INTEGRITY QUALITY SERVICE 0202 Table of Contents >> 3 Major Financial Ratio and Information 4 Report of the Board of Directors 7 Board of Directors 15 The Advisory Board / Board of Executive Committee Board of Audit Committee / Executive Officers 16 Direct Investment of Saha-Union in the Group Companies 18 Business Results and Five Years Financial Statistics 20 Structure of Income and Investment Types of Business Manufacturing 22 Textile 24 Footwear 26 Plastics, Rubber and Metal 28 Computer and Electronics Parts 30 Energy 33 Trading, Investment and Service International School 36 Structure of Shareholding 38 Structure of Management 48 Management Discussion and Analysis 54 Risk Factors 56 Directorsû Reporting 57 Report of the Audit Committee 58 Common Interested Persons and Connected Transactions 61 Report of Independent Auditor and Financial Statements 94 SET Information Reference Guide Under the Principles of Corporate Governance 95 General Information 99 SET Information Reference Guide under Form 56-2 100 Office Locations Major Financial Ratio and Information Saha-Union Public Company Limited (Consolidated) Unit : Million Baht 2004 2003 2002 (Restated) (Restated) Total Revenues 17,633.1 18,178.4 17,931.5 Total Sales 16,791.8 17,414.7 17,118.9 Gross Profit 1,802.3 2,234.6 2,303.4 Net Profit 424.5 980.8 988.9 Total Assets 20,730.4 19,316.2 17,700.3 Total Liabilities 6,788.7 5,621.4 4,474.2 Total Shareholderûs Equity 13,941.7 13,694.8 13,226.0 Earning Ratio (%) 2.41% 5.40% 5.51% Earning per Share (Baht) 1.46 3.37 3.40 Dividend per Share (Baht) 1.25 1.25 1.25 Book Value (Baht) 43.10 43.32 41.68 Net Asset Value (Baht) 43.10 43.32 41.68 Return on Assets (%) 2.12% 5.30% 5.60% Return on Equity (%) 3.38% 7.93% 8.38% Debt to Equity Ratio (Times) 0.54 0.45 0.37 Saha-Union Public Company Limited 2004 2003 2002 (Restated) (Restated) Total Revenues 15,961.7 16,085.0 15,523.1 Total Sales 15,235.3 14,931.2 14,291.6 Export 7,190.6 7,360.5 7,181.5 Domestic 8,044.7 7,570.7 7,110.1 Gross Profit 813.4 811.4 843.3 Net Profit 424.5 980.8 988.9 Earning per Share (Baht) 1.46 3.37 3.40 Dividend per Share (Baht) 1.25 1.25 1.25 Book Value (Baht) 43.10 43.32 41.68 >> SAHA-UNION PUBLIC COMPANY LIMITED ANNUAL REPORT 03032004 0404 >> Report of the Board of Directors During the last couple of years, Thailand has experienced a continuous resurgent economic growth with a Gross Domestic Product of 6.7% in 2003, and 6.1% in 2004. The high growth of export volumes is a major factor in the Kingdomûs economic revival, while another important factor has been government spending policies and the expansion of loans to the public sector to encourage and increase spending in the private sector. These policies have all helped inject increased cash flow into the markets. The Kingdom saw export volumes grow by 18.2% in 2003, and by 23.0% in 2004. Although government spending also increased and grew at a high rate, government policies did not cause a sufficient budget deficit to have any noticeable impact on the financial situation, such as inflation, which has been kept well under control. Loans in the private sector grew at a high rate of 9.8% in 2004, more than double the growth of 4.8% in 2003. Production growth in both domestic consumption and exports was considered satisfactory, while a strong indicator was the overall production capacity of the industrial sector, which climbed from 66.3% in 2003 to 72.7% in 2004. This production growth rate will encourage further investment in the private sector to boost production capacity in an upward future trend in 2005. Continuous expansion by the industrial sector should also act as a stable force for the Kingdomûs future economic growth. There are also encouraging signals as a result of the governmentûs economic policies, with their emphasis on encouraging economic growth by promoting investment in basic economic foundations during the next four years. These measures will undoubtedly support and stimulate further investment in the private sector. However, state agencies maintained a target economic growth rate of 6 % for 2005, a little lower than the past two years. The modest target reflects the general apprehension of the current economic situation worldwide. Many trading partners of the Kingdom are showing signs of an economic slowdown, while dark clouds of rising oil prices are appearing, without any hope of reversing, due to higher demand worldwide and the unresolved situation in the Middle East. Our major trading partner, the United States of America is showing a budget deficit for the fourth-year running, resulting in a weaker US Dollar and a stronger Thai Baht, while the worldûs financial institutions are poised ready for interest rates to continue their upward climb. In 2005, Thailand has her own unique problems, besides the world market situation. The Kingdomûs southern provinces, the top earners in tourism, were wrecked by a tsunami in the Andaman Sea. The tourism industry was nearly wiped out for the year. There is also political unrest in the three Southern provinces, which, together, continue to pose a negative impact with investors. The drought in the agricultural provinces has also affected agricultural output, compounded by the hovering problem of avian flu, which has had a noticeable effect on poultry exports. These factors are combining to present a major challenge for the Kingdom in 2005, as Thailand experiences a trade deficit and current budget deficit, following many years of having enjoyed a balanced budget. Above all, the Kingdom and its productive force will face, and must somehow overcome, much stronger competition in world markets during 2005 and in the years ahead. This year, textile quotas are abolished, and competition will be a free-for-all as far as textiles are concerned. The textile industry is therefore bracing itself for the impact of these major changes. It is expected that those with a strong production efficiency and good customer relations, will survive. The free trade measures also extend to many industries with expected stronger competition in many areas. The Thai Government has already signed multi- lateral agreements in support of free market access, i.e., World Trade Organization (WTO), ASEAN Free Trade Agreement (AFTA) and Free Trade Agreements (FTA). Operations by Saha-Union Public Company Limited during the past year reflected the impact of having to cope with strong competition in very unstable economic situations, both within the Kingdom and worldwide. The companyûs total revenue indicated a total Baht 17,633 million for 2004, against Baht 18,178 million, the previous year. Net profit was Baht 425 million, far less than the previous yearûs Baht 981 million, indicating Baht 1.46 per share for 2004, against Baht 3.37 per share in 2003. The companyûs Board of Directors and the management have planned for this eventuality and have decided to initiate counter measures and strategies to alleviate the various problems. For example, the company has moved into China and expanded production bases there in search of new sources of income and profits. The operations in China have so far done well in the fields of energy business, chemical and textile industries and provision of educational services. All was well until the end of 2004, when the price of coal, the main fuel used in power plants, experienced a sharp increase in price, which escalated up to a massive 50% increase. However, the price of electricity remained stable at most plants, while others increased the price by a mere 8% to comply with the Chinese Governmentûs strict price control regulations. As a result, Saha Unionûs overall operation in China faced a profit of Baht 58 million in 2004, comparing to Baht 323 million profit of a year before. Furthermore, impacted from adjusted the investment loss and other assets amounted to Baht 216 million. The Board and management are urgently trying to correct the situation through adjustments in planning and seeking cooperation with the Government through renegotiations. Although the net profits declined to Baht 1.46 per share, the companyûs financial situation is nevertheless still very stable. Total liabilities are Baht 6,789 million, with shareholdersû total equity of Baht 12,499 million, indicating a debt per share ratio of 0.54:1. The company had an retained-earning of Baht 5,013 million at the end of 2004. As a result, the Board has agreed to propose a motion at the annual shareholdersû meeting for the authorized payment of shareholdersû dividends at the agreed amount of Baht 1.25 per share, which is the same amount as last year. >> SAHA-UNION PUBLIC COMPANY LIMITED ANNUAL REPORT 05052004 0606 >> The Board of Directors expects the governmentûs economic policies will help the companyûs overall operations, to enable it to adjust and cope with changing market conditions and so strengthen its efficiency and capability to keep it at the forefront of its competitors. The Board of Directors would like to express its sincere gratitude towards all shareholders, trading partners and all customers who have always placed their trust in, and supported the company. The Board, management and all personnel remain fully committed to working to their utmost effort for a strong and prosperous Saha Union, in the best interest of all shareholders and for society as a whole. Mr. Panas Simasathien Mr. Amnuay Viravan Mr.