

ast n

ame/

A

ge

Edu

catio

n an

d Se

min

ar o

n Di

rect

or

in C

ompa

ny

Rela

tions

hip

with

P

erio

d

Pos

ition

N

ame

of O

rgan

izat

ion

Com

pany

Typ

e of

Bus

ines

s Re

late

d to

Po

sitio

n

(ye

ar)

R

oles

and

Res

pons

ibili

ties

(%)

Man

agem

ent

Com

pany

Mr.

Alai

n D

upon

t 67

En

gine

er F

rom

The

Fre

nch

Ecol

e

- -

1987

- 20

07

Chai

rman

and

Chi

ef

Cola

s S.

A. -

Cons

truct

ion

and

mai

nten

ance

of r

oads

, man

ufac

turin

g an

d D

irect

or

Spe

ciale

Des

Tra

vaux

Pub

lics

Ex

ecut

ive O

ffice

r di

strib

utin

g as

phal

t em

ulsio

n A

utho

rized

Dire

ctor

19

89 -

pres

ent

Mem

ber

The

Boar

d of

Dire

ctor

s of

the

Fede

ratio

n of

Fre

nch

Road

Con

stru

ctio

nʼs

Unio

n (U

.S.I.

R.F.

)

1991

- pr

esen

t M

embe

r Th

e Bo

ard

of D

irect

ors

of th

e Un

ion

of E

ntre

pren

eurs

of F

renc

h Pu

blic

Wor

ks

19

96 -

pres

ent

Mem

ber -

Pre

siden

t Th

e Bo

ard

of th

e Fr

ench

Nat

iona

l Fun

d fo

r Pub

lic W

orks

Ent

repr

eneu

rs

since

200

7 (C

.N.E

.T.P

)

1987

- pr

esen

t St

andi

ng re

pres

enta

tive

The

Boa

rd o

f Dire

ctor

s of

Cofi

rout

e (M

otor

way

conc

essio

n co

mpa

ny in

of

Col

as S

.A.

the

priva

te s

ecto

r)

1998

- pr

esen

t Vi

ce -

Pres

iden

t Th

e Fr

ench

Fed

erat

ion

of P

ublic

Wor

ks (F

.N.T

.P.)

19

97 -

pres

ent

Mem

ber

The

Boar

d of

Dire

ctor

s of

Bou

ygue

s S.

A.

20

07 -

pres

ent

Mem

ber

The

Boar

d of

Dire

ctor

s of

the

Fren

ch In

stitu

te o

f Int

erna

tiona

l Rel

atio

ns

(I.F.

R.I.)

2007

- pr

esen

t Pr

esid

ent

The

Boar

d of

Dire

ctor

s of

SM

Avie

BTP

(Con

stru

ctio

n an

d Pu

blic

Wor

ks

Li

fe in

sura

nce

Com

pany

)

2008

- pr

esen

t M

embe

r of t

he B

oard

Co

las

S.A.

- Co

nstru

ctio

n an

d m

aint

enan

ce o

f roa

ds, m

anuf

actu

ring

and

di

strib

utin

g as

phal

t em

ulsio

n

2000

- pr

esen

t Di

rect

or

Tipc

o As

phal

t PCL

. / M

anuf

actu

ring

and

dist

ribut

ing

asph

alt

prod

ucts

Mr.

Jacq

ues

Mar

echa

l 42

M

aste

r Deg

ree

in C

orpo

rate

-

- 19

96 -

2000

De

puty

Inte

rnat

iona

l

Dire

ctor

Fina

nce

- Dau

phin

e

Fina

nce

Man

ager

Co

las

S.A.

/ Co

nstru

ctio

n an

d m

aint

enan

ce o

f roa

ds, m

anuf

actu

ring

Aut

horiz

ed D

irect

or

Un

ivers

ity, P

aris

(DES

S)

2000

- pr

esen

t In

tern

atio

nal F

inan

ce

and

dist

ribut

ing

asph

alt e

mul

sion

Man

ager

2007

- pr

esen

t Di

rect

or

Tipc

o As

phal

t PCL

. / M

anuf

actu

ring

and

dist

ribut

ing

asph

alt

prod

ucts

Mr.

Jacq

ues

Pas

tor

53

Civil

Eng

inee

r Hig

h Sc

hool

-

- 19

93 -

pres

ent

Asia

Are

a M

anag

er

Cola

s S.

A. /

Cons

truct

ion

and

mai

nten

ance

of r

oads

, man

ufac

turin

g an

d D

irect

or

“Arts

et M

etie

rs”

dist

ribut

ing

asph

alt

emul

sion

Exe

cutiv

e Di

rect

or

2000

- pr

esen

t Ex

ecut

ive D

irect

or

Tipc

o As

phal

t PCL

. / M

anuf

actu

ring

and

dist

ribut

ing

asph

alt p

rodu

cts

Nom

inat

ion

and

Rem

uner

atio

n

Com

mitte

e M

embe

r A

utho

rized

Dire

ctor

33


S

hare

hold

ing

Fa

mily

W

orki

ng E

xper

ienc

e du

ring

the

last

5 y

ears

Nam

e –L

ast n

ame/

A

ge

Edu

catio

n an

d Se

min

ar o

n Di

rect

or

in C

ompa

ny

Rela

tions

hip

with

P

erio

d

Pos

ition

N

ame

of O

rgan

izat

ion

Com

pany

Typ

e of

Bus

ines

s Re

late

d to

Po

sitio

n

(ye

ar)

R

oles

and

Res

pons

ibili

ties

(%)

Man

agem

ent

Com

pany

Mr.T

hier

ry D

efre

ne

37

Civil

Eng

inee

r, AL

ES M

inin

g -

- 19

96 -

1997

Pr

oject

Man

ager

- Co

las

D

irect

or

Scho

ol -

Fran

ce

- M

adag

asca

r E

xecu

tive

Dire

ctor

Man

agem

ent C

ours

es -

1997

- 19

98

Gen

eral

Man

ager

- N

omin

atio

n an

d Re

mun

erat

ion

Fran

ce, O

pera

tions

Cou

rses

-

ETPC

- M

AYO

TTE

-

Com

mitte

e M

embe

r

Cour

ses

- Bitu

men

Em

ulsio

ns -

Fr

ance

, D

irect

or o

f Int

erna

tiona

l Sal

es

Fr

ance

, UK.

19

98 -

1999

M

anag

ing

Dire

ctor

-

Co

las

S.A.

Con

stru

ctio

n an

d m

aint

enan

ce o

f roa

ds, m

anuf

actu

ring

Aut

horiz

ed D

irect

or

Th

ai In

stitu

te o

f Dire

ctor

s (IO

D)

Co

las

East

Afri

ca L

td -

and

dist

ribut

ing

asph

alt e

mul

sion

2007

: Di

rect

or A

ccre

dita

tion

Keny

a, -

Busin

ess

P

rogr

am (

DAP)

Deve

lopm

ent M

anag

er

- Col

as S

A

- S

outh

ern

& Ea

st A

frica

,

19

99 -

2004

M

anag

ing

Dire

ctor

Co

las

Sout

h Af

rica

(PTY

) Ltd

. -

Sout

h Af

rica,

2005

- pr

esen

t Ex

ecut

ive D

irect

or

Tipc

o As

phal

t PCL

. / M

anuf

actu

ring

and

dist

ribut

ing

asph

alt p

rodu

cts

Mr.

Emm

anue

l Sch

eer

39

Mas

ter D

egre

e in

Neg

otia

tion

-

- 19

94 -

1996

M

arke

ting

Exec

utive

Pé

chin

ey S

A, N

ew Y

ork,

USA

D

irect

or

Eco

le S

upér

ieur

e de

Ges

tion,

19

96 -

1998

In

tern

al A

udito

r Co

las

SA, P

aris,

Fra

nce

Exe

cutiv

e Di

rect

or

Par

is, F

ranc

e

19

98 -

2000

Co

ntro

ller S

ully-

Mille

r Co

ntra

ctin

g Co

., In

c. (C

olas

Gro

up),

Califo

rnia

, USA

D

eput

y Ch

ief F

inan

cial O

ffice

r

20

00 -

2002

Co

rpor

ate

Cont

rolle

r Co

lask

a In

c. (C

olas

Gro

up),

W

ashi

ngto

n, U

SA

Aut

horiz

ed D

irect

or

20

02 -

pres

ent

Fina

nce

& Ad

mini

strat

ion C

olas

Asia

, Ban

gkok

, Tha

iland

M

anag

er

2006

- pr

esen

t Ex

ecut

ive D

irect

or

Tipc

o As

phal

t PCL

. / M

anuf

actu

ring

and

dist

ribut

ing

asph

alt p

rodu

cts

Mr.

Sitila

rb S

upsa

korn

Di

rect

or

56

B.S.

(Bus

ines

s Adm

.) Ba

bson

-

Mr.

Sitila

rb

1996

- pr

esen

t Di

rect

or

Than

omwo

ngse

Ser

vice

Co.

, Ltd

. / R

oad

Cons

truct

ion

& M

aint

enan

ce E

xecu

tive

Dire

ctor

C

olle

ge, W

elle

sley,

Mas

s,

Su

psak

orn

19

98 -

pres

ent

Dire

ctor

Si

am C

onta

iner

Tra

nspo

rt an

d Te

rmin

al C

o., L

td. /

Cus

tom

s lic

ense

d N

omin

atio

n an

d Re

mun

erat

ion

U

.S.A

.

is th

e yo

unge

r

in

land

con

tain

er d

epot

that

can

han

dle

all n

eces

sary

Cus

tom

s

Com

mitte

e M

embe

r

Bro

ther

of

proc

edur

e bo

th im

port

and

expo

rt sh

ipm

ents

for c

onta

iner

ized

carg

oes.

Aut

horiz

ed D

irect

or

M

rs. A

nura

t 20

04 -

pres

ent

Dire

ctor

Ek

acha

i Con

tain

er T

erm

inal

Co.

, Ltd

. /Cu

stom

s lic

ense

d in

land

con

tain

er

Tiam

tan

depo

t tha

t can

han

dle

all n

eces

sary

Cus

tom

s pr

oced

ure

both

impo

rt an

d

expo

rt sh

ipm

ents

for c

onta

iner

ized

carg

oes.

20

01 -

pres

ent

Exec

utive

Dire

ctor

Ti

pco

Asph

alt P

CL. /

Man

ufac

turin

g an

d di

strib

utin

g as

phal

t pro

duct

s

34


S

hare

hold

ing

Fa

mily

W

orki

ng E

xper

ienc

e du

ring

the

last

5 y

ears

Nam

e –L

ast n

ame/

A

ge

Edu

catio

n an

d Se

min

ar o

n Di

rect

or

in C

ompa

ny

Rela

tions

hip

with

P

erio

d

Pos

ition

N

ame

of O

rgan

izat

ion

Com

pany

Typ

e of

Bus

ines

s Re

late

d to

Po

sitio

n

(ye

ar)

R

oles

and

Res

pons

ibili

ties

(%)

Man

agem

ent

Com

pany

Mr.

Som

chit

Sertt

hin

55

B.

S. (B

usin

ess A

dm) B

abso

n -

- 19

74 -

1979

Se

nior

Man

ager

Co

ntin

enta

l Ban

k of

Chi

cago

Dire

ctor

C

olle

ge W

elle

sley,

Mas

s,

1980

- 19

86

Vice

Pre

siden

t and

C

hief

Exe

cutiv

e O

ffice

r

U

.S.A

.

Coun

try C

orpo

rate

Ch

ase

Man

hatta

n Ba

nk, T

aipe

i Bra

nch

Nom

inat

ion

and

Rem

uner

atio

n

Th

ai In

stitu

te o

f Dire

ctor

s (IO

D)

M

anag

er

Com

mitte

e M

embe

r

2003

: Di

rect

or A

ccre

dita

tion

2005

- Pr

esen

t Di

rect

or

Tipc

o Fo

ods

(Tha

iland

) PCL

. A

utho

rized

Dire

ctor

Prog

ram

(DAP

)

20

00 -

Pres

ent

Chie

f Exe

cutiv

e O

ffice

r Ti

pco

Asph

alt P

CL. /

Man

ufac

turin

g an

d di

strib

utin

g as

phal

t pro

duct

s

Mr.

Chay

ongs

ak P

isitp

ong

49

M

.B.A

., No

rthwe

st

- -

1981

- 19

95

Vice

Pre

siden

t Ch

ase

Man

hatta

n Ba

nk, B

angk

ok B

ranc

h D

irect

or

Miss

ouri

Stat

e Un

ivers

ity,

1995

- pr

esen

t Ch

ief F

inan

cial O

ffice

r Ti

pco

Asph

alt P

CL. /

Man

ufac

turin

g an

d di

strib

utin

g as

phal

t pro

duct

s C

hief

Fin

ancia

l Offi

cer

U.S

.A.

Aut

horiz

ed D

irect

or

M

.A. (

Econ

omics

),

Uni

vers

ity o

f Ka

nsas

, U.S

.A.

Thai

Inst

itute

of D

irect

ors

(IOD)

20

03 :

Dire

ctor

Acc

redi

tatio

n

Pr

ogra

m (D

AP)

Mr.

Chai

wat S

rival

wat

47

B.En

g. (E

ngin

eerin

g), L

iverp

ool

- -

1983

- 20

02

Mar

ketin

g Di

rect

or

Dire

ctor

U

nive

rsity

, Eng

land

20

02 -

pres

ent

Man

agin

g Di

rect

or M

anag

ing

Dire

ctor

Thai

Inst

itute

of D

irect

ors

(IOD)

A

utho

rized

Dire

ctor

2003

: Di

rect

or C

ertifi

catio

n

Pro

gram

(DCP

)

Tipc

o As

phal

t PCL

. / M

anuf

actu

ring

and

dist

ribut

ing

asph

alt p

rodu

cts

35


S

hare

hold

ing

Fa

mily

W

orki

ng E

xper

ienc

e du

ring

the

last

5 y

ears

Nam

e –L

ast n

ame/

A

ge

Edu

catio

n an

d Se

min

ar o

n Di

rect

or

in C

ompa

ny

Rela

tions

hip

with

P

erio

d

Pos

ition

N

ame

of O

rgan

izat

ion

Com

pany

Typ

e of

Bus

ines

s Re

late

d to

Po

sitio

n

(ye

ar)

R

oles

and

Res

pons

ibili

ties

(%)

Man

agem

ent

Com

pany

Mr.

Prap

hot I

ssar

iyaku

l 52

En

gine

erin

g, C

hula

long

korn

-

- 19

81 -

1996

Pr

oduc

tion

Supp

ort

Siam

Cem

ent P

CL.

Dire

ctor

- O

pera

tions

U

nive

rsity

Head

19

97 -

1999

Pr

oduc

tion

Dire

ctor

2000

- pr

esen

t Di

rect

or -

Ope

ratio

ns

Ms.

Auc

hcha

Rat

traku

ltip

60

Min

i MBA

– E

cono

mics

/ Bu

sines

s -

- 20

01 -

2002

Se

nior

Man

ager

D

irect

or -

Fina

nce

Cred

it

Adm

inist

ratio

n

20

02 -

pres

ent

Dire

ctor -

Fina

nce

Cred

it Ti

pco

Asph

alt P

CL. /

Man

ufac

turin

g an

d di

strib

utin

g as

phal

t pro

duct

s C

ontro

l and

Leg

al

M

ini M

BA -

Com

mer

ce a

nd

Co

ntro

l and

Leg

al

A

ccou

ntin

g / B

usin

ess

A

dmin

istra

tion

Mr.

Kasid

is C

hare

anch

olwa

nich

46

M

.B.A

. Fin

ance

and

Mar

ketin

g

- -

2000

- 20

05

Sale

Dire

ctor

IC

I Pai

nts

(Tha

iland

) Co.

, Ltd

. D

irect

or -

Dom

estic

Sal

es

G

eorg

e Au

gust

Uni

vers

ity o

f

20

06 -

pres

ent

Dire

ctor

- Do

mes

tic

Tipc

o As

phal

t PCL

. / M

anuf

actu

ring

and

dist

ribut

ing

asph

alt p

rodu

cts

G

oettin

gen,

Ger

man

y

Sale

s

Exec

utiv

e O

ffice

rs

Tipc

o As

phal

t PCL

. / M

anuf

actu

ring

and

dist

ribut

ing

asph

alt p

rodu

cts

36


Management and Authorized in Subsidiaries, Associated companies or other as follows:

Name Company Subsidiaries Associated Others

1 2 3 4 5 6 7 8 9 10 1 2 3 1 2 3 4 5 6

Mrs. Anurat Tiamtan X X X // Mr. Pahol Chindakul / Mr. Thaweesin Devahastin Na Ayudhya / Mr. Parnchalerm Sutatam / Mr. Alain Dupont / Mr. Jacques Marechal / Mr. Jacques Pastor // / / / / / / / / / / / / / Mr. Sitilarb Supsakorn // / / / / / / / / Mr. Somchit Sertthin // / / / / / / / / / / / / Mr. Chayongsak Pisitpong // / / / / / / / / / Mr. Chaiwat Srivalwat // / / / / / / / / / / Mr. Thierry Defrene // / / / / / / / / / / Mr. Niphon Suthimai / Mr. Emmanuel Scheer // / / / / / Ms. Auchcha Rattrakultip / / / Mr. Praphot Issariyakul / / / / / Notes : Company : Tipco Asphalt PCL. Subsidiaries 1 : Surat Bitumen Co., Ltd. 2 : Tipco Maritime Co., Ltd. 3 : Delta Shipping Co., Ltd. 4 : Alpha Maritime Co., Ltd. 5 : Thai Bitumen Co., Ltd. 6 : Bitumen Marine Co., Ltd. 7 : Tasco International Co., Ltd. 8 : Raycol Asphalt Co., Ltd. 9 : Tasco Shipping Co., Ltd. 10 : Tasco International (Hong Kong) Ltd. Associated 1 : Colasie Co., Ltd. 2 : Cambodia Asphalt Co., Ltd. 3 : Kemaman Oil Corporation SDN. BHD.

Other 1 : The Tipco Foods (Thailand) PCL. 2 : Thanomwongse Service Co., Ltd. 3 : Ekachai Container Terminal Co., Ltd. 4 : Siam Container Transport and Terminal Co., Ltd. 5 : Tipco F & B Co., Ltd. 6 : Thai Slurry Seal Co., Ltd. Notes : X = Chairperson / = Director // = Director Executive

37


Remuneration in cash

Total Remuneration in 2007 for the Board of Directors, Audit Committee and the Nomination and Remuneration Committee in cash was Baht 3,840,000. This included Baht 3,000,000 for the 14 members of the Board of Directors, Baht 720,000 for the 4 members of Audit Committee and Baht 120,000 for the 6 members of the Nomination and Remuneration Committee.

Name Positions Baht

1. Mrs. Anurat Tiamtan Chairperson 400,000

2. Mr. Pahol Chindakul Independent Director, Chairman of Audit Committee 400,000 and Nomination and Remuneration Committee Member

3. Mr. Thaweesin Devahastin Na Ayudhya Independent Director, Audit Committee Member and 400,000 Chairman of Nomination and Remuneration Committee

4. Mr. Parnchalerm Sutatam Independent Director and Audit Committee Member 380,000

5. Mr. Niphon Suthimai Independent Director and Audit Committee Member 380,000

6. Mr. Alain Dupont Director 200,000

7. Mr. Jacques Marechal Director 100,000

8. Mr. Jacques Pastor Executive Director and Nomination and remuneration 220,000 Committee Member

9. Mr. Thierry Defrene Executive Director, Director of International Sales 220,000 and Nomination and remuneration Committee Member

10. Mr. Sitilarb Supsakorn Executive Director and Nomination and Remuneration 220,000 Committee Member

11. Mr. Emmanuel Scheer Executive Director and Deputy Financial Officer 200,000

12. Mr. Somchit Sertthin Chief Executive Officer and Nomination and 220,000 Remuneration Committee Member

13. Mr. Chayongsak Pisitpong Chief Financial Officer 200,000

14. Mr. Chaiwat Srivalwat Director and Managing Director 200,000

Total 3,740,000

Note: Mr. Micheal Roullet resigned from Board of Directors in May 2007 and received Baht 100,000 remuneration during his directorship. Mr. Micheal Roullet was replaced by Mr. Jacques Marechal.

No non-financial remuneration for Directors in 2007

(b) Total remuneration in 2007 for Directors, Executive Directors and members of senior management, which included salary, Bonus and Retirement fund was Baht 67.4 Million.

38


Corporate Governance

The Board of Directors is fully aware of the importance of good corporate governance in order to improve efficiency, competitiveness, transparency and to build trust among the shareholders, investors and related parties. The Board of Directors, therefore, has set the following policies to support the Good Corporate Governance:

- To treat all shareholders and stakeholders equally;

- To increase the added value to the business in the long term, be diligent and thorough in the decision process with an aim of maximizing the shareholdersʼ benefits with no conflicts of interest at any level of operations;

- To conduct the business with transparency, accountability and adequate information disclosure to all related parties;

- The Board of Directors has set the Companyʼs code of conduct for directors, management, and staff to adhere to.

1. Rights of Shareholders

The Board of Directors provides necessary information relating to the Annual General Shareholdersʼ meeting both in Thai and English, providing ample time to review such information which is also available on the Companyʼs website (www.tipco.co.th). The Company facilitates the shareholders by providing proxy forms and voting cards.

In the invitation to the Annual General Shareholders meeting, the Company provides details of the Directors resolution of each agenda for the shareholders consideration such as providing resume of each director for new election or re-election, to appoint or re-appoint the external auditors with information on scope of services, proposed fee compared to the previous yearʼs, rationale on dividend payment, public announcement in the daily newspaper 3 days consecutively prior to the meeting, to say a few.

The Company, through the SET and the Companyʼs website, welcome the shareholders to propose an agenda to be included in the Annual General Shareholdersʼ meeting as well as to propose qualified candidate(s) of director(s) to be elected. The vote casting is on each candidate basis. The Chairperson welcomes the shareholders to ask questions and voice opinion on important issues, all of which are recorded in the minutes. At each Annual General Shareholdersʼ meeting, there will not be any new agenda proposed during the meeting other than what was in the list of agenda sent to the shareholders. At the meeting, some director may not be able to attend due to their residing in foreign country. The Chairperson and chairman of various committees, the Chief Executive Officer, Managing Director, Chief Finance Officer will be present to answer questions from the shareholders.

In the minutes of the meeting, voting method and result are recorded showing numbers of approved votes, disapproved votes and abstained votes. The directors attending the meeting, any questions and answers and all important issues discussed are recorded in the minutes of the Annual General Shareholdersʼ meeting.

Remuneration of Directors and Executives

Directorsʼ remuneration: The Company sets the remuneration of the directors clearly with transparency and appropriateness to attract and retain high caliber directors. Directors who are also members in the Audit Committee will be compensated additional remuneration in accordance to the greater responsibilities. Remunerations of various committees are proposed to the shareholders for consideration and approval with the recommendation of the Nomination and Remuneration Committee. Executivesʼ remuneration is in accordance with the industry and is subject to the Companyʼs operational result and their individual performance.

2. Equitable Treatment of Shareholders

The Company has to treat all shareholders equally and in a proper manner. The Company provides the shareholders proxy form to appoint other individual or the Companyʼs independent director to attend and vote on their behalf. The Company has implemented measures to protect the internal and other confidential information to be used unethically. Employeeʼs handbooks are given to all employees as well as directors specifying clear guidelines for the use of Companyʼs information. The Companyʼs directors and executives have to report any changes in his/her share holding interest in the Company. The Company also has to report those changes to the Stock Exchange of Thailand. The Company does not provide any financial assistance to other companies that are not subsidiaries.

39


Shareholders are provided with adequate information at least 7 days before the meeting date with accurate, detailed information on the various agendas together with proxy form.

3. Role of Stakeholders

Directors place great emphasis on all stakeholders to support the Company to effectively compete, make positive bottom line contribution and build successes. Thus, the Company values its employees, customers, suppliers, shareholders, competitors and to adhere to the principle of fulfilling all contractual obligations the Company is a party to.

The Companyʼs business philosophy is also to support successes of the stakeholders in providing quality products to customers and be a responsible company to the society at large. Each product under the Companyʼs distribution channel passes the ISO 9001 Quality Management System in order to ensure high standards of quality. Additionally, the Company has been awarded ISO 14001 accreditation for environment management, TIS 18001 standard for occupational health and safety management system. Our laboratories and lab equipment pass international standards guaranteed by ISO/12C 17025 award on quality system and technical competency and TLS 8001 of the Thai Labor Standard certification.

Despite all the certificates received, the Company is consciously aware of the importance of safety, welfare and benefits of our employees. The Company has joined the Provident Fund Scheme, “Rattanasiri” aiming to encourage long term savings of the employees. Moreover, the Companyʼs human resources department is constantly improving their yearly personnel development program.

4. Disclosure and Transparency

Disclosure of the Companyʼs general and financial information is accurate, complete, reliable, transparence in a timely manner. Disclosed information in the annual report and Form 56-1 is reviewed by the Companyʼs directors, executives, members of audit committee, nomination and remuneration committee, and independent directors and is posted on the Companyʼs website ( HYPERLINK “http://www.tipco.co.th” www.tipco.co.th) with reviewed notes written by the Board of Directors and the external auditor. There are reports on the large shareholders, shareholding interests of directors and executives, remuneration of the directors and details of each board meeting. The Company prohibits its directors, executives and employees to use the internal information for personal benefits.

Investors Relation

The Board of Directors recognizes the importance to the disclosure of information which is correct, complete, transparent and easy access to the public covering financial and general information of the Companyʼs business. The information is disclosed via the Stock Exchange of Thailand to the investor at large, financial analysts and to general public.

Such information can be obtained by contacting Mr. Chayongsak Pisitpong at telephone number 02-273-6425, facsimile number 02-271-3363 or by email at HYPERLINK “mailto:[email protected]” [email protected] or HYPERLINK “http://www.tipco.co.th” http://www.tipco.co.th in the Investors Relation section.

5. Responsibilities of the Board

The Board of Directors has determined the roles, duties and responsibilities of the Board of Directors clearly. Additionally, the Companyʼs visions, strategies covering marketing, production, general management, human resources, finance and budgeting are clearly defined in order for the management to measure their performance against the budget. Furthermore, operations are periodically audited by the internal audit team whose report of significant findings are scrutinized with proper corrective measures under the close supervision of the Board members.

Leadership and Vision

Vision

To be recognized as Asiaʼs leading road construction materials company and key contributor to the success of customers, business partners, employees, stockholders and well being of society.

40


Mission

To strengthen domestic market leadership and to expand into high potential overseas markets through higher customer-driven marketing, diversified products and services, strategic partnerships, technical expertise, professional team, higher efficiency and good corporate governance.

To achieve operational and technical excellence through acquiring technology, research and development, partnerships, human resources development, information technology, supply and logistic management.

Conflicts of Interest

The Board of Directors desires that conflicts of interest should be avoided. However, if there are cases to be considered, the Board of Directors will treat it with transparency and to the best interest of the Company and with full disclosure.

Business Ethics

The Companyʼs codes of conduct have been provided for the Board of Directors, the executives and employees to follow. This guideline can lead to transparent practices and a foundation for operating business with due regards to society as a whole.

Balance of Non-Executive Directors

The Board of Directors has 14 members, which consists of:

Executive Directors 8 Non-executive Directors 2 Independent Directors 4

Combination or Separation of Position

The Chairman of the Board of Directors and the Chief Executive Officer are not the same individual. However, the Chairman of the Board is not an independent director.

Remuneration of the Directors and the Executives

Directorsʼ remuneration: the Company sets the remuneration of the directors clearly, with transparency and adequate to attract and retain high caliber directors. Director who is assigned to be the Audit Committee will be given additional remuneration in accordance with higher responsibilities. Executivesʼ remuneration is in accordance with the industry and is subject to the operational result of the Company and each executiveʼs performance.

Board Meetings

Board meetings are scheduled to be held minimum 4 times a year. Invitation letters were sent with complete agenda details and related documents for consideration prior to the meetings. The Company maintained detailed minutes of every Board meeting. The directors approved these minutes and they are readily available for review.

41


In 2

007,

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mee

tings

. Eac

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atte

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was

as

follo

ws:

Num

ber o

f Mee

tings

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nded

(tim

es)

Aud

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omm

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N

omin

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emun

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es

Title

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rs. A

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8/8

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r. Ja

cque

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1/

4

Rem

arks

:

Mr.

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Mar

echa

l was

app

oint

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s a

dire

ctor

on

May

18,

200

7

Mr.

Alai

n D

upon

t and

Mr.

Mic

hel R

oulle

t, ar

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ors

who

wor

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s. T

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be

the

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s of

the

Com

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as

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prom

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ʼs tra

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par

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as.

42


The Board of Directors has recorded the minutes of every meeting in writing and arrange for the safe keeping of such certified minutes.

Control and Internal Audit

The Board of Directors places great importance on the control and internal audit both at the managerial and operational levels with a Procedure Manual and approval authority for each level of operations for proper control.

As for internal audit, there are operational internal audits done regularly under close supervision of the Audit committee.

Inside Information Control

It is the Companyʼs strict policy to inform directors, executives, their spouses and children, who are still a minor, of their responsibility to accurately report on the activities of their Companyʼs stocks trading activities as in accordance with the Securities and Exchange Act B.E. 2535 as well as the notifications of the Stock Exchange of Thailand (SET). The Company has distributed to all directors, executives and employees the Companyʼs Code of Ethics which include the policy on the appropriate use of internal information.

Staff

Number of Employees

As at December 31, 2007, the total number of Companyʼs employees is 849 persons comprising of 741 permanent employees and 108 temporary staff. Of the permanent employees, 189 persons and 552 persons work at the head office and the factory respectively.

It is noted that in the last 4 years, the Company did not have any legal proceedings concerning labor dispute.

Employees Remuneration

The total remuneration of the Companyʼs staff comprises of salary, bonus, work benefits, overtime pay, allowances, other remuneration and the Companyʼs contribution to the staff provident fund amounting to Baht 394.2 million in 2007 compared to Baht 336.9 million in 2006.

Employee Development Policy

Employee development is a key responsibility of all supervisors and employees. The Companyʼs Employees Development Policy comes in various methods / forms such as training, coaching, on the job training, delegation and assignment, as well as providing employees with organizational knowledge resources. These activities will enhance employeesʼ competence and allow them to perform their work effectively and enable the company to cope with the lacking of competent employee.

In 2006, the company approved a budget for employee development in an amount of Baht 4,000,000 which was used for competency based training along with the development program in line with companyʼs strategic plans. In 2007, the Company has implemented a new Development Program for high potential employees in order to allow them to improve their skills and knowledge by means of blended solutions. Moreover, the result of employee satisfaction survey in terms of development factor has also been used in employee development planning.

With these development methods, The Companyʼs employees will surely improve their skills and knowledge as well as blending themselves to the globalized working cultures.

Internal Control

The Audit Committee had considered the annual audit plan, audit reports, and the assessment of the adequacy of internal controls of fives areas namely; (1) Organizational Control and the Business Environment, (2) Risk Management, (3) Management Control Activities, (4) Information and Communications, and (5) Monitoring.

43


The Audit Committee commented that the Company has adequately, appropriately and efficiently implemented internal control measures in all areas with no significant findings noted.

Dividend Policy

The Company has the policy to pay dividend not less than 60% of its company alone financial statementʼs net profit of each fiscal year. However, the actual dividend payment depends on cash flow, investment plan of the company and its subsidiaries, term and conditions of agreements entered by the Company together with all other necessity and suitability in the future.

The Companyʼs subsidiaries have the policy to pay dividend not less than 60% of each subsidiariesʼ net profit of each fiscal year. However, the actual dividend payment depends on cash flow, investment plan of the company and its subsidiaries, term and conditions of agreements entered by the Company together with all other necessity and suitability in the future.

44


Rel

ated

Per

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and

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actio

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Rel

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par

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llow

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: int

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sha

reho

lder

s, d

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or m

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Nam

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Per

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Nat

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of B

usin

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Rel

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actio

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Type

of C

onne

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Con

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(% h

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of 2

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and

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spac

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ears

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onth

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oil

C

ost p

lus

certa

in m

argi

n 12

4.84

pr

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ts

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ayco

l Asp

halt

Co.

, Ltd

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anuf

actu

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and

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r of f

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ry s

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t plu

s ce

rtain

mar

gin

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dist

ribut

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of a

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lt pr

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s Bu

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t plu

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rtain

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pr

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e Ti

pco

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s (T

haila

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CL.

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2% s

hare

hold

ing

in

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r of o

il pr

oduc

ts

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0

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o As

phal

t PCL

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i Con

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Co.

, Ltd

. In

land

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epot

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omm

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t plu

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rtain

mar

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Si

am C

onta

iner

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nspo

rt an

d

Inla

nd C

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iner

Dep

ot

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mon

dire

ctor

s Bu

yer o

f oil

prod

ucts

C

ost p

lus

certa

in m

argi

n 4.

27

Term

inal

Co.

, Ltd

.

Th

ai S

lurry

Sea

l Co.

, Ltd

. R

oad

cons

truct

ion

and

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omm

on d

irect

ors

Buye

r of a

spha

lt pr

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Cos

t plu

s ce

rtain

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gin

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7

m

aint

enan

ce c

ontra

ctor

C

olas

S.A

. R

oad

cons

truct

ion

and

30

.82%

sha

reho

ldin

g in

Co

nsul

tant

(Tec

hnica

l Man

agem

ent)

5 ye

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cont

ract

at 1

15,0

00 p

er a

nnum

18

.01

mai

nten

ance

con

tract

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o As

phal

t PCL

plus

0.7

5% a

t rev

enue

of s

peci

fic p

rodu

ct

in

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nce

Bu

yer o

f asp

halt

prod

ucts

61.2

0

Th

ai C

rush

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Plan

t Co.

, Ltd

. Di

strib

utes

Agg

rega

te fo

r the

road

C

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on d

irect

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r of o

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ts

Cos

t plu

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gin

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3

Ti

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B C

o., L

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Rea

dy fr

uit d

rink

Com

mon

dire

ctor

s Fr

uit j

uice

C

ost p

lus

certa

in m

argi

n 6.

47

Ya

la C

onst

ruct

ion

Com

pany

Lim

ited

Roa

d co

nstru

ctio

n Ex

ecut

ive

Offi

cer i

s al

so a

Dire

ctor

Bu

yer o

f asp

halt

and

oil p

rodu

cts

Cos

t plu

s ce

rtain

mar

gin

34.8

6

Co

mbo

dia

Asph

alt C

ompa

ny L

imite

d M

anuf

actu

ring

and

dist

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C

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on d

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Buye

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lt pr

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Cos

t plu

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mar

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34.8

6

of

asp

halt

prod

ucts

45


Discussion on Financial Status and Operations

Operation Analysis

The Company and subsidiaries reported 2007 net profit of Baht 306.16 million, a decrease of Baht 37.25 million from Baht 343.41 million in 2006. The reasons for the decrease are as follows:

The Company reported 2007 sales and services of Baht 10,455.29 million, an increase from 2006 of Baht 887.90 million or 9.28 per cent. The increase was mainly due to significant hike in asphalt prices which was in line with the erupted increase in oil prices during the period and the slight slow down in the budget disbursement impacted by the political change in Thailand during the year.

The Companyʼs gross profit margin decreased from 11.78 per cent to 9.3 percent from the uptrend in asphalt prices and inability to pass on the full cost increase to the customers particularly export customers.

Expenses during 2007 were effectively controlled reflecting in a decrease in selling, general and administrative expenses to sales from 6.05 per cent in 2006 to 5.12 per cent in 2007. The Company also has to recognize to share of loss from the asphalt refinery joint venture in Malaysia in the amount of Baht 11.23 million due to the refinery has already been commissioned and started to recognize expenses.

Financial Analysis

Financial status of the Company at the end of 2007 is analyzed as follows:

Liquidity ratio in 2007 is at par with the previous year with increased efforts on trade collection and controlling expenses.

The Companyʼs ability to generate cash slightly weakened due to the uptrend in the asphalt prices and the uncertainty caused by the political situation despite efforts in trying to control expenses and cost of production.

Return relative to fixed assets improved in an attempt to increase the assets utilization to the fullest.

The Company continues to manage loan and other liabilities closely and regularly monitor debt to equity ratio resulting in various financial ratios at the end of 2007 at par with those of 2006.

46


Non-audit fee

No. Company Non-audit service Name of company Non-audit fee service Paid for the For Payment period in the future

11 Tipco Asphalt Public Company Tax services Ernst&Young Corporate 1,080,079.58 409,443.49 Limited services limited

12 Tipco Asphalt Public Company Specific Review of Ernst & Young Auditing 100,000.- - Limited Accounting Office Limited Transaction for Mr. Supachai the purpose of Punyawattana Consolidation affiliates

13 Bitumen Marine Company Review the Ernst & Young Auditing 70,000.- - Limited compliant of Office Limited Board of Mr. Supachai investment Punyawattana conditions

Total non-audit fee 1,250,079.58 409,443.49

The confirmation for the complete correctness of the payment to auditorFor the year ended December 31, 2007

Audit fee

No. Company Name of auditor Audit fee (Baht)

1 Tipco Asphalt Public Company Limited Ernst & Young Auditing Office Limited Mr. Supachai Punyawattana 1,711,741.-

2 Tipco Maritime Company Limited Ernst & Young Auditing Office Limited Mr. Supachai Punyawattana 514,910.-

3 Thai Bitumen Company Limited Ernst & Young Auditing Office Limited Mr. Supachai Punyawattana 211,840.-

4 Surat Bitumen Company Limited Ernst & Young Auditing Office Limited Mr. Supachai Punyawattana 139,437.-

5 Delta Shipping Company Limited Ernst & Young Auditing Office Limited Mr. Supachai Punyawattana 171,900.-

6 Alpha Maritime Company Limited Ernst & Young Auditing Office Limited Mr. Supachai Punyawattana 170,960.-

7 Bitumen Marine Company Limited Ernst & Young Auditing Office Limited Mr. Supachai Punyawattana 261,940.-

8 Raycol Asphalt Co., Ltd. Ernst & Young Auditing Office Limited Mr. Supachai Punyawattana 436,150.-

9 Tasco International Company Limited Ernst & Young Auditing Office Limited Mr. Supachai Punyawattana 372,812.-

10 Tasco Shipping Company Limited Ernst & Young Auditing Office Limited Mr. Supachai Punyawattana 70,000.-

Total audit fee 4,061,690.-

47


Above information:

Correct and complete. I hereby confirmed that there was no other service performed to the Company and Subsidiaries which generated any fee income to the auditing company which I am a partner of and/or from other related individuals and/or other related parties that I am aware of and is not disclosed in the above information.

Incorrect and incomplete :.............................................................................................................................................. .......................................................................................................................................................................................

in amending the above information (if any), I hereby comfirm that all the information in this report herewith shows the compensation for auditing work and other services that the Company and Subsidiaries paid to the undersigned, the auditing firm which I am a partner, to related individuals or to related parties and to the auditing firm, are correct and complete.

Mr. Supachai Punyawattana Ernst & Young Auditing Office Limited The auditor of TIPCO ASPHALT PUBLIC COMPANY LIMITED

X

48


Report of The Audit Committee

The Audit Committee of Tipco Asphalt Public Company Limited comprises of four independent directors with Khun Pahol Chindakul as the Chairman, and members are of Khun Thaweesin Devahastin Na Ayudhya, Khun Parnchalerm Sutatam and Khun Niphon Suthimai.

During 2007, the Audit Committee meetings have been held every quarter with the external auditors, the management and the Internal Audit Department, and since June 2007 the meetings with the Internal Audit Department were held monthly, with the following topics to be considered:

The Company Financial Statements

The Audit Committee has reviewed the Company financial statements of 2007 and found them to be complete, contained with adequate information, and prepared in accordance to the Generally Accepted Accounting Principles. The Companyʼs Financial Statements had been presented to and approved by the Companyʼs Board of Directors.

Inter-Company Transactions

The Audit Committee had reviewed the inter-company transactions and noted that they were of normal business transactions.

Internal Control

The Audit Committee had considered the annual audit plan, audit reports, and the assessment of the adequacy of internal controls of fives areas namely; (1) Organizational Control and the Business Environment, (2) Risk Management, (3) Management Control Activities, (4) Information and Communications, and (5) Monitoring.

The Audit Committee commented that the Company has adequately, appropriately and efficiently implemented internal control measures in all areas with no significant findings noted.

Pahol Chindakul (Chairman of the Audit Committee)

49


Report of Directors Relating to Responsibilities for Financial Statements

The Company Board of Directors is responsible for the consolidated and the financial statements of Tipco Asphalt Public Company Limited and other financial information appears in the Annual Report pertaining to the Company and its subsidiaries. The financial statements are prepared in accordance with Generally Accepted Accounting Principles while the Accounting Policies are selected for their appropriateness and consistently implemented. The financial statements are also prepared with careful considerations and best possible estimates while significant information is sufficiently and transparently disclosed in the notes for the benefits of shareholder and other investors.

The Board of Directors had appointed the Audit Committee, comprises of independent directors whose qualifications are in accordance to requirements of Security Exchange of Thailand, to review the accuracy and sufficiency of the Companyʼs financial reports and the disclosures of related transactions and the adequacy and efficiency of internal control system. Opinion of the Audit Committee is reported in the Audit Committeeʼs report published in this Annual Report.

The Board of Directors comments that the Company consolidated finance statements and the Company financial statements of 31st December 2007 that were jointly reviewed by the Audit Committee, Management and external auditors had stated the proper financial and operating performances, and in accordance with the Generally Accepted Accounting Principles.

Chairperson Managing Director

50


51


TIPCO ASPHALT PUBLIC COMPANY LIMITED

AND ITS SUBSIDIARIES

REPORT AND CONSOLIDATED FINANCIAL STATEMENTS

31 DECEMBER 2007 AND 2006

52


Report of Independent Auditor

To the Shareholders of Tipco Asphalt Public Company Limited

I have audited the accompanying consolidated balance sheets of Tipco Asphalt Public Company Limited and

its subsidiaries as at 31 December 2007 and 2006, the related consolidated statements of income, changes

in shareholdersʼ equity and cash flows for the years then ended, and the separate financial statements of

Tipco Asphalt Public Company Limited for the same periods. These financial statements are the responsibility

of the management of the Company and its subsidiaries as to their correctness and the completeness of the

presentation. My responsibility is to express an opinion on these financial statements based on my audits.

The financial statements of nine indirectly-held overseas subsidiaries, overseas jointly controlled entity and

associates as at 31 December 2007 and 2006 and for the years then ended were audited by other auditors,

whose reports have been furnished to me. My opinion on the consolidated financial statements and the

separate financial statements, insofar as they relate to the amounts included for those subsidiaries and jointly

controlled entity and associates, is based solely on the reports of the other auditors. The financial statements

of these subsidiaries reflect total assets as at 31 December 2007 and 2006 of approximately Baht 941 million

and Baht 833 million (constituting 13 percent and 12 percent of consolidated total assets), respectively, and

total revenues for the years ended 31 December 2007 and 2006 of approximately Baht 1,403 million and

Baht 1,972 million (constituting 14 percent and 20 percent of consolidated total revenues), respectively.

The financial statements of the subsidiaries, jointly controlled entity and associates reflect total net loss for

the year ended 31 December 2007 of approximately Baht 8.8 million (total net income for the year ended

31 December 2006 of approximately Baht 107 million, constituting and 31 percent of consolidated total net

income).

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

that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are

free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts

and disclosures in the financial statements. An audit also includes assessing the accounting principles

used and significant estimates made by management, as well as evaluating the overall financial statement

presentation. I believe that my audits and the reports of the other auditors referred to in the first paragraph

provide a reasonable basis for my opinion.

In my opinion, based on my audits and the reports of the other auditors, the financial statements referred to

above present fairly, in all material respects, the financial position of Tipco Asphalt Public Company Limited

and its subsidiaries and of Tipco Asphalt Public Company Limited as at 31 December 2007 and 2006, and

the results of their operations, and cash flows for the years then ended in accordance with generally accepted

accounting principles.

53


Without qualifying my opinion on the above financial statements, I draw attention to the matter as discussed

in Note 4 to the financial statements whereby the Company changed its accounting policy for recording

investments in subsidiaries, jointly controlled entity and associates in the separate financial statements from

the equity method to the cost method as described in Note 4.1 to the financial statements. In addition, during

2007, the Company changed its accounting policy for recording investment in jointly controlled entity in the

consolidated financial statements from the proportionate method to the equity method. The Company has

thus restated the separate and consolidated financial statements as at 31 December 2006 and for the year

then ended to reflect these accounting changes.

Supachai Phanyawattano

Certified Public Accountant (Thailand) No. 3930

Ernst & Young Office Limited

Bangkok: 18 February 2008

54


TIPCO ASPHALT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES BALANCE SHEETS AS AT 31 DECEMBER 2007 AND 2006

(Unit: Baht) Consolidated financial statements Separate financial statements Note 2007 2006 2007 2006 (Restated) (Restated) ASSETS CURRENT ASSETS Cash and cash equivalents 361,287,307 193,809,844 162,153,827 72,422,561 Current investments 6 44,960,035 17,920,328 1,970,520 1,761,000 Trade accounts and notes receivable Related parties 7, 8 996,432,085 255,814,199 1,191,166,079 632,450,211 Unrelated parties 7 1,520,695,864 1,736,990,594 941,887,425 1,013,936,793 Less: Allowance for doubtful accounts (66,628,406) (77,126,125) (31,777,286) (59,812,314) Trade accounts and notes receivable - net 7 2,450,499,543 1,915,678,668 2,101,276,218 1,586,574,690 Amounts due from related parties 8 11,332,943 12,791,159 11,152,220 16,268,764 Short-term loans to related parties and accrued interest income 8 5,588,150 - 6,744,639 - Investment in preference shares of the jointly controlled entity under option agreement to co-venturer 13 317,941,999 - - - Inventories - net 9 511,181,529 1,241,292,608 247,527,203 937,173,982 Other current assets Prepaid expenses 17,227,567 20,651,656 5,871,617 9,997,721 Advances for merchandise 3,178,576 27,315,895 3,092,248 8,884,164 Other receivables 36,019,063 28,407,232 2,808,731 2,556,100 Advance payment 27,700,774 29,930,599 19,239,484 23,223,809 Others 45,206,264 18,047,876 28,823,733 15,622,515TOTAL CURRENT ASSETS 3,832,123,750 3,505,845,865 2,590,660,440 2,674,485,306

The accompanying notes are an integral part of the financial statements.

55


TIPCO ASPHALT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES BALANCE SHEETS (Continued) AS AT 31 DECEMBER 2007 AND 2006

(Unit: Baht) Consolidated financial statements Separate financial statements Note 2007 2006 2007 2006 (Restated) (Restated)NON-CURRENT ASSETS Investments in subsidiaries 10 - - 2,224,098,978 708,948,802 Investment in jointly controlled entity 11 265,826,292 870,846 7,856,680 7,856,680 Investments in associates 12 31,309,538 29,374,412 18,558,580 18,558,580 Investment in convertible preference shares of the jointly controlled entity 13 - 328,146,720 - - Investment in preference shares of the jointly controlled entity 13 317,649,792 388,166,993 - - Investment in preference shares of the subsidiary of the jointly controlled entity 13 452,410,310 456,096,217 - - Other long-term investments - net 14 6,013,300 7,983,820 6,013,300 7,983,820 Long-term loans to related parties and accrued interest income - net 8 7,234,664 8,444,840 91,792,763 1,645,212,082 Property, plant and equipment - net 15 1,757,607,022 1,657,201,695 815,018,002 839,263,172 Assets awaiting sale 16 264,750,893 264,807,066 - - Intangible assets Software licenses - net 5,997,495 4,860,901 4,842,960 3,944,290 Other non-current assets Leasehold rights - net 17 51,850,535 53,632,753 5,241,749 5,469,651 Deferred charges - net 25,530,718 33,410,805 6,601,283 2,305,703 Others 16,995,187 15,626,187 9,324,839 6,450,831TOTAL NON-CURRENT ASSETS 3,203,175,746 3,248,623,255 3,189,349,134 3,245,993,611TOTAL ASSETS 7,035,299,496 6,754,469,120 5,780,009,574 5,920,478,917


56


TIPCO ASPHALT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES BALANCE SHEETS (Continued) AS AT 31 DECEMBER 2007 AND 2006 (Unit: Baht) Consolidated financial statements Separate financial statements Note 2007 2006 2007 2006 (Restated) (Restated) LIABILITIES AND SHAREHOLDERS EQUITY CURRENT LIABILITIES Short-term loans from financial institutions 18 1,379,537,414 1,041,194,998 897,452,701 800,610,267 Trade accounts payable Related parties 8 19,659,979 13,140,661 92,645,568 35,469,851 Unrelated parties 473,845,730 536,795,419 368,101,480 468,556,914 Amounts due to and advance from related parties 8 4,810,257 4,432,852 3,386,217 3,885,604 Short-term loan from related party and accrued interest expenses 8 - - 33,536,521 - Current portion of long-term loans 20 256,120,000 256,120,000 217,120,000 217,120,000 Liabilities under hire purchase agreements - current portion 19,115,471 14,632,439 16,480,164 13,180,126 Short-term loan from other company 19 250,561,740 - - - Other current liabilities Accrued freight expenses - 146,224,328 - 144,832,623 Other accrued expenses 128,777,633 159,594,927 65,571,082 68,444,829 Advance from customers 56,118,682 8,910,404 26,973,846 - Other payable 29,310,499 35,432,947 7,967,001 21,151,888 Others 23,808,838 17,792,323 12,992,551 8,451,389TOTAL CURRENT LIABILITIES 2,641,666,243 2,234,271,298 1,742,227,131 1,781,703,491NON-CURRENT LIABILITIES Long-term loans - net of current portion 20 1,215,962,444 1,470,247,986 1,032,200,000 1,249,320,000 Liabilities under hire purchase agreements - net of current portion 34,440,316 22,662,988 29,086,477 20,167,469 TOTAL NON-CURRENT LIABILITIES 1,250,402,760 1,492,910,974 1,061,286,477 1,269,487,469TOTAL LIABILITIES 3,892,069,003 3,727,182,272 2,803,513,608 3,051,190,960


57


TIPCO ASPHALT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES BALANCE SHEETS (Continued) AS AT 31 DECEMBER 2007 AND 2006 (Unit: Baht) Consolidated financial statements Separate financial statements Note 2007 2006 2007 2006 (Restated) (Restated)SHAREHOLDERS EQUITY Share capital Registered 21 164,315,138 ordinary shares of Baht 10 each (2006: 164,317,638 ordinary shares of Baht 10 each) 1,643,151,380 1,643,176,380 1,643,151,380 1,643,176,380 Issued and fully paid 152,543,726 ordinary shares of Baht 10 each (2006: 151,930,634 ordinary shares of Baht 10 each) 1,525,437,260 1,519,306,340 1,525,437,260 1,519,306,340 Premium on share capital 886,048,487 880,465,726 886,048,487 880,465,726 Share subscription received in advance - 230,165 - 230,165 Retained earnings of a subsidiary arising as a result of the Companyʼs acquisition of minority interest in the subsidiary at a price lower than book value 6,237,755 6,237,755 - - Translation adjustments (77,967,640) (40,095,892) - - Retained earnings Appropriated - statutory reserve 22 41,623,000 28,100,000 41,623,000 28,100,000 Unappropriated 540,516,122 422,612,647 523,387,219 441,185,726

EQUITY ATTRIBUTABLE TO THE COMPANYʼS SHAREHOLDERS 2,921,894,984 2,816,856,741 2,976,495,966 2,869,287,957 MINORITY INTEREST - Equity attributable to minority shareholders of subsidiaries 221,335,509 210,430,107 - - TOTAL SHAREHOLDERS EQUITY 3,143,230,493 3,027,286,848 2,976,495,966 2,869,287,957 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 7,035,299,496 6,754,469,120 5,780,009,574 5,920,478,917


58


TIPCO ASPHALT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES INCOME STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006 (Unit: Baht) Consolidated financial statements Separate financial statements Note 2007 2006 2007 2006 (Restated) (Restated) REVENUES Sales and services 10,455,293,921 9,567,387,377 9,285,213,030 8,268,181,024 Other income Interest income 5,020,362 5,439,106 52,076,782 101,778,351 Dividend income - - 133,669,216 243,678,482 Gain on sales of assets 7,807,664 3,635,850 4,443,747 3,066,715 Others 85,827,053 61,042,148 76,958,941 62,917,416 Share of income from investments in jointly controlled entity and associates 2,285,613 4,390,467 - - TOTAL REVENUES 10,556,234,613 9,641,894,948 9,552,361,716 8,679,621,988EXPENSES Cost of sales and services 9,482,735,814 8,440,172,704 8,729,497,921 7,598,876,060 Selling and administrative expenses 534,975,865 579,019,218 337,044,644 334,141,237 Doubtful accounts for long-term loans to a subsidiary and accrued interest income - - 49,189,686 175,522,553 Loss on reclassification of investment - 26,878,660 - 26,878,660 Loss on exchange rate 7,530,734 47,714,173 20,236,958 20,806,916 Share of loss from investments in jointly controlled entity and associates 13,515,821 428,479 - - TOTAL EXPENSES 10,038,758,234 9,094,213,234 9,135,969,209 8,156,225,426INCOME BEFORE INTEREST EXPENSES CORPORATE INCOME TAX AND MINORITY INTEREST 517,476,379 547,681,714 416,392,507 523,396,562INTEREST EXPENSES (160,477,978) (160,955,652) (128,707,739) (133,310,843)CORPORATE INCOME TAX 24 (30,466,726) (21,663,164) (17,225,640) - INCOME AFTER CORPORATE INCOME TAX 326,531,675 365,062,898 270,459,128 390,085,719NET INCOME ATTRIBUTABLE TO MINORITY INTEREST (20,370,565) (21,650,839) - - NET INCOME FOR THE YEAR 306,161,110 343,412,059 270,459,128 390,085,719


59


TIPCO ASPHALT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES INCOME STATEMENTS (Continued) FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006 (Unit: Baht) Consolidated financial statements Separate financial statements Note 2007 2006 2007 2006 (Restated) (Restated)

EARNINGS PER SHARE 27 Basic earnings per share Net income 2.01 2.37 1.77 2.70 Weighted average number of ordinary shares (shares) 152,106,443 144,598,351 152,106,443 144,598,351 Diluted earnings per share 27 Net income 1.96 2.31 1.73 2.62 Weighted average number of ordinary shares (shares) 155,969,083 148,609,056 155,969,083 148,609,056


60


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61


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1,66

1,21

1)

-

-

-

(51,

661,

211)

Incr

ease

in s

hare

cap

ital (

Note

21)

6,

130,

920

5,58

2,76

1 (2

30,1

65)

-

-

-

-

-

-

11,4

83,5

16Ne

t inco

me

for t

he y

ear

-

-

-

-

-

-

-

306,

161,

110

-

306,

161,

110

Divid

end

paid

(Not

e 31

) -

-

-

-

-

-

-

(1

74,7

34,6

35)

-

(174

,734

,635

)Ap

prop

riate

d ne

t inco

me

for t

he y

ear

to

lega

l res

erve

(Not

e 22

) -

-

-

-

-

-

13

,523

,000

(1

3,52

3,00

0)

-

- In

crea

se in

min

ority

inte

rest

- eq

uity

attr

ibut

able

to m

inor

ity s

hare

hold

ers

of s

ubsid

iarie

s -

-

-

-

-

-

-

-

10

,905

,402

10

,905

,402

Bala

nce

as a

t 31

Dece

mbe

r 200

7 1,

525,

437,

260

886,

048,

487

-

-

6,23

7,75

5 (7

7,96

7,64

0)

41,6

23,0

00

540,

516,

122

221,

335,

509

3,14

3,23

0,49

3

Th

e ac

com

pany

ing

note

s ar

e an

inte

gral

par

t of t

he fi

nanc

ial s

tate

men

ts.

62


TIPC

O A

SPHA

LT P

UBLI

C CO

MPA

NY L

IMIT

ED A

ND IT

S SU

BSID

IARI

ESST

ATEM

ENTS

OF

CHAN

GES

IN S

HARE

HOLD

ERS

EQ

UITY

(Con

tinue

d)FO

R TH

E YE

ARS

ENDE

D 31

DEC

EMBE

R 20

07 A

ND 2

006

(U

nit:

Baht

)

Se

para

te fi

nanc

ial s

tate

men

ts

U

nrea

lised

Sh

are

loss

on

the

Re

tain

ed e

arni

ngs

Iss

ued

and

su

bscr

iptio

n

cha

nge

in

Ret

aine

d ea

rnin

gs

App

ropr

iate

d

pai

d-up

Pr

emiu

m o

n

rece

ived

va

lue

of

o

f

T

rans

latio

n

- st

atut

ory

sha

re c

apita

l s

hare

cap

ital

in a

dvan

ce

inve

stm

ent

a su

bsid

iary

adj

ustm

ents

rese

rve

U

napp

ropr

iate

d

To

tal

Ba

lanc

e as

at 3

1 De

cem

ber 2

005

- as

prev

ious

ly re

porte

d

1,4

22,8

71,5

50

808,

352,

867

-

(37,

762,

988)

-

9,

068,

678

10,8

00,0

00

203

,228

,845

2,

416,

558,

952

Cum

ulat

ive e

ffect

of t

he c

hang

e in

acc

ount

ing

polic

y fo

r

inve

stm

ents

in s

ubsid

iarie

s, jo

intly

con

trolle

d en

tity

and

asso

ciate

s (N

ote

4.1)

- -

-

-

-

(9

,068

,678

) -

(2

8,10

0,58

1)

(37,

169,

259)

Bala

nce

as a

t 31

Dece

mbe

r 200

5 - a

s re

stat

ed

1,4

22,8

71,5

50

808,

352,

867

-

(37,

762,

988)

-

-

10,8

00,0

00

175,

128,

264

2,37

9,38

9,69

3Un

real

ised

item

s in

inco

me

stat

emen

t

Reve

rsal

of u

nrea

lised

loss

on

the

chan

ge

in v

alue

of in

vest

men

t in a

vaila

ble-

for-s

ales

secu

ritie

s du

e to

sal

e

- -

-

37

,762

,988

-

-

-

-

37

,762

,988

Incr

ease

in s

hare

cap

ital

96

,434

,790

72

,112

,859

-

-

-

-

-

-

16

8,54

7,64

9Ca

sh re

ceip

t in a

dvan

ce fr

om s

hare

sub

scrip

tion

-

-

230,

165

-

-

-

-

-

230,

165

Net in

com

e fo

r the

yea

r (re

stat

ed)

-

-

-

-

-

-

-

390,

085,

719

390,

085,

719

Divid

end

paid

(Not

e 31

)

- -

-

-

-

-

-

(1

06,7

28,2

57)

(106

,728

,257

)Ap

prop

riate

d ne

t inco

me

for t

he y

ear

to

lega

l res

erve

(Not

e 22

)

- -

-

-

-

-

17

,300

,000

(1

7,30

0,00

0)

- Ba

lanc

e as

at 3

1 De

cem

ber 2

006

- as

rest

ated

1

,519

,306

,340

88

0,46

5,72

6 23

0,16

5

-

-

-

28,1

00,0

00

441,

185,

726

2,86

9,28

7,95

7

The

acco

mpa

nyin

g no

tes

are

an in

tegr

al p

art o

f the

fina

ncia

l sta

tem

ents

.

63


TIPC

O A

SPHA

LT P

UBLI

C CO

MPA

NY L

IMIT

ED A

ND IT

S SU

BSID

IARI

ES

ST

ATEM

ENTS

OF

CHAN

GES

IN S

HARE

HOLD

ERS

EQ

UITY

(Con

tinue

d)

FO

R TH

E YE

ARS

ENDE

D 31

DEC

EMBE

R 20

07 A

ND 2

006

(U

nit:

Baht

)

Sep

arat

e fin

ancia

l sta

tem

ents

Unr

ealis

ed

Sha

re

loss

on

the

R

etai

ned

earn

ings

Issu

ed a

nd

su

bscr

iptio

n

cha

nge

in

Reta

ined

ear

ning

s

Appr

opria

ted

pa

id-u

p

Pre

miu

m o

n

rece

ived

va

lue

of

of

Tra

nsla

tion

-

stat

utor

y

s

hare

cap

ital

sh

are

capi

tal

in a

dvan

ce

in

vest

men

t

a s

ubsid

iary

a

djus

tmen

ts

re

serv

e

U

napp

ropr

iate

d

Tot

al

Bala

nce

as a

t 31

Dece

mbe

r 200

6 - a

s pr

evio

usly

repo

rted

1,5

19,3

06,3

40

880,

465,

726

230,

165

-

6,23

7,75

5 (4

0,09

5,89

2)

28,1

00,0

00

422,

612,

647

2,81

6,85

6,74

1 Cu

mul

ative

effe

ct o

f the

cha

nge

in a

ccou

ntin

g po

licy

for

in

vest

men

ts in

sub

sidia

ries,

join

tly c

ontro

lled

entity

an

d as

socia

tes

(Not

e 4.

1)

-

-

-

-

(6,2

37,7

55)

40,0

95,8

92

-

18,5

73,0

79

52,4

31,2

16

Bala

nce

as a

t 31

Dece

mbe

r 200

6 - a

s re

stat

ed

1,5

19,3

06,3

40

880,

465,

726

230,

165

-

-

-

28,1

00,0

00

441,

185,

726

2,86

9,28

7,95

7In

crea

se in

sha

re c

apita

l (No

te 2

1)

6,

130,

920

5,58

2,76

1 (2

30,1

65)

-

-

-

-

-

11,4

83,5

16Ne

t inco

me

for t

he y

ear

-

-

-

-

-

-

-

270,

459,

128

270,

459,

128

Divid

end

paid

(Not

e 31

)

- -

-

-

-

-

-

(1

74,7

34,6

35)

(174

,734

,635

)Ap

prop

riate

d ne

t inco

me

for t

he y

ear

to

lega

l res

erve

(Not

e 22

)

- -

-

-

-

-

13

,523

,000

(1

3,52

3,00

0)

- Ba

lanc

e as

at 3

1 De

cem

ber 2

007

1,5

25,4

37,2

60

886,

048,

487

-

-

-

-

41,6

23,0

00

523,

387,

219

2,97

6,49

5,96

6

Th

e ac

com

pany

ing

note

s ar

e an

inte

gral

par

t of t

he fi

nanc

ial s

tate

men

ts.

64


TIPCO ASPHALT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES CASH FLOW STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006 (Unit: Baht) Consolidated financial statements Separate financial statements 2007 2006 2007 2006 (Restated) (Restated) Cash flows from operating activities: Net income 306,161,110 343,412,059 270,459,128 390,085,719 Adjustments to reconcile net income to net cash provided by (paid from) operating activities :- Depreciation and amortisation 190,121,652 214,017,058 89,887,015 111,560,894 Allowance for doubtful accounts (reversal) (10,491,531) (6,560,957) (28,035,029) (6,686,907) Allowance for inventory obsolescense (reversal) (1,127,998) 2,101,426 (1,127,998) 1,245,744 Allowance for diminution in value of inventories - 39,160,080 - 1,084,422 Dividend income from subsidiaries and associates - - (133,669,216) (243,678,483) Doubtful accounts for long-term loans to a subsidiary and accrued interest income (net of reversal) - - 46,215,924 175,522,553 Unrealised loss on exchange rate 53,755,350 27,338,298 54,784,684 6,450,703 Loss on reclassification of investment - 26,878,661 - 26,878,661 Accrued interest receivable from related parties - - (40,298,299) (85,716,912) Gain on sale and write-off of assets (5,167,136) (3,754,711) (4,443,747) (3,135,560) Share of income from investments in jointly controlled entity and associates (2,285,613) (4,390,467) - - Share of loss from investments in jointly controlled entity and associates 13,515,821 428,479 - - Net income attributable to minority interest 20,370,566 21,650,840 - - Income from operating activities before changes in operating assets and liabilities 564,852,221 660,280,766 253,772,462 373,610,834 (Increase) decrease in operating assets Trade accounts and notes receivable (576,871,101) 1,248,440 (525,228,936) 64,892,219 Inventories 731,239,078 (962,635,106) 690,774,777 (759,422,696) Other current assets (25,432,525) (42,948,422) (8,018,469) (60,541,050) Other non-current assets (11,741,411) (36,629,072) (9,665,290) (816,935) Increase (decrease) in operating liabilities Trade accounts payable (56,160,734) 64,150,932 (43,892,460) 225,753,751 Other current liabilities (140,217,730) 225,405,605 (139,804,095) 152,255,804 Other non-current liabilities - 16,747,332 - 12,799,501 Net cash from (used in) operating activities 485,667,798 (74,379,525) 217,937,989 8,531,428


65


TIPCO ASPHALT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES CASH FLOW STATEMENTS (Continued) FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006 (Unit: Baht) Consolidated financial statements Separate financial statements 2007 2006 2007 2006 (Restated) (Restated)

Cash flows from investing activities: Cash and cash equivalent of subsidiary company on acquisition date (Note 28) - 23,967,375 - - Decrease in current investments - 67,179,112 - - Cash receipt from redemption of amortising debentures 1,761,000 1,573,780 1,761,000 1,573,780 Increase in restricted bank deposits (26,842,270) (26,729,918) - - Acquisition of minority interest in a subsidiary - (104,808,900) - (104,808,900) Cash paid for investment in a subsidiary - - (163,366,300) - Cash paid for investment in other company (70,712,293) - (70,712,293) - Proceed from sale of investment in other company 68,467,924 - 68,467,924 - Increase in short-term loans to related parties and accrued interest income (5,588,150) - (6,744,639) - Increase in long-term loans to related parties and accured interest income - - 183,103,366 (118,182,941) Proceeds from sale of investment in securities held for trading - 51,043,744 - 51,043,744 Dividend income from subsidiaries and associates - 9,731,043 133,669,216 243,678,483 Dividend paid to minority shareholders of subsidiary (9,425,784) (11,700,000) - - Acquisition of intangible assets (2,942,973) (2,558,567) (2,342,644) (2,141,373) Acquisition of property, plant and equipment (197,619,263) (41,310,360) (12,282,260) (15,196,019) Proceeds from sales of property, plant and equipment 9,457,554 4,942,899 5,755,471 4,148,113 Net cash from (used in) investing activities (233,444,255) (28,669,792) 137,308,841 60,114,887


66


TIPCO ASPHALT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES CASH FLOW STATEMENTS (Continued) FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006 (Unit: Baht) Consolidated financial statements Separate financial statements 2007 2006 2007 2006 (Restated) (Restated) Cash flows from financing activities: Increase (decrease) in short-term loans from financial institutions 338,413,878 (238,541,272) 96,842,435 (396,929,493) Increase in short-term loan from related party and accrued interest - - 33,536,521 - Cash paid for hire-purchase creditors (17,672,541) (18,843,145) (15,523,403) (18,843,145) Cash receipt from long-term loans - 401,569,440 - 400,000,000 Repayment of long-term loans (254,274,381) (193,821,840) (217,120,000) (158,560,000) Net cash receipt from share subscription 11,713,682 168,547,649 11,713,682 168,547,649 Cash receipt in advance from share subscription (230,165) 230,165 (230,165) 230,165 Dividend paid (174,734,634) (106,728,257) (174,734,634) (106,728,257) Net cash from (used in) financing activities (96,784,161) 12,412,740 (265,515,564) (112,283,081)Decrease in translation adjustments 12,038,081 6,560,931 - - Net increase (decrease) in cash and cash equivalents 167,477,463 (84,075,646) 89,731,266 (43,636,766)Cash and cash equivalents - beginning of year 193,809,844 277,885,490 72,422,561 116,059,327Cash and cash equivalents - end of year 361,287,307 193,809,844 162,153,827 72,422,561 Supplemental cash flows information Cash paid during the year for: Interest expenses 159,248,130 159,962,891 127,285,471 134,641,546 Corporate income tax 35,597,959 5,128,155 27,653,479 2,182,220 Non-cash transactions Investment in new preference shares of the jointly controlled entity by redeeming the existing preference shares 67,380,259 - - - Acquistion of assets through hire-purchase 16,260,360 27,194,989 12,219,046 23,247,157


67


TIPCO ASPHALT PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006

1. GENERAL INFORMATION Tipco Asphalt Public Company Limited (“the Company”) is a public company incorporated and domiciled in Thailand. The major shareholders of the Company are the Supsakorn family and Colas Group, France. The Company is principally engaged in the manufacture and distribution of asphalt products and its registered address is 118/1 Rama 6 Road, Samsen-nai Sub district, Phayathai District, Bangkok.

2. BASIS OF PREPARATION 2.1 The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Profession Act B.E. 2547. The presentation of the financial statements has been made in compliance with the stipulations of the Notification of the Department of Business Development dated 14 September 2001, issued under the Accounting Act B.E. 2543. The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies. 2.2 Basis of consolidation a) The consolidated financial statements include the financial statements of the Company and the following subsidiaries: Revenue as a Assets as a percentage to the percentage to the consolidated total consolidated revenues for the Country of Percentage of total assets as at year ended Companyʼs name Nature of business incorporation shareholding 31 December 31 December 2007 2006 2007 2006 2007 2006 (Restated) (Restated)Subsidiary companies Surat Bitumen Co., Ltd. Manufacture and Thailand 99.99 99.99 5.48 4.84 7.16 8.63 distribution of asphalt productsRaycol Asphalt Co., Ltd. Manufacture and Thailand 41.44 41.44 6.05 6.67 8.90 6.09 distribution of asphalt productsDelta Shipping Co., Ltd. Marine transportation Thailand 99.99 99.99 1.39 1.50 0.11 0.54 Alpha Maritime Co., Ltd. Marine transportation Thailand 99.93 99.93 0.18 0.38 - - Bitumen Marine Co., Ltd. Marine transportation Thailand 99.99 99.99 7.28 7.94 0.23 0.06 Tipco Maritime Co., Ltd. Shipping management Thailand 99.97 99.97 0.23 0.06 0.02 - and agency Tasco Shipping Co., Ltd. Marine transportation Thailand 99.99 - 2.30 - - - (not yet commenced business operations)Thai Bitumen Co., Ltd. Ceased operations Thailand 99.99 99.99 22.35 20.49 0.65 0.19Tasco International Ltd. Holding company Cayman Island 100.00 100.00 9.95 10.25 13.92 20.61 and its subsidiaries*Tasco International Holding company Hong Kong 100.00 - 0.05 - - - (Hong Kong) Ltd.

*The subsidiary companies owned by Tasco International Company Limited Langfang Tongtai Road Manufacture and China 51.00 51.00 2.93 4.08 7.31 4.71 Material Co., Ltd. distribution of asphalt productsZhenjiang Tipco Asphalt Manufacture and China 51.00 51.00 3.31 2.00 3.02 6.40 Co., Ltd. distribution of asphalt productsTipco Asphalt (Xinhui) Manufacture and China 100.00 100.00 3.58 6.28 3.24 9.49 Co., Ltd. distribution of asphalt products

68


b) The financial statements of overseas subsidiaries and jointly control entity are translated into Thai Baht at the closing exchange rate as to assets and liabilities, and at monthly average exchange rates as to revenues and expenses. The resultant differences have been shown under the caption of “Translation adjustment” in shareholdersʼ equity.

c) Material balances and transactions between the Company and its subsidiary companies have been eliminated from the consolidated financial statements.

d) Investments in the subsidiary companies as recorded in the Companyʼs books of account are eliminated against the equity of the subsidiary companies.

e) The financial statements of Raycol Asphalt Co., Ltd. are included in the consolidated financial statements even though the Companyʼs shareholding is 41 percent. This is because the Company has control over that company through its board of directors, and it is therefore regarded as a subsidiary company.

Moreover, during the current year, a subsidiary, Thai Bitumen Co., Ltd., invested in the newly established company described in Note 10.

f) The consolidated financial statements exclude the financial statements of Kemmaman Oil Corporation SDN BHD and its subsidiaries. Although the Company and its subsidiary have a 97 percent shareholding in that company, their voting rights in that Company stand at 50 percent. The Company therefore does not have control over such jointly controlled entity more than 50 percent and it is not regarded as a subsidiary.

g) As described in Note 10 to the financial statements, during the year 2006 the Company acquired all of the minority interest in Tasco International Ltd. at a price Baht 6.2 million lower than the book value of such interest. The Company recorded this difference under the caption of “Retained earnings of a subsidiary arising as a result of Companyʼs acquisition of minority interest in the subsidiary at a price lower than book value” in shareholderʼs equity in the balance sheet. 2.3 The separate financial statements, which present investments in subsidiaries, jointly controlled entity and as sociates under the cost method, have been prepared solely for the benefit of the public.

3. ADOPTION OF NEW ACCOUNTING STANDARDS

The Federation of Accounting Professions (FAP) has issued Notifications No. 9/2550, 38/2550 and 62/2550 regarding Accounting Standards. The notifications mandate the use of the following new Accounting Standards.

a) Accounting Standards which are effective for the current year TAS 44 (revised 2007) Consolidated Financial Statements and Separate Financial Statements TAS 45 (revised 2007) Investments in Associates TAS 46 (revised 2007) Interests in Joint Ventures

These accounting standards become effective for the financial statements for fiscal years beginning on or after 1 January 2007. During the current year, the Company changed its accounting policy for recording investments in subsidiaries, jointly controlled entity and associates in the separate financial statements in order to comply with the revised Thai Accounting Standards No. 44, 45 and 46 as discussed in Note 4.1, and during the second quarter of the current year the Company changed its accounting policy for recording investments in jointly controlled entity in the consolidated financial statements according to the revised Accounting Standard No. 46, as discussed in Note 4.2.

b) Accounting Standards which are not effective for the current year TAS 25 (revised 2007) Cash Flow Statements TAS 29 (revised 2007) Leases TAS 31 (revised 2007) Inventories TAS 33 (revised 2007) Borrowing Costs TAS 35 (revised 2007) Presentation of Financial Statements TAS 39 (revised 2007) Accounting Policies, Changes in Accounting Estimates and Errors TAS 41 (revised 2007) Interim Financial Reporting TAS 43 (revised 2007) Business Combinations

69


TAS 49 (revised 2007) Construction Contracts TAS 51 Intangible Assets

These accounting standards will become effective for the financial statements for fiscal years beginning on or after 1 January 2008. The management has assessed the effect of these accounting standards and believes that they will not have any significant impact on the financial statements for the year in which they are initially applied.

4. CHANGES IN ACCOUNTING POLICIES

4.1 Change in accounting policy for recording investments in subsidiaries, jointly controlled entity and associates in the separate financial statements

During the current year, the Company changed its accounting policy for recording investments in subsidiaries, jointly controlled entities and associates in the separate financial statements from the equity method to the cost method, in compliance with Accounting Standard No. 44 (Revised 2007) regarding “Consolidated Financial Statements and Separate Financial Statements”, under which investments in subsidiaries, jointly controlled entities and associates are to be presented in the separate financial statements under the cost method.

In this regard, the Company has restated the previous periodʼs separate financial statements as though the investments in the subsidiaries, jointly controlled entities and associates had originally been recorded using the cost method. The change has the effect of decreasing net income in the separate income statements for the year ended 31 December 2007 by Baht 35.7 million (Baht 0.2 per share) and increasing net income for the year ended 31 December 2006 by Baht 46.7 million (Baht 0.3 per share). The cumulative effect of the change in accounting policy has been presented under the heading of “Cumulative effect of the change in accounting policy for investments in subsidiaries, jointly controlled entity and associates” in the separate statements of changes in shareholdersʼ equity.

Such change in accounting policy affects only the accounts related to investments in subsidiaries, jointly controlled entity and associates in the Companyʼs separate financial statements, with no effect to the consolidated financial statements.

4.2 Change in accounting policy for recording investments in jointly controlled entity in the consolidated financial statements

During the current year, the Company changed its accounting policy for recording investments in jointly controlled entity in the consolidated financial statements from the proportionate method to the equity method, in compliance with Accounting Standard No. 46 (revised 2007) regarding “Interest in Joint Ventures”, under which investments in jointly control entity can be presented under the equity method as an alternative to the proportionate method. In this regard, the Company has restated the prior yearʼs consolidated financial statements as though investment in jointly control entity had originally been recorded using the equity method. The change has the effect of decreasing assets liabilities and shareholders equity in the consolidated financial statements as at 31 December 2006 by Baht 667.5 million, Baht 643.9 million and Baht 23.6 million, respectively. The cumulative effect of the change in accounting policy for investment in jointly control entity has been presented under the heading of “Cumulative effect of the change in accounting policy for investment in jointly controlled entity” in the consolidated statements of changes in shareholdersʼ equity.

However, such change in the accounting policy did not affect the net income of prior year.

5. SIGNIFICANT ACCOUNTING POLICIES

5.1 Revenue Recognition

Sales of goods

Sales of goods are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are the invoiced value, excluding value added tax, of goods supplied after deducting discounts and allowances.

Rendering of services

Service revenue is recognised when services have been rendered taking into account the stage of completion.

70


Vessel operating income consists of time charters and voyage charters. Income from time charters is recognised when the right to use a vessel is transferred to a lessee for an agreed period of time, while income from voyage charters is recognised by reference to the stage of completion.

Interest income Interest income is recognised as interest accrues based on the effective rate method.

Dividends

Dividends are recognised when the right to receive the dividends is established.

5.2 Cash and cash equivalents Cash and cash equivalents consist of cash in hand, cash at banks, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions.

5.3 Trade accounts receivable Trade accounts receivable are stated at the net realisable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection experience and analysis of debtor aging.

5.4 Inventories Finished goods are valued at the lower of cost determined under the FIFO method and net realisable value. Cost of finished goods includes direct materials, labor costs and factory overheads.

Raw materials are valued at the lower of cost determined under the FIFO method and net realisable value. Packaging, spare parts and factory supplies are valued at the average cost and are charged to production costs whenever consumed.

5.5 Investments a) Investments in securities held for trading are presented at fair value. Gains or losses arising from changes in the carrying amounts of securities are included in determining income. b) Investments in available-for-sale securities are determined at fair value. Changes in the carrying amounts of securities are recorded as separate items in shareholdersʼ equity until the securities are sold, when the changes are then included in determining income. c) Investments in debt securities, both due within one year and expected to be held to maturity, are recorded at amortised cost. Premiums/discounts on debt securities are amortised by the effective rate method with the amortised amount presented as an adjustment to the interest income. d) Investments in non-marketable equity securities, which the Company classifies as other investments, are stated at cost net of allowance for loss on diminution in value (if any). e) Investment in jointly controlled entities and associates are accounted for in the consolidated financial statements using the equity method. f) Investments in subsidiaries, jointly controlled entities and associates are accounted for in the separate financial statements using the cost method.

The fair value of marketable securities is based on the latest bid price of the last working day of the year as quoted on the Stock Exchange of Thailand. The fair value of debt instruments is determined based on the required rate of return or the yield rates quoted by the Thai Bond Market Association. The fair value of unit trusts is determined from their net asset value.

The weighted average method is used for computation of the cost of investments.

In the event the Company reclassifies investments in securities, such investments are adjusted to their fair value as at the reclassification date. Differences between the carrying amount of the investments and their fair value on that date are included in determining income or recorded as surplus (deficit) from change in the value of investments in shareholdersʼ equity, depending on the type of investment which is reclassified.

5.6 Property, plant and equipment/Depreciation Land is stated at cost. Plant and equipment are stated at cost less accumulated depreciation and less allowance for loss on impairment of property, plant and equipment (if any).

71


Depreciation of plant and equipment is calculated by reference to their costs on the straight-line basis over the following estimated useful lives:-

Land improvement 20 years Buildings and complements 20, 30 years Building improvements 20, 30 years Machinery and equipment 5 - 20 years Furniture and office equipment 5 years Computers and equipment 3, 5 years Motor vehicles 5, 7, 10 years Vessels 10, 15, 20, 30 years

The Companyʼs and its subsidiariesʼ vessels and plant and equipment of the subsidiaries in China are depreciated based on acquisition cost less residual value.

Depreciation is included in determining income.

No depreciation is provided on land and construction in progress.

5.7 Intangible assets and amortisation Computer software is stated at cost less accumulated amortisation. Amortisation is calculated by reference to cost on a straight-line basis over the period for which the assets are expected to generate economic benefit, which is approximately 5 years.

The amortisation is included in determining income.

5.8 Leasehold right Leasehold right is stated at cost less accumulated amortisation. Amortisation is calculated by reference to cost on a straight-line basis over the lease period.

The amortisation is included in determining income.

5.9 Deferred expenses Deferred expenses for vessel repair are amortised over 30 months using the straight-line basis. The period is in accordance with the period for dry docking under the rules of marine transportation.

5.10 Related party transactions Related parties comprise enterprises and individuals that control, or are controlled by, the Company and its subsidiaries, whether directly or indirectly, or which are under common control with the Company and its subsidiaries.

They also include associated companies and individuals which directly or indirectly own a voting interest in the Company and its subsidiaries that gives them significant influence over the Company and its subsidiaries, key management personnel, directors and officers with authority in the planning and direction of operations of the Company and it subsidiaries.

5.11 Long-term lease agreements Leases of property, plant or equipment which transfer substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lower of the fair value of the leased assets and the present value of the minimum lease payments. The outstanding rental obligations, net of finance charges, are included in other long-term payables, while the interest element is charged to the income statements over the lease period. The property, plant or equipment acquired under finance leases is depreciated over the useful life of the asset.

5.12 Foreign currencies Foreign currency transactions are translated into Baht at the exchange rates ruling on the transaction dates. Assets and liabilities denominated in foreign currencies outstanding at the balance sheet date are translated into Baht at the exchange rates ruling on the balance sheet date.

Gains and losses on exchange are included in determining income.

72


5.13 Impairment of assets The Company and its subsidiaries assess at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, the Company and its subsidiaries make an estimate of the assetʼs recoverable amount. Where the carrying amount of the asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses are recognised in the income statement. An assetʼs recoverable amount is the higher of fair value less costs to sell and value in use.

5.14 Employee benefits Salaries, wages, bonuses and contributions to the social security fund and provident fund are recognised as expenses when incurred.

5.15 Provisions Provisions are recognised when the Company and its subsidiaries have a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

5.16 Income Tax Income tax is provided for in the accounts based on the taxable profits determined in accordance with tax legislation.

5.17 Derivatives - forward exchange contracts Receivables and payables arising from forward exchange contracts are translated into Baht at the rates of exchange ruling on the balance sheet. Gains and losses from the translation are included in determining income. Premiums or discounts on forward exchange contracts are amortised on a straight-line basis over the contract periods.

5.18 Use of accounting estimates Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions in certain cicrcumstances, affecting amounts reported in these financial statements and related notes. Actual results could differ from these estimates.

6. CURRENT INVESTMENTS (Unit: Baht) Consolidated financial statements Separate financial statements 2007 2006 2007 2006 (Restated) Investment in debt security - net of current portion 1,970,520 1,761,000 1,970,520 1,761,000 Deposits with financial institutions pledged as guarantee commitment 42,989,515 16,159,328 - - Total current investments 44,960,035 17,920,328 1,970,520 1,761,000

7. TRADE ACCOUNTS AND NOTES RECEIVABLE

The outstanding balances of trade accounts receivable as at 31 December 2007 and 2006 are aged, based on due date, as follows:

73


(Unit: Baht) Age of receivables Consolidated financial statements Separate financial statements 2007 2006 2007 2006 (Restated) Trade accounts receivable - related parties Not yet due 187,114,904 141,459,804 348,613,516 493,823,458 Past due Up to 3 months 79,762,181 72,580,174 102,318,801 116,885,806 3 - 6 months 19,463,841 41,038,087 28,178,593 21,740,947 6 - 9 months 710,091,159 736,134 711,512,852 - 9 - 12 months - - 542,317 - Total 996,432,085 255,814,199 1,191,166,079 632,450,211 Trade accounts receivable - unrelated parties Not yet due 1,040,870,604 1,257,299,963 715,810,540 781,661,308 Past due Up to 3 months 262,693,854 204,481,732 108,828,965 104,085,610 3 - 6 months 92,962,223 111,711,266 47,383,784 32,622,026 6 - 9 months 28,060,002 63,006,399 24,600,017 23,615,536 9 - 12 months 43,622,033 16,617,311 20,363,482 12,079,408 Over 12 months 52,487,148 83,873,923 24,900,637 59,872,905 Total 1,520,695,864 1,736,990,594 941,887,425 1,013,936,793 Total trade accounts and notes receivable 2,517,127,949 1,992,804,793 2,133,053,504 1,646,387,004 Less: Allowance for doubtful accounts (66,628,406) (77,126,125) (31,777,286) (59,812,314) Trade accounts and notes receivable - net 2,450,499,543 1,915,678,668 2,101,276,218 1,586,574,690

The outstanding balance of trade accounts receivable - related party of the Company, amounting to approximately Baht 710 million, represents debts of Kemaman Oil Corporation SDN BHD (KOC), which is a jointly controlled entity established with a co-venturer in Malaysia in order to operate an asphalt refinery business, as discussed in Note 11. The trade accounts receivable was from the sale of crude oil to KOC in January 2007.

On 11 January 2008, the Company and a subsidiary, the co-venturer, and KOC entered into an agreement, whereby it was agreed that KOC will sell the crude oil and all related products and settle all debts and related interest as stipulated in the agreement with the Company within March 2008. If KOC fails to settle debts with the Company within the due date, the Company has an option to convert the debt to ordinary shares of KOC instead. The man agement of the Company believes that the Company will receive full payment of such debt from the jointly controlled entity.

During 2006, the Company has written-off approximately Baht 85 million of trade accounts receivable. These write-offs do not affect income for the year since full allowance for doubtful accounts had already been made for the relevant debts in previous years.

8. RELATED PARTY TRANSACTIONS During the years, the Company and its subsidiaries had significant business transactions with related parties, which have been concluded on commercial terms and bases agreed upon in the ordinary course of businesses between the Company and those companies. Below is a summary of those transactions.

74


(Unit: Million Baht)

Consolidated financial Separate financial statements statements Pricing Policy 2007 2006 2007 2006 (Restated) Transactions with subsidiary companies (eliminated from the consolidated financial statements) Sales and services - - 2,009.7 2,115.2 Cost plus certain margin Rental and service income - - 32.7 32.7 Contract price Loans to (weigted average balance of loan outstanding during the year) - - 842.0 1,685.2 Interest income - - 49.0 98.4 5.75 per annum (2006 : 4 percent per annum) Dividend income - - 133.7 233.9 Purchases - - 0.6 0.8 Cost plus certain margin Rental and service expenses - - 410.0 296.7 Contract price Transactions with the jointly controlled entity Sales 753.3 0.3 753.3 0.3 Cost plus certain margin Loans to (weighted average balance of loan outstanding during the year) 7.5 8.4 6.0 6.8 Transactions with subsidiary of the jointly controlled entity Sales 2.4 - 2.4 - Cost plus certain margin Loans to (weighted average balance of loan outstanding during the year) 5.6 - - - Transactions with related parties Sales and services 649.0 703.3 411.9 589.3 Cost plus certain margin Rental and service income 2.5 4.6 2.5 4.5 Contract price Dividend income - 9.7 - 9.7 Purchases 1.2 2.3 0.1 1.7 Cost plus certain margin Rental and service expenses 60.9 52.3 43.9 35.7 Contract price

75


The balances of the accounts between the Company and those related companies as at 31 December 2007 and 2006 are as follows: (Unit: Baht) Consolidated financial statements Separate financial statements 2007 2006 2007 2006 (Restated) Trade accounts and notes receivable - related parties Subsidiary companies Surat Bitumen Co., Ltd. - - 124,536,182 26,967,385 Tipco Maritime Co., Ltd. - - - 3,499 Alpha Maritime Co., Ltd. - - - 2,927,006 Bitumen Marine Co., Ltd. - - - 86,734 Raycol Asphalt Co., Ltd. - - 119,470,194 154,072,543 Langfang Tongtai Road Material Co., Ltd. - - - 163,391,917 Zhenjiang Tipco Asphalt Co., Ltd. - - 69,341,985 20,764,917 Tipco Asphalt (Xinhui) Co., Ltd. - - - 111,873,097 Jointly controlled entity Kemaman Oil Corporation SDN BHD 710,091,159 - 710,091,159 - Subsidiary company of jointly controlled entity Kemaman Bitumen Company SDN BHD - 273,014 - 273,014 Associated company Cambodia Asphalt Co., Ltd. 18,227,665 31,021,409 18,227,665 31,021,409 Related parties Thai Slurry Seal Co., Ltd. 115,796,985 117,935,506 10,030,534 17,970,832 Thai Crushing Plant Co., Ltd. 1,794,005 1,975,049 1,794,005 1,975,049 Ekachai Container Terminal Co., Ltd. - 686,138 - 686,138 Siam Container Transport and Terminal Co., Ltd. - 1,297,000 - 1,297,000 Thanomwongse Service Co., Ltd. 85,148,481 57,724,037 72,300,565 57,724,037 Yala Construction Co., Ltd. - 40,650,594 - 37,164,182 Tipco Foods (Thailand) Public Company Limited 2,905,050 4,251,452 2,905,050 4,251,452 Tipco F&B Co., Ltd. 1,389,127 - 1,389,127 - Colas S.A. 61,079,613 - 61,079,613 - Total trade accounts and notes receivable - related parties 996,432,085 255,814,199 1,191,166,079 632,450,211

76


(Unit: Baht) Consolidated financial statements Separate financial statements 2007 2006 2007 2006 (Restated) Amounts due from related parties Subsidiary companies Surat Bitumen Co., Ltd. - - 2,531,184 5,071,930 Thai Bitumen Co., Ltd. - - 178,590 261,237 Tipco Maritime Co., Ltd. - - 633,486 644,619 Delta Shipping Co., Ltd. - - 89,880 24,610 Alpha Maritime Co., Ltd. - - 71,690 1,373,345 Bitumen Marine Co., Ltd. - - 65,003 200,716 Raycol Asphalt Co., Ltd. - - 558,880 1,161,957 Tasco Shipping Co., Ltd. - 3,424 - Tasco International Ltd. - - 426,825 188,350 Langfang Tongtai Road Material Co., Ltd. - - - 198,947 Tipco Asphalt (Xinhui) Co., Ltd. - - - 19,192 Subsidiary company of jointly controlled entity Kemaman Bitumen Company SDN BHD 4,195,624 4,544,106 42,467 45,062 Related parties Thai Slurry Seal Co., Ltd. 1,069,400 207,312 1,069,400 207,312 Thai Crushing Plant Co., Ltd. 23,265 17,451 23,265 17,451 Ekachai Container Terminal Co., Ltd. 1,202 - 1,202 - Siam Container Transport and Terminal Co., Ltd. 535 - 535 - Thanomwongse Service Co., Ltd. 5,806,223 7,566,405 5,219,695 6,398,151 Yala Construction Co., Ltd. - 193,562 - 193,562 Tipco Foods (Thailand) Public Company Limited 109,277 130,212 109,277 130,212 Tipco F&B Co., Ltd. 127,417 132,111 127,417 132,111 Total amount due from related parties 11,332,943 12,791,159 11,152,220 16,268,764

Short-term loans to related parties and accrued interest incomeShort-term loans to related parties Subsidiary company Thai Bitumen Co., Ltd. - - 6,739,100 - Subsidiary company of jointly controlled entity Kemaman Bitumen Company SDN BHD 5,585,090 - - - 5,585,090 - 6,739,100 - Accrued interest income from related parties Subsidiary company Thai Bitumen Co., Ltd. - - 5,539 - Subsidiary company of jointly controlled entity Kemaman Bitumen Company SDN BHD 3,060 - - - 3,060 - 5,539 -Total short-term loans to related parties and accrued interest income 5,588,150 - 6,744,639 -

77


� Consolidated financial statements Separate financial statements 2007 2006 2007 2006 (Restated) Long-term loans to related parties and accrued interest income Long-term loans to related parties Subsidiary companies Thai Bitumen Co., Ltd. - - 9,800,000 1,511,632,087 Less: Allowance for doubtful accounts (Note 10) - - - (156,018,399) Delta Shipping Co., Ltd. - - - 58,500,000 Alpha Maritime Co., Ltd. - - - 17,600,000 Less: Allowance for doubtful accounts - - - (67,333) Bitumen Marine Co., Ltd. - - - 83,700,000 Tasco International Ltd. - - 70,799,734 122,282,941 Jointly controlled entity

Kemaman Oil Corporation SDN BHD 7,234,664 8,444,840 5,787,731 6,755,872 7,234,664 8,444,840 86,387,465 1,644,385,168 Accrued interest income from related parties Subsidiary companies Thai Bitumen Co., Ltd. - - 161,849 349,107,438 Less: Allowance for doubtful accounts (Note 10) - - - (349,107,438) Delta Shipping Co., Ltd. - - - 285,688 Alpha Maritime Co., Ltd. - - - 1,819,790 Less: Allowance for doubtful accounts - - - (1,819,790) Bitumen Marine Co., Ltd. - - - 408,754 Tasco International Ltd. - - 5,243,449 132,472 - - 5,405,298 826,914Total long-term loans to related parties and accrued interest income 7,234,664 8,444,840 91,792,763 1,645,212,082

Trade accounts payable - related parties Subsidiary companies Surat Bitumen Co., Ltd. - - 1,076,737 871,007 Tipco Maritime Co., Ltd. - - 6,214,480 1,121,031 Delta Shipping Co., Ltd. - - 8,708,010 3,631,128 Alpha Maritime Co., Ltd. - - 9,765,831 2,504,315 Bitumen Marine Co., Ltd. - - 46,735,288 13,196,433 Raycol Asphalt Co., Ltd. - - 659,868 1,171,416 Related parties Ekachai Container Terminal Co., Ltd. 488,718 871,055 321,069 744,434 Thanomwongse Service Co., Ltd. 219,162 81,764 217,536 42,245 Tipco F&B Co., Ltd. 867,621 - 867,621 - Tipco Foods (Thailand) Public Company Limited 94,160 96,368 94,160 96,368 Colas S.A. 17,990,318 12,091,474 17,984,968 12,091,474 Total trade accounts payable - related parties 19,659,979 13,140,661 92,645,568 35,469,851

78


(Unit: Baht) Consolidated financial statements Separate financial statements 2007 2006 2007 2006 Amounts due to and advance from related parties Related parties

Ekachai Container Terminal Co., Ltd. - 221,770 - 221,770 Thanomwongse Service Co., Ltd. 3,700,582 3,135,065 3,266,961 2,720,728 Tipco F&B Co., Ltd. 81,180 1,076,017 81,180 943,106 Tipco Foods (Thailand) Public Company Limited 111,353 - - - Colas S.A. 917,142 - 38,076 - Total amounts due to and advance from related parties 4,810,257 4,432,852 3,386,217 3,885,604

Short-term loans from related party and accrued interest expenses Short-term loans from related party Subsidiary company Tasco Shipping Co., Ltd. - - 33,300,000 - Accrued interest expenses to related party Subsidiary company Tasco Shipping Co., Ltd. - - 236,521 - Total short-term loans from related parties and accrued interest expenses - - 33,536,521 -

During the current year, the Company additional recorded allowance for doubtful accounts of approximately Baht 49.2 million for long-term loans to Thai Bitumen Co., Ltd., together with related accrued interest. This was presented as “Doubtful accounts for long-term loans to a subsidiary and accrued interest income” in the income statement.

Directors and managementʼs remuneration In 2007 the Company and its subsidiaries paid salaries, meeting allowances and gratuities to their directors and man agement totaling Baht 77.8 million (The Company only: Baht 70.5 million) (2006: Baht 54.1 million, the Company only: Baht 49.7 million).

Guarantee obligations with related parties The Company has outstanding guarantee obligations with its related parties, as described in Note 32.5 to the financial statements.

9. INVENTORIES (Unit: Baht) Consolidated financial statements Separate financial statements 2007 2006 2007 2006 (Restated) Finished goods 295,427,693 212,930,251 159,480,451 93,134,052 Raw materials 93,157,560 234,707,221 38,600,022 63,136,690 Spare parts, factory supplies and packing materials 43,246,578 32,590,124 23,132,647 18,138,302 Goods in transit 83,221,864 804,140,834 28,953,152 766,532,005 Total 515,053,695 1,284,368,430 250,166,272 940,941,049 Less: Allowance for inventory obsolescence (3,872,166) (3,915,742) (2,639,069) (2,682,645) Allowance for diminution in value of inventories - (39,160,080) - (1,084,422) Inventories - net 511,181,529 1,241,292,608 247,527,203 937,173,982

During the current year, the Company and its three subsidiaries reversed allowance for diminution in value of inventories amounting to Baht 39.2 million (The Company only: Baht 1.1 million) since the net realisable value of the inventories was higher than their cost.

79


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80


Investment in Thai Bitumen Company Limited (Thai Bitumen)

In January 2007, Thai Bitumen acquired all shares (2 shares at a price of 1 ringgit each) of Multi Strategies Sdn. Bhd. which was incorporated in Malaysia for the purpose of investing in preference shares of the joint venture, as described in Note 7.

Meeting No.4/2007 of the Companyʼs Board of Directors held on 18 May 2007 approved changes in the investment structure and the reduction of the registered and paid up share capital of Thai Bitumen, for the purpose of writing off accumulated losses. On 17 May 2007 and 1 June 2007 extraordinary shareholdersʼ meetings No.5/2007 and No.6/2007 of Thai Bitumen passed the following resolutions:-

1) Approved an increase in that companyʼs registered and paid up share capital from Baht 1,000,000,000 to Baht 2,905,100,000 by issuing 19,051,000 new ordinary shares with a par value of Baht 100 each. The company registered the increase in its registered and paid up share capital to Baht 2,905,100,000 with the Ministry of Commerce on 7 June 2007.

2) Approved the reduction of the registered and paid up share capital of the company by Baht 1,493,457,000 through the retirement of 14,934,570 shares of Baht 100 each. After the share reduction process, Thai Bitumen will have 14,116,430 registered and paid up share capital of Baht 100 each, totaling Baht 1,411,643,000. Thai Bitumen was completed the share reduction process and registered its share capital with the ministry of Com merce on 28 September 2007.

During June 2007, Thai Bitumen made payment of all outstanding loans and accrued interest expenses to the Company, amounting to approximately Baht 1,909 million. The Company therefore reversed all of the provision for doubtful accounts recorded for the loans and accrued interest. Such transactions have no effect to the separate income statement for the year.

Investment in Tasco Shipping Company Limited

During June 2007, the Company invested in the acquisition of all, 1,599,993 shares, of a newly established subsidiary, Tasco Shipping Company Limited, with a per value of Baht 100 each; totaling Baht 159,999,300. This company was set up to operate a marine transportation business. The Company paid all share subscription in this subsidiary in September 2007.

Investment in Tasco International Limited (TIL)

On 18 May 2007, meeting No. 4/2007 of the Companyʼs Board of Directorsʼ approved an increase of RMB 3.6 million (equal to Baht 16.2 million) in the registered and issued share capital of Zhenjiang Tipco Asphalt Company Limited (51 percent held by TIL), from the existing capital of RMB 8.4 million (equal to Baht 37.8 million). During the current year, the Company made payment of approximately RMB 1.8 million to increase its investment in that company in proportion to its existing holding.

On 13 November 2007 the Companyʼs Board of Directors Meeting No. 6/2007 passed a resolution to wind-up TIL and transfer investments held by TIL to a newly established subsidiary, Tasco International (Hong Kong) Limited,. At present TIL is in the process of winding up and expects the process to be completed within the first quarter of 2008.

Investment in Tasco International (Hong Kong) Limited

During December 2007, the Company acquired 780,230 shares of a newly established subsidiary, Tasco International (Hong Kong) Limited, with a par value of HKD 1 each; totaling HKD 780,230 (approximately Baht 3.4 million). This company was set up to operate as a holding company. The Company already paid the share price.

81


11. INVESTMENTS IN JOINTLY CONTROLLED ENTITY

11.1 Details of investments in jointly controlled entity: (Unit: Baht) Consolidated financial statements Shareholding Carrying amounts based on Jointly controlled entity Nature of business percentage Cost equity method 2007 2006 2007 2006 2007 2006 (%) (%) (Restated) Kemaman Oil Holding company in 97 50 Corporation SDN BHD asphalt refinery business (Registered under the law of Malaysia) 337,967,570 9,820,850 265,826,292 870,846

(Unit: Baht) Separate financial statements Provision for impairment of Carrying amounts based Jointly controlled entity Cost investments on cost method - net 2007 2006 2007 2006 2007 2006 (Restated) Kemaman Oil Corporation SDN BHD (Registered under the law of Malaysia) 7,856,680 7,856,680 - - 7,856,680 7,856,680

(Unit: Baht) Consolidated financial statements Separate financial statements Share of income (loss) from investments in jointly controlled entities Dividend received Jointly controlled entity during the year during the year 2007 2006 2007 2006 Kemaman Oil Corporation SDN BHD (13,327,414) 424,955 - -

On 13 July 2004, the Company and Thai Bitumen Co., Ltd. (Thai Bitumen) entered into a Shareholdersʼ Agreement with a Malaysian Company, Seloga Holdings Berhad (SHB), which is a publicly listed company in Malaysia, to jointly participate in the establishment of a new company, Kemaman Oil Corporation SDN BHD (KOC), registered under the law of Malaysia, as a vehicle for the purposes of holding share capital of Kemaman Bitumen Company SDN BHD (KBC), and conducting any other business related to the manufacturing trading and/or marketing of asphalt products. The structure of Kemaman Oil Corporation SDN BHD is as follows:

Shareholders Percentage holding Seloga Holdings Berhad 50 percent Tipco Asphalt Public Company Limited 40 percent Thai Bitumen Co., Ltd. 10 percent

In September 2004, the Company and Thai Bitumen have invested in KOC in accordance with the shareholdersʼ agreement, making payment of 95,001 shares of KOC of 1 ringgit per share, a total of 95,001 ringgit, or equal to approximately Baht 1.0 million.

In January 2005, KOC called up an additional 855,000 shares of 1 ringgit per share from the Company and Thai Bitumen a total of 0.85 million ringgit, or equal to approximately Baht 8.8 million. As a result the shareholdings of the Company and the subsidiary in that jointly controlled entity remain unchanged at 40 percent and 10 percent, respectively.

82


In May 2005, the Company and Thai Bitumen entered into an agreement to sell Thai Bitumenʼs machinery and equipment and engineering works for an asphalt refinery plant project to KBC at a price of USD 30 million, with the cost of the assets to be settled with preference shares of KOC and KBC as described in Note 13. Thai Bitumen received such preference shares in June 2005, December 2005, February 2006 and February 2007.

In January 2007, the jointly controlled entity invested in all 10,000 shares of KBC Energy Pte. Ltd., which was in corporated in Singapore, at a price of USD 1 per share, for a total of USD 10,000 (equal to Baht 0.4 million).

During March 2007 Thai Bitumen received 31.35 million ordinary shares of 1 ringgit per share from the conversion of the jointly controlled entity non-redeemable convertible preference shares. As a result of such conversion the percentage holding of the Company and Thai Bitumen in the jointly controlled entity changed from 50 percent to 97 percent. However, the change in holding percentage is temporary since the co-venturer has not additionally in vested in the jointly controlled entity at that time and, according to the Call Option Agreement as discussed in Note 13, during the option period the Company and the subsidiary and the co-venturer still have a 50:50 interest in the equity and control in the jointly controlled entity, as specified in Shareholdersʼ Agreement. The Company and the subsidiary therefore continues to use the old percentage holdings for taking operating results of the joint venture, based on the equity method, in the consolidated financial statements.

During January 2008 there was a change in the shareholding structure of KOC, in accordance with the Option Agreement and newly issued agreements, as follows:

1. As discussed in Note 13 to the financial statements, in January 2007 the Company and Thai Bitumen entered into a Call Option Agreement with the co-venturer (SHB), granting an option to the co-venturer to purchase 31.35 million redeemable convertible preference shares of 1 ringgit per share (24.7 million shares held by MSSB, a subsidiary of Thai Bitumen and 6.65 million shares held by Thai Bitumen) within 10 January 2008. At the due date of the option SHB offered a related company, Aras Jarinan Sdn Bhd (Aras), the chance to exercise the option instead, as stipulated in the Settlement Agreement dated 11 January 2008. In accordance with the Settlement Agreement, Thai Bitumen has converted the 6.65 million preference shares to ordinary shares and will sell the ordinary shares at cost plus interest to Aras. In addition, during January 2008, Thai Bitumen also had MSSB convert its 24.7 million preference shares to ordinary shares and transferred MSSB to Aras.

2. Under the option agreement, if the co-venturer does not exercise the option to purchase such preference shares, Thai Bitumen and its subsidiary have the option to purchase all of the co-venturerʼs ordinary shares in KOC. Therefore, during January 2008 Thai Bitumen purchased all 950,001 shares ordinary shares of KOC held by SHB at 1 ringgit per share, for a total of 950,001 ringgit, plus interest as stipulated in the option agreement. Such ordinary shares are to be sold to Aras in accordance with the Settlement Agreement.

3. During January 2008 Aras invested 19 million ringgit in the ordinary shares of KOC and has an option to invest an additional 12.35 million ringgit within March 2008, as stipulated in the Settlement Agreement. If the option is exercised, the proportionate shareholdings of the Company and Thai Bitumen, and Aras in KOC will be 50:50. The Settlement Agreement, stipulates that throughout the option period the Company and Thai Bitumen, and Aras will each have 50 percent interests in equity and in terms of control of KOC. However, if Aras does not exercise the option within the specified option period, equity interest and control will be in accordance with the shareholding percentage at the expiry date of the Settlement Agreement.

4. Thai Bitumen requested conversion of 31.35 million redeemable convertible preference shares of KOC (RCPS-B) at 1 ringgit per share. The preference shares were converted to KOCʼs ordinary shares in January 2008.

5. The shareholding structure of KOC before and after the Settlement Agreement can be summarized as follows: Before Settlement Agreement After Settlement Agreement No. of ordinary Shareholding No. of ordinary Shareholding Shareholders shares percentage shares percentage Tipco Asphalt 760,001 2.28% 760,001 0.66% Thai Bitumen 31,540,000 94.86% 70,490,001* 61.32% SHB 950,001 2.86% - - MSSB - - 24,700,000 21.49% Aras - - 19,000,000** 16.53% * Included 7,600,001 shares awaiting sale to Aras

** Has the option to invest in an additional 12.35 million shares within March 2008

83


The construction of the asphalt refinery of KBC in Malaysia is now completed. The management of the Company expect that the plant will officially start production during 2008.

11.2 Summarised financial information of jointly controlled entity

Kemaman Oil corporation SDN BHD (KOC) and its subsidiaries

The Companyʼs proportionate shares of the assets, liabilities, revenue and expenses of KOC and its subsidiaries are as follows: (Unit: Million Baht) As at 31 December 2007 2006 Current assets 462 34 Non-current assets 1,368 1,227 1,830 1,261 Current liabilities (441) (209) Non-current liabilities (412) (435) Net assets 977 617 (Unit: Million Baht) For the years ended 31 December 2007 2006 Revenue 4.1 0.9 Cost of sales (1.3) (0.8) Selling and administrative expenses (12.8) 0.4 Loss before income tax (10.0) 0.5 Income tax (0.5) (0.1) Net loss (10.5) (0.4)

A subsidiary of KOC, KBC, has mortgaged its leasehold rights, premises and machinery with a total net book value as at 31 December 2007 of approximately Baht 2,656 million (The Companyʼs proportion: Baht 1,328 million). In addition, KOC and KBC have pledged their bank deposits of approximately Baht 69.7 million (The Companyʼs proportion: Baht 34.8 million) as collateral for credit facilities granted by a commercial bank.

12. INVESTMENTS IN ASSOCIATES 12.1 Details of associates: (Unit: Baht) Consolidated financial statements Nature of Shareholding Carrying amounts based on Companyʼs name business percentage Cost equity method 2007 2006 2007 2006 2007 2006 (%) (%) Colasie Co., Ltd. Holding company 40 40 18,403,580 18,403,580 26,600,830 24,065,121 (Registered under the law of France) Cambodia Asphalt Co., Ltd. (Registered under the law of Cambodia) Trading of asphalt 40 40 155,000 155,000 4,708,708 5,309,291 products Total investments in associated companies 18,558,580 18,558,580 31,309,538 29,374,412

84


(Unit: Baht) Separate financial statements Provision for impairment Carrying amounts based Companyʼs name Cost of investments on cost method - net 2007 2006 2007 2006 2007 2006 Colasie Co., Ltd. 18,403,580 18,403,580 - - 18,403,580 18,403,580 (Registered under the law of France) Cambodia Asphalt Co., Ltd. 155,000 155,000 - - 155,000 155,000 (Registered under the law of Cambodia) Total investments in associated companies 18,558,580 18,558,580 - - 18,558,580 18,558,580 (Unit: Baht) Consolidated financial statements Separate financial statements Share of income/loss from investments in associates Dividend received Companyʼs name during the year during the year 2007 2006 2007 2006 Colasie Co., Ltd. 2,285,613 2,556,943 - 9,731,042 Cambodia Asphalt Co., Ltd. (188,407) (428,479) - - Total 2,097,206 2,128,464 - 9,731,042

On 21 December 2007 Meeting No. 8/2007 of the Companyʼs Board of Directors passed a resolution for the Company to terminate its investment in Cambodia Asphalt Co., Ltd. by disposing of its shares in that company to Cambodian shareholder at book value. At present, the Company is in the process of selling the investment in the associate in accordance with the resolution.

12.2 Summarised financial information of associates Paid-up capital Total assets Total liabilities Total revenues Net income (loss) as at as at as at for the year ended for the year ended Companyʼs name 31 December 31 December 31 December 31 December 31 December 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 Colasie Co., Ltd. (in Million Euro) 1.04 1.04 1.39 1.27 - - 0.13 0.15 0.12 0.13 Cambodia Asphalt Co., Ltd. (in Million USD) 0.01 0.01 0.87 1.29 0.52 0.92 3.50 4.89 (0.02) (0.03)

85


13. INVESTMENTS IN PREFERENCE SHARES

Investments in preference shares are preference shares of the overseas jointly controlled entity (KOC) and its subsidiary (KBC) that held by a subsidiary of the Company (Thai Bitumen) and a subsidiary of Thai Bitumen (Multi Strategies Sdn Bhd: MSSB). The preference shares which the subsidiary received are presented below. (Unit: Baht) Consolidated financial statements 31 December 2007 31 December 2006 (Restated) Investment in convertible preference shares of the jointly controlled entity (NRCPS-A) Non-redeemable convertible preference shares of the jointly controlled entity amounting to 31.35 million ringgit - 328,146,720 Investment in preference shares of the jointly controlled entity (RCPS-B) Redeemable convertible preference shares of the jointly controlled entity amounting to 31.35 million ringgit (2006: redeemable non-convertible preference shares amounting to 38.00 million ringgit) 317,649,792 388,166,993 Investment in preference shares of the subsidiary of the jointly controlled entity (RNCPS-KBC) Redeemable non-convertible cumulative preference shares of the subsidiary of the jointly controlled entity amounting to 44.65 million ringgit 452,410,310 456,096,217 Investment in preference shares of the jointly control entity under option agreement to the co-venturer (RCPS-C) Redeemable convertible preference shares of the jointly controlled entity amounting to 31.35 million ringgit. 317,941,999 -

Investment in convertible preference shares of the jointly controlled entity (NRCPS-A)

The non-redeemable convertible preference shares of the jointly controlled entity were received from the sales of machineries, equipment and engineering works for asphalt refinery plant project to KBC. The preference shares are convertible into ordinary shares but have no dividends or voting rights. The conversion period runs for 18 months after the Engineering Procurement and Construction contract was signed on 2 September 2005 or the asphalt refinery plant is commissioned, whichever is earlier.

In November 2006, Thai Bitumen requested conversion of the preference shares in accordance with the above conditions. The preference shares were converted to KOCʼs ordinary shares in March 2007.

Investment in preference shares of the jointly controlled entity (RCPS-B)

The redeemable non-convertible preference shares of the jointly controlled entity were received from the sales of machineries, equipment and engineering works for asphalt refinery plant project to KBC. The preference shares entitle the holder to the preferential return of paid-up capital, but do not grant any right to profit sharing or other benefits. The shares can be redeemed after the asphalt refinery plant has been commissioned.

In January 2007, Thai Bitumen requested redemption of 6.65 million ringgit (equal to Baht 67.9 million) of the preference shares, and such preference shares were redeemed as requested in February 2007. Thai Bitumen also requested KOC change the conditions of the remaining preference shares, amounting to 31.35 million ringgit, such that they would be redeemable convertible preference shares with a coupon rate of 6 percent per annum, redeemable until 30 November 2007 or convertible until 15 December 2007. KOC issued new preference shares in accordance with the request to Thai Bitumen in February 2007.

As discussed in Note 11, Thai Bitumen requested conversion of the preference shares and the preference shares were converted to KOCʼs ordinary shares in January 2008.

86


Investment in preference shares of the subsidiary of the jointly controlled entity (RNCPS-KBC)

The jointly controlled entity redeemable non-convertible cumulative preference shares of the subsidiary of the jointly controlled entity were received from the sales of machineries, equipment and engineering works for asphalt refinery plant project to KBC. The preference shares entitle the holders to a 5 percent cumulative preferential dividend and the preferential return of paid-up capital, but do not grant any further rights to profit sharing or other benefits. The shares can be redeemed after the project loan is fully repaid.

Investment in preference shares of the jointly controlled entity under option agreement to the co-venturer (RCPS-C)

In January 2007, the subsidiary established in Malaysia, Multi Strategies Sdn Bhd (MSSB), and Thai Bitumen invested 24.70 million ringgit (equal to Baht 252.3 million) and 6.65 million ringgit (equal to Baht 67.9 million), respectively, in the new redeemable convertible preference shares issued by KOC. The preference shares bear interest at a rate of 6 percent per annum and can be converted or redeemed on demand. The Company and the subsidiary have entered into a Call Option Agreement with the co-venturer, granting an option to the co-venturer to purchase such preference shares at a price stipulated in the option agreement within 10 January 2008. Under the option agreement, throughout the option period the Company and the subsidiary and the co-venturer still have 50:50 interests in the equity and control of the jointly controlled entity, as specified in Shareholdersʼ Agreement. However, if the co-venturer does not exercise the option to purchase such preference shares in accordance with the option agreement, Thai Bitumen and its subsidiary have an option to purchase all of the co-venturerʼs ordinary shares in KOC at a price stipulated in the option agreement.

In accordance with the conditions of the above agreements, the co-venturer requested approval for the investments under the shareholders and the option agreements from the Securities and Exchange Commission of Malaysia. How ever, on 4 July 2007, the Securities and Exchange Commission rejected the request of the co-venturer.

As of 11 January 2008, which was the expiry date of the option agreement, the co-venturer had not exercised the option granted under the agreement, Thai Bitumen thus exercised its option to purchase all of the ordinary shares in KOC held by the co-venturer (950,001 shares) and has entered into the Settlement Agreement to change the shareholding structure of KOC, as discussed in Note 11.

14. OTHER LONG-TERM INVESTMENTS (Unit: Baht) Consolidated financial statements Separate financial statements 2007 2006 2007 2006 (Restated) Investment in amortising debentures (interest at the rate of 11.5625 percent per annum) 7,983,820 9,744,820 7,983,820 9,744,820 Less: Current portion (1,970,520) (1,761,000) (1,970,520) (1,761,000) Investment in debt security - net of current portion 6,013,300 7,983,820 6,013,300 7,983,820

87


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89


16. ASSETS AWAITING SALE (Unit: Baht) Consolidated financial statements 2007 2006 Land and land improvement 383,607,742 383,607,742 Less: Allowance for impairment of assets (118,874,781) (118,874,781) Net 264,732,961 264,732,961 Vehicles, equipment and other tools 17,932 74,105 Assets awaiting sale - net 264,750,893 264,807,066

The outstanding balance of assets awaiting sale comprises the property, plant and equipment of Thai Bitumen Company Limited and most are assets of the asphalt refinery plant project, which the subsidiary terminated in 1999.

In January 2005, the land and land improvement were appraised by an independent appraisal company and the subsidiary recorded allowance for impairment loss for assets with appraisal values lower than their book value under “Selling and administrative expenses” in the income statement for 2005. The management of the subsidiary believes that fair values of the land and land improvement as at 31 December 2007 were not materially different from these appraisal values.

17. LEASEHOLD RIGHTS

The Company entered into an agreement to lease office space in China for a period of 30 years, under which the Company paid advance rental totaling 1.4 million renminbi.

Two subsidiary companies in China entered into agreements to lease land for a period of 50 years, under which the subsidiary paid advance rental totaling 12.6 million renminbi.

The leasehold rights balances are as follows: (Unit: Baht) Consolidated financial statements Separate financial statements 2007 2006 2007 2006 (Restated) Leasehold rights 65,062,915 65,107,590 6,837,063 6,837,063 Less: Accumulated amortisation (13,212,380) (11,474,837) (1,595,314) (1,367,412) Leasehold rights - net 51,850,535 53,632,753 5,241,749 5,469,651 Amortisation expenses included in the income statements for the year 1,737,543 1,786,190 227,902 227,902

A subsidiary of the Company has pledged leasehold rights amounting to approximately Baht 48.2 million (2006: Baht 46.6 million) as collateral against credit facilities received from financial institutions.

18. SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS (Unit: Baht) Consolidated financial statements Separate financial statements 2007 2006 2007 2006 (Restated) Promissory note 1,082,591,489 315,000,000 763,271,409 170,000,000 Trust receipt 134,181,293 630,610,267 134,181,292 630,610,267 Loan agreements in renminbi 122,231,250 48,004,605 - - Loan agreements in US Dollars 40,533,382 47,580,126 - - Total 1,379,537,414 1,041,194,998 897,452,701 800,610,267

As at 31 December 2007, the Company and its local subsidiaries had short-term Baht loans from local financial institutions, which carry interest at rates ranging from 3.4 - 4.4 percent per annum (2006: 5.4 - 5.8 percent per annum) and either have maturities of between 1 and 2 months or are repayable at call.

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In addition, oversea subsidiaries have short-term loans from overseas financial institutions, which carry interest at rates ranging from 5.8 - 6.7 percent per annum (2006: 5.8 - 6.9 percent per annum) and have maturities of between 1 month to 7 months. These short-term loans are secured with guarantees provided by the Company and with assets of the overseas subsidiary.

As at 31 December 2007, the short-term credit facilities of the Company and its subsidiaries which have not yet been drawn down amounted to Baht 3,165 million (The Company Only: Baht 3,007 million).

19. SHORT-TERM LOAN FROM OTHER COMPANY

Short-term loan from other company is a 24.7 million ringgit loan obtained from a Malaysian company by the subsidiary of Thai Bitumen, Multi Strategies Sdn Bhd (MSSB), for the purpose of subscribing to the preference shares of the jointly controlled entity under the agreement granting options to the co-venturers, as described in Note 13. The loan is due within 1 month after the co-venturer exercises the option to purchase preference shares under the option agreement. However, if the co-venturer does not exercise the option, MSSB can repay the loan in cash or make settlement by transferring 24.7 million ringgit of preference/ordinary shares of the jointly controlled entity to that company at the end of the option period.

On 11 January 2008, the expiry date of the option agreement, the co-venturer did not exercise the option. Therefore Thai Bitumen transferred MSSB, which held 24.7 million ringgit shares in the jointly controlled entity, to the lender in settlement of the loan as discussed in Note 13.

20. LONG-TERM LOANS (Unit: Baht) Consolidated financial statements Separate financial statements 2007 2006 2007 2006 (Restated) Long-term loans in Baht currency 1,458,320,000 1,711,440,000 1,249,320,000 1,466,440,000 Long-term loans in renminbi 13,762,444 14,927,986 - - Total 1,472,082,444 1,726,367,986 1,249,320,000 1,466,440,000 Less: Current portion of long-term loans (256,120,000) (256,120,000) (217,120,000) (217,120,000) Long-term loans - net of current portion 1,215,962,444 1,470,247,986 1,032,200,000 1,249,320,000

Long-term loans of the Company

In October 2005, the Company entered into a long-term credit agreement with a local bank (the lender), granting the Company a Baht term facility of up to Baht 1,225 million in order to make payment of the existing long-term loans. The loan facility is subject to interest at 5.25 percent per annum (from November 2005 to October 2007) and MLR- 1.25 percent per annum (from November 2007 to October 2012) and is secured by a corporate guarantee provided by a subsidiary company. Repayment is scheduled to be made in 14 semi-annual installments, beginning on the last working day of the period of six months following the first drawdown date. The Company drew down the loan in full on 31 October 2005.

The loan agreements contain covenants that, among other things, require the Company to maintain certain debt to equity and debt service coverage ratios.

Moreover, in November 2005 the Company received a Baht 400 million credit facility from the branch of an overseas bank. The loan facility is subject to interest at 5 percent per annum for the first year, 5.25 percent per annum for the second year and at MLR-3.75 percent per annum for the third to the seventh years. Repayment is scheduled to be made in semi-annual installments of Baht 28.56 million per installment, beginning on the last working day of the period of six months following the first drawdown date. The Company drew down Baht 400 million on 7 February 2006.

The long-term loans of the Company were secured by a related company.

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Long-term loans of subsidiaries

In 2002, Bitumen Marine Co., Ltd. entered into two long-term loan agreements with a bank to obtain Baht loans totaling Baht 396 million to be used for the repair and purchase of a vessel, as follows:

- The first agreement is for a facility of Baht 359 million, with repayment to be made within 8 years. The interest rate is 5.25 percent per annum for the first three years, and thereafter MLR per annum, with interest to be paid monthly commencing after the first draw down date. The first principal repayment amounting to Baht 3 million, was to be made in the thirteenth month, after which repayment is to be made monthly. The subsidiary drew down the full facility on 29 May 2003. - The second agreement is for a facility of Baht 37 million, with repayment to be made within 5 years. The interest rate is 5.25 percent per annum for the first three years, and thereafter MLR per annum, with interest to be paid monthly commencing after the first draw down date. The first principal repayment, amounting to Baht 685,185, was to be made in the seventh month, after which repayment was to be made monthly. However, the subsidiary completed repayment of the loan in 2006.

During January 2008, Tasco Shipping Co., Ltd. entered into a long-term loan agreement with a local bank to obtain a baht loan of Baht 684.25 million to be used for shipbuilding. The loan is repayable within 8 years and subject to interest at the rate of 4.75 percent per annum for the first year, 5 percent per annum for the second and third years, and at bank prime rate less one percent per annum for the fourth to the eighth year.

The long-term Baht loans of the subsidiaries were secured by a guarantee provided by a related party and the mortgage of the subsidiaryʼs assets.

The outstanding balance of long-term loans in renminbi comprises long-term loans of an indirectly-held subsidiary company in China, which were obtained from its co-venturer.

21. SHARE CAPITAL AND WARRANTS

Meeting No. 1/2005 of the Extraordinary General Meeting of shareholders, held on 9 June 2005, passed resolutions to approve the issuance and offer of 25,000,000 ordinary share warrants to existing shareholders who subscribed to new ordinary shares, free-of-charge, in a ratio of 1 warrant for each new ordinary share. The term of the warrants is 3 years from the issue date, and the exercise price is the offer price of the new ordinary shares plus a margin, which will change depending on the exercise period. Such exercise price may be altered to accord with the conditions of any adjustment of rights. During the first 12 months since the date of issue of warrants, the warrants could be exercised every month and for the subsequent period, the warrants can be exercised every 3 months. The first exercise date was to be on the last business day of the first month after the date of issue of the warrants.

On 5 September 2005 the Office of the Securities and Exchange Commission approved the Companyʼs application to offer ordinary share warrants to existing shareholders and reserve shares for the exercise of such warrants. The Company set the following issue date, exercise period, exercise price, conversion price and conversion ratio for the warrants: - The date of issue was 11 October 2005. - The first exercise date was 31 October 2005. - The last exercise date is 30 September 2008. - The exercise price is Baht 17.50 per share for warrants exercised during the 1st-12th months from the date of issue. - The exercise price is Baht 18.375 per share for warrants exercised during the 13th-18th months from the date of issue. - The exercise price is Baht 19.25 per share for warrants exercised during the 19th -24th months from the date of issue. - The exercise price is Baht 20.125 per share for warrants exercised during the 25th -30th months from the date of issue. - The exercise price is Baht 21.00 per share for warrants exercised during the 31st-36th months from the date of issue. - The conversion ratio is 1 warrant to 1 ordinary share.

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On 11 October 2005, which was the date of issue, all 25 million warrants were allocated to the shareholders, and the SET approved the listing of the warrants as securities on 18 October 2005.

During the current year, 613,092 warrants were exercised to purchase 613,092 new ordinary shares, representing capital of Baht 11,781,908. The Company registered the resulting increases in the share capital with the Ministry of Commerce on 8 January 2007, 9 April 2007, 29 June 2007 and 11 October 2007 and therefore the Companyʼs issued and paid up share capital is Baht 1,525,437,260. As at 31 December 2007, 11,771,412 warrants remained unexercised.

On 23 April 2007, the Annual General Meeting of shareholders of the Company was resolved the resolution to approve the decrease of the Companyʼs registered capital from Baht 1,643,176,380 (164,317,638 ordinary shares of Baht 10 each) to Baht 1,643,151,380 (164,315,138 ordinary shares of Baht 10 each) through the elimination of the 2,500 unissued ordinary shares. The Company registered the resulting increase in the registered share capital with the Ministry of Commerce on 11 May 2007.

22. STATUTORY RESERVE Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a statutory reserve at least 5 percent of its net income after deducting accumulated deficit brought forward (if any), until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution.

23. NUMBER OF EMPLOYEES AND RELATED COSTS Consolidated financial statements Separate financial statements 2007 2006 2007 2006 (Restated) Number of employees at end of year (persons) 942 910 586 576 Employee costs for the year (Million Baht) 394.2 336.9 253.6 232.1

24. CORPORATE INCOME TAX Corporate income tax for the current year was calculated on net income before income tax from non-promoted operations after adding back expenses and deducting income which are disallowable for tax computation purposes.

The Company has no corporate income tax liabilities for 2006 because tax losses brought forward from prior years exceed net income from non-promoted operations.

25. PROMOTIONAL PRIVILEGES The Company and three of its subsidiaries were granted investment promotion privileges by the Board of Investment (BOI). Important tax privileges granted to the companies are summarised below :-

Exemption from Exemption from 50% reduction of corporate income tax corporate income tax corporate income tax for 6 years for 8 years rate for 5 years commencing from commencing from commencing from Tipco Asphalt Public Company Limited Manufacture of asphalt - 7 July 1997 8 July 2005 - 13 August 1998 14 August 2006 - 1 December 2000 2 December 2008 Manufacture of chemical products from petroleum 2 January 1997 - 3 January 2003 28 January 1997 - 29 January 2003 13 June 1997 - 14 June 2003 Surat Bitumen Company Limited Manufacture of asphalt - 24 August 1998 25 August 2006 Manufacture of chemical products from petroleum 17 February 1997 - 18 February 2003 Raycol Asphalt Company Limited Manufacture of asphalt - - 13 August 1997 2 May 2001 14 August 2005 3 May 2009 Bitumen Marine Company Limited Marine transportation - 24 June 2003 -

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The Companyʼs operating revenues for the years are below shown divided according to promoted and non-promoted operations. (Unit: Baht) Promoted operations Non-promoted operations Total 2007 2006 2007 2006 2007 2006 Sales and services Domestic sales and local services 954,262,149 879,784,567 3,992,669,765 3,576,794,325 4,946,931,914 4,456,578,892 Export sales and international services 82,745,314 100,965,348 4,255,535,802 3,710,636,784 4,338,281,116 3,811,602,132 Total sales and services 1,037,007,463 980,749,915 8,248,205,567 7,287,431,109 9,285,213,030 8,268,181,024 26. TAX PRIVILEGES FOR MARITIME COMMERCE

Three subsidiaries, Delta Shipping Company Limited, Alpha Maritime Company Limited and Bitumen Marine Company Limited, are entitled to withholding income tax privileges under Revenue Department Instruction No. Por 110/2545 since they are international marine transportation business operators, whereby income from vessel rental is subject to withholding tax at a rate of 1%. Moreover, the subsidiaries are exempted from corporate income tax on their income from international marine transportation under Announcement of the Director-General of the Revenue Department No. 72.

27. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net income for the year by the weighted average number of ordinary shares in issue during the year.

Diluted earnings per share is calculated by dividing net income for the year by the sum of the weighted average number of ordinary shares in issue during the year and the weighted average number of ordinary shares which would need to be issued to convert all dilutive potential ordinary shares into ordinary shares. The calculation assumes that the conversion took place either at the beginning of the year or on the date the potential ordinary shares were issued.

Reconciliation between basic earnings per share and diluted earnings per share is as follows: (Unit: Baht) Consolidated financial statements For the years ended 31 December Weighted average number Net income of ordinary shares Earnings per share 2007 2006 2007 2006 2007 2006 (Shares) (Shares) Basic earnings per share Net income 306,161,110 343,412,059 152,106,443 144,598,351 2.01 2.37 Effect of dilutive potential ordinary shares Warrants 11,771,412 units (2006: 12,384,504 units) - - 3,862,640 4,010,705 Diluted earnings per share Net income of ordinary shareholders assuming the conversion of warrants to ordinary shares 306,161,110 343,412,059 155,969,083 148,609,056 1.96 2.31

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(Unit: Baht) Separate financial statements For the years ended 31 December Weighted average number Net income of ordinary shares Earnings per share 2007 2006 2007 2006 2007 2006 (Shares) (Shares) Basic earnings per share Net income 270,459,128 390,085,719 152,106,443 144,598,351 1.77 2.70 Effect of dilutive potential ordinary shares Warrants 11,771,412 units (2006: 12,384,504 units) - - 3,862,640 4,010,705 Diluted earnings per share Net income of ordinary shareholders assuming the conversion of warrants to ordinary shares 270,459,128 390,085,719 155,969,083 148,609,056 1.73 2.62

28. CASH FLOW STATEMENT The cash flow statements for 2006 include cash and cash equivalents of a subsidiary company, Raycol Asphalt Company Limited, at the acquisition date. Such company has been under the Companyʼs control since 13 March 2006.

29. SEGMENT INFORMATION The Company and its subsidiariesʼ business operations involve three principal segments: (1) manufacture and sale of asphalt products (2) marine transportation (3) investment and others. The business operations are carried on both in Thailand and overseas. However, during the years ended 31 December 2007 and 2006, the Company and its subsidiaries did not have significant business transactions or outstanding balances relating to the marine transportation and investment and other business segments. Therefore financial information by segment has been presented only by geographic area, as follows: (Unit: Million Baht) Elimination of inter-segment Thailand Overseas revenues Consolidation 2007 2006 2007 2006 2007 2006 2007 2006 (Restated) (Restated) (Restated) Revenue from external customers 9,000 7,616 1,455 1,951 - - 10,455 9,567 Inter segment revenues 784 1,415 - - (784) (1,415) - - Total revenue 9,784 9,031 1,455 1,951 (784) (1,415) 10,455 9,567 Segment operating income 880 880 93 247 973 1,127 Unallocated income and expenses: Interest income 5 5 Other income 94 65 Selling and administrative expenses (543) (653) Share of income from investments in jointly controlled entity and associates 2 4 Share of loss from investments in jointly controlled entity and associates (14) - Interest expenses and finance costs (161) (161) Corporate income tax (30) (22) Minority interest (20) (22) Net income 306 343

95


(Unit: Million Baht) Elimination of inter-segment Thailand Overseas revenues Consolidation 2007 2006 2007 2006 2007 2006 2007 2006 (Restated) (Restated) (Restated) Property plant and equipment 1,620 1,524 138 133 - - 1,758 1,657 Other assets 5,277 5,097 Total assets 7,035 6,754 Transfer prices between the segments are as set out in Note 8 to the financial statements.

30. PROVIDENT FUND

The Company and its subsidiaries and their employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. Both employees and the Company and its subsidiaries contribute to the fund monthly. The fund, which is managed by B.T. Asset Management Co., Ltd., will be paid to employees upon termination in accordance with the fund rules. During the year 2007, the Company and its subsidiaries contributed Baht 5.1 million (2006: Baht 4.7 million) to the fund (The Company Only: Baht 4.0 million, 2006: Baht 3.7 million).

31. DIVIDENDS

On 23 April 2007, the Annual General Meeting of shareholders of the Company resolved that the Company pay a dividend for the year 2006 of Baht 1.15 per share, a total of Baht 174,734,635. The dividend was recorded and paid during the second quarter of the current year.

32. COMMITMENTS AND CONTINGENT LIABILITIES

32.1 Capital commitment

As at 31 December 2007, a subsidiary has capital commitments totaling approximately USD 18.4 million related to undelivered shipbuilding contracts.

32.2 Operating lease commitments

The Company has entered into several lease agreements with respect of the lease of a building, warehouses and motor vehicles and also entered into several related service agreements.

Future minimum rental and service fees payable under these as at 31 December 2007 were as follow: Consolidated financial statements Separate financial statements Payable within : Baht US dollars Baht US dollars 1 year 25.0 0.2 20.2 0.1 2 - 5 years 17.5 - 15.7 - 42.5 0.2 35.9 0.1

32.3 Long-term service commitments

The Company has entered into the Technical and Administrative Assistance Agreement with Colas S.A., a related party in France, in relation to methods and systems of management and technical assistance concerning the manufacture of Asphalt Emulsion and Modified Asphalt. Under this agreement, which is for a period of five years unless terminated by either party with at least one yearʼs prior notice, the Company agrees to pay an administrative of an annual lump sum of Euros 115,000 plus a technical assistance fee equal to 0.75 percent of the consolidated revenues of the Company generated from the stipulated products. The fees are invoiced semi-annually. The fees for the year 2007 amounted to approximately Baht 18.0 million.

In addition, on 10 October 2002, a subsidiary of the Company entered into the License and Technical Assistance Collaboration Agreement with the same related party. Under this agreement, which is for a period of five years unless terminated by either party with at least one yearʼs prior notice, the subsidiary agrees to pay annual fees of at least Baht 8 million. The fees for the year 2007 amounted to approximately Baht 15.8 million.

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On 1 March 2007, a subsidiary of the Company entered into the Consultancy Agreement with an overseas company for procurement of crude oil. Under the agreement, which is for a period of six years, the subsidiary agrees to pay a monthly retainer and consultant fees at the rates stipulated in the agreement. These rates depend upon the performance of the consultant but the maximum amount payable is USD 2.7 million (net of payment made).

32.4 Commitments under to sale and purchase agreements

As at 31 December 2007, the Company has commitments arising from some of sale and purchase agreements, under which there are stipulated minimum sales/purchase quantities with specified unit prices and periods. The agreements mature within one year.

32.5 Guarantees

1. The Company has guaranteed bank credit facilities of its local subsidiaries and overseas subsidiaries amounting to Baht 4 million, USD 2.5 million, respectively. In addition, the Company has entered into the Financial Support Agreement, whereby it agrees to provide financial support to a subsidiary in an amount not exceeding Baht 60 million for a period of 2 years.

2. The Company has obtained various credit facilities from banks. Under the agreements with the banks, the Company allows its subsidiaries to use such facilities, with the Company responsible to the banks for the amounts drawn down by the subsidiaries.

3. As at 31 December 2007, there were outstanding bank guarantees of approximately Baht 5.5 million issued by the banks on behalf of the Company and its subsidiaries in respect of certain performance bonds as required in the normal course of business. (The Company Only: Baht 4.7 million).

32.6 As at 31 December 2007, the Company has commitment of approximately HKD 30.19 million, or equal to approximately Baht 130.5 million in respect of the uncalled portion of investment in a subsidiary.

33. FINANCIAL INSTRUMENTS

33.1 Financial risk management

The Company and its subsidiariesʼ financial instruments, as defined under Thai Accounting Standard No. 48 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equivalents, trade accounts receivable, loans, investments, and short-term and long-term loans. The financial risks associated with these financial instruments and how they are managed is described below.

Credit risk

The Company and its subsidiaries are exposed to credit risk primarily with respect to trade accounts receivable, loans, notes and other receivable. The Company and its subsidiaries manage the risk by adopting appropriate credit control policies and procedures and therefore does not expect to incur material financial losses. In addition, the Company and its subsidiaries do not have high concentrations of credit risk since it has a large customer base. The maximum exposure to credit risk is limited to the carrying amounts of receivables, loans, other receivables and notes receivable as stated in the balance sheet.

Interest rate risk

The Company and its subsidiariesʼ exposure to interest rate risk relates primarily to its cash at banks, bank overdrafts, debentures and long-term borrowings. However, since most of the Company and its subsidiariesʼ financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate, the interest rate risk is expected to be minimal.

Significant financial assets and liabilities as at 31 December 2007 classified by type of interest rate are summarised in the table below, with those financial assets and liabilities that carry fixed interest rates further classified based on the maturity date, or the repricing date if this occurs before the maturity date.

97


Consolidated financial statements Fixed interest rates Floating Non- Within 1-5 Over interest interest Interest 1 year years 5 years rate bearing Total rate (Million Baht) (% p.a.) Financial Assets Cash and cash equivalents - - - 81.1 280.2 361.3 0.5 Current investments 2.0 - - 43.0 - 45.0 2.3-11.6 Trade accounts and notes receivable 710.1 - - - 1,740.4 2,450.5 7.5 Amounts due from related parties - - - - 11.3 11.3 - Short-term loans to related parties 5.6 - - - - 5.6 5.0 Investment in preference shares of the subsidiary of the jointly controlled entity - - 452.4 - - 452.4 5.0 Investment in preference shares of the jointly controlled entity under option agreement to co-venturer 317.9 - - - - 317.9 1.5 Other long-term investments - 6.0 - - - 6.0 11.6 Long term loans to related companies - - - - 7.2 7.2 - Financial liabilities Short-term loans from financial institutions 1,379.5 - - - - 1,379.5 3.4-4.4 Trade accounts payable - - - - 493.5 493.5 - Amounts due to and advance from related party - - - - 4.8 4.8 - Short-term loan from other company - - - - 250.6 250.6 - Long-term loans 314.3 - - 1,144.0 13.8 1,472.1 5.2-7.0

Separate financial statements Fixed interest rates Floating Non- Within 1-5 interest interest Interest 1 year years rate bearing Total rate (Million Baht) (% p.a.) Financial Assets Cash and cash equivalents - - 54.1 108.0 162.1 0.5 Current investments 2.0 - - - 2.0 11.6 Trade accounts and notes receivable 710.1 - - 1,391.2 2,101.3 7.5 Amounts due from related parties - - - 11.2 11.2 - Short-term loans to related parties 6.7 - - - 6.7 5.0 Other long-term investments - 6.0 - - 6.0 11.6 Long term loans to related companies 91.8 - - - 91.8 5.0-6.4 Financial liabilities Short-term loans from financial institutions 897.5 - - - 897.5 3.4-4.4 Trade accounts payable - - - 460.7 460.7 - Amounts due to and advance from related party - - - 3.4 3.4 - Short-term loan from related party 33.3 - - 0.2 33.5 4.25 Long-term loans 314.3* - 935.0* - 1,249.3 5.3-6.0

* The Company’s long-term loan facilities of Baht 1,225 million and Baht 400 million, which have fixed interest rates for the first two

years and subjected to floating interest rates for the third to the seventh years (see Note 20).

98


The subsidiary of the overseas jointly controlled entity entered into an interest rate swap agreement to swap a floating interest rate on a long-term loan for a fixed rate interest at 5.5 percent per annum, for loan principal of USD 30.83 million. The agreement matures in June 2012.

Foreign currency risk

The Company and its subsidiariesʼ exposure to foreign currency risk arises mainly from trading transactions and loans that are denominated in foreign currencies. The Company seeks to reduce risk from trading transactions by entering into forward exchange contracts when it considers appropriate. Generally, the forward contracts mature within one year.

The balances of financial assets and liabilities of the Company and its subsidiaries denominated in foreign currencies as at 31 December 2007 are summarised below.

Financial Financial Average exchange rate Foreign currency assets liabilities as at 31 December 2007 (Million) (Million) (Baht per 1 foreign currency unit) US Dollar 10.6 4.5 33.7 Ringgit Malaysia 83.5 0.2 10.1 Renminbi 0.4 - 4.6

Foreign exchange contracts of the Company and its subsidiaries outstanding at 31 December 2007 are summarised below.

Contractual exchange rate Foreign currency Bought contracts Sold contracts Bought Sold (Million) (Million) (Baht per 1 foreign currency unit) US Dollar 6.3 16.8 33.6-34.2 33.6-34.0

However, the Company and its subsidiaries are exposed to foreign exchange risk on their investments in overseas subsidiaries, jointly controlled entity, and associated companies. These investments are currently not hedged by derivative financial instruments.

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33.2 Fair value of financial instruments

The estimated fair value of financial instruments as at 31 December 2007, in comparison with the related amounts carried in the balance sheet, is as follows: (Unit: Million Baht) Consolidated financial statements Separate financial statements Carrying amount Fair value Carrying amount Fair value Financial assets Cash and cash equivalents 361.3 361.3 162.1 162.1 Current investments 45.0 45.2 2.0 2.2 Trade accounts and notes receivable 2,450.5 2,450.5 2,101.3 2,101.3 Amounts due from related parties 11.3 11.3 11.2 11.2 Short-term loans to related parties 5.6 5.6 6.7 6.7 Investment in preference shares of the subsidiary of the jointly controlled entity 452.4 -* - - Investment in preference shares of the jointly controlled entity under option agreement to

co-venturer 317.9 - - - Other long-term investments 6.0 6.8 6.0 6.8 Long-term loans to related companies 7.2 7.2 86.4 86.4 Financial liabilities Short-term loans from financial institutions 1,379.5 1,379.5 897.5 897.5 Trade accounts payable 493.5 493.5 460.8 460.8 Amounts due to and advance from related parties 4.8 4.8 3.4 3.4 Short-term loan from related party - - 33.3 33.3 Short-term loan from other company 250.6 250.6 - - Long-term loans 1,472.1 1,463.4 1,249.3 1,241.7

*The Company was unable to estimate the fair value of the investments in preference shares of the jointly

controlled entity and the subsidiary of the jointly controlled entity because such fair value depends on the

redemption of such shares in the future.

There is no material gain/loss as a result of estimation of the fair values of forward exchange contracts outstanding as at 31 December 2007.

The methods and assumptions used by the Company in estimating the fair value of financial instruments are as follows:

a) For financial assets and liabilities which have short-term maturities, including cash and cash at banks, accounts and short-term loan receivables, accounts and short-term loan payables, the carrying amounts in the balance sheet approximate their fair value.

b) For debts and equity securities, fair value is generally derived from quoted market prices, or based on generally accepted pricing models when no market price is available.

c) For fixed rate long-term loans, their fair value is estimated by discounting expected future cash flows by the current market interest rate of loans with similar terms and conditions.

d) For long-term loans carrying interest at rates approximating to the market rates, the carrying amounts in the balance sheet approximate fair value.

e) For derivatives, fair value is generally derived from quoted market prices, or based on generally accepted pricing models when no market price is available.

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34. SUBSEQUENT EVENT

During January 2008, the Company and a subsidiary, Thai Bitumen Co., Ltd., entered into the First Cargo Settlement Agreement and the Settlement Agreements with the co-venturer and its related party in Malaysia. The major objectives of the agreements are to agree on the conditions for settlement of debts arising from sales of crude oil and changes the shareholding structure in the jointly controlled entity, Kemaman Oil Corporation SDN BHD, as discussed in Note 7 and Note 11.

35. RECLASSIFICATION

In addition to the change in accounting policy as mentioned in Note 4, which affects the previously reported net income and shareholderʼs equity, certain other amounts in the financial statements for the year ended 31 December 2006 have been reclassified to conform to the current yearʼs classification but with no effect to previously reported net in come or shareholdersʼ equity other than from the change in accounting policy.

36. APPROVAL OF FINANCIAL STATEMENTS

These financial statements were authorised for issue by the Companyʼs authorised directors on 18 February 2008.

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