THE NEW RECORD BREAKTHROUGH

STP&I PUBLIC COMPANY LIMITED

ANNUAL REPORT

2012

ANNUAL REPORT 2012

Con

tent

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Investment StructureRevenue StructureIndustry and Competitive ReviewRisk FactorsManagement StructureGood Corporate GovernanceRelated Parties TransactionManagement Discussion and AnalysisReport of The Audit Committee for the year 2012Report of the Responsibility of the Board ofDirectors on Financial ReportsIndependent Auditor’s ReportFinancial StatementNote to Consolidated Financial StatementOther References

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62 6370 99

Message from Managing DirectorCompany InformationFinancial HighlightBoard of Directors and Executive BoardProfiles Board of Directors and Executive BoardBusiness OverviewShareholders

ANNUAL REPORT 2012

Con

tent

s

Investment StructureRevenue StructureIndustry and Competitive ReviewRisk FactorsManagement StructureGood Corporate GovernanceRelated Parties TransactionManagement Discussion and AnalysisReport of The Audit Committee for the year 2012Report of the Responsibility of the Board ofDirectors on Financial ReportsIndependent Auditor’s ReportFinancial StatementNote to Consolidated Financial StatementOther References

2348

102427303132333639495257

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62 6370 99

Message from Managing DirectorCompany InformationFinancial HighlightBoard of Directors and Executive BoardProfiles Board of Directors and Executive BoardBusiness OverviewShareholders

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Message FromManaging Director

Mr. Masthawin Charnvirakul

Managing Director

STP & I Public Company Limited

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The management team and I are pleased to inform our shareholders of one of the most important achievements in the

year 2012 which has resulted from the continuing commitment and efforts of our marketing and operational team. The

company has been awarded the module assembly project for LNG Onshore Facilities which to date, accounts for the

largest project the company has ever undertaken. The prefabrication of the modular components will be fabricated and

assembled in Thailand before being shipped to Australia for final installation into the LNG Onshore Facilities. With the

project worth $739 million, the Company has gained the highest volume of workload in its history; thus, driving a

continued growth of the company for the next 3 years

The company’s performance in 2012 has improved markedly from the year 2011 both in terms of increasing workload and

higher profit. Our commitments to improving our experienced team, developing the business database software,

managing the project contracts, and strengthening health, safety and environment monitoring systems have enabled the

company to continue delivering a satisfactory project to our customers. Furthermore, the Company has continuously

maintained its operations without any Lost Time Incidents (LTI) from previous years.

With our experienced teams who have succeeded in a variety of extensive projects, the Company is ready and

confident to drive the aforementioned large-scale project forward to its targeted completion. Nevertheless, the management

team and I admit that there is a need to focus on improving the risk evaluation and management strategies to a

controllable level; namely material price fluctuation, workforce and exchange rate risks. It is a challenge and complexity for

the management team to develop and create the best return for our shareholders simultaneously. The management team

and I are committed to run the business carefully and to ensure satisfaction for our customers and to bring prosperity

and security to the Company in the long term.

On behalf of STP & I Public Company Limited, I would like to thank our shareholders, customers, partners, executives,

employees, financial institutions and all related parties, including the public and private sectors, for their trust and

continued support for our business, and I hereby, assure that the Company shall continue to operate with transparency,

prudence and under good corporate governance with sustainable development practices with our full capacity for the

best interests of all stakeholders.

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Annual Report 2012

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Message FromManaging Director

Mr. Masthawin Charnvirakul

Managing Director

STP & I Public Company Limited

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The management team and I are pleased to inform our shareholders of one of the most important achievements in the

year 2012 which has resulted from the continuing commitment and efforts of our marketing and operational team. The

company has been awarded the module assembly project for LNG Onshore Facilities which to date, accounts for the

largest project the company has ever undertaken. The prefabrication of the modular components will be fabricated and

assembled in Thailand before being shipped to Australia for final installation into the LNG Onshore Facilities. With the

project worth $739 million, the Company has gained the highest volume of workload in its history; thus, driving a

continued growth of the company for the next 3 years

The company’s performance in 2012 has improved markedly from the year 2011 both in terms of increasing workload and

higher profit. Our commitments to improving our experienced team, developing the business database software,

managing the project contracts, and strengthening health, safety and environment monitoring systems have enabled the

company to continue delivering a satisfactory project to our customers. Furthermore, the Company has continuously

maintained its operations without any Lost Time Incidents (LTI) from previous years.

With our experienced teams who have succeeded in a variety of extensive projects, the Company is ready and

confident to drive the aforementioned large-scale project forward to its targeted completion. Nevertheless, the management

team and I admit that there is a need to focus on improving the risk evaluation and management strategies to a

controllable level; namely material price fluctuation, workforce and exchange rate risks. It is a challenge and complexity for

the management team to develop and create the best return for our shareholders simultaneously. The management team

and I are committed to run the business carefully and to ensure satisfaction for our customers and to bring prosperity

and security to the Company in the long term.

On behalf of STP & I Public Company Limited, I would like to thank our shareholders, customers, partners, executives,

employees, financial institutions and all related parties, including the public and private sectors, for their trust and

continued support for our business, and I hereby, assure that the Company shall continue to operate with transparency,

prudence and under good corporate governance with sustainable development practices with our full capacity for the

best interests of all stakeholders.

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CompanyInformation

Company name : STP & I Public Company Limited

Types of Business : Steel Structure Fabrication

Piping Fabrication

Process Module

Other Steel Fabrication

Address : 32/24, Sino-Thai Tower, 3rd Floor,

Sukhumvit 21 Road (Asoke), Klongtoey-Nua,

Wattana, Bangkok 10110

Thailand

Company registration number : 0107538000452 (Bor Mor Jor 568)

Telephone : +66 (0) 2260 1181

Facsimile : +66 (0) 2260 1182

e-mail : contact@stpi.co.th

website : www.stpi.co.th

Registered Capital : 371,000,000 Baht including 371,000,000 common

shares at 1 Baht Par Value (as of Dec.31, 2012)

Paid-up Capital : 368,492,092 Baht including 368,492,092 common

shares at 1 Baht Par Value (as of Dec.31, 2012)

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FinancialHighlight

For the Year Ended December 31st 2010 2011 2012

Financial Statements Total Assets (Mil.Baht) 4,260 3,523 7,233Total Liabilities (Mil.Baht) 1,022 424 2,922Shareholders’ Equity (Mil.Baht) 3,238 3,099 4,311Registered, Issued and Fully Paid (Mil.Baht) 368 368 368

Operating Results Revenues from Fabrication Work, Sales and Services (Mil.Baht) 4,770 1,001 3,140Cost of Fabrication Work, Sales and Services (Mil.Baht) 2,842 971 1,883Gross Earnings (Mil.Baht) 1,928 30 1,257Selling and Administrative Expenses (Mil.Baht) 110 122 121Other Income (Mil.Baht) 278 496 213Other Expenses (Mil.Baht) 18 - -Earnings from Operating Activities (Mil.Baht) 2,078 404 1,349Interest Expenses (Mil.Baht) 1 1 4Corporate Income Tax (Mil.Baht) 55 3 255Net Profit (Mil.Baht) 2,021 400 1,090

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FinancialHighlight

For the Year Ended December 31st 2010 2011 2012

Financial Statements Total Assets (Mil.Baht) 4,260 3,523 7,233Total Liabilities (Mil.Baht) 1,022 424 2,922Shareholders’ Equity (Mil.Baht) 3,238 3,099 4,311Registered, Issued and Fully Paid (Mil.Baht) 368 368 368

Operating Results Revenues from Fabrication Work, Sales and Services (Mil.Baht) 4,770 1,001 3,140Cost of Fabrication Work, Sales and Services (Mil.Baht) 2,842 971 1,883Gross Earnings (Mil.Baht) 1,928 30 1,257Selling and Administrative Expenses (Mil.Baht) 110 122 121Other Income (Mil.Baht) 278 496 213Other Expenses (Mil.Baht) 18 - -Earnings from Operating Activities (Mil.Baht) 2,078 404 1,349Interest Expenses (Mil.Baht) 1 1 4Corporate Income Tax (Mil.Baht) 55 3 255Net Profit (Mil.Baht) 2,021 400 1,090

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Total Assets(Million Baht)

Debt/Equity Ratio(Times)

Revenues from Fabrication WorkSales and Services(Million Baht)

Total Liabilities(Million Baht)

Shareholders’ Equity(Million Baht)

4,260

0.32

3,238

4,770

1,001

3,140

2010

2010 2010

20102011

2011 2011

20112012

2012 2012

2012

3,523

0.14

3,099

4241,022

7,233

0.68

4,311

2,922

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For the Year Ended December 31st 2010 2011 2012

Financial Ratio Gross Profit (%) 40.42 3.01 40.02Net Profit Margin (%) 40.04 26.68 32.50Return on Asset (%) 38.03 10.27 20.26Return on Equity (%) 70.06 12.61 29.42Debt/Equity Ratio (Times) 0.32 0.14 0.68

Share Information Net Earnings per Share1) (Baht) 5.68 1.10 2.97Book Value per Share2) (Baht) 9.10 8.53 11.68Dividend per Share (Baht) 6.13 0.32 N/A

Remark: 1) Net Earnings per Share = Net income for the year devided by the number of ordinary shares, after adjusting the number

of ordinary shares to reflect the impact of the stock dividend. The prior year’s basic earnings per share has been recalculated

as if the stock dividend had been distributed at the beginning of the earliest period reported.

2) Book Value per Share = Shareholders’s Equity divided by weighted average of No. of common shares

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For the Year Ended December 31st 2010 2011 2012

Financial Ratio Gross Profit (%) 40.42 3.01 40.02Net Profit Margin (%) 40.04 26.68 32.50Return on Asset (%) 38.03 10.27 20.26Return on Equity (%) 70.06 12.61 29.42Debt/Equity Ratio (Times) 0.32 0.14 0.68

Share Information Net Earnings per Share1) (Baht) 5.68 1.10 2.97Book Value per Share2) (Baht) 9.10 8.53 11.68Dividend per Share (Baht) 6.13 0.32 N/A

Remark: 1) Net Earnings per Share = Net income for the year devided by the number of ordinary shares, after adjusting the number

of ordinary shares to reflect the impact of the stock dividend. The prior year’s basic earnings per share has been recalculated

as if the stock dividend had been distributed at the beginning of the earliest period reported.

2) Book Value per Share = Shareholders’s Equity divided by weighted average of No. of common shares

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Gross Earnings(Million Baht)

Net Profit(Million Baht)

Return on Asset(%)

Return on Equity(%)

Gross Profit(%)

Net Profit Margin (%)

Net Earningper Share(Baht)

2010 2010 2011 2012

2010

2010

2011

2011

2011

2012

2012

2012

1,928

2,021

38.03

10.2720.26

1,090

400

40.42

40.04

70.06

12.61

29.42

26.68

32.50

3.0130

1,257

5.68

1.10

2.97

40.02

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Boardof Directors

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05

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01. Mr.Anutin Charnvirakul Chairman of the Board02. Dr.Wicha Jiwalai Independent Director and Chairman of the Audit Committee03. Police General Jate Mongkolhutthi Independent Director and Member of the Audit Committee04. Mr.Chamni Janchai Independent Director and Member of the Audit Committee

05. Admiral Amorntep Nabangchang Independent Director 06. Mr.Masthawin Charnvirakul Director and Managing Director07. Mr.Suwat Riensiriwan Director and Deputy Managing Director I08. Mr.Choavalit Limpanich Director/Deputy Managing Director II

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Boardof Directors

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06 08

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01. Mr.Anutin Charnvirakul Chairman of the Board02. Dr.Wicha Jiwalai Independent Director and Chairman of the Audit Committee03. Police General Jate Mongkolhutthi Independent Director and Member of the Audit Committee04. Mr.Chamni Janchai Independent Director and Member of the Audit Committee

05. Admiral Amorntep Nabangchang Independent Director 06. Mr.Masthawin Charnvirakul Director and Managing Director07. Mr.Suwat Riensiriwan Director and Deputy Managing Director I08. Mr.Choavalit Limpanich Director/Deputy Managing Director II

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ExecutiveBoard

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02 03

05

08

06

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01. Mr.Masthawin Charnvirakul Director and Managing Director02. Mr.Suwat Riensiriwan Director/ Deputy Managing Director I03. Mr.Choavalit Limpanich Director/Deputy Managing Director II

04. LT.JG.Kitti Junsangsri

Marketing & Estimation

Department Manager

05. Mr.Thammanoon Narind

Fabrication Plants Department

Manager (Chonburi Rayong

and Sriracha)

06. Mr. Damrong Panket

Laem Chabang Assembly Yard

Department Manager

07. Mrs.Anilrat Nitisaroj

Business Development & Legal

Department Manager

08. Mrs.Atitaya Charnvirakul

Administrative Department

Manager

09. Ms.Prempha Hitaphan

Finance & Accounting

Department Manager

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Annual Report 2012

Profile Board ofDirectors and

Executive Board

Mr. Anutin CharnvirakulChairman of the Board

Directorship • Induction since 2008 • 2 Directorship period2012 Meeting Attendance • 5/6 Board of Director MeetingsStock Holding • 37,406,883 shares, 10.15%Qualification Experience • Honorary doctorate degree, Civil Engineering, Ramkamhaeng University • B.S. in Industrial Engineering, Hofstra University, New York, U.S.A. • Mini MBA Program at Thammasat University, Bangkok • Financial statement for directors class 1/2008 • Certificate of Director Accreditation Program (DAP) Class 77th, Thai Institute of Directors (IOD) • Capital Market Academy No. 9 • Urban Green Development Institute (BMA 1) • Certificate of Energy Literacy for a Sustainable Future Class 1st, Thailand Energy AcademyExperience • Deputy Minister of Commerce • Deputy Minister of Public HealthRelationship with other Executives • Sibling of Mr. Masthawin Charnvirakul ( Director and Managing Director ) • Sibling of Mrs. Anilrat Nitisaroj (Business Development & Legal Department Manager)

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Annual Report 2012

Profile Board ofDirectors and

Executive Board

Mr. Anutin CharnvirakulChairman of the Board

Directorship • Induction since 2008 • 2 Directorship period2012 Meeting Attendance • 5/6 Board of Director MeetingsStock Holding • 37,406,883 shares, 10.15%Qualification Experience • Honorary doctorate degree, Civil Engineering, Ramkamhaeng University • B.S. in Industrial Engineering, Hofstra University, New York, U.S.A. • Mini MBA Program at Thammasat University, Bangkok • Financial statement for directors class 1/2008 • Certificate of Director Accreditation Program (DAP) Class 77th, Thai Institute of Directors (IOD) • Capital Market Academy No. 9 • Urban Green Development Institute (BMA 1) • Certificate of Energy Literacy for a Sustainable Future Class 1st, Thailand Energy AcademyExperience • Deputy Minister of Commerce • Deputy Minister of Public HealthRelationship with other Executives • Sibling of Mr. Masthawin Charnvirakul ( Director and Managing Director ) • Sibling of Mrs. Anilrat Nitisaroj (Business Development & Legal Department Manager)

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11Dr. Wicha JiwalaiIndependent Director andChairman of the Audit Committee

Directorship • Induction since 1999 • 5 consecutive directorship periods2012 Meeting Attendance • 6/6 Board of Director Meetings and 8/8 Audit Committee MeetingsStock Holding • None Qualification Experience • Ph.D. (Geodetic Science), The Ohio State University, USA • B.Eng (Civil Engineering), Chulalongkorn University • Certificate of Director Accreditation Program (DAP) Class 8th, Thai Institute of Directors (IOD) • Certificate of Director Certification Program (DCP) Class 14th, Thai Institute of Directors (IOD) • Certificate of Chairman 2000 (RCP) Class 13th, Thai Institute of Directors (IOD) Certificate of Audit Committee Program (ACP) Class 14th, Thai Institute of Directors (IOD) • Certificate of Finance for Non-Finance Director (FND) Class 10th, Thai Institute of Directors (IOD)Experience • Associated Professor and Head of Department of Survey Engineering, Faculty of Engineering, Chulalongkorn University • Associated Governor of Bangkok Metropolitan • Chairman of Director * Geo-Informations and Space Technology Development Agency (Public Organization)Present Position • Chairman of the Board * Salintara Co., Ltd. * Banpulom Co., Ltd. • Chairman of the Audit Committee * Thai Nondestructive Testing Plc. • Audit Committee * Thai Optical Group Plc. • Director * World Resort Co., Ltd.Relationship with other Executives • None

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Annual Report 2012

Police General Jate MongkolhutthiIndependent Director andMember of Audit Committee

Directorship • Induction since 1999 • 4 consecutive directorship periods2012 Meeting Attendance • 6/6 Board of Director Meetings and 8/8 Audit Committee MeetingsStock Holding • None Qualification Experience • Bachelor of Civil Law, Ramkhamhaeng University • Master of Law, Chulalongkorn University • Certificate of Director Accreditation Program (DAP) Class 8th, Thai Institute of Directors (IOD) • Certificate of Audit Committee Program (ACP) Class 14th, Thai Institute of Directors (IOD) • Certificate of Finance for Non – Finance Directors (FND) Class 30th, Thai Institute of Directors Association • Certificate of the National Defence College (NDC 4515) • Certificate of Program on Judicial Administration for the Director General Public Prosecutor 6th Trainning, Office of The Attorney GeneralExperience • Vice - Commissioner, Metropolitan Police Bureau, Royal Thai Police • Commissioner General (Legal Affaire and Litigation) Office of Commissioner General, Royal Thai Police • Deputy Commissioner, Metropolitan Police Bureau, Royal Thai PolicePresent Position • Advisor (Sor. Bor.10) in Law and Investigation, Officer of Commissioner General, Royal Thai Police • Director (Independent Director) * Government Housing Bank • Consultants * National Credit Bureau Co., Ltd. • Independent Director and Member of the Audit Committee * Sino-Thai Engineering and Construction Plc.Relationship with other Executives • None

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Annual Report 2012

Police General Jate MongkolhutthiIndependent Director andMember of Audit Committee

Directorship • Induction since 1999 • 4 consecutive directorship periods2012 Meeting Attendance • 6/6 Board of Director Meetings and 8/8 Audit Committee MeetingsStock Holding • None Qualification Experience • Bachelor of Civil Law, Ramkhamhaeng University • Master of Law, Chulalongkorn University • Certificate of Director Accreditation Program (DAP) Class 8th, Thai Institute of Directors (IOD) • Certificate of Audit Committee Program (ACP) Class 14th, Thai Institute of Directors (IOD) • Certificate of Finance for Non – Finance Directors (FND) Class 30th, Thai Institute of Directors Association • Certificate of the National Defence College (NDC 4515) • Certificate of Program on Judicial Administration for the Director General Public Prosecutor 6th Trainning, Office of The Attorney GeneralExperience • Vice - Commissioner, Metropolitan Police Bureau, Royal Thai Police • Commissioner General (Legal Affaire and Litigation) Office of Commissioner General, Royal Thai Police • Deputy Commissioner, Metropolitan Police Bureau, Royal Thai PolicePresent Position • Advisor (Sor. Bor.10) in Law and Investigation, Officer of Commissioner General, Royal Thai Police • Director (Independent Director) * Government Housing Bank • Consultants * National Credit Bureau Co., Ltd. • Independent Director and Member of the Audit Committee * Sino-Thai Engineering and Construction Plc.Relationship with other Executives • None

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13Admiral Amorntep NabangchangIndependent Director

Directorship • Induction since 20122012 Meeting Attendance- • 3/3* Board of Director MeetingsStock Holding • noneQualification • Bachelor of Business Administration (General Management), Sukhothai Thammathirat Open University • Master of Public and Private management, National Institutes of Development Administration • Capital Market Academy No. 11 • Urban Green Development Institute (BMA 1) • Certificate of Energy Literacy for a Sustainable Future Class 1 Thailand Energy AcademyExperience • Director of Joint Communications, Royal Thai Navy • Deputy Chief of Staff Royal Thai Fleet, Royal Thai Fleet • Chief Staff Officer, Deputy Chief of Defense Forces - Director of Joint Communications, Royal Thai Armed Forces Headquarters • Assistant Commander-in-Chief, RTN. Royal Thai Navy • Director of Thailand National Defence College, National Defence Studies Institute Present Position • President, Royal Thai Navy Advisory Group, Royal Thai NavyRelationship with other Executives • none

Remarks*:* Admiral Amorntep Na-bangchang was appointed to be an Independent Director as per Resolution of Board Director meeting no.3/2012 on 24th April 2012.

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Annual Report 2012

Mr. Chamni JanchaiIndependent Director andMember of Audit Committee

Directorship • Induction since 1999 • 4 consecutive directorship periods2012 Meeting Attendance • 6/6 Board of Director Meetings and 8/8 Audit Committee MeetingsStock Holding • 4,975,553 shares, 1.35%Qualification • Advance Certificate – Public Economic Management, Prajadhipok’s Institute • Master of Business Administration, Thammasat University • B.A. ( Accounting ), Thammasat University • Certificate of Director Accreditation Program (DAP), Class 30th , Thai Institute of Directors (IOD) • Certificate of Role of the Chairman Program (RCP), Class 21st , Thai Institute of Directors (IOD)Experience • Director and Deputy of Managing Director * NTS Steel Group Plc. • Vice President * Nakorn Thai Strip Mill Plc. • Qualified Director and Executive Director * Iron and Steel Institute of Thailand • Advisor to the Chairman of the Committee of Communications and Telecommunications. * House of Representatives • Advisor to the Board of Directors * Iron and Steel Institute of Thailand • Chairman * Burapa Steel Industries Co., Ltd. * Thai Capital Corporation Plc. • Advisor to the Board of Directors * National Housing Authority • Advisor to the Chairman of the Provincial Electrocity Authority * Provincial Electrocity Authority • Director and Audit Committee * Thai Theparos Food Products Plc.Present Position • Director and Chairman of Audit Committee * Sino-Thai Engineering & Construction Plc. • Chairman of the Board * Max Metal Corporation Plc. • President * CJ Morgan Co., Ltd. * CJM Consult Co., Ltd.Relationship with other Executives • None

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Annual Report 2012

Mr. Chamni JanchaiIndependent Director andMember of Audit Committee

Directorship • Induction since 1999 • 4 consecutive directorship periods2012 Meeting Attendance • 6/6 Board of Director Meetings and 8/8 Audit Committee MeetingsStock Holding • 4,975,553 shares, 1.35%Qualification • Advance Certificate – Public Economic Management, Prajadhipok’s Institute • Master of Business Administration, Thammasat University • B.A. ( Accounting ), Thammasat University • Certificate of Director Accreditation Program (DAP), Class 30th , Thai Institute of Directors (IOD) • Certificate of Role of the Chairman Program (RCP), Class 21st , Thai Institute of Directors (IOD)Experience • Director and Deputy of Managing Director * NTS Steel Group Plc. • Vice President * Nakorn Thai Strip Mill Plc. • Qualified Director and Executive Director * Iron and Steel Institute of Thailand • Advisor to the Chairman of the Committee of Communications and Telecommunications. * House of Representatives • Advisor to the Board of Directors * Iron and Steel Institute of Thailand • Chairman * Burapa Steel Industries Co., Ltd. * Thai Capital Corporation Plc. • Advisor to the Board of Directors * National Housing Authority • Advisor to the Chairman of the Provincial Electrocity Authority * Provincial Electrocity Authority • Director and Audit Committee * Thai Theparos Food Products Plc.Present Position • Director and Chairman of Audit Committee * Sino-Thai Engineering & Construction Plc. • Chairman of the Board * Max Metal Corporation Plc. • President * CJ Morgan Co., Ltd. * CJM Consult Co., Ltd.Relationship with other Executives • None

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15Mr. Masthawin CharnvirakulDirector and Managing Director

Directorship • Induction since 1996 • 5 consecutive directorship periods2012 Meeting Attendance • 6/6 Board of Director Meetings Stock Holding • None Qualification • MBA ( International Business ), University of Southern California, USA • B.A. ( Marketing ), Chulalongkorn University • Certificate of Director Accreditation Program (DAP), Class 1st , Thai Institute of Directors (IOD) • Capital Market Academy No. 11Experience • Marketing Manager, SCC-Dow Chemical Joint VenturePresent Position • Director * Sino-Thai Engineering and Construction Plc. • Director/ Managing Director * STIT Co., Ltd.Relationship with other Executives • Spouse of Mrs. Atitaya Charnvirakul (Administrative Department Manager) • Sibling of Mr. Anutin Charnvirakul ( Chairman of the Board ) • Sibling of Mrs. Anilrat Nitisaroj (Business Development & Legal Department Manager)

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Annual Report 2012

Mr. Suwat RiensiriwanDirector / Deputy Managing Director I

Directorship • Induction since 2005 • 2 consecutive directorship periods2012 Meeting Attendance • 6/6 Board of Director Meetings Stock Holding • None Qualification • B.Eng ( Mechanical ), Chulalongkorn University • Mini MBA, Thammasat University, Class 17th

• Certificate of Director Accreditation Program ( DAP ), Class 55th, Thai Institute of Directors (IOD) • Certificate of Understanding the Fundamental of Finance Statement, Class 3rd, Thai Institute of Directors ( IOD ) • Certificate of Director Certification Program (DCP), Class 140th, Thai Institute of Directors (IOD)Experience • Associated General Manager * Sino-Thai Pressure Vessel and Iron Works Co., Ltd. • Director and Managing Director * STIT Co., Ltd.Relationship with other Executives • None

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Annual Report 2012

Mr. Suwat RiensiriwanDirector / Deputy Managing Director I

Directorship • Induction since 2005 • 2 consecutive directorship periods2012 Meeting Attendance • 6/6 Board of Director Meetings Stock Holding • None Qualification • B.Eng ( Mechanical ), Chulalongkorn University • Mini MBA, Thammasat University, Class 17th

• Certificate of Director Accreditation Program ( DAP ), Class 55th, Thai Institute of Directors (IOD) • Certificate of Understanding the Fundamental of Finance Statement, Class 3rd, Thai Institute of Directors ( IOD ) • Certificate of Director Certification Program (DCP), Class 140th, Thai Institute of Directors (IOD)Experience • Associated General Manager * Sino-Thai Pressure Vessel and Iron Works Co., Ltd. • Director and Managing Director * STIT Co., Ltd.Relationship with other Executives • None

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17Mr. Choavalit LimpanichDirector / Deputy Managing Director II

Directorship • Induction since 20102012 Meeting Attendance • 6/6 Board of Director Meetings Stock Holding • 14,749,999 shares, 4%Qualification • MBA, National Institute of Development Administration ( NIDA ) • B.Eng. ( Mechanical ), Prince of Songkla University • Certificate of Director Acceditation Program (DAP), Class 99th, Thai Institute of Director (IOD)Experience • Plant Engineer * Kao Industrial ( Thailand ) Co., Ltd. • Mechanical Engineer * Sino-Thai Engineering and Construction Public Co., Ltd. • Technical Manager * Sino-Thai Pressure Vessel and Iron Works Co., Ltd. • Director of Operations/ Plant Management ( Chonburi ) * STP&I Public Company LimitedPresent Position • Director * Thai Maintenance Contracting Co., Ltd.Relationship with other Executives • None

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Annual Report 2012

LT. JG. Kitti Junsangsri Marketing & Estimation Department Manager

Stock Holding • 3,687,499 shares, 1%Qualification • MBA, Chulalongkorn University • Master of Engineering, King Mongkut Institute of Technology • B.Eng ( Mechanical ), Chiang Mai UniversityExperience • Designing and Planning Engineer * King Rama 5 Naval Dock Yard, Naval Dock Yard Bureau, Royal Thai Navy • Engineer * Sino-Thai Pressure Vessel and Iron Works Co., Ltd.Relationship with other Executives • None

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Annual Report 2012

LT. JG. Kitti Junsangsri Marketing & Estimation Department Manager

Stock Holding • 3,687,499 shares, 1%Qualification • MBA, Chulalongkorn University • Master of Engineering, King Mongkut Institute of Technology • B.Eng ( Mechanical ), Chiang Mai UniversityExperience • Designing and Planning Engineer * King Rama 5 Naval Dock Yard, Naval Dock Yard Bureau, Royal Thai Navy • Engineer * Sino-Thai Pressure Vessel and Iron Works Co., Ltd.Relationship with other Executives • None

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19Mr. Thammanoon NarindFabrication Plants Department Manager(Chonburi, Rayong and Sriracha)

Stock Holding • None Qualification • MBA, National Institute of Development Administration ( NIDA ) • B.Eng ( Industrial ), Prince of Songkla UniversityExperience • Engineer * Sino-Thai Pressure Vessel and Iron Works Co., Ltd. • Administrative Manager/ Engineering Manager/ QA/ QC Manager * STP&I Public Company Limited • Windsurf Production Manager/ Production section Manager 6 * Cobra International Co.,Ltd.Relationship with other Executives • None

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Mr. Damrong Panket Laem Chabang Assembly Yard Department Manager

Stock Holding • None Qualification • MBA, Burapha University • Master of Engineering, Chiang Mai UniversityExperience • Mechanical Engineer Chiyoka (Thailand) Co.,Ltd. • Area Superintendent *Clough Sino-thai Co., Ltd. • Construction Manager * Pro-En Technologies, Ltd.Relationship with other Executives • None

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Mr. Damrong Panket Laem Chabang Assembly Yard Department Manager

Stock Holding • None Qualification • MBA, Burapha University • Master of Engineering, Chiang Mai UniversityExperience • Mechanical Engineer Chiyoka (Thailand) Co.,Ltd. • Area Superintendent *Clough Sino-thai Co., Ltd. • Construction Manager * Pro-En Technologies, Ltd.Relationship with other Executives • None

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21Mrs. Anilrat NitisarojBusiness Development & LegalDepartment Manager

Stock Holding • None Qualification • MBA Finance & Strategy Sloan School of Management Massachusetts Institute of Technology USA. • B.A. ( Accounting ), Chulalongkorn UniversityExperience • Commercial Manager * Clough Sino-Thai Co., Ltd.Present Position • Director * Sino-Thai Engineering and Construction Public Co., Ltd.Relationship with other Executives • Sibling of Mr. Anutin Charnvirakul ( Chairman of the Board ) • Sibling of Mr. Masthawin Charnvirakul ( Director and Managing Director )

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Mrs. Atitaya CharnvirakulAdministrative Department Manager

Stock Holding • None

Qualification • MBA ( International Business ), University of Southern California, USA • B.A. ( Accounting ), Chulalongkorn UniversityExperience • Finance and Accounting Manager/ Auditing and Controlling Cost Manager * STP&I Public Company LimitedPresent Position • Director * STIT Co., Ltd.Relationship with other Executives • Spouse of Mr. Masthawin Charnvirakul (Director and Managing Director)

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Mrs. Atitaya CharnvirakulAdministrative Department Manager

Stock Holding • None

Qualification • MBA ( International Business ), University of Southern California, USA • B.A. ( Accounting ), Chulalongkorn UniversityExperience • Finance and Accounting Manager/ Auditing and Controlling Cost Manager * STP&I Public Company LimitedPresent Position • Director * STIT Co., Ltd.Relationship with other Executives • Spouse of Mr. Masthawin Charnvirakul (Director and Managing Director)

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23Ms. Prempha HitaphanFinance & Accounting Department Manager

Stock Holding • NoneQualification • Master of Management, Mahidol University • B.A. ( Accounting ), Chulalongkorn UniversityExperience • Assistant Audit Manager * Ernst & Young Company Office LimitedRelationship with other Executives • None

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Business Overview

STP & I Public Company Limited was established in 1975, with over 38 years of experience, the Company has

provided customers with professional manufacturing of customised quality steel fabrication including Steel Structure,

Piping Fabrication, Process Module, and Other Fabrication steels such as Modules, Tank, Pressure Vessel, and Boiler.

One of STP&I’s strengths is its capability to fabricate large built-up beam steel for huge infrastructure and heavy

industry projects such as power plants, refineries, high-rise buildings, roof structures, bridges, elevated highways,

and airports.

STP&I owns and operates four production plants include steel fabrication plants in Chonburi and Rayong,

Piping fabrication shop in Sri Racha and Assembly yard at Laem Chabang Port. With a total capacity of 115,000 ton/

year, STP&I has used its capacity at 50 % in year 2012.

STP & I Public Company Limited has three subsidiaries, STIT Co., Ltd (“STIT”), STIT 2011 Company Limited

(“STIT2011”) and LGR (Thailand) Co.,Ltd (“LRG”) with the following details;

Company Name Type of Business Paid-up Capital(Baht)

% of Shares Held by STP&I

1. STIT Co., Ltd.

� Sales and rental of machinery

and equipment for construction and

manufacturing industries

� Engineering services

135,000,000 100

2. STIT 2011 Co., Ltd.

�Sales and rental of machinery and

equipment for construction industry

� Contractor for steel and concrete

works

66,033,000 100

3. LGR (Thailand) Co.,Ltd � Operated as a holding company 410,000,000 100

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Business Overview

STP & I Public Company Limited was established in 1975, with over 38 years of experience, the Company has

provided customers with professional manufacturing of customised quality steel fabrication including Steel Structure,

Piping Fabrication, Process Module, and Other Fabrication steels such as Modules, Tank, Pressure Vessel, and Boiler.

One of STP&I’s strengths is its capability to fabricate large built-up beam steel for huge infrastructure and heavy

industry projects such as power plants, refineries, high-rise buildings, roof structures, bridges, elevated highways,

and airports.

STP&I owns and operates four production plants include steel fabrication plants in Chonburi and Rayong,

Piping fabrication shop in Sri Racha and Assembly yard at Laem Chabang Port. With a total capacity of 115,000 ton/

year, STP&I has used its capacity at 50 % in year 2012.

STP & I Public Company Limited has three subsidiaries, STIT Co., Ltd (“STIT”), STIT 2011 Company Limited

(“STIT2011”) and LGR (Thailand) Co.,Ltd (“LRG”) with the following details;

Company Name Type of Business Paid-up Capital(Baht)

% of Shares Held by STP&I

1. STIT Co., Ltd.

� Sales and rental of machinery

and equipment for construction and

manufacturing industries

� Engineering services

135,000,000 100

2. STIT 2011 Co., Ltd.

�Sales and rental of machinery and

equipment for construction industry

� Contractor for steel and concrete

works

66,033,000 100

3. LGR (Thailand) Co.,Ltd � Operated as a holding company 410,000,000 100

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Core Business of STP&I can be categorised into three key groups:

1. Engineering Service: The Company provides engineering service in detail design of steel-to-steel connection, shop

drawing for steel structure, piping, and erection works by various specialized software.

2. Fabrication: The Company provides fabrication service and has the capability to fabricate steel and pipe in workshop

which equipped with state of the art machine and equipment, CNC Cutting and Welding machine, Press machine,

automatic Blasting machine and other tools necessary to undertake the variety and complexity of fabricated products

to ensure the efficiency of fabrication processes and cost effective.

3. Construction: STP&I’s construction works include assembly, mechanical equipment installation and erection for

various manufacturing plants. The Company performs the works both at the Company’s facilities and at the client’s

project site.

Company Products can be categorized into 4 groups.

1. Steel Structure Fabrication

1.1 Steel structures for heavy industrial such as power plant, refinery, petrochemical plant, etc.

1.2 Steel Structure for building such as high – rise building, airport terminal.

1.3 Steel Structure for infrastructure system such as bridge, elevated road, airport, etc.

1.4 Steel structures for construction equipment and mechanical parts and general steel works such as

Antenna structure transmission line tower, etc.

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2. Piping Fabrication : STP&I has expertise in piping fabrication which includes piping pre-fabrication,

piping erection, and pipeline constructions. The spoon fabrication is carried out in STP&I’s facilities, then the semi -

completed products are transported to the project sites for installation. These pipes are essential parts in the production

process of industrial plants such as power plants, oil refineries, petrochemical plants, offshore process plants, etc.

3. Process Module : STP&I expands its business to Process Module assembly. Module is a large system

structure comprises steel structure, piping system, boiler, pressure vessels, machinery, electrical system and controlling

system for various industries. Module mostly used in offshore construction such as oil and gas platform or large

projects that have limitation on working area or labor or time constraint.

4. Other Fabrication Steel : The Company has provided other Fabrication steel such as pressure vessel

work includes drum, reactor, columns, splitter towers, stream drums, and separators under ASME standards. STP&I

also designs spherical tanks and large diameter storage tanks under various standards. These tanks are used for

storing liquids or gas in refineries, and for production process in power plants and petrochemical plants.

STP&I places great importance in producing high quality and maintaining high standards of all its products.

The Company follows stringent quality-control management practices as per international standards. And also, the

Company realized that the commitment to the community on the safety of our products in various projects such as

bridges, terminal buildings, and industrial plants. As such, STP&I has obtained accredited certifications from numerous

internationally recognized institutions including:

- ISO 9001 : 2008 - The Manufacture of Structural Steel and Piping Work (Excluding Design)

- JSA Grade “H” (Japan Steel Structure Appraisal Center Limited) for Structural Steel Work for export to

Japan.

The Company delivers only high quality products and services, thus, it has fully earned trust from its customers

and has established a world-class status in the market. STP&I always give priority to both quality products and

operational safety to which the Company will continue to invest in these two critical areas to even better serve both

its domestic and overseas customers by increasing safety practices and ensuring all products are of exceptional quality.

The Company has competed with the highest record of over 67 million hours of accident free operation since 2007.

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2. Piping Fabrication : STP&I has expertise in piping fabrication which includes piping pre-fabrication,

piping erection, and pipeline constructions. The spoon fabrication is carried out in STP&I’s facilities, then the semi -

completed products are transported to the project sites for installation. These pipes are essential parts in the production

process of industrial plants such as power plants, oil refineries, petrochemical plants, offshore process plants, etc.

3. Process Module : STP&I expands its business to Process Module assembly. Module is a large system

structure comprises steel structure, piping system, boiler, pressure vessels, machinery, electrical system and controlling

system for various industries. Module mostly used in offshore construction such as oil and gas platform or large

projects that have limitation on working area or labor or time constraint.

4. Other Fabrication Steel : The Company has provided other Fabrication steel such as pressure vessel

work includes drum, reactor, columns, splitter towers, stream drums, and separators under ASME standards. STP&I

also designs spherical tanks and large diameter storage tanks under various standards. These tanks are used for

storing liquids or gas in refineries, and for production process in power plants and petrochemical plants.

STP&I places great importance in producing high quality and maintaining high standards of all its products.

The Company follows stringent quality-control management practices as per international standards. And also, the

Company realized that the commitment to the community on the safety of our products in various projects such as

bridges, terminal buildings, and industrial plants. As such, STP&I has obtained accredited certifications from numerous

internationally recognized institutions including:

- ISO 9001 : 2008 - The Manufacture of Structural Steel and Piping Work (Excluding Design)

- JSA Grade “H” (Japan Steel Structure Appraisal Center Limited) for Structural Steel Work for export to

Japan.

The Company delivers only high quality products and services, thus, it has fully earned trust from its customers

and has established a world-class status in the market. STP&I always give priority to both quality products and

operational safety to which the Company will continue to invest in these two critical areas to even better serve both

its domestic and overseas customers by increasing safety practices and ensuring all products are of exceptional quality.

The Company has competed with the highest record of over 67 million hours of accident free operation since 2007.

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Shareholders

1. Company’s Equity

(A) Common Shares

Registered capital and paid up capital as of December 31st, 2012, as follow;

Registered capital 371,000,000.00 Baht

Paid up capital 368,492,092.00 Baht

Par value per share 1.00 Baht

(B) Warrant

Extraordinary General Meeting no. 1/2007 held on 6 November 2007 passed its resolution approving the

issuance of not more than 83,500,000 warrants free of charge to offer to the Company’s existing shareholders at a

ratio of 3 ordinary shares to 1 warrant. On 3 April 2008, the Company was granted permission to offer such warrants

to the shareholders from the Office of the Securities and Exchange Commission.

On 13 May 2008, the Stock Exchange of Thailand accepted 83,333,014 units of the warrants

(STPI - W1) as listed securities, effective from 15 May 2008. A summary of the warrant is as below;STPI - W1

No. of warrants 83,333,014Life of warrants (years) 5Exercisable Semi-annuallyFirst exercise date 29 May 2009Final exercise date 6 May 2013Exercise price per 1 ordinary shares (Baht) 2.48200**Exercise ratio (warrants to ordinary shares) 1:1.40418**

Remark : ** By resolution of Board of Directors Meeting No.1/2011 on March 7th, 2011, the Board approved dividend payment of 1.32 Baht per share. When combine with interim dividend payouts paid on November 19th, 2010 and December 24th, 2010, the total dividend paid for the year 2010 is 6.13 Baht per share which is more than 40% of net profit (after deduction of corporate income tax) according to the Company’s financial statement as at December 31th, 2010. Therefore, the Exercise

ratio and the Exercise price of Warrant have been adjusted as follows :

Existing Rate STPI-W1

The Exercise price per share (Baht) 2.596

The Exercise ratio 1:1.34267

New Rate STPI-W1

The Exercise price per share (Baht) 2.48200

The Exercise ratio 1:1.40418

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Presented below is a summary of warrant activity:-

STPI-W1(Units)

Share capital to support the warrant Exercise (Share)

No. of warrants issued 83,333,014 96,700,000No. of warrants B/F at 1 January 2012 1,631,254 3,124,687Exercised during the second quarter of 2012 (13,465) (18,906)Exercised during the fourth quarter of 2012 (427,264) (599,953)Outstanding as at 31 December 2012 1,190,525 3,124,687

2. Treasury Stock

On 3 December 2008, the Board of Directors of the Company approved a share buyback program for liquidity

surplus management purposes. The summary of the program are:

� a budget of Baht 200 million

� a number of shares to buy back is up to 25 million shares (par value of Baht 1 each), or 10 percent of total

shares issued

� the shares shall be purchased on the Stock Exchange of Thailand between 17 December 2008 and 16 June

2009

As at 31 December 2010, the Company has bought back 4.4 million ordinary shares (par value of Baht 1 each),

or 1.21 percent of total number of shares issued, for a total of Baht 35.6 million (excluding other buyback expenses).

On 8 December 2009, the Meeting of the Company’s Board of Directors no. 4/2009 passed a resolution to shorten the

resale of Treasury stocks period in order to comply with the ministerial regulation governing the timing of resale of

treasury stock. The Company reported the amendment in the Share Resale Disclosure Form (TS-7) as follows;

� the period of the resale of treasury stocks shall be from 17 December 2009 - 16 June 2012

� the offering price of the resale of treasury stocks shall not be lower than 85% of average of the closing price

of the 5 business days prior to the resale date

During the first quarter of 2012, the Company disposed 4,446,400 treasury shares at the total price of Baht

135.28 million.

3. Shareholders

List of top 10 shareholders and percentage of shares holding as of March 21, 2013

Name / Group Number of Shares % of holding1. Mr. Anutin Charnvirakul 37,406,883 10.152. Thai NVDR Co.,Ltd. 21,697,620 5.893. Best Quality Skills Company Limited 17,700,000 4.804. Equity Plus Company Limited 16,000,000 4.345. Mr. Choavalit Limpanich 14,749,999 4.006. Mr. Yanyong Nitisaroj 14,264,892 3.877. Mr. Jirat Tharaphetsawat 12,846,136 3.498. Mr. Suthep Setboonsang 10,520,986 2.869. Mr.Chavarat Charnvirakul 10,362,639 2.8110. Ms. Sureerat Techakamolsuk 9,400,000 2.55Other Shareholders 203,542,937 55.24Total 368,492,092 100.00

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Presented below is a summary of warrant activity:-

STPI-W1(Units)

Share capital to support the warrant Exercise (Share)

No. of warrants issued 83,333,014 96,700,000No. of warrants B/F at 1 January 2012 1,631,254 3,124,687Exercised during the second quarter of 2012 (13,465) (18,906)Exercised during the fourth quarter of 2012 (427,264) (599,953)Outstanding as at 31 December 2012 1,190,525 3,124,687

2. Treasury Stock

On 3 December 2008, the Board of Directors of the Company approved a share buyback program for liquidity

surplus management purposes. The summary of the program are:

� a budget of Baht 200 million

� a number of shares to buy back is up to 25 million shares (par value of Baht 1 each), or 10 percent of total

shares issued

� the shares shall be purchased on the Stock Exchange of Thailand between 17 December 2008 and 16 June

2009

As at 31 December 2010, the Company has bought back 4.4 million ordinary shares (par value of Baht 1 each),

or 1.21 percent of total number of shares issued, for a total of Baht 35.6 million (excluding other buyback expenses).

On 8 December 2009, the Meeting of the Company’s Board of Directors no. 4/2009 passed a resolution to shorten the

resale of Treasury stocks period in order to comply with the ministerial regulation governing the timing of resale of

treasury stock. The Company reported the amendment in the Share Resale Disclosure Form (TS-7) as follows;

� the period of the resale of treasury stocks shall be from 17 December 2009 - 16 June 2012

� the offering price of the resale of treasury stocks shall not be lower than 85% of average of the closing price

of the 5 business days prior to the resale date

During the first quarter of 2012, the Company disposed 4,446,400 treasury shares at the total price of Baht

135.28 million.

3. Shareholders

List of top 10 shareholders and percentage of shares holding as of March 21, 2013

Name / Group Number of Shares % of holding1. Mr. Anutin Charnvirakul 37,406,883 10.152. Thai NVDR Co.,Ltd. 21,697,620 5.893. Best Quality Skills Company Limited 17,700,000 4.804. Equity Plus Company Limited 16,000,000 4.345. Mr. Choavalit Limpanich 14,749,999 4.006. Mr. Yanyong Nitisaroj 14,264,892 3.877. Mr. Jirat Tharaphetsawat 12,846,136 3.498. Mr. Suthep Setboonsang 10,520,986 2.869. Mr.Chavarat Charnvirakul 10,362,639 2.8110. Ms. Sureerat Techakamolsuk 9,400,000 2.55Other Shareholders 203,542,937 55.24Total 368,492,092 100.00

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4. Dividend Policy

STP&I prohibits to pay the dividend if the company has deficit in the fiscal year. The dividend will only be

paid from the Company’s Net Profit and equally paid per share.

Our dividend policy is to distribute not less than 30% of the Company Net Profit after Tax and appropriated-

statutory reserve to its shareholders. However, the Company may pay dividend less than the rate stated above upon

the consideration of overall operational performance, the financial status and also other factors that can affect the

Company operations in the future.

Subsidiaries and affiliated companies have the Dividend Policy to pay the company under their performance

each year.

STP&I has paid dividends for the period six months of the year 2010 and for the performance of year 2010 and

2011 as per below.

As of 31st December As of 31st December2010

(Dividends by cash)2010

(Stock Dividends)2011

Dividend per share (Baht) 3.67** 2.46* 0.32

Remark : * By resolutions of the Extraordinary Meeting of Shareholders No. 1/2010 on 25 November 20101 approving the declaration of dividends payment by stock dividend issuing new ordinary shares amounting to 24,047,038 shares, at par value of Baht 1 per share, to the Company’s shareholders at the ratio of 14 existing shares to 1 stock dividend, the value of stock dividend equals to Baht 2.46 per share, totaling Baht 827,458,582. In case that any shareholder holds merely a fraction of the current shares after such allocation, the dividend shall be paid in cash in the amount of Baht 2.46 per share.

** The Board of Director Meeting No.4/2010 on October 22, 2010 approved the interim dividend of 2.35 Baht per share and the Annual General Meeting of Shareholders No. 16/2011 on April 27, 2011 approve the declaration of dividends of 1.32 Baht per share totaling 3.67 Baht per share.

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Investment Structure

Company Name Type of Business Registered Capital

(Baht)

% of

HoldingSubsidiaries STIT Co., Ltd. 40 Moo 10

Bangna-Trad Road Km. 4.5 Bangna, Bangna,

Bangkok Thailand

Tel : +66 (0) 2393 7931-4

FAX : +66 (0) 2393 7930

Website : www.sino-thai.com

� Sales and rental of machinery and

equipment for construction and

manufacturing industries

� Engineering services

135,000,000

(Fully paid-up)

100

STIT 2011 Co., Ltd.

32/24, Sino-Thai Tower, 3rd Floor,

Sukhumvit 21 Road (Asoke), Kwaeng

Klongtoey Nua, Khet Wattana, Bangkok.

� Sales and rental of machinery and

equipment for construction industry

� Contractor for steel and concrete

works

66,033,000

(Fully paid-up)

100

LGR (Thailand) Co.,Ltd.

990 Abdulrahum Building 25th Floor,

Thanon Rama IV Silom, Bang Rak, Bangkok

� operated as a holding company 410,000,000

(Fully paid-up)

100

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Investment Structure

Company Name Type of Business Registered Capital

(Baht)

% of

HoldingSubsidiaries STIT Co., Ltd. 40 Moo 10

Bangna-Trad Road Km. 4.5 Bangna, Bangna,

Bangkok Thailand

Tel : +66 (0) 2393 7931-4

FAX : +66 (0) 2393 7930

Website : www.sino-thai.com

� Sales and rental of machinery and

equipment for construction and

manufacturing industries

� Engineering services

135,000,000

(Fully paid-up)

100

STIT 2011 Co., Ltd.

32/24, Sino-Thai Tower, 3rd Floor,

Sukhumvit 21 Road (Asoke), Kwaeng

Klongtoey Nua, Khet Wattana, Bangkok.

� Sales and rental of machinery and

equipment for construction industry

� Contractor for steel and concrete

works

66,033,000

(Fully paid-up)

100

LGR (Thailand) Co.,Ltd.

990 Abdulrahum Building 25th Floor,

Thanon Rama IV Silom, Bang Rak, Bangkok

� operated as a holding company 410,000,000

(Fully paid-up)

100

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Revenue Structure

The revenue structure of STP&I and its subsidiaries in 2010 to 2012 are provided in the table below:

(Unit: Million Baht)2010 2011 2012

Revenue By Amount % Amount % Amount %1. Structural Steel

Fabrication

STP&I 189.70 3.76 119.13 7.96 126.02 3.76

2. Piping Fabrication STP&I 384.56 7.62 72.44 4.84 483.24 14.413. Process Module STP&I 3,861.86 76.50 516.33 34.48 2,152.54 64.204. Revenues from

Sales and Services1)

STP&I/STIT/

STIT2011

333.75 6.61 293.13 19.58 378.24 11.28

5. Other Income 2) STP&I/ STIT/

STIT2011

278.15 5.51 496.33 33.15 212.86 6.35

Total 5,048.02 100.00 1,497.36 100.00 3,352.90 100.00

Remarks : 1) Revenues from Sales and Services derived from manufacturing, sales and rental Machinery, Construction Material and Equipment.

2) Others incomes consist of Gain on sales of investments, Gain on Foreign exchange, reversal of provision for loss from construction contract, reversal of trade accounts payable, interest income, gain on sale of equipment and scrap sales.

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For the year 2013, the Company maintains the strategy in having Australia as its major market as the economy

and construction industry in Australia will continue to boom for at least 2-3 years especially for the mega projects in

Energy sector which will make Australia become the largest producer and exporter of LNG within 2017. Japan and

in Middle East countries economy, our secondary market, are stable and slightly slow down and the project size is

likely to be small to medium size.

The business of the Company is expected to expand significantly in 2013 as the mega project on hand will

commence during March 2013 and continue until September 2015.

To create and establish its competitive advantage within the construction industry, STP&I remains committed

to ensure the highest production standards that will deliver quality products on time. STP&I focused on the expansion

to the high value-added products, such as Process Modules and Offshore Platforms due to the expansion of Energy

related business such as Gas Processing Plant, Oil Refinery and Power Plant. In addition to support our main business,

the Company will expand on the related Engineering works in the future.

Competitive Review

� Industrial Competition

1. Local Competition : There are 7 key local competitors of STP&I’s with the steel fabrication capacity of over

10,000 tons per year. Competitors are limited to these 7 manufacturers because of the high cost of raw material

imports and the high standards the competitors are required to meet as per the Thai Industrial Standards

Institute (TISI).

2. International Competition : STP&I’s overseas competitors consist mostly of domestic steel fabricators in each

project’s country and steel fabricators within the Southeast Asia region.

� STP&I’s Company Status and its Potential

With an annual steel fabrication capacity of 100,000 - 115,000 tones of per year, STP&I is one of the largest steel

fabricators in Thailand. STP&I has adopted Quality Management Program in accordance with the International

Organization for Standardization System Level ISO 9001 : 2008 and JSA Grade “H” to ensure quality control and

meet customer’s satisfaction. All assigned projects, as a result, are always completed on time and fully met the

requirements of STP&I customers. These professional services has strengthened STP&I reputation in both the domestic

and international markets.

Additionally, STP&I is the leader in exporting fabricated steel structure to customers worldwide. The Company

received BOI privilege which allows STP&I the benefits of corporate exemption STP&I also gets exemptions on VAT

and Import Duty of Imported Material. These privileges have contributed to the competitive advantages for STP&I

to effectively compete with other steel fabricators within the region.

Industry and Competitive

Review

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For the year 2013, the Company maintains the strategy in having Australia as its major market as the economy

and construction industry in Australia will continue to boom for at least 2-3 years especially for the mega projects in

Energy sector which will make Australia become the largest producer and exporter of LNG within 2017. Japan and

in Middle East countries economy, our secondary market, are stable and slightly slow down and the project size is

likely to be small to medium size.

The business of the Company is expected to expand significantly in 2013 as the mega project on hand will

commence during March 2013 and continue until September 2015.

To create and establish its competitive advantage within the construction industry, STP&I remains committed

to ensure the highest production standards that will deliver quality products on time. STP&I focused on the expansion

to the high value-added products, such as Process Modules and Offshore Platforms due to the expansion of Energy

related business such as Gas Processing Plant, Oil Refinery and Power Plant. In addition to support our main business,

the Company will expand on the related Engineering works in the future.

Competitive Review

� Industrial Competition

1. Local Competition : There are 7 key local competitors of STP&I’s with the steel fabrication capacity of over

10,000 tons per year. Competitors are limited to these 7 manufacturers because of the high cost of raw material

imports and the high standards the competitors are required to meet as per the Thai Industrial Standards

Institute (TISI).

2. International Competition : STP&I’s overseas competitors consist mostly of domestic steel fabricators in each

project’s country and steel fabricators within the Southeast Asia region.

� STP&I’s Company Status and its Potential

With an annual steel fabrication capacity of 100,000 - 115,000 tones of per year, STP&I is one of the largest steel

fabricators in Thailand. STP&I has adopted Quality Management Program in accordance with the International

Organization for Standardization System Level ISO 9001 : 2008 and JSA Grade “H” to ensure quality control and

meet customer’s satisfaction. All assigned projects, as a result, are always completed on time and fully met the

requirements of STP&I customers. These professional services has strengthened STP&I reputation in both the domestic

and international markets.

Additionally, STP&I is the leader in exporting fabricated steel structure to customers worldwide. The Company

received BOI privilege which allows STP&I the benefits of corporate exemption STP&I also gets exemptions on VAT

and Import Duty of Imported Material. These privileges have contributed to the competitive advantages for STP&I

to effectively compete with other steel fabricators within the region.

Industry and Competitive

Review

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Risk Factors

Key business risk factors are categorized and described as follows:

1. Operational Risks

1) Risks in fluctuations of Income

STP&I’s revenues are from steel fabrication, steel piping and other steel-related products which are mainly

made to order works. The nature of custom-made orders, however, have contributed to STP&I’s income fluctuations,

where in 2010, the company’s revenue from construction was 4,436.11 million baht, dropped to 707.90 million baht

in 2011 then increased to 2,761.79 million baht in 2012.

STP&I’s income are solely based on a success in getting new project and the uncertainty and delay of the

Client’s new investment projects will directly effect to our Company’s revenue.

The company’s possibility in securing new projects is our operational risks. The company’s strategy is to

uphold its reputation in world-class quality and standard work together with on-time delivery to help maintain

continuity of revenue. The Company also focuses on Process Module Assembly for LNG plant because LNG is an

important world’s energy and global LNG trend keeps rising.

STP&I also constantly build a close working partnership with the main contractors and be their preferred

sub-contractors by establishing the company’s credibility as the leader in steel fabrication so that they will only seek

the services from STP&I for all or most of their steel fabrication projects.

2) Risks in fluctuations of raw material costs

Raw materials used by STP&I consist of steel section, sheet metals and pipe which are still affected by the risks

of market price fluctuations not much in year 2011. However, in 2012, the Company saw that the price of steel section

and steel plate still stable for both local market and Asian market, Japan China and Korea, whereas pipe price may

be fluctuate. Realizing this, the company has thus proposed some of its customers to source their own pipe while the

Company will provide steel section and steel plate. This has proven mutually beneficial to both customers and

STP&I where in 2012, STP&I provided its own materials accounted for 12% towards the total company’s revenue,

and cost of steel section, steel plate and pipe total accounted for 2.0% of cost of sales.

In year 2011 and 2012, STP&I purchased its own raw materials, namely, steel section which accounted for 1.3%

and 1.5% of its total cost of sales, respectively. Additionally, the Company also purchased sheet metals accounted for

0.5% in 2011 and 2012, and purchased pipe in year 2011 and 2012 accounted for 0.3% and 0.1%, respectively. The

purchase of all above materials were made directly from local suppliers.

The materials, which purchased from local suppliers in 2012, were standard steel grade and were not affected

from price fluctuation. Moreover, the Company inquired the price before accepted the project from customer. After

project execution, the Company will conclude and fix material price with suppliers for whole project. Therefore,

changes in market price will not effect to our cost of sales.

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Annual Report 2012

The chart below shows price changes for steel section steel plate and pipe.

Unit : Baht / Kilogram

Source : Company Report on cost of Steel Section and Steel Plate.

Analysis of the chart indicates that the domestic price per kilogram for steel section remains unchanged during

3 years at 27 - 28 Baht per Kilogram. Steel plate price decreased from 26 Baht per Kilogram in 2011 to 24 - 25 Baht per

Kilogram in 2012 while pipe price increased from 27 Baht per Kilogram in end of 2010 to 32 Baht per Kilogram in

2011 then decreased to 25-27 Baht per Kilogram in 2012. (Price of pipe may different depend on grade of project spec

in each period)

Although raw material prices were not more fluctuate during 2010 – 2012, STP&I still closely monitor material

prices situation in order to determine the best price and time to purchase. In case where STP&I source raw materials,

especially steel section and steel plate, STP&I will create Bill of Materials for cost estimation in order to determine the

customer’s project requirement for steel. STP&I will then negotiate prices with suppliers for fixing price of the whole

project. For steel pipe which are more fluctuation, STP&I negotiated customers to provide their own steel pipe and

main equipments while STP&I will source some steel pipe.

3) Risks in shortage of skilled labor

During year 2013, it is a significant increase in demand of experienced engineer and skilled labor as the sharp

increase in both domestic and oversea projects in the next 2-3 years. There are some shortages on the skilled labor

compare to the volume of work in the market which are possibly to have the shortage and higher cost of labor. In

order to minimize these labor risks, the estimation team had included all concerned factors to the bidding price. And

the Company has policy to utilize more technology than using labor. The Company also introduced the program with

the education institutes in order to develop the new skilled workers to work the Company continuously with high

safety standard.

With track record of fair treatment to our staff and worker, the Company provide a good structure of pay and

professional management therefore, the Company is in a good position of attracting its employees. Then, the Company

has maintained the key personnel successfully for the coming projects.

4) Risks in foreign exchange rate fluctuations

Foreign exchange rate fluctuations are closely monitored by the Company. To avoid such risks, the Company

through the assistance of local commercial banks has adopted the use of Forward Contracts for overseas sales and

matching of revenue and expense in the same currency. The Company also use Forward Contracts for oversea

investment both mutual funds and bonds.

Mar.10-

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Steel Section Steel Plate

Sep.10 Dec.10 Mar.11 Jun.11 Sep.11 Dec.11 Mar.12 Jun.12 Sep.12 Dec.12

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The chart below shows price changes for steel section steel plate and pipe.

Unit : Baht / Kilogram

Source : Company Report on cost of Steel Section and Steel Plate.

Analysis of the chart indicates that the domestic price per kilogram for steel section remains unchanged during

3 years at 27 - 28 Baht per Kilogram. Steel plate price decreased from 26 Baht per Kilogram in 2011 to 24 - 25 Baht per

Kilogram in 2012 while pipe price increased from 27 Baht per Kilogram in end of 2010 to 32 Baht per Kilogram in

2011 then decreased to 25-27 Baht per Kilogram in 2012. (Price of pipe may different depend on grade of project spec

in each period)

Although raw material prices were not more fluctuate during 2010 – 2012, STP&I still closely monitor material

prices situation in order to determine the best price and time to purchase. In case where STP&I source raw materials,

especially steel section and steel plate, STP&I will create Bill of Materials for cost estimation in order to determine the

customer’s project requirement for steel. STP&I will then negotiate prices with suppliers for fixing price of the whole

project. For steel pipe which are more fluctuation, STP&I negotiated customers to provide their own steel pipe and

main equipments while STP&I will source some steel pipe.

3) Risks in shortage of skilled labor

During year 2013, it is a significant increase in demand of experienced engineer and skilled labor as the sharp

increase in both domestic and oversea projects in the next 2-3 years. There are some shortages on the skilled labor

compare to the volume of work in the market which are possibly to have the shortage and higher cost of labor. In

order to minimize these labor risks, the estimation team had included all concerned factors to the bidding price. And

the Company has policy to utilize more technology than using labor. The Company also introduced the program with

the education institutes in order to develop the new skilled workers to work the Company continuously with high

safety standard.

With track record of fair treatment to our staff and worker, the Company provide a good structure of pay and

professional management therefore, the Company is in a good position of attracting its employees. Then, the Company

has maintained the key personnel successfully for the coming projects.

4) Risks in foreign exchange rate fluctuations

Foreign exchange rate fluctuations are closely monitored by the Company. To avoid such risks, the Company

through the assistance of local commercial banks has adopted the use of Forward Contracts for overseas sales and

matching of revenue and expense in the same currency. The Company also use Forward Contracts for oversea

investment both mutual funds and bonds.

Mar.10-

5.00

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5) Risks in the policy of allowance for doubtful account

The Company has an average period of each project is approximately at 1-2 years therefore, the Company will

not reserve the over 1 year of outstanding account receivables. However, the Company has policy to reserve the

allowance for doubtful account by evaluating on financial status, economy situation, and customer relationship of

individual clients. Resulting from the policy, the Company is not able to get the payment from client and these doubtful

accounts are not reserved which will directly effect to the operation.

As at December 31, 2011, the Company has the over 12 months account receivables of 43.54 million baht and

allowance for doubtful account to be bad debt account of 43.35 million baht.

As at December 31, 2012, the Company has the over 12 months account receivables of 37.39 million baht and

allowance for doubtful account to be bad debt account of 37.25 million baht. The transaction has been reviewed and

evaluated by the Management with an appropriate practice.

6) Risks from lawsuits

As of 31 December 2012, the Company no longer had any pending lawsuits which had negative effects to its

assets over 5 percent of total shareholders’ equity. However, there has still been a lawsuit under the Supreme Court

processing with the value under initial court ruling over 5 percent of total shareholders’ equity as at 31 December

2011.

On September 21, 2005, an overseas company (“counterparty”) sued the Company for damages amounting

to US 7 million dollars. Subsequently in December 2011, the Central Intellectual Property and International Trade

Court issued its initial ruling ordering the Company to pay damages for the work amounting to USD 2 million together

with interest at 7.5 percent per annum from 15 June 2005 until the payment is settled; equivalent to approximately

Baht 104 million. The Company already filed for Appeal petition to the Supreme Court on June 28, 2012 as a disagreement

to the initial court ruling. The case is currently under the appealing process at the Supreme Court and the outcomes

are yet to be known.

The Company has set aside a provision of Baht 180 million for potential liabilities arising as a result of this

case since 2008. Based on the opinions of its legal department and the Executive Committee, no additional provision

is needed because it is expected that the possible damages will not exceed the provision already set aside as mentioned

above.

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Annual Report 2012

Management Structure

The corporate management structure consists of 3 groups of directors which are:

1. Board of Directors

2. Audit Committee

3. Executive Board

Board of Directors

The Board of Directors is responsible for the following issues:

� To endorse the corporate policy and its business plan

� To approve the change in corporate accounting policy and consider its quarterly and annually financial

performance

� To govern the Executive Board to perform efficiently and in compliance to the company’s policy

� To ensure sufficiency, efficiency and effectiveness of Corporate Internal Control System and Internal Audit

System

� To perform annual review and appraisal on the corporate Internal Control system for its adequacy and

efficiency

� To ensure the company’s compliance of Thai laws and other related rules and regulations set by the Stock

Exchange of Thailand

� To monitor and prevent any conflict of interests

� To prepare and disclose the report on the Board of Directors’ Responsibility to the company’s financial

statements together with the Report of the Audit Committee and the Report of Independent Auditor in the

Annual Report

� To perform in accordance with the rules and regulations set by SET and SEC regarding the good corporate

governance guidelines and principles of good practice for directors

In the Annual General Meeting of shareholders, at least one-third of the directors shall retire from the office.

If the number of retired directors is not dividable, the nearest number to one-third shall retire and the retiring directors

may be re-elected.

Audit committee � To review the Company’s financial reporting process to ensure that its accuracy and adequacy

� To review the Company’s internal control system and internal audit system to ensure that they are suitable

and efficient, to determine an internal audit unit’s independence, as well as to approve the appointment,

transfer and dismissal of the chief of an internal audit unit or any other unit in charge of an internal audit

� To review the Company’s compliance with the law on securities and exchange, the Exchange’s regulations,

and the laws relating to the Company’s business

� To consider, select and nominate an independent person to be the Company’s auditor, and to propose such

person’s remuneration, as well as to attend a non-management meeting with an auditor at least once a year

� To review the Connected Transactions, or the transactions that may lead to conflicts of interests, to ensure

that they are in compliance with the law and the Exchange’s regulations, and are reasonable and for the

best interest of the Company

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Annual Report 2012

Management Structure

The corporate management structure consists of 3 groups of directors which are:

1. Board of Directors

2. Audit Committee

3. Executive Board

Board of Directors

The Board of Directors is responsible for the following issues:

� To endorse the corporate policy and its business plan

� To approve the change in corporate accounting policy and consider its quarterly and annually financial

performance

� To govern the Executive Board to perform efficiently and in compliance to the company’s policy

� To ensure sufficiency, efficiency and effectiveness of Corporate Internal Control System and Internal Audit

System

� To perform annual review and appraisal on the corporate Internal Control system for its adequacy and

efficiency

� To ensure the company’s compliance of Thai laws and other related rules and regulations set by the Stock

Exchange of Thailand

� To monitor and prevent any conflict of interests

� To prepare and disclose the report on the Board of Directors’ Responsibility to the company’s financial

statements together with the Report of the Audit Committee and the Report of Independent Auditor in the

Annual Report

� To perform in accordance with the rules and regulations set by SET and SEC regarding the good corporate

governance guidelines and principles of good practice for directors

In the Annual General Meeting of shareholders, at least one-third of the directors shall retire from the office.

If the number of retired directors is not dividable, the nearest number to one-third shall retire and the retiring directors

may be re-elected.

Audit committee � To review the Company’s financial reporting process to ensure that its accuracy and adequacy

� To review the Company’s internal control system and internal audit system to ensure that they are suitable

and efficient, to determine an internal audit unit’s independence, as well as to approve the appointment,

transfer and dismissal of the chief of an internal audit unit or any other unit in charge of an internal audit

� To review the Company’s compliance with the law on securities and exchange, the Exchange’s regulations,

and the laws relating to the Company’s business

� To consider, select and nominate an independent person to be the Company’s auditor, and to propose such

person’s remuneration, as well as to attend a non-management meeting with an auditor at least once a year

� To review the Connected Transactions, or the transactions that may lead to conflicts of interests, to ensure

that they are in compliance with the law and the Exchange’s regulations, and are reasonable and for the

best interest of the Company

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� To prepare, and to disclose in the Company’s annual report, an audit committee’s report which must be

signed by the audit committee’s chairman and consist of at least the following information

- opinion on the accuracy, sufficiency and accountability of the Company’s financial report,

- an opinion on the effectiveness of the Company’s internal control system,

- an opinion on the compliance with the law on securities and exchange, the Exchange’s regulations, or

the laws relating to the Company’s business,

- an opinion on the suitability of an auditor,

- an opinion on the transactions that may lead to conflicts of interests,

- the number of the audit committee meetings, and the attendance of such meetings by each committee

member,

- an opinion or overview comment from the audit committee’s performance of duties in accordance with

the charter, and

- other transactions which, according to the audit committee’s opinion, should be informed to the

shareholders and general investors, subject to the scope of duties and responsibilities assigned by the

Company’s board of directors; and

� To perform any other act as assigned by the Company’s board of directors, with the approval of the audit

committee.

Executive Board

The Management Executives are responsible for ensuring the effectiveness of the company’s operation according

to the company’s policy. The Management Executives are also responsible for considering and screening all business

matters for the Board of Directors approval.

Managing Director

Managing Director is responsible for efficiently and effectively conducting the business under the company’s

policies. His scope of authority in conducting and approving any issues related to company’s general administration,

unless it is required by regulations or laws to be approved by the Board of Directors Meeting or shareholders’ meeting.

The managing director must not engage in any related transactions which may have conflict of interests with the

company. The managing director shall be able to appoint other person(s) to act on his behalf to manage and conduct

company’s business.

Authorized Directors

All Company documents have to be signed by the Company Authorization, either by Mr. Anutin Charnvirakul,

Chairman or Mr. Masthawin Charnvirakul, Director and Managing Director.

Selection of Directors, Independent Directors and Management Executives

The company has not formed the Selection Committee to appoint the Directors. The directors have been selected

by considering each individual qualifications to fit the Board of Directors roles and responsibilities. Member of the

Board of Directors will be selected from qualified persons and propose to the annual general meeting of shareholders

to consider the appointment by resolution. The rights of shareholders can be defined as following:

1. One-share one-vote basis will be applied.

2. Each shareholder has to use up his votes for director appointment.

3. The nominees whose votes are chronological order ranging from the top to the last shall be elected as a Director.

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The Definition of Independent Director� Holding shares no more than 5 per cent of paid-up capital of the company, affiliated company, associated

company or related company, which shall be inclusive of the shares held by related persons.

� Being a director who does not take part in the management of the company, affiliated company, associated

company, related company or majority shareholder of the company. Not being an employee, staff member

or advisor who receives a regular salary from the company, affiliated company, associated company, related

company or majority shareholder of the company

� Being a director who has no direct or indirect benefit or interest in finance and management of the company,

affiliated company, associated company or majority shareholder of the company. Being a director who has

no benefit or interest of the said nature during the period of 1 year before his appointment as a member of

the Audit Committee except where the Board of Directors has carefully considered that such previous

benefit or interest does not affect the performance of duties and the giving of independent opinions.

� Being a director who is not a related person or close relative of any management member or majority

shareholder of the company.

� Being a director whom is not appointed as a representative of the company’s directors, majority shareholders

or shareholders who are related to the company’s majority shareholders.

� Being capable of performing duties, giving opinions or reporting the results of performance of work according

to the duties delegated by the Board of Directors without the control of the management or the majority

shareholders of the company including related persons or close relatives of the said persons.

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The Definition of Independent Director� Holding shares no more than 5 per cent of paid-up capital of the company, affiliated company, associated

company or related company, which shall be inclusive of the shares held by related persons.

� Being a director who does not take part in the management of the company, affiliated company, associated

company, related company or majority shareholder of the company. Not being an employee, staff member

or advisor who receives a regular salary from the company, affiliated company, associated company, related

company or majority shareholder of the company

� Being a director who has no direct or indirect benefit or interest in finance and management of the company,

affiliated company, associated company or majority shareholder of the company. Being a director who has

no benefit or interest of the said nature during the period of 1 year before his appointment as a member of

the Audit Committee except where the Board of Directors has carefully considered that such previous

benefit or interest does not affect the performance of duties and the giving of independent opinions.

� Being a director who is not a related person or close relative of any management member or majority

shareholder of the company.

� Being a director whom is not appointed as a representative of the company’s directors, majority shareholders

or shareholders who are related to the company’s majority shareholders.

� Being capable of performing duties, giving opinions or reporting the results of performance of work according

to the duties delegated by the Board of Directors without the control of the management or the majority

shareholders of the company including related persons or close relatives of the said persons.

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39 The Company is committed to the principles of good corporate governance in compliance with the recom-

mended best practices for listed company and relevant rules, regulations and guidelines of the Stock Exchange of

Thailand (“SET”), the Office of the Securities and Exchange Commission (“SEC”),

1 Rights of Shareholders

Shareholders: Rights of Shareholders

The Company’s Shareholders shall have the following basic rights:

• Rights to buy, sell, or transfer shares;

• Rights to share in the profit of the Company;

• Rights to have access to the Company’s information in a timely fashion and on a regular basis;

• Rights to participate and vote in the Shareholders’ Meeting including the rights to:

- Elect or remove directors;

- Propose and approve the appointment of the external auditor;

- Participate in the decision making of any transactions that affect the Company and/or the Shareholders

in a material manner.

Meeting of Shareholders

The company had one Annual General Meeting (AGM) in 2012, meeting number 17/2012 on April 26, 2012.

This AGM covered topics regarding the company’s 2011 operating performance, dividend payment, the appointment

of Director, the remuneration for Director, the appointment of audit and the audit fee.

To ensure that all processes and procedures for shareholders meeting allow equitable treatment of all shareholders,

the Notice of Annual General Meeting with details on date, time, venue and agenda together with necessarily

supporting documents were distributed to all shareholders prior the meeting date and disclosed on the Company’s

website at least 30 days in advance.

The Annual General Meeting of Shareholders (AGM) 17/2012 was attended by the company’s directors,

company management executives and other specialists, including the company’s appointed company secretary and

attorneys who were responsible for the recording minutes of the meetings and to provide unbiased and transparent

legal advice where needed. The Chairman of the AGM offered company shareholders to express their views and to

raise any questions they had regarding the company’s operations. Executive summary of the Annual General

Meeting of Shareholders (AGM) 17/2012 was presented to the Stock Exchange of Thailand (SET) and disclosed on

the Company website within the specified period.

In the Annual General Meeting of Shareholders 17/2012, the Company encouraged to use the proxy form for

the minority of shareholders to nominate candidates for director positions and shareholders who cannot vote in

person and prepared the voting ballots for all agendas covered in the AGM to ensure full transparency and allow of

a thorough review of any disagreements and conflicting issues.

Good CorporateGovernance

Annual Report 2012

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2. Equitable Treatment of Shareholders

The Board of Directors gave the importance to Equitable Treatment of Shareholders. The Shareholders shall be

informed of the criteria and procedures governing the Shareholders’ Meeting including the voting procedure and use

of proxy. The Independent Director shall be assigned to be a proxy for shareholders who cannot attend the meeting.

An English version of the Notice of Shareholders’ meeting is provided for foreign shareholders.

For policy regarding the use of inside information, the Company has established “Business Ethics” practice

which is specified in writing. This “Business Ethics” practice is used as the code of business conduct for all company

employees to ensure business manners and employee performance follows the company’s set guidelines.

Additionally, the company specified that all members of the Board of Directors and Management Executives must

disclose the numbers of shares they held in accordance with the Securities & Exchange Act B.E. 2535 Section 59. The

company also delivers all information obtained from the SET and the SEC to the Board of Directors and Management

Executive.

For conflict of interest, the Company shall appoint the Audit Committee to give opinion on necessity and

reasonableness of such transaction and shall comply with the laws concerning securities and stock exchange and the

regulations, announcement, orders or requirements of the Stock Exchange of Thailand. The Directors and Executive

Directors strictly follow the notifications and conditions of the Stock Exchange of Thailand on price fixing as normal

transaction with third party. The responsibilities of executives are to accurately report on the Company’s stock activities

and strictly follow the notifications of the Stock Exchange of Thailand.

3. Role of Stakeholders

The Company strongly believes in the rights of stakeholders. The Company’s success can never be sustained

unless all stakeholders are treated fairly.

The Company’s employees must be given proper wages, returns and treated equally, fairly, and in compliance

with Thai laws and other related rules and regulations. STP&I also places priority to safety standard to ensure well-being

of its workers.

For our customers, our products’ quality must fully meet the customer’s satisfaction. The goods and services

shall be sold properly in accordance with the quantity, quality, and price as agreed upon and be responsible for its

own commitment.

In business competition, the company will ensure all competition will be handled in accordance with business

ethics, transparency, and sufficiency of information disclosure.

For transaction with government organizations, the Company shall act straightforwardly, honestly and righteously

and shall abide by the rules of laws in business transactions and refrain from making a bride.

The Company promises to be responsible to community, society and environment by refrain from undertaking

business that is detrimental to the society or harmful to natural resources and environment or cause pollution to the

surrounding and society. The Company respect to the intellectual rights of the other people of business shall pay

attention on the creation of works for people in the community in compatibility with the potential of such community.

Regarding Corporate Social Responsibility, the Company also continually supports various activities on both

community and organization level.

Annual Report 2012

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2. Equitable Treatment of Shareholders

The Board of Directors gave the importance to Equitable Treatment of Shareholders. The Shareholders shall be

informed of the criteria and procedures governing the Shareholders’ Meeting including the voting procedure and use

of proxy. The Independent Director shall be assigned to be a proxy for shareholders who cannot attend the meeting.

An English version of the Notice of Shareholders’ meeting is provided for foreign shareholders.

For policy regarding the use of inside information, the Company has established “Business Ethics” practice

which is specified in writing. This “Business Ethics” practice is used as the code of business conduct for all company

employees to ensure business manners and employee performance follows the company’s set guidelines.

Additionally, the company specified that all members of the Board of Directors and Management Executives must

disclose the numbers of shares they held in accordance with the Securities & Exchange Act B.E. 2535 Section 59. The

company also delivers all information obtained from the SET and the SEC to the Board of Directors and Management

Executive.

For conflict of interest, the Company shall appoint the Audit Committee to give opinion on necessity and

reasonableness of such transaction and shall comply with the laws concerning securities and stock exchange and the

regulations, announcement, orders or requirements of the Stock Exchange of Thailand. The Directors and Executive

Directors strictly follow the notifications and conditions of the Stock Exchange of Thailand on price fixing as normal

transaction with third party. The responsibilities of executives are to accurately report on the Company’s stock activities

and strictly follow the notifications of the Stock Exchange of Thailand.

3. Role of Stakeholders

The Company strongly believes in the rights of stakeholders. The Company’s success can never be sustained

unless all stakeholders are treated fairly.

The Company’s employees must be given proper wages, returns and treated equally, fairly, and in compliance

with Thai laws and other related rules and regulations. STP&I also places priority to safety standard to ensure well-being

of its workers.

For our customers, our products’ quality must fully meet the customer’s satisfaction. The goods and services

shall be sold properly in accordance with the quantity, quality, and price as agreed upon and be responsible for its

own commitment.

In business competition, the company will ensure all competition will be handled in accordance with business

ethics, transparency, and sufficiency of information disclosure.

For transaction with government organizations, the Company shall act straightforwardly, honestly and righteously

and shall abide by the rules of laws in business transactions and refrain from making a bride.

The Company promises to be responsible to community, society and environment by refrain from undertaking

business that is detrimental to the society or harmful to natural resources and environment or cause pollution to the

surrounding and society. The Company respect to the intellectual rights of the other people of business shall pay

attention on the creation of works for people in the community in compatibility with the potential of such community.

Regarding Corporate Social Responsibility, the Company also continually supports various activities on both

community and organization level.

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4. Disclosure and Transparency

Policy on Corporate Good Governance

The Board of Directors defines the importance of corporate good governance in written in order to gain the

company’s sustainable growth and management efficiency. The review of sufficient internal control system has been

performed annually since 2002 in order to ensure the efficient company’s operations, and supervising the executives

to obtain the management efficiency. The company disclosed all information required by SET in bilingual (Thai and

English) via the company’s website.

The Board of Directors also reviewed the Company’s Corporate Governance Policy and Risk Management

including the evaluation of Board of Directors’ performance.

Report of the Board of Directors

The Board of Directors Report on the company’s financial performance has been issued. The report clearly

stated the integrity, accuracy, completeness, and appropriateness of book keeping of financial data which met the

Generally Accepted by Accounting Standards.

Relations with Investors

The company has set up an investor relations unit to provide the company’s information both financial and

non-financial issues to the investors. The company has to disclose all important information correctly, completely and

transparently. In case of further information required, the investors can phone 02-260-1181 or send an email to ir@stpi.co.th.

5. Responsibilities of the Board of Directors

Leadership and Vision

The Board of Directors approved all company’s policy, business plan, and also monitored the company’s

operations to ensure all activities are conducted in accordance with relevant laws and ethical standards.

The Board of Directors reviewed and approved key business matters such as the vision and mission of the

company, strategy, financial targets, risks, internal control system and auditing system. To conduct the best interest

of the shareholders, the Board of Directors, the Audit Committee, and the Executive Directors have their own roles

and responsibilities to perform their duties transparently and independently.

The Board of Directors set the approval authority line for the Executive Directors for managing day-to-day

business operations. The brief guideline of the approval transactions with no conflict of interests was set so that the

transactions are conducted for the best interest of the company and all shareholders.

Business Ethics

A written Business Ethics is used as code of business conduct for everyone in the company to ensure the

appropriate business manners and performance. Compliance of the code is closely monitored by the Board of Directors.

Balance of Power Aggregation or Segregation

The company’s Board of Directors consists of 8 members. Of these 8 members, 3 are managements, 1

non-management director and 4 independent directors. The proportion of independent directors is 1 to 3 of the total

member of the Board of Directors.

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Remuneration of Board of Directors and Management Executives

The Board of Directors remuneration was set in accordance with SET regulations and within the limit approved

by shareholders. The appropriate remuneration has been offered according to each director’s qualifications, experiences,

obligations, scope of work, accountability and responsibilities and contributions. Members of the Board of Directors

who were assigned to more tasks such as committee, have received higher remuneration.

Executives’ salaries, bonuses, and other long-term compensation have corresponded to the company’s performance

and that of each executive.

Board of Directors and Audit Committee - 2011 Remuneration

Name

Meeting Compensation (Baht) Remuneration (Baht)

TotalBoard of Director

Audit committee

Board of Director

Audit committee

1. Mr. Anutin Charnvirakul 120,000 - 1,568,000 1,688,000

2. Dr.Wicha Jiwalai 120,000 160,000 - 1,568,000 1,848,000

3. Pol. Gen. Jate Mongkolhutthi 90,000 120,000 - 1,568,000 1,778,000

4. Mr.Dol Watanasri* 120,000 120,000 - 1,568,000 1,808,000

5. Mr.Chamni Janchai 120,000 120,000 - 1,568,000 1,808,000

6. Adm.Amorntep Nabangchang** - - - -

7. Mr.Masthawin Charnvirakul 120,000 - 1,568,000 - 1,688,000

8. Mr.Suwat Riensiriwan 120,000 - 1,568,000 - 1,688,000

9. Mr.Choavalit Limpanich 120,000 - 1,568,000 - 1,688,000

Total of Director Payment 930,000 - 6,272,000 - 7,202,000

Total Amount of Audit Committee Payment - 520,000 - 6,272,000 6,792,000

Total Amount of Board of Director Payment 13,994,000

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Remuneration of Board of Directors and Management Executives

The Board of Directors remuneration was set in accordance with SET regulations and within the limit approved

by shareholders. The appropriate remuneration has been offered according to each director’s qualifications, experiences,

obligations, scope of work, accountability and responsibilities and contributions. Members of the Board of Directors

who were assigned to more tasks such as committee, have received higher remuneration.

Executives’ salaries, bonuses, and other long-term compensation have corresponded to the company’s performance

and that of each executive.

Board of Directors and Audit Committee - 2011 Remuneration

Name

Meeting Compensation (Baht) Remuneration (Baht)

TotalBoard of Director

Audit committee

Board of Director

Audit committee

1. Mr. Anutin Charnvirakul 120,000 - 1,568,000 1,688,000

2. Dr.Wicha Jiwalai 120,000 160,000 - 1,568,000 1,848,000

3. Pol. Gen. Jate Mongkolhutthi 90,000 120,000 - 1,568,000 1,778,000

4. Mr.Dol Watanasri* 120,000 120,000 - 1,568,000 1,808,000

5. Mr.Chamni Janchai 120,000 120,000 - 1,568,000 1,808,000

6. Adm.Amorntep Nabangchang** - - - -

7. Mr.Masthawin Charnvirakul 120,000 - 1,568,000 - 1,688,000

8. Mr.Suwat Riensiriwan 120,000 - 1,568,000 - 1,688,000

9. Mr.Choavalit Limpanich 120,000 - 1,568,000 - 1,688,000

Total of Director Payment 930,000 - 6,272,000 - 7,202,000

Total Amount of Audit Committee Payment - 520,000 - 6,272,000 6,792,000

Total Amount of Board of Director Payment 13,994,000

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Board of Directors and Audit Committee - 2012 Remuneration

Name

Meeting Compensation (Baht) Remuneration (Baht)

TotalBoard of Director

Audit committee

Board of Director

Audit committee

1. Mr. Anutin Charnvirakul 200,000 - 1,662,000 - 1,862,000

2. Dr.Wicha Jiwalai 180,000 320,000 - 1,662,000 2,162,000

3. Pol. Gen. Jate Mongkolhutthi 180,000 240,000 - 1,662,000 2,082,000

4. Mr.Dol Watanasri* 30,000 60,000 - - 90,000

5. Mr.Chamni Janchai 180,000 240,000 - 1,662,000 2,082,000

6. Adm.Amorntep Nabangchang** 90,000 - 1,099,000 1,189,000

7. Mr.Masthawin Charnvirakul 180,000 - 1,662,000 - 1,842,000

8. Mr.Suwat Riensiriwan 180,000 - 1,662,000 - 1,842,000

9. Mr.Choavalit Limpanich 180,000 - 1,662,000 - 1,842,000

Total of Director Payment 1,400,000 - 7,747,000 - 9,147,000

Total Amount of Audit Committee Payment 860,000 - 4,986,000 5,846,000

Total Amount of Board of Director Payment 14,993,000

Remark: * Mr. Dol Wattanasri resigned from Independent Director and Audit Committee Member effective on March , 2012.

** Adm.Amorntep Nabangchang was appointed to a director as per Resolution on BOD No. 3/2012 on 24 April 2012.

The remuneration was calculated pro rata from 24 April 2012 - 31 December 2012, totaling 252 days.

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Total remuneration in 2011 and 2012 were paid to 10 and 9 members of the Executive Board in the form below.

(Unit : Baht)

Remuneration 2011 2012Salary 15,619,887.00 16,427,640Bonus 2,672,420.00 5,199,850Total Payment 18,292,307.00 21,627,490Provident Fund 464,467.00 474,108No. of Executives(Payroll) 9 People 9 people

Employees

The company had employees in 2011 and 2012 at 1,201 and 2,637 employees, respectively.

(Unit: persons)

ResponsibilitiesTotal No. of Employees

2011 2012Operations staff 967 2,127Support staff 234 510

Total 1,201 2,637

(Unit : Baht )

Employee ClassificationEmployee compensation

2011 2012Employee salary 219,518,903 649,505,793Employee bonus 15,846,942 85,351,704

Provident Fund 2,060,717 2,356,812

Other compensation/benefits 38,224,572 76,619,651Total 275,651,134 813,833,960

Board of Directors Meetings

In 2012 the company held 6 Board of Directors meeting which was attended by company executives to discuss

the topic regarding the company’s Board of Directors.

For the best interest of the company, the Board of Directors concentrated on the Quarterly Financial Performance and

the Report of Audit Committee coupled with the business risk which could affect the company’s performance includ-

ing the follow up of legal cases and the operation risk.

The secretary of the Board of Directors is responsible for minutes taking, distributing the meeting notifications

with other relevant documents to all directors at least 7 days prior the meeting date. Minutes of the Board of Directors

of Meetings were certified by the Board and filed properly as reference.

Board of Sub-Committee

The Board of Sub-Committee appointed the Audit Committee and Management Executives to perform and

monitor the company’s operations. Their duties and responsibilities have been defined clearly in the Management

Structure section.

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Total remuneration in 2011 and 2012 were paid to 10 and 9 members of the Executive Board in the form below.

(Unit : Baht)

Remuneration 2011 2012Salary 15,619,887.00 16,427,640Bonus 2,672,420.00 5,199,850Total Payment 18,292,307.00 21,627,490Provident Fund 464,467.00 474,108No. of Executives(Payroll) 9 People 9 people

Employees

The company had employees in 2011 and 2012 at 1,201 and 2,637 employees, respectively.

(Unit: persons)

ResponsibilitiesTotal No. of Employees

2011 2012Operations staff 967 2,127Support staff 234 510

Total 1,201 2,637

(Unit : Baht )

Employee ClassificationEmployee compensation

2011 2012Employee salary 219,518,903 649,505,793Employee bonus 15,846,942 85,351,704

Provident Fund 2,060,717 2,356,812

Other compensation/benefits 38,224,572 76,619,651Total 275,651,134 813,833,960

Board of Directors Meetings

In 2012 the company held 6 Board of Directors meeting which was attended by company executives to discuss

the topic regarding the company’s Board of Directors.

For the best interest of the company, the Board of Directors concentrated on the Quarterly Financial Performance and

the Report of Audit Committee coupled with the business risk which could affect the company’s performance includ-

ing the follow up of legal cases and the operation risk.

The secretary of the Board of Directors is responsible for minutes taking, distributing the meeting notifications

with other relevant documents to all directors at least 7 days prior the meeting date. Minutes of the Board of Directors

of Meetings were certified by the Board and filed properly as reference.

Board of Sub-Committee

The Board of Sub-Committee appointed the Audit Committee and Management Executives to perform and

monitor the company’s operations. Their duties and responsibilities have been defined clearly in the Management

Structure section.

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Internal Control System and Internal Audit

Internal auditors are responsible for the company’s financial activities to compliance with the SET requirements

and other relevant laws. The company’s performance has to be reported directly to the Audit Committee and the

Board of Directors for their consideration.

Policy on Human Resources Development

Human resource development is one of the Company’s commitments, we strive to promote and support our

employees to obtain further expertise and knowledge at all levels.

1. Management Level : Skills on management and leadership & Vision

2. Supervisor : Basic Management, supervising skill, team building skill, communication skill and other specific

skill

3. Staff : Self-development and motivation skills, knowledge, expertise and experience related to the scope of

work, good attitude toward executives and company.

Policy Sustainable Development Guideline

The Company incorporates the guideline of Sustainable Development to define our vision and policy. The

equilibrium among economic, social and environment will support the Company to its steady growth. The Company

shall constantly improve its work process, expand toward higher value added products and emphasize on safety

standard, well-being of employees, quality of community and environmental concerns.

Company Secretary

The Board of Directors has appointed Mrs. Atitaya Charnvirakul, The Secretary of the Board of Directors, as

the Company Secretary, with authority as follows.

1. To prepare and store the following documents :• List of company directors

• Board of Directors meeting notice, Board of Directors meeting minutes, annual report

• Shareholders’ meeting notice and shareholders meeting minutes

2. To file the report of interests as informed by company directors or executives

3. To engage in other duties as required by the Equity Market Committee

Corporate Social Responsibility

• Donating the second hand computers printer projectors and scanner to Suankaew Foundation.• Donating the second hand computers to Baan Khoa Nang Tuam School, Nong Bua District, Nakhon Sawan

for learning activities in school.• Receiving 5 students for an internship to broaden their experiences and equip them with essential skills for

their future employment.• Donating to support Thai Canals Preservation Project, Ministry of Finance.

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Corporate Social Responsibility

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Related PartiesTransaction

Related company means the company that STP&I owns at least 20% of its total shares and/or the company that is a

shareholder of STP&I and/or has common shareholder(s)/director(s) with STP&I.

1) Subsidiary Companies

Company Name/Type of Business

Relationship Paid-Up(Baht)

% of Shares

Investment(Cost Price)

(Baht)

1) STIT Company Limited (Sales and rental of machinery and equipment for construction and manufacturing industries, Engineering services)

1)100% owned subsidiary of STP&I2) Common Directors

135,000,000 100 135,000,000

2) STIT 2011 Co., Ltd.* (Sales and rental of machinery and equipment for construction industry, Contractor for steel and concrete works)

100% owned subsidiary of STIT 66,033,000 100 23,060,000

3) LGR (Thailand) Co., Ltd.**

(Holding Company)100% owned subsidiary of STP&I 410,000,000 100 21,761,200

* A 100% owned subsidiary of STIT Company Limited, formerly Marvel (FT) Holdings Company Limited, which had a capital increase

of 5 Mil.Baht in 2011. During year 2012, it had a capital decrease of 198 Mil.Baht to compensate for its deficit.** On Feb 4, 2013, STP&I acquired 100% shares of LGR (Thailand) Co., Ltd. total cost of 21.76 Mil.Baht resulting in a 100% shareholding

after acquisition.

2) Related Companies

Company Name Type of business Relationship Paid-Up Capital(Baht)

% of Holding STP&I Shares

Sino-Thai Engineering andConstruction Public Company Limited Construction

Common Directors 1,186,208,619 -

Thai Maintenance Contracting Company Limited

Industrial plant and factory maintenance

Common Directors 12,315,000 -

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3) Related Party Transactions as of December 31st, 2012

(Unit: Million Baht)

Name Transaction

Revenue Type Amount Expense Type Amount

Sino-Thai Group

Sino-Thai Engineering and Construc-tion Public Company Limited

Sales and Services 11.0 Purchase of goods and services Purchase of services

33.94.0

Total 11.0 37.9Subsidiaries

1) STIT Company Limited Sales and ServiceInterest income

3.21.0

Fabrication Cost 2.6

Purchase of goods and services

0.4

2) STIT 2011 Co.,Ltd. None - Fabrication Cost 612.9

Total 4.2 615.9

Necessity of the related transactions

Transactions between the company and its subsidiaries, affiliates and/or related companies have been done

by taking consideration to the best interest of the Company. The transactions were normal course of business and

undertaken on competitive basis. The pricing was comparable to market prices and same conditions with other third parties.

Approval procedure related Transactions

For transactions between the company and its subsidiaries, affiliates, related companies or any persons who

might have conflict of interest, the Company complied with rules and regulations of the Stock Exchange of Thailand

(SET) not to allow such shareholders or management or director to take part in the approval process.

Connected Transactions Policy

For future related transactions that will be incurred in accordance with the normal business of the Company

and have general terms and conditions, the Company has established the policy to ensure that pricing must be in line

with market rate and with the same conditions to other third parties. The transactions will be fairly practiced and for

the mutual benefit of the company and its subsidiaries, affiliates and/or related companies.

For other related transactions without specific terms of trade, the company shall appoint the Audit Committee

to give opinion on necessity and reasonableness of such transaction and shall comply with the laws concerning

securities and stock exchange and the regulations, announcement, orders or requirements of the Stock Exchange of

Thailand as well as the requirements concerning the disclosure of the related and the acquisition and disposal of the

material assets of the Company. In case that the transactions are not in the expertise of the Audit Committee, the

Company may appoint experts to give opinion to the Board of Directors or shareholders as the case may be. Any

person who might have conflict of interest shall not be allowed to take part in the approval process. In addition, the

Company has disclosed the related transactions in the note of our audited financial statements.

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3) Related Party Transactions as of December 31st, 2012

(Unit: Million Baht)

Name Transaction

Revenue Type Amount Expense Type Amount

Sino-Thai Group

Sino-Thai Engineering and Construc-tion Public Company Limited

Sales and Services 11.0 Purchase of goods and services Purchase of services

33.94.0

Total 11.0 37.9Subsidiaries

1) STIT Company Limited Sales and ServiceInterest income

3.21.0

Fabrication Cost 2.6

Purchase of goods and services

0.4

2) STIT 2011 Co.,Ltd. None - Fabrication Cost 612.9

Total 4.2 615.9

Necessity of the related transactions

Transactions between the company and its subsidiaries, affiliates and/or related companies have been done

by taking consideration to the best interest of the Company. The transactions were normal course of business and

undertaken on competitive basis. The pricing was comparable to market prices and same conditions with other third parties.

Approval procedure related Transactions

For transactions between the company and its subsidiaries, affiliates, related companies or any persons who

might have conflict of interest, the Company complied with rules and regulations of the Stock Exchange of Thailand

(SET) not to allow such shareholders or management or director to take part in the approval process.

Connected Transactions Policy

For future related transactions that will be incurred in accordance with the normal business of the Company

and have general terms and conditions, the Company has established the policy to ensure that pricing must be in line

with market rate and with the same conditions to other third parties. The transactions will be fairly practiced and for

the mutual benefit of the company and its subsidiaries, affiliates and/or related companies.

For other related transactions without specific terms of trade, the company shall appoint the Audit Committee

to give opinion on necessity and reasonableness of such transaction and shall comply with the laws concerning

securities and stock exchange and the regulations, announcement, orders or requirements of the Stock Exchange of

Thailand as well as the requirements concerning the disclosure of the related and the acquisition and disposal of the

material assets of the Company. In case that the transactions are not in the expertise of the Audit Committee, the

Company may appoint experts to give opinion to the Board of Directors or shareholders as the case may be. Any

person who might have conflict of interest shall not be allowed to take part in the approval process. In addition, the

Company has disclosed the related transactions in the note of our audited financial statements.

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Report on Interest of Directors, Executives and Related Persons

To comply with the announcement Tor.Jor.2/2552 (2009) of Capital Market Supervisory Board and Section 89/14

of the Securities and Exchange Act B.E. 2535 (1992) as amended by the Securities and Exchange Act (No.4) B.E. 2551

(2008), the Board of Directors mandate directors and executives to disclose his interest or his related person’s interest

that may have conflict with the Company or its subsidiary for the purpose of Conflict of Interest monitoring to the

Company. The Board of Directors also assigned the Company Secretary to keep the original reports and copy to the

Chairman of the Board and the Chairman of Audit Committee.

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Annual Report 2012

ManagementDiscussion

and Analysis

The Auditor’s Opinion

The Auditor issued unqualified opinion that the financial statements of the Company and its subsidiaries for

the year ended 31 December 2010 to 2012 presented fairly the financial position and operating performance in accordance

with the generally accepted accounting principles.

Financial analysis

1. Operating performance

• Revenues from Fabrication work, sales and services.

In 2011, the Company reported revenue from fabrication work, sales and services at Baht 1,001.03 million

which decreased 79.01% from that of 2010 because the Company has already completed and delivered the major

projects which were executed from 2008 until first quarter of 2010 and the ongoing projects are in small size.

In 2012, the company reported revenue from fabrication work, sales and services at Baht 3,140.03 million

which increased 213.68 % from the same period of 2011. This is mainly because the company has realized higher revenue

from various projects on hand during the year. Moreover, the Company has been able to recognize some revenue

during the preparation stage of the major project which was awarded in the first quarter of 2012.

• Other incomes

The Company’s other incomes consist of sales of scrap materials that the Company normally sell to interested

buyers who offer the highest bid, interest income, dividend income from available for sales securities, customs duty

refund, reversal of provision for loss from construction contract, reversal of trade accounts payable, gain from sales

of fixed assets, and gain on FOREX.

In 2011, the main other income was from reversal of unbilled payable total of Baht 399.12 million or 26.66%

of total revenues. As the year 2010, the Company set aside provision for the contingent costs as a result of the warranty

provided under a project contract, including this amount under the caption of “Unbilled payables”. This was recorded

because, in the past, the original letter of guarantee issued by a bank to guarantee the project work had not been

returned, because the Company was under inspection and negotiating responsibility for rectification work performed

with a unit of the counterparty, and there was a risk that the counterparty would claim the cost of the rectification

work from the Company. However, during March 2011, the Company was able to conclude negotiations to finalize

the project and the counterparty returned the original letter of guarantee. The Company therefore reversed the above

provision, recording the reversal as “income from reversal of unbilled payables” in the statements of comprehensive

income of the current year. The Company also has income from interest income and gain from sales of short-term

investments, Baht 67.36 million (or 4.50% of total revenues). Other incomes of Baht 29.85 million (or 1.99% of total

revenues) are from dividend from available-for-sale securities and other miscellaneous incomes.

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Annual Report 2012

ManagementDiscussion

and Analysis

The Auditor’s Opinion

The Auditor issued unqualified opinion that the financial statements of the Company and its subsidiaries for

the year ended 31 December 2010 to 2012 presented fairly the financial position and operating performance in accordance

with the generally accepted accounting principles.

Financial analysis

1. Operating performance

• Revenues from Fabrication work, sales and services.

In 2011, the Company reported revenue from fabrication work, sales and services at Baht 1,001.03 million

which decreased 79.01% from that of 2010 because the Company has already completed and delivered the major

projects which were executed from 2008 until first quarter of 2010 and the ongoing projects are in small size.

In 2012, the company reported revenue from fabrication work, sales and services at Baht 3,140.03 million

which increased 213.68 % from the same period of 2011. This is mainly because the company has realized higher revenue

from various projects on hand during the year. Moreover, the Company has been able to recognize some revenue

during the preparation stage of the major project which was awarded in the first quarter of 2012.

• Other incomes

The Company’s other incomes consist of sales of scrap materials that the Company normally sell to interested

buyers who offer the highest bid, interest income, dividend income from available for sales securities, customs duty

refund, reversal of provision for loss from construction contract, reversal of trade accounts payable, gain from sales

of fixed assets, and gain on FOREX.

In 2011, the main other income was from reversal of unbilled payable total of Baht 399.12 million or 26.66%

of total revenues. As the year 2010, the Company set aside provision for the contingent costs as a result of the warranty

provided under a project contract, including this amount under the caption of “Unbilled payables”. This was recorded

because, in the past, the original letter of guarantee issued by a bank to guarantee the project work had not been

returned, because the Company was under inspection and negotiating responsibility for rectification work performed

with a unit of the counterparty, and there was a risk that the counterparty would claim the cost of the rectification

work from the Company. However, during March 2011, the Company was able to conclude negotiations to finalize

the project and the counterparty returned the original letter of guarantee. The Company therefore reversed the above

provision, recording the reversal as “income from reversal of unbilled payables” in the statements of comprehensive

income of the current year. The Company also has income from interest income and gain from sales of short-term

investments, Baht 67.36 million (or 4.50% of total revenues). Other incomes of Baht 29.85 million (or 1.99% of total

revenues) are from dividend from available-for-sale securities and other miscellaneous incomes.

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In 2012, others revenue are mainly consisted of Baht 84.32 million interest income, Baht 27.07 million

dividend income and Baht 17.82 million gain on sales of investment. Moreover, the company received revenue from

foreign currency contracts due to higher hedged rate than market rate which resulted in Baht 70.04 million gain on

exchange rate (or 2.09% of total revenue).

• Cost of fabrication work, sales and services.

In 2011, the Company’s cost of fabrication work, sales and services decreased 65.84% from that of 2010 to

stand at Baht 970.89 million or 64.84% of total revenues because the Company worked with lower production capacity

on the much smaller size of on hand projects.

In 2012, the Company reported cost of fabrication work, sales and services at Baht 1,883.34 million or

56.17% of total revenue, increased 93.98% from that of 2011 which was in line with the higher volume of fabrication work.

• Gross Profit

In 2011, the Company had a gross profit of Baht 30.14 million which decreased 98.44% comparing to Baht

1,927.95 million in 2010. This was due to the drop in revenue and profit margin from that of 2010 when the Company

could recognize revenue for the compensation of acceleration cost and additional work order from a large project.

In 2012, Gross profit from fabrication work, sales and services was recorded at Baht 1,256.69 million,

equivalent to 40.02% of the revenue from fabrication work, sales and services; improved sharply when compared to

3.01% gross profit margin of the year 2011. This substantial increase was attributed to the much higher revenue

recognition from many high profit margin projects executed in 2012. In addition, the Company has been successful

in negotiation for price adjustment of a pipe fabrication project due to the higher fitting density.

• Selling and Administrative expenses and Finance cost

In 2011, selling and administrative expenses increased 11.22 % from 2010 to Baht 122.48 million mainly

from an increase in the allowance of doubtful debt of Baht 6.10 million and a reserve for impairment of assets of Baht

4.67 million.

In 2012, a slight decrease in selling and administrative expenses of 1.34% from 2011 to Baht 120.83 million

was resulted from reversal of allowance for doubtful debt because the Company received repayment from a debtor

which full allowance had previously been set aside. There was no significant change for other items in this category.

• Net profit

In 2011, the Company reported net profit of Baht 399.50 million or 26.68% of total revenues which decreased

by Baht 1,621.93 million from 2010. This was because the profit margin of works in 2011 was lower than 2010 and

there were some fixed cost that remained unchanged. Net profit of the year 2011 was mainly from the reversal of

unbilled payables.

In 2012, the Company reported net profit of Baht 1,089.76 million or 32.50% net profit margin which increased

by Baht 690.26 million from that of 2011. Main reasons were from the higher revenue recognition and the successful

negotiation for price adjustment of a pipe fabrication project as mentioned above. However, the Company no longer had

tax loss carried forward and its BOI tax benefits already expired; therefore, the Company needed to accrue Baht 255.01

million for corporate income tax in 2012.

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2. Financial status

• Assets

At the end of 2011, the Company’s total assets was reported at Baht 3,522.89 million, 17.30% decreased from

2010 which resulted mainly from payment of dividend in 2011.

At the end of 2012, the Company’s total assets increased 105.31% from those of 2011 to Baht 7,232.79 million,

mainly from an increase in cash and cash equivalent, and investment.

- Cash and cash equivalent

The Company’s cash and cash equivalent was reported at Baht 85.19 million in 2011, decreased 7.72%

from 2010 because of the Company’s decision to invest more in high-liquidity short-term investments to improve

returns and dividend payout in 2011.

At the end of 2012, the Company reported cash and cash equivalent at Baht 373.94 million which increased

338.95% because the Company has collected large amount of construction revenue received in advance from the major

project which was awarded in 1stquarter of 2012, included revenue received from other ongoing projects as well.

- Trade Accounts Receivable and Unbilled Receivable

According to the Company’s business practice, a credit terms ranging from 30 – 60 days has been provided

to both domestic and overseas customers. Regarding the policy for provision of doubtful accounts, the management

will determine on a case by case basis, taken into consideration track record and financial status of each customer as

well as the relevant economic situation. The Company recorded the revenue by percentage of completion whilst the

undue revenues were booked as unbilled receivables.

In 2011, net accounts receivable decreased slightly to Baht 93.71 million or 2.66% of total assets, in line

with the declining work under construction. The Company has reserved Baht 43.54 million as the allowance for

doubtful accounts to cover the accounts receivable that were more than 12 months overdue totaling Baht 43.35 million.

In 2012, net accounts receivable increased to Baht 582.61 or 8.06% of total assets because the company

could utilize more production capacity so that revenue recognition and billing were improved. However, there was

Baht 37.39 million outstanding balance which overdue more than 12 months and Baht 37.25 million has been provided

for allowance for doubtful accounts.

Unbilled receivable as at 31 December 2011 and 2012 were Baht 71.76 million and Baht 372.52 million, respectively.

However, the undue revenues at end of 2012 were billed and paid in the following month.

- Plant, property and equipment

At the end of 2011, the Company’s plant, property and equipment decreased Baht 116.87 million or 9.86%

from those of 2010 to Baht 1,068.08 million because the value of such additional assets was lower than the depreciation

for the period.

During 2012, the Company has continuously invested in various capital expenditures to improve its

production facilities and to add more machinery to support the awarded major project more efficiently. It also acquired

approximately 1,100 rais of land area in Sattahip district of Chonburi province with main objective to prepare for

future production capacity expansion which will also enable a more integrated cost control systems. Moreover, the

subsidiary company is constructing the new office and production plant in its own land, instead of operating in the

rented land, which will support the business expansion more effectively. As a result, the Company recorded Baht

497.85 million more in Property, Plant and Equipment as at 31th December 2012.

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2. Financial status

• Assets

At the end of 2011, the Company’s total assets was reported at Baht 3,522.89 million, 17.30% decreased from

2010 which resulted mainly from payment of dividend in 2011.

At the end of 2012, the Company’s total assets increased 105.31% from those of 2011 to Baht 7,232.79 million,

mainly from an increase in cash and cash equivalent, and investment.

- Cash and cash equivalent

The Company’s cash and cash equivalent was reported at Baht 85.19 million in 2011, decreased 7.72%

from 2010 because of the Company’s decision to invest more in high-liquidity short-term investments to improve

returns and dividend payout in 2011.

At the end of 2012, the Company reported cash and cash equivalent at Baht 373.94 million which increased

338.95% because the Company has collected large amount of construction revenue received in advance from the major

project which was awarded in 1stquarter of 2012, included revenue received from other ongoing projects as well.

- Trade Accounts Receivable and Unbilled Receivable

According to the Company’s business practice, a credit terms ranging from 30 – 60 days has been provided

to both domestic and overseas customers. Regarding the policy for provision of doubtful accounts, the management

will determine on a case by case basis, taken into consideration track record and financial status of each customer as

well as the relevant economic situation. The Company recorded the revenue by percentage of completion whilst the

undue revenues were booked as unbilled receivables.

In 2011, net accounts receivable decreased slightly to Baht 93.71 million or 2.66% of total assets, in line

with the declining work under construction. The Company has reserved Baht 43.54 million as the allowance for

doubtful accounts to cover the accounts receivable that were more than 12 months overdue totaling Baht 43.35 million.

In 2012, net accounts receivable increased to Baht 582.61 or 8.06% of total assets because the company

could utilize more production capacity so that revenue recognition and billing were improved. However, there was

Baht 37.39 million outstanding balance which overdue more than 12 months and Baht 37.25 million has been provided

for allowance for doubtful accounts.

Unbilled receivable as at 31 December 2011 and 2012 were Baht 71.76 million and Baht 372.52 million, respectively.

However, the undue revenues at end of 2012 were billed and paid in the following month.

- Plant, property and equipment

At the end of 2011, the Company’s plant, property and equipment decreased Baht 116.87 million or 9.86%

from those of 2010 to Baht 1,068.08 million because the value of such additional assets was lower than the depreciation

for the period.

During 2012, the Company has continuously invested in various capital expenditures to improve its

production facilities and to add more machinery to support the awarded major project more efficiently. It also acquired

approximately 1,100 rais of land area in Sattahip district of Chonburi province with main objective to prepare for

future production capacity expansion which will also enable a more integrated cost control systems. Moreover, the

subsidiary company is constructing the new office and production plant in its own land, instead of operating in the

rented land, which will support the business expansion more effectively. As a result, the Company recorded Baht

497.85 million more in Property, Plant and Equipment as at 31th December 2012.

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- Liabilities

In 2011, despite the setting up of the Provision for long-term employee benefits of Baht 45.45 million per

the new accounting standards issued by the Federation of Accounting Professions, the Company reported lower

total liabilities of Baht 423.97 million or 58.51% drop from 2010 as a result of the reversal of Unbilled account payable

to other income from the completion of its major project.

At the end of 2012, the Company reported total liabilities of Baht 2,922.20 million which increased from

those of 2011 due to higher construction revenue received in advance from the major project awarded in the 1st

Quarter as well as the increases of trade and unbilled payable of ongoing projects. This increase was in line with the

rising of fabrication work.

• Shareholders’ Equity

In 2011, the shareholders’ equity of the Company decreased to Baht 3,098.92 million or 4.29%, despite the

net profit of Baht 399.50 million, due to the dividend payment from its net profit and retained earnings of Baht 479.29

million.

At the end of 2012, the shareholders’ equity strongly rose to Baht 4,310.59 million or increased by 39.10%

from that of 2011. The main reason for such increase was attributed to the net profit of Baht 1,089.76 million, surplus

on changes in value of available-for-sale investment of Baht 101.87 million, and gain on sales of treasury shares of

Baht 134.98 million. However, the Company also paid dividend from the operating results of the year 2011 totaled

116.47 million during 2012.

• Company cash flow

In 2011, net cash flow from operating activities was Baht 185.48 million which mainly included net profit

before tax of Baht 402.63 million and cash received from sale of investments in available-for-sale securities of Baht

272.07 million. However, there were the decrease of unbilled payables and construction revenue received in advance

of Baht 58.77 million and Baht 179.71 million respectively.

For financing activities, net cash flow increased by Baht 272.48 million mainly from redemption of

held-to-maturity debt securities and cash received from sale-leaseback of equipment of Baht 10.25 million, the Company’s

major cash outflow from financing activities was the dividend payment.

In 2012, net cash flow from operating activities was reported at Baht 2,302.54 million which mainly comprised

net profit before tax of Baht 1,344.76 million and construction revenue received in advance of Baht 1,909.34 million.

The Company deposited some part of that cash flow in current available-for-sale securities to enhance returns on

investment which led to an increase of Baht 444.95 million in the said assets. Furthermore, higher revenue recognition

contributed to an increase in trade and other receivables and unbilled receivables of Baht 773.65 million, as well as

an increase in trade and other payables of Baht 254.85 million. Apart from deposit in current available-for-sale securities,

substantial portion of cash was invested in the hold-to-maturity debt securities and in the newly acquired land, plant

improvement and machinery to support the major projects. Meanwhile, cash flow from financing activities mainly

consisted of cash received from disposal of treasury shares total Baht 134.98 million and sales-leaseback of equipment

of Baht 31.93 million. Nevertheless, there was a dividend payment of Baht 117.42 million during 2012 which caused

net cash from financing activities to report at Baht 32.83 million only.

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3. Financial Ratio

• Current Ratio

In 2012, the Company reported current ratio of 1.90 times and quick ratio of 1.66 times which decreased

from those of 2011 although current assets increased by 188.74%. This is because the proportion of increase in current

asset was less than that of current liabilities due mainly to larger amount of trade and bill payables and construction

revenue received in advance. Moreover, some of cash received was invested in land and machinery which were

classified as non-current assets.

• Return on Asset

Return on Asset in 2010 was 38.03% from the completion of its major project, enabling the Company to

recognize remaining contract value which led to improvement of gross profit while a sharp drop in workload in 2011

caused a Return on Asset to decrease to 10.27%.

Meanwhile, an increase of revenue recognition in 2012 doubled the Return on Asset to 20.26%.

• Return on Equity

In 2010, the Company continued to deliver and receive payment from large projects carried from 2008

and could manage to produce a high return on equity of 70.06 which increased from 60.17% of 2009 while a sharp

drop in workload in 2011 caused a Return on Equity to decrease to 12.61%. However, the profit generated from

larger workloads of ongoing projects in 2012 led to an increase of Return on Equity to 29.42%.

4. Audit fee

Ernst & Young Office Ltd. has been appointed as the Company’s auditing firm since 2001 and our auditors

were Mr. Khitsada Lerdwana for the year 2010 -2012 with the following remunerations:

• Audit fee

In 2012, the total auditing fee was Baht 1,195,000 of which Baht 880,000 pertained to the Company’s

auditing fee and the remaining Baht 315,000 was for its affiliated companies as per the chart below:

(Unit : Baht)

Year 2010 2011 2012The Company 1,030,000 800,000 880,000Affiliated company 300,000 300,000 315,000Total 1,330,000 1,100,000 1,195,000

• Non-audit fee

Ernst & Young Office Ltd. also provided specific audit as per the BOI requirements for the company’s

two BOI promoted businesses in 2010 and 2011 which was the year that these BOI tax benefits expired so there was

no such fee in 2012.

Year 2010 2011 2012No. of certificate(s) 2 1 -Fee amount (Baht) 200,000 100,000 -

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3. Financial Ratio

• Current Ratio

In 2012, the Company reported current ratio of 1.90 times and quick ratio of 1.66 times which decreased

from those of 2011 although current assets increased by 188.74%. This is because the proportion of increase in current

asset was less than that of current liabilities due mainly to larger amount of trade and bill payables and construction

revenue received in advance. Moreover, some of cash received was invested in land and machinery which were

classified as non-current assets.

• Return on Asset

Return on Asset in 2010 was 38.03% from the completion of its major project, enabling the Company to

recognize remaining contract value which led to improvement of gross profit while a sharp drop in workload in 2011

caused a Return on Asset to decrease to 10.27%.

Meanwhile, an increase of revenue recognition in 2012 doubled the Return on Asset to 20.26%.

• Return on Equity

In 2010, the Company continued to deliver and receive payment from large projects carried from 2008

and could manage to produce a high return on equity of 70.06 which increased from 60.17% of 2009 while a sharp

drop in workload in 2011 caused a Return on Equity to decrease to 12.61%. However, the profit generated from

larger workloads of ongoing projects in 2012 led to an increase of Return on Equity to 29.42%.

4. Audit fee

Ernst & Young Office Ltd. has been appointed as the Company’s auditing firm since 2001 and our auditors

were Mr. Khitsada Lerdwana for the year 2010 -2012 with the following remunerations:

• Audit fee

In 2012, the total auditing fee was Baht 1,195,000 of which Baht 880,000 pertained to the Company’s

auditing fee and the remaining Baht 315,000 was for its affiliated companies as per the chart below:

(Unit : Baht)

Year 2010 2011 2012The Company 1,030,000 800,000 880,000Affiliated company 300,000 300,000 315,000Total 1,330,000 1,100,000 1,195,000

• Non-audit fee

Ernst & Young Office Ltd. also provided specific audit as per the BOI requirements for the company’s

two BOI promoted businesses in 2010 and 2011 which was the year that these BOI tax benefits expired so there was

no such fee in 2012.

Year 2010 2011 2012No. of certificate(s) 2 1 -Fee amount (Baht) 200,000 100,000 -

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Report of theAudit Committeefor the year 2012

The Audit Committee is composed of 3 independent directors:

1) Dr. Wicha Jiwalai Chairman of the Audit Committee

2) Pol.Lt.Gen.Jate Mongkolhutthi Audit Committee

3) Mr.Chamni Janchai Audit Committee

In 2012, the Audit Committee performed their duties and responsibilities in accordance with the Audit Committee

Charter in reviewing the Company’s financial statements, internal control system and law compliance. The Audit

Committee emphasized that the Company operates in compliance with good corporate governance principal according

to the Notification of the Stock Exchange of Thailand on Qualifications and Rules and Responsibilities of the Audit

Committee and Best Practice Guidelines for the Audit Committee issued by the Listed Companies Division of the

Stock Exchange of Thailand. The Audit Committee held 8 meetings which the summery of main activities are:

1. Review of the Quarterly Financial Statements and the Annual Financial Statement

The Audit Committee reviewed the Quarterly and Annual Financial Statements and received clarification

from the management and the Independent Auditor relating to the accuracy and the completeness of the financial

statements, and the adequacy of information disclosure. Therefore, the Audit Committee agreed that the aforesaid

financial statements are correct in material respects in accordance with the generally accepted accounting principles;

and the information disclosure in those financial statements is punctual, correct and complete.

2. Review of the Internal Control System

The Audit Committee together with the Internal Auditor reviewed the Company internal control on a

regular basis and examined all internal audit reports according to the approved work plans, covering the significant

working systems of the Company, including the securities of information system. The Audit Committee agreed that

the Company and its subsidiary have adequate and suitable and updated internal controls. The Audit Committee

also urged the management to constantly improve the internal control system and reviewed the Company’s risk

management and found it to be efficient and effective.

3. Monitoring of the Internal Audit

The Audit Committee considered the work plans, scope of work, independence, manpower, and budgets

of the Internal Audit Department to be appropriate and in conformity with the internal audit guidelines of the Stock

Exchange of Thailand (SET). The Audit Committee agreed that the Company’s internal audit was carried out continuously

effectively and on a timely and basis. The Audit Committee realized the significance of the internal audit and therefore

given its regular support to the internal audit both in terms of personnel development and guidelines of audit to be

in accordance with the prescribed standard.

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4. Compliance with the Law and the Government Regulations

The Audit Committee reviewed the compliance with Rules and Regulations of the Securities and Exchange

Commission, regulations of the Stock Exchange of Thailand, the law relating to the Company’s business operations;

and deemed that there is no significant issue relating to non-compliance with the law, regulations, and other related

laws.

5. Review and Comments on Related Transactions or those with Potential Conflict of Interest

The Audit Committee agreed with the Independent Auditor that, according to the Regulations of the Stock Exchange

of Thailand and the Securities and Exchange Commission, no significant related transactions and/or those with

potential conflict of interest was found.

6. Self-Performance Appraisal

To comply with the best practices guidelines for the Audit Committee, the Audit Committee conduct the

self-performance appraisal annually. In 2011, the self-performance appraisal result of the Audit Committee can be

summarized that the Audit Committee has performed its duties fully according to its Charter and complied with the

best practice guidelines for the Audit Committee, which will result in effective implementation of the rules of good

corporate governance.

7. Selection, Nomination, and Remuneration of the Independent Auditor

The selection, nomination, and remuneration of the Independent Auditor of 2013 shall be proposed for

the Board of Directors to request for approval in the Annual General Meeting (AGM) 2013, whereas, the Audit Committee

considered work performance, independence, and appropriateness of the remuneration, which shall not be contrary

to the Notification of the Office of the Securities and Exchange Commission and the Stock Exchange of Thailand

governing the circulation of auditors. Therefore, it is deemed expedient to appoint Mr. Narong Puntawong, the

certified public accountant no.3315; or Mr. Supachai Phanyawattano, the certified public accountant no.3930; or Mr.

Termphong Opanaphan, the certified public accountant no.4501 of Ernst & Young Office Ltd., as the Company’s

Independent Auditor of 2013, with a total remuneration of 1,180,000 Baht.

In 2012, the Audit Committee held meetings with the Independent Auditor of Ernst & Young Office Ltd.,

to review and make an inquiry relating to the appropriateness of the set-aside provisions and allowances and the

company’s accounting policy. The Audit Committee inquired and received the clarification from the Independent

Auditor, which can be summarized that the Company has its accounting policy and the set-aside provisions and

allowances duly in accordance with the generally accepted accounting principles. Furthermore, the audit committee

involved in planning and advising for implement the International Financial Reporting Standards: IFRS) which has

been executed since 2011, included planning for new accounting standard about Income Taxes which shall be effective

in 2013 as well.

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4. Compliance with the Law and the Government Regulations

The Audit Committee reviewed the compliance with Rules and Regulations of the Securities and Exchange

Commission, regulations of the Stock Exchange of Thailand, the law relating to the Company’s business operations;

and deemed that there is no significant issue relating to non-compliance with the law, regulations, and other related

laws.

5. Review and Comments on Related Transactions or those with Potential Conflict of Interest

The Audit Committee agreed with the Independent Auditor that, according to the Regulations of the Stock Exchange

of Thailand and the Securities and Exchange Commission, no significant related transactions and/or those with

potential conflict of interest was found.

6. Self-Performance Appraisal

To comply with the best practices guidelines for the Audit Committee, the Audit Committee conduct the

self-performance appraisal annually. In 2011, the self-performance appraisal result of the Audit Committee can be

summarized that the Audit Committee has performed its duties fully according to its Charter and complied with the

best practice guidelines for the Audit Committee, which will result in effective implementation of the rules of good

corporate governance.

7. Selection, Nomination, and Remuneration of the Independent Auditor

The selection, nomination, and remuneration of the Independent Auditor of 2013 shall be proposed for

the Board of Directors to request for approval in the Annual General Meeting (AGM) 2013, whereas, the Audit Committee

considered work performance, independence, and appropriateness of the remuneration, which shall not be contrary

to the Notification of the Office of the Securities and Exchange Commission and the Stock Exchange of Thailand

governing the circulation of auditors. Therefore, it is deemed expedient to appoint Mr. Narong Puntawong, the

certified public accountant no.3315; or Mr. Supachai Phanyawattano, the certified public accountant no.3930; or Mr.

Termphong Opanaphan, the certified public accountant no.4501 of Ernst & Young Office Ltd., as the Company’s

Independent Auditor of 2013, with a total remuneration of 1,180,000 Baht.

In 2012, the Audit Committee held meetings with the Independent Auditor of Ernst & Young Office Ltd.,

to review and make an inquiry relating to the appropriateness of the set-aside provisions and allowances and the

company’s accounting policy. The Audit Committee inquired and received the clarification from the Independent

Auditor, which can be summarized that the Company has its accounting policy and the set-aside provisions and

allowances duly in accordance with the generally accepted accounting principles. Furthermore, the audit committee

involved in planning and advising for implement the International Financial Reporting Standards: IFRS) which has

been executed since 2011, included planning for new accounting standard about Income Taxes which shall be effective

in 2013 as well.

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8. Reporting of the Resolution of the Board of Directors

The Audit Committee reported all minutes of its meetings and the internal audit appraisal to the Board

of Directors in accordance with the guidelines of best practices of the Audit Committee.

In summary, the Audit Committee performed its duties fully in accordance with its Charters approved

by the Board of Directors. The Audit Committee gave opinion that the Company has implemented its good corporate

governance practice, prepared its financial statements in accordance with the generally accepted accounting principles,

disclosed the correct, complete, and adequate information in the financial report, provided its appropriate internal

control, adhered to the business ethics, and complied with the rules, regulations, and related laws, thus, in conformity

with the Notification of the Office of the Securities and Exchange Commission (OSEC) and the Stock Exchange of

Thailand (SET).

Dr. Wicha Jiwalai

Chairman of the Audit Committee

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Annual Report 2012

Report of the Reponsibility of the Board of Directors

on Financial Reports

The Company’s Board of Directors is responsible for the separate financial statements of the Company and the

consolidated financial statements of the Company and its subsidiaries as well as financial information presented in

the annual reports. The financial statements for the year ended 31 December 2012 have been prepared in accordance

with Thailand’s Generally Accepted Accounting Principles (GAAP). In preparing the financial statements, appropriate

accounting policies have been adopted and regularly adhered to, using careful discretion and reasonable estimates.

As well, key information has been adequately disclosed in the notes to the financial statements. The purpose is to

ensure that the disclosed information rightly reflect the Company’s financial status, performance and cash flows in

a transparent manner, which are beneficial to the investing public. Importantly, the certified auditor from Ernst &

Young Office Limited has audited the financial statements and issued an unqualified opinion on them.

The Board of Directors has also put in place and maintained risk management systems, internal control systems,

internal audit systems as well as appropriate and efficient corporate governance. In this connection, the Board of

Directors has appointed the Audit Committee with all of its members being independent directors. The Committee

is responsible for reviewing accounting policies and ensuring the quality of financial reports. It is also responsible for

reviewing internal control systems, the internal audit systems, and the risk management systems. As well, it is

responsible for ensuring that the disclosure of information about related party transactions is complete, adequate and

appropriate. The opinion of the Audit Committee is given in its report which is already included in this Annual

Report.

The Board of Directors is of the opinion that the overall internal control systems are adequate and appropriate

and gives rise to the reasonable confidence that the separate financial statements of the Company as well as the consoli-

dated financial statements of the Company and its subsidiaries for the year ended 31 December 2012 are reliable and

in compliance with the Generally Accepted Accounting Principles (GAAP) as well as the related laws and regulations.

Board of Directors

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Annual Report 2012

Report of the Reponsibility of the Board of Directors

on Financial Reports

The Company’s Board of Directors is responsible for the separate financial statements of the Company and the

consolidated financial statements of the Company and its subsidiaries as well as financial information presented in

the annual reports. The financial statements for the year ended 31 December 2012 have been prepared in accordance

with Thailand’s Generally Accepted Accounting Principles (GAAP). In preparing the financial statements, appropriate

accounting policies have been adopted and regularly adhered to, using careful discretion and reasonable estimates.

As well, key information has been adequately disclosed in the notes to the financial statements. The purpose is to

ensure that the disclosed information rightly reflect the Company’s financial status, performance and cash flows in

a transparent manner, which are beneficial to the investing public. Importantly, the certified auditor from Ernst &

Young Office Limited has audited the financial statements and issued an unqualified opinion on them.

The Board of Directors has also put in place and maintained risk management systems, internal control systems,

internal audit systems as well as appropriate and efficient corporate governance. In this connection, the Board of

Directors has appointed the Audit Committee with all of its members being independent directors. The Committee

is responsible for reviewing accounting policies and ensuring the quality of financial reports. It is also responsible for

reviewing internal control systems, the internal audit systems, and the risk management systems. As well, it is

responsible for ensuring that the disclosure of information about related party transactions is complete, adequate and

appropriate. The opinion of the Audit Committee is given in its report which is already included in this Annual

Report.

The Board of Directors is of the opinion that the overall internal control systems are adequate and appropriate

and gives rise to the reasonable confidence that the separate financial statements of the Company as well as the consoli-

dated financial statements of the Company and its subsidiaries for the year ended 31 December 2012 are reliable and

in compliance with the Generally Accepted Accounting Principles (GAAP) as well as the related laws and regulations.

Board of Directors

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“STP&I Public Company Limited and its subsidiaries”

Report and consolidated

financial statements31 December 2012 and 2011

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รายงานประจ�าปี 2555

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Annual Report 2012

Independent Auditor’s Report

To the Shareholders of STP&I Public Company Limited

I have audited the accompanying consolidated financial statements of STP&I Public Company Limited and its

subsidiaries, which comprise the consolidated statement of financial position as at 31 December 2012, 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 STP&I 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 judgment, 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.

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

STP&I Public Company Limited and its subsidiaries and of STP&I Public Company Limited as at 31 December 2012, their

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

Khitsada Lerdwana

Certified Public Accountant (Thailand) No. 4958

Ernst & Young Office Limited

Bangkok: 27 February 2013

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Annual Report 2012

Independent Auditor’s Report

To the Shareholders of STP&I Public Company Limited

I have audited the accompanying consolidated financial statements of STP&I Public Company Limited and its

subsidiaries, which comprise the consolidated statement of financial position as at 31 December 2012, 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 STP&I 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 judgment, 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.

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

STP&I Public Company Limited and its subsidiaries and of STP&I Public Company Limited as at 31 December 2012, their

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

Khitsada Lerdwana

Certified Public Accountant (Thailand) No. 4958

Ernst & Young Office Limited

Bangkok: 27 February 2013

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(Unit: Baht)

Consolidated financial statements

Separate financial statements

Note 2012 2011 2012 2011AssetsCurrent assetsCash and cash equivalents 6 373,944,907 85,194,392 315,453,361 54,317,925 Current investments 7 3,471,021,084 1,332,094,009 3,396,636,709 1,332,094,009 Trade and other receivables 8, 9 628,399,919 121,340,644 551,445,416 61,046,188 Unbilled receivables 10 372,518,730 71,763,738 372,518,730 71,763,738 Work in progress - 17,555,774 - 17,555,774 Inventories 11 155,733,139 103,596,996 24,661,092 31,116,031 Other current assets 12 55,037,250 19,707,457 42,993,921 13,311,898 Total current assets 5,056,655,029 1,751,253,010 4,703,709,229 1,581,205,563 Non-current assetsRestricted bank deposits 13 25,550,824 25,884,835 23,882,970 24,579,969 Long-term loan to subsidiary 9 - - 50,000,000 - Investments in subsidiary 14 - - 135,000,000 135,000,000 Other long-term investments 15 540,650,357 642,452,287 540,650,357 642,452,287 Investment property 16 - - 29,498,000 - Property, plant and equipment 17 1,565,930,729 1,068,083,763 1,360,138,206 981,375,171 Intangible assets 6,414,817 5,966,595 6,414,817 5,966,595 Other non-current assets 37,589,461 29,252,864 19,173,334 26,542,038 Total non-current assets 2,176,136,188 1,771,640,344 2,164,757,684 1,815,916,060 Total assets 7,232,791,217 3,522,893,354 6,868,466,913 3,397,121,623

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

STP&I Public Company Limited and its subsidiaries

Statements of financial position

As at 31 December 2012

STP&

I PU

BLIC

CO

MPA

NY L

IMIT

ED

64

รายงานประจ�าปี 2555

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I PU

BLIC

CO

MPA

NY L

IMIT

ED

64

Annual Report 2012

(Unit: Baht)Consolidated financial

statementsSeparate financial

statementsNote 2012 2011 2012 2011

Liabilities and shareholders’ equity

Current liabilities

Trade and other payables 9,19 350,996,997 97,188,825 303,206,780 71,131,469

Unbilled payables 154,535,123 6,422,756 151,832,360 2,509,629

Advances received from hirers 23,018,495 24,490,633 1,774,685 10,494,322

Construction revenue received in advance 10 1,909,336,355 - 1,909,336,355 -

Current portion of liabilities under long-term lease agreements 20 17,881,880 7,784,146 1,360,046 838,086

Income tax payable 154,443,696 29,901 154,376,165 -

Short-term provisions 4,552,696 10,366,916 - 7,889,983

Other current liabilities 52,142,800 39,193,653 38,236,756 32,085,426

Total current liabilities 2,666,908,042 185,476,830 2,560,123,147 124,948,915

Non-current liabilities

Liabilities under long-term lease agreements - net

of current portion 20 24,116,183 12,867,765 3,381,069 -

Provision for long-term employee benefits 21 51,064,930 45,449,455 42,768,710 38,147,106

Long-term provisions 35.4 180,000,000 180,000,000 180,000,000 180,000,000

Other non-current liabilities 109,473 178,554 - -

Total non-current liabilities 255,290,586 238,495,774 226,149,779 218,147,106

Total liabilities 2,922,198,628 423,972,604 2,786,272,926 343,096,021

Shareholders’ equity

Share capital

Registered

371,000,000 ordinary shares of Baht 1 each 371,000,000 371,000,000 371,000,000 371,000,000

Issued and fully paid up

368,492,092 ordinary shares of Baht 1 each

(2011: 367,873,233 ordinary shares of Baht 1 each) 22 368,492,092 367,873,233 368,492,092 367,873,233

Share premium

Premium on ordinary shares 22 1,355,620,919 1,354,703,769 1,355,620,919 1,354,703,769

Premium on treasury shares 25 99,327,356 - 99,327,356 -

Retained earnings

Appropriated - statutory reserve 24 37,100,000 37,100,000 37,100,000 37,100,000

Appropriated - treasury shares reserve 25 - 35,653,539 - 35,653,539

Unappropriated 2,346,993,068 1,338,052,387 2,118,594,466 1,293,157,239

Other components of shareholders’ equity 103,059,154 1,191,361 103,059,154 1,191,361

Treasury shares 25 - (35,653,539) - (35,653,539)

Total shareholders’ equity 4,310,592,589 3,098,920,750 4,082,193,987 3,054,025,602

Total liabilities and shareholders’ equity 7,232,791,217 3,522,893,354 6,868,466,913 3,397,121,623

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

STP&I Public Company Limited and its subsidiaries

Statements of financial position (continued)

As at 31 December 2012

STP&

I PU

BLIC

CO

MPA

NY L

IMIT

ED

64

รายงานประจ�าปี 2555

STP&

I PU

BLIC

CO

MPA

NY L

IMIT

ED

64

Annual Report 2012

(Unit: Baht)Consolidated financial

statementsSeparate financial

statementsNote 2012 2011 2012 2011

Liabilities and shareholders’ equity

Current liabilities

Trade and other payables 9,19 350,996,997 97,188,825 303,206,780 71,131,469

Unbilled payables 154,535,123 6,422,756 151,832,360 2,509,629

Advances received from hirers 23,018,495 24,490,633 1,774,685 10,494,322

Construction revenue received in advance 10 1,909,336,355 - 1,909,336,355 -

Current portion of liabilities under long-term lease agreements 20 17,881,880 7,784,146 1,360,046 838,086

Income tax payable 154,443,696 29,901 154,376,165 -

Short-term provisions 4,552,696 10,366,916 - 7,889,983

Other current liabilities 52,142,800 39,193,653 38,236,756 32,085,426

Total current liabilities 2,666,908,042 185,476,830 2,560,123,147 124,948,915

Non-current liabilities

Liabilities under long-term lease agreements - net

of current portion 20 24,116,183 12,867,765 3,381,069 -

Provision for long-term employee benefits 21 51,064,930 45,449,455 42,768,710 38,147,106

Long-term provisions 35.4 180,000,000 180,000,000 180,000,000 180,000,000

Other non-current liabilities 109,473 178,554 - -

Total non-current liabilities 255,290,586 238,495,774 226,149,779 218,147,106

Total liabilities 2,922,198,628 423,972,604 2,786,272,926 343,096,021

Shareholders’ equity

Share capital

Registered

371,000,000 ordinary shares of Baht 1 each 371,000,000 371,000,000 371,000,000 371,000,000

Issued and fully paid up

368,492,092 ordinary shares of Baht 1 each

(2011: 367,873,233 ordinary shares of Baht 1 each) 22 368,492,092 367,873,233 368,492,092 367,873,233

Share premium

Premium on ordinary shares 22 1,355,620,919 1,354,703,769 1,355,620,919 1,354,703,769

Premium on treasury shares 25 99,327,356 - 99,327,356 -

Retained earnings

Appropriated - statutory reserve 24 37,100,000 37,100,000 37,100,000 37,100,000

Appropriated - treasury shares reserve 25 - 35,653,539 - 35,653,539

Unappropriated 2,346,993,068 1,338,052,387 2,118,594,466 1,293,157,239

Other components of shareholders’ equity 103,059,154 1,191,361 103,059,154 1,191,361

Treasury shares 25 - (35,653,539) - (35,653,539)

Total shareholders’ equity 4,310,592,589 3,098,920,750 4,082,193,987 3,054,025,602

Total liabilities and shareholders’ equity 7,232,791,217 3,522,893,354 6,868,466,913 3,397,121,623

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

STP&I Public Company Limited and its subsidiaries

Statements of financial position (continued)

As at 31 December 2012

STP&

I PU

BLIC

CO

MPA

NY L

IMIT

ED

65

STP&

I PU

BLIC

CO

MPA

NY L

IMIT

ED

65

(Unit: Baht)

Consolidated financial statements

Separate financial statements

Note 2012 2011 2012 2011Profit or loss:

Revenues

Revenues from fabrication work 2,761,794,161 707,897,862 2,761,794,161 707,897,862

Sales and services income 378,240,064 293,129,648 16,359,519 33,954,079

Others income

Interest income 84,316,533 46,980,790 84,487,115 46,702,081

Dividend income 27,071,250 21,086,064 27,071,250 21,086,064

Gain on foreign exchange 70,035,297 - 70,552,901 -

Reversal of unbilled payables 26 - 399,123,116 - 399,123,116

Others 31,439,909 29,145,891 30,322,754 24,836,377

Total revenues 3,352,897,214 1,497,363,371 2,990,587,700 1,233,599,579

Expenses

Cost of fabrication work 1,591,543,166 714,733,047 1,754,289,496 736,388,160

Cost of sales and services 291,799,770 256,153,171 6,273,146 26,480,004

Selling expenses 18,814,865 15,208,916 269,036 1,156,576

Administrative expenses 102,014,710 107,268,068 70,667,478 85,083,788

Total expenses 2,004,172,511 1,093,363,202 1,831,499,156 849,108,528

Profit before finance cost and corporate income tax 1,348,724,703 404,000,169 1,159,088,544 384,491,051

Finance cost (3,960,142) (1,368,292) (1,292,866) (670,333)

Profit before corporate income tax 1,344,764,561 402,631,877 1,157,795,678 383,820,718

Income tax expenses 28 (255,005,569) (3,125,928) (251,540,140) -

Profit for the year 1,089,758,992 399,505,949 906,255,538 383,820,718

Other comprehensive income:

Investments in available-for-sale securities

Adjustment - reclassification as loss (gain) due to sale 13,121,360 (1,076,559) 13,121,360 (1,076,559)

Gain (loss) on change in value of investments 88,746,433 (17,529,656) 88,746,433 (17,529,656)

Other comprehensive income for the year 101,867,793 (18,606,215) 101,867,793 (18,606,215)

Total comprehensive income for the year 1,191,626,785 380,899,734 1,008,123,331 365,214,503

Earnings per share 29

Basic earnings per share 2.970 1.100 2.469 1.057

Diluted earnings per share 2.953 1.093 2.456 1.050

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

STP&I Public Company Limited and its subsidiaries

Statements of comprehensive income

For the year ended 31 December 2012

STP&

I PU

BLIC

CO

MPA

NY L

IMIT

ED

66

รายงานประจ�าปี 2555

STP&

I PU

BLIC

CO

MPA

NY L

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66

Annual Report 2012

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I Pub

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รายงานประจ�าปี 2555

STP&

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BLIC

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NY L

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Annual Report 2012

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Annual Report 2012

(Unit: Baht)

Consolidated financial statements

Separate financial statements

2012 2011 2012 2011Cash flows from operating activitiesProfit before tax 1,344,764,561 402,631,877 1,157,795,678 383,820,718 Adjustments to reconcile profit before tax to net cash provided by (paid from) operating activities: Depreciation and amortisation 158,785,282 180,930,011 147,801,952 175,070,639 Allowance for doubtful accounts (reversal) (6,052,852) 6,099,000 (6,099,000) 6,099,000 Allowance for diminution in value of inventories (reversal) (1,202,299) 4,671,542 (1,217,818) 4,279,326 Gain on sales of equipment (1,795,039) (4,809,727) (1,464,291) (1,152,126) Gain on sales of investments in trading securities (12,624,016) (6,167,953) (12,490,355) (6,167,953) Gain on sales of investments in available-for-sale securities (3,883,973) (2,587,759) (3,883,973) (2,587,759) Gain on sales of investments in held-to-maturity debt securities (1,311,947) (11,626,162) (1,311,947) (11,298,331) Unrealised loss (gain) on valuation of investments (1,463,136) 6,992,767 (1,212,422) 6,992,767 Dividend received from investments in available-for-sale securities (27,071,250) (21,086,064) (27,071,250) (21,086,064) Reversal of unbilled payables - (399,123,116) - (399,123,116) Short-term provisions (reversal) (5,814,220) 5,604,227 (7,889,983) 4,367,892 Provision for long-term employee benefits 7,237,045 6,729,685 6,027,354 5,653,335 Unrealised loss (gain) on foreign exchange (4,985,282) 9,707,833 (3,887,753) 10,537,985 Interest income (77,808,619) (46,676,116) (78,438,892) (46,676,116) Interest expenses 2,318,491 584,803 114,377 56,037 Income from operating activities before changes in operating assets and liabilities 1,369,092,746 131,874,848 1,166,771,677 108,786,234 Operating assets (increase) decrease Current investment - available-for-sale securities (444,950,409) 272,071,365 (370,950,409) 272,071,364 Trade and other receivables and unbilled receivables (773,648,336) (7,971,993) (756,851,257) (2,616,671) Work in progress 17,555,774 81,392,622 17,555,774 81,392,622 Inventories (50,933,844) (7,806,228) 7,672,757 19,157,464 Other current assets (33,207,913) 20,968,261 (28,741,963) 21,829,119 Other non-current assets (215,512) 141,826 (260,520) 189,936 Operating liabilities increase (decrease) Trade and other payables 254,851,209 (14,274,593) 233,111,754 9,118,506 Unbilled payables 148,112,367 (58,766,883) 149,322,731 (62,367,255) Advance received from hirers (1,472,138) 2,496,408 (8,719,637) (3,128,189) Construction revenue received in advance 1,909,336,355 (179,707,500) 1,909,336,355 (179,707,500) Provision for long-term employee benefits (1,621,570) (2,499,514) (1,405,750) (2,327,539) Other current liabilities 12,949,147 10,990,323 6,151,330 5,349,678 Cash from operating activities 2,405,847,876 248,908,942 2,322,992,842 267,747,769 Cash received from witholding tax refundable 13,030,533 - 13,030,533 - Cash paid for corporate income tax (116,342,083) (54,103,587) (97,163,974) (50,647,813)

Net cash from operating activities 2,302,536,326 194,805,355 2,238,859,401 217,099,956

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

STP&I Public Company Limited and its subsidiaries

Cash flow statements

For the year ended 31 December 2012

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Annual Report 2012

(Unit: Baht)

Consolidated financial statements

Separate financial statements

2012 2011 2012 2011Cash flows from operating activitiesProfit before tax 1,344,764,561 402,631,877 1,157,795,678 383,820,718 Adjustments to reconcile profit before tax to net cash provided by (paid from) operating activities: Depreciation and amortisation 158,785,282 180,930,011 147,801,952 175,070,639 Allowance for doubtful accounts (reversal) (6,052,852) 6,099,000 (6,099,000) 6,099,000 Allowance for diminution in value of inventories (reversal) (1,202,299) 4,671,542 (1,217,818) 4,279,326 Gain on sales of equipment (1,795,039) (4,809,727) (1,464,291) (1,152,126) Gain on sales of investments in trading securities (12,624,016) (6,167,953) (12,490,355) (6,167,953) Gain on sales of investments in available-for-sale securities (3,883,973) (2,587,759) (3,883,973) (2,587,759) Gain on sales of investments in held-to-maturity debt securities (1,311,947) (11,626,162) (1,311,947) (11,298,331) Unrealised loss (gain) on valuation of investments (1,463,136) 6,992,767 (1,212,422) 6,992,767 Dividend received from investments in available-for-sale securities (27,071,250) (21,086,064) (27,071,250) (21,086,064) Reversal of unbilled payables - (399,123,116) - (399,123,116) Short-term provisions (reversal) (5,814,220) 5,604,227 (7,889,983) 4,367,892 Provision for long-term employee benefits 7,237,045 6,729,685 6,027,354 5,653,335 Unrealised loss (gain) on foreign exchange (4,985,282) 9,707,833 (3,887,753) 10,537,985 Interest income (77,808,619) (46,676,116) (78,438,892) (46,676,116) Interest expenses 2,318,491 584,803 114,377 56,037 Income from operating activities before changes in operating assets and liabilities 1,369,092,746 131,874,848 1,166,771,677 108,786,234 Operating assets (increase) decrease Current investment - available-for-sale securities (444,950,409) 272,071,365 (370,950,409) 272,071,364 Trade and other receivables and unbilled receivables (773,648,336) (7,971,993) (756,851,257) (2,616,671) Work in progress 17,555,774 81,392,622 17,555,774 81,392,622 Inventories (50,933,844) (7,806,228) 7,672,757 19,157,464 Other current assets (33,207,913) 20,968,261 (28,741,963) 21,829,119 Other non-current assets (215,512) 141,826 (260,520) 189,936 Operating liabilities increase (decrease) Trade and other payables 254,851,209 (14,274,593) 233,111,754 9,118,506 Unbilled payables 148,112,367 (58,766,883) 149,322,731 (62,367,255) Advance received from hirers (1,472,138) 2,496,408 (8,719,637) (3,128,189) Construction revenue received in advance 1,909,336,355 (179,707,500) 1,909,336,355 (179,707,500) Provision for long-term employee benefits (1,621,570) (2,499,514) (1,405,750) (2,327,539) Other current liabilities 12,949,147 10,990,323 6,151,330 5,349,678 Cash from operating activities 2,405,847,876 248,908,942 2,322,992,842 267,747,769 Cash received from witholding tax refundable 13,030,533 - 13,030,533 - Cash paid for corporate income tax (116,342,083) (54,103,587) (97,163,974) (50,647,813)

Net cash from operating activities 2,302,536,326 194,805,355 2,238,859,401 217,099,956

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

STP&I Public Company Limited and its subsidiaries

Cash flow statements

For the year ended 31 December 2012

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(Unit: Baht)

Consolidated financial statements

Separate financial statements

2012 2011 2012 2011Cash flows from investing activities

Decrease in restricted bank deposits 334,011 33,060,446 696,999 30,694,520

Acquisition of investments in available-for-sale securities (326,798,474) (113,671,087) (326,798,474) (113,671,087)

Cash received from sale of investments

in available-for-sale securities 341,255,005 114,266,423 341,255,005 114,266,423

Acquisition of held-to-maturity debt securities (6,382,989,204) (5,474,367,291) (5,971,384,958) (5,474,367,291)

Cash received from redemption of held-to-maturity debt securities 4,894,978,060 5,696,041,941 4,483,373,814 5,668,732,532

Cash paid for long-term loan to subsidiary - - (50,000,000) -

Proceeds from sales of equipment 5,347,696 6,276,088 5,086,014 2,140,281

Acquistion of intangible assets (2,764,110) (2,302,167) (2,764,110) (2,302,167)

Acquisition of property, plant and equipment (652,646,785) (52,166,057) (552,077,509) (29,919,258)

Dividend received from investments in available-for-sale securities 27,071,250 21,086,064 27,071,250 21,086,064

Interest income 49,596,206 44,255,488 50,226,479 44,255,488

Net cash from (used in) investing activities (2,046,616,345) 272,479,848 (1,995,315,490) 260,915,505

Cash flows from financing activities

Cash paid for liabilities under long-term lease agreements (18,193,648) (4,510,587) (1,502,661) (1,009,879)

Cash received from sale-leaseback of equipment 31,929,996 10,250,600 - -

Cash received from share capital issued as a result

of warrants exercise 1,536,009 811,952 1,536,009 811,952

Cash received from disposals of treasury shares 134,980,895 - 134,980,895 -

Dividend paid - net (117,422,718) (480,962,627) (117,422,718) (480,962,627)

Net cash from (used in) financing activities 32,830,534 (474,410,662) 17,591,525 (481,160,554)

Net increase (decrease) in cash and cash equivalents 288,750,515 (7,125,459) 261,135,436 (3,145,093)

Cash and cash equivalents at beginning of year 85,194,392 92,319,851 54,317,925 57,463,018

Cash and cash equivalents at end of year 373,944,907 85,194,392 315,453,361 54,317,925

Supplemental cash flows information:

Non-cash related transactions

Asset acquired under long-term lease agreements 5,291,313 11,000,000 5,291,313 -

Deferred gain from sale-leaseback of equipment 109,473 178,554 - -

Transfer assets under construction to intangible assets 314,983 - 314,983 -

Transfer land and land improvement for rent to investment property - - 29,498,000 -

Reclassification of investments 149,000,000 - 149,000,000 -

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

STP&I Public Company Limited and its subsidiaries

Cash flow statements (continued)

For the year ended 31 December 2012

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Annual Report 2012

1. General information

STP&I Public Company Limited (“the Company”) is a public company incorporated and domiciled in Thailand.

The Company is principally engaged in steel fabrication work, and the manufacture of boilers and pressure vessels.

The registered office of the Company is at 32/24, 3rd Floor Sino-Thai Tower, Sukhumvit 21 Road, Kwaeng

Klongtoey Nua, Khet Wattana, Bangkok.

2. Basis of preparation

2.1 The financial statements have been prepared in accordance with accounting standards enunciated under the

Accounting Profession Act B.E. 2547 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 STP&I Public Company Limited

(“the Company”) and the following subsidiary companies (“thesubsidiaries”).

Company’s name Nature of businessCountry of

incorporationPercentage ofshareholding

2012Percent

2011Percent

Held by the Company

STIT Company Limited Manufacture, sale and rental of construction equipment

Thailand 100 100

Held by subsidiary company

STIT 2011 Company Limited Sale and rental of construction equipment Thailand 100 100

b) Subsidiaries are fully consolidated as from the date of acquisition, being the date on which the Company obtains

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

c) The financial statements of the subsidiaries are prepared using the same significant accounting policies

as the Company.

d) Material balances and transactions between the Company and its subsidiary companies have been

eliminated from the consolidated financial statements.

STP&I Public Company Limited and its subsidiariesNote to consolidated financial statementsFor the year ended 31 December 2012

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Annual Report 2012

1. General information

STP&I Public Company Limited (“the Company”) is a public company incorporated and domiciled in Thailand.

The Company is principally engaged in steel fabrication work, and the manufacture of boilers and pressure vessels.

The registered office of the Company is at 32/24, 3rd Floor Sino-Thai Tower, Sukhumvit 21 Road, Kwaeng

Klongtoey Nua, Khet Wattana, Bangkok.

2. Basis of preparation

2.1 The financial statements have been prepared in accordance with accounting standards enunciated under the

Accounting Profession Act B.E. 2547 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 STP&I Public Company Limited

(“the Company”) and the following subsidiary companies (“thesubsidiaries”).

Company’s name Nature of businessCountry of

incorporationPercentage ofshareholding

2012Percent

2011Percent

Held by the Company

STIT Company Limited Manufacture, sale and rental of construction equipment

Thailand 100 100

Held by subsidiary company

STIT 2011 Company Limited Sale and rental of construction equipment Thailand 100 100

b) Subsidiaries are fully consolidated as from the date of acquisition, being the date on which the Company obtains

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

c) The financial statements of the subsidiaries are prepared using the same significant accounting policies

as the Company.

d) Material balances and transactions between the Company and its subsidiary companies have been

eliminated from the consolidated financial statements.

STP&I Public Company Limited and its subsidiariesNote to consolidated financial statementsFor the year ended 31 December 2012

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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.

3. New accounting standards not yet effective

The Federation of Accounting Professions issued the following new/revised accounting standards that are effective

for fiscal years beginning on or after 1 January 2013.

Accounting standards:

TAS 12 Income Taxes

TAS 20 (revised 2009) Accounting for Government Grants and Disclosure of Government Assistance

TAS 21 (revised 2009) The Effects of Changes in Foreign Exchange Rates

Financial Reporting Standard:

TFRS 8 Operating Segments

Accounting Standard Interpretations:

SIC 10 Government Assistance - No Specific Relation to Operating Activities

SIC 21 Income Taxes - Recovery of Revalued Non-Depreciable Assets

SIC 25 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders

The Company’s management believes that these accounting standards will not have any significant impact on the

financial statements for the year when they are initially applied, except for TAS 12 Income Taxes.

TAS 12 Income Taxes

This accounting standard requires an entity to identify temporary differences, which are differences between the

carrying amount of an asset or liability in the accounting records and its tax base, and to recognize deferred tax

assets and liabilities under the stipulated guidelines. The management of the Company expects the adoption of this

accounting standard to have the effect of increasing the Company and its subsidiaries’ brought-forward retained

earnings and other components of shareholders’ equity of the year 2013 by approximately Baht 115 million in total

(the Company only: approximately Baht 96 million).

In addition, the Federation of Accounting Professions has issued Notification No. 30/2555 - 34/2555, published in

the Royal Gazette on 17 January 2013, mandating the use of accounting treatment guidance and accounting

standard interpretations as follows.

Effective dateAccounting Treatment Guidance for Transfers of Financial Assets 1 January 2013Accounting Standard Interpretation: SIC 29 Service Concession Arrangements: Disclosures 1 January 2014Financial Reporting Standard Interpretations: TFRIC 4 Determining whether an Arrangement contains a Lease 1 January 2014 TFRIC 12 Service Concession Arrangements 1 January 2014 TFRIC 13 Customer Loyalty Programmes 1 January 2014

The management of the Company has assessed the effect of these standards and believes that these standards are

not relevant to the business of the Company.

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Annual Report 2012

4. Significant accounting policies

4.1 Revenues and expenses recognition

a) Revenues

Revenues from fabrication work under long-term contracts

Revenues from fabrication work under long-term contracts are recognised on a percentage of completion basis,

based on the assessment of the Company’s and its subsidiary’s engineers. Recognised revenues, that are not yet

due per the contracts have been presented under the caption of “Unbilled receivables” in the statements of fi-

nancial posiiton.

Sales of goods

Sales of goods are recognised when the significant risks and rewards of ownership of the goods have passed to

the buyer. Sales are the invoiced value, excluding value added tax, of goods supplied after deducting discounts

and allowances.

Rendering of services

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

completion.

Rental income

Equipment rental income is recognised on an accrual basis.

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.

b) Expenses

Costs of fabrication work

Costs of fabrication work are recognised in accordance with the percentage of work completed based on total

estimated costs. Provision for anticipated losses on construction projects is made in the accounts in full when

the possibility of loss is ascertained. Differences between the recorded costs on the percentage of worked

completed based on the estimated cost and the actual costs are presented as current assets or current liabilities

in the statements of financial position.

Other expenses

Other expenses are recognised on an accrual basis.

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 accounts receivable

Trade accounts receivable are stated at the net realisable value. Allowance for doubtful accounts is provided for

the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection

experiences and analysis of debt aging.

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Annual Report 2012

4. Significant accounting policies

4.1 Revenues and expenses recognition

a) Revenues

Revenues from fabrication work under long-term contracts

Revenues from fabrication work under long-term contracts are recognised on a percentage of completion basis,

based on the assessment of the Company’s and its subsidiary’s engineers. Recognised revenues, that are not yet

due per the contracts have been presented under the caption of “Unbilled receivables” in the statements of fi-

nancial posiiton.

Sales of goods

Sales of goods are recognised when the significant risks and rewards of ownership of the goods have passed to

the buyer. Sales are the invoiced value, excluding value added tax, of goods supplied after deducting discounts

and allowances.

Rendering of services

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

completion.

Rental income

Equipment rental income is recognised on an accrual basis.

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.

b) Expenses

Costs of fabrication work

Costs of fabrication work are recognised in accordance with the percentage of work completed based on total

estimated costs. Provision for anticipated losses on construction projects is made in the accounts in full when

the possibility of loss is ascertained. Differences between the recorded costs on the percentage of worked

completed based on the estimated cost and the actual costs are presented as current assets or current liabilities

in the statements of financial position.

Other expenses

Other expenses are recognised on an accrual basis.

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 accounts receivable

Trade accounts receivable are stated at the net realisable value. Allowance for doubtful accounts is provided for

the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection

experiences and analysis of debt aging.

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4.4 Inventories

Inventories are valued at the lower of cost (first-in, first-out method) and net realisable value.

4.5 Investments

a) Investments in available-for-sale securities are stated at fair value. Changes in the fair value of these

securities are recorded as a separate item in shareholders’ equity, and will be recorded in profit or loss when

the securities are sold.

b) Investments in unit trusts of open-ended fund are stated at fair value. Changes in the fair value of these unit

trusts are recorded in profit or loss.

c) Investments in debt securities, both due within one year and expected to be held to maturity, are recorded at

amortised cost. The premium/discount on debt securities is amortised/accreted by the effective rate method

with the amortised/accreted amount presented as an adjustment to the interest income.

d) Investments in non-marketable equity securities, which the Company classifies as other investments, are stated

at cost net of allowance for impairment loss (if any).

e) Investments in subsidiary companies are accounted for in the separate financial statements using the cost

method.

The fair value of marketable securities is based on the latest bid price of the last working day of the year. The fair

value of debt instruments is determined based on yield rates quoted by the Thai Bond Market Association. The fair

value of unit trusts is determined from their net asset value.

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

In the event the Company reclassifies investments from one type to another, such investments will be

readjusted to their fair value as at the reclassification date. The difference between the carrying amount of the

investments and the fair value on the date of reclassification are recorded in profit or loss or recorded as surplus

(deficit) from changes in the value of investments in shareholders’ equity, depending on the type of investment

that is reclassified.

On disposal of an investment, the difference between net disposal proceeds and the carrying amount of the

investment is recognised in profit or loss.

The fair value of unit trusts of open-ended fund is determined from their net asset value.

4.6 Investment properties

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

recognition, investment properties are stated at cost less accumulated depreciation and 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.

4.7 Property, plant and equipment/Depreciation

Land is stated at cost. Building and equipment are stated at cost less accumulated depreciation and allowance for

loss on impairment of assets (if any).

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Annual Report 2012

Depreciation of plant and equipment is calculated by reference to their cost on the straight-line basis over the

following estimated useful lives:

Land improvements - 20 years

Buildings and construction - 5, 20 years

Machinery, tools and construction equipment - 3 - 15 years

Office equipment, furniture and fixtures - 3, 5 years

Motor vehicles - 5 years

Depreciation of construction on lease land is calculated by reference to cost on a straight-line basis over the lease

period.

Depreciation is included in determining income.

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

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are

expected from its use or disposal. Any gain or loss arising on disposal of an asset is included in profit or loss when

the asset is derecognised.

4.8 Intangible assets

Intangible assets acquired through business combination are initially recognised at their fair value on the date of

business acquisition while intangible assets acquired in other cases are recognised at cost. Following the initial

recognition, the intangible assets are carried at cost less any accumulated amortisation and any accumulated

impairment losses.

Intangible assets with finite lives are amortised on a systematic basis over the economic useful life and tested for

impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period

and the amortisation method of such intangible assets are reviewed at least at each financial year end. The

amortisation expense is charged to profit or loss.

The intangible assets with finite useful lives is computer software with useful lives of 5 years.

4.9 Goodwill

Goodwill is initially recorded at cost, which equals to the excess of cost of business combination over the fair value

of the net assets acquired. If the fair value of the net assets acquired exceeds the cost of business combination, the

excess is immediately recognised as gain in profit or loss.

Goodwill is carried at cost less any accumulated impairment losses. Goodwill is tested for impairment

annually and when circumstances indicate that the carrying value may be impaired.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the

Company’s cash generating units (or group of cash-generating units) that are expected to benefit from the synergies

of the combination. The Company estimates the recoverable amount of each cash-generating unit (or group of

cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is

less than the carrying amount, an impairment loss is recognised in profit or loss. Impairment losses relating to

goodwill cannot be reversed in future periods.

4.10 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.

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Annual Report 2012

Depreciation of plant and equipment is calculated by reference to their cost on the straight-line basis over the

following estimated useful lives:

Land improvements - 20 years

Buildings and construction - 5, 20 years

Machinery, tools and construction equipment - 3 - 15 years

Office equipment, furniture and fixtures - 3, 5 years

Motor vehicles - 5 years

Depreciation of construction on lease land is calculated by reference to cost on a straight-line basis over the lease

period.

Depreciation is included in determining income.

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

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are

expected from its use or disposal. Any gain or loss arising on disposal of an asset is included in profit or loss when

the asset is derecognised.

4.8 Intangible assets

Intangible assets acquired through business combination are initially recognised at their fair value on the date of

business acquisition while intangible assets acquired in other cases are recognised at cost. Following the initial

recognition, the intangible assets are carried at cost less any accumulated amortisation and any accumulated

impairment losses.

Intangible assets with finite lives are amortised on a systematic basis over the economic useful life and tested for

impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period

and the amortisation method of such intangible assets are reviewed at least at each financial year end. The

amortisation expense is charged to profit or loss.

The intangible assets with finite useful lives is computer software with useful lives of 5 years.

4.9 Goodwill

Goodwill is initially recorded at cost, which equals to the excess of cost of business combination over the fair value

of the net assets acquired. If the fair value of the net assets acquired exceeds the cost of business combination, the

excess is immediately recognised as gain in profit or loss.

Goodwill is carried at cost less any accumulated impairment losses. Goodwill is tested for impairment

annually and when circumstances indicate that the carrying value may be impaired.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the

Company’s cash generating units (or group of cash-generating units) that are expected to benefit from the synergies

of the combination. The Company estimates the recoverable amount of each cash-generating unit (or group of

cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is

less than the carrying amount, an impairment loss is recognised in profit or loss. Impairment losses relating to

goodwill cannot be reversed in future periods.

4.10 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.

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They also include associated companies 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.

4.11 Long-term leases

Leases of motor vehicles, machinery and equipment which transfer substantially all the risks and rewards of

ownership are classified as finance leases. Finance leases are capitalised at the lower of the fair value of the leased

assets and the present value of the minimum lease payments. The outstanding rental obligations, net of finance

charges, are included in other long-term payables, while the interest element is charged to profit or loss over the

lease period. The assets acquired under finance leases is depreciated over their useful life.

Operating lease payments are recognised as an expense in the profit or loss on a straight line basis over the lease

term.

4.12 Foreign currencies

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.

4.13 Impairment of assets

At the end of each reporting period, the Company and its subsidiaries performs 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.

4.14 Employee benefits

Short-termemployeebenefits

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

incurred.

Post-employmentbenefitsandotherlong-termemployeebenefits

Defined contribution plans

The Company and its employees have jointly established a provident fund. The fund is monthly contributed by

employees and by the Company. The fund’s assets are held in a separate trust fund and the Company’s

contributions are recognised as expenses when incurred.

Defined benefit plans and other long-term employee benefits

The Company has obligations in respect of the severance payments it must make to employees upon retirement

under labor law and other employee benefit plans. The Company treats these severance payment obligations as a

defined benefit plan. In addition, the Company provides other long-term employee benefit plan, namely long

service awards.

The obligation under the defined benefit plan and other long-term employee benefit plans is determined by a

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

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Annual Report 2012

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

immediately in profit and loss.

For the first-time adoption of TAS 19 Employee benefits in 2011, the Company elected to recognise the

transitional liability, which exceeds the liability that would have been recognised at the same date under the

previous accounting policy, through an adjustment to the beginning balance of retained earnings in 2011.

4.15 Provisions

Provisions are recognised when the Company and its subsidiaries have a present obligation as a result of a past

event, it is probable that an outflow of resources embodying economic benefits will be required to settle the

obligation, and a reliable estimate can be made of the amount of the obligation.

4.16 Income tax

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.

4.17 Derivatives

Forward exchange contracts

Receivables and payables arising from forward exchange contracts are translated into Baht at the rates of exchange

ruling at the end of reporting period. Unrecognised gains and losses from the translation are included in

determining income. Premiums or discounts on forward exchange contracts are amortized on a straight-line basis

over the contract periods.

4.18 Treasury shares

Treasury shares are stated at cost and presented as a deduction from shareholders’ equity. Gains on disposal of

treasury shares are determined by reference to the carrying amountand are presented as premium on

treasury shares. Losses on disposal of treasury shares are determined by reference to the carrying amount and are

presented in premium on treasury shares and retained earnings, consecutively.

5. Significant accounting judgements and estimates

The preparation of financial statements in conformity with generally accepted accounting principles at times requires

management to make subjective judgments and estimates regarding matters that are inherently uncertain. These

judgments and estimates affect reported amounts and disclosures; and actual results could differ from these

estimates. Significant judgments and estimates are as follows:

Estimated construction project costs

The Company and its subsidiaries estimates costs of construction projects based on details of the construction

work, taking into account the volume and value of construction materials to be used in the project, labour costs

and other miscellaneous costs to be incurred to completion of service, taking into account the direction of the

movement in these costs. Estimates are reviewed regularly or whenever actual costs differ significantly from the

figures used in the original estimates.

Provision for losses on construction projects

Management applied judgement in estimating the loss they expect to be realised on each construction project, based

on estimates of anticipated costs that take into account the progress of the project and actual costs incurred to date,

together with fluctuations in costs of construction materials, labour and the current situation.

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Annual Report 2012

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

immediately in profit and loss.

For the first-time adoption of TAS 19 Employee benefits in 2011, the Company elected to recognise the

transitional liability, which exceeds the liability that would have been recognised at the same date under the

previous accounting policy, through an adjustment to the beginning balance of retained earnings in 2011.

4.15 Provisions

Provisions are recognised when the Company and its subsidiaries have a present obligation as a result of a past

event, it is probable that an outflow of resources embodying economic benefits will be required to settle the

obligation, and a reliable estimate can be made of the amount of the obligation.

4.16 Income tax

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.

4.17 Derivatives

Forward exchange contracts

Receivables and payables arising from forward exchange contracts are translated into Baht at the rates of exchange

ruling at the end of reporting period. Unrecognised gains and losses from the translation are included in

determining income. Premiums or discounts on forward exchange contracts are amortized on a straight-line basis

over the contract periods.

4.18 Treasury shares

Treasury shares are stated at cost and presented as a deduction from shareholders’ equity. Gains on disposal of

treasury shares are determined by reference to the carrying amountand are presented as premium on

treasury shares. Losses on disposal of treasury shares are determined by reference to the carrying amount and are

presented in premium on treasury shares and retained earnings, consecutively.

5. Significant accounting judgements and estimates

The preparation of financial statements in conformity with generally accepted accounting principles at times requires

management to make subjective judgments and estimates regarding matters that are inherently uncertain. These

judgments and estimates affect reported amounts and disclosures; and actual results could differ from these

estimates. Significant judgments and estimates are as follows:

Estimated construction project costs

The Company and its subsidiaries estimates costs of construction projects based on details of the construction

work, taking into account the volume and value of construction materials to be used in the project, labour costs

and other miscellaneous costs to be incurred to completion of service, taking into account the direction of the

movement in these costs. Estimates are reviewed regularly or whenever actual costs differ significantly from the

figures used in the original estimates.

Provision for losses on construction projects

Management applied judgement in estimating the loss they expect to be realised on each construction project, based

on estimates of anticipated costs that take into account the progress of the project and actual costs incurred to date,

together with fluctuations in costs of construction materials, labour and the current situation.

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Impairment of equity investments

The Company treats available-for-sale investments and other investments as impaired when there has been a

significant or prolonged decline in the fair value below their cost or where other objective evidence of impairment

exists. The determination of what is “significant” or “prolonged” requires judgement of the management.

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 Company’s 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 record impairment losses in the period 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.

Post-employment benefits under defined benefit plans and other long-term employee benefits

The obligation under the defined benefit plan and other long-term employee benefit plans 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.

Litigation

The Company has contingent liabilities as a result of litigation. The Company’s management has used judgment

to assess of the results of the litigation, as described in Note 35.4 to the financial statements.

6. Cash and cash equivalents

(Unit: Thousand Baht)

Consolidated financial statements Separate financial statements

2012 2011 2012 2011

Cash 616 387 300 240

Bank deposits 373,329 84,807 315,153 54,078

Total 373,945 85,194 315,453 54,318

As at 31 December 2012, bank deposits in saving accounts carried interests between 0.10 and 0.75 percent per an-

num (2011: between 0.50 and 0.88 percent per annum).

7. Current investments

(Unit: Thousand Baht)

Consolidatedfinancial statements

Separatefinancial statements

2012 2011 2012 2011

Investments in trading securities - Fair value 833,960 374,923 759,576 374,923

Investments in held-to-maturity debt securities - due within one year 2,350,000 834,677 2,350,000 834,677

Investments in available-for-sale securities, Cost 271,412 126,296 271,412 126,296

Add: Differences exchange rate (2,530) 3,186 (2,530) 3,186

Less: Surplus (deficit on) changes in value of investments 18,179 (6,988) 18,179 (6,988)

Investments in available-for-sale securities, Fair value 287,061 122,494 287,061 122,494

Total 3,471,021 1,332,094 3,396,637 1,332,094

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Annual Report 2012

During the current year, the Company sold the available-for-sale securities with book values totaling Baht 324

million and recognised gains on the sales amounting to Baht 4 million in profit or loss. This amount included

the loss transferred from the loss on valuation of the available-for-sale securities in other comprehensive income,

amounting to Baht 10 million (after tax).

8. Trade and other receivables

(Unit: Thousand Baht)

Consolidated financial statements

Separatefinancial statements

2012 2011 2012 2011

Trade receivables - related parties

Aged on the basis of due dates

Not yet due 2,179 1,916 155 79

Past due

Up to 3 months 1,447 534 257 89

3 - 6 months 957 173 - -

6 - 12 months 1,591 - - -

Over 12 months 17,898 17,898 17,898 17,898

Total 24,072 20,521 18,310 18,066

Less: Allowance for doubtful debts (17,898) (17,898) (17,898) (17,898)

Total trade receivables - related parties, net 6,174 2,623 412 168

Trade receivables - unrelated parties

Aged on the basis of due dates

Not yet due 517,110 53,873 483,445 18,748

Past due

Up to 3 months 43,573 29,558 24,191 10,585

3 - 6 months 14,246 6,306 2,075 5,134

6 - 12 months 1,364 1,159 1,113 599

Over 12 months 19,496 25,646 17,324 23,426

Total 595,789 116,542 528,148 58,492

Less: Allowance for doubtful debts (19,355) (25,454) (17,312) (23,411)

Total trade receivables - unrelated parties, net 576,434 91,088 510,836 35,081

Total trade accounts receivable - net 582,608 93,711 511,248 35,249

Other receivables

Other receivables and advance to related parties 99 126 169 291

Other receivables and advance to unrelated parties 5,861 970 1,990 81

Retention receivables from construction

Contracts - related parties 831 356 - -

Retention receivables from construction

Contracts - unrelated parties 3,763 19,054 2,655 18,255

Accrued interest income 35,482 7,269 35,482 7,269

Accrued income - 53 - -

Total 46,036 27,828 40,296 25,896

Less: Allowance for doubtful debts (244) (198) (99) (99)

Total other receivables - net 45,792 27,630 40,197 25,797

Total trade and other receivables - net 628,400 121,341 551,445 61,046

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Annual Report 2012

During the current year, the Company sold the available-for-sale securities with book values totaling Baht 324

million and recognised gains on the sales amounting to Baht 4 million in profit or loss. This amount included

the loss transferred from the loss on valuation of the available-for-sale securities in other comprehensive income,

amounting to Baht 10 million (after tax).

8. Trade and other receivables

(Unit: Thousand Baht)

Consolidated financial statements

Separatefinancial statements

2012 2011 2012 2011

Trade receivables - related parties

Aged on the basis of due dates

Not yet due 2,179 1,916 155 79

Past due

Up to 3 months 1,447 534 257 89

3 - 6 months 957 173 - -

6 - 12 months 1,591 - - -

Over 12 months 17,898 17,898 17,898 17,898

Total 24,072 20,521 18,310 18,066

Less: Allowance for doubtful debts (17,898) (17,898) (17,898) (17,898)

Total trade receivables - related parties, net 6,174 2,623 412 168

Trade receivables - unrelated parties

Aged on the basis of due dates

Not yet due 517,110 53,873 483,445 18,748

Past due

Up to 3 months 43,573 29,558 24,191 10,585

3 - 6 months 14,246 6,306 2,075 5,134

6 - 12 months 1,364 1,159 1,113 599

Over 12 months 19,496 25,646 17,324 23,426

Total 595,789 116,542 528,148 58,492

Less: Allowance for doubtful debts (19,355) (25,454) (17,312) (23,411)

Total trade receivables - unrelated parties, net 576,434 91,088 510,836 35,081

Total trade accounts receivable - net 582,608 93,711 511,248 35,249

Other receivables

Other receivables and advance to related parties 99 126 169 291

Other receivables and advance to unrelated parties 5,861 970 1,990 81

Retention receivables from construction

Contracts - related parties 831 356 - -

Retention receivables from construction

Contracts - unrelated parties 3,763 19,054 2,655 18,255

Accrued interest income 35,482 7,269 35,482 7,269

Accrued income - 53 - -

Total 46,036 27,828 40,296 25,896

Less: Allowance for doubtful debts (244) (198) (99) (99)

Total other receivables - net 45,792 27,630 40,197 25,797

Total trade and other receivables - net 628,400 121,341 551,445 61,046

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9. 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 Transfer Pricing policy

2012 2011 2012 2011

Transactions with subsidiaries(eliminated from the consolidated financial statements)

Revenue from sales and services - - 3 6 Market price or contract price

Cost of fabrication work - - 613 21 Market price or contract price

Purchase of goods and services - - 3 2 Market price

Interest income - - 1 - 3.5% per annum

Transactions with related companies

Revenue from fabrication work - 9 - 9 Contract price

Revenue from sales and services 11 7 - - Market price or contract price

Purchase of goods and services 34 19 34 - Contract price

Purchase of services 4 3 - - Contract price

As at 31 December 2012 and 2011, the balances of the accounts between the Company and those related companies

are as follows:

(Unit : Thousand Baht)

Consolidated financial statements

Separatefinancial statements

2012 2011 2012 2011

Trade and other receivables - related parties

Subsidiaries

STIT Company Limited - - 431 282

STIT 2011 Company Limited - - 51 51

Related companies

Sino-Thai Engineering and Construction Public Company Limited 7,005 3,006 - 27

Thai Maintenance Contracting Company Limited 17,997 17,997 17,997 17,997

Total 25,002 21,003 18,479 18,357

Less: Allowance for doubtful debts (17,997) (17,997) (17,997) (17,997)

Total trade and other receivables - related parties, net 7,005 3,006 482 360

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Annual Report 2012

(Unit : Thousand Baht)

Consolidated financial statements

Separatefinancial statements

2012 2011 2012 2011

Trade and other payables - related parties

Subsidiaries

STIT Company Limited - - 1,241 184

STIT 2011 Company Limited - - 98,533 8,451

Related companies

Sino-Thai Engineering and Construction Public Company Limited 9,679 - 9,679 -

Thai Maintenance Contracting Company Limited 659 659 659 659

Total trade and other payables - related parties 10,338 659 110,112 9,294

Long-term loan to subsidiary

As at 31 December 2012, the balance of long-term loan to subsidiary and the movements are as follows:

(Unit: Thousand Baht)

Separate financial statements

1 January 2012 Increase during the year 31 December 2012

Long-term loan to subsidiary STIT Co., Ltd. - 50,000 50,000

Total - 50,000 50,000

Directors and management’s benefits

During the year ended 31 December 2012 and 2011, the Company and its subsidiaries had employee benefit

payable to their directors and management as below.

(Unit: Thousand Baht)

Consolidatedfinancial statements

Separatefinancial statements

2012 2011 2012 2011

Short-term employee benefits 41,277 37,617 36,677 32,370

Post-employment benefits 1,543 1,443 1,284 1,202

Other long-term benefits 39 19 32 30

Total 42,859 39,079 37,993 33,602

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Annual Report 2012

(Unit : Thousand Baht)

Consolidated financial statements

Separatefinancial statements

2012 2011 2012 2011

Trade and other payables - related parties

Subsidiaries

STIT Company Limited - - 1,241 184

STIT 2011 Company Limited - - 98,533 8,451

Related companies

Sino-Thai Engineering and Construction Public Company Limited 9,679 - 9,679 -

Thai Maintenance Contracting Company Limited 659 659 659 659

Total trade and other payables - related parties 10,338 659 110,112 9,294

Long-term loan to subsidiary

As at 31 December 2012, the balance of long-term loan to subsidiary and the movements are as follows:

(Unit: Thousand Baht)

Separate financial statements

1 January 2012 Increase during the year 31 December 2012

Long-term loan to subsidiary STIT Co., Ltd. - 50,000 50,000

Total - 50,000 50,000

Directors and management’s benefits

During the year ended 31 December 2012 and 2011, the Company and its subsidiaries had employee benefit

payable to their directors and management as below.

(Unit: Thousand Baht)

Consolidatedfinancial statements

Separatefinancial statements

2012 2011 2012 2011

Short-term employee benefits 41,277 37,617 36,677 32,370

Post-employment benefits 1,543 1,443 1,284 1,202

Other long-term benefits 39 19 32 30

Total 42,859 39,079 37,993 33,602

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10. Unbilled receivables/Construction revenue received in advance

(Unit: Thousand Baht)

Consolidated/Separate financial statements

2012 2011

Project value as per contract 27,437,243 4,437,365

Accumulated amount recognised as revenue on percentage of completion basis 3,253,379 1,303,705

Less: Value of total billed (4,790,196) (1,231,941)

Total (1,536,817) 71,764

Add: Construction revenue received in advance 1,909,336 -

Unbilled receivables 372,519 71,764

11. Inventories

(Unit: Thousand Baht)

Consolidated financial statements

CostReduce cost to net realisable value Inventories - net

2012 2011 2012 2011 2012 2011

Finished goods 70,608 78,029 (1,931) (1,908) 68,677 76,121

Spare parts and factory supplies 58,964 33,248 (10,523) (11,748) 48,441 21,500

Goods in transit 38,615 5,976 - - 38,615 5,976

Total 168,187 117,253 (12,454) (13,656) 155,733 103,597

(Unit: Thousand Baht)

Separate financial statements

CostReduce cost to net realisable value Inventories - net

2012 2011 2012 2011 2012 2011

Finished goods 7,808 10,329 (720) (713) 7,088 9,616

Spare parts and factory supplies 28,096 33,248 (10,523) (11,748) 17,573 21,500

Total 35,904 43,577 (11,243) (12,461) 24,661 31,116

12. Other current assets

(Unit: Thousand Baht)

Consolidated financial statements

Separatefinancial statements

2012 2011 2012 2011

Refundable value added tax 19,299 7,791 15,027 6,121

Prepaid expenses 9,911 8,022 8,589 6,939

Advance payment for goods 11,237 - 11,237 -

Others 14,590 3,894 8,141 252

Other current assets 55,037 19,707 42,994 13,312

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Annual Report 2012

13. Restricted bank deposits

These represents a fixed deposit of the Company and its subsidiaries which pledged with banks to secure credit

facilities granted by banks.

14. Investments in subsidiary

Separate financial statements

Company’s name Paid-up capitalShareholdingpercentage Cost

2012 2011 2012 2011 2012 2011

Million Baht Million Baht (%) (%) Thousand Baht Thousand Baht

STIT Company Limited 135 135 100 100 135,000 135,000

Total 135,000 135,000

No dividend was received from the subsidiary company for the year ended 31 December 2012 and 2011.

15. Other long-term investments

(Unit: Thousand Baht)

Consolidated/Separate financial statements

2012 2011

Investments in available-for-sale securities

Cost 330,770 334,273

Add: Surplus on changes in value of investments 84,880 8,179

Fair value 415,650 342,452

Investments in held-to-maturity debt securities

Debentures 175,000 412,700

Less: Maturity within 1 year (50,000) (112,700)

Maturity within 2 - 10 years 125,000 300,000

Other Investments - other company

Ordinary shares 2,340 2,340

Less: Provision for impairment of investments (2,340) (2,340)

Total - -

Other long-term investments, net 540,650 642,452

During the year 2012, the Company received dividend from investments in available-for-sale securities of Baht 27

million (2011: Baht 21 million).

During the first quarter of 2012, the Company reclassified its investments in held-to-maturity debt securities to

investments in available-for-sale securities, using their fair value as at the reclassification date. The cost of

investments in the reclassified debt securities as at the reclassification date was approximately Baht 149 million.

The Company recorded the difference between the cost and the fair value of the debt securities, amounting to Baht

4 million as unrealised gain on reclassification of investments in the statement of other comprehensive income.

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Annual Report 2012

13. Restricted bank deposits

These represents a fixed deposit of the Company and its subsidiaries which pledged with banks to secure credit

facilities granted by banks.

14. Investments in subsidiary

Separate financial statements

Company’s name Paid-up capitalShareholdingpercentage Cost

2012 2011 2012 2011 2012 2011

Million Baht Million Baht (%) (%) Thousand Baht Thousand Baht

STIT Company Limited 135 135 100 100 135,000 135,000

Total 135,000 135,000

No dividend was received from the subsidiary company for the year ended 31 December 2012 and 2011.

15. Other long-term investments

(Unit: Thousand Baht)

Consolidated/Separate financial statements

2012 2011

Investments in available-for-sale securities

Cost 330,770 334,273

Add: Surplus on changes in value of investments 84,880 8,179

Fair value 415,650 342,452

Investments in held-to-maturity debt securities

Debentures 175,000 412,700

Less: Maturity within 1 year (50,000) (112,700)

Maturity within 2 - 10 years 125,000 300,000

Other Investments - other company

Ordinary shares 2,340 2,340

Less: Provision for impairment of investments (2,340) (2,340)

Total - -

Other long-term investments, net 540,650 642,452

During the year 2012, the Company received dividend from investments in available-for-sale securities of Baht 27

million (2011: Baht 21 million).

During the first quarter of 2012, the Company reclassified its investments in held-to-maturity debt securities to

investments in available-for-sale securities, using their fair value as at the reclassification date. The cost of

investments in the reclassified debt securities as at the reclassification date was approximately Baht 149 million.

The Company recorded the difference between the cost and the fair value of the debt securities, amounting to Baht

4 million as unrealised gain on reclassification of investments in the statement of other comprehensive income.

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16. Investment property

Investment property is land and land improvement for rent as presented below.

(Unit: Thousand Baht)

Separate financial statements

2012 2011

Net book value at beginning of year - -

Transfer 29,498 -

Net book value at end of year 29,498 -

As at 31 December 2012, the fair value of land was Baht 23 million, which was appraised by an accredited

independent valuer in 2011 using the market approach. The Company has an additional investment in land

improvements during the current year amounting to Baht 9 million. The Company has not reappraised the value

of such land, since the management believes that the fair value of this asset did not material differ from its net

book value.

17. Property, plant and equipment

(Unit: Thousand Baht)

Consolidated financial statements

Land and land

improvements

Buildings and

construction

Machinery,tools and

constructionequipment

Office equipment, furniture

and fixturesMotor

vehicles

Assets under installation and under

construction Total

Cost:

1 January 2011 236,938 1,298,794 768,405 128,712 82,780 14,378 2,530,007

Additions 11,500 5,010 37,208 7,754 4,150 7,794 73,416

Disposals - (386) (22,922) (5,758) (8,338) - (37,404)

Transfers in (out) 7,140 1,638 201 3 - (8,982) -

31 December 2011 255,578 1,305,056 782,892 130,711 78,592 13,190 2,566,019

Additions 399,140 9,175 66,150 10,681 21,483 151,310 657,939

Disposals - (640) (6,080) (11,713) (11,391) - (29,824)

Transfers in (out) 1,579 5,839 878 37 - (8,648) (315)

31 December 2012 656,297 1,319,430 843,840 129,716 88,684 155,852 3,193,819

Accumulated depreciation:

1 January 2011 2,434 482,761 538,654 89,146 54,412 - 1,167,407

Depreciation for the year 1,999 67,572 82,567 17,036 9,578 - 178,752

Depreciation on disposals - (134) (12,185) (5,749) (7,797) - (25,865)

31 December 2011 4,433 550,199 609,036 100,433 56,193 - 1,320,294

Depreciation for the year 2,466 68,011 59,232 16,361 10,084 - 156,154

Depreciation on disposals - (504) (6,054) (11,688) (7,955) - (26,201)

31 December 2012 6,899 617,706 662,214 105,106 58,322 - 1,450,247

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Annual Report 2012

(Unit: Thousand Baht)

Consolidated financial statements

Land and land

improvements

Buildings and

construction

Machinery,tools and

constructionequipment

Office equipment, furniture

and fixturesMotor

vehicles

Assets under installation and under

construction Total

Allowance for impairment loss:

31 December 2011 - 170,737 6,904 - - - 177,641

31 December 2012 - 170,737 6,904 - - - 177,641

Net book value:

31 December 2011 251,145 584,120 166,952 30,278 22,399 13,190 1,068,084

31 December 2012 649,398 530,987 174,722 24,610 30,362 155,852 1,565,931

Depreciation for the year

2011 (Baht 173 million included in cost of sales and services and cost of fabrication work and the balance in administrative expenses) 178,752

2012 (Baht 149 million included in cost of sales and services and cost of fabrication work and the balance in administrative expenses) 156,154

(Unit: Thousand Baht)

Separate financial statements

Land and land

improvementsBuildings andconstruction

Machinery,tools and

constructionequipment

Office equipment,

furniture and fixtures

Motor vehicles

Assets under installation and under

construction Total

Cost:

1 January 2011 208,358 1,295,997 695,536 123,410 69,632 1,548 2,394,481

Additions 11,500 4,882 1,071 7,350 - 5,115 29,918

Disposals - (386) (8,944) (5,758) (4,379) - (19,467)

Transfers in (out) - 695 204 - - (899) -

31 December 2011 219,858 1,301,188 687,867 125,002 65,253 5,764 2,404,932

Additions 399,140 9,175 17,085 10,117 18,978 102,874 557,369

Disposals - (640) (6,080) (11,713) (11,151) - (29,584)

Transfers in (out) (28,000) 3,914 - 37 - (5,764) (29,813)

31 December 2012 590,998 1,313,637 698,872 123,443 73,080 102,874 2,902,904

Accumulated depreciation:

1 January 2011 2,277 481,297 478,526 85,395 44,007 - 1,091,502

Depreciation for the year 1,417 67,337 79,099 16,518 8,522 - 172,893

Depreciation on disposals - (134) (8,758) (5,749) (3,838) - (18,479)

31 December 2011 3,694 548,500 548,867 96,164 48,691 - 1,245,916

Depreciation for the year 1,782 67,591 51,766 15,792 8,240 - 145,171

Depreciation on disposals - (504) (6,054) (11,688) (7,716) - (25,962)

31 December 2012 5,476 615,587 594,579 100,268 49,215 - 1,365,125

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Annual Report 2012

(Unit: Thousand Baht)

Consolidated financial statements

Land and land

improvements

Buildings and

construction

Machinery,tools and

constructionequipment

Office equipment, furniture

and fixturesMotor

vehicles

Assets under installation and under

construction Total

Allowance for impairment loss:

31 December 2011 - 170,737 6,904 - - - 177,641

31 December 2012 - 170,737 6,904 - - - 177,641

Net book value:

31 December 2011 251,145 584,120 166,952 30,278 22,399 13,190 1,068,084

31 December 2012 649,398 530,987 174,722 24,610 30,362 155,852 1,565,931

Depreciation for the year

2011 (Baht 173 million included in cost of sales and services and cost of fabrication work and the balance in administrative expenses) 178,752

2012 (Baht 149 million included in cost of sales and services and cost of fabrication work and the balance in administrative expenses) 156,154

(Unit: Thousand Baht)

Separate financial statements

Land and land

improvementsBuildings andconstruction

Machinery,tools and

constructionequipment

Office equipment,

furniture and fixtures

Motor vehicles

Assets under installation and under

construction Total

Cost:

1 January 2011 208,358 1,295,997 695,536 123,410 69,632 1,548 2,394,481

Additions 11,500 4,882 1,071 7,350 - 5,115 29,918

Disposals - (386) (8,944) (5,758) (4,379) - (19,467)

Transfers in (out) - 695 204 - - (899) -

31 December 2011 219,858 1,301,188 687,867 125,002 65,253 5,764 2,404,932

Additions 399,140 9,175 17,085 10,117 18,978 102,874 557,369

Disposals - (640) (6,080) (11,713) (11,151) - (29,584)

Transfers in (out) (28,000) 3,914 - 37 - (5,764) (29,813)

31 December 2012 590,998 1,313,637 698,872 123,443 73,080 102,874 2,902,904

Accumulated depreciation:

1 January 2011 2,277 481,297 478,526 85,395 44,007 - 1,091,502

Depreciation for the year 1,417 67,337 79,099 16,518 8,522 - 172,893

Depreciation on disposals - (134) (8,758) (5,749) (3,838) - (18,479)

31 December 2011 3,694 548,500 548,867 96,164 48,691 - 1,245,916

Depreciation for the year 1,782 67,591 51,766 15,792 8,240 - 145,171

Depreciation on disposals - (504) (6,054) (11,688) (7,716) - (25,962)

31 December 2012 5,476 615,587 594,579 100,268 49,215 - 1,365,125

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(Unit: Thousand Baht)

Separate financial statements

Land and land

improvementsBuildings andconstruction

Machinery,tools and

constructionequipment

Office equipment,

furniture and fixtures

Motor vehicles

Assets under installation and under

construction Total

Allowance for impairment loss:

31 December 2011 - 170,737 6,904 - - - 177,641

31 December 2012 - 170,737 6,904 - - - 177,641

Net book value:

31 December 2011 216,164 581,951 132,096 28,838 16,562 5,764 981,375

31 December 2012 585,522 527,313 97,389 23,175 23,865 102,874 1,360,138

Depreciation for the year

2011 (Baht 169 million included in cost of sales and services and cost of fabrication work and the balance in administrative expenses) 172,893

2012 (Baht 141 million included in cost of sales and services and cost of fabrication work and the balance in administrative expenses) 145,171

As at 31 December 2012, certain plant and equipment items of the Company and its subsidiaries have been fully

depreciated but are still in use. The gross carrying amount (before deducting accumulated depreciation and

allowance for impairment loss) of those assets approximately Baht 473 million (2011: Baht 441 million) (Separate

financial statements: Baht 394 million, 2011: Baht 387 million).

The machinery, equipment and motor vehicles acquired by the Company and its subsidiaries under long-term lease

agreements which net book values as at 31 December 2012 and 2011 were approximately Baht 54 million and Baht

27 million, respectively (Separate financial statements: Baht 5 million and Baht 1 million, respectively).

The Company and its subsidiaries has mortgaged land with structures thereon with total net book values as at 31

December 2012 and 2011 of Baht 193 million and Baht 150 million, respectively (Separate financial statements: Baht

113 million and Baht 115 million, respectively) as collateral for credit facilities granted by commercial banks.

During the current year, the Company rented out land and land improvements of Baht 29 million to a subsidiary.

Thus, the Company transferred such land and land improvements to investment property in separate financial

statements.

18. Bank overdrafts and credit facilities from financial institutions

The Company’s bank overdraft and packing credit facilities from local banks are secured by the Company’s fixed

deposits as discussed in Note 13 to the financial statements and the mortgage some of the Company’s land with

structures thereon as discussed in Note 17 to the financial statements, and are guaranteed by its subsidiary. Under

the loan agreements, the Company has to comply with certain covenants, including maintenance of financial ratios,

restrictions on disposals of fixed assets and limits on additional liabilities, as normally required by banks.

As at 31 December 2012, the bank overdraft of the Company which has not yet drawn down amounted to Baht 75

million (2011: Baht 90 million).

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Annual Report 2012

19. Trade and other payables

(Unit: Thousand Baht)

Consolidated financial statements

Separate financial statements

2012 2011 2012 2011

Trade payable - related parties 8,558 659 107,942 9,294

Trade payable - unrelated parties 224,376 64,597 159,893 39,704

Amount due to and advances from related parties - - 390 -

Other payable - unrelated parties 21,744 2,579 - -

Retention payable from construction contract - related parties 1,780 - 1,780 -

Retention payable from construction contract - unrelated parties 10,961 9,466 9,695 9,466

Accrued expenses 83,578 19,888 23,507 12,667

Total trade and other payables 350,997 97,189 303,207 71,131

20. Liabilities under long-term lease agreements

(Unit: Thousand Baht)

Consolidated financial statements

Separatefinancial statements

2012 2011 2012 2011

Liabilities under long-term lease agreements 45,536 22,756 5,198 862

Less: Deferred interest expenses (3,538) (2,104) (457) (24)

Total 41,998 20,652 4,741 838

Less: Portion due within one year (17,882) (7,784) (1,360) (838)

Liabilities under long-term lease agreements - net of current portion 24,116 12,868 3,381 -

The Company and its subsidiaries have entered into the long-term lease agreements with leasing companies for

rental of machinery, equipment and motor vehicles for use in its operation, whereby it is committed to pay rental

on a monthly basis. The terms of the agreements are generally between 3 and 4 years. Long-term lease agreements

are non-cancelable.

Future minimum lease payments required under the long-term lease agreements were as follows:

(Unit: Thousand Baht)

Consolidated financial statements

2012 2011

Less than 1 year

1 - 4 years Total

Less than 1 year

1 - 4 years Total

Future minimum lease payments 20,129 25,407 45,536 9,015 13,741 22,756

Deferred interest expenses (2,247) (1,291) (3,538) (1,231) (873) (2,104)

Present value of future minimum lease payments 17,882 24,116 41,998 7,784 12,868 20,652

(Unit: Thousand Baht)

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Annual Report 2012

19. Trade and other payables

(Unit: Thousand Baht)

Consolidated financial statements

Separate financial statements

2012 2011 2012 2011

Trade payable - related parties 8,558 659 107,942 9,294

Trade payable - unrelated parties 224,376 64,597 159,893 39,704

Amount due to and advances from related parties - - 390 -

Other payable - unrelated parties 21,744 2,579 - -

Retention payable from construction contract - related parties 1,780 - 1,780 -

Retention payable from construction contract - unrelated parties 10,961 9,466 9,695 9,466

Accrued expenses 83,578 19,888 23,507 12,667

Total trade and other payables 350,997 97,189 303,207 71,131

20. Liabilities under long-term lease agreements

(Unit: Thousand Baht)

Consolidated financial statements

Separatefinancial statements

2012 2011 2012 2011

Liabilities under long-term lease agreements 45,536 22,756 5,198 862

Less: Deferred interest expenses (3,538) (2,104) (457) (24)

Total 41,998 20,652 4,741 838

Less: Portion due within one year (17,882) (7,784) (1,360) (838)

Liabilities under long-term lease agreements - net of current portion 24,116 12,868 3,381 -

The Company and its subsidiaries have entered into the long-term lease agreements with leasing companies for

rental of machinery, equipment and motor vehicles for use in its operation, whereby it is committed to pay rental

on a monthly basis. The terms of the agreements are generally between 3 and 4 years. Long-term lease agreements

are non-cancelable.

Future minimum lease payments required under the long-term lease agreements were as follows:

(Unit: Thousand Baht)

Consolidated financial statements

2012 2011

Less than 1 year

1 - 4 years Total

Less than 1 year

1 - 4 years Total

Future minimum lease payments 20,129 25,407 45,536 9,015 13,741 22,756

Deferred interest expenses (2,247) (1,291) (3,538) (1,231) (873) (2,104)

Present value of future minimum lease payments 17,882 24,116 41,998 7,784 12,868 20,652

(Unit: Thousand Baht)

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Separate financial statements

2012 2011

Less than 1 year

1 - 4years Total

Less than 1 year

1 - 4 years Total

Future minimum lease payments 1,586 3,612 5,198 862 - 862

Deferred interest expenses (226) (231) (457) (24) - (24)

Present value of future minimum lease payments 1,360 3,381 4,741 838 - 838

21. Provision for long-term employee benefits

Provision for long-term employee benefits was as follows:

(Unit: Thousand Baht)

Consolidated financial statements

Severance payment obligations

Long service awards Total

2012 2011 2012 2011 2012 2011

Defined benefit obligation at beginning of year 38,671 34,153 6,778 7,066 45,449 41,219

Current service cost 4,322 4,040 1,069 1,041 5,391 5,081

Interest cost 1,565 1,366 281 282 1,846 1,648

Benefits paid during the year (722) (888) (899) (1,611) (1,621) (2,499)

Balance at end of year 43,836 38,671 7,229 6,778 51,065 45,449

(Unit: Thousand Baht)

Separate financial statements

Severance payment obligations

Long service awards Total

2012 2011 2012 2011 2012 2011

Defined benefit obligation at beginning of year 32,539 28,845 5,608 5,976 38,147 34,821

Current service cost 3,634 3,428 839 832 4,473 4,260

Interest cost 1,320 1,154 234 239 1,554 1,393

Benefits paid during the year (722) (888) (683) (1,439) (1,405) (2,327)

Balance at end of year 36,771 32,539 5,998 5,608 42,769 38,147

Long-term employee benefit expenses included in the profit or loss was as follows:

(Unit: Thousand Baht)

Consolidated financial statements

Separate financial statements

2012 2011 2012 2011

Current service cost 5,391 5,081 4,473 4,260

Interest cost 1,846 1,648 1,554 1,393

Total expense recognized in profit or loss 7,237 6,729 6,027 5,653

Line items under which such expenses are included in profit or loss

Cost of sales 558 540 - -

Selling and administrative expenses 6,679 6,189 6,027 5,653

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Annual Report 2012

Principal actuarial assumptions at the valuation date were as follows:

Consolidated financial statements

Separate financial statements

2012 2011 2012 2011

(% per annum) (% per annum) (% per annum) (% per annum)

Discount rate 4.0 4.0 4.0 4.0

Future salary increase rate 3.0 - 5.0 3.0 - 5.0 4.0 - 5.0 4.0 - 5.0

Staff turnover rate 0 - 20.0 0 - 20.0 0 - 5.0 0 - 5.0

22. Share capital

Movements in share capital during the years ended 31 December 2012 are summarised below.

Increase in paid up share capital from warrant exercise

Increase in share premium from warrant exercise

Date of registration of additional shares from

warrant exercise with the Ministry of

Commerce

(Thousand Baht) (Thousand Baht)

Outstanding as at 31 December 2011 367,873 1,354,704

Exercised during May 2012 19 28 11 June 2012

Exercised during November 2012 600 889 11 December 2012

Outstanding as at 31 December 2012 368,492 1,355,621

23. Warrants

STPI - W1

No. of warrants granted (Units) 83,333,014

Life of warrants (years) 5

Exercisable Semi-annually

First exercise date 29 May 2009

Final exercise date 6 May 2013

*Exercise price per 1 ordinary share (Baht) 2.482

*Exercise ratio 1:1.40

*Adjusted the exercise price and exercise ratio based on a resolution of the Meeting of the Company’s Board of

Directors no. 1/2011

Presented below is a summary of warrant activity:

(Units)

STPI-W1

No. of warrants issued 83,333,014

Exercised during 2009 (69,065,158)

Exercised during 2010 (12,403,627)

Exercised during 2011 (232,975)

Exercised during 2012 (440,729)

Outstanding as at 31 December 2012 1,190,525

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Annual Report 2012

Principal actuarial assumptions at the valuation date were as follows:

Consolidated financial statements

Separate financial statements

2012 2011 2012 2011

(% per annum) (% per annum) (% per annum) (% per annum)

Discount rate 4.0 4.0 4.0 4.0

Future salary increase rate 3.0 - 5.0 3.0 - 5.0 4.0 - 5.0 4.0 - 5.0

Staff turnover rate 0 - 20.0 0 - 20.0 0 - 5.0 0 - 5.0

22. Share capital

Movements in share capital during the years ended 31 December 2012 are summarised below.

Increase in paid up share capital from warrant exercise

Increase in share premium from warrant exercise

Date of registration of additional shares from

warrant exercise with the Ministry of

Commerce

(Thousand Baht) (Thousand Baht)

Outstanding as at 31 December 2011 367,873 1,354,704

Exercised during May 2012 19 28 11 June 2012

Exercised during November 2012 600 889 11 December 2012

Outstanding as at 31 December 2012 368,492 1,355,621

23. Warrants

STPI - W1

No. of warrants granted (Units) 83,333,014

Life of warrants (years) 5

Exercisable Semi-annually

First exercise date 29 May 2009

Final exercise date 6 May 2013

*Exercise price per 1 ordinary share (Baht) 2.482

*Exercise ratio 1:1.40

*Adjusted the exercise price and exercise ratio based on a resolution of the Meeting of the Company’s Board of

Directors no. 1/2011

Presented below is a summary of warrant activity:

(Units)

STPI-W1

No. of warrants issued 83,333,014

Exercised during 2009 (69,065,158)

Exercised during 2010 (12,403,627)

Exercised during 2011 (232,975)

Exercised during 2012 (440,729)

Outstanding as at 31 December 2012 1,190,525

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24. Statutory reserve

Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a

statutory reserve at least 5 percent of its net income after deducting accumulated deficit brought forward (if any)

until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend

distribution. At present, the statutory reserve has fully been set aside.

25. Treasury shares/appropriated retained earnings for treasury shares

According to letter No. Gor Lor Tor. Chor Sor. (Vor) 2/2548 of the Office of the Securities and Exchange

Commission, dated 14 February 2005, concerning the acquisition of treasury shares, a public limited company may

buy back treasury shares in an amount not exceeding the amount of its retained earnings and is to appropriate an

equal amount of retained earnings to a reserve for treasury shares, which must be maintained until the Company

either sells the treasury shares or reduces its paid up share capital by an amount equal to the value of the treasury

shares which it could not sell. The Company proceeded in accordance with these guidelines and appropriated an

amount of retained earnings to the treasury shares reserve equal to the amount paid to acquire the shares.

During the first quarter of 2012, the Company disposed 4.4 million treasury shares with cost of Baht 36 million at

total price of Baht 135 million. The resale of the treasury shares was done on the Stock Market at prevailing market

prices at the time of sale. The Company realised Baht 99 million as a gain on the aforesaid shares which has been

presented as “Premium on treasury shares” in the shareholders’ equity, and reversed treasury shares reserve to

unappropriated retained earnings.

26. Income from reversal of unbilled payables

During the year 2010, the Company set aside provision for the contingent costs as a result of the warranty provided

under a project contract, including this amount under the caption of “Unbilled payables”. This was recorded because,

in the past, the original letter of guarantee issued by a bank to guarantee the project work had not been returned,

because the Company was under inspection and negotiating responsibility for rectification work performed with a

unit of the counterparty, and there was a risk that the counterparty would claim the cost of the rectification work

from the Company. However, during March 2011, the Company was able to conclude negotiations to finalize the

project and the counterparty returned the original letter of guarantee. The Company therefore reversed the above

provision, recording the reversal as “income from reversal of unbilled payables” in the statements of comprehensive

income of 2011.

27. Expense by nature

Significant expenses by nature are as follow:

(Unit: Thousand Baht)

Consolidated financial statements

Separate financial statements

2012 2011 2012 2011

Salary and wages and other employee benefits 843,252 278,630 327,623 227,741

Depreciation and amortisation 158,785 180,930 147,802 175,071

Construction materials and subcontractors 225,929 61,882 789,307 69,862

Rental expenses from operating lease agreements 141,269 122,154 134,336 116,452

Utilities expenses 36,835 15,860 35,379 14,716

Repair and maintenance expenses 32,569 21,996 29,623 17,451

Changes in inventories of finished goods (12,320) (23,656) 7,672 9,163

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28. Corporate income tax

Corporate income tax of the Company has been calculated on net income of the non-promoted activities after

adding back certain expenses and deducting income which are disallowable for tax computation purposes.

The subsidiary companies’ corporate income tax are calculated on net income after adding back certain expenses

and deducting income which are disallowable for tax computation purposes.

29. Earnings per share

Basic earnings per share is calculated by dividing profit for the year (excluding other comprehensive income)

by the weighted average number of ordinary shares in issue during the year.

Diluted earnings per share is calculated by dividing profit for the year (excluding other comprehensive income)

by the weighted average number of ordinary shares in issue during the year plus the weighted average number

of ordinary shares which would need to be issued to convert all dilutive potential ordinary shares into ordinary

shares. The calculation assumes that the conversion took place either at the beginning of the period or on the date

the potential ordinary shares were issued.

The following table sets forth the computation of basic and diluted earnings per share:

Consolidated financial statements

Profit for the yearWeighted average number

of ordinary shares Earnings per share2012 2011 2012 2011 2012 2011

(Thousand Baht)

(Thousand Baht)

(Thousand Shares)

(Thousand Shares)

(Baht) (Baht)

Basic earnings per share Profit for the year 1,089,759 399,506 366,982 363,220 2.970 1.100Effect of dilutive potential ordinary shares STPI-W1 - - 2,074 2,252Diluted earnings per share Profit of ordinary shareholders assuming the conversion of warrants to ordinary shares 1,089,759 399,506 369,056 365,472 2.953 1.093

Separate financial statements

Profit for the yearWeighted average number

of ordinary shares Earnings per share2012 2011 2012 2011 2012 2011

(Thousand Baht)

(Thousand Baht)

(Thousand Shares)

(Thousand Shares)

(Baht) (Baht)

Basic earnings per share Profit for the year 906,256 383,821 366,982 363,220 2.469 1.057Effect of dilutive potential ordinary shares STPI-W1 - - 2,074 2,252Diluted earnings per share Profit of ordinary shareholders assuming the conversion of warrants to ordinary shares 906,256 383,821 369,056 365,472 2.456 1.050

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Annual Report 2012

28. Corporate income tax

Corporate income tax of the Company has been calculated on net income of the non-promoted activities after

adding back certain expenses and deducting income which are disallowable for tax computation purposes.

The subsidiary companies’ corporate income tax are calculated on net income after adding back certain expenses

and deducting income which are disallowable for tax computation purposes.

29. Earnings per share

Basic earnings per share is calculated by dividing profit for the year (excluding other comprehensive income)

by the weighted average number of ordinary shares in issue during the year.

Diluted earnings per share is calculated by dividing profit for the year (excluding other comprehensive income)

by the weighted average number of ordinary shares in issue during the year plus the weighted average number

of ordinary shares which would need to be issued to convert all dilutive potential ordinary shares into ordinary

shares. The calculation assumes that the conversion took place either at the beginning of the period or on the date

the potential ordinary shares were issued.

The following table sets forth the computation of basic and diluted earnings per share:

Consolidated financial statements

Profit for the yearWeighted average number

of ordinary shares Earnings per share2012 2011 2012 2011 2012 2011

(Thousand Baht)

(Thousand Baht)

(Thousand Shares)

(Thousand Shares)

(Baht) (Baht)

Basic earnings per share Profit for the year 1,089,759 399,506 366,982 363,220 2.970 1.100Effect of dilutive potential ordinary shares STPI-W1 - - 2,074 2,252Diluted earnings per share Profit of ordinary shareholders assuming the conversion of warrants to ordinary shares 1,089,759 399,506 369,056 365,472 2.953 1.093

Separate financial statements

Profit for the yearWeighted average number

of ordinary shares Earnings per share2012 2011 2012 2011 2012 2011

(Thousand Baht)

(Thousand Baht)

(Thousand Shares)

(Thousand Shares)

(Baht) (Baht)

Basic earnings per share Profit for the year 906,256 383,821 366,982 363,220 2.469 1.057Effect of dilutive potential ordinary shares STPI-W1 - - 2,074 2,252Diluted earnings per share Profit of ordinary shareholders assuming the conversion of warrants to ordinary shares 906,256 383,821 369,056 365,472 2.456 1.050

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30. Promotional privileges

The Company has received promotional privileges from the Board of Investment under the Investment Promotion

Act B.E. 2520. Significant privileges of the Company are as follow:

Details

1. Certificate No. 1114/2542 2800(2)/2555 2888(2)/2555

2. Certificate Date 31/03/1999 6/12/2012 17/12/2012

3. Promotional privileges for Manufacturing of fabrication work

Manufacturing of structural steel of construction work

Manufacturing of structural steel of construction work

4. The significant privileges are

4.1 Exemption of corporate income tax for profit from promoted operations and exemption of income tax on dividends paid from the profit of the operations throughout the period in which the corporate income tax is exempted.

8 years 5 years 5 years

4.2 A 50 percent reduction of corporate income tax on income derived from the promoted operations for a period of 5 years after the tax-exemption period ends.

Granted Non-granted Non-granted

4.3 Allowance for 5 percent of the increment in export income over the preceding year for ten years.

Granted Non-granted Non-granted

4.4 Exemption of import duty on machinery as approved by the board.

Granted Granted Granted

4.5 Exemption of import duty on raw materials and significant supplies used in export production for a period as mention, from the first import date and can extend the period of import duty exemption when the period expired.

Granted (Expired

19/07/2013)

Granted (Have yet to

exercise BOI tax privilege)

Granted (Have yet to exercise BOI tax privilege)

5. Date of first earning operating income 8/01/2001 Have yet to exercise BOI tax privilege

Have yet to exercise BOI tax privilege

The Company’s operating revenues for the years are below shown divided according to promoted and

non-promoted operations.

(Unit: Thousand Baht)

Promoted operations Non-promoted operations Total

2012 2011 2012 2011 2012 2011

Revenues from fabrication work

Export - 10,993 619,579 69,479 619,579 80,472

Local - 20,191 2,142,216 607,235 2,142,216 627,426

Total - 31,184 2,761,795 676,714 2,761,795 707,898

Revenues from sales and services - - 16,359 33,954 16,359 33,954

Total revenues - 31,184 2,778,154 710,668 2,778,154 741,852

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31. Segment information

The Company and its subsidiaries’ business operations involve mainly (a) the fabrication work for construction

and industrial purpose, and (b) the sale of construction machines, and service of machinery repair and maintenance.

The Company and its subsidiaries’ business operations are carried on locally geographic area.

Below is the consolidated financial information for the years ended 31 December 2012 and 2011 of the Company

and its subsidiaries by segment.

(Unit: Million Baht)

Fabrication work (a)

Sales and services (b)

Elimination of inter-segment

revenuesConsolidated

financial statements

2012 2011 2012 2011 2012 2011 2012 2011

Revenue from external customers

Revenue from domestic 2,144 627 355 287 - - 2,499 914

Revenue from export 618 81 23 6 - - 641 87

Total 2,762 708 378 293 - - 3,140 1,001

Inter-segment revenues - - 619 28 (619) (28) - -

Total revenues 2,762 708 997 321 (619) (28) 3,140 1,001

Segment operating profit 1,170 (7) 86 37 1,256 30

Unallocated income and expenses:

Other income 144 97

Reversal of unbilled payables - 399

Gain on foreign exchange rate 70 -

Selling expenses (19) (15)

Administrative expenses (102) (108)

Finance cost (4) (1)

Corporate income tax (255) (3)

Profit for the year 1,090 399

(Unit: Million Baht)

Fabrication work (a)

Sales and services (b)

Elimination of inter-segment

revenuesConsolidated

financial statements

2012 2011 2012 2011 2012 2011 2012 2011

Trade accounts receivable 507 35 114 61 (38) (2) 583 94

Unbilled receivables 373 72 - - - - 373 72

Property, plant and equipment 1,566 1,068

Other assets 4,711 2,289

Total asset 7,233 3,523

Transfer prices between business segments of the Company and its subsidiaries are as set out in Note 9 to the

financial statements.

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31. Segment information

The Company and its subsidiaries’ business operations involve mainly (a) the fabrication work for construction

and industrial purpose, and (b) the sale of construction machines, and service of machinery repair and maintenance.

The Company and its subsidiaries’ business operations are carried on locally geographic area.

Below is the consolidated financial information for the years ended 31 December 2012 and 2011 of the Company

and its subsidiaries by segment.

(Unit: Million Baht)

Fabrication work (a)

Sales and services (b)

Elimination of inter-segment

revenuesConsolidated

financial statements

2012 2011 2012 2011 2012 2011 2012 2011

Revenue from external customers

Revenue from domestic 2,144 627 355 287 - - 2,499 914

Revenue from export 618 81 23 6 - - 641 87

Total 2,762 708 378 293 - - 3,140 1,001

Inter-segment revenues - - 619 28 (619) (28) - -

Total revenues 2,762 708 997 321 (619) (28) 3,140 1,001

Segment operating profit 1,170 (7) 86 37 1,256 30

Unallocated income and expenses:

Other income 144 97

Reversal of unbilled payables - 399

Gain on foreign exchange rate 70 -

Selling expenses (19) (15)

Administrative expenses (102) (108)

Finance cost (4) (1)

Corporate income tax (255) (3)

Profit for the year 1,090 399

(Unit: Million Baht)

Fabrication work (a)

Sales and services (b)

Elimination of inter-segment

revenuesConsolidated

financial statements

2012 2011 2012 2011 2012 2011 2012 2011

Trade accounts receivable 507 35 114 61 (38) (2) 583 94

Unbilled receivables 373 72 - - - - 373 72

Property, plant and equipment 1,566 1,068

Other assets 4,711 2,289

Total asset 7,233 3,523

Transfer prices between business segments of the Company and its subsidiaries are as set out in Note 9 to the

financial statements.

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32. Provident fund

The Company, its subsidiaries and their employees have jointly established a provident fund in accordance with

the Provident Fund Act B.E. 2530. The Company, its subsidiaries and their employees contribute to the fund

monthly at the rate of 3 percent of basic salary. The fund, which is managed by Thai Military Asset Management

Company Limited, will be paid to employees upon termination in accordance with the fund rules. During the year

2012, the Company and its subsidiaries contributed Baht 3 million (Separate financial statements: Baht 2 million)

(2011: Baht 2 million, Separate financial statements: Baht 2 million) to the fund.

33. Dividend

Dividends Approved by Total dividends Dividend per share

(Million Baht) (Baht)

Final dividends for 2010, on 2010 profit of the promoted operations and

retained earnings of the promoted operations*

Annual General Meeting of the shareholder on 27 April 2011

479 1.32

Total dividends for 2011 479 1.32

Final dividends for 2011, on the operating results of the year 2011**

Annual General Meeting of the shareholder on 26 April 2012 116 0.32

Total dividends for 2012 116 0.32

* 4,446,400 ordinary shares which hold by the Company as treasury shares have no right to receive dividend

** 3,896,400 ordinary shares which hold by the Company as treasury shares have no right to receive dividend

34. Contracts in progress

As at 31 December 2012, the Company’s aggregate amount of construction cost incurred and recognised profits or

losses to date for contracts in progress was approximately Baht 3,102 million (2011: Baht 1,319 million) and gross

amounts due from customers for contracts progress were approximately Baht 373 million (2011: Baht 89 million).

35. Commitments and contingent liabilities

35.1 Capital commitments

As at 31 December 2012, the Company and its subsidiaries had capital commitments of approximately Baht 162

million (2011: Baht 2 million) (Separate financial statements: Baht 56 million, 2011: Baht 2 million), relating to the

construction of factory buildings and acquisition of machinery.

35.2 Operating lease commitments

The Company has entered into several lease agreements in respect of the lease of land, office building space. The

terms of the agreements are generally between 1 and 13 years. Operating lease agreements are

non-cancelable.

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Future minimum lease payments required under these non-cancellable operating leases contracts were as

follows.

(Unit: Million Baht)

As at 31 December

2012 2011

Payable:

Within 1 year 100 93

1 - 5 years 373 458

Over 5 years 257 257

35.3 Guarantees

As at 31 December 2012, the Company and its subsidiaries had the following outstanding guarantees issued by

banks on behalf of the Company and its subsidiaries in respect of certain performance bonds as required in the

normal course of business. These included letters of guarantee amounting to Baht 42 million and USD 74 million

(Separate financial statements: Baht 30 million and USD 74 million) (2011: Baht 41 million, Separate financial

statements: Baht 40 million) to guarantee contractual performance and Baht 34 million (Separate

financial statements: Baht 33 million) (2011: Baht 29 million, Separate financial statements: Baht 29 million) to

guarantee electricity use and others.

35.4 Lawsuit

During the year 2004, the Company was contracted to perform construction work by an overseas company

(“counterparty”), and commenced certain construction work. Subsequently, in the first quarter of 2005 the

Company and the counterparty agreed that the Company would hand back the work, and the Company charged

for the expenses incurred in relation to the work already performed. However, the Company has not yet to receive

payment from the counterparty and has sued the counterparty to recover the above expenses, which amounted to

approximately Baht 17 million in the second quarter of 2005 (amended the statement of claim and increased the

amount in dispute to be Baht 41 million in the second quarter of 2010). In the third quarter of 2005, the

counterparty sued the Company to seek payment for expenses caused by the hand back of work amounting to

approximately USD 7 million. As at 31 December 2006, the Company has set aside provision of Baht 120 million

and as at 31 December 2008, the Company has set aside additional provision of Baht 60 million for liabilities arising

as a result of these cases, based on the opinions of its legal department and the Executive Committee.

Subsequently, in December 2011, the Central Intellectual Property and International Trade Court issued its initial

ruling ordering the Company to pay damages relating to the handover of the work amounting to USD 2 million,

together with interest at 7.5 percent per annum, calculated from 15 June 2005 until payment is made. However, in

June 2012, the Company filed a petition asking the appeal court to overturn the initial ruling and dismiss the

lawsuit. Meanwhile, the counterparty has filed an appeal against the ruling, suing the Company for additional

payment of USD 3 million together with interest at 7.5 percent per annum, counting from 15 June 2005.

The case is currently pending in the appeals court and the result is not yet known. However, the Executive

Committee believes that losses incurred, if any, will not exceed the provision already set aside as mentioned above.

36. Financial instruments

36.1 Financial risk management

The Company and its subsidiaries’ financial instruments, as defined under Thai Accounting Standard No. 107

“Financial instruments: Disclosure and Presentations”, principally comprise the following:

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Annual Report 2012

Future minimum lease payments required under these non-cancellable operating leases contracts were as

follows.

(Unit: Million Baht)

As at 31 December

2012 2011

Payable:

Within 1 year 100 93

1 - 5 years 373 458

Over 5 years 257 257

35.3 Guarantees

As at 31 December 2012, the Company and its subsidiaries had the following outstanding guarantees issued by

banks on behalf of the Company and its subsidiaries in respect of certain performance bonds as required in the

normal course of business. These included letters of guarantee amounting to Baht 42 million and USD 74 million

(Separate financial statements: Baht 30 million and USD 74 million) (2011: Baht 41 million, Separate financial

statements: Baht 40 million) to guarantee contractual performance and Baht 34 million (Separate

financial statements: Baht 33 million) (2011: Baht 29 million, Separate financial statements: Baht 29 million) to

guarantee electricity use and others.

35.4 Lawsuit

During the year 2004, the Company was contracted to perform construction work by an overseas company

(“counterparty”), and commenced certain construction work. Subsequently, in the first quarter of 2005 the

Company and the counterparty agreed that the Company would hand back the work, and the Company charged

for the expenses incurred in relation to the work already performed. However, the Company has not yet to receive

payment from the counterparty and has sued the counterparty to recover the above expenses, which amounted to

approximately Baht 17 million in the second quarter of 2005 (amended the statement of claim and increased the

amount in dispute to be Baht 41 million in the second quarter of 2010). In the third quarter of 2005, the

counterparty sued the Company to seek payment for expenses caused by the hand back of work amounting to

approximately USD 7 million. As at 31 December 2006, the Company has set aside provision of Baht 120 million

and as at 31 December 2008, the Company has set aside additional provision of Baht 60 million for liabilities arising

as a result of these cases, based on the opinions of its legal department and the Executive Committee.

Subsequently, in December 2011, the Central Intellectual Property and International Trade Court issued its initial

ruling ordering the Company to pay damages relating to the handover of the work amounting to USD 2 million,

together with interest at 7.5 percent per annum, calculated from 15 June 2005 until payment is made. However, in

June 2012, the Company filed a petition asking the appeal court to overturn the initial ruling and dismiss the

lawsuit. Meanwhile, the counterparty has filed an appeal against the ruling, suing the Company for additional

payment of USD 3 million together with interest at 7.5 percent per annum, counting from 15 June 2005.

The case is currently pending in the appeals court and the result is not yet known. However, the Executive

Committee believes that losses incurred, if any, will not exceed the provision already set aside as mentioned above.

36. Financial instruments

36.1 Financial risk management

The Company and its subsidiaries’ financial instruments, as defined under Thai Accounting Standard No. 107

“Financial instruments: Disclosure and Presentations”, principally comprise the following:

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Financial assets Financial liabilities

- Cash and cash equivalents - Trade and other payables

- Current investments - Liabilities under long-term lease agreements

- Trade and other receivables

- Restricted bank deposits

- Other long-term investments

The financial risks associated with these financial instruments and how they are managed is described below.

Creditrisk

The Company and its subsidiaries are exposed to credit risk primarily with respect to trade and other

receivables. The Company and its subsidiary manage the risk by adopting appropriate credit control policies and

procedures and therefore do not expect to incur material financial losses.

Interestraterisk

The Company’s and its subsidiaries’ exposure to interest rate risk relates primarily to cash at banks. Most of their

financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate,

their interest rate.

The significant financial assets and liabilities exposed to interest rate risk are summarised and classified by type of

interest rate in the table below, with those financial assets and liabilities that carry fixed interest rates further clas-

sified based on maturity, or the repricing date, if this occurs before the maturity date.

Consolidated financial statements

As at 31 December 2012

Fixed interest rates

Within 1 year 1-5 years

Floating interest rate

Non-interest bearing Total

Effective interest rate

(Million Baht) (% p.a.)

Financial Assets

Cash and cash equivalent - - 337 37 374 0.10 - 0.75

Current investments 2,607 - - 864 3,471 3.10 - 9.03

Trade and other receivables - - - 628 628 -

Restricted bank deposits - - 26 - 26 0.63 - 2.45

Other long-term investments - 125 - 416 541 4.25 - 4.70

2,607 125 363 1,945 5,040

Financial liabilities

Trade and other payables - - - 351 351 -

Liabilities under long-term lease agreements 18 24 - - 42 4.56 - 8.63

18 24 - 351 393

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Separate financial statements

As at 31 December 2012

Fixed interest rates

Within 1 year 1-5 years

Floating interest rate

Non-interest bearing Total

Effective interest rate

(Million Baht) (% p.a.)

Financial Assets

Cash and cash equivalent - - 278 37 315 0.10 - 0.75

Current investments 2,607 - - 790 3,397 3.10 - 9.03

Trade and other receivables - - - 551 551 -

Restricted bank deposits - - 24 - 24 1.15 - 2.45

Other long-term investments - 125 - 416 541 4.25 - 4.70

2,607 125 302 1,794 4,828

Financial liabilities

Trade and other payables - - - 303 303 -

Liabilities under long-term lease agreements 1 4 - - 5 4.93 - 5.92

1 4 - 303 308

Consolidated financial statements

As at 31 December 2011

Fixed interest rates

Within 1 year 1-5 years

Floating interest rate

Non-interest bearing Total

Effective interest rate

(Million Baht) (% p.a.)

Financial Assets

Cash and cash equivalent - - 73 12 85 0.50 - 0.88

Current investments 957 - - 375 1,332 3.14 - 8.75

Trade and other receivables - - - 121 121 -

Restricted bank deposits - - 26 - 26 0.90 - 2.35

Other long-term investments - 300 - 342 642 4.25 - 6.50

957 300 99 850 2,206

Financial liabilities

Trade and other payables - - - 97 97 -

Liabilities under long-term lease agreements 8 13 - - 21 4.56 - 8.63

8 13 - 97 118

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Separate financial statements

As at 31 December 2012

Fixed interest rates

Within 1 year 1-5 years

Floating interest rate

Non-interest bearing Total

Effective interest rate

(Million Baht) (% p.a.)

Financial Assets

Cash and cash equivalent - - 278 37 315 0.10 - 0.75

Current investments 2,607 - - 790 3,397 3.10 - 9.03

Trade and other receivables - - - 551 551 -

Restricted bank deposits - - 24 - 24 1.15 - 2.45

Other long-term investments - 125 - 416 541 4.25 - 4.70

2,607 125 302 1,794 4,828

Financial liabilities

Trade and other payables - - - 303 303 -

Liabilities under long-term lease agreements 1 4 - - 5 4.93 - 5.92

1 4 - 303 308

Consolidated financial statements

As at 31 December 2011

Fixed interest rates

Within 1 year 1-5 years

Floating interest rate

Non-interest bearing Total

Effective interest rate

(Million Baht) (% p.a.)

Financial Assets

Cash and cash equivalent - - 73 12 85 0.50 - 0.88

Current investments 957 - - 375 1,332 3.14 - 8.75

Trade and other receivables - - - 121 121 -

Restricted bank deposits - - 26 - 26 0.90 - 2.35

Other long-term investments - 300 - 342 642 4.25 - 6.50

957 300 99 850 2,206

Financial liabilities

Trade and other payables - - - 97 97 -

Liabilities under long-term lease agreements 8 13 - - 21 4.56 - 8.63

8 13 - 97 118

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Separate financial statements

As at 31 December 2011

Fixed interest rates

Within 1 year 1-5 years

Floating interest rate

Non-interest bearing Total

Effective interest rate

(Million Baht) (% p.a.)

Financial Assets

Cash and cash equivalent - - 43 11 54 0.50 - 0.88

Current investments 957 - - 375 1,332 3.14 - 8.75

Trade and other receivables - - - 61 61 -

Restricted bank deposits - - 25 - 25 0.90 - 2.35

Other long-term investments - 300 - 342 642 4.25 - 6.50

957 300 68 789 2,114

Financial liabilities

Trade and other payables - - - 71 71 -

Liabilities under long-term lease agreements 1 - - - 1 4.93

1 - - 71 72

Foreigncurrencyrisk

The Company’s and its subsidiaries’ exposure to foreign currency risk relates primarily to account receivables and

payables which are denominated in foreign currencies. The Company and its subsidiaries use forward contract to

manage such foreign currency risk.

The balances of financial assets and liabilities denominated in foreign currencies are summarised below.

Consolidatedfinancial statements

Separatefinancial statements

Average exchange rate as at 31 December

2012 2011 2012 2011 2012 2011

(Million) (Million) (Million) (Million) (Baht per 1 foreign currency unit)

Assets

Euro - 0.1 - - 40.5563 41.0274

US dollar 20.8 5.1 20.3 5.1 30.6316 31.6912

Liabilities

Euro 1.0 0.2 - - 40.5563 41.0274

US dollar 0.1 0.3 - - 30.6316 31.6912

Japanese yen 15.4 3.2 4.5 1.5 0.3545 0.4084

Foreign exchange contracts outstanding are summarised below. As at 31 December 2012

Consolidatedfinancial statements

Separatefinancial statements

Contractual maturity date

Contractual exchange rate

(Million) (Million) (Baht per 1 foreign currency unit)

Bought amount Euro 1.0 - 15/01/13 - 11/02/13 39.36 - 40.07Sold amount

US dollar 6.0 5.9 25/01/13 - 15/10/13 30.66 - 31.91

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As at 31 December 2011Consolidated

financial statementsSeparate

financial statementsContractual

maturity dateContractual

exchange rate

(Million) (Million) (Baht per 1 foreign currency unit)

Bought amount

US dollar 0.6 - 20/01/12 - 06/02/12 31.06 - 31.14

Euro 0.1 - 03/01/12 - 06/02/12 41.56 - 42.52

Japanese yen 25.1 - 06/01/12 0.40

Sold amount

US dollar 25.6 25.6 20/01/12 - 24/12/12 30.78 - 31.98

In addition, as at 31 December 2012, the Company has outstanding forward exchange contracts to sell foreign

currency to hedge foreign currency risk arising from installments received from construction contracts in a

notional amount of USD 468 million (2011: Nil), with exchange rate in the contract ranging from Baht 31.41 to Baht

32.52 per USD 1. These contracts will be mature during November 2013 and December 2015. If the Company

recorded the above contracts at fair value based on current market fluctuations of exchange rates, it would have

an unrealised gain on forward exchange contracts which mature in 2013 amounting to Baht 4 million and an

unrealised gain on forward exchange contracts which mature between 2014 and 2015 amounting to approximately

Baht 38 million.

36.2 Fair values of financial instruments

Since the majority of the Company’s and its subsidiaries’ financial instruments are short-term in nature and their

fair value is not expected to be materially different from the amounts presented in the statements of

financial position.

A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable,

willing parties in an arm’s length transaction. The fair value is determined by reference to the market price of the

financial instrument or by using an appropriate valuation technique, depending on the nature of the

instrument.

37. 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 2012, the Group’s

debt-to-equity ratio was 0.7:1 (2011: 0.1:1) and the Company’s was 0.7:1 (2011: 0.1:1).

38. Subsequent Events after the reporting period

As at 4 February 2013, the Company invested in 2,009,000 ordinary shares and 2,091,000 preferred shares of

LGR (Thailand) Company Limited (a company is principally engaged in investment holding business) for a total

of Baht 22 million. As a result, the Company has 100 percent interest in the equity interest of such company.

39. Approval of the financial statements

These financial statements were authorised for issue by the Company’s authorised directors on 27 February

2013.

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Annual Report 2012

As at 31 December 2011Consolidated

financial statementsSeparate

financial statementsContractual

maturity dateContractual

exchange rate

(Million) (Million) (Baht per 1 foreign currency unit)

Bought amount

US dollar 0.6 - 20/01/12 - 06/02/12 31.06 - 31.14

Euro 0.1 - 03/01/12 - 06/02/12 41.56 - 42.52

Japanese yen 25.1 - 06/01/12 0.40

Sold amount

US dollar 25.6 25.6 20/01/12 - 24/12/12 30.78 - 31.98

In addition, as at 31 December 2012, the Company has outstanding forward exchange contracts to sell foreign

currency to hedge foreign currency risk arising from installments received from construction contracts in a

notional amount of USD 468 million (2011: Nil), with exchange rate in the contract ranging from Baht 31.41 to Baht

32.52 per USD 1. These contracts will be mature during November 2013 and December 2015. If the Company

recorded the above contracts at fair value based on current market fluctuations of exchange rates, it would have

an unrealised gain on forward exchange contracts which mature in 2013 amounting to Baht 4 million and an

unrealised gain on forward exchange contracts which mature between 2014 and 2015 amounting to approximately

Baht 38 million.

36.2 Fair values of financial instruments

Since the majority of the Company’s and its subsidiaries’ financial instruments are short-term in nature and their

fair value is not expected to be materially different from the amounts presented in the statements of

financial position.

A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable,

willing parties in an arm’s length transaction. The fair value is determined by reference to the market price of the

financial instrument or by using an appropriate valuation technique, depending on the nature of the

instrument.

37. 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 2012, the Group’s

debt-to-equity ratio was 0.7:1 (2011: 0.1:1) and the Company’s was 0.7:1 (2011: 0.1:1).

38. Subsequent Events after the reporting period

As at 4 February 2013, the Company invested in 2,009,000 ordinary shares and 2,091,000 preferred shares of

LGR (Thailand) Company Limited (a company is principally engaged in investment holding business) for a total

of Baht 22 million. As a result, the Company has 100 percent interest in the equity interest of such company.

39. Approval of the financial statements

These financial statements were authorised for issue by the Company’s authorised directors on 27 February

2013.

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99Share Registrar : Thailand Securities Depository Company Limited

4th, 6-7th Floor, Stock Exchange of Thailand Building

62 Ratchadaphisek Road, Klongtoey

Bangkok 10110, Thailand

Tel : +66 (0) 2359 1200 -1

Fax : +66 (0) 2359 1262 -3

Auditor : Ernst and Young Office Limited

33rd Floor, Lake Ratchada Building

193/136-137 Ratchadaphisek Road

Klongtoey, Bangkok 10110, Thailand

Tel : +66 (0) 2264 0777, +66 (0) 2661 9190

Fax : +66 (0) 2264 0789 -90, +66 (0) 2661 9192

Attorneys-At-Law : Dej-Udom & Associated Limited

9th Floor, Charn Issara Tower

942/142-3 Rama IV Road, Bangkok 10500, Thailand

Tel : +66 (0) 2233 0055

Fax : +66 (0) 2236 6681

Other References

THE NEW RECORD BREAKTHROUGH

STP&I PUBLIC COMPANY LIMITED32/24 Sino-Thai Tower, 3rd Floor, Sukhumvit 21 Road (Asoke)Klongtoey-Nua, Wattana, Bangkok 10110, ThailandTel : +66 2 260 1181 Fax : +66 2 260 1182E-mail : contact@stpi.co.th website : www.stpi.co.th