12 Financial status and operational results

12.1 Financial statements

Summary of audit reports for three years

+----------------+-------------+------------+------------+------------+
| Name of        |   Audit     | 2003       | 2004       | 2005       |
| Auditor        |   Company   |            |            |            |
+----------------+-------------+------------+------------+------------+
| 1. Mr Nirand   | KPMG        | U          |            |            |
| Lilamethwat    | Phoomchai   | nqualified |            |            |
|                | Audit       |            |            |            |
|                | Limited     | opinion    |            |            |
+----------------+-------------+------------+------------+------------+
| 2. Ms Somboon  |             |            | U          | U          |
| Supasiripinyo  |             |            | nqualified | nqualified |
|                |             |            |            |            |
|                |             |            | opinion    | opinion    |
+----------------+-------------+------------+------------+------------+

  2003

  In 2003 Auditor expressed an unqualified opinion and emphasis to the
  following matters:

1.  Company’s ability to continue as a going concern,

2.  The appraised of fixed assets by an independent appraisal,

3.  Debts claimed by Creditors.

  2004

  In 2004 Auditor expresses an unqualified opinion and emphasis to the
  results of the operation. Commencement of normal operations and the
  increased production volume have, however, required additional working
  capital, particularly to fund the increased level of inventory and
  trade accounts receivable, is still operating under the terms of debt
  restructuring agreements and needs to generate sufficient operating
  cash flows to meet both its working capital requirement and
  obligations under those agreements. In consideration thereof, the
  Company has obtained working capital facilities with financial
  institutions and the Company’s cash flow forecasts indicate that
  sufficient funds are available to meet the Company’s working capital
  requirements and to meet its obligations under the debt restructuring
  agreements.

  2005

  In 2005 Auditor expressed an unqualified opinion and emphasis to the
  following matters:

1.  The financial statements have been prepared on the going concern
    basis on the assumption that the Company will obtain sufficient
    additional credit facilities to allow it to continue its operations
    and meet its obligations under the rehabilitation plan,

2.  The valuation of the suspended construction in progress represented
    in the Direct Reduced Iron plant (DRI) if the project is aborted.

3.  The Company has made an adjustment in the financial statements to
    increase the accrual for Past Accrued Interest,

4.  The Company has not made the necessary adjustment to the components
    of shareholders’ equity to comply with the requirements of the
    circular dated 16 November 2005 issued by the Securities and
    Exchange Commission regarding the accounting treatment following a
    capital reduction,

5.  The Company has significant transactions with related parties.

  1) Consolidated balance sheets

+-----------------------+--------+-----+--------+-----+-------+-----+
| Balance Sheets        |        |     |        |     |       |     |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Assets                |        |     |        |     |       |     |
+-----------------------+--------+-----+--------+-----+-------+-----+
|                       | 2005   |     | 2004   |     | 2003  |     |
+-----------------------+--------+-----+--------+-----+-------+-----+
|                       | Th     | %   | Th     | %   | Tho   | %   |
|                       | ousand |     | ousand |     | usand |     |
|                       | Baht   |     | Baht   |     | Baht  |     |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Current Assets        |        |     |        |     |       |     |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Cash and cash         | 3      | 1   | 1,0    | 3   | 3,26  | 11  |
| equivalents           | 76,841 | .15 | 26,940 | .12 | 2,200 | .00 |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Current investment –  |        |     |        |     |       |     |
| deposits at financial |        |     |        |     |       |     |
| Institutions pledged  |        |     |        |     |       |     |
| for                   |        |     |        |     |       |     |
+-----------------------+--------+-----+--------+-----+-------+-----+
| issuing letters of    | 2      | 0   | 5      | 1   | 19    | 0   |
| credit                | 58,115 | .79 | 92,663 | .80 | 7,192 | .67 |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Trade accounts        | 2,228  | 0   | 8      | 2   | 250   | -   |
| receivable            |        | .01 | 25,263 | .51 |       |     |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Inventories - net     | 4,8    | 14  | 3,6    | 11  | 1,03  | 3   |
|                       | 01,685 | .74 | 30,683 | .04 | 5,696 | .50 |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Advances to           | 1      | 0   | 1,1    | 3   | 12    | 0   |
| suppliers - net       | 56,406 | .48 | 58,182 | .52 | 9,034 | .43 |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Other current         | 1      | 0   | 6      | 1   | 7     | 0   |
| assets - net          | 26,790 | .39 | 09,151 | .85 | 1,793 | .24 |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Total current assets  | 5,7    | 17  | 7,8    | 23  | 4,69  | 15  |
|                       | 22,065 | .56 | 42,882 | .84 | 6,165 | .84 |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Non – Current Assets  |        |     |        |     |       |     |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Other long-t          | 92,565 | 0   | 1      | 0   | 12    | 0   |
| erm investments - net |        | .28 | 36,908 | .42 | 8,848 | .43 |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Long-term loans and   |        |     |        |     |       |     |
| advances to           |        |     |        |     |       |     |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Related parties - net | 11,598 | 0   | 11,598 | 0   | 1     | 0   |
|                       |        | .04 |        | .04 | 1,598 | .04 |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Advance to supplier   | 2      | 0   | 3      | 1   | -     | -   |
|                       | 75,474 | .84 | 44,456 | .05 |       |     |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Property, plant and   | 24,3   | 74  | 22,4   | 68  | 22,64 | 76  |
| equipment - net       | 41,492 | .70 | 05,469 | .12 | 5,858 | .39 |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Intangible assets -   | 44,002 | 0   | 49,624 | 0   | 6     | 0   |
| net                   |        | .14 |        | .15 | 0,927 | .21 |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Suspended             | 2,0    | 6   | 2,0    | 6   | 2,03  | 6   |
| construction in       | 39,093 | .26 | 39,093 | .20 | 9,093 | .88 |
| progress - net        |        |     |        |     |       |     |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Refundable deposits   | 60,149 | 0   | 59,806 | 0   | 6     | 0   |
|                       |        | .18 |        | .18 | 2,955 | .21 |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Tot                   | 26,8   | 82  | 25,0   | 76  | 24,94 | 84  |
| al Non-Current Assets | 64,373 | .44 | 46,954 | .16 | 9,279 | .16 |
+-----------------------+--------+-----+--------+-----+-------+-----+
| Total Assets          | 32,5   | 100 | 32,8   | 100 | 29,64 | 100 |
|                       | 86,438 | .00 | 89,836 | .00 | 5,444 | .00 |
+-----------------------+--------+-----+--------+-----+-------+-----+

+-------------------------+--------+-----+-------+-----+-------+-----+
| Balance Sheets          |        |     |       |     |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Liabilities and         |        |     |       |     |       |     |
| Shareholders’ Equity    |        |     |       |     |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
|                         | 2005   |     | 2004  |     | 2003  |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
|                         | Th     | %   | Tho   | %   | Tho   | %   |
|                         | ousand |     | usand |     | usand |     |
|                         | Baht   |     | Baht  |     | Baht  |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Current Liabilities     |        |     |       |     |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
|   Bank overdrafts and   | 2      | 0   | 1,76  | 5   | -     | -   |
|   short-term loans from | 26,796 | .69 | 9,978 | .38 |       |     |
|   financial             |        |     |       |     |       |     |
|   institutions          |        |     |       |     |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Trade accounts payable  | 3      | 1   | 44    | 1   | 3     | 0   |
|                         | 91,878 | .20 | 7,713 | .36 | 2,633 | .11 |
+-------------------------+--------+-----+-------+-----+-------+-----+
|   Advance received from | 4      | 1   | 2     | 0   | -     | -   |
|   customers             | 58,476 | .41 | 7,658 | .08 |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
|   Construction cost     | 11,863 | 0   | 7,477 | 0   | 3     | 0   |
|   payables              |        | .04 |       | .02 | 5,041 | .12 |
+-------------------------+--------+-----+-------+-----+-------+-----+
|   Accrued expenses      | 3      | 1   | 40    | 1   | 10    | 0   |
|                         | 31,963 | .02 | 9,168 | .25 | 7,809 | .36 |
+-------------------------+--------+-----+-------+-----+-------+-----+
|   Other current         | 8,448  | 0   | 3,584 | 0   | 3,041 | 0   |
|   liabilities           |        | .02 |       | .01 |       | .01 |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Total current           | 1,4    | 4   | 2,66  | 8   | 17    | 0   |
| liabilities             | 29,424 | .38 | 5,578 | .10 | 8,524 | .60 |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Liabilities un          | 13,3   | 40  | 12,14 | 36  | 11,94 | 40  |
| der rehabilitation plan | 37,455 | .93 | 2,266 | .92 | 6,003 | .30 |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Total liabilities       | 14,7   | 45  | 14,80 | 45  | 12,12 | 40  |
|                         | 66,879 | .31 | 7,844 | .02 | 4,527 | .90 |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Shareholders’ Equity    |        |     |       |     |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Authorized              | 107,6  |     | 1     |     | 1     |     |
| 13,045,999,265 ordinary | 29,494 |     | 05,72 |     | 05,72 |     |
| shares, 12,815,748,029  |        |     | 9,921 |     | 9,921 |     |
| ordinary shares and     |        |     |       |     |       |     |
| 12,815,748,029 ordinary |        |     |       |     |       |     |
| shares, Baht 8.25 par   |        |     |       |     |       |     |
| value, Baht 8.25 par    |        |     |       |     |       |     |
| value and Baht 8.25 par |        |     |       |     |       |     |
| value as at December    |        |     |       |     |       |     |
| 31, 2005, 2004 and      |        |     |       |     |       |     |
| 2003, respectively      |        |     |       |     |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Issued and paid-up      | 76,0   | 233 | 74,13 | 225 | 74,13 | 250 |
| share capital           | 37,361 | .34 | 7,788 | .41 | 7,788 | .08 |
| 9,216,649,877 ordinary  |        |     |       |     |       |     |
| shares, 8,986,398,641   |        |     |       |     |       |     |
| ordinary shares and     |        |     |       |     |       |     |
| 8,986,398,641 ordinary  |        |     |       |     |       |     |
| shares, Baht 8.25 par   |        |     |       |     |       |     |
| value, Baht 8.25 par    |        |     |       |     |       |     |
| value and Baht 8.25 par |        |     |       |     |       |     |
| value as at December    |        |     |       |     |       |     |
| 31, 2005, 2004 and      |        |     |       |     |       |     |
| 2003, respectively      |        |     |       |     |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Warrants                | 1      | 0   | 16    | 0   | 16    | 0   |
|                         | 61,694 | .50 | 1,694 | .49 | 1,694 | .55 |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Discount on share       | (57,75 | (1  | (5    | (1  | (5    | (1  |
| capital                 | 7,356) | 77. | 6,364 | 71. | 6,364 | 90. |
|                         |        | 24) | ,336) | 37) | ,336) | 13) |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Revaluation surplus on  | 3,655  | 0   | 5     | 0   | 7     | 0   |
| investments             |        | .01 | 1,697 | .16 | 3,998 | .25 |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Retained earnings       | (62    | (1. | 9     | 0   | (488  | (1. |
| (Deficit)               | 5,795) | 92) | 5,149 | .29 | ,227) | 65) |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Shareholders’ Equity    | 17,8   | 54  | 18,08 | 54  | 17,52 | 59  |
|                         | 19,559 | .69 | 1,992 | .98 | 0,917 | .10 |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Liabilities and         | 32,5   | 100 | 32,88 | 100 | 29,64 | 100 |
| Shareholders’ Equity    | 86,438 | .00 | 9,836 | .00 | 5,444 | .00 |
+-------------------------+--------+-----+-------+-----+-------+-----+

  2) Statement of Cash flows

+--------------------------------------+---+--------+---+--------+---+-------+
| Statements of Cash flows             |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
|                                      | 2 |        | 2 |        | 2 |       |
|                                      | 0 |        | 0 |        | 0 |       |
|                                      | 0 |        | 0 |        | 0 |       |
|                                      | 5 |        | 4 |        | 3 |       |
+--------------------------------------+---+--------+---+--------+---+-------+
|                                      | T |        | T |        | T |       |
|                                      | h |        | h |        | h |       |
|                                      | o |        | o |        | o |       |
|                                      | u |        | u |        | u |       |
|                                      | s |        | s |        | s |       |
|                                      | a |        | a |        | a |       |
|                                      | n |        | n |        | n |       |
|                                      | d |        | d |        | d |       |
|                                      | B |        | B |        | B |       |
|                                      | a |        | a |        | a |       |
|                                      | h |        | h |        | h |       |
|                                      | t |        | t |        | t |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Cash Flows from operating Activities |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Net loss (profit)                    | ( |        | 5 |        | 2 |       |
|                                      | 7 |        | 8 |        | 3 |       |
|                                      | 2 |        | 3 |        | , |       |
|                                      | 0 |        | , |        | 2 |       |
|                                      | , |        | 3 |        | 2 |       |
|                                      | 9 |        | 7 |        | 7 |       |
|                                      | 4 |        | 6 |        | , |       |
|                                      | 4 |        |   |        | 8 |       |
|                                      | ) |        |   |        | 7 |       |
|                                      |   |        |   |        | 5 |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Adjustments to reconcile net profit  |   |        |   |        |   |       |
| to net cash used in operating        |   |        |   |        |   |       |
| activities:                          |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Allowance for loss on advances to    | - |        | 1 |        | 1 |       |
| suppliers and non refundable         |   |        | 4 |        | 5 |       |
| deposits                             |   |        | , |        | , |       |
|                                      |   |        | 3 |        | 1 |       |
|                                      |   |        | 1 |        | 3 |       |
|                                      |   |        | 3 |        | 9 |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Allowance for doubtful account       | 2 |        | - |        | - |       |
|                                      | 5 |        |   |        |   |       |
|                                      | 0 |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Loss on (reversal of) devaluation of | 3 |        | ( |        | 1 |       |
| inventories                          | 6 |        | 8 |        | 0 |       |
|                                      | 5 |        | 0 |        | 0 |       |
|                                      | , |        | , |        | , |       |
|                                      | 4 |        | 0 |        | 1 |       |
|                                      | 3 |        | 1 |        | 6 |       |
|                                      | 1 |        | 1 |        | 1 |       |
|                                      |   |        | ) |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Transaction costs of debt            | - |        | - |        | 7 |       |
| instruments written-off and          |   |        |   |        | 4 |       |
| amortization of discount on          |   |        |   |        | 8 |       |
| debentures                           |   |        |   |        | , |       |
|                                      |   |        |   |        | 3 |       |
|                                      |   |        |   |        | 0 |       |
|                                      |   |        |   |        | 4 |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Depreciation and amortization        | 6 |        | 5 |        | 4 |       |
|                                      | 5 |        | 7 |        | 1 |       |
|                                      | 0 |        | 5 |        | 0 |       |
|                                      | , |        | , |        | , |       |
|                                      | 6 |        | 6 |        | 4 |       |
|                                      | 9 |        | 4 |        | 9 |       |
|                                      | 9 |        | 6 |        | 4 |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Interest expense                     | 5 |        | 3 |        | 5 |       |
|                                      | 1 |        | 6 |        | 4 |       |
|                                      | 7 |        | 2 |        | , |       |
|                                      | , |        | , |        | 9 |       |
|                                      | 1 |        | 1 |        | 0 |       |
|                                      | 6 |        | 9 |        | 2 |       |
|                                      | 8 |        | 0 |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Consulting fee for restructuring     | - |        | - |        | ( |       |
|                                      |   |        |   |        | 1 |       |
|                                      |   |        |   |        | 8 |       |
|                                      |   |        |   |        | , |       |
|                                      |   |        |   |        | 9 |       |
|                                      |   |        |   |        | 5 |       |
|                                      |   |        |   |        | 5 |       |
|                                      |   |        |   |        | ) |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Gain on debt restructuring of        | - |        | - |        | - |       |
| receivable                           |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Gain on debt restructuring           | - |        | - |        | ( |       |
|                                      |   |        |   |        | 2 |       |
|                                      |   |        |   |        | 2 |       |
|                                      |   |        |   |        | , |       |
|                                      |   |        |   |        | 9 |       |
|                                      |   |        |   |        | 6 |       |
|                                      |   |        |   |        | 0 |       |
|                                      |   |        |   |        | , |       |
|                                      |   |        |   |        | 0 |       |
|                                      |   |        |   |        | 4 |       |
|                                      |   |        |   |        | 4 |       |
|                                      |   |        |   |        | ) |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Reversal of allowance for loss on    | ( |        | - |        | ( |       |
| impairment of fixed assets           | 1 |        |   |        | 8 |       |
|                                      | , |        |   |        | 8 |       |
|                                      | 7 |        |   |        | 2 |       |
|                                      | 8 |        |   |        | , |       |
|                                      | 4 |        |   |        | 5 |       |
|                                      | , |        |   |        | 5 |       |
|                                      | 8 |        |   |        | 3 |       |
|                                      | 6 |        |   |        | ) |       |
|                                      | 4 |        |   |        |   |       |
|                                      | ) |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Provision for additional past        | 1 |        | - |        | - |       |
| accrued interest                     | , |        |   |        |   |       |
|                                      | 1 |        |   |        |   |       |
|                                      | 1 |        |   |        |   |       |
|                                      | 1 |        |   |        |   |       |
|                                      | , |        |   |        |   |       |
|                                      | 0 |        |   |        |   |       |
|                                      | 1 |        |   |        |   |       |
|                                      | 5 |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Unrealized loss/(gain)on foreign     | 3 |        | ( |        | ( |       |
| exchange                             | 0 |        | 9 |        | 6 |       |
|                                      | 7 |        | 2 |        | 9 |       |
|                                      | , |        | , |        | , |       |
|                                      | 0 |        | 9 |        | 8 |       |
|                                      | 1 |        | 1 |        | 7 |       |
|                                      | 3 |        | 6 |        | 5 |       |
|                                      |   |        | ) |        | ) |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Realized gain on foreign exchange    | - |        | - |        | ( |       |
| from debt restructuring              |   |        |   |        | 7 |       |
|                                      |   |        |   |        | 2 |       |
|                                      |   |        |   |        | 7 |       |
|                                      |   |        |   |        | , |       |
|                                      |   |        |   |        | 8 |       |
|                                      |   |        |   |        | 4 |       |
|                                      |   |        |   |        | 8 |       |
|                                      |   |        |   |        | ) |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Gain on sale of fixed assets         | - |        | ( |        | ( |       |
|                                      |   |        | 2 |        | 1 |       |
|                                      |   |        | 1 |        | , |       |
|                                      |   |        | ) |        | 3 |       |
|                                      |   |        |   |        | 3 |       |
|                                      |   |        |   |        | 9 |       |
|                                      |   |        |   |        | ) |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Gain on sale of investment           | ( |        | - |        | ( |       |
|                                      | 4 |        |   |        | 6 |       |
|                                      | 5 |        |   |        | 5 |       |
|                                      | 0 |        |   |        | , |       |
|                                      | ) |        |   |        | 5 |       |
|                                      |   |        |   |        | 3 |       |
|                                      |   |        |   |        | 1 |       |
|                                      |   |        |   |        | ) |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Changes in operational assets and    |   |        |   |        |   |       |
| liabilities                          |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase in trade accounts           | 8 |        | ( |        | - |       |
| receivable                           | 2 |        | 8 |        |   |       |
|                                      | 2 |        | 2 |        |   |       |
|                                      | , |        | 4 |        |   |       |
|                                      | 7 |        | , |        |   |       |
|                                      | 8 |        | 8 |        |   |       |
|                                      | 5 |        | 4 |        |   |       |
|                                      |   |        | 5 |        |   |       |
|                                      |   |        | ) |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Decrease (Increase) in Inventories   | ( |        | ( |        | ( |       |
|                                      | 1 |        | 2 |        | 5 |       |
|                                      | , |        | , |        | 4 |       |
|                                      | 6 |        | 5 |        | 0 |       |
|                                      | 2 |        | 5 |        | , |       |
|                                      | 2 |        | 8 |        | 7 |       |
|                                      | , |        | , |        | 9 |       |
|                                      | 8 |        | 2 |        | 7 |       |
|                                      | 9 |        | 1 |        | ) |       |
|                                      | 3 |        | 3 |        |   |       |
|                                      | ) |        | ) |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase in advances to suppliers    | 1 |        | ( |        | - |       |
|                                      | , |        | 1 |        |   |       |
|                                      | 0 |        | , |        |   |       |
|                                      | 7 |        | 3 |        |   |       |
|                                      | 0 |        | 8 |        |   |       |
|                                      | , |        | 6 |        |   |       |
|                                      | 7 |        | , |        |   |       |
|                                      | 5 |        | 0 |        |   |       |
|                                      | 8 |        | 6 |        |   |       |
|                                      |   |        | 1 |        |   |       |
|                                      |   |        | ) |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Decrease (Increase) in other current | 4 |        | ( |        | ( |       |
| assets                               | 8 |        | 5 |        | 4 |       |
|                                      | 2 |        | 3 |        | 5 |       |
|                                      | , |        | 7 |        | , |       |
|                                      | 3 |        | , |        | 9 |       |
|                                      | 6 |        | 3 |        | 8 |       |
|                                      | 1 |        | 5 |        | 6 |       |
|                                      |   |        | 8 |        | ) |       |
|                                      |   |        | ) |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Decrease in refundable deposits      | ( |        | 1 |        | 4 |       |
|                                      | 3 |        | , |        | , |       |
|                                      | 4 |        | 2 |        | 1 |       |
|                                      | 3 |        | 9 |        | 1 |       |
|                                      | ) |        | 1 |        | 6 |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase (Decrease) in trade         | ( |        | 4 |        | 2 |       |
| accounts payable                     | 6 |        | 2 |        | 8 |       |
|                                      | 3 |        | 2 |        | , |       |
|                                      | , |        | , |        | 6 |       |
|                                      | 3 |        | 2 |        | 6 |       |
|                                      | 6 |        | 9 |        | 4 |       |
|                                      | 0 |        | 7 |        |   |       |
|                                      | ) |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase in advances received from   | 4 |        | 2 |        | - |       |
| customers                            | 3 |        | 7 |        |   |       |
|                                      | 2 |        | , |        |   |       |
|                                      | , |        | 6 |        |   |       |
|                                      | 9 |        | 5 |        |   |       |
|                                      | 2 |        | 8 |        |   |       |
|                                      | 2 |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Decrease in construction cost        | 4 |        | ( |        | 3 |       |
| payable                              | , |        | 2 |        | 2 |       |
|                                      | 6 |        | 7 |        | , |       |
|                                      | 3 |        | , |        | 0 |       |
|                                      | 7 |        | 0 |        | 3 |       |
|                                      |   |        | 9 |        | 3 |       |
|                                      |   |        | 0 |        |   |       |
|                                      |   |        | ) |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase in accrued expenses         | ( |        | 2 |        | ( |       |
|                                      | 4 |        | 5 |        | 4 |       |
|                                      | 2 |        | 1 |        | 4 |       |
|                                      | , |        | , |        | , |       |
|                                      | 1 |        | 0 |        | 0 |       |
|                                      | 1 |        | 2 |        | 6 |       |
|                                      | 0 |        | 5 |        | 8 |       |
|                                      | ) |        |   |        | ) |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase (Decrease) in other current | 4 |        | 5 |        | 2 |       |
| liabilities                          | , |        | 4 |        | , |       |
|                                      | 8 |        | 2 |        | 7 |       |
|                                      | 6 |        |   |        | 1 |       |
|                                      | 5 |        |   |        | 3 |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| N                                    | 1 |        | ( |        | ( |       |
| et cash used in operating activities | , |        | 3 |        | 7 |       |
|                                      | 5 |        | , |        | 3 |       |
|                                      | 3 |        | 2 |        | 2 |       |
|                                      | 4 |        | 6 |        | , |       |
|                                      | , |        | 8 |        | 5 |       |
|                                      | 9 |        | , |        | 9 |       |
|                                      | 4 |        | 1 |        | 5 |       |
|                                      | 0 |        | 7 |        | ) |       |
|                                      |   |        | 7 |        |   |       |
|                                      |   |        | ) |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
|                                      |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
|                                      |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Statements of Cash flows             |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
|                                      |   | 2005   |   | 2004   |   | 2003  |
+--------------------------------------+---+--------+---+--------+---+-------+
|                                      |   | Th     |   | Th     |   | Tho   |
|                                      |   | ousand |   | ousand |   | usand |
|                                      |   | Baht   |   | Baht   |   | Baht  |
+--------------------------------------+---+--------+---+--------+---+-------+
| Cash flows from investing activities |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Decrease in other long-term          |   | -      |   | 1,892  |   | 1,903 |
| investment                           |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase in current investment –     |   | 3      |   | (39    |   | (60   |
| deposits at financial institutions   |   | 34,547 |   | 5,470) |   | ,481) |
| pledged for issuing letters of       |   |        |   |        |   |       |
| credit                               |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase in deposits pledged as      |   | (      |   | (3     |   | (3    |
| collateral                           |   | 8,700) |   | 2,252) |   | ,196) |
+--------------------------------------+---+--------+---+--------+---+-------+
| Proceeds from sale of fixed assets   |   | -      |   | 21     |   | 1,318 |
+--------------------------------------+---+--------+---+--------+---+-------+
| Proceeds from sale of investment     |   | 5,450  |   | -      |   | 11    |
|                                      |   |        |   |        |   | 6,215 |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase in property, plant and      |   | (70    |   | (27    |   | (13   |
| equipment                            |   | 7,362) |   | 8,477) |   | ,587) |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase in intangible assets        |   | (      |   | (      |   | -     |
|                                      |   | 2,413) |   | 2,238) |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Net cash provided by (used in)       |   | (37    |   | (70    |   | 4     |
| Investing activities                 |   | 8,478) |   | 6,524) |   | 2,172 |
+--------------------------------------+---+--------+---+--------+---+-------+
| Cash flows from financing activities |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase (decrease) in bank          |   | (1,57  |   | 1,7    |   | (29   |
| overdrafts and short-term loan from  |   | 3,443) |   | 98,309 |   | ,786) |
| financial institution                |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Proceeds from public offering        |   | -      |   | -      |   | 3,96  |
|                                      |   |        |   |        |   | 0,000 |
+--------------------------------------+---+--------+---+--------+---+-------+
| Subscription warrants                |   | -      |   | -      |   | 16    |
|                                      |   |        |   |        |   | 1,693 |
+--------------------------------------+---+--------+---+--------+---+-------+
| Transaction costs of an Equity       |   | -      |   | -      |   | (192  |
| Transaction                          |   |        |   |        |   | ,604) |
+--------------------------------------+---+--------+---+--------+---+-------+
| Interest paid                        |   | (21    |   | (5     |   | (7    |
|                                      |   | 6,367) |   | 8,867) |   | ,554) |
+--------------------------------------+---+--------+---+--------+---+-------+
| Liabilities under rehabilitation     |   | (1     |   | -      |   | -     |
| plan                                 |   | 6,751) |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Net c                                |   | (1,80  |   | 1,7    |   | 3,89  |
| ash provided by Financing Activities |   | 6,561) |   | 39,442 |   | 1,749 |
+--------------------------------------+---+--------+---+--------+---+-------+
| Net increase (decrease) in cash and  |   | (65    |   | (2,23  |   | 3,20  |
| cash equivalents                     |   | 0,099) |   | 5,259) |   | 1,326 |
+--------------------------------------+---+--------+---+--------+---+-------+
| Cash and cash equivalents at         |   | 1,0    |   | 3,2    |   | 6     |
| beginning of years                   |   | 26,940 |   | 62,199 |   | 0,873 |
+--------------------------------------+---+--------+---+--------+---+-------+
| Cash and cash equivalents at end of  |   | 3      |   | 1,0    |   | 3,26  |
| years                                |   | 76,841 |   | 26,940 |   | 2,199 |
+--------------------------------------+---+--------+---+--------+---+-------+

  3) Statement of Income

+------------------------+--------+-----+-------+-----+-------+-----+
| Statements of Income   |        |     |       |     |       |     |
+------------------------+--------+-----+-------+-----+-------+-----+
|                        | 2005   |     | 2004  |     | 2003  |     |
+------------------------+--------+-----+-------+-----+-------+-----+
|                        | Th     | %   | Tho   | %   | Tho   | %   |
|                        | ousand |     | usand |     | usand |     |
|                        | Baht   |     | Baht  |     | Baht  |     |
+------------------------+--------+-----+-------+-----+-------+-----+
| Revenues               |        |     |       |     |       |     |
+------------------------+--------+-----+-------+-----+-------+-----+
| Sale – net             | 13,9   | 88  | 9,73  | 97  | 2     | 1   |
|                        | 85,696 | .20 | 0,353 | .54 | 9,400 | .61 |
+------------------------+--------+-----+-------+-----+-------+-----+
| Gain on exchange rate  | -      | -   | 10    | 1   | 84    | 46  |
|                        |        |     | 5,031 | .05 | 2,077 | .23 |
+------------------------+--------+-----+-------+-----+-------+-----+
| Reversal of            | -      | -   | 8     | 0   | -     | -   |
| devaluation of         |        |     | 0,012 | .80 |       |     |
| inventories            |        |     |       |     |       |     |
+------------------------+--------+-----+-------+-----+-------+-----+
| Reversal of allowance  | 1,7    | 11  | -     | -   | 88    | 48  |
| for loss on            | 84,864 | .26 |       |     | 2,554 | .45 |
| impairment of fixed    |        |     |       |     |       |     |
| assets                 |        |     |       |     |       |     |
+------------------------+--------+-----+-------+-----+-------+-----+
| Other income           | 85,523 | 0   | 6     | 0   | 6     | 3   |
|                        |        | .54 | 0,666 | .61 | 7,655 | .71 |
+------------------------+--------+-----+-------+-----+-------+-----+
|  Total Revenues        | 15,8   | 100 | 9,97  | 100 | 1,82  | 100 |
|                        | 56,083 | .00 | 6,061 | .00 | 1,686 | .00 |
+------------------------+--------+-----+-------+-----+-------+-----+
| Expenses               |        |     |       |     |       |     |
+------------------------+--------+-----+-------+-----+-------+-----+
| Cost of sales          | 13,4   | 81  | 8,49  | 90  | 4     | 0   |
|                        | 79,981 | .32 | 0,746 | .40 | 8,920 | .20 |
+------------------------+--------+-----+-------+-----+-------+-----+
| Cost of shut down      | -      | -   | -     | -   | 41    | 1   |
| operations             |        |     |       |     | 4,153 | .69 |
+------------------------+--------+-----+-------+-----+-------+-----+
| Selling and            | 7      | 4   | 53    | 5   | 27    | 1   |
| administrative         | 33,985 | .43 | 9,749 | .75 | 0,931 | .11 |
| expenses               |        |     |       |     |       |     |
+------------------------+--------+-----+-------+-----+-------+-----+
| Loss on devaluation of | 3      | 2   | -     | -   | -     | -   |
| inventories            | 65,431 | .20 |       |     |       |     |
+------------------------+--------+-----+-------+-----+-------+-----+
| Loss on exchange rate  | 3      | 2   | -     | -   | -     | -   |
|                        | 69,447 | .23 |       |     |       |     |
+------------------------+--------+-----+-------+-----+-------+-----+
| Other expenses         | -      | -   | -     | -   | 76    | 3   |
|                        |        |     |       |     | 4,949 | .12 |
+------------------------+--------+-----+-------+-----+-------+-----+
| Provision for          | 1,1    | 6   | -     | -   | -     | -   |
| additional past        | 11,015 | .70 |       |     |       |     |
| accrued                |        |     |       |     |       |     |
| interest               |        |     |       |     |       |     |
+------------------------+--------+-----+-------+-----+-------+-----+
| Total Expenses         | 16,0   | 96  | 9,03  | 96  | 1,49  | 6   |
|                        | 59,859 | .88 | 0,495 | .15 | 8,953 | .12 |
+------------------------+--------+-----+-------+-----+-------+-----+
| Profit (loss) before   | (20    | 3   | 94    | 3   | 32    | 93  |
| interest expense       | 3,776) | .12 | 5,566 | .85 | 2,733 | .88 |
+------------------------+--------+-----+-------+-----+-------+-----+
| Interest expense       | 5      | 3   | 36    | 3   | 5     | 0   |
|                        | 17,168 | .12 | 2,190 | .85 | 4,902 | .22 |
+------------------------+--------+-----+-------+-----+-------+-----+
| Net profit from        | (72    | 4   | 58    | -   | 26    | 93  |
| ordinary activities    | 0,944) | .35 | 3,376 |     | 7,831 | .66 |
+------------------------+--------+-----+-------+-----+-------+-----+
| Extraordinary item     |        |     |       |     |       |     |
+------------------------+--------+-----+-------+-----+-------+-----+
| Gain on debt           | -      | -   | -     | -   | 22,96 | 93  |
| restructuring          |        |     |       |     | 0,044 | .66 |
+------------------------+--------+-----+-------+-----+-------+-----+
| Net profit (loss)      | (72    |     | 58    |     | 23,22 |     |
|                        | 0,944) |     | 3,376 |     | 7,875 |     |
+------------------------+--------+-----+-------+-----+-------+-----+
| Basic earnings per     | (0.08) |     | 0.06  |     | 0.13  |     |
| share                  |        |     |       |     |       |     |
+------------------------+--------+-----+-------+-----+-------+-----+

  4) Financial ratio

  --------------------------------- ------------- ------------ ------------
                                    2005          2004         2003

  Liquidity ratios:                                            

  Current ratio (times)             4.00          2.95         24.17

  Quick ratio (times)               0.45          0.91         17.80

  Cash flow liquidity ratio (times) 0.75          (2.31)       (0.03)

  Receivables turnover (times)      33.80         23.57        10.28

  Collection period (days)          11            15           35.03

  Inventory period (times)          3.20          3.64         0.23

  Inventory turnover period (days)  113           99           1,532.33

  Account payable turnover (times)  32.11         35.35        0.28

  Payment period (days)             11            10           1,298.49

  Cash cycle (days)                 113           104          268.88

                                                               

  Gross profit margin (%)           3.62%         12.74%       (66.39%)

  Net Profit (%)                    (5.15%)       6.00%        1,275.08%

  Return on equity (%)              (4.02%)       3.28%        N/A

                                                               

  Return on assets (%)              (2.20%)       1.87%        83.13%

  Return on fixed assets (%)        (2.84%)       2.37%        96.69%

  Assets turnover (times)           0.48          0.32         0.065

                                                               

  Debt to equity ratio (times)      0.83          0.82         0.69

  Interest coverage (times)         (0.39)        2.61         (14.06)

  Dividend payout ratio (%)         0             0            0
  --------------------------------- ------------- ------------ ------------

2.  Management discussion and analysis

  The Company is one of the substantial flat steel producers in
  Thailand. Our 2005 performance was mainly due to the Company’s timely
  optimization of efficiency and production capacity through a strong
  management team and dedicated workforce, as well as the continuing
  improving the volume of production and sale during the year.

  The Company reported net sales of Baht 13,985 million. We believe
  Thailand’s robust economic growth will continue to result in strong
  demand for hot-rolled steel products in 2006, particularly in response
  to the continued expansion by the country’s automotive and electrical
  appliances sectors, as well as in response to increased spending on
  public and private sector construction projects. In addition, the
  Company is in the process of test running of the push-pull pickling
  line, which will help provide a further boost to our profit margins
  during the year.

  The Company is currently in the process of amending the Continuous
  Galvanizing Line Contract, which is under the Finishing Mill Facility,
  to ensure its applicability to current and future customer
  requirements. Current assessments cause the delay in the start-up of
  certain sections of the Finishing Mill Facility. However, the effect
  of such delay is expected to be negligible as only additional salary
  and utility costs will be incurred during the period of delay.

  Financial statement for the year ended December 31, 2005, the Company
  has total revenue Baht 15,856 million, net loss Baht 720 million,
  total assets Baht 32,586 million and total liabilities Baht 14,766
  million.

  12.2.1 Operational results

  Sales and Cost of sales

  Sales and gross profit for the year ended December 31, 2005 amounted
  to Baht 13,985.69 million and Baht 505.71 million, respectively,
  compared to last year’s Baht 9,730.35 million and Baht 1,239.61
  million, respectively. The sale was greater through the improved
  volume of production and sale. Gross profit shrank as the finished
  product price decreased faster than corresponding raw material price
  adjustment.

  Reversal of allowance for loss on impairment of fixed assets

  For the year ended December 31, 2005, the Company’s fixed assets were
  appraised by an independent appraisal firm as per the Company’s
  policy, and as a result reversed the allowance for loss on impairment
  of the fixed assets. The Company did not undertake asset appraisal
  during 2004.

  Provision for additional past accrued interest

  The MRA creditors have since made claims for amounts higher than the
  recorded amount, citing the interest calculation method as specified
  in the Plan. The final decision on these claims should, however, be
  made by the Central Bankruptcy Court.

  At present, the Company is in the process of filing a petition to the
  Central Bankruptcy Court to establish such amounts. Pending a
  decision, the Company has recorded a provision in the financial
  statements to reflect the full amount of such claims.

  Loss on devaluation of inventories and reversal of allowance for
  devaluation of inventories

  For the year ended December 31, 2005 the Company recorded a provision
  for devaluation of the finished products to reflect the faster market
  price declination compared to market price of finished goods during
  the last year.

  Selling and administrative expenses

  Selling and administrative expenses for the year ended December 31,
  2005 amounting to Baht 733.98 million, was higher than last year’s
  Baht 539.75 million. This was due to the increasing sale volume along
  with the adjustment of the fixed overheads recognized as
  administrative expense consequent to the low production during the
  third quarter of the year, in accordance with TAS #31.

  Gain/(loss) on exchange rate

  Loss on exchange rate amounting to Baht 369.45 million in 2005,
  decreasing from 2004 which was a gain of Baht 105.03 million, owing to
  the weakness of Thai baht against the foreign currency.

  Interest expenses

  Interest expense represents the amount of interest due to the holder
  of restructured term loan of US$188.04 million, in accordance with the
  approved rehabilitation plan and interests from the finance and trade
  facilities.

  12.2.2 Financial status

Assets

  As at December 31, 2005 and 2004, the total asset was Baht 32,586.44
  million and 32,889.83 million, respectively. The reduction of about 1%
  came mainly from the trade accounts receivable, advances to suppliers
  and cash and cash equivalents. Assets increased from inventories and
  property, plant and equipment. The reason is described as follows.

1) Accounts receivable

  As of December 31, 2005 and 2004, the amount of the accounts
  receivable were Baht 2.23 million and Baht 825.26 million,
  respectively, a huge decrease given that the Company’s policy is for
  cash advance before delivery.

  2) Advances to suppliers

  As at December 31, 2005, advances to suppliers was Baht 156.40
  million. This is a decrease from December 31, 2004, when it was Baht
  1,158.18 million, because the Company slowed down purchasing of
  material during the end of the year downturn for the steel market,
  compared to the earlier year.

  3) Cash and cash equivalents

  As at December 31, 2005, cash and cash equivalents was Baht 376.84
  million which decreased from the December 31, 2004, of Baht 1,026.94
  million. This was due to the cash used in the financing activities of
  Baht 1,806 million, in investing activities of Baht 378 million, and
  provided by the operating activities of Baht 1,534 million (see
  details in the Statement of Cash Flow).

4) Inventory

  As of December 31, 2005 and 2004, details of the inventory of the
  Company were as follows:

Unit: million Baht

  For 2005, the Company’s inventory has increased 32.25% over 2004’s
  because the Company stocked more finished goods for sale for the first
  quarter of 2006. However, during 2005 the Company recorded a provision
  for devaluation of the finished products to reflect the faster market
  price declination compared to market price of finished goods for the
  previous year, in accordance to the Thai Accounting Standard No 31.

5) Property, plant and equipment

  As at December 31, 2005 and 2004, property, plant and equipment were
  Baht 24,341 million and Baht 22,405 million, respectively. The 8.64%
  increase was due to the reversal of allowance for loss on impairment
  of the fixed assets.

Liabilities

  As at December 31, 2005 and 2004, total liabilities were Baht 14,766
  million and Baht 14,808 million, respectively. The 0.28% decrease was
  due to the short-term loans from financial institutions. There was an
  increase in liabilities under the rehabilitation plan and the advance
  received from the customers. The reason is described as follows.

1) Short-term loans from financial institutions

  Short-term loan from financial institutions represents trust receipts,
  bearing interest from 6.37 to 7.47% per annum.

  In 2005, the Company has short-term trade financing facilities from
  financial institutions with a total maximum credit limit of US$ 44
  million. The trade financing facilities included letters of credit and
  trust receipts.

  Such facilities are paid for material purchasing which decreased due
  to the Company slowing down of purchasing of material at the end of
  the year.

2) Liabilities under rehabilitation plan

  Liabilities under rehabilitation plan increased due to exchange rate
  movement and interest charges as stipulated in the Plan.

  During 2005, a local financial institution and a note holder exercised
  their option to apply to convert their portion of the Restructured
  Debt into ordinary shares of the Company.

3) Advance received from customers

  As at December 31, 2005 and 2004, the Company has advance received
  from customers amounting to Baht 458.47 million and Baht 27.66
  million, respectively. The increase was over 1,500% compared to
  2004’s. During 2005, the Company had a trade facility from its foreign
  supplier with a total maximum credit limit of US$ 85 million. The
  Company had utilized such the facility in terms of letters of credit
  amounting to Baht 276.48 million and in terms of advance from customer
  amounting to Baht 458.42 million.

Contingent liabilities in connection with unsettled liabilities

  At present, there are some unsettled item claims from certain
  creditors which were claimed to the total of Baht 434.99 million. In a
  situation where the Court or the official receiver holds or orders the
  Company to be responsible for such claims in all aspects, the maximum
  liabilities which may be incurred to the Company are Baht 362.75
  million or approximately 1.11 % of total assets as of 31^(st) December
  2005.

Plan of Payment

  After the restructure, the long-term liabilities remained US$200
  million.

  During 2005, two creditors exercised their option to apply to convert
  their portion of the Restructured Debt into ordinary shares of the
  Company. As a result the remaining outstanding became US$ 188.04
  million of which US$ 97.96 million will be converted into Thai Baht at
  the rate of 43.5065 per 1 US$.

  Resulting long-term loans in foreign currency of the Company was
  US$90.08 million. Such total liabilities are due within 10 years
  provided that the principal amount shall be repaid each quarter
  equally from the sixth year, totaling US$ 40 million per year.

  The interest will be paid as per the condition set out below.

+--------------+--------------+----------+----------+----------------+
| Currency     | 1^(st) –     | 4^(      | 5^(      | 6^(th)         |
|              |  3^(rd) year | th) year | th) year | – 10^(th) year |
|              |              |          |          |                |
|              | (per year)   | (per     | (per     | (per year)     |
|              |              | year)    | year)    |                |
+--------------+--------------+----------+----------+----------------+
| Thai Baht    | 1%           | 3%       | 5%       | MLR (TMB)      |
+--------------+--------------+----------+----------+----------------+
| US Dollar    | 1%           | 3%       | 5%       | LIBOR (1 year) |
+--------------+--------------+----------+----------+----------------+

  The Company is required to pay accrued interests, which are margins of
  actual interest occurred at the rate of MLR or LIBOR, as the case may
  be, and actual interests paid during the 1^(st) – 5^(th) years, within
  10 years from the Effective Date of the Plan.

  In addition, MRA provides that the Company shall distribute its cash
  flow to repay its debts in the following order.

(1) Accrued interests, which are margins of actual interests, occurred
    at the rate of MLR or LIBOR, as the case may be, and actual
    interests paid during the 1^(st) – 5^(th) years, in the reasonable
    amount in comparison to the excess of cash flow.

(2) Principal amount in the reverse order.

  Creditors have the right to convert Restructured Debt to common shares
  of the Company within 18 months from the Effective Date. The option to
  apply for debt to equity conversion expired on 30 April 2005.

Shareholder’s equity

  Presently, the issued and fully paid capital of the Company is Baht
  76,037 million. As at the end of 2005, shareholder’s equity is Baht
  17,819 million, compared to Baht 18,081 million for 2004. This came
  from the net loss for the year 2005 and an increase in its authorized
  share capital and share discount due to the debt to equity conversion
  during 2005.

Liquidity

  Per financial statements as of December 31, 2005 and 2004, liquidity
  of the Company represented by financial ratios are as follows:

  -------------------------------- --------------------- -----------------
                                   As of December 31     

                                   2005                  2004

  Current Ratio                    4.00                  2.95

  Quick Ratio                      0.45                  0.91

  Debt to Equity Ratio             0.83                  0.82
  -------------------------------- --------------------- -----------------

  Current ratio moved from 2.95 times to 4.0 in 2005 because the Company
  received cash proceeds from sale of products and repayment for the
  credit facilities from the financial institutions. Quick ratio was
  lower from 0.91 to 0.45 for 2005 as the Company used cash remaining
  from the proceed from the Public Offering and from sale of products to
  support the increase in the production volume. Debt to equity was
  essentially unchanged for the two years.