12. FINANCIAL POSITION AND ITS OPERATING RESULTS

    1) Financial Statements : Financial Status and Operating Results for
    the past 3 years

-   AUDITORS’ REPORTS

The Company’s auditor for the year 2002 was Mr. Sophon Permsiriwallop,
CPA No. 3182, of Ernst & Young, and for the year 2003 till present is
Ms. Ratana Jala, CPA no. 3734, of Ernst & Young.

From the auditor report for the year ended 31 December 2002, 2003 and
2004, the auditors have expressed their opinions without any conditions
that the Company’s consolidated financial statements have presented
fairly, in all materials aspect, the financial position of the Company
and associates and of the Company, and the results of their operations
and cash flows in accordance with the generally accepted accounting
principles.

-   The Summary of Financial Statements

SVOA Public company Limited had its summarized financial position and
operating results as of 2002, 2003 and 2004 as following:

  ------------------------- --------------- ------ --------------- ------ --------------- ------
  Balance Sheets            Year 2004              Year 2003              Year 2002       

  (Unit : Baht)             Amount          %      Amount          %      Amount          %

  Assets                                                                                   

  Current Assets                                                                           

  Cash or cash equivalents  77,670,145      3%     17,274,736      1%     59,102,203      4%

  Fixed deposits at bank    3,007,180       0%     47,397,905      2%     36,653,000      2%
  and deposits with                                                                       
  restriction                                                                             

  Trade account             753,087,406     31%    680,479,926     29%    503,435,170     33%
  receivable - net                                                                        

  Current portion of        236,170,723     10%    271,160,105     11%    19,992,560      1% 
  long-term financial lease                                                               
  receivables                                                                             

  Inventories – net         378,725,036     15%    300,833,732     13%    321,592,969     21%

  Other current assets      66,761,883      3%     89,617,092      4%     94,463,104      6%

  Total Current Assets      1,515,422,373   62%    1,406,763,496   60%    1,035,239,006   68%

  Non-Current Assets                                                                       

  Investment accounted for  270,949,230     11%    201,413,186     9%     84,621,659      6%
  under equity method                                                                     

  Other Long-term           23,040,962      1%     17,401,653      1%     11,346,682      1%
  Investments                                                                             

  Property, Plant and       291,576,809     12%    274,560,502     12%    289,103,172     19%
  Equipment - net                                                                         

  Long-term Financial lease 262,103,473     11%    383,862,591     16%    48,489,556      3% 
  receivables – net of                                                                    
  current portion                                                                         

  Other non-current assets  86,017,447      4%     77,238,382      3%     46,820,377      3%

  Total Non-Current Assets  933,687,921     38%    954,476,314     40%    480,381,446     32%

  Total Assets              2,449,110,294   100%   2,361,239,810   100%   1,515,620,452   100%
  ------------------------- --------------- ------ --------------- ------ --------------- ------

  --------------------------- --------------- ------ --------------- ------ ------------- ------
  Balance Sheets (Continued)  Year 2004              Year 2003              Year 2002     

  (Unit : Baht)               Amount          %      Amount          %      Amount        %

  Liabilities and                                                                          
  Shareholders’ Equity                                                                    

  Current Liabilities                                                                      

  Bank overdrafts and         474,925,694     34%    392,372,408     26%    171,150,731   21%
  short-term bank loan                                                                    

  Trust Receipts              40,802,175      3%     0               0%     58,404,067    7% 

  Current portion of          59,024,374      4%     187,692,782     12%    12,766,147    2% 
  long-term loan from bank                                                                

  Accounts payable -                          0%                     0%     26,714,016    3% 
  factoring                                                                               

  Accounts payable            431,834,279     31%    413,912,153     27%    325,129,712   39%

  Current portion of          13,703,099      1%     14,454,064      1%     11,809,045     1%
  liabilities under financial                                                             
  lease agreement                                                                         

  Total other current         213,887,066     15%    199,531,854     13%    139,092,975   17%
  liabilities                                                                             

  Total Current Liabilities   1,234,176,687   88%    1,207,963,261   80%    745,066,693   90%

  Non-Current Liabilities                                                                  

  Long-term loan from bank –  154,703,285     11%    282,864,913     19%    45,421,069    5% 
  net of current portion                                                                  

  Liabilities under financial 15,548,868      1%     28,444,425      2%     36,866,208    4% 
  lease agreement – net of                                                                
  current portion                                                                         

  Total Non-Current           170,252,153     12%    311,309,338     20%    82,287,277    10%
  Liabilities                                                                             

  Total Liabilities           1,404,428,840   100%   1,519,272,599   100%   827,353,970   100%
  --------------------------- --------------- ------ --------------- ------ ------------- ------

  -------------------------- --------------- ------ --------------- ------ --------------- ------
  Balance Sheets (Continued) Year 2004              Year 2003              Year 2002       

  (Unit : Baht)              Amount          %      Amount          %      Amount          %

  Shareholders’Equity                                                                       

  Share Capital                                                                             

  Registered                                                                                

  240,000,000 convertible    240,000,000            240,000,000            240,000,000      
  preferred shares of Baht 1                                                               

  710,000,000 ordinary       710,000,000            710,000,000            710,000,000      
  shares of Baht 1                                                                         

                             950,000,000            950,000,000            950,000,000      

  Issued and fully paid up                                                                  

  240,000,000 convertible    240,000,000     10%    240,000,000     10%    240,000,000     16%
  preferred shares of Baht 1                                                               

  622,040,000 ordinary       622,040,000     25%    615,790,000     26%    500,000,000     33%
  shares of Baht 1                                                                         

                             862,040,000     35%    855,790,000     36%    740,000,000     49%

  Premium on ordinary shares 712,200,000     29%    712,200,000     30%    712,200,000     47%

  Discount on ordinary       (900,000,000)   -37%   (900,000,000)   -38%   (900,000,000)   -59%
  shares                                                                                   

  Premium on ordinary shares 78,763,835      3%     52,797,876       2%                     0%
  of associated company                                                                    

  Retained earnings                                                                         

  Appropriated – statutory   46,541,851      2%     37,996,569      2%     24,110,637      2%
  reserve                                                                                  

  Un appropriated            245,135,768     10%    83,182,766      4%     111,955,845     7%

                             291,677,619     12%    121,179,335     5%     136,066,482     9%

  Total Shareholders’Equity  1,044,681,454   43%    841,967,211     36%    688,266,482     45%

  Total Liabilities and      2,449,110,294   100%   2,361,239,810   100%   1,515,620,452   100%
  Shareholders’Equity                                                                      
  -------------------------- --------------- ------ --------------- ------ --------------- ------

+------------------------+---------+---+--------+---+---------+---+
| Statement of Earnings  | Year    |   | Year   |   | Year    |   |
|                        | 2004    |   | 2003   |   | 2002    |   |
+------------------------+---------+---+--------+---+---------+---+
| (Unit : Baht)          | Amount  | % | Amount | % | Amount  | % |
+------------------------+---------+---+--------+---+---------+---+
| REVENUES               |         |   |        |   |         |   |
+------------------------+---------+---+--------+---+---------+---+
| Sales and service      | 3,935,  | 9 | 3      | 9 | 3,011,  | 9 |
| income                 | 383,079 | 5 | ,998,7 | 6 | 683,795 | 7 |
|                        |         | % | 83,963 | % |         | % |
+------------------------+---------+---+--------+---+---------+---+
| Share of profit form   | 39,     | 1 | 35,2   | 1 | 18,     | 1 |
| investments in         | 803,761 | % | 48,175 | % | 407,409 | % |
| associated company     |         |   |        |   |         |   |
| accounted for under    |         |   |        |   |         |   |
| equity method          |         |   |        |   |         |   |
+------------------------+---------+---+--------+---+---------+---+
| Other incomes          |         |   |        |   |         |   |
+------------------------+---------+---+--------+---+---------+---+
| Selling Support        | 23,     | 1 | 30,1   | 1 | 25,     | 1 |
|                        | 743,216 | % | 28,953 | % | 329,515 | % |
+------------------------+---------+---+--------+---+---------+---+
| Revenue form reversal  | 24,     | 1 | 23,8   | 1 |         |   |
| of liabilities         | 605,557 | % | 18,723 | % |         |   |
+------------------------+---------+---+--------+---+---------+---+
| Revenue from reversal  | 44,     | 1 |        | 0 |         | 0 |
| of provision for       | 116,222 | % |        | % |         | % |
| contingent liabilities |         |   |        |   |         |   |
+------------------------+---------+---+--------+---+---------+---+
| Revenue from reversal  |         | 0 | 24,3   | 1 |         | 0 |
| of provision for       |         | % | 35,238 | % |         | % |
| refundable input vat   |         |   |        |   |         |   |
+------------------------+---------+---+--------+---+---------+---+
| Gain on sale of        | 10,     | 0 | 36,6   | 1 |         | 0 |
| investment in          | 868,197 | % | 24,352 | % |         | % |
| associated company     |         |   |        |   |         |   |
+------------------------+---------+---+--------+---+---------+---+
|   Revenue from         |         | 0 |        | 0 | 37,     | 1 |
|   reversal of          |         | % |        | % | 523,495 | % |
|   provision            |         |   |        |   |         |   |
|                        |         |   |        |   |         |   |
|   for impairment of    |         |   |        |   |         |   |
|   investment           |         |   |        |   |         |   |
+------------------------+---------+---+--------+---+---------+---+
|   Interest Income      | 35,     | 1 | 13,3   | 0 | 5,      | 0 |
|                        | 271,182 | % | 01,584 | % | 287,034 | % |
|                        |         |   |        |   |         |   |
+------------------------+---------+---+--------+---+---------+---+
| Others                 | 19,     | 0 | 10,5   | 0 | 15,     | 0 |
|                        | 068,502 | % | 74,199 | % | 098,770 | % |
+------------------------+---------+---+--------+---+---------+---+
| Total Other Incomes    | 157,    | 4 | 138,7  | 3 | 83,     | 3 |
|                        | 672,876 | % | 83,049 | % | 238,814 | % |
+------------------------+---------+---+--------+---+---------+---+
| TOTAL REVENUES         | 4,132,  | 1 | 4      | 1 | 3,113,  | 1 |
|                        | 859,716 | 0 | ,172,8 | 0 | 330,018 | 0 |
|                        |         | 0 | 15,187 | 0 |         | 0 |
|                        |         | % |        | % |         | % |
+------------------------+---------+---+--------+---+---------+---+
| EXPENSES               |         |   |        |   |         |   |
+------------------------+---------+---+--------+---+---------+---+
|   Cost of sales and    | 3,397,  | 8 | 3      | 8 | 2,616,  | 8 |
|   services             | 178,891 | 3 | ,537,8 | 5 | 385,623 | 4 |
|                        |         | % | 22,159 | % |         | % |
+------------------------+---------+---+--------+---+---------+---+
| Selling and            | 525,    | 1 | 494,5  | 1 | 390,    | 1 |
| administrative         | 041,955 | 2 | 14,449 | 2 | 997,376 | 3 |
| expenses               |         | % |        | % |         | % |
+------------------------+---------+---+--------+---+---------+---+
| Director’s             | 1,      | 0 | 1,6    | 0 | 1,      | 0 |
| remuneration           | 800,000 | % | 00,000 | % | 040,000 | % |
+------------------------+---------+---+--------+---+---------+---+
| TOTAL EXPENSES         | 3,924,  | 9 | 4      | 9 | 3,008,  | 9 |
|                        | 020,846 | 5 | ,033,9 | 7 | 422,999 | 7 |
|                        |         | % | 36,608 | % |         | % |
+------------------------+---------+---+--------+---+---------+---+
| EARNINGS BEFORE        | 208,    | 5 | 138,8  | 3 | 104,    | 3 |
| INTEREST EXPENSES      | 838,870 | % | 78,579 | % | 907,019 | % |
+------------------------+---------+---+--------+---+---------+---+
| INTEREST EXPENSES      | (38,3   | - | (34,08 | - | (11,4   | 0 |
|                        | 40,586) | 1 | 9,679) | 1 | 33,965) | % |
|                        |         | % |        | % |         |   |
+------------------------+---------+---+--------+---+---------+---+
| NET EARNINGS FOR THE   | 170,    | 4 | 104,7  | 3 | 93,     | 3 |
| YEAR                   | 498,284 | % | 88,900 | % | 473,054 | % |
+------------------------+---------+---+--------+---+---------+---+
| EARNINGS PER SHARE     | 0.20    |   | 0.14   |   | 0.13    |   |
+------------------------+---------+---+--------+---+---------+---+

+-----------------------------------------+-------+---------+---------+
| Statement of Cashflows                  | Year  | Year    | Year    |
|                                         | 2004  | 2003    | 2002    |
+-----------------------------------------+-------+---------+---------+
| (Unit : Baht)                           | A     | Amount  | Amount  |
|                                         | mount |         |         |
+-----------------------------------------+-------+---------+---------+
| CASH FLOWS FROM (USED IN) OPEARATING    |       |         |         |
| ACTIVITIES                              |       |         |         |
+-----------------------------------------+-------+---------+---------+
| Net earnings for the year               | 1     | 104,    | 93,     |
|                                         | 70,49 | 788,900 | 473,054 |
|                                         | 8,284 |         |         |
+-----------------------------------------+-------+---------+---------+
| Adjustment to reconcile net earnings to |       |         |         |
| net cash provided by (used in)          |       |         |         |
| operating activities:-                  |       |         |         |
+-----------------------------------------+-------+---------+---------+
| Gain on sale of investment in           | (1    | (36,6   | -       |
| associated company                      | 0,868 | 24,352) |         |
|                                         | ,197) |         |         |
+-----------------------------------------+-------+---------+---------+
| Share of profit from investments in     | (3    | (35,2   | (18,4   |
| associated company accounted for under  | 9,803 | 48,175) | 07,409) |
| equity method                           | ,761) |         |         |
+-----------------------------------------+-------+---------+---------+
| Depreciation and amortisation           | 44,69 | 42,     | 26,     |
|                                         | 6,764 | 114,385 | 906,469 |
+-----------------------------------------+-------+---------+---------+
|   Goodwill Amortisation                 | 68    | -       | -       |
|                                         | 9,937 |         |         |
+-----------------------------------------+-------+---------+---------+
| Loss on impairment of investments in    | 28    | (1      | 786,069 |
| other companies (Reversal)              | 5,691 | 29,971) |         |
+-----------------------------------------+-------+---------+---------+
| (Gain) loss on disposal of assets       | 1,11  | (3      | (4,1    |
|                                         | 7,983 | 01,509) | 15,720) |
+-----------------------------------------+-------+---------+---------+
| Unrealised (gain) loss on exchange      | 31    | (2      | 135,715 |
|                                         | 4,263 | 58,871) |         |
+-----------------------------------------+-------+---------+---------+
| Allowance for doubtful accounts         | (     | 5,      | 7,      |
|                                         | 2,621 | 742,187 | 964,448 |
|                                         | ,363) |         |         |
+-----------------------------------------+-------+---------+---------+
| Revenue from reversal of liabilities    | (2    | (23,8   | -       |
|                                         | 4,605 | 18,723) |         |
|                                         | ,557) |         |         |
+-----------------------------------------+-------+---------+---------+
| Revenue from reversal of provision for  | (4    | -       | -       |
| contingent liabilities                  | 4,116 |         |         |
|                                         | ,222) |         |         |
+-----------------------------------------+-------+---------+---------+
| Revenue form reversal of provision for  | -     | (24,3   | -       |
| refundable input vat                    |       | 35,238) |         |
+-----------------------------------------+-------+---------+---------+
| Provision for other current assets and  | 48    | 2,      | 3,      |
| other asset                             | 9,551 | 421,012 | 850,343 |
+-----------------------------------------+-------+---------+---------+
| Provision for inventory and written off | 8,32  | 4,      | 5,      |
|                                         | 7,089 | 265,935 | 080,260 |
+-----------------------------------------+-------+---------+---------+
| Provision for warranty                  |       |         |         |
+-----------------------------------------+-------+---------+---------+
| Revenue from reversal of provision for  | -     | -       | (37,5   |
| impairment of investment                |       |         | 23,495) |
+-----------------------------------------+-------+---------+---------+
| Provision for warranty                  | (741  | 7,      | 864,302 |
|                                         | ,940) | 538,337 |         |
+-----------------------------------------+-------+---------+---------+
| Loss from cancellation of project sale  | 1,03  | -       | -       |
|                                         | 6,128 |         |         |
+-----------------------------------------+-------+---------+---------+
| Earnings from operating before change   | 1     | 46,     | 79,     |
| in operating assets and liabilities     | 04,69 | 153,917 | 014,036 |
|                                         | 8,650 |         |         |
+-----------------------------------------+-------+---------+---------+
| Operating asset (increase) decrease     |       |         |         |
+-----------------------------------------+-------+---------+---------+
| Trade accounts receivable               | (7    | (172,3  | (201,5  |
|                                         | 5,393 | 27,055) | 36,244) |
|                                         | ,401) |         |         |
+-----------------------------------------+-------+---------+---------+
| Amounts due to related parties          | 3,02  | (10,4   | 4,      |
|                                         | 4,324 | 40,544) | 108,127 |
+-----------------------------------------+-------+---------+---------+
| Inventories                             | (     | 16,     | (46,3   |
|                                         | 86,21 | 639,780 | 18,391) |
|                                         | 8,393 |         |         |
+-----------------------------------------+-------+---------+---------+
| Financial lease receivables             | 1     | (586,5  | (79,9   |
|                                         | 60,56 | 40,580) | 34,106) |
|                                         | 5,830 |         |         |
+-----------------------------------------+-------+---------+---------+
|   Other current assets                  | 22,37 | (30,2   | (17,1   |
|                                         | 0,209 | 61,555) | 30,621) |
+-----------------------------------------+-------+---------+---------+
| Other non-current assets                | (     | 29,     | (29,7   |
|                                         | 8,251 | 293,455 | 80,485) |
|                                         | ,065) |         |         |
+-----------------------------------------+-------+---------+---------+
| Operating liabilities (increase)        |       |         |         |
| decrease                                |       |         |         |
+-----------------------------------------+-------+---------+---------+
| Trade account payable                   | (     | 80,     | 6,      |
|                                         | 1,427 | 774,237 | 860,544 |
|                                         | ,921) |         |         |
+-----------------------------------------+-------+---------+---------+
| Amounts due to related parties          | 19,44 | 4,      | 995,952 |
|                                         | 0,525 | 661,184 |         |
+-----------------------------------------+-------+---------+---------+
| Other current liabilities               | 83,41 | 80,     | (5,4    |
|                                         | 4,190 | 325,156 | 15,058) |
+-----------------------------------------+-------+---------+---------+
| Other non-current liabilities           | -     | -       | (28,2   |
|                                         |       |         | 61,069) |
+-----------------------------------------+-------+---------+---------+
| Net cash flows from (used in) operating | 2     | (541,7  | (317,3  |
| activities                              | 22,22 | 22,005) | 97,315) |
|                                         | 2,948 |         |         |
+-----------------------------------------+-------+---------+---------+

  ------------------------------------------ --------------- --------------- --------------
  Statement of Cashflows (continued)         Year 2004       Year 2003       Year 2002

  (Unit : Baht)                              Amount          Amount          Amount

  CASH FLOWS FROM (USED IN) INVESTING                                         
  ACTIVITIES                                                                 

  Decrease (increase) in fixed deposits at   44,390,725      (10,744,905)    (36,653,000)
  banks and deposits with restriction                                        

  Decrease (increase) in short-term          -               -               70,792,766
  investments- in bill of exchange and debt                                  
  securities                                                                 

  Decrease (increase) in investment in other (5,925,000)     (5,925,000)     -
  company                                                                    

  Decrease (increase) in investment in       (24,343,789)    (48,126,439)    -
  associated company                                                         

  Dividend receive from associated company   14,296,975      9,199,125       5,572,300

  Cash receive from sale of trading security 16,458,750      46,806,192      -

  Purchase of property, plant and            (68,053,396)    (30,125,696)    (27,961,908)
  equipment - net                                                            

  Cash receipt from sale of property, plant  2,219,293       -               -
  and equipment                                                              

  Net cash flows from (used in) investing    (20,956,442)    (38,916,723)    11,750,158
  activities                                                                 

                                                                              

  CASH FLOWS FROM (USED IN) FINANCING                                         
  ACTIVITIES                                                                 

  Increase in bank overdrafts and loan from  82,553,286      194,507,061     116,150,730
  financial institutions                                                     

  Increase (decrease) in trust receipts      40,802,175      (58,404,067)    58,404,067

  Increase in long-term loans                (256,830,036)   412,370,479     58,187,216

  Increase (decrease) in accounts payable -  0               0               26,714,016
  factoring                                                                  

  Increase (decrease) in liabilities under   (13,646,522)    (5,776,765)     48,675,253
  financial lease agreement                                                  

  Cash receipt from increase in share        6,250,000       115,790,000     -
  capital                                                                    

  Dividend paid                              -               (119,676,047)   (18,496,655)

  Net cash flows from (used in) financing    (140,871,097)   538,810,661     289,634,627
  activities                                                                 

  Net increase (decrease) in cash and cash   60,395,409      (41,828,067)    (16,012,530)
  equivalents                                                                

  Cash and cash equivalents at beginning of  17,274,736      59,102,203      75,114,733
  the year                                                                   

  Cash and cash equivalents at end of the    77,670,145      17,274,136      59,102,203
  year                                                                       
  ------------------------------------------ --------------- --------------- --------------

-   SIGNIFICANT FINANCIAL RATIOS

  The significant financial ratios of SVOA Public Co.,Ltd were as
  followings:

+---+-------------------------------------+---------+--------+--------+
|   |                                     | Year    | Year   | Year   |
|   |                                     | 2004    | 2003   | 2002   |
+---+-------------------------------------+---------+--------+--------+
|   | Liquidity Ratio                     |         |        |        |
+---+-------------------------------------+---------+--------+--------+
| 1 | Current ratio (time)                | 1.2     | 1.2    | 1.4    |
+---+-------------------------------------+---------+--------+--------+
| 2 | Quick Ratio (time)                  | 0.7     | 0.6    | 0.8    |
+---+-------------------------------------+---------+--------+--------+
| 3 | Cash Ratio (time)                   | 0.1     | 0.0    | 0.1    |
+---+-------------------------------------+---------+--------+--------+
| 4 | Account receivable Turnover (time)  | 5.5     | 6.8    | 7.5    |
+---+-------------------------------------+---------+--------+--------+
| 5 | Collection Period (days)            | 66      | 53     | 48     |
+---+-------------------------------------+---------+--------+--------+
| 6 | Inventory Turnover (time)           | 10.0    | 11.4   | 8.7    |
+---+-------------------------------------+---------+--------+--------+
| 7 | Inventory Turnover Period (day)     | 36      | 32     | 41     |
+---+-------------------------------------+---------+--------+--------+
| 8 | Account Payable Turnover (time)     | 8.0     | 9.6    | 8.1    |
+---+-------------------------------------+---------+--------+--------+
| 9 | Payment Period (days)               | 45      | 38     | 44     |
+---+-------------------------------------+---------+--------+--------+
| 1 | Cash Cycle                          | 57      | 47     | 45     |
| 0 |                                     |         |        |        |
+---+-------------------------------------+---------+--------+--------+
|   | Profitability Ratio                 |         |        |        |
+---+-------------------------------------+---------+--------+--------+
| 1 | Gross Profit Margin (%)             | 13.7%   | 11.5%  | 13.1%  |
+---+-------------------------------------+---------+--------+--------+
| 2 | Net Profit Margin (%)               | 4.1%    | 2.5%   | 3.0%   |
+---+-------------------------------------+---------+--------+--------+
| 3 | Return to shareholders (%)          | 18.1%   | 13.7%  | 14.4%  |
+---+-------------------------------------+---------+--------+--------+
|   |  Efficiency Ratio                   |         |        |        |
+---+-------------------------------------+---------+--------+--------+
| 1 | Return on Assets (%)                | 7.1%    | 5.4%   | 7.0%   |
+---+-------------------------------------+---------+--------+--------+
| 2 | Return on Fixed Assets (%)          | 76.0%   | 52.2%  | 45.0%  |
+---+-------------------------------------+---------+--------+--------+
| 3 | Assets Turnover (time)              | 1.7     | 2.2    | 2.3    |
+---+-------------------------------------+---------+--------+--------+
|   | Financial Policy Ratio              |         |        |        |
+---+-------------------------------------+---------+--------+--------+
| 1 | Debt to equity ratio (time)         | 1.3     | 1.8    | 1.2    |
+---+-------------------------------------+---------+--------+--------+
| 2 | Interest coverage ratio (time)      | 5.4     | 4.1    | 9.2    |
+---+-------------------------------------+---------+--------+--------+
| 3 | Interest coverage ratio (time)      | 1.0     | 0.8    | 1.4    |
+---+-------------------------------------+---------+--------+--------+
| 4 | Dividend Yield                      | 60.7%   | 61.1%  | 59.4%  |
+---+-------------------------------------+---------+--------+--------+

]

(2) EXPLANATORY AND ANAYSIS OF FINANCIAL POSITION AND OPERATING RESULTS

(a) Operating Results per business plan

  - None –

(b) Operating Performance

1) Overall Operating Performance

The Company’s operating performance is divided into 3 main business
units based on the aforementioned business operation structure, namely
ITDSBU, SISBU, and ITPSBU operated under SVOA.

-   Operating Performance

As for the 2004 operating performance ending on December 31, the Company
had a net profit of Baht 170.5 million, an increase from last year of
Baht 65.7 million or 62.5%. The Company was still on tax holiday due to
tax loss from the years before.

+------------------+--------+--------+-------+-------+-------+-------+
| (Unit : Million  | 2004   |        | 2003  |       | Inc   |       |
| Baht)            |        |        |       |       | rease |       |
|                  |        |        |       |       | (Decr |       |
|                  |        |        |       |       | ease) |       |
+------------------+--------+--------+-------+-------+-------+-------+
| Total Income     | 4      | 100.0% | 4,    | 1     | -39.9 | 2.9%  |
|                  | ,132.9 |        | 172.8 | 00.0% |       |       |
+------------------+--------+--------+-------+-------+-------+-------+
| Total Expense    | -3     | -95.1% | -4,   | -     | -     | 1.3%  |
|                  | ,924.9 |        | 033.9 | 96.7% | 109.9 |       |
+------------------+--------+--------+-------+-------+-------+-------+
| Interest paid    | -38.3  | -0.9%  | -34.1 | -0.8% | 4.2   | 12.3% |
+------------------+--------+--------+-------+-------+-------+-------+
| Corporate Income | 0.0    | 0.0%   | 0.0   | 0.0%  | 0.0   | NA    |
| Tax              |        |        |       |       |       |       |
+------------------+--------+--------+-------+-------+-------+-------+
| Profit           | 170.5  | 4.0%   | 104.8 | 2.5%  | 65.7  | 62.7% |
+------------------+--------+--------+-------+-------+-------+-------+

-   Analysis of revenue and gross profit

+--------------------+--------+------+--------+------+------+------+
| (Unit : Million    | 2004   |      | 2003   |      | Incr |      |
| Baht)              |        |      |        |      | ease |      |
|                    |        |      |        |      | (D   |      |
|                    |        |      |        |      | ecre |      |
|                    |        |      |        |      | ase) |      |
+--------------------+--------+------+--------+------+------+------+
| Sales and service  | 3      | 10   | 3      | 10   | -    | -    |
| income             | ,935.4 | 0.0% | ,998.8 | 0.0% | 63.4 | 1.6% |
+--------------------+--------+------+--------+------+------+------+
| Sale Cost          | 3      | 8    | 3      | 8    | -1   | -    |
|                    | ,397.2 | 6.9% | ,537.8 | 8.5% | 40.6 | 0.4% |
+--------------------+--------+------+--------+------+------+------+
| Gross Profit       | 538.2  | 1    | 461.0  | 1    | -204 | -4   |
|                    |        | 3.1% |        | 1.5% |      | 4.2% |
+--------------------+--------+------+--------+------+------+------+

In 2004, there was a slight decrease in sale and service revenue of Baht
63.4 million or 1.6%, unlike in 2003, the Company won no major
government bid. That resulted from the fact that some of the projects
that the Company had joined in the bid were cancelled and the bid was
postponed to a later time, and that the Company failed to win the
lottery system service bid of the Government Lottery Office (On January
31, 2005, the Administrative Court accepted the Company’s petition
requesting the Government Lottery Office to revoke or quash its
directives that would debar the Company from entering bid competitions.
The petition is at the moment in consideration of The Administrative
Court.). (See the analysis of income structure of each business unit in
No.2.)

-   Analysis of Expenditure

+-----------------------+------+-------+------+-------+-----+-------+
| (Unit : Million Baht) | 2004 |       | 2003 |       | In  |       |
|                       |      |       |      |       | cre |       |
|                       |      |       |      |       | ase |       |
|                       |      |       |      |       | (   |       |
|                       |      |       |      |       | Dec |       |
|                       |      |       |      |       | rea |       |
|                       |      |       |      |       | se) |       |
+-----------------------+------+-------+------+-------+-----+-------+
| Sale and              | 5    | 99.7% | 4    | 99.7% | 3   | 6.5%  |
| Administrative        | 25.0 |       | 94.5 |       | 2.3 |       |
| expenditure           |      |       |      |       |     |       |
+-----------------------+------+-------+------+-------+-----+-------+
| Remuneration for      | 1.8  | 0.3%  | 1.6  | 0.3%  | 0.2 | 12.5% |
| Board of Directors    |      |       |      |       |     |       |
+-----------------------+------+-------+------+-------+-----+-------+
| Total Expenses        | 5    | 1     | 4    | 1     | 3   | 6.6%  |
|                       | 26.8 | 00.0% | 96.1 | 00.0% | 2.5 |       |
+-----------------------+------+-------+------+-------+-----+-------+

Sale and administrative expenditure increased by Baht 32.5 million or
6.6% as result of the following :

-   For the first time after 2002 and 2003 of bonus free, the Company
    offered its employees a bonus of one-month average each, the amount
    totaling Baht 11 million.

-   The Company insured risk of bad debts at IT Distribution Strategic
    Business Unit with a local insurance company, creating a burden in
    bad debt insurance premium of Baht 3.3 million for the Company

-   The Company recorded loss from the devalue of long-term investment
    assets of Baht 5.8 million in a company which has been satisfying
    its debt payment obligation.

As for other expenditures, the Company still curbed its fixed cost to
maintain at zero growth while simultaneously controlling variable costs
including marketing cost, bad debt cost, and rate of outdated goods to
vary less than the rate of sale and service income expansion.

-   Analysis of Financial Cost

+----------------+------+---------+--------+--------+--------+--------+
| (Unit :        | 2004 |         | 2003   |        | In     |        |
| Million Baht)  |      |         |        |        | crease |        |
|                |      |         |        |        | (Dec   |        |
|                |      |         |        |        | rease) |        |
+----------------+------+---------+--------+--------+--------+--------+
| Earned         | -    | -92.2%  | -13.3  | -39.0% | -22.0  | 165.4% |
| interest       | 35.3 |         |        |        |        |        |
+----------------+------+---------+--------+--------+--------+--------+
| Interest Paid  | 38.3 | 100.0%  | 34.1   | 100.0% | 4.2    | 12.3%  |
+----------------+------+---------+--------+--------+--------+--------+
| Net            | 3.0  | 7.8%    | 20.8%  | 61.0%  | -17.8  | -85.6% |
+----------------+------+---------+--------+--------+--------+--------+

In 2004, the Company had a paid interest of Baht 38.3 million and an
earned interest of baht 35.3 million. That was a direct effect from
project financing from banks and financial institutions to accord
interest gained from financial lease receivables. There was an unearned
interest of Baht 38 million to be accounted for at the end of the year
on December 31, 2004. (See notes to financial statements No. 8)

-   Analysis of profit share from investment in associated company by
    means of equity method

There was an increase in profit share from investment in associated
company of Baht 4.6 million or 12.9% as a result of good operating
performance of IT CITY Plc.

-   Analysis of other revenue

+-------------------+------+--------+-------+-------+-------+-------+
| (Unit : Million   | 2004 |        | 2003  |       | Inc   |       |
| Baht)             |      |        |       |       | rease |       |
|                   |      |        |       |       | (Decr |       |
|                   |      |        |       |       | ease) |       |
+-------------------+------+--------+-------+-------+-------+-------+
| Revenue from sale | 23.7 | 19.1%  | 30.1  | 24.0% | -6.4  | -     |
| promotion         |      |        |       |       |       | 21.3% |
+-------------------+------+--------+-------+-------+-------+-------+
| Revenue from      | 24.6 | 19.8%  | 23.8  | 19.0% | 0.8   | 3.4%  |
| reversal debt     |      |        |       |       |       |       |
+-------------------+------+--------+-------+-------+-------+-------+
| Revenue from      | 44.1 | 35.5%  | 0.0   | 0.0%  | 44.1  | 100%  |
| potential         |      |        |       |       |       |       |
| reversal          |      |        |       |       |       |       |
| provision         |      |        |       |       |       |       |
+-------------------+------+--------+-------+-------+-------+-------+
| Revenue from      | 0.0  | 0.0%   | 24.3  | 19.4% | -24.3 | -100% |
| deferred tax      |      |        |       |       |       |       |
| return            |      |        |       |       |       |       |
+-------------------+------+--------+-------+-------+-------+-------+
| Profit from sale  | 10.9 | 8.8%   | 36.6  | 29.2% | -25.7 | -     |
| of investment in  |      |        |       |       |       | 70.2% |
| associated        |      |        |       |       |       |       |
| company           |      |        |       |       |       |       |
+-------------------+------+--------+-------+-------+-------+-------+
| Others            | 19.1 | 54.3%  | 10.6  | 31.1% | 8.5   | 80.2% |
+-------------------+------+--------+-------+-------+-------+-------+
| Net               | 1    | 100.0% | 125.4 | 1     | -3    | -2.4% |
|                   | 22.4 |        |       | 00.0% |       |       |
+-------------------+------+--------+-------+-------+-------+-------+

-   Revenue from sale promotion, which is part of sale activities,
    decreased from the same period of last year by Baht 6.4 million or
    21.3% due to the financial support in sale of Baht 44.1 million the
    Company received last year by participating in the government ICT
    computer project.

-   In 2004, potential reversal provision of Baht 44.1 million turned
    out to be an income as such a potential debt burden was discharged.

-   In the third quarter, the Company sold 3 million stocks of IT CITY
    Plc. in the Stock exchange of Thailand, generating a profit of Baht
    10.9 million from such an operation.

    2.  Past operating performance of each business unit

  Revenue from sales and services

  Operating results of each Strategic Business Unit (SBU) of SVOA Puclic
  Company Limited for the year ended 31 December 2003 can be summarized
  as followings:

  ---------------- -------- ----- -------- ---- -------- ----- -------- ---- -------- ----- -------- ----
                   2004                         2003                         2002                    

                   Income   %     Gross    %    Income   %     Gross    %    Income   %     Gross    %
                                  Profit                       Profit                       Profit   

  IT Distribution  2,246    57    270      12   2,091    52    233      11   1,835    61    176      10
  Strategic                                                                                          

  Business Unit                                                                                       
  (ITDSBU)                                                                                           

  Systems          1,054    27    229      22   715      18    102      14   921      31    191      21
  Integration                                                                                        
  Strategic                                                                                          

  Business Unit                                                                                       
  (SISBU)                                                                                            

  IT Project       553      14    39       7    1,193    30    126      11   256      8     28       11
  Strategic                                                                                          

  Business Unit                                                                                       
  (ITPSBU)                                                                                           

  Components       82       2     0                                                                   
  Distribution                                                                                       

  Business Unit                                                                                       
  (CDBU)                                                                                             

  TOTAL            3,935    100   538      14   3,999    100   461      12   3,012    100   395      13
  ---------------- -------- ----- -------- ---- -------- ----- -------- ---- -------- ----- -------- ----

-   IT Distribution Strategic Business Unit : ITDSBU

  2004 saw a continuing growth in sales and service revenue in the IT
  Distribution Strategic Business Unit. Compared to the same period of
  2002-2003, gross profit rate was higher this year due to “SVOA PC”
  product drive. In 2004, the Company perpetually generated great income
  from SVOA PC and had the biggest market share among local brands.

  In 2004, under the “business alliances” concept, ITDSBU also extended
  its distribution channels for computer products into five foreign
  countries, namely Nepal, Sri Lanka, Indonesia, Myanmar and Laos.

  In the second quarter of 2004, the Company introduced the Components
  Distribution Business Unit (CDBU) under the supervision of ITDSBU to
  accommodate the supply of components used both as raw materials for
  SVOA PCs and as finished goods to sell and later incorporated CDBU
  into AET Technology Co., Ltd. In which the Company has held a 49%
  stake in the fourth quarter to avoid conflict of interest.

-   System Integration Strategic Business Unit : SISBU

  Sales and service revenue in the Systems Integration Strategic
  Business Unit rose this year as a number of banks had plans for an
  upgrade in the ATM system which in turn created a sale opportunity for
  the Company. Delivery and record of revenue would be undertaken
  continuously from the third quarter of 2004 to 2005. Besides, SISBU
  still focused more on outsourcing service and, since the second
  quarter, the Company had initiated installation work so as to provide
  full-scale banking service to the Islamic Bank of Thailand.

-   IT Project Strategic Business Unit : ITPSBU

  2004 saw a drop in sales and service revenue in the IT Project
  Strategic Business Unit as part of income from grand projects was
  account for in the previous year, particularly the computer leasing
  project of schools in Bangkok Metropolitan Administration whose value
  plus value added tax amounted to Baht 633 million. The vicissitudes in
  ITPSBU’s sales and gross profit depended on how many government bids
  the Company would be able to win.

3) Operating results compared with forecasts (if the Company has filed
its forecasts)

Filing Submission

  - None -

(a) Financial Position

1.  Assets

-   Analysis of assets structure

  ----------------------- --------- -------- --------- -------- ------------ --------
  (Unit : Million Baht)   2004               2003               Increase     
                                                                (Decrease)   

  Total current assets    1,515.4   61.9%    1,406.8   59.6%    108.6        7.7%

  Investments accounted   271.0     11.1     201.4     8.5%     69.6         34.6%
  for under the equity                                                       
  method                                                                     

  Other long term         23.0      0.9%     17.4      0.7%     5.6          32.2%
  Investment                                                                 

  Land, building and      291.6     11.9%    274.6     11.6%    17.0         6.2%
  equipment-Net                                                              

  Financial lease         262.1     10.7%    383.9     16.3%    -121.8       -31.7%
  receivables-Net                                                            

  Total other non-current 86.0      3.5%     77.2      3.3%     8.8          11.4%
  assets                                                                     

  Total Assets            2,449.1   100.0%   2,361.2   100.0%   87.9         3.7%
  ----------------------- --------- -------- --------- -------- ------------ --------

The Company had the total assets of Baht 2,499.1 million, a rise of Baht
87.9 million from last year or 3.7% reasons for that are as follows :

1.  Current assets increased by Baht 108.6 million or 7.7% because of
    the following :

    -   Cash and cash equivalents rose by Baht 60.4 million or 349.6%.
        (see analysis in Section 3.1 Cash Flow)

    -   Accounts receivable increased by Baht 72.6 million or 10.7% from
        immense business expansion this year. This year, the Company’s
        debt collection period averaged at 66 days.

    -   Merchandise inventory improved by Baht 78 million or 26% from
        material purchase for manufacturing and finished products for
        sale. Inventory circulation rate averaged at 36 days.

    -   Current portion of financial lease receivables dropped by Baht
        35 million or 12.9% due to the account of income from financial
        lease.

2.  Investment accounted for by means of equity of IT CITY Plc. rose by
    Baht 69.5 million or 34.5% resulting directly from good operating
    performance of IT CITY Plc. In the first quarter, the Company
    received a dividend of Baht 14.3 million. Moreover, the Company
    bought and sold IT CITY’s shares as well as common stock warrants of
    6,505,646 shares. That allowed the Company to hold 88.202 million
    shares of IT CITY, which accounted for 32.59% of the called-up
    capital.

3.  Current portion of financial lease receivables dropped by Baht 121.8
    million or 31.7% due to the financial lease payment.

2) Quality of Assets

1.  Assets

  The Company reserved asset devalue as follows:

  ------------------------------------ ----------------- ----------------
  (Unit : Million Baht)                2004              2003

  Other long-term investments          28.8              22.9

  Reserve for assets devalue           -5.8              5.5

  Long-term investment-Net             23.0              17.4
  ------------------------------------ ----------------- ----------------

The Company’s reserve of assets devalue of long-term investment was
based on operating performance and financial status as manifested in the
financial statements of those particular companies.

2.2 Debtors

Debtors’ arrears were divided according to the period of accrued
liabilities as follows:

  -------------------------- ---------- ---------- ----------- -----------
  (Unit : Million Baht)      2004                  2003        

  Not Yet due                540.2      70.3%      424.2       61.0%

  Past due                                                     

  Less than 3 months         176.5      23.0%      253.5       36.4%

  3-6 months                 35.4       4.6%       7.3         1.0%

  6-12 months                7.9        1.0%       4.1         0.6%

  Over 12 months             8.3        1.1%       6.8         1.0%

  Total accounts receivable  768.3      100.0%     695.9       100.0%

  Reserve for bad debts      -15.2      -2.0%      -15.4       -2.2%

  Accounts Receivable - net  753.1      98.0%      680.5       97.8%
  -------------------------- ---------- ---------- ----------- -----------

The Company had a policy to reserve a sum for bad debts by appraising
the number of debts the Company had been unable to collect based on
experience in payment collection and current status of accrued debtors
on the date in the balance sheet.

2004 was the first year the Company guarded against risks of bad debts,
especially debtors of ITDSBU, by insuring with an insurance company in
Thailand.

1.  Liquidity

3.1 Cash flow

  Cash flow of the Company was as follows:

+---------------------------------------+---------------+--------------+
| (Unit : Million Baht)                 | 2004          | 2003         |
+---------------------------------------+---------------+--------------+
| Net cash flow spent in operating      | 222.2         | -541.7       |
| activities                            |               |              |
+---------------------------------------+---------------+--------------+
| Cash flow spent in investment         | -20.9         |   -38.9      |
| activities                            |               |              |
+---------------------------------------+---------------+--------------+
| Cash flow spent in fund raising       | -140.9        | 538.8        |
| activities                            |               |              |
+---------------------------------------+---------------+--------------+
| Increase (decrease) of net cash and   | 60.4          | -41.8        |
| savings                               |               |              |
+---------------------------------------+---------------+--------------+

In 2004, the Company’s business expanded tremendously as evident in the
Company’s cash flow of Baht 104.7 million considered in terms of net
cash flow spent in operating activities prior to changes in assets and
operating debt. Due to great business expansion, the Company raised fund
in the form of such credits from financial institutions as overdrafts,
short-term circulating capital and long-term loan to primarily support
trade accounts receivable and inventory. As can be seen, trade accounts
receivable increased by Baht 75.4 million while merchandise inventory
rose by Baht 86.2 million and financial lease receivables paid up Baht
160.6 million. All that left the Company with operating cash of Baht
222.2 million.

3.2 Significant liquidity ratios

From the ratio table in section ( c ) above, the 2004 liquidity, just
like the previous year, was adequate to pay off due short-term
liabilities as the Company valued financial discipline and matching
fund. That is, ITDSBU would exploit investment from short-term
investment sources while ITPSBU and SISBU would use investment from
project investment appropriate to each project duration.

3.  Capital expenditure

In 2004, the Company continued to spend its capital on assets for lease
such as computers and large components as consumer behavior shifted from
buying to leasing and outsourcing. The Company would invest in assets
for lease only if it obtained the work.

To decrease its direct circulating capital expenditure that was supposed
to be spent on product purchase for sale as well as accommodate ITDSBU’s
debtors selling on credit, the Company simultaneously requested
financial institutions for their direct support of long-term loan and
others to accord the same temporal condition and sale-and-lease back.

As for return rate from such an investment, the Company separated
operating return from return on investment. In all lease service
contracts, gross return rate must be equal to that of direct sale to the
customers. Also, return on investment left must suffice for financial
cost burden throughout the contracts.

3.4 Capital Expenditure Plan

In 2005, the Company will set aside a budget of Baht 20 million for a
new warehouse as the current one in Ratburana was fully used. The new
warehouse is expected to open for use in the fourth quarter.

Aside from investing in the new warehouse, the Company still maintains
its future investment expenditure plan of Baht 101 million for providing
5-year full-scale banking system service to the Islamic Bank of
Thailand. Such an investment will be an important stepping-stone to
other outsourcing services in the future.

1.  Sources of Investment

    1.  Appropriateness of investment structure

  -------------------------------------------------- ---------- ----------
                                                     2004       2003

  Ratio of total liabilities to total assets (time)  0.57       0.64

  Ratio of total liabilities to shareholders’ equity 1.34       1.80
  (time)                                                        
  -------------------------------------------------- ---------- ----------

As can be seen, change in the Company’s investment structure diminished
this year. The Company spent by using its investment source in the form
of liabilities accounting for 57% of the total assets whereas another
43% came from share capital. That means the Company depended 1.34 time
more on liabilities investment source than on share capital. The Company
still maintained the policy that encouraged financial institutions to
directly support a variety of projects and transferred debt payment
rights to those institutions to relieve the pressure of using share
capital.

2.  Causes of change in shareholders’ equity

  Analysis of shareholders’ equity structure

  ----------------------- --------- -------- -------- --------- -------------------- --------
  (Unit: Million Baht)    2004               2003               Increase(Decrease)   

  Outstanding and paid-up 862.0     82.5%    855.8    101.6%    6.2                  0.7%
  capital stock                                                                      

  Premium on ordinary     712.2     68.2%    712.2    84.6%     0.0                  0.0%
  shares                                                                             

  Discount on ordinary    -900.0    -86.1%   -900.0   -106.9%   0.0                  0.0%
  shares                                                                             

  Premium on share of     78.8      7.5%     52.8     6.3%      26.0                 49.2%
  associated company                                                                 

  Retained earnings       291.7     27.9%    121.2    14.4%     170.5                140.7%

  Total Shareholders’     1,044.7   100.0%   842.0    100.0%    202.7                24.1%
  equity                                                                             
  ----------------------- --------- -------- -------- --------- -------------------- --------

Shareholders’ equity of the Company amounted to Baht 1,044.7 million, an
increase of Baht 202.7 million or 24.1% from last year, resulting from
operating profits totaling Baht 170.5 million.

-   Outstanding and paid-up capital stock increased by Baht 6.2 million
    as,

  In the second quarter of 2004, shareholders exercised their rights to
  the warrants of 6,250,000 units priced at 1 Baht yielding the total of
  Baht 6.25 million.

-   Premium on shares stood at Baht 26 million as,

  In the first quarter of 2004, IT CITY Plc., an associated company,
  sold 20 million ordinary shares to increase capital priced at 1 Baht
  per share to specific investors at 8 Baht per share. That associated
  company recorded premium on ordinary shares of Baht 138.7 million in
  its premium on shares account. Based on the equity method, the Company
  recorded an additional amount of Baht 41 million in its financial
  statements and was exhibited in the balance sheet under the section
  “premium on share of associated company”. The account balance on March
  31, 2004 was Baht 93.8 million.

  In the second of quarter of 2004, holders exercised their warrant
  rights and bought 17,726,529 IT CITY Plc. shares priced at 1 Baht
  each. Thus, IT CITY Plc. registered an increase of paid-up stock from
  Baht 225,000,000 (225,000,000 ordinary shares at 1 baht each) to Baht
  242,726,529 (242,726,529 ordinary shares at 1 Baht each).

  During the third quarter of 2004, the Company sold the investment in 3
  million IT City Plc. Ordinary shares generating a profit of baht 10.9
  million. Such selling reduced the Company’s investment proportion in
  that company to 32.42% and the balance sheet amounted to baht 80.12
  million.

  In the fourth quarter of 2004, holders exercised their warrant rights
  and bought 27.89 million IT City Plc. Shares priced at 1 baht each.
  The Company exercised its warrant rights to buy 8.25 million shares
  priced at 1 baht each as well. That lessened the Company’s investment
  proportion there to 32.59% and the balance of the “premium on share of
  associated company” account exhibited in the shareholders balance
  sheet amounted to baht 79 million.

-   Accumulated profit improved by baht 170.5 million because of the
    Company’s own operating performance in 2004.

    1.  Liabilities

    -   Analysis of liability structure

+--------------------+------+-------+-------+-------+-------+--------+
| (Unit: Million     | 2004 |       | 2003  |       | Inc   |        |
| Baht)              |      |       |       |       | rease |        |
|                    |      |       |       |       | (Decr |        |
|                    |      |       |       |       | ease) |        |
+--------------------+------+-------+-------+-------+-------+--------+
| C                  | 1,2  | 87.9% | 1,    | 79.5% | 26.2  | 2.2%   |
| urrent Liabilities | 34.2 |       | 208.0 |       |       |        |
+--------------------+------+-------+-------+-------+-------+--------+
| Non-current        | 1    | 12.1% | 311.3 | 20.5% | -     | -45.3% |
| Liabilities        | 70.2 |       |       |       | 141.1 |        |
+--------------------+------+-------+-------+-------+-------+--------+
| Total sh           | 1,4  | 1     | 1,    | 1     | -     | -7.6%  |
| areholders’ equity | 04.4 | 00.0% | 519.3 | 00.0% | 114.9 |        |
+--------------------+------+-------+-------+-------+-------+--------+

  The Company’s total liabilities were baht 1,404.4 million, a decrease
  of baht 114.9 million or 7.6% on account of the following:

-   Current liabilities slightly rose by baht 26.2 million or 2.2%,
    which was direct effect from debt burden triggered by business
    expansion previously mentioned. Liabilities form banks and financial
    institutions went up by baht 123.4 million or 31.4% while current
    portion of long-term bank loan declined by baht 128.7 million or
    68.6% following paid-up settlement. There were increases in trade
    accounts payable and other current liabilities of baht 17.9 million
    and baht 14.3 million respectively, with the debt payment period
    increasing to 43 days. The Company still perpetuated the pay-back
    policy that offered a 1.5-2% cash discount to those creditors who
    made a debt payment before due date.

-   Non- current liabilities increased by baht 141.1 million or 45.3%
    resulting from a great amount of debt payment by current portion of
    long-term financial lease of baht 72.2 million shown under current
    liabilities.

-   Debt burden to banks and financial institutions

+------------+-----------+----------+---------+--------+-------------+
| Item       | Balance   | Due      | I       | Se     | R           |
|            |           | period   | nterest | curity | estrictions |
|            | (Baht)    |          | Rate    |        | under loan  |
|            |           |          |         |        | contract    |
+------------+-----------+----------+---------+--------+-------------+
| Bank       | 10,9      | Within   | MOR     | 1.     | 1. Not to   |
| overdrafts | 95,539.06 | 2004     |         | Land   | make a      |
|            |           |          |         | and    | further     |
|            |           |          |         | bu     | mortgage    |
|            |           |          |         | ilding |             |
|            |           |          |         | mo     | 2.          |
|            |           |          |         | rtgage | Maintaining |
|            |           |          |         |        | gearing per |
|            |           |          |         | 2.     | capital at  |
|            |           |          |         | Fac    | 0.5 time    |
|            |           |          |         | toring |             |
|            |           |          |         | from   |             |
|            |           |          |         | p      |             |
|            |           |          |         | roduct |             |
|            |           |          |         | sale   |             |
+------------+-----------+----------+---------+--------+-------------+
| Short-term | 463,9     | Within   | 3.0% up |        |             |
| Bank Loan  | 30,154.63 | 2004     | to      |        |             |
|            |           |          | M       |        |             |
|            |           |          | LR-2.5% |        |             |
+------------+-----------+----------+---------+--------+-------------+
| Long-term  | 27,5      | May      | MLR     | Fac    | N/A         |
| bank loan, | 50,239.96 | 21,2007  |         | toring |             |
| Contract 1 |           | Monthly  |         | from   |             |
| , Baht 50  |           | r        |         | lease  |             |
| million    |           | epayment |         | co     |             |
| Baht       |           | of Baht  |         | ntract |             |
|            |           | 940,000  |         |        |             |
+------------+-----------+----------+---------+--------+-------------+
| Long-term  | 3,550,000 | S        | Fixed   | Fac    | N/A         |
| bank loan, |           | eptember | rate at | toring |             |
| contract   |           | 30,2005  | 6.25%   | from   |             |
| 2, Baht 13 |           | q        | per     | co     |             |
| million    |           | uarterly | year    | mputer |             |
|            |           | r        | for 2   | lease  |             |
|            |           | epayment | years,  | co     |             |
|            |           | of Baht  | MLR the | ntract |             |
|            |           | 1        | fo      | to     |             |
|            |           | ,200,000 | llowing | bank   |             |
|            |           |          | years   | worth  |             |
|            |           |          |         | Baht   |             |
|            |           |          |         | 18     |             |
|            |           |          |         | m      |             |
|            |           |          |         | illion |             |
+------------+-----------+----------+---------+--------+-------------+
| Long-term  | 7,083,327 | April    | M       | Fac    | N/A         |
| bank loan, |           | 30, 2006 | LR-0.5% | toring |             |
| contract   |           | Monthly  |         | from   |             |
| 3, Baht 15 |           | r        |         | lease  |             |
| million    |           | epayment |         | co     |             |
|            |           | of Baht  |         | ntract |             |
|            |           | 416,667  |         |        |             |
+------------+-----------+----------+---------+--------+-------------+
| Long-term  | 155,7     | May 31,  | Fixed   | Fac    | N/A         |
| bank loan, | 04,092.15 | 2007 80% | rate at | toring |             |
| contract   |           | r        | 5.75%   | from   |             |
| 4, Baht    |           | epayment | per     | sale   |             |
| 400        |           | of       | year    | and    |             |
| Million    |           | s        | for 2   | s      |             |
|            |           | pecified | years,  | ervice |             |
|            |           | lease,   | MLR-1%  | co     |             |
|            |           | deposit  | the     | ntract |             |
|            |           | another  | fo      | worth  |             |
|            |           | 20% for  | llowing | Baht   |             |
|            |           | Baht 2   | years   | 633    |             |
|            |           | million  |         | m      |             |
|            |           | within 6 |         | illion |             |
|            |           | months   |         |        |             |
+------------+-----------+----------+---------+--------+-------------+
| Long-term  | 1         | Q        | MLR     | Fac    | N/A         |
| bank loan, | 0,640,000 | uarterly |         | toring |             |
| contract   |           | capital  |         | from   |             |
| 5, Baht 16 |           | r        |         | s      |             |
| million    |           | epayment |         | ervice |             |
|            |           | of Baht  |         | co     |             |
|            |           | 1        |         | ntract |             |
|            |           | ,340,000 |         | worth  |             |
|            |           | staring  |         | Baht 7 |             |
|            |           | from Mar |         | m      |             |
|            |           | 2004 to  |         | illion |             |
|            |           | Feb 2007 |         |        |             |
+------------+-----------+----------+---------+--------+-------------+
| Long-term  | 9,200,000 | Q        | MLR     | Fac    | N/A         |
| bank loan, |           | uarterly |         | toring |             |
| contract   |           | capital  |         | from   |             |
| 6, Baht 14 |           | r        |         | s      |             |
| Million    |           | epayment |         | ervice |             |
|            |           | of baht  |         | co     |             |
|            |           | 1        |         | ntract |             |
|            |           | ,200,000 |         | worth  |             |
|            |           | staring  |         | baht   |             |
|            |           | from Mar |         | 16     |             |
|            |           | 2004     |         | m      |             |
|            |           |          |         | illion |             |
+------------+-----------+----------+---------+--------+-------------+
| Financial  | 29,2      | Monthly  |         | Full   | N/A         |
| Lease      | 51,966.88 | r        |         | ac     |             |
| Contract   |           | epayment |         | counts |             |
|            |           | for      |         | rece   |             |
|            |           |          |         | ivable |             |
|            |           | 3-5      |         | tr     |             |
|            |           | years    |         | ansfer |             |
|            |           |          |         | (fact  |             |
|            |           |          |         | oring) |             |
+------------+-----------+----------+---------+--------+-------------+

FACTORS AND MAJOR INFLUECE POSSIBLY AFFECTING OPERATING PERFORMANCE OR
FINANCIAL STATUS

Factoring and major influence that may affect the Company’s operating
performance or financial status in the future depends on the adaptation
and adjustment of the company to respond to the change cause by strong
competition in the industry. In particular, in the ITDSBU which is the
Company’s main source of income and which tends to produce smaller gross
profit, price competition becomes a major factor in business operation.
Therefore, if any proprietor is incapable of product mix management to
average out net gross profit great enough to continue the operation, the
Company may possibly face problems in the future.

Accommodating measures

1.  The Company adjusted by creating more options by means of product
    mix which will average out net gross profit at no less than 8%. If
    any product was found to produce unduly low net gross profit, the
    Company would stop marketing that particular product to reduce the
    pressure of investment quest to support the product and to lessen
    expenditure burden caused by fast outdated product reserve. At the
    same time the Company had to hurriedly search for new products with
    high gross profit to substitute the old one, especially products
    with the SVOA brand including SVOA personal computers, SVOA notebook
    computers, SVOA digital cameras, and so on. That allowed the company
    to manage product cost with greater flexibility than other
    distributing companies.

2.  The Company adjusted and got itself into service business more so
    that it could be less dependent on sales with low gross profit. The
    service business was able to generate more profit for the Company as
    it required on inventory management cost. Besides, the service
    business seeks to respond to consumer’s specific needs, and
    therefore, the pressure activated by tough price war was relatively
    meager. The service business managed to create net gross profit of
    no less than 20%.