13.1. Report of Independent Auditor

To The Board of Directors and Shareholders of

Thai Carbon Black Public Company Limited

I have audited the accompanying consolidated balance sheets of Thai
Carbon Black Public Company Limited and its subsidiary companies as at
31 December 2004 and 2003, and the related consolidated statements of
earnings, changes in shareholders’ equity and cash flows for the years
then ended , and the separate financial statements of Thai Carbon Black
Public Company Limited for the same periods. These financial statements
are the responsibility of the Company’s management as to their
correctness and completeness of the presentation. My responsibility is
to express an opinion on these financial statements based on my audits.

The financial statements as at 31 December 2004 and for the year then
ended of an overseas subsidiary were audited by the subsidiary company’s
auditors, whose report has been furnished to me. My opinion on the
consolidated and the Company’s financial statements, insofar as they
relate to the amounts included for this subsidiary company, is based
solely on the report of that other auditors. These financial statements
reflect total assets as at 31 December 2004 and 2003 of approximately
Baht 569 million and Baht 320 million respectively, total revenues for
the years then ended of approximately Baht 229 million and Baht 47
million respectively, and net loss for the years then ended of
approximately Baht 43 million and Baht 22 million respectively. In
addition, the Company’s financial statements include its investment in
this subsidiary company stated under the equity method, amounting to
Baht 236 million and Baht 193 million as at 31 December 2004 and 2003,
respectively, and its share of loss for years then ended, amounting to
Baht 33 million and Baht 16 million, respectively.

I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my audits
and the report of the other auditors referred to in the second paragraph
provide a reasonable basis for my opinion.

In my opinion, based on my audit and the report of the other auditors,
the financial statements referred to above present fairly, in all
material respects, the financial position of Thai Carbon Black Public
Company Limited and its subsidiary companies and of Thai Carbon Black
Public Company Limited as at 31 December 2004 and 2003, the results of
their operations and cash flows for the years then ended in accordance
with generally accepted accounting principles.

Supachai Phanyawattano

Certified Public Accountant (Thailand) No. 3930 

13.2 Financial statement

Balance sheets

Unit : Baht

  ----------------------------------- --------------- --------------- ---------------
                                      CONSOLIDATED                    

                                      2004            2003            2002

  ASSETS                                                              

  CURRENT ASSETS                                                      

  Cash and cash equivalents           473,626,828     395,108,522     488,632,812

  Short-term investments - deposits   -               545,000,000     575,000,000
  with financial institutions                                         

  Trade accounts receivable                                           

  Unrelated parties                   729,618,565     576,138,899     561,419,329

  Related parties                     34,735,344      30,865,655      30,560,690

  Short-term loan to related party    -               12,000,000      12,000,000

  Inventories - net                   900,576,910     602,603,534     438,420,097

  Other current assets                                                

  Advance for purchases of raw        63,028,757      94,518,971      -
  materials                                                           

  Refundable input tax                67,054,216      51,320,068      13,401,047

  Duty drawback and export incentive  4,802,412       19,922,594      11,888,649
  receivable                                                          

  Others                              22,870,107      19,560,428      13,760,329

  TOTAL CURRENT ASSETS                2,296,313,139   2,347,038,671   2,145,082,953

  LONG-TERM ASSETS                                                    

  Investments accounted for under     918,782,281     517,216,127     520,264,844
  equity method                                                       

  Other long-term investments                                         

  Investments in related parties      322,741,663     322,741,663     322,741,663

  Investments in preference shares    600,000,000     600,000,000     600,000,000

  Advance for purchases of fixed      55,077,827      -               
  assets                                                              

  Property, plant and equipment - net 1,295,695,343   1,183,568,494   1,168,173,177

  Intangible assets                   10,659,089      10,668,797      5,045,963

  Other long-term assets              2,773,342       763,342         892,954

  TOTAL LONG-TERM ASSETS              3,205,729,545   2,634,958,423   2,617,118,601

  TOTAL ASSETS                        5,502,042,684   4,981,997,094   4,762,201,554
  ----------------------------------- --------------- --------------- ---------------

Balance sheets

Unit : Baht

  --------------------------------------- -------------- ------------- -------------
                                          CONSOLIDATED                 

                                          2004           2003          2002

  LIABILITIES AND SHAREHOLDERS' EQUITY                                 

  CURRENT LIABILITIES                                                  

  Bank overdrafts and short-term loans    273,869,798    162,738,880   450,782,957
  from financial institutions                                          

  Trade accounts payable                                               

  Unrelated parties                       121,842,962    107,673,465   142,795,595

  Related parties                         10,348,037     7,578,596     9,843,797

  Short-term loans from related parties   -              170,000,000   -

  Current portion of long-term                                         
  liabilities under                                                    

  financial lease agreement                                            63,395,862

  Other current liabilities                                            

  Corporate income tax payable            100,970,419    118,867,913   133,462,236

  Accrued expenses                        27,060,233     25,450,943    41,789,565

  Others                                  31,224,940     41,568,095    31,253,161

  TOTAL CURRENT LIABILITIES               565,316,389    633,877,892   873,323,173

  LONG-TERM LIABILITIES                                                

  Long-term loans from financial          164,777,990    -             
  institutions                                                         

  Provision for employee retirement       21,398,845     21,743,900    -
  benefit                                                              

  TOTAL LONG-TERM LIABILITIES             186,176,835    21,743,900    -

  TOTAL LIABILITIES                       751,493,224    655,621,792   873,323,173
  --------------------------------------- -------------- ------------- -------------

Balance sheets

Unit : Baht

  -------------------------------------- --------------- --------------- ---------------
                                         CONSOLIDATED                    

                                         2004            2003            2002

  SHAREHOLDERS' EQUITY                                                   

  Share capital                                                          

  Registered, issued and fully paid                                      

  300,000,000 ordinary shares of Baht 1  300,000,000     300,000,000     300,000,000
  each                                                                   

  Capital premium                                                        

  Share premium                          930,000,000     930,000,000     930,000,000

  Share of revaluation surplus of        102,441,142     110,743,111     119,045,082
  subsidiary company                                                     

  Translation adjustments                                                

  Subsidiary company                     (13,272,356)    (9,194,246)     -

  Associated company                     (198,704,413)   (158,180,826)   (141,412,118)

  Retained earnings                                                      

  Appropriated - statutory reserve       30,000,000      30,000,000      30,000,000

  Unappropriated                         3,432,309,467   2,970,244,863   2,600,584,672

  EQUITY ATTRIBUTABLE TO THE COMPANY'S   4,582,773,840   4,173,612,902   3,838,217,636
  SHAREHOLDERS                                                           

  MINORITY INTEREST - EQUITY                                             
  ATTRIBUTABLE TO                                                        

  MINORITY SHAREHOLDERS OF SUBSIDIARY    167,775,620     152,762,400     50,660,745
  COMPANIES                                                              

  TOTAL SHAREHOLDERS' EQUITY             4,750,549,460   4,326,375,302   3,888,878,381

  TOTAL LIABILITIES AND SHAREHOLDERS'    5,502,042,684   4,981,997,094   4,762,201,554
  EQUITY                                                                 
  -------------------------------------- --------------- --------------- ---------------

Balance sheets

Unit : Baht

  ----------------------------------- --------------- --------------- ---------------
                                      THE COMPANY                     
                                      ONLY                            

                                      2004            2003            2002

  ASSETS                                                              

  CURRENT ASSETS                                                      

  Cash and cash equivalents           410,934,415     366,350,531     488,396,845

  Short-term investments - deposits   -               545,000,000     575,000,000
  with financial institutions                                         

  Trade accounts receivable                                           

  Unrelated parties                   628,586,692     471,198,180     487,031,399

  Related parties                     24,062,270      28,191,364      30,390,617

  Short-term loan to related party    -               12,000,000      12,000,000

  Inventories - net                   792,863,414     494,762,772     378,105,732

  Other current assets                                                

  Advance for purchases of raw        -               -               -
  materials                                                           

  Refundable input tax                37,388,282      33,592,465      10,946,243

  Duty drawback and export incentive  4,028,844       19,440,131      11,176,376
  receivable                                                          

  Others                              14,389,928      16,112,387      12,375,517

  TOTAL CURRENT ASSETS                1,912,253,845   1,986,647,830   2,005,422,729

  LONG-TERM ASSETS                                                    

  Investments accounted for under     1,300,667,164   821,316,420     596,255,962
  equity method                                                       

  Other long-term investments                                         

  Investments in related parties      322,741,663     322,741,663     322,741,663

  Investments in preference shares    600,000,000     600,000,000     600,000,000

  Advance for purchases of fixed      55,077,827      -               
  assets                                                              

  Property, plant and equipment - net 598,905,109     714,895,117     768,765,828

  Intangible assets                   -               -               -

  Other long-term assets              1,043,342       763,342         892,954

  TOTAL LONG-TERM ASSETS              2,878,435,105   2,459,716,542   2,288,656,407

  TOTAL ASSETS                        4,790,688,950   4,446,364,372   4,294,079,136
  ----------------------------------- --------------- --------------- ---------------

Balance sheets

Unit : Baht

  -------------------------------------- ------------- ------------- -------------
                                         THE COMPANY                 
                                         ONLY                        

                                         2004          2003          2002

  LIABILITIES AND SHAREHOLDERS' EQUITY                               

  CURRENT LIABILITIES                                                

  Bank overdrafts and short-term loans   2,987         11,256,953    91,804,827
  from financial institutions                                        

  Trade accounts payable                                             

  Unrelated parties                      54,084,200    72,446,927    108,759,159

  Related parties                        1,486,747     421,919       744,653

  Short-term loans from related parties  -             -             -

  Current portion of long-term                                       
  liabilities under                                                  

  financial lease agreement                                          63,395,862

  Other current liabilities                                          

  Corporate income tax payable           100,330,192   118,867,913   133,462,236

  Accrued expenses                       18,835,962    16,241,200    27,159,739

  Others                                 20,381,581    37,865,701    30,535,024

  TOTAL CURRENT LIABILITIES              195,121,669   257,100,613   455,861,500

  LONG-TERM LIABILITIES                                              

  Long-term loans from financial         -             -             -
  institutions                                                       

  Provision for employee retirement      12,793,441    15,650,857    -
  benefit                                                            

  TOTAL LONG-TERM LIABILITIES            12,793,441    15,650,857    -

  TOTAL LIABILITIES                      207,915,110   272,751,470   455,861,500
  -------------------------------------- ------------- ------------- -------------

Balance sheets

Unit : Baht

  -------------------------------------- --------------- --------------- ---------------
                                         THE COMPANY                     
                                         ONLY                            

                                         2004            2003            2002

  SHAREHOLDERS' EQUITY                                                   

  Share capital                                                          

  Registered, issued and fully paid                                      

  300,000,000 ordinary shares of Baht 1  300,000,000     300,000,000     300,000,000
  each                                                                   

  Capital premium                                                        

  Share premium                          930,000,000     930,000,000     930,000,000

  Share of revaluation surplus of        102,441,142     110,743,111     119,045,082
  subsidiary company                                                     

  Translation adjustments                                                

  Subsidiary company                     (13,272,356)    (9,194,246)     -

  Associated company                     (198,704,413)   (158,180,826)   (141,412,118)

  Retained earnings                                                      

  Appropriated - statutory reserve       30,000,000      30,000,000      30,000,000

  Unappropriated                         3,432,309,467   2,970,244,863   2,600,584,672

  EQUITY ATTRIBUTABLE TO THE COMPANY'S   4,582,773,840   4,173,612,902   3,838,217,636
  SHAREHOLDERS                                                           

  MINORITY INTEREST - EQUITY                                             
  ATTRIBUTABLE TO                                                        

  MINORITY SHAREHOLDERS OF SUBSIDIARY    -               -               -
  COMPANIES                                                              

  TOTAL SHAREHOLDERS' EQUITY             4,582,773,840   4,173,612,902   3,838,217,636

  TOTAL LIABILITIES AND SHAREHOLDERS'    4,790,688,950   4,446,364,372   4,294,079,136
  EQUITY                                                                 
  -------------------------------------- --------------- --------------- ---------------

Earnings statements

Unit : Baht

  ---------------------------------- --------------- --------------- ---------------
                                                     CONSOLIDATED     

                                     2004            2003            2002

  REVENUES                                                           

  Sales                              4,236,551,316   3,720,972,784   3,572,041,840

  Other income                                                       

  Dividend income                    87,479,365      19,156,546      20,110,059

  Interest income                    11,869,073      18,806,773      13,114,788

  Tax refund from the Revenue        -               17,082,237      -
  Department                                                         

  Others                             12,181,394      38,345,505      18,510,391

  Share of profit (loss) from                                        
  investments accounted for under                                    
  equity method                                                      

  Associated companies               79,773,020      13,719,991      (7,277,353)

  TOTAL REVENUES                     4,427,854,168   3,828,083,836   3,616,499,725

  EXPENSES                                                           

  Cost of sales                      3,144,515,830   2,667,161,492   2,340,294,818

  Selling and administrative                                         
  expenses                                                           

  Selling expenses                   286,151,648     235,268,439     252,085,123

  Administrative expenses            162,763,312     171,595,405     134,932,502

  Other expenses                                                     

  Directors' remuneration            740,000         590,750         144,250

  Exchange loss                      1,245,086       4,635,406       2,411,939

  TOTAL EXPENSES                     3,595,415,876   3,079,251,492   2,729,868,632

  EARNINGS BEFORE INTEREST EXPENSES  832,438,292     748,832,344     886,631,093
  AND INCOME TAX                                                     

  INTEREST EXPENSES                  (7,571,554)     (8,575,378)     (19,943,387)

  CORPORATE INCOME TAX                                               

  Corporate income tax of current    (178,502,259)   (182,615,155)   (211,180,600)
  year                                                               

  Adjustment of prior year's balance 1,104,513       352,167         (5,497,394)

  NET EARNINGS BEFORE MINORITY       647,468,992     557,993,978     650,009,712
  INTEREST                                                           

  MINORITY INTEREST IN SUBSIDIARY    (13,706,357)    (16,635,758)    (22,390,020)
  COMPANIES                                                          

  NET EARNINGS FOR THE YEAR          633,762,635     541,358,220     627,619,692
  ---------------------------------- --------------- --------------- ---------------

Earnings statements

Unit : Baht

  ------------------------------------- --------------- --------------- ---------------
                                        THE COMPANY                     
                                        ONLY                            

                                        2004            2003            2002

  REVENUES                                                              

  Sales                                 3,500,488,566   3,219,059,680   3,166,531,358

  Other income                                                          

  Dividend income                       87,479,365      19,156,546      20,110,059

  Interest income                       11,869,073      18,806,773      13,114,788

  Tax refund from the Revenue           -               17,082,237      -
  Department                                                            

  Others                                7,147,715       24,335,774      15,721,667

  Share of profit (loss)from                                            
  investments accounted for under                                       
  equity method                                                         

  Subsidiary companies                  2,304,273       18,865,081      33,585,028

  Associated companies                  79,773,020      13,719,991      (7,277,353)

  TOTAL REVENUES                        3,689,062,012   3,331,026,082   3,241,785,547

  EXPENSES                                                              

  Cost of sales                         2,583,289,152   2,309,307,827   2,081,744,209

  Selling and administrative expenses                                   

  Selling expenses                      186,821,753     172,506,902     201,393,255

  Administrative expenses               108,191,059     119,611,435     102,788,830

  Other expenses                                                        

  Directors' remuneration               740,000         590,750         144,250

  Exchange loss                         240,007         3,049,044       2,411,939

  TOTAL EXPENSES                        2,879,281,971   2,605,065,958   2,388,482,483

  EARNINGS BEFORE INTEREST EXPENSES AND 809,780,041     725,960,124     853,303,064
  INCOME TAX                                                            

  INTEREST EXPENSES                     (698,086)       (2,338,916)     (9,005,378)

  CORPORATE INCOME TAX                                                  

  Corporate income tax of current year  (176,423,833)   (182,615,155)   (211,180,600)

  Adjustment of prior year's balance    1,104,513       352,167         (5,497,394)

  NET EARNINGS BEFORE MINORITY INTEREST 633,762,635     541,358,220     627,619,692

  NET EARNINGS FOR THE YEAR             633,762,635     541,358,220     627,619,692
  ------------------------------------- --------------- --------------- ---------------

Statements of changes in shareholders’ equity

Unit : Baht

  ----------------- -------------- ------------- ------------- ------------- --------------- -------------- ---------------- ----------------- ---------------
                    CONSOLIDATED                                                                                                               

                                                                                                                             Minority          

                                                                                                                             interest-equity   

                                                 Share of      Translation                                                   attributable to   Total
                                                 revaluation   adjustments                                                   minority          

                    Issued and     Premium on    surplus from  Subsidiary    Accociated      Retained                        shareholders of   
                    paid-up                                                                  earnings                                          

                    share capital  share capital subsidiary    Company       Company         Appropriated   Unappropriated   subsidiary         
                                                 company                                                                     companies         

                                                                                                                                               

  Balance beginning 300,000,000    930,000,000   127,347,048   -             (182,127,703)   30,000,000     2,069,663,014    28,270,725        3,303,153,084
  of 2002                                                                                                                                      

  Dividend paid in  -              -             -             -             -               -              (105,000,000)    -                 (105,000,000)
  respect of                                                                                                                                   
  previous years'                                                                                                                              
  earnings                                                                                                                                     

  Share of                                                                                                                                     -
  amortisation of                                                                                                                              
  revaluation                                                                                                                                  
  surplus from                                                                                                                                 

  subsidiary        -              -             (8,301,966)   -             -               -              8,301,966        -                 -
  company                                                                                                                                      

  Translation       -              -             -             -             40,715,585      -              -                -                 40,715,585
  adjustments                                                                                                                                  

  Net earnings      -              -             -             -             -               -              627,619,692      22,390,020        650,009,712

  Balance end of    300,000,000    930,000,000   119,045,082   -             (141,412,118)   30,000,000     2,600,584,672    50,660,745        3,888,878,381
  2002                                                                                                                                         

  Dividend paid in  -              -             -             -             -               -              (180,000,000)    -                 (180,000,000)
  respect of                                                                                                                                   
  previous years'                                                                                                                              
  earnings                                                                                                                                     

  Share of                                                                                                                                     -
  amortisation of                                                                                                                              
  revaluation                                                                                                                                  
  surplus of                                                                                                                                   

  subsidiary        -              -             (8,301,971)   -             -               -              8,301,971        -                 -
  company                                                                                                                                      

  Translation       -              -             -             (9,194,246)   (16,768,708)    -              -                -                 (25,962,954)
  adjustments                                                                                                                                  

  Minority interest -              -             -             -             -               -              -                85,465,897        85,465,897
  in new subsidiary                                                                                                                            
  company                                                                                                                                      

  Net earnings      -              -             -             -             -               -              541,358,220      16,635,758        557,993,978

  Balance end of    300,000,000    930,000,000   110,743,111   (9,194,246)   (158,180,826)   30,000,000     2,970,244,863    152,762,400       4,326,375,302
  2003                                                                                                                                         
  ----------------- -------------- ------------- ------------- ------------- --------------- -------------- ---------------- ----------------- ---------------

Statements of changes in shareholders’ equity

Unit : Baht

  ----------------- -------------- ------------- ------------- -------------- --------------- -------------- ---------------- ----------------- ---------------
                    CONSOLIDATED                                                                                                                

                                                                                                                              Minority          

                                                                                                                              interest-equity   

                                                 Share of      Translation                                                    attributable to   Total
                                                 revaluation   adjustments                                                    minority          

                    Issued and     Premium on    surplus from  Subsidiary     Accociated      Retained                        shareholders of   
                    paid-up                                                                   earnings                                          

                    share capital  share capital subsidiary    Company        Company         Appropriated   Unappropriated   subsidiary         
                                                 company                                                                      companies         

  Balance beginning 300,000,000    930,000,000   119,045,082   -              (141,412,118)   30,000,000     2,600,584,672    50,660,745        3,888,878,381
  of 2003                                                                                                                                       

  Dividend paid in  -              -             -             -              -               -              (180,000,000)    -                 (180,000,000)
  respect of                                                                                                                                    
  previous years'                                                                                                                               
  earnings                                                                                                                                      

  Share of                                                                                                                                      
  amortisation of                                                                                                                               
  revaluation                                                                                                                                   
  surplus of                                                                                                                                    

  subsidiary        -              -             (8,301,971)   -              -               -              8,301,971        -                 -
  company                                                                                                                                       

  Translation       -              -             -             (9,194,246)    (16,768,708)    -              -                -                 (25,962,954)
  adjustments                                                                                                                                   

  Minority interest -              -             -             -              -               -              -                85,465,897        85,465,897
  in new subsidiary                                                                                                                             
  company                                                                                                                                       

  Net earnings      -              -             -             -              -               -              541,358,220      16,635,758        557,993,978

  Balance end of    300,000,000    930,000,000   110,743,111   (9,194,246)    (158,180,826)   30,000,000     2,970,244,863    152,762,400       4,326,375,302
  2003                                                                                                                                          

  Dividend paid in  -              -             -             -              -               -              (180,000,000)    -                 (180,000,000)
  respect of                                                                                                                                    
  previous years'                                                                                                                               
  earnings                                                                                                                                      

  Share of                                                                                                                                      
  amortisation of                                                                                                                               
  revaluation                                                                                                                                   
  surplus of                                                                                                                                    

  subsidiary        -              -             (8,301,969)   -              -               -              8,301,969        -                 -
  company                                                                                                                                       

  Translation       -              -             -             (4,078,110)    (40,523,587)    -              -                -                 (44,601,697)
  adjustments                                                                                                                                   

  Net earnings      -              -             -             -              -               -              633,762,635      15,013,220        648,775,855

  Balance end of    300,000,000    930,000,000   102,441,142   (13,272,356)   (198,704,413)   30,000,000     3,432,309,467    167,775,620       4,750,549,460
  2004                                                                                                                                          
  ----------------- -------------- ------------- ------------- -------------- --------------- -------------- ---------------- ----------------- ---------------

Statements of changes in shareholders’ equity

Unit : Baht

  -------------------- ------------- ------------- ------------- ------------- --------------- -------------- ---------------- ---------------
                       THE COMPANY                                                                                             
                       ONLY                                                                                                    

                                                   Share of      Translation                                                   
                                                   revaluation   adjustments                                                   

                       Issued and    Premium on    surplus from  Subsidiary    Accociated      Retained                        
                       paid-up                                                                 earnings                        

                       share capital share capital subsidiary    Company       Company         Appropriated   Unappropriated   Total
                                                   company                                                                     

                                                                                                                               

  Balance beginning of 300,000,000   930,000,000   127,347,048   -             (182,127,703)   30,000,000     2,069,663,014    3,274,882,359
  2002                                                                                                                         

  Dividend paid in     -             -             -             -             -               -              (105,000,000)    (105,000,000)
  respect of previous                                                                                                          
  year's earnings                                                                                                              

  Share of                                                                                                                     -
  amortisation of                                                                                                              
  revaluation surplus                                                                                                          
  from                                                                                                                         

  subsidiary company   -             -             (8,301,966)   -             -               -              8,301,966        -

  Translation          -             -             -             -             40,715,585      -              -                40,715,585
  adjustments                                                                                                                  

  Net earnings         -             -             -             -             -               -              627,619,692      627,619,692

  Balance end of 2002  300,000,000   930,000,000   119,045,082   -             (141,412,118)   30,000,000     2,600,584,672    3,838,217,636

  Dividend paid in     -             -             -             -             -               -              (180,000,000)    (180,000,000)
  respect of previous                                                                                                          
  year's earnings                                                                                                              

  Share of                                                                                                                     
  amortisation of                                                                                                              
  revaluation surplus                                                                                                          
  from                                                                                                                         

  subsidiary company   -             -             (8,301,971)   -             -               -              8,301,971        -

  Translation          -             -             -             (9,194,246)   (16,768,708)    -              -                (25,962,954)
  adjustments                                                                                                                  

  Net earnings         -             -             -             -             -               -              541,358,220      541,358,220

  Balance end of 2003  300,000,000   930,000,000   110,743,111   (9,194,246)   (158,180,826)   30,000,000     2,970,244,863    4,173,612,902
  -------------------- ------------- ------------- ------------- ------------- --------------- -------------- ---------------- ---------------

Statements of changes in shareholders’ equity

Unit : Baht

  -------------------- ------------- ------------- ------------- -------------- --------------- -------------- ---------------- ---------------
                       THE COMPANY                                                                                              
                       ONLY                                                                                                     

                                                   Share of      Translation                                                    
                                                   revaluation   adjustments                                                    

                       Issued and    Premium on    surplus from  Subsidiary     Accociated      Retained                        
                       paid-up                                                                  earnings                        

                       share capital share capital subsidiary    Companies      Companies       Appropriated   Unappropriated   Total
                                                   company                                                                      

                                                                                                                                

  Balance beginning of 300,000,000   930,000,000   119,045,082   -              (141,412,118)   30,000,000     2,600,584,672    3,838,217,636
  2003                                                                                                                          

  Dividend paid in     -             -             -             -              -               -              (180,000,000)    (180,000,000)
  respect of previous                                                                                                           
  year's earnings                                                                                                               

  Share of                                                                                                                      
  amortisation of                                                                                                               
  revaluation surplus                                                                                                           
  from                                                                                                                          

  subsidiary company   -             -             (8,301,971)   -              -               -              8,301,971        -

  Translation          -             -             -             (9,194,246)    (16,768,708)    -              -                (25,962,954)
  adjustments                                                                                                                   

  Net earnings         -             -             -             -              -               -              541,358,220      541,358,220

  Balance end of 2003  300,000,000   930,000,000   110,743,111   (9,194,246)    (158,180,826)   30,000,000     2,970,244,863    4,173,612,902

  Dividend paid in     -             -             -             -              -               -              (180,000,000)    (180,000,000)
  respect of previous                                                                                                           
  year's earnings                                                                                                               

  Share of                                                                                                                      
  amortisation of                                                                                                               
  revaluation surplus                                                                                                           
  from                                                                                                                          

  subsidiary company   -             -             (8,301,969)   -              -               -              8,301,969        -

  Translation          -             -             -             (4,078,110)    (40,523,587)    -              -                (44,601,697)
  adjustments                                                                                                                   

  Net earnings         -             -             -             -              -               -              633,762,635      633,762,635

  Balance end of 2004  300,000,000   930,000,000   102,441,142   (13,272,356)   (198,704,413)   30,000,000     3,432,309,467    4,582,773,840
  -------------------- ------------- ------------- ------------- -------------- --------------- -------------- ---------------- ---------------

Statements of Cash Flows

Unit : Baht

  --------------------------------------- --------------- --------------- ---------------
                                                          CONSOLIDATED     

                                          2004            2003            2002

  Cash flows from (used in) operating                                     
  activities                                                              

  Net earnings                            633,762,635     541,358,220     627,619,692

  Adjustments to reconcile earnings to                                    
  net cash                                                                

  provided by (used in) operating                                         
  activities :-                                                           

  Dividend received                       (87,479,365)    (19,156,546)    (20,110,059)

  Unrealised exchange loss (gain)         1,897,229       666,752         (1,545,666)

  Provision for stock obsolescence        -               3,285,009       -

  Depreciation and amortisation           223,356,161     213,517,127     185,966,855

  Loss on disposals of fixed assets       (265,206)       -               

  Provision of reserve for employee       -               21,743,900      
  retirement benefit                                                      

  Minority interest in net earnings of    15,013,220      16,635,758      22,390,020
  subsidiary companies                                                    

  Share of loss (profit) from investments                                 
  accounted for under equity method                                       

  Subsidiary companies                    -               -               -

  Associated companies                    (79,773,020)    (13,719,991)    7,277,353

  Earnings from operating activities                                      
  before changes in operating assets                                      

  and liabilities                         706,511,654     764,330,229     821,598,195

  Decrease (increase) in operating assets                                 
  :-                                                                      

  Accounts receivable - unrelated parties (155,376,895)   (15,386,322)    (64,488,737)

  Accounts receivable - related parties   (3,869,689)     (304,965)       (1,649,729)

  Inventories                             (297,973,376)   (167,468,446)   238,223,332

  Advance for purchases of raw materials  31,490,214      (94,518,971)    -

  Other current assets                    (3,923,645)     (51,753,065)    34,917,398

  Intangible assets                       (2,388,234)     (7,534,490)     -

  Other long-term assets                  (2,010,000)     129,612         (173,178)

  Increase (decrease) in operating                                        
  liabilities :-                                                          

  Accounts payable - unrelated parties    14,169,497      (35,122,130)    89,772,282

  Accounts payable - related parties      2,769,441       (2,265,201)     (2,339,289)

  Other current liabilities               (26,976,414)    (20,618,011)    58,068,692

  Net cash from operating activities      262,422,553     369,488,240     1,173,928,966
  --------------------------------------- --------------- --------------- ---------------

Statements of Cash Flows

Unit : Baht

  --------------------------------------- --------------- --------------- ---------------
                                          CONSOLIDATED                    

                                          2004            2003            2002

  Cash flows from (used in) investing                                     
  activities                                                              

  Dividend received                       87,479,365      19,156,546      20,110,059

  Dividend received from associated       1,135,500       -               
  company                                                                 

  Decrease in deposit with maturity more  545,000,000     30,000,000      (285,469,408)
  than 3 months                                                           

  Repayment received for short-term loan  12,000,000      -               
  to related company                                                      

  Advance for purchases of fixed assets   (55,077,827)    -               

  Proceed from disposals of fixed assets  502,523         -               

  Payment of additional investments in    (363,452,220)   -               
  subsidiary and associated companies                                     

  Net purchase of property, plant and     (333,322,386)   (141,534,891)   (82,713,013)
  equipment                                                               

  Net cash from (used in) investing       (105,735,045)   (92,378,345)    (348,072,362)
  activities                                                              

                                                                          

  Cash flows from (used in) financing                                     
  activities                                                              

  Increase (decrease) in bank overdrafts                                  
  and short-term loans                                                    

  from financial institutions             111,130,918     (288,044,077)   (176,595,476)

  Increase (decrease) in short- term loan (170,000,000)   170,000,000     (20,000,000)
  from related parties                                                    

  Payment under financial lease agreement -               (63,395,862)    (70,952,478)

  Cash received from long-term loans      164,777,990     -               

  Dividend paid                           (180,000,000)   (180,000,000)   (105,000,000)

  Net cash used in financing activities   (74,091,092)    (361,439,939)   (372,547,954)

  Translation adjustment of investment in (4,078,110)     (9,194,246)     -
  new subsidiary company                                                  

  Net increase (decrease) in cash and     78,518,306      (93,524,290)    453,308,650
  cash equivalents                                                        

  Cash and cash equivalents at beginning  395,108,522     488,632,812     35,324,162
  of year                                                                 

  Cash and cash equivalents at end of     473,626,828     395,108,522     488,632,812
  year                                                                    

                                                                          

  Supplemental cash flow information                                      

  Cash paid during the year for :-                                        

  Interest                                34,956,627      7,840,599       22,470,939

  Corporate income tax                    192,868,447     197,209,478     153,074,746
  --------------------------------------- --------------- --------------- ---------------

Statements of Cash Flows

Unit : Baht

  --------------------------------------- --------------- --------------- ---------------
                                          THE COMPANY                     
                                          ONLY                            

                                          2004            2003            2002

  Cash flows from (used in) operating                                     
  activities                                                              

  Net earnings                            633,762,635     541,358,220     627,619,692

  Adjustments to reconcile earnings to                                    
  net cash                                                                

  provided by (used in) operating                                         
  activities :-                                                           

  Dividend received                       (87,479,365)    (19,156,546)    (20,110,059)

  Unrealised exchange loss                1,897,229       666,752         (1,545,666)

  Provision for stock obsolescence        -               -               -

  Depreciation and amortisation           180,305,131     176,012,679     155,006,025

  Loss on disposals of fixed assets       (265,206)       -               

  Provision of reserve for employee       -               15,650,857      -
  retirement benefit                                                      

  Share of (profit) loss from investments                                 
  accounted for under equity method                                       

  Subsidiary companies                    (2,304,273)     (18,865,081)    (33,585,028)

  Associated companies                    (79,773,020)    (13,719,991)    7,277,353

  Earnings from operating activities                                      
  before changes in operating assets                                      

  and liabilities                         646,143,131     681,946,890     734,662,317

  Decrease (increase) in operating assets                                 
  :-                                                                      

  Accounts receivable - unrelated parties (159,285,741)   15,166,467      (61,725,307)

  Accounts receivable - related parties   4,129,094       2,199,253       (2,557,826)

  Inventories                             (298,100,642)   (116,657,040)   239,902,410

  Other current assets                    13,337,929      (34,646,847)    33,559,474

  Other long-term assets                  (280,000)       129,612         (173,178)

  Increase (decrease) in operating                                        
  liabilities :-                                                          

  Accounts payable - unrelated parties    (18,362,727)    (36,312,232)    78,573,599

  Accounts payable - related parties      1,064,828       (322,734)       (1,317,679)

  Other current liabilities               (36,284,495)    (18,182,185)    59,628,127

  Net cash from operating activities      152,361,377     493,321,184     1,080,551,937
  --------------------------------------- --------------- --------------- ---------------

Statements of Cash Flows

Unit : Baht

  ------------------------------------ --------------- --------------- ---------------
                                       THE COMPANY                     
                                       ONLY                            

                                       2004            2003            2002

  Cash flows from (used in) investing                                  
  activities                                                           

  Dividend received                    87,479,365      19,156,546      20,110,059

  Dividend received from associated    1,135,500       -               
  company                                                              

  Decrease (increase) in deposit with  545,000,000     30,000,000      (285,469,408)
  maturity more than 3 months                                          

  Repayment received for short-term    12,000,000      -               -
  loan to related company                                              

  Advance for purchases of fixed       (55,077,827)    -               -
  assets                                                               

  Proceed from disposals of fixed      502,523         -               -
  assets                                                               

  Payment of additional investments in (443,010,647)   (218,438,340)   -
  subsidiary and associated companies                                  

  Net purchase of property, plant and  (64,552,441)    (122,141,968)   (77,504,894)
  equipment                                                            

  Net cash from (used in) investing    83,476,473      (291,423,762)   (342,864,243)
  activities                                                           

                                                                       

  Cash flows from (used in) financing                                  
  activities                                                           

  Increase (decrease) in bank          (11,253,966)    (80,547,874)    (107,751,844)
  overdrafts and short-term loans from                                 
  financial institutions                                               

  Increase (decrease) in short- term   -               -               -
  loan from related parties                                            

  Payment under financial lease        -               (63,395,862)    (70,952,478)
  agreement                                                            

  Dividend paid                        (180,000,000)   (180,000,000)   (105,000,000)

  Net cash used in financing           (191,253,966)   (323,943,736)   (283,704,322)
  activities                                                           

  Translation adjustment of investment -               -               -
  in new subsidiary company                                            

  Net increase (decrease) in cash and  44,583,884      (122,046,314)   453,983,372
  cash equivalents                                                     

  Cash and cash equivalents at         366,350,531     488,396,845     34,413,473
  beginning of year                                                    

  Cash and cash equivalents at end of  410,934,415     366,350,531     488,396,845
  year                                                                 

  Supplemental cash flow information                                   

  Cash paid during the year for :-                                     

  Interest                             548,086         1,170,368       10,639,155

  Corporate income tax                 187,528,757     197,209,478     153,074,746
  ------------------------------------ --------------- --------------- ---------------

13.3 Ratio Analysis

(The company only)

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

  LIQUIDITY RATIOS :                                            

  Current Ratio (Times)              9.80          7.73        4.40

  Quick Ratio (Times)                5.45          5.53        3.49

  Liquidity of Cashflow (Times)      0.67          1.38        2.43

  Accounts Receivable Turnover       6.08          6.33        6.53
  (Times)                                                      

  Collection Period (Days)           59.24         56.86       55.17

  Inventory Turnover (Times)         4.01          5.29        4.18

  Average Sales Time (Days)          89.72         68.04       86.13

  Accounts Payable Turnover (Times)  40.23         25.33       29.37

  Payment Period (Days)              8.95          14.22       12.26

  Cash Cycle (Days)                  140.01        110.68      129.04

  PROFITABILITY RATIOS :                                        

  Gross Profit Margin (%)            26.20         28.26       34.26

  Net Profit Margin (%)              17.18         16.25       19.32

  Return on Networth (%)             14.48         13.51       17.65

  EFFICIENCY RATIOS :                                           

  Return on Total Assets (%)         13.72         12.39       15.56

  Return on Fixed Assets (%)         123.93        96.70       96.92

  Total Assets Turnover (Time)       79.88         76.22       80.54

  FINANCIAL POLICY RATIO:                                       

  Debt/Equity Ratio (Times)          0.05          0.07        -

  Interest Payment Coverage (Times)  1,160.00      310.38      94.75

  Pay-out Ratio (%)                  28.40         33.25       28.68

  PER SHARE VALUES :                                            

  Par Value (Baht)                   1.00          1.00        1.00

  Book Value (Baht)                  15.28         13.91       12.79

  Earning Per Share (Baht)           2.11          1.80        2.09

  Dividend Per Share (Baht)          0.60          0.60        0.60

  (Proposed for year 2004)                                     
  ---------------------------------- ------------- ----------- -----------

* Restated figures have been used wherever restated for previous year

Consolidated

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

  LIQUIDITY RATIOS :                                            

  Current Ratio (Times)              4.06          3.70        2.46

  Quick Ratio (Times)                2.19          2.46        1.91

  Liquidity of Cashflow (Times)      0.44          0.49        1.30

  Accounts Receivable Turnover       6.18          6.21        6.39
  (Times)                                                      

  Collection Period (Days)           58.27         58.00       56.33

  Inventory Turnover (Times)         4.18          5.12        4.20

  Average Sales Time (Days)          86.05         70.26       85.76

  Accounts Payable Turnover (Times)  25.42         19.91       21.49

  Payment Period (Days)              14.16         18.08       16.76

  Cash Cycle (Days)                  130.15        110.18      125.34

  PROFITABILITY RATIOS :                                        

  Gross Profit Margin (%)            25.78         28.32       34.48

  Net Profit Margin (%)              14.31         14.14       17.32

  Return on Networth (%)             13.96         13.18       17.45

  EFFICIENCY RATIOS :                                           

  Return on Total Assets (%)         12.09         11.11       13.85

  Return on Fixed Assets (%)         68.95         64.03       66.59

  Total Assets Turnover (Time)       84.47         78.57       79.98

  FINANCIAL POLICY RATIO:                                       

  Debt/Equity Ratio (Times)          0.16          0.15        0.22

  Interest Payment Coverage (Times)  109.94        87.32       44.46

  Pay-out Ratio                      28.40         33.25       28.68

  PER SHARE VALUES :                                            

  Par Value (Baht)                   1.00          1.00        1.00

  Book Value (Baht)                  15.28         13.91       12.79

  Earning Per Share (Baht)           2.11          1.80        2.09

  Dividend Per Share (Baht)          0.60          0.60        0.60

  (Proposed for year 2004)                                      
  ---------------------------------- ------------- ----------- -----------

* Restated figures have been used wherever restated for previous year

13.4 Management Discussions & Analysis

Production

The company’s plant continued to operate at full capacity. The
production of various grades of carbon black during the year was higher
by 1% compared to last year. The company has optimized its production
process by way of debottlenecking and improvement in the production
process and is operating at best possible production level of approx
161, 000 MT per year.

During the year the company decided to invest funds for expansion of its
capacity by adding 5^(th) production line with additional capacity of
approx 45,000 tons per year to produce carbon black. The expansion
project is currently under implementation and expected to commence
production by August 2005. After expansion the total production capacity
will be approx.205,000 MT/year.

Sales Revenue

The Sales Revenue in 2004 has registered an impressive growth of 8.74%,
increased from Baht 3,219 million to Baht 3,500 million. The increase
was possible mainly due to improved domestic sales on the back of
domestic economic growth and better performance of automobile industry
and cost push increase in selling prices due to high raw material cost.
The sales volume also marginally increased by 2%.

The ratio of export to local sales for the year 2004 is balanced at
45:55 as against 49:51 in 2003 as company achieved better sales volume
and realization in domestic market which is in line with company’s
strategy to enhance contribution margin. It is company’s strategy to
strive for optimum product and customer mix to enhance the contribution
margin and sales revenue.

Equity Income

The share of profits in 2004 from investment accounted under equity
method was higher at Baht 82 million as compared to Baht 33 million last
year. This increase comes from better operational performance by one of
the subsidiary and two associated companies.

Other Income

The interest income from the surplus funds placed with the financial
institutions was lower by 37% from Baht 19million to Baht 12 million
mainly due to use of funds for investment in Egypt project, Chinese
subsidiary, expansion project and due to declining interest rates.

The dividend income of Baht 87 million from related and associated
companies is substantially higher mainly due to one time dividend
payment of Baht 72 million received from one related company namely Thai
Epoxy & Allied Products Co.,Ltd due to its plan to sale its entire
business to another Associated company namely Thai Organic Chemicals
Co.,Ltd.

The other income also reduced from Baht 24.34 million to Baht 7.15
million mainly due to no duty drawback on imported raw material in 2004
as duty has been reduced to nil in 2004 and no major insurance claim
received in 2004 (in 2003 it was Baht 11 million).

Cost and Expenses

The cost of sales have gone up by 12% to Baht 2,583 million in 2004
against 2,309 million last year due to increase in raw material prices
and depreciation and lower realization from energy utilization. The
price of raw material which is carbon black feed stock oil were all time
high due to highest annual average crude oil prices in the world market.
The higher oil price trend is likely to continue next year, however
downward correction is possible.

The selling expense were higher by 8%at Baht 187 million compared to
Baht 173 million in 2003 mainly due to higher ocean freight rates for
export. Freight rates were higher world wide due to shortage of
containers and high bunker oil prices

The administrative expense were lower by 10% at Baht 108 million
compared to Baht 120 million in 2003 mainly due to overall control of
various administrative expenses in 2004.

The interest expenses were reduced from Baht 2.34 million in 2003 to
Baht 0.70 million in 2004 as no long term and short term loans are
outstanding in 2004.

Profits

The company has been able to record net profits of Baht 633 million for
the year 2004 compared to Baht 541 million in the previous year thereby
registered an impressive increase of 17% despite high raw material
prices due to higher selling prices, dividend from investee company,
selling volume and lower administrative and maintenance expenses.

The equity income from subsidiary and associated companies increased
from Baht 33 million to Baht 82 million mainly due to better operational
performance by one of its subsidiary and two associated companies.

Financial Position (Company only)

Assets

The total assets as at 31^(st) Dec 2004 amounted to Baht 4,791 million
compared to Baht 4,446 million for the previous year, an increase of
7.74% Details of major assets are as follow

-   Cash

  The cash and cash equivalents and funds placed with financial
  institutions were lower at Baht 411 million as at 31^(st) Dec 2004
  compared to Baht 911 million as at 31^(st) Dec 2003. The reduction was
  mainly due to investment in Chinese Joint Venture, Egypt project and
  expenses for expansion project and normal CAPEX.

-   Inventory

  At the year end the inventory was higher at Baht 793 million compared
  to Baht 495 million for the previous year mainly due to receipt of
  large raw material shipment in the last week of Dec’04 of approx value
  of Baht 452 million.

-   Investment

  Investments accounted for under equity method increased from 821
  million Baht to 1,301 million Baht in 2004 mainly due to the following
  reasons:

-   Investment of Baht 266 million in a Green Field Acrylic Fibre
    project in Egypt namely Alexandria Fibre Co.,S.A.E.

-   Purchase of additional 9.75 million new shares of Thai Organic
    Chemical Co.,Ltd with a total addition investment amount of Baht
    97.5 million.

-   -Investment of 79.56 million Baht in equity of Lioaning Birla Carbon
    Co.,Ltd which is the remaining amount as per its shareholding
    portion. Better performance and improved share of profit in
    subsidiary namely Thai Sulphites & Chemicals Co.,Ltd and two of the
    associated companies namely P.T Indo Liberty Textiles, Indonesia and
    Thai Organic Chemicals Co.,Ltd.

Liabilities and Shareholders Equity

The total liabilities for the year ended amounted to Baht 208 million, a
decrease of Baht 65 million mainly due to reduction in short term loan,
trade payable and corporate tax payable.

The shareholders equity at the year end was higher by Baht 409 million,
an increase of 10% mainly on account of profit for the year

Earning per share

The earning per share was Baht 2.11 in 2004 compared to Baht 1.80 in
2003 due to higher profit for 2004

Book value per share

The book value per share increased to Baht 15.28 in 2004 against Baht
13.91 due to profit during the year.

Analysis of Financial Ratios (Company only)

Liquidity

The company’s current ratio was higher at 9.80 times up from 7.73 times
last year which reflects company’s very strong and comfortable liquidity
and cashflow position. The current liabilities reduced by 24% mainly due
to repayment of short term loan , lower account payables and corporate
income tax payable. The current assets also reduced marginally mainly
due to the decrease in short term placements with banks and financial
institutions, though inventory is higher due to receipt of larger raw
material shipment in end Dec’ 04.

Equity

The company has historically maintained very low debt to equity ratio.
At the year end, company did not have any long term and short term
borrowings except very minor overdrawn balance. The debt to equity ratio
is 0.05:1

Profitability

The gross profit margin of the company marginally decreased to 26% as
compared to 28% in 2003 mainly due to higher raw material price,
depreciation and maintenance expenses. The net profit margin is
marginally increased to 17% compared to 16% in 2003. The return on
average shareholders equity based on total profit after tax is 14%
compared to 13% last year.

Efficiency

The fixed assets turnover ratio improved to 5.84 in 2004 against 4.50 in
2003. The return on fixed assets also improved from 96.70% to 123.93% in
2004 The inventory turnover ratio is little lower due to higher price of
raw material and higher raw material inventory as larger raw material
shipment was received in end Dec’04.