12. FINANCIAL PPOSITION AND OPERATING RESULTS

2.12.1 FINANCIAL STATEMENT

  2.12.1.1 Audit for report of consolidation financial statements of
  year 2003

MR. BOONSRI TECHAVARUTAMA

 CERIFIED PUBLIC ACCOUNT (THAILAND), NO. 3336

 BDO RICHFIELD LIMITED

2.  Summary of independent auditor’s report : Unqualified report as
    follows:

a) As discussed in Note 2 to the financial statements, the Company and
its subsidiary companies have experienced persistent operating losses
and have current liabilities substantially in excess of current assets.
Nevertheless, the accompanying financial statements have been prepared
on the going concern basis, assuming that the realization of assets and
settlement of liabilities and obligations will occur in the ordinary
course of business of the Company and its subsidiary companies, without
any expectation of significant disruption to the ongoing activities.

b) As discussed in Note 15 to the financial statements, land awaiting
development of a subsidiary company (Sky Cliff Limited) amounting to
Baht 409 million, is stated at the fair market value appraised by an
independent appraisal company according to his report dated 14th July,
1999. In addition during the year 2003, a company offered to purchase
such land at the price of Baht 422 million which is over the appraisal
value. As a result of the appraised value by the independent company in
1999 together with the offered price by a company in 2003, the Company
and its subsidiary company believe that the carrying amount of this land
does not materially differ from the fair market value at the balance
sheet date.

c) As discussed in Note 25 to the financial statements, due to
persistent losses generated from operating results, the Company and the
subsidiary company (Cholsin Limited) considered whether there had been
impairment of the value of its operating equipment, of which the net
book value as at 31 December 2003 was approximately Baht 77.7 million
(approximately Baht 53.5 million for the Company only). To this end,
cash flows from the quarry were projected, using a discounted rate of 7
percent. These projected cash flows suggested that the future cash flows
would be in excess of the net book value of the assets as at the balance
sheet date. The Company believes that the future projected cash flows
form the quarry would not be significantly different from the projection
and will exceed the net book value of the assets as at the balance sheet
date. However, given the adverse effects of the uncertainty of the
Company’s bidding result to get the order from a client and andesite
selling capability, there may be the impairment in the stated value of
the related assets.

d) As discussed in Note 3 to the financial statements, the Company
requested the Stock Exchange of Thailand ("SET") for the consideration
of allowing to resume the trading of the Company's securities, the SET
considered and agreed that the Company has complied with the conditions
and directions for allowing the trading of securities. Therefore, the
SET decided to allow the trading of the Company's securities since 25th
March, 2003. The Company has to submit the progress report on the
Company's operation of each business to the SET every 3 months. In
addition, three shareholders of the Company, which hold totalling
81,738,070 ordinary shares or 17.08 percent of the Company's paid up
capital, voluntarily certify to the SET that their shares will not be
sold for 6 months from the date which the Company resumes the trading of
its securities. Should the Company increase the capital by allocating to
existing shareholders during the securities trading suspension period of
the said shareholders, such suspension shall include the increased
shares which are allocated to the said three shareholders.

e) As discussed in Note 16 to the financial statements, on 23rd January,
2003, the subsidiary company (Tungkum Limited) received the remaining
three gold mining licenses of the six licenses of the first batch, and
paid a Baht 6.5 million bonus for the six licenses to the Department of
Mineral Resources (DMR) in accordance with the concession agreement for
the gold exploration and mining B.E. 2534. In addition, the Company
received Investment Promotion Certificate No. 1108/2546 dated 25th
February, 2003 from the Board of Investment.

3.  Summary of significant accounting policies

1 Sales

Revenues from sales of tin ore and andesite are recognized when the
goods produced are sold and delivered, after excluding value added tax.

2 Allowance for doubtful accounts

Allowance for doubtful accounts is provided for the estimated collection
losses that may be incurred in collection of receivables. The allowance
is based on collection experience and the current status of receivables
outstanding at the balance sheet date.

3 Inventories

Inventories are valued at the lower of cost (average method) and net
realisable value.

4 Amortisation

Investments in andesite mining (excluded cost of land purchased and cost
of land improvement) and tin mining rights are amortised by equal annual
installments over the period of 25 years.

5 Investments accounted for under equity method

Investments in subsidiaries (only in the financial statements of the
Company) are stated under the equity method. Loss of subsidiaries in
excess of cost of investments in subsidiaries is presented as an
liability under the caption of “Provision for loss from investments
accounted for under equity method”.

6 Other investments

Long-term investments in non-marketable equity securities, which the
Company holds as other investments, are valued at cost. The Company
recognizes loss on impairment of other investments in the earnings
statements when the fair value of the investments is lower than the
cost.

7 Fixed assets and depreciation

Fixed assets are stated at cost less related accumulated depreciation.

Depreciation of fixed assets, less approximate salvage value, is
provided on the straight-line method, over the following estimated
useful lives:

Land improvement - 10 years

Buildings, temporary buildings and dry dock - 5 years and 20 years

Motor vehicles - 5 years

Furniture and office equipment - 10 years

Machinery and equipment - 10 years

Others - 5 years and 10 years

No depreciation is provided for land and work in progress.

8 Land awaiting development

Land awaiting development, which is a fixed asset of a subsidiary
company, was initially recorded at cost. However, the land was
subsequently revalued by an independent appraiser and was therefore
recorded by its reappraised value. Revaluations are to be made with
sufficient regularity to ensure that the carrying amount of assets does
not materially differ from their fair value at the balance sheet date.

The differences arising from revaluation are dealt in the financial
statements as follows :

- When an asset’s carrying amount is increased as a result of the
revaluation, the increase is credited directly to equity under the
heading of “Revaluation surplus”. However, a revaluation increase will
be recognized as income to the extent that it reverses a revaluation
decrease of the same asset previously recognized as an expense.

- When an asset’s carrying amount is decreased as a result of the
revaluation, the decrease is recognized as an expense. However, a
revaluation decrease will be charged directly against the related
“Revaluation surplus” to the extent that the decrease does not exceed
the amount held in the revaluation surplus in respect of that same
asset. Any excess amount is to be recognized as an expense in the
earnings statements.

9 Exploration expenditures and development costs

Exploration expenditures and development costs incurred before the date
of issuance of mining rights are deferred as assets in the balance
sheets to await amortisation once the concession begins to earn
operating income.

10 Interest capitalisation

The interest cost of the borrowings related to mine exploration and
development has been capitalised and has recorded them under exploration
expenditures and development costs, until the mine is ready for its
intended use.

11 Foreign currency

Exchange rates adopted :-

Foreign currency transactions during the period - at the rates ruling on
the transaction dates.

Assets and liabilities in foreign currency outstanding on the balance
sheet date -at the rates ruling on the balance sheet date.

Exchange gains and losses are included in determining earnings.

12 Buffer stock contributions

Believing that the buffer stock contributions will not be recoverable,
the Company has adopted a policy of expending buffer stock contributions
to earnings instead of recognizing them as an asset in the balance
sheets.

13 Impairment of assets

The Company will reduce the carrying amount of the Company’s asset to
its recoverable amount if, and only if, the recoverable amount of an
asset is less than its carrying amount. That reduction is an impairment
loss.

14 Basic loss per share

Basic loss per share as presented in the earnings statements is
determined by dividing net loss for the year by the weighted average
number of ordinary shares in issued during the year.

15 Use of accounting estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues, expenses,
assets and liabilities and disclosure of contingent assets and
liabilities. Subsequent actual results may differ from these estimates.

4.  Summary of financial statement

Comparative financial statements and consolidated financial statements
for the past two consecutive years (Audited Account).

  -------------- --------------- ------------- -- ------ --------------------- --- -- -------------- -------- ------- ----------- ----------- --------- ------------
  TONGKAH                                                                                                                                               
  HARBOUR PUBLIC                                                                                                                                        
  COMPANY                                                                                                                                               
  LIMITED AND                                                                                                                                           
  ITS                                                                                                                                                   
  SUBSIDIARIES                                                                                                                                          

  Balance Sheets                                                                                                                                        

  As at 31st                                                                                                                                            
  December, 2003                                                                                                                                        
  and 2002                                                                                                                                              

                                                                                      (Unit :                                                           
                                                                                      Thousand Baht)                                                    

                                                                                      Consolidated                                                      

                                                                                      %                       2003                %                     2002

                                                                                                                                                        (Restated)

                                 Assets                                                                                                                 

  Current assets                                                                                                                                        

                 Cash and cash                                                                                                    0.24                  2,590
                 equivalents                                                                                                                            

                 Current                                                                                                          0.00                  1
                 investment -                                                                                                                           
                 fixed deposits                                                                                                                         

                 Trade accounts                                                                                                   0.18                  1,910
                 receivable -                                                                                                                           
                 net                                                                                                                                    

                 Short-term                                                                                                       1.27                  13,870
                 advances to                                                                                                                            
                 related parties                                                                                                                        

                 Short-term                                                                                                       0.16                  1,722
                 loans to                                                                                                                               
                 related parties                                                                                                                        

                 Inventories -                                                                                0.57                6,203                 1.96
                 net                                                                                                                                    

                 Other current                                                                                                                          
                 assets                                                                                                                                 

                                 Cash                                                                         0.15                1,662                 0.05
                                 advance -                                                                                                              
                                 general                                                                                                                

                                 Input tax                                                                    0.29                3,117                 0.73
                                 refundable                                                                                                             

                                 Others                                               0.45                    4,951               0.50                  4,509

                 Total other                                                                                          0.89                    9,730     
                 current assets                                                                                                                         

  Total current                                                                                                       3.31                    36,026    
  assets                                                                                                                                                

  Non-current                                                                                                                                           
  assets                                                                                                                                                

                 Long-term                                                                                                                              
                 investments                                                                                                                            

                                 Investments                                                                  3.84                41,816                4.65
                                 in andesite                                                                                                            
                                 mining - net                                                                                                           

                                 Investments                                                                  -                   -                     -
                                 accounted for                                                                                                          
                                 under equity                                                                                                           
                                 method                                                                                                                 

                                 Investments                                                                  -                   -                     0.04
                                 in other                                                                                                               
                                 companies -                                                                                                            
                                 net                                                                                                                    

                 Other                                                                                                -                       -         
                 receivable -                                                                                                                           
                 related parties                                                                                                                        

                 Long-term loans                                                                                      -                       -         
                 to related                                                                                                                             
                 parties                                                                                                                                

                 Property, plant                                                                                      16.45                   179,022   
                 and equipment -                                                                                                                        
                 net                                                                                                                                    

                 Tin mining                                                                                   0.16                1,703                 0.30
                 rights - net                                                                                                                           

                 Land awaiting                                                                                        43.15                   469,759   
                 development                                                                                                                            

                 Exploration                                                                                          32.96                   358,770   
                 expenditures                                                                                                                           
                 and development                                                                                                                        
                 costs                                                                                                                                  

                 Goodwill                                                             0.04                    486                 0.05                  466

                 Other                                                                                        0.09                988                   0.06
                 non-current                                                                                                                            
                 assets                                                                                                                                 

  Total                                                                                                       96.69               1,052,544             96.34
  non-current                                                                                                                                           
  assets                                                                                                                                                

  Total assets                                                                                       100.00           1,088,570               100.00    
  -------------- --------------- ------------- -- ------ --------------------- --- -- -------------- -------- ------- ----------- ----------- --------- ------------

  -------------- --------------- ------------- -- ------ --------------------- --- -- ---------- -------- ------- --------- --------- --------- ------------
  TONGKAH                                                                                                                                       
  HARBOUR PUBLIC                                                                                                                                
  COMPANY                                                                                                                                       
  LIMITED AND                                                                                                                                   
  ITS                                                                                                                                           
  SUBSIDIARIES                                                                                                                                  

  Balance Sheets                                                                                                                                

  As at 31st                                                                                                                                    
  December, 2003                                                                                                                                
  and 2002                                                                                                                                      

                                                                                      (Unit :                                                   
                                                                                      Thousand                                                  
                                                                                      Baht)                                                     

                                                                                      The                                                       
                                                                                      Company                                                   
                                                                                      Only                                                      

                                                                                      %                   2003              %                   2002

                                                                                                                                                (Restated)

                                 Assets                                                                                                         

  Current assets                                                                                                                                

                 Cash and cash                                                                                              0.12                1,113
                 equivalents                                                                                                                    

                 Current                                                                                                    -                   -
                 investment -                                                                                                                   
                 fixed deposits                                                                                                                 

                 Trade accounts                                                                                             0.21                1,910
                 receivable -                                                                                                                   
                 net                                                                                                                            

                 Short-term                                                                                                 1.16                10,615
                 advances to                                                                                                                    
                 related parties                                                                                                                

                 Short-term                                                                                                 1.35                12,333
                 loans to                                                                                                                       
                 related parties                                                                                                                

                 Inventories -                                                                            0.59              5,427               2.01
                 net                                                                                                                            

                 Other current                                                                                                                  
                 assets                                                                                                                         

                                 Cash                                                                     0.11              978                 0.05
                                 advance -                                                                                                      
                                 general                                                                                                        

                                 Input tax                                                                0.14              1,307               0.16
                                 refundable                                                                                                     

                                 Others                                               0.28                2,610             0.27                2,267

                 Total other                                                                                      0.53                4,895     
                 current assets                                                                                                                 

  Total current                                                                                                   3.96                36,293    
  assets                                                                                                                                        

  Non-current                                                                                                                                   
  assets                                                                                                                                        

                 Long-term                                                                                                                      
                 investments                                                                                                                    

                                 Investments                                                              4.56              41,816              5.05
                                 in andesite                                                                                                    
                                 mining - net                                                                                                   

                                 Investments                                                              64.27             589,081             72.37
                                 accounted for                                                                                                  
                                 under equity                                                                                                   
                                 method                                                                                                         

                                 Investments                                                              -                 -                   0.04
                                 in other                                                                                                       
                                 companies -                                                                                                    
                                 net                                                                                                            

                 Other                                                                                            0.90                8,264     
                 receivable -                                                                                                                   
                 related parties                                                                                                                

                 Long-term loans                                                                                  12.41               113,741   
                 to related                                                                                                                     
                 parties                                                                                                                        

                 Property, plant                                                                                  13.69               125,466   
                 and equipment -                                                                                                                
                 net                                                                                                                            

                 Tin mining                                                                               0.19              1,703               0.32
                 rights - net                                                                                                                   

                 Land awaiting                                                                                    -                   -         
                 development                                                                                                                    

                 Exploration                                                                                      -                   -         
                 expenditures                                                                                                                   
                 and development                                                                                                                
                 costs                                                                                                                          

                 Goodwill                                                             -                   -                 -                   -

                 Other                                                                                    0.03              276                 0.01
                 non-current                                                                                                                    
                 assets                                                                                                                         

  Total                                                                                                   96.04             880,347             97.08
  non-current                                                                                                                                   
  assets                                                                                                                                        

  Total assets                                                                                   100.00           916,640             100.00    
  -------------- --------------- ------------- -- ------ --------------------- --- -- ---------- -------- ------- --------- --------- --------- ------------

  --------------- ---------------- ---------------- ------------- ------ --------------------- ---------- -- -------------- ------- --------- --------- ----------- --------- ------------
  TONGKAH HARBOUR                                                                                                                                                             
  PUBLIC COMPANY                                                                                                                                                              
  LIMITED AND ITS                                                                                                                                                             
  SUBSIDIARIES                                                                                                                                                                

  Balance Sheets                                                                                                                                                              
  (Continued)                                                                                                                                                                 

  As at 31st                                                                                                                                                                  
  December, 2003                                                                                                                                                              
  and 2002                                                                                                                                                                    

  (Unit :                                                                                                                                                                     
  Thousand Baht)                                                                                                                                                              

                                                                                                             Consolidated                                                     

                                                                                                             %                      2003                %                     2002

                                                                                                                                                                              (Restated)

                                   Liabilities and                                                                                                                            
                                   shareholders'                                                                                                                              
                                   equity                                                                                                                                     

  Current                                                                                                                                                                     
  liabilities                                                                                                                                                                 

                  Bank overdrafts                                                                                                   0.39                4,206                 0.62

                  Short-term loan                                                                                                             4.60                  50,000    
                  from financial                                                                                                                                              
                  institution                                                                                                                                                 

                  Trade account                                                                                                               -                     -         
                  payable -                                                                                                                                                   
                  related party                                                                                                                                               

                  Trade account                                                                                                               4.10                  44,670    
                  payable - others                                                                                                                                            

                  Current portion                                                                                                             1.27                  13,847    
                  of long-term                                                                                                                                                
                  loans                                                                                                                                                       

                  Short-term                                                                                                                  0.66                  7,200     
                  advances from                                                                                                                                               
                  related parties                                                                                                                                             

                  Short-term loans                                                                                                            0.23                  2,522     
                  from related                                                                                                                                                
                  parties                                                                                                                                                     

                  Other payable -                                                                                                             -                     -         
                  related party                                                                                                                                               

                  Other payable -                                                                                                             6.44                  70,127    
                  purchase of                                                                                                                                                 
                  office building                                                                                                                                             
                  and land                                                                                                                                                    

                  Current portion                                                                                                             0.58                  6,363     
                  of hire purchase                                                                                                                                            
                  creditors                                                                                                                                                   

                  Other current                                                                                                                                               
                  liabilities                                                                                                                                                 

                                   Accrued expenses                                                                         0.98              10,644                1.13      

                                   Others                                                                    0.61                   6,589               0.53                  4,789

                                                                                                             1.58                   17,233              1.66                  14,925

  Total current                                                                                                                                         19.86                 216,168
  liabilities                                                                                                                                                                 

  Non-current                                                                                                                                                                 
  liabilities                                                                                                                                                                 

                  Long-term loans                                                                                                                       -                     -
                  from related                                                                                                                                                
                  party                                                                                                                                                       

                  Long-term                                                                                                         4.98                54,231                7.53
                  loans - net                                                                                                                                                 

                  Hire purchase                                                                                                               1.23                  13,422    
                  creditors - net                                                                                                                                             

                  Provision for                                                                                                               -                     -         
                  loss from                                                                                                                                                   
                  investments                                                                                                                                                 
                  accounted for                                                                                                                                               
                  under equity                                                                                                                                                
                  method                                                                                                                                                      

  Total                                                                                                                                       6.21                  67,653    
  non-current                                                                                                                                                                 
  liabilities                                                                                                                                                                 

  Total                                                                                                                             26.07               283,821               13.89
  liabilities                                                                                                                                                                 

  Shareholders'                                                                                                                                                               
  equity                                                                                                                                                                      

                  Share capital                                                                                                                                               

                                   Registered                                                                                                                                 

                                                    599,920,010                                                                     599,920                                   599,920
                                                    ordinary                                                                                                                  
                                                    shares of                                                                                                                 
                                                    Baht 1 each                                                                                                               

                                   Issued and fully                                                                                                                           
                                   paid-up                                                                                                                                    

                                                    483,648,570                                                                                                               
                                                    ordinary                                                                                                                  
                                                    shares of                                                                                                                 
                                                    Baht 1 each                                                                                                               

                                                    (2002 :                                                  44.43                  483,649             47.10                 423,574
                                                    423,573,481                                                                                                               
                                                    ordinary                                                                                                                  
                                                    shares of                                                                                                                 
                                                    Baht 1 each)                                                                                                              

                  Share premium                                                                                             25.57             278,355               22.50     

                  Share discount                                                                                            -5.25             -57,099               -         

                  Revaluation                                                                                                       -0.45               -4,903                -
                  surplus                                                                                                                                                     
                  (decrease) on                                                                                                                                               
                  land                                                                                                                                                        

                  Retained                                                                                                                                                    
                  earnings                                                                                                                                                    
                  (deficit)                                                                                                                                                   

                                   Unappropriated                                                            -0.59                  -6,386              4.18                  37,615

                  Equity                                                                                                            63.71               693,616               73.78
                  attributable to                                                                                                                                             
                  the Company's                                                                                                                                               
                  shareholders                                                                                                                                                

                  Minority                                                                                                                              10.22                 111,133
                  interests -                                                                                                                                                 
                  equity                                                                                                                                                      
                  attributable to                                                                                                                                             
                  minority                                                                                                                                                    
                  shareholders of                                                                                                                                             
                  subsidiaries                                                                                                                                                

  Total                                                                                                                     73.93             804,749               86.11     
  shareholders'                                                                                                                                                               
  equity                                                                                                                                                                      

  Total                                                                                                                             100.00              1,088,570             100.00
  liabilities and                                                                                                                                                             
  shareholders'                                                                                                                                                               
  equity                                                                                                                                                                      

  The                                                                                                                                                                         
  accompanying                                                                                                                                                                
  notes are an                                                                                                                                                                
  integral part                                                                                                                                                               
  of the                                                                                                                                                                      
  financial                                                                                                                                                                   
  statements.                                                                                                                                                                 

  TONGKAH HARBOUR                                                                                                                                                             
  PUBLIC COMPANY                                                                                                                                                              
  LIMITED AND ITS                                                                                                                                                             
  SUBSIDIARIES                                                                                                                                                                

  Balance Sheets                                                                                                                                                              
  (Continued)                                                                                                                                                                 

  As at 31st                                                                                                                                                                  
  December, 2003                                                                                                                                                              
  and 2002                                                                                                                                                                    

                                                                                               (Unit :                                                                        
                                                                                               Thousand                                                                       
                                                                                               Baht)                                                                          

                                                                                                             The Company                                                      
                                                                                                             Only                                                             

                                                                                                             %                      2003                %                     2002

                                                                                                                                                                              (Restated)

                                   Liabilities and                                                                                                                            
                                   shareholders'                                                                                                                              
                                   equity                                                                                                                                     

  Current                                                                                                                                                                     
  liabilities                                                                                                                                                                 

                  Bank overdrafts                                                                                                   0.46                4,206                 0.63

                  Short-term loan                                                                                                             -                     -         
                  from financial                                                                                                                                              
                  institution                                                                                                                                                 

                  Trade account                                                                                                               1.53                  14,026    
                  payable -                                                                                                                                                   
                  related party                                                                                                                                               

                  Trade account                                                                                                               0.24                  2,168     
                  payable - others                                                                                                                                            

                  Current portion                                                                                                             1.34                  12,256    
                  of long-term                                                                                                                                                
                  loans                                                                                                                                                       

                  Short-term                                                                                                                  0.72                  6,569     
                  advances from                                                                                                                                               
                  related parties                                                                                                                                             

                  Short-term loans                                                                                                            0.53                  4,896     
                  from related                                                                                                                                                
                  parties                                                                                                                                                     

                  Other payable -                                                                                                             0.00                  45        
                  related party                                                                                                                                               

                  Other payable -                                                                                                             7.65                  70,127    
                  purchase of                                                                                                                                                 
                  office building                                                                                                                                             
                  and land                                                                                                                                                    

                  Current portion                                                                                                             0.33                  3,006     
                  of hire purchase                                                                                                                                            
                  creditors                                                                                                                                                   

                  Other current                                                                                                                                               
                  liabilities                                                                                                                                                 

                                   Accrued expenses                                                                         0.69              6,347                 0.79      

                                   Others                                                                    0.17                   1,553               0.19                  1,585

                                                                                                             0.86                   7,900               0.98                  8,125

  Total current                                                                                                                                         13.66                 125,199
  liabilities                                                                                                                                                                 

  Non-current                                                                                                                                                                 
  liabilities                                                                                                                                                                 

                  Long-term loans                                                                                                                       1.38                  12,690
                  from related                                                                                                                                                
                  party                                                                                                                                                       

                  Long-term                                                                                                         5.31                48,662                7.35
                  loans - net                                                                                                                                                 

                  Hire purchase                                                                                                               0.20                  1,790     
                  creditors - net                                                                                                                                             

                  Provision for                                                                                                               3.25                  29,780    
                  loss from                                                                                                                                                   
                  investments                                                                                                                                                 
                  accounted for                                                                                                                                               
                  under equity                                                                                                                                                
                  method                                                                                                                                                      

  Total                                                                                                                                       10.14                 92,922    
  non-current                                                                                                                                                                 
  liabilities                                                                                                                                                                 

  Total                                                                                                                             23.80               218,121               19.82
  liabilities                                                                                                                                                                 

  Shareholders'                                                                                                                                                               
  equity                                                                                                                                                                      

                  Share capital                                                                                                                                               

                                   Registered                                                                                                                                 

                                                    599,920,010                                                                     599,920                                   599,920
                                                    ordinary                                                                                                                  
                                                    shares of                                                                                                                 
                                                    Baht 1 each                                                                                                               

                                   Issued and fully                                                                                                                           
                                   paid-up                                                                                                                                    

                                                    483,648,570                                                                                                               
                                                    ordinary                                                                                                                  
                                                    shares of                                                                                                                 
                                                    Baht 1 each                                                                                                               

                                                    (2002 :                                                  52.76                  483,649             51.19                 423,574
                                                    423,573,481                                                                                                               
                                                    ordinary                                                                                                                  
                                                    shares of                                                                                                                 
                                                    Baht 1 each)                                                                                                              

                  Share premium                                                                                             30.37             278,355               24.45     

                  Share discount                                                                                            -6.23             -57,099               -         

                  Revaluation                                                                                                       -                   -                     -
                  minus on land                                                                                                                                               

                  Retained                                                                                                          -                                         -
                  earnings                                                                                                                                                    
                  (deficit)                                                                                                                                                   

                                   Unappropriated                                                            -0.70                  -6,386              4.55                  37,615

                  Equity                                                                                                            76.20               698,519               80.18
                  attributable to                                                                                                                                             
                  the Company's                                                                                                                                               
                  shareholders                                                                                                                                                

                  Minority                                                                                                                              -                     -
                  interests -                                                                                                                                                 
                  equity                                                                                                                                                      
                  attributable to                                                                                                                                             
                  minority                                                                                                                                                    
                  shareholders of                                                                                                                                             
                  subsidiaries                                                                                                                                                

  Total                                                                                                                     76.20             698,519               80.18     
  shareholders'                                                                                                                                                               
  equity                                                                                                                                                                      

  Total                                                                                                                             100.00              916,640               100.00
  liabilities and                                                                                                                                                             
  shareholders'                                                                                                                                                               
  equity                                                                                                                                                                      

  TONGKAH HARBOUR                                                                                                                                                             
  PUBLIC COMPANY                                                                                                                                                              
  LIMITED AND ITS                                                                                                                                                             
  SUBSIDIARIES                                                                                                                                                                

  Statements of                                                                                                                                                               
  earnings                                                                                                                                                                    

  For the years                                                                                                                                                               
  ended 31st                                                                                                                                                                  
  December, 2003                                                                                                                                                              
  and 2002                                                                                                                                                                    

                                                                                                             (Unit :                                                          
                                                                                                             Thousand Baht)                                                   

                                                                                                             Consolidated                                                     

                                                                                                             %                      2003                %                     2002

                                                                                                                                                                              (Restated)

  Revenues                                                                                                                                                                    

                  Sales                                                                                                                                                       

                                   Tin ore sales                                                                                    48.14               20,834                50.19

                                   Andesite sales                                                                                   33.70               14,585                34.00

                  Other income                                                                                                                                                

                                   Earnings on                                                                                                -                     -         
                                   sales of fixed                                                                                                                             
                                   assets                                                                                                                                     

                                   Interest income                                                                          0.08              34                    0.01      

                                   Amortization of                                                                                                                            
                                   excess of net                                                                                                                              
                                   book value over                                                                                                                            
                                   cost of                                                                                                                                    

                                                    investments                                                             0.04              19                    0.02      
                                                    accounted for                                                                                                             
                                                    under equity                                                                                                              
                                                    method                                                                                                                    

                                   Revaluation                                                                                      8.50                3,677                 -
                                   decrease on land                                                                                                                           

                                   Others                                                                    9.54                   4,127               3.73                  3,135

  Total revenues                                                                                                                              100.00                43,276    

  Expenses                                                                                                                                                                    

                  Cost of sales                                                                                                                                               

                                   Cost of tin ore                                                           43.96                  19,024              46.16                 38,749
                                   sales                                                                                                                                      

                                   Cost of andesite                                                                         47.14             20,401                29.03     
                                   sales                                                                                                                                      

                  Selling and                                                                                                       84.40               36,524                40.36
                  administrative                                                                                                                                              
                  expenses                                                                                                                                                    

                  Loss from                                                                                                         15.18               6,568                 -
                  diminution in                                                                                                                                               
                  value of                                                                                                                                                    
                  inventories                                                                                                                                                 

                  Directors'                                                                                                        0.88                381                   0.44
                  remuneration                                                                                                                                                

                  Share of loss                                                                                                               -                     -         
                  from investments                                                                                                                                            
                  accounted for                                                                                                                                               
                  under equity                                                                                                                                                
                  method                                                                                                                                                      

  Total expenses                                                                                                                    191.56              82,898                115.99

  Loss before                                                                                                                                 -91.56                -39,622   
  interest                                                                                                                                                                    
  expenses                                                                                                                                                                    

  Interest                                                                                                                          -12.28              -5,316                -7.43
  expenses                                                                                                                                                                    

  Loss before                                                                                                                                 -103.84               -44,938   
  minority                                                                                                                                                                    
  interest                                                                                                                                                                    

  Minority                                                                                                                                    2.17                  937       
  interest in                                                                                                                                                                 
  (earnings) loss                                                                                                                                                             
  of subsidiaries                                                                                                                                                             

  Net loss for                                                                                                                      -101.67             -44,001               -23.16
  the year                                                                                                                                                                    

                                                                                                                                                                              

  Basic loss per                                                                                                                                                              
  share (Baht per                                                                                                                                                             
  share)                                                                                                                                                                      

                  Net loss for the                                                                                                                      -0.09                 
                  year                                                                                                                                                        

                                                                                                                                                                              

                  Weighted average                                                                                                                                            
                  numbers of                                                                                                                                                  
                  ordinary share                                                                                                                                              
                  (Thousand                                                                                                                                                   
                  shares)                                                                                                                                                     
  --------------- ---------------- ---------------- ------------- ------ --------------------- ---------- -- -------------- ------- --------- --------- ----------- --------- ------------

  -------------- ---------------- -------------- ------------- ------ --------------------- --- ---------- --------- ------- -------- -------- --------- --------- ------------
  TONGKAH                                                                                                                                                          
  HARBOUR PUBLIC                                                                                                                                                   
  COMPANY                                                                                                                                                          
  LIMITED AND                                                                                                                                                      
  ITS                                                                                                                                                              
  SUBSIDIARIES                                                                                                                                                     

  Statements of                                                                                                                                                    
  earnings                                                                                                                                                         

  For the years                                                                                                                                                    
  ended 31st                                                                                                                                                       
  December, 2003                                                                                                                                                   
  and 2002                                                                                                                                                         

                                                                                                (Unit :                                                            
                                                                                                Thousand                                                           
                                                                                                Baht)                                                              

                                                                                                           The                                                     
                                                                                                           Company                                                 
                                                                                                           Only                                                    

                                                                                                           %                 2003              %                   2002

                                                                                                                                                                   (Restated)

  Revenues                                                                                                                                                         

                 Sales                                                                                                                                             

                                  Tin ore sales                                                                              41.72             20,834              46.84

                                  Andesite sales                                                                             29.21             14,585              31.74

                 Other income                                                                                                                                      

                                  Earnings on                                                                                         -                  -         
                                  sales of fixed                                                                                                                   
                                  assets                                                                                                                           

                                  Interest                                                                           10.68            5,334              6.18      
                                  income                                                                                                                           

                                  Amortization                                                                                                                     
                                  of excess of                                                                                                                     
                                  net book value                                                                                                                   
                                  over cost of                                                                                                                     

                                                 investments                                                         -                -                  -         
                                                 accounted for                                                                                                     
                                                 under equity                                                                                                      
                                                 method                                                                                                            

                                  Revaluation                                                                                7.36              3,677               -
                                  decrease on                                                                                                                      
                                  land                                                                                                                             

                                  Others                                                                   11.03             5,506             3.28                2,950

  Total revenues                                                                                                                      100.00             49,936    

  Expenses                                                                                                                                                         

                 Cost of sales                                                                                                                                     

                                  Cost of tin                                                              38.10             19,024            43.09               38,749
                                  ore sales                                                                                                                        

                                  Cost of                                                                            38.46            19,206             23.90     
                                  andesite sales                                                                                                                   

                 Selling and                                                                                                 42.33             21,139              23.80
                 administrative                                                                                                                                    
                 expenses                                                                                                                                          

                 Loss from                                                                                                   13.15             6,568               -
                 diminution in                                                                                                                                     
                 value of                                                                                                                                          
                 inventories                                                                                                                                       

                 Directors'                                                                                                  0.76              381                 0.41
                 remuneration                                                                                                                                      

                 Share of loss                                                                                                        43.71              21,829    
                 from investments                                                                                                                                  
                 accounted for                                                                                                                                     
                 under equity                                                                                                                                      
                 method                                                                                                                                            

  Total expenses                                                                                                             176.52            88,147              113.46

  Loss before                                                                                                                         -76.52             -38,211   
  interest                                                                                                                                                         
  expenses                                                                                                                                                         

  Interest                                                                                                                   -11.59            -5,790              -8.15
  expenses                                                                                                                                                         

  Loss before                                                                                                                         -88.11             -44,001   
  minority                                                                                                                                                         
  interest                                                                                                                                                         

  Minority                                                                                                                            -                  -         
  interest in                                                                                                                                                      
  (earnings)                                                                                                                                                       
  loss of                                                                                                                                                          
  subsidiaries                                                                                                                                                     

  Net loss for                                                                                                               -88.11            -44,001             -21.61
  the year                                                                                                                                                         

                                                                                                                                                                   

  Basic loss per                                                                                                                                                   
  share (Baht                                                                                                                                                      
  per share)                                                                                                                                                       

                 Net loss for the                                                                                                              -0.09               
                 year                                                                                                                                              

                                                                                                                                                                   

                 Weighted average                                                                                                                                  
                 numbers of                                                                                                                                        
                 ordinary share                                                                                                                                    
                 (Thousand                                                                                                                                         
                 shares)                                                                                                                                           

                                                                                                                                                                   

  The                                                                                                                                                              
  accompanying                                                                                                                                                     
  notes are an                                                                                                                                                     
  integral part                                                                                                                                                    
  of the                                                                                                                                                           
  financial                                                                                                                                                        
  statements.                                                                                                                                                      
  -------------- ---------------- -------------- ------------- ------ --------------------- --- ---------- --------- ------- -------- -------- --------- --------- ------------

5.  Table of important financial ratios of the fiscal year 2003

  ------------------------------------------- -------------- -------------
                                              Consolidated   

                                              2003           2002

  LIQUIDITY RATIO                                            

  Current Ratio (Times)                       0.17           0.63

  Quick Ratio (Times)                         0.02           0.06

  Quick Ratio (Cash Basis) (Times)            -0.23          -0.54

  Receivable Turnover (Times)                 15.41          17.20

  Collection Period (Days)                    23.36          20.93

  Inventory Turnover (Times)                  3.31           4.71

  Inventory Turnover (Days)                   108.82         76.50

  Accounts Payable Turnover (Days)            1.64           17.78

  Payment Period (Days)                       219.14         20.25

  Cash Cycle (Days)                           -86.97         77.18

                                                             

  PROFITABLE RATIO                                           

  Gross Profit Margin (%)                     (11.31%)       10.68%

  Net Profit Margin (%)                       (101.68%)      (23.16%)

  Return on Equity (%)                        (5.57%)        (2.61%)

                                                             

  EFFICIENCY RATIO                                           

  Return on Total Assets (%)                  (4.43%)        (2.21%)

  Return on Fixed Assets (%)                  (26.30%)       (13.62%)

  Asset Turnover (Times)                      0.04           0.10

                                                             

  FINANCIAL POLICY RATIO                                     

  Debt to Equity Ratio (Times)                0.35           0.16

  Interest Coverage (Times)                   -7.28          -2.12

  Contingency Coverage (Times)                -5.09          -1.48

  Contingency Coverage (Cash Basis) (Times)   -0.21          -0.31

  Pay Out Ratio (%)                           0.00%          0.00%
  ------------------------------------------- -------------- -------------

2.12.2 SUMMARY OF FINANCIAL POSITION AND OPERATING RESULTS

REVIEW OF FINANCIAL RESULTS

The Company incurred a loss of Baht 44 million in 2003 due mainly to the
fact that the Company has not yet realized income from its gold mining
project. The Company only derived income from two of its three major
mining projects (the tin and andesite mining operations). In late 2003,
the Company initiated a 29-story condominium project “Le Metro” on its
land on Ratchadapisek Road. The main building construction will commence
in early of 2004.

TIN PERFORMANCE

In 2003, the Company’s income from tin and tantalum was based on
production and price levels at the international metals market. Total
revenue received during the year from tin ore sales totaled Baht 20.83
million as compared to Baht 42.13 million in the year 2002, representing
a decrease of 50.56%. Likewise, operational costs charged by the
contractor decreased 50.92% from Baht 38.75 million charged in the year
2002 to Baht 19.02 million charged in 2003. Overall, the Company’s net
income from its tin mining operations decreased 46.45% from the previous
year due to the decrease in number of dredges used from 3 in year 2002
to 1 in 2003. Additionally, in 2003, mining operations were conducted
for only 8 months (May – December) as compared to 10 months in 2002. Tin
prices, in 2003 increased on average approximately 17% from the previous
year. However, the Company gross margin from tin remained approximately
8%, as in 2002 as the Company has to absorb an increased royalty fee as
prices increased. The Premiums from its tin by-product (tantalum), also
decreased slightly from Baht 0.53 million in 2002 to Baht 0.45 million
in 2003.

QUARRY PERFORMANCE

Revenue from andesite sales in 2003 decreased 48.88% from the preceding
year. Total sales amounted to Baht 14.59 million for the year as
compared to Baht 28.54 million the preceeding year. In terms of cost,
the operational costs decreased from Baht 24.37 million in 2002 to Baht
20.40 million in 2003, a decrease of 16.29%. The decline was due mainly
to decreased sales of Ballast product which higher selling price than
other products. The State Railway of Thailand (SRT) suspended all
projects last year due to restructuring of purchasing procedures as
instructed by the government and the Minister of Transportation.

OVERALL PERFORMANCE

Total revenue for the Company was Baht 43.28 million, a decrease of
48.45% from Baht 83.95 million in 2002. The decrease in revenue is
attributable to the decrease in both tin and andesite revenues.

General and administrative expenses slightly increased from Baht 33.88
million in 2002 to Baht 36.52 million in 2003, an increase of 7.79% from
the previous year. Interest expenses decreased from Baht 6.24 million in
2002 to Baht 5.32 million in 2003, representing a 14.74% decrease.

LIQUIDITY ANALYSIS

As at 31 December 2003, the Company’s current assets totaled Baht 36.03
million as compared to Baht 32.88 million for the preceding year. The
Company’s current liabilities increased from Baht 52.48 million in 2002
to Baht 216.17 in 2003, representing an increase of 311.91%. As a
result, the current ratio stood at 0.17 times when compared to 0.63
times in 2002. The dramatic increase of current liabilities was due to
the utilization of a short term loan for infrastructure construction of
the gold mine and processing plant, which began in March 2003. In
addition, in late 2003, the Company started piling installation work at
its new condominium project on its Ratchadapisek land, and moved its
head office from its Ratchadapisek land to the 7^(th) Floor, Muang Thai
– Phatra Office Tower 1. The Company managed to get a long term loan for
its new office in the beginning of 2004. Currently, the Company is in
the process of finalizing the long term loans for its gold processing
plant construction and the condominium tower construction.

CASH FLOW FOR OPERATING ACTIVITIES

The net cash flow utilized for operations amounted to approximately Baht
31.17 million, the majority of which was expended on the Phuket bay
development project.

CASH FLOW FOR INVESTING ACTIVITIES

The net cash flow utilized for investment purposes amounted to Baht
85.90 million. Funds were expended for infrastructure construction at
the gold mining project site which began in March 2003. In addition,
some funds were utilized in constructing the new condominium project on
the Company’s Ratchadapisek property. The Company also bought new office
space at the 7^(th) floor, Muang Thai-Phatra Office Tower 1, and a land
plot in Phuket.

CASH FLOW FOR FINANCING ACTIVITIES

The net cash flow from financing activities amounted to Baht 118.95
million. The Company increased its capital by way of private placement
and ESOP, and the paid-up capital of the Company increased from Baht
423.57 million to Baht 483.65 million. The Company also obtained a short
term loan of Baht 50 million from a finance company for the
infrastructure construction at its gold mining project site. Funds were
mainly utilized in the above investing activities and in repaying its
long term and short term loans.

PROFITABILITY ANALYSIS

The Company has attempted to diligently expedite the approval of its
gold Mining Licenses Applications (MLAs) during the past several years.
In March 2003, the Company officially received all six (6) mining
licenses. The Company believes that Tungkum Limited’s proposed gold and
base metal mining program is still a viable project despite the
unnecessary and prolonged delay in being granted the six mining
licenses. The Company’s profitability shall definitely improve once its
gold mine starts commercial operations.