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DISCUSSION AND ANALYSIS OF OPERATING RESULTS AND FINANCIAL POSITION 2007

Analysis of Overall Performance

The distribution business of the plastic resins, plastic, and petrochemical related products need relatively

high working capital. The key success factors of this business depend on the inventory management, the

logistic systems that meet the clients’ needs in time, cost of capital, receivables management and sales

revenue. Due to this business has low gross profit margin, to build up more sales revenue will result in

good net profit.

Sales revenue

The Company had total sales revenue of Baht 3,456 million in 2007, increased Baht 78 million from last

year or equivalent to 2.30%. The main reason of this rise was the growth of the relevant industries such as

packaging and automotive sectors, etc.

Another reason was due to the marketing strategy of focusing on the specialty products, which have high

growth, better gross profit margin and less price sensitivity compared to the commodity products.

Financial Operating Results

In 2007, total cost of sales and operating expenses were Baht 3,314 million, or 1.11% increased from last

year which was in line with the growth of sales revenue. Costs of goods sold slightly decreased from

94.00% to 93.06% was mainly due to the increasing sales proportion of specialty products.

GC incurred Baht 98 million in selling and administrative expenses, a decrease of 4.15% from last year.

Key factors contributing to this saving was the better control of both bad debts and doubtful debts as well

as obsolete inventories, and as a result the Allowance for doubtful accounts was maintained in 2007

whereas there was a reversal of Allowance for diminution in value of inventory amounting to Baht 1.7

million as the slow moving inventories had been reduced. However, in 2007 there was an increase in

personnel expenses due to both annual salary adjustments and the additional number of staff as per business

expansion.

Interest expenses were Baht 15 million, or 24.76% lower than last year’s. This was due to the downward

trend of interest rate in 2007 coupled with the prepayment of principal of long-term loan amounting to Baht

40 million during 2007 result in a reduction of interest burden for the year 2007.

As a result of the discussed factors, our net income rose to Baht 108 million in 2007 versus Baht 67 million

in 2006 or equivalent to 62.80% increased.

Comparison of Financial Position (FY2007/2006)

Assets: As of 31 December 2007, GC recorded total assets of Baht 946 million, representing an increase of

Baht 94 million from last year. This was due to the rise in both trade accounts receivable and inventories.

As of 31 December 2007 trade accounts receivable showed Baht 554 million, an increase of Baht 72

million or 15.01% increased from last year. This was mainly due to the expansion of market into specialty

products and extended credit term to customers especially in commodity group who switched from general

retail products to industrial products whereby longer credit term is required. However, we have also added

higher margin for this segment.

While inventories showed Baht 212 million as of 31 December 2007, an increase of Baht 28 million or

15.05% increased from last year. Due to the cut down of import duty from 8.75% to 5.00% in 2007, the

inventory for imported goods was maintained at low level during the last quarter of 2006. In addition,

some commodity products were short of supply in 2007, causing the company to maintain high level of

inventory for this product group for our main customers.

Liabilities : As of 31 December 2007, GC recorded total liabilities of Baht 579 million, an increase of Baht

44 million from the previous year. This was due to the increase of short-term loan resulting from the rise in

both trade accounts receivable and inventories as mentioned above as well as the prepayment of long-term

loan. During 2007, GC made prepayment of principal of long-term loan amounting to Baht 40 million to

cut down interest burden. Therefore, the ending 2007 balance of long-term loan was Baht 20 million

versus 77 million as of 2006 or equivalent to 74.13% decreased. This was also caused the Debts to Equity

Ratio reduced to 1.58 times compared to 1.70 times of 2006.

Sources of Funds : The structure of GC’s funds in 2007 was not much different from those of 2006 as they

were in term of short-term liabilities. The major liabilities were from short-term loans from financial

institutions, bank overdrafts, trade accounts payable, and long-term loan.

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Shareholders’ Equity: As of 31 December 2007, the portion of shareholders’ equity amounted to Baht

366 million, an increase of Baht 50 million, or 15.98%, due to a rise in net profit from operations in fiscal

year 2007.

Liquidity: In 2007 GC had better liquidity. Since after listed, GC had good fund from the IPO proceeds at

the end of 2005 and the working capital from deposits redemption at the beginning of 2006. This caused a

better working capital management to reduce the cost of fund and generated more profit.

In 2007 GC had a current ratio at 1.37 times compared to 1.46 times in 2006 which had been increasing

since 2002 at 0.86 time. The key factor was the increase in both trade accounts receivable and inventories

reflected from sales growth.