12 Financial status and operational results

12.1 Financial statements

Summary of audit reports for three years

+---------------+-------------+-------------+------------+------------+
| Name of       |   Audit     | 2002        | 2003       | 2004       |
| Auditor       |   Company   |             |            |            |
+---------------+-------------+-------------+------------+------------+
| 1. Mr. Nirand | KPMG        | Unable to   | U          |            |
| Lilamethwat   | Phoomchai   | express     | nqualified |            |
|               | Audit       | opinion     |            |            |
|               | Limited     |             | opinion    |            |
+---------------+-------------+-------------+------------+------------+
| 2. Ms.        |             |             |            | U          |
| Somboon       |             |             |            | nqualified |
| Supasiripinyo |             |             |            |            |
|               |             |             |            | opinion    |
+---------------+-------------+-------------+------------+------------+

Reason in audit report for unable to express opinion in 2002

  The main reason the auditor did not provide an opinion on the
  financial statements was the significance of the uncertainty about the
  Company’s ability to continue as a going concern. The Company’s
  operations had been suspended, certain construction projects had been
  suspended, the Company had incurred certain events of default under
  its long-term debt agreements, and the Company’s access to its cash at
  banks had been severely restricted under the terms of the long-term
  debt agreements. The Company is in the process of rehabilitation under
  the order of the Central Bankruptcy Court, and the financial
  statements do not include any adjustments relating to the
  recoverability of the recorded assets, liabilities to amount
  eventually due, and reclassification of accounts that might be
  necessary should the Company be unable to continue as a going concern.

In 2002, there were two additional concerns given by the auditor:

  (i) unadjusted liabilities to reflect the different amount of claims
  filed by the Creditors; and

  (ii) the inability to be satisfied as to the recoverable amount of
  deferred charges incurred relating to the issuance of debt
  instruments.

  2003

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

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

2.  The appraised of Fixed assets by an independent appraisal.

3.  Debts claimed by Creditors.

  2004

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

1) Consolidated balance sheets

+----------------------+-------+-----+---------+-----+--------+-----+
| Balance Sheets       |       |     |         |     |        |     |
+----------------------+-------+-----+---------+-----+--------+-----+
| Assets               |       |     |         |     |        |     |
+----------------------+-------+-----+---------+-----+--------+-----+
|                      | 2004  |     | 2003    |     | 2002   |     |
+----------------------+-------+-----+---------+-----+--------+-----+
|                      | Tho   | %   | T       | %   | Th     | %   |
|                      | usand |     | housand |     | ousand |     |
|                      | Baht  |     | Baht    |     | Baht   |     |
+----------------------+-------+-----+---------+-----+--------+-----+
| Current Assets       |       |     |         |     |        |     |
+----------------------+-------+-----+---------+-----+--------+-----+
| Cash and cash        | 1,02  | 3   | 3,      | 11  | 60,873 | 0   |
| equivalents          | 6,940 | .12 | 262,200 | .00 |        | .24 |
+----------------------+-------+-----+---------+-----+--------+-----+
| Current investment – |       |     |         |     |        |     |
| deposits at          |       |     |         |     |        |     |
| financial            |       |     |         |     |        |     |
+----------------------+-------+-----+---------+-----+--------+-----+
| Institutions pledged | 59    | 1   | 197,192 | 0   | -      | -   |
| for issuing letters  | 2,663 | .80 |         | .67 |        |     |
| of credit            |       |     |         |     |        |     |
+----------------------+-------+-----+---------+-----+--------+-----+
| Trade accounts       | 82    | 2   | 250     | -   | 250    | -   |
| receivable           | 5,263 | .51 |         |     |        |     |
+----------------------+-------+-----+---------+-----+--------+-----+
| Inventories - net    | 3,63  | 11  | 1,      | 3   | 6      | 2   |
|                      | 0,683 | .04 | 035,696 | .50 | 17,872 | .35 |
+----------------------+-------+-----+---------+-----+--------+-----+
| Advances to          | 1,23  | 3   | 129,034 | 0   | 1      | 0   |
| suppliers - net      | 2,078 | .75 |         | .43 | 73,943 | .67 |
+----------------------+-------+-----+---------+-----+--------+-----+
| Other current        | 60    | 1   | 71,793  | 0   | 64,165 | 0   |
| assets - net         | 9,151 | .85 |         | .24 |        | .24 |
+----------------------+-------+-----+---------+-----+--------+-----+
| Total current assets | 7,91  | 24  | 4,      | 15  | 9      | 3   |
|                      | 6,778 | .07 | 696,165 | .84 | 17,103 | .50 |
+----------------------+-------+-----+---------+-----+--------+-----+
| Non – Current Assets |       |     |         |     |        |     |
+----------------------+-------+-----+---------+-----+--------+-----+
| Other long-te        | 13    | 0   | 128,848 | 0   | 2      | 0   |
| rm investments - net | 6,908 | .42 |         | .43 | 32,725 | .89 |
+----------------------+-------+-----+---------+-----+--------+-----+
| Long-term loans and  |       |     |         |     |        |     |
| advances to          |       |     |         |     |        |     |
+----------------------+-------+-----+---------+-----+--------+-----+
| Related parties -    | 1     | 0   | 11,598  | 0   | 11,598 | 0   |
| net                  | 1,598 | .04 |         | .04 |        | .04 |
+----------------------+-------+-----+---------+-----+--------+-----+
| Advance to supplier  | 27    | 0   | -       | -   | -      | -   |
|                      | 0,560 | .82 |         |     |        |     |
+----------------------+-------+-----+---------+-----+--------+-----+
| Property, plant      | 24,44 | 74  | 24,     | 83  | 24,1   | 92  |
| and equipment - net  | 4,561 | .32 | 684,951 | .27 | 90,176 | .19 |
+----------------------+-------+-----+---------+-----+--------+-----+
| Intangible assets -  | 4     | 0   | 60,927  | 0   | 8      | 3   |
| net                  | 9,624 | .15 |         | .21 | 18,338 | .11 |
+----------------------+-------+-----+---------+-----+--------+-----+
| Refundable deposits  | 5     | 0   | 62,955  | 0   | 69,867 | 0   |
|                      | 9,807 | .18 |         | .21 |        | .27 |
+----------------------+-------+-----+---------+-----+--------+-----+
|  รว                  | 24,97 | 75  | 24,     | 84  | 25,3   | 96  |
| มสินทรัพย์ไม่หมุนเวียนTota | 3,058 | .93 | 949,279 | .16 | 22,704 | .50 |
| l Non-Current Assets |       |     |         |     |        |     |
+----------------------+-------+-----+---------+-----+--------+-----+
| Total Assets         | 32,88 | 100 | 29,     | 100 | 26,2   | 100 |
|                      | 9,836 | .00 | 645,444 | .00 | 39,807 | .00 |
+----------------------+-------+-----+---------+-----+--------+-----+

+-------------------------+--------+-----+-------+-----+-------+-----+
| Balance Sheets          |        |     |       |     |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Liabilities and         |        |     |       |     |       |     |
| Shareholders’ Equity    |        |     |       |     |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
|                         | 2004   |     | 2003  |     | 2002  |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
|                         | Th     | %   | Tho   | %   | Tho   | %   |
|                         | ousand |     | usand |     | usand |     |
|                         | Baht   |     | Baht  |     | Baht  |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Current Liabilities     |        |     |       |     |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
|   Bank overdrafts and   | 1,7    | 5   | 1     | 0   | 4     | 0   |
|   short-term loans from | 85,773 | .43 | 5,795 | .06 | 6,807 | .18 |
|   financial             |        |     |       |     |       |     |
|   institutions          |        |     |       |     |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Trade accounts payable  | 4      | 1   | 3     | 0   | 32    | 1   |
|                         | 47,713 | .36 | 2,633 | .11 | 0,265 | .22 |
+-------------------------+--------+-----+-------+-----+-------+-----+
|   Advance received from | 27,658 | 0   |       |     |       |     |
|   customers             |        | .08 |       |     |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
|   Long-term debt        | -      | -   | -     | -   | 29,96 | 114 |
|   classified as current |        |     |       |     | 8,325 | .21 |
+-------------------------+--------+-----+-------+-----+-------+-----+
|   Construction cost     | 7,477  | 0   | 3     | 0   | 84    | 3   |
|   payables              |        | .02 | 5,041 | .12 | 6,788 | .23 |
+-------------------------+--------+-----+-------+-----+-------+-----+
|   Accrued expenses      | 4      | 1   | 10    | 0   | 23,27 | 88  |
|                         | 09,168 | .25 | 7,809 | .36 | 5,351 | .70 |
+-------------------------+--------+-----+-------+-----+-------+-----+
|   Other current         | 3,584  | 0   | 3,041 | 0   | 326   | -   |
|   liabilities           |        | .01 |       | .01 |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Total current           | 2,6    | 8   | 19    | 0   | 54,45 | 207 |
| liabilities             | 81,373 | .15 | 4,319 | .66 | 7,862 | .54 |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Liabilities un          | 12,1   | 36  | 11,93 | 40  | -     | -   |
| der rehabilitation plan | 26,471 | .87 | 0,208 | .24 |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Total liabilities       | 14,8   | 45  | 12,12 | 40  | 54,45 | 207 |
|                         | 07,844 | .02 | 4,527 | .90 | 7,862 | .54 |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Shareholders’ Equity    |        |     |       |     |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Authorized              | 105,7  |     | 1     |     | 8,60  |     |
| 12,815,748,029 ordinary | 29,921 |     | 05,72 |     | 0,000 |     |
| shares, 12,815,748,029  |        |     | 9,921 |     |       |     |
| ordinary shares and     |        |     |       |     |       |     |
| 860,000,000 ordinary    |        |     |       |     |       |     |
| shares, Baht 8.25 par   |        |     |       |     |       |     |
| value, Baht 8.25 par    |        |     |       |     |       |     |
| value and Baht 10 par   |        |     |       |     |       |     |
| value as at December    |        |     |       |     |       |     |
| 31, 2004, 2003 and      |        |     |       |     |       |     |
| 2002, respectively      |        |     |       |     |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Issued and paid-up      | 74,1   | 225 | 74,13 | 250 | 7,18  | 27  |
| share capital           | 37,788 | .41 | 7,788 | .08 | 6,399 | .39 |
| 8,986,398,641 ordinary  |        |     |       |     |       |     |
| shares, 8,986,398,641   |        |     |       |     |       |     |
| ordinary shares and     |        |     |       |     |       |     |
| 718,639,864 ordinary    |        |     |       |     |       |     |
| shares, Baht 8.25 par   |        |     |       |     |       |     |
| value, Baht 8.25 par    |        |     |       |     |       |     |
| value and Baht 10 par   |        |     |       |     |       |     |
| value as at December    |        |     |       |     |       |     |
| 31, 2004, 2003 and      |        |     |       |     |       |     |
| 2002, respectively      |        |     |       |     |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Warrants                | 1      | 0   | 16    | 0   | 38    | 1   |
|                         | 61,694 | .49 | 1,694 | .55 | 8,997 | .48 |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Discount on share       | (56,36 | (1  | (5    | (1  | 51    | 1   |
| capital                 | 4,336) | 71. | 6,364 | 90. | 0,000 | .94 |
|                         |        | 37) | ,336) | 13) |       |     |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Revaluation surplus on  | 51,697 | 0   | 7     | 0   | (11   | (0. |
| investments             |        | .16 | 3,998 | .25 | ,150) | 04) |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Retained earnings       | 95,149 | 0   | (488  | (1. | (3    | (1  |
| (Deficit)               |        | .29 | ,227) | 65) | 6,292 | 38. |
|                         |        |     |       |     | ,301) | 31) |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Shareholders’ Equity    | 18,0   | 54  | 17,52 | 59  | (2    | (1  |
|                         | 81,992 | .98 | 0,917 | .10 | 8,218 | 07. |
|                         |        |     |       |     | ,055) | 54) |
+-------------------------+--------+-----+-------+-----+-------+-----+
| Liabilities and         | 32,8   | 100 | 29,64 | 100 | 26,23 | 100 |
| Shareholders’ Equity    | 89,836 | .00 | 5,444 | .00 | 9,807 | .00 |
+-------------------------+--------+-----+-------+-----+-------+-----+

2) Statement of Cash flows

+--------------------------------------+---+--------+---+--------+---+-------+
| Statements of Cash flows             |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
|                                      | 2 |        | 2 |        | 2 |       |
|                                      | 0 |        | 0 |        | 0 |       |
|                                      | 0 |        | 0 |        | 0 |       |
|                                      | 4 |        | 3 |        | 2 |       |
+--------------------------------------+---+--------+---+--------+---+-------+
|                                      | T |        | T |        | T |       |
|                                      | h |        | h |        | h |       |
|                                      | o |        | o |        | o |       |
|                                      | u |        | u |        | u |       |
|                                      | s |        | s |        | s |       |
|                                      | a |        | a |        | a |       |
|                                      | n |        | n |        | n |       |
|                                      | d |        | d |        | d |       |
|                                      | B |        | B |        | B |       |
|                                      | a |        | a |        | a |       |
|                                      | h |        | h |        | h |       |
|                                      | t |        | t |        | t |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Cash Flows from operating Activities |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Net loss (profit)                    | 5 |        | 2 |        | ( |       |
|                                      | 8 |        | 3 |        | 9 |       |
|                                      | 3 |        | , |        | 9 |       |
|                                      | , |        | 2 |        | 6 |       |
|                                      | 3 |        | 2 |        | , |       |
|                                      | 7 |        | 7 |        | 1 |       |
|                                      | 6 |        | , |        | 7 |       |
|                                      |   |        | 8 |        | 5 |       |
|                                      |   |        | 7 |        | ) |       |
|                                      |   |        | 5 |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Adjustments to reconcile net profit  |   |        |   |        |   |       |
| to net cash used in operating        |   |        |   |        |   |       |
| activities:                          |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Allowance for loss on advances to    | 1 |        | 1 |        | 1 |       |
| suppliers and non refundable         | 4 |        | 5 |        | 8 |       |
| deposits                             | , |        | , |        | 6 |       |
|                                      | 3 |        | 1 |        |   |       |
|                                      | 1 |        | 3 |        |   |       |
|                                      | 3 |        | 9 |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Loss on (reversal of) devaluation of | ( |        | 1 |        | ( |       |
| inventories                          | 8 |        | 0 |        | 3 |       |
|                                      | 0 |        | 0 |        | 5 |       |
|                                      | , |        | , |        | , |       |
|                                      | 0 |        | 1 |        | 0 |       |
|                                      | 1 |        | 6 |        | 7 |       |
|                                      | 1 |        | 1 |        | 0 |       |
|                                      | ) |        |   |        | ) |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Transaction costs of debt            | - |        | 7 |        | 2 |       |
| instruments written-off and          |   |        | 4 |        | 5 |       |
| amortization of discount on          |   |        | 8 |        | 4 |       |
| debentures                           |   |        | , |        | , |       |
|                                      |   |        | 3 |        | 0 |       |
|                                      |   |        | 0 |        | 1 |       |
|                                      |   |        | 4 |        | 9 |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Depreciation and amortization        | 5 |        | 4 |        | 5 |       |
|                                      | 7 |        | 1 |        | 6 |       |
|                                      | 5 |        | 0 |        | 0 |       |
|                                      | , |        | , |        | , |       |
|                                      | 6 |        | 4 |        | 8 |       |
|                                      | 4 |        | 9 |        | 1 |       |
|                                      | 6 |        | 4 |        | 5 |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Consulting fee for restructuring     | - |        | ( |        | - |       |
|                                      |   |        | 1 |        |   |       |
|                                      |   |        | 8 |        |   |       |
|                                      |   |        | , |        |   |       |
|                                      |   |        | 9 |        |   |       |
|                                      |   |        | 5 |        |   |       |
|                                      |   |        | 5 |        |   |       |
|                                      |   |        | ) |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Gain on debt restructuring of        | - |        | - |        | ( |       |
| receivable                           |   |        |   |        | 1 |       |
|                                      |   |        |   |        | 0 |       |
|                                      |   |        |   |        | 1 |       |
|                                      |   |        |   |        | , |       |
|                                      |   |        |   |        | 3 |       |
|                                      |   |        |   |        | 6 |       |
|                                      |   |        |   |        | 7 |       |
|                                      |   |        |   |        | ) |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Gain on debt restructuring           | - |        | ( |        | - |       |
|                                      |   |        | 2 |        |   |       |
|                                      |   |        | 2 |        |   |       |
|                                      |   |        | , |        |   |       |
|                                      |   |        | 9 |        |   |       |
|                                      |   |        | 6 |        |   |       |
|                                      |   |        | 0 |        |   |       |
|                                      |   |        | , |        |   |       |
|                                      |   |        | 0 |        |   |       |
|                                      |   |        | 4 |        |   |       |
|                                      |   |        | 4 |        |   |       |
|                                      |   |        | ) |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Reversal of allowance for loss on    | - |        | ( |        | ( |       |
| impairment of fixed assets           |   |        | 8 |        | 5 |       |
|                                      |   |        | 8 |        | , |       |
|                                      |   |        | 2 |        | 4 |       |
|                                      |   |        | , |        | 6 |       |
|                                      |   |        | 5 |        | 5 |       |
|                                      |   |        | 5 |        | , |       |
|                                      |   |        | 3 |        | 2 |       |
|                                      |   |        | ) |        | 5 |       |
|                                      |   |        |   |        | 9 |       |
|                                      |   |        |   |        | ) |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Unrealized gain on foreign exchange  | ( |        | ( |        | ( |       |
|                                      | 9 |        | 6 |        | 5 |       |
|                                      | 2 |        | 9 |        | 0 |       |
|                                      | , |        | , |        | 3 |       |
|                                      | 9 |        | 8 |        | , |       |
|                                      | 1 |        | 7 |        | 3 |       |
|                                      | 6 |        | 5 |        | 9 |       |
|                                      | ) |        | ) |        | 9 |       |
|                                      |   |        |   |        | ) |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Realized gain on foreign exchange    | - |        | ( |        | - |       |
| from debt restructuring              |   |        | 7 |        |   |       |
|                                      |   |        | 2 |        |   |       |
|                                      |   |        | 7 |        |   |       |
|                                      |   |        | , |        |   |       |
|                                      |   |        | 8 |        |   |       |
|                                      |   |        | 4 |        |   |       |
|                                      |   |        | 8 |        |   |       |
|                                      |   |        | ) |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Gain on sale of fixed assets         | ( |        | ( |        | - |       |
|                                      | 2 |        | 1 |        |   |       |
|                                      | 1 |        | , |        |   |       |
|                                      | ) |        | 3 |        |   |       |
|                                      |   |        | 3 |        |   |       |
|                                      |   |        | 9 |        |   |       |
|                                      |   |        | ) |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Gain on sale of investment           | - |        | ( |        | - |       |
|                                      |   |        | 6 |        |   |       |
|                                      |   |        | 5 |        |   |       |
|                                      |   |        | , |        |   |       |
|                                      |   |        | 5 |        |   |       |
|                                      |   |        | 3 |        |   |       |
|                                      |   |        | 1 |        |   |       |
|                                      |   |        | ) |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Changes in operational assets and    |   |        |   |        |   |       |
| liabilities                          |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase in trade accounts           | ( |        | - |        | - |       |
| receivable                           | 8 |        |   |        |   |       |
|                                      | 2 |        |   |        |   |       |
|                                      | 4 |        |   |        |   |       |
|                                      | , |        |   |        |   |       |
|                                      | 8 |        |   |        |   |       |
|                                      | 4 |        |   |        |   |       |
|                                      | 5 |        |   |        |   |       |
|                                      | ) |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Decrease (Increase) in Inventories   | ( |        | ( |        | 7 |       |
|                                      | 2 |        | 5 |        | 4 |       |
|                                      | , |        | 4 |        | , |       |
|                                      | 5 |        | 0 |        | 1 |       |
|                                      | 5 |        | , |        | 1 |       |
|                                      | 8 |        | 7 |        | 9 |       |
|                                      | , |        | 9 |        |   |       |
|                                      | 2 |        | 7 |        |   |       |
|                                      | 1 |        | ) |        |   |       |
|                                      | 3 |        |   |        |   |       |
|                                      | ) |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase in advances to suppliers    | ( |        | - |        | - |       |
|                                      | 1 |        |   |        |   |       |
|                                      | , |        |   |        |   |       |
|                                      | 3 |        |   |        |   |       |
|                                      | 8 |        |   |        |   |       |
|                                      | 6 |        |   |        |   |       |
|                                      | , |        |   |        |   |       |
|                                      | 0 |        |   |        |   |       |
|                                      | 6 |        |   |        |   |       |
|                                      | 1 |        |   |        |   |       |
|                                      | ) |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Decrease (Increase) in other current | ( |        | ( |        | ( |       |
| assets                               | 5 |        | 4 |        | 2 |       |
|                                      | 3 |        | 5 |        | , |       |
|                                      | 7 |        | , |        | 2 |       |
|                                      | , |        | 9 |        | 0 |       |
|                                      | 3 |        | 8 |        | 4 |       |
|                                      | 5 |        | 6 |        | ) |       |
|                                      | 8 |        | ) |        |   |       |
|                                      | ) |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Decrease in refundable deposits      | 1 |        | 4 |        | 1 |       |
|                                      | , |        | , |        | , |       |
|                                      | 2 |        | 1 |        | 7 |       |
|                                      | 9 |        | 1 |        | 5 |       |
|                                      | 1 |        | 6 |        | 7 |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase (Decrease) in trade         | 4 |        | 2 |        | 1 |       |
| accounts payable                     | 2 |        | 8 |        | 0 |       |
|                                      | 2 |        | , |        | 6 |       |
|                                      | , |        | 6 |        |   |       |
|                                      | 2 |        | 6 |        |   |       |
|                                      | 9 |        | 4 |        |   |       |
|                                      | 7 |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase in advances received from   | 2 |        | - |        | - |       |
| customers                            | 7 |        |   |        |   |       |
|                                      | , |        |   |        |   |       |
|                                      | 6 |        |   |        |   |       |
|                                      | 5 |        |   |        |   |       |
|                                      | 8 |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Decrease in construction cost        | ( |        | 3 |        | - |       |
| payable                              | 2 |        | 2 |        |   |       |
|                                      | 7 |        | , |        |   |       |
|                                      | , |        | 0 |        |   |       |
|                                      | 0 |        | 3 |        |   |       |
|                                      | 9 |        | 3 |        |   |       |
|                                      | 0 |        |   |        |   |       |
|                                      | ) |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase in accrued expenses         | 3 |        | 3 |        | 6 |       |
|                                      | 0 |        | , |        | , |       |
|                                      | 5 |        | 2 |        | 1 |       |
|                                      | , |        | 8 |        | 0 |       |
|                                      | 8 |        | 0 |        | 2 |       |
|                                      | 2 |        |   |        | , |       |
|                                      | 5 |        |   |        | 5 |       |
|                                      |   |        |   |        | 9 |       |
|                                      |   |        |   |        | 6 |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase (Decrease) in other current | 5 |        | 2 |        | 3 |       |
| liabilities                          | 4 |        | , |        | 6 |       |
|                                      | 2 |        | 7 |        |   |       |
|                                      |   |        | 1 |        |   |       |
|                                      |   |        | 3 |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Liabilities under rehabilitation     | 2 |        | - |        | - |       |
| plan                                 | 4 |        |   |        |   |       |
|                                      | 8 |        |   |        |   |       |
|                                      | , |        |   |        |   |       |
|                                      | 5 |        |   |        |   |       |
|                                      | 2 |        |   |        |   |       |
|                                      | 3 |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| N                                    | ( |        | ( |        | ( |       |
| et cash used in operating activities | 3 |        | 7 |        | 1 |       |
|                                      | , |        | 4 |        | 0 |       |
|                                      | 3 |        | 0 |        | 9 |       |
|                                      | 2 |        | , |        | , |       |
|                                      | 7 |        | 1 |        | 8 |       |
|                                      | , |        | 4 |        | 4 |       |
|                                      | 0 |        | 9 |        | 0 |       |
|                                      | 4 |        | ) |        | ) |       |
|                                      | 4 |        |   |        |   |       |
|                                      | ) |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
|                                      |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
|                                      |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Statements of Cash flows             |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
|                                      |   | 2004   |   | 2003   |   | 2002  |
+--------------------------------------+---+--------+---+--------+---+-------+
|                                      |   | Th     |   | Th     |   | Tho   |
|                                      |   | ousand |   | ousand |   | usand |
|                                      |   | Baht   |   | Baht   |   | Baht  |
+--------------------------------------+---+--------+---+--------+---+-------+
| Cash flows from investing activities |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Decrease in other long-term          |   | 1,892  |   | 1,903  |   | 617   |
| investment                           |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase in current investment –     |   | (39    |   | (6     |   | -     |
| deposits at financial institutions   |   | 5,470) |   | 0,481) |   |       |
| pledged for issuing letters of       |   |        |   |        |   |       |
| credit                               |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase in deposits pledged as      |   | (3     |   | (      |   | 14    |
| collateral                           |   | 2,252) |   | 3,196) |   | 7,632 |
+--------------------------------------+---+--------+---+--------+---+-------+
| Proceeds from sale of fixed assets   |   | 21     |   | 1,318  |   | -     |
+--------------------------------------+---+--------+---+--------+---+-------+
| Proceeds from sale of investment     |   | -      |   | 1      |   | -     |
|                                      |   |        |   | 16,215 |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase in property, plant and      |   | (27    |   | (1     |   | (173) |
| equipment                            |   | 8,477) |   | 3,587) |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase in intangible assets        |   | (      |   | -      |   | -     |
|                                      |   | 2,238) |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Net cash provided by (used in)       |   | (70    |   | 42,172 |   | 14    |
| Investing activities                 |   | 6,524) |   |        |   | 8,076 |
+--------------------------------------+---+--------+---+--------+---+-------+
| Cash flows from financing activities |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Increase (decrease) in bank          |   | 1,7    |   | (2     |   | (3)   |
| overdrafts and short-term loan from  |   | 98,309 |   | 9,786) |   |       |
| financial institution                |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Proceeds from public offering        |   | -      |   | 3,9    |   | -     |
|                                      |   |        |   | 60,000 |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Subscription warrants                |   | -      |   | 1      |   | -     |
|                                      |   |        |   | 61,693 |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Transaction costs of an Equity       |   | -      |   | (19    |   | -     |
| Transaction                          |   |        |   | 2,604) |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Net c                                |   | 1,7    |   | 3,8    |   | (3)   |
| ash provided by Financing Activities |   | 98,309 |   | 99,303 |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Net increase (decrease) in cash and  |   | (2,23  |   | 3,2    |   | 3     |
| cash equivalents                     |   | 5,259) |   | 01,326 |   | 8,233 |
+--------------------------------------+---+--------+---+--------+---+-------+
| Cash and cash equivalents at         |   | 3,2    |   | 60,873 |   | 2     |
| beginning of years                   |   | 62,199 |   |        |   | 2,640 |
+--------------------------------------+---+--------+---+--------+---+-------+
| Cash and cash equivalents at end of  |   | 1,0    |   | 3,2    |   | 6     |
| years                                |   | 26,940 |   | 62,199 |   | 0,873 |
+--------------------------------------+---+--------+---+--------+---+-------+
| Additional cash flow information     |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Cash paid during the years for :     |   |        |   |        |   |       |
+--------------------------------------+---+--------+---+--------+---+-------+
| Withholding tax                      |   | 292    |   | -      |   | -     |
+--------------------------------------+---+--------+---+--------+---+-------+
| Interest expense                     |   | 58,866 |   | 7,554  |   | -     |
+--------------------------------------+---+--------+---+--------+---+-------+

3) Statement of Income

+------------------------+--------+-----+-------+----+---------+-----+
| Statements of Income   |        |     |       |    |         |     |
+------------------------+--------+-----+-------+----+---------+-----+
|                        | 2004   |     | 2003  |    | 2002    |     |
+------------------------+--------+-----+-------+----+---------+-----+
|                        | Th     | %   | Tho   | %  | T       | %   |
|                        | ousand |     | usand |    | housand |     |
|                        | Baht   |     | Baht  |    | Baht    |     |
+------------------------+--------+-----+-------+----+---------+-----+
| Revenues               |        |     |       |    |         |     |
+------------------------+--------+-----+-------+----+---------+-----+
| Sale – net             | 9,7    | 97  | 2     | 1. | 58,985  | 0   |
|                        | 30,353 | .54 | 9,400 | 61 |         | .96 |
+------------------------+--------+-----+-------+----+---------+-----+
| Gain on exchange rate  | 1      | 1   | 84    | 4  | 502,299 | 8   |
|                        | 05,031 | .05 | 2,077 | 6. |         | .19 |
|                        |        |     |       | 23 |         |     |
+------------------------+--------+-----+-------+----+---------+-----+
| Reversal of            | 80,012 | 0   | -     | -  | -       | -   |
| devaluation of         |        | .80 |       |    |         |     |
| inventories            |        |     |       |    |         |     |
+------------------------+--------+-----+-------+----+---------+-----+
|   Gain on debt         | -      | -   | -     | -  | 101,367 | 1   |
|   restructuring of     |        |     |       |    |         | .66 |
|   receivable           |        |     |       |    |         |     |
+------------------------+--------+-----+-------+----+---------+-----+
|   Reversal of          | -      | -   | 88    | 4  | 5,      | 89  |
|   allowance for loss   |        |     | 2,554 | 8. | 465,259 | .13 |
|   on impairment of     |        |     |       | 45 |         |     |
|   fixed assets         |        |     |       |    |         |     |
+------------------------+--------+-----+-------+----+---------+-----+
| Other income           | 60,666 | 0   | 6     | 3. | 3,801   | 0   |
|                        |        | .61 | 7,655 | 71 |         | .06 |
+------------------------+--------+-----+-------+----+---------+-----+
|  Total Revenues        | 9,9    | 100 | 1,82  | 1  | 6,      | 100 |
|                        | 76,061 |     | 1,686 | 00 | 131,711 | .00 |
+------------------------+--------+-----+-------+----+---------+-----+
| Expenses               |        |     |       |    |         |     |
+------------------------+--------+-----+-------+----+---------+-----+
| Cost of sales          | 8,4    | 90  | 4     | 0. | 39,053  | 0   |
|                        | 90,746 | .40 | 8,920 | 20 |         | .55 |
+------------------------+--------+-----+-------+----+---------+-----+
| Cost of shut down      | -      | -   | 41    | 1. | 378,756 | 5   |
| operations             |        |     | 4,153 | 69 |         | .31 |
+------------------------+--------+-----+-------+----+---------+-----+
| Selling and            | 5      | 5   | 27    | 1. | 194,064 | 2   |
| administrative         | 39,749 | .75 | 0,931 | 11 |         | .72 |
| expenses               |        |     |       |    |         |     |
+------------------------+--------+-----+-------+----+---------+-----+
| Other expenses         | -      | -   | 76    | 3. | 184,936 | 2   |
|                        |        |     | 4,949 | 12 |         | .60 |
+------------------------+--------+-----+-------+----+---------+-----+
| Total Expenses         | 9,0    | 96  | 1,49  | 6. | 796,809 | 11  |
|                        | 30,495 | .15 | 8,953 | 12 |         | .18 |
+------------------------+--------+-----+-------+----+---------+-----+
| Profit before interest | 9      | 3   | 32    | 9  | 5,      | 88  |
| expense                | 45,566 | .85 | 2,733 | 3. | 334,902 | .82 |
|                        |        |     |       | 88 |         |     |
+------------------------+--------+-----+-------+----+---------+-----+
| Interest expense       | 3      | 3   | 5     | 0. | 6,      | 88  |
|                        | 62,190 | .85 | 4,902 | 22 | 331,076 | .82 |
+------------------------+--------+-----+-------+----+---------+-----+
| Net profit from        | 5      | -   | 26    | 9  | (9      | 0   |
| ordinary activities    | 83,376 |     | 7,831 | 3. | 96,174) | .00 |
|                        |        |     |       | 66 |         |     |
+------------------------+--------+-----+-------+----+---------+-----+
| Extraordinary item     |        |     |       |    |         |     |
+------------------------+--------+-----+-------+----+---------+-----+
| Gain on debt           | -      | -   | 22,96 | 9  | -       | -   |
| restructuring          |        |     | 0,044 | 3. |         |     |
|                        |        |     |       | 66 |         |     |
+------------------------+--------+-----+-------+----+---------+-----+
| Net profit (loss)      | 5      |     | 23,22 |    | (9      |     |
|                        | 83,376 |     | 7,875 |    | 96,174) |     |
+------------------------+--------+-----+-------+----+---------+-----+
| Basic earnings per     | 0.06   |     | 0.13  |    | (1.39)  |     |
| share                  |        |     |       |    |         |     |
+------------------------+--------+-----+-------+----+---------+-----+

4) Financial ratio

  --------------------------------- ------------- ------------ ------------
                                    2547          2546         2545

  Liquidity ratios:                                            

  Current ratio (times)             2.95          24.17        0.02

  Quick ratio (times)               0.91          17.80        0.0012

  Cash ratio (times)                (2.31)        (0.03)       (0.002)

  Receivables turnover (times)      23.57         10.28        10.78

  Collection period (days)          15            35.03        33.39

  Inventory period (times)          3.64          0.23         0.25

  Inventory turnover period (days)  99            1,532.33     1,420.97

  Account payable turnover (times)  35.35         0.28         0.13

  Payment period (days)             10            1,298.49     2,723.60

  Cash cycle (days)                 104           268.88       (1,269.23)

  Profitability Ratio                                          

  Gross profit margin (%)           12.74%        (66.39%)     33.79%

  Net Profit (%)                    6.00%         1,275.08%    (16.25)%

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

  Efficiency Ratio                                             

  Return on assets (%)              1.87%         83.13%       (4.18)%

  Return on fixed assets (%)        2.37%         96.69%       (2.856)%

  Assets turnover (times)           0.32          0.065        0.26

  Financial Ratio                                              

  Debt to equity ratio (times)      0.82          0.69         (1.93)

  Interest coverage (times)         2.61          (14.06)      (0.02)

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

2.  Management discussion and analysis

The Company is one of the largest flat steel producers in Thailand. Our
2004 performance was mainly due to strong demand for hot-rolled steel
products and the Company’s timely optimization of efficiency and
production capacity through a strong management team and dedicated
workforce, as well as our success in boosting production volume during
the year. The Company reported net sales of Baht 9,730 million and a
full-year net profit after tax of Baht 583 million. We believe
Thailand’s robust economic growth will continue to result in strong
demand for hot-rolled steel products in 2005, particularly in response
to the continued expansion by the country’s automotive and electrical
appliances sectors, as well as in response to increased spending on
public and private sector construction projects. In addition, the
Company will be commencing the commissioning and test run of push-pull
pickling line by the second half of 2005, which will help provide a
further boost to our profit margins during the year.

Financial statement for the year ended December 31, 2004, the Company
has total revenue Baht 9,976 million, net profit Baht 583 million, total
assets Baht 32,890 million and total liabilities Baht 14,808 million.

12.2.1 Operational results

  The Company has commenced normal operations during the year 2004 which
  produced 502,115 tons of Hot Rolled Coil and generated income from
  product sales of Baht 9,511.33 million. Because of a rise in
  production volume during the year, especially during the 4^(th)
  quarter that culminated in production reaching 222,885 tonnes and
  generated income from product sales of Baht 4,572 million in such
  4^(th) quarter.

  Gain on exchange rate amounting to Baht 105.03 million in 2004
  decreased from 2003, amounting to Baht 842.08 million because of
  strength of Thai Baht against foreign currency.

  In 2004, the Company has recorded a gain from adjustment of finished
  product valuation which is at lower of cost or net realizable value
  amounting to Baht 80 million.

  Cost of sale represents cost of finished products and raw material
  which were sold during the year 2004.

  Selling and administrative expenses represents associated cost and all
  general business expenses incurred in connection with the above
  mentioned resumption of normal operation and sales during the year
  ended December 31, 2004.

  Interest expense represents the amount of interest due to the holder
  of restructured term loan of USD 200 million in accordance with the
  approved rehabilitation plan.

12.2.2 Financial status

Assets

  As at December 31, 2004 and 2003, total asset were Baht 32,889.83
  million and 29,645.44 million, respectively which rise 10.94% from raw
  material included increase in trade accounts receivable and advances
  to suppliers.

  Cash and cash equivalents

  As at December 31, 2004, cash and cash equivalents was Baht 1,026.94
  million which decrease from December 31, 2003, was Baht 3,262.20
  million, because cash used in operating activities and invested in
  plant and equipment.

Accounts receivable

  As of December 31, 2004 and 2003, the amount of the accounts
  receivable were Baht 825.26 million and Baht 0.25 million,
  respectively. However, trade accounts receivable amounting to Baht
  809.23 million were covered by letters of credit.

Inventory

  As of December 31, 2004 and 2003, details of the inventory of the
  Company were as follows:

Unit: million Baht

  -------------------------------- ------------------- -------------------
  Inventories                      December 31, 2004   December 31, 2003

  Raw materials                    2,096.59            305.63

  Spare parts and supplies         595.64              487.51

  Materials in transit             268.61              285.28

  Finished goods                   690.24              83.07

  Less allowance for devaluation   (20.40)             (125.79)
  of inventories                                       

  Total inventories – net          3,630.68            1,035.70
  -------------------------------- ------------------- -------------------

  In 2004 the Company’s inventory has increased 250.55% compare to 2003
  due to the Company stocked more raw material with 3 month storage
  period. In addition, during the year 2004 the Company recorded
  reversal of devaluation of inventory according to Thai Accounting
  Standard No. 31 amounting to Bath 80.01 million.

Liabilities

  As at December 31, 2004 and 2003, total liabilities were Baht 14,808
  million and Baht 12,125 million respectively, 22.13% increase due to
  short-term loans from financial institutions, trade accounts payable,
  accrued expenses and liabilities under rehabilitation plan.

Short-term loans from financial institutions

  Short-term loan from financial institution represents trust receipt
  and promissory notes, bearing interest at from 3.31% to 5.21% per
  annum.

  In 2004, the company obtained short-term trade financing facilities
  from financial institution with a total maximum credit limit of US$ 40
  million. The trade financing facilities included letters of credit and
  trust receipts.

  Such facilities are paid for material purchasing.

Trade accounts payable and Accrued expenses

  As at December 31, 2004 and 2003, the Company has accounts payable
  amounting to Baht 447.71 million and Baht 32.63 million respectively,
  which increase 1,272.08% from 2003.

  As at December 31, 2004 and 2003, the Company has accrued expenses
  amounting to Baht 409.17 million and Baht 107.81 million respectively,
  which increase 279.53% from 2003.

  Accounts payable and accrued expenses increase from 2003 because the
  Company has commenced normal operations during the year 2004.

Liabilities under rehabilitation plan

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

Contingent liabilities in connection with unsettled liabilities

  At present, there are some unsettled item claims from certain
  creditors which were claimed totaling Baht 434.99 million. In a
  situation where the Court or the official receiver holds or orders the
  Company to be responsible for such claims in all aspects, the maximum
  liabilities may be occurred to the Company are Baht 362.75 million or
  approximately 1.10 percent of total assets as of 31^(st) December
  2004.

Plan of Payment

  After the restructure, the remaining long-term liabilities under the
  restructured of US$ 200 million of which US$ 103.89 million will be
  converted into Thai Baht at the rate of 43.5065 per 1 US dollar,
  resulting long-term loans in foreign currency of the Company was only
  US$ 96.11 million. Such total liabilities are due within 10 years;
  provided that, the principal amount shall be repaid each quarter
  equally from the 6^(th) year, totaling of US$ 40 million per year. The
  interest will be paid in the condition set out here below.

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

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

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

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

(2) Principal amount in the reverse order.

  Creditors have the right to convert Restructured Debt to common shares
  of the Company within 18 months from the effective date. (Please see
  detail in 8 the company’s capital structure)

Shareholder’s equity

  At present, the issued and fully paid capital of the Company is Baht
  74,138 million. As at the end of 2004, shareholder’s equity of the
  Company is equal to Baht 18,082 million in comparison with Baht 17,521
  million in 2003 because of net profit for the year 2004.

Liquidity

  Financial Statement as of December 31, 2004 and 2003, the liquidity of
  the Company presented by using certain financial ratios as follows:

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

                           2004                   2003

  Current Ratio            2.95                   24.17

  Quick Ratio              0.91                   17.80

  Debt to Equity Ratio     0.82                   0.69
  ------------------------ ---------------------- -----------------------

  In 2004 the Company has a lower of current ratio from 24.17 time to
  2.95 time and quick ratio from 17.80 time to 0.91 time because the
  company used cash proceed from Public Offering, sale products and
  credit facilities from the financial institutions for working capital.
  Debt to equity increases from 0.69 time to 0.82 time due to increase
  in current liabilities to support increase in production volume.