annua r 01 001 - 3k battery · analysis and description of managements overall business operation...

AnnuAl RepoRt 2015 001

Financial Highlight 002Message from The Chairman of the Board of Directors 003Board of Directors 004Management Team 005Report of the Audit Committee 025 Organization Chart 029Policy and Overview 030Type of Business Operations 038

Risk Factors 047Shareholder Structure and Management 051The Sustainable Development 065Related Transactions 073Analysis and Description of Managements Overall Business Operation and Significant Change 077Independent Auditor’s Report 085Statement of financial position 087Notes to Consolidated Financial Statements 096

Summary of financial 2015

Baht

Consolidated Financial Statement Data 2015 2014 2013 Growth Rate

Total Assets 3,549,149,221.00 3,870,410,913.00 4,094,132,098.00 (8.30) (5.46)

Total Liabilities 1,640,984,904.00 2,105,498,190.00 2,487,532,893.00 (22.06) (15.36)

Shareholder’s Equity attributable to owners of parent 1,861,528,838.00 1,718,569,514.00 1,570,115,089.00 8.32 9.46

Sales Revenue 5,056,859,390.00 5,174,961,105.00 5,550,410,674.00 (2.28) (6.76)

Total Revenue 5,128,511,642.00 5,293,775,066.00 5,623,254,027.00 (3.12) (5.86)

Cost of Sales 3,784,365,095.00 4,056,816,060.00 4,392,968,146.00 (6.72) (7.65)

Selling and Administrative expenses 1,028,147,438.00 924,004,847.00 1,014,170,399.00 11.27 (8.89)

Gross Profit 1,272,494,295.00 1,118,145,045.00 1,157,442,528.00 13.80 (3.40)

Net Profit 219,908,929.00 205,178,454.00 119,464,751.00 (7.18) (71.75)

Paid-up Capital 200,000,000.00 200,000,000.00 200,000,000.00

Financial Proportion

NetnProfit Margin (%) 4.29 3.88 2.12

Return on Equity (%) 12.29 12.48 7.81

Return on Assets (%) 5.93 5.15 3.03

Earning Per Share (Baht) 11.00 10.26 5.97

Book Value (Baht) 93.08 85.93 78.51


นายกวี ขอไพบูลย์ประธานกรรมการ

Mr. Kavie KorphaiboolThe Chairman of the Board of Directors

In 2015, our company has further established the product

development , which was the most innovative premium class

car battery using another level of technology. This innovation

was designed to maximize the battery efficiency and to be

compatible with various types of car accessories in order to

modernize to meet needs of our customers. During the end

of the year, the company has launched a new product which

was developed to have extended power and helps prolong

battery life. This has been well accepted by our customers.

As a result, this has contributed to boosting sales and the

company’s performance. Further more, our company also

won the 2015 ‘Popular Automotive Business Award’ or

the TAQA Award for the fourth consecutive year for the

Outstanding Satisfaction for Car Battery from the Ministry of

Industry. This is the Awards in which our company is highly

proud of as this prestigious award reflects the success of

our team’s dedication and commitment to development and

delivery of quality products to our consumers throughout the

business establishment.

In terms of the 2015 operating results, despite the domestic

economic slowdown and the consumption as a whole were

Message from The Chairman of the Board of Directors

สารจากประธานกรรมการ

being affected by the political situation, as well as the decline

consumers confidence, our company was able to make THB

219 million on net profit with THB 14 million increase from

that of last year, which equivalent to 11.00 baht earnings

per share.

In 2015 the company had continued to focus on expanding

the business by buying equipment to increase production

capacity to meet the needs of consumers as well as

optimizing production capacity. Moreover, our company

had also highlighted the development of our personnel

by organizing the new technologies training and learning

programme, including crafted development plans to promote

and enhance our company to excellence.

On this occasion, I would like to express my gratitude to all

shareholders who have strongly trusted in our operations.

We also appreciate our customers and business partners

for the confidence and always great support. I am also

thankful to the Board of Directors and all our employees for

your dedication and commitment to achieve the operational

efficiency all along. I look forwards to continually receiving

your support.

คณะกรรมการBoard of Directors

นายกวี ขอไพบูลย์

Mr. Kavie Korphaibool

นายศิริทัศน์ ประเสริฐมนูกิจMr. Siritas Prasertmanukitch

ดร.ศรีสุวรรณ ขอไพบูลย์Ph.D. Srisuvarn Korphaibool

นางสาววีรวรรณ ขอไพบูลย์Miss Veerawan Korphaibool

นายวีรวัฒน์ ขอไพบูลย์Mr. Veerawat Korphaibool

นายวีรวิน ขอไพบูลย์Mr. Veerawin Korphaibool

นายนนทพล นิ่มสมบุญMr. Nontaphon Nimsomboon

นายสุชาติ จันลาวงศ์Mr. Suchat Chanlawong

นายวีระชัย ศรีขจรMr. Veerachai Srikajon

นายอภิชัย ชวเจริญพันธ์Mr. Apichai Chvajarernpun

ดร.สิรินุช ไทยวัฒน์Ph.D. Sirinuj Thaivadh

นายอดิศักดิ์ ทองไข่มุกต์Mr. Adisak Tongkaimook


Management Teamคณะผู้บริหาร

นางสาววีรวรรณ ขอไพบูลย์Miss. Veerawan Korphaibool กรรมการ และ ประธานเจ้าหน้าที่บริหาร กรรมการผู้มีอำานาจลงนามผูกพันบริษัทฯ Director and Chief Executive Officer Authorized Director

นายกวี ขอไพบูลย์Mr. Kavie Korphaiboolประธานกรรมการ และประธานบริษัท กรรมการผู้มีอำานาจผูกพันบริษัทChairman of the Board of Directors and President

ดร. ศรีสุวรรณ ขอไพบูลย์Ph.D. Srisuvarn Korphaiboolกรรมการบริหาร กรรมการผู้มีอำานาจผูกพันบริษัทฯExecutive director

นายจักรพันธ์ สังข์แก้วMr. Chakkapan Sangkaewผู้จัดการทั่วไปสายงานปฏิบัติการGeneral Manager- Operation

นายคำานึง วนิชาชีวะMr. Khamnung Wanichachiwaผู้จัดการทั่วไปสายงานบริหารGeneral Manager- Administrative

นายวีระชัย บุญชูขื่นMr. Wirachai Bunchuchuenผู้จัดการทั่วไปสายงานบัญชีและการเงินGeneral Manager-Accounting and Finance

นายสุวิทวัส แก้ววิเชียรMr. Suwittawat Kaewwichianผู้จัดการทั่วไปสายงานการตลาดและขาย General Manager-Marketing and Sales

นาย ยุทธศักดิ์ ชื่นสวัสดิ์ Mr. Yuttasack Chunsawasผู้จัดการทั่วไปสายงานโลจิสติกส์ General Manager Logistics

นายชยพล อัศววัลลภMr. Chayaphol Asavavallopผู้จัดการทั่วไปสายงานประกันคุณภาพและ พัฒนาผลิตภัณฑ์General Manager-Quality Assurance and Product Development

Board of DirectorsMr. Kavie Korphaibool Position Chairman of the Board of Directors and President Authorized Director Age 77 Working Years 30 Education

Bachelor of Mechanical Engineer Musashikogyo University Director Accreditation Program. Class 19/2004, (IOD)

Working Experience 2009 – Present – Chairman of the Board of Directors and President

Thai Storage Battery PCL. 3K Products Co., Ltd. Thai Nonferrous Metal Co., Ltd.

2010 – Present – Chairman of the Board of Directors and President, Power Plast Co., Ltd. 2008 – Present – Chairman of the Board of Directors and President

3K Traction Battery Co., Ltd. 1997 – 2008 – Director, Thai Nonferrous Metal Co., Ltd. 1987 - 2008 – Director, 3K Products Co., Ltd. 1986 - 2008 – Director, Thai Storage Battery PCL. 2004 - 2008 – President, Thai Nonferrous Metal Co., Ltd. 2003 - 2008 – President, 3K Products Co., Ltd. 1993 - 2008 – President, Thai Storage Battery PCL.

% of Share 7.32 Family relationship between executives Husband of Mrs. Srisuvarn Korphaibool


Mr. Siritas Prasertmanukitch Position Vice Chairman of the Board of Directors Age 78 Working Years 22 Education

B.S. : Mechanical Engineer, Swansea University, England Director Accreditation Program. Class 19/2004, (IOD)

Working Experience 2009 – Present – Vice Chairman of the Board of Directors, Thai Storage Battery PCL. 1994 – Present – Director, Thai Storage Battery PCL. 2010 – Present – Director, Power Plas Co., Ltd. 1997 – Present – Director, Thai Nonferrous Metal Co., Ltd. 1994 – Present – Director, 3K Products Co., Ltd. 1998 – 2011 – Chairman of the Board of Directors, Thai Tank Terminal Co., Ltd. 1996 – Present – Director, HMC Polymers Co., Ltd. 1992 – 1995 – Managing Director, Shell Company of Thailand Ltd.

% of Share 1.74 Family relationship between executives : No family relationship

Ph.D. Srisuvarn Korphaibool Position Director

Authorized Director Age 76 Working Years 23 Education

BBA : Accounting Chulalongkorn University Master of Art (Leadership in Society, Business & Politics) Doctor of Philosophy (Public Administration) Director Accreditation Program. Class 19/2004, (IOD) Director Certification Program (DCP) 150/2011 (IOD)

Working Experience 1993 – Present – Director, Thai Storage Battery PCL. 2010 – Present – Director, Power Plas Co., Ltd. 2004 – Present – Director, Thai Nonferrous Metal Co., Ltd. 1993 – Present – Director, 3K Products Co., Ltd. 2015 – Present – Chief Executive Officer, Thai Nonferrous Metal Co., Ltd. 1993 – 2014 – Vice President – Government Affairs Coordination,

Thai Storage Battery PCL. 3K Products Co., Ltd.

1998 - 1999 – Assistant Auditor General (Executive Level 9) Office of the Auditor General of Thailand

Certified Public Accountant No.1692 % of Share 5.05 Family relationship between executives Wife of Mr. Kavie Korphaibool


Miss. Veerawan Korphaibool Position Director and Chief Executive Officer


M.B.A. MIS, ST Peters College New Jersey U.S.A Director Accreditation Program. Class 13/2004, ( IOD) Financial Statements for Directors Class 9/2010 (IOD) Director Certification Program. Class 141/2011 (IOD)

Working Experience 2013 – Present – Vice Chairman of the Board of Directors, Thai Storage Battery PCL. 1999 – Present – Director, Thai Storage Battery PCL. 2010 – Present – Director, Power Plas Co., Ltd. 2008 – Present – Director, 3K Traction Battery Co., Ltd. 2004 – Present – Director, Thai Nonferrous Metal Co., Ltd. 2000 – Present – Director, 3K Products Co., Ltd. 2015 – Present – Chief Executive Officer, Thai Storage Battery PCL. 2010 – 2014 – Senior Vice President - Administrative, Thai Storage Battery PCL. 2004 – 2009 – Administrative General Manager, Thai Storage Battery PCL. 2001 – 2004 – Senior Marketing and Sales Manager, Thai Storage Battery PCL.

% of Share 10.53 Family relationship between executives Daughter of Mr.Kavie Korphaibool and Mrs. Srisuvarn Korphaibool

Mr. Veerawat Korphaibool Position Vice Chairman of the Board of Directors


M.B.A. Business Administration, University of New Haven U.S.A. Director Accreditation Program. Class 13/2004,(IOD) Director Certification Program. Class 151/2011 (IOD) Financial Statements for Directors. Class 14/2011 (IOD)

Working Experience 2013 – Present – Vice Chairman of the Board of Directors, Thai Storage Battery PCL. 2000 – Present – Director, Thai Storage Battery PCL. 2010 – Present – Director, Power Plas Co., Ltd. 2008 – Present – Director, 3K Traction Battery Co., Ltd. 2003 – Present – Director, 3K Products Co., Ltd. 2000 – Present – Director, Thai Nonferrous Metal Co., Ltd.. 2015 – Present – Chief Executive Officer, 3K Products Co., Ltd. 2013 – 2014 – Vice President-Marketing, Thai Storage Battery PCL. 2010 – 2014 – Senior Vice President, 3K Products Co., Ltd. 2003 – 2009 – Managing Director, 3K Products Co., Ltd. 2000 – 2002 – Sales Manager, 3K Products Co.,Ltd.

% of Share 9.74 Family relationship between executives Son of Mr.Kavie Korphaibool and Mrs. Srisuvarn Korphaibool


Mr. Veerawin Korphaibool Position Vice Chairman of the Board of Directors Authorized Director Age 40 Working Years 13 Education

BS: Mechanical Engineering, School of Engineering Rutgers, The State University of New Jersey Director Accreditation Program. Class 49/2005,(IOD) Director Certification Program. Class 160/2012 (IOD)

Working Experience 2013 – Present – Vice Chairman of the Board of Directors, Thai Storage Battery PCL. 2006 – Present – Director, Thai Storage Battery PCL. 2010 – Present – Director, Power Plas Co., Ltd. 2008 – Present – Director, 3K Traction Battery Co., Ltd. 2005 – Present – Director, 3K Products Co., Ltd. 2004 – Present – Director, Thai Nonferrous Metal Co., Ltd. 2015 – Present – Chief Executive Officer, Power Plas Co., Ltd. 2010 – 2014 – Managing Director, Power Plas Co., Ltd. 2014 – 2014 – Senior Vice President - Operation, Thai Storage Battery PCL. 2010 – 2013 – Vice President - Operation, Thai Storage Battery PCL. 2008 – 2009 – Factory General Manager, Thai Storage Battery PCL. 2004 – 2007 – Factory Manager, Thai Storage Battery PCL

% of Share 10.73 Family relationship between executives Son of Mr.Kavie Korphaibool and Mrs. Srisuvarn Korphaibool

Mr. Suchat Chanlawong Position Independent Director and Audit Committee Age 69 Working Years 19 Education

Bachelor of Civil Engineering, Kasetsart University Master of Science in Civil Engineer University Of Missouri, U.S.A. Director Accreditation Program. Class 19/2004, (IOD)

Working Experience 1997 – Present – Independent Director and Audit Committee, Thai Storage Battery PCL. 1997 – Present – Director, 3K Products Co., Ltd. 1997 – Present – Director, Thai Nonferrous Metal Co., Ltd. 2004 – 2008 – Inspector General, Ministry of Energy 2003 – 2004 – Deputy Director General Department of Mineral Fuels 2001 – 2003 – Deputy Director General Department of Industrial Works.

– Deputy Director General Department of Mineral Resources % of Share : None Family relationship between executives: No family relationship


Mr.Nontaphon Nimsomboon Position Independent Director and Chairman of the Audit Committee Age 72, With the Company: 18 Years Education

B.A in Accountancy, B.Com.(Hons.) - Thammasat University M.B.A. University of Iowa, U.S.A.(Under Royal Thai Government Scholarship) Doctorate Degree in Accountancy (Honorary) Thammasat University National Defense College Degree, Class 35 C.P.A (Thailand) Fellow of The Canadian Comprehensive Auditing Foundation Director Capacity Building Programs with IOD

Director Accreditation Program (DAP) Class 4/2003 Director Certification Program (DCP), Class 89/2007 Monitoring Fraud Risk Management (MFM) Class 1/2009 Monitoring The System of Internal Control and Risk Management (MIR), Class 8/2010 Monitoring The Internal Audit Function (MIA), Class 7/2010 Monitoring The Quality of Financial Reporting (MFR), Class 11/2010

Working Experience : 2005 – 2014 - Member of The Court of Directors, Audit Committee Chairman, The Bank of

Thailand 2006 – 2014 - Member of the Audit Committee, Commission, Securities and Exchange

Commission, Thailand 1999 – 2013 - Independent Director, CG Committee Chairman, Big C Supper Center PCL. 2006 – 2008 - Independent Director, Audit Committee Chairman, Airports of Thailand PCL. 2002 – 2005 - Director, Vice Executive Chairman, Saha-Union PCL. 1997 – 2001 - Auditor General, Office of the Auditor General of Thailand 1997 – 2001 - President, The Institute of Certified Accountants and Auditors of Thailand 2010 – 2016 – Audit Committee Chairman, Bangkok University

Other Current Positions : 2005 – Present - Chairman, AMC International Consulting 2008 – Present - Member of the Board of Trustees, Risk Oversight Committee Chairman,

Audit Committee Chairman, Walailak University

2005 – Present - Member of the Audit Committee, Suranaree University of Technology 2008 – Present - Member of the Audit Committee, Mae Fah Luang University 2010 – Presesent - Finance and Property Management Committee,

MahachulalongkornRajavidyalaya University. % of Share holding : None Family relationship between executives: No family relationship

Mr. Veerachai Srikajon Position Independent Director, Audit Committee Age 63 Working Years 15 Education

M.B.A. Business South Eastern University Washington D.C. U.S.A. Bachelor of Mechanical Engineering, Kasetsart University Director Accreditation Program (DAP) 102/2009 Capital Market Academy (CMA) 4/2551

Working Experience 2008 – Present – Independent Director and Audit Committee Thai Storage Battery PCL. 2001 – Present – Director, Thai Storage Battery PCL. 2012 – Present – Director, Thai Non Ferrous Metal Co., Ltd. 1993 – Present – Director 3K Products Co., Ltd. 2004 – 2010 – Managing Director, TKS Technologies PCL.

% of Share 0.10 Family relationship between executives: No family relationship


Mr. Apichai Chvajarernpun Position Independent Director Age 66 Working Years 7 Education

Bachelor of Engineering ( Industrial Chemical) , Chulalongkorn University Master of Engineering (Nuclear Technology) , Chulalongkorn University Graduate Diploma in Mini MBA Class 5 , University of theThai Chamber of Commerce Graduate Diploma in Senior Executive Class 26, Office of The Civil Service Commission Graduate Diploma in Information Technology Management, Office of The Civil Service

Commission Certified of National Defence College Class 13 Graduate Diploma in Government in democratic for Senior Executive Class 9, King

Prajadhipok’s Insititute Graduate Diploma in Directors Certification Program (DCP) Class 91/2007 (IOD)

Working Experience 2009 – Present – Independent Director, Thai Storage Battery PCL. 2010 – Present – Director, Thai Non Ferrous Metal Co., Ltd. 2009 – Present – Director, 3K Products Co., Ltd. 2008 – 2009 – Deputy Permanent , Ministry of Natural Resources and Environment 2006 – 2008 – Director General, Department of Mineral Resources 2003 – 2006 – Director General, Pollution Control Department

% of Share : None Family relationship between executives: No family relationship

Ph.D. Sirinuj Thaivadh Position Independent Director Age 66 Working Year 7 Education

Bachelor of Science , Chulalongkorn University Master of Accountancy , Thammasart University Doctor of Public Administration, Bangkokthonburi University Graduate Diploma in The Association National Defense college, Advanced Security

Management Program Graduate Diploma in The Association National Defense college Class 4414 Graduate Diploma in Public Law, King Prajadhipok’s Institute Graduate Diploma in Directors Certification Program (DCP) of IOD Institutes (Thai Institutes of

Directors) Graduate Diploma in Audit Committee Program (ACP) of IOD Institutes (Thai Institutes of

Directors) Working Experience

2011 – Present – Honorary Advisor to The Senate in Taxation, Finance & Banking 2009 – Present – Independent Director, Thai Storage Battery PCL. 2012 – Present - Director, Thai Non Ferrous Metal Co., Ltd. 2009 – Present – Director 3K Products Co., Ltd. 2007 – Present – Subcommittee On Anti-Corruption (Security) 2009 – 2010 – Director, PTT Exploration & Production PCL. 2008 – 2009 – Director General, The Excise Department 2006 – 2010 – Director, Padaeng Industry PCL. 2004 – 2008 – Inspector General, Ministry of Finance 2003 – 2004 – Director, TOT PCL. 2001 – 2003 – Director of CAT Telecom Co., Ltd

% of Share : None Family relationship between executives: No family relationship


Mr. Adisak ThongkaiMook Position Director Age 65 Working Year 5 Education

Bachelor degree of Science ( Sanitary Sciences), Mahidol University Master of Science (Environmental Technology and Management) , Asian Institute of

Technology

Working Experiences 2011 – Present - Director, Thai Storage Battery Public Company Limited.

2011 – Present -Director, Thai Non Ferrous Metal Co., Ltd. 2011 – Present -Director 3K Products Co., Ltd. 2010-2011 - Director General of the Department of Mineral Resources , Ministry of Natural

Resources and Environment 2009 – 2010 - Director General of the Department of Marine and Coastal Resources,

Ministry of Natural Resources and Environment. 2008 – 2009 - Inspector General, Ministry of Natural Resources and Environment 2007 – 2008 - Director General of the Department of Water Resources, Ministry of Natural

Resources and Environment 2006 – 2007 - Deputy Permanent Secretary, Ministry of Natural Resources and Environment 2003 – 2006 - Deputy Director General of the Department of Pollution Control, Ministry of

Natural Resources and Environment

Management TeamMANAGEMENT TEAM Mr. Kavie Korphaibool Position Chairman of the Board of Directors and President Authorized Director Age 77 Working Years 30 Education

Bachelor of Mechanical Engineer Musashikogyo University Director Accreditation Program. Class 19/2004, (IOD)

Working Experience 2009 - Present – Chairman of the Board of Directors and President

Thai Storage Battery PCL. 3K Products Co., Ltd. Thai Nonferrous Metal Co., Ltd.

2010 - Present – Chairman of the Board of Directors and President, Power Plast Co., Ltd. 2008 - Present – Chairman of the Board of Directors and President

3K Traction Battery Co., Ltd. 1997 - 2008 – Director, Thai Nonferrous Metal Co., Ltd. 1987 - 2008 – Director, 3K Products Co., Ltd. 1986 - 2008 – Director, Thai Storage Battery PCL. 2004 - 2008 – President, Thai Nonferrous Metal Co., Ltd. 2003 - 2008 – President, 3K Products Co., Ltd. 1993 - 2008 – President, Thai Storage Battery PCL.

% of Share 7.32 Family relationship between executives Husband of Mrs. Srisuvarn Korphaibool


Ph.D. Srisuvarn Korphaibool Position Executive director



Working Experience 1993 - Present – Director, Thai Storage Battery PCL. 2010 - Present – Director, Power Plas Co., Ltd. 2004 - Present – Director, Thai Nonferrous Metal Co., Ltd. 1993 - Present – Director, 3K Products Co., Ltd. 2015 - Present – Chief Executive Officer, Thai Nonferrous Metal Co., Ltd. 1993 - 2014 – Vice President – Government Affairs Coordination,



Certified Public Accountant No.1692 % of Share 5.05 Family relationship between executives

Wife of Mr. Kavie Korphaibool

Miss. Veerawan Korphaibool

Position Director and Chief Executive Officer Authorized Director

Age 44 Working Years 20 Education

M.B.A. MIS, ST Peters College New Jersey U.S.A Director Accreditation Program. Class 13/2004, ( IOD) Financial Statements for Directors Class 9/2010 (IOD) Director Certification Program. Class 141/2011 (IOD)

Working Experience 2013 - Present – Vice Chairman of the Board of Directors, Thai Storage Battery PCL. 1999 - Present – Director, Thai Storage Battery PCL. 2010 - Present – Director, Power Plas Co., Ltd. 2008 - Present – Director, 3K Traction Battery Co., Ltd. 2004 - Present – Director, Thai Nonferrous Metal Co., Ltd. 2000 - Present – Director, 3K Products Co., Ltd. 2015 - Present – Chief Executive Officer, Thai Storage Battery PCL. 2010 - 2014 – Senior Vice President - Administrative, Thai Storage Battery PCL. 2004 - 2009 – Administrative General Manager, Thai Storage Battery PCL. 2001 - 2004 – Senior Marketing and Sales Manager, Thai Storage Battery PCL.

% of Share 10.53 Family relationship between executives

Daughter of Mr.Kavie Korphaibool and Mrs. Srisuvarn Korphaibool

Ph.D. Srisuvarn Korphaibool Position Executive director



Working Experience 1993 - Present – Director, Thai Storage Battery PCL. 2010 - Present – Director, Power Plas Co., Ltd. 2004 - Present – Director, Thai Nonferrous Metal Co., Ltd. 1993 - Present – Director, 3K Products Co., Ltd. 2015 - Present – Chief Executive Officer, Thai Nonferrous Metal Co., Ltd. 1993 - 2014 – Vice President – Government Affairs Coordination,



Certified Public Accountant No.1692 % of Share 5.05 Family relationship between executives

Wife of Mr. Kavie Korphaibool

Miss. Veerawan Korphaibool


Mr. Khamnung Wanichachiwa Position General Manager- Administrative Age 49 Years Working 21 Years with the Company Education

BBA : Accounting Ramkhamhaeng University Working Experience

2008 – Present – Director, 3K Traction Battery Co., Ltd. 2014 – Present –General Manager- Administrative, Thai Storage Battery PCL. 2014 – Present –General Manager- Administrative, Thai Storage Battery PCL. 2007 – 2014 – Assistant Administrative General Manager, Thai Storage Battery PCL. 2004 – 2006 – Senior Financial Manager, Thai Storage Battery PCL. 2001 – 2004 – Financial Manager, Thai Storage Battery PCL. 2000 – 2001 – Accounting Manager, Thai Storage Battery PCL

% of Share : None Family relationship with the Company’s executives: No family relationship

Mr. Chakkapan Sangkaew Position General Manager- Operation Age 43 Years Working 21 Years with the Company Education

Bachelor of Science in Electrical Engineering, Kasem Bundit University Master of Business Administration Courses (MBA), Bangkok University

Working Experience 2014 – Present – General Manager- Operation, Thai Storage Battery PCL. 2000 – 2014 – Manufacturing Factory Manager , Thai Storage Battery PCL. 2008 – 2008 – Assistant Production Factory Manager, Thai Storage Battery PCL. 2007 – 2007 – Senior Formation Production Manager, Thai Storage Battery PCL. 2000 – 2006 – Battery Plate Production Manager, Thai Storage Battery PCL. 1998 – 1999 – Assistant Battery Plate Production Manager, Thai Storage Battery PCL


Mr. Chayaphol Asavavallop Position General Manager-Quality Assurance and Product Development Age 47 Working Years 5 Education

Bachelor Degree of Science in Mechanical Engineer from Boston University, USA. Working Experience

2015 – Present – General Manager-Quality Assurance and Product Development, Thai Storage Battery PCL

2011 – 2015 – Assistant Factory Manager of Dry Charge Battery Assembly, Thai Storage Battery PCL

2006 – 2011 – Factory Manager of Thai Dai-ichi Co., Ltd. 2004 – 2006 – Factory Manager of Mik Denshi Kogyo Co., Ltd. 2002 – 2004 – Factory Manager of Marubeni Co., Ltd. 1997 – 2002 – Engineer Manager of Sony Mobile Electronics Thailand Co., Ltd. 1995 – 1997 – Quality Assurance Manager of Mitsui Siam Components Co., Ltd. 1991 – 1994 – Supervisor of Product development of Bridgestone Japan Co., Ltd.

% of Share : None Family relationship between executives: No family relationship Mr. Suwittawat Kaewwichian Position General Manager-Marketing and Sales Age 47 Working Years 4 Education

Bachelor of Science, Khonkaen University Working Experience 2015 – Present – General Manager-Marketing and Sales, Thai Storage Battery PCL. 2010 – 2015 – Business Development Division Senior Manager, Thai Storage Battery PCL. 2009 – 2009 – Business Development Manager, Thai Storage Battery PCL. 2008 –2008 – Domestic Sales Manager (SLI), Thai Storage Battery PCL. 2006 –2007 – Assistant Manager of Domestic Sales, Department Thai Storage Battery PCL. 2001– 2005 –Chief Domestic Sales Department, Thai Storage Battery PCL.

% of Share: None Family relationship between executives: No family relationship


Mr. Wirachai Bunchuchuen Position General Manager-Accounting and Finance Age 46 Years Working 15 Years with the Company Education

B.Acc : Faculty of Economices and Business Administration, Kasetsart University Master of Accoutancy, Faculty of Management and Tourism Burapha University

Working Experience 2008 – Present – Director, 3K Traction Battery Co., Ltd. 2015 – Present – General Manager-Accounting and Finance 2006 – 2015 – Senior Accounting Manager, Thai Storage Battery PCL. 2003 – 2005 – Accounting Manager, Thai Storage Battery PCL. 2000 – 2002 – Assistant Accounting Manager, Thai Storage Battery PCL.

% of Share : None Family relationship with the Company’s executives: No family relationship Mr. Yuttasack Chunsawas Position General Manager Logistics Age 57 years Working 11 months with the Company Education

BA (French) Faculty of Humanities & Social Sciences, Prince Of Songkla University, Pattani Campus

MBA (English) Institute of International Studies, Ramkhamheng University Working Experience

2015 – Present -General Manager Logistics, TSB 2015 – 2015 - Purchasing Manager, TSB 2014 – 2014 - Vice President Manufacturing & Operations, Thai Yanyond Co., Ltd. 2013 – 2014 - Global Manufacturing Director, RMA Automotive Co., Ltd. 2011 – 2013 - Operations Manager, RMA Automotive Co., Ltd. 2008 – 2011 - Group Materials Planning Manager, RMA Automotive Co., Ltd. 2004 – 2008 - General Manager Marketing, Summit Auto Seats Industry, Co., Ltd.

2001 – 2004 - General Manager Purchasing & Logistics, DaimlerChrysler (Thailand) Co., Ltd.

1993 – 2001 - Logistics Department Manager, Thai Swedish Assembly Co., Ltd. 1990 – 1992 - Warehouse Manager, Thai Swedish Assembly Co., Ltd. 1987 – 1989 - Materials Control & Production Planning Manager, Siam Renault Co., Ltd.



Report of the Audit Committee

1

Report of the Audit Committee

The Audit Committee of Thailand's Storage Battery Public Co., Ltd. was consented from the consensus of the 1/ 2014 Board of Directors Meeting held on February 20, 2014 with a term of two years and shall perform the duties of the Audit Committee until the end of term, which would be on April 30, 2016.

The Audit Committee consists of 3 independent directors who are not the company’s executives. At least one of the committees must be knowledgeable in accounting and finance. The company had also appointed the manager of Internal Audit to acts as secretary of the Audit Committee.

The Audit Committee performs duties as assigned by the Board of Directors and as according to the Charter of the Audit Committee, which has been approved by the Board of Directors.

In the past year, the Audit Committee held 5 meetings in which some directors and the company’s managements and external auditors were invited to participate. In addition the Audit Committee had also held a separate meeting without any participation of the Board of Directors or company’s managements.

The Chairman of the Audit Committee and all audit committees had participated in all 5 meets.

The Audit Committee has been acknowledged by the auditor's report from the review of quarterly financial statements. And on the audit of financial statements for the year 2015, the Audit Committee had assigned the auditors to make recommendations which could improve the internal control system or reduce costs with follow up discussions and enquiries with the auditors to clarify all doubts. Furthermore, the Audit Committee has recognized the important of supporting the auditors and the internal to perform duties independently. In all lines of duty carried out according to the Charter, the Audit Committee has obtained opinions from the executives and the parties concerned for considerations.

For 2015 key activities, the Audit Committee has adopted a classification of activities as follows. Preparation of the Financial Statements

1. Considered results of 2015 audit financial statements and quarterly consolidated financial statements of the company were discussed with the auditor with additional annotations from the

2

auditor with additional information included from the officers and directors of the company. In this regard, the Audit Committee has made comments to the operators to adjust the financial statements of the company and the subsidiaries to be as accurate as possible with more principles essence and accounting standards practicing in Thailand, including an adequate disclosure to all stakeholders.

2. Reviewed the financial disclosure statements, including the auditor's report, both in verbal and in writing, regarding the transactions between the company, the subsidiaries and executives, together with the revision of potential cases of corruption that are significant in order to ensure that the auditors had reasonably perform the duty and to verify on these matters adequately.

Internal Control and Internal Audit

3. Reviewed the Company's internal audit system to ensure the appropriateness, effectiveness and considered the independence of the internal audit. In this assignment, the internal auditors were appointed to review the internal control systems of the various functions, then, reported to the Audit Committee on a regular basis.

4. Reviewed the audit plan and reports from the results of an internal investigation of the internal audit including overseeing performances of the internal audit to ensure and optimize the efficiency and the effectiveness of the resources available in order to maximize the benefits to the company and shareholders by reviewing the missions, scope of obligations and responsibilities of the internal audit department.

5. Considered important issues relating to the company’s internal control and provided necessary recommendations to improve internal controls to the Board of Directors and the managements of the company to consider.

6. Supervised the internal auditors and coordinated with the company’s auditors appropriately.

7. Because the internal auditor position of the company was in vacancy for a certain period, the Audit Committee has been recommending that the company accelerating the recruitment of the internal audit to fulfill the vacancy rapidly.

Relating Transactions

8. Reviewed the relative transaction which may cause conflicts of common interest with the company. By reviewing whether the transactions were treated as according to normal business practices and accountings or disclosure in accordance with the specified accounting standards


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meet the requirements of regulatory authorities. This was undergone by revision with the auditors, reviewing the audit report and considering the questions in detail with the auditors. In addition, information was also requested from the managements and key positions employees in the Company. As a result, there were no significant items or issues that might qualify as a relating transaction which may cause the conflicts of common interest found.

Selection of the Auditors

9. The Committee had considered and recommended the suitable person with rights to act as the auditor of the company and the subsidiaries and had agreed that Mr. Satian Wongsanan who possessed the Auditor License No. 3495, or Mr. Wichai Ruchitanont who possessed the Auditor License No. 4054, or Mr. Atipong Atipongsakul who possessed the Auditor License No. 3500, or Miss Kulathida Pasurakul who possessed the Auditor License No. 5946, or Mr. Yutthapong Chuea Muangphan who possessed the Auditor License No. 9445 or other qualified auditors who were affiliated with ANS Audit Co., Ltd. were independent, knowledgeable and experienced enough to perform duties as the auditors. Furthermore, the professional fees proposed were appropriate to their responsibilities. Therefore, the Committee resolved to propose to the Board of Directors to consider for an approval at the Annual General Meeting of Shareholders and to be appointed as the 2015 auditors of our company. Nonetheless, the Board of Directors suggested that the professional fees for auditing company’s 2015 financial statements should not exceed THB 1.6 million (one million six hundred thousand baht).

Compliance with Laws and Regulations as well as Related Authorities

10. Having considered the review of compliance with the Securities and Exchange Law. Terms of SET And the Securities and Exchange Commission. And other laws related to the Company's business. That comply with the relevant laws and regulations as may be required.

The Summary

The auditors were able to perform their duty independently, in which the company had comply with the principles of good governance by the Board of Directors and the managements of the company who partly acted as the company’s major shareholders led to an effective system of internal controls sufficient to prevent significant errors. In the case if the errors shall occur or, they would be notified and could be solved within a reasonable time. The internal audit department works independently as appropriate and strives to improve the effectiveness of various internal controls with an ongoing development. However, the capability has not been fulfilled and should be accelerated by

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the recruiting process for speedy replacements. For the relating transactions that may cause conflicts of mutual interest, they were the real commercial items under the normal course of business to be conducts and had been operated sensibly and appropriately to benefit the company with no significant abnormalities. The results of the financial statements and consolidated financial statements of the company were compliance with laws and regulations of the related authorities. The fiscal year ended one December 31, 2105 and being certified by the auditors as had been prepared properly in accordance with the International Financial Reporting Standards basis. The financial disclosure was sufficiently significant with no event or issue that has an impact on the significant financial statements.

(Mr. Nontaphon Nimsomboon) Chairman of Audit Committee

February 25, 2016

(Mr. Suchart Chanlawong) (Mr. Veerachai Srikajon) Audit Committee Audit Committee


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Policy and OverviewPolicy and Overview Goal and Mission

The goal is to maintain the leadership in the battery market of Thailand and the Company is committed to develop products and services of battery to the word market.

Mission 3K Battery will be dedicated to the development of products and services to be valuable both domestically and internationally and for the best satisfaction of dealers and customers.

„ Managing business efficiently and transparently with integrity and satisfactory operating results for the best benefits of shareholders

„ Treating good working environment and providing knowledge for developing capabilities and appropriate benefits to employees so that employees are able to learn and work with their full competencies and feel proud of being a part of the Company’s achievement

„ Being responsible for environment and communities, and regularly organizing activities for the society Thai Storage Battery Public Company Limited was founded in 1986 and became a public company in 1994

under company registration certificate no. 0107537002141. The company’s main business objective is the manufacture and distribution of automotive and motorcycle batteries with domestic distributions under the “3K” brand and export distributions to over 50 countries on every continent worldwide under the “3K” and “KV” brands. The company features the following eight product groups:

1. Automotive Batteries 2. Motorcycle Batteries 3. Lighting Batteries 4. Golf Cart Batteries 5. EB Batteries 6. Traction Batteries 7. EV Batteries 8. Stationary Batteries

The company’s offices and factories are located at 387 Moo 4, SoiPatthana 3, Bangpoo Industrial Estate,

Sukhumvit Road, Praeksa, Muang District, Samutprakarn 10280, Tel. 0 - 2709 - 3535 (16 automatic lines), Home Page: www.3kbattery.com. At present, the company has 20,000,000 common shares of paid-up and issued registered capital valued at ten baht per share. The company’s average production capacity for all types of batteries is 420,000 batteries per month.


General Information The subsidiary and affiliated companies which the company holds their shares more than 10% are as follows:

Figure 1. Structure of share holdings.

The Company has divided its operation in the Group as follows: Upstream Business

Thai Nonferrous Metal Company Limited holds the total of 2,425,000 shares, equivalent to 97.00%. It is the factory of recycled lead smelting plant by using used batteries with paid excise tax as the raw materials of the production. Most produced leads will be distributed to the Company in order to reduce the impacts of price fluctuation and shortage of raw materials from lead import.

Power Plas Company Limited holds the total of 4,999,996 shares, equivalent to 49.00%. It is the company for manufacturing and distributing plastic earings for batteries and providing OEM service or processing or molding all kinds of plastic product.

Intermediate Business is Thai Storage Battery Public Company Limited. Downstream Business

3K Products Company Limited holds the total of 79,994 shares, equivalent to 99.99%. It is responsible for being a distributor and planning marketing strategies for the replacement-equipment market (REM) by distributing products through over 200 dealers of the Company in all regions over the country and more than 3,000 stores.

3K Traction Company Limited holds the total of 1,999,993 shares, equivalent to 99.99%. It is responsible for manufacturing metal earing for battery for forklift, leasing, maintaining, and providing maintenance service for batteries, forklifts, including after-sales service to other companies.

Thai Storage Battery Public Company Limited

3K Products Co.,Ltd. Thai Nonferrous Metal Co., Ltd.

ถือหุ้นร้อยละ 97.00

Power Plas Co.,Ltd. 3K Traction Battery Co.,Ltd.

Thai Storage Battery Japan Co.,Ltd.

ถือหุ้นร้อยละ 16.67

Thai Storage Battery Japan Company holds the total of 10 shares, equivalent to 16.67%. It is the joint venture company with Japan in order to be responsible for selling batteries of automobiles and batteries for electric forklifts, including providing after-sales service and other sale promotions in Japan. Subsidiaries

3K Products Company Limited

Thai Storage Battery Public Company Limited holds 79,994 shares, or 99.99% of all registered and paid-up capital in 3K Product Company Limited which is the sole distributor of automotive batteries, golf cart batteries and lighting batteries in Thailand and managing marketing strategy. Company Profile Company Name 3K Products Company Limited Head Office 159/10 - 14, Moo 12, Sukhumvit Road, Soi 103 Bang Na, Bangkok 10260 Telephone 0-2393-3333Facsimile 0-2749-4153 Registration As a limited company on September 10, 1987 Corporate Registration No . 0105530046044 Type of Business Distribution of batteries for automobiles, golf cars and general lighting

Distribution of Dividend According to the annual general meeting of shareholders Fiscal Year 1 January - 31 December Auditor Ms. SupanneeTriyanantakul Certified Public Account No. 4498

Ms. WarapornPrapasirikul Certified Public Account No. 4579 Mr. TermpongOponpan Certified Public Account No. 4501

Power Plas Co., Ltd.

Manufacture of plastic casing for battery

Thai Nonferrous Metal Co., Ltd.

Lead Alloy and Pure Leas Thai Storage Battery Public Company Limited

Manufacturing and Distributor Overseas

3K Product Co., Ltd.

The Sole distributor in Thailand

3K Traction Battery Co., Ltd.

Sales and after sale servicing forklift battery


As of 31 December 2015 Registered Capital of Ordinary Shares 80,000 shares at the par value of 100 baht per share Issued and Paid-up Capital 80,000 shares at the par value of 100 baht per share Number of Shareholders 7 shareholders Board of Directors as of 31 December 2015

1. Mr. KavieKorphaibool 2. Mr. SiritasPrasertmanukitch 3. Mrs. SrisuvarnKorphaibool 4. Miss VeerawanKorphaibool 5. Mr. VeerawatKorphaibool 6. Mr. VeerawinKorphaibool 7. Mr. SuchatChanlawong 8. Mr. NontaphonNimsomboon 9. Mr. VeerachaiSrikajon 10. Mr. ApichaiChawacharoenpun 11. Mrs. SirinujThaivadh 12. Mr. AdisakTongkhaimook Thai Nonferrous Metal Company Limited

Company Name Thai Nonferrous Metal Company Limited Factory 192, Moo 7, Gateway City Industrial Estate, HuaSamrongSubdistrict,

Plaengyao District, Chachoengsao Province 24190 Telephone 0-3857-5368-9, 0-3857-5381-6 Facsimile 0-3857-5373 Registration As a limited company on March 28, 1997 Corporate Registration No. 0105540032437 Type of Business Lead Alloy and Pure Lead Distribution of Dividend According to the annual general meeting of shareholders Fiscal Year 1 January - 31 December Auditor Ms. SupanneeTriyanantakul Certified Public Account No. 4498


As of 31 December 2015 Registered Capital of Ordinary Shares 2,500,000 shares at the par value of 100 baht per share Issued and Paid-up Capital 2,500,000 shares at the par value of 100 baht per share Number of Shareholders 7 shareholders Board of Directors as of 31 December 2015 1. Mr. KavieKorphaibool 2. Mr. SiritasPrasertmanukitch 3. Mrs. SrisuvarnKorphaibool 4. Miss VeerawanKorphaibo 5. Mr. VeerawatKorphaibool 6. Mr. VeerawinKorphaibool 7. Mr. SuchatChanlawong 8. Mr. NontaphonNimsomboon 9. Mr. VeerachaiSrikajon 10. Mr. ApichaiChawacharoenpun 11. Mrs. SirinujThaivadh 12. Mr. AdisakTongkhaimook

Power Plas Company Limited

Company Name Power Plas Company Limited Head Office 298, Moo 4, Soi 5, Sukhumvit Road, PraeksaSubdistrict, Muang District,

Samutprakarn Province 10280 Telephone 0-2709-4095 Facsimile 0-2709-4093 Registration As a limited company on August 26, 2010 Corporate Registration No. 0105538086410 Type of Business Manufacture and distribution of plastic casing for batteries Distribution of Dividend According to annual general meetings of shareholders Fiscal Year 1 January - 31 December Auditor Ms. SupanneeTriyanantakul Certified Public Account No. 4498



As of 31 December 2015 Registered Capital of Ordinary Shares 5,000,000 shares at the par value of 10 baht per share Issued and Paid-up Capital 5,000,000 shares at the par value of 10 baht per share Number of Shareholders 4 shareholders Board of Directors as of 31 December 2015 1. Mr. KavieKorphaibool 2. Mr. SiritasPrasertmanukitch 3. Mr. VeerawinKorphaibool 4. Mrs. SrisuvarnKorphaibool 5. Mr. VeerawatKorphaibool 6. Miss VeerawanKorphaibool

3K Traction Battery Company Limited Company Name 3K Traction Battery Company Limited Head Office 298, Moo 4, Soi 5, Sukhumvit Road, PraeksaSubdistrict, Muang District, Samutprakarn Province 10280 Telephone 0-2709-4088 Facsimile 0-2709-4087 Registration As a limited company on July 21, 1995 Corporate Registration No. 0105538086410 Type of Business Manufacturing forklift battery steel casing, forklift batteries leasing, after sale

servicing Distribution of Dividend According to annual general meetings of shareholders Fiscal Year 1 January - 31 December Auditor Ms. SupanneeTriyanantakul Certified Public Account No. 4498


As of 31 December 2015 Registered Capital of Ordinary Shares 2,00,000 shares at the par value of 10 baht per share Issued and Paid-up Capital 7 shares at the par value of 10 baht per share Total of 1,999,993 shares at the par value of 4 baht per share Number of Shareholders 8 shareholders Board of Directors as of 31 December 2015 1. Mr. KavieKorphaibool 2. Mr. VeerawatKorphaibool 3. Miss VeerawanKorphaibool 4. Mr. VeerawinKorphaibool 5. Mr. KhamnungWanichachiwa 6. Mr. WirachaiBunchuchuen

Joint Ventures Thai Storage Battery Japan Company Limited

Company Name Thai Storage Battery Japan Corporation Head Office 1 - 3 - 10, Kuzuhanakanoshiba, Hirakata-shi, Osaka-fu, Japan Telephone/Facsimile 81 - 72 - 850 - 72 - 2267 Type of Business Importer and distributor of battery Registration As a limited company on July 7, 2000 Fiscal Year 1 April - 31 March As of 31 December 2015 Registered Capital of Ordinary Shares 60 shares at the par value of 50,000 yen per share

Issued and Paid-up Capital 60 shares at the par value of 50,000 yen per share

Auditor Ms. SupanneeTriyanantakul Certified Public Account No. 4498 Ms. WarapornPrapasirikul Certified Public Account No. 4579 Mr. TermpongOponpan Certified Public Account No. 4501 Ernst & Young Office Limited. Number of Shareholders 5 shareholders


Other reference persons Share Registrar Thailand Securities Depository Co., Ltd. 62, The Stock Exchange of Thailand Building, 4th Floor, 6 - 7 Ratchadaphisek Road, Klong Toei, Bangkok 10110 Telephone 0 - 2229 – 2800 Auditor Ms. SupanneeTriyanantakul Certified Public Account No. 4498 Ms. WarapornPrapasirikul Certified Public Account No. 4579 Mr. TermpongOponpan Certified Public Account No. 4501 Ernst & Young Office Limited 193/136, Lekratchada Building, New Ratchada, Klongtoey, Bangkok 10110 Telephone 0 - 2226 - 077 Fax 02-264-0789-090

Legal Advisor Bunchong and Vidhaya Law office Co., Ltd 33/35, Wall Street Tower Building, 9th Floor, Surawongse Road, Bang Rak, Bangkok 10500 Telephone 0 - 2236 - 2334

Type of Business OperationsType of Business Operations History & Background

Thai Storage Battery Public Company Limited was established on 10 June, 1986 with an initial registered capital investment of 8 million baht for the manufacturing and distribution of automotive and motorcycle batteries under the “3K” trademark.

On 10 June 1994, the company registered its transformation to a public company after receiving approval from the Stock Exchange of Thailand. The company’s shares were first traded on 10 February 1995.

As of December 31, 2013, the company has registered capital of 200 million baht and 1,570 million baht equity shares, worth 5,549 million baht, the proportion of domestic sales and exports at a rate of 56 : 44.

The Company’s batteries production, research & development have been accredited by the following international standards; 1. Thai Industrial Standards and received TISI 6 – 1981 logo on 15 May 1989 2. ISO 14001:2004 Quality management certification received on 21 May 2004 3. ISO 9001:2008 Quality management certification received on 1 October 2010 4. ISO 9001:2008 NAC Quality management certification received on 1 October 2010 5. ISO/TS 16949:2009 Quality management certification received on 1 February 2010 6. JIS-Japanese Industrial Standard 7. DIN – Detaches Institute Fur Norm 8. SAE – Society of Automotive Engineers 9. International Electro Technical Commission (IEC)

The Company’s batteries are suitable for all types of vehicles manufactured under European, Japanese and US standard and different weather conditions whether in cold or hot climate. The Company’s products can be classified into five categories as following;

1. Conventional Type Battery: is a lead antimony alloy battery. Because of the use of antimony for grid structure, the battery has high rate of water loss during usage. Hence, users need to fill the battery with distilled water regularly.

2. Maintenance Free Battery (MF): is an alloy battery which uses lead, calcium and tin for grid structure. As a result of using calcium and tin components, the battery has low water loss rate. This allows users to use the battery conveniently as they do not need to fill in distilled water during usage (under specified working conditions).

3. Sealed Maintenance Free Battery (SMF): is an alloy battery which uses lead, calcium, tin and silver for grid structure. As a result using calcium, tin and silver components, the battery has low water loss rate. In addition,


the battery also has Polyethylene (PE) separator which increase power when start the enquire and prolong the usage life. The battery is designed to have covers by CAD / CAM / CAE program which allows the reduction of rate of water loss.

4. Valve Regulated Lead Acid Battery (VRLA): is an alloy battery which uses lead, calcium and tin for grid structure. As a result, using calcium and tin components, the battery has low rate of water loss. The battery also has Absorptive Glass Mat (AGM) separator which prevents acid from spilling outside.

5. The battery is designed to have secured pressure plates which increase the battery’s lifetime and usage hour.

6. Deep Cycle Battery: is an alloy battery with grid structure with high antimony contents. a. Golf: battery for golf cart b. EB: battery for uninterruptible power supply c. EV: battery for electric vehicle d. Traction: battery for electric forklift, with Tubular plate, the battery has high durability

Product Types

The company’s products can be classified into the following eight groups: 1. Automotive Batteries

1.1 Low Maintenance Batteries 1.2 Maintenance-Free Batteries

2. Motorcycle Batteries 2.1 Low Maintenance Batteries 2.2 Valve-Regulated Lead-Acid Batteries (VRLA)

3. Lighting Batteries 4. Golf Cart Batteries – Deep cycle type; capable of supplying steady power for long periods of time. Suitable for all types of golf carts. 5. EB Battery – Deep cycle, easy to maintain, long life, capable of supplying power for long periods of time and rechargeable with a low current with environmentally friendly alternative power. There are several types and most are costly, depending upon production technology and maintenance, e.g. Ni-cd, Lead Acid Battery, and NiH. At present, Deep Cycle Lead Acid Batteries are the most popular and less expensive than other types. 6. Traction Batteries 7. Batteries (EV) – Suitable for electric vehicles, tour vehicles, electric wheelchairs; capable of supplying steady power for long periods of time.

8. Stationary Batteries – suitable for standby application in large power plants, telephone exchanges and other types of standby power systems. Overview of the Company’s Business Operations The company is one of the largest battery manufacturers in Thailand and possesses its own production technology. The Company’s main shareholders are Thais. Battery production in Thailand is mainly used for batteries for automotive and motorcycle (Conventional Type). In order to reduce imports and expand domestic market, the Company has pioneered and developed other types of batteries including batteries for electric forklift (Traction Battery), batteries for golf cart batteries and solar cells power panel (Deep Cycle Battery). Industrial Conditions and Domestic Competition

Status of Manufacturers There are eight major manufacturers in the Thai battery manufacturing industry:

Manufaturers Brand Thai Storage Battery Public Company Limited 3K Siam GS Battery Company Limited GS Furukawa Battery Company Limited FB Yuasa Battery Public Company Limited, Thailand YUASA Panasonic Battery Company Limited, Thailand PANASONIC Siam Battery Industry Company Limited BOLIDEN Thai Petrochemical Company Limited TPS Hitachi Storage Battery (Thailand) Company Limited Hitachi

Most of battery manufacturers in Thailand are joint ventures between Thai and foreign companies, especially from Japan. These companies use technology that has been transferred from parent companies in Japan. Only Thai Storage Battery Public Co., Ltd, which is run by Thais, possesses its own advanced production technology that is competitive in the battery manufacturing industry. Although the production technology has been developed for sometimes, lead is still remained as main raw material for battery because of its competitive price when compare to other materials such as lithium.


Table : Total Production and Domestic Automotive (Units)

Year Passenger Car

Pick up 1 Ton

Commercial Vehicles Total Growth

Rate

Motorcycle Growth Rate

2548 277,603 822,867 24,846 1,125,316 21.25%

2,309,214 -24.17% 2549 298,819 866,990 22,235 1,188,044 5.57%

2,075,579 -10.12%

2550 315,444 948,388 23,514 1,287,346 8.36%

1,646,853 -20.66% 2551 401,309 974,642 17,791 1,393,742 8.26%

1,906,760 15.78%

2552 313,442 670,737 15,199 999,378 -28.30%

1,634,113 -14.30% 2553 554,387 1,066,759 24,158 1,645,304 64.63%

2,024,599 23.90%

2554 537,987 899,200 20,608 1,457,795 -11.40%

2,043,039 0.91% 2555 957,622 1,451,843 44,252 2,453,717 68.32%

2,606,161 27.56%

2556 1,071,076 1,332,913 53,068 2,457,057 0.14%

2,218,625 -14.87% 2557 742,678 1,114,778 22,551 1,880,007 -23.49%

1,842,708 -16.94%

2558 760,688 1,115,818 36,496 1,913,002 1.76% 1,807,325 -1.92% Source: The Thai Automotive Industry Association

Domestic Market

The marketing strategies employed by the company include increasing the number of agencies, providing discounts to agencies and establishing new distribution channels, such as car care centers and modern trade service centers, building brand awareness to consumers via advertisements through media, organizing marketing activities and promotion events.

1. Original Equipment Market (OEM) is a stable market with operational standard and clear production target and delivery date. Car assembly plants are the main customers of battery manufacturers because most consumers choose to replace old batteries with the same type and brand of battery that originally came with the vehicle. However, most of the car assembly plants in Thailand belonged or co-owned by Japanese firms. Most of these plants would mainly purchase batteries from their joint ventures in Thailand. As a result, manufacturers would have more difficulties when dealing with Japanese assembly plants than the Europe and U.S. assembly plants. This is opportunity for operators to expand their customer bases.

2. Replacement Equipment Market (REM) – This market has large product varieties in order to meet the diversified needs of consumers in the market and replace the original batteries that are damaged or deteriorated. Presently, the REM is very competitive in terms of price, quality and product diversification offered from both domestic and overseas manufacturers.

The Company gives primary importance to the REM market, and the strategy employed is cutting costs while maintaining product quality. This strategy is implemented by increasing production in order to reduce the cost per unit and other costs by employing modern production technology, thus enabling minimization of raw material used while maintaining product quality and efficiency. Table -Total Production and Domestic Automotive & Motorcycle Battery Sales (Units) 2015 2014 2013

Total Production 17,118,881 17,688,805 18,402,619

Domestic Sales 11,411,624 11,502,195 11,700,388

International distribution 5,552,926 5,778,334 4,314,247

Total value of sales (Million Baht) 20,092 20,163 17,803

Source: Office of Industrial Economics Export Market

The production efficiency of the Thai battery manufacturing industry continues to improve due to the implementation of highly efficient technologies and machinery in the production process to increase battery quality and standards in order to be widely accepted in the international arena.

Currently, the Company’s target exports approximately 50 percent of the total revenue. The company emphasizes on export market because of steady growth of global economy which impose positive impact on the automobile industry. The Company focuses on expanding export market into Asia Pacific, Middle East, Africa and South America. In addition, our company has set survey and field work strategy supporting upcoming AEC market. Pricing Strategy

Most of the operators are using advertisement and promotions, especially rebates, to compete with one another in battery market. The Company has policy to maintain selling prices of products which are similar or equivalent to other brands. Price adjustment will be determined by the responsible Board of Directors of the Company.


Distribution and Sales Channels

The Company sells its products to both domestic and overseas markets. Domestic sales accounted for approximately 56 percent of the total revenue. Regarding this, 50 percent are car batteries, 4 percent are motorcycle batteries and 2 percent are other sales. The company also sells products solely through “3K Products Co., Ltd.” which is both distributor and subsidiary of the Company. 3K Products Co., Ltd. is distributing products directly and through more than 200 retail stores and distributing agents. Regarding this, the company has a policy to increase more distributing agents by turning our major customers to become our agents. This strategy will stimulate the Company’s sales further.

The Company’s export constitutes approximately 44 percent of the total sales. Regarding this, 39 percent arecar batteries, 1 percent is motorcycle batteries and 5 percent are lead-acid batteries. The Company is selling products directly to end users or through distribution agents to more than 50 countries around the world in Indochina region, East Asia, Southeast Asia, South Asia, South America, Middle East and Africa. Furthermore, the Company plans to stimulate its sales through increasing number of distributing agents in both domestic and overseas markets. In addition, the Company also has a policy to penetrate the U.S., Japan and Europe markets with its new products including Maintenance Free Battery and Traction Battery which are popular in those countries.

The company focuses on the export market because steady global upward growth trends have been experienced by this market. Another reason for this emphasis is to reduce the impact of the aggressive price competition in the domestic market. Accordingly, the company’s exports account for approximately 40 percent of the company’s sales revenue. At present, the company exports products to over 50 countries in Indo-China, East Asia, South-East Asia, South Asia, South America, Middle East, and Africa. Characteristics and Relationship between Customers and the Company or Subsidiaries

For Replacement Equipment Market, 49 percent of the Company’s total sales are distributed through 3K Products Co., Ltd. The Company is selling another 5 percent of the sales to auto manufacturers and other customers. Price adjustment will be determined by the responsible Board of Directors. The Company will consider new customers based on their past business operational history. Moreover, customers must have their own shops.

1.) 3K Product Company Limited. The company holds a total of 79,994 shares amounting to 99.99% of the total shares. This subsidiary is a product distributor and planner of strategic marketing plans for the Replacement

Equipment Market (REM). It distributes products through more than 200 representatives covering all regions of Thailand with over 3,000 retail shops.

2.) Thai Non-Ferrous Metal Company Limited. The company holds a total of 2,425,000 shares amounting to 97% of the total shares. This subsidiary consists of a plant that recycles lead from used batteries. Most of the lead produced is sold to Thai Storage Battery Public Company Limited to minimize the effects of price volatility and raw material scarcity.

3.) Power Plas Company Limited. The Company holds a total of 2,499,998 shares amounting to 49% of the total shares. The company produces plastic casing for batteries.

4.) 3K Traction Battery Company Limited. Thai Storage Battery Public Company Limited holds a total of 1,999,993 shares amounting to 99.99% of the total shares. 3K Traction Battery Company Limited manufactures forklift battery metal cases for the company and offers to lease, supervise and maintain forklift batteries in addition of providing services after sale to other companies in general.

5.) Thai Storage Battery (Japan) Company Limited. The company holds a total of 10 shares which amounts to 16.67 percent of the total shares. A joint venture in Japan, Thai Storage Battery (Japan) Company Limited distributes automotive and electric forklift batteries with services after sale and other sales promotions in Japan.


Sales by Products of Thai Storage Battery Public Company Limited

2015 2014 2013

Thousand

Baht

% Thousand

Baht

% Thousand

Baht

%

Domestic Sales

Automotive and Other Batteries 2,643,182 52.27 2,286,023 44.17 2,766,030 49.83

Motorcycle and Lighting Batteries 154,855 3.06 201,960 3.90 215,995 3.89

Lead 136,303 2.70 312,369 6.04 122,738 2.21

Total Domestic Sales 2,934,340 58.03 2,800,351 54.11 3,104,763 55.95

Export Sales

Automotive and Other Batteries 1,795,624 35.51 198,8241 38.42 2,150,682 38.75


Lead - - 7,245 0.14 1,074 0,02

Total Export Sales 2,122,520 41.97 2,374,610 45.89 2,445,648 44.07

Export and Domestic Sales

Automotive and Other Batteries 4,438,806 87.78 4,274,264 82.60 4,916,712 88.58


Lead 136,303 2.70 319,623 6.18 123,811 2.23

Total Export and Domestic Sales 5,056,859 100.00 5,174,961 100.00 5,550411 100.00

Sales Growth (%) (2.28) (6.76) (2.05)

Production Capacity of Thai Storage Battery Public Company Limited

2015 2014 2013

Full Production Capacity (unit : batteries)

Automotive and Other Batteries 5,040,000 5,040,000 5,040,000

Motorcycle and Lighting Batteries 1,800,000 1,800,000 1,800,000

Total 6,840,000 6,840,000 6,840,000


Risk FactorsRisk Factors

Raw Material Risk Factors Over 60% of the raw materials used in the manufacture of Lead Acid Batteries are pure lead and lead alloy. Therefore, the fluctuations (increases or decreases) in lead prices will directly affect the operating profit. The degree of the impact depends upon the company’s ability to manage costs. In order to manage this risk factor, the company has divided the raw material risk into two main factors: 1. Raw Material Procurement Risk Factors

Lead Domestic production remains insufficient and the quality is not as required by the current demands of the battery industry. Thus, there is a need to import pure lead, especially, from exporters such as China and Australia, etc.

„ For pure lead, the company manages risks by seeking raw materials from foreign distributors. When raw materials have passed tests and meet the company’s production standards criteria, an agreement is drafted for the purchase of pure lead to ensure sufficient supply to meet the company’s demands for the whole year.

„ For lead alloy, the company has managed risk by establishing Thai Nonferrous Metal Co., Ltd., a smelting plant that produces lead alloy from old batteries. The company hopes to reduce the impacts of supply fluctuation with this risk prevention measure. The company can also purchase lead alloy, which is equivalent in quality, from other suppliers.

Plastic Domestic battery markets in Thailand have been growing continuously every year, resulting in the growing demand for parts used in producing batteries. The battery plastic casing considered as a crucial part of the production and if the production cannot meet the demand due to the expanded battery markets, the company, therefore, decides to prevent the risk from shortage by establishing the “Power Plas Company Limited” to manufacture and supply the battery plastic casing to the company. 2. Raw Material Price Fluctuation Risks Lead prices fluctuate depending upon supply and demand of the world market. The company and its suppliers confirm prices one month preceding delivery by referring to the market price of the London Metal Exchange. Another company’s main materials is battery casing which is made from polypropylene (PP), another raw material with prices tied to the price of crude oil and fluctuate according to world market prices. The company purchases the polypropylene (PP) directly from the manufacturers and delivers it to the battery casing manufacturers. This measure enables the company to negotiate for proper raw material prices and ensures sufficient raw material supplies to meet demands.

Marketing Risk Factors The company’s goal is becoming a leader in all types of lead-acid batteries. The company’s ratio for domestic sales and export is approximately 50:50 as a means of dispersing the impact of marketing risks. 1. Domestic Market Risk Factors

1.1 The domestic automotive battery market can be classified into the following two types of market: Original Equipment Market (OEM) is a stable market with operational standard and clear production target and delivery date. Car assembly plants are the main customers of battery manufacturers because most consumers choose to replace old batteries with the same type and brand of battery that originally came with the vehicle. However, most of the car assembly plants in Thailand belonged or co-owned by Japanese firms. Most of these plants would mainly purchase batteries from their joint ventures in Thailand. As a result, manufacturers would have more difficulties when dealing with Japanese assembly plants than the Europe and U.S. assembly plants. This is the opportunity for operators to expand their customer bases.

1.2 Replacement Equipment Market (REM) ‟ This market has large product varieties in order to meet the diversified needs of consumers in the market and to replace the original batteries that are damaged or deteriorated. Presently, the REM is very competitive in terms of price, quality and product diversification offered from both domestic and overseas manufacturers.

In order to manage the REM risks and increase the Company’s competitiveness, the Company has a policy to enhance sales potential by developing new products, improving packages’ appearances and design to be more modern and attractive. The Company also plans to publicize its brand by giving official support to sport activities such as Thai Boxing competition, being a sponsor of Liverpool Football club, 3K / ISUZU One Make Race, etc. Furthermore, the Company also emphasizes on enhancing after-sales service through distribution channels under the name “3K Shop” and hotline for emergency assistance for our customers. 2. Export Market Risk

Automotive industry has been experiencing constant growth in the global market. This leads in increasing demand for batteries, particularly in the Asia-Pacific, Middle East and Africa region, as well as higher competition in the market. Our main competitors, in terms of price, quality, product varieties marketing strategies are manufacturers from Korea, China, India and Indonesia.

In managing export market risks, the company has diversified its products, placed more suitable and tangible product positioning in each market, selected and recruited potential new dealers in the market in order to add distribution channels, adjusted strategic plan for market expansion, prepared market surveys and research to analyze and determined more effective and competitive marketing plan.


Technological Risks Despite rapid technological advances in battery manufacturing, the company faces no risks due to

technological changes in production because the primary raw material remains lead, which is more commercially suitable than other more costly materials, such as silver or cadmium. Hence, developing technology for production procedures for lower production costs per unit is essential to the company’s competitive edge in the battery manufacturing industry. For this reason, the company maintains policy for investments in modern machinery to minimize waste and improve production efficiency. Exchange Rate Risk Factors

At present, the company imports pure lead from oversee by paying in US dollars and thereby creating potential risks due to currency fluctuations.

Hence, the company manages the aforementioned risk by exporting its products and receives payments in foreign currency such as US dollars and pays for imported raw materials with the same currency. In addition, the company protects itself against risk due to exchange rate fluctuations by making future currency purchase/sale contracts in relation to the period of payment to be received. This helps the company minimize the exchange rate fluctuation risks to some extents. Risk from Interest Rate

The Company and its subsidiaries have the risk from significant interest rate related to the bank deposit, bank overdraft, short-term loan, and long-term loan with interests and liabilities according to the financial lease. Most financial assets and liabilities carry the interest rate which is changed in accordance with the market rate or carry the fixed interest rate similar to the current market rate. Significant financial assets and liabilities can be categorized based on the types of interest. For the assets and financial liabilities with fixed interest rate can be classified based on the maturity date or the repricing date (if this occurs before the maturity date) as follows; Doubtful Debt Risk Factors

The company is at risk in offering credit involving accounts receivable and trade debtors. However, the risk level is not high while the risk is manageable and the debts remain collectable. The company has a wide customer base, so a Credit Committee has been established to approve credit and collect debts from each customer. For these reasons, the company does not anticipate any significant losses due to the aforementioned debts. For existing agencies, the company has shared good trade relationships for over 20 years, so existing agencies are unlikely to suspend/miss their payments to the company. Environmental Cost Management Risk Factors

Because lead is the main raw material in battery manufacturing industry, and lead is hazardous to health and environment, the company must implement controls to prevent lead from contaminating the environment and establish measure to protect employees from exposure to the hazards of lead poisoning. In addition, the company must operate under the supervision of various government agencies in compliance with regulations or laws enforced by these agencies. As a result, the company will inevitably incur additional costs for environmental management aimed at meeting government regulations. The aforementioned costs are incomparable to the costs for curing the environment in the event of any environmental impact for which the company is liable.


Shareholder Structure and ManagementShareholder Structure and Management A list of the top ten shareholders containing share holdings and percentage of total shares at the most recent closing of the share register book on 20 March 2015.

Name Number of Shares Percent of Shares 1.Korphaibool Group 8,676,530.00 43.38% 2.Mr. SOMI JOHNY ISSA MASSOUD 1,800,000.00 9.00% 3.Mrs. KATIA ABOUD ABD ELMASIH 1,468,000.00 7.34% 4. MR. PHILIP JOHNY ISSA MASSOUD 1,000,000.00 5.00% 5.MR. MIGHIL MASSOUD 1,00,000.00 5.00% 6.Dumrongkeattivaj Group 502,525.00 2.51% 7.Mr. Niti Osathanukrou 495,100.00 2.48% 8.Mr. Bunyong Anukhadham 400,000.00 2.00% 9.Mr. Siritas Presertmanukitch 347,100.00 1.74% 10.Mr.KENNETH RUDY KAMON 339,000.00 1.70%

16,028,255.00 80.14% Management and Control The company’s board of directors values the Code of Best Practices and Corporate Governance according to the guidelines set forth by the Stock Exchange of Thailand. Management and Control Policy

The company’s board of directors is well aware of its roles and responsibilities as the directors of a registered company and promotes activities leading to excellent corporate governance in order to raise the company’s competitive advantage and build confidence in shareholders, investors and all parties concerned with efficient and transparent management. The company board’s policy is for the company to disclose all important and relevant information in an accurate, complete and timely manner in compliance with the regulations of the Stock Exchange of Thailand and the Security Exchange Commission. Moreover, the company encourages its directors to adhere to “Code of Best Practice for Directors of Listed Companies” and “Best Practice Guidelines for Audit Committees” provided by the Stock Exchange of Thailand.

Shareholder Rights The company’s board of directors gives equal value and supervision to the rights that shareholders have or

should have, which not only includes legal rights, but also the rights to attend and vote in the shareholder’s general meeting in order to decide upon major changes in management policies and to exercise their rights to remove directors and the rights to receive the profit.

The Chairperson of the sub-committee is always present at the shareholders’ general meeting to provide the shareholders an opportunity to ask questions regarding relevant matters. In addition, the company also offers its shareholders the choice of appointing an Audit Committee Director, by proxy, when the shareholder is unable to attend the meeting. Stakeholder Rights The company values the following important and related stakeholder rights: Employees The company deals with all employees equally and provides them with fair and suitable

returns. Suppliers and Creditors The company deals with all of its trade partners and creditors fairly and in compliance

with agreements. Customers The company shows responsibility for its customers by manufacturing quality products that

meet international standards and selling them at suitable prices. Shareholders The company operated at maximum capability to achieve good performance so

shareholders receive appropriate returns. Competitors The company adheres to legal regulations and good competition practices to uphold the

competition norm. Community and Society The company meets international standards for pollution treatment systems, while

operating responsibly and ensuring that there are no impacts on the community or social environments.

The company is highly conscious of manufacturing processes involving the use of lead as a raw material. Hence, the company has carefully chosen to situate its plant inside an industrial estate regulated by the Industrial Estate Authority of Thailand and established strict preventive rules and regulations related to industrial operations for employees in addition to arranging for semi-annual physical check-ups. Shareholders’ Meeting

The company holds an annual common shareholders’ meeting within four months of the end of each fiscal year whereby the company sends documents containing the date, time, venue and agenda concerning discussions and voting activities to its shareholders seven days before the meeting. In the meeting, the company


allows shareholders to freely inquire, comment and suggest issues concerned with the company’s business operations. Furthermore, all key inquiries, comments and suggestions are accurately recorded in the minutes to the meeting for future reference and examination by shareholders.

The company arranged for the board of directors, managing directors, audit committee directors, executives, auditors and legal consultants to attend the meeting and answer questions from shareholders. Leadership and Vision

The company’s board of directors is composed of individuals with ability, knowledge and experience in the company’s business field to perform the duty of setting company policy and direction in addition to overseeing the management team in operating the business by established policies with responsibility, integrity and corporate governance in the interests of the company and its shareholders.

The company also places importance on efficient internal control and audit and review systems to ensure that the company operates under legal regulations and good control. The company has also established employment rules and regulations for compliance with employee guidelines to follow.

Board of Directors

The board of directors is not only required to comply with the law, objectives, regulations and shareholder’s resolutions, but also has the following responsibilities:

„ Determining the issuance of interim dividends to shareholders. „ Determining the issuance of awards, bonuses or other benefits to part-time and full-time employees,

except for the board of directors themselves „ In performing work in line with its responsibilities, the board of directors may appoint one or many

directors or other individuals to act on a director’s behalf. „ The board of directors holds at least one meeting every quarter. „ The company’s board of directors appoints a number of directors to be managing directors as deemed

fitting with supervisory responsibilities as set forth by the board. „ The Board is authorized to invite any individual to offer consultation involving the company’s operations to

the Board. Director and Executive Recruitment

The company’s board of directors consists of at least five directors, and more than half of the total number of directors must hold Thai nationality.

Nominations of directors have not been dour by nominating committee because the company has not established nominating committee and appointments to the company’s directors are carried out by the shareholders’ general meeting under the following criteria:

1. Each shareholder is entitled to one vote per share held. 2. Directors can be elected individually or as a group, depending upon the shareholders’ preference.

During the election, each shareholder must cast all of his/her votes for only one person. Shareholders are not permitted to divide votes between two or more nominees.

3. The nominees with the most votes are elected as directors in a descending order according to the quota for each election. If remaining directors have equal amounts of votes, the Chairman of the meeting shall make the final decision. Dismissal of Directors

The meeting of common shareholders can dismiss a director or directors before the end of their term. This can be done in the shareholders meeting with no less than 75 percent of the total votes, and the total shares must be no less than half of the shares present at the meeting with rights to vote.

No ratios have been set for directors representing each group of shareholders and rights of minor shareholders in the appointment of directors. Balance of Power for Non-Executive Directors

The company’s current organizational structure contains one board of directors made up of twelve directors:

1. Executive Directors 5 2. Non-Executive Directors 2 3. Independent Directors 5 As a result, There are 5 independent directors, which accounts for 41.67% of the total member of the

board. Five Executive Directors consisted of: List Name Scope of duties

1. Mr. Kavie Korphaibool President 2. Miss Veerawan Korphaibool Chief Executive Officer 3. Mrs. Srisuvarn Korphaibool Executive director


Five Independent Directors consisted of: List Name Independent Director

1. Mr. Nontaphon Nimsomboon Chairman of the Audit Committee 2. Mr. Veerachai Srikajon Audit Committee 3. Mr. Suchat Chanlawong Audit Committee 4. Mr. Apichai Chawacharoenpun Independent Director 5. Mrs. Sirinuj Thaivadh Independent Director Definition “Independent Committee”

The company defines the “Independent Committee” in accordance with the Principle of the Good Corporate Governance and the SEC Rule of Practices to assure the investors and to maintain the equilibrium of effective management. Therefore, the company defines “Independent Committee” as a committee, who does not take accountability in managing the company, or subsidiaries, or joint ventures, and be independent out of Management and potential shareholders, and has not engaged with the business of company in the way that may restrict their expression of the independent opinion. “Independent Committee” shall be qualified as follows.

1. Independent Committee shall hold shares of not exceeding 1% of total voting rights in the company or subsidiaries.

2. Independent Committee shall neither engaged in management, nor being a salary employee of the consultants, nor professional audit service provider, nor attorney, nor carrying on any occupation that may affect or restrict the expression of independent opinion for company, its subsidiaries, or joint venture, nor decisionmaker in controlling the company, its subsidiaries, or joint venture, nor being a person who may cause the interest conflict and must be vacated of the office or position that is critical to the formation of the interest conflict for a minimum 2 years or higher.

3. Independent Committee shall not engage in the business involvement that may restrict their autonomy in the position of committee whose amount of money has been proportionate significantly to the company’s earning according to the required criteria. In addition, the independent committee shall not be a stakeholder either directly or indirectly in financial and administrative area of the company, its subsidiaries, joint venture, or individual who may cause the interest conflict in the way that impedes their autonomy in performing their duty.

4. Independent Committee shall not be a close relative to the top executives or major shareholders of the company, its subsidiaries, joint venture, or individual who may cause the interest conflict and has not been appointed as fiduciary to secure the interest of major shareholder directors.

5. Independent Committee shall not be appointed as fiduciary of major shareholder directors or shareholders who have concerned to the major shareholders of the company.

6. Independent Committee shall be proficient to perform functions and make comments or report the result of performance as assigned by the Board of Directors independently and not be subjected to the control of such executives, company’s major shareholders, concerned individuals or close relatives. The definition mentioned above is similar to the requirements imposed by the Securities and Exchange Commissions and Stock Exchange of Thailand.

Corporate Governance of Subsidiary and Joint Venture Company Nomination and casting votes for appointing directors in the subsidiaries will be implemented by the Management. The nomination and exercising of such right must be approved by the Board of Directors as well. Any persons appointed to be a director in the subsidiaries will be responsible for implementing the best performance for that subsidiary. In addition, the Company has established that such appointed person must be approved by the Board of Directors before resolving a resolution or exercising the right to cast a vote on significant matters at the same level being approved by the Board of Directors in case of the operation of that company.

Additionally, in case of subsidiaries, any persons appointed by that company will be responsible for establishing the subsidiary’s regulations on the connected transactions-related company, collecting data and recording accounts so that the company is able to audit and collect for providing consolidated financial statements in time.

Currently, the Board of Directors of the Company and 2 subsidiaries, which are 3K Products Company Limited and Thai Nonferrous Metal Company Limited, are the same Board in order to supervise the management and operation of subsidiaries and maintain the benefits of the Company’s capital.


Director and Executive Remuneration During 2015, director remuneration comprised of the following meeting allowances and individual director

bonuses (baht). No Director’s Name Position Remuneration

Board of Directors

Audit Committee

Total

1 Mr. Kavie Korphaibool Chairman of Board of Directors

350,000 - 350,000

2 Mr. Siritas Prasetmanukitch Vice-president 310,000 28,000 338,000

3 Mr. Veerawat Korphaibool Vice-president 310,000 7,000 317,000

4 Miss Veerawan Korphaibool Vice-president 310,000 7,000 317,000

5 Mr. Veerawin Korphaibool Vice-president 310,000 7,000 317,000

6 Mrs. Srisuvarn Korphaibool Director 310,000 28,000 338,000

7 Mr. Adisak Tongkhaimook Director 310,000 - 310,000

8 Mr. Nontaphon Nimsomboon Chairman of the Audit Committee, Independent Director

310,000 100,000 410,000

9 Mr. Suchat Chanlawong Audit Committee, Independent Director

310,000 60,000 370,000

10 Mr. Veerachai Srikajon Audit Committee, Independent Director

310,000 60,000 370,000

11 Mr. Apichai Chawacharoenpun Independent Director 310,000 - 310,000

12 Mrs. Sirinuj Thaivadh Independent Director 310,000 - 310,000

รวม 3,760,000 297,000 4,047,000

In the first annual common shareholders’ meeting of 1999, a resolution was passed to approve

remuneration for directors within a limit of no more than 5 million baht. This resolution will be effective until the shareholders make changes for other arrangements. At present, the company has no sub-committee to set remuneration rates. However, there are proper consideration processes by using information from other companies in the same industry and of comparable size. Company performance is also used in the process of consideration.

Furthermore, consideration of executive remuneration, which includes salary, bonuses and other benefits (fuel expenses, telephone allowances, food expenses, etc.) is based mainly upon company performance, including evaluations of individual management performance. In 2015, the total compensation for 5 executives are at amount of 60.32

No. Name and Surname Amount (Baht)

2015 2014 2013

Allowances Bonus Allowances Bonus Allowances Bonus

1 Mr. Kavie Korphaibool 150,000 200,000 150,000 200,000 150,000 200,000

2 Mr. Siritas Prasetmanukitch 138,000 200,000 145,000 200,000 138,000 200,000

3 Mrs. Srisuvarn Korphaibool 117,000 200,000 145,000 200,000 138,000 200,000

4 Miss Veerawan Korphaibool 117,000 200,000 110,000 200,000 110,000 200,000

5 Mr. Veerawat Korphaibool 117,000 200,000 110,000 200,000 110,000 200,000

6 Mr. Veerawin Korphaibool 138,000 200,000 110,000 200,000 110,000 200,000

7 Mr. Nontaphon Nimsomboon 110,000 200,000 210,000 200,000 210,000 200,000

8 Mr. Veerachai Srikajon 210,000 200,000 158,000 200,000 170,000 200,000

9 Mr. Suchat Chanlawong 160,000 200,000 170,000 200,000 170,000 200,000

10 Mr. Apichai Chawacharoenpun 170,000 200,000 110,000 200,000 110,000 200,000

11 Mrs. Sirinuj Thaivadh 110,000 200,000 110,000 200,000 110,000 200,000

12 Mr. Adisak Tongkhaimook 110,000 200,000 110,000 200,000 110,000 200,000

Total 1,647,000 2,400,000 1,636,000 2,400,000 1,636,000 2,400,000

Board of Directors Meetings With highly proficiency of management experience, now the company Has 12 sophisticated board of directors, which one is enable to take three-year-period position with unrestricted period frequency. All detail of each delegated person are as followings;


No. Director’s Name Position Accreditation

Year

Latest Accreditation

Year

Next Accreditation

Year

Been Appointed/ Nominated as One of Board Members

for Year 2014

1 Mr. Kavie Korphaibool Chairman of Board of

Directors 1995 2015 2018 No

2 Mr. Siritas Prasetmanukitch Vice-president 1995 2015 2018 No

3 Mr. Veerawat Korphaibool Vice-president 2000 2014 2017 Yes

4 Miss Veerawan Korphaibool Vice-president 1999 2014 2017 Yes

5 Mr. Veerawin Korphaibool Vice-president 2005 2014 2017 Yes

6 Mrs. Srisuvarn Korphaibool Director 1995 2016 2019 No

7 Mr. Adisak Tongkhaimook Director 2011 2016 2019 No

8

Mr. Nontaphon Nimsomboon Chairman of the Audit Committee, Independent Director 1998 2016 2019 No

9 Mr. Suchat Chanlawong Audit Committee,

Independent Director 1997 2015 2018 No

10 Mr. Veerachai Srikajon Audit Committee,

Independent Director 1995 2015 2018 No

11 Mr. Apichai Chawacharoenpun

Independent Director 2009 2014 2017 Yes

12 Mrs. Sirinuj Thaivadh Independent Director 2009 2016 2019 No

The company will send invitations for every board of directors meeting along with the meeting agenda and accompanying documents at least seven days before the meeting so the company’s directors will have sufficient time to prepare for the meeting. Furthermore, the minutes to the meeting will be recorded in writing with copies for each director and one copy of the minutes will be kept at the company’s offices for the inspection of related individuals. Mr.Wirachai Bunchuchen is corporate secretary of the meetings.

Secretary of the Company The Board of Directors passed the resolution of appointing Mr.Wirachai Bunchuchen to be the secretary of the Company on February 26, 2008. The Biography of Company Secretary Mr. Wirachai Bunchuchuen „ B.Acc : Faculty of Economices and Business Administration, Kasetsart University

„ Master of Accoutancy, Faculty of Management and Tourism Burapha University In recent years, The board of directors have and each director attended the meetings as follows:

Meeting

Proportion Holding Company

No. Director’s Name Position Board of Directors

Audit Committee

Shareholder’s Meeting

1 Mr. Kavie Korphaibool Chairman of Board of

Directors 4/4 - 1/1 7.32%

2 Mr. Siritas Prasetmanukitch Vice-president 4/4 4/4 1/1 1.74%

3 Mr. Veerawat Korphaibool Vice-president 4/4 - 1/1 9.74%

4 Miss Veerawan Korphaibool Vice-president 4/4 - 1/1 10.53%

5 Mr. Veerawin Korphaibool Vice-president 4/4 - 1/1 10.73%

6 Mrs. Srisuvarn Korphaibool Director 4/4 4/4 1/1 5.05%

7 Mr. Adisak Tongkhaimook Director 4/4 - 1/1 -

8

Mr. Nontaphon Nimsomboon Chairman of the Audit Committee, Independent Director 4/4 5/5 1/1

-

9 Mr. Suchat Chanlawong Audit Committee,

Independent Director 4/4 5/5 1/1 -

10 Mr. Veerachai Srikajon Audit Committee,

Independent Director 4/4 4/5 1/1 0.10%

11 Mr. Apichai Chawacharoenpun

Independent Director 4/4 - 1/1

-

12 Mrs. Sirinuj Thaivadh Independent Director 4/4 - 1/1 -


Subcommittees

At present, the company has only one subcommittee consisting of the Audit Committee which was established on 14 December 1999 with a committee term of two years. Currently, there are three directors on the Audit Committee.

Mr. Nontaphon Nimsomboon Chairman of the Audit Committee Mr. Suchat Chanlawong Audit Committee Mr. Veerachai Srikajon Audit Committee Mr. Nontaphon Nimsomboon as the Chairman of the Audit Committee who has knowledge and experiences

in reviewing the financial statements of the Company. The Chief Executive Officer of the Audit Department was appointed to be the secretary of the Audit Committee.

The Audit Committee has established the scope of authorization, duty, and responsibility of the Audit Committee of Thai Storage Battery Public Company Limited. It focuses on the efficient mechanism of the Board of Thai Storage Battery Public Company Limited for supervising the operations of departments of Thai Storage Battery Public Company Limited and other sections in the group to ensure that they are in compliance with good corporate governance principles, including providing the appropriate risk management, qualified internal control system and internal audit. These will help the Company to be an efficient, well-accepted, and reliable organization based on the vision of Thai Storage Battery Public Company Limited and the Charter of the Audit Committee approved by the Board of Directors on August 9, 2007.

The Audit Committee has to report relevant matters to the Board of Directors. Their primary responsibilities are

1. Reviewing the internal performance and providing suggestions to the Board of Directors and/or the Management in case the Audit Committee is of the opinion that such suggestions are useful to the efficient governance and compliance of each department and achieve the objectives in line with the good governance principles

2. Reviewing the internal control system, risk management, and security of the Company’s information technology to be concisely and effectively in accordance with the generally accepted standards

3. Reviewing the Company’s operation to ensure that it is in compliance with policies, plans, rules, regulations, related laws, and ethical requirements

4. Reviewing the accuracy and appropriateness of applied accounting policies and the financial reports of the Company and sections under the Group to ensure that they are accurate and reliable, and disclose sufficient information in conformity with generally accepted accounting principles

5. Selecting and nominating an appropriate person to be the Company’s auditor, and fixing the proper remuneration of the auditor so that the Board of Directors and shareholders can approve, respectively under the scope of related laws and regulations

6. Promoting the independence of external auditors and supporting the operation of internal auditors to ensure that it is independent, accurate, and compliant with generally accepted standards, including encouraging the coordination among the Management of the Company, external auditors, and internal auditors appropriately and sufficiently

7. Studying letters submitted by external auditors to directors of the Company, reporting observations and suggestions relating to weakness, irregular statement, or significant error detected from the audit, considering and providing opinions to the Board of Directors. In case such observations or suggestions are not considered or implemented without sufficient reasons, discussing with the Management and presenting to the Board of Directors for reconsideration.

8 Providing advices relating to appointment, withdrawal, and transfer the Chief Executive Officer of the Audit Department to the President of the Company

9 Providing advices relating to annually considering on merits of employees in the executive level and internal auditors to the President of the Company

10 Supervising, advising, supporting the independent operations of internal auditors, reviewing the audit report of the internal auditors

11 Granting an approval of action plans and audit plans, manpower plan, and the plan for development of knowledge, skill, and specific characteristics of personnel in the audit department

12 Reviewing conflict of interests between the Company and directors, executives, or employees of the Company

13 Reviewing the summary and supporting evidence in case employees or directors possibly perform fraudulent act or abuse of official functions which cause damages to the Company, presenting such reviewing results to the Board of Directors for consideration immediately

14 Auditing and revising the Company’s rules, regulations, and practices regarding to authorization of internal auditors at regular intervals, at least every year, to ensure that they are appropriate and up-to-date, and provide sufficient independence to the internal auditors for the efficient operations. In this regard, the Audit Committee proposes the limitation and possibly existing weakness to the Board of Directors in order to modify and improve it.

15 Other issues assigned by the Board of Directors.


Internal Audit In 2014, the Chief Executive Officer of the Internal Audit Department is Mr.Wiwat Chongkolrat. The Head of

the Internal Audit Department and the Audit Committee commented that auditors have performed their duties efficiently and suggested the executives of the Company to develop knowledge and skills of auditors since having good auditors will cause valuable benefits to the Company in the future. Managing Conflicts of Interest

The board of directors will make decisions for cases involving transactions with conflicts of interests in order to maximize the company’s benefits. Furthermore, if conflicts of interest arise, the Audit Committee shall be responsible for rectifying the conflict. Related financial accounts must also be fully disclosed in the addendums to financial statements. The Audit Committee is also responsible for reviewing such matters. Business Ethics

The company strictly adheres to good business ethics in line with best practice associated with the corporate governance standards set forth by the Stock Exchange of Thailand. The board of directors, management teams and employees must follow company regulations and the Code of Best Practice for Directors of Listed Companies.

Internal Audit and Control Systems

Concerning the sufficiency and suitability of internal control, the board of directors defers to the opinions of the Audit Committee. Concerning risk management, the board of directors has not set up a specific committee for risk management. Therefore, risk management remains under the direct control and supervision of the board of directors. Board of Directors Reports

The board of directors is well aware of its responsibilities as directors of a listed company in ensuring the accuracy and completeness of the company’s financial reports in terms of accounting information, including compliance with Generally Accepted Accounting Principles (GAAP) to help shareholders understand the company’s actual financial situation and performance.

The board of directors views the company’s financial statement for 2013, which has been audited by certified external auditors and reviewed by the Audit Committee, as being complete, correct, reliable and compliant with Generally Accepted Accounting Principles with use and regular adherence to proper accounting policy. The information disclosed is sufficient and in accordance with relevant laws and regulations. Investor Relationships The board of directors places great importance in the disclosure of information with impact on the company’s share price. The company’s management team has ensured the disclosure of information is accurate,

reliable and thorough. At the moment, the company has not set up an Investor Relations Department as the workload in this area remains limited. However, the company publicizes its information through the channels provided by the Stock Exchange of Thailand. The company has also assigned a Senior Accounting Manager to perform this duty instead. For more information, investors may call 02-709-3535, extension 1501, during office hours. Controlling Use of Insider Information

The Company has issued policy to control the usage of insider information for personal gain. This code of conduct is as follows: 1.) Directors, managers, spouses or children under 18 must not disclose to the public any insider information for the purpose of buying, selling, transferring or receiving transfer of shares issued by the company, which means adherence to the laws governing securities businesses. Moreover, the aforementioned must notify the company of such activities for the company’s subsequent reports. 2.) Directors, managers, spouses or children who are minors must not buy, sell, transfer or receive transfer of shares issued by the company for a period of one month before public disclosure of the company’s financial statement. The company will consider penalties for individuals found in violation of the aforementioned code as deemed fitting in each case e.g. verbal or written warning, probation, suspension, decommission or dismissal, depending upon The case. In addition, the company has instructed the executives regarding their duties in reporting company shares held and set penalties according to the Security and Stock Exchange Act (1992) and the stipulations of the Stock Exchange of Thailand.

Dividend Payment Policy

The company has policy for paying “25 to 50 percent of its net profits from the consolidated income statement” as dividend to its shareholders. However, the company’s dividend payments must be in accordance with the law under the Public Company Act 1992, Section 115. As for policy stipulating that subsidiaries must pay dividend to the company, According to the annual net profit ratio of each company compared to the dividend that the company is required to pay to shareholders, shall be used as a guideline.


The Sustainable DevelopmentThe Sustainable Development

The Board of Directors has the policy to operate our company and subsidiaries to conform to the sustainability of business and society as a whole, which is part of our business operation.

To strive for the effectiveness of social responsibility through sustainability reporting guidelines recognized internationally as follows.

1. Corporate Governance 2. Operating with Fairness 3. Anti-corruption 4. Respect for Human Rights 5. Treat Workers with Fairness 6. Responsibility for Consumers 7. Environmental Preservation and Energy Conservation 8. Community and Society Development 9. Innovation and Sharing of Innovation 10. Developing the Sustainability Report

1. Corporate Governance

Our company is obliged to operate our business to be conformed to laws and regulations concerning the company’s businesses. The company must maintain methodologies and procedures in order to operate sincere and honest businesses. We believe that to operate businesses sincerely, honestly and ethically is an excellent business policy which would result in endurable and sustainable business prosperity. Therefore, we respect and abide particular local traditions and cultures.

Our company will operate businesses under transparent policies including the financial, structural and budgets and project investment assessing policies concisely and clearly. Furthermore, we trust that our Board of Directors, managements and all employees would honestly adhere our company’s policy, accounting process and other measures. Employees are anticipated to report to the management team directly on any suspicions of organizational ethical violation which may cause damage to the company’s reputation.

In 2015, the company has prepared the Code of Business Ethics and Operation and 2015 Operation Plan in order to communicate to the employees to enhance their understanding, thus, can be implemented.

2. Operating with Fairness: Treat all business partners equitably and fairly with integrity, as well as paying respect to intellectual property including: 2.1 Fair Competition: Compliance with the terms agreed upon with sellers or creditors strictly as according commitments given in the mutual business practices.

Guidelines: Specify mutual terms and agreements in the trading contracts. In the case of not able to comply with

any terms, we must inform the other parties immediately in order to jointly find solutions. Provide sufficient and accurate and timely information to customers. Deliver products to on time and meet quality agreed upon with customers

2.2 Promote social responsibility with business partners: Open opportunities for buyers and sellers to participate in social activities of our company both directly and indirectly.

Guidelines: They are able to attend social activities with our Company by supporting funds or anything according to

their capability and needs. 2.3 Respect for property rights: promote the property usage and strictly conform to the intellectual property rights and

patent rights. Guidelines:

Encourage the managements and employees to utilize the company’s resources and assets effectively to enhance competitiveness. Promote the use of products and services under license.

3. Anti-corruption: Obtaining things or other benefits which can influence decision on duty. Anti-corruption policy

Guidelines: Our employees are prohibited from obtaining things or other benefits from the person(s) or

company(ies) which conduct businesses with our company. In the case of our partners involved commit fraud, the company reserves all rights to suspend all

business conduct with that company(ies) immediately.

In 2015, the Board of Directors has adopted and announced the Anti-corruption policy as follows. The Board of Directors, managements and employees of the company must not allow any kind of corruption either

directly or indirectly. For examples, offering compensations or rewards to private or official suppliers or other people involved. Whereas, the committees, managements and employees are prohibited to accept any compensations or rewards from private or official suppliers or other people involved except for the traditional or seasonal presents as appropriate. 4 Respect for Human Rights:

The company recognizes the respect for human rights and the dignity of the humanity as the foundation of all business operations.

Guidelines: Manage work environment and system to ensure employees’ safety of life, property and to have work

condition with good hygiene. Provide health insurance for employees. Establish Provident Fund for employees. In 2015, the company has conducted the following activities.

1. Medical and health checks up for employees and managements twice in April and October. 2. Distribute drinking milk to all employees and management every day.


5 Treat Workers with Fairness: The company treats employees fairly as according to the International Human Rights Watch and good ethics in order to contribute to peace in the society.

Guidelines: Not restricting to races, colors, genders, religions and nationalities in employment considerations and

following laws in employment of people with disabilities. Encourage employees to regularly enhance their skills and knowledge Fairness in employment terms and conditions including reasonable compensations in the form of wages,

salaries, bonuses based on their competency. Appoint and transfer the staff honestly and based on their knowledge, ability and suitability of the staff. Strictly follow the laws and regulations in relation with employees.

6 Responsibility for Consumers: Our company practices the ISO / TS 16949 quality management system with the quality policy of "Producing quality products and creating satisfaction for customers along with an ongoing quality improvement‛ in order to rest assure all purchasers from our company that not only they will obtain quality products with fair price, but also our company is aware of the potential impact on the environment.

Guidelines: The Rights of Trade Confidentiality: the company has taken measures to maintain the confidentiality of our

customers and will not use our customers’ data for the benefit of ourselves or others. The Right to Express Opinions: The company has a process for customer enquiry and complaints

regarding the quality, quantity and safety of the products, as well as being speedy responsive. The Rights to Receive Compensations: Our customers receive a fair conduct in the case that our products

did not meet the standards by setting the warranty under reasonable terms and periods which must comply with the Consumer Protection Act.

The Rights to Information: The company is providing sufficiently and timely information and advice concerning products to customers.

2015 Automotive (OEM) Customers’ Satisfaction Survey Results Importance placed

Product usefulness 80.00% Satisfaction 80.00% Personnel’s response 86.87% Satisfaction 86.67% Marketing support 93.33% Satisfaction 93.33% Punctuality of product delivery 93.33% Satisfaction 93.33% Completeness of product delivered 93.33% Satisfaction 93.33% Error in product delivery 93.33% Satisfaction 93.33% Competitive pricing 86.67% Satisfaction 86.67%

7 Environmental Preservation and Energy Conservation: The Company practices the ISO 14001: 2001 Quality Management System with the policy of ongoing environmental improvement procedures and conducts, as well as to prevent pollutions caused by the products, services and activities in the production of company’s batteries, in which the managements and employees are committed to the following.

Guidelines: Conduct all actions to comply with the laws, rules and regulations concerning the environment, which are

relating to our company strictly. Improve, control and reduce the environmental impact of air, water and soil pollution effectively, along with

conserve and utilize energy and resource efficiency. Promote the ongoing environmental improvement by defining environmental objectives and goals in which

the company has set up. Promote understanding and raise awareness concerning the environments to all employees within the

company by enhancing communication and environmental training. Support and promote energy conservation, reduce unnecessary energy usage follow the Laws on Energy

Conservation. Our company has been focusing on maximizing the use of resources to generate the highest effective outcome

by following The Energy Promotion Conservation Act (No. 2) B.E. 2550 (2007) concrete actions. In 2015, our company conducted the following activities.

1. Energy conservation measures for the year 2015 Installed 3 units of Inverter Reacting blower lead powder. Changed the working methods of Chiller water pump sets. Installed the motor Inverter for Chiller water pump. Installed current transformers on Feed line pipes

Savings occurred of approximately 2 million baht per year. 1. The pollution preventions and monitoring of the environmental impacts with the ongoing environmental

measurements. Air Quality Our company has been using natural gas to fuel the production process to reduce amounts of air pollutions

such as Nitrogen (NOx), Sulphuroxcide (Sox), etc. There is a high performance air pollution treatment system installed such as dust collectors, wet scrubbers, etc. before the air being released into the environment. There are regular maintenance performed by the experts, regular air quality testing and measurement both in the workplace and regular ventilators, as well as strictly follow the official laws and regulations.

Water Quality Our company installed waste water control system for water releasing from the production process by using

chemical treatment to accelerate the precipitation and precautious on the wastes water quality at risky points in the daily, weekly and monthly productions. At the same time we strictly monitor waste water samples to find the parameter as implied by laws at


waste water release points. Waste water testing and monitoring results are according to standard implied by laws. (As shown in the 2015 Environmental Monitoring Results Summary)

Industrial Wastes Our company has a systematic industrial wastes management and assigned specialists to handle the release of

industrial wastes. These specialists would take control of and eliminate industrial wastes as according to rules and regulations, as well as perform tasks on environmental management as implied by laws. 2015 Environmental Monitoring Results Summary

Environment Quality 2015

Criteria by Laws (Jan.-Jun.) (Jul. – Dec.)

Waste water quality Water temperature at the releasing points (๐C) 30.59 32.20 40 pH 7.52 7.18 5.5-9.0 BOD (mg/L) 2.20 2.00 ≤ 20 COD (mg/L) 25.00 25.00 ≤ 120 SS (mg/L) 5.00 5.00 ≤ 50 Air quality from the ventilators Amount of TSP released (mg/m3) 1.76 2.84 ≤ 400 Amount of H2SO4 released (ppm) 0.0087 0.014 ≤ 25 Amount of Pb released (mg/m3) 0.0268 0.0216 ≤ 30 Workplace air quality Amount of total dust (mg/m3) 1.955 2.052 ≤ 15 Amount of H2SO4 (mg/m3) 0.055 0.108 ≤ 1 Amount of Pb (mg/m3) 0.032 0.027 ≤ 0.2 Amount of Asbestos (Fiber/cm3) 0.009 0.004 ≤ 5 Workplace noise quality Average workplace noise level in 8 hrs. -Leq 8 hr (dB(A))

83.021 ≤ 90

Workplace highest noise level -Lmax (dB(A)) 100.82 ≤ 140 Average noise level in 24 hrs. within factory premise- Leq 24hr (dB(A))

61.25 ≤ 70

Highest noise level within factory premise- Lmax (dB(A)) 89.1 ≤ 115 Amount of industrial wastes Hazardous industrial wastes (tons/year) 1,601.79 Eliminated by legitimate organization

Non-hazardous industrial wastes (tons/year) 1.762 Eliminated by legitimate organization

3. Enhance the distribution of knowledge relating to environment among employees so they have better understanding, as well as to foster this into our organizational culture in order to sustain the practice with the following procedures.

1. Offered environmental related training programme for all employees from the entry levels 2. Offered training programme on environmental related regulations 3. Offered environmental taskforce training program 4. Offered environmental management training program 5. Offered EMR ISO14001 course 6. Offered INTERNAL AUDIT ISO14001 course

8 Community and Society Development: The company is committed to the development and promotion of our employees as well as the surrounding communities and societies to sustainably be developed and grow together with the business of our company.

Guidelines: Promoting the Khathin Ceremony (Ceremony of presenting the robes to the Buddhist monks at the end

of the Buddhist Lent): Our managements and employees jointly hosted the Khathin Ceremony in Samut Prakan annually and will be scheduled to host the ceremony for three consecutive years to support the development continuously. After that we will host this ceremony at other temples in Samut Prakan where there are demands for development in the next offense.

Opening of the factory to be a Learning Center to other agencies who wish to visit the factory: In promoting learning with the company together with government agencies and educational institutes, our company plans to open the factory for agencies who are interested in learning the production management system and products quality control.

Encourage employees to be the good people of society: To promote Buddhism and encourages employees to have a chance to ordain and learning the disciplines and teachings of Lord Buddha, as well as to pay an obligation to their parents; our company support staff ordination ceremony during the rainy season every year.

In 2015 the company had carried out the following activities. 1. Performed the Khathin Ceremony (Ceremony of presenting the robes to the Buddhist monks at the end of

the Buddhist Lent) on November 8, 2015 at Khotaram Temple in Samutrprkarn Province, in which our head office is located, so that our employees and managements could help developing the community together.

2. Joined the parade of worshipping Phra Samut Chedi / Annual Red Cross Fair for the year 2015 of Samut Prakan Province.


3. Coordination between 3K and JS 100 for ‘Warm Heated Songkran, Safe Jurney with 3K’. 4. Assisted in a project to help travelers to travel safely during the New Year Festival, from December 28, 2015

to January 3, 2016.

5. 3K Battery delivered playground equipments under the ‚3K Sharing Happiness with All Our Hearts … for Ban Hong Sai School‛ on March 23, 2015.

6. 3K Battery offered Scholarships to the Faculty of Medicine, Khonkaen University on March 23, 2015.

9. The innovation and sharing of innovation, which was acquired from operating with responsibility for society, environments and stakeholders: Our company has the ability to design and manufacture products with a commitment to stakeholders and society in order to contribute to value adding to the organization in the long run.

Guidelines: The Company has ability to design and manufacture products that are environmentally friendly, which

reduces fuel consumption and the consequential greenhouse gas. The examples are: Batteries for electric folk lift cars which powered by a battery. Batteries for solar cells to promote clean energy.

The company invested in the lead smelting plant from old battery scraps. This is one of our subsidiaries that help eliminating industrial wastes, promoting utilization of resources effectively, being cost effective. Moreover, this also helps reducing the use of natural resources which are limited. This practice conforms to measures of The EIA (Environmental Impact Assessment) and the Environment and Health Impact Assessment Statement (EHIA).

3K Products Co., Ltd. was nominated to the ‘Popular Automotive Business Award’ in automotive related products, battery type in the ‘TAQA Award 2015’. The company has received this award for 4 consecutive years. This award came from end users voted for the most satisfactory in quality and service.

2015 Thailand’s Most Admired Brand Award for being the most trustworthy battery manufacturer that has long been the most admired among consumers for 15 consecutive years.

10. Developing the Sustainability Report

The company is developing the Sustainability Report in order to draw together responsibilities guidelines, organizational directions, organizational core information, directions and scopes in term of economy, environment and security to be completed within 2 years from 2015.


Related TransactionsRelated Transactions

In 2015, the company had transactions with its subsidiaries and related companies, which were related through same shareholders and/or joint directors and management. The majority of the transactions were buying and selling of products, which were in accordance with conditions agreed between the company and related companies, and in-line with general business practices. The company had disclosed such transactions in the Note Number 7 of the annual financial statement, ending on December 31, 2015, which possessed the following details:

1. Measures and Procedures for Approval of Inter-Transaction The company has regulated the measures for controlling the inter-transactions between the company, subsidiaries, joint ventures, and subsidiaries of the similar level and stakeholders or persons those who may engage of the futuristic interest conflict according to the Announcement of the Securities and the Exchange Commission. In doing so, the Audit Committee shall comment pertaining to the necessity of transactions and appropriateness of inventory prices based on conditions in normal commercial manner and compare price with that occurred with the outsiders. In case that the Audit Committee have not specialized in contemplating the inter-transaction occurred, the company shall provide the independent specialists or internal auditor to make comments on such inter-transactions so that it will be used to support the decision-making of the Board of Directors and/or Audit Committee and/or shareholders, as the case may be. Those individuals engaging with interest conflict or stakeholders in the inter-transactions shall have no right of voting for approval of such respective inter-transactions. Moreover, the company shall disclose the related transactions, acquisition, or distribution of the important assets of the company and its subsidiaries according to the Stock and Exchange Commission’s requirements, as well as the accounting standard imposed by the Institute of Certificated Public Accounts and Auditors of Thailand.

2. Policy and Futuristic Tendency toward Inter-Transactions In the future, if there will be the inter-transactions, the company shall apply the Securities and Exchange Commission Act, rules, announcement, order, or regulations required by the Stock Exchange of Thailand and the accounting standard required by Institute of Certificated Public Accounts and Auditors of Thailand. All of these, it shall not be construed of transfer or assigned the interests between company or company’s shareholders, but it shall consider thehighest interest of all shareholders. In case of normal commercial transactions and continuing transactions in the future, the company shall arrange such transactions in accordance with normal commerce by referring to price and conditions for proper, fair, reasonable and identifiable normal trade, and will not cause transfer of the interest. Such arrangement shall be submitted to

the Audit Committee for approval, and shall be further implemented by Management under the Securities and Exchange Commission Act, rules, announcement, order, or regulations required by the Stock Exchange of Thailand and the accounting standard required by Institute of Certificated Public Accounts and Auditors of Thailand. In some cases tioned above, the Management can proceed immediately without the consent of the Audit Committee. However, to meet the Good Corporate Governance, the company requires that Internal Audit shall do auditing all such transactions on monthly basis to see if the prices refer to the market price, conditions and terms of normal trade are competitive as compared to the outsider traders. This is to maintain the highest benefits of the company. The results of auditing shall be submitted and informed to the Audit Committee on quarterly basis. In case it is proven by Audit Committee that the execution has been inconsistent with the required policy, the Audit Committee shall notify the company’s Board of Director or President for correction.

In respect of normal commercial transactions of the company, it shall be characterized of normal business. If the related transactions are not carried out, the similar transactions engaging with other persons shall be conducted wherein such respective transactions shall include the conditions and terms of ordinary trade; including price and fair conditions that might not cause the transfer of interest as well as the following conditions and prices; 1. Price and conditions accepted by company is similar to that of general people. 2. Price and conditions accepted by related persons is similar to that of general people. 3. Price and conditions manifested by the company that other operators follow it in the similar way to general people. However, in case of the inter-transactions are characterized of different transactions, the company shall submit the Audit Committee to make comments on appropriateness of price, soundness of such respective transactions. In case that the Audit Committee has not specialized in contemplating the inter-transaction occurred, the company shall provide the independent specialists or internal auditor to make comments on such inter-transactions so that it will be used to support the decision making of the Board of Directors and/or Audit Committee and/or shareholders, as the case may be. This is to ensure that such transactions shall not be transferred or assigned of the interest between companies or shareholders, but the highest interest of all shareholders shall be considered.


1. 3K Products Company Limited Descriptions of Relationship The Company holds 99.99 percent fully paid-up and registered capital. The

juristic personnel include some common directors. Type of Business Distributing agent of batteries for automobiles, golf carts, general lighting,

and motorcycles. Pricing Policy The company sells its goods to 3K Products Company Limited, which is the

sole distributor in Thailand. The transactions are done under regular conditions, the same as those of non-related companies, and prices are in-line with market prices controlled by the Excise Department.

Type and Extend of Related transactions Unit : Baht

Sales Dividend income Other income Accounts receivable Other Account payable

2,119,193,865 19,998,500 1,805,820 159,903,456 154,893

2. Thai Nonferrous Metal Company Limited Descriptions of Relationship The Company holds 97.00 percent of fully paid-up and registered capital.

The juristic personnel include some common directors and executives. Type of Business Lead alloy and pure lead smelting Pricing Policy The company purchases lead alloy and pure lead from Thai Nonferrous

Metal Company Limited under regular business conditions.

Type and Extent of Related transactions Unit : Baht

Purchases Other income Account payable Other Account Receivable

724,062,726 10,361,202 34,449,049 3,561,240

3. 3K Traction Battery Company Limited Descriptions of Relationship The Company holds 99.99 percent of paid-up registered capital of 4.00 Baht per

shares. The juristic personnel include some common directors and executives. Type of Business Manufacture and distribute, Forklift metal cases, Leasing, Maintenance and service

of folklift batteries. Pricing Policy The Company purchases from 3K Traction Battery Company Limited under regular

business conditions. Type and Extent of Related transactions None

4. Power Plas Company Limited Descriptions of Relationship The Company holds 49.00 percent of fully paid-up and registered capital.

The juristic personnel include some common directors. Type of Business Manufacture and distribution of plastic casing for batteries. Price Policy Related The Company purchases plastics, and sale plastic casing for batteries . Type and Extent of Related transactions

Unit : Baht Purchases Sales Other income Account

payable Account

Receivable

Other Account

Receivable

130,915,327 56,674,480 7,035,175.44 22,627,881 10,028,714 1,270,928

5. Thai Storage Battery Japan Company Limited Descriptions of Relationship The Company holds 16.67 percent of paid-up registered capital .The juristic

personnel include some common directors and executives. Type of Business Provide after sales services, technical knowledge for agents and

consumers, and carries out sales promotions in the Japanese market. Pricing Policy The Company sets a commission for Thai Storage Battery Japan Company

Limited under general business conditions, the same as those for non-related companies, and in-line with market prices.

Type and Extent of Related transactions None


Analysis and Description of Managements Overall Business Operation and Significant Change

Thai Storage Battery Public Company Limited Part 2 Financial Status and Operation Performance

2015 Financial Disclosure (Statement 56-1) Page 61

Analysis and Description of Managements Overall Business Operation and Significant Change

In 2015, the industrial production rose in line with the domestic demand which had positive trend, partly was the result of temporary factors. The automotive manufacturing accelerated the production from the domestic orders before the increase of vehicle excise tax in 2016, together with a gradual recovery in international demand gradually made exports of new eco-cars and commercial cars well expand. The baht averaged at 34.29 baht per dollar in 2015, depreciated by 5.6 percent compared to 2014. This was the result of the monetary policies of major economies, concerns over a slowdown in the Chinese economy, as well as the interest rate cuts and the announcement of a scientific movement of international finance from the Bank of Thailand. This reflected that the baht currency has continued to appreciate more than partner and competitor countries.

The value of exports decreased by 5.6 percent, the volume of exports decreased by 3.4 percent and the export prices decreased by 2.3 percent. When calculating in terms of baht currency, the value of exports decreased by 0.5 percent due to the economic deterioration of the main trading partners; and the export prices decrease in accordance with crude oil price and agricultural products price in the world market.

Decreasing export goods included rice, rubber, tapioca, petroleum products, petrochemicals, chemicals, machinery and equipment.

Increasing exports goods included automotive, air conditioning and integrated circuits and components.

Exports to the United States, European Union, China, Japan, ASEAN and Australia decreased while exports to CLMV market continues to grow.

The 2015 revenue was slightly decreased by 3% compared to that of 2014’s due to the overall recovery of the automotive industry at the end of the year before the increase of excise duty and the 3K Battery Hybrid customers were responding very well. In addition, an aggressive marketing of more road shows; the 3K UNLIMITED POWER and the 3K Race Queen activities were well received by consumers. Moreover, the company continued to work with the dealers or distributors of over 500 locations nationwide to stimulate the point of sale while also



support motorsports activities or Sports Marketing. These activities will continue to heavily be focused like the past year.

The economy is recovering in 2016 and the private investment started to play roles, with the belief that consumers are starting to spend, thus, pushing the overall economy to improve in the future. The estimation of 2016 GDP will be at 3.5%, while the growth rate of the battery market is expected to increase by 3-4%, in a similar proportion.

For the 2016 domestic investment, the company is expanding the investment to increase the production capacity of battery for electrical forklift cars to be 400 sets per month in order to meet the rising demand. The usage of production capacity is approximately 70% of total capacity.

Conditions of lead price in London Metal Exchange (LME) had declined with the closing price of US $ 1,701 per metric ton and US $ 1936 per metric ton as of December 2015 and 2014 respectively.

The auditor has notified us on the Financial Statement item 27.4 regarding the case that our company received the raw materials and machinery exporting tariff estimation notification from Thai Customs Department in 2013 which is still under the investigation. Thus, to prepare for the contingency plan, we have prepared a served amount of 10 million baht which may be needed to cover the damage from Tariff estimation in the ‘Other Debt Estimation’ of the Financial Statement. However, this exporting tariff estimation has not been finalized.

Operation Performance and the Ability to Make Profit

Our company and our subsidiaries operate mainly as stated in the report of only a single duty which is a manufacturer and distributor of batteries and operate in a single geographic area, which is in Thailand. The company evaluated performance of each segment based on profit or loss from the operations, which are measured using the same criteria used to measure the profit or loss of operations in the financial statements. Therefore, the revenues, earnings from operations and assets reflected in the financial statements are already reported as according to segment operations and geographic area.




Total Revenue In 2015, the company had consolidated total revenues of THB 5,129 million

compared the year 2014 of THB 5,294 million, a decrease of THB 165 million or decreased by 3.17 percent.

This was due to the decrease volume of oversea sales because of the fierce price competition in the market. However, the company was able to increase domestic sales. As a result, the company’s revenue from sale was not decreased dramatically.

In 2015, the company obtained other revenue of THB 71.65 million, compared to the year 2014 with a total of THB 118.81 million, a decrease of THB 47.16 million or by 39.69 percent due to the decrease of profit from hedging and foreign exchange. Gross Profit Margin and Net Profit.

The company's gross margin for the years 2015 and 2014 were 25.16 and 21.61 percent respectively, and increased by 3.15 percent. The company could reduce such cost of production as raw materials and overtime pay.

In 2015, the company obtained a net profit of THB 219.91 million or 4.06 per cent of the revenue from sales compared to a net profit of THB 205.18 million in 2014, representing 3.96 percent of the revenue from sales. This resulted from the rise of margins, the decreased of financial expense by THB 18.54 million and the increase of income tax expenses by THB 15.83 million.

Selling and administrative expenses in 2015 amounted to THB 1,028 million or 20.33 percent of the revenue from sales compared to 2014 which amounted to THB 924 million or 17.85 percent of the revenue from sales. This was an increase from the previous year with the amount of THB 104 million due to increased promotional costs associated with the increased value of domestic sales of the company.

Return on equity in the year 2015 was at the rate of 12.29 per cent compared to the year 2014 of 12.48 percent. Moreover, the Board of Directors proposed to the share holders meeting to increase dividend payment from retained earnings by 3.00 baht per share.



Asset Management Capability Liquidating Asset

The ratio of the company’s current assets to total assets decreased by 47.07 percent in 2015, while the ratio in 2014 was at 51.24 percent, due to lower inventories.

On December 31, 2015 and 2014, our company has the remaining balance of THB 860 million and THB 1,115 with THB 50.03 million decreased. Most company’s raw materials are lead and battery’s sheets, shells and lids. There is no limitation on raw material life, thus, there is no raw material expiration date. From the production process to finished products, we operate raw materials on the ‘First-In- First-Out’ (FIFO) method and will consider the reserve for expired products as according to the life of stock inventory. Our policy is to reduce cost into the net receivable for the whole lot of remaining products with more than 1 year non performing inventory which on December 31, 2015 and 2014 at THB 22.15 million and THB 37.19 million respectively.

In 2015, the company’s fixed asset and total asset ratio was 41.57% with 38.38% reduction from that of 2014’s. The total land, buildings and equipment on December 31, 2015 and 2014 was THB 1,475 million and THB 1,486 million respectively. There were also of real-estate for investment and land in 2015 and 2014 worth THB 307 million baht. The company is now conducting the research on the possibility of a project which could bring the highest potential benefit to the company. If considering the current real-estate market price, this land has gained more value.

In 2015 and 2014, the company had an average collection period of 44.48 days and 40.97 days respectively, thus, an increase of 3.51 days in accordance to market conditions of higher competition.

Company’s total trade receivable on December 31, 2015 and 2014 were THB 647.32 million and THB 536.29 million respectively, with the 3 months credit length and delayed payment of THB 631.77 million or 97.60% of trade receivable, however, in 2014 was THB 531.72 million or 99.15% of account receivable.

In battery distribution and export, company will consider the ability to pay of each individual customer for example setting 30 days credit term of payment before delivering to new customers after the Bill of Landing dates, etc. For within the country transaction, the company’s




policy is for customers to settle the invoice every 15 days. However, for selling other products, credit terms is as normal business practice of 30-60 days.

For the reserve for non-performing account receivable, we mainly consider the evaluation of life of account receivable and debtor’s payment history by reserving the whole amount of more than 12 months non-performing account receivable.

In 2015, the company has reduced reserve of non-performing account receivable

by THB 16.71 million as the customers had made their payments. Liquidity and capital adequacy of the company

In 2015 and 2014, our company has the remaining cash balance of THB 99.47 million and THB 240.89 million respectively, with THB 50.03 million decreased. The company's ratio of current assets to current liabilities was 1.07 times greater, compared to the year 2014, with a ratio of 0.98 times. This was because the company held the bank overdrafts and short-term loan of THB 922.61 million, which was lower than the same period of last year with the amount of THB 1472.61 million, decreased to THB 550 million which related to the inventory reduction.

In operating the business, our company uses the working capital from business operation which is considered the low cost investment for buying lands, buildings and paying loans. Our company and the subsidiaries obtained many types of loan from several financial institutions with the net amount of THB 4,475 million non-use credit to support the company’s operation.

In 2015 and 2014, the ratio of company’s debt and equity was 0.88: 1.23.

Factors which may impact the future operations Important risk factors which may impact company’s future operations

include the followings: 1. Marketing risk factor from within Thailand and export market

decelerated because of the ongoing world economic down turn in 2016. Therefore, battery types of products are likely to also being affected as the supplies are greater than demands. However, the company will try to retain the market share.



2. Risks from the uncertainty of raw materials and commodity price such as oil, lead and plastic. The average price of crude oil from four markets (Dubai, Oman, Brent and West Texas) is at 51.12 US dollars per barrel which was less than the average price of 96.38 US dollars per barrel, a decrease by 47.0 percent. Due to the production volume of OPEC and the OECD crude oil inventories increased, while the world economy slowed down. Therefore, this would be a beneficial factor for our company to reduce the production cost.

3. For the risk in term of the current exchange rate in 2016, it is estimated that the exchange rate would be liquidated in between 35.00-36.00 baht/ USD with minimal fluctuation which would also be a positive factor for our company.

4. Trend of consumers turning to the ready-to- use battery types with acid already added and power already charged from the manufacturers plants have gained popularity. This increases the convenience of not having to worry about filling water frequently. The company has production technology and production capacity sufficient enough to accommodate future growth with ready action plans and goals for the future.

The followings are plans and directions to prevent and solve the potential risk factors which are to enhance organization effectiveness.

1. Enhance technological skills and modern technique to effectively increase production and the production of new products such as batteries for ECO-CAR vehicle and cars using ISS (Idling Stop System) in order to protect the environment and save energy.

2. Our company focuses on supporting and developing skills for labors to be flexible in order to adjust to economic environment changes.

3. Use production resource wisely to minimize the damage from production process.

4. Designate the work group to work on preventing the risks on the current exchange and commodities.




Debt Obligations (Note for financial report no. 27).

Obligation to Capital Expenditure

As of December 31, 2015, the company and the subsidiaries had outstanding capital obligations in relation to the acquisition of machinery and equipment with the amount of THB 8 million (31 December 2014: THB 4 million). Obligations on Operating Leases

The company and the subsidiaries have started to oblige in operating lease related to the rental of spaces for product and transportation storage with the contract periods between one to five years.

The company and the subsidiaries have a minimum to be paid amount under non-cancellable operating leases in the future, all are as follows.

(Million Baht) Consolidated Financial Statement Separate Financial Statement As of December 31 As of December 31 2015 2014 2015 2014 Payable

Within 1 year 22 25 1 2 More than 1, but not more than 5 years

15 33 0 1

Guarantee

As of December 31, 2014, the company and the subsidiaries holds guarantees issued by banks on behalf of the company and the subsidiaries with the remaining amount of THB 22 million (2014: THB 22 million) (Separate financial statements: THB 20 million (2014: THB 21 million)) in respect of the obligations required in the normal course of business of the company and the subsidiaries.

The company and the subsidiaries obtained various types of credit facilities from financial institutions including the limit that has not been used with a total of THB 4,475 million (December 31, 2014: amount of THB 4,045 million) (Separate financial statements: amount of THB 2,875



million. (December 31, 2014: amount of THB 2,470 million)) in which most amount was jointly guaranteed by the company and the subsidiaries.

The Remuneration of the Auditor

1) The Audit Remuneration The company and the subsidiaries had paid the amount of THB 2.95 million to an audit

company in which the auditors work for in the past fiscal year. 2) Other Non-audit Fee The company and the subsidiaries did not pay any of the other services provided by to

the auditors or the audit firm in which the auditors work for including the agreement of incomplete services in the past fiscal year.


Independent Auditor's Report

To the Shareholders of Thai Storage Battery Public Company Limited

I have audited the accompanying consolidated financial statements of Thai Storage Battery

Public Company Limited and its subsidiaries, which comprise the consolidated statement of

financial position as at 31 December 2015, and the related consolidated statements of

comprehensive income, changes in shareholders’ equity and cash flows for the year then ended,

and a summary of significant accounting policies and other explanatory information, and have

also audited the separate financial statements of Thai Storage Battery Public Company Limited

for the same period.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements

in accordance with Thai Financial Reporting Standards, and for such internal control as

management determines is necessary to enable the preparation of financial statements that are

free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

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

I conducted my audit in accordance with Thai Standards on Auditing. Those standards require

that I comply with ethical requirements and plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements. The procedures selected depend on the auditor's

judgement, including the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the entity's preparation and fair presentation of the financial

statements in order to design audit procedures that are appropriate in the circumstances, but not

for the purpose of expressing an opinion on the effectiveness of the entity's internal control.

An audit also includes evaluating the appropriateness of accounting policies used and the

reasonableness of accounting estimates made by management, as well as evaluating the overall

presentation of the financial statements.

Independent Auditor’s Report

2

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my

audit opinion.

Opinion

In my opinion, the financial statements referred to above present fairly, in all material respects, the

financial position of Thai Storage Battery Public Company Limited and its subsidiaries and of Thai

Storage Battery Public Company Limited as at 31 December 2015, and their financial performance

and cash flows for the year then ended, in accordance with Thai Financial Reporting Standards.

Emphasis of matter

I draw attention to Note 27.4 to the financial statements regarding the Company’s receipt of

notices of assessment of import duty, value added tax and surcharge assessment, covering the

years 2007 through 2010, from the Customs Department. Currently, such tax dispute is being

considered in order to reach a conclusion, and the Company expects that the tax dispute will not

result in significant damages to the Company. My opinion is not qualified in respect of this matter.

Supannee Triyanantakul

Certified Public Accountant (Thailand) No. 4498

EY Office Limited

Bangkok: 25 February 2016


Thai Storage Battery Public Company Limited and its subsidiaries

Statement of financial position

As at 31 December 2015

(Unit: Baht)

Note 31 December 2015 31 December 2014 31 December 2015 31 December 2014

Assets

Current assets

Cash and cash equivalents 7 99,465,070 240,893,637 14,199,118 24,172,731

Trade and other receivables 8 654,398,702 541,329,612 397,907,990 338,929,154

Inventories 9 860,418,241 1,115,388,595 484,808,433 692,618,395

Input tax refundable 4,411,946 16,653,076 7,630,762 15,882,863

Receivables under forward exchange contracts 4,527,198 28,042,395 4,527,198 28,042,395

Other current assets 47,539,028 40,709,424 14,389,320 12,774,139

Total current assets 1,670,760,185 1,983,016,739 923,462,821 1,112,419,677

Non-current assets

Investments in subsidiaries 10 - - 269,481,630 274,481,630

Investment properties - land 11 307,118,002 300,118,002 94,370,575 94,370,575

Property, plant and equipment 12 1,475,233,364 1,485,531,085 1,089,644,475 1,135,919,589

Intangible assets - computer software 13 28,195,339 31,365,402 24,803,470 27,833,241

Deferred tax assets 21 48,366,079 47,867,657 13,740,881 13,843,846

Other non-current assets 14 19,476,252 22,512,028 3,555,369 7,602,836

Total non-current assets 1,878,389,036 1,887,394,174 1,495,596,400 1,554,051,717

Total assets 3,549,149,221 3,870,410,913 2,419,059,221 2,666,471,394

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

Separate financial statementsConsolidated financial statements

1



Statement of financial position


Statement of financial position (continued)


(Unit: Baht)


Liabilities and shareholders' equity

Current liabilities

Short-term loans from financial institutions 15 922,612,104 1,472,605,315 447,612,104 799,105,315

Trade and other payables 16 550,772,814 507,944,719 420,283,000 480,538,349

Current portion of liabilities under finance

lease agreements 17 11,061,614 10,550,156 - -

Income tax payable 43,370,064 5,897,456 33,786,129 2,245,113

Other current liabilities 32,994,616 42,236,826 30,356,089 39,623,520

Total current liabilities 1,560,811,212 2,039,234,472 932,037,322 1,321,512,297

Non-current liabilities

Liabilities under finance lease agreements - net

of current portion 17 - 11,061,614 - -

Provision for long-term employee benefits 18 80,173,692 55,202,104 41,402,245 31,067,892

Total non-current liabilities 80,173,692 66,263,718 41,402,245 31,067,892

Total liabilities 1,640,984,904 2,105,498,190 973,439,567 1,352,580,189



2








(Unit: Baht)


Shareholders' equity

Share capital

Registered

20,000,000 ordinary shares of Baht 10 each 200,000,000 200,000,000 200,000,000 200,000,000

Issued and fully paid

20,000,000 ordinary shares of Baht 10 each 200,000,000 200,000,000 200,000,000 200,000,000

Share premium 389,501,173 389,501,173 389,501,173 389,501,173

Retained earnings

Appropriated - statutory reserve 19 20,000,000 20,000,000 20,000,000 20,000,000

Unappropriated 1,252,027,665 1,109,068,341 836,118,481 704,390,032

Equity attributable to owners of the Company 1,861,528,838 1,718,569,514 1,445,619,654 1,313,891,205

Non-controlling interests of the subsidiaries 46,635,479 46,343,209 - -

Total shareholders' equity 1,908,164,317 1,764,912,723 1,445,619,654 1,313,891,205

Total liabilities and shareholders' equity 3,549,149,221 3,870,410,913 2,419,059,221 2,666,471,394

- - - -


Directors


3





Statement of comprehensive income

For the year ended 31 December 2015

(Unit: Baht)

Separate financial statements

Note 2015 2014 2015 2014

Profit or loss:

Revenues

Sales 5,056,859,390 5,174,961,105 4,483,285,136 4,469,171,430

Other income 71,652,252 118,813,961 104,599,820 142,818,331

Total revenues 5,128,511,642 5,293,775,066 4,587,884,956 4,611,989,761

Expenses

Cost of sales 3,784,365,095 4,056,816,060 3,788,381,730 3,924,926,216

Selling expenses 557,054,225 472,709,943 320,198,477 302,623,227

Administrative expenses 471,093,213 451,294,904 218,358,560 214,964,765

Total expenses 4,812,512,533 4,980,820,907 4,326,938,767 4,442,514,208

Profit before finance cost and income tax expenses 315,999,109 312,954,159 260,946,189 169,475,553

Finance cost (32,909,593) (51,446,674) (18,769,712) (29,902,123)

Profit before income tax expenses 283,089,516 261,507,485 242,176,477 139,573,430

Income tax expenses 21 (62,237,290) (46,407,747) (43,102,965) (22,269,829)

Profit for the year 220,852,226 215,099,738 199,073,512 117,303,601

Other comprehensive income:

Other comprehensive income not to be reclassified

to profit or loss in subsequent periods

Actuarial gains (loss) 18 (21,721,470) 4,045,994 (9,181,329) 2,946,123

Less: Income tax effect 21 4,120,838 (832,214) 1,836,266 (589,225)

Net other comprehensive income not to be reclassified

to profit or loss in subsequent periods (17,600,632) 3,213,780 (7,345,063) 2,356,898

Other comprehensive income for the year (17,600,632) 3,213,780 (7,345,063) 2,356,898

Total comprehensive income for the year 203,251,594 218,313,518 191,728,449 119,660,499


Consolidated financial statements

1



Statement of comprehensive income



Statement of comprehensive income (continued)


(Unit: Baht)


Note 2015 2014 2015 2014

Profit attributable to:

Equity holders of the Company 219,908,929 205,178,454 199,073,512 117,303,601

Non-controlling interests of the subsidiaries 943,297 9,921,284

220,852,226 215,099,738

Total comprehensive income attributable to:

Equity holders of the Company 202,959,324 208,454,425 191,728,449 119,660,499

Non-controlling interests of the subsidiaries 292,270 9,859,093

203,251,594 218,313,518

Earnings per share 23

Basic earnings per share

Profit attributable to equity holders of the Company 11.00 10.26 9.95 5.87



2



Statement of comprehensive income (continued)

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9,50

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Pro

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11

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199,

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19

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Cash flow statement



2015 2014 2015 2014

Cash flows from operating activities

Profit before tax 283,089,516 261,507,485 242,176,477 139,573,430

Adjustments to reconcile profit before tax

to net cash provided by (paid from) operating activities:

Depreciation and amortisation 200,252,766 204,780,235 151,828,528 157,700,864

Reversal of allowance for doubtful accounts (16,707,208) (5,313,296) - (3,590,374)

Reduction of inventory to net realisable value (reversal) (15,044,455) 337,453 8,115,373 (8,017,059)

(Gain) loss on sales of equipment (336,298) (4,226,303) 356,539 (3,054,255)

Write-off of equipment 444,484 1,671,275 - 47,886

Unrealised (gain) loss on exchange (1,132,706) 632,672 (1,132,706) 632,672

Unrealised gain on forward exchange contracts (4,527,198) (28,042,395) (4,527,198) (28,042,395)

Unrealised loss on price hedging contracts - 14,521,114 - 14,521,114

Provision for long-term employee benefits 7,801,348 7,303,128 4,268,254 4,021,377

Gain from sales of investment in subsidiaries - - (139,928) -

Dividend income (16,222) - (39,414,722) (34,997,375)

Interest expenses 31,416,397 51,446,674 17,277,069 29,902,123

Profit from operating activities before changes in

operating assets and liabilities 485,240,424 504,618,042 378,807,686 268,698,008

Operating assets (increase) decrease

Trade and other receivables (101,548,086) 51,877,398 (57,165,040) 53,054,295

Inventories 270,014,809 50,025,749 199,694,588 89,354,361

Other current assets 33,453,921 38,916,954 34,772,544 33,484,500

Other non-current assets 5,265,759 (3,594,654) 4,047,467 129,656

Operating liabilities increase (decrease)

Trade and other payables 44,007,816 23,867,377 (60,071,700) 22,095,472

Other current liabilities (9,000,594) (12,895,852) (9,267,430) (14,994,802)

Provision for long-term employee benefits (4,551,230) (1,268,545) (3,115,230) (693,100)

Cash flows from operating activities 722,882,819 651,546,469 487,702,885 451,128,390

Cash paid for interest expenses (32,405,499) (50,621,745) (18,141,809) (30,371,114)

Cash paid for corporate income tax (27,872,784) (21,060,557) (9,715,946) (5,557,192)

Net cash flows from operating activities 662,604,536 579,864,167 459,845,130 415,200,084


(Unit: Baht)


1



Cash Flow Statement



Cash flow statements (continued)



2015 2014 2015 2014

Cash flows from investing activities

Cash received from decrease in share capital

in subsidiary - - - 3,000,000

Cash received from sales of investment in subsidiaries - - 5,139,928 -

Acquisition of plant and equipment (183,460,445) (64,700,706) (103,126,536) (46,967,597)

Proceeds from sales of equipment 2,205,696 4,541,150 1,265,855 3,064,738

Acquisition of intangible assets (1,379,500) (6,798,089) (1,019,501) (6,683,788)

Dividend received 16,222 - 39,414,722 34,997,375

Net cash flows used in investing activities (182,618,027) (66,957,645) (58,325,532) (12,589,272)

Cash flows from financing activities

Decrease in bank overdrafts and short-term loans

from financial institutions (549,993,211) (324,973,787) (351,493,211) (284,038,845)

Cash paid for liabilities under finance lease agreements (11,421,865) (11,935,707) - -

Repayments of long-term loans from financial institutions - (67,070,000) - (66,720,000)

Dividend paid (60,000,000) (60,000,000) (60,000,000) (60,000,000)

Net cash flows used in financing activities (621,415,076) (463,979,494) (411,493,211) (410,758,845)

Net increase (decrease) in cash and cash equivalents (141,428,567) 48,927,028 (9,973,613) (8,148,033)

Cash and cash equivalents at beginning of the year 240,893,637 191,966,609 24,172,731 32,320,764

Cash and cash equivalents at end of the year 99,465,070 240,893,637 14,199,118 24,172,731

- -

Supplemental disclosures of cash flows information

Non-cash transaction

Increase in investment property due to debt settlement 7,000,000 - - -


(Unit: Baht)


2



Cash Flow Statements (continued)

10


Notes to consolidated financial statements


1. General information

Thai Storage Battery Public Company Limited (“the Company”) is a public company

incorporated and domiciled in Thailand. The Company is principally engaged in the

manufacture and distribution of batteries. The registered office of the Company is at 387

Moo 4, Soi Patana 3, Bangpoo Industrial Estate, Sukhumvit Rd., Praekasa, Samutprakarn.

2. Basis of preparation

2.1 The financial statements have been prepared in accordance with Thai Financial Reporting

Standards enunciated under the Accounting Professions Act B.E. 2547 and their

presentation has been made in compliance with the stipulations of the Notification of the

Department of Business Development dated 28 September 2011, issued under the

Accounting Act B.E. 2543.

The financial statements in Thai language are the official statutory financial statements of

the Company. The financial statements in English language have been translated from the

Thai language financial statements.

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 Thai Storage

Battery Public Company Limited (“the Company”) and the following subsidiary

companies (“the subsidiaries”):

Country of Percentage of

Company’s name Nature of business incorporation shareholding

2015 2014

Percent Percent

Subsidiaries held directly by the Company

3K Products Company Limited Local distribution agency of batteries Thailand 100 100

Thai Nonferrous Metal

Company Limited

Manufacturer of lead alloy and

pure lead

Thailand 97 97

3K Traction Battery Company

Limited

Sales, leasing of forklift batteries and

fabrication of metal casing for

forklift truck batteries

Thailand - 100

Power Plas Company Limited Manufacturer and distribution of

plastic casing for batteries

Thailand 49 49



Notes to Consolidated Financial Statements


11

Country of Percentage of

Company’s name Nature of business incorporation shareholding

2015 2014

Percent Percent

Subsidiary held through 3K Products Company Limited


Limited

Sales, leasing of forklift batteries and

fabrication of metal casing for

forklift truck batteries

Thailand 100 -

b) The Company is deemed to have control over an investee or subsidiaries if it has

rights, or is exposed, to variable returns from its involvement with the investee, and it

has the ability to direct the activities that affect the amount of its returns.

c) Subsidiaries are fully consolidated, being the date on which the Company obtains

control, and continue to be consolidated until the date when such control ceases.

d) The financial statements of the subsidiaries are prepared using the same significant

accounting policies as the Company.

e) The financial statements of Power Plas Company Limited are included in the

consolidated financial statements even though the Company’s shareholding is 49

percent. This is because the Company has control over its financial and operating

policies, therefore such company is regarded as a subsidiary.

f) Material balances and transactions between the Company and its subsidiary

companies have been eliminated from the consolidated financial statements.

g) Non-controlling interests represent the portion of profit or loss and net assets of the

subsidiaries that are not held by the Company and are presented separately in the

consolidated profit or loss and within equity in the consolidated statement of financial

position.

2.3 The separate financial statements, which present investments in subsidiaries under the

cost method, have been prepared solely for the benefit of the public.

12

3. New financial reporting standards

Below is a summary of financial reporting standards that became effective in the current

accounting year and those that will become effective in the future.

(a) Financial reporting standards that became effective in the current year

The Company and its subsidiaries have adopted the revised (revised 2014) and new

financial reporting standards issued by the Federation of Accounting Professions which

become effective for fiscal years beginning on or after 1 January 2015. These financial

reporting standards were aimed at alignment with the corresponding International Financial

Reporting Standards, with most of the changes directed towards revision of wording and

terminology, and provision of interpretations and accounting guidance to users of

standards. The adoption of these financial reporting standards does not have any

significant impact on the financial statements of the Company and its subsidiaries.

However, some of these standards involve changes to key principles, which are

summarised below:

TAS 19 (revised 2014) Employee Benefits

This revised standard requires that the entity recognise actuarial gains and losses

immediately in other comprehensive income while the former standard allowed the entity to

recognise such gains and losses immediately in either profit or loss or other

comprehensive income, or to recognise them gradually in profit or loss.

This revised standard does not have any impact on the financial statements as the

Company and its subsidiaries already recognise actuarial gains and losses immediately in

other comprehensive income.

TFRS 10 Consolidated Financial Statements

TFRS 10 prescribes requirements for the preparation of consolidated financial statements

and replaces the content of TAS 27 Consolidated and Separate Financial Statements

dealing with consolidated financial statements. This standard changes the principles used

in considering whether control exists. Under this standard, an investor is deemed to have

control over an investee if it has rights, or is exposed, to variable returns from its

involvement with the investee, and it has the ability to direct the activities that affect the

amount of its returns, even if it holds less than half of the shares or voting rights. This

important change requires the management to exercise a lot of judgement when reviewing

whether the Company and its subsidiaries have control over investees and determining

which entities have to be included in preparation of the consolidated financial statements.


13

This standard does not have any impact on the Company’s and its subsidiaries’ financial

statements.

TFRS 12 Disclosure of Interests in Other Entities

This standard stipulates disclosures relating to an entity’s interests in subsidiaries, joint

arrangements and associates, including structured entities. This standard therefore has no

financial impact on the financial statements of the Company and its subsidiaries.

TFRS 13 Fair Value Measurement

This standard provides guidance on how to measure fair value and stipulates disclosures

related to fair value measurement. Entities are to apply the guidance under this standard if

they are required by other financial reporting standards to measure their assets or liabilities

at fair value. The effects of the adoption of this standard are to be recognised

prospectively.

This standard does not have any significant impact on the Company’s and its subsidiaries’

financial statements.

(b) Financial reporting standard that will become effective in the future

During the current year, the Federation of Accounting Professions issued a number of the

revised (revised 2015) and new financial reporting standards and accounting treatment

guidance which is effective for fiscal years beginning on or after 1 January 2016. These

financial reporting standards were aimed at alignment with the corresponding International

Financial Reporting Standards. The Company’s and its subsidiaries' management believe

that the revised and new financial reporting standards and accounting treatment guidance

will not have any significant impact on the financial statements when it is initially applied.

4. Significant accounting policies

4.1 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.

Interest income

Interest income is recognised on an accrual basis based on the effective interest rate.

Dividends

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

14

4.2 Cash and cash equivalents

Cash and cash equivalents consist of cash in hand and at banks, and all highly liquid

investments with an original maturity of three months or less and not subject to withdrawal

restrictions.

4.3 Trade and other receivables

Trade and other receivables 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

debt aging.

4.4 Inventories

Finished goods and work in process are valued at the lower of cost (under the weighted

average method) and net realisable value. The cost of inventories is measured using the

standard cost method, which approximates actual cost and includes all production costs

and attributable factory overheads.

Raw materials, spare parts and factory supplies are valued at the lower of average cost

and net realisable value and are charged to production costs whenever consumed.

4.5 Investments

a) Investments in non-marketable equity securities, which the Company classifies as

other investments, are stated at cost net of allowance for impairment loss (if any).

b) Investments in subsidiaries are accounted for in the separate financial statements

using the cost method.

4.6 Investment properties - land

Investment properties are measured initially at cost, including transaction costs. Subsequent

to initial recognition, investment properties are stated at cost less allowance for loss on

impairment (if any).

On disposal of investment properties, the difference between the net disposal proceeds

and the carrying amount of the asset is recognised in profit or loss in the period when the

asset is derecognised.


15

4.7 Property, plant and equipment/Depreciation

Land is stated at cost. Buildings and equipment are stated at cost less accumulated

depreciation and allowance for loss on impairment of assets (if any).

Depreciation of plant and equipment is calculated by reference to their costs on the straight-

line basis over the following estimated useful lives:

Buildings - 30 years

Buildings improvements - 5 and 20 years

Machinery and equipment - 3 - 10 years

Furniture and office equipment - 4 and 5 years

Motor vehicles - 4 and 5 years

Depreciation is included in determining income.

No depreciation is provided on land and assets under installation and construction.

4.8 Intangible assets

Computer software is measured at cost. Following initial recognition, computer software is

carried at cost less any accumulated amortisation and allowance for impairment losses

(if any).

Computer software with finite life is amortised on a straight-line basis over the useful life of

10 years and tested for impairment whenever there is an indication that the computer

software may be impaired. The amortisation period and the amortisation method of such

computer software are reviewed at least at each financial year end. The amortisation

expense is charged to profit or loss.

4.9 Related party transactions

Related parties comprise enterprises and individuals that control, or are controlled by, the

Company, whether directly or indirectly, or which are under common control with the

Company.

They also include associated company and individuals which directly or indirectly own a

voting interest in the Company that gives them significant influence over the Company, key

management personnel, directors, and officers with authority in the planning and direction

of the Company’s operations.

16

4.10 Long-term leases

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 long-

term payables, while the interest element is charged to profit or loss over the lease period.

The assets acquired under finance leases is depreciated over the useful life of the lease

assets.

Leases of property, plant or equipment which do not transfer substantially all the risks and

rewards of ownership are classified as operating leases. Operating lease payments are

recognised as an expense in profit or loss on a straight line basis over the lease term.

4.11 Foreign currencies

The consolidated and separate financial statements are presented in Baht, which is also

the Company’s functional currency. Items of each entity included in the consolidated

financial statements are measured using the functional currency of that entity.

Transactions in foreign currencies are translated into Baht at the exchange rate ruling at

the date of the transaction. Monetary assets and liabilities denominated in foreign currencies

are translated into Baht at the exchange rate ruling at the end of reporting period.

Gains and losses on exchange are included in determining income.

4.12 Impairment of assets

At the end of each reporting period, the Company and its subsidiaries perform impairment

reviews in respect of the property, plant and equipment and other intangible assets

whenever events or changes in circumstances indicate that an asset may be impaired.

An impairment loss is recognised when the recoverable amount of an asset, which is

the higher of the asset’s fair value less costs to sell and its value in use, is less than

the carrying amount.

An impairment loss is recognised in profit or loss.

4.13 Employee benefits

Short-term employee benefits

Salaries, wages, bonuses and contributions to the social security fund are recognised as

expenses when incurred.


17

Post-employment benefits

Defined contribution plans

The Company, its subsidiaries and theirs employees have jointly established a provident fund.

The fund is monthly contributed by employees and by the Company and its subsidiaries. The

fund’s assets are held in a separate trust fund and the Company’s and its subsidiaries’

contributions are recognised as expenses when incurred.

Defined benefit plans

The Company and its subsidiaries have obligations in respect of the severance payments it

must make to employees upon retirement under labor law. The Company and its

subsidiaries treat these severance payment obligations as a defined benefit plan.

The obligation under the defined benefit plan is determined by a professionally qualified

independent actuary based on actuarial techniques, using the projected unit credit method.

Actuarial gains and losses arising from post-employment benefits are recognised

immediately in other comprehensive income.

4.14 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.

4.15 Income tax

Income tax expense represents the sum of corporate income tax currently payable and

deferred tax.

Current tax

Current income tax is provided in the accounts at the amount expected to be paid to the

taxation authorities, based on taxable profits determined in accordance with tax legislation.

Deferred tax

Deferred income tax is provided on temporary differences between the tax bases of assets

and liabilities and their carrying amounts at the end of each reporting period, using the tax

rates enacted at the end of the reporting period.

18

The Company and its subsidiaries recognise deferred tax liabilities for all taxable temporary

differences while they recognise deferred tax assets for all deductible temporary

differences and tax losses carried forward to the extent that it is probable that future

taxable profit will be available against which such deductible temporary differences and tax

losses carried forward can be utilised.

At each reporting date, the Company and its subsidiaries review and reduce the carrying

amount of deferred tax assets to the extent that it is no longer probable that sufficient

taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

The Company and its subsidiaries record deferred tax directly to shareholders' equity if the

tax relates to items that are recorded directly to shareholders' equity.

4.16 Derivatives

Forward exchange contracts

Forward currency contracts are presented in the financial statements at fair value. Any

gains or losses arising from changes in the fair value of those forward currency contracts

are recorded in profit or loss.

Price hedging contracts

Forward price hedging contracts and option contracts are presented in the financial

statements at fair value. Any gains or losses arising from changes in the fair value of those

forward currency contracts are recorded in profit or loss.

4.17 Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in

an orderly transaction between buyer and seller (market participants) at the measurement

date. The Company and its subsidiaries apply a quoted market price in an active market to

measure their assets and liabilities that are required to be measured at fair value by

relevant financial reporting standards. Except in case of no active market of an identical

asset or liability or when a quoted market price is not available, the Company and its

subsidiaries measure fair value using valuation technique that are appropriate in the

circumstances and maximises the use of relevant observable inputs related to assets and

liabilities that are required to be measured at fair value.


19

All assets and liabilities for which fair value is measured or disclosed in the financial

statements are categorised within the fair value hierarchy into three levels based on

categorise of input to be used in fair value measurement as follows:

Level 1 - Use of quoted market prices in an observable active market for such assets or

liabilities

Level 2 - Use of other observable inputs for such assets or liabilities, whether directly or

indirectly

Level 3 - Use of unobservable inputs such as estimates of future cash flows

At the end of each reporting period, the Company and its subsidiaries determine whether

transfers have occurred between levels within the fair value hierarchy for assets and

liabilities held at the end of the reporting period that are measured at fair value on a

recurring basis.

5. Significant accounting judgements and estimates

The preparation of financial statements in conformity with financial reporting standards at

times requires management to make subjective judgements and estimates regarding

matters that are inherently uncertain. These judgements and estimates affect reported

amounts and disclosures and actual results could differ from these estimates. Significant

judgements and estimates are as follows:

Consolidation of subsidiary that the Company holds less than half of shares

The management of the Company determined that the Company has control over Power

Plas Company Limited, even though the Company holds 49% of shares and voting rights

that is less than half of shares and voting rights. This is because the Company is a major

shareholder and has the ability to direct the significant activities, while other shareholders

are only minor shareholders. As a result, Power Plas Company Limited is deemed to be a

subsidiary of the Company and has to be included in the consolidated financial statements

from the date on which the Company assumed control.

Leases

In determining whether a lease is to be classified as an operating lease or finance lease,

the management is required to use judgement regarding whether significant risk and

rewards of ownership of the leased asset has been transferred, taking into consideration

terms and conditions of the arrangement.

20

Allowance for doubtful accounts

In determining an allowance for doubtful accounts, the management needs to make

judgement and estimates based upon, among other things, past collection history, aging

profile of outstanding debts and the prevailing economic condition.

Fair value of financial instruments

In determining the fair value of financial instruments recognised in the statement of

financial position that are not actively traded and for which quoted market prices are not

readily available, the management exercise judgement, using a variety of valuation

techniques and models. The input to these models is taken from observable markets, and

includes consideration of credit risk (bank and counterparty, both) liquidity, correlation and

longer-term volatility of financial instruments. Change in assumptions about these factors

could affect the fair value recognised in the statement of financial position and disclosures

of fair value hierarchy.

Property plant and equipment/Depreciation

In determining depreciation of plant and equipment, the management is required to make

estimates of the useful lives and residual values of the plant and equipment and to review

estimate useful lives and residual values when there are any changes.

In addition, the management is required to review property, plant and equipment for

impairment on a periodical basis and records impairment losses when it is determined that

their recoverable amount is lower than the carrying amount. This requires judgements

regarding forecast of future revenues and expenses relating to the assets subject to the

review.

Deferred tax assets

Deferred tax assets are recognised for deductible temporary differences and unused tax

losses to the extent that it is probable that taxable profit will be available against which the

temporary differences and losses can be utilised. Significant management judgement is

required to determine the amount of deferred tax assets that can be recognised, based

upon the likely timing and level of estimate future taxable profits.

Post-employment benefits under defined benefit plans

The obligation under the defined benefit plan is determined based on actuarial techniques.

Such determination is made based on various assumptions, including discount rate, future

salary increase rate, mortality rate and staff turnover rate.


21

Litigation and tax assessments

The Company has contigent liabilities as a result of tax assessments and a subsidiary has

contingent liabilities as a result of litigation. The Company’s and its subsidiaries’ management have used judgement to assess of the results of the litigation and tax

assessments and believe that no loss will result. Therefore no contingent liabilities are

recorded as at the end of reporting period.

6. Related party transactions

During the years, the Company and its subsidiaries had significant business transactions

with related parties. Such transactions, which are summarised below, arose in the ordinary

course of business and were concluded on commercial terms and bases agreed upon

between the Company and those related parties.

(Unit: Million Baht)

Consolidated

financial statements

Separate

financial statements Pricing policy

2015 2014 2015 2014

Transactions with subsidiaries

(eliminated from the consolidated

financial statements)

Sales of goods - - 2,177 1,837 With reference to market prices

Purchases of raw materials - - 856 992 With reference to market prices

Other income - - 16 33 Contract prices

Rental expense - - 1 1 Contract prices

As at 31 December 2015 and 2014, the balances of the accounts between the Company

and those related companies are as follows:

(Unit: Thousand Baht)

Consolidated


Separate


2015 2014 2015 2014

Trade and other receivables - related parties (Note 8)

Subsidiaries - - 174,764 133,219

Trade and other payables - related parties (Note 17)

Subsidiaries - - 57,232 117,395

22

Directors and management’s benefits

During the year ended 31 December 2015 and 2014, the Company and its subsidiaries had

employee benefit expenses payable to their directors and management as below.


Consolidated


Separate


2015 2014 2015 2014

Short-term employee benefits 126,656 114,640 54,516 51,948

Post-employment benefits 2,910 2,753 1,697 1,642

Total 129,566 117,393 56,213 53,590

Guarantee obligations on behalf of related party

The Company has guarantee obligations on behalf of its subsidiary, as described in Note

27.3 to the financial statements.

7. Cash and cash equivalents

The balances of cash and cash equivalents as at 31 December 2015 and 2014 are as

follows:


Consolidated


Separate


2015 2014 2015 2014

Cash 1,478 598 1,333 454

Bank deposits 97,987 240,296 12,866 23,719

Total 99,465 240,894 14,199 24,173

As at 31 December 2015, bank deposits in saving accounts and fixed deposits carried

interests between 0.05 and 0.75 percent per annum (2014: between 0.01 and 2.55 percent

per annum).


23

8. Trade and other receivables

The balances of trade and other receivables as at 31 December 2015 and 2014 are as

follows:


Consolidated financial statements Separate financial statements

2015 2014 2015 2014

Trade receivables - related parties

Aged on the basis of due dates

Not yet due - - 155,452 105,041

Past due

Up to 3 months - - 14,480 11,432

Total trade receivables - related parties - - 169,932 116,473

Trade receivables - unrelated parties

Aged on the basis of due dates

Not yet due 394,862 288,004 172,020 159,836

Past due

Up to 3 months 236,904 243,713 39,944 42,278

3 - 6 months 5,583 761 3,597 5

6 - 12 months 3,896 2,596 3,697 995

Over 12 months 30,704 42,549 2,817 227

Total 671,949 577,623 222,075 203,341

Less: Allowance for doubtful debts (24,628) (41,335) - -

Total trade receivables - unrelated parties, net 647,321 536,288 222,075 203,341

Total trade receivable - net 647,321 536,288 392,007 319,814

Other receivables

Other receivables - related parties - - 4,832 16,746

Other receivables - unrelated parties 5,204 2,485 666 1,696

Advance payment 1,874 2,373 403 673

Others - 184 - -

Total 7,078 5,042 5,901 19,115

Trade and other receivables - net 654,399 541,330 397,908 338,929

24

9. Inventories

The balances of inventories as at 31 December 2015 and 2014 are as follows:



Cost

Reduce cost to

net realisable value Inventories - net

2015 2014 2015 2014 2015 2014

Finished goods 166,850 272,179 (939) (24,657) 165,911 247,522

Work in process 125,834 149,501 - (2,838) 125,834 146,663

Raw materials 521,035 623,691 (17,652) (8,621) 503,383 615,070

Spare parts and factory

supplies 30,557 30,678 (3,556) (1,075) 27,001 29,603

Raw material in transit 38,289 76,531 - - 38,289 76,531

Total 882,565 1,152,580 (22,147) (37,191) 860,418 1,115,389



Cost

Reduce cost to

net realisable value Inventories - net

2015 2014 2015 2014 2015 2014

Finished goods 89,768 162,161 (939) (8,350) 88,829 153,811

Work in process 125,834 151,438 - (2,838) 125,834 148,600

Raw materials 226,238 291,553 (17,334) (1,451) 208,904 290,102

Spare parts and factory

supplies 26,508 25,856 (3,556) (1,075) 22,952 24,781

Raw material in transit 38,289 75,324 - - 38,289 75,324

Total 506,637 706,332 (21,829) (13,714) 484,808 692,618

During the current year, the Company and it subsidiaries reverse the write-down of cost of

inventories by Baht 15 million (The Company only of 2014: Baht 8 million), and reduced the

amount of inventories recognised as expenses during the year. The Company reduced cost

of inventories by Baht 8 million (The Company and its subsidiaries of 2014: Baht 0.3

million), to reflect the net realisable value. This was included in cost of sales.


25

10. Investments in subsidiaries

10.1 Details of investments in subsidiaries as presented in separate financial statements are as

follows:


Company’s name Paid-up capital

Shareholding

percentage Cost

Dividend received

during the year

2015 2014 2015 2014 2015 2014 2015 2014

(%) (%)

3K Products Company Limited 8,000 8,000 100 100 8,000 8,000 20,000 34,997

Thai Nonferrous Metal Company

Limited 250,000 250,000 97 97 229,632 229,632 19,400 -


Limited - 5,000 - 100 - 5,000 - -

Power Plas Company Limited 65,000 65,000 49 49 31,850 31,850 - -

Total 269,482 274,482 39,400 34,997

10.2 Details of investments in subsidiaries that have material non-controlling interests


Company’s name

Proportion of equity

interest held by

non-controlling

interests

Accumulated balance

of

non-controlling

interests

Profit/loss allocated to

non-controlling

interests during the

year

Dividend paid to non-

controlling interests

during the year

2015 2014 2015 2014 2015 2014 2015 2014

(%) (%)

Thai Nonferrous Metal Company

Limited

3 3 8,615 9,796 (349) 2,091 600 -

Power Plas Company Limited 51 51 37,415 36,622 1,287 7,827 - -

26

10.3 Summarised financial information that based on amounts before inter-company elimination

about subsidiaries that have material non-controlling Summarised information about financial position



Company Limited Power Plas Company Limited

31 December

2015

31 December

2014

31 December

2015

31 December

2014

Current assets 410,142 490,720 33,760 41,123

Non-current assets 231,943 195,043 77,180 77,963

Current liabilities 353,138 367,075 34,731 34,622

Non-current liabilities 11,685 5,557 2,192 12,003

Summarised information about comprehensive income


For the year ended 31 December



2015 2014 2015 2014

Revenue 856,061 1,146,575 135,133 170,595

Profit (loss) (11,635) 69,701 2,524 15,348

Other comprehensive income (4,234) (150) (968) (115)

Total comprehensive income (15,869) 69,551 1,556 15,233

Summarised information about cash flow


For the year ended 31 December



2015 2014 2015 2014

Cash flow from operating activities 93,063 17,963 5,474 32,652

Cash flow used in investing activities (68,175) (11,345) (12,538) (3,995)

Cash flow used in financing activities (25,000) (20,000) (11,375) (11,375)

Net increase (decrease) in cash and

cash equivalents (112) (13,382) (18,439) 17,282


27

Investments in 3K Traction Battery Company Limited

On 12 November 2015, the Company entered into share sale and purchase agreement to sell

all ordinary shares of 3K Traction Battery Company Limited to 3K Products Company which is

a subsidiary company. The shares were transferred on 12 November 2015 with a total value of

Baht 5.1 million. The Company therefore had a gain on sale of this investment amounting to

Baht 0.1 milion, recorded in other income.

The value of the disposed assets and liabilities in the financial statements of 3K Traction

Battery Company Limited as at the disposal date is presented below.


Cash and cash equivalents 4,292

Trade and other receivables 248

Inventories 75

Other current assets 3

Rental building improvements and equipment 894

Trade and other payables (153)

Tax payable (162)

Other current liabilities (57)

Total net assets (equivalent to selling price) 5,140

Net book value of investment in subsidiary (5,000)

Gain on sales of investments in subsidiary 140

11. Investment properties - land


Consolidated


Separate


2015 2014 2015 2014

Balance at beginning of year 300,118 300,118 94,371 94,371

Purchase 7,000 - - -

Balance at end of year 307,118 300,118 94,371 94,371

During the current year, 3K Products Company Limited received settlement of Baht 7

million from the debtor, in the form of land and building thereon.

The Company and its subsidiaries believe that the fair value of investment properties as at

31 December 2015 is close to the book value as stated in the statement of financial position.

28

12. Property, plant and equipment



Land

Buildings and

buildings

improvements

Machine and

equipment

Furniture

and office

equipment

Motor

vehicles

Assets under

installation

and

construction Total

Cost:

As at 1 January 2014 310,408 715,559 2,082,786 162,754 68,362 67,680 3,407,549

Addition - 83 3,674 6,420 6,409 48,115 64,701

Disposals/ write-off - - (9,159) (344) (20,143) (1,382) (31,028)

Transfers - 5,480 56,199 11,912 - (73,591) -

As at 31 December 2014 310,408 721,122 2,133,500 180,742 54,628 40,822 3,441,222

Additions - 2,044 6,121 7,687 2,197 165,411 183,460

Disposals/ write-off - - (4,508) (31) (4,365) - (8,904)

Transfers - 3,587 30,413 55 - (34,055) -

As at 31 December 2015 310,408 726,753 2,165,526 188,453 52,460 172,178 3,615,778

Accumulated depreciation:

As at 1 January 2014 - 355,921 1,242,298 135,797 54,109 - 1,788,125

Depreciation for the year - 19,250 156,947 14,563 5,961 - 196,721

Depreciation on disposals/

write-off - - (8,855) (246) (20,054) - (29,155)

As at 31 December 2014 - 375,171 1,390,390 150,114 40,016 - 1,955,691


Depreciation on disposals/

write-off - - (3,848) (28) (3,070) - (6,946)

As at 31 December 2015 - 395,286 1,541,197 162,206 41,856 - 2,140,545

Net book value:

As at 31 December 2014 310,408 345,951 743,110 30,628 14,612 40,822 1,485,531

As at 31 December 2015 310,408 331,467 624,329 26,247 10,604 172,178 1,475,233

Depreciation for the year

2014 (Baht 180 million include in manufacturing cost, and the balance in selling and administrative expenses) 196,721



29



Land

Buildings and

buildings

improvements

Machine and

equipment

Furniture

and office

equipment

Motor

vehicles

Assets under

installation Total

Cost:

As at 1 January 2014 201,085 560,589 1,679,640 114,238 36,849 66,379 2,658,780

Additions - - 815 3,216 3,010 39,927 46,968

Disposals / write-off - - (6,636) (71) (17,986) - (24,693)

Transfers - 5,142 53,180 12,901 - (71,223) -

As at 31 December 2014 201,085 565,731 1,726,999 130,284 21,873 35,083 2,681,055

Additions - - 2,289 5,997 1,326 93,514 103,126

Disposals - - (1,466) - (3,924) - (5,390)

Transfers - 1,687 25,571 55 - (27,313) -

As at 31 December 2015 201,085 567,418 1,753,393 136,336 19,275 101,284 2,778,791

Accumulated depreciation:

As at 1 January 2014 - 273,944 1,017,464 92,897 31,603 - 1,415,908


Depreciation on disposals /

write-off - - (6,593) (64) (17,977) - (24,634)

As at 31 December 2014 - 289,264 1,134,627 105,603 15,641 - 1,545,135


Depreciation on disposals - - (1,006) - (2,761) - (3,767)

As at 31 December 2015 - 304,761 1,254,414 115,437 14,535 - 1,689,147

Net book value:

As at 31 December 2014 201,085 276,467 592,372 24,681 6,232 35,083 1,135,920

As at 31 December 2015 201,085 262,657 498,979 20,899 4,740 101,284 1,089,644

Depreciation for the year



As at 31 December 2015, the subsidiaries had machinery and vehicles with net book value

of Baht 30 million (2014: Baht 35 million) which were acquired under finance lease

agreements.

As at 31 December 2015, certain items of plant and equipment were fully depreciated but

are still in use. The gross carrying amount before deducting accumulated depreciation of

those assets amounted to approximately Baht 924 million (2014: Baht 884 million) (The

Company only: Baht 750 million, 2014: Baht 721 million).

30

13. Intangible assets – Computer software

Details of intangible assets which are computer software as follows:


Consolidated


Separate


2015 2014 2015 2014

Cost

1 January 64,164 57,366 56,866 50,182

Additions 1,380 6,798 1,020 6,684

31 December 65,544 64,164 57,886 56,866

Accumulated amortisation

1 January 32,799 28,467 29,033 25,193

Amortisation for the years 4,550 4,332 4,050 3,840

31 December 37,349 32,799 33,083 29,033

Net book value as at 31 December 28,195 31,365 24,803 27,833

Amortisation expenses

Included in selling and administrative expenses 4,550 4,332 4,050 3,840

As at 31 December 2015, certain items of computer software were fully amortised but are

still in use. The gross carrying amount before deducting accumulated amortisation of those

assets amounted to approximately Baht 11 million (2014: Baht 11 million) (The Company

only: Baht 10 million, 2014: Baht 10 million).

14. Other non-current assets

The balances of other non-current assets as at 31 December 2015 and 2014 are as follows:


Consolidated


Separate


2015 2014 2015 2014

Export subsidy receivable 2,635 6,681 2,635 6,681

Deferred expenses 9,807 9,235 - -

Others 7,034 6,596 920 922

Total other non-current assets 19,476 22,512 3,555 7,603


31

15. Short-term loans from financial institutions

The balances of short-term loans from financial institutions as at 31 December 2015 and

2014 are as follows:


Interest rate

Consolidated


Separate


(percent per annum) 2015 2014 2015 2014

Promissory notes MMR 875,000 1,163,500 400,000 490,000

Trust receipts MMR 47,612 309,105 47,612 309,105

Total 922,612 1,472,605 447,612 799,105

Short-term loans from financial institutions are unsecured. Under those agreements, the Company and its subsidiaries have to comply with certain conditions and restrictions

stipulated in the agreements.

16. Trade and other payables

The balances of trade and other payables as at 31 December 2015 and 2014 are as

follows:


Consolidated


Separate


2015 2014 2015 2014

Trade payables - related parties - - 57,077 116,007

Trade payables - unrelated parties 225,048 233,078 219,094 221,008

Other payables - related parties - - 155 1,388

Other payables - unrelated parties 43,991 40,824 32,163 27,369

Accrued expenses 184,871 176,373 94,588 99,261

Accrued promotions 82,140 41,962 2,922 -

Advance received from customers 14,723 15,708 14,284 15,505

Total trade and other payables 550,773 507,945 420,283 480,538

32

17. Liabilities under finance lease agreements



2015 2014

Liabilities under finance lease agreements 11,375 22,797

Less: Deferred interest (313) (1,185)

Total 11,062 21,612

Less: Portion due with one year (11,062) (10,550)

Liabilities under finance lease agreements - net of

current portion - 11,062

The subsidiaries have entered into the finance lease agreements with leasing companies

for rental of the motor vehicles and machinery for use in its operation, whereby it is

committed to pay rental on a monthly basis. The terms of the agreements are generally

between 2 and 5 years.

Future minimum lease payments required under the finance lease agreements of the

subsidiaries were as follows:




Less than

1 year

1 - 5 years

Total

Future minimum lease payments 11,375 - 11,375

Deferred interest (313) - (313)

Present value of future minimum lease payments 11,062 - 11,062




Less than

1 year

1 - 5 years

Total

Future minimum lease payments 11,422 11,375 22,797

Deferred interest (872) (313) (1,185)

Present value of future minimum lease payments 10,550 11,062 21,612


33

18. Provision for long-term employee benefits

Provision for long-term employee benefits, which represents compensation payable to

employees after they retire form the Company and its subsidiaries, was as follows:


Consolidated


Separate


2015 2014 2015 2014

Provision for long-term employee benefits at

beginning of year 55,202 53,214

31,068

30,686

Included in profit or loss:

Current service cost 5,756 5,421 3,161 2,977

Interest cost 2,045 1,882 1,107 1,044

Included in other comprehensive income:

Actuarial (gain) loss arising from

Demographic assumptions changes - (5,475) - (1,321)

Financial assumptions changes 8,273 (2,091) 3,657 (1,046)

Experience adjustments 13,449 3,520 5,524 (579)

Benefits paid during the year (4,551) (1,269) (3,115) (693)

Provision for long-term employee benefits at

end of year 80,174 55,202

41,402

31,068

Line items in profit or loss under which long-term employee benefit expenses are

recognised are as follows:


Consolidated


Separate


2015 2014 2015 2014

Cost of sales 2,718 2,512 2,056 1,892

Selling and administrative expenses 5,083 4,791 2,212 2,129

Total expenses recognised in profit or loss 7,801 7,303 4,268 4,021

The Company and its subsidiaries expect to pay Baht 2 million of long-term employee benefits

during the next year (2014: Baht 6 million) (The Company only: Baht 1 million (2014: Baht 4

million)).

As at 31 December 2015, the weighted average duration of the liabilities for long-term

employee benefit is 8 - 11 years (2014: 8 - 11 years) (The Company only: 8 years (2014: 8

years)).

34

Significant actuarial assumptions are summarised below:

Consolidated financial statements Separate financial statements

2015 2014 2015 2014

(% per annum) (% per annum) (% per annum) (% per annum)

Discount rate 2.5 - 2.6 3.8 - 4.0 2.5 3.8

Future salary increase rate 3.0 - 6.5 3.0 - 6.5 4.0 - 5.0 4.0 - 5.0

Employee turnover rate

(depending on age of employees) 0.0 - 60.0 0.0 - 60.0 0.0 - 60.0 0.0 - 60.0

The result of sensitivity analysis for significant assumptions that affect the present value of

the long-term employee benefit obligation from post-employment benefits plan as at

31 December 2015 are summarised below:


Consolidated


Separate


Increase 0.5% Decrease 0.5% Increase 0.5% Decrease 0.5%

Discount rate 76,966 83,479 39,927 42,972

Salary increase rate 83,366 77,036 42,927 39,954

Increase 10% Decrease 10% Increase 10% Decrease10%

Turnover rate 77,851 82,574 40,133 42,806

19. 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 profit 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.

At present, the statutory reserve has fully been set aside.


35

20. Expenses by nature

Significant expenses classified by nature are as follows:


Consolidated


Separate


2015 2014 2015 2014

Salaries and wages and other employee benefits 604,446 615,958 367,610 390,217

Depreciation and amortisation 200,253 204,780 151,829 157,701

Sales promotion expenses 204,726 178,313 25,284 54,204

Excise tax expenses 248,347 215,920 248,347 215,920

Repair and maintenance expenses 50,694 52,660 42,233 38,061

Electricity expenses 149,805 167,739 136,634 146,705

Shipping expense 84,956 65,381 43,897 33,376

Raw materials and consumables used and

purchase of finished goods 2,833,986 3,119,169 2,940,427 3,128,774

Changes in inventories of finished goods and work

in process increase (decrease) (128,996) (32,696) (97,997) 20,023

21. Income tax

Income tax expenses for the years ended 31 December 2015 and 2014 are made up as

follows:


Consolidated


Separate


2015 2014 2015 2014

Current income tax:

Current income tax charge 58,245 14,905 41,164 7,897

Adjustment in respect of income tax of

previous year 370 74 - -

Total 58,615 14,979 41,164 7,897

Deferred tax:

Relating to origination and reversal of

temporary differences 3,023 10,830 1,939 901

Utilisation of tax loss carried forward

during the year 599 20,599 - 13,472

Total deferred tax 3,622 31,429 1,939 14,373

Income tax expenses reported in the

statements of comprehensive income 62,237 46,408 43,103 22,270

36

The amounts of income tax relating to each component of other comprehensive income for

the years ended 31 December 2015 and 2014 are as follows:


Consolidated


Consolidated


2015 2014 2015 2014

Deferred tax relating to actuarial gain (loss) (4,121) 832 (1,836) 589

The reconciliation between accounting profit and income tax expenses in shown below.


Consolidated


Separate


2015 2014 2015 2014

Accounting profit before tax 283,090 261,507 242,176 139,573

Applicable tax rate 20% 20% 20% 20%

Accounting profit before tax multiplied by Income tax rate 56,618 52,301 48,435 27,915

Adjustment in respect of income tax expense of previous year 370 74 - -

Utilisation of previously unrecognised reduction of inventories

to net realisable value (260) - - -

Effects of:

Promotional privileges (Note 22) (93) (11,144) - -

Non-deductible expenses 4,727 4,567 2,547 1,123

Exemption of income - - (7,879) (6,999)

Others 875 610 - 231

Total 5,509 (5,967) (5,332) (5,645)

Income tax expenses reported in the statement of

comprehensive income 62,237 46,408 43,103 22,270


37

The components of deferred tax assets and deferred tax liabilities are as follows:


Statements of financial position

Consolidated


Separate


As at

31 December

2015

As at

31 December

2014

As at

31 December

2015

As at

31 December

2014

Deferred tax assets

Allowance for doubtful accounts 4,890 8,233 - -

Reduction of inventory to net realisable value 4,366 1,824 4,366 2,743

Provision for long-term employee benefits 15,596 10,852 8,280 6,214

Unused tax loss 20,596 20,125 - -

Unrealised profit from inter-sales transactions 6,078 5,448 - -

Other 1,095 4,887 1,095 4,887

Total 52,621 51,369 13,741 13,844

Deferred tax liabilities

Differences of depreciation for accounting

and tax purpose

(4,255)

(3,501) - -

Total (4,255) (3,501) - -

Deferred tax assets - net 48,366 47,868 13,741 13,844

22. Promotional privileges

The Company has received promotional privileges from the Board of Investment for the

manufacture of batteries for vehicles, pursuant to the investment promotion certificate No.

9005(2)/2554 issued on 7 May 2011. Subject to certain imposed conditions, the privileges

include an exemption from corporate income tax for a period of 3 years from the date the

promoted operations commenced generating revenues and exemption of import duty on

machinery as approved by the board. Currently, the Company has not commenced the first

earning operating income.

Thai Nonferrous Metal Company Limited, which is a subsidiary, has received promotional

privileges from the Board of Investment for its recycle production of unused materials, pursuant

to the investment promotion certificate No. 1134(2)/2550 issued on 8 February 2007. Subject

to certain imposed conditions, the privileges include an exemption from corporate income tax

for a period of 8 years from the date the promoted operations commenced generating

revenues (8 January 2008) and exemption of import duty on machinery as approved by the

board.

38

Power Plas Company Limited, which is a subsidiary, has received promotional privileges

from the Board of Investment for the manufacture of plastic part for industries, pursuant to

the investment promotion certificate No. 2406(5)/2553 issued on 22 December 2010.

Subject to certain imposed conditions, the privileges include an exemption from corporate

income tax for a period of 8 years from the date the promoted operations commenced

generating revenues (13 January 2011) and exemption of import duty on machinery as

approved by the board.

23. Earnings per share

Basic earnings per share is calculated by dividing profit for the year attributable to equity

holders of the Company (excluding other comprehensive income) by the weighted average

number of ordinary shares in issue during the year.

24. Segment information

Operating segment information is reported in a manner consistent with the internal reports

that are regularly reviewed by the chief operating decision maker in order to make

decisions about the allocation of resources to the segment and assess its performance.

The chief operating decision maker has been identified as the President.

The Company and its subsidiaries are principally engaged in the manufacture and distribution

of batteries. Its operations are carried on only in Thailand. Segment performance is measured

based on operating profit or loss, on a basis consistent with that used to measure operating

profit or loss in the financial statements. As a result, all of the revenues, operating profits and assets as reflected in these financial statements pertain exclusively to the

aforementioned reportable operating segment and geographical area. Export sales for the

year ended 31 December 2015 amounted to Baht 2,122 million (2014: Baht 2,374 million).

Major customers

For the year 2015, the Company and its subsidiaries have revenue from two major

customers in amount of Baht 734 million and Baht 432 million (2014: Baht 905 million and

Baht 494 million derived from two major customers).

25. Provident fund

The Company and its subsidiaries and theirs employees have jointly established a

provident fund in accordance with the Provident Fund Act B.E. 2530. Details are as follow:

Company name The fund is managed by % per annum of basic salary

Thai Storage Battery Public Company

Limited

UOB Asset Management

(Thailand) Company Limited

3

3K Products Company Limited TMB Asset Management Company

Limited

2-5

Thai Nonferrous Metal Company Limited UOB Asset Management

(Thailand) Company Limited

3


39

Both the Company and its subsidiaries and employees contribute to the fund monthly. The

fund will be paid to employees upon termination in accordance with the fund rules. During

the year 2015, the Company and its subsidiaries contributed Baht 6 million (2014: Baht 7

million) (The Company only: Baht 4 million, 2014: Baht 4 million) to the fund.

26. Dividends

Dividends Approved by Total Dividends Dividend per share

(Million Baht) (Baht per Share)

Final dividends for 2013 Annual General Meeting of the

shareholders on 24 April 2014 60 3

Final dividends for 2014 Annual General Meeting of the

shareholders on 23 April 2015 60 3

27. Commitments and contingent liabilities

27.1 Capital commitments

As at 31 December 2015, the Company and its subsidiaries had capital commitments of

approximately Baht 8 million (31 December 2014: Baht 4 million) relating to the purchase of

machinery and equipment.

27.2 Operating lease commitments

The Company and its subsidiaries had entered into lease agreements in respect of the

lease of land, warehouse and motor vehicles. The term of the agreements is generally

between 1 and 5 years.

Future minimum rentals payable under these non-cancellable operating lease contracts

were as follows.


Consolidated


Separate


As at 31 December As at 31 December

2015 2014 2015 2014

Payable in

Up to 1 year 22 25 1 2

Over 1 and up to 5 years 15 33 - 1

40

27.3 Guarantees

As at 31 December 2015, the Company and its subsidiaries had outstanding bank

guarantees of approximately Baht 22 million (2014: Baht 22 million) (The Company only:

Baht 20 million (2014: Baht 21 million)) issued by banks on behalf of the Company and its

subsidiaries in respect of certain performance bonds as required in the normal course of

their businesses.

The Company and its subsidiaries have been granted various types of credit facilities, by

several financial institutions of which Baht 4,475 million (2014: Baht 4,045 million)

(The Company only: Baht 2,875 million (2014: Baht 2,470 million)) has not been utilised. Most

of the facilities have been cross-guaranteed by the Company and its subsidiaries.

27.4 Tax assessment

On 4 January 2013, the Company received 135 notifications from the Customs Department

concerning assessments of import duty, value added tax and surcharges on imports of raw

materials and machinery during the years 2007-2010. According to the notifications, the

Company had underpaid tax, and the Customs Department therefore required the Company

to pay import duty and value added tax of Baht 9.92 million and Baht 89.57 million,

respectively, totaling Baht 99.49 million, together with surcharges of Baht 60.12 million. The

payment amount was Baht 159.61 million in total.

The Company performed a preliminary review of its documentation and noted some

discrepancies, where the serial numbers of and the amounts per some import entry forms

specified in the tax assessment notifications from the Customs Department did not match

those per the Company’s documentation and accounting records. In addition, on 5 October

2010, the Company was informed by the customs officers who conducted the investigation that

the Company’s customs clearance agents had forged customs documents and receipts in

order to mislead the Company, causing the Company to believe that all documents were

genuine. The Company therefore requested all original supporting documents from the

Customs Department in order to file charges against the customs brokers. The Company

received three sets of supporting documents from the Customs Department and proceeded

with legal action against the customs clearance agents on 19 October 2010. The court of first

instance ruled that there were sufficient grounds under the Criminal Code to accept the lawsuit

against the customs clearance agents and their authorised representatives.


41

Based on the above facts, the management believes that the Company has taken complete

and appropriate action and has no intention to defraud a government agency. The

Company believes that the documents that it possesses had passed through customs

procedures and the receipts obtained from the Customs Department had been signed off by

a finance officer, and supporting documentation for the customs procedures had been

signed off by real customs officers. Moreover, the Customs Department would not have

released the cargo, had the Company not paid its due tax fully and accurately. In addition,

the Company's legal counsel believes that the Company will not incur losses as a result of

the above assessment. For these reasons, the management of the Company expects that

the tax dispute will not have any significant adverse impact on the Company.

27.5 Litigation

In 2013, a lawsuit was filed against a subsidiary with the Chachoengsao Provincial Court on

grounds related to breach of a sales and purchase contract with the plaintiff, who sought

damages of Baht 2.9 million from the subsidiary. On 7 January 2014, the Court of First

Instance ordered the subsidiary to pay the damages, and the subsidiary has paid them in

full. However, the subsidiary did not agree with the Court of First Instance's judgement and

therefore filed an appeal with the Appeal Court on 1 April 2014. The Appeal Court upheld

the decision of the Court of First Instance on 4 November 2014 and the subsidiary therefore

appealed the judgement of the Appeal Court to the Supreme Court on 26 December 2014.

The Supreme Court upheld the order of the Appeal Court on 10 February 2016. The

management of the subsidiary did not agree with the Supreme Court’s ruling, and lodged an appeal asking for explanation of the ruling from the Supreme Court. Therefore, the case is

not yet finalised. However, the independent legal counsel of the subsidiary believes that the

subsidiary will eventually win the case and the subsidiary has therefore recorded the

damages paid as “Other receivables" under the caption of “other current assets” in the

statements of financial position.

28. Fair value hierarchy

As at 31 December 2015, the Company and its subsidiaries had certain assets and

liabilities that were measured or disclosed at fair value using different levels of inputs as

follows:



/Separate financial statements

Level 1 Level 2 Level 3 Total

Financial assets measured at fair value

(Note 29)

Derivatives

Forward exchange contracts - 4,527 - 4,527

42

29. Financial instruments

29.1 Financial risk management

The Company’s financial instruments, as defined under Thai Accounting Standard

No.107 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash equivalents, trade and other receivable, investments, short-term loans and

liabilities under finance lease agreement. 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

and other receivable. The Company and its subsidiaries manage the risk by adopting

appropriate credit control policies and procedures and therefore do not expect to incur

material financial losses. In addition, the Company and its subsidiaries do not have high

concentrations of credit risk since they have a large customer base. The maximum

exposure to credit risk is limited to the carrying amounts of trade and other receivables as

stated in the statement of financial position.

Interest rate risk

The Company and its subsidiaries exposure to interest rate risk relates primarily to its cash

at banks, short-term loans borrowings and liabilities under finance lease agreement. Most

of the financial assets and liabilities bear floating interest rates or fixed interest rates which

are close to the market rate.

Significant financial assets and liabilities 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. (Unit: Million Baht)

Consolidated financial statements as at 31 December 2015

Fixed interest rates

Within 1-5 Floating Non-interest Effective

1 year years interest rate bearing Total interest rate

(% per annum.)

Financial Assets

Cash and cash equivalent - - 80 19 99 0.05 - 0.75

Trade and other receivables - - - 654 654 -

- - 80 673 753

Financial liabilities

Short-term loans from financial institutions - - 923 - 923 MMR

Trade and other payables - - - 551 551 -

Liabilities under finance lease agreements 11 - - - 11 5.19

11 - 923 551 1,485


43


Consolidated financial statements as at 31 December 2014

Fixed interest rates

Within 1-5 Floating Non-interest Effective

1 year years interest rate bearing Total interest rate

(% per annum.)

Financial Assets

Cash and cash equivalent 8 - 175 58 241 0.01 - 2.55

Trade and other receivables - - - 541 541 -

8 - 175 599 782


Short-term loans from financial institutions - - 1,473 - 1,473 MMR

Trade and other payables - - - 508 508 -

Liabilities under finance lease agreements 11 11 - - 22 5.19, 5.30

11 11 1,473 508 2,003


Separate financial statements as at 31 December 2015

Floating Non-interest Effective

interest rate bearing Total interest rate

(% per annum.)

Financial Assets

Cash and cash equivalent 12 2 14 0.13 - 0.63

Trade and other receivables - 398 398 -

12 400 412


Short-term loans from financial institutions 448 - 448 MMR

Trade and other payables - 420 420 -

448 420 868

44


Separate financial statements as at 31 December 2014

Floating Non-interest Effective

interest rate bearing Total interest rate

(% per annum.)

Financial Assets

Cash and cash equivalent 23 1 24 0.01 - 0.50

Trade and other receivables - 339 339 -

23 340 363


Short-term loans from financial institutions 799 - 799 MMR

Trade and other payables - 481 481 -

799 481 1,280

Foreign currency risk

The Company’s exposure to foreign currency risk relates primarily to purchase of major raw

materials and sales of goods which are denominated in foreign currencies. The Company

seeks to reduce this risk 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 denominated in foreign currencies are

summarised below.

Financial assets Financial liabilities Average exchange rate

Foreign currency as at as at as at

31 December

2015

31 December

2014

31 December

2015

31 December

2014

31 December

2015

31 December

2014

(Million) (Million) (Million) (Million) (Baht per 1 foreign currency unit)

US dollar 4 4 3 3 36.0886 32.9187

Japanese yen 21 9 3 3 0.2996 0.2734

Forward exchange contracts outstanding are summarised below.

Contractual exchange rate

As at Foreign currency Bought amount Sold amount Bought Sold

(Million) (Million) (Baht per 1 foreign currency unit)

31 December 2015 US dollar 4 1 35.8471 - 36.2041 36.2129 - 36.2329

Japanese yen - 57 - 0.2964 - 0.3004

31 December 2014 US dollar 24 26 33.0520 - 33.2421 32.7354 - 33.1814

Japanese yen - 28 - 0.2788 - 0.2822

The outstanding forward exchange contracts as at 31 December 2015 will be matured

within May 2016 to July 2016.


45

29.2 Fair values of financial instruments

Since the majority of the Company and its subsidiaries financial instruments are short-term

in nature or bear floating interest rates, their fair value is not expected to be materially

different from the amounts presented in statement of financial position.

30. Capital management

The primary objective of the Company’s capital management is to ensure that it has

appropriate capital structure in order to support its business and maximise shareholder

value. As at 31 December 2015, the Group's debt-to-equity ratio was 0.88:1 (2014: 1.19:1)

and the Company's was 0.67:1 (2014: 1.03:1).

31. Approval of financial statements

These financial statements have been approved by the Board of Directors to be issued

according to the established procedures via the Stock Exchange of Thailand on 25 February

2016.

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