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GMP Certificate

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Superbrands Thailand 2005

รายงานประจำปี

2553 Annual Report 2010

บริษัท สุรพลฟู้ดส์ จำกัด (มหาชน) SURAPON FOODS PUBLIC COMPANY LIMITED


247 Moo 1 Theparak Rd., Theparak, Muang, Samutprakarn 10270, Thailand Tel : (662) 385 3038-54 Fax : (662) 385 3179

website : www.surapon.com E-mail : [email protected]

247 หมู่ที่ 1 ถนนเทพารักษ์ ตำบลเทพารักษ์ อำเภอเมือง จังหวัดสมุทรปราการ 10270 โทร : (662) 385 3038-54 แฟกซ์ : (662) 385 3179

ISBN : 978-974-401-569-3 รายงานประจำปี 2553

Annual Report 2010 / บริษัท สุรพลฟู้ดส์ จำกัด (มหาชน)

SURAPON

FOO

DS PUBLIC COM

PANY LIM

ITED

Your Total

Quality

Surapon Foods Public Company Limited 1

Contents

1. Financial Highlight 2

2. Message from Chairman and Chief Executive Officer 3

3. General Information 5

4. Board of Directors and Executives 8

5. Business Types 14

5.1 Overall Industry and Competition 14

5.2 Structure of Revenue 16

5.3 Overall Business and Important Changes 17

6. Risk Factors 19

7. Structure of Shareholding and Management 20

7.1 Structure of Shareholders 20

7.2 Structure of Management 21

7.3 Structure of Board of Directors 22

7.4 Details of Directors and Authorized Persons 26

7.5 Remuneration of Directors and Executives 27

8. Corporate Governance 28

8.1 Corporate Governance Policy 28

8.2 Principles on Nomination of Directors 37

8.3 Principles on Remuneration of Directors 39

9. Internal Control 40

10. Dividend Payment Policy 43

11. Related Transaction 44

12. Performance and Financial Analysis 46

13 Report of the Audit Committee to the Shareholders 48

14. Report of the Board of Directors’ Responsibilities for Financial Reporting 51

15. Audit Fee 52

16. Audit Report and Financial Statements 53


Financial Highlight

2010 2009 2008

Total Assets 2,908.07 2,427.37 2,438.89

Total Liabilities 1,018.33 425.29 618.89

Total Equity 1,889.74 2,002.08 1,820.00

Revenue from Sales 5,481.26 5,373.31 5,144.83

Total Revenue 5,592.07 5,487.92 5,233.56

Gross Profit 503.09 728.15 714.05

Net Profit 52.05 271.31 173.22

Financial Ratio

Net Profit Margin (%) 0.93 4.94 3.31

Return on Equity (%) 2.67 14.20 9.91

Return on Total Assets (%) 1.95 11.15 7.26

Net Profit per Share (Baht) 0.19 1.00 0.64

Book Value per Share (Baht) 7.00 7.42 6.74

Net Asset Value per Share (Baht) 6.94 7.35 6.68

Comparative Annual Business Turnover (Unit : Million Baht)

Revenue from Sales (Million Baht)

Net Profit per Share (Baht)

Net Profit (Million Baht)

5,800

5,600

5,400

5,200

5,000

4,800

4,600

4,400 2010

5,481 5,373

2009 2008

0.40

0.60

0.80

1.00

1.20

0.20

0 2010 2009 2008

5,145

2010 2009 2008

100

150

200

250

300

50

0

52

271

173

0.19

1.00

0.64


Message from Chairman and Chief Executive Officer

The year 2010 was one of the golden years for many industries as both the Thai and the global

economy continuously grew from 2009. However, 2010 was one of the most challenging years for the frozen

food and seafood industry. Even though the overall export value of Thailand’s frozen food and seafood rose

dramatically from the previous year, most of the companies’ net profits showed a much different story from the

rising sales figures. Deeper analysis reveals that the sales volume growth rates were much higher than the sales

value growth rates. Unexpected events around the world caused the market shrimp supply to drop approximately

thirteen percent while pushing the shrimp raw material prices up to historical high of around twenty percent.

This crisis had significantly affected the industry’s profitability as the overall cost of goods sold increased to be

higher than ninety percent.

Although, the manufacturers and exporters in the industry can still compete competitively by selling

more but profitability had been drastically reduced from last year. Surapon Foods Public Company Limited is

no exception as the company’s major raw material is shrimp; however, the Company can still pose 2010 a

satisfactory performance result in this tough period of raw material price crisis.

In 2010, the Company had started and ran many important projects. For example, the Company had

forward integrated into the restaurant business where the Company had invested in a joint venture company

with business alliances from Japan under the name of Champion Foods Co., Ltd. The restaurant business, under

the name “Ringer Hut” serves Japanese Champon noodle Nagasaki style. The first shop was officially opened

for business in April of 2010. Surapon Nichirei Foods Co., Ltd., another joint venture company, also expanded

its production capacity by the opening its fourth production facility in Kabinburi area to serve the every

growing global chicken demand growth.

In addition, the company had brought in many new additional machines with modern technology to

better increase the production efficiencies and to be prepared to face with more severe competitions. These new

machineries would allow the Company to produce a longer variety range of innovative value added products

and would ultimately strengthened the Company’s unexploited selling and marketing opportunities. Lastly, the

Company participated in the Logistics Cost Reduction for Thai Exporters program organized by the Department

of Export Promotion and won the excellent award.


For the year 2011, many economic research institutes forecast that the Thai economy growth will

slow down from 2010. Hence, we believe that the year 2011 still poses as another challenging year for our

business. The Company will conduct business with great care and will try to best manage for business and

operational consistencies as well as sustainable returns to all stakeholders. The Company will continuously

develop and improve work efficiencies in the overall value chain to ensure that only the highest quality

products and services are delivered to our customers by the best professionals in the industry under the

Company’s mission, “Your Total Quality.”

Lastly, as the representatives of the Company’s Board of Directors, Management Team, and

Employees, we would like to thank you for your continuous support and we commit that we will always

conduct the business by upholding the best interests of the Company and the Shareholders under the good

corporate governance scheme as well as delivering highest quality products and services to our customers and

stakeholders.

Bangkok on February 25, 2011

(Mr.Kosol Chantikul) (Mr.Surapon Vongvadhanaroj)

Chairman Chief Executive Officer


General Information

Name : Surapon Foods Public Company Limited

Address : 247 Moo 1 Theparak Road, Theparak Sub-district,

Muang District, Samutprakarn 10270, Thailand

Tel : Head Office: +66-2-385-3038-54

Company Secretary: +66-2-385-3038-54 ext. 561

Investor Relation: +66-2-3853038-54 ext. 215

Fax : +66-2-385-3179

Company Registration Number : 0107537000661

Website : www.surapon.com

Type of Business : Manufacturing and Distribution of Frozen Foods

Stock Symbol : SSF

Registered Capital : 270,000,000 Baht

Paid up Capital : 269,999,000 Baht

Par Value 1.00 Baht per share

Ending period : December 31

Summary Information of Subsidiary Company and Other Investments Subsidiary Company (SSF has shareholding more than 50% of paid up capital)

1. Surat Seafoods Co., Ltd. (SS)

Address : 247 Moo 1 Theparak Road, Theparak Sub-district, Muang District,

Samutprakarn 10270, Thailand

Type of Business : Processor and Exporter of Frozen Seafoods

Contact : Tel: +66-2-385-3038-54 Fax: +66-2-385-3176


Shareholding by SSF : 94.28%

2. Surapon Aquaculture Co., Ltd. (SAC)

Address : 247 Moo1 Theparak Road, Theparak Sub-district, Muang District,


Type of Business : Shrimp Farm

Contact : Tel: +66-2-385-3038-54 Fax: +66-2-385-3176




3. Chantaburi Marine Farm Co., Ltd. (CHAMF)




Contact : Tel: +66-2-385-3038-54 Fax: +66-2-385-3176



4. Punpin Co., Ltd. (PP)



Type of Business : Manufacturing and Distribution of Food Products

Contact : Tel: +66-2-385-3038-54 Fax: +66-2-385-3176


Shareholding by SSF : 100%

5. Champion Foods Co., Ltd. (CHAMPION)

Address : 589/131 Bangna-Trad Road, Bangna Sub-district, Bangna District,

Bangkok 10260, Thailand

Type of Business : Restaurant

Contact : Tel: +66-2-7456270 Fax: +66-2-7456272


Shareholding by PP : 51%

Related Company (SSF has shareholding between 20% to 50% of paid up capital)

1. Surapon Nichirei Foods Co., Ltd. (SUNIF)

Address : 22/5 Moo 4 Theparak Road, Bangpleeyai Sub-district,

Bangplee District, Samutprakarn 10540, Thailand

Type of Business : Processor and Distributor of Frozen Foods

Contact : Tel: +66-2385-5021-4 Fax: +66-2-385-5119



2. BJC Marine Resources Development Co., Ltd. (BMRD)




Contact : Tel: +66-2-385-3038-54 Fax: +66-2-385-3176




3. Independent Consultant Co., Ltd. (ICC)

Address : 1168/75 Lumpini Tower 26th Floor, Rama IV Road,


Type of Business : Insurance Broker

Contact : Tel: +66-2-679-8184 Fax: +66-2-285-6428



The Company which SSF has shareholding between 10.00% to 19.99% of paid up capital) 1. Sompo Japan Insurance (Thailand) Co., Ltd. (SOMPO)

Address : 990 Abdulrahim Place 12th Floor, Rama IV Road,


Type of Business : Insurance

Contact : Tel: +66-2-636-2333 Fax: +66-2-636-2340



Reference

1. Security Registrar Thailand Securities Depository Company Limited

62 The Stock Exchange of Thailand Building,

4th, 7th Floor, Rachadapisek Road, Klongtoey, Bangkok 10110

Tel: +66-2-229-2800 Fax: +66-2-654-5599

2. Auditor Ms. Bongkot Amsageam CPA License No. 3684

KPMG Phoomchai Audit Co., Ltd.

Empire Tower, 22nd Floor, 195 South Sathorn Road,

Sathorn, Bangkok 10120

Tel: +66-2-677-2000 Fax: +66-2-677-2222

3. Bankers Kasikorn Bank Public Company Limited

Bangkok Bank Public Company Limited

Siam Commercial Bank Public Company Limited


Board of Directors and Executives

Board of Directors 1. Mr. Kosol Chantikul Age 64 Years Education Master Degree in Law, University of Sydney, Australia Master Degree in Law, Chulalongkorn Univeristy Bachelor Degree in Law, Thammasat University Training on Directorship DCP class 18/2002 Thai Institute of Directors Association (IOD) The Role of Chairman Program class 13/2006 Thai Institute of Directors Association (IOD) Position in the Company Independent Director and Chairman Position in Subsidiaries No Other Positions Legal Advisor, Team Group of Companies Co.,Ltd. Director, Unipalm Industry Co., Ltd. Legal Advisor, HNP Counsellors Limited Amount of Shareholding 0 Share Share increasing/decreasing last year 0 Share Qualification for Independent Directors Qualifications are conformed with the qualification of Independent

Directors as announcement by the Stock Exchange of Thailand, The Securities and Exchange Commission and The Company’s principles on nomination of Directors

Dispute No 2. Mr. Surapon Vongvadhanaroj Age 65 Years Education Master Degree in Political Economics, Chulalongkorn University Bachelor Degree in Political Science, Ramkamhaeng University Training on Directorship Role of the Chairman Program (RCP) class 7/2002 Thai Institute of Directors Association (IOD) DCP class 41/2004 Thai Institute of Directors Association (IOD) Developing Corporate Governance Policy 2008 Thai Institute of Directors Association (IOD) Position in the Company Director, Executive Committee and Nomination and Remuneration

Committee Position in Subsidiaries Chairman, Surat Seafoods Co., Ltd. Chairman, Surapon Nichirei Foods Co., Ltd. Chairman, Sompo Japan Insurance (Thailand) Co., Ltd. Director, Surapon Aquaculture Co., Ltd. Director, Chantaburi Marine Farm Co., Ltd. Other Positions Advisor to the Board of Directors and Director, The Thai National Shippers’ Council Director, Thai Listed Companies Association Director, Board of Trade of Thailand Amount of Shareholding 105,441,750 Shares (39.05%) Share increasing/decreasing last year 0 Share Dispute No

(Information as of January 31, 2011)


3. Mr. Sithichai Kraisithisirin Age 66 Years Education Master Degree in Business Administration, Chulalongkorn University Bachelor Degree in Law, Chulalongkorn University Training on Directorship DCP class 5/2001 Thai Institute of Directors Association (IOD) Position in the Company Director and Corporate Governance Committee Position in Subsidiaries Director and Advisor, Surapon Nichirei Foods Co., Ltd. Director, Surat Seafoods Co., Ltd. Director, Surapon Aquaculture Co., Ltd. Director, Chantaburi Marine Farm Co., Ltd. Other Positions Director, Lighting and Equipment Public Company Limited Director, The Thai National Shippers’ Council Amount of Shareholding 32,436,000 Shares (12.01%) Share increasing/decreasing last year Decrease 3,000,000 Shares Dispute No 4. Mr. Chokchai Jiengwareewong Age 66 Years Education High School, Amnuaysilpa School Training on Directorship DAP class 6/2003 Thai Institute of Directors Association (IOD) Position in the Company Director, Executive Committee, Chairman of Nomination and

Remuneration Committee and Chairman of Risk Management Committee

Position in Subsidiaries Director, Surat Seafoods Co., Ltd. Director, Surapon Aquaculture Co., Ltd. Director, Chantaburi Marine Farm Co., Ltd. Amount of Shareholding 30,615,000 Shares (11.34%) Share increasing/decreasing last year 0 Share Dispute No 5. Mrs. Boonperm Jiamtiranat Age 62 Years Education Bachelor Degree in Accounting, Chulalongkorn University Training on Directorship DCP class 81/2006 Thai Institute of Directors Association (IOD) Position in the Company Independent Director and Chairman of Corporate Governance

Committee Position in Subsidiaries No Other Positions Independent Director and Chairman of Audit Committee, Noble

Development Public Company Limited Director, Noble Estate Co., Ltd Independent Director and Chairman of Audit Committee Rian Thai Interplas Co., Ltd. Amount of Shareholding 0 Share Share increasing/decreasing last year 0 Share Qualification for Independent Directors Qualifications are conformed with the qualification of Independent Directors as announcement by the Stock Exchange of Thailand,

The Securities and Exchange Commission and The Company’s principles on nomination of directors.

Has adequate expertise and experience to review creditability of the financial reports

Dispute No


6. Mr. Adul Amatavivadhana Age 72 Years Education Ph.D. in Chemical Engineering, London University, United Kingdom Bachelor Degree in Chemical Engineering, London University,

United Kingdom Training on Directorship DAP class 30 2004 Thai Institute of Directors Association (IOD) Position in the Company Independent Director, Corporate Governance Committee and

Nomination and Remuneration Committee Position in Subsidiaries No Other Positions Director and Chairman of Audit Committee, DRACO PCB Public Company Limited. Director and Chairman of Audit Committee, Thai O.P.P. Public Company Limited. Amount of Shareholding 0 Share Share increasing/decreasing last year 0 Share Qualification for Independent Directors Qualifications are conformed with the qualification of

Independent Directors as announcement by the Stock Exchange of Thailand, The Securities and Exchange Commission and The Company’s principles on nomination of directors

Dispute No 7. Mr. Pisanu Rienmahasarn Age 62 Years Education Master Degree in Economics, Duke University, USA. Bachelor Degree in Economics, Thammasat University Training on Directorship DAP class 80/2009 Thai Institute of Directors Association (IOD) Position in the Company Independent Director and Audit Committee Position in Subsidiaries No Other Positions Deputy Rector and Dean of Business Administration Faculty,

Huachiew Chalermprakiet University Amount of Shareholding 0 Share Share increasing/decreasing last year 0 Share Qualification for Independent Directors Qualifications are conformed with the qualification of

Independent Directors as announcement by the Stock Exchange of Thailand, The Securities and Exchange Commission and The Company’s principles on nomination of directors

Dispute No


8. Mr. Sathaporn Kotheeranurak Age 54 Years Education Master Degree in Business Administration, Chulalongkorn University Advanced Certificate in Accounting, Thammasat University Bachelor Degree in Accounting, Rajamangala University of

Technology Training on Directorship DAP class 35/2005 Thai Institute of Directors Association (IOD) Position in the Company Independent Director and Chairman of Audit Committee Position in Subsidiaries No Other Positions Independent Director, Interlink Communication PLC. Independent Director, Kunkul Engineering PLC. Independent Director, Star Sanitaryware PLC. Managing Director, DBMT Co., Ltd Treasurer, Board of Trade of Thailand Amount of Shareholding 0 Share Share increasing/decreasing last year 0 Share Qualification for Independent Directors Qualifications are conformed with the qualification of Independent Directors as announcement by the Stock Exchange of Thailand, The Securities and Exchange Commission and The Company’s

principles on nomination of Directors Has adequate expertise and experience to review creditability of

the financial reports Dispute No 9. Mr. Paiboon Kangvonkit Age 43 Years Education Master Degree in International Trade, Texas A&M International University, USA. Bachelor Degree in Accounting, The University of Thai Chamber

of Commerce Training on Directorship DAP class 75/2010 Thai Institute of Directors Association (IOD) Position in the Company Director, Executive Committee and Risk Management Committee Position in Subsidiaries Director, Surat Seafoods Co., Ltd. Director and President, Surapon Nichirei Foods Co., Ltd. Amount of Shareholding 0 Share Share increasing/decreasing last year 0 Share Dispute No 10. Miss Malai Wongwatroj Age 55 Years Education Bachelor Degree in International Marketing, Baruch College, USA. Training on Directorship DCP class 135/2010 Thai Institute of Directors Association (IOD) Position in the Company Director, Executive Committee and Risk Management Committee Position in Subsidiaries Director, Surat Seafoods Co., Ltd. Amount of Shareholding 12,000 Shares (0.01%) Share increasing/decreasing last year 0 Share Dispute No


Executives 1. Mr. Surapon Vongvadhanaroj Age 65 Years Education Master Degree in Political Economics, Chulalongkorn University Bachelor Degree in Political Science, Ramkamhaeng University Position in the Company Chief Executive Officer Position in Subsidiaries Chairman, Surat Seafoods Co., Ltd. Chairman, Surapon Nichirei Foods Co., Ltd. Chairman, Sompo Japan Insurance (Thailand) Co., Ltd. Director, Surapon Aquaculture Co., Ltd. Director, Chantaburi Marine Farm Co., Ltd. Amount of Shareholding 105,441,750 Shares (39.05%) Share increasing/decreasing last year 0 Share 2. Miss Malai Wongwatroj Age 55 Years Education Bachelor Degree in International Marketing, Baruch College, USA. Position in the Company Administrative Director Position in Subsidiaries Director, Surat Seafoods Co., Ltd. Amount of Shareholding 12,000 Shares (0.01%) Share increasing/decreasing last year 0 Share 3. Mr. Supakorn Ruangsin Age 38 Years Education Bachelor Degree in Food Science and Technology, Suan Dusit

Rajabhat University Position in the Company General Manager-Frozen Seafoods Group Position in Subsidiaries Director, Surat Seafoods Co., Ltd. Amount of Shareholding 0 Share Share increasing/decreasing last year 0 Share 4. Mr. Thomas (Ferenc) Ung Age 40 Years Education Bachelor Degree in Sociology, Polhems Skolan College, Sweden Position in the Company General Manager- Frozen Food Group Position in Subsidiaries No Amount of Shareholding 0 Share Share increasing/ decreasing last year 0 Share


5. Mrs. Soranee Ung Age 36 Years Education Master Degree in Business Administration, Sasin Graduate

Institute of Business Administration of Chulalongkorn University Bachelor Degree in Finance, Boston College, USA. Training on Directorship DCP 118/2009 Thai Institute of Directors Association (IOD) Position in the Company General Manager- Business Development Group Position in Subsidiaries Director, Surapon Nichirei Foods Co., Ltd. Director, Punpin Co., Ltd. Director and Chairman, Champion Foods Co., Ltd. Amount of Shareholding 747,300 Shares (0.28%) Share increasing/decreasing last year 0 Share 6. Mr. Sorapon Vongvadhanaroj Age 29 Years Education Master Degree in Business Administration, Sasin Graduate

Institute of Business Administration of Chulalongkorn University Bachelor Degree in Business Administration, Babson College,

USA. Position in the Company General Manager- Finance and Corporate Services Group Position in Subsidiaries No Amount of Shareholding 1,582,000 Shares (0.59%) Share increasing/decreasing last year 0 Share 7. Miss Silawan Kraisithsirin Age 32 Years Education Master Degree in Accounting, University of Virginia, USA. Bachelor Degree in Business Administration, Babson College,

USA. Position in the Company Corporate Finance and Accounting Manager Position in Subsidiaries Director, Punpin Co., Ltd. Director, Champion Foods Co., Ltd. Amount of Shareholding 1,000,000 Shares (0.34%) Share increasing/ decreasing last year Increase 1,000,000 Shares

Company Secretary Mr. Somnuk Somchaikulsup Education Master Degree in Economics, Thammasat University Bachelor Degree in Economics, Thammasat University


Business Types

Overall Industry and Competition Production Situation

Overall processed seafood production in the year 2010 increased from the year 2009. Data from the

Ministry of Industry indicated that index of production value of processed seafood product for the first 11

months of 2010 was 162.26, while the year 2009 was at 147.32. The capacity utilization rate for the first 11

months of 2010 marked at 52.86 while year 2009 at 47.60%

Production of Processed Seafoods Product 180

160

140 120 100 80

60 40

20 0 42

44

46

48

50

52

54

56

2003 2004 2005 2006 2007 2008 2009 2010

Index of Production Value Rete of Capacity Utiliztion

Remarks : 1. The based year is year 2000 which index is equal to 100

2. Data for the year 2010 is preliminary data for the period of Jan.-Nov.

Source : Ministry of Industry

Sales Situation

Frozen and processed seafood industry relies on export market more than domestic market. Shrimp is

the major raw material with the highest production and sales in the frozen and processed seafood business.

Products, which are mainly produced from shrimp, can be categorized in 2 main groups - fresh chilled/frozen

shrimp and processed frozen shrimp. Export value of fresh chilled/frozen shrimp is higher than processed frozen

shrimp around 24%

Export value of Thai fresh chilled/frozen shrimp for the first 11 months of 2010 was 48,664 million

Baht, 14% increase from the same period of 2009. USA is the Thai’s highest export market, accounted for 45%

of total export value of fresh chilled/frozen shrimp. Other Thai main export markets are Japan and Europe,

accounted for 19% and 15% respectively.


Export market of Thai chilled/frozen shrimp products

Countries

Value (Million Baht) Growth (%) Proportion (%)

2008 2009 2010 (Jan-Nov)

2009 2010 (Jan-Nov)

2009 2010 (Jan-Nov)

U.S.A. 20,898 20,728 21,928 (0.82) 13.14 44.96 45.06

Japan 7,188 9,215 9,422 28.20 12.12 19.99 19.36

E.U. 5,186 6,109 7,170 17.79 26.39 13.25 14.73

ASEAN 867 1,298 1,194 49.76 7.65 2.81 2.45

Others 8,616 8,749 8,950 1.54 13.63 18.98 18.39

Total 42,755 46,099 48,664 7.82 14.66 100.00 100.00

Source : The Office of Permanent Secretary, Ministry of Commerce in cooperation with Department of Customs

Export value of Thai processed shrimp products for the first 11 months of 2010 was 39,251 million

Baht, 2.67% higher than the same period of 2009. USA is the Thai’s highest export market, accounted for 50%

of total export value of processed frozen shrimp. Other Thai main export markets are Japan and Europe,

accounted for 22% and 16% respectively.

Export market of Thai processed shrimp products

Countries

Value (Million Baht) Growth (%) Proportion (%)

2008 2009 2010 (Jan-Nov)

2009 2010 (Jan-Nov)

2009 2010 (Jan-Nov)

U.S.A. 18,932 22,248 19,623 17.52 (3.25) 53.03 49.99

Japan 8,262 8,969 8,594 8.56 4.81 21.38 21.89

E.U. 4,205 5,801 6,224 37.95 17.85 13.83 15.86

ASEAN 120 89 87 (25.67) 17.11 0.21 0.22

Others 4,476 4,846 4,723 8.27 7.48 11.55 12.03

Total 35,995 41,953 39,251 16.55 2.67 100.00 100.00

Source : The Office of Permanent Secretary, Ministry of Commerce in cooperation with Department of Customs

In summary, the whole Thai shrimp business in 2010 continued to grow from 2009 in term of values

of export and production. However, cost of production; especially shrimp raw material increased dramatically.

This situation leaded the manufacturers gain the much lower margin rate compared to 2009.


Struc

ture

of R

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Sales

by

Sale C

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2010

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SSF

1,2

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1,378

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24.05

1,2

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SS

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16.29

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1,649

16

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768,5

35

14.29

SUNI

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2,7

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2,692

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2,7

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Dom

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Sale

SSF

55

6,672

9.6

1 45

0,059

7.8

6 41

2,936

7.6

8

SS

94.28

%

224,4

28

3.88

269,8

86

4.71

185,8

05

3.45

SUNI

F 49

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9,9

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Overall Business and Important Changes

Surapon Foods Public Company Limited was established in 1977 under the name of Surapon

Seafoods Co., Ltd. The Company was the first frozen food manufacturer listed in the Stock Exchange of

Thailand. In the first stage, the main products were frozen seafood. In 1996, the Company had renamed from

Surapon Seafoods Public Co., Ltd. to Surapon Foods Public Co., Ltd. in the order to reflect diversification in

more variety of businesses both frozen seafood and frozen non-seafood products.

At the present moment, we are manufacturer and distributor of various frozen foods which include

frozen Ready-to-cook and Ready-to-eat products. Our production processes have been internationally accredited

by GMP, BRC, HACCP, HALAL and etc. These international standards give high level of trustworthy in safety,

quality, and traceability in our food products.

In addition, The Company has invested and established the other subsidiaries company in various

businesses such as frozen food business under the name of Surat Seafoods Co., Ltd., Surapon Nichirei Foods

Co., Ltd. and Punpin Co., Ltd., Sompo Japan Insurance (Thailand) Co., Ltd. and Independent Consultant

Co., Ltd. as insurance business, and Champion Foods Co., Ltd. as restaurant business.

In the year 2010, the Company has important changes as follow:-

1. Our production in Theparak facility has been accredited the HALAL certificate. The certificate

gives us more selling and marketing opportunities in the countries that required HALAL certificate.

2. We have established the sales unit in the upcountry area. We have opened the sales unit in

Pattaya area. We will continue to open more sales units in other provinces in the future.

3. We have expanded into the restaurant business under the name of “Ringer Hut” shop. The shop

is operated and managed by Champion Foods Co., Ltd., the joint-venture with our Japanese alliances named

Nichirei Foods and Ringer Hut Japan. The shop serves Champon noodle Nagasaki-style. We opened the first

branch on April 2010 at K Village, Sukhumvit 26. We have planned to open more branches in the future.

4. We started studying of shrimp cultivation project. We have set our target to supply shrimp raw

material from our own farm to our commercial production in the future. However, the project will be analyzed

and monitored closely.

5. We have started to hire the legal foreign workers whose register with the Ministry of Labor and

Social Welfare to supplement the domestic labor shortage.

6. We have managed to increase the efficiency and reduce cost in logistics activity. In 2010, we

have participated in the Logistics Cost Reduction for Thai Exporters program organized by the Department of

Export Promotion and won the excellent award.

7. Surapon Nichirei Foods Co., Ltd., another joint venture company, also expanded its production

capacity by the opening its fourth production facility in Kabinburi area to serve the every growing global

chicken demand growth. The plant has an annual maximum capacity of 5000 tons. The plant also employed

high technology machines with higher energy saving.


8. We have made changes in internal organization structure to improve Company’s efficiency.

We have integrated the production and sales functions to help increase responsiveness to all internal and

external customers. The integration of production and sale functions will also help better data exchange,

planning and business decision making. With the reorganization, there are three main business groups that will

contribute and drive sales for the Company - Frozen Seafood business group, Frozen Food business group, and

Business Development business group.

9. We have strengthened and developed the efficiency of all departments/functions to deliver

the best quality of goods and services to our customers in accordance with the Company policy; “Your Total

Quality”.


Risk Factors

1. Risk from Fluctuation of Foreign Exchange

Since the Company’s earning derives from export, fluctuation in foreign exchange has no doubt affect our performance. In the year 2010, the Baht -Thai currency is stronger compared to the year 2009.

Risk Management

Closer monitoring of the exchange rate is exercised. A clear policy fits to take care and protect against the risk arisen in any interval via the financial instruments such as forwarding, direct hedge, and foreign exchange option are also in place. Furthermore, the company tries to diversify sales in several currencies fit for each customer group in every country. These implementations are done through the zero speculation policy.

2. Risk from International Trade Regulations

Stringent quality standards and regulations are imposed more and more. One by one; non- trade measurements and methodologies (such as food safety and labor protection and welfare) are being introduced and penetrated to international trade; along with the rising healthy food’s trend. Unable to cope with these non tariff barriers could reduce the export industry’s competitiveness as well as lose of sales opportunity.

Risk Management

Constantly monitor out and up-date trade regulations and laws on the imported countries, the Company assigns a team to follow up, analyze impacts and propose actions to the Company. In additional, the team monitors, communicates and exchanges information with relevant agencies/organizations – public and private as well as overseas business alliances, which helps the Company to access information, quickly analyzes, develops production process, control and protection, to meet the standards and regulations.

3. Risk from Fluctuation of Raw Material

Since the raw materials required are from agriculture and fisheries, and depends largely on natural circumstances and natural crises in domestic and/or other countries. Fluctuation in both price and quantity is common and could affect to business.

Risk Management

Enhance competency of procurement department – to obtain raw material information, as well as to analyze data, to keep stock of raw material for production during the shortage of raw material, the Company reduces fluctuation of raw material price and quantity during that period. The Company also joins forces with business alliance – shrimp suppliers, for contract farming, communicates essential information and exchanges up-to-date events/situations with suppliers so they can equip and increase their ability in order to decrease raw material shortage as well as to ensure customers’ confidence in quality of shrimps.


Structure of Shareholders Common Stock = 269,999,000 shares (Par value = 1 Baht)

Name of Shareholders No. of share Proportion of

Shareholding (%)

1. Mr.Surapon Vongvadhanaroj 105,441,750 39.05

2. Mr.Sithichai Kraisithisirin 32,436,000 12.01

3. Mr.Chokchai Jiengwareewong 30,615,000 11.34

4. Mr.Aryuth Chansestikul 9,391,500 3.48

5. Mrs.Sukanya Vongvadhanaroj 6,957,000 2.58

6. Mrs.Wipaporn Pichetwanichchok 5,140,000 1.90

7. Miss Woraran Taepaisitpong 5,000,000 1.86

8. HSBC PRIVATE BANK (SUISSE) SA, HONG KONG BRANCH 3,915,720 1.45

9. Thai NVDR Co., Ltd. 3,835,100 1.42

10. Mr.Thanathip Pichetwanichchok 3,549,300 1.31

Source : Thailand Securities Depositary Co., Ltd (Information as of January 26, 2011)

Structure of Shareholding and Management


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Structure of Board of Directors Management Structure consists the Board of Directors and 5 sub-committees. The sub-committees

comprise of the Audit Committee, the Corporate Governance Committee, the Nomination and Remuneration

Committee, the Executive Committee and the Risk Management Committee.

1. The Board of Directors

Duties and Responsibilities of the Board of Directors

The Board has authority and responsibilities to supervise the Company’s operation and management

to meet the Company’s target in accordance with the objectives of the Company, Articles of Association, the

resolutions of the shareholders’ meeting, the resolutions of the Board of Directors’ meeting, and related

regulations. In addition, the Board is committed to work by concerning fiduciary duties - loyalty, care and

disclosure.

As of December 31, 2010, the Board of Directors consists of the following persons:

Name - Surname Position No. of the meeting attended in 2010

1. Mr.Kosol Chantikul Chairman and Independent Director 6/6

2. Mr.Surapon Vongvadhanaroj Director 6/6

3. Mr.Sithichai Kraisithisirin Director 5/6

4. Mr.Chokchai Jiengwareewong Director 6/6

5. Mrs.Boonperm Jiamtiranat Independent Director 6/6

6. Mr.Adul Amatavivadhana Independent Director 6/6

7. Mr.Pisanu Rienmahasarn Independent Director 5/6

8. Mr.Sathaporn Kotheeranurak Independent Director 5/6

9. Mr.Paiboon Kangvonkit(1) Director 5/5

10. Miss Malai Wongwatroj(2) Director 4/5

11. Mr.Chatuporn Watcharanat(1) Director 0/1

12. Mrs.Suntharee Shinomiya(2) Director 1/1

Thereby, Mr.Somnuk Somchaikulsup carries out duties as Secretary of the Board of Directors

Remarks: (1) Mr.Paiboon Kangvonkit in place of Mr.Chatuporn Watcharanat, who retired by rotation on April 8, 2010

(2) Miss Malai Wongwatroj in place of Mrs.Suntharee Shinomiya, who retired by rotation on April 8, 2010


2. The Audit Committee

Duties and Responsibilities of the Audit Committee

The Audit Committee’s responsibilities are to review the Company’s operation regarding to the

Company’s policies and Articles of Association and the compliance with relevant rules and regulations. The

Committee supports the development of report system on financial and accounting areas in comply with

international standard. In addition, the committee is responsible for reviewing the Company’s internal control

system, internal audit system, and the risk management system that they are appropriate and efficient. The

committee is independent and be able to consult any matter with outside advisors. The committee has to

convene the meeting with certified public accountant without the management.

As of December 31, 2010, the Audit Committee consists of the following persons:


1. Mr.Sathaporn Kotheeranurak(1) Chairman 5/5

2. Mrs.Boonperm Jiamtiranat(1) Director 5/5

3. Mr.Pisanu Rienmahasarn Director 5/5

Thereby, Mrs.Suree Nuntatikul carries out duties as Secretary of the Audit Committee

Remarks: (1) Mr.Sathaporn Kotheeranurak posts position of the chairman in place of Mrs.Boonperm Jiamtiranat according to the resolution of Board of Directors’ meeting no.3/2553 on July 15, 2010 (2) The committee no.1 and 2 have adequate expertise and experience to review creditability of the financial report

3. The Corporate Governance Committee

Duties and Responsibilities of the Corporate Governance Committee

The Corporate Governance Committee is responsible for monitoring an implementation of the

corporate governance policy

As of December 31, 2010, the Corporate Governance Committee consists of the following persons:


1. Mrs.Boonperm Jiamtiranat(1) Chairman 1/1

2. Mr.Adul Amatavivadhana Director 4/4

3. Mr.Sithichai Kraisithisirin Director 4/4

4. Mr.Sathaporn Kotheeranurak(2) Chairman 3/3

Thereby, Mr.Somnuk Somchaikulsup carries out duties as Secretary of the Corporate Governance Committee

Remark: (1) Mrs.Boonperm Jiamtiranat posts position of the chairman in place of Mr.Sathaporn Kotheeranurak according to the resolution of Board of Directors’ meeting no.3/2553 on July 15, 2010 (2) Mr.Sathaporn Kotheeranurak retired from the Chairman and Director effective on August 31, 2010


4. The Nomination and Remuneration Committee

Duties and Responsibilities of the Nomination and Remuneration Committee

The Nomination and Remuneration Committee is responsible for recruitment and selection of

qualified candidate as Director and Chief Executive Officer. The committee’s responsibilities are to convey

opinions and views regarding compensation of the directors to the Board of Directors and the shareholders’

meeting. To consider the compensation for the Chief Executive Officer is one of the responsibilities.

As of December 31, 2010, the Nomination and Remuneration Committee consists of the following

persons:


1. Mr.Chokchai Jiengwareewong(1) Chairman 3/3

2. Mr.Surapon Vongvadhanaroj(1) Director 3/3

3. Mr.Adul Amatavivadhana Director 3/3

Thereby, Mr.Somnuk Somchaikulsup carries out duties as Secretary of the Nomination and Remuneration Committee

Remark : (1) Mr.Chokchai Jiengwareewong posts position of the chairman in place of Mr.Surapon Vongvadhanaroj according to

the resolution of Board of Directors’ meeting no.3/2553 on July 15, 2010

5. The Executive Committee

Duties and Responsibilities of the Executive Committee

The Board of Directors designated the Executive Committee to assist the Board. The Executive

Committee is responsible for supervising the Company’s management in accordance with vision and both short-

term and long-term policies and goals as well as guidelines for efficient and effective management.

As of December 31, 2010, the Executive Committee consists of the following persons:

Name - Surname Position

1. Mr.Surapon Vongvadhanaroj Chairman

2. Mr.Chokchai Jiengwareewong Director

3. Miss Malai Wongwatroj Director

4. Mr.Paiboon Kangvonkit Director

5. Mr.Supakorn Ruangsin Director

6. Mr.Thomas Ung Director

7. Mr.Cherdsak Charoenmongkonsuk Director

8. Mr.Montai Chulatitta Director

9. Mrs.Soranee Ung Director

10. Miss Silawan Kraisithsirin Director

11. Mr.Sorapon Vongvadhanaroj Director

Thereby, Mr.Somnuk Somchaikulsup carries out duties as Secretary of the Executive Committee

Remark: There is 16 times meeting throughout the year 2010


6. The Risk Management Committee

Duties and Responsibilities of the Risk Management Committee

The Risk Management Committee is responsible for setting and reviewing the risk management

system.

As of December 31, 2010, the Risk Management Committee consists of the following persons:

Name - Surname Position

1. Mr.Chokchai Jiengwareewong Chairman

2. Miss Malai Wongwatroj Director

3. Mr.Paiboon Kangvonkit Director

4. Mr.Supakorn Ruangsin Director

5. Mr.Cherdsak Charoenmongkonsuk Director

6. Mr.Thomas Ung Director

7. Mr.Montai Chulatitta Director

8. Mrs.Soranee Ung Director

9. Miss Silawan Kraisithsirin Director

10. Mr.Sorapon Vongvadhanaroj Director

Thereby, Mrs.Vilairat Kamyuang carries out duties as Secretary of the Risk Management Committee

Remark: There is 5 times meeting throughout the year 2010


Details of Directors and Authorized Persons (as of December 31, 2010)

Name SSF

Subsidiaries

SS SUNIF PP SAC CHAMF CHAMPION

Mr. Kosol Chantikul ///

Mr. Surapon Vongvadhanaroj /,//,X /, //, /// /, //, /// /, // /, //

Mr. Sithichai Kraisithisirin /, // /, // /, // /, // /, //

Mr. Chokchai Jiengwareewong /, // /, // /, // /, //

Mrs. Boonperm Jiamtiranat /

Mr. Adul Amatavivadhana /

Mr. Pisanu Rienmahasarn /

Mr. Sathaporn Kotheeranurak /

Miss Malai Wongwatroj / /, //

Mr. Paiboon Kangvonkit / /, //

Mr. Chatuporn Watcharanat /, //, X /, //

Mr. Supakorn Ruangsin /, //

Mrs. Soranee Ung /, // /, // /, //, ///

Miss Silawan Kraisithsirin /, // /, //

Mrs. Soraya Sorakraikitikul /, //

Mr. Somnuk Somchaikulsup /, // /, //

Note: / = Board of Directors X = Chief Executive Officer

// = Authorized Director /// = Chairman

Explanations of the abbreviation

SSF = Surapon Foods Public Company Limited

SS = Surat Seafoods Company Limited

SUNIF = Surapon Nichirei Foods Company Limited

PP = Punpin Company Limited

SAC = Surapon Aquaculture Company Limited

CHAMF = Chantaburi Marine Farm Company Limited

CHAMPION = Champion Foods Company Limited

The above Directors and Executives have all qualifications in accordance with Chapter 6 of the

Public Limited Company Act B.E.2535 and Notification of the Securities and Exchange Commission.


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Corporate Governance

Corporate Governance Policy

Surapon Foods Public Company Limited issued the Corporate Governance Policy on August 9, 2005 then the Board of Directors’ meeting on January 12, 2006 improved the Corporate Governance Policy substituting the former policy. There is also 5 times amendment of the Policy as follows:

1. The Board of Directors’ meeting no.4/2006 on July 14, 2006 approved the Corporate Governance Policy No. 2/2006 which added dividend payment policy.

2. The Board of Directors’ meeting no. 1/2007 on January 11, 2007 approved the Corporate Governance Policy No. 3 (2007) which included the Board of Directors, disclosure and information transparency, risk management and development of the Board and executives complying with Principles of Good Corporate Governance for Listed Companies 2006 of the Stock Exchange of Thailand.

3. The Board of Directors’ meeting no. 4/2008 on August 14, 2008 approved the revision of the Corporate Governance Policy with the added context complied with the Securities and Exchange Act B.E.2551, the rules on Independent Director and Audit Committee set by the Securities and Exchange Commission as well as disclosure of information and its transparency.

4. The Board of Directors’ meeting no. 8/2009 on December 17, 2009 approved the revision of the Corporate Governance Policy with the added context complied with the additional procedures which included proportion of shareholding by Independent Director, Disclosure of related transaction, Dividend payment from annual net profit of single financial statement.

5. The Board of Directors’ meeting no.6/2010 on December 16, 2010 approved the revision of the Corporate Governance Policy with the added context complied with the Notification of the Securities and Exchange Commission no. Kor Chor. 8/2553 Re: Determination of Untrustworthy Characteristics of Company Directors and Executives.

The Current Corporate Governance Policy consists of 6 categories as the followings: 1. The Board of Directors 2. Shareholders: Rights and Equality Treatment 3. Rights of all Stakeholders 4. Disclosure of Information and Transparency 5. Internal Control and Risk Management 6. Development of the Board and Executives

Details of each category shown in the attachment. Effective on December 17, 2010 onwards.

(Mr.Kosol Chantikul) (Mr.Surapon Vongvadhanaroj) Chairman Chief Executive Officer


1. The Board of Directors

1.1 Composition

The Board of Directors shall consist of not less than 5 directors and not more 11 directors -

at least half of the total number of directors must have residence in the Thai Kingdom.

The Board of Directors shall consist of independent directors not less than one-third of the total directors and not less than 3 directors. Independent Directors and their connected persons shall not hold more than 1% of the share in the Company and/or its subsidiary and associated companies.

1.2 Qualification

1.2.1 Qualify without any forbidden characteristics laid down by Public Company Law.

1.2.2 Knowledgeable/Experience in either of the following fields – industry, commerce, service, law, accounting, finance, public relation, or public administration.

1.2.3 No indication of untrustworthy characteristics of the Company’ directors and executives according to the Securities and Exchange Commission or other regulatory institutions’ requirements.

1.2.4 Knowledgeable, capable, experience, honest, sincere and ethically conduct business with ample time to devote one’s knowledge, ability, experience and execution to the company.

1.3 Duties and Responsibilities

The Board is responsible for shareholders regarding business operation and supervision of management to achieve the targets and to attain utmost benefits of shareholders on basis of code of ethics and awareness of the best interests of all stakeholders and social; in particular Fiduciary Duty. The Board has the duties and responsibilities in accordance with the laws, the Company’s objectives and the Company’s Articles of Association, including the obedience of the resolutions of shareholders’ meetings. The Board carries out of duties with loyalty and care and the disclosure of information which is conducted accurately, completely and timely.

The Board appoints the Chief Executive Officer to be responsible for business management and the corporate governing. The Board appoints the sub-committees as it fits.

The Board establishes the Board of Directors’ duties and responsibilities as follows:

1.3.1 To set vision, mission and policy guidelines on business operations of the Company.

1.3.2 To approve the Company’s business plan and annual budget.

1.3.3 To approve the Company’s quarterly business performance.

1.3.4 To approve the significant transactions such as investment projects, acquisition and disposition of assets and any other operation in compliance with laws.

1.3.5 To approve and/or advise to connected transaction between the Company and its subsidiary companies in comply with the announcement, rules and guideline concerning the Stock Exchange of Thailand and the Securities and Exchange Commission.

1.3.6 To assess the Board’s performance.

1.3.7 To assess the Chief Executive Officer’s performance


1.3.8 To set the written Corporate Governance Policy and review the policy and compliance to the policy regularly, at least annually.

1.3.9 Any other operations according to law, objectives, the Articles of Association of the Company and the resolutions of the shareholders’ meeting

1.3.10 To consider any conflict of interest thoroughly. There should be an independent participating in the meeting and decision making process.

1.3.11 To establish the Risk Management Committee and set a risk management policy to cover all activities of the company. The Board should review the risk management system or assess the effectiveness of risk management at least annually.

1.3.12 To review responsibility and delegation of authorities to Chief Executive Officer.

1.3.13 To set the written Internal Audit and Audit Control Policy.

1.4 The Board of Directors’ Meeting

1.4.1 The Board of Directors’ meeting must be held at least 6 times a year with the specific agenda distributed in advance and related documents to allow enough time for due consideration. The consideration of each agenda, the Board should realize the shareholders’ benefits and all stakeholders fairly. The chairman chairs the meetings and encourages every director to express their opinions freely, while ensuring each matter gets due consideration. The record of meeting attendance will be shown in annual report.

1.4.2 Besides the Sub Committees’ meeting will be held if necessary and appropriate regarding duties and responsibilities for example, the Audit Committee convenes at least 5 times a year and the Nomination and Remuneration Committee convenes at least 2 times a year.

1.4.3 The Board sets the Board of Director Meeting yearly schedule in advance and notify each director of the schedule so that each member of the board can manage time to attend the meetings.

1.4.4 Besides operational report presented to the Board meeting, the Company prepares monthly performance report to the Board in every month.

1.4.5 The Chairman and Chief Executive Officer set the Board meeting agenda together meanwhile Chairman discusses with other Directors to propose an issue for a meeting agenda.

1.4.6 Agenda and meeting documents consisting of data and information should be sent to each director not less than 7 day prior to the meeting date except any urgent and/or confidential documents. Nonetheless, the company shall carry out such urgent and/or confidential documents to the minimal amount so the board can have enough time to focus on the issues prior to the meeting.

1.4.7 The Chairman allocates the meeting time appropriately for complete management’s presentation and comprehensive directors’ discussion. The meeting agenda includes matters to inform which open time to every director to inform important matters related to the Company.

1.4.8 The Non-Executive Directors are able to meet, as necessary, among themselves concerning acute management with or without management team. The meeting outcome has to be notified by them to Chief Executive Officer and the Chairman.


1.4.9 The Board encourages high level management to join the board meeting to provide information related to the direct operations and in order to get acquainted with. The invitation every time will be jointly approved from both Chairman and Chief Executive Officer.

1.4.10 The Board of Directors assigns the Company Secretary to take minutes of the Board Directors’ meeting by concerning completeness of the minute and important opinion from the directors.

1.5 Reporting of the Board of Directors

The Board provides financial statement and reports in form of the annual report proposing to the shareholders’ meeting with regards to law. In addition, the report of explanation towards scope of responsibilities of the certified public accountant attached the report of financial statement published in annual report.

In accordance with rules and principles of the Stock Exchange of Thailand as well as related laws, the Board of Directors assigns the Audit Committee review the above mentioned report to be up-to-date to ensure that the Company’s consolidated financial statement in conformity with generally accepted accounting principles based on rules and regulation of the Stock Exchange of Thailand, the Securities and Exchange Commission and related laws.

1.6 The Chairman

With respect to the differences in duties and responsibilities between the Chairman as the head of policy level, whereas Chief Executive Officer, as the head of management. The Company deems it appropriate that two positions of the Chairman and Chief Executive Officer is to ensure the balance of authority.

The Chairman is non-executive director, head of the directors. His duty is to chair the Board of Directors’ meeting and shareholders’ meeting.

1.7 The Sub-Committees

The Board has established sub-committees with responsibility for specific matters to ensure proper consideration such as the Executive Committee, the Audit Committee and the Corporate Governance Committee, the Nomination and Remuneration Committee. Each committee reports directly to the Board.

1.7.1 The Executive Committee

The Executive Committee consists of Chief Executive Officer and Executive Directors not less than 3 directors. Chief Executive officer chairs the committee. The committee’s duties and responsibilities are to supervise the business operation and management to meet the policy, vision and goals both short-term and long-term. Furthermore, they issue policy, regulations and principles including practices in order to efficient and transparent management.

1.7.2 The Audit Committee

The Audit Committee consists of not less than 3 independent directors and the independent directors must be not less than one-third of the total directors. The committee is responsible for ensuring the Company’s audit policies and principles, laws, regulations, and rules of governing authorities, as well as supporting the Company to develop system of financial and accounting system in accordance with international standard. The committee is responsible for reviewing the Company’s internal control system, internal audit system and the risk management system that they are appropriate, up-to-date, and efficient.


The Audit Committee is independent, with the internal audit office as the operating unit. The Audit Committee has the authority to ask for external consultant in matters to clarify and in the interest of the company as well as a meeting with the external accounting auditor, without the management office, at least once a year.

1.7.3 The Nomination and Remuneration Committee

The Nomination and Remuneration Committee consists of independent directors and executive directors not less than 3 directors. This committee is responsible to recruit and select qualified candidates as Directors and Chief Executive Officer. The committee’s responsibilities are to convey opinions and views regarding remuneration of the directors to the Board of Directors for their approval or proposing to the shareholders’ meeting. To consider the compensation for the Chief Executive Officer is one of their responsibilities.

1.7.4 The Corporate Governance Committee

The Corporate Governance Committee consists of independent directors and executive directors not less than 3 directors. The committee is responsible for supervision and monitoring the implementation of Corporate Governance Policy.

1.7.5 The Risk Management Committee

The Risk Management Committee consists of directors and the company top executives. The Committee is responsible for setting the risk management system, establishing risk management, assessing and reviewing risk management system regularly.

1.8 The Chief Executive Officer

The Board appoints Chief Executive Officer whom is the pinnacle executive of the company accountable for the management in order to achieve the laid down plans, reported to the Board of Directors. Chief Executive Officer with the authority from the Board can delegate (a) committee(s) or person(s) to operate and run the business and he sees fit and necessary.

1.9 The Company Secretary

The Board appoints the Company Secretary whose responsibility is to follow up and gives initial recommendations to the Board and executives on issues related to laws and regulations from the Securities and Exchange Commission, the Stock Exchange of Thailand, Laws involved company’s regulations, the board’s resolutions and shareholders meeting’s resolution, together with the duty to arrange the shareholders meeting and the board’s meeting in compliance with the laws.

1.10 Qualification and Nomination of the Board Members

The Nomination and Remuneration Committee is responsible for selecting qualified candidates on basis of qualification, knowledge, capabilities, and past working experience regarding to principles of nominating Board members that are clearly defined in writing. The committee is responsible for selection a new director and the director whose term is retired by rotation or whenever there is a vacancy to propose to the Board of Directors and/or shareholders’ meeting for nomination.

The Directors should not post in other listed companies more than 5 companies except the Board of Directors considers that the nominated director possesses knowledge, capability, working experience that would help the Company.


1.11 Term of the Board of Directors and the Sub-Committees

At every annual general meeting of shareholders, one-thirds of the directors shall retire by rotation. If the number of directors is not a multiple of three, then the number nearest to one-thirds shall retire. Whenever the directorship is retired by rotation, the directors might be reappointed.

The Sub-Committee has two-year tenure from either the appointed date or the Board’s resolution which can be reappointed after the tenure is completed.

1.12 Directors’ Remuneration

When consideration directors’ remuneration, the Board of Directors who considers their duties and responsibilities and then propose to the shareholders’ meeting. The Nomination and Remuneration Committee also consider on guidelines of remuneration. Details of remunerations paid to directors can be found in annual report.

Remuneration for the executives is set by Chief Executive Officer based on individual duties, responsibilities and performance including the company’s short-term and long-term operational result which would be in line of market competitiveness and sufficient to keep and attract high quality executives.

Remuneration for the directors and Chief Executive Officer is comparable to the industry level in which the company operates; reflect experience, scope of work, accountability and responsibilities.

1.13 Evaluation of the Board’s performance

The Board has set up evaluation on individual’s performance of the directors at least once a year as a guideline to improve the Board’s operations. The evaluation would be summarized to the Board’s acknowledgement. The Board has set up criteria of the Board’s assessment with principles and reliability to obtain the maximum benefits to the duties of the Board of Directors.

1.14 Conflict of Interest

The Board has great emphasis on the conflict of interest of all stakeholders carefully, fairly and transparently as well as disclosure of information with completeness. In case that a director may have possible conflict with the Company’s interest in any matter considered by the Board at moment, that director must leave the meeting during which the matter is considered or must not be entitled to vote on such matter.

The Director and Executives including their related person has to report their related transaction to the Company.

1.15 Code of Ethics

The Board of Directors has formulated a Code of Ethics in writing for standard practice aimed at directors, executives and all staffs. The Board also supervises the company to employ it in practical.

1.16 Code of Conducts

The Board prepares proper Code of Conducts for staff in every level to guide and contribute to operations in accordance with Corporate Governance.


2. Shareholders: Rights and Equal Treatment

2.1 Rights and Treatment to Shareholders

The Board of Director respects the rights of all shareholders equally and is responsible for taking care of all shareholders’ interest. Not only the major shareholders and the minor and foreign shareholders are treated equally as follows:

2.1.1 Equal rights as defined by the law and the Company’s Articles of Association.

2.1.2 Rights on preserving their interest by voting, expressing opinion and approving in the shareholders’ meeting.

2.1.3 Rights on decision-making of significant policies and matters including elect directors.

2.1.4 Rights on accessing to accurate, complete and transparent information.

2.1.5 Rights on profit-sharing equally.

2.1.6 The Company policy is to pay the dividend approximately 60% of net profit after tax of separate financial statement, except when investment or cash flow is needed – the Board of Directors could present the shareholders’ meeting to pay the dividend as it fits.

2.2 Shareholders’ Meeting

The Company’s policy on shareholders’ meeting is complied with the laws and the Company’s Articles of Association and Guidelines for effective shareholders’ meeting proposed by the related regulatory institutes.

In the invitation letter comprising of meeting agenda with detailed information on each agenda and the Board of Directors’ opinions. The invitation letter will be sent to all shareholders in accordance with the time-line as set by the related regulatory institutes.

During the shareholders’ meeting, all shareholders are equal in voting and accessing information. The Chairman of the meeting allows shareholders inquire and express their opinions and recommendations on an equal basis.

The Board of Directors is responsible for assignment to at least 1 independent director as the proxy in case the shareholders are not able to attend the meeting. The shareholders have rights on voting separately for proposed agenda.

The Board of Directors is responsible for attending the meeting to answer any inquiries.

The shareholders have rights to jointly submit a request with adequate reasons, for the Board to hold an extraordinary shareholders’ meeting in compliance with the Company’s Articles of Association. In this case, the Board must organize the meeting within one month after receipt of the written request.

The Board will publicize accurate and completed minutes within 14 day after the meeting date and will post the minutes on the Company’ website (www.surapon.com). The Company will send the minutes to the regulatory institutions according to the laws and regulations.


3. Concerning the Rights of All Stakeholders

The Board of Directors is aware of rights of all stakeholders such as shareholders, staffs, executives, customers, business partners, creditors and society and the country in general. The Board monitors and supervises the management system to ensure that the Company is responsible for all stakeholders with equality which is written in Code of Ethics to be guidelines for directors, executives and staffs.

The Board is aware of good corporate citizen as strictly prescribed by laws, operating business with transparency, paying tax correctly and committing to improve the society’s quality of life. It just adds the mentioned guidelines in the Code of Ethics for staffs. The directors and executive should be the prototypes.

The Board set up the channel which shareholders and all stakeholders can suggest their concerns/suggestions to the Company by sending to Chairman of the Audit Committee. 4. Disclosure of Information and Transparency

4.1 The Board of Directors has a policy to disclose information both finance and non-finance concerning business and operational result which is accurate, complete and adequate, consistent, timely and showing business operation and financial status as well as the future of business. This management of information covers channels which the company uses in various communication channels such as annual report, company’s website, information to the Stock Exchange of Thailand, and etc.

4.2 The Board of Directors has the policy to treat information both positive and negative equally. The Board of Directors shall concern the equal accession of information from all shareholders in line with keeping confidentiality of important information. The disclosure of information will comply with requirements of the Stock Exchange of Thailand and the Securities and Exchange Commission.

4.3 The Board assigns the management to supervise an implementation that they strictly comply with laws, regulation and relevant principles regarding to disclosure of information and transparency.

4.4 The Board reports and communicates with the shareholders, investors including the securities analysts on equitable basis in addition to the information disclosure in the company’s annual report and the company’s website (www.surapon.com).

4.5 The Board provides the report of the Board of Directors’ responsibilities for financial statement together with Audit Report of Certified Public Accountant on the Company’s annual report.

4.6 The Board and all sub-committees disclose their duties and responsibilities and times of meeting attendance in annual report.

4.7 The Board discloses the principles of remuneration of directors in annual report and the company’s website (www.surapon.com).

4.8 The Directors and Executives as specified by the notification of Securities and Exchange Commission no. Tor Chor. 23/2551 have to report their stock trading transaction of the Company’s stock to the Board of Directors’ meeting.


5. Internal Control and Risk Management

5.1 Control System and Internal Control

The Board of Directors encourages and is aware of the importance of control system and internal control. There have been the efficient control and internal audit and maintained the flexible practice. This

system is controllable, governing, assessing and reviewing.

The Company establishes an internal audit unit working under supervision of the Audit Committee to review the Company’s operations to comply with policy, business plan, authorization and rule and regulations as well as to assess risk management and internal control. The Audit Committee has the duty to

approve, transfer or discontinue the head of internal audit unit.

5.2 Risk Management

The Board of Directors pays a lot of attention to manage risk. The Board establishes the Risk

Management Committee for assessment of the efficiency of the risk management.

6. Development of the Board and Executives

6.1 The Board encourages and facilitate training for all directors with providing Board of Directors’ Handbook comprising relevant important and useful information to perform their duties. Training and site visit to the company’s factory including instruction and / or orientation presenting to new directors.

6.2 The Company assigns Chief Executive Officer to designates succession plan for the top executives and notifies candidate names of successors on major positions. Chief Executive Officer establishes the Succession Plan in writing.

6.3 The Board of Directors conducts Board Self Assessment at least annually. The Board meeting evaluation has to be assessed regularly in every meeting.


Principles on Nomination of Directors

Board of Directors’ Meeting no. 1/2006 on January 12, 2006 has passed the resolutions on Principles

on Nomination of Directors.

Then, the first amendment is made at the Board of Directors’ Meeting no. 1/2007 on January 11,

2007 added a principle on nomination of directors (no. 1.1.2) in compliance with the Principles of Good

Corporate Governance for Listed Companies 2007 issued by The Stock Exchange of Thailand. The second

amendment is made at the Board of Directors’ Meeting no. 8/2009 on December 17, 2009 revised

characteristics of directors in order to comply with the Securities and Exchange Act B.E.2551 and Notification

of the office of Securities and Exchange Commission No. Kor Lor Tor. Kor (Wor) 32/2551 dated June 5, 2008.

The third amendment is made at the Board of Directors’ Meeting no. 6/2010 on December 16,2010 added

the context to comply with the Notification of the Securities and Exchange Commission no. Kor Chor. 8/2553

Re: Determination of Untrustworthy Characteristics of Company Directors and Executives.

The Nomination and Remuneration Committee recruits and nominates the directors as the following

criteria.

1.1 Qualifications

The Directors must possess the following qualifications:

1.1.1 Director must have and do not have the forbidden qualifications as prescribed by Public

Company Acts while recruiting and nominating.

1.1.2 Independent Directors and their connected persons shall not hold more than 1% of the

share in the Company and/or its subsidiary and associated companies. In addition, characteristics of Independent

Director must be in accordance with the announcement of the Stock Exchange of Thailand and related

regulatory institutes.

1.1.3 The Independent Director has knowledge and experience in one of business type such as

industry, commerce, service business, law, accounting, finance, public relations or public administration and not

be have relationship directly or legally as father, mother, spouse, brother, children including children’ spouse of

any executive and major shareholder of the Company and its subsidiaries. The Independent Director is not

director who involves management, staff, employee or consultant who receive monthly remuneration. Moreover

the Independent Director is not professional service provider (for example auditor, legal advisor).

1.1.4 Director possesses knowledge, capability, working experience, integrity and ethics and

dedicates the necessary time for the Company to share knowledge, skill, and experience in business and

working for the Company.

1.1.5 Director shall be person whose no untrustworthy characteristics of the Company’ directors

according to the Securities and Exchange Commission or other regulatory institutions’ requirements ***


1.2 Nominating

1.2.1 To consider the balanced portion, structure and component of the Board of Directors

compared with the Company’s business and market.

1.2.2 To consider from shareholders, Executives and outsiders based on qualifications. The

nominated person must have no untrustworthy characteristics of the Company’ directors according to the

Securities and Exchange Commission or other regulatory institutions’ requirements.

1.2.3 In case of recruitment from outside, the Committee must recruit who has background,

expertise, credentials in a range of professions, leadership, vision, transparent record as well as independent

opinions.

1.2.4 The Committee is responsible for nominating all the Board of Directors whom retire from

the office by rotation or any other reasons.

1.2.5 The Committee is responsible for nominating Chief Executive Officer.

1.2.6 The Committee approaches the candidate of director(s) whose characteristics are

complying with the determined condition. This is to make sure that the said candidate has willingness to accept

the nomination to the shareholders’ meeting or Board of Directors’ meeting**

1.2.7 The Committee shall propose the candidate of director(s) for the Board of Directors’

consideration and then propose to shareholders or the Board of Directors for appointment.

1.3 Term of Directorship

At every annual general meeting, one-third of the directors shall retire from the office by

rotation to comply with the Article of the Association. The term in office of sub-committee shall be 2 years.

Note: * Resolution of the Board of Directors’ meeting no.1/2007 on January 12, 2007. ** Resolution of the Board of Directors’ meeting no.8/2009 on December 17, 2009. *** Resolution of the Board of Directors’ meeting no.6/2010 on December 16, 2010.


Principles on Remuneration of Directors

At the Board of Directors’ Meeting no. 1/2006 on January 12, 2006 has passed the resolution on

Principles of Remuneration of Directors. Then, the Board of Directors’ meeting no.8/2009 on December 17,

2009 revised the procedure in order to comply with additional recommendations on Best practices of the

Remuneration committee proposed by the Stock Exchange of Thailand on April 2008.

The Nomination and Remuneration Committee designates the directors’ remuneration as the following

criteria:-

1. Directors’ Remuneration

The remuneration of directors depends on duties, responsibilities and performance with the

shareholders’ approval.

The Committee’s duty is to propose category, how to pay remuneration and amount to the

shareholders’ meeting.

The Committee has to be aware of the appropriate remuneration in line with director’s duties,

responsibilities, dedication, group and size of business, market, and competitors. The remuneration is in proper

level and adequate to motivate and retain the qualified directors.

The Committee is also responsible for consideration of the Chief Executive Officer’s compensation.

2. Category of Remuneration

2.1 Meeting Allowance reflects the directors’ performance. Payment of the meeting allowance is to

induce the directors to attend the meeting.

2.2 Monthly Remuneration reflects the directors’ duties and responsibilities.

3. Method of Payment

3.1 Meeting Allowance is paid to the directors and the sub-committees who attend the meeting

(inclusive of independent directors, non-executive directors and executive directors).

3.2 Monthly Remuneration is paid to the independent directors and non-executive directors on

monthly basis. Although the executive directors receive salary which covers duties and responsibilities in the

post of executives, they receive monthly remuneration to reflect duties and responsibilities in the post of

directors.


The Company pays attention to efficiency of the Internal Control system. Board of Directors has arranged a programme evaluation about adequacy and suitability of the Internal Control system. In 2010, Audit Committee has evaluated internal control system according to the evaluation form of Securities and Exchange Commission and then present to the Board of Directors’ meeting no.1/2011 on February 24, 2011 for their approval.

The Board of Directors confirms that the Company’s current internal control system fits with today’s operation and auditor did not find any significant weakness in the system. In addition, the management has provided the proper support to develop and improve the current internal control system continuously to ensure that the system accomplish its objectives. The current audit system is based on The Committee of Sponsoring Organization of the Treadway Commission (COSO) which constitutes the following agendas for an organizational internal audit framework; 1. Organizational Control and Environment

The Company puts great emphasis on the organization structure as well as the working environment, since both elements are the essential roots of the internal control system. Thus, in the order for the Company to move forward into reaching the goal, the Company has implemented the following:

To establish clear business policies, objectives, and directions in order to monitor the system, goals and objectives as well as constantly reviewing them. We have hired an external consultant to suggest and help improve strategic formulation and business goals setting systems.

Structure the organizational layers to make sure that the Company operates in an efficient manner through the Check and Balance system by separating the CEO from the Chairman. The Board of Directors will have to consist of not less than one third of independent directors and not less than three persons. In addition, in order achieve the Board’s objectives, the Company also appointed many other sub-committees such as: Corporate Governance Committee, Risk Management Committee, Nomination and Remuneration Committee, and Executive Committee.

Communication of corporate governance and business ethics for employee. The Company acknowledged all the employee to comply with these standards through the signing of the good governance booklet which the Company provided. The Company puts great emphasis on employee performance since integrity, ethics and transparency are the essential elements of good corporate governance.

The Board and Management attended the signing ceremony for business ethics. The purpose is to show their willpower and responsibilities of business management because they will be the good role models of their employees.

Identify the clear and written job scope, description, rules, regulations, and job authority of each of the management level in order to prevent any type of fraud.

Internal Control


2. Risk Management

The Company always assesses both internal and external business risks. Hence, the Company established the Risk Management Committee in order to be updated and timely act upon all possible business risks along with analyzing the root of each risk factor within the guideline of the Enterprise Risk Management framework. In 2010, the risk management department is appointed to follow all the foreseeable business risk trends and to manage those risks to the minimally accepted risk. Besides, the company arranged Event risk evaluation. For an example, Political unrest in Thailand on the beginning of 2010 to assure that company operation has not been affected.

In 2010, the Company arranged workshop seminars in enterprises risk management for the managers level and above; and also equipped the senior officers with the functional risk training in order for these employees to gain knowledge and understanding in risk factors. Risk Tolerance and Key Risk Indicators are also introduced. 3. Management Control Activities

The Company has always put a strong emphasis on the performance results of all the employees. Management of authority and right power of attorney limits assigned in writing to avoid possible unfair abuses from the management through collaboration with finance and accounting departments under the Company’s regulations.

Disintegrate possible authorities from loopholes that favor the possibility of fraud, for example (1) personnel with the authority (2) recorder of accounting and information, and (3) personnel in charge of asset monitor in order to ensure good governance and transparency in all transactions.

In case approval of related transaction, The Company will consider carefully. The person, who has conflict of interest, will not vote for this. In case there are significant differences, the audit committee will consider at first then the case will be sent to the Board of Directors for approval and disclosure the transaction in the annual report

The consideration of related transaction will considered base on the maximized benefits of the company.

Written operating manual for every working unit.

Establish working groups to follow laws, regulations accepted impact study and impact study report shall submit to risk management committee in order to comply with it and reduce risks.

4. Information and Communication Measure The Company values carefulness, thoroughness, decision based on care, good quality and adequate information in financial and non financial. Thus, communications to involved parties are essential. The company; therefore

Arrange the data sufficiently to support decision making of management. Management and the staff involved are invited to attend in the Board of Director meeting to present and clear the main issue.

Consider to employ the suitable accounting record system in accordance with Generally Accepted Accounting Standard. The Company has no policy to use accounting policy which may lead to mislead figure.


Arrange the document keeping systematically as well as determine the duration of document keeping in accordance with the laws and regulations.

The Company emphasizes to manage ICT system to comply with the regulations. The company also announced legal punishment by informing the penalty risk. Besides, the Company had created a document keeping system in corresponding to the announcement of MICT.

Provide back up data system and set up DRP (Disaster Recovery Plan). Preparation of business interruption avoidance, company planed to test DRP system at least once in a year.

Disclose the Company’s important information via the Company’s website (www.surapon.com) such as the invitation letter of Shareholders’ meeting, the minutes of Shareholders’ meeting, and annual report.

5. Monitoring system The Company emphasizes in the monitoring system to ensure operations are both efficient and effective, goes as objectives with continuous internal control system, revise accordingly to the changing circumstances as well as promptly correction so

Board of Directors shall convene the meeting to update and monitor the Company’s performance. The Boards shall also give suggestion to the management in order to develop and improve the performance to achieve the Company’s target.

The Audit Committee convene the quarterly meeting together with certified auditor, finance and accounting department, and internal audit department to review financial statement, internal control system, monitor the improvement action including the reporting of the significant issue to the Board of Directors.

The Corporate Governance Committee convenes the quarterly meeting to supervise and monitor the overall operation to comply with the Corporate Governance policy.

The Risk Management Committee convenes the quarterly meeting to supervise and monitor the overall operation and Business unit operation to comply with the Risk Management policy.

The Nomination and Remuneration Committee convenes the meeting to consider the nomination of the director and Chief Executive Officer including determination of remuneration for shareholders’ approval. The committee is also responsible for assessment of CEO’s performance and remuneration.

The Board of Directors, the Audit Committee, and the Management have high concern with internal audit. The Company assigned internal auditor can audit, review, and give her opinion freely and send the report to the Audit Committee quarterly.

The Board of Directors will consider and approve the annual internal audit action plan which is planned according to risk-based evaluation. This is to ensure that the high-risk activities shall be taken into account in first priority. The internal auditor shall report the result of auditing to the Management of each function immediately in case there is significant weakness. The internal auditor also reports the Audit Committee and the Board of Directors to acknowledge or to ask for suggestions. This is to ensure that the Company shall achieve the objectives of internal audit and control effectively and efficiently - financial audit, compliance audit, operation audit.


July 14 2006, the Board of Directors meeting no. 4/2006 had passed the resolution to add a

sub-section 2.1.6 regarding the policy of dividend payment in the Corporate Governance Policy in Section

2 (Shareholders’ rights and the equal treatment). The Board of Directors’ meeting no.8/2009 has passed

the resolution to adjust some wordings to make it clearer.

The Company’s dividend policy as mentioned in the Corporate Governance policy sub-section 2.1.6 is

“The Company’s policy is to pay the dividend approximately 60% of annual net profit after tax of Separate

Financial Statement, except when investment or cash flow is needed - the Board of Directors could present the

shareholders’ meeting to pay the dividend as it fits”

Dividend Payment Policy


Related Transaction

In business operation, the Company may have related transaction with related person and/or juristic

person. The company, however, carefully makes decision and closely monitors the related transaction by

concerning shareholders’ benefits and in line with the laws and regulations.

In addition, the Audit Committee has reviewed and given the opinion to the Board of Directors. In

case the Company enters into related transaction with the director, the involved director will not vote for this

transaction.

Disclosure of related transaction shall comply with the laws and regulations as well as Generally

Accepted Accounting Standard. The related transaction of the year 2010 has been disclosed in note of the

financial statement as specified in the annual report 2010.

In 2010, the Company reported the related transaction to the Stock Exchange of Thailand according

to the Board of Directors’ meeting has passed the resolution to approve the related transaction in rent

and service with Mrs.Soraya Sorakraikitikul - the company extended the leasing for a suite at the Central

City Bangna Tower 1, no. 589/131 Bangna-Trad road, Bangna, Bangkok, around 333 square meters. The lease

is 2 years from November 1, 2010 to October 31, 2012.

As the Company continues to expand the domestic market, we need the place for our workforce in

sales, marketing and business development for them which we cannot accommodate at our office

in Samutprakarn area. Moreover, it helps our transportation - convenient, fast and flexible to conduct business

with our customers, visitors and staffs.

Mrs.Soraya Sorakraikitikul (former last name - Vongvadhanaroj) is the daughter of one of the

Company’s executive - Mr. Surapon Vongvadhanaroj who is the major shareholder of the Company.

Mrs. Soraya Sorakraikitikul is also the Company’s shareholder.

Total value of the payment or total value of the transaction, conditions, rent rate, term of payment

and insurance are as followed:

1. Total leasing 2,400,000 Baht: monthly leasing 100,000 Baht from November 1, 2010 to October

31, 2012.

2. Damages insurance and contract obligations in total 190,000 Baht (this amount of money

will be returned within 30 days after the contract expired when there is no damage.)

3. Grand total amount of money: 2,590,000 Baht


The company had extend a 2-years-lease for the suite at the Central City Bangna Tower 1 with the

same monthly leasing price of 100,000 Baht for the total of 2,400,000 Baht. Compared the other leasing price

for the offices in Central City Bangna Tower, this rate is lower than others. Together with the service charge,

building structure as well as its location, the company decided that this office is the most suitable place.

The amount of the money on the connected transaction in comparison with the net tangible asset

(NTA) as of March 31, 2010 showed that the connected transaction was 0.17%, which was considered to be a

medium-size connected transaction as specified in the Notification of the Stock Exchange of Thailand reference

no. Bor Jor/Por 22-01 on the disclosure of information and operations of the company listed in the Stock

Exchange of Thailand in the connected transactions (year 2002) and the notification of the Securities and

Exchange Commission no. Tor Jor 21/2551 on the connected transactions, in the category of the main essence

is to divide the connected persons and categories of rent or short term asset rent/lease transaction not longer

than 3 years. Hence; the company had reported the information to the Stock Exchange of Thailand

in conjunction with the regulation and the extend leasing had been approved from the Board of Directors’

meeting on August 11, 2010 and agreed by the Audit Committee.


Performance and Financial Analysis

Overall Performance Surapon Foods Public Company Limited and its subsidiaries’ consolidated annual revenues increased

by 2% in 2010 from the previous year. One of the factors that attributed to this rise was the Company offers

new products varieties and differentiations to both the domestic and the international markets. In addition, the

Company invested in brand awareness building and marketing activities through joining international and

domestic food exhibitions, channel penetration and communication, and media advertisements. The Company

always emphasizes the strict control of food safety, traceability, and utmost quality. Because of all these

Company activities, the customers gained more confidence with the Surapon brand, increasing the overall sales

figures; however, in 2010 the overall cost of goods sold rose dramatically by 7% due to the shortage of Thai

shrimp supply to meet the global demand. These high shrimp raw material prices directly impacted the

Company’s performance due to the fact that the Company could not adjust its selling price abruptly in

accordance with the ever-rising shrimp prices trend due to industry’s intense competition structure.

In 2010, the Company and its subsidiaries’ net profit was 52 Million Baht, a decrease of 81% from

2009.

Revenue

The Company and its subsidiaries posted total revenue of 5,592 Million Baht in 2010, an increase of

104 Million Baht or 2% compared to 2009. The major contribution to this increase was attributed from

development of various sales and marketing activities including marketing communications, channel

developments, and media advertising.

Expenses

Total cost of goods sold and expenses in 2010 were 5,439 Million Baht, an increase of 8% from the

previous year, due to the following important factors:

Cost of goods sold increased by 7% or 91% of total sales compared to 86% in 2009 due to the

higher raw material prices.

Selling and administrative expenses increased by 12%. The major items are: 18% increase

in human resource management expenses and 107% increase in selling, branding, and advertising

activities expenses.

The total interest expense rose by 19% in 2010 because the Company required more funding

for investments and operations coupled with the higher interest rate compared to 2009.


Financial Status Assets

The Company and its subsidiaries’ total assets as of 31 December 2010 were 2,908 Million Baht, an

increase of 481 Million Baht or 20% from the previous year. This increase is largely due to:

Cash and cash equivalents increased by 144 Million Baht due to more sales for the fiscal year.

Property, plant and equipment increased by 288 Million Baht due to the investment in new and

existing plants for higher production capacity, renovation of plants, and purchase of new machines

and equipments.

Liabilities

The Company and its subsidiaries’ total liabilities as of 31 December 2010 were 1,018 Million Baht,

an increase of 593 Million Baht or 139% from the previous year. The major cause of this increase is due to the

392 Million Baht increase in short-term loans and 176 Million Baht increase in long-term loans from financial

institutions. The higher funding requirements arose from the Company and its subsidiaries’ needs for investment

in property, plant, and equipment to increase production capacity as well as renovate the existing plants.

Shareholders’ Equity

The total shareholders’ equity for the Company and its subsidiaries as of 31 December 2010 was

1,890 Million Baht, a decrease of 112 Million Baht or 5%, which was largely due to the decrease in net profit.

Liquidity

Total cash and cash equivalents for the Company and its subsidiaries increased by 144 Million Baht.

In 2010, net operating cashflow was 284 Million baht, while net cashflow from investing activities was 444

Million Baht. 448 Million Baht was invested in acquisition of property, plant, and equipment to expand the

production capacities and renovation of existing facilities; 4 Million Baht came from the proceed of the sales of

assets. Net cashflow from financing activities was 303 Million Baht: 382 Million Baht from short-term loans,

163 Million Baht from long-term loans, and a dividend payout of 241 Million Baht.

The current ratio decreased from 2.68 in 2009 to 1.36 in 2010 mainly because of the lower overall

net profit and the increase in funding requirements for both investing and operating activities.

Conclusion

The Company and its subsidiaries’ net profit for the year 2010 was 52 Million Baht, which was

largely attributed to the significant increase in major raw material prices, and ultimately pushing the total cost

of goods sold percentage of sales up by substantial proportion.


Report of Audit Committee to the Shareholders

Board of Directors has appointed 3 independent directors whose background expertise are in accounting and business management to be the Audit Committee with Mr.Sathaporn Kotheeranurak presides as the Chairman, Mrs.Boonperm Jiamtiranat and Mr.Pisanu Rienmahasarn as the members. Every director is well qualified according to notification of Stock Exchange of Thailand Re: Qualification and Operation Scope of the Audit Committee, as well as the qualification enlisted in charter of the Audit Committee in conjunction with the procedure and practice guideline of the Audit Committee which suggested by the Stock Exchange of Thailand. Whereas Mrs.Suree Nuntatikul, internal audit manager, acts as the secretary of the Audit Committee. The Audit Committee has performed the duties under scope of work, duties and responsibilities independently without limitation of information access including good cooperation with the executives and staff. The Audit Committee’s scope of work covers corporate governance, internal control, risk management and managerial transparency for the best benefits of all stakeholders. In 2010, there were 5 meetings of the Audit Committee, 4 times joint meeting with the external auditor, internal audit unit, and the management team including 1 time annual meeting. Besides, 2 times meeting without the management. The Audit Committee attended all 3 persons for all the meeting. The summary of the meeting has summarized and submitted to the Board of Director’s meeting that can be summarized as follow:

1. Financial Statement Review

There were meeting with the external auditor, the executives, and internal auditor to considered financial statement, accounting policy, changes in accounting policy, observation in financial statement review, discuss with the executives before presented to the Board of Directors for approval. Besides, there were 2 times meeting without the management to consult and seek advices from the external auditor in the order to get an open idea which will be benefits to the company.

2. Internal Control System Review

To consider efficiency and effectiveness of internal control system through internal audit report quarterly. The report covered important function such as financial, accounting and other business management. In addition, the Audit Committee also considered and reviewed the report of internal control of ICT system from the external auditor. The result of internal control system report was not found any significant weakness.

The Audit committee viewed that the internal control system is adequate, appropriate, and efficient according to the composition of internal control system.


3. Operation Review to be in line with the laws and regulations

Operation review to ensure compliance with rules and notification of the Stock Exchange of Thailand and other business laws through the quarterly report from laws and regulations monitoring working committee submitted to the Risk Management Committee. Besides, internal audit department had regularly done the audit sampling and including fraud inspection or illegitimacy that relating with the Securities and Exchange Act section 89/25. The Audit Committee had opinion that the Company has complied properly and adequacy with the laws and regulations.

4. Connected and Conflict of Interest Transactions Review

The Audit Committee has considered reasonability of connected and/or conflict of interest transactions by considering the transaction’s condition, impact, and benefit to the Company. The Audit Committee had consult with the external auditor about correctness, adequacy for information disclosure in annual report which conformed with the guidelines from the Stock Exchange of Thailand. The Audit Committee had opinion that connected and conflict of interest transactions were done in transparency and fairness by concerning the Company’s benefit, as well as adequate, correct and complete disclosure of information. 5. Internal Audit System Review

Mission, Work scope, Duty and Responsibility have reviewed and revised to be consistent with international professional standard. Approval of internal audit plan and risk- based audit plan have considered based on guideline of The Committee of Sponsoring Organizations of the Treadway Commission (COSO), The Audit Committee also evaluated the internal audit unit’s performance by considering Key Performance Indicators. The Audit Committee concludes that the Company’s internal audit system is independent, sufficient and efficient in conjunction with the set up objectives with the continuous development in audit quality according to international professional standard.

6. Risk Management System Review

Follow up the risk management policy as well as review the Risk Management Committee’s minute of meeting. In 2010, the Company has appointed the risk management department to follow up efficiency of risk management.

The Audit Committee viewed that risk management system is appropriate and suitable.


7. Selection of Certified Public Accountants and the auditing fee for year 2011

Selection of certified public accountants, The Company considered the reliability, acceptance from international, independence, quality of work and services, and remuneration before submit to the Board of Directors meeting and Shareholders’ meeting for the year 2011 The Audit committee recommends the Board of Directors to appoint Mrs.Bongkot Amsageam Certified Public Accountant, Registration No. 3684 or Miss Orawan Siriratanawong Certified Public Accountant, Registration No. 3757 or Mr.Thanit Osathalert Certified Public Accountant, Registration No. 5155 from KPMG Phoomchai Audit Ltd. to be the Company’s auditor for year 2011.

8. Performance Assessment of the Audit Committee for the year 2010

This is to ensure that performance is completely done as specified in the charter of the Audit Committee and compled with guideline from the Stock Exchange of Thailand. Overall assessment result is “Very Good” and also submitted to the Board of Directors. In conclusion, the Audit Committee has an opinion that the Board of Directors and the Executives have a solid commitment to achieve the Company’s goal by given first priority to business conduct, be transparent, Internal audit and risk management system that appropriate and suitable with continuously development their work quality.

(Mr.Sathaporn Kotheeranurak) (Mrs.Boonperm Jiamtiranat) (Mr.Pisanu Rienmahasarn) Chairman of the Audit Committee Member of the Audit Committee Member of the Audit Committee


Report of the Board of Directors’ Responsibilities for Financial Reporting

The Board of Directors of Surapon Foods Public Company Limited is responsible for the financial

statement of the Company which has been prepared in according with the Generally-accepted Accounting

Standards in Thailand. The policies pursued are deemed appropriate and applied consistently with adequate

disclosure of important information in the notes to the financial statements.

The Board has appointed the Audit Committee consisted of independent directors to provide effective

oversight of finances and the internal control system to ensure that accounting records are accurate, complete

and timely to prevent fraud and materially irregular operation. The views of the Audit Committee are reported

in the Audit Committee’s report in the Company’s annual report.

The Board assessed sufficiency of internal control system and believes that the internal control system

of the Company presenting the financial status, operational results and cash flow accurately in significant matter

and satisfactory level as well as transparency. The Board creates confidence on financial statements as of

December 31, 2010.

(Mr. Kosol Chantikul) (Mr. Surapon Vongvadhanaroj)

Chairman Chief Executive Officer


Audit Fee

The Company’s auditor in 2010 named Miss Bongkot Amsageam CPA No. 3684 of KPMG

Phoomchai Audit Ltd.

The Company paid off remunerations to the Auditor as follows:-

Audit Fee

No. Company Audit fee (Baht)

1 Surapon Foods Public Company Limited 1,147,000

2 Surat Seafoods Co., Ltd. 495,000

3 Surapon Aquaculture Co., Ltd 55,000

4 Chantaburi Marine Farm Co., Ltd. 55,000

5 Punpin Co., Ltd. 70,000

6 Surapon Nichirei Foods Co., Ltd. 813,000

7 Champion Foods Co., Ltd. 80,000

Total Audit Fee 2,715,000

Non Audit Fee

Company Non-Audit Service Name of Company Service Non-Audit Fee

Interim Payment Future Payment

- None - - None - - None - - 0 - - 0 -

Total Non-Audit Fee - 0 - - 0 -


Audit Report and Financial Statements


Balance sheets Surapon Foods Public Company Limited and its Subsidiaries

As at 31 December 2010 and 2009

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


Balance sheets

Surapon Foods Public Company Limited and its Subsidiaries

As at 31 December 2010 and 2009



Statements of income


For the years ended 31 December 2010 and 2009



Sura

pon

Food

s Pub

lic C

ompa

ny L

imite

d an

d its

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sidi

arie

sSt

atem

ents

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hang

es in

equ

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r th

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ars e

nded

31

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embe

r 20

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nd 2

009

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ition

alU

nrea

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paid

-in c

apita

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tal e

quity

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mR

eval

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nat

tribu

tabl

e to

and

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on o

rdin

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ty h

olde

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ote

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l sh

ares

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sset

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gal r

eser

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iate

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rest

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tal e

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ance

at

1 Ja

nuar

y 20

0926

9,99

9,00

027

0,00

0,00

029

1,76

8,20

227

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477,

844,

214

1,33

6,61

1,41

648

3,39

0,63

21,

820,

002,

048

Prof

it fo

r the

yea

r-

--

-27

1,30

6,00

227

1,30

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294

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366,

231,

041

Div

iden

ds30

--

--

(80,

999,

100)

(8

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9,10

0)

-

(80,

999,

100)

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f sub

sidi

ary

paid

to m

inor

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tere

sts

--

--

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(103

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)

(1

03,1

53,9

00)

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alan

ce a

t 31

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0926

9,99

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0,00

029

1,76

8,20

227

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668,

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116

1,52

6,91

8,31

8

47

5,16

1,77

1

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2,08

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9

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ance

at

1 Ja

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1026

9,99

9,00

027

0,00

0,00

029

1,76

8,20

227

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668,

151,

116

1,52

6,91

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8

47

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2,08

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9

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ear

--

--

52,0

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64

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11

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vest

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ts b

y m

inor

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tere

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--

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12

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--

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)

(1

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f sub

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paid

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--

--

--

(90,

278,

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8,84

9)

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alan

ce a

t 31

Dec

embe

r 20

1026

9,99

9,00

027

0,00

0,00

029

1,76

8,20

227

,000

,000

569,

004,

906

1,42

7,77

2,10

8

46

1,96

6,05

6

1,88

9,73

8,16

4

Ret

aine

d ea

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gs

(in B

aht)

Con

solid

ated

fina

ncia

l sta

tem

ents

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acc

ompa

nyin

g no

tes a

re a

n in

tegr

al p

art o

f the

se fi

nanc

ial s

tate

men

ts.

5

Stat

emen

ts of

cha

nges

in e

quity

Sura

pon

Food

s Pu

blic C

ompa

ny L

imite

d an

d its

Sub

sidia

ries

For

the

year

s en

ded

31 D

ecem

ber

2010

and

200

9

The

acco

mpa

nyin

g no

tes

are

an in

tegr

al p

art o

f th

ese

finan

cial s

tatem

ents.


Stat

emen

ts of

cha

nges

in e

quity

Sura

pon

Food

s Pu

blic C

ompa

ny L

imite

d an

d its

Sub

sidia

ries

For

the

year

s en

ded

31 D

ecem

ber

2010

and

200

9

The

acco

mpa

nyin

g no

tes

are

an in

tegr

al p

art o

f th

ese

finan

cial s

tatem

ents.

Th

e ac

com

pany

ing

notes

are

an in

tegr

al p

art o

f th

ese

finan

cial s

tatem

ents.





Statements of cash flows


Notes to the Financial Statements




Notes to the Financial Statements Surapon Foods Public Company Limited and its Subsidiaries



59,093


5,791


48,432


270,000 270,000 270,000 270,000


1,934,739

251,806

GMP Certificate

HACCP Certificate

BRC Certificate

Traceability System from Farm to Table

ISO 22000

ISO/IEC 17025 : 2005

Certificate of Compliance for Japan

Green Ticket for U.S.A.

Superbrands Thailand 2005

รายงานประจำปี

2553 Annual Report 2010



247 Moo 1 Theparak Rd., Theparak, Muang, Samutprakarn 10270, Thailand Tel : (662) 385 3038-54 Fax : (662) 385 3179

website : www.surapon.com E-mail : [email protected]

247 หมู่ที่ 1 ถนนเทพารักษ์ ตำบลเทพารักษ์ อำเภอเมือง จังหวัดสมุทรปราการ 10270 โทร : (662) 385 3038-54 แฟกซ์ : (662) 385 3179

ISBN : 978-974-401-569-3 รายงานประจำปี 2553

Annual Report 2010 / บริษัท สุรพลฟู้ดส์ จำกัด (มหาชน)

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