management & shareholders - Thoresen Thai Agencies PCL

Thoresen Thai AgenciesPublic Company LimitedCONTENTSFinancial Highlights .......................................................................................................... 2Message from the Chairman ............................................................................................. 3Audit Committee Report ................................................................................................... 4Board of Directors ............................................................................................................ 5Organisation Chart ............................................................................................................ 6Nature of Business ............................................................................................................ 7Market Situation .............................................................................................................. 13Statement of the Board of Directors’ Responsibilities for the Financial Statements .... 18Consolidated and Company Financial Statements .......................................................... 19Income Structure ............................................................................................................. 73Risk Factors ..................................................................................................................... 73Management & Shareholders .......................................................................................... 74Corporate Governance ..................................................................................................... 81Related Party Transactions .............................................................................................. 83Internal Control ............................................................................................................... 84Inside Information Control ............................................................................................. 84Management Discussion & Analysis ............................................................................... 85Company Investments ..................................................................................................... 87On the CoverVessel ...........Thor PilotDWT ............ 33,400Built ............ 19861

Thoresen Thai AgenciesPublic Company LimitedFINANCIAL HIGHLIGHTSENDED 30 SEPTEMBER (Thousand Baht)FINANCIAL STATUS2003 2002 2001• Total Revenues 5,073,332 3,715,325 3,764,310• Total Expenses 4,070,739 3,302,386 3,434,797• Net Profit (Loss) 1,002,800 410,393 330,975† Gain(Loss) on Exchange Rate 224,173 59,994 (35,693)• Total Assets 5,763,588 3,842,879 3,099,358• Total Liabilities 4,072,440 3,166,317 2,827,442• Total Shareholders’ Equity 1,691,149 676,562 271,916• Share Capital : Registered 770,000 770,000 770,000Paid up 549,183 426,404 425,092OPERATING PERFORMANCE• Number of Vessels 33 25 25• Average DWT as of 30 September 22,954 20,516 17,496• Vessel Days 9,923 8,852 9,059• TC Rate/Day (USD) 5,650 4,329 4,288• Net Profit (Loss) 778,627 350,399 366,668(Excluding gain/loss on exchange rate)† Shipping Operations 732,415 265,937 339,955† Shipping Services 116,020 144,921 97,692† Holding Activities (69,808) (60,459) (70,979)(including interest expenses and general administrative expenses)• Net Cash Flow from Operating Activities 929,877 675,157 655,379(After interest payments)• Average Accounts Payable Period (days) 53 59 53FINANCIAL RATIO• Par Value (Baht) 1 10 10• Book Value (Baht) 3.28 15.74 6.22• Number of Shares 549,183,360 42,640,457 42,509,225• Earnings Per Share * 1.52 8.24 8.63• Net Cash Flow Per Share 0.55 15.87 15.42(from operating activities/after interest payment)• Dividend Per Share (Baht) 0.50 2.50 0• Return on Shareholders’ Equity (%) * 84.82 73.89 361.56• Return on Total Assets (%) * 20.88 10.09 12.40• Net profit Margin (%) * 16.06 9.43 9.74*Excluding Gain/Loss on Exchange Rate2

Thoresen Thai AgenciesPublic Company LimitedAUDIT COMMITTEE REPORTThe Audit Committee of Thoresen Thai Agencies Public Company Limited was appointed by the Board ofDirectors to examine all matters relating to the financial status of the Company, and its internal and external audits.The Committee pursues and promotes good corporate governance by actively creating awareness and providingadvice to management on sound risk management and internal control practices.The Audit Committee comprises of three independent directors as follows:1. M.R. Chandram S. Chandratat Chairman of the Audit Committee2. Mr. Sompong Thanasophon Audit Committee Member3. Vice Admiral Kittichai Senanarong Audit Committee MemberThe Audit Committee has major roles and responsibilities as follows:• Review the reliability of financial reports and the transparency and accuracy of the disclosure of connectedtransactions or transactions which may have the conflict of interest.• Review the internal control systems and provide for more effective internal audit systems.• Review the compliance with rules and regulations of the Stock Exchange of Thailand, commitments withother parties, laws and relevant regulations.• Consider the appropriate external auditor and audit fee• Perform any other duties assigned by the Board of DirectorsDuring the financial year ended on 30 September 2003, the Audit Committee convened seven meetings toreview accounting systems, internal control systems and quarterly and annually financial reports beforeproposing them to the Board of Directors’ meeting and for publicity. The review of all matters is based onindependent consideration by discussion and exchange ideas with external auditors, related management andinternal auditors.In conclusion, the Audit Committee is of the opinion that the Company’s operations during previous year hadreasonable and sufficient internal control systems and the financial report was prepared in accordance withthe generally accepted accounting principles and the Company has complied with relevant laws and regulations.For the financial year ended on 30 September 2004, the Audit Committee has recommended to the Boardof Directors that PricewaterhouseCoopers ABAS Limited be re-appointed as the Company’s auditors due to thefact that its reputation and audit standards are widely acceptable. The appointment of the audit firm would befurther proposed to the Shareholders for approval at the Annual Ordinary General Meeting of the Shareholders.(M.R. Chandram S. Chandratat)Chairman of the Audit Committee4

Thoresen Thai AgenciesPublic Company LimitedBOARD OF DIRECTORSM.R. Chandram S. ChandratatChairmanMr. Arne TeigenManaging DirectorMr. Sompong ThanasophonIndependent DirectorVice Admiral Kittichai SenanarongIndependent DirectorMr. Sathien TejapaibulDirectorMr. Bjorn OstromDirectorDr. Teera AshakulDirectorMr. Lance Karl DepewDirectorMr. Frode TeigenExecutive DirectorMr. Ole TeigenExecutive DirectorMr. Opart PetchmuneeDirector5

Thoresen Thai AgenciesPublic Company LimitedNATURE OF BUSINESSSHIPPING OPERATIONSThoresen Thai Agencies Public Company Limited owns and operates, through separate subsidiary companies,a fleet of 33 general cargo vessels and bulk carriers which, as of 30 September 2003, consisted of thefollowing vessels:The vessels are usually traded until they reach 27 to 32 years of age, and the average age of Thoresen’s fleetcompares against a world average of 22 years for general cargo vessels (10-30,000 DWT) and 20 years forbulk carriers (20-40,000 DWT).Vessel Average Year of AverageNo Design DWT Built Age1 SD-14 15,240 1977 26.36 Santa Fe 20,868 1977 26.34 Multi Purpose 17,279 1983 20.77 TD-15A 16,229 1986 17.22 Pasat 18,173 1988 15.620 Tween-Deckers 17,976 1982 20.93 Wismar (Box) 24,126 1985 17.94 Con-Bulkers (Box) 25,319 1983 20.23 Bulk 34,653 1985 18.11 Bulk (Box) 36,663 1985 17.82 Bulk 41,850 1985 18.113 Bulk Carriers 30,613 1985 18.733 Fleet Average 22,954 1983 20.0The Company took delivery of four additional general cargo vessels/bulk carriers in the first quarter of the2003/2004 financial year, with an average DWT and age of 26,240 and 16.4 years, bringing the fleet up to 37 vesselsas of 31 December 2003.The Thoresen fleet consists of tween-deckers, and open hatch box shaped and conventional bulk carriers,of between 15,000 and 42,000 DWT. Although such vessels are often inter-changeable, and influenced bythe same overall market forces, each design does have its own advantages.Typical Thoresen Tween-DeckerTypical Bulk CarrierLiner ModeBulker ModeConventionalBulk CarrierOpen HatchBulk CarrierCargo SpaceFuel Oils/Fresh Water/Ballast WaterOther Non-Cargo SpaceCrew Quarters/Engine Room7

Thoresen Thai AgenciesPublic Company LimitedNATURE OF BUSINESSSHIPPING OPERATIONSAlthough a tween-decker is almost identical to a conventional bulk carrier when trading in “bulker mode”,the tween-decker is more versatile in that one more loading deck is made available when trading in “liner mode”.Such addtional loading deck can be very advantageous especially if traded in liner services, as a result oftier limitations (machineries can not be put on top of each other / limitation on how high certain cargoes canbe stacked), and flexibility to carry more parcel cargoes (twice as many cargo compartments when trading in“liner mode”). The conventional bulk carrier will however be more efficient if one carries only bulk cargoes.The open hatch box shaped bulk carrier has much wider hatch openings than a conventional bulk carrier, andits cargo holds are fully “box” shaped, a design which makes cargo operations much more efficient whencarrying unitised cargoes, such as steel and forest products. The conventional bulk carries will however stillbe more efficient when carrying bulk cargoes, especially bulk cargoes which can easily shift (low frictioncargoes such as grain).Thoresen is predominantly a liner operator, and the mix of vessels available, both in terms of design and size,gives us great flexibility with regard to cargoes which can be carried (design), and quantities traded on each ofthe routes (size). The vessels are however at the same time versatile enough to also be traded in the generaltramp market when need be.The Company currently offers liner services between S.E. Asia into the Arabian Gulf, Red Sea, Mediterranean,and to various destinations in East Africa, with a large share of return cargoes being contract based. Includingreturn voyages, such liner services constituted 60% of available vessel days during the 2002/03 financial year, whilstthe remaining 40% constituted of various tramp services where the vessels are operated on a global basis, withno fixed schedules, and ususally fixed with large international trading companies.The liner services tend to deliver more stability in respect of earnings, as compared to the general tramp market,and it is Thoresen’s policy to work with the shippers on a long term basis, and to gradually expand its liner tradesbased on customer demand.8

Thoresen Thai AgenciesPublic Company LimitedNATURE OF BUSINESSSHIPPING OPERATIONSThere are substantial cargo flows on Thoresen’s trade routes, with S.E. Asia being a large exporter of agriculturaland forest products, and with the Arabian Gulf and the Red sea ports being large exporters of fertlisers. Duringthe 2002/2003 financial year, Thoresen carried a total of 4.8 million tons of cargoes, an increase of 37% over lastyear,including 0.7 million tons carried on chartered in tonnage due to increased clients’ demand, of which 74%consisted of fertilisers, agricultural, and forest products.Trading Patterns2002/2003 Financial YearCargoes Carried by Thoresen2002/2003 Financial YearLiner ServiceVessels call regularly at pre-announced ports. Shippers pay a fixed freight rate per revenue ton of cargo, whilst vessel owners pay for all voyagerelated expenses, including loading and discharge expenses, fuel oils, port expenses, and agency fees. Number, and variety of cargoes tend to be high.Tramp - Voyage CharterVessel is employed from port A to port B. Charterer pays a fixed amount per ton of cargo carried. Vessel owner pays for all voyage related expenses.Tramp - Time CharterVessel is employed from port A to port B, or from region A to region B. Charterer pays a fixed amount per day for the use of vessel, covers allvoyage related expenses, and instructs the captain on cargo to be loaded.9

Thoresen Thai AgenciesPublic Company LimitedNATURE OF BUSINESSSHIPPING SERVICES• Ship AgenciesThoresen is the largest ship agency group in Thailand, handling over2,000 vessel calls per year. The services offered include arrangingfor port entry formalities, berthing, discharging and loading, bookingcargoes, supplying fuel, water and stores, vessel repairs and crewchanges, etc.Ship agency services are undertaken directly by ISS ThoresenAgencies Ltd., company which is formally being marketed aspart of the Inchcape International Agency Network, the world’slargest ship agency group, and by Gulf Agency Company(Thailand ) Ltd., which is a local joint venture between Thoresen(51%) and the Gulf Agency Group (49%), the world’s second largestship agency group.• P & I Club RepresentationThai P&I Services International Ltd., which is 90% owned byThoresen, acts as the local correspondents in Thailand for P & IClubs as well Hull and Machinery Insurance companies.The services offered include arranging for cargo damage surveys,collision investigations, stowaway repatriation, dispute resolutionand legal representation.• StevedoringChidlom Transport & Services Co., Ltd., which is 100% owned byThoresen, undertakes the loading and discharging of over two milliontons of cargo per year. The company also co-ordinates the tallying,and packing and transporting of cargoes to/from ships and receivers.Chidlom Marine Services & Supplies Ltd., also 100% owned byThoresen, provides cargo lashing materials, including consumableitems such as dunnage and steel wires, to its clients. The companyalso represents various Chinese producers of lashing materials.10

Thoresen Thai AgenciesPublic Company LimitedNATURE OF BUSINESSSHIPPING SERVICES• Ship BrokerageFearnleys (Thailand) Ltd., is a local joint venture between Thoresen(51%) and Fearnleys A/S of Norway (49%), one of the world’slargest ship brokerage houses. The company fulfills the role of a brokerbetween cargo interests and ship owners, and has become thelargest ship broking company in Thailand.The company also acquired 100% of PT. Fearnleys Indonesia in2002, thereby expanding and strengthening its marketing position.• Ship Maintenance and RepairsT.S.C. Maritime Ltd., which is 100% owned by Thoresen, focuseson wet and dry blasting, painting, and steel work onboard vessels,combined with reconditioning and overhaul of various marinemachinery. The majority of work is currently performed onThoresen-owned vessels; the objective is for the company togradually expand its third party client base.• Offshore Related ServicesMermaid Maritime performs a wide range of maritime services,mainly geared towards local and international clients within themerchant shipping and offshore oil & gas industries. The companyis accredited and authorized by all the major classification societiesand international maritime organizations to provide:♦ Offshore service & support vessels♦ Diving and ROV services♦ Non Destructive testing♦ Safety Equipment service & supply♦ Other specialist servicesMermaid Maritime was a pioneer in offering such services inThailand, and has firmly established itself as the local leader withinits field of operations. In recent years the company has alsoexpanded overseas and now executes large contracts in other SouthEast Asian and Middle Eastern countries.Mermaid Maritime was first established in 1982 and is a joint venturebetween TTA and a group of local and foreign professionals.11

Thoresen Thai AgenciesPublic Company LimitedNATURE OF BUSINESSSHIPPING SERVICES• Marine CommunicationHorizon Mobile Communications Co., Ltd., a company in whichThoresen holds 33% of the shares, is a specialised provider of mobilesatellite communications and packaged IT solutions, including♦♦♦♦♦Satellite communication hardwareInmarsat and Iridium airtime (appointed Iridium servicepartner in March 2002)HMCmail : software and HUB software for compression ofdataHMCforms : software of handling various document beingsent to and from vesselsDistributor of other softwares, including electronic charting,weather routing and vessel tracking systems.The company is represented in Thailand, Singapore, Hong Kong,Norway and Australia.• Port OperationsSharjah Ports Services, which is a joint venture between SharjahPorts Authority in the United Arab Emirates (51%) and Thoresen(49%), has a concession covering all stevedoring, cargo handling,cargo storage, cargo delivery, marketing and accounting for allgeneral cargo, ro-ro (roll on, roll of) and reefer (refrigerated)break-bulk cargoes for Port Khalid, Hamrijah and Sharjah Creek ports,for a period of 10 years, with options for renewals.The company came into existence in June 2002, as part of a portprivatisation programme. All existing employees of the port, about500 in total, and all existing equipment, were taken over by the newcompany.Port Khalid is the largest of the three ports covered under thecontract and is located some 16km south of Dubai. Together, the threeports currently handle in excess of 1 million tonnes of cargo per year,with significant available capacity for increases, and generatedDirhams 36 million (Baht 407 million) in turnover in 2003.12

Thoresen Thai AgenciesPublic Company LimitedMARKET SITUATIONSHIPPING OPERATIONSThe world fleet of bulk and general cargo carriers over 10,000 DWT consisted of 6,994 vessels as of October2003, with the smaller vessels constituting the largest segment in terms of number of vessels. The number ofvessels in each segment, and the main cargoes carried by such vessels, can be summarised as follows:Ship Type Size No. of Ships Representative CargoesCapesize + 80,000 DWT 616 Iron Ore/Coal/Grain/SaltPanamax 60 – 80,000 DWT 1,071 Iron Ore/Coal/Grain/Bauxite/PhosphateHandymax 40 – 60,000 DWT 1,188 Grain/Coal/Steel Products/Cement/Potash/Minor BulksHandysize 25 – 40,000 DWT 1,652 Minor Bulks*/Steel ProductsHandysize 10 – 25,000 DWT 1,163 Minor Bulks*/Steel ProductsGeneral Cargo 10 – 25,000 DWT 1,304 Minor Bulks/General Cargoes* Minor Bulks include rice, sugar, gypsum, fertilisers, forest products, scrap, minerals, etc.Source : Fairplay World Shipping Encyclopaedia as at October 2003.As a general rule, due to the economy of scale, the bigger the cargo parcels, and the faster the loading anddischarging operations, the bigger the vessel transporting the cargo would generate greater profit. The market willtherefore always seek to use larger vessels when the trade permits.However, there is a general limitation in the average ship size serving the different routes due to factors such asa) port restrictions: many ports/river ports have draft limitations, b) infrastructure: less advanced portinfrastructure and/or inland infrastructure make it impossible to quickly bring large quantities of cargoes to/fromthe port areas, c) trade limitations: many traders lack the financial strength to deal in large volumes/limiteddemand for individual cargoes at various destinations, and d) intra-area trades. The economy of scale onlyapplies when vessels are at sea, and the shorter the distance the less time will be spent at sea. As such, it is ouropinion that the smaller vessels will remain very much in demand, and that the larger vessels will notsubstantially encroach into their current market.13

Thoresen Thai AgenciesPublic Company LimitedMARKET SITUATIONSHIPPING OPERATIONSAs can be seen from the table below, the average TC rates achieved by the Thoresen fleet did rise quitesubstantially over the previous year. The higher rates were the direct result of an improved shipping market ingeneral, combined with an improved fleet composition resulting from investments made over the previous 18 months.Thoresen Freight Rates(USD/Day-TC basis)Thoresen Vessel Size(Average DWT-Daily Average)Source: Thoresen/Average per Year/Based on 365 vessel days per yearSource: Thoresen/1995-2003Notes:TC IncomeTC RateDWTTime Charter Income: arrived at by deducting all voyage related expenses, such as for loading and discharging, port expenses,agency fees, fuel, and canal fees, from gross freight.Time Charter Rate: arrived at by dividing TC Income with vessel days required to earn such income. Expressed in USD per vesselper day.Dead Weight Tons: total carrying capacity of vessel, including cargo, fuel oils, fresh water, spares and stores etc.The dry bulk market did show a remarkable, and substantial, upswing toward the end of our 2003 financial year,an improvement which was largely due to very strong economic developments in Asia, especially for the steelindustry and in particular in China. Asia is now taking an increasingly large share of bulk imports, and it is estimatedthat around 65% of all dry bulk imports are now destined for Asia.Although the Company did record substantially higher freight rates in the 2003 financial year, as compared to theprevious year, the overall freight market, for similar type and size vessels, did record even higher rates, especiallytoward the end of the period. Thoresen is primarily a liner operator (60% of fleet capacity, measured in vessel days,were utilised in liner trades in the 2002/03 financial year), and, although such liner services tend to deliver morestability in respect of earnings, it usually takes three to four months to fully implement rate changes. As such, itwould be reasonable to expect further significant increases in Thoresen’s average TC rates over the comingquarters, even if one were to conclude that the overall freight market would record no further improvements.14

Thoresen Thai AgenciesPublic Company LimitedMARKET SITUATIONSHIPPING OPERATIONSThe overall world economic situation now looks somewhat more positive. This, combined with the continuedsolid economic growth recorded by most of the Asian economies, indicates that the overall demand for dry cargovessels will record healthy growth rates also in the coming period. With dry cargo vessels already being inshort supply, with only limited new capacity being delivered over the next three years, and where shipyards arealready virtually fully booked until early 2007, building mostly other types of vessels, such as tankers, containervessels, and LPG carriers, it would be reasonable to expect that freight rates will continue to rise, and remainat a relatively high level, in the coming periods.Demand/Supply IndicatorsTrade Volume (Million Tonnes) and % change year on yearFleet in Million DWT and % change year on yearCommodity 2001 % 2002 % 2003 % 2004 %Segment 2001 % 2002 % 2003 % 2004 %Iron Ore 454 1 474 4 515 9 561 9Coal 536 8 547 2 592 8 602 2Grains 263 -1 268 2 267 0 265 -1Other Major Bulks 81 -1 80 -1 80 0 81 1Minor Bulks 709 0 705 -1 721 2 738 2Capesize 92.6 4 92.6 0 94.4 2 100.9 7Panamax 72.3 10 74.4 3 74.9 1 75.6 1Handymax 49.5 9 52.2 5 54.1 4 57.5 6Handysize 75.4 -3 73.9 -2 72.5 -2 72.1 -1General Cargo 23.7 -7 20.5 -13 19.8 -3 18.9 -4Total Bulks 2,043 2 2,074 2 2,175 5 2,247 3Total Available 313.5 3 313.6 0 315.7 1 325.0 3Notes: General Cargo fleet 2004 based on same level of scrappings as Nov. 2003/Capesize/Panamax Fleets include ComboSource: Clarkson Research Studies, October 2003As can be seen from the table above, the supply of the smaller general cargo and bulk carriers has recordedsubstantial declines in the last few years as such segments have been subject to under investment by the shippingcommunity in terms of new-buildings since the late 1970’s.Over the last twenty years, very few general cargo vessels, and smaller bulk carriers, have been built, whilstthe bulk carrier new tonnage entering the market in the same period has been concentrated on the largerHandymax, Panamax and Capesize vessels. Due to the current age profile of the smaller general cargo andbulk carriers, combined with more stringent regulatory requirements, it is widely expected that the supply ofsuch vessels will continue to decline, at substantial rates, also in the coming periods.15

Thoresen Thai AgenciesPublic Company LimitedMARKET SITUATIONSHIPPING OPERATIONSNumber of Vessels Built/1970 to 2005Tweendeckers for 10,000-40,000 DWTBulkers for 10,000-40,000 DWTSource: Fairplay World Shipping Encyclopedia, October 2003The age profiles set out above indicate that the Thoresen target market has become dominated by over-age smallergeneral cargo and bulk carriers, many of which can be considered “poor quality” and with a limited remaininglifetime. As these vessels are taken off the market and scrapped, the available supply of vessels for shippers isreduced which should further harden TC rates.Although there has been a trend toward consolidation, the segment in which Thoresen operates is still veryfragmented, with the largest owners controlling a relatively small share of the overall market.Fleet Distribution by Owners/ ManagersGeneral Cargo & Bulk Carriers (15,000-45,000 DWT)Source: Fairplay World Shipping Encyclopedia, October 2003It is our opinion that such fragmentation will very much delay the required fleet renewal, as few owners have thefinancial strenght to build new and expensive vessels, in large numbers, thus reducing the risk of a suddenoversupply of new vessel entering the market.16

Thoresen Thai AgenciesPublic Company LimitedMARKET SITUATIONSHIPPING SERVICESThoresen has a long history in Thailand when it comes to providing services to the maritime industry. The Companystarted by providing various ship agency services as early as 1926, with a branch office formally opened in 1937,and has since expanded the services to also include stevedoring, port operations, ship brokerage, ship mainetnanceand repairs, maritime communication, and various offshore related activities.The service activities encompass a wide spectrum of services, and they are all related in that the customer baseis often one and the same. As such, Thoresen is in a position to meet most of the needs of its clients.Although there are also other companies providing similar services within most sectors, we feel that Thoresenhas a definite advantage over such competitors due to (a) high name recognition, (b) large market share withinmost sectors, (c) wide range of services offered, and the synergies achieved as a result, and (d) high qualityof services provided.The net contributions from the Company’s service activities, which have grown at a relatively high rate overthe years, did however record a decline for the current year, mainly as a result of lower contributions fromthe ship agencies activities, caused by most cruise vessels temporarily having cancelled cruises to and fromThailand during the year as a result of the SARS scare at the time. As the situation has now normalized, wedo expect that the contributions from service activities will again record healthy growth rates in the periodsto come.Net Profit from Shipping ServicesNote: Net Profit/Loss from Thoresen Thai Agencies Plc related to holding/ investment activities excluded.17

Thoresen Thai AgenciesPublic Company LimitedSTATEMENT OF THE BOARD OF DIRECTORSRESPONSIBILITIES FOR THE FINANCIAL STATEMENTSIn accordance with the policy on good corporate governance of listed companies as stipulated by the StockExchange of Thailand, the board of directors of listed companies shall present a statement on the responsibilitiesof the company’s directors for the audited financial statements in annual reports.The board of directors of Thoresen Thai Agencies Plc certified that the audited consolidated and companyfinancial statements were prepared in accordance with the standards of the Institute of Certified Accountantsand Auditors of Thailand as well as recognised accounting standards and that they presented the true andfair financial and operational status of the Company and its subsidiaries.(Mr. Arne Teigen)Managing Director(M.R. Chandram S. Chandratat)Chairman18

Thoresen Thai AgenciesPublic Company LimitedINCOME STRUCTUREIncome Business 2003 2002 2001Segment Income Percentage Income Percentage Income Percentage1. Freight Shipping 4,524.15 89.18 3,293.42 88.64 3,449.40 91.64Charges Operations2. Service Shipping 188.76 3.72 205.03 5.52 210.56 5.59Income Services3. Commission Shipping 46.15 0.91 48.49 1.31 41.43 1.10Income Services4. Share of Profit from Associates 47.11 0.93 42.38 1.14 17.06 0.455. Others 267.16 5.26 126.01 3.39 45.86 1.22Total 5,073.33 100 3,715.33 100.00 3,764.31 100.00* Names of 35 Shipping Companies are shown in the item of Company Investments(Million Baht)RISK FACTORSBesides the general economic situation and its effects on freight rates, the following factors represent risks to theCompany:a) Currency Exchange RiskThe Company’s loans are mainly in USD (USD 72.79 million, or 99.32 % of total loans ), and a depreciation ofthe Baht can result in significant exchange losses when such loans are translated into Baht at lower rates.Almost all of the Company’s earnings are USD based.b) Oil PricesThe Company’s vessels consume significant quantities of fuel and diesel oils, and in the 2002/2003financial year, such expenses amounted to 27.73 % of the total vessel operating expenses. Although theCompany seeks to compensate for higher oil prices by raising the freight rates quoted to its customers,there is a time lag, due to forward bookings and other marketing constraints, normally of around three to sixmonths, before such increased freight rates become effective.c) AccidentsVessels are movable assets, and accidents can lead to loss of income. Although the Company has takenout insurances against damage and/or loss of the property itself, there is no insurance in effect coveringloss of time/earnings. Between 2001 and 2003, an average of 0.2 % of vessel days available was lost due toaccidents involving groundings, collisions, machinery and structural damage, and fires.d) Shortage of Skilled PersonnelThe Company is dependent on the availability of skilled, and certified, officers and crew. As the Companyis continuously training and promoting existing personnel, there is currently no shortage of such personnel.e) Risk on Maintenance ExpensesThe company has a policy of acquiring second-hand vessels, and to upgrade such vessels after delivery.Subsequent maintenance expenses, consisting of regular repair and maintenance (Baht 465.96 million in2002/2003), and of drydocking expenses (Baht 64.5 million in 2002/2003), can however fluctuate, dependingon trading patterns and regulatory requirements.73

Thoresen Thai AgenciesPublic Company LimitedMANAGEMENT & SHAREHOLDERSMANAGEMENT STRUCTUREA) The Board of Directors1. M.R. Chandram S. Chandratat Chairman2. Mr. Arne Teigen Managing Director3. Mr. Sompong Thanasophon Independent Director4. Vice Admiral Kittichai Senanarong Independent Director5. Mr. Bjorn Ostrom Director6. Mr. Sathien Tejapaibul Director7. Dr. Teera Ashakul Director8. Mr. Lance Karl Depew Director9. Mr. Opart Petchmunee Director10. Mr. Frode Teigen Executive Director11. Mr. Ole Teigen Executive DirectorScope of Duties and Responsibilities of the Board of Directors1. To carry out activities in compliance with laws, the objectives of the company, the Articles ofAssociation and the resolutions of the shareholders.2. To determine the interim dividends to the shareholders.3. To appoint and remove company staffs. The board of directors may appoint any director or a group ofdirectors to act on their behalf.4. To consider and approve the rewards for employees or any persons who work for the Companytemporarily or permanently.Structure and Appointment of the Board of Directors1. The number of directors on the Board shall be no less than five, and no less than one-half ofthe total directors shall reside in Thailand.2. The directors shall be elected by the shareholders in general meeting according to the following rulesand procedures:(1) Every shareholder shall have one vote per share.(2) Every shareholder may use all his votes set forth in (1) to elect one or more directors and maynot however divide those votes in any proportion for any particular director.(3) Those who receive the highest respective votes shall be elected as directors, in order of theirrespective votes, in a number equal to the number of directors to be elected at such meeting. In thecase of a tie at lower place which would result in the number of directors greater than that permittedfor the time being, the presiding chairman shall have a casting vote.74

Thoresen Thai AgenciesPublic Company LimitedMANAGEMENT & SHAREHOLDERSMANAGEMENT STRUCTUREB) The Audit Committee1. M.R. Chandram S. Chandratat Chairman of the Audit Committee2. Mr. Sompong Thanasophon Member of the Audit Committee3. Vice Admiral Kittichai Senanarong Member of the Audit CommitteeScope of Duties and Responsibilities of the Audit Committee1. To review the sufficiency, creditability and objectivity of the financial reporting by coordinating withthe external auditors and the management who are responsible for preparing the quarterly and yearlyfinancial reports.2. To review the adequacy and effectiveness of internal control systems and internal audit functionsby coordinating with the external auditors and internal auditors.3. To review compliance with the Securities and Exchange Acts, Regulations of the SET, and any otherrelevant laws.4. To consider and advise the appointment of the external auditors including the audit fee.5. To consider compliance with all connected transaction disclosures or the conflict of interests disclosures.6. To take care of any other matters assigned to it by the board of directors, such as reviewing the company’sfinancial and risk management policies.7. To report the activities of the audit committee in the company’s annual report, which must be signed bythe chairman of the audit committee.Structure and Appointment of the Audit CommitteeThe number of audit committee shall be no less than three. The qualifications of each member must bein accordance with the announcement of the Stock Exchange of Thailand. The audit committee will beselected and appointed by the board of directors.C) The Remuneration Committee1. M.R. Chandram S. Chandratat2. Mr. Arne Teigen3. Mr. Sompong Thanasophon4. Vice Admiral Kittichai SenanarongScope of Duties and Responsibilities of the Remuneration CommitteeTo consider and determine the remunerations for the executives and the employees.75

Thoresen Thai AgenciesPublic Company LimitedMANAGEMENT & SHAREHOLDERSMANAGEMENT STRUCTUREStructure and Appointment of the Remuneration CommitteeThe remuneration committee shall consist of one executive director and three external directors to beappointed by the board of directors.D) The Executives of the Company1. Mr. William Arthur Wilcox General Manager Ship Agency Department2. Mr. Pongsak Kanchanakpan General Manager, Group Personnel and Administration3. Ms. Nuch Kalyawongsa General Manager, Group Finance and AccountingSecretary to the Board of Directors : Ms. Mantanee SurakarnkulSUPPLEMENTAL DISCLOSURES OF INFORMATION IN ACCORDANCE WITH THE PUBLIC LIMITED COMPANIES ACT1. A Report of Disclosure of Information in Accordance with Section 88(1) of Public Limited Companies ActContracts which the directors have interest in, either directly or indirectly, made within fiscal year of 2003-None-2. A Report of Disclosure of Information in Accordance with Section 88(2) of Public Limited Companies ActSHAREHOLDINGS BY THE DIRECTORS AS OF 30 SEPTEMBER 2003(based on par value of Baht 1)As of Changes As of30 Sept. 02 During Year 30 Sept. 031. M.R.Chandram S. Chandratat 383,740 153,490 537,230Spouse 475,000 (125,000) 350,0002. *Mr. Arne Teigen 49,030,240 (40,150,600) 8,879,6403. Mr. Sompong Thanasophon - - -4. Vice Admiral Kittichai Senanarong - - -5. Mr. Bjorn Ostrom - - -6. Mr. Sathien Tejapaibul 2,597,500 - 2,597,500Spouse 1,817,500 (406,500) 1,411,0007. Dr. Teera Ashakul 1,700,000 (1,700,000) -8. Mr. Lance Karl Depew 282,000 837,900 1,119,900Spouse - - -9. *Mr. Frode Teigen 50,904,650 (223,160) 50,681,490Spouse - - -10. *Mr. Ole Teigen 38,544,130 1,738,780 40,282,91011. Mr. Opart Petchmunee 1,250 - 1,250Total 145,736,010 (39,875,090) 105,860,920* In the Extraordinary General Meeting of the Shareholders on 14 October 2002, it was resolved that the par value of shares be split from Baht 10 per share toBaht 1 per share. The number of shares in 30 September 2002 have been split for comparative purposes.* The amount of shares as of 30 September 2002 and 30 September 2003 included shares in the scriptless system76

Thoresen Thai AgenciesPublic Company LimitedMANAGEMENT & SHAREHOLDERSMANAGEMENT STRUCTURESHAREHOLDINGS BY EXECUTIVES AS OF 30 SEPTEMBER 2003As of Changes As of30 Sept. 02 During Year 30 Sept. 031. Mr. William Arthur Wilcox - - -2. Mr. Pongsak Kanchanakpan 1,500 500 2,0003. Ms. Nuch Kalyawongsa 1,250 500 1,7502,750 1,000 3,750MANAGEMENT REMUNERATIONSA)Remunerations in cash as of 30 September 20031. Remunerations of the Board of DirectorsRemunerations of the Board of DirectorsBaht1. M.R. Chandram S. Chandratat 2,160,0002. Mr. Arne Teigen -3. Mr. Sompong Thanasophon 480,0004. Vice Admiral Kittichai Senanarong 480,0005. Mr. Bjorn Ostrom 240,0006. Mr. Sathien Tejapaibul 240,0007. Dr. Teera Ashakul 240,0008. Mr. Lance Karl Depew 240,0009. Mr. Frode Teigen -10. Mr. Ole Teigen -11. Mr.Opart Petchmunee -Total 4,080,000Note: a) Total remunerations of seven directors out of eleven directors were Baht 4.08 million. The other four directors did not receive the director’ remunerationsbecause they are regular employees of the Company.b) Director’ remunerations of M.R. Chandram S. Chandratat, Mr. Sompong Thanasophon and Vice Admiral Kittichai Senanarong include additionalremunerations for serving on the Audit Committee.2. Remunerations of the ExecutivesTotal remunerations (in the form of salary and bonus) of the seven executives (including executivedirectors) were Baht 46.86 million.77

Thoresen Thai AgenciesPublic Company LimitedMANAGEMENT & SHAREHOLDERSMANAGEMENT STRUCTUREB) Other remunerations as of 30 September 2003The Company has contributed Baht 4.20 million to the provident fund and social security fund for the sevenexecutives.SHAREHOLDERSMajor shareholders as of 7 February 2003 (The latest share register book’s closing date)No. Name No. of Shares Percentage1. Teigen Group 193,220,390 36.022. Thai NVDR Co., Ltd. 85,679,031 15.973. Albouys Nominees Limited 62,990,990 11.744. The Industrial Finance Corporation of Thailand 57,429,910 10.715. C.S. Capital Co., Ltd. 14,179,740 2.646. Chotechalit Co., Ltd. 12,809,400 2.397. G.K. Goh Stockbrokers Pte Ltd. 7,000,000 1.308. Nordea Bank Norge ASA 6,400,000 1.199. Somers (U.K.) Limited 5,000,000 0.9310. Prudential Securities Incorporated 3,000,000 0.56Total 447,709,461 83.4578

Thoresen Thai AgenciesPublic Company LimitedMANAGEMENT & SHAREHOLDERSBOARD OF DIRECTORSWorking ExperienceM.R. Chandram S. Chandratat 2003 – present Director, United Palm Oil Industrial Plc2001 – present Chairman of the Audit Committee, Thoresen Thai Agencies Plc1994 – present Chairman, Thoresen Thai Agencies Plc1991 – present Managing Director, C.S. Capital Ltd.2001 – 2002 Chairman, United Palm Oil Industrial Plc1990 – 1992 Chairman of the Executive Board, Capital Nomura Securities Plc1985 – 1990 Director General, Government Savings Bank1982 – 1985 Deputy General Manager, Bank for Agriculture & Agricultural CooperativesMr. Arne Teigen 1994 – present Director and Managing Director, Thoresen Thai Agencies Plc1983 – present Director, Thoresen & Co., (Bangkok) Ltd.1978 – 1992 Chairman and Managing Director, Thoresen & Co., Ltd., Hong Kong1975 – 1985 Director, Norse Petroleum A/S, Norway1974 – 1984 Chairman and Managing Director, BK Skibs A/S, Norway1975 – 1977 Director, Norinvest A/S, Norway1964 – 1978 Managing Director, Arne Teigen Rederi A/S, NorwayMr. Sompong Thanasophon 1999 – present Audit Committee Member, Thoresen Thai Agencies Plc1994 – present Independent Director, Thoresen Thai Agencies Plc1990 – 1996 Vice Chairman, Bangkok Metropolitan Bank Plc1985 – 1990 Chairman of the Executive Board, Bangkok Metropolitan Bank Plc1979 – 1984 Deputy Governor, Bank of ThailandVice Admiral Kittichai Senanarong 1999 – present Audit Committee Member, Thoresen Thai Agencies Plc1994 – present Independent Director, Thoresen Thai Agencies Plc1993 – 1994 Deputy Chief of Staff Attached General Headquarters1989 Deputy Commandant, Naval Academy1988 Chief of Staff, Naval Academy1984 – 1987 Naval Attache, ParisMr. Bjorn Ostrom Oct. 2000 – present Director, Thoresen Thai Agencies Plc1997 – 2000 Counsellor, the Singapore Shipping AssociationSept.1986 – 31 Aug. 2000 Executive Vice President of Christiania Bank, Singapore Branch1985 – 1986 Director of Asia Shipping Group, PK Christiania Hong Kong1979 – 1984 Director Adjoint, Banque de la Societe Financiere Europeanne Paris1975 – 1979 Senior Executive, Hambros Bank LondonDr. Teera Ashakul July 2000 – present Chairman of the Executive Committee, IFCT Advisory Co., Ltd.July 2000 – present Economic Advisor, The Industrial Finance Corporation of Thailand1996 – present Director, Thoresen Thai Agencies PlcJune 2002 – 2003 Audit Committee, Small Industry Credit Guarantee CorporationMay 2002 - 2003 Director, Small Industry Credit Guarantee Corporation1991 – June 2000 Senior Vice President, Research Department, The Industrial Finance Corporation of Thailand1996 – 1999 Director of L.C.B. Terminal 1 Co., Ltd.1991 – 1999 Director of the Industrial Management Co., Ltd. (IMC)1991 – 1999 Director of the Eastern Sea Laem Chabang Terminal Co., Ltd. (ESCO)1985 – 1991 Research Fellow at Thailand Development Research Institute (TDRI), HumanResources and Social Development Program and Macroeconomic Policy Program1984 – 1985 Economist, National Economic and Social Development Board (NESDB)Mr. Sathien Tejapaibul 1996 – present Chairman, Ambrose Wine Limited1994 – present Director, Thoresen Thai Agencies Plc1967 – present Director, Tejapaibul Co., Ltd.79

Thoresen Thai AgenciesPublic Company LimitedMANAGEMENT & SHAREHOLDERSBOARD OF DIRECTORS (cont’d)Working ExperienceMr. Frode Teigen March 2003 – present Director, Thoresen Chartering (HK) LimitedJune 2002 – present Director, Sharjah Ports ServicesFeb. 2002 – present Director, Thoresen Shipping FZESept. 2000 – present Director, ISS Thoresen Agencies Ltd.July 2000 – 2003 Director, Horizon Mobile Communications Co., Ltd.1997 – present Director, Thoresen Chartering (Pte) Ltd.1992 – present Director, Thoresen Thai Agencies PlcDirector, Gulf Agency Company (Thailand) Ltd.1990 – present Director, Fearnleys (Thailand) Ltd.1991 – April 2000 Director, Chidlom Transport & Services Ltd.1989 – 1992 Director, Thoresen & Co., (Bangkok) Ltd.1987 – 1988 Deputy General Manager, Thoresen Ship Management Ltd., Hong KongMr. Lance Karl Depew Jan. 2002 - present Director, Thoresen Thai Agencies Plc2002 - present General Partner, Railay Capital Partners, L.P.2000-presentManaging Partner, Uluwatu Partners International LLC1994-presentPortfolio Manager, Quest Management Inc.1993-1994 Equity Research Intern, Trust Company of the West, U.S.A.1989-1992 Senior Consultant, KPMG Peat MarwickMr. Ole Teigen Feb. 2000 – present Director, Horizon Mobile Communications Co., Ltd.1994 – present Director, Mermaid Maritime Ltd.1993 – present Director, Thoresen Thai Agencies Plc & 34 subsidiary companies of Thoresen Group1992 – present Director, Thoresen & Co., (Bangkok) Ltd.1989 – 1990 Project Manager, Thoresen Ship Management Ltd., Hong KongMr. Opart Petchmunee 1990 – present Director, Thoresen Thai Agencies Plc1983 – 1990 Operation Manager, Euro Asia Chartering Pte. Ltd., SingaporeEXECUTIVESWorking ExperienceMr. William Arthur Wilcox 2000 – present Director, ISS Thoresen Agencies Ltd.1996 – present General Manager, Agency Division, Thoresen Thai Agencies Plc1993 – 1994 General Manager, Shipping Agency, Shipping, Trading & Lighterage Co.(STALCO),Dubai, U.A.E.1991 – 1992 Manager, Soper Chartering, Mombasa, Kenya1989 – 1990 Vice President, Lavino Shipping Agencies Inc. Philadelphia, U.S.A.1983 – 1989 Director/Manager, Wallem Shipping (Thailand) Ltd.1977 – 1982 General Manager, Dodwell Shipping Kenya Ltd., Mombasa, KenyaMr. Pongsak Kanchanakpan 2003 – present Director, ISS Thoresen Agencies Ltd.Jan. 2002 – present Director, Viking Life-Saving Equipment (Thailand) Ltd.2000 – present Director, Mermaid Maritime Ltd.2000 – present Director, Thai P&I Services International Ltd.2000 – present Director, Horizon Mobile Communications Co., Ltd.1993 – present Director, Gulf Agency Company (Thailand) Ltd.1992 – present Director, Thoresen & Co., (Bangkok) Ltd.1989 – present General Manager, Group Personnel and Administration, Thoresen Group of Companies1985 – 1988 Faculty, University of Oklahoma Libraries, University of Oklahoma, U.S.A.Ms. Nuch Kalyawongsa 1996 – present Director, Fearnleys (Thailand) Ltd.1990 – present Director, Kaset Samuth Ltd.1987 – present General Manager, Group Finance and Accounting, Thoresen Group of Companies1979 – 1987 Assistant Chief Accountant, Vidhyakom Plc80

Thoresen Thai AgenciesPublic Company LimitedCORPORATE GOVERNANCECOMPLIANCE TO THE PRINCIPLES OF GOOD CORPORATE GOVERNANCEPolicy on Corporate GovernancePrinciple 1The Company understands the importance of good corporate governance principles and intends to apply theseprinciples in managing the Company. Our core management objectives include the creation of an efficient transportorganisation and a strong foundation to sustain future business growth. By fulfilling these objectives, the Companyis able to maximise the benefits to all of its stockholders. Therefore, the board of directors, management, andemployees of the Company will strive to achieve the 15 key governance principles recommended by the StockExchange of Thailand (SET) in August 2001.Shareholder Rights/ Shareholder MeetingsPrinciple 2 and 4Every shareholder of the Company is accorded equal rights. Each shareholder is able to express opinions andraise issues or questions freely and to vote his shares as appropriate during shareholder meetings. The Companywill send out invitations to meetings in advance so that shareholders have time to consider the issues and relatedrecommendations of the board of directors. The Company also sends proxy forms with these invitations so thatany shareholder who is unable to attend meetings can nominate a representative to attend and vote on his behalf.Rights of Different StakeholdersPrinciple 3The Company understands and respects the interests of different stakeholders and attempts to maximise thebenefits for all groups. Given the utmost importance of its clients, the Company will strive to protect their rightsand interests, particularly with respect to the delivery of goods and services. Information provided by clientswill be kept confidential and will not be disclosed without the clients’ prior consent. Employees of the Companywill receive benefits and training to improve their capabilities and skills.Management VisionPrinciple 5The board of directors stresses the Company’s continued growth and creation of shareholder value. Therefore,the Company has established clear policies and strategies that are deemed to be achievable and created theproper incentives to achieve these policies and strategies. The Company’s quarterly financial reports providebenchmarks on which management can be assessed in achieving these policies.Conflicts of InterestPrinciple 6The Company will attempt to avoid entering into any connected transactions or those which create inherentconflicts of interest. If such transactions arise, the Company will report them to SET. If such a transaction needs tobe approved by the board of directors, shareholders will be notified of its details and the recommendationof independent directors on the matter. Any party which has a conflict of interest will not be allowed to vote onthe matter.Business EthicsPrinciple 7The Company has formulated a set of corporate ethics by which management and employees will abide.Ethical procedures include appropriate ways to deal with shareholders, clients, and competitors. These ethicalprocedures have been clearly stated in writing by the Company.81

Thoresen Thai AgenciesPublic Company LimitedCORPORATE GOVERNANCEChecks and BalancesPrinciple 8The board of directors consists of 11 members, of which three are executive directors and eight are nonexecutivedirectors. Among the non-executive directors are members of the Audit Committee, independentdirectors, and directors who represent different shareholder groups. During board meetings, non-executivedirectors can provide opinions and suggestions and vote along side executive directors. All directors have one voteand if the votes are tied on any issue, the chairman has one extra vote to decide the issue.Executive PositionsPrinciple 9In order to achieve an appropriate balance between executive directors and non-executive directors, the positionsof chairman of the board and managing director will be separate. The chairman will preside over all boardmeetings and be a non-executive director. The chairman’s responsibilities include establishing the agenda forboard meetings or shareholder meetings. The managing director will be an executive director and is responsiblefor implementing the board’s policies. The chairman must be elected by the board of directors.Executive CompensationPrinciple 10The Company has a fair and transparent executive compensation policy. All compensations for directors will beproposed for consideration and approval at the annual shareholders’ meeting. Furthermore, an ExecutiveCompensation Committee has been established to consider all executive compensation issues includingmanagement pay. The Executive Compensation Committee will meet and make recommendations to the board,which has the right to approve or reject them. The Company discloses all compensation policies and amounts(earned by the board of directors and senior management) per the requirements of the Securities and ExchangeCommission (SEC).Board MeetingsPrinciple 11The Company will hold regular board meetings and will invite all directors to attend in advance. The invitationswill include the meeting agenda, and matters will be approved by a simple majority vote. If any director votesagainst an item, his objection will be noted in the minutes of the meeting and kept within the Company.During the past year the record of attendance of each director during board meetings is as follows:No. Name Attendance/Number of MeetingsFrom 1 October 2002-30 September 20031. M.R. Chandram S. Chandratat 11/112. Mr. Arne Teigen 11/113. Mr. Sompong Thanasophon 8/114. Vice Admiral Kittichai Senanarong 10/115. Mr. Bjorn Ostrom 9/116. Mr. Sathien Tejapaibul 5/117. Dr. Teera Ashakul 9/118. Mr. Lance Karl Depew 11/119. Mr. Frode Teigen 10/1110. Mr. Ole Teigen 10/1111. Mr. Opart Petchmunee 10/1182

Thoresen Thai AgenciesPublic Company LimitedCORPORATE GOVERNANCEBoard CommitteesPrinciple 12The board of directors has appointed two committees, namely the Audit Committee and the ExecutiveCompensation Committee. Each committee has specific and clearly defined roles. The board committeesmeet regularly to discuss issues and report their findings to the board of directors. The board of directorsselects members of the two committees.Internal Control and AuditPrinciple 13The Company has an Internal Audit Department responsible for all internal audit and control activities. Thedepartment’s main objective is to ensure that the Company is following all applicable rules and regulations,including those of SET and SEC. In order to ensure transparency, all audit reports are sent to the Audit Committee,which will then forward them to the board of directors.ReportingPrinciple 14The board of directors is responsible for the accuracy and completeness of the Company’s financial statements,which are to be prepared according to generally accepted accounting principles. Apart from the financialstatements, important information related to the Company’s performance most also be disclosed to ensuretransparency. The board of director is also responsible for the accuracy of the information in the Companyannual report. The board of directors must certify to the accuracy of the Company’s financial statements andannual report. The information contained in these reports must follow the good corporate governance principlesoutlined by the SET.Investor RelationsPrinciple 15The Company stresses the importance of reporting accurate, complete, and trustworthy information within theprescribed time periods to all shareholders, potential investors, clients, regulatory agencies, and other interestedparties. The Company has assigned the Company’s Corporate Affairs Department to be responsible for thepreparation of all information that will be released to SET and shareholders. The Corporate Affairs Departmentis responsible for answering all questions or issues raised by shareholders. All pertinent information on theCompany is available on the following website: http://www.thoresen.comRELATED PARTY TRANSACTIONSDuring the financial year ended on 30 September 2003, the Company and its subsidiaries had no related partytransactions with major shareholders, directors and related persons.83

Thoresen Thai AgenciesPublic Company LimitedINTERNAL CONTROLEffective internal control is an important management tool to ensure good corporate governance. Up to thepresent, the Company has focused on five main areas on internal control.1. Control EnvironmentThe organisation structure of the Company has been appropriately designed to facilitate the managementto effectively manage their activities. In addition, business goals have been formulated for employees to followand have been closely monitored.2. Risk AssessmentExternal and internal risks such as currency exchange, oil price, accidents, shortage of skilled personnel,maintenance expenses and so on have been continually evaluated by the management. The mechanism tominimize those risks has been set up and regularly reviewed.3. Control ActivitiesAuthority and approval assignments have been defined for each department to follow and have beenmonitored regularly. Transactions with major shareholders, directors, management and related partieshave been carefully controlled to conform with the Notification of the Stock Exchange of Thailandregarding Rules and Procedures and Disclosure of Connected Transactions of Listed Companies.4. Information and CommunicationInformative technology has been developed to ensure efficient business operations of the Company andto serve the management’s needs. The accounting records conform with the generally accepted accountingstandards and the accounting files are updated regularly. Documents for the shareholders meetings andthe board of directors meetings have been delivered in an appropriate time and contained sufficient informationfor the shareholders or the board of directors to make decision.5. MonitoringThe internal audit system has been regularly reviewed by the Internal Audit Department and the results ofthe performed audit had been reported to the Audit Committee. Up to the present, no material deficiencieshave been found. However, recommendations have been provided in some areas such as inventory,cash advance, and procedural matter.INSIDE INFORMATION CONTROLThe directors and the management are required to submit securities holding reports to the Company onthe same day as when they submit the reports to SEC and SET in accordance with the SEC andSET Notifications regarding reports of securities holding. They are also required to follow the SET Guidelineon Insider Trading which require the directors and executives refraining from securities trading before thedisclosure of financial statements or other important information that may affect the price of the securities.84

Thoresen Thai AgenciesPublic Company LimitedMANAGEMENT DISCUSSION & ANALYSISExcluding a Baht 224.2 million and Baht 60.0 million gains on exchange rate recorded in the 2002/03 and2001/02 financial years, as a result of the Baht having appreciated against the USD, the total consolidatedrevenues of the Company increased from Baht 3,655.3 million in the 2001/02 financial year, to Baht 4,849.2million in the 2002/03 financial year, an increase of Baht 1,193.9 million, increase which was mainly due tohigher freight charges, combined with a larger fleet.The total consolidated expenses of the Company increased from Baht 3,302.4 million in the 2001/02 financialyear, to Baht 4,070.7 million in the 2002/03 financial year, an increase of Baht 768.3 million, mainly as a resultof higher vessel operating expenses, and higher depreciation charges.Vessel operating expenses, which increased Baht 575.8 million over the previous year, consists of owner expenses(crew, repair and maintenance, insurances, onboard administration and communication, and amortization ofdry-docking and special survey expenses), and voyage related expenses (loading and discharging, fuel oils, portand agency expenses).Owner expenses increased from Baht 975.8 million in the 2001/02 financial year, to Baht 1,062.3 million inthe 2002/03 financial year, an increase of 8.86%, mainly as a result of our fleet expansion from 25 vesselsin 2002 to 33 vessels in 2003.Voyage related expenses increased from Baht 1,549.33 million in the 2001/02 financial year, to Baht 2,038.65million in the 2002/03 financial year, an increase of Baht 489.32 million, increase which was mainly due toavailable vessel days being increased from 8,852 in the 2001/02 financial year, to 9,923 in the 2002/03 financialyear.The total consolidated assets of the Company increased from Baht 3,842.9 million in the 2001/02 financial year,to Baht 5,763.5 million in the 2002/03 financial year, an increase of Baht 1,920.6 million. Such increasewere mainly the result of a Baht 1,846.4 million increase in property and equipments, being a direct resultof the Company’s fleet renewal programme, whereby the fleet composition changed from 25 vessels with anaverage DWT and age of 20,516 and 20.4 years as at 30 September 2002, to 33 vessels with an average DWTand age of 22,954 and 20.0 years as at 30 September 2003.With regard to liabilities, the total consolidated liabilities of the Company increased from Baht 3,155.5 millionas of 30 September 2002, to Baht 4,072.4 million as of 30 September 2003, an increase of Baht 916.9 million.Such increase were mainly due to a Baht 680.7 million net increase in long term loans, and a Baht 215.0 millionincrease in short-term loans, both used to finance the Company’s fleet renewal programme explained above.85

Thoresen Thai AgenciesPublic Company LimitedMANAGEMENT DISCUSSION & ANALYSISIn terms of cash flow, the Company recorded an increase in the cash flows from operating activities, fromBaht 675.2 million in the 2001/02 financial year, to Baht 929.8 million in the 2002/03 financial year, an increaseof 254.7 million. The current ratio remained more or less constant, standing at 0.72 as at 30 September 2003,as compared to 0.74 the year before.The Company did take delivery of a vessel in late September 2003, and paid for same in cash, whilst thecorresponding long term USD financing, a total of Baht 200.5 million base on the USD/Baht exchange rate as of30 September 2003, was only received in October.Adding to current assets above mentioned Baht 200.5 million long term financings received after thebalance sheet date, the current ratio would have stood at 0.86 as at 30 September 2003. The management isof the opinion that such ratio will not cause any liquidity problems in the coming year since the current portionof long term loans is expected to be paid from next year’s operating cash flow, and since the Company hadunused overdraft facilities, of Baht 142.3 million as at 30 September 2003. It should also be noted that mostfreights are received in advance, and as such, most shipping companies tend to have significantly highertrade accounts payable as compared to trade accounts receivable.The Company’s cash, and short term investments, decreased from Baht 319.2 million as at 30 September 2002,to Baht 281.9 million as at 30 September 2003, a decrease of Baht 37.3 million, whilst bank overdrafts, andshort term loans, increased from Baht 99.6 million as at 30 September 2002, to Baht 304.3 million as at30 September 2003, an increase of Baht 204.7 million. Had the Company received the Baht 200.5 million inlong term financings, for vessel paid for in cash prior to 30 September 2003, as described above, the Company’scash, and overdraft and short term loan position, would have remained at levels close to the previous year.The overall dry bulk market has improved significantly since the end of the 2002/03 financial year, and moststatistics point toward further improvements in the coming period. Freight rates for the smaller general cargoand bulk carriers have also recorded significant increases towards the end of 2003, and, taking into considerationthe continued sharp decline in available supply of smaller general cargo and bulk carriers, it is the opinion ofthe management that the financial performance, and operating cash flow, will both improve significantly inthe coming year.86

Thoresen Thai AgenciesPublic Company LimitedCOMPANY INVESTMENTSInvestments of the Company in other companies for more than 10% of the other companies’ sharesas of 30 September 2003Type of Business : International Maritime TransportationNo. Type of # of Issued # of Invested % of ParShares Shares Shares Holding Value1. Thoresen & Co., (Bangkok) Ltd. Ordinary 9,470,000 9,470,000 99.9 1026/26-27 Orakarn Building Preference 3,030,000 3,029,994 - -8th Floor, Chidlom Road, Khet Pathumwan, Bangkok 10330Tel. : +66 (0) 2250-0569 Fax : +66 (0) 2254-94172. Helios Shipping Co., Ltd. Ordinary 800,000 799,993 99.9 1003. Hermes Shipping Co., Ltd. Ordinary 270,000 269,994 99.9 1004. Hektor Shipping Co., Ltd. Ordinary 250,000 249,993 99.9 1005. Herakles Shipping Co., Ltd. Ordinary 250,000 249,993 99.9 1006. Heron Shipping Co., Ltd. Ordinary 250,000 249,993 99.9 1007. Heritage Shipping Co., Ltd. Ordinary 250,000 249,993 99.9 1008. Hermelin Shipping Co., Ltd. Ordinary 1,000,000 999,993 99.9 1009. Thor Star Shipping Co., Ltd. Ordinary 300,000 299,993 99.9 10010. Thor Skipper Shipping Co., Ltd. Ordinary 300,000 299,993 99.9 10011. Thor Sailor Shipping Co., Ltd. Ordinary 300,000 299,993 99.9 10012. Thor Sun Shipping Co., Ltd. Ordinary 400,000 399,993 99.9 10013. Thor Spirit Shipping Co., Ltd. Ordinary 400,000 399,993 99.9 10014. Thor Sky Shipping Co., Ltd. Ordinary 400,000 399,993 99.9 10015. Thor Sea Shipping Co., Ltd. Ordinary 400,000 399,993 99.9 10016. Thor Master Shipping Co.,Ltd. Ordinary 1,880,000 1,879,993 99.9 100(Formerly named “Hai Meng Shipping Co., Ltd.”)17. Thor Merchant Shipping Co., Ltd. Ordinary 200,000 199,994 99.9 100(Formerly named “ Hai Lee Shipping Co., Ltd.”)18. Thor Mariner Shipping Co., Ltd. Ordinary 350,000 349,994 99.9 100(Formerly named “ Thoresen Ship Agencies Ltd.”)19. Thor Mercury Shipping Co., Ltd. Ordinary 600,000 599,994 99.9 100(formerly named “Thoresen Barge Services Ltd.”)20. Thor Captain Shipping Co., Ltd. Ordinary 1,530,000 1,529,994 99.9 100(formerly named “Halldor Shipping Co., Ltd.”)21. Thor Pilot Shipping Co., Ltd. Ordinary 800,000 799,993 99.9 100(formerly named “Hero Shipping Co., Ltd.”)22. Thor Jasmine Shipping Co., Ltd. Ordinary 700,000 699,993 99.9 100(formerly named “Hernes Shipping Co., Ltd.”)23. Thor Champion Shipping Co., Ltd. Ordinary 750,000 749,993 99.9 100(formerly named “Hermod Shipping Co., Ltd.”)24. Thor Orchid Shipping Co., Ltd. Ordinary 472,500 472,493 99.9 10025. Thor Navigator Shipping Co., Ltd. Ordinary 450,000 449,993 99.9 100(Formerly named “Hermion Shipping Co., Ltd.”)26. Thor Commander Shipping Co.,Ltd. Ordinary 1,150,000 1,149,993 99.9 100(Formerly named “Hai Hing Shipping Co., Ltd.”)27. Thor Transporter Shipping Co., Ltd. Ordinary 2,000,000 1,999,993 99.9 100(Formerly named “ Helikon Shipping Co., Ltd.”)28. Thor Lotus Shipping Co., Ltd. Ordinary 630,000 629,993 99.9 100(Formerly named “ Auto Transport Ltd.”)29. Thor Trader Shipping Co., Ltd. Ordinary 450,000 449,993 99.9 10030. Thor Traveller Shipping Co., Ltd. Ordinary 450,000 449,993 99.9 10031. Thor Venture Shipping Co., Ltd. Ordinary 750,000 749,993 99.9 10032. Thor Nautica Shipping Co., Ltd. Ordinary 500,000 449,993 99.9 10033. Thor Confidence Shipping Co., Ltd. Ordinary 200,000 199,993 99.9 10034. Thor Guardian Shipping Co., Ltd. Ordinary 200,000 199,993 99.9 10035. Thor Triumph Shipping Co., Ltd. Ordinary 200,000 199,993 99.9 100Note: The registered office address of companies in item No. 2 – 35 is26/32 Orakarn Building 10th Floor, Soi Chidlom, Ploenchit Road,Khet Pathumwan, Bangkok 10330Tel. : +66 (0) 2250-0569 Fax : +66 (0) 2254-843687

Thoresen Thai AgenciesPublic Company LimitedCOMPANY INVESTMENTSType of Business : Stevedoring36. Chidlom Transport & Services Co., Ltd. Ordinary 5,000 4,994 99.9 1,00026/49 Orakarn Building 14th Floor,Soi Chidlom, Ploenchit Road, Khet Pathumwan, Bangkok 10330Tel. : +66 (0) 2655-5148-50 Fax : +66 (0) 2655-5147Type of Business : Ship Agencies37. Gulf Agency Company (Thailand) Ltd. Ordinary 22,000 11,210 51.0 1,00026/30-31 Orakarn Building 9th Floor,Soi Chidlom, Ploenchit Road, Khet Pathumwan, Bangkok 10330Tel. : +66 (0) 2650-7400 Fax : +66 (0) 2650-740138. ISS Thoresen Agencies Ltd. Ordinary 50,000 49,993 99.9 10026/26-27 Orakarn Building 8th Floor,Soi Chidlom, Ploenchit Road, Khet Pathumwan, Bangkok 10330Tel. : +66 (0) 2254-0260-3 Fax : +66 (0) 2254-062839. Thoresen Shipping FZE Ordinary 1 1 100.0 550,5001901-19th Floor, Golden Tower, Corniche Road,DirhamsOpp. Marbella Resort, Al Buhaira Corniche, Sharjah, UAE.Tel. 971-6-574 4458 Fax. 971-6-574 4244Type of Business : Ship Brokerage40. Fearnleys (Thailand) Ltd. Ordinary 20,000 10,194 51.0 10026/55 Orakarn Building 15th Floor,Soi Chidlom, Ploenchit Road, Khet Pathumwan, Bangkok 10330Tel. : +66 (0) 2253-6160 Fax : +66 (0) 2655-0486-91Type of Business : Offshore Related Services41. Mermaid Maritime Ltd. Ordinary 48,980 24,490 50.0 1,00026/49 Orakarn Building, 14th FloorSoi Chidlom, Ploenchit Road, Khet Pathumwan, Bangkok 10330Tel. : +66 (0) 2255-3115-6 Fax : +66 (0) 2255-1079Type of Business : Ship Maintenance & Repairs42. T.S.C. Maritime Ltd. Ordinary 100,000 99,993 99.9 10026/49 Orakarn Building 14th Floor,Soi Chidlom, Ploenchit Road, Khet Pathumwan, Bangkok 10330Tel. : +66 (0) 2650-3861 Fax : +66 (0) 2650-3863Type of Business : Marine Supplies43. Chidlom Marine Services & Supplies Ltd. Ordinary 50,000 49,993 99.9 10026/49 Orakarn Building 14th Floor,Soi Chidlom, Ploenchit Road, Khet Pathumwan, Bangkok 10330Tel. : +66 (0) 2655-5148-50 Fax : +66 (0) 2655-5147Type of Business : P & I Club Representation44. Thai P & I Services International Ltd. Ordinary 10,000 9,000 90.0 10026/49 Orakarn Building 14th Floor,Soi Chidlom, Ploenchit Road, Khet Pathumwan, Bangkok 10330Tel. : +66 (0) 2255-7227-9 Fax : +66 (0) 2655-5291Type of Business : Marine Communication45. Horizon Mobile Communications Co., Ltd. Ordinary 200,500 65,845 32.84 10026/56-57 Orakarn Building 16th Floor,Soi Chidlom, Ploenchit Road, Khet Pathumwan, Bangkok 10330Tel. : +66 (0) 2250-1374-7 Fax : +66 (0) 2652-7232Type of Business : Chartering Services46. Thoresen Chartering (Pte) Ltd. Ordinary 100,000 100,000 100.0 S$ 18 Cross Street # 11-00, PWC Building, Singapore 04842447. Thoresen Chartering (HK) Limited Ordinary 500,000 499,999 99.9 HK$ 1Room 403, 4th Floor, Printing House, 6 Duddell Street,Central, HongkongType of Business : Port OperationsNo. Type of # of Issued # of Invested % of ParShares Shares Shares Holding Value48. Sharjah Ports Services Ordinary 20,000 9,800 49.0 100P.O. Box 510 Port Khalid, Shajah, United Arab Emirates. (indirect DirhamsTel. 971-6-528 1327 Fax : 971-6-528 1425holding)88

THE COMPANYAS OF 30 SEPTEMBER 2003Name of Company • Thoresen Thai Agencies Public Company LimitedRegistration No. • Bor Mor Jor 520Date of Establishment • 16 August 1983Date of Conversion toPublic Company Limited • 15 December 1994Date of Being Listed in SET • 25 September 1995Address • 26/26-27 Orakarn Building, 8 th Floor,Soi Chidlom, Ploenchit Road,Type of Business • Shipping OperationsShipping ServicesRegistered Capital • Baht 770,000,000Paid up Capital • Baht 549,183,360Kwaeng Lumpinee, Pathumwan, Bangkok 10330ThailandNo. of Issued Shares • 549,183,360 ordinary sharesPar Value/ Share • Baht 1Securities Registrar • Thailand Securities Depository Co.,Ltd.The Stock Exchange of Thailand Building,62 Ratchadapisek Road, Kwaeng Klongtoey,Khet Klongtoey, Bangkok 10110 ThailandTelephone : +66 (0) 2229-2800, +66 (0) 2654-5599Auditor • Mrs. Anothai LeekitwattanaCertified Public Accountant (Thailand) No. 3442PricewaterhouseCoopers ABAS Limited15 th Floor, Bangkok City Tower,179/74-80 South Sathorn Road, Bangkok 10120ThailandTelephone : +66 (0) 2344-1000Legal Advisor • Tilleke & Gibbins International Ltd.64/1 Soi Ton-Son, Ploenchit Road,Bangkok 10330 ThailandTelephone : +66 (0) 2254-2640