12. Management’s Analysis

Clarification of the Company’s operating results for 2002

The results are summarized below:

(Unit : Million Baht)

+----------------------------------------+--------------+--------------+
|                                        | 2002         | 2001         |
+----------------------------------------+--------------+--------------+
| Sales                                  | 159 (100%)   | 5,430 (100%) |
+----------------------------------------+--------------+--------------+
| Other income and Exchange gain/(loss)  | 17 (10.93%)  | 175 (3.22%)  |
+----------------------------------------+--------------+--------------+
| Material Costs                         | 86.50%       | 90.31%       |
+----------------------------------------+--------------+--------------+
| Direct Labor                           | 9.11%        | 1.44%        |
+----------------------------------------+--------------+--------------+
| Variable Overhead                      | 7.67%        | 2.70%        |
+----------------------------------------+--------------+--------------+
| Fixed OH, R&D                          | 129 (80.92%) | 177 (3.25%)  |
+----------------------------------------+--------------+--------------+
| General & Administrative               | 197          | 250 (4.67%)  |
|                                        | (124.12%)    |              |
+----------------------------------------+--------------+--------------+
| Operating Income/ (Loss)               | (307)        | 48 (0.88%)   |
|                                        | (-193.23%)   |              |
+----------------------------------------+--------------+--------------+
| Interest expenses                      | 82 (51.76%)  | 0 (0.00%)    |
+----------------------------------------+--------------+--------------+
| Extraordinary income: Reversal of      | (164)        | 0 (0.00%)    |
| reserves                               | (103.11%)    |              |
+----------------------------------------+--------------+--------------+
| Share of Profit (Loss) from Subsidiary | (544)        | (90)         |
| and Associated Co. and restructuring   |              |              |
| of related parties                     |              |              |
+----------------------------------------+--------------+--------------+
| Net Profit (Loss)                      | (770)        | (42)         |
+----------------------------------------+--------------+--------------+

Note : There were reclassifications in the profit and loss statement for
2001 to conform with the presentation for 2002..

The Company’s net loss for 2002 was Baht 770 million as compared to the
reported loss of Baht 42 million for 2001.

A major customer had terminated the engagement with the Company in
producing the monitors as consequence of their decision to discontinue
with the production of small-middle size Trinitron monitors in 2001.

The Company has begun to develop a new product instead of Trinitron
monitors. In addition, the Company has researched and developed LCD –TV.
This product is expected to substitute the CRT televisions in the near
future. The Company has continued in researched and development of this
product through the year 2002.

The Company had sent the sample of new products to its prospective
customers and also agreed to produce the product under two leading
brands in the market.

Turnover for 2002 was low as a result of low production volume due to
the discontinuance by the Company’s major customer to engage the company
in the production of computer monitors. As a result, the Company’s
operation did not achieve the optimum level of activity and as such the
company is not able to benefit from economy of scale. As a result cost
of production is higher than sales approximately 103.28%. Fixed cost,
research and development and general and administration are higher than
sales amount by approximately 80.92% and 124.12% respectively.

Fixed overhead costs and General and Administrative expenses in 2002
decreased by Baht 101 million as compared to 2001 mainly due to the
Company’s restructuring and cost reduction programs.

The Company continued its workforce reduction in order to decrease fixed
cost as low as possible. There were 349 staffs as at December 31, 2002
compared to 1,182 staffs in 2001.

The loss of Baht 389 million in 2002 was mainly due to the reduction in
sales and the gross margin was not enough to cover the minimum costs and
expenses even though a lot of efforts were made to reduce costs and
expenses. The Company addresses the reduction in sales by introducing a
new product line for LCD multimedia / LCD TV. .

The Company had concentrated in a restructuring program involving some
of its associated companies in year 2002. This resulted in net losses
from investment in subsidiary and associated companies and restructuring
of Baht 544 million.

.

The CRT based monitor market has been gradually replaced by the LCD
monitors. Continuous improvement and product development in the LCD
market necessary. Hence, the Company is concentrating in LCD monitors
and LCD multi-media products as well as new customer base in order to be
competitive in the market with the objective to earn a reasonable margin
in near and long term.